The Real Good Food Company Announces Leadership Changes and Supply Chain Optimization - Seite 2

Strategic Actions to Optimize Supply Chain

In an effort to accelerate the optimizing of its supply chain, the Company plans to cease operations at its City of Industry (“COI”) facility by June 30, 2024. While ongoing analysis of the closure's overall impact is underway, preliminary assessments indicate substantial cost savings with negligible cash outlays. With a significant portion of COI's production set to transition to the Bolingbrook, IL facility, alongside co-packing arrangements and rationalization measures, this decision is expected to improve capacity utilization, reduced fixed overhead costs, enhance margins, and streamline the supply chain.

Business Updates

• According to SPINS and IRI, for the two months ended February 29, 2024, total consumption of the Company’s branded products increased by 53% year over year. This included a 23% increase in the unmeasured channel and 96% increase in the measured channel.
  • In the measured channel, according to SPINS, consumption for the RGF brand for the two months ended 2/28/24 was $26M or up 96% y/y. For the latest four week ended 2/28/24 consumption was $12.5M or up 102% y/y.
  • In the unmeasured channel, according to IRI, consumption for the RGF brand for the two month ended 2/28/24 was $23.7M or up 23% y/y.
• The previously disclosed refinancing in March 2024 reduced the Company’s revolver balance to $25 million and reduced the maximum availability under revolver to $35 million, implying $10 million in liquidity at the time of the refinancing. The refinancing in November 2023 and March 2024 combined have significantly reduced the company’s cash debt service and enhanced liquidity. Cash debt service is currently at $1.0 million a month.
• The aforementioned organizational changes, streamlining of supply chain and yield improvement initiatives are expected to significantly accelerate the Company’s path to generating free cash flow and self-funding its growth.
  

Management Commentary

Executive Chairman Bryan Freeman commented: “We are pleased to announce the appointment of Tim Zimmer as Chief Executive Officer, as his experience aligns with the slate of strategic actions we announced today. These are aimed at significantly accelerating the path to profitability and are a testament to our commitment to fellow shareholders.

“Our growth remains strong, with total consumption of our branded products increasing 53% year-over-year in the two months ended February 29, 2024. On the liquidity front, after taking into account our latest refinancing, the Company has significantly reduced its cash debt service. Ultimately, we expect these changes will enable us to generate free cash flow and self-fund our future growth.”