TRUBAR Inc. (TRBR.V) Earnings Call Transcript & Summary

Hello, everyone. Thank you for joining us today, and welcome to Simply Better Brands' Fourth Quarter and Fiscal 2024 Investor Webinar for the period ending December 31, 2024. This call is being recorded. I trust that everyone has received a copy of our financial results press release that was issued today. Listeners are encouraged to download a copy of our quarterly financial statements and management discussion and analysis from sedar.com. My name is Pardeep Sangha, and I'll be moderating the call today. Next slide, please. Please note, portions of today's call, other than historical performance, including statements of forward-looking information within the meaning of applicable securities laws, these statements are made under the safe harbor provisions of those laws. Please refer to today's press release and in our management discussion and analysis for our disclosure of risks and uncertainties. We provide forward-looking statements solely for the purpose of providing information about management's current expectations and plans relating to the future. We do not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any changes in our expectations or any change in events, conditions, assumptions or circumstances under which such statements are based, except if it's required by law. We use such terms as adjusted EBITDA, gross profit and gross margin, which are non-IFRS non-GAAP measures. For more information on how we define these terms, please refer to the definition set under management discussion and analysis. Next slide, please. Joining me on the call today are the company's Chairman and CEO, Kingsley Ward, who will first provide an overview of the business and financial summary of our financial 2024 results. Then we have Erica Groussman, Founder and CEO of TRUBAR, who will provide an update on TRUBAR, and finally, Kingsley will end off with some closing remarks. With that, let me turn the call over to Kingsley Ward, Chairman and CEO. Kingsley?

Thanks very much, Pardeep, and good afternoon, everybody. Thank you for being with us here today. I am super excited to be here and tell you a little bit about what we accomplished in 2024 and our exciting plans for 2025. As many of you are probably well aware now with our release last night, the most important initiative that we've got underway for the coming year is this rebranding of the business to TRUBAR. As you'll see here, this graph represents a significant effort to restructure this business in the last year. I'd like to thank all our team that helped execute a very, very difficult series of activities. But here we are, it's all cleaned up. All the restructuring is in the rearview mirror. We're here today really just to talk about TRUBAR. I'd like to add that our small brand, No B.S., we have a letter of intent on the table to purchase the company and we're looking to close it by the end of June. So you see the new corporate structure here on the right side. We're simply going to change the name of Simply Better Brands to reflect the simply best brand we have and change the name to TRUBAR, and we're going to have the 2 operating entities, U.S. and Canada, underneath that mothership public company. I just want to point out that there's no activity required by shareholders to get -- affect the change of their stock, and all the rights with regards to warrants will transfer to our new world. So some highlights for 2024 here, you really see some really strong performance across the board. The difference that 69% to 77% is all about the small brand, No B.S. being still in the mix. But it's all about the TRUBAR growth at 77%. And we're going to talk a little bit more about that in a slide or 2. But they are some of our big accomplishments in 2024. Let's go to the next slide. This is just a graphical representation, again, of some really strong numbers. Again, the difference there, the total revenue is simply just you add No B.S. into the mix for 2024, and that's why the small differences here. Back to the TRUBAR story, gross profit moving forward, cash flow increasing, really fabulous results here. Next slide. I want to take a moment to explain how we are going about growing this business. Now if you look at this chart, Simply Better, again, you add the No B.S. picture, you see the numbers, the gross sales, the net sales and the nice growth, all right? But let's go to TRUBAR, because I think this is really, really important for everyone to note. Gross sales are up almost 95%. Now, you work with your retail network and you're executing trade discounts, et cetera, et cetera, to get yourself to a net sales number. And there you have it, still incredibly positive, almost 77% growth. And on the quarter, that's year-to-date, I'd like everybody to focus on the year, okay? There's some noise in the statements due to the restructuring and some accounting work that we had to do to clean up 2024. But then you look even at the quarter-over-quarter performance, and it really is staggering. So we can come back to that in the Q&A if you'd like, but I just wanted to give everybody that picture of gross, net and on to the year and quarter. Next, a little bit on the balance sheet. Again, across the board some very, very significant improvements across the board here on the balance sheet. Next slide. Before turning it over to Erica to let her tell you a little bit about our plans in 2025, I really think it's important just to come back to the story of TRUBAR, look at this graph and what Erica has been able to accomplish in really 4 years of having some small resources at the beginning and now a lot more resources to deploy. But look at that CAGR, it's truly amazing. You see some of the growth initiatives and the catalysts here. Erica is going to talk about that. So without further ado, Erica, 2025.

Here we go. Hi, everyone. I'm Erica Groussman, and I am the CEO and founder of TRUBAR. Really excited to share more about what is going on. So we have obviously, TRUBAR, for those of you who don't know or haven't been familiar or tasted TRUBAR, they are 12 grams of protein, 190 calories, all indulgent nutrition. We have many flavors and they're all delicious. They have no seed oils, no sugar, alcohols, kosher, soy-free and plant-based. So, we have recently, just in the past 6 months, built out this world-class leadership team, and they have combined over 100 years of CPG skills. So they are going to be there to help us support the growth and momentum that is behind TRUBAR. And we have so much to go. We're just getting started. Here's our distribution expansion. So as you can see in '23, we did 4,500. And then in the year '24, we did over 15,000 stores. And we have this huge goal that we think will surpass the 25,000 stores, national, regional as well as global. I can announce that we launched Costco Mexico, so that we are now live in Costco Mexico and looking at other places to go with this amazing partner. Here is our Amazon breakthrough. So as you know, we've gone -- look at this chart. It's unbelievable. It's a true reflection of consumer demand. And we, right now, are at a $13 million run rate. And we plan to just continue to see this grow. So this is a very important slide, and it shows just how amazing we're doing as well as that 2 of our flavors are in the top 10. We are an asset-light operating model. And we have co-mans as well as headquarters, 3PL distribution strategically across the United States so that we can get to all of our consumers. We also are building a great quality and food safety, state-of-the-art. And we also have just been working on our ERP implementation with this amazing new team that we have, and that is going to be completed by the end of Q2. Here's our innovation pipeline. So we are working on getting flavors into retailer information as well as flavor and different pack sizes. And a lot of our flavors are already selling out. So you can see those. Here's our marketing approach. So we are going into all these different areas. And in '24, we did an amazing job. But now we are -- the brand is getting noticed and remembered and we're really excited to continue all of these activations and really get the brand out there to a whole new level. I'm super excited about 2025. The doors is -- I mean we are going to be in so many new retailers with new flavors. We've got new formats, different size packs and the best thing is, as you can see from Amazon, we are outpacing the category. So the brand awareness is rising like I said, we are getting noticed and we are getting remembered. People are going out there and searching for us and buying us and buying us on Amazon.

So folks, that brings our presentation to conclusion, and we're happy to open up the floor to questions or comments here. Pardeep, over to you, sir.

[Operator Instructions] First question is coming from Noel Atkinson from Clarus Securities.

Noel, it looks like you're still muted.

Noel, you can unmute. Let's go to Najib Islam from Canaccord.

Sure. So I was wondering if you could please provide some more details about the marketing plans you have for the year ahead. Could you give me some details on which channels you're looking to prioritize?

Yes. We're looking on all fronts. So we're going to be doing influencer, PR. We've already done a lot of PR. I don't know if you've noticed, we've been in a lot of new articles and TV shows. And so there's a lot going on around PR, influencers, and we're going to be doing a full funnel paid media. So driving awareness and conversion, national ad campaigns. We're investing into our Walmart, our Target, our other retailers that we're in to just build the brand awareness. That's the most important, the trial and the awareness.

Sure. And another question I had is, could you provide me a bridge from sort of the 15,000 stores you have in 2024 to the 25,000 you're targeting in 2025, which are the major retailers that are going to be driving that?

You want to speak to that a little bit?

I mean, we have some doors that we're already in that we're going to expand, and then there's a lot of the new retailers that we're bringing on. So I don't want to -- I don't want to give them out, but it's exciting. We did actually up our Walmart. We started in 711, and we just launched about 1.5 weeks ago an additional 100. So we are growing there, but...

I'm going to add some color, I think, that might help. Folks, look, 2024 was still a year of concentrated activity at Costco. They're a fantastic partner, and we continue to build momentum with them. But what we're undertaking right now is expanding our reach across multiple, multiple channels. And getting our -- we had about 80% of our business in Costco last year. We're going to work towards getting that to 60% or less. And we're excited in some of those big names that you've seen, and the recent announcement of Target is super new. We're going to see what Mexico has to offer with the recent launch in Costco, Mexico. So hopefully, that helps give you a little bit of color about where we're going on the distribution front.

Sure. Got it. And I know, like you mentioned that Costco has been a very important partner for you. And it's -- I know it's still very early days. But is there any details you can provide on how the Western Canada rollout is progressing there?

Right now, our numbers are phenomenal. They're really loving it. So thank you for all of you who have been purchasing them and enjoying them. So that's really all I can say right now.

I'm going to add that the sell-through numbers across the board are extremely strong. So we're gaining traction on all fronts. I really can't think of one story you're telling me or what the team is bringing forward in terms of any point of distribution that's experiencing anything but very, very positive sell-through.

We can go back to Noel Atkinson at Clarus Securities.

Erica, congrats on a great ramp in TRUBAR sales over 2024. First off, just going back to sort of the focus of adding doors in 2025, you're now national with some of the leading bar retailers. Are there channels that are big drivers of bar sales that you guys still want to get into? Like is it convenience? Is it grocery, like regional grocery? Like what would be your sort of ideal sort of growth mix here?

All of the above.

I was going to guess you were going to say that.

We're working on everything, right? We kind of break out our sales team as convenience, grocery, club, right? So -- and then we also are working on other channels, so alternative channels, food service and such. So we're working on all fronts and plan to grow in all avenues.

The market in the U.S. is just enormous, folks. We're talking well north of 100,000 doors that we need to break into. And you can only go so fast building the team and building the entire distribution ecosystem. But we're well underway and with the team that's been assembled, I think the most important thing is to -- and the ERP system that's coming into play is to make sure that you don't have a big whoopsie with a major retailer. And I'm very, very pleased to report that everything we're seeing on the -- call it, the back end of the business and the partners that we have, the co-mans, the distribution partners, it's all Tier 1 quality and we're delivering on all fronts. So we're just going to look to build as many distribution points as we can as quickly as we can.

Okay. Great. And then nextly, in terms of the gross revenue versus net revenue in Q4, it looks like there was some reallocation, some true-ups of, I guess, marketing spend quarters and putting it into trade spend to be more representative of maybe where it should have been captured. Can you talk at all about what the normalized Q4 sort of trade spend was like or gross margin or something like that? And what you guys might hope to do in '25? Like I think it was -- blended, it was about 30% gross margin, I think, in 2024, up a little bit from '23. Can you kind of help us a little bit on that?

Yes. Look, remember, we were still in cleanup. We had a significant addition to our -- a couple of additions to our accounting team. And we made some -- exactly what you said, some adjustments at the year-end, similar to what we had to do in '23 before I got on the scene. And we definitely want to normalize. We've got a lumpy revenue picture in the past. I think it's going to -- I think it's going to flatten out a bit. Well, when I say flatten out, I mean in a normalized and build and very positive forward momentum. So in anticipation of that question, Noel, I actually have a slide that I'd like -- Pardeep, if you could bring that slide up. I want to take you to where we are and where we're going here. Look, folks, if you simply look at $100 of sales, we're averaging right now, trade spend around $20. And that's discounting, that's listing fees, that's couponing, right? So you look at over time, we want to try to bring that trade spend down more to a 15% level. And then you get to your net sales line on the COGS front, we've got a great team that's working to bring our COGS lower and lower. And then you get to this gross profit here picture of around 30% today. And our plan is to build it towards 40%. It's going to take time. But I think it's important to note that we're active on all fronts here. And I am hoping that our financial profile is going to get much easier to understand and build in a very, very positive manner over the next -- over the year. Does that help, Noel?

Sure. So this is going from Model A to Model B to Model C is the progression you hope to achieve over sort of a multiyear time frame?

Well, ideally, I'd like to hope that we could do this in 12 to 18 months, get to C. We're active on this every day. And please come back to the incredible team that -- and the depth of experience Erica mentioned, we got 100 years of CPG experience now loaded into our world. And so we're -- like I said, we're active every day building towards Model C. But you got to evolve, right? And the trade spend is absolutely necessary today to help build that consumer awareness through trial, and we're very, very active on that front. So -- do you have anything to add on that?

That's what I was going to add that we need this trade spend, right, to really get the trial and the awareness out there. And that is what helps us gain new customers who then are repurchasers and want to see it other places. So it's very important to have trade spend. If we didn't, if we did lower it dramatically, it would hurt us because we wouldn't be able to do the trade, and that's the most important, to get trial and awareness.

And let's not forget, too, right, that all the work that we're doing especially with Costco, but across the board, is driving that direct-to-consumer activity, and that you can see it's working. So we'll be working on all fronts to drive better gross margin, but it will take some time.

Okay. Great. One last quick one, if I can. Do you have any kind of relative performance of reorder or sell-through or whatever for TRUBAR in recent months versus your peer group?

I mean you can tell from Amazon like that is really a direct correlation. I don't have any examples of any particular retailer, but I can tell you, just an example, I recently had a meeting, and we did a small launch test. And it was like there -- we did like 12 bars per week per store, which is how you kind of equate how bars are. And their best bar that has marketing dollars behind it, right? We didn't do anything because it was a small test and couldn't, and they're only like 13 bars. So we're doing really well. We're doing like above expectations. And if any of you have tried it, which I know Noel you have, I mean, they just -- once you try it, you're hooked. So that's really the name of the game.

Maybe you want to comment on some of that SPINS data on the 8,000 stores. Is that a -- can you put a little color around that?

So we have SPINS data, and it shows that we are above what our competitors are doing, that we are thriving and selling above.

Is it accurate? I think the numbers I saw were like 30-plus percent better performance than our...

That's correct.

Our competitors.

Yes, it is.

And this was a sample that we took of 8,000 stores and worked through the...

Above the category.

Yes. So hopefully, that helps, Noel.

Yes. So we'll move over to questions from the Q&A coming in from the listeners. A question here from a listener, [ Kenny ]. Given recent global trade and market dynamics, has the company adjusted its international expansion plans, particularly regarding Costco or distribution efforts in markets like the U.K., Mexico or Australia?

Do you want to take that?

Yes. So -- so originally, when the tariffs came out, that's what you're referring to, there was tariffs on everything. They've, everyone knows, changed a couple of times. So right now, it's not interfering directly with any kind of export that we're doing, hence Mexico or to Canada. So there is no issue there. As day by day, as everybody is doing, we'll see how it flows. But right now, we're just kind of staying on path and seeing how it evolves.

From a financial standpoint, I think to summarize it, folks, it's -- we don't think that the tariffs are going to have any significant effect on our business. I think that...

It's nominal.

It's nominal. So -- and we're managing, okay? So every day, again, teams are at work to try and manage through the changes. But right now, we do not see a huge bogey on the horizon even moving into these different markets.

We've got several questions that have come in that are very similar. And [ Andrew ] is one and some other listeners here as well. This is regarding the name change. And maybe Kingsley, you can talk to this. Can you please confirm the company's intentions moving forward with regards to the name change and whether you're splitting attention between TRUBAR and searching for an acquisition?

Yes, 100%. Look, folks, we are focused on TRUBAR, period, full and stop. We're bringing that simple message to life with the name change, the rebranding, and we are pausing all business development activities and putting all our resources to work on building TRUBAR. We think we have an absolute unicorn in the space. Erica has just done an unbelievable job getting us to where we are. And there's so much to build on here. And then back to the team, I don't want -- you have to realize the help that Erica has now around the table and the resources to keep -- not only keep up the momentum, but accelerate. So no, we're all-in on TRUBAR, folks.

A question here from [ Trevor ] on the line. How did the Canada West launch go? This is probably for Erica?

Yes. I think we kind of touched on it a little bit that we're doing above expectations. And like I thank everyone for buying them, but we're doing phenomenal there. The flavor profile hit it on the spot, even though it was a little bit of a surprise. And so it's doing really well.

Okay. Another question from a listener here. Given your aggressive expansion and the company's asset-light model, how is the team ensuring product quality, on-shelf availability and retail execution staying consistent through its next phase of growth?

Do want to take that?

Can you just repeat the first part about it?

Yes. Just given the aggressive expansion and so how is the team ensuring product quality, on-shelf availability and retail execution in the next phase of growth?

Did you see the team. We want to pull the team up again. We -- I mean, they have substantial CPG backgrounds, from Mars to L'Oreal to Keurig, they are top notch. So there is no doubt in continuing to have the utmost products. And I mean...

Erica, why don't you actually step through and actually talk about each of the persons on your team, and that might be helpful as well?

So Kate joined us in August, September. And she was at Red Bull, at Sazerac, at L'Oreal, and she's VP of Sales. So she is leading the charge with sales and doing a phenomenal job. Claire, she comes from Mars and Kimberly-Clark with global supply chain at the best, like she is world-class. I've never seen the skills that she is like putting together. So it's very exciting to see all the procurement and operations that she's bringing to our team.

And the food safety, quality control.

Yes, and the food safety, quality control that she's also -- she's heading, so she's doing great. And Luc just came on about 60 days ago, and he's our VP of Finance, and he is a wizard with numbers. So he also comes from Mars and he was there for also like 25 years. So tons of experience, CPG-heavy background and really knows how to play with our numbers and make them perfect. And then Natasha, she's VP of Marketing, and we've never had someone really controlling marketing. So this is very exciting and she's building out amazing plans for us in all avenues, so...

I want to add too that the ERP system that is hopefully going to go live at the end of June. Again, world-class, we had Tier 1 resources around the table to help guide us to what we need to make sure that, again, we just want world-class, best-in-class activity across all fronts on the operations side of things to be able to support this growth. And I think -- I really do think it would be difficult to find a much more qualified team than what we have here, folks. This is very, very exciting. And they're going to make sure we get to where we're going.

Okay. So we've had several questions come in with regards to different international, Mexico as well as Europe and stuff. So I'll just consolidate all these questions into one sort of just talk about your international plans and then what that looks like?

So we're only going international if we have an amazing partner to go there with and one of our partners has shown a lot of initiatives for that. So that's where we went with Mexico. Obviously, we're in Canada also, international. And then we'll see where it goes, right? I'm not going to say that we're 100% going everywhere or that we're not. And especially with the tariffs and with what is going on, we're going to have to just play it day by day. So there is no straightforward plan.

Really following a retailer's asks.

Right.

Right. That's what our plan is, folks. There's just so much opportunity here in the United States that you don't want to dilute your efforts. So -- but when a big retailer asks, you want to support the ask.

Another question here from one of the listeners. How are you balancing wholesale club channel expansion with the growing strength of your DTC channel, particularly Amazon? So the strength of 2 different channels, and how do you balance that?

Yes. They really have nothing to do with each other. We want to be everywhere. So we're working full force in every direction and staying true to that.

Yes. The goal is ubiquitous distribution for the brand, and all the different components or all the different constituencies are really their own little ecosystem. But let's not forget that the heavy trade spend, mainly in certain areas like club has driven the growth and now transferring over into online D2C activity.

Can you talk about some additional depth on the Amazon. There are some questions here that come in, in terms of how you're marketing to the Amazon channel? And how are you -- different things in terms of what the focus on the Amazon or direct-to-consumer in general, Amazon, you also have Shopify as well. So there's been several questions along those lines. So maybe just comment a little bit on how you're marketing to that channel and how that works?

Yes. So we're definitely marketing on Amazon keywords, but there are a lot of people that are going directly to Amazon looking for us and other brands are actually using our keyword. They're using TRUBAR because there is such a drive looking for us. So that just shows how strong we are in the market and how people are trying it and want to buy it, want to find it elsewhere, so...

And we've also -- just to add a little more color on that, too, we've also got some -- again, maybe we're overusing the phrase, but world-class advisers helping you on the build-out of the plan on D2C, right?

Absolutely.

So -- and our current addition to the marketing team, we're really excited about what '25 is going to bring on that front.

Some questions have come in related to Walmart. Just talk about your Walmart expansion over the past year and kind of what you're looking forward to going forward?

Yes. So Walmart, I know everyone keeps talking about the 4,700 doors. But we got in 711 early. And due to our numbers thriving, we've only been in for just over 5 months. And so we got an additional 100 doors. And I'm sure there'll be another opening where we get another amount of doors, but we don't want to go directly into 4,700 or we want to make sure that we're building up strategically and that people are aware of our brand as we grow it and that they're actually selling through. So right now, we're on a perfect path. I couldn't ask for anything more and our numbers are perfect.

Some questions have come in, Kingsley, around guidance. I think the plan is to provide guidance maybe later in the year. Is that -- what are your thoughts there?

Yes. Folks, look, let's get through wrapping up Q1, and we'll be possibly putting up some guidance here with the reporting on Q1 activity. There's quite a number of significant deals still that we hope to land here this month and next. So we'll look forward to putting something out there with the guidance with Q1.

And we'll be wrapping up here. This is the last question. What should investors be expecting in terms of key milestones or inflection points over the next 12 months?

Wow. Okay. Well, there's so many. You just look at the distribution channels and trying to really drive activity on all fronts, all of those distribution points, innovation. You've got some new products coming into the market, right?

Yes, I do.

Hopefully, some very significant opportunities there. What else? Those are really the...

Different pack sizes, different variety packs.

And again accelerating our marketing.

And seeing new flavors in stores, right? Like we launched 4 new flavors recently, so actually seeing more SKUs in the doors that we're already in.

So again, folks, we're super excited about 2025. We really, really appreciate everybody's support as shareholders. Look forward to continuing to gain your trust and build shareholder value, and execute this fantastic growth plan.

Any last comments, Erica or Kingsley?

Just so excited with everything to come. I mean this couldn't be a better time. Right now, we are thriving, and go out and get some TRUBAR again.

We're just getting going. Yes, I think that's really the key message here. We really just are getting going and the team is positioned to deliver. So, super excited.

Thank you, everyone, for joining today, and we look forward to talking to you in Q1 reporting. Thank you very much.

Thank you.

Thank you.