Barfresh Food Group, Inc. Q3 FY2025 earnings call

• Pivotal development: Completion of Arps Dairy acquisition in early October, providing own manufacturing capabilities with an operational 15,000 square foot processing facility and a near-completion 44,000 square foot state-of-the-art manufacturing facility in Ohio, with integration proceeding smoothly.
• Third quarter results: Revenue growth driven by improved production consistency, successful back-to-school season, Pop & Go 100% Juice Freeze Pops gaining traction in the lunch daypart, and many customers reintroducing products in the fourth quarter due to resolved supply constraints.
• Arps Dairy benefits: Direct control over production capacity, enhanced operational efficiency, flexibility to innovate and scale products, and reduction in dependency on third-party co-manufacturers.

In the third quarter, revenue was $4.2 million, representing 16% year-over-year growth, which is the company's highest quarterly revenue. Gross margin improved to 37% in the third quarter of 2025 compared to 31% in the first half of 2025. Adjusted EBITDA was positive in the third quarter, a major milestone demonstrating operational momentum.

• Raised fiscal year 2025 revenue guidance to a range of $14.5 million to $15.5 million, representing 36% to 46% year-over-year growth.
• Issued preliminary fiscal year 2026 revenue guidance of $30 million to $35 million, a 126% increase compared to the high end of fiscal year 2025 guidance, reflecting full year contribution from Arps Dairy, continued market penetration in education channel, and expansion of Pop & Go product line.

• Previously faced manufacturing challenges and start-up issues for Juice Freeze Pops, though expected to be fully resolved by end of fourth quarter.
• Near-term margin impact from Arps Dairy transition with start-up and implementation costs, and different margin profiles of Arps Dairy's existing milk processing business.

Q: What have you been doing to build trust with some of those schools that you had to pull product from or you weren't able to deliver product to last school year and that you're reintroducing your products to this fourth quarter?

A: We've been staying in close contact with our customers and really communicating where things are at. Having a broad broker network and our own sales team, we let them know we've gone into our own manufacturing facilities and are building relationships to make them aware product is coming, with a lot of reintroductions happening in Q4 and into Q1 next year.

Q: So when you talk about the Q4 to Q1 switchover, so is it almost like a pilot trial in this fourth quarter and then you'll probably properly kind of be reentering the school districts in the first quarter with like full steam ahead?

A: You mean in terms of the customer sales process or in terms of the production at the new facility? If talking about sales to the schools, when we go back to the schools and they put us back on the menu, the sales go back immediately. We don't need to retrial the product. The sales process doesn't start over again; it's more just about them placing orders and it going back on the menu with sales starting immediately from when they place orders.

Q: Talking about those manufacturing facilities, can you give some detail on your CapEx expectations as you retrofit those facilities for your products? And just kind of like what that entails and how long you expect that to take?

A: We're working through that now. We've been preliminarily approved for a $2.3 million government grant which will go towards the remainder of the fit-out for the construction of the new facility. There's an operational 15,000 square foot processing facility already, and the plan is to move into the new facility from the old one, with a lot of equipment going over. If we need new pieces to upgrade as we move into the new facility, we'll address those at the time and look at financing them then