Very Good Food Company Execs Detail Management Changes, Path Forward
The Very Good Food Company (VGFC) shared its plans for moving forward following the departure of the company’s two co-founders, Mitchell Scott (CEO) and James Davison, chief R&D officer, during its Q4 2021 earnings call on Thursday.
“We are at an important juncture and are taking decisive steps. Our focus is to continue to build on our brand and reputation and grow our market share in the plant-based meat segment, while optimizing our operations towards…profitability growth,” said Ana Silva, president and interim CFO. “Although we are experiencing some near-term liquidity challenges, we will continue to invest in the core parts of our business and remain confident in the growth trajectory for [the company].”
VGFC also announced yesterday that Jordan Rogers, formerly the head of retail sales for Canada, will now serve as CCO; Kevin Callaghan, who led U.S. retail sales, will be VP of Sales for North America; and Parimal Rana, formerly director of food safety & regulatory and interim director of supply chain, now holds the role of VP of operations. All three will join the executive committee overseeing business decisions and operations while its search for a new CEO is ongoing.
VGFC reported annual revenue of $12.3 million for 2021 with record fourth quarter earnings of $4.3 million, a year-over-year increase of 164% and 134%, respectively. Adjusted EBITDA loss in Q4 2021 was $5 million compared to $8.2 million in Q3 2021 with adjusted EBITDA loss for fiscal year 2021 at $2.3 million.
Costs associated with marketing expenses increased by $2.2 million (101%) in Q4 due to increased costs accrued from digital marketing. At the end of 2021 the brand’s Very Good Butcher and Cheese brands were sold in a total of 1,395 stores, an increase of 273% YOY; that count now stands around 1,651 as of the end of March.
For 2021 VGFC had four goals, Silva said: investment into scaling the business, building brand awareness via marketing efforts, developing and launching new products and deepening or establishing relationships with wholesale accounts. Though several of these goals have carried over from previous years, in the past these efforts have been hampered by capacity struggles, an issue Silva said the opening of the company’s new production facility in Q1 2021 has alleviated.
However, now the company has too much capacity, Silva said, with Rana noting that VGFC is evaluating how to undertake cost saving measures.
“We are currently looking at the capacities of all three locations, assessing which plants could be consolidated based on financial stability,” Rana said. “We are going to take some time and not weeks or months, but fairly quickly here to decide on which locations can consolidate.”
During the Q&A portion of the call, Rodgers declined to answer why more aggressive cost savings measures had not been undertaken or if Scott had resisted these efforts.
Silva also provided an update on November loan agreements with the former co-founders. Scott’s $750,000 loan has already been repaid in full, along with $2,772 in interest. Davidson has repaid $89,732 of his $500,000 loan, though the company currently holds one million shares as security.
In response to an investor’s question as to “How much investor money was lost to Mitchell’s pockets before he was terminated,” Hoang said compensation was public via investor filings and neither Scott nor Davidson received severance upon their departure. To regain “investor confidence,” Rodger’s pledged to “being in front of our community and being as open and as available as we can.”
Executives added that they were still working to determine what influence Scott and Dickenson still hold as shareholders of the company, particularly regarding senior management or board composition, as well as if an opportunity to sell to a larger company was off the table.
Despite the changes, VGFC’s executive team remained positive about its growth outlook, noting that retailers, wholesalers and foodservice operators are eager to take in the products.
“We have amazing products that taste great, that have really been validated in the market through same-store sales growth with authentic ingredients,” Rodgers said. “What we have in the R&D pipe, which has generated a lot of retailer excitement and I think we’re really just getting started yet. We have a lot of work to do and we’re excited to have everyone on this very good journey with us.”
