Business Overview and History
Stryve Foods, Inc. (SNAX) is an emerging leader in the healthy snacking industry, revolutionizing the way consumers approach their on-the-go nutrition. With a relentless focus on delivering high-protein, low-sugar snacks that cater to the growing demand for better-for-you options, Stryve has carved out a unique position in the rapidly evolving consumer packaged goods (CPG) landscape.
Stryve Foods, Inc. is an emerging healthy snacking company that manufactures, markets, and sells highly differentiated healthy snacking products. Founded with the mission to help Americans snack better and live happier, better lives, Stryve offers convenient snacks that are lower in sugar and carbohydrates and higher in protein than other snacks.
The company's current product portfolio consists primarily of air-dried meat snack products marketed under the Stryve, Kalahari, Braaitime, and Vacadillos brand names. Unlike beef jerky, Stryve's all-natural air-dried meat snack products are made of beef and spices, are never cooked, most contain zero grams of sugar, and are free of monosodium glutamate (MSG), gluten, nitrates, nitrites, and preservatives. As a result, Stryve's products are Keto and Paleo diet friendly. The company believes that its air-dried meat snack products are some of the healthiest shelf-stable snacks available today based on their protein density and sugar content.
Since its inception, Stryve has made substantial investments in product development, establishing its manufacturing facility, and building its marketing, sales, and operations infrastructure to grow its business. These investments have resulted in net losses since the company's founding. Stryve distributes its products in major retail channels, primarily in North America, including mass, convenience, grocery, club stores, and other retail outlets, as well as directly to consumers through its e-commerce websites and the Amazon platform.
In July 2021, Stryve completed a business combination transaction, which provided the company with additional capital and resources to continue growing its business. However, the company has continued to face challenges, including the need to rationalize low-quality revenue sources, manage inflationary pressures, and optimize its operations and cost structure. Despite these challenges, Stryve has worked to improve its product quality, enhance its packaging, and strengthen its brand positioning to better appeal to health-conscious consumers.
Financial Performance
Stryve's financial performance has been characterized by a mix of top-line growth and operational challenges. In the fiscal year 2023, the company reported net sales of $17.71 million, a 40.8% increase compared to the prior year. However, the company has also grappled with net losses, reporting a net loss of $19.04 million in 2023. The annual operating cash flow was -$7.43 million, and the annual free cash flow was -$7.53 million.
For the nine months ended September 30, 2024, Stryve reported net sales of $16.48 million, up from $14.82 million in the same period of the previous year. Gross profit increased to $3.94 million, or 23.9% of net sales, compared to $2.57 million, or 17.3% of net sales, in the prior year period. However, the company continued to report net losses, with a net loss of $10.00 million for the nine-month period, down from a net loss of $13.73 million in the same period of 2023.
In the most recent quarter (Q3 2024), revenue was $5.70 million, representing a 36.4% increase year-over-year. The net loss for the quarter was $3.11 million. The growth in revenue was primarily driven by significantly increased sell-through at retail and promotional efficiencies supported by strategic pricing initiatives. Gross profit also improved to 21.7% from 13.3% in the prior year period, reflecting enhanced operational efficiencies.
Liquidity
The company's liquidity position has been a point of focus, with Stryve securing a term loan and an asset-based line of credit in 2022 to bolster its working capital needs. As of September 30, 2024, the company had $183,360 in cash and cash equivalents and $16.39 million in total debt, including $13.02 million in short-term borrowings and the current portion of long-term debt.
Stryve secured an $8.0 million asset-based line of credit, of which $4.0 million was drawn as of September 30, 2024, leaving $4.0 million in available credit. The company also has a $4.0 million term loan, of which the full amount was drawn. The current ratio was 0.38 and the quick ratio was 0.17 as of September 30, 2024.
To address its liquidity challenges, Stryve has taken various actions to enhance its financial position, including issuing promissory notes and convertible notes, and most recently, completing a public offering that raised approximately $2.9 million in gross proceeds. The company continues to evaluate additional strategies to further strengthen its liquidity and execute its business plan.
Transformation and Operational Improvements
In May 2022, Stryve announced a leadership change with Chris Boever becoming the new CEO. Under his leadership, the company implemented a three-phase strategy focused on cost reduction, revenue rationalization, and productivity enhancements. These initiatives have yielded tangible results, with the company reporting a 15.9% reduction in operating expenses in the third quarter of 2024 compared to the same period in the prior year.
The transformation plan consisted of three phases: 1. Cost reduction, revenue rationalization, pricing, and organizational design 2. Improvements in quality, talent, and productivity 3. Accelerating quality growth through brand reinvigoration, enhanced sales strategies, disciplined promotional activity, and new partnerships to expand the reach of Stryve's brands
Stryve has also made substantial investments in improving its product quality, unveiling upgraded packaging, and enhancing its brand positioning. These efforts have resonated with consumers, as evidenced by the company's growing retail velocities and distribution footprint.
Strategic Partnerships and Distribution Expansion
Stryve has forged strategic partnerships to strengthen its distribution capabilities and supply chain efficiency. In 2024, the company announced a collaboration with Dot Foods, North America's largest food industry redistributor. This partnership is expected to help streamline Stryve's operations, improve service levels, and optimize customer lead times.
Furthermore, Stryve has secured new and expanded distribution with a range of prominent retailers, including Kroger, Key Foods, Save Mart, Yesway, Allsup's, HomeGoods, Energy North, and GreenChef. These distribution wins reflect the growing consumer demand for Stryve's healthy, high-protein snack options and the company's ability to execute on its growth strategies.
Outlook and Future Opportunities
As Stryve continues to execute on its transformation initiatives, the company is well-positioned to capitalize on the burgeoning demand for better-for-you snacking options. The company's focus on product innovation, operational efficiency, and strategic partnerships sets the stage for sustainable growth and a path to profitability.
While Stryve did not provide specific financial guidance for the remainder of fiscal year 2024, the company expects to see "significant and meaningful growth year-over-year" in Q4 2024, potentially close to or exceeding 100% growth. The recent $2.9 million capital raise is anticipated to help address the working capital constraints they have faced, allowing them to better fulfill the strong demand for their products.
Looking ahead to 2025, Stryve is optimistic that the strategic distribution wins coming online in Q1 2025, along with their focus on operational efficiencies and cost management, will set them up for "sustained growth with a clear path to profitability."
Stryve's recent launch of its High Steaks pet treat brand further diversifies its portfolio and allows the company to leverage its core expertise in the attractive and rapidly growing pet treat segment. This strategic move underscores Stryve's commitment to innovation and its ability to identify and address evolving consumer preferences.
Conclusion
Stryve Foods, Inc. (SNAX) has emerged as a formidable player in the healthy snacking industry, driven by its commitment to delivering high-quality, nutritious products that cater to the growing demand for better-for-you options. Through its transformation initiatives, strategic partnerships, and distribution expansion, the company is well-positioned to capitalize on the long-term trends shaping the consumer packaged goods landscape.
As Stryve continues to execute on its growth strategies and navigate the evolving market dynamics, investors will closely monitor the company's ability to translate its operational improvements into sustainable profitability and shareholder value. The company's recent financial performance, coupled with its strategic initiatives and expanding distribution network, suggest a promising trajectory for Stryve in the competitive and rapidly growing healthy snacking market.