Cherry Hill / NJ. (rgfc) The Real Good Food Company Inc., a leading health and wellness frozen and refrigerated foods company, provided a corporate update concurrent with the appointment of foods executive Tim Zimmer as Chief Executive Officer, effective March 15, 2024.
Leadership Changes
The Company announced the appointment of Tim Zimmer as the Company’s Chief Executive Officer effective March 15, 2024. Zimmer succeeds Gerard Law, who departed the Company as its Chief Executive Officer, effective March 15, 2024.
Tim Zimmer was most recently the Chief Marketing Officer at Smithfield Foods and held prior roles that included responsibilities across business management, demand planning, R+D and operation process design. Tim has over 30 years of experience in the packaged foods industry at Smithfield Foods, Sara Lee Foods, Kraft Foods and Nestle.
While at Smithfield, Tim played a pivotal role in growing the company’s packaged meats business and significantly improving its profitability. Prior to his tenure at Smithfield, Tim was a leader in the turnaround efforts at Sara Lee Fresh Bakery, transforming it into a profitable business before its eventual sale to Grupo Bimbo. Tim has served in management roles in finance, business management, sales, and marketing over his career in multiple channels and temperature zones. Tim holds a B.B.A. in Marketing + Finance from the University of Texas at Arlington and an M.B.A. in Strategy and Finance from the Wake Forest University School of Business.
The Company also appointed Mark Dietz as Senior Vice President of Operations, who will assist the Company with streamlining of the Company’s supply chain and improving efficiencies. Mark brings extensive experience in operational leadership, having previously served as VP of Business Management at Smithfield Foods and holding management roles within Sara Lee Meat Brands. While at Smithfield, Mark had full P+L responsibilities for the Curly’s and Stefano’s brands, which represented well over USD 600 million in retail sales. Under Mark’s leadership, the Curly’s brand was introduced into the retail channel and grew to over USD 150 million in retail sales and turned profitable. Mark also oversaw the plant consolidation and turnaround of the Stefano’s brand, which was handheld business that is similar from a manufacturing standpoint to RGF’s operations. In his new role, Mark will spearhead initiatives to optimize supply chain and enhance plant efficiencies. Mark holds a B.B.A. in Finance from The University of Cincinnati, Lindner School of Business.
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, Illinois 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 percent year over year. This included a 23 percent increase in the unmeasured channel and 96 percent increase in the measured channel.
- In the measured channel, according to SPINS, consumption for the RGF brand for the two months ended 02/28/24 was USD 26M or up 96 percent y/y. For the latest four week ended 02/28/24 consumption was USD 12.5M or up 102 percent y/y.
- In the unmeasured channel, according to IRI, consumption for the RGF brand for the two month ended 02/28/24 was USD 23.7M or up 23 percent y/y.
- The previously disclosed refinancing in March 2024 reduced the Company’s revolver balance to USD 25 million and reduced the maximum availability under revolver to USD 35 million, implying USD 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 USD 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 percent 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.»
Tim Zimmer concluded: «In assuming the role of CEO, I am fully committed to leading the Company through the transformative journey that lies ahead. The brand continues to perform well and has a strong, rapidly growing consumer base. I see a clear opportunity to unlock significant value by streamlining the supply chain, improving manufacturing efficiencies and instilling a culture of operational excellence. Together, we plan to earn back our right to grow by proving that we can operate with excellence and generate cash flow.»
Restatement of Prior Financial Statements
During the preparation of the Company’s consolidated financial statements for the year ended December 31, 2023, the Company identified certain errors related to differences between the 2022 year-end physical inventory listing and the inventory recorded as of December 31, 2022. The Company is currently in the process of assessing the magnitude of the errors, but currently estimates the reduction to the inventory balance as between USD 7 million and USD 12 million. The Company will file an amended Form 10-K for 2022 and amended Form 10-Qs for each of the quarters in 2023, as soon as practicable, to restate the financial statements for such periods. Accordingly, investors should no longer rely upon the Company’s previously issued consolidated financial statements and earnings releases for the aforementioned periods. For more information, see the Company’s current report on Form 8-K filed with the SEC on March 18, 2024.
