Barfresh: Q1 Revenue Beats Expectations Amid Customer Recovery – Quarterly Update Report

Revenue Beat Supports Transition-Year Setup. Manufacturing Integration and Customer Recovery Position BRFH for 2H26 Inflection.

• Key Takeaways:

  • Revenue accrued 92% y/y to $5.6 million, exceeding $5.0-$5.2 cardinal guidance, driven by stronger Arps beverage contribution.

  • Gross borderline declined to 18% from 31% y/y arsenic lower-margin beverage premix and installation startup costs weighed connected profitability.

  • Education betterment is building, with progressive bid season, broker-led reactivation, and large-district momentum supporting a stronger 2H26 setup.

  • FY26 guidance remains $28-$32 cardinal gross and $3.2-$3.8 cardinal adjusted EBITDA, implying crisp 2H26 conversion.

  • At ~$39 cardinal marketplace headdress and 1.32x 2026E sales, valuation discounts capacity-led upside and EBITDA scalability.

• Top-line bushed was driven by stronger-than-expected publication from Arps Dairy’s beverage processing operations, supporting continued gross scale-up. BRFH’s 1Q26 gross accrued 92% y/y to $5.6 cardinal from $2.9 cardinal successful 1Q25, exceeding management’s $5.0-$5.2 cardinal guidance range. The upside was driven by stronger-than-anticipated publication from Arps Dairy’s earthy and processed beverage business, which expanded the consolidated gross basal but carries a little borderline illustration than BRFH’s halfway frozen beverage and nutrient products.

• Profitability reflected the transitional quality of the exemplary shift, with gross borderline unit partially offset by opex subject and a narrower adjusted EBITDA loss. Gross borderline declined to 18% successful 1Q26 from 31% successful 1Q25, driven by Arps Dairy’s lower-margin beverage processing publication and startup costs associated with producing successful the recently acquired processing facility. Adjusted EBITDA improved to a nonaccomplishment of $238,000 from a nonaccomplishment of $506,000 y/y, but came successful beneath anterior breakeven expectations due to the fact that gross premix was much heavy weighted toward lower-margin beverage processing than anticipated and accumulation volumes done the acquired installation were little than planned. Net nonaccomplishment improved to $661,000 from $761,000 y/y, indicating that gross standard and outgo subject are opening to constrictive losses, though not yet capable to afloat offset integration costs and installation ramp inefficiencies.

  • Operating expenses remained controlled, reinforcing operating leverage potential erstwhile gross borderline normalizes and higher-margin acquisition measurement ramps. Selling, selling and organisation disbursal declined to $697,000 from $824,000 successful 1Q25, reflecting little unit costs arsenic BRFH progressively leverages its broker network, reduced sampling disbursal pursuing the Pop & Go frost popular launch, and little instrumentality attraction costs arsenic single-serve products go a greater stock of the education-channel mix. G&A disbursal was fundamentally level astatine $755,000 versus $747,000 y/y.

• Arps Dairy remains the cardinal strategical inaugural arsenic it gives BRFH accumulation control, improves lawsuit credibility, and creates the manufacturing basal needed to enactment a larger organization platform. The Arps processing installation supported ~50% of BRFH’s frozen beverage and nutrient measurement successful 1Q26, portion the institution continued to usage co-manufacturers for immoderate merchandise during the transition. We presumption this arsenic a staged internalization process alternatively than a completed transition, with existent inefficiencies tied to instrumentality ramp-up, installation timing, training, and lower-than-planned accumulation volumes done the owned facility. The strategical payment is that owned accumulation gives BRFH greater power implicit availability, timing, and execution, reducing reliance connected third-party co-manufacturers portion strengthening its quality to prosecute larger schoolhouse districts and foodservice accounts that necessitate dependable proviso astatine scale.

  • Manufacturing modulation remains the cardinal near-term resistance connected margins, but the span to betterment is becoming clearer. Gross borderline declined to 18% successful 1Q26 from 31% successful 1Q25, reflecting Arps Dairy’s lower-margin earthy and processed beverage business, commodity-price fluctuations, and startup costs tied to accumulation transfer. The processed beverage concern was moving astatine astir 5% borderline successful conception reporting, compared with a normalized consolidated gross borderline people successful the low-40% range. As throughput improves, caller instrumentality is installed, and school-year measurement shifts premix toward halfway Barfresh products, consolidated gross borderline should statesman recovering from the 1Q26 trough.

  • Revenue premix remains the captious 2H26 plaything origin arsenic maturation shifts from lower-margin beverage processing toward halfway acquisition products. Arps’ bequest beverage concern is expected to stay comparatively level alternatively than thrust important growth, and its stronger-than-expected 1Q26 publication was margin-dilutive contempt helping gross transcend guidance. The much important 2H26 trial is whether higher-margin halfway Barfresh acquisition measurement becomes a larger percent of gross arsenic school-year orders ramp and lower-margin Arps beverage gross becomes little ascendant successful the consolidated mix. That premix displacement is cardinal to some the 2026 adjusted EBITDA usher of $3.2-$3.8 cardinal and the longer-term operating leverage lawsuit arsenic BRFH scales done its vertically integrated platform.

• The larger 44,000-square-foot Defiance installation remains connected way for commissioning earlier year-end 2026 and should supply the step-change successful throughput, flexibility, and portion economics needed for the adjacent signifier of growth. BRFH continues to procure and instal instrumentality and unit astatine the larger Ohio facility, supported by a $2.4 cardinal authorities assistance for specialized instrumentality and the $7.5 cardinal elder convertible enactment financing completed successful March 2026. The financing allowed BRFH to wage disconnected the existing owe connected the installation and ain it escaped and clear, portion absorption expects to measure owe and instrumentality financing against the unencumbered installation to enactment maturation objectives and perchance repay a information of the convertible note.

• Customer betterment and large-district momentum reenforce request visibility successful the halfway acquisition channel, wherever proviso reliability is often arsenic important arsenic merchandise adoption. Education remains BRFH’s superior absorption and top near-term opportunity, with tangible advancement rebuilding lawsuit relationships and adding caller schoolhouse territory wins during 1Q26. The broker web and nonstop income squad person been communicating manufacturing advancement and improved proviso reliability to districts, and that connection appears to beryllium gaining traction. The 7-year grant with the 5th largest schoolhouse territory successful the U.S. remains a cardinal validation point, demonstrating that BRFH tin vie for large-scale procurement contracts wherever compliance, operational simplicity, and dependable fulfillment are cardinal determination criteria. More importantly for the existent quarter, bid play remains progressive and the institution is progressing connected lawsuit reactivation arsenic anterior proviso constraints ease.

  • Active bid play and lawsuit reactivation constituent to a perchance strongest-ever backmost fractional for halfway Barfresh products. BRFH is inactive receiving bids for the upcoming schoolhouse play and is actively returning to customers that dropped disconnected due to the fact that of anterior deficiency of supply. Management expects a measurement summation successful gross arsenic the schoolhouse twelvemonth begins, driven by some caller customers and recovered accounts, and described the upcoming backmost fractional arsenic perchance the strongest ever for Barfresh products. This is important due to the fact that 1Q26 gross upside was Arps-led, portion 2H26 should supply a cleaner work connected whether improved accumulation reliability is converting into recurring halfway acquisition revenue, reinstated districts, and caller schoolhouse wins.

• BRFH’s 2026 priorities stay centered connected completing the manufacturing transition, rebuilding acquisition demand, and expanding the semipermanent gross base. The contiguous absorption is commissioning the caller manufacturing installation earlier year-end 2026, which should amended accumulation efficiency, capacity, and proviso reliability. In parallel, the institution is rebuilding and expanding its acquisition lawsuit basal pursuing anterior proviso disruptions, portion opening to measure adjacent opportunities successful foodservice, convenience, and different channels arsenic capableness increases. Longer term, the expanded installation could besides enactment co-manufacturing gross erstwhile operations are stabilized, adding a imaginable incremental maturation watercourse beyond BRFH’s halfway branded acquisition business.

• 2026 remains a modulation year, with gross maturation and EBITDA conversion weighted to the backmost half. Management introduced 2Q26 gross guidance of $5.2-$5.6 million, representing much than 200% maturation versus the prior-year period, and expects an adjusted EBITDA nonaccomplishment of $0.3-$0.2 cardinal arsenic the institution continues progressing done manufacturing modulation and installation optimization. At the midpoint, 2Q26 gross of $5.4 cardinal would beryllium astir successful enactment with 1Q26 gross of $5.6 million, but the y/y examination remains beardown due to the fact that 2Q25 was seasonally anemic for the bequest Barfresh business. The institution reiterated 2026 gross guidance of $28-$32 million, representing 97%-125% maturation versus 2025, and adjusted EBITDA guidance of $3.2-$3.8 million, implying profitability should amended meaningfully successful 2H26 arsenic school-year demand, accumulation efficiency, and merchandise premix improve.

  • The 2026 usher embeds a wide 2H26 inflection, with execution babelike connected school-year volume, premix recovery, and installation optimization. At the midpoint, 2026 gross of $30.0 cardinal implies astir 111% y/y maturation from 2025 gross of $14.2 million, portion adjusted EBITDA of $3.5 cardinal implies an astir 11.7% adjusted EBITDA margin. This compares with a 1Q26 adjusted EBITDA nonaccomplishment of $238,000 and a 2Q26 guided adjusted EBITDA nonaccomplishment of $0.2-$0.3 million, meaning the full-year outlook depends connected 3Q26 and 4Q26 execution. The cardinal upcoming indicators are gross borderline betterment from 18%, higher halfway Barfresh mix, throughput betterment successful the existing facility, bid conversion for the caller schoolhouse year, lawsuit reactivations, and confirmation that the larger Defiance installation remains connected way earlier year-end.