Good afternoon. Thank you for standing by, and welcome to the fourth quarter and full year 2021 conference call and webcast for Stryve Foods, Inc. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there'll be an opportunity to ask questions. To join the question queue, you may press star, then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and zero. I would now like to turn the call over to Austin Ke, General Counsel, to begin.
Thank you, operator, and thank you all for joining us. With me are Stryve's Chief Executive Officer and Co-founder, Joe Oblas, and Chief Financial Officer, Alex Hawkins. Before we begin, I would like to remind everyone that part of our discussion today will include forward-looking statements, which are based on our current expectations of future performance. Our actual results could differ substantially from these expectations. These statements are not guarantees of future performance, and therefore, undue reliance should not be placed upon them. We do not undertake to update these forward-looking statements at a later date. We refer you to today's shareholder report and the SEC filings filed by Stryve Foods, Inc. for a more detailed discussion of the risks that could impact future operating results and financial condition. In addition, today's call will also include a discussion of non-GAAP financial measures such as EBITDA.
Non-GAAP financial measures should be considered as a supplement to, and not a substitute for, GAAP financial measures such as net income and net loss. We refer you to the reconciliation of the non-GAAP measures to the nearest GAAP measure included in today's shareholder report for further detail. I would now like to turn the call over to Stryve's Chief Executive Officer and Co-founder, Joe Oblas.
Thank you, Austin, and good afternoon, everyone. Before I give a brief introduction to Q4 2021 and the full year 2021 results, I want to explain the new Stryve quarterly shareholder letter you received today at market close. Going forward, we'll be sharing our results in this shareholder letter format, which is designed to give you a full view of the Stryve quarterly financial results, forecasts, and strategic milestones. Moving forward, our plan is to release the shareholder letter at market close after each quarter. The following morning, we will hold a conference call giving you plenty of time to review, and so we can primarily focus on the Q&A. As much as we know you like to hear us talk, we know you'd prefer to spend most of the time asking questions.
Since we had already announced our earnings call for Q4 this afternoon, we had to release the shareholder letter right before the call, and as such, apologize for not giving you much time to review. If you do not have the shareholder letter, you can download it at the Investors tab located at the bottom of our website, stryve.com. As mentioned above, for Q2, we will definitely give you more time. Now to the highlights of the letter, Q4 and 2021. The irony behind the Stryve story is that we have essentially created and are leading a new U.S. meat snack category with a product that has been perfected and consumed for over 500 years. While people throughout the world long ago learned that hanging and drying meat in the open air is the best way to preserve it, Americans, it turns out, are loving it now too.
It's better late than never, and it's better to be a first mover in creating a well-defended category. According to SPINS, our first-mover investments have earned us approximately a 90% market share of this new U.S. meat snack subcategory of air-dried beef in which our Biltong and Carne Seca brands participate. According to Statista, the healthy snacking market is expected to reach $110 billion this year, of which approximately $5 billion will comprise meat snacks. The highlights are as follows. Number one, we are the first company to establish a large, scalable, U.S.-based air-dried meat snack manufacturing facility to be licensed by the USDA.
Two, our highly competitive nutritional profile is achieved through 100% natural ingredients, never frozen beef, natural spices and vinegar, resulting in products that pack up to 16 grams of protein per ounce and generally contain 0 grams of sugar and no carbs. Three, we're bringing in new participants to the meat snack category, including women and those who the jerky category wasn't relevant to. Four, Stryve has either begun or will begin distribution in 2022 across all top 10 grocers in the U.S. and seven of the top 10 convenience store chains. Key things to focus on in the letter is our announcement launching chain-wide with the world's leading natural and organic foods retailer with more than 510 stores in the U.S.
Five, Stryve product innovation with the introduction of Biltong slabs and the addition of meat snack sticks to the Vacadillos product line and the continued initial development and expansion of our Stryve Nutrition brand. All of these factors are fueling impressive in-store velocities. According to SPINS, for the 12-week trailing period as of February twentieth, our Vacadillos brand experienced a 401% increase in dollar velocity within C stores. What's particularly amazing is the broad acceptance of Stryve products across an incredibly diverse distribution ecosystem. Our products can be and are sold just about everywhere. Sports arenas, colleges, airports, farm and tractor stores, club convenience stores, supermarkets, truck stops, et cetera. In addition to recently adding the world's leading natural and organic foods retailer, our burgeoning partnership with Costco is expanding and plays into our forecast and guidance outlined in the shareholder letter.
Our top-line revenue increased by nearly 77% to $30.1 million in 2021 as we benefited from a full year of contributions from our DTC e-commerce sales platform, increased sales to existing wholesale and private label accounts, and generated net new sales from additional distribution wins at a number of key retailers in the club, mass, grocery, and convenience channel. Importantly, besides new and expanded distribution, we attribute the growth in the wholesale channel in part to higher sell-through velocities of products supported by increased foot traffic following an easing of pandemic-related restrictions. For Q4, our net sales increased to $6.8 million, representing 71.3% growth year-over-year.
Strong wholesale gains contributed to 54.4% of net sales, increasing 254.6% year-over-year, including significant new year-over-year distribution across most channels with a particularly strong lift coming from convenience and club. Like most businesses today, during 2021, Stryve faced pervasive industry challenges affecting supply chain, labor, and transportation. These factors negatively impacted net sales performance in the second half of 2021. Throughout the second half, we experienced significant cost pressure related to both labor and commodity cost increases. While our gross margin showed resilience through the first three quarters of 2021, our annual gross margin decreased slightly to 34.1% from 34.7%. However, due to top line sales growth, gross profit increased $4.5 million from $5.9 million to $10.3 million.
While we expect continued volatility in the beef commodity markets, we are seeing a welcome drop in the price of beef from the highs seen in Q3 of 2021, with current prices down between 15% and 20% for some cuts. With that, I'd like to turn the call over to Alex to walk through our Q4 and full year 2021 highlights as well as our 2022 outlook.
Thanks, Joe. Good afternoon, everyone. I'll now review our fourth quarter results and discuss guidance for 2022. For the fourth quarter, net sales increased 71.3% to $6.8 million, compared to $4 million in the year ago period as we experienced sales growth in our wholesale and e-commerce channels. Net sales to wholesale customers rose 254.6% to $3.7 million, up from $1 million as we added significant new doors of distribution across our brands during the quarter itself on top of additional distribution that we secured earlier in the year. E-commerce sales rose 15.9% to $2.3 million, up from $2 million. The majority of this growth was derived from our direct-to-consumer efforts on our own websites.
That said, the performance of our e-commerce business in the fourth quarter of 2021 was impacted by fulfillment supply chain issues that hindered our ability to maintain in-stock percentages of our products, particularly at Amazon, for most of the quarter. As a result, many direct-to-consumer orders weren't fulfilled or were delayed. Like most direct-to-consumer advertisers, both our investment in and results from direct-to-consumer advertising were significantly impacted by the iOS 14 update that limited Facebook Ads functionality, including tracking for app and web conversion activity. The digital advertising behind our DTC business became significantly more expensive and simultaneously less effective. As a result, we elected to significantly scale back digital advertising midway through the fourth quarter.
While we acknowledged that this decision would result in lower overall direct-to-consumer sales in the fourth quarter of 2021, we believe that the resulting direct-to-consumer business will be significantly more profitable on a bottom-line basis. We anticipate that these trends in digital advertising will continue for the foreseeable future, and as such, plan to proceed with what we believe to be a more prudent approach to direct-to-consumer advertising spending in 2022. Finally, private label sales fell 14.2% to $0.8 million, down from $1 million. Private label continues to be an important piece of our story. Not only does it provide incremental volumes, but it helps to deepen our relationships with our retailers.
The performance of our private label business in the fourth quarter of 2021 was negatively impacted by packaging supply chain challenges that hindered our ability to deliver orders for our customers in the quarter. Cost of goods sold increased by $3.3 million to $6.1 million during the quarter, compared to $2.7 million in the year ago period. This was driven primarily by increased sales volume as well as increased labor and commodity costs. Our primary commodity input is beef, and beef prices have increased significantly due to what we believe to be the direct and indirect supply chain factors related to the pandemic, and this isn't limited to beef. Many of our other inputs have been affected as well, although they have had lower impact on our overall business.
We are also experiencing significant wage pressure driven by what we believe to be similar factors. Further, we are seeing a more expensive and less efficient transportation network. Gross profit decreased 39.3% to $0.8 million in the fourth quarter, down from $1.2 million in the year ago period. As a percentage of net sales, gross profit margin fell to 11% compared to 31.2% in the year ago period. To help offset these pressures, we are aggressively identifying areas for optimization in our cost structure, and we are raising prices. While we took price on our owned websites in December, price increases to wholesale accounts were not yet implemented in the fourth quarter, but are in the process of being rolled out. We hope to see the effects of these price increases take hold throughout the year of 2022.
Our cash balance as of December 31st was $2.2 million. In January of 2022, Stryve successfully completed a private placement of Class A common stock and warrants, generating approximately $35 million in proceeds before deducting placement agent fees and other offering expenses. Leveraging this capital raise, Stryve has paid off its senior bank debt, invested heavily in its working capital to support the upcoming retail distribution advances expected in the first half of 2022. Further, the company has bolstered its primary manufacturing facility in Madill, Oklahoma, and is planning to build and/or procure other facilities during 2022. Stryve is also investing in product innovation, supply chain improvements, and expanding our marketing initiatives efficiently. Now, taking a moment to look forward, Stryve's financial outlook for 2022 is as follows.
We anticipate net sales in the range of approximately $43 million-$48 million, an increase of 42.9%-59.6% compared to 2021. While we anticipate modest growth quarter-over-quarter from Q4 2021 to Q1 2022, we expect that our base revenues will grow considerably throughout 2022 as new distribution comes online over the course of the year. Further, we anticipate an outsized second quarter of 2022, given the expected amount of new distribution lay-in orders for major retailers paired with the Costco MVM lay-in orders all set to occur in the second quarter. Typically, a retailer's lay-in orders are significantly greater in size than the subsequent orders that follow to support that ongoing distribution.
While the impact of the Costco MVM to gross revenue is expected to be substantial in Q2 2022, its relative impact to net sales is partially offset due to the associated coupon on sales. Accordingly, we anticipate that our quarter-to-quarter revenues during 2022 will fluctuate depending on the timing of the receipt and associated recognition of revenue of large new distribution lay-in orders. With respect to gross margins, we anticipate continued gross margin pressure comparable to Q4 2021 in the first half of the year, with recovery beginning in the second half of 2022 based on price increases, among other factors.
In response to today's fundamentally changed macroeconomic, supply chain, and digital advertising environment, we have refocused our energy from being focused on hyper-fast growth to instead accepting more sustained growth while being laser-focused on operating more profitably across the board, in particular, driving efficiencies in production and throughout selling, marketing, and G&A expenses. While the company continues to grow rapidly, enjoying impressive in-store velocities and increasingly widespread retail distribution, we are being more conservative in our management of expenses while continuing to invest in profit-enhancing manufacturing, innovation, and diversification. With that, I'll pass it back to Joe.
Thanks, Alex. In summary, we begin 2022 with a foundation that we believe will enable us to significantly expand our category, creating market share, retail, and DTC distribution, product innovation, and manufacturing excellence. We are well-capitalized, virtually debt-free, and are off to a great start in continuing to add meaningful distribution across all channels. We feel that we have weathered an unprecedented time period for up-and-coming growth businesses, and virtually all of our indicators are now pointing in the right direction. We will continue to work tirelessly to build a high-growth, profitable company that should benefit our shareholders going forward. With that, I believe we're ready to open it up to questions.
Thank you. We will now begin the question-and-answer session. To join the question queue, you may press star, then one on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star, then two. Once again, to join the question queue, please press star, then one now. Our first question comes from Mike Grondahl of Northland Securities. Please go ahead.
Hey, guys. Just looking for some thoughts on gross margins as we head through 2022. I think you said sort of the first half is consistent with the fourth quarter and then some recovery. You know, is that the right spot to be just with the cost pressures as they continue for really the first half of 2022?
Hey, Mike. So the way I'd characterize it is that, you know, we've experienced these pressures and they will continue to affect our business certainly in the first quarter. We might see a slight lift. As Joe mentioned, there has been some improvement in commodity beef prices that we will benefit from in the latter part of the quarter. But overall, I think directionally speaking versus where we were a year ago, it's in the same ballpark for the first quarter. In the second quarter, I would say it's generally the same, although we'll start seeing some of the benefits of price increases, but that will be partially muted by the impact of the Costco MVM couponing that'll happen.
There's a very substantial amount of revenue, gross revenue associated with that, but also a substantial coupon helping to drive trial and, you know, consumer adoption of our brand. That'll help to, you know, keep margins around the same ballpark area. Starting in Q3, we should see the full benefit of those price increases and hopefully a continuation of this recent trend in meat prices coming down, and then obviously no impact from the significant coupon associated with the Costco MVM.
Got it. What's kind of your medium-term goal for gross margin?
I mean, I think that it depends on the timeline that we're talking here. I think as we look to the end of the fourth quarter, we'd like to be on the path to recovering, you know, back to generally where we were on the full year of 2021. Again, there's a lot of factors at play here, including the meat prices and the continued evolution of the business mix that we have.
Got it. Just trying to think through your revenue guidance for 2022, you know, as you're picking up the Costco business and more Walmart business, could you, maybe without naming retailers, but if you can, you know, which ones are doing better? Which ones are you more challenged at?
Hey, Mike, it's Joe. Overall distribution velocities have been really strong, I mean, and strong across the board, and it's eye-opening to see how well it's been received and our products have been really well received in some of the channels that, you know, some of the more rural retailers, I would say. It's been really quite surprising that the product has been accepted so quickly. Walmart numbers have been very strong, and natural channel's been great. I mean, I think we're really pleased with where velocity, you know, has been, even with a lot of the retailers already jumping and taking some price as well.
I mean, we're very pleased on where we are from the velocity and retailer standpoint, and we've got, you know, as we've previously announced, we have a lot of big expansions coming up here over the next few months. You got Walmart, you got Target, obviously going, you know, to the national distribution with Costco, Speedway's distribution comes online. I mean, there's a tremendous amount, and the team's doing very, very well at continuing to add distribution. A lot of it is very small, you know, 20 stores to 100 stores. You know, the frequency is really impressive. You know, we're super excited about that.
We're just trying to be very cautious after, you know, one thing the last year's taught us is, you know, expect the unexpected right now because this is stuff that, you know, I've been doing this for 30 years and I haven't seen a lot of these things ever happen.
Got it. Is there any update on the health stuff, or some of that, the natural stuff you were getting into?
Stryve Nutrition, we just recently have launched onto our own Stryve website. Stryve Nutrition's website should be up soon. But we're getting, you know, nice feedback from the pre-workouts that were just recently launched. The collagen and bone broth are great products, but they're more commodity type SKUs. I mean, I've got a lot of history and success in this category, and as does our chairman, Ted Casey. I think this narrative though, it's gonna be really nice for Stryve in the future and it should be accretive to margin as we go forward as well.
Got it. Okay.
Our next question comes from Alex Fuhrman of Craig-Hallum. Please go ahead.
Great. Guys, thanks for taking my question. You know, wanted to ask about your guidance for 2022. You know, it certainly sounds like there's a lot of demand for your product at retail, and it sounds like the velocities have been strong and there's new accounts that are looking to add your product in more doors. Can you talk about where then the shortfall is coming from in terms of what we've been modeling, what you'd been kind of initially looking for as your growth rate for this year? Is there any particular retailer or maybe something in your manufacturing that has not met your expectations? Or are you just taking numbers down pretty significantly to be conservative here?
It certainly, you know, it just sounds like there's a lot of good things happening on the retail side of the business. Just trying to square how that then ends up at your guidance.
Well, hey, Alex, it's Joe. Not that we're trying to be, we want to be more conservative in nature to where we're going because, you know, uncertainty, it's hard to predict uncertainty. You know, putting a level of conservatism on that is really number one. Number two, as we're starting to move the business and focusing our energy to say, "Look, we wanna be good, conservative, you know, stewards of capital and cut the business's burn down tremendously," we pulled back consciously a lot of our digital spending, and that'll translate to some reduction in overall e-com performance. That to us, with the iOS change and, you know, the bit of a fall of the return on ad spend, it's just not intelligent for us now.
We don't see a logical reason to keep pushing heavy into that arena when we're not gonna get the return. I would say some from the e-com side as well. Now, the other point to mention is the Costco MVM carries a coupon, and that coupon will fall as a net to revenue. We just wanna be very, very cautious. We don't know what those redemptions on the coupons will look like as we've not done an MVM before. We're just trying to make sure that going forward, we know that what we're guiding to, we're gonna go out and make sure that we're beating consistently.
Okay, that's really helpful, Joe. You know, in the past, you've talked about having the potential to manufacture to a $100 million revenue run rate, and you just completed an expansion of your primary manufacturing facility. Do you think there is a time in the near future or intermediate term when there will be enough demand that you'll need that much capacity? Can you kinda walk us through, you know, when you expect to be utilizing the entirety of your new manufacturing capacity?
Well, we are consistently expanding our capacity at the Madill factory. As we've also previously announced, we are in the process of securing an additional location here in the Dallas-Fort Worth area, of which we will look to house our corporate office, our e-com fulfillment center, and then our finished goods and pack out functions out of our current factory, allowing us more space for production expansion. As our run rate starts to run up and you see the size of, for instance, the upcoming Costco order, we have to produce and be well in advance of the need for that capacity. We're being, you know.
I think we're showing good foresight in what we're doing at the factory, but we are gonna continue scaling up capacity because we know it's not a question of if, it's a question of when.
Just to elaborate on that a bit. You know, the part of the question was when do we expect to see that kind of run rate demand, and I think said a little different way is, you know, kind of right now, right? We're working through this very substantial nationwide rollout to Costco, on top of our base business. When you think about the run rate manufacturing capacity you gotta have to accommodate that level of production in such a short window of time, we need that run rate capacity. That's part of the need here for the expansions that we've recently completed, and continuing to look for, you know, additional space and capacity moving forward.
That said, you know, it's about the run rates and not necessarily the full year of the production capacity that we have to think about when we're looking to expand our manufacturing capabilities. You know, It'd be great if we could outsource the manufacture of the product, but, you know, we have the added benefit of being pretty unique, right? Our manufacturing footprint is pretty unique. We're the only people who can make this at scale. Obviously we have to make sure we have it built on the front end ahead of time.
Okay. That's really helpful. Thanks, Alex. Thanks, Joe.
Thanks, Alex.
This concludes the question and answer session. I would like to turn the conference back over to Mr. Oblas for any closing remarks.
Thanks, everyone, for attending our fourth quarter and full year 2021 conference call and webcast for Stryve. Hope everybody has a great week. Thanks very much.
This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.