Edible Garden AG Inc (EDBL) 2025 Q3 法說會逐字稿

Good morning, and welcome to the Edible Garden Incorporated 2025 third-quarter business update conference call. (Operator Instructions) Please note this conference is being recorded. I will now turn the conference over to your host, Ted Ayvas, Investor Relations Crescendo Communications. Ted, the floor is yours.

Thanks, Jenny. Good morning, and thank you for joining Edible Garden's third-quarter 2025 earnings conference call and business update. On the call with us today are Jim Kras, Chief Executive Officer of Edible Garden; and Kostas Dafoulas, Interim Chief Financial Officer of Edible Garden. Earlier this morning, the company announced its operating results for the three months ended September 30, 2025. The press release is posted on the company's website, www.ediblegardenag.com.

In addition, the company has filed its quarterly report on Form 10-Q with the US Securities and Exchange Commission, which can also be accessed on the company's website as well as the SEC's website at www.sec.gov. If you have any questions after the call, would like any additional information about the company, please contact Crescendo Communications at (212) 671-1020.

Before Mr. Kras reviews the company's operating results for the quarter ended September 30, 2025, and provides a business update, we would like to remind everyone that this conference call may contain forward-looking statements.

All statements other than statements of historical facts contained in this conference call, including statements regarding our future results of operations and financial position, strategy and plans and our expectations for future operations are forward-looking statements. The words aim, anticipate, believe, could, expect, may, plan, project, strategy, will and the negative of such terms and other words and terms of similar expressions are intended to identify forward-looking statements.

These forward-looking statements are based largely on the company's current expectations and projections about future events and trends that it believes may affect its financial condition, results of operations, strategy, short-term and long-term business operations and objectives and financial needs. These forward-looking statements are subject to several risks, uncertainties and assumptions as described in the company's filings with the SEC, including the company's annual report on Form 10-K for the year ended December 31, 2024.

Because of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this conference call may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. Although the company believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, level of activity, performance, or achievements.

In addition, neither the company nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. The company disclaims any duty to update any of these forward-looking statements, except as required by law. All forward-looking statements attributable to the company are expressly qualified in their entirety by these cautionary statements as well as others made on this conference call.

You should evaluate all forward-looking statements made by the company in the context of these risks and uncertainties. Having said that, I'd now like to turn the call over to Mr. Jim Kras, Chief Executive Officer of Edible Garden. Jim?

Thanks, Ted. Good morning, and thank you to everyone for joining us today. Third-quarter marked an important step forward for Edible Garden as we continued executing our strategic evolution towards a CEA-informed consumer packaged goods or CPG model.

In Q3, traditionally our seasonally softest period, we delivered a 9% year-over-year revenue increase, underscoring our strategic growth driven by our product realignment, focus on nonperishable product expansion and the resilience of our higher-value branded portfolio. This growth was driven by key initiatives, the continued expansion of our retail footprint, strong performance from our shelf-stable portfolio and the early benefits of our operational realignment following the NaturalShrimp asset acquisition.

Together, these actions reinforce our progress in repositioning Edible Garden as a next-generation sustainable food company that combines innovation, brand strength, and operational efficiency. Building on our heritage in fresh herbs and produce, where sustainability, traceability and freshness define our brand, we've expanded into categories with stronger margins and greater scalability.

Our CPG products, including clean-label and functional offerings, extend the Edible Garden brand beyond fresh produce into shelf-stable products that meet consumer demand for better-for-you plant-based nutrition. During the quarter, we continued to expand our retail footprint, launching our USDA Organic fresh herb line at Kroger and introducing Edible Garden branded herbs at The Fresh Market. We also strengthened our Midwest presence through partnerships with Pete's Fresh Market and Angelo Caputo’s Fresh Markets.

Internationally, we expanded our reach through key partners, including PriceSmart and Amazon. Collectively, these relationships underscore the growing appeal of the Edible Garden brand and the momentum of our expanding global platform. Demand for better-for-you CPG products continues to accelerate, creating a powerful tailwind for our business. Globally, the functional food and beverage market is projected to expand from approximately $400 billion to $610 billion by 2030, according to Virtue Market Research.

In the US, sales of natural organic and functional products are expected to reach $386 billion by 2028, according to the Nutrition Business Journal. These trends reinforce the strength of our strategy and highlight the significant opportunity ahead for Edible Garden as we align our product portfolio with these macro trends. Our CPG portfolio continues to be an important driver of growth, anchored by brands such as Kick, Sports Nutrition, Pickle Party, Pulp and Vitamin Whey.

These brands represent a key pillar of our transformation into a diversified innovation-driven CPG company and highlight the versatility of Edible Garden's platform. Kick, Sports Nutrition continues to build momentum with a clean, better-for-you performance line designed for athletes and active consumers seeking natural energy and recovery solutions. The brand is gaining meaningful traction across both online and retail channels, supported by rising consumer interest in plant-forward performance nutrition.

Earlier this year, Kick entered a major Midwest big-box retailer, expanding its brick-and-mortar presence while growing online footprint to broaden awareness and engagement. By leveraging our expertise in clean functional ingredients, Kick delivers products that combine taste, convenience and nutritional value, attributes that resonate strongly with the fast-growing health and wellness segment.

Vitamin Whey, our protein and supplement line complements Kick by addressing the broader market for functional nutrition. Pickle Party highlights the engaging flavor forward side of our CPG strategy, offering a line of fresh, fermented pickles and sour crafted with clean-label, non-GMO ingredients and natural fermentation.

The brand combines bold, craveable flavors with a focus on gut health and sustainability, striking a balance between indulgence and wellness. Its distinctive identity as both fun and functional continues to resonate with younger consumers and health-conscious shoppers seeking better-for-you alternatives in the condiment aisle.

Finally, Pulp, our line of organic refrigerated fermented hot sauces continues to expand through new retail placements and regional growth. The brand has gained meaningful traction through rollouts at Target, Meijer and most recently at ShopRite, further broadening its reach and consumer visibility. Pulp brings culinary innovation to the forefront of the Edible Garden portfolio, offering bold, clean-label condiments that reflect our commitment to flavor, sustainability and the better-for-you principles driving today's consumer demand.

Collectively, these brands showcase how we're leveraging our expertise in sustainability, flavor and functional nutrition to build a high-margin, scalable portfolio that extends the Edible Garden brand far beyond fresh produce and positions us to capture meaningful share in the growing clean labeled CPG market.

Turning to our produce business. We remain a trusted provider of sustainable, sustainably grown herbs and leafy grains. Our new organic program with Kroger is gaining traction while our presence at the fresh market and established retail partners, including Pete’s Market and Angelo Caputo’s Fresh Markets continues to broaden retail penetration and increase brand visibility across key markets. Operationally, we've strengthened our platform for growth through enhanced efficiency and scalability. Innovation and sustainability remains central to our strategy, guided by our zero waste inspired approach.

We're pursuing new categories, including nutraceuticals, sustainable proteins and functional foods that align with our commitment to health, flavor, and environmental responsibility. As we move into the fourth-quarter and beyond, we believe that Edible Garden is positioned for continued growth. Our focus remains on disciplined execution, expanding retail partnerships and advancing product innovation to build long-term shareholder value. I'm extremely proud of our team. Their dedication and commitment to quality, sustainability and innovation have been instrumental in driving our progress and momentum heading into year-end.

With that, I'll turn the call over to Kostas Dafoulas, our Interim CFO, who will review the financial results for the quarter ended September 30, 2025. Kostas?

Thanks, Jim, and good morning, everyone. Revenue for the quarter increased 9% to $2.8 million compared to $2.6 million in the third-quarter of 2024. With our strategic exit from the floral and lettuce categories now complete, this quarter reflects the strength and resilience of our repositioned portfolio. The growth of $0.2 million or 9% was primarily driven by strong performance across our shelf-stable product portfolio, including Kick's, Sports Nutrition, Vitamin Whey, Pulp and Pickle Party. Specifically, this portfolio grew 54% year-over-year in Q3.

In our core herb portfolio, we saw strength in hydro basil, up 21% year-over-year and wheat grass up 59% year-over-year. Gross profit totaled approximately $0.3 million compared to $0.7 million in the prior year quarter, reflecting higher labor, freight, and raw material costs as well as inflationary pressures within the nutraceutical supply chain.

Selling, general and administrative expenses were $3.8 million compared to $2.2 million in the same period last year, primarily due to expenses related to the assets purchased from NaturalShrimp and the associated depreciation, legal, audit and accounting expenses. Net loss was $4 million compared to a net loss of $2.1 million in the third-quarter of 2024. We ended the quarter with $0.8 million in cash and equivalents compared to $3.5 million at year-end 2024.

Furthermore, the company refinanced its outstanding debt, securing a lower interest rate and more favorable terms. This refinancing is expected to reduce annual interest expense and reduce financing cash outflows, providing greater flexibility to support the company's strategic initiatives and growth objectives. We continue to manage working capital with discipline, optimizing inventory turnover through improved production planning and distribution efficiency.

At the same time, we are diversifying our sources of liquidity at a lower cost of capital to ensure that we have the flexibility to act decisively on strategic opportunities as they arise. With that, I'll open the call for any questions.

(Operator Instructions)

Anthony Vendetti, Maxim Group.

Just in terms of the NaturalShrimp facility that you acquired, can you talk about the build-out of that, how you intend to utilize that initially and then over the next 6 to 12 months? And then what specific product lines will be going in there? Any color on that would be helpful.

Sure, Anthony. How are you? Thanks for being on the call. Well, first of all, it's an impressive facility. So I mean 6.2 acres, it's about an hour from Des Moines Airport. It's right there in the center of the country and gives us access to all types of different raw materials and whatnot to do all types of products, some of which we've already started. We are -- our near-term plan is actually the facility is going through a gap analysis right now with a third party. We will be doing some R&D for next-generation products, whether they're nutraceuticals or food is sort of in the works right now.

We have some major opportunities with our retailers. One of the great things about Edible Garden and there are many, is that we have significant relationships with major retailers and being on trend with the type of products that we're offering, clean labeled, fermented, all those products that we are currently pushing out are only growing in demand as people are focusing on having less processed product.

And Walmart, for example, just came out and said I think it was in the last month that they're mandating their suppliers of their private label to remove all artificial colors and dyes and sweeteners from their products, something Edible Garden has been doing for the last year and then some -- the fact that we are growers and we grow the actual raw ingredients, plants that go into many of these products, and to harvest some of the therapeutics without additives and without artificial dyes or colors or things that just aren't really needed. That trend, we're at the forefront, and we're doing in line with sustainability.

So to answer your question, we're getting asked by major companies to come in and work on their private label products, many of which I think will go into Heartland, which I think will be an incredible nutritional hub and sustainability hub in that part of the country. And we couldn't be more excited, timing and happen stance sometimes work to an advantage. And I think we're just at that intersection of having the ability, the right products at the right time.

Now we're going to have the right vertical integration to deliver on it. And I couldn't be more excited. It's all come together quite well. And I think a lot of it is really the team as well. I want to give the people that work with us quite a bit of credit because it's been -- it's been a big effort here to not only tool up with the facilities that we currently have, but to get focused, get efficient, let some of the business that we knew that was a drag on the business kind of go and kind of bite the bullet the previous quarters a little bit.

But we're back on track. And Q4 is always a strong season for us, and we're excited about that. It looks great. We're in the heat of the battle right now with Thanksgiving, which is our Super Bowl. Once again, Kroger, Fresh Market, ShopRite, they're all coming to us not only for our branded product, but some of these other innovative things that we're doing.

And I think Edible Garden Prairie Hills, which is what we named Iowa, will, I think, be at the forefront of driving that innovation and volume for us, frankly.

Okay. So just to follow-up. It sounds like the big grocery stores, in particular, are where the largest opportunity is. Would you say that's also the largest opportunity moving into '26? It's the ShopRite's, the Kroger's, The Fresh Market, these bigger grocery chains where you see the most opportunity in 2026?

I see -- yes. Look, I see our core business is that we're a business that has excelled in produce where many have failed, whether established companies that have been around for quite some time or upstarts that came in sort of drafting us and kind of spinning a similar story. I mean we're one of the last standing and we're accelerating the business. So yes, what's happening is not only is it our produce business, it's the existing branded business that we have in there, whether it's Kick, Sports Nutrition or Pickle Party, then there's private label. And we have a substantial private label business currently with key players like Meijer.

And we're getting asked to do more of the next-generation products from the likes of the big box retailers coming to us and saying, all right, we love what you're doing, you're on trend. The current political environment is pushing for less processed foods, research is coming back and saying as such, what can you do for us under our label? We like what you're doing. We can do some in your label, but a lot of it is being driven by these big box retailers saying, hey, private label is such a powerhouse now. What can you do to sort of allow us to be in step with you with these innovations and have those offerings out on our shelves as quickly as possible? So 2026 is going to be a great year.

And yes, it's going to be driven by people -- retailers kind of coming to us and saying, hey, what can you do for us because we like what you're doing, and we want more of what you have. And so it's a great place to be, and it doesn't always happen. And I think timing is just on our side and a lot of it is just driven by who we are and what we've been doing for the last decade. It might end up looking like overnight success, but ultimately, it's been 10 years in the works to get to this place.

So on the margin side, Jim, so obviously, it -- sometimes private label is tougher to get a larger margin on. But if they're asking for the natural products, the ones with less additive that's like you said, that's right in your wheelhouse. Are you able to push back and say, look, yes, we can do that for you, but those are higher-priced products -- and then maybe talk about the margin related to that as well as your kickstart program, the Protein, how is that doing? And what do you see the outlook for that in '26?

So I think on the private label piece, yes, to a certain extent, I think you can -- I think some of it's also sort of like modulating the words that we use, right? So I think command is a strong word. I don't think you -- when you're Edible Garden, we're a smaller company that's nimble and can move quickly. And that I've always told my crew that we're a customer service company that mkes things. I think that's boded well for us because we are quick to respond.

I would tell you that I think that the margin -- there's opportunity to have a fair margin, but what you're getting is volume. You're going to get contracts, you're going to get consistent volume, you're going to have a relationship with major retailers that like we have currently with, like I said, some key retailers now that we're doing private label where you build on that. And so yes, there's the margin play, but there's the additional products, there's a deeper relationship, and it's long-term.

And most private label relationships, I mean, all private label relationships come with a contract and contract to business and commitments to take a certain base amount of product, you can call it an offtake agreement is key, and its key to the business. It gives us security that we can support the facilities.

It also gives us visibility down the road for a long period of time that we know that we -- as long as we don't do anything that's catastrophic to the business or there's a black swan event, we are in business with a major retailer making something that has their label on it that's got upside. So yes, there is that pushback that will allow you to say, hey, you guys are getting this first. We're putting the focus of the company on this. But the other -- and the idea is you're going to get all this -- this is how you grow the business, frankly. So I mean, ideally, you have a blend, right?

You have a blend of retailers, private label, and then you have obviously your branded products and then maybe you even make stuff for other brands that have -- that can command -- you can commend a higher model margin, and that kind of gives you a blended margin on the manufacturing. And that's where we're going with Iowa with some of the new products that I can't disclose, but that we're going to be putting in there that are going to be -- offer significant upside. And I think you had another question regarding Kick. I don't know if I answered that or not. I don't think.

Yes. So let's say -- so maybe it's, okay, you know what, you want guaranteed product availability of certain products that are private label that maybe aren't as high margin. But we'll provide that to you. But alongside that, yes, you have to take our higher-margin protein product even if you're in somebody else's or you have to take some of our branded products as well.

There's some of that.

(multiple speakers) leverage there. Okay.

Yes, there's some of that. I mean, look, its business, right, and it's not an exact science. And it's in everybody's best interest to support, especially if you're a major retailer, I mean, pick one, whoever it is, it could be CVS, somebody who, let's say, we're doing a nutraceutical product, for example, for them, you know that it's usually a two or three-year sort of contract, sometimes longer. We're going to put for the longest ones possible.

And yes, I mean, they realize it's in their best interest to support the company because it takes time to tool up. I think when you look at a facility like Iowa and the things that we're looking to do, that takes -- we've already started spending money on getting the place up and running last quarter, and we'll continue to get the place ready for prime time.

And these retailers, they understand it's in their best interest to put other products in maybe a branded product or a higher-margin private label that they know that will help, I guess, underwrite maybe the higher volume, lower-margin business that they want to compete in. So those are the type of strategic conversations that we're having at multiple major retailers, and you're already starting to see some of that come to fruition, and you will see more as we move forward into 2026. So yes, there is that type of relationship.

It's like anything else. It's -- you got to have something that they want, and you got to work hard with them. There's a whole certification process and their people come in and inspect everything and -- it's -- but we've gotten pretty good at it, and we got a great crew. So I couldn't be more excited. But yes -- so yes, that's definitely the way that it should go.

Not everybody does that, but they should work with you, understanding it's in their best interest to help give you some fuel to build out the business. You can't just rely on us to bring in our own capital. I mean they got to -- some of that's got to be kind of cushioned with products that they know that are established that they give to us that allow us to offset. So -- sorry, that was a long-winded, but yes, yes. I guess -- yes, there is that opportunity.

Did I answer your quick question, Anthony? I don't know if I did or not.

Yes. No, that (technical difficulty) Yes, that was good.

All right. Thank you, Anthony.

(Operator Instructions)

Okay. I'm not seeing any further questions in the queue. So I will now hand back over to the management team for any closing comments.

Thanks again to everyone for joining us today. Third-quarter was another important step forward for Edible Garden. We're executing our strategy with focus, expanding our retail reach, growing our higher-margin CPG brands, and strengthening our operations to support scalable, profitable growth. Momentum continues across Kick's, Sports Nutrition, Pickle Party, Pulp and Vitamin Whey. These brands show that our approach is working and that consumers are responding to clean-label, better-for-you products.

At the same time, our core produce business remains strong, grounded in freshness, sustainability, and quality. As we approach year-end, our priorities are clear, continue executing at a high level, advance our innovation pipeline and deliver lasting value for our shareholders. We're excited about where we're heading and look forward to sharing more of our progress in the months ahead. Thank you.

Thank you very much. This does conclude today's conference. You may disconnect your phone lines at this time, and have a wonderful day and a wonderful weekend. We thank you for your participation.