Edible Garden AG Inc (EDBL) 2026 Q2 法說會逐字稿

Good morning everyone and welcome to Edible Garden Incorporated 2026 Second Quarter Business Update Conference.

(Operator Instructions)

I will now turn the call over to your host, Ted Ayvas, Investor Relations at Crescendo Communications. Ted, the floor is yours.

Thanks, Jenny.

Good morning, and thank you for joining Edible Garden's 2026 second-quarter earnings conference call and business update. On the call with us today are Jim Krash, Chief Executive Officer of Edible Garden, and Kostas DeFoulis, Interim Chief Financial Officer of Edible Garden.

Earlier today, the company announced its operating results for the three and six months ended June 30, 2026. The press release is posted on the company's website, www.ediblegarden.ediblegardenag.com. In addition, the company has filed its quarterly report on Form 10-Q with the U.S. 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 or would like any additional information about the company, please contact Crescendo Communications at 212-671-1020.

Before Mr. Crash reviews the company's operating results for the quarter ended June 30th, 2026, 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 in 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, 2025.

Because of these risks, uncertainties, and assumptions, the forward-looking events and circumstances discussed in the 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. With that, I would now like to turn the call over to Mr. Jim.

Chief Executive Officer of Edible Garden. Jim.

Thanks, Ted, and good morning, everyone. The second quarter was another period of solid progress for Edible Garden. Revenue grew 12.8% year-over-year to $3.6 million, while total sales increased by more than 31%. What was particularly encouraging was the breadth of that growth. Cutter of sales increased more than 42%, driven by continued growth with existing customers and newer programs. With major retailers, including Kroger, Target and Weiss. We saw growth across potted herbs, international vitamins and condiments as well, while expanding our relationships with retailers including Target, Walmart, Wayfront ShopRite and the Fresh Market.

In addition, we extended a multi-year private label contract with a major Midwest retailer. More recently, we were awarded fresh cut herb distribution through a key target Midwest distribution center, further expanding that relationship and broadening distribution of our premium fresh cut herb portfolio across the region.

We believe the award demonstrates our ability to leverage our Midwest production and distribution infrastructure to efficiently support additional volume as our retail programs expand. Overall, we see a core business that continues to gain traction across customers, products and channels. Improving the underlying economics of the business remains an important priority.

In Metro North, for example, in Metro New York, for example, we are traditioning more volume from direct store deliveries to retail distribution centers and regional logistics hubs. We believe this can reduce transportation and delivery related costs. The network and create better operating leverage as we grow.

At the same time, the retail relationships, distribution capabilities and infrastructure we have built through our core business gives us a foundation that can be leveraged well beyond traditional produce. That leads me to what we believe is the most significant long-term growth opportunity in front of Edible Garden, our farm-to-formula strategy and the development of the ready-to-drink RTD manufacturing platform at Perry Hills.

In Webster City, Iowa. We believe this has the potential to fundamentally change the scale and profile of our business over time, and we made significant progress during the second quarter. Most notably, we successfully completed prototype production at Tetra Pak's new product development center.

This is much more than a product development exercise. It allowed us to run our proprietary clean label formulations under commercial processing conditions, generate production data. Further optimize the products and advancer preparation for customer sales and commercial manufacturing.

In parallel, we continued moving forward with the physical development of Perry Hills board with Structura Architects and E2 Building Group supporting the design, engineering, and construction process. Together, these milestones represent meaningful progress towards a scalable commercial manufacturing platform we envision.

The reason why we are so focused on this opportunity is the potential scale. Perry Hills is being developed as a flexible, high-capacity platform for shelf-stable, clean-labelled nutritional beverages utilizing advanced Tetra Pak processing and packaging technologies.

At full production, we expect the facility to have capacity to manufacture more than 100 million beverage units annually, providing the potential to participate across sports nutrition, protein beverages, functional wellness, meal replacement, GLP-1 support, and other better-for-you categories. Importantly, the platform is being developed to drive our own brands as well as private label and co-manufacturing opportunities, giving us multiple potential paths to build volume and create value from the facility.

What makes this opportunity particularly compelling is that we are not starting from scratch. Our products are already available in more than 6,000 retail locations and growing. We've spent years developing relationships with national and regional retailers along with the food safety, supply chain and commercialization and retail execution capabilities needed to serve them. Combining that existing commercial infrastructure with scalable domestic RTD manufacturing has the potential to significantly expand our addressable market, diversify our revenue base and over time improve the earning profiles of the business.

That is really what Farm to Formula is about. We started with controlled environment agriculture and fresh produce, expanded into higher value branded nutrition and functional foods, and now Prairie Hills gives us the opportunity to take another significant step into shelf stable clean label nutrition. We view Prairie Hills as much more than a new manufacturing facility. We believe it has the potential to become an important growth engine for edible garden and a key part of our evolution into a broader clean label food and nutrition. Platform.

Our focus remains on execution, growing the core business, improving operating efficiency and advancing Prairie Hills towards commercial production and developing the branded and private label opportunities that can ultimately utilize that capacity. We believe the pieces are increasingly coming together and we're excited about the direction of the business and the opportunity ahead. With that, I'll turn the call over to Costas to review the financials. Costas.

Thanks, Jim, and good afternoon. Good morning, everyone. Revenue for the three months ended June 30th, 2026, increased 12.8% to approximately $3.6 million, compared with approximately $3.1 million in the prior year period. The increase was driven.

By continued growth in our cutter herb and potted portfolio, which increased approximately half a million dollars or 50% year-over-year. Revenue growth was supported by underlying volume gains concentrated in select categories with total gross sales increasing 7.6% year-over-year.

While cutter herbs and continents drove the growth, our financial focus is on converting that higher volume and revenue into improved operating performance as we continue to scale the business. Gross profit for the quarter was approximately $0.6 million, essentially flat with the prior year period.

While we continue to generate top-line growth, cost of goods sold remained elevated, and improving profitability of that growth remains an important focus for us. One of the more meaningful improvements during the quarter was in net selling, general, and administrative expenses. SG&A declined approximately $0.9 million or 21.5% to $3.1 million.

Compared with approximately $4 million in the second quarter of last year. We believe this reflects a continued focus across the organization on managing expenses and improving operating efficiency as we scale the business.

Net loss improved year-over-year to approximately $3.3 million from approximately $4 million in the second quarter of 2025.

Turning to the balance sheet and cash flow, total debt increased approximately $14.2 million from approximately $1.9 million at year-end, reflecting $13.5 million of new financing this quarter related to our initial investment in the Prairie Hills manufacturing facility in Iowa. Cash and restricted cash together were approximately $10.7 million at June 30, 2026, so approximately $10 million of that was held in a restricted account.

For the Iowa facility, leaving approximately $0.7 million of cash available for operations compared with approximately $1.1 million of unrestricted cash at year-end.

Total assets were approximately $27.7 million compared with approximately $20.6 million at December 31, 2025, and total liabilities were approximately $22.1 million. We continue to focus on strengthening our capital position as we fund the business and invest in Prairie Hills. Operating cash flow was positive for the second consecutive quarter with net cash provided by operating activities of approximately $0.9 million for the six months ended June 30, 2026, compared with cash used and operations of approximately $6.8 million in the prior-year period.

As we look ahead, our financial priorities remain closely aligned with the operating strategy Jen discussed. We are focused on continuing to grow revenue.

We believe can generate the greatest long-term returns. At the same time, we are continuing to invest in the development of Prairie Hills and the RTD platform. As we make those investments, we intend to remain disciplined in how we deploy capital and balance the requirements of the existing business with the opportunity to see in building a scalable domestic clean label beverage manufacturing platform.

We believe the combination of continued revenue growth, a more efficient operating structure, and disciplined investment in higher value growth opportunities provides a path towards improving the financial profile of Edible Garden over time. With that, I'll turn the call back to the operator for questions.

Thank you very much.

(Operator Instructions)

Thank you.

Nick Sherwood, Maxim Group. Nick, your line is live.

Hi. Good morning.

Thank you for taking my questions. My first question is about the new expansion and the new target expanded distribution. Can you kind of contextualize what that distribution was before and how big of a win or a gain this new distribution?

Good morning, Nick.

Yes, it's significant. We've had a long-standing relationship with Target and we've made quite a bit of investment in the, just in the relationship and being able to be positioned for this type of opportunity. And, there's been market conditions and, obviously, some peruse for suppliers, not us. We're very fortunate, we're in controlled environment agriculture, which means we control, how we grow and with, credible safety, food safety processes in place. With that said, this is their, one of their largest, if not. One of their largest, pretty close. They just opened up a new fresh distribution center since they've been growing this part of their business target. But this has been the longstanding largest.

And so, we had picked up some business earlier in the year, this year, and then this, based on performance and market conditions. There's just a lot of consolidation in CEA right now with some of our major competitors basically going out of business.

We're a trusted supplier with best-in-class fill rates. And on-time rates. And so with the changes, the concerns, some of the instability in the business, Target reached out and wanted us to be able to pick this up for them because they wanted to know that they would hopefully have a partner where they wouldn't have anything to worry about.

And so for us, it's very significant since it's in Iowa. It helps align with our facilities out there, as well as the fact that they're based in Minnesota, which isn't that far from Iowa. And thus, like I said, this is really kind of central to their business. And we're very fortunate and happy to have gotten this opportunity. And like I said, there's quite a bit of consolidation. We put out a press release, I think it was maybe even a week or two ago, that just talked about the fact that my phone's been ringing off the hook.

With people trying to align with Edible Garden since my team does such a great job of execution and it's always been the key for us. So yeah, it's pretty significant.

But any other specifics on that, Nick, that I can answer? I hope that helps.

No, yeah, I think that's a perfect explanation for what I was thinking about. And kind of one thing that you mentioned in that answer was some of this consolidation that's kind of going.

On in the industry. Can you kind of give us a little bit of an insight on, maybe how that may have accelerated in the past year and, kind of what it's looking like through the end of the year and kind of the opportunity that might still remain available to Your clipboard operation is not allowed by company policy in addition to this target distribution expansion?

Well, yeah, there's been there's been quite a bit of consolidation, and I think it's really driven by where people put their investment dollars and the fact that Edible Garden had put an investment in their distribution platform and the relationships.

There's going to be issues in these types of business, whether it's supply chain issues or whatnot. There's always just issues. And I think what's happened is that our competitors put a lot of money into technology, a lot of money in trying to talk more about yield per square foot than really going. Out, securing the relationships in parallel, making investments like we have in, the customer experience. Yes, we have technology with green thumb, it's patented, and it helps with our supply chain efficiency, all those great things. When we bought the greenhouse in Michigan, we did a retrofit versus doing a greenfield project, just things like that that's kept the business. And you can see it in our numbers this quarter, just tighter and tighter. And tighter as we've continued to drive the business, the delivery part of the business, as I like to say, the on-time and in full in-stock rate. So all of that has really just led to us being positioned to really pick up the ball when it's been dropped by our competitors. And I think this sort of build it and they will come attitude in this category specifically has not worked out well because. You really, it's really ultimately about people buying your products and making sure that that loop gets completed. And I think that's just somewhere where we've really done a nice job. I think Casas has brought, a discipline, to the business that's allowed us to really focus on cleaning up SG&A and doing some things just to be more and more efficient. We're still in, serious growth mode.

Obviously, with the Iowa facility, that's going to really. Take the company to the next level. Excited about that, but I think, most importantly here, I think we've earned our stripes to be where we are, and, people are, people calling us because they just don't, they don't want a headache. They want people who are going to service their business, and that's something that, my team has been really focused on, and so I think it's paid off.

I mean, sounds like there's definitely a continued opportunity there, and then kind of switching gears, this Tetra Pak opportunity, it really is one of the key opportunities that it seems like for your company going forward. Can you kind of just give us some insight on is that timeline still intact on, building out the facility, any specific insights into the completion of the prototype production at Tetra Pak's new product development center, and just kind of, tell us what do you still need to bring in or to do to make sure that, everything remains on schedule for this?

Well, first of all, we're still on track and we're looking at the tail end of 2027 to see the first bottle come off the line. We have, once again, having the reputation that we have for our service levels, our execution, we've got pre-sold commitments for 100% of the facility, which is just, unheard of, but she tells you an idea of what the demand is there. It's got, we have a nice blend of our brand as well as private label.

We knew there was a shortfall in the industry, protein is hot, it continues to stay hot, continues to grow, we continue to innovate as well. Obviously, kind of building that bridge from farm to formula is a big thrust for us to harness and really add another dimension to what we do in the greenhouse. So we're really excited about that and there's a lot of things on the horizon here that are just actually going to be just tremendous.

But we're on track, we are going to be starting with a co-manufacturer this year at the end of Q4 to allow us to kind of continue to approve out the formulas. To allow us to go to market quickly and see the revenue from that and not have to wait over a year to really capture some of the this pent-up demand for these type of products. So it's, Tetra Pack has been just an unbelievable partner.

They're just such a great company. And, we consider us fortunate to continue to work with them. The development process at their state-of-the-art facility in Denton, Texas was just phenomenal. And, we have some real significant players on our team that have, who have been working with Tetrapak for decades that, came on to Edible Garden, like Dr. Chuck Sizer is one of them. He helped develop the majority of the patents. For Tetra Pak on some of the packaging, he's on he's on our on our team and advises us and Ed was there on the run to develop the product, but great tasting, clean labelled.

Product that right now is just really exciting to be able to work with, so it's really pretty tremendous and to be able to leverage off a growing core business and it just really continues to uniquely position us for the type of growth I think this is going to be a much different.

Company, as we head into Q4 next year, and especially in 2028, as we're pumping out, product out of Iowa, and, we're really focused on driving that business. So yeah, it's really exciting. It's going really well. But H1stly, we just have a great team and people are excited about what we're doing, between our zero waste inspired mission and mission and trying to, cut out waste and, and. Have an eye on recyclable packaging. Touch pack obviously plays into that to this front formula notion that I think is quite novel that I think will continue to shake up the industry and get us positioned properly with not only our own brands like Kick, which will be launching in Q4.

But also a lot of the development work that we're doing with major retailers on this product. So once again, really exciting. And I think what we've done and how the team is executing, where we focus their time and energy and just sticking to our knitting and getting to where we are, it's been challenging, but I mean, that's part of business. And I think everybody that I work with wants to compete and hopefully continue the wins that we have going on, whether it's in. Whether it's in, Pickles, with, the Safeway win this past year, and Woodman's, or, whether it's continued growing pulp with Wakefront this year, and some other retailers, or just the RGDs, which I think is just going to be just incredibly, awesome, to be quite frank.

Okay, great. Yeah, I'm looking forward to following along, and I'll return to the queue.

Thank you for answering all my questions. You're welcome.

Thank you very much.

(Operator Instructions)

Nicole Kaufman, Blackridge Capital. Nicole, your line is live.

Hi, good morning guys. Congratulations on the quarter results.

Jim, you've talked about the significant opportunity you see at Prairie Hills and the ability to support both edible garden brands and private label and co-manufacturing customers.

Can you talk about the level of interest you're seeing from potential customers and how those discussions are progressing?

Well, the interest has been just phenomenal. I mean, that's really.

Why we did this was because retailers were coming to us and saying, hey, you guys are an innovative group. You're in a really challenging category. You've done a great job servicing our business.

We want to, we want more of what you're doing. Have you thought about doing this and taking what it is that you grow and potentially put it into, a beverage, helping us with our current, milk and whey-based products? Can you do something there? I've got, years of experience working at, companies like Nature's Mining and Ginomoto, so that always gave me some credibility that I could figure this out with the team and, but really what's happened is. Think it's been, once again, a real collective effort, leveraging from a very advantageous position where people are coming to us.

It doesn't happen that way in this industry. I said to somebody, it's been a long time since I'm managing where am I going to put my time and how do I prioritize who we work with based on opportunity and collective vision versus just. More, some more widgets. So, once again, I mean, major retailers, everyone from, the major retailers that we currently deal with to even new people who are coming that we haven't necessarily worked with before on the fresh side saying, hey, can you do this for us? Look, private label continues to grow. There's a place for both.

And I and it's very it's underserved, the private label part of it for a multitude of reasons. There's just not enough capacity out in the marketplace. There's not there's just there's just there's just there's just there's a pent up demand, especially on private label. If you go into most of the grocery stores, you won't see a private label RTV. There's reasons for that. A lot of it's just capacity, and so we're going to solve that problem and solve it with some of the major retailers. Like I said, we've got commitments on pretty much on the whole factory, and so right now we're just focused on executing and getting it up and running, and then as there'll be other opportunities.

Continue to do that, and we're also seeing, we're seeing, the ability to start to get, some pricing power here on the URBS, which hopefully will lead to the RTD. There's, once again, it's like consolidation on the URBS, and not many companies who do what we do and do it as well as we do.

So that, obviously, retailers will pay a little bit more now. And then because they want some of the problems to go away, and they want products. And if they don't have products on the shelves, they lose that sale. So we help take some of that risk away from them. And then on the RTDs, it's once again, I think we'll continue to capture that void of volume, and I think that'll help us across the board, whether.

Just driving top-line or being able to, prices, accordingly so that, everybody sort of wins.

Well, that's great.

I guess this kind of leads into my next question is that you guys delivered double-digit revenue growth this quarter, and your SG&A significantly declined year over year. So what are you seeing as the biggest opportunities that would translate into the continued revenue growth and improved profitability and operating leverage?

Well, look, I think it's kind of the conventional wisdom that many of our costs will stay relatively static as we put more volume into the existing greenhouses.

Building any more greenhouses. Currently, we've got two greenhouses, we can continue to not only drive, our signature product, and expand that, but also, continue to drive more fresh cut herbs, which are not necessarily contingent on how much growing space we have. And so, I continue to see either that revenue line continuing to go forward and that core business, as well, and. And look, we'll make some investments in, obviously in Iowa, but we have a lot of people already that can do a lot of things and work across the whole platform. And so we're going to see some good gains on revenue. We'll see some incremental staffing that will be strategic, that will be probably more focused on the Tetra Pack facility more than anything else. And some of that information. But for me, I think it's like, let's continue to grow the top-line. We're streamlining costs, really on the greenhouse business, and there's still some more work to do. Costas and his team have done a very nice job, I think, especially last quarter of focusing on the SG&A, we're working to procure better on some of the things that, some of the suppliers that we use, as we continue to be consistent with our orders, it allows us to.

Negotiate better terms with our suppliers. And a lot of that, I probably don't speak enough about that. I know that we've been doing this for over a decade and we've got some really good suppliers that partner with us and they're happy our business is growing. They're happy they're obviously making money with us. And so as we scale, they're scaling and our costs go down as we get scale on. And that's always right. The.

Around economies of scale, and we're starting to see that pick some of that up and help limit our cost and be more efficient in what we're doing. So, revenue will continue to climb here with costs being minimized and relatively static, some key strategic investments in people, which I think is our most important asset, and then from there, we'll.

Continue to do what we need to do to capture the opportunities and make the investments in the relationships or branding or anything else that we feel is warranted to make sure that we continue in the current trajectory.

Well, thank you, Jim. I appreciate that insight. I'll jump back in the queue if I have additional questions.

Thank you very much. Appreciate it.

Thank you very much.

Well, we have no further questions in the queue at this time. I will now hand back over to Jim for closing comments.

Before we conclude, I want to leave you with a few thoughts. We came into 2026 focused on strengthening our core business while continuing to build a foundation for Edible Garden's next phase of growth.

Through the first half of the year, we believe we made meaningful progress on both fronts. Our core business continues to grow, supported by expanding relationships with leading retailers.

Growth across our product portfolio, and we continued efforts to improve operating efficiency. We believe that business provides an increasingly strong commercial foundation for where we want to take out of Bolgarten next. At the same time, we are making tangible progress with farm-to-formula in Prairie Hills. The work completed with TetraPak along with the continued development of Prairie Hills facility brings us closer to our goal of building a scalable domestic RTD manufacturing platform capable of supporting. Both our own brands and private label opportunities. We believe Prairie Hills has the potential to significantly expand the scale and reach the edible garden while we combine that opportunity with retail relationships. Distribution network and operating capabilities we have already built. We believe we have the foundation to evolve Edible Garden into a much broader clean label food and nutrition company. There is a lot of work ahead and our focus remains on execution, but we are encouraged by the progress we are making and excited about the opportunity in front of us.

Thank you to our employees, customers, retail partners and shareholders for your continued support. We look forward to updating you on our progress.

Thank you for joining us today.

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