Edible Garden AG Inc Q3 FY2024 earnings call

• Strategic shift away from low-margin products, including phasing out legacy floral business and lettuce categories. - Installed new production lines in Grand Rapids to expand capacity for higher-margin products. - Strengthened balance sheet with $5.65 million gross proceeds from S1 offering, used to pay down debt and invest in working capital. - Partnership with Walmart evolved, including debut of sustainably grown Hydro Basil and launch of Vitamin Whey products on Walmart Marketplace. - Pulp Flavors line saw sales growth in Q3 2024 with expansion of distribution network. - Launched Kick Sports Nutrition line of performance products. - Received USDA grants for organic certification to support R&D and reduce expenses.

For the three months ended September 30, 2024, revenue totaled $2.6 million, compared to $3 million in the same period of 2023. Cost of goods sold was $1.9 million in Q3 2024 vs $3.3 million in Q3 2023. Gross profit margin for Q3 2024 was 27.1%. For the first nine months of 2024, revenue showed a slight year-over-year increase, cut herbs sales were up 55%, and gross profit surged by $1.7 million (324% increase over prior year).

• Confident Q4 2024 will show significant growth in margin and revenue, potentially being one of the strongest quarters. - Expect significant growth from Kick Sports Nutrition line, with launches planned in Q1 2025 and rollouts with major retailers and Amazon. - Q1 2025 launch of paste herbs line.

• Weather events impacted revenue, such as Hurricane Helene shifting $215k of nutraceutical revenue from Q3 to Q4. - Dependence on external factors like weather and market conditions affecting product availability and sales.

Q: Concern about handling demand this season with fewer contract growers?

A: Don't need contract growers, have infrastructure and capacity, with new production line in Grand Rapids, Q4 could be best quarter ever.

Q: Impact of hurricanes on revenue?

A: $215k of nutraceutical revenue shifted from Q3 to Q4 due to Hurricane Helene, with additional orders teed up for Q4.

Q: Growth expectation for Sports Nutrition line?

A: Significant growth expected, with commitments already in place, launches planned in Q1 2025 and rollouts with major retailers and Amazon.

Q: Leverage from exiting low-margin products on gross margin?

A: Gross profit to continue expanding as they focus on core business and efficiencies across supply chain