Edible Garden AG Inc Q1 FY2025 earnings call

Key Points

• The company is realigning towards higher-margin, shelf-stable products like Kick, Sport Nutrition, Pickle Party, Squeezables, Pulp, and Vitamin Way, which is gaining traction.
• Launched/strengthened relationships with major retailers such as Walmart, Stop & Shop, etc., driving growth in fresh and non-perishable categories.
• Acquired Natural Shrimp Farms facility, which provides R&D, warehousing, and water treatment capabilities, supporting vertical integration and sustainability.
• Selling, general, and administrative expenses decreased to $3.3 million from $3.9 million in Q1 2024 due to cost optimization.

Total revenue for the first quarter of 2025 was $2.7 million, a decline of $414,000 from the prior year. This was primarily due to exiting lower-margin floral and lettuce categories. Non-perishable revenue grew 15% year-over-year. Cut herbs sales rose 13% seasonally. Gross profit increased to $88,000 from $23,000 in Q1 2024, with gross margin improving to 3.2% from 0.7%.

Forward-Looking

• Continued focus on growing the higher-margin, shelf-stable non-perishable portfolio.
• Expectation of further expansion of national retail presence and e-commerce growth.
• Anticipation of margin expansion and scalable, profitable growth from the non-perishable product line.

Risks

• Forward-looking statements are subject to risks, uncertainties, and assumptions as outlined in the company's SEC filings. Actual results may differ materially from forward-looking statements due to various factors mentioned in these filings.

Q: Talk about initial plans for Natural Shrimp acquisition and synergies.

A: Immediate initiatives include leveraging the facility for warehousing, accelerating R&D for nutraceuticals, and expanding retail relationships. The facility provides warehousing space for refrigerated products, supports R&D for shrimp-based nutraceuticals, and enhances market penetration.

Q: Revenues of Natural Shrimp in 2024 and margin accretion.

A: Sales of Natural Shrimp were nominal. Leveraging the facility's space and distribution will lead to margin accretion through improved warehousing and logistics efficiency.

Q: Sports nutrition line performance and outlook.

A: Kick. Sport Nutrition saw new brick-and-mortar placement in a Midwest big-box retailer. There are upcoming launches, continued investment in marketing and sales, and expectation of growth as protein products remain in demand.

Q: Drivers of gross margin improvement and growth of shelf-stable products.

A: Investment in the right people, products, marketing, and diversification of the portfolio. Upcoming launches and success at trade shows like Expo West are expected to drive further growth in shelf-stable products.