Edible Garden AG Inc Q4 FY2023 earnings call

• Revenue grew 21.6% annually in 2023 and 32.8% in the fourth quarter of 2023. - Expanded distribution network with new retail partners like Tops Friendly Markets, Uncle Giuseppe’s Marketplace, and a leading U.S. food retailer. - Expanded product offerings, including new flavors from Vitamin Whey at Meijer and the pulp product line. - Enhanced production capabilities with greenhouse operations in New Jersey and Michigan, reducing dependency on contract growers. - Secured two new patents for GreenThumb greenhouse management system and self-watering display technology. - Received grants for organic crop certification training, safety improvements, and other expenses. - Engaged in collaborations with NYIT, USDA, EPA, and Auburn University for food safety and innovation.

In 2023, Edible Garden's annual revenue was $14 million, a 21.6% increase from $11.6 million in 2022. The fourth quarter of 2023 saw revenue of $4.1 million, a 32.8% increase from $3.1 million in the same quarter of 2022. Gross profit margin in 2023 was 5.9% of revenue, a 270 basis point increase from 3.2% in 2022. The fourth quarter gross profit margin was 6.9% of revenue. Product segments include herbs, produce, floral products, vitamins/supplements, pulp, and ornamental. Revenue from herbs, produce, and floral products contributed to the 21.6% annual growth, and sales of vitamins/supplements increased by $324,000 in 2023. The pulp product line, a new category, has seen expansion into various retail partners.

• Anticipate increased profit margins from the ornamental sector. - Plan to add higher margin products to the product line. - Leverage the distribution platform to push more products through retail partners. - Introduce new products within the condiment category that align with the zero waste inspired theme.

• Forward-looking statements are subject to risks, uncertainties, and assumptions as detailed in SEC filings. - Risks related to supply chain management, including dependency on contract growers and potential seasonality issues. - Competition in the organic and sustainable products market could impact growth and margins.

Q: Can you provide an update on the build out and integration of the Heartland facility?

A: The Heartland facility is fully operational, shipping significant volume to Meijer. It has a state-of-the-art packhouse with new machinery, and in April, will bring in four-inch potted higher margin product, becoming fully vertically integrated by May.

Q: What is the near-term, medium-term plan for the protein powder sold at Meijer locations?

A: With the completion of the Heartland facility, they are leveraging the distribution platform to push more product through retailers. They plan to augment the Vitamin Whey line and introduce a new, cleaner labeled, more contemporary line with Nutricon.

Q: Can you provide more extensive details on the introduction of EG Direct and the sourcing and supplier?

A: EG Direct is being developed to leverage relationships, looking at national and international opportunities to source higher margin products, including some from overseas.

Q: What are you doing to drive efficiencies and get the company cash flow positive?

A: Investing in technology and more efficient production lines, integrating the contract grower business, which will help with cash flow and profitability.

Q: What do you attribute the success of gross profit margin and how will you further increase it?

A: Less reliance on contract growers, giving more control over cost structure; adding higher margin, more shelf-stable products to the product mix. This includes products like pulp and vitamins, which will widen the product base and improve margins.

Q: Are you exploring any other product categories to enter?

A: Yes, looking at products that fit the zero waste inspired theme and brand persona, introducing new products within the condiment category this year that link to their fresh produce reputation.