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Edible Garden AG rporated(EDBL) - 2025 Q2 - Earnings Call Transcript
2025-08-14 13:00
Financial Data and Key Metrics Changes - Revenue for Q2 2025 was $3.1 million, down from $4.3 million in the same period last year, primarily due to the strategic exit from the floral and lettuce categories, which accounted for approximately $740,000 of the difference [15] - Gross profit decreased to $634,000 from $1.6 million year-over-year, driven by changes in product mix and lower sales volume following category exits [15] - Net loss for the quarter was $4 million, compared to $1.9 million in the same period last year, largely reflecting higher selling, general, and administrative expenses [16] Business Line Data and Key Metrics Changes - Private label products sold through major retailers grew 19.1% year-over-year, driven by expanded retail programs and strong sell-through of sustainably grown herb products [9] - The core produce category saw hydroponic basil grow 7.1% quarter-over-quarter, with potted herbs up 6.4% and wheatgrass up 4.1% [9] - E-commerce sales increased, demonstrating the scalability of the product portfolio online and the growing strength of digital sales [10] Market Data and Key Metrics Changes - International revenue grew 66.5% due to new distribution partnerships and expanded retail placements in key global markets [11] - The functional food and beverage market is projected to expand from $400 billion to $610 billion by 2030, with U.S. sales of natural, organic, and functional products expected to reach $386 billion by 2028, growing at roughly 5% annually [12] Company Strategy and Development Direction - The company is focusing on higher-margin innovation-driven categories and has exited low-margin categories to build a more resilient and adaptable portfolio [8] - The acquisition of Natural Shrimp Aquaculture enhances R&D capabilities in aquaponics and supports year-round climate-controlled production [13] - The company aims to capitalize on emerging opportunities in the better-for-you consumer packaged goods market, aligning with long-term consumer trends towards health and sustainability [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strategy, noting that the second quarter results indicate that the strategic decisions made are delivering real impact [6] - The company anticipates a strong Q4, driven by holiday programs and new accounts, with significant preorders already in place [41] - Management highlighted the importance of the Kick Sports Nutrition line and its potential for growth, particularly through e-commerce channels [48] Other Important Information - Selling, general, and administrative expenses increased to $4.2 million from $2.7 million year-over-year, mainly due to expenses related to the natural shrimp acquisition and legal costs [16] - The company closed the quarter with $2.8 million in cash and is focused on driving inventory efficiency [17] Q&A Session Summary Question: Is private label a growing part of the business? - Management confirmed that private label is a growing segment, with significant growth seen in partnerships with retailers like Meijer, contributing to overall revenue growth [20][24] Question: What accounted for the revenue shortfall this quarter? - The majority of the revenue shortfall was attributed to the exit from floral and lettuce categories, with some softness also noted in the condiments business and legacy vitamin products [26][27] Question: What does the Natural Shrimp acquisition bring to the portfolio? - The acquisition expands R&D capabilities, improves sustainability, and enhances distribution efficiency, positioning the company for future growth [32][34] Question: What are the expectations for Q4? - Management is optimistic about Q4, citing strong preorders and a stable operational position compared to the previous year [41][42] Question: What is the status of the Kick Sports Nutrition line? - The line is accelerating in growth, with strong support from Amazon and positive early results from marketing efforts [48][49] Question: How does the international business fit into long-term growth plans? - The international business is expected to grow significantly, particularly through shelf-stable products that can be distributed globally [54][56]