Edible Garden (EDBL) 13 Nov 242024 Q3 Earnings call transcript

Good morning, and welcome to the Edible Garden AG Incorporated 2024 Third Quarter Business Update. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Ted Ayvas of Crescendo Communications. Ted, the floor is yours.

Thanks, Jenny. you Conference Edible Call thank September quarter and XXXX, XX, and morning, for Garden's joining ended Good Business Update.

with Edible Dafoulas, call Executive of the us Jim are On Kras, Edible Officer Garden. of Chief Garden; Interim Kostas and Financial Officer today Chief

ended posted morning, months on website, company the the the The XXXX. this its operating company's XX, Earlier for press results announced X September release is www.ediblegardenag.com.

Exchange the Commission, filed its can quarterly on U.S. the Securities on addition, with and SEC's website accessed as company has be at In website www.sec.gov. well which the Form also report company's XX-Q the as

If information after about you Communications the additional please company, like contact Crescendo any questions have the XXX-XXXX. at call any (XXX) with

quarter update, XXXX, the and provide operations position, other historical conference terms All intended including future may, Before future words of similar in strategy for and expectations statements. our forward-looking Mr. identify will are to Kras terms in than statements. expressions would operations anticipate, reviews financial we call regarding statements. this of of our strategy, and conference the everyone the project, September forward-looking a may believe, such and could, aim, and plan, other and expect, ended company's words plans results are that negative of The business statements to statements for operating remind like forward-looking this statements contained contain XX, facts call, results

year strategy, that SEC long-term to projections described with financial believes operations the in company's its forward-looking uncertainties short-term assumptions the annual Form ended future These needs. and the forward-looking company's may risks, largely based trends December operations, XX, financial objectives the and business results expectations statements several the on are XXXX. for statements it report and subject XX-K of filings and These condition, are about including as current on events and company's and affect

circumstances anticipated from uncertainties and discussed events and the could adversely may statements. in assumptions, in this implied the results these call and those not occur or forward-looking conference and actual of risks, forward-looking Because materially differ

rely not events. should as of future You predictions forward-looking upon statements

believes performance level the statements cannot achievements. forward-looking the it activity, results, of guarantee Although expectations reflected that or future are the company in reasonable,

addition, nor conference responsibility of any update except as these cautionary and statements. in any as qualified law. these statements, forward-looking by by their any company neither to In others company statements required the well duty to are The forward-looking the statements attributable accuracy All assumes call. entirety these disclaims in for this person of any completeness company as forward-looking of the made expressly

these made should You company and the evaluate forward-looking all context in of risks the statements by uncertainties.

call I that, now to to of Jim Edible Kras, Officer turn over Executive would Chief Garden. said like Jim? Having the

everyone you and morning, Good us today. to thank Ted. Thanks, joining for

to strong profit QX an report period We compared to by XXXX $XXX,XXX another last quarter, highlighted for same are increase of year. pleased in gross the

revenue our $X.X our this XXXX our increase impacting margin Our margin in for prior an improvement recent reaching has third gross fueled growth consistent the million, second surged gross significant over experienced impressive by quarters. the of reflects the months and in while growth quarters, XX.X% quarter. growth XXX% profit first Furthermore, progress profit This X significant year. that marginally

months increase. slight XXXX. to XXXX, of demonstrated first cut year-over-year X a herbs of and compared showed by XXXX Revenue Our for first the months for ended stronger the XX% in ever, fundamentals core a increase as September business than X are XX, sales

categories. lower-margin from XXXX phase Third quarter revenue was for to same last of products strategic year, period the driven a decision down by and out

growth profitability. expand legacy our flow sustainable higher-margin the installed new to drive believe and Grand our we these Rapids, our Garden of of with facility in floral the Edible connection achieving production in cash accelerate phasing products. example, help initiatives lines will business at For goal capacity our We have Heartland to out

of our down in reduce million XXXX, strengthened went balance Part million also towards achieving leverage funds raising our closer our sheet cash We due these $X.X move with flow. approximately in September debt SX paying us to helping proceeds. positive gross free offering, to and $X.XX

we Additionally, a to season season, quarter ahead capital in us invested peak fourth customer working of in and sales. putting meet position holiday demand the strong

of Hydro with Station that featured partnership evolve ways, Basil, a in our without seamlessly Walmart Our disrupting debut grown in current fits into meaningful custom-designed including continues Basil planograms. produce sections to the sustainably Walmart's

lines Vitaminway This Edible powders expand Walmart Whey protein to Garden lays groundwork products, our the new offering Vitamin our on plant-based platform enhances the Additionally, also accessibility we of products. for whey Marketplace. with on and launched only not but

We with innovative audience. and products with positions our are evolving consumer believe will deepening collaboration Walmart of resonate confident Garden this expanded taste the We revenue growth XXXX an beyond. in Edible

keHE organic is demand USDA to network, grow the rising includes sales and sustainable Williams, XXXX, flavors line meet Woodman's and that billion experienced distributors quarter in XXXX unique to poised bold, take distribution Morton of line of billion in which $XXX meals third and gourmet bland sauces pulp for to Flavors we the to XXXX UNFI growth retailers Target, Dierbergs, as and the condiments such as sauces to more. Meijer, of to Pulp market of and Foods, existing According bold. our our like fermented prominent from continue research For add is $XXX Whole from markets, global and in projected

expected that for billion clean dietary from is and options. fueled grow quality preferences billion on-the-go offer in to for According to needs athletes. demand nutrition of athletes sports to performance by $XXX their also We personalized to performance, designed market who the of XXXX, prioritize XXXX Sports intake. nutritional Nutrition impact Kick Group, IMARC our introduced an evolving premium the of innovative catered health-conscious the Kick addresses a products enhance label, convenient line, increasing today's range $XX products by

the than just of like a sports over set launches record Sports of MET-Rx, industry. With line. standard years a more is I'm track Kick brand to successful that Fortress, in and new in nutrition, a product confident Nutrition It's Body going the and Protein Pure XX experience

Our athletes category needs are delivering evolving vision to more truly that important than that is of innovative, purpose-driven address solutions the for better by redefine the you ever.

only Edible new certifications. at Garden with development support innovation. also product and USDA financial Certification Program, and Rapids expenses received providing maintaining funds to but the Grand Organic key offset and our will also facilities, certification, grants organic processing of from associated New our help the organic for handling support Belvidere, Jersey not and certification reduce These research cost

environment look R&D we funds serve. agriculture, the from further to in committed positive organic work offerings, we forward organic and make business. a By to local, USDA contribution sustainable our in with controlled lead the organic and agriculture, the together we new with to these to asset opportunities waste company's These As grants ensuring way inspired to new mission. utilizing we certification and valuable deeply are communities align the drive the to seamlessly partnership strengthened leaders and a that zero for producing lasting making sustainable products, the exploring continue to industry

Kostas? turn Interim will Officer, to for months the Chief I X financial results who the would XX, review like Financial call ended the to Dafoulas, now XXXX. Kostas over our September

and everyone. Thanks, good morning, Jim,

of million September X results. and fourth from Hurricane lettuce to nutraceutical categories compared in to quarter eliminate driven the floral the from our events, decrease from of to Revenue our resulted ended specifically $XXX,XXX primarily on strategic the months Helene of for revenue the XXXX. decision our was strategic $XXX,XXX The weather $X.X of $X totaled for the a to quarter. Turning and by products products million third shift impact in the sale accounted impact of XX, the our lower-margin shift away third decrease and revenue,

months a this our that We move away previously for for QX ended gross low third-party XXXX delivered for margin totaled $X.X in XXXX. decision sold straight well categories. compared ended XX, made The seasonally continued current sold. material primarily X our saw goods our was September as to of million double-digit use driven growers margin the quarter the of quarter of gross of elimination profit goods our second million of the by $X.X strategic XX, large sales of XXXX, as strength Cost September in X the XX%, of months from decrease low-margin profit as to of result margin. portion up cost We a positive the

XXXX, for we XX, was efficiencies expenses months Selling, September for months million our the XX, continue to ended $X.X the labor structure. This fees in decrease costs find general September and compared ended and in cost $X.X reduction professional a primarily to administrative were due XXXX. million as to X X

of a months September gross share per $X.XX the XXXX, or driven ended lower $XX.XX other $X.X by million million Net per or margin net SG&A, offset months ended to expenses. XXXX. loss was profit by in loss XX, X compared the $X.X expansion primarily our for X loss improvement was share The September and net XX, for

has are experienced we hard into proud closing, we work In gross strong and improving margin quarter. of the this put team our our the execution

reliance shift on strategic disciplined off, financial demonstrate to reduced is committed mix and in we that remain results and third-party QX Our approach. growers product our a paying

the with line operator, And for please open questions. that,

the Maxim is Your Instructions] Vendetti question [Operator Anthony first of coming from Group.

which your reduced gross So obviously significantly. on significantly the growers, you've margin contract -- improves

season? that. as see move the the them in you contract that able to right are is handle season rely with this to to So we're than fewer on last you your we're into you But now, this season, busy glad have to quarter this demand? meet growers do Or demand

service facilities That's Anthony, quarter-to-quarter improvement business need result it integrating to and so GP the quarters, more fundamentals and we the don't on GP a X -- last of is improvement the bringing in the what answer capacity. and vertically of growers are demand; adding infrastructure, the and improvement shows that. at the in sequential dramatic focused contract we our

was, made another this we that investment in there -- my believe, and release production Grand in state-of-the-art, put line So we and Rapids. script, in the I opening in did press

partners see lot way on units. we the strong handle more a you push our now what can we what in a to retail have, of can out think only lot I a currently take can not we is and that we signal more

and ability more right now, putting So we've more only -- is significant lines continue as process the our to limited to our and of And in capacity. business. capacity we got by grow is sort only

shaping cross-stocking function warehousing that the that top to potentially products, having herbs, once are line. more of even ability set quarter we take set, a best our ever and fundamentals up can that new now QX as to be and more add the do And is so. is to again on more platform

just really to -- of give we that So business. and by sort we that standpoint, can legacy us out that what trying didn't GP are a move now core other products products from were that of needed focus build these

lot it. set we're to pretty run, that's order a this get excited to So to ready quarter And about of past work hard into and get a we're volume position in the for coming. with

in then that fourth And you the from quarter? from just the total can in quarter moved third the impact quantify further has Great. to much revenue How Okay. of hurricanes the Florida.

the relationship it That a been PriceSmart. we considerably line I've months was as understand by Well, of them. nutraceutical they've with big making we're them business $XXX,XXX for the box business. major decades, doing, investment with supply and had we're X over they driven that have watching relationship in We a approximately. was a That for has growing that so last segment what the a been

they Port of the Miami. ship out of so And

any we evacuating So closed of end people the the trucking. and they they and while a were at had were hurricane the ports in bringing right unfortunately, quarter,

that pushed didn't again, plus once into we from. gets QX So benefit $XXX,XXX that the

in that are of obviously on additional of by well PriceSmart. $XXX,XXX So teed the end and the will year that QX, for orders up the ship as that there's top

So roll Trust unfortunately impacted wanted of trucks weather. can't that's control I and kind to I me, it. the

Sure, of course.

So expect the line? kind as from of we look to what growth sports we nutrition can XXXX,

which being ran some big business of look, grew MET-Rx, another I in this relaunched category. earlier, Protein, the Nature's Pure I them great for probably part line a of Bounty line. worked Fortress, is also which mentioned is I where that $XXX million developed from concept them, one businesses, and as $XXX million Body at and the I category. relaunched is Well, up

later, So towards for years XX better you. point the still they're trends being, around are and

We have formulas. right the

to the continuing years originators We partner, were with. XX, ago. we're have are relationship of fantastic a Nutracom XX They what just which that some MET-Rx the box, started of deepen products our white industry the the like

even haven't them. them already we're said, looking with commitments Kick that and to With with look to potentially full-scale with the driving last we launch to I was gone week. We're coincide partnership for a just at production. Amazon

so see to and tail some going towards expecting of of product And lot Obviously, rolling to we're for significant a the out QX. make we're us, have growth. end that you'll

see I think roll a internationally. deep we And relationship at coincide likes that the then of think a said, on out I a like I PriceSmart launch Amazon have with, major with you'll and big traditional box will that retail. with

So be greenhouses it. I Like we're operate where behind manufacturing, the and think business and there. getting couldn't operate about excited us, I I like more fixing said, they the putting can core

we're got in new we launching of QX now lot start can herbs focusing that line products. We've these well. So paste on as a a of

to these let's half year. what doing at with launches, start next the my business next only So and I'm year, but look, team, say, we QX looking drive are second of not pushing sales

watching and c*** couldn't more of and and about real are. for pretty here. in the and pretty sort calls to I out, our positioned been feel couldn't a excited that we others of ship. more where all it's we like more But a the coming been lot be more, have were and competition so lot problems on tough And get we a to journey -- CEA businesses side on I solved of we're

go I And answer and I I'm I'm so is. it's like it ahead? I been question, so tough truly but -- said, excited. sorry, that mean, mean

particularly side. there now? the as level lettuce, exiting or Yes. from to reflected the third from such Was margin maybe there on that the you, It like leverage margin products additional gross at question right is fully you've the other the exited. were but gross you're sounds products low-margin leverage that Last low ability quarter? margin increase in Or lettuce

every all improving that I bear. whole chain, efficiencies to margins, we it's supply Well, our we're down mean, about I look, is I think, -- toolbox the leveraging; did that the coming that driving have the in across for us, currently tool

is should And stronger. you question expand gross get see and so the answer that your to to continue profit

no business. And sort not the yes, I low we we're -- when out look, some the business of service or margin just in had the of of fully We're not mean between business. lettuce we the lettuce customers to started that first

it flowers. pushing core just what business, by just but for not kind look, it's florals that eliminating food business business, is us, once and and an aside nothing the floral The interesting And it's focusing our business. kind and again, which on of of we're in, against

end the You don't but the wasn't like them, at day, really business. core that of our

of a to drag. to bought facility the on distributors Grand not reasons. I greenhouse road, phone in I moved a we Rapids. business. the executed can call sure our that them, when pick I don't the everybody I'm multitude the on. We the well down And took for was crops It adhered commitment competing always up but the and our like core to if floral in we wanted do We and

cleared media. place gorgeous. got had other don't Meijer shooting I just capacity, looks ready deck. I to the day the we've We're run, about for that anymore. at worry have super there to business I down social and Now

the the more and running about more to to logistics. trucks those of And trucks, it produce, it X,XXX was that has leveraging put was, business, really automated that all we for new are margin I doors it what moving seasonal, and are been an what impacted sort not it it's just what And the on on never that improving just in parts. just we the labor was do it's business getting core old products, fundamentals, because do, wanted intensive and and of

right where this. or we've to said, I we and and come frankly, quarter players like see mean just strong X. started the got are you And I it really refine we in been us now, some in real get last and to help able --

about it. excited be couldn't I So more

have hand over for now management [Operator Instructions] back any Okay. will think to questions. team the closing I . comments. don't we further I

our margin in but quarters, and the With business, place, growth strongest drive thank that that successfully shareholders. Based growth marking constrained in sustained history. solid well are a current revenue, results performing Core today. us elements fundamentals the believe only operations for confident potentially also we quarters and significant are you and to now We will the and display our XXXX foundation in strong fourth quarter on not infrastructure to well. company's one revenue achieve of our Well, previously both a for streamlined healthy of we removed long-term value in are and coming have we joining growth. robust trends, positioned

Thank much. This does today's conference. conclude you very

You Thank your you your phone disconnect a this Thank for and participation. you. lines time, have may at wonderful day.