Edible Garden AG Incorporated Q2 FY2025 earnings call

• The company exited underperforming low-margin categories (lettuce and floral) to invest in higher-margin innovation-driven categories like CEA informed better-for-you shelf-stable products.
• Private label products grew 19.1% YOY due to expanded retail programs and strong sell-through of sustainably grown CEA-produced herb products.
• Core produce category showed growth in hydroponic basil, potted herbs, and wheatgrass, supported by controlled environment agriculture model.
• Defined better-for-you market strategy with 3 key pillars: fresh produce/fresh condiments, farm formula supplementation, performance beverages.
• Launched Kick Sports Nutrition line on Amazon, driving e-commerce sales growth.
• Advanced brand expansion with retail growth of Pickle Party and debut of USDA organic hydroponic basil.
• Acquired NaturalShrimp aquaculture in Iowa, expanding R&D capabilities in aquaponics, bringing patented water treatment technologies for sustainability and efficiency.

Revenue for the second quarter was $3.1 million compared to $4.3 million in the same period last year. Private label products sold through major big box retailers delivered a standout second quarter performance, climbing 19.1% year-over-year. The core produce category saw hydroponic basil grow 7.1% quarter-over-quarter, potted herbs up 6.4%, and wheatgrass up 4.1%. International revenue grew 66.5% as the company secured new distribution partnerships and expanded retail placements in key global markets. Private label contributes significantly to revenue growth, with contracted business and low marketing costs, and is a growing part of the business.

• Confident in strong Q4 performance due to holiday programs starting in November and preorders already in, with new accounts adding to produce side revenue.
• Anticipates acceleration in Kick Sports Nutrition business with new product launches and continued investment in digital marketing.
• International business growth to continue as shelf-stable products like vitamins and supplements capture global demand for better-for-you products.

• Forward-looking statements subject to risks, uncertainties, and assumptions as described in SEC filings, including potential differences between anticipated and actual results due to market trends, category exits impact, and operational challenges.
• Risks related to executing strategic shifts, managing inventory efficiency, and sustaining growth in competitive markets.

Q: Please dive deeper into private label, what percent of revenues is private label and if it's a growing part of the business?

A: Private label is a growing part of the business. It's about 19% in dollars and 22% in units growth, with contracted business, low marketing costs, and a 3-year contract with Meijer providing security.

Q: What accounted for the remainder of the revenue shortfall besides exiting lettuce and floral?

A: Softness in condiments business and transition from legacy vitamin whey products to Kick Sports Nutrition line contributed to the remainder of the shortfall.

Q: Anticipation for fourth quarter seasonality?

A: Q4 is significant with holiday programs starting in November, preorders up, new accounts adding to produce side revenue, and bullish on a strong Q4.

Q: Status and plans for Kick Sports Nutrition launch on Amazon?

A: Kick Sports Nutrition launch in mid-May, business accelerating with resources, support from Amazon buyer, and new products launching at PriceSmart and online.

Q: How do international markets fit into longer-term growth plans?

A: Shelf-stable products like vitamins and supplements drive international growth, allowing more global reach with products that align with global demand for better-for-you products, working on new products aligning with functional foods and partnering with global retailers like PriceSmart.