SOLESENCE, INC. Q4 FY2025 earnings call

• In 2025, company nearly doubled revenue, increased patent portfolio by 20% to over 120, and invested in manufacturing infrastructure. - Launched Transform and Transcend initiative in 2025, which has four core pillars: operational excellence through lean management principles, technology-driven expansion, shift toward a product development and supply model, and collaborative globalization. - In October 2025, showcased Day Mode Hero Concealer, a hybrid product that was a finalist in four categories of the Cosmetics and Toiletries Alley Awards. - Added Laura Risner as CFO in September 2025 and Yuli Park as vice president of brand partnerships, who brings over 20 years of experience in component supply and turnkey manufacturing

Fourth quarter 2025: Revenue was $12.5 million, roughly even compared to previous year. Gross profit was $3.4 million compared to $2.8 million in same period 2024. Gross margin was 27% compared to 22% in same period 2024. Operating expenses were $3.2 million compared to $2.8 million in same period 2024. Net income for the quarter was $163,000 compared to a net loss of $558,000 previous year. Full year 2025: Revenue reached a record $62.1 million, up 18.6% from $51.9 million in 2024. Full year gross profit was $16.1 million compared to $16.2 million in 2024. Adjusted EBITDA was $4.2 million, less than 7% of revenue

• 2026 guidance focuses on operational health, establishing a 30% gross margin floor as target for the year. - Expect EBITDA improvement in 2026, returning to double digits as realize six-figure annual savings from facility consolidation and elimination of 2025 operational inefficiencies. - Critical goal in 2026 is to increase free cash flow by reducing safety stock and improving procurement operations. - First quarter results will be impacted by investments in training and restructuring associated with Transform and Transcend, and changes in customer order patterns. - Anticipate period of revenue normalization but plan to improve EBITDA relative to 2025 and remain confident in achieving full year guidance

• Factors include customer canceling purchase orders or supply agreements, demand for acceptance of company's products, changes in development and distribution relationships, impact of competitive products and technology, possible disruption in commercial activities occasioned by public health issues, terrorist activities, and armed conflicts and other risks indicated in company's filings with the Securities and Exchange Commission

Q: Will EPS in 2026 be at or above the 2024 levels and address 30% gross margin floor?

A: Laura said they aren't prepared to provide guidance on EPS this morning, and the 30% gross margin floor is intentionally conservative with intention to leverage Transform and Transcend initiative to improve it. Kevin reaffirmed guidance is on annual basis and taking conservative approach but expect to focus on improving enterprise value.

Q: Address roadmap to grow to $200 million in revenue and aspirational profit margin?

A: Consolidation was successful with no negative impact on ODA during consolidation. Transform and Transcend plan to address operational execution challenges to amplify innovation platform. Building platform targeting fast - growing areas and working with fast - growing brands. Anticipate resuming growth at multiple of industry's growth rate and Transform and Transcend initiatives will help increase gross profit margin and EBITDA.

Q: Still planning dedicated investor call and trend on BASF volumes?

A: Intent to provide improved communications to investors and will have further information on investor presentation in months to come. Can't provide specific guidance on BASF's performance.

Q: Why struggled on production, lost brand partner, why call took long, anticipate sales improvement?

A: Simultaneous growth at multiple of industry's growth rate and installed new capability led to production challenges. Did not mention loss of any brand partner, just challenges with one mass market brand partner's sell - through. Call scheduled after year - end audit completed. 2026 will be period of normalization with sales