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01/10 16:00
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents a mixed outlook: while there are improvements in gross margin and a focus on higher-margin products, revenue decline and competitive pressures remain concerns. The Q&A highlights potential growth in new product lines and strategic acquisitions, but lacks clarity on financial impacts. The absence of shareholder return plans and the risks associated with acquisitions and regulatory compliance temper optimism. Overall, the sentiment is balanced, suggesting a neutral stock price movement.
Total Revenue $2.7 million, a decrease of 13.2% compared to $3.1 million for Q1 2024. This decline was primarily driven by the company’s strategic exit from lower-margin floral and lettuce products.
Non-perishable Revenue Increased by 15% year-over-year, indicating strong performance from innovative shelf-stable brands.
Cost of Goods Sold $2.6 million for Q1 2025, down from $3.1 million in Q1 2024, reflecting decreased revenue.
Gross Profit $88,000, an increase of approximately 283% year-over-year from $23,000 in Q1 2024.
Gross Margin Improved to 3.2% from 0.7% in 2024, reflecting early returns from the shift to higher-margin, shelf-stable product lines.
Selling, General and Administrative Expenses $3.3 million for Q1 2025, down from $3.9 million in Q1 2024, primarily due to lower personnel costs and the roll-off of severance expenses.
Net Loss $3.3 million for Q1 2025, compared to a net loss of $4 million for Q1 2024, with improvement driven by cost reductions and higher-margin non-perishable product sales.
New Product Launches: Kick. Sport Nutrition achieved a milestone with new brick-and-mortar placement at a major Midwest big-box retailer. The brand includes clean-labeled whey and plant-based protein powders, with planned expansion into pre- and post-workout formulas and hydration products. Pickle Party, created in partnership with Hermann Pickle Company, is the world’s first functional pickle, launching across all Berkot’s Super Foods stores and has secured pre-orders at Foodtown, Lincoln Market. Squeezables, our shelf-stable, stir in paste line has successfully completed its pilot and is moving into full-scale production. Pulp, our line of organic fermented gourmet hot sauces and chili-based condiments continues to gain momentum in the premium condiments category. Vitamin Way and Vitamin Whey offer a growing portfolio of whey and plant-based protein powders, designed to support recovery and overall wellness.
Market Expansion: The company launched or strengthened relationships with major retailers including Walmart, Stop & Shop, Wakefern, ShopRite and Berkot’s Super Foods.
Operational Efficiency: Gross profit increased 283% year-over-year, while gross margin improved to 3.2% from 0.7%. Cost of goods sold decreased to $2.6 million for Q1 2025 compared to $3.1 million for the same period in 2024. Selling, general and administrative expenses were reduced to $3.3 million from $3.9 million in the prior year.
Strategic Shift: The company is realigning towards higher-margin, shelf-stable products and exiting lower-margin floral and lettuce categories. Acquisition of NaturalShrimp Farms for $15.5 million to strengthen balance sheet and enhance vertical integration.
Revenue Decline: Total revenue declined by $414,000 to $2.7 million, primarily due to the strategic exit from lower-margin floral and lettuce categories.
Competitive Pressures: The company is facing competitive pressures in the market as it transitions to higher-margin products, which may impact its market share.
Regulatory Issues: The company’s operations are subject to various regulatory requirements, which could pose challenges in compliance and operational efficiency.
Supply Chain Challenges: The company may encounter supply chain challenges, particularly in sourcing ingredients for its new product lines, which could affect production and delivery.
Economic Factors: Economic fluctuations could impact consumer spending on non-perishable products, affecting overall sales and profitability.
Acquisition Risks: The recent $15.5 million acquisition of NaturalShrimp Farms carries risks related to integration, operational efficiency, and return on investment.
Forward-Looking Statements: The company cautions that forward-looking statements are subject to risks and uncertainties that could lead to actual results differing materially from expectations.
Strategic Transformation: The company is realigning towards higher-margin, shelf-stable products, which is gaining traction and becoming visible across the business.
Retail Expansion: Edible Garden has strengthened relationships with major retailers including Walmart, Stop & Shop, and ShopRite, driving growth in both fresh and non-perishable categories.
Product Mix Shift: The company is exiting lower-margin floral and lettuce categories, which is contributing to margin expansion.
Acquisition: A $15.5 million acquisition from NaturalShrimp Farms was announced, enhancing the company's vertically integrated model and operational capabilities.
Sustainability Initiatives: The company is committed to sustainability, having avoided nearly 11,800 metric tons of virgin plastic in 2024 and conserving over 28,000 gallons of diesel.
Revenue Expectations: Total revenue for Q1 2025 was $2.7 million, a decline of 13.2% year-over-year, primarily due to the exit from lower-margin products.
Gross Margin Improvement: Gross margin improved to 3.2% from 0.7% year-over-year, reflecting stronger cost control and improved product mix.
Net Loss Projection: Net loss for Q1 2025 was $3.3 million, an improvement from $4 million in Q1 2024, driven by cost reductions and higher-margin sales.
Future Growth: The company believes it is well positioned to deliver long-term value through focused strategy and brand momentum.
Shareholder Return Plan: The company did not announce any share buyback program or dividend program during the earnings call.
Despite revenue growth and strategic expansion plans, the company faces significant challenges: declining gross profit, increased operating expenses, and a widening net loss. The cash position has deteriorated, raising liquidity concerns. While there are positive strategic initiatives, such as the NaturalShrimp facility and retailer partnerships, the lack of detailed guidance and the negative financial metrics overshadow these efforts. The Q&A session highlighted management's vague responses, further contributing to uncertainty. Given these factors, the stock price is likely to experience a negative reaction in the short term.
The earnings call presents a mixed picture: while there are strategic realignments and positive developments like the NaturalShrimp acquisition and high-margin product focus, financials reflect declining revenue and increased losses. The Q&A reveals growth in private labels and optimism about new product lines, but management's vague responses on specifics raise concerns. The company's dependency on new revenue streams and margin pressures add uncertainty. Considering these factors, the stock price is likely to remain stable, hence a neutral sentiment.
The earnings call presents a mixed outlook: while there are improvements in gross margin and a focus on higher-margin products, revenue decline and competitive pressures remain concerns. The Q&A highlights potential growth in new product lines and strategic acquisitions, but lacks clarity on financial impacts. The absence of shareholder return plans and the risks associated with acquisitions and regulatory compliance temper optimism. Overall, the sentiment is balanced, suggesting a neutral stock price movement.
The earnings call reflects mixed signals. The strategic refocus on high-margin products and improved gross margin are positives, while the revenue decline and competitive pressures are negatives. The acquisition of Natural Shrimp poses risks, and the lack of a share repurchase plan is neutral. Q&A insights show optimism in sports nutrition but uncertainty in shrimp operations. The overall sentiment is neutral, with potential for growth balanced by current challenges and uncertainties.
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