Release Date: March 31, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Edible Garden AG Inc (EDBL, Financial) reported a significant gross profit increase of 181.3% for 2024, with gross margins nearly tripling from 5.9% to 16.7%.
- The company strategically refocused on its core herb business, resulting in a 16.3% year-over-year revenue growth in this segment.
- Edible Garden AG Inc (EDBL) successfully launched new product lines, including Kick Sports Nutrition and Squeezables, which are expected to drive future growth.
- The company strengthened its balance sheet through disciplined cost controls and capital raises, improving liquidity and financial flexibility.
- Edible Garden AG Inc (EDBL) signed a non-binding letter of intent to acquire Narayan Group, which could expand its international footprint and diversify product offerings.
Negative Points
- Total revenue for 2024 remained relatively flat due to the strategic exit from lower-margin product lines like lettuce and floral.
- The company reported a net loss of $11.1 million for 2024, an increase from $10.2 million in 2023, primarily due to higher SG&A expenses.
- Q4 2024 revenue decreased slightly to $3.9 million from $4.1 million in Q4 2023, impacted by the exit from certain product categories.
- Selling, general, and administrative expenses increased by 15.8% to $11.6 million in 2024, driven by higher legal, audit, and accounting fees.
- The company faced increased labor costs in Q4 2024 due to ramping up production for the holiday season, impacting gross profit margins.
Q & A Highlights
Q: Can you explain the factors that impacted the gross margins in the fourth quarter, and are there any inventory write-offs involved?
A: Kostas Dafoulas, Interim CFO, explained that the fourth quarter gross margin was affected by increased labor costs due to ramping up production for the holiday season. There were no significant inventory write-offs, and the increased costs were primarily due to labor expenses to support holiday production.
Q: Regarding the proposed acquisition of Narayan Group, what are the cross-selling opportunities, and how does it align with your strategy for higher-margin products?
A: Jim Kras, CEO, highlighted that Narayan Group's coconut and superfood products offer cross-selling opportunities, particularly with Aldi, a major retailer. The acquisition supports Edible Garden's strategy by providing access to higher-margin products and expanding their product portfolio with organic, certified offerings.
Q: What is the potential for the Sports Nutrition category in 2025, and how does it fit into Edible Garden's growth strategy?
A: Jim Kras noted that the Sports Nutrition category, particularly the Kick brand, is a significant growth area. The clean-label products are launching on Amazon, with plans for traditional retail distribution. The category aligns with consumer trends towards healthier supplements and offers substantial growth potential.
Q: Are there any expected costs or charges in the first quarter of 2025 related to exiting the lettuce and floral business?
A: Jim Kras confirmed that there are no anticipated one-time charges related to exiting the lettuce and floral business. The transition has been completed, and the company is now focused on more profitable product lines.
Q: How do you plan to leverage the improvements from vertical integration to enhance gross profit margins moving forward?
A: Jim Kras emphasized that the company is now well-positioned to focus on top-line growth, having completed the transition to vertical integration. The improvements in operational efficiency and product mix are expected to drive higher gross profit margins, with a target of 35% to 40%.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
