Edible Garden AG Q4 2025 Earnings Call - RTD push aims to pivot company to higher-margin CPG

John, Conference Operator: Please note, this conference is being recorded. I will now turn the conference over to your host, Ted Avis, Investor Relations. The floor is yours.

Ted Avis, Investor Relations, Edible Garden AG: Thanks, John. Good afternoon, and thank you for joining Edible Garden’s 2025 fourth quarter and full year earnings conference call and business update. On the call with us today are Jim Kras, Chief Executive Officer of Edible Garden, and Kostas Dafoulas, Interim Chief Financial Officer of Edible Garden. Earlier today, the company announced its operating results for the three months and year ended December 31, 2025. The press release is posted on the company’s website, www.ediblegardenag.com. In addition, the company has filed its annual report on Form 10-K with the U.S. Securities and Exchange Commission, which can also be accessed on the company’s website as well as the SEC’s website at www.sec.gov. If you have any questions after the call or would like any additional information about the company, please contact Crescendo Communications at 212-671-1020. Before Mr.

Kras reviews the company’s operating results for the quarter and year ended December 31, 2025 and provides a business update. We would like to remind everyone that this conference call may contain forward-looking statements. All statements other than statements of historical facts contained in the conference call, including statements regarding our future results of operations and financial position, strategy and plans, and our expectations for future operations are forward-looking statements. The words aim, anticipate, believe, could, expect, may, plan, project, strategy, will, and the negative of such terms and other words and terms of similar expression are intended to identify forward-looking statements. These forward-looking statements are based largely on the company’s current expectations and projections about future events and trends that it believes may affect its financial condition, results of operations, strategy, short-term and long-term business operations and objectives, and financial needs.

These forward-looking statements are subject to several risks, uncertainties, and assumptions as described in the company’s filings with the SEC, including the company’s annual report on Form 10-K for the year ended December 31, 2025. Because of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in the conference call may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. Although the company believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance, or achievements. In addition, neither the company nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. The company disclaims any duty to update any of these forward-looking statements except as required by law.

All forward-looking statements attributable to the company are expressly qualified in their entirety by these cautionary statements as well as others made on the conference call. You should evaluate all forward-looking statements made by the company in the context of these risks and uncertainties. Having said that, I would now like to turn the call over to Jim Kras, Chief Executive Officer of Edible Garden. Jim?

Jim Kras, Chief Executive Officer, Edible Garden AG: Thanks, Ted. Good afternoon, and thanks to everyone for joining us today. 2025 was a defining year for Edible Garden as we continued to build on our foundation and expand our long-term growth potential. Over the past several quarters, we have executed a deliberate strategy to grow beyond our core controlled environment agricultural platform into a broader innovation-driven consumer packaged goods business, focusing on higher growth, higher margin opportunities aligned with what consumers and retailers are actively seeking. During the fourth quarter, we continued to build momentum across our core business, securing new and expanded placements with key retail partners, including Kroger, Weis Markets, Safeway, The Fresh Market, and Busch’s, increasing our distribution to nearly 6,000 store locations. This reflects growing demand for our products, our ability to gain market share, and the strength of our retail relationships.

We saw a strong performance across both our core produce and CPG categories, including double-digit growth in cut herbs driven by expansion in existing accounts and the onboarding of Kroger, as well as continued strength in our vitamin and supplement portfolio, where demand remains robust both domestically and internationally. We also saw significant growth in our condiment platform, supported by new customer wins such as Wakefern and Safeway. Importantly, these efforts, along with targeted investments in customer onboarding, resulted in incremental distribution of more than 700 additional retail locations, further expanding our reach across key markets. At the same time, we’re expanding our portfolio of Better for You brands, including KICK Sports Nutrition, Jellyci GLP-I, Vitamin Way, Pickle Party, and Pulp, and broadening distribution across domestic, e-commerce, and international markets, including placements with Amazon, PriceSmart, target.com, and walmart.com.

This expanded retail footprint and brand portfolio positions us to support our next phase of growth into higher margin, shelf-stable, and ready to drink categories. This is not a shift away from what we’ve built. It’s a deliberate evolution of our business, supported by our national retail distribution and infrastructure, much of which is already in place and positioned to drive scale across higher value categories. Key next step in our strategy is expanding into the ready-to-drink or RTD category, a fast-growing market where demand for clean label, shelf-stable nutrition continues to outpace supply. We are leveraging our farm-to-formula approach, our sustainable manufacturing infrastructure, and our established relationships with leading retailers to enter this category from a position of strength. Importantly, we are not starting from scratch.

Our products are already carried across approximately 6,000 store locations, giving us the ability to deepen existing relationships while expanding into a category that aligns closely with our brand portfolio. To support this expansion, we recently announced the development of a state-of-the-art RTD manufacturing initiative at our Midwest facility as part of our Zero-Waste Inspired platform. We have selected Tetra Tech, a global leader in food processing and packaging solutions to plan, install, and integrate proprietary processing capabilities, which we expect will enable us to meet growing retailer demand at scale. When you look at the broader market, the opportunity is significant. The global RTD category is estimated at approximately $842.5 billion in 2025 and is projected to reach roughly $1.26 trillion by 2033.

We believe this represents a durable opportunity and builds naturally on our platform, combining controlled environment agriculture, scalable aseptic capabilities, and our portfolio of differentiated brands across sports nutrition, performance nutrition, adult nutrition, kids nutrition, GLP-1 supportive and functional categories. Looking ahead, we are focused on scaling our presence in higher margin RTD shelf-stable categories while continuing to build a more diversified consumer packaged goods business beyond fresh produce. As we execute on the strategy, Edible Garden is evolving into a more vertically integrated, innovation-driven company with the ability to deliver more predictable and scalable results. We believe this positions us as a differentiated player in the evolving food and nutrition landscape with a clear path to sustainable long-term growth. With that, I’ll turn the call over to Kostas to review the financials.

Kostas Dafoulas, Interim Chief Financial Officer, Edible Garden AG: Thanks, Jim, and good afternoon, everyone. Starting with the fourth quarter results, revenue for the three months ended December 31, 2025 was approximately $4.1 million compared to $3.9 million in the prior year period, reflecting a strong quarter across the business. We launched our USDA organic herb programs with Kroger in October and recorded our first international CPG shipment of KICK Sports Nutrition to PriceSmart, marking our entry into the markets beyond domestic retail. These wins reflect the growing demand we are seeing for our products and the continued strength of our retail relationships heading into 2026. Cost of goods sold in Q4 was approximately $5.3 million compared to $3.8 million in the year prior. The increase reflects the cost profile of the company that was actively onboarding new retail customers during a seasonally compressed period.

We made a deliberate investment in these new accounts that secures 2026 shelf space and builds the fulfillment track record that major retailers require. We expect the cost structure to normalize as those programs mature and volume increases. Gross profit was approximately a $1.2 million loss compared to flat in 2024. Q4 was a quarter where we made a deliberate decision to absorb elevated costs to secure a 2026 shelf space and deepen relationships with retailers like Kroger, Wakefern, and Safeway. Bringing customers of that caliber requires front-loaded investment, and we see this as necessary to support future growth and operational scalability. Selling, general, and administrative expenses were approximately $4.6 million compared to $2.6 million in the prior year.

Primary drivers were depreciation and rent tied to the NaturalShrimp asset acquisition, higher legal and professional fees from that acquisition and our capital markets activities, along with higher compensation expenses in 2025. While the absolute number is elevated, a meaningful portion reflects non-recurring or deal related costs rather than ongoing run rate expense. Turning to the full year, revenue was approximately $12.8 million versus $13.9 million in 2024. The headline decline is largely a function of our strategic exit from floral and lettuce, which together contributed approximately $1 million of 2024 revenue, but at low margins. Excluding those exits, core revenue was essentially flat year-over-year, and Q4 was a genuine growth quarter, up approximately 5%. That trajectory is what we consider most indicative of where the business is headed.

Full year cost of goods sold was approximately $13 million versus $11.6 million in 2024. The increase was concentrated in the second half and driven by the same Q4 onboarding dynamics I described earlier. Gross profit for the full year was approximately a loss of $0.2 million compared to a gain of $2.3 million in 2024. The first half ran at margins more consistent with our historical range. However, the full year result reflects Q4 specifically, and we do not view it as a representative of our own ongoing cost structure. Gross margin recovery is a top priority for 2026 as new program scale, third-party procurement costs decline, and fixed costs are absorbed over a larger revenue base.

Full year SG&A was approximately $15.3 million versus $11.6 million in 2024, with the increase driven primarily by the Natural Shrimp acquisition, along with other capital markets activity. The balance reflects continued investment in the team and infrastructure supporting our long-term strategy. On the balance sheet, we ended the year in a stronger position. Stockholders’ equity improved through the preferred stock issuance associated with the Natural Shrimp acquisition, and total debt declined approximately $0.6 million year-over-year as we continue to reduce our outstanding notes. We remain focused on managing costs while investing in the infrastructure and capabilities needed to support our transition to a higher margin, more scalable business model. With that, I will turn the call over to the operator for any questions.

John, Conference Operator: Our first question comes from Jeremy Pearlman with Maxim Group. Please proceed.

Jeremy Pearlman, Analyst, Maxim Group: Thank you for taking my question. Good afternoon. Firstly, you know, as you transition your business, you expand it from the fresh to include, you know, more shelf-stable CPG and now the RTD. How should we view the margins, you know, from the fresh to the CPG products? What do you think, you know, the revenue expectation breakdown for CPG versus fresh through 2026?

Jim Kras, Chief Executive Officer, Edible Garden AG: Costas, I can do this with you. How do you wanna? I think

Kostas Dafoulas, Interim Chief Financial Officer, Edible Garden AG: Do you wanna talk high level and I can get into some detail?

Jim Kras, Chief Executive Officer, Edible Garden AG: Yeah, that’d be great. First of all, thanks for the question. You know, our expectation obviously is there’s gonna be much more of a you know robust margin as it relates to, you know, to the RTD business and the consumer packaged, you know, items. You know, the fact that they are shelf stable, we don’t have to worry about the, some of the shrink issues that we have with fresh. You know, the fresh business has been great to us. It’s really opened doors. It’s built our relationships with major retailers, you know, such as Walmart, Meijer, whatnot, where, you know, we have great performance as it relates to our in-stocks and our delivery, you know, you know, our delivery capabilities.

When, you know, when you have a 98% in-stock rate and acceptance rate with major retailers, they tend to wanna do more business. This business is really all about availability. On the margin end, what’ll be nice here is that there’s much more stable business because you control much more in manufacturing with the shelf stable products than you may with fresh goods. Fresh goods, like I said, have been our staple, and I think it’s really showed, you know, how we can execute and our operational excellence to be able to deliver on time in full in a really difficult category. That’s really paying off for us, that investment. You’ll see.

In this business, you’re gonna see the margins, you know, they’re gonna be much more stable. They’ll be, like I said, more robust as a function of that. Then, you know, the revenue side of it, you know, just based on the size of the market, which I outlined in, you know, in the call earlier in our script, is more than meaningful. This is a big category with a lot of pent-up demand, with a lot of capacity issues out there. We’re stepping in really at the request of retailers who trust us and want these products, and they want it from somebody who they know who can deliver in time, on full, on spec.

For us, it’s a great evolution, leveraging our Farm-to-Formula approach, and our, you know, and our wherewithal as a strong supplier to major accounts.

Jeremy Pearlman, Analyst, Maxim Group: Right.

Jim Kras, Chief Executive Officer, Edible Garden AG: Costas, do you wanna add to that at all?

Kostas Dafoulas, Interim Chief Financial Officer, Edible Garden AG: Yeah, sure. Thanks, Jim. Yeah, Jeremy, so just to kinda add to what Jim said, you know, we can think about the portfolio kind of in three pieces, right? The core CEA business, which I think we’ll see kind of return to steady growth in the high single digits sorta range, maybe even higher, depending on customer wins and customer growth. In the CEA space, you know, margins, we can kinda look to return to, like, normalized margins that we saw earlier this year and last year. In addition to that, the nutraceutical business actually showed really strong growth, you know, in kind of double-digit, 20%-ish range year-over-year. That, you know, I think is gonna be a larger component of our revenue growth story going into 2026.

The trade-off there is, you know, a good portion of that product is co-manufactured. So while it gives us a lot of stability and visibility into our cost structure, the margins are not as rich as, you know, if we were to do it ourselves. So I think, you know, blended margin, kind of low double digits to mid-teens is, you know, a reasonable expectation going forward. The biggest upside we have in the whole portfolio is around this RTD business where we’re looking at, you know, pretty significant revenue opportunity with margins kind of in the 20%-30% range. We’re working through that right now as we start scoping this project out and understand the input costs a little bit better, but that’s sort of first blush expectations there.

Jeremy Pearlman, Analyst, Maxim Group: Okay, great. Yeah, thanks for the information. Maybe while we’re talking about RTD, you know, it is a broad category. Where specifically do you expect to, you know, to put out your products within there? You know, I don’t know, energy drinks, more like the healthy, you know, green drinks. Is that gonna be produced at the Midwest facility that you talked about? I have another question to follow up about that facility afterwards.

Jim Kras, Chief Executive Officer, Edible Garden AG: Okay. It’s gonna be primarily in the protein segment. You know, obviously we’ll have a few different formulations, but we’ve been requested by a major retailer to help develop this for their private label as a start. It just opened up the floodgates. You know, we’re at a point now where, you know, our goal is. I don’t think it’s lofty, but is to sell out the plant in the next 90 days or so. You know, which when you think about, we’re looking at capacity into the hundreds of millions of units within a couple years. This is transformative for Edible Garden. It’s a huge opportunity.

The fact that we’ve got the type of, you know, association that we have with Tetra Pak, that’s driven by the major retailers saying, "Hey, you know, we trust these guys. These guys do a great job, not only in fresh but also in the nutraceuticals." I’ve been doing nutraceuticals. You know, I grew up in the business. I’ve been doing it for almost 30 years. You know, kind of all points have led to this. For us, we’re gonna be playing in the sports nutrition, performance nutrition, arena. I don’t wanna use anybody out there as an example. I just know we’re gonna do it cleaner, we’re gonna do it better, and we’re gonna do it at massive scale.

We’ll be not only driving our own KICK, high protein, you know, lower calorie, lower carb type of product, that’s gonna be something that we’ll be providing. We’ll be doing clean labeled, of course. We have a GLP-1 formula, supportive formula under our Jealousy brand, so we’ll have our own higher margin brands. We’ll also be taking on co-man opportunities with brands that are out there that don’t have their own manufacturing. Then obviously, you know, I would say, you know, half of the facility will be private label ranging from, you know, all the major players, you know, from, you know, you name them, all the, all the chains and the existing. What’s great about Edible Garden is the existing relationships we have. I mean, we, you know, we service Meijer.

You know, we service Walmart, Wakefern, you know, Ahold Delhaize, Kroger, Safeway. That investment that you saw in Q4 serves a couple purposes, one of which obviously is it’s great to get their businesses. Our competitors had issues, and they turned to us and picked up the phone, and we made the investment to service their business and capture that opportunity. We have a nice business with Weis Markets right now. We have a nice business with Kroger. Those conversations, when they’re happy with you, they turn to RTDs for them as well. It’s not whether it’s you know, looking at what you’re currently making for yourself or, you know, for your brand or doing it for them.

When you look at our roster of accounts, you know, Walmart and Target and Meijer and Wakefern and like I said, Ahold Delhaize, and you know, the list goes on and on, CVS and you know, Walgreens. I mean, these are. They’re coming to us for innovation because they know that we’ll get the job done. For us, we’re gonna start. The answer, sorry it was so long-winded, but I’m excited about it. It’s really in the sports nutrition. Then we’ll move to the adult, you know, type of products. You know, many of these you’re familiar with out in the marketplace, whether it’s, you know, Insure or Booster or, you know, Premier Protein product.

You know, we’ll be doing similar type of products in Tetra Pak, which, you know, is the world leader in this packaging. Sustainable as well, which really goes to our core as a company and what we stand for with, you know, sustainable, using sustainable materials, you know, using less resources. It’s why we’re Giga Guru with Walmart. You know, that’s the plan. It’s exciting. It’s, you know, I got an excited team here. I hope that answers your question.

Jeremy Pearlman, Analyst, Maxim Group: Yeah, no, that’s great. It really sounds like a really great opportunity for the company. Maybe just a final question just around the Midwest facility. You know, what can we expect some of the CapEx requirements for that and the build-out timeline and, you know, when you expect to be. You know, what’s the total scale of that, what you’re hoping for and when you can reach that? Thanks.

Jim Kras, Chief Executive Officer, Edible Garden AG: Well, yeah, I mean, it’s. I don’t want to give any specific numbers, but, you know, and there’s, you know, and I. Some of it’s also we just don’t, you know. This is such a huge opportunity, and we’re not the only ones, you know, would want it, right? You know, look, this is gonna be a significant, you know. We’re talking about a big facility with considerable velocity coming out of it. We’re working closely with the local and state authorities to be able to support this with incentives. We’ve already gotten the nod on a few things, which is great.

You know, obviously, you know, we’re gonna need to buy machines and retrofit a building. You’re talking, you know, some real CapEx. You know, we’ve been there before, and we’ve built a significant greenhouse in New Jersey, and we did a beautiful retrofit in Grand Rapids for Meijer. You know, we’re prepared as a company to take on the challenge, and our plan is to really hopefully be out in the marketplace, you know, probably towards the tail end of 2027.

Jeremy Pearlman, Analyst, Maxim Group: Okay, great. Thank you so much for all that information and thank you. Take care.

Jim Kras, Chief Executive Officer, Edible Garden AG: Great question. Savvi. Nice to meet you.

Jeremy Pearlman, Analyst, Maxim Group: Have a nice night. Yep. Okay.

John, Conference Operator: Once again, if you have a question or a comment, please press star one on your touchtone phone. The next question comes from Nick Pincus with Barst Capital. Please proceed.

Nick Pincus, Analyst, Barst Capital: Hey, thanks for taking the call, and congrats on the progress. A lot of my questions have already been asked, but you highlighted the strong fourth quarter momentum, including new retail placements and expansion to nearly 6,000 locations. My question is how sustainable is this level of growth, and should we expect similar distribution gains and category performance going forward?

Jim Kras, Chief Executive Officer, Edible Garden AG: Well, yes and yes. You know, the expansion indoors, I mean, that has been a lot of us getting kinda organized on the greenhouse business, getting focused, getting rid of some of the product lines that just didn’t make sense, like floral and lettuce at the time because of, you know, the lack of margin. We really shored things up this past year. It’s been challenging, you know, and tough because, you know, we are in a growth sector. People are eating better. People are buying more fresh goods.

People are cooking, you know, continue to cook more and more at home, whether it’s, you know, pressures with costs of eating out or just people are being more creative because that’s been a trend line. You know, we’ve benefited from that. The herbs are. They, you know, they make any average dish that much better, right, using fresh herbs. For us, you know, it’s really just about, you know, making sure that, you know, we continue to take care of our current customers. They’re the ones who got us here. They continue to give us opportunity, not only within this category, which means, you know, more penetration, and ideally more velocity, you know, sales velocity at current doors.

You know, there’s a great story around our organic growth, by the way, Nick. That’s where, you know, we’ve seen, you know, good same store sales over the last year. For us, you know, that’s great, kind of exit velocity out of the year. We’re, you know, gonna continue to, you know, focus on our core ’cause that’s what’s gotten us here. Now when you look at something like RTD, which is just a huge massive business with just so much untapped opportunity, you know, and there’s just a shortfall of capacity.

It’s very rare in your career that they intersect and you’ve got people asking you, right, you know, for, you know, to take on their business because they trust you. You know, it’s, you know, it makes me sleep a little better at night knowing that the money that we spent over the last couple years has really gone to unlock, you know, these opportunities. You know, look, you’re gonna see more store counts I think across the whole business, I know you’re gonna see it across the whole business, whether it’s the herbs, whether it’s the pickles, which by the way is a sleeper. And then the RTDs, I think you’re gonna see doors, you’re gonna see new accounts, you’re gonna see all kinds of, you know, it’s just incredibly.

You know, those are sold everywhere in all kinds of classes of trade, including classes of trade that we’re not even in, like convenience store currently, right? The beverage business, it’s a great business. People love the convenience. These are great items. Protein’s hot. Has been hot for a while. No one sees that slowing down. You know, we’re gonna have a state-of-the-art facility, you know, cranking this stuff out, you know, for the betterment of our, you know, of our great, you know, supermarket, you know, partners. Yes.

Nick Pincus, Analyst, Barst Capital: Very well.

Jim Kras, Chief Executive Officer, Edible Garden AG: It’s gonna continue, Nick.

Nick Pincus, Analyst, Barst Capital: Yes. Keep up the good work. Thank you.

Jim Kras, Chief Executive Officer, Edible Garden AG: I appreciate it. Thanks, Nick.

John, Conference Operator: Okay. We have no further questions in the queue. I’d like to turn the floor back over to management for any closing remarks.

Jim Kras, Chief Executive Officer, Edible Garden AG: Sure. Thanks again to everyone for joining us today. We believe 2025 was a year of meaningful progress for Edible Garden as we continued to build beyond our CEA foundation and expanded into broader, higher margin consumer packaged goods platform. We’re seeing that progress reflected in our momentum across our business, growing demand for our products, and our ability to continue to gain market share with our leading retail partners. At the same time, we believe our expansion into the ready-to-drink category represents a significant opportunity for Edible Garden, one that builds on our existing infrastructure, retail relationships, and our product development capabilities, and positions us to scale into a large and growing market where demand continues to outpace supply.

As we look ahead, we remain focused on executing against that opportunity while continuing to expand higher margin categories and leverage our retail network to support long-term growth. We believe this continued evolution of our business is positioning us to deliver greater scale, improved margins, and long-term value for our shareholders, and we’re confident in the path that we’re on as we continue to execute and deliver on the opportunity ahead. We’re encouraged by the progress we’re making and look forward to updating you on our continued execution and success in the months ahead. Thank you, everybody. Appreciate it.

John, Conference Operator: This concludes today’s conference, and you may disconnect your lines at this time. Thank you for your participation.