Buda Juice (AMEX:BUDA) held its first-quarter earnings conference call on Wednesday. Below is the complete transcript from the call.

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The full earnings call is available at https://events.q4inc.com/attendee/605302226

Summary

Buda Juice reported a 17.7% year-over-year revenue growth for the first quarter of 2026, driven entirely by its existing customer base.

The company faced a temporary gross margin decline due to a spike in lime costs caused by supply chain disruptions in Mexico, but expects recovery in the second quarter.

Buda Juice announced a major expansion into 256 Walmart stores across nine states, significantly increasing its store count by more than 75%.

Operational efficiencies were highlighted with labor costs as a percentage of revenue improving by over 150 basis points year-over-year.

Despite increased general and administrative expenses due to public company costs, the company remains profitable and debt-free, ending the quarter with $20 million in cash.

Management emphasized continued strategic focus on expanding distribution and maintaining profitability while diversifying its geographic footprint beyond Texas.

Full Transcript

Dennis (Operator)

Hello and thank you for standing by. My name is Dennis and I will be your conference operator today. At this time I would like to welcome everyone to the Buda Juice first quarter 2026 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press STAR followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. I would now like to turn the call over to Brian Siegel, Investor Relations. Please go ahead.

Brian Siegel (Investor Relations)

Thank you Dennis. During today's call, Horatio Lanzdel Hands, Buda Juice's Chief Executive Officer and Clint Bowers, Buda Juice's Chief Financial Officer, will discuss Buda Juice's financial and operational results that were reported this morning. Any forward looking statements made during this conference call, during the prepared remarks or in the question and answer session, whether general or specific in nature, are subject to risks and uncertainties that may cause actual results in the future to differ materially from those discussed on today's call. These risks and uncertainties include, but are not limited to, specific risks and uncertainties disclosed in Buda Juice's periodic and annual SEC filings. BUDA assumes no obligation to update any forward looking statements or to update the factors that may cause actual results to differ materially from those that they forecast. Please note that our earnings release is available on the investor relations page of the Buda Juice website has also been filed on Form 8K with the SEC. Finally on this call we will refer to non GAAP measures including non GAAP net income and eps free cash flow and adjusted ebitda. Please see our earnings release for an explanation of our use of non GAAP measures and reconciliations to GAAP measures. Now I'd like to turn the call over to Horatio.

Horatio Lanzdel Hands (Chief Executive Officer)

Thank you Brian. Good morning, everyone and thank you for joining us. The first quarter of 2026 was our first full quarter as a public company. Revenue grew 17.7% year over year which is about the mid teens outlook we discussed in our last earnings call. Importantly, that growth came entirely from our existing customer base. Gross margin during the quarter was impacted by the temporary disruption in citrus supply. In February, lime costs spiked significantly following disruptions in western Mexico that interrupted normal supply routes. This was a temporary issue and conditions have now stabilized. Even with that temporary pressure, labor cost as a percentage of revenue improved by more than 150 basis points year over year which reflects continued operational efficiency across the business. We enter 2026 from a position of strength profitable, debt free and well capitalized following our IPO which we believe positions us well for long term expansion. Looking beyond our first Quarter On Monday this week we announced a major milestone for our company expansion of our products into 256 stores across nine states including Texas, New Mexico, Colorado, Mississippi, Arkansas, Missouri, Tennessee, Alabama and Kentucky, all with a new customer, Walmart. This expansion takes us from one state to nine states and increases our store count by more than 75%. The Buda Juice Fresh Cherry Limeade is now available in these Walmart stores In both the 12 ounce single serve and 32 ounce multi serve formats. The products are being merchandised in the fresh produce department, reinforcing our ultra fresh within the retail environment. These new products are manufactured at our Dallas facility where we recently invested in additional capacity and automation following our IPO to support future growth. When we went public this year we had built a strong and profitable business concentrated primarily in Texas. This expansion now diversifies both our geographic footprint and customer base as we continue building the business beyond our historical Texas concentration. When we went public, we outlined a clear strategy expand distribution, grow responsibly and bring ultra fresh products to more consumers across the country, all while maintaining profitability and balance sheet discipline. We believe we are executing directly against that strategy today and with that I'll turn the call over to Clint for

Clint Bowers (Chief Financial Officer)

review of our financials. Thank you Horatio and good morning everyone. Today I'll walk you through our first quarter financial results and provide context on the key line items. The first thing as Horatio said, Revenue for the first quarter was up 17.7%. This represented a half million dollar increase to 3.5 million from 3 million in the prior year period. Gross profit was 1.4 million compared to 1.3 million last year. Gross margin was 39.5% down from 44.9%. This decline was driven primarily by the temporary spike in lime costss Horatio previously described. This resulted in a roughly 300% line costs increase starting in late February and continuing through March due to the cartel related supply chain disruptions in western Mexico. And for additional context on this, when we normalize Q1 lime costss to prior year, our resulting gross margin would have been closer to historical levels in the mid 40% range. Further, since the end of Q1, we have seen lime prices stabilize and get back towards normalized levels. Therefore, with the recovery of lime costss, we expect to Trend back above 40% gross margin for the second quarter, partially offsetting these transitory increases in costs. Production labor as a percentage of revenue improved by more than 150 basis points year over year. This remains a key area of focus as we scale our general and Administrative expenses increased to 663,000 from 416,000 in the prior year. The increase reflects three main items. Normalized executive compensation as we transition to a public company Additional facility lease expense from our Q3 2025 capacity expansion and 183,000 in public company costss, mainly from audit fees, legal costs, insurance and investor relations. Please note these costss did not exist last year and we continue to believe public company costss will be around 1 million annually. Operating income was 0.6 million compared to 0.8 million in Q1 2025. Moving to other income and taxes, we reported 137,000 in interest income and 359,000 in federal income tax expense. For context, the tax expense includes the 21% corporate rate for the first quarter earnings plus a one time 182,000 non cash charge related to our LLC to C Corp conversion on January 1, 2026 and as a C Corporation we're now subject to federal corporate taxes. GAAP net income was 0.4 million versus 0.8 million last year. On a non GAAP basis, net income was 0.6 million and earnings per share was $0.05. With weighted average diluted shares outstanding for the quarter at 12.35 million. Adjusted EBITDA was 850,000 down just slightly from last year. Also importantly to note, free cash flow was strong at 1.1 million up 36.5% year over year. We ended the quarter with approximately 20 million in cash and no debt. Thank you operator. With that we're ready for questions.

Dennis (Operator)

At this time I would like to remind everyone, in order to ask a question, simply press star followed by the number one on your telephone keypad. And your first question is from the line of Ryan Myers with Lake Street. Please go ahead.

Ryan Myers (Equity Analyst)

Hey guys, thanks for taking my questions. Congrats on the good quarter. Just wondering if you can start by unpacking the revenue growth during the quarter. You know how much of that just came from, call it maybe new doors at your two large customers versus how much of that was just increased volume at existing doors you guys were in.

Horatio Lanzdel Hands (Chief Executive Officer)

So Good morning Ryan. Basically the good news is all the revenue from the first quarter was from existing customers, not the new customers that we now have. So it's really organic growth from existing customers.

Ryan Myers (Equity Analyst)

Got it. And then as we think about the announcement on Monday, first off, congrats on being able to bring Walmart on board. You know, how should we think about the potential growth Rate for, you know, this quarter as well as the rest of the year as you continue to see the strong organic momentum within existing customers and then in addition to the customer that you guys just brought on. Yeah, that's a great question. It will bring incremental revenue and profit. However, we're not really able to share that with you unfortunately, since we are not doing any, any guidance in that, in that regard on, on revenues. But it will be incremental. Okay, got it. And then just lastly the rollout within Walmart. Can you just kind of walk us through how you guys plan to do that? Is it, you know, you're going to start with 100 stores that then accelerates into the 200 and then the remaining roughly called 50 stores or so. Just walk us through kind of the plan there and sort of the rollout of, you know, when you guys will fully be in all of the stores.

Horatio Lanzdel Hands (Chief Executive Officer)

Okay, that's another good question. So as of Saturday last week, so that's what, four days ago, we are on all the shelves in those 246 stores in nine states. So our products, if you go to any of those stores, the products are on our shelves right now. So we have the 32 ounce multi serve cherry Limeade and we have the single serve 12 ounce cherry limeade already on the shelves.

Ryan Myers (Equity Analyst)

Okay, got it. No, that's great to know. Congrats again. Thanks for taking my questions.

Dennis (Operator)

Once again, if you would like to ask a question, simply press star followed by the number one on your telephone keypad. Your next question is from the line of Eric Delorious with Craig Hallam. Please go ahead. And Eric, your line is open. Please check to see if you're muted on your end.

Eric Delorious (Equity Analyst)

Thank you very much. Appreciate you taking, taking my questions here and congratulations as well on the, on the Walmart announcement. Very exciting. Thank you. Good morning. First one for me, just wondering if you could just comment on how conversations with other retailers are going and if we should be kind of thinking about potential shelf resets in terms of timing for potentially getting into new retailers or if they're all sort of on different schedules and not necessarily waiting for official shelf resets.

Horatio Lanzdel Hands (Chief Executive Officer)

So basically every day we're working on growing the business with existing and new customers coming online. So we have, should I say several, you know, hopeful customers coming on board over the next few months, two years at different times. I can't really give you again because of the guidance, but give you what's happening as we couldn't Mention Walmart until we're on the shelves. But I would say that I'm very encouraged by all the meetings we're having and the response to the ultra fresh category, which I think is really important because it's incremental revenue to all these grocery stores that need more foot traffic. And the fresh produce department is bringing in the foot traffic for these big retailers. So, you know, we have something that, you know, basically everyone wants. The consumers want fresh, and if the consumers want fresh, then how do these grocery stores produce fresh? Either they do it in store or they come to us. So I think we're in a good position here because we were able to scale through our cold chain, the fresh products, the citrus products, the wonderful lemonades we have, or the shots that is very exciting for everyone because we can actually give these products to them today.

Eric Delorious (Equity Analyst)

Yeah, it's very exciting and encouraging and certainly highly attractive category from a retailer perspective. Thank you for that. And then just next one for me, if we kind of look at your sort of main historical customer, we'll leave Walmart to the side for right now. Can you just help us understand how much additional room you see for growth in your existing store base? Like how big of a variety do you see in overall velocities between, let's say, your lowest and highest performing stores? Is there an opportunity to kind of take best practices across the footprint or is each store a little different? And I guess just overall, would you say we're still in the early innings of driving growth with that existing store base, or should we expect sort of a natural deceleration? You know, I guess, you know, on the horizon as distribution matures and you guys start adding several new doors as well. Thank you.

Horatio Lanzdel Hands (Chief Executive Officer)

Yeah, Eric, that's another great question. I think the last question is actually the way to start answering this question, which is, you know, we feel we're at the early stages of our growth. Even in Texas, which as you know, is the most competitive grocery market in the country, we feel there's so many more customers that we can bring on board. There's continuing organic growth for our existing customers, which we feel will continue for several years. Because if you think about it, you know, once you have fresh, you always want that taste. You want the fresh taste. So what we're doing also is the value piece of, you know, as an example, you know, you can buy a wonderful family size lemonade, you know, 52 ounce fresh lemonade for like, you know, 5.98 in one group and 5.99 in another. Or you can have, you know, the Walmart 12 ounce lemonade, the single serve lemonade prices at $1.50, actually just slightly under that. I mean that's very affordable. So what we're doing is we're bringing fresh, clean, great tasting products to the mass market which hasn't existed before. So it's a whole new category which as you know, we call ultra fresh, which we feel is really, it's great to start in Texas because it is so competitive. But we feel this is definitely a nationwide ultra fresh category which we're seeing the early stages with Walmart of kind of getting it out of Texas now. But there's a lot to come.

Eric Delorious (Equity Analyst)

Yeah, very exciting to see what's on the horizon and great second win with Walmart here getting you guys out of Texas. Congrats again and thanks for taking my questions.

Dennis (Operator)

once again, everyone. If you would like to ask a question, simply press star then the number one on your telephone keypad. And at this time there appear to be no further questions. And this will conclude today's question and answer session along with today's call. Thank you all for joining. You may now disconnect and have a great day.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.