Edible Garden (NASDAQ:EDBL) held its second-quarter earnings conference call on Friday. Below is the complete transcript from the call.

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Summary

Edible Garden AG Inc reported a 12.8% year-over-year revenue increase to $3.6 million for the second quarter of 2026, with cut herb sales rising over 42% due to expansion with major retailers like Kroger and Target.

The company is advancing its 'Farm to Formula' strategy by developing a ready-to-drink (RTD) manufacturing platform at Prairie Hills, Iowa, which is expected to significantly expand their business scale and profile.

SG&A expenses decreased by 21.5% year-over-year, contributing to an improved net loss of $3.3 million from $4 million. The company remains focused on enhancing operating efficiency and scaling up business operations.

Total debt increased due to a $13.5 million investment in the Prairie Hills facility, with cash flow from operations turning positive for the second consecutive quarter.

Management highlighted strategic retailer relationships and infrastructure as key strengths, emphasizing the potential of the Prairie Hills project to support both company-branded and private label products.

Full Transcript

OPERATOR

Good morning everyone and welcome to Edible Garden 2026 Second Quarter Business Update Conference. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press 0 on your phone keypad. Please note this conference is being recorded. I will now turn the call over to your host, Ted Avas, Investor Relations at Crescendo Communications.

Ted, the floor is yours.

Ted Avas, Investor Relations at Crescendo Communications

Thanks, Jenny. Good morning and thank you for joining Edible Garden's 2026 second quarter earnings conference call and business update. On the call with us today are Jim Kras, Chief Executive Officer of Edible Garden, and Casas de Foulis, Interim Chief Financial Officer of Edible Garden. Earlier today, the company announced its operating results for the three and six months ended June 30, 2026. The press release is posted on the company's website, www.ediblegardenag.com.

In addition, the company has filed its quarterly report on Form 10-Q 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 and 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 ended June 30, 2026 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 this conference call, including statements regarding our future, 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 expressions, 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 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 this conference call. You should evaluate all forward-looking statements made by the company in the context of these risks and uncertainties.

With that, I would now like to turn the call over to Mr. Jim Kras, Chief Executive Officer of Edible Garden.

Jim Kras, Chief Executive Officer

Thanks, Ted, and good morning everyone. The second quarter was another period of solid progress for Edible Garden. Revenue grew 12.8% year over year to $3.6 million, while total sales increased by more than 31%. What's particularly encouraging was the breadth of that growth. Cut herb sales increased more than 42%, driven by continued growth with existing customers and newer programs with major retailers including Kroger, Target and Weis. We saw growth across potted herbs, international, vitamins and condiments as well, while expanding our relationships with retailers including Target, Walmart, Wakefern, ShopRite and The Fresh Market.

In addition, we extended a multi-year private label contract with a major Midwest retailer. More recently, we were awarded fresh cut herb distribution through a key Target Midwest distribution center, further expanding that relationship and broadening distribution of our premium fresh cut herb portfolio across the region. We believe the award demonstrates our ability to leverage our Midwest production and distribution infrastructure to efficiently support additional volume as our retail programs expand.

Overall, we see a core business that continues to gain traction across customers, products and channels. Improving the underlying economics of the business remains an important priority. In Metro New York, for example, we are transitioning more volume from direct store deliveries to retail distribution centers and regional logistics hubs. We believe this can reduce transportation and delivery-related costs, simplify the network and create better operating leverage as we grow.

At the same time, the retail relationships, distribution capabilities and infrastructure we have built through our core business gives us a foundation that can be leveraged well beyond traditional produce. That brings me to what we believe is the most significant long-term growth opportunity in front of Edible Garden, our Farm to Formula strategy and the development of the ready-to-drink, or RTD, manufacturing platform at Prairie Hills in Webster City, Iowa.

We believe this has the potential to fundamentally change the scale and profile of our business over time, and we made significant progress during the second quarter. Most notably, we successfully completed prototype production at Tetra Pak's new product development center. This was much more than a product development exercise. It allowed us to run our proprietary clean-label formulations under commercial processing conditions, generate production data, further optimize the products and advance our preparation for customer sales and commercial manufacturing.

In parallel, we continued moving forward with the physical development of Prairie Hills, with Structura Architects and E2 Building Group supporting the design, engineering and construction process. Together, these milestones represent meaningful progress towards the scalable commercial manufacturing platform we envisioned. The reason why we are so focused on this opportunity is the potential scale. Prairie Hills is being developed as a flexible, high-capacity platform for shelf-stable, clean-label nutritional beverages utilizing advanced Tetra Pak processing and packaging technologies.

At full production, we expect the facility to have capacity to manufacture more than 100 million beverage units annually, providing the potential to participate across sports nutrition, protein beverages, functional wellness, meal replacement, GLP-1 support and other better-for-you categories. Importantly, the platform is being developed to drive our own brands as well as private label and co-manufacturing opportunities, giving us multiple potential paths to build volume and create value from the facility.

What makes this opportunity particularly compelling is that we are not starting from scratch. Our products are already available in more than 6,000 retail locations and growing. We've spent years developing relationships with national and regional retailers along with the food safety, supply chain, commercialization and retail execution capabilities needed to serve them. Combining that existing commercial infrastructure with scalable domestic RTD manufacturing has the potential to significantly expand our addressable market, diversify our revenue base and, over time, improve the earnings profile of the business.

That is really what Farm to Formula is. We started with controlled environment agriculture and fresh produce, expanded into higher-value branded nutrition and functional foods, and now Prairie Hills gives us the opportunity to take another significant step into shelf-stable, clean-label nutrition. We view Prairie Hills as much more than a new manufacturing facility. We believe it has the potential to become an important growth engine for Edible Garden and a key part of our evolution into a broader clean-label food and nutrition platform.

Our focus remains on execution, growing the core business, improving operating efficiency and advancing Prairie Hills towards commercial production and developing the branded and private label opportunities that can ultimately utilize that capacity. We believe the pieces are increasingly coming together, and we're excited about the direction of the business and the opportunity ahead. With that, I'll turn the call over to Casas to review the financials.

Casas de Foulis, Interim Chief Financial Officer

Thanks, Jim, and good afternoon. Good morning, everyone. Revenue for the three months ended June 30, 2026 increased 12.8% to approximately $3.6 million, compared with approximately $3.1 million in the prior year period. The increase was driven by continued growth in our butterhead and potted portfolio, which increased approximately half a million dollars, or 50% year over year. Revenue growth was supported by underlying volume gains concentrated in select categories, with total gross sales increasing 7.6% year over year. While cut herbs and potted drove the growth, our financial focus is on converting that higher volume and revenue into improved operating performance as we continue to scale the business.

Gross profit for the quarter was approximately $0.6 million, essentially flat with the prior year period. While we continue to generate top-line growth, cost of goods sold remained elevated, and improving profitability of that growth remains an important focus for us. One of the more meaningful improvements during the quarter was in selling, general and administrative expenses. SG&A declined approximately $0.9 million, or 21.5%, to $3.1 million, compared with approximately $4 million in the second quarter of last year.

We believe this reflects a continued focus across the organization on managing expenses and improving operating efficiency. As we scale the business, net loss improved year over year to approximately $3.3 million from approximately $4 million in the second quarter of 2025. Turning to the balance sheet and cash flow, total debt increased approximately $14.2 million from approximately $1.9 million at year-end, reflecting $13.5 million of new financing this quarter related to our initial investment in the Prairie Hills manufacturing facility in Iowa.

Cash and restricted cash together were approximately $10.7 million at June 30, 2026, though approximately $10 million of that was held in a restricted account for the Iowa facility, leaving approximately $0.7 million of cash available for operations, compared with approximately $1.1 million of unrestricted cash at year-end. Total assets were approximately $27.7 million compared with approximately $20.6 million at December 31, 2025, and total liabilities were approximately $22.1 million.

We continue to focus on strengthening our capital position as we fund the business and invest in Prairie Hills. Operating cash flow was positive for the second consecutive quarter, with net cash provided by operating activities of approximately $0.9 million for the six months ended June 30, 2026, compared with cash used in operations of approximately $6.8 million in the prior year period. As we look ahead, our financial priorities remain closely aligned with the operating strategy Jim discussed.

We are focused on continuing to grow revenue in opportunities we believe can generate the greatest long-term returns. At the same time, we are continuing to invest in the development of Prairie Hills and the RTD platform. As we make those investments, we intend to remain disciplined in how we deploy capital and balance the requirements of the existing business with the opportunity we see in building a scalable domestic clean-label beverage manufacturing platform.

We believe the combination of continued revenue growth, a more efficient operating structure, and disciplined investment in higher-value growth opportunities provides a path towards improving the financial profile of Edible Garden over time. With that, I'll turn the call back to the operator for questions.

OPERATOR

Thank you very much. At this time we will be conducting our question-and-answer session. If you would like to ask a question, please press star one on your phone keypad now. A confirmation tone will indicate that your line is in the queue. You may press star two if you would like to remove your question from the queue. For any participants using speaker equipment, it may be necessary to pick up your handset before you press the keys. Please wait a moment whilst we poll for questions.

Thank you. Our first question is coming from Nick Sherwood of Maxim Group. Nick, your line is live.

Nick Sherwood, Analyst at Maxim Group

Hi, good morning. Thank you for taking my questions. My first question is about the new expansion and the new Target expanded distribution. Can you kind of contextualize what that distribution was before and how big of a win or a gain this new distribution is?

Jim Kras, Chief Executive Officer

Good morning, Nick. Yes, it's significant. We've had a long-standing relationship with Target, and we've made quite a bit of investment just in the relationship and being able to be positioned for this type of opportunity. And there's been market conditions, you know, obviously some producer suppliers—not us, we're very fortunate. You know, we're in controlled-environment agriculture, which means we control how we grow, and we have incredible food safety processes in place.

With that said, you know, this is their one of their largest—if not one of their largest, pretty close. They just opened up a new fresh distribution center since they've been growing this part of their business, Target, but this has been the longstanding largest, and so we had picked up some business earlier in the year, this year, and then this, based on performance and market conditions. There's just a lot of consolidation in CEA right now, with some of our major competitors basically going out of business.

We're a trusted supplier with best-in-class fill rates and on-time rates. And so with the changes, the concerns, some of the instability in the business, Target reached out and wanted us to be able to pick this up for them because they wanted to know that they would hopefully have a partner where they wouldn't have anything to worry about. For us, it's very significant since Iowa helps align with our facilities out there, as well as the fact that they're based in Minnesota, which isn't that far from Iowa.

And thus, like I said, this is really kind of central to their business. And we're very fortunate and happy to have gotten this opportunity. And like I said, there's quite a bit of consolidation. We have put out a press release, I think it was maybe even a week or two ago, that just talked about the fact that, you know, my phone's been ringing off the hook with people trying to, you know, align with Edible Garden since my team does such a great job of execution, and it's always been the key for us.

So, yeah, it's pretty significant. But any other specifics on that, Nick, that I can answer? I hope that helps.

Nick Sherwood, Analyst at Maxim Group

No, yeah, I think that's, you know, a perfect explanation for what I was thinking about. And kind of one thing that you mentioned in that answer was some of this consolidation that's kind of going on in the industry. Can you kind of give us a little bit of an insight on maybe how that may have accelerated in the past year and kind of what it's looking like through the end of the year and kind of the opportunity that might still remain available to Edible Garden in addition to this Target distribution expansion?

Jim Kras, Chief Executive Officer

Well, yeah, there's been quite a bit of consolidation, and I think it's really driven by where people put their investment dollars and the fact that Edible Garden had put an investment in their distribution platform and the relationships. And so there's going to be issues in these types of business—whether supply chain issues, whatnot. There's always just issues. I think what's happened is that our competitors put a lot of money into technology, a lot of money in trying to talk more about yield per square foot than really going out, securing the relationships in parallel, making investments like we have in the customer—the customer experience.

Yes, we have technology with Green Thumb. It's patented, and it helps with our supply chain efficiency, all those great things. When we bought the greenhouse in Michigan, we did a retrofit versus doing a greenfield project—just things like that that kept the business, and you can see it in our numbers this quarter, just tighter and tighter and tighter as we've continued to drive the business. The delivery part of the business, as I like to say, the on-time and in-full in-stock rates.

So all of that has really just led to us being positioned to really pick up the ball when it's been dropped by our competitors. And I think this sort of "build it and they will come" attitude in this category specifically has not worked out well because it's really ultimately about people buying your products and making sure that that loop gets completed. And I think that's just somewhere where we've really done a nice job. You know, I think Costas has brought, you know, a discipline to the business that allowed us to really focus on cleaning up SG&A and doing some things just to be more and more efficient.

We're still in, you know, serious growth mode, obviously, with the, you know, with the Iowa facility. That's gonna really, you know, take the company to the next level. Excited about that. But I think, you know, most importantly here, you know, I think we've earned—we've earned our stripes to be where we are. And people are, you know, people calling us because they just don't, you know, they want—they don't want—they don't want a headache. They want people who are going to service their business.

And that's something that, you know, my team has been really focused on, and so I think it's paid off.

Nick Sherwood, Analyst at Maxim Group

Yeah, I mean, sounds like there's definitely a continuing opportunity there. And then kind of switching gears, you know, this Tetra Pak opportunity, it really is one of the key, key opportunities, it seems like, for your company going forward. Can you kind of just give us some insight on, is that timeline still intact on building out the facility? Any specific insights into the completion of the prototype production at Tetra Pak's new product development center?

And just kind of, you know, tell us, what do you still need to bring in or to do to make sure that, you know, everything remains on schedule for this?

Jim Kras, Chief Executive Officer

Well, first of all, we're still on track, and we're looking at tail end of 2027 to see the first bottle come off the line. We have, once again, having the reputation that we have for our service levels, our execution—we've got pre-sold commitments for 100% of the facility, which is just unheard of, which tells you an idea of what the demand is there. We have a nice blend of our brand as well, as well as private label. We knew there was a shortfall in the industry.

Protein's hot, it continues to stay hot, it continues to grow. We continue to innovate as well. Obviously, building that bridge from farm to formula is a big thrust for us to harness and really add another dimension to what we do in the greenhouse. We're really excited about that. There's a lot of things on the horizon here that are just, I think, are going to be just tremendous. But you know, Tetra Pak has been just an unbelievable partner. They're just such a great company, and I consider us fortunate to continue to work with them.

The development process at their state-of-the-art facility in Denton, Texas was just phenomenal, and we have some real significant players on our team that have been working with Tetra Pak for decades that came on to Edible Garden, like Dr. Chuck Sizer is one of them. He helped develop the majority of the patents for Tetra Pak on some of their packaging. He's on our team and advises us and was there on the run to develop the product. But great-tasting, clean-label product that right now is just really exciting to be able to work with.

We are going to be starting with a co-manufacturer this year at the end of Q4 to allow us to kind of continue to prove out the formulas, to allow us to go to market quickly and see the revenue from that and not have to wait over a year to really capture some of the pent-up demand for these type of products. So it's really pretty tremendous. And to be able to leverage off a growing core business really continues to uniquely position us for the type of growth. I think this is going to be a much different company as we head into Q4 next year and especially in 2020 as we're pumping out product out of Iowa and we're really focused on driving that business. Between our zero-waste inspired mission and trying to cut out waste and have an eye on recyclable packaging, Tetra Pak obviously plays into that; this Farm to Formula notion that I think is quite novel, that I think will continue to shake up the industry and get us positioned properly with not only our own brands like Kick, which will be launching in Q4, but also a lot of the development work that we're doing with major, major retailers on this product. So once again, really exciting, and I think what we've done and how the team has executed and where we focus their time and energy, and just sticking to knitting and getting to where we are, it's been challenging.

But I mean that's part of business and I think everybody that I work with wants to compete and hopefully continue the wins that we have going on, whether it's in the herbs, whether it's in pickles, with the Safeway win this past year and Woodman's, whether it's continued growing pulp with Wakefern this year and some other retailers, or just the RTDs, which I think is just going to be just incredibly awesome, to be quite frank.

Nick Sherwood, Analyst at Maxim Group

Okay, great. Yeah, I'm looking forward to following along and I'll return to the queue. Thank you for answering all my questions.

Jim Kras, Chief Executive Officer

You're welcome.

OPERATOR

Thank you very much. Just a reminder, if there are any questions, you can join the queue now by pressing Star-1 on your phone keypad. Our next question is coming from Nicole Kaufman of Blackridge Capital. Nicole, your line is live.

Nicole Kaufman, Analyst at Blackridge Capital

Hi, good morning, guys. Congratulations on the quarter results. Jim, you've talked about the significant opportunity you see at Prairie Hills and the ability to support both Edible Garden brands and private label and co-manufacturing customers. Can you talk about the level of interest you're seeing from potential customers and how those discussions are progressing?

Jim Kras, Chief Executive Officer

Well, the interest has been just phenomenal. I mean that's really why we did this, because retailers were coming to us and saying, hey, you guys are an innovative group, you're in a really challenging category. You've done a great job servicing our business. We want more of what you're doing. Have you thought about doing this and taking what it is that you grow and potentially put it into a beverage, helping us with our current milk- and whey-based products?

Can you do something there? I've got years of experience working at companies like Matrix Monty and Ngina Moto, so that at least gave me some credibility that I could figure this out with the team. But really what's happened is I think it's been once again a real collective effort leveraging from a very advantageous position where people are coming to us. It doesn't happen that way in this industry. I said to somebody, it's been a long time since I'm managing where am I going to put my time and how do I prioritize who we work with based on opportunity and collective vision versus just trying to sell more widgets.

Once again, major retailers—everyone from the major retailers that we currently deal with to even new people who are coming that we haven't necessarily worked with before on the fresh side—saying, hey, you know, can you do this for us? Private label continues to grow. There's a place for both and it's very underserved, the private label part of it, for a multitude of reasons. There's just not enough capacity out in the marketplace. There just isn't. There's a pent-up demand, especially on private label. If you go into most of the grocery stores, you won't see a private label RTD. There's reasons for that and a lot of it's just capacity. And so we're going to solve that problem, solve it with some of the major retailers. Like I said, we've got commitments on the whole factory. Right now we're just focused on executing and getting it up and running, and then, as there'll be other opportunities, we'll continue to do that.

And we're also seeing the ability to start to get some pricing power here on the herbs, which hopefully will lead to the RTD, as there's once again consolidation on the herbs and not many companies who do what we do and do it as well as we do. So obviously retailers will pay a little bit more now because they want some of the problems to go away and they want product, and if they don't have product on the shelves, they lose that sale. So we help take some of that risk away from them.

And then on the RTDs, once again, I think we'll continue to capture that void of volume, and I think that'll help us across the board, whether it's just driving top line or being able to price accordingly so that everybody sort of wins.

Nicole Kaufman, Analyst at Blackridge Capital

Well, that's great. I guess this kind of leads into my next question, is that you guys delivered double-digit revenue growth this quarter and your SG&A significantly declined year over year. So what are you seeing as the biggest opportunities that would translate into continued revenue growth and improved profitability and operating leverage?

Jim Kras, Chief Executive Officer

Well, look, I think it's kind of the conventional wisdom that many of our costs will stay relatively static as we put more volume into the existing greenhouses. We're not building any more greenhouses currently. We've got two greenhouses. We can continue to not only drive our signature potted product and expand that, but also continue to drive more fresh cut herbs, which are not necessarily contingent on how much growing space we have. And so I continue to see that revenue line continuing to go forward in that core business as well.

And look, we'll make some investments obviously in Iowa, but we have a lot of people already that can do a lot of things and work across the whole platform. And so we're going to see some good gains on revenue. We'll see some incremental staffing that will be strategic, that will be probably more focused on the Tetra Pak facility more than anything else. And some of that information will be forthcoming. But for me, I think it's like, let's continue to grow the top line.

We're streamlining costs, really, on the greenhouse business, and there's still some more work to do. Costas and his team have done a very nice job, I think, of that, especially this last quarter of focusing on the SG&A. We're working to procure better on some of the things, with some of the suppliers that we use. As we continue to be consistent with our orders, it allows us to negotiate better terms with our suppliers. And a lot of that—I probably don't speak enough about that.

I think I know that we've been doing this for over a decade, and we've got some really good suppliers that partner with us and they're happy our business is growing. They're happy. They're obviously making money with us. As we scale, they're scaling, and our costs go down as we get scale. That's always the idea around economies of scale. And we're starting to see that pick some of that up and help limit our costs and be more efficient in what we're doing will continue to climb here with costs being minimized and relatively static.

Some key strategic investments in people, which I think is our most important asset. And then from there, we'll continue to do what we need to do to capture the opportunities and make the investment in the relationships or branding or anything else that we feel is warranted to make sure that we continue in the future, in the current trajectory.

Nicole Kaufman, Analyst at Blackridge Capital

Well, thank you, Jim. I appreciate that insight. I'll jump back in the queue if I have additional questions.

Jim Kras, Chief Executive Officer

Thank you very much. Appreciate it.

OPERATOR

Thank you very much. Well, we have no further questions in the queue at this time. I will now hand back over to Jim for closing comments.

Jim Kras, Chief Executive Officer

Thank you. Before we conclude, I want to leave you with a few thoughts. We came into 2026 focused on strengthening our core business while continuing to build a foundation for Edible Garden's next phase of growth. Through the first half of the year, we believe we made meaningful progress on both fronts. Our core business continues to grow, supported by expanding relationships with leading retailers, broader growth across our product portfolio, and continued efforts to improve operating efficiency.

We believe that business provides an increasingly strong commercial foundation for where we want to take Edible Garden next. At the same time, we are making tangible progress with Farm to Formula and Prairie Hills. The work completed with Tetra Pak, along with the continued development of Prairie Hills facility, brings us closer to our goal of building a scalable domestic RTD manufacturing platform capable of supporting both our own brands and private label opportunities.

We believe Prairie Hills has the potential to significantly expand the scale and reach of Edible Garden. When we combine that opportunity with the retail relationships, distribution network, and operating capabilities we have already built, we believe we have the foundation to evolve Edible Garden into a much broader, clean label food and nutrition company. There's a lot of work ahead and our focus remains on execution, but we are encouraged by the progress we are making and excited about the opportunity in front of us.

Thank you to our employees, customers, retail partners and shareholders for your continued support. We look forward to updating you on our progress. Thank you for joining us today.

OPERATOR

Thank you very much. This does conclude today's conference. You may disconnect your phone lines at this time and have a wonderful day. We thank you for your participation.

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.