Q4 2024 Edible Garden AG Inc Earnings Call
Speaker Change: [music].
Greetings and welcome to the edible garden, a G incorporated's 2020 for fourth quarter business update conference call.
At this time all participants are in a listen only mode and a question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
Please note this conference is being recorded.
Speaker Change: I will now turn the conference over to your host Mr. Ted gave us Investor relations, Sir the floor is yours.
Ted Gave: Thanks Ali good morning, and thank you for joining edible gardens fourth quarter and full year 2024 earnings conference call and business update.
Speaker Change: On the call with us today.
Jim <unk>: Jim <unk>, Chief Executive Officer of vertical Garden, and Cosmos deploy interim Chief financial Officer available Garden.
Jim <unk>: Earlier this morning, the company announced its operating results for the three months and year ended December 31 2024.
Jim <unk>: This release is posted on the company's website www, you've got edible gardening a G. Dot com. In addition, the company will file its annual report on Form 10-K with U S Securities and Exchange Commission later today, which can also be accessed on the company's website as well.
Jim <unk>: Web site at Www Dot FCC Dot Gov. If you have any questions after the call or would like any additional information about the company. Please contact Crescendo communications at 2126 70 11020.
Jim <unk>: Before Mr Press reviews, the Companys operating results for the quarter and year ended December 31, 2024, and provide the 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.
Jim <unk>: And play and our expectations for future operations are forward looking statements.
Jim <unk>: Words aim anticipate believe could expect May plan project strategy will and the negative of such terms in other words.
Jim <unk>: In terms of similar expressions are intended to identify forward looking statements. These forward looking statements are based largely on the companys 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 in financial need these.
Jim <unk>: 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 2024.
Jim <unk>: Because of these risks uncertainties and assumptions the forward looking events and circumstances discussed in this conference call may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward looking statements you.
Jim <unk>: You said not replying upon forward looking statements as predictions of future events.
Jim <unk>: Although the company believes that the expectations reflected in the forward looking statements are reasonable it cannot guarantee future results level of activity performance or achievements. In addition, neither the company nor any other person that assumes responsibility for the accuracy and completeness of any of these forward looking statements. The company disclaims any duty to update any of these.
Jim <unk>: 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 that was made in this conference call.
Jim <unk>: And evaluate all forward looking statements made by the company in the context of these risks and uncertainties with that I will now like to turn the call over to Mr. Jim <unk>, Chief Executive officer of edible gardening.
Jim <unk>: Jim.
Jim <unk>: Thanks, Ted Good morning, and thank you to everyone for joining US today 2024 was a pivotal year for edible gardening and I'm proud of the meaningful progress we made across the business. Our gross profit from 'twenty to 'twenty four grew an impressive 181, 3% and our gross margin nearly tripled from five 9% last year.
Jim <unk>: To 16, 7%. The fact, we're reflecting the strength of our core business and the successful execution execution of our <unk> plant and vertical integration.
Jim <unk>: In may of 'twenty 'twenty, four we made a strategic decision to refocus our operations around corp, or our core business and to launch a new launch new shelf stable products and they clean labeled sports nutrition line that lens stepping away from some of the lower margin categories like lettuce in Florida that was delivering accretive levels of profitability.
Jim <unk>: Q4, 'twenty 'twenty, four we repurposed and expanded additional shelf space at our leading Midwest retail partner to prelaunch kit sports nutrition, it's a mass market associated with this loss. This launch we definitely stepped away from our legacy lower margin whey protein products by narrowing our focus all our core or port.
Jim <unk>: Palio and launching innovative shelf stable products, we have rationalized our product portfolio with a focus on higher margin more profitable opportunities. We began to realize the benefits of these decisions in the second half of 2024 with strong growth in our portfolio improve grow out gross profit and a meaningful expansion in margins.
Jim <unk>: We're confident that this momentum will carry into 2025 as a vertically integrated model with a more focused approach and product introductions will drive growth and more than that and move us closer to profitability.
Jim <unk>: Total revenue for the year remained relatively flat, reflecting our intentional decision to exit lower margin product lines as part of our strategic rely on it.
Jim <unk>: When you look at our core business all its all revenue grew by $1 7 million or 16, 3% year over year, which really highlights the strength of our focused approach. This shift has ends up improved profitability. It's also made us more efficient operationally and help reduce our cost of goods. Thanks to better use of our own facilities and increased buying power.
Jim <unk>: With most most of that transition behind us we believe edible gardening now like great position to ramp up top line growth and to stay focused on driving long term profitability.
Jim <unk>: In addition, we made solid progress in 2020 for strengthening our balance sheets with disciplined cost controls and successful capital raises and the execution of our operational realignment.
Jim <unk>: These efforts significantly improves our working capital, giving us more liquidity and greater financial flexibility.
Jim <unk>: With this strong foundation in place we believe we're now in a better position to operate more efficiently move quickly on better.
Jim <unk>: In a better position to operate more efficiently and to move quickly on new opportunities as we reinvest with confidence and the highest growth areas of our business. It also gives us the ability to better leverage our capital expanding our buying power, bringing down our cost of goods and setting the stage for accelerated growth as we head into 2025 and beyond.
These strong results also highlight the broader impact of the operational improvements we've made ranging from the enhanced automation and data driven decision, making to targeted investments in our patented agricultural technology.
Jim <unk>: Combined with the benefits of our vertically integrated model. These efforts are helping us operate more efficiently and cost effectively across the board as we expand our retail partnerships and continue refining our processes. We remain focused on driving sustained margin improvement and long term profitability, all while creating lasting value for our customers and shareholders.
Jim <unk>: One of the most significant developments. This year was the signing of a non binding letter of intent to acquire the Orion group a European producer of organic coconut superfood products. This proposed acquisition marks a major step forward in edible garden strategic growth plans. That's completed it would be a transformative move expanding our FERC footprint internationally.
Jim <unk>: And diversifying our product offerings that are meaningful way.
Jim <unk>: What makes this opportunity even more compelling as new Orleans vertically integrated supply chain, which would give us greater control over our sourcing production and distribution boosting efficiency lowering cost and enhancing transparency.
Jim <unk>: The transaction also has the potential to open new opportunities for clean labeled plant based ingredients in both North America, and Europe, helping us scale, the edible garden platform and reach new markets, a real cross selling opportunity.
Jim <unk>: Garden is continuing to grow its retail footprint across the us strengthening our presence in key consumer markets by expanding distribution of all.
Jim <unk>: But just of our USDA organic Irvine and new products, we're making are sustainably.
Jim <unk>: Grown high quality products, even more accessible to shoppers. This growth directly supports our strategy to meet the increasing demand for organic locally sourced products, while reinforcing our commitment to sustainability and innovation and controlled environment agriculture.
Jim <unk>: Innovation continues to be a key driver of vegetable gardens growth strategy, one of the newest product launches squeezable. The shelf stable line of stern or pace that extends life shelf life without sacrificing flavor and offering a convenient better for you option for both consumers and retailers.
Jim <unk>: Squeezable adds the edible gardens growing presence in the fresh condiments category, which also includes pulp and a lot of fermented gourmet sauces, and Chile blocks and all available a major national retailers and Pickle party. The world's first function pick all developed with harmony Pillow company together these offerings reflect the company's focus on clean label ingredients.
Jim <unk>: Bold flavors and sustainable sourcing we've also expanded into active lives into the active lifestyle space with kick sports nutrition and clean label lineup that includes protein powders hydration mixes and formulas for both pre and post workout kit launch exclusively on Amazon.
Speaker Change: Through a strategic partner with E Commerce part of its expert Granta gives us instant access to a global audience and I hope It helps drive brand awareness and engagement and this is only the beginning.
Speaker Change: Traditional real rollout was just around the corner to consign coincide with upcoming bid season on the technology front, we advanced our work in agriculture innovation through networks through nano bubble trials in partnership with <unk> group.
Speaker Change: And N J I T. Early results showed up to a 55% increase in yield and a 30% reduction in harvest cycle time, highlighting the potential of this technology to revolutionize sustainable growing practices.
We're exceptionally proud of edible gardens inclusion inclusion in the top 50 of the 'twenty 'twenty four food type 500, which highlights global leaders at the intersection of food technology.
Speaker Change: And that's all responsibilities.
Speaker Change: Underscores our growing reputation as a pioneer and sustainable food innovation. This recognition reflects the meaningful progress we've made through our commitment to innovation and sustainability across product development operations and strategic partnerships from launching shelf stable often offerings like squeezable.
Speaker Change: Spanning into a high growth categories with kicked sports nutrition, where meeting evolving consumer needs, while advancing our sustainability goals. We also introduced curbside recyclable parts as part of our sustainable packaging initiatives contributing to the elimination over 11 with 11800 metric tons of C O two emissions.
Speaker Change: The 'twenty 'twenty 'twenty four Walmart project get upon these achievements reinforced our vision for long term growth stronger retail partnerships and continued leadership in building a more sustainable food system.
Causes: I would now like to turn the call over to causes to force our interim CFO.
Speaker Change: Oh, who will review the financial results for the three months and year ended December 31st 'twenty 'twenty four cost us.
Speaker Change: Thanks, Jim and good morning, everyone.
Speaker Change: Starting with the fourth quarter of 'twenty 'twenty four for.
Speaker Change: For the fourth quarter ended December 31, 2024 revenue totaled $3 9 million, a slight decrease compared to $4 1 million for three months ended December 31 2023.
Speaker Change: The decrease was mainly driven by a loss of $400000 related to our strategic exit from the floral and lettuce categories offset by our growth in the core or Arab portfolio.
Speaker Change: Cost of goods sold was $3 8 million for Q4 'twenty to 'twenty four flat from.
Speaker Change: A year ago.
Speaker Change: Selling general and administrative expenses were $2 7 million for the three months ended December 31, 2024 slightly higher than the $2 6 million for the same period in 2023.
Speaker Change: The slight increase was primarily driven by costs associated with our warrant inducement transaction in December.
Speaker Change: Net loss was 3 million for the three months ended December 31st.
Speaker Change: The net loss of 3 million for the three months ended December 31 2023.
Speaker Change: Net loss for the three months.
Speaker Change: Ended December 31, 2023 also include a onetime noncash impairment expense of point 7 million related to the legacy assets acquired from our predecessor company.
Speaker Change: Yeah.
Speaker Change: Turning to the results for the year ended.
Speaker Change: Number 31st 2024.
Speaker Change: Revenue totaled $13 9 million, reflecting a one 4% decrease compared to 14 million for the year ended December 31, 'twenty two 'twenty three.
Speaker Change: Decrease was primarily due to our strategic shift away from the letter some floral product lines, which accounted for $1.7 million decline in revenue.
Speaker Change: Additionally, sales in the vitamin business declined by $23 million year over year as we've moved to refresh this product line with the launch of <unk> sports nutrition.
Speaker Change: However, these declines were partially offset by a $1.8 million increase in sales from the core <unk> business, which saw continued growth of 16, 3% year over year.
Speaker Change: Lots of goods sold decreased by 1.7 million or 12, 7% to $11 6 million for the year ended December 31, 2024, compared to $13 2 million in the prior year.
Speaker Change: The reduction in Cogs was driven by a decrease reliance on third party growers is edible garden Heartland became fully operational in 2020 for enabling the company to internalize the production of its portfolio.
Speaker Change: The transition away from low margin floral and lettuce products resulted in cost savings of $4 1 million off partially offset by an increase of $2 4 million in costs related to integrating these activities until the company's own facilities.
Speaker Change: Gross profit increased 181, 3% or $1 5 million to $2 3 million compared with <unk> 8 million in 2023.
Speaker Change: Gross margin improved significantly from five 9% of sales in 2023 to 16, 7% of sales in 2024.
Speaker Change: And the company's efforts to streamline operations and focus on higher margin products, along with a reduction in our reliance on third party growers.
Speaker Change: Selling general and administrative expenses increased by $1 6 million or 15, 8% to $11 6 million in 2024 compared to $10 million in 2020 three.
Speaker Change: The increase was primarily driven by higher legal audit and accounting fees related to the capital market activities of <unk> 9 million and <unk>.
Speaker Change: <unk> costs of <unk> 7 million following the departure of the Chief Financial Officer.
Speaker Change: Net loss for the year ended December 31, 2024 was $11 1 million compared with $10 $2 million in 2023. This increase in net loss is primarily due to the rise of SG&A expenses and interest costs associated with the theater advanced facilities that we executed in 2024.
Speaker Change: Partially offset by improved gross profit.
Speaker Change: Net loss for the 12 months ended December 31st.
Speaker Change: Finally, 23 also included a onetime noncash impairment expense of <unk> 7 million related to legacy assets acquired from our predecessor companies.
Speaker Change: And with that operator, please open the line for questions.
Speaker Change: Thank you 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 telephone keypad.
Speaker Change: A confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Speaker Change: One moment, please where we pull for questions.
Anthony Vendetti: Thank you we have a question from Anthony Vendetti with Maxim Group Your line is life.
Speaker Change: Thank you.
Anthony Vendetti: Just to focus a little bit on the gross margins and then I'd like to.
Speaker Change: I ask a question about the proposed acquisition.
Speaker Change: On the gross margin you mentioned that the <unk>.
Speaker Change: <unk> gross profit increased this year.
Speaker Change: Which is a step in the right direction.
Speaker Change: For the fourth quarter.
Speaker Change: It was it was.
Speaker Change: Barely profitable was that was that due to an inventory write off and the numbers you provided.
Speaker Change: Excluding any any <unk>.
Speaker Change: Inventory write offs due to obsolescence or or any.
Speaker Change: Any other reasons for the inventory write offs.
Speaker Change: And are those largely complete do you believe.
Speaker Change: Yeah. So Anthony there was kind of two components that drove that fourth quarter number.
Speaker Change:
Speaker Change: Part of it.
Speaker Change: The majority of it was a ramp up and in labor costs for the holiday season and early in Q1, we went into a pretty heavy production mode for the holiday.
Speaker Change: And there was some increase in cost of good labor to support.
Speaker Change: Those efforts in the fourth quarter, So I would say you know.
Speaker Change: Tilting more towards those costs in the fourth quarter.
Speaker Change: <unk> was the bigger driver of the bus the lower gross profit margin.
Speaker Change: Okay. So that's the way it there's always somebody I think Q4, just the hotel with.
Speaker Change: That.
Speaker Change: We was the first year that we had all of holiday.
Speaker Change: Which is obviously you know peak business for the core business. So we ended up really.
Speaker Change: Ramping up labor to make sure that we could execute at the level that we executed with that which is 90, 899% fill rate. So that's in order to service new Walmart business that would come on the prior to Q4 that.
Speaker Change: That we were.
Speaker Change: Ramping up for and then obviously, the Mira business, which is substantial at that facility at Heartland, but this is the first year that it was all in house and we left nothing to chance. So we made sure we staffed up appropriately.
Speaker Change: To make sure that we can execute because we knew executing would drive obviously.
Speaker Change: The future for us with both of those retailers.
Speaker Change: Okay and then.
Speaker Change: And then in terms of the acquisition, Jim You mentioned, some cross selling opportunities can you, specifically talk about which which products.
Speaker Change: Do you believe there's there's cross selling opportunities with and what what kind of margins.
Speaker Change:
Speaker Change: So as Mary foods have that.
Speaker Change: You know in terms of in terms of gross profit and as and does that support your your movement towards higher gross margin products overall as a company.
Speaker Change: They have two lines of businesses right. They have they're very steeped in the coconut water coconut oil business, which is a which is a growing global business. They're there number one supplier to all day and all of these one of the top grocery store chains in the world and fastest growing.
Speaker Change: <unk> grocery store chain in the U S. So that will that that starts to give us some wherewithal, they're just starting to make inroads not only to all the work we've done business in the past, but also into more coconut informed and develop products, whether it's coconut oils waters whatnot and then you have sue.
Speaker Change: <unk> foods, which is a combination of both the porges and other types of products.
Speaker Change: That are all organic.
Speaker Change: And therefore, he certified so for US what's nice is that starts to allow us to leverage the 5000 doors here in the U S to start to bring those products and I know they have a new pistachio butter product that they're coming out with as well. So really all about your organic certified products that will help us expand the.
Speaker Change: Portfolio go into different parts of the stores leveraging.
Speaker Change:
Speaker Change: Leveraging our our relationships.
Speaker Change: And when you have kick kick as a sports nutrition brand, we will look to add some color coconut water.
Speaker Change: Since it has such great hydration properties to that line.
Speaker Change: So.
Speaker Change: The upside for us as dramatic here to be able to use some of those products on our platform and then Conversely, where there's quite a few things that we offer that we could potentially bring over to Europe to plug into their until there are 75000 doors that are that theyre in throughout.
Speaker Change: Europe their margins are very healthy and we know that we know that their cost of doing business. There is less than ours, we know that they've they've been very very.
Speaker Change: Very efficient in the way that they source and manufacture so.
Speaker Change: So for US we were pretty excited about it we know it's very complementary.
Speaker Change: Not only from a product portfolio in cross selling but also just from a operational strength and a and a margin standpoint.
Speaker Change: But maybe just a follow up then on sports nutrition side of the business.
Speaker Change: You mentioned the movement.
Speaker Change: And you know that to further scale that business within edible.
Speaker Change: Where are you at with that.
Speaker Change: Uh huh.
Speaker Change: Has just edible gardens, and then and then maybe just talk about what the opportunity is.
Speaker Change: In the sports nutrition category.
Speaker Change: In 2025.
Speaker Change: Okay. So one last thing that I'd, Miss though you know.
Speaker Change: No. Ryan is also EBITDA positive. So when you start to look at the scale of putting the two companies together not only from a margin expansion opportunity you know, it's going to allow us to be a much bigger company that within a pretty short period of time will be positive as a total EBITDA positive as a as a totality of the.
Speaker Change: Business, especially with the trajectory. We're on so just wanted to add that as far as sports nutrition. That's a lot of my background and that's where I came from originally it's pretty interesting. The journey that we're on as its supplementation has become such a such a bigger part of of the consumer's life, Obviously sports nutrition the dynamic has changed.
Speaker Change: <unk> there for years, it was pseudoscience and getting bigger stronger faster people work looking necessarily at what was in the in the bottle. They just wanted the results I think people have come down to Earth and realized that you know not only do they have to exercise and eat right, but it's also important to.
Speaker Change: Put the right supplements into your body.
Speaker Change: I think I've mentioned this on calls in the past and they know what's in my buyouts I. You know I started I started it neutral bond is a brand person relaunching metrics and pure protein and body for gist, which is about $300 million worth of business for them and to this day is still is with that said kicked us really contemporary it's clean labeled wheat.
Speaker Change: Partnered with neutral combo adult who I've been working with for going back 2020, some odd years and this is a real growth area and all the research substantiates.
Speaker Change: That consumers are looking for.
They're looking at the supplement and they're looking for.
Speaker Change: Products that are better cleaner labeled.
Speaker Change: Better for you and that said you know what their lifestyle is and so for US the growth is tremendous as you know a huge category I think I know the timing is as strong for.
Speaker Change: For us and right now we're launching exclusively on Amazon that was a pretty involved a conversation and that in order to get that opportunity as it work with Toronto, which is out on the west Coast and works hand in glove with some of the biggest REIT.
Speaker Change: <unk> out there on Amazon and so to be able to be in this position with the support of Amazon to launch in a category of the Amazon does very very well and I know that the one of the category leaders.
Speaker Change: Does the over $200 million just on the Amazon alone on.
Speaker Change: Four skus of protein powder, so theres a lot of upside, though we just introduced we're just introducing into traditional distribution.
Speaker Change: Right on the heels of the launch so call. It I would say within the next six weeks will be.
Speaker Change: We will be in and in our largest Midwest partner with kick.
Speaker Change: Traditional retail launch that sort of be like I said on the heels of Amazon law. So we've already manufactured and are going to be turning on Amazon in the next two weeks call. It mid April and then and shortly after we'll be ready for beach season in traditional retail and then we'll be pushing out from there. So.
Speaker Change: Pretty excited about that part of the business and then another one that we don't we haven't talked a lot about which is and you know is the pickle line pivotal party line with Herman's Hermans.
Speaker Change: Pickles, they've been making pickles for 75 years for some of the biggest brands out there we partnered with them to really put our spin on it fresh.
Speaker Change: Pickles that are refrigerated that cut that appear in our produce right along with the trucks that we currently have going into into distribution, we've already lined up some big box opportunities with that coming out of our extremely successful Expo last.
Speaker Change: Where are we it's the matter of have enough time in the day to cover off on the meetings that we have in order to to you to deliver on the commitments that we have and in the conversations that we have so.
Speaker Change: The second half of 2025 looks really bright with these new products and now that we've got that that base that with the.
Speaker Change: The core business, where we are where it's at it's running.
Speaker Change: Correctly and the margins are there and things are only improving and like I said, we made a we made a significant.
Speaker Change: Investment in people on Q4 and to make sure that we left nothing to chance that we could really drive the business. This year and focus on top line, so I'm pretty bullish on where we're going.
Speaker Change: Hello.
Speaker Change: And then and then just lastly, as you as you focus on the higher margin products and exited some of the lower load in your mind.
Speaker Change: Yeah, we can hear you caused us yep yep.
Speaker Change: Yeah can you hear me.
Speaker Change: Yes, yes, Okay, you hear me okay.
Speaker Change: Okay sure I can.
Speaker Change: The.
Speaker Change: Exit the.
Speaker Change: You know I spoke on the higher margin products exited some of the lower margin products like lettuce in the floral business are there any costs.
Speaker Change: And expected in the first quarter of 'twenty five.
Speaker Change:
Speaker Change: One time charges related to the exiting of.
Speaker Change: Lettuce in the floral business.
Speaker Change: Any other charges expected I know that probably would be some.
Speaker Change: Charges or costs associated with the proposed acquisition, but any costs associated with exiting the lettuce or flower business.
Speaker Change: And you're talking about just to reaffirm and I know that I think causes may have dropped off the line, but I can answer. This question. So just to just to recap what you're asking in Q1 of 2025 are there any additional costs beyond what's associated with the the lettuce and let us in the floral business was that the question.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: We don't anticipate any I mean, frankly, the business is pretty clean excused upon we've been able to get rid of some of these just lower these lower you know margin no margin business is that you know provided some top line revenue, but when you think about what we were able to accomplish last year, we're replacing that revenue.
Speaker Change: Revenue in a pretty short period of time, and we we only had six months of of of benefiting from a from you know them.
Speaker Change: Being more efficient.
Speaker Change: Shedding their contract growers.
Speaker Change: And driving that margin and like I said, you know we look at look at the numbers that we put in this this year with everything just much better order. We're gonna you know, we should be able to drive that business and like I said I don't think we're going to see much drag in Q1. So he causes I saw that you just don't jump back on.
Speaker Change: Anthonys question was in regards to you know Q1, and any any potential one time charges over and beyond you know who the anything associated with exiting the lettuce and and floral business. So I said you know.
Speaker Change: Go ahead, yeah go.
Speaker Change: Yeah, I don't I don't see any charges coming from those exits Anthony it's a you know the growing equipment and stuff like that we kind of took care of or those in 2023, and we can use those assets for other other purposes, So nothing else there.
Speaker Change: Okay, great. Thanks for thanks for all the color I'll hop back into queue I appreciate it.
Speaker Change: Alright, thank you.
Speaker Change: Thank you.
Speaker Change: Our next question is.
Speaker Change: Apologies firstly before I go ahead, if anybody does have any other questions or comments. Please indicate so no by pressing star one we do have another question.
Speaker Change: On the line.
Speaker Change: Nick Pincus with Forest capital your line is life.
Speaker Change: First off congrats on the tremendous progress that you guys are making.
Speaker Change: Touched on this previously in the prior Q&A, but benefited from only six months of the vertical integration implementation and it really is impacting the gross profit could you expand on your plans to leverage these improvements going forward.
Nick Pincus: Yeah. Thank you for the question Nick.
Speaker Change: Yeah look.
Speaker Change: Well like I said six months was you know when you think about how far we came in such a short period of time and where the business is now we're really positioned to focus our energies on that top line growth right and so last year was really as I liked it.
Speaker Change: Kind of say around around the the office. It was really about fixing the machine and that was something that we were able to not only think about it bring bring five acres up in running put in.
Speaker Change: More automation and be able to be ready for a big capacity.
Speaker Change: The city and you know and I'll put it in Q4, you know all of that sort of has to happen pretty quickly last year. As we were as we were transitioning out of out of.
Speaker Change: Ah contract growers, so I'm really proud of what the team was able to accomplish.
Speaker Change: To.
Speaker Change: Keep our reputation as someone who could pick pack and ship at such a high rate, which is the expectation by all of these major big box retailers all of that drives new opportunity in those new opportunities are coming to fruition now. So they have that you know, it's an ongoing process no matter, what but to have that kind of behind us.
Speaker Change: And focus on you know on the second half of this year and putting in these new product, which I think are the right products at the right time with the right pricing. The right formulas are I couldnt be more proud of how quickly you know the team has been able to rise to that occasion and when you start to think about what.
Speaker Change: Make smaller companies grey and bigger companies, it's the ability to be.
Speaker Change: The ability to go to market quickly to be able to reaction to there was something that was put into the into the you know it's the releasing into the script are which.
Speaker Change: Which you know, which I believe it was put in by causes which as you know and he's got the you know he's somewhat new needs and that now is the vet because he's been here and lived through it in the past year.
Speaker Change: And has really impacted our business.
Speaker Change: It's really about is this ability to move quickly to take the capital that we have we've strengthened the balance sheet and we can go after opportunities and really move you know move and you know I know on a dime, whereas bigger companies are going to you know they're gonna, they're just they're just going to take a long time.
Speaker Change: And the market the other times of the market opportunity passes by or there they don't have that opportunity.
Speaker Change: A a a first market mover, which is something that I've always powdered prided myself on and what I thought I brought to the table with my marketing background and I think here, that's what you're going to see is our ability you know our ability to really stick and move our leverage off that you know we're going to have some good base business growth that you know, but really it's the new products the new accounts more.
Speaker Change: Moving into the likes of of bid.
Speaker Change: Big box retailers that are truly going to drive the volume and so.
Speaker Change: This is the first time since I've been involved in the business that I really feel like we can really put our energies towards growing growing the business with the right products with the right margins and I think we've got and I know we've got the right team. So last year was really still a hey, let's we got to fix all of this before we can really start to you know to start to <unk>.
Speaker Change: And so that's that's where I think you know when you look at only six months I mean, that's it's only six months. This year is going to is going to be pretty compelling Hum and I'm pretty excited about you know between the new products. The opportunity you wouldn't Orion, which I think is very like minded companies that are looking to put great products out there.
Speaker Change: You know with the right formulas in the REIT Nutritionals at the right time in it.
Speaker Change: Having that manufacturing.
Speaker Change: Leverage now that we will have that we haven't had.
Speaker Change: In the past because we didn't we didn't have it and if we can do something accretive like no Ryan it's really going to accelerate the business and it's going to get really interesting really quick for us, which I think is great.
Speaker Change: No I agree I think you said it very well and this isn't really a question, but what I'm excited about is <unk> built a very impressive distribution platform access to 5000, plus stores contracted business with Walmart Meyer and so now what I am.
Speaker Change: Looking forward to seeing how you guys could leverage that for the new products that whole party Paul kicks. So good luck.
Speaker Change: Well I appreciate it and that's always been a discussion right. It's like you know one of the biggest Athens going into this and when you look at the fact that so many of our competitors. When you just look at ski a specifically, which is controlled environment agriculture have gone out of business and they've raised.
Speaker Change: At 10 times, the money and it's just not that that's a real number 10 times and most recently a company that raised 20 times.
Speaker Change: You know we are we are we are we haven't we have a.
Speaker Change: Relationships aren't just about hey, I know the buyer. It's about performing you know when we make an investment like we did in Q4 in people to drive it to drive.
Speaker Change: No in stocks and ship rates, you know that that we get you get you know the theory is you'll get rewarded for that down the road and we have and we continue that and we have a seat at the table. It at major retailers and we're making investments in the shows and then you know in the in the marketing and the advertising so that we cannot own.
Speaker Change: The you know.
Speaker Change: Sell in but sell through so I'm like I said, where we're there it's taken years frankly.
Speaker Change: To get there and we're there now and like I said, it's we're at we're in a great inflection point and I'm pretty pretty thrilled.
Speaker Change: T O.
Speaker Change: I appreciate it thank you.
Speaker Change: Thank you.
Speaker Change: A question from Bryan Kennedy with capital market. Your line is live.
Speaker Change: Yes, good morning, Jim and again good morning, Brian how are you.
Speaker Change: Good morning.
Speaker Change: We're good we're good.
Speaker Change: Hey, Eric Yeah, what Nick said, yes, congratulations its a very impressive.
Speaker Change: Gross margin improvement and then and the fact that it's such.
Speaker Change: Such a short period of time that you achieved it in.
Speaker Change: And I'm looking at the numbers I mean, when I look at year to date numbers annual you're you're approaching 20% there and you only did it for what part of the year.
Speaker Change: I'm, just trying to understand a little bit though in terms of what the gross profit was in the fourth quarter I mean, a drag it doesn't really reflect what's your.
Speaker Change: Full year was so can you speak a little bit about what may be impacted it.
Speaker Change: Because I think we're on a trend here, taking 20% of them that you know normalized is it fair to say you can be more approaching 30% once everything kind of worked through the system.
Speaker Change: Yeah, I think that's fair I think you know look I think we've got you know we've got a target G. P. That's you know that's you know 35 to 40, we think thats definitely achievable as the product mix starts to sort of you know iron out with some of these more shelf stable products coming in at you know much higher.
Hmm.
Speaker Change: Rings as they would say right. So when you think about the fact that how many basal plant you have to sell versus how many jars of sports nutrition or pickles. You know its considerable Q4 was was when we continue to invest in people I think Anthony had asked this.
Speaker Change: Western earlier, and I'll hand over to causes in a second to talk a little bit more about the nuts and bolts of the numbers, but it was really a wow Q4 tends to be our heaviest.
Speaker Change: Highland type of year time of year, we have it.
Speaker Change: It's here in the you know it's obviously in the states as you know, it's Thanksgiving Christmas New year's and herbs are a big part of everybody's meals and parties.
Speaker Change: So we see a considerable lift and you know when we see it at some of our key retailers and in this instance, Myer does a huge what's called the holiday program that really kicks off in.
Speaker Change: In the middle of to the end of October all the way through the first week in January where we see a 10 times lift in volume coming out of the facility. So this year was a combination of land labor ramp up plus there were some items that we ended up having to pay a little bit more for because.
Speaker Change: Of the fires that were out in California, So whether it was time or or time or or sage that were impacted all of that sort of went into our cost of goods, but you know that the labor was a big piece of it that really we ended up investing in to make sure that we nailed holiday because we knew that.
Speaker Change: That drives.
Speaker Change: The next year, if you if you fall down during the holiday and you don't ship at 98%.
Speaker Change: Plus you know that's the expectation from these retailers, whether it's Meyer or Walmart, which was in that facility. This year as well so that was really where that that that that I look at it more of an investment knowing that this year, we're gonna be a lot more prepared since this was the first year, Brian that we have that all of that pro.
Speaker Change: Graham.
Speaker Change: For both of those major retailers.
Speaker Change: Our heartland facility. So we didn't have the year before we had we had a weird weird outsourced. It. So we ended up making sure left nothing to chance by making sure. We had enough people and that was a that was a lot of what that expenses related to cost as you have anything to add there.
Speaker Change: I think.
Speaker Change: You hit the highlights on the head Jim.
Speaker Change: Now.
Speaker Change: The Cogs was certainly related to the ramp up and.
Speaker Change: Now those the labor component and the purchases component really drove kind of the.
Speaker Change: The <unk>.
Speaker Change: The decline versus a year years trend.
Speaker Change: But I think so normalizes as we get through 2025, and we have a much better understanding.
Speaker Change: <unk> of our demand and how to how to properly adjust for for those things from from an input perspective.
Speaker Change: Yeah.
Speaker Change: Oh, that's great.
Speaker Change: Yeah.
Jim: Go ahead, Jim you know finish up no I just wanted to make it you know look the reality is that there's there's there's some room for improvement there at the facility. We you know we brought in a new production.
Jim: Manager, who ran the program. It was his first program and like I said, we probably overstaffed to make sure. We didn't have any problems in luck and I'll take responsibility for that because I hang our hat on or off or was operational excellence as it relates to our ability to fill orders and <unk>.
Jim: So I don't think you're going to see that this year now that we will have a year under our belt. We you know we will have a full year plus of the facility operating the lines won't be new and new to the people and I fully expect Q4 to two.
Jim: At to outperform Q4 of this past year, because we just won't have some of those harder I made sure that we didn't have to.
Jim: Yeah.
Jim: It's not all about the investment it's all about the inverse right Rofin and I think the fact that you were able to I mean this is what I wanted to highlight a little bit because you did so much in such a few months.
Jim: To have such a strong margin for the whole year I. You know you can just see that kind of trending for 25. It should be very very strong. So we look forward to that look forward to increase the revenues too I think you've got a lot of great initiatives there to does.
Speaker Change: Certainly increase the up line. So you guys are well on your way.
Speaker Change: Noticed that in your financials, you paid down some debt. So that was nice to see that you've got that are enrolling in the right direction, you've got just a little bit of that.
Speaker Change: That left so that's and I take that's on your fixed assets your greenhouse facilities.
Speaker Change:
Speaker Change: Primarily yeah yeah.
Speaker Change: Yeah, that's I mean, that's a good bet.
Speaker Change: Right, that's got lower interest that we've got a little bit of receivables that out there.
Speaker Change: We'll be working through this year, but you know like I said, where we're in a great spot and and the team has done a great job.
Speaker Change: Frankly causes has done a great job, but I think he deserves a lot of credit as well as bringing just allowing me to focus on new products and some of the things that I know that I do well to drive revenue.
Speaker Change: It's I'm excited to get after it this year.
Speaker Change: I'm less worried about.
Speaker Change: But you know.
Speaker Change: I don't know what the right phrase, but you know, it's just like I'm less worried about certain things more more focused on and on.
Speaker Change: Driving the business because that's what I enjoy to do and I think you know driving that top line and there's no Ryan.
Speaker Change: Opportunity I think is huge.
Speaker Change: And it took really will change the dynamic of really put an interesting face on edible garden I think position us.
Speaker Change: Differently in the eyes of some of the bigger players out there since like I said, we're still we're still quick the market. There's a real strong team in Slovenia aware at an Orion space that I think is going to help deliver some really interesting products into the into the platform and the shared platforms. So I think growth could be exponential moving forward.
Speaker Change: Now that we are we have focused on that growth versus worrying about contract growers and constant negotiation on a lot of stuff. So being vertically integrated now really gives us a lot of strength and we're not carrying a lot of that to your point, which is just gives us a lot of flexibility and we had a nice cash balance going into into the year, so that that take some of them.
Speaker Change: That worry away.
Speaker Change: Got it.
Speaker Change: Read it all.
Speaker Change:
Speaker Change: The main points, Jim you know.
Speaker Change: They're kind of in Q4, we did pay a pay down about $3 2 million in debt to kind of shore up the balance sheet, which was.
Speaker Change: Kind of put us in a really good position entering 2025.
Speaker Change: Our balance sheet perspective, and we're looking to make smart investments like we mentioned in the cake line.
Speaker Change: And others, along with this and Orion transaction, which I think could be really transformative for us and in 2025.
Speaker Change: I know you got a nice cash balance going in from last year, So that specials really well the last point I just wanted to make or ask and this is just the.
And you see all of these metrics working in the right direction I, just don't understand and the market cap of edible you know this this company to me looks really well undervalued do you you've got tremendous customer base, they're hard to get you've made investment to keep the customers as you pointed out there.
Speaker Change: You know, that's just a tremendous investment to get those customers and keep them and there were a whole lot of money. So you know I'm looking forward to seeing what you guys going to do this year in terms of I guess investor relation and letting the world know about this this terrific growth opportunity because I mean at this market cap today, it's ridiculous.
Speaker Change: Compared to like your business is really doing so congratulations.
Speaker Change: Thank you.
Speaker Change: Thanks.
Speaker Change: Thank you.
Speaker Change: As we have no further questions on the lines at this time I would like to hand, it back over to management for closing remarks.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: And thank you for joining us today.
Speaker Change: We've demonstrated that we can grow intelligently by prioritizing higher margin categories investing in sustainability, leveraging vertical integration and embracing technologies that are shaping the future of agriculture, and we're not just scaling and we're just getting started with our heartland facility fully transitioned to growing herbs product line in house cleaner more strategic.
Speaker Change: Product mix and global expansion opportunities on the horizon, we're heading into 2025 with strong momentum a clear vision and a solid foundation to drive long term shareholder value.
Speaker Change: We're excited about what's ahead and we remain committed to delivering value for our customers our partners and our shareholders. Thank you very much and have a good day. Thank you for the support.
Speaker Change: Thank you ladies and gentlemen, this does conclude today's call you may disconnect. Your lines at this time and have a wonderful day, we thank you for your participation.
Speaker Change: That's right.
Speaker Change: Yeah.