• Gross Profit Increase: $687,000 increase in Q3 2024 compared to the same period last year.
• Gross Profit Margin: 27.1% for Q3 2024.
• Revenue: $2.6 million for Q3 2024, down from $3 million in Q3 2023.
• Cost of Goods Sold: $1.9 million for Q3 2024, down from $3.3 million in Q3 2023.
• Selling, General and Administrative Expenses: $2.2 million for Q3 2024, down from $2.4 million in Q3 2023.
• Net Loss: $2.1 million or $0.65 per share for Q3 2024, compared to $2.4 million or $13.83 per share in Q3 2023.
• Debt Reduction: Paid down $3.2 million in debt due 2025.
• Funds Raised: $5.65 million from September S1 offering.
• Sales Growth: 55% increase in sales of cut herbs for the first nine months of 2024.

• Warning! GuruFocus has detected 5 Warning Signs with EDBL.

Release Date: November 13, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Edible Garden AG Inc (NASDAQ:EDBL) reported a significant increase in gross profit for Q3 2024, with a $687,000 rise compared to the same period last year.
• The company's gross profit margin improved significantly, reaching 27.1% in Q3 2024, reflecting consistent margin growth.
• Sales of cut herbs increased by 55% for the first nine months of 2024, indicating strong demand for core products.
• The company strengthened its balance sheet by raising approximately $5.65 million in gross proceeds from a September S1 offering, which helped reduce debt.
• Edible Garden AG Inc (NASDAQ:EDBL) expanded its partnership with Walmart, launching new products like Hydro Basil and Vitamin Way protein powders, enhancing product accessibility and potential revenue growth.

Negative Points

• Q3 2024 revenue decreased to $2.6 million from $3 million in the same period last year, primarily due to phasing out lower margin products.
• The strategic decision to eliminate the lettuce and floral categories resulted in a $597,000 decrease in revenue.
• Weather events, specifically Hurricane Helene, impacted nutraceutical product sales, shifting $215,000 of revenue from Q3 to Q4.
• Despite improvements, the company reported a net loss of $2.1 million for Q3 2024, although this was an improvement from the previous year's loss.
• The transition away from contract growers and lower margin products may pose challenges in meeting demand during peak seasons without relying on external resources.

Q & A Highlights

Q: With the reduction in contract growers, can Edible Garden handle the demand this busy season without them? A: Jim Kras, CEO, confirmed that they do not need contract growers to meet demand. The company has focused on infrastructure and gross profit improvement, adding more capacity with new production lines. This positions them to handle current and increased demand, potentially making Q4 their best quarter ever.

Q: Can you quantify the impact of the hurricanes in Florida on revenue? A: Jim Kras stated that approximately $215,000 in revenue was shifted from Q3 to Q4 due to hurricane-related port closures affecting their Nutrisa line for a major client, PriceSmart.

Q: What growth can be expected from the sports nutrition line in 2025? A: Jim Kras expressed optimism about significant growth, citing commitments for the KIC sports nutrition line. They plan to launch with major retailers and Amazon, leveraging his extensive experience in the category.

Q: Is the gross margin improvement from exiting low-margin products fully reflected in Q3, or is there more potential? A: Jim Kras indicated that gross profit margins should continue to expand as they focus on core business and efficiencies. They have exited low-margin products like certain lettuces and florals, which were not core to their business.

Q: What are the expectations for Q4 2024 and beyond? A: Jim Kras concluded that they expect significant growth in both margin and revenue in Q4 2024, potentially marking it as one of the strongest quarters in the company's history. They are well-positioned for sustained growth and long-term shareholder value.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.