Edible Garden AG Incorporated Common Stock 2026 Q2 Earnings Call

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 Costas Staflis, 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.ediblegarden.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 or would like any additional information about the company, please contact Crescendo Communications at 212-671-1020.

Before Mr. Kras reviews the company's operating results for the quarter 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 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 financial condition, results of operations, strategy, short-term and long-term business operations and objectives, and financial needs.

These forward-looking statements are subject to several risks, uncertainties and assumptions as described in the company's filings with the SEC, including the company's annual report on Form 10-K for the year ended December 31, 2025. Because of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in the conference call may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. Although the company believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, level 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? 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 is 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 N.Y., 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 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 is 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 forward 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 and 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 earning profiles of the business. That is really what Farm-to-Formula is about. 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 Costas to review the financials.

Costas? Thanks, Jim, and good morning, everyone.

Revenue for the three months ended June 30, 2026 increased 12.8% to approximately $3.6 million, paired with approximately $3.1 million in the prior year period. The increase was driven by continued growth in our cut herb 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 condiments 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.