Once Upon a Farm, PBC 2026 Q2 Earnings Call

Thank you, welcome to the Once Upon a Farm second quarter 2026 earnings conference call. With us on the call today are John Foraker, Chief Executive Officer and Co-founder, and Larry Waldman, President and Chief Financial Officer. By now, everyone should have access to the earnings press release that was issued earlier this afternoon and is available on the investor relations section of Once Upon a Farm's website at www.onceuponafarmorganics.com. This call is also being webcast, and a replay will be available shortly after the call concludes. Before we begin, please note certain comments made on this call include forward-looking statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

These forward-looking statements are based on management's current expectations and beliefs concerning future events and are subject to several risks and uncertainties that could cause actual results to differ materially from those described in these forward-looking statements. Please refer to today's press release and other filings with the SEC for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. We do not undertake any obligation to update any forward-looking statements to reflect events or circumstances after the date of this call, except as required by law. During the call, we will use some non-GAAP financial measures as we describe business performance. The SEC filings, as well as the earnings press release, provide reconciliations of the non-GAAP financial measures to the most directly comparable GAAP measures.

Now I will turn the call over to John to begin.

Thanks, Brian. Good afternoon, everyone, and thank you for joining us today. We delivered another quarter of high-quality, volume-led growth, with net sales increasing 42.3% year-over-year. Our portfolio continued to drive category growth for our retail partners, rooted in strong velocities, expanding distribution, and stronger assortments in all our key categories from highly incremental innovation. In the second quarter, we also executed a very successful national program at a major retailer. Consumer demand remained resilient across our channels, with household penetration, repeat, and buy rate all improving year-over-year. Our 100% certified organic portfolio is well-positioned against durable health and wellness trends, and consumers continue to recognize the differentiated value that our brand and products provide. Our business has significant momentum with consumers and retailers alike in the current economic climate.

Based on our second quarter performance and current outlook, we are again raising our full year net sales guidance to $327 million-$335 million, or approximately 36%-39%, while increasing our adjusted EBITDA guidance to a range of $3 million-$4.5 million. Larry will provide more details on this revised outlook shortly. Consumption remained in the low to mid 30% range during the second quarter. Trends continue to be strong across our core metrics. We remain the fastest-growing brand in baby and toddler snacks by dollar share. We continue to gain share in baby and toddler pouches as well by bringing new incremental consumers to the category and by taking share directly from larger, established conventional competitors. Our brand is a key driver of growth across the baby category for all our key retailers.

The difference between net sales growth of 42.3% and consumption growth in the low to mid 30% range primarily reflects favorable cooler slotting versus Q2 last year and significant distribution gains during the quarter, including the strong initial shipments of our protein position innovation in both baby and kid. Underlying base consumption remained strong throughout the quarter. Our effective and modern marketing, as well as our broadening distribution footprint, continue to amplify the compelling promise of our mission: to drive systemic improvements in childhood nutrition for a healthier, happier, and more equitable world. Household penetration grew to 6.2% at the end of June compared to 5% a year ago. Despite that significant increase in households, our buy rate continued to grow.

Drilling down, our repeat rate among households with kids increased 351 basis points compared to a year ago to 52.1%. New families are repeating at even higher rates, reflecting the success of our strategy to build the brand from baby through kid. As the brand scales, we continue gaining share across our portfolio in pouches and snacks from baby through kid. This is exactly the kind of high-quality growth we expect to deliver. Our funnel is widening. We are increasing retention and growing spend per household all at the same time. Looking at second quarter sales in more detail. Growth was again led by our baby business, where net sales increased 73% year-over-year to $41.5 million, with pouches and snacks increasing at similar rates. Velocities remained strong. We added over 85,000 points of distribution in baby during Q2 at existing and new retailers.

Innovation was a key driver of our baby pouch growth during the quarter. We are very pleased with the performance of our meat and legume protein pouches we launched in March. They have been 61% incremental to Once Upon a Farm and 63% incremental to the total baby category at certain retailers, and we are just getting started. Expanded distribution fueled baby snack sales, creating a long tail for growth, given baby snacks are a very critical entry point to the brand for new Once Upon a Farm consumers. Turning to our kid business, as expected, net sales growth re-accelerated to 22% year-over-year to $43.9 million. Snacks grew at a slightly faster rate, reflecting innovation impact from both successful launch of Power Wheels with protein in kid bar sets and protein and probiotic pouches into kid dairy sets.

This innovation contributed to the addition of over 15,000 new points of distribution during the quarter in our kid portfolio. In kid pouches, growth was driven by the success of a national club program. Packaging refreshes have also proven to be a very key accelerator in kid pouches. The packaging updates we implemented to our dairy-free smoothies line this past spring are driving immediate 10%-15% average velocity increases on same distribution. We'll continue to drive packaging improvements across our total kid pouch portfolio through the rest of this year as we see excellent opportunities to both increase on-shelf impact and to further sharpen our consumer value proposition. We'll also be introducing a new sub-line of functional kid pouches with several key customers in the coming weeks. The performance of the national club program we ran in May was exceptional, driving velocity and volume that met our high expectations.

This program successfully exposed the brand and these products to millions of new households, which was the primary objective. Household penetration in our immunity blend portfolio is up over 20% versus April, confirming that we've brought new incremental consumers into the offering. We'll be adding another national program, albeit somewhat smaller in scope, at the same customer during Q3, focusing on our best-selling Tractor Wheels toddler snack products. We think this program will drive incremental consumer purchase activity, deeper household penetration, and increased awareness, which should accelerate our momentum across all channels. Turning to our baby coolers, productivity per cooler continues to increase, reflecting broader consumer awareness as well as our expanding assortment.

For example, at one of our larger customers, our cooler velocity increased by over 30% in the quarter compared to last quarter, driven by the addition of our new meat and legume protein pouches and our oat bar minis, which we've also begun placing in coolers. Importantly, the majority of this increase was incremental to Once Upon a Farm and to the category. We expect cooler productivity to continue trending higher for the foreseeable future. We remain on track for approximately 5,000 coolers in 2026, 8,000 in 2027, and at least 15,000 coolers over time. Our proof of concept is resulting in further and deeper engagement with additional major retailers. During the quarter, we implemented a targeted price increase on selected items, effective in late September, to offset specific inflationary pressures. Retailers have broadly accepted the increase.

We designed the action to preserve our consumer value proposition. Based on historical elasticity and current demand trends, we expect a limited impact on units. Before I turn it over to Larry, I want to spend a minute on something we are really excited about for the future of this business. Our growth trajectory is increasing our confidence in the ultimate scale of this platform. We are building the supply chain required to support that opportunity. Working with our co-manufacturing partners, we are advancing new targeted automation and productivity initiatives across our highest volume platforms. These projects are designed to increase capacity, improve service, and reduce costs, particularly labor-related costs. We expect some initial benefits in 2027 and a larger incremental contribution in 2028 as the projects reach their fuller utilization.

It's important to point out that our expectation for meaningful profitability expansion in 2027 does not depend on receiving the full benefit of these productivity initiatives. We expect improvement next year to be supported by continued growth, operating leverage, and initial supply chain productivity benefits. These productivity initiatives just further strengthen our confidence in our long-term profit path. It's still early, and we don't want to get ahead of ourselves on precise metrics today, but we did want to send a clear signal about the opportunity and the importance of these new initiatives. We look forward to sharing many more details over the coming quarters. With that, I'll turn the call over to Larry to walk through the financial details.