EDBLW · Edible Garden AG Incorporated

Edible Garden AG Incorporated faced a pivotal yet difficult FY2025, marked by revenue of $12.8 million, down 7.6% from $13.9 million in FY2024. This decline occurred despite a significant increase in demand from both existing and new customers unable to source sufficient supply from their prior vendors. The Company works with contract growers to locate production near customers, but changes in demand or growers' ability to meet purchase orders led to shifting growing locations over time. These dynamics contributed to operational pressures that eroded profitability.

Gross profit swung sharply to a -$204,000 loss, or -1.6% margin, from $2.3 million the prior year—a 108.8% deterioration. The primary driver was an increase in cost of goods sold from elevated procurement and logistics costs, particularly in the fourth quarter of 2025. This surge was tied to fulfilling sudden demand spikes, highlighting vulnerabilities in supply chain responsiveness even as overall growing capacity with contract growers, Edible Garden Heartland, and the Flagship Facility remains sufficient for existing customers.

Operating income worsened 70.4% to -$15.8 million (-123.3% of revenue) from -$9.3 million, as the gross loss filtered through to broader operations. Net income followed suit, deepening 56.8% to -$17.3 million with diluted EPS at -$117.64 versus -$68.38. These results underscore how Q4 cost pressures overwhelmed revenue stability, amplifying losses in a capital-intensive fresh produce business.

Cash flow reflected persistent burn, with net cash used in operating activities rising to $11.8 million from $8.5 million, yielding free cash flow of -$12.4 million after $638,000 in capital expenditures—up from $303,000 prior year. Capital outlays supported ongoing facility development, where equipment procurement, installation, modifications, and integration demand substantial investment over the build-out period. Primary liquidity requirements center on working capital, these capex needs, and other strategic investments.

Looking ahead, the Company anticipates Phase 1 production at the Webster City facility in 2027, contingent on a final supply agreement with Tetra Pak, engineering completion, regulatory approvals, and capital availability. Tools like the GreenThumb inventory management system aid in optimizing levels, order quantities, fill rates, and truck loads. Management plans continued operational efficiency initiatives in 2026 to reduce waste and enhance production planning. However, severe weather conditions pose ongoing risks to supply, sales volumes, unit costs, and shipping, potentially exacerbating margin pressures seen in FY2025.