Buda Juice, Inc. (BUDA) Q4 2025 Earnings Call Transcript

Ladies and gentlemen, thank you for standing by. My name is Krista and I'll be your conference operator today. At this time, I would like to welcome everyone to Buttigieg's fourth quarter in full year 2025 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question at that time, simply press star then the number one on your telephone keypad and if you'd like to withdraw your question again press star one we will also be taking web questions if you would like to ask a question via the web please type your question in the question box and enter and press enter thank you i would now like to turn the conference over to brian siegel investor relations please go ahead.

Thank you, Operator. During today's call, Horatio Lanzo-Hans, Buda Juice as a Chief Executive Officer, and Clint Bowers, Buda's Chief Financial Officer, will discuss Buda's financial and operational results that were reported this morning. Any forward-looking statements made during this conference call during the prepared remarks or in the Q&A session, whether general or specific in nature, are subject to risks and uncertainties that may cause actual results in the future to differ materially from those discussed on today's call. These risks and uncertainties include, but are not limited to, specific risks and uncertainties disclosed in Buddha's periodic SEC filings. Buddha assumes no obligation to update any forward-looking statements or to update the factors that may cause actual results to differ materially from those that they forecast. Please note that our earnings release is available on the Investor Relations page of the Buddha Juice website and has been filed on Form 8K with the SEC. Finally, on this call, we will refer to non-GAAP measures, including free cash flow and adjusted EBITDA. Please see our earnings release for an explanation of our use of non-GAAP measures and reconciliations to the GAAP measures. Now I would like to turn the conference over to Horatio.

Thank you, Brian. And good morning, everyone. And thank you for joining us for Buda Juice's first earnings call as a public company. In January, we completed our IPO on the New York Stock Exchange American. That was an important milestone, but more importantly, it positions us to scale what we believe is a new category in the fresh perimeter of the supermarket. At Buttigieg, we've created what we call the ultra-fresh category. We produce, package, ship, and deliver our products entirely with our fresh 35 cold chain. No pasteurization, no HPP, no UV, and no shortcuts. That allows us to deliver generally fresh products at scale into the produce department, which we believe is fundamentally different from both the shelf stable beverages and in-store juicing. Turning to our results, in 2025, it was another solid year for buddha juice revenue grew approximately 12 percent year over year operating income was 3.45 million and gap net income was 3.53 million importantly we remain profitable and debt free at our size that is not common and we believe it positions buddha among a relatively small group of public microcap companies that are both growing and generating consistent earnings We've also begun targeted capital investments at our Dallas facility to increase capacity and improve automization. These projects are underway and are expected to support future growth and operating efficiency over time. As we move through 2026, our focus remains straightforward. forward, expanding distribution within existing retail partners, adding new retail accounts, and continuing to build our ultra-fresh category in the produce department. This is not just a product story. It is a category creation and an infrastructure story. We believe we are still in the early stages of building a meaningful new category, and we're doing so from position of financial strength. With that, I'll turn over the call to Clint Bowers, our Chief Financial Officer.

Thank you. Good morning, everyone. Let me start with full year 2025. We delivered approximately 12% revenue growth while maintaining strong profitability. Gross margin was 44.6%, down modestly from 46.2% in 2024, primarily due to higher citrus costs in the second half of the year. Operating expenses were $2.2 million, up from $1.8 million. About half of that increase reflects the normalization of executive compensation as part of our transition to a public company, which we do not expect to repeat at the same level going forward. Operating income was $3.45 million, very consistent with the prior year. Net income was $3.5 million compared to $3.6 million last year. Adjusting for the benefit for the receipt of insurance proceeds in 2024, net income would have increased by approximately 4% year over year. Adjusted EBITDA was $3.8 million, and free cash flow was $3 million, with a modest decline driven by IPO-related expenses. Turning to the fourth quarter, revenue was $2.9 million, up 4.4 percent year-over-year. As expected, we saw typical seasonal softness in same-store sales in the fourth quarter. Gross margin was 42%, reflecting higher citrus costs and a small inventory write-off. Operating expenses were approximately $550,000, up from $400,000, driven by the executive compensation normalization, additional facility lease expense, and public company costs. Operating income was $660,000, and GAP net income was $676,000. This was down from prior year as a result of the earlier mentioned gross margin factors and higher operating expenses. Adjusted EBITDA was $719,000, and free cash flow was approximately $500,000. We ended the year with approximately $2 million in cash and no debt. And then in January, we added roughly $18 million net from our IPO proceeds, providing a very strong balance sheet of approximately $20 million in cash and no debt to support our continued growth. Looking at 2026, while we generally do not plan on issuing guidance going forward, I'm going to provide some assistance for modeling purposes since this is our first earnings report. We have a handful of days left in the first quarter, and I'm excited to say our revenue growth rate for the quarter will accelerate to the mid-teens versus last year, which at this stage is all from existing customers. Additionally, when modeling our full year 2026 compared to 2025, there are a few items to note. As a C corporation, we will begin to reflect federal income taxes on the income statement as well as stock-based compensation, and approximately $1 million in annual public company costs. Thank you. We'll now open up the call for questions.

Thank you. If you would like to ask a question via the phone, please press star 1 on your telephone keypad. To withdraw that question, again, press star 1. If you would like to ask a question via the web, please type your question in the question box and press enter to submit. Your first question comes from Eric DeLaurier with Craig Hallam. Please go ahead.

Thank you for taking my question. First one, just curious how conversations with new grocers beyond your primary customer are going. What are some of the biggest sort of hurdles or pushback that you're encountering? And then what are some of the strongest selling points or sort of favorable aspects of your business that are helping you sort of get a foot in the door here?

I'm sorry. Good morning, Eric. So the question, just to be clear, from existing customers, what are the challenges? Is that what the question is?

No, sorry. I guess I wasn't super clear. um i'm just kind of wondering how overall conversations with new grocers are going um you know what uh what's what's any potential um pushback or hurdles that you're encountering and you know what what else uh about your business or products are you know really helping you um in those conversations or you know get get the foot in the door just kind of wondering how these new conversations are progressing?

Well, that's a harder question than the previous one. Okay. Well, everything is proceeding according to plan. We've been working with new customers coming on board. There is, you know, there's a time lag, but we've been taking us, we've been working with a couple of them for years, and we're getting close, very close. With that in mind, we've been building more capacity here and more optimization, and we look forward to having one or two new customers on board soon.

All right, great. And is this new category that you're creating, is this something that you think would be kind of subject to the typical shelf resets? or is this something that, you know, perhaps you could sort of start to layer in and a bit more smoothly? I'm just kind of wondering how we should expect new customers to ramp.

Well, I think that most new customers will probably not just put in four SKUs to begin with. They'll probably start a little slower like we did with HEB. And over time, they start increasing and giving us more shelf space. As you may know, we really fit into the freshly cut fruit, you know, that perimeter that's really expanding in the fresh and the ultra-fresh category, not in so much in the juice set with all the other, you know, more shelf-stable and HPP products. So, yes, I mean, I think, you know, once, okay, once this is incremental sales for the produce demand, so it's really exciting for them because it brings a whole new category to them, a whole new, you know, the customers are looking for, you know, for fresh. I mean, you don't go to the grocery store to pick up loo paper or any paper towels or cleaning you get that on amazon it's delivered to your door so you know the grocery the challenge right now in the grocery business is how do you get customers back in the stores two or three times a week and the solution is fresh so they're all expanding the perimeter of the store with fresh and that's well we beautifully into that because we are ultra fresh and we have all these wonderful products from shots to fresh lemonade to citrus and so on that really um added great value because incremental sales to the produce department and it's what the customers want but it hasn't really been available to most of the grocery stores because it's very expensive to do in-house and challenging and it hasn't been available on a scalable basis until we've come And now we're able to, especially in this market, we're already here, but as we expand in this market, we eventually will do the East and the West Coast, and it will be available nationwide.

That's great to hear. I appreciate the color. And then just last one from me on the competitive landscape. Can you kind of just give us an overview here? You know, what are the competitive dynamics with other, you know, I would say adjacent brands, you know, maybe some wellness shop brands. And then as it relates to your infrastructure and cold chain, you know, what are your sort of primary advantages compared to others here?

Well, that's a great question. So, basically, the market consists right now of shelf-stable, pasteurized, HPP, UV products. That's pretty much the entire juice set today. um where way different is um the short shelf life the the ultra fresh uh so the customers are really getting real juices real lemonade they're not even taste great um but they're you know that they have a short shelf life so you know they're fresh and that's the point of difference the the advantage here is it's hard when you're pasteurizing like all the hundreds of different brands out there in the juice set, they all are doing the same thing. So who has the most money to buy shelf space, to spend on marketing, branding companies, all this stuff, because they're all selling the same product. It's just a different brand. In our case, we actually have a new category, and we have products that taste great and better for you, and they actually belong in the freshly cut fruit space with a shorter shelf life, and the consumers look at them and say, ah, yeah, this is fresh, but it has the price point of a pasteurized product generally. So that's a huge competitive advantage. Now, the most that we have is this, over the last 12 years, with the help of, you know, Brian Herr and Doug Burris from Country Fresh, you know, this amazing coal chain we put in place. So from farm all the way through to the consumer, we keep it at 35 degrees. And this is including the water, the water that we wash the food in and sanitize. It includes the water that comes in and that we put through a water filtration system. It includes when it's shipped to us, when it arrives at 35 degrees. It goes through our whole cold chain at 35 degrees. Now, just imagine everyone else doesn't have to worry about that because they're pasteurizing it. So basically, they can do it at ambient temperature, be it 70, 80, 90 degrees, whatever the production facility is at. So it's a huge change to take a pasteurized product and then produce it in a fresh facility. I mean, that's going to take years and a lot of money and expertise to convert and do it that way. So we have really a first-mover advantage here where we feel now being public, we have the ability to expand and grow. Although, let's be clear here, we're going to grow and be profitable. So our executive chairman, we just had a board meeting yesterday, and he was very clear that expansion is great, and we're going to do it, and we're going to plan it correctly, but we are going to stay profitable. And that is our model. We have no debt, we have growth, and we have profits. And that's what we're going to continue to see and do as we grow.

That's all very helpful and great to hear. Thank you for taking my questions, and congrats on the success so far.

Thank you, Eric. again if you would like to ask a question please press star one on your telephone keypad your next question comes from the line of bret brenner with who is a personal investor please go ahead hello my name is bret brenner i'm retired from uh morgan stanley money manager and your company interested me quite a bit because you had high gross margins and a new concept and I have a couple questions. First of all, what's your geographic footprint right now and what do you plan to do over the next year?

Good morning, Brett. Thank you for the question. Good question. So right now we're in Texas. In the next, let's say the next few months we're going to expand into a couple other states within out of the dallas plant out of our facility here and then later on in the year as we grow with our existing customers and new customers coming on board we look to expand to the east coast and build a facility duplicating this plant basically and putting it on the east coast so we can service the eastern seaboard Fantastic.

I think Florida would be a great market, and so California, because you have a lot of health-conscious people. My second question is, you were talking about recurring revenue. I know the distribution costs would be higher in, say, health food stores and health bars, where you'd have more recurring revenue, but higher distribution costs.

Have you considered that option uh that that's also an interesting question so um one thing that we're going to do is um especially in this initial expansion is stay really focused on what we know works which is in the grocery store for supermarkets and not try and do some other verticals like the health food stores, hotels, restaurants, clubs, bars, all of those could be down the road, you know, could be very good verticals for us to get into. But today, the market is massive for us already with a supermarket opportunity, you know, like Country Fresh has 15,000 points of distribution throughout the country. So, you know, we basically have a very tip of an iceberg work here. We have a first mover advantage, we have a proprietary cold chain, and we have customers, and we feel that a lot of the target customers down the road, I mean, we're bringing them something that they need because the consumers want these products. So we feel that the supermarket opportunity is so vast right now, let's stay focused on that and not get distracted by all these other opportunities, plenty of opportunities out there. There's a hundred everyday ideas, everyone coming through. But let's stay focused on what we know works and what we know is out there. And then down the road, a few years down the road, we can start to add in other areas of opportunity when we need more growth.

Okay. And what's your current distribution as far as I see that's Costco and Kroger? What stores are you currently in? And And do you have any ones on the line? And I know that you can't say for sure, but do you have any other fish on the hook that you might land in the near future?

Yeah, right now, we're in approximately 350, 400 stores with all our customers. and as we have new customers on coming on board that will obviously grow nicely all I can say is we are increasing our capacity of putting more production in putting more pool of space in more termization in and we're not doing that just for our existing business and growth so that's about all I can say as far as what's going on in the future.

What customers specifically do you have right now? What grocery stores?

Well, our main 800-pound grower is ATB, which if you're familiar with Texas, they're right at the top of the grocery. With no disrespect to anyone else, ATB is an exceptional customer for us and a wonderful grocery store. A lot of grocery stores around the country to look at what they're doing. So basically, you know, they're the ones who helped us build where we are today and get better and better all the time. So now we've got – so we just started with Kroger here. And so we look to grow that business, and we've got more coming online.

Fantastic. And in the future, maybe production facilities that are – are you looking, you know as you expand to get production facilities since it's based on so fresh closer to your major markets like florida or california where you do have citrus and a lot more customer base as far as people that are healthy and interested in the product yes right that's correct as i used to say if you can make it work in new york can make it anywhere well in the grocery stores, if you can make it in Texas, they say you can make it anywhere because this is truly the most competitive grocery store market in the country.

And we feel that, yes, Orada on the East Coast and the West Coast, we feel, would love our products. So when we're ready, we will build a facility on the East Coast first and service the Eastern Seaboard and then do probably the following to a plant on the west coast, so does the western sea forward.

Fantastic. Well, thank you for answering my questions, and good luck in growth, and let's keep it double-digit.

Thank you very much, Brett. Appreciate your questions.

Thank you. Brian, I would like to turn the conference back to you for web questions.

Thank you. So the first question, you answered a couple of questions already, so I'm just going to move to this one. So can you expand on your brand strategy for Buddha Juice? How do you plan to familiarize consumers with the brand and deepen engagement with those consumers?

Yeah, that's a good one. Well, first of all, we are unique in the fact that we don't spend a lot of money on marketing because we don't buy shelf space. We haven't been advertising. Everything's really been – because we – don't forget the history. We started with our own retail stores, put millions of money building up the stores, marketing the products and all that stuff, and then we pivoted. We went from all the way from our own stores into wholesale under our brand and white label, other people's brands. And so the advantage of doing that is you don't have to spend a lot of money because customers typically spend their own money promoting their brands, their white labels. So, you know, basically we have the Buddha juice, which is the corporate identity, and then we have Buddha Fresh, which is all our, you know, all our great fresh products that we make, lemonade, lime, and fresh citrus. And then we have the white label lime, which is other people's brands. So the beauty of the model is we have high margins. We have distribution where we distribute to their DCs. They take care of the product, and then they own the product. So there's no credit back. There's no marketing or very limited amount. So our job is really to keep the cold chain, produce very fresh, interesting products for our customers and for the end consumers, and grow the business that way. It's a different model from what everyone else is doing today, where they're spending millions and millions and millions on branding and advertising and buying shelf space and doing deals where they buy back things that don't sell and all this stuff. This is not the model we have. We have truly a great moat around our business, which is the cold chain from farm all the way through to the end consumers with all these really tasty, fresh products.

Thank you, Rachel. So, last set of questions. What does the margin profile look like as you scale? Do you see room for operating margins to meaningfully accelerate once you're past the infrastructure build-outs? And then, in general, how should we be thinking about operating leverage with the business?

Okay. Well, we're really happy with the margins right now. We believe as we scale, there could be a little compression in the margins. However, the added volume and efficiencies of the business will offset that, we believe. So, you know, I mean, I think, you know, one will offset the other, but I wouldn't say we're going to go a whole lot higher than our margins because they're already very high by the industry standards. They're really up there. So I think we're really happy with those margins and we'll do everything we can to keep them. And the more volume we put through, we can buy lower. And, of course, the efficiency is having, you know, we used to order under maybe about 10 cents an ounce. And now it's about a penny an ounce of labor. We are working on getting that even further down as we expand and put in automation here into the facility.

And maybe Clint can handle this part of it. But as you do scale, how do operating expenses scale with that? Is there operating leverage in the model still? Or if you can put a little bit more detail into that, that would be helpful.

Yeah, sure. Well, I think there's probably a couple things to touch on that. As far as operating leverage, some of the things that are being done in the actual facility from automation and continuing to lower our, you know, our per pound costs, those are ongoing and will continue. And then also touching back on a previous question regarding, you know, distribution, um we we have quite a bit of of leverage as we scale in in the um in our distribution cost you'll see that even um you know with the 12 increase in sales our distribution cost was flat year over year right and so the the model being going to distribution centers as as additional product and we add SKUs to existing customer and new customers, our distribution cost does not go up hardly at all, because we're just adding product to the same truck that's going to the distribution center. So, we gain quite a bit of operating leverage in there.

And where do SG&A? How does that scale as the business grows?

Yeah, SG&A. I think in my last comment mentioning additional IPO costs and just the overhead around being a public company. So those costs, they come in. I'm not going to call them fixed. I don't believe that they are 100% fixed because I do believe we can get leverage there. But with that said, as you scale, the incremental cost from a G&A perspective is minimal, okay? So this year, you know, right like we were talking about, we should have – we have our expectations for our costs, you know, But we're able to get leverage on that as just that's not going to increase on a percentage basis the same as we scale.

Yeah, and also just to add in, we do have a different model, and that is all the way through, and it starts at the top with our executive chairman, you know, Brian Hur, who's built massively successful companies. It's just a different model from what a lot of people do. And so for us, you know, managing it very carefully and caring about, you know, every little detail of our operations so we don't spend money where we don't need to is critical to our success. And that's the culture we have. And as long as Brian Hur is executive chairman, that is not going to change. So, you know, we're very excited about the opportunity because it took us – you know, when we pivoted from, you know, a private company with – or our own retail stores, and we used up a line of credit of $3 million on energy, and we had our shelves, our family shelves, put in more money, millions of dollars. And then when we pivoted, we paid back the $3 million and paid back the shareholders. And it takes years to be profitable. And once you get it, you do not want to give it up. It takes so long to find something that works. And when it works and you're making money and you're growing, it is a formula that everyone wants. And we're lucky enough to have one. And Brian's a huge part of that. And so going forward, you know, we are going to stay where we are in profit.

Last question. Are you considering a D2C model by selling online?

No, we're not. We have in our past life. We've done the, you know, the e-shop. And it was the flavor of the day. It was so exciting. and make lots of money and all this stuff. And all we ended up doing was losing more money. You know, if you're not set up for online shopping, it's a very, very different endeavor, especially since, don't forget, we're fresh. So everything has to be packed carefully. It has to be refrigerated as it shifts out. And, you know, a lot of people, they open their packages and, oh, what happened? The bottle's this. or they got cracked or they exploded or they're not cold. We're focused on the grocery store. That is such a huge market for us nationwide. We do not need to get distracted spending millions of dollars building an online business today. Amazon are the experts of that, as are Walmart and everyone else. So let them do that, and we'll focus on servicing the customers, or want fresh and go to the grocery store. That doesn't mean they don't place their orders ahead of time and let the retailers deliver because that's a massive business. We're able to handle that, but not for us to provision and do all that.

Ladies and gentlemen, that does conclude our question and answer session, and it also concludes our call for today. Thank you all for joining, and you may now...