Operator
Hello and thank you for standing by. My name is Dennis and I will be your conference operator today. At this time, I would like to welcome everyone to the Buddha Juice first quarter 2026 earnings 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 during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. I would now like to turn the call over to Brian Siegel, Investor Relations. Please go ahead.
Thank you, Dennis. During today's call, Horatio Lonsdale-Hans, Buddha's Chief Executive Officer, and Clint Bowers, Buddha's Chief Financial Officer, will discuss Buddha'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 question and answer 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 and annual 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 Buttigieg's website and has also been filed on Form 8K with the SEC. Finally, on this call, we will refer to non-GAP measures, including non-GAP net income and EPS, free cash flow, and adjusted EBITDA. Please see our earnings released for an explanation of our use of non-GAP measures and reconciliations to GAP measures. Now I'd like to turn the call over to Horatio.
Thank you, Brian. Good morning, everyone, and thank you for joining us. The The first quarter of 2026 was our first full quarter as a public company. Revenue grew 17.7% year-over-year, which is above the mid-team outlook we discussed in our last earnings call. Importantly, that growth came entirely from our existing customer base. The growth margin during the quarter was impacted by a temporary disruption in citrus supply. In February, line costs spiked significantly, following disruptions in western Mexico that interrupted normal supply routes. This was a temporary issue, and conditions have now stabilized. Even with that temporary pressure, labor costs as a percentage of revenue improved by more than 150 basis points year over year which reflects continued operational efficiency across the business we entered 2026 from a position of strength profitable debt-free and well capitalized following our ipo which we believe positions us well for the long-term expansion looking beyond our first quarter on monday this week we announced a major milestone for our company expansion of our products into 256 stores across nine states including texas new mexico colorado mississippi arkansas missouri tennessee alabama and Kentucky, all with a new customer, Walmart. This expansion takes us from one state to nine states and increases our store count by more than 75%. The Buddha Fresh Cherry Limeade is now available in these Walmart stores in both the 12-ounce single-serve and 32-ounce multi-serve formats. The products are being merchandised in the fresh produce department, reinforcing our ultra-fresh within the retail environment. These new products are manufactured at our Dallas facility, where we recently invested in additional capacity and automation following our IPO to support future growth. Where we went public this year, we had built a strong and profitable business concentrated primarily in texas this expansion now diversifies both our geographic footprint and customer base as we continue building the business beyond beyond our historical texas concentration when we went public we outlined a clear strategy expand distribution grow responsibly and bring ultra-fresh products to more consumers across the country, all while maintaining profitability and balance sheet discipline. We believe we are executing directly against that strategy today. And with that, I'll turn the call over to Clint for a review of our financials.
Thank you, Harisha, and good morning, everyone. Today, I'll walk you through our first quarter financial results and provide context on the key line items. The first thing, as the ratio said, revenue for the first quarter was up 17.7%. This represented a half million dollar increase to 3.5 million from 3 million in the prior year period. Gross profit was 1.4 million compared to 1.3 million last year. Gross margin was 39.5%, down from 44.9%. This decline was driven primarily by the temporary spike in line costs Horatio previously described. This resulted in a roughly 300% line cost increase starting in late February and continuing through March due to the cartel-related supply chain disruptions in western Mexico. And for additional context on this, when we normalize quarter one lime costs to prior year, our resulting gross margin would have been closer to historical levels in the mid 40% range. Further, since the end of quarter one, we have seen lime prices stabilize and get back towards normalized levels. Therefore, with the recovery of LIME costs, we expect to trend back above 40% gross margin for the second quarter, partially offsetting these transitory increases in costs. Production labor, as a percentage of revenue, improved by more than 150 basis points year over year. This remains a key area of focus as we scale. Our general and administrative expenses increased to $663,000 from $416,000 in the prior year. The increase reflects three main items. Normalized executive compensation as we transition to a public company, additional facility lease expense from our Q3 2025 capacity expansion, and $183,000 in company costs, mainly from audit fees, legal costs, insurance, and investor relations. Please note, these costs did not exist last year, and we continue to believe public company costs will be around $1 million annually. Operating income was $0.6 million compared to $0.8 million in 401-2025. Moving to other income and taxes, we reported $137,000 in interest income and $359,000 in federal income tax expense. For context, the tax expense includes the 21% corporate rate for the first quarter earnings plus a one-time $182,000 non-cash charge related to our LLC to C-Corp conversion on January 1, 2026. And as a C-Corporation, we're now subject to federal corporate taxes. GAP net income was $0.4 million versus $0.8 million last year. On a non-GAAP basis, net income was 0.6 million, and earnings per share was five steps, with weighted average diluted shares outstanding for the quarter at 12.35 million. Adjusted EBITDA was 850,000, down just slightly from last year. Also, importantly to note, free cash flow was strong at 1.1 million, up 36.5% year-over-year. We ended the quarter with approximately $20 million in cash and no debt. Thank you. Operator, with that, we're ready for questions.
Operator
At this time, I would like to remind everyone, in order to ask a question, simply press star, followed by the number one on your telephone keypad. And your first question is from the line of Ryan Myers with Lake Street. Please go ahead.
Hey, guys. Thanks for taking my questions. Congrats on the good quarter. I was wondering if you can start by unpacking the revenue growth during the quarter. You know, how much of that just came from, let's call it maybe new doors at your two large customers versus how much of that was just increased volume at existing doors you guys were in?
So, good morning, Raj. Right. Basically, the good news is all the revenue from the first quarter was from existing customers, not the new customers that we now have. So it's really organic growth from existing customers.
Got it. And then as we think about the announcement on Monday, first off, congrats on being able to bring Walmart on board. How should we think about the potential growth rate for this quarter as well as the rest of the year as you continue to see this strong organic momentum within existing customers and then in addition to the customer that you guys just brought on?
Yeah, that's a great question. Well, it will bring incremental revenue and profit. However, we're not really able to share that with you, unfortunately, since we're not doing any guidance in that regard on revenues. But it will be incremental.
Okay, got it. And then just lastly, the rollout within Walmart. Can you just kind of walk us through how you guys plan to do that? Is it, you know, you're going to start with 100 stores, that's an acceleration to the 200, and then the remaining roughly called 50 stores or so.
Just walk us through kind of the plan there and sort of the rollout of, you know, when you guys will fully be in all of the stores. okay that's a that's another good question so um as of saturday um last week so that's what four days ago we have um we're on all the shelves in those 246 stores in nine states so our products if you go to any of those stores um we will the products are on our shelves right now so we have the 32-ounce multi-serve cherry limeade, and we have the single-serve 12-ounce cherry limeade
already on the shelves. Okay, got it. No, that's great to know. Congrats again. Thanks for taking my questions.
Operator
Once again, if you would like to ask a question, simply press star followed by the number one on your telephone keypad. Your next question is from the line of Eric DeLauris with Craig Hallam. Please go ahead. And, Eric, your line is open. Please check to see if you're muted on your end.
Thank you very much. Appreciate you taking my questions here, and congratulations as well on the Walmart announcement. Very exciting.
First one from me, just wondering if you could just comment on how conversations with other retailers are going And if we should be kind of thinking about potential shelf resets in terms of timing for potentially getting into new retailers or if they're all sort of, you know, on different schedules and not necessarily waiting for, you know, official shelf resets.
So basically every day we're working on growing the business with existing and new customers coming online. So we have, should I say, several hopeful customers coming on board over the next few months to years at different times. I can't really give you again because of the guidance give you what's happening as we couldn't mention Walmart until we're on the shelves but I would say that I'm very encouraged by all the meetings we're having and the response to the ultra fresh category which I think is really important because it's incremental revenue to all these grocery stores that need more foot traffic and the fresh produce department is bringing in the foot traffic for these big retailers. So, you know, we have something that, you know, basically everyone wants, the consumers want fresh. And if the consumers want fresh, then how do these grocery stores produce fresh. Either they do it in-store or they come to us. So I think we're in a good position here because we're able to scale, you know, through our cold chain, the fresh products, the citrus products, the wonderful lemonades we have, all the shots. um that is that is um you know that's very exciting for everyone because we can actually give these products to them today yeah sorry it's very uh exciting and encouraging um and certainly uh highly attractive um category from a retailer perspective um thank you for that um and then just
next one for me um if we kind of look at your uh your your sort of main historical customer we'll leave walmart to the side uh for right now can you just help us understand how much additional room you see um for growth in your existing store base like how big of a variety do you see in overall velocities between let's say your lowest and highest reforming stores um is there an opportunity to kind of take best practices across the footprint or is each store a little different And I guess just overall, like, would you say we're still in the early innings of driving growth with that existing store base, or should we expect sort of a natural deceleration, you know, I guess, you know, on the horizon as distribution matures and you guys start adding several new doors as well? Thank you.
Yeah, Eric, that's another great question. I think the last question is actually the way to start answering this question, which is, you know, we feel we're at the early stages of our growth. Even in Texas, which, as you know, is the most competitive grocery market in the country, we feel there's so many more customers that we can bring on board. There's continuing organic growth for our existing customers, which we feel will continue for several years. Because if you think about it, you know, once you have fresh, you always want that taste. You want the fresh taste. So what we're doing also is the value piece of, you know, as an example, you know, you can buy a wonderful family-sized lemonade, you know, a 52-ounce fresh lemonade for like, you know, $5.98 in one group and $5.99 in another. Or you can have, you know, the Walmart 12-ounce lemonade, the single-serve lemonade, they price it at $1.50, actually just slightly under that. I mean, that's very affordable. So what we're doing is we're bringing fresh, clean, great-tasting products to the mass market, which it hasn't existed before. So it's a whole new category, which is, you know, we call ultra fresh, which we feel is really, you know, it's great to start in Texas because it is so competitive. But we feel that this is definitely a nationwide ultra fresh category, which, you know, we're seeing the early stages with Walmart kind of getting it out of Texas now. But there's a lot to come.
Yeah, very exciting to see what's on the horizon and, you know, great second win with Walmart here getting you guys out of Texas. Congrats again, and thanks for taking my questions.
Operator
Thank you, Eric. Once again, everyone, if you would like to ask a question, simply press star, then the number one on your telephone keypad. And at this time, there appear to be no further questions, and this will conclude today's question and answer session along with today's call. Thank you all for joining. You may now disconnect and have a great day. Thank you.
