Earnings call transcript: Else Nutrition reports flat revenue, improved margins in Q1 2025

Else Nutrition Holdings Inc., a plant-based nutrition company with a market capitalization of $5.39 million, reported its financial results for the first quarter of 2025. The company saw flat year-over-year revenue at $2.1 million, while significantly improving its gross profit margin. Despite a net loss of $3.43 million, Else Nutrition reduced its loss per share from $0.04 to $0.01. The stock has shown significant volatility, with a 33.33% gain year-to-date but a -71.43% return over the past year. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value assessment.

Key Takeaways

• Gross profit margin tripled to 25% from 8% year-over-year.
• Operating expenses were reduced by 48%.
• The launch of new products, including toddler and kids’ nutrition lines, expanded retail presence.
• The company aims for cash positivity by 2026/2027.
• Strategic focus on expanding in U.S. and Canadian markets.

Company Performance

Else Nutrition’s performance in Q1 2025 reflects strategic cost-cutting measures and operational efficiencies. The company maintained steady revenue while significantly enhancing profitability metrics. This performance comes amid persistent market headwinds and a challenging economic environment, with InvestingPro data showing an overall Financial Health Score of ’WEAK’ (1.47). The company’s efforts to innovate and expand its product offerings are central to its competitive strategy. For deeper insights into Else Nutrition’s financial health and growth potential, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.

Financial Highlights

• Revenue: $2.1 million (flat year-over-year)
• Gross Profit: $500,000 (up from $180,000)
• Gross Profit Margin: 25% (up from 8%)
• Operating Expenses: Reduced by 48% to $2.2 million
• Net Loss: Improved by 37% to $3.43 million
• Loss Per Share: Decreased from $0.04 to $0.01

Outlook & Guidance

Else Nutrition is targeting cash positivity by 2026/2027, driven by strategic partnerships and product expansion in the adult and infant nutrition sectors. The company plans to enhance its operational efficiency to improve gross margins further. Analysts project impressive revenue growth of 75.48% for FY2025, according to InvestingPro data. Despite market challenges, Else Nutrition remains committed to its growth strategy, focusing on retail and online sales, maintaining a healthy current ratio of 1.18.

Executive Commentary

CEO Hamital Yitzak emphasized the company’s disciplined approach, stating, "We are moving forward with more discipline, sharper focus, and growing confidence in the direction we’re taking." Yitzak also highlighted the company’s commitment to sustainable growth and innovation, noting, "Our focus on sustainable growth, cost efficiency, and innovation positions us well for the quarters ahead."

Risks and Challenges

• Delayed product launches due to cash flow constraints.
• Market headwinds expected to persist through 2024-2025.
• Regulatory challenges in the infant formula market.
• Potential out-of-stock issues, as experienced in the Canadian market.
• Need for strategic partnerships to support international expansion.

Else Nutrition’s Q1 2025 earnings call provided insights into its strategic direction and operational improvements. The company’s focus on cost efficiency and product innovation positions it for future growth, despite the challenges ahead.

Full transcript - Else Nutrition Holdings Inc (BABY) Q1 2025:

Conference Operator: Greetings. Welcome to e. F. Nutrition First Quarter Conference Call. At this time, all participants are in a listen only mode.

Please note this conference is being recorded. I will now turn the conference over to Alexandra Schell, Investor Relations. Thank you. You may begin.

Alexandra Schell, Investor Relations, E.S. Nutrition: Good morning and thank you for joining E. S. Nutrition’s twenty twenty five first quarter financial results and business update conference call. On the call with us today is Hamital Yitzsak, Chief Executive Officer of E. L.

S. Nutrition. The company issued a press release today containing its twenty twenty five first quarter financial results, which is also posted on the company’s website. 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. The company’s management will now provide prepared remarks reviewing the financial and operational results for the first quarter ended 03/31/2025.

Before we get started, we would like to remind everyone that today’s call will contain forward looking statements that are based on current assumptions and subject to risks and uncertainties that could cause actual results to differ materially from those projected, and the company undertakes no obligation to update these statements except as required by law. Information about these risks and uncertainties are included in the company’s filings as well as periodic filings with regulators in Canada and The United States, which you can find on SEDAR and E. S. Nutrition’s website. With that, we will now turn the call over to Hamital Yitzak, Chief Executive Officer.

Please go ahead, Hamital.

Hamital Yitzak, Chief Executive Officer, E.S. Nutrition: Thank you, Alexandra, and good morning, everyone. I appreciate you joining to discuss our first quarter twenty twenty five results. Before I begin, I want to take a moment to acknowledge the delay in reporting. This delay was due to technical reporting issues outside of our control, combined with the broader macro pressures we’ve been navigating in Israel and funding constraints. We thank you for your patience and continued support as we work to ensure the completeness and accuracy of our disclosures.

As we entered 2025, we remained in an ongoing process of reshaping Health Nutrition, implementing the strategic changes necessary to drive long term success. While the headwinds of 2024 have persisted into the early part of this year, I can confidently say that we are moving forward with more discipline, sharper focus and growing confidence in the direction we’re taking. We are continuing to implement a comprehensive transformation strategy, one rooted in operational discipline, market focus and product innovation. Due to funding and cash flow constraints, we’ve made difficult but necessary decisions to realign our cost structure. Over the last few quarters, we reduced overhead, restructured roles to reflect current priorities and eliminated inefficiencies that were weighing down our performance.

These moves were essential in significantly lowering our cash burn, protecting core capabilities and positioning us for a more stable and sustainable future. We’re also continuing to scale our operations in smarter, more cost effective ways. A major milestone in this effort is our planned shift towards manufacturing powder formulas in Europe. This initiative will allow us to reduce production costs, improve gross margins and better control inventory logistics. This geographic diversification is a key part of mitigating supply chain risk, navigating tariff and strengthening their reliability of our product delivery.

On The U. S. Retail side, I’m very pleased to share that our kids ready to drink products are now in nine fifty Walmart stores in The U. S, a significant leap forward in our presence with mainstream retailers. On the regulatory front, we’ve remained deeply committed to advancing our infant formula product and continued our advocacy in Washington.

In March, we saw a meaningful shift with the launch of Operation Stork Speed, an initiative aimed at accelerating innovation and increasing infant formula resilience in The U. S. Market. This initiative directly supports our goal for of introducing clean label, plant based infant nutrition that meets the highest safety and scientific standards. In addition, we also recently recognized as part of our lobbying efforts, The U.

S. House Appropriations Committee advancement of the financial year 2026 Agriculture Appropriations Bill, which includes groundbreaking provisions to expand access to alternative infant formula. This legislation is a vital step forward for the countless families seeking plant based non dairy and non soy options due to allergies, intolerances or personal values. For too long, U. S.

Regulations have limited innovation in this space, while global markets have moved ahead. The build language directing the FDA to streamline approval pathways and issue clear regulatory guidance marks a turning point, one that embraces inclusion, diversity and nutritional accessibility. While additional steps remain, this progress sends a powerful message. The needs of modern families are being heard and the future of infant nutrition is changing for the better. Our hope and our expectations are that this evolving regulatory environment will finally allow us to begin clinical trials for our infant formula product, which we know addresses an important gap in the market.

We’re proud to be contributing to this national conversation and we’re featured in The Washington Times in an OPEB that underscores the need for modernized regulations and greater access to safe, science backed alternatives for families. Now let me briefly walk through our financial performance for the first quarter, which is reported in Canadian dollars. We’re pleased to share our financial results for the 2025, which reflect meaningful progress in operational efficiency and cost reduction. Total revenues for the quarter were $2,100,000 same level as in the 2024, while increasing gross margins and significantly reducing operational costs. This stability in top line performance is encouraging, given the broader market headwinds and reflects the resilience of our core business.

Most notably, gross profit and gross profit margin surged from $500,000 which reflects 25%, tripling from $180,000 which reflects 8% in the prior year quarter. This significant improvement was driven by substantial reduction in cost of sales, down 15% year over year, highlighting our successful efforts to optimize production and supply chain operations. Operating expenses saw a dramatic reduction of nearly 48%, falling from $4,200,000 to $2,200,000 This was achieved through disciplined cost control across all major categories. Noting two in particular, employee benefits were reduced by 24%, reflecting a leaner, more focused team structure, which we expect to decrease further over the next coming quarters. Advertising was cut nearly in half, reflecting a more efficient spend, but also reduced marketing expenditure due to funding constraints, but still maintaining the same revenue level.

These efforts contributed to a significant narrowing of our operating loss, which improved by over 58% to $1,700,000 from $4,000,000 in the 2024. While non operating items, including warrants and convertible loan reevaluations impacted our bottom line, our net loss improved by 37% year over year, landing at $3,430,000 Importantly, our loss per share decreased from $0.04 to $0.01 supported by a larger shareholder base and improved financial discipline. We remain confident in our strategic direction and are encouraged by the early signs of operational turnaround. Our focus on sustainable growth, cost efficiency and innovation positions us well for the quarters ahead. Looking ahead, we plan to continue operating with a small team well into 2026, with a goal to become cash positive by the ’6 or the ’7, focusing on a few critical areas: maintaining and growing our retail accounts, growing online sales, adding international distributors, improving gross margins through efficiency in sourcing, production and logistics and growing our product portfolio with an emphasis on adult and infant nutrition.

In parallel, we continue to pursue select strategic partnerships that could accelerate our path to scale. Conversations are ongoing at this moment, and we remain open to opportunities that align with our mission and deliver value to our shareholders. As we implement these initiatives, we remain focused on what matters most, delivering better nutrition to more families and building a stronger, more agile business. In closing, I want to reiterate my deep appreciation to our investors, our team, our suppliers and retail and regulatory partners for their continued support. While challenges remain, our strategic path is clear, and we are confident in our ability to drive meaningful progress in the months ahead.

At this point, I’d like to address questions that come in from investors. Alexandra, please lead the Q and A session.

Alexandra Schell, Investor Relations, E.S. Nutrition: Thank you, Hamital. Our first question is, can you please provide an update on the status of the adult RTD product?

Hamital Yitzak, Chief Executive Officer, E.S. Nutrition: Sure. Because of cash flow challenges, we have had to prioritize the production of different product lines. And hence, we decided to delay the commercial launch of this product in The U. S. And Canada.

We are working to secure listings in leading retailers and we will produce more when this is done.

Alexandra Schell, Investor Relations, E.S. Nutrition: Thank you, Hamital. Our next question is, can you provide a status update on the Canadian retail market?

Hamital Yitzak, Chief Executive Officer, E.S. Nutrition: Yes. In the last few months, to cash flow constraints again, we had several incidents of out of stock in Canada. That drove unfortunately to the loss of several key listings. We are working to realign our sales efforts in Canada with our priorities and to rebuild some of the lost channels during the next twelve months.

Alexandra Schell, Investor Relations, E.S. Nutrition: Thank you. Can you update us on the status of the Toddler Signature, the European made product launch?

Hamital Yitzak, Chief Executive Officer, E.S. Nutrition: Yes, of course. I’m pleased to report that this new product has been received very well online. We are working to enter into some online retailers and stores. The product is also gaining interest with international buyers.

Alexandra Schell, Investor Relations, E.S. Nutrition: Thank you. Is the company seeking M and A or strategic collaborations for international expansion following the recent developments with the FDA? Yes.

Hamital Yitzak, Chief Executive Officer, E.S. Nutrition: The company is actively seeking strategic collaborations, which include distribution of its current product portfolio in new territories outside of North America as well as R and D, clinical and scientific long term collaborations related to the unique IP and infant formula recent development.

Alexandra Schell, Investor Relations, E.S. Nutrition: Thank you. And can you provide more details on the specific regulatory challenges E. S. Encountered with the FDA that led to the pause in its clinical development process? And how have recent positive developments impacted the company’s regulatory outlook and strategy moving forward?

Hamital Yitzak, Chief Executive Officer, E.S. Nutrition: Okay. The National Academies of Science, Engineering and Medicine, NASA, issued a comprehensive set of recommendations to the FDA in July 2024, focusing on improving the regulation, supply resilience and nutritional evaluation of infant formula in The U. S. NASM’s final report addressed systemic vulnerabilities in The U. S.

Infant formula market exposed during the 2022 shortage. Key recommendations included diversifying the supply chain to reduce reliance on a few manufacturers, improving regulatory alignment with international standards, especially in Europe enhancing transparency and oversight in manufacturing and labeling and most relevant to e. F, encouraging innovation and entry of new manufacturers through streamlined regulatory pathways. The PR study was the issue that challenged health review. The recommendations regarding that study as a guide to help the development of new formula policy are as follows.

The PEARCE study or RET bioassay study traditionally used to assess protein quality in infant formula was critical reviewed. NASA recommended phasing out the PARE study due to ethical concerns, scientific limitations and lack of relevance to human infant, replacing it with other validated methods, one of which is the clinical growth studies in infant. This alternative is considered more scientifically robust and better aligned with modern nutritional science and international practices. We expect this National Academy study results to soon be reflected in new FDA policy and guidance on infant formulas, blustering Elf’s regulatory pathway used for clearance.

Alexandra Schell, Investor Relations, E.S. Nutrition: Thank you, Hametal. That does conclude our Q and A session. So at this point, I’ll turn the call back over to you for closing remarks.

Hamital Yitzak, Chief Executive Officer, E.S. Nutrition: Thank you, Alexandra. As we close, I want to acknowledge the continued complexity of the environment we’re operating in. The challenges we faced in 2024 ranging from limited marketing resources and inventory shortages to persistent funding constraints undoubtedly impacted our ability to scale at the pace we envisioned. However, they also pushed us to think more strategically and operate more efficiently. In response, we continued to implement focused initiatives to optimize operations, reduce costs and secure the capital necessary to ensure business continuity.

While financing remains a hurdle, we are actively mitigating its impact by strengthening margins, prioritizing high performing channels and refining our go to market execution. Looking ahead, our focus remains firmly on the future. We are working to scale distribution, grow brand visibility and drive innovation across our product lines, whether through the expansion of our kids RTD products in Walmart stores, the launch of our adult RTD line in Canada and U. S. Or our regulatory process towards bringing a new infant formula category to life.

We’re executing with purpose. We deeply appreciate the continued support of our investors, partners and loyal customers who believe in our mission to redefine plant based clean label nutrition. Thank you for joining us today, and we look forward to updating you on our progress in the months to come.

Conference Operator: Thank you. This will conclude today’s conference. You may disconnect your lines at this time and thank you for your participation.

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