Great. Thanks everyone for coming today. We are BranchOut Foods , ticker BOF on Nasdaq. My name is Eric Healy. I'm the Founder and CEO of the company. We have here in the front row, John Dalfonzi, our CFO, former Roth Capital investment banker. He does public markets extraordinaire. He's the one that's kind of navigated our IPO and everything there. We got Josh O'Brien, our Chief Commercial Officer here as well today. We have a booth out there, so stop by and try our products. We have some of our select products here to sample, so jump here. Again, I'm Eric Healy. Quick background on myself. I was an aerospace engineer for about 10 years, jumped into the natural food world. My family had been in this space for a long time, having started Kettle Brand, Kettle Chips, which is a multibillion-dollar global brand now, Kona Brewery as well.
I decided to kind of merge the two, I like to say. This is a technology-based food manufacturing company. We're using a new technology that's really a game- changer in what we're doing. Quick kind of update on our stock. T his is actually very outdated as of yesterday. If you've seen, we're up to, I think $270 today or so. We went public in 2023, so we're pretty new still. We have great volume, a lot of insiders holding the shares, myself included. L ike I said, we're a technology-based company. We are using a new dehydration technology. There's actually another company here today called EnWave . They're also presenting later. We've essentially licensed the technology from them. It's called REV, Radiant Energy Vacuum. We believe it's essentially freeze-dried 2.0. It's going to replace the legacy freeze-dried technology.
I'll get into why it's just better in every way. We've built out the largest- scale factory in the world that primarily uses this technology. It's pretty new. We're a very early, very close partner of EnWaves . We went all in on it and believe it's the future. We can do roughly 800 MT in our new facility down in Peru. I'll get into why we're down there, but that's very strategic in what we're doing. We just opened the factory early this year, like January or so. It's fairly new. The factory's been up and running now for roughly nine months, and w e can't keep up with the orders. We're actually expanding that further into next year. One of the big things, so we're in Peru mainly because as everyone knows, that's where all the fruits and vegetables come from, right? We're right there.
If you were to go to our factory, walk out the door, there's farms. Pretty much any fruit or vegetable you can imagine is grown right there. Part of our secret sauce is not just the technology, but we buy fresh. It goes from the farm into our equipment within a few days. We're also able to buy kind of second-grade fruits. It's not fruit or vegetables that are graded for export, so we get it at a much lower cost. In turn, we kind of help the local economy in that way as well. The technology itself, we call it GentleDry. That's kind of how we describe it to the consumer market, like on our packaging and everything. Basically, it's a large vacuum chamber with an industrial microwave component. Again, it's really meant to replace freeze-dried. It's roughly a $36 billion industry that hasn't been disrupted yet.
The way it works is, the product goes in, we pull down a vacuum to near zero pressure. That lowers the boiling point of water. It also removes oxidation. W e hit it with the microwave energy, w e're literally boiling the water out of the food at near room temperature. What that does is, you know, things that kill food products are high heat, oxidation, freezing, long process times. This just solves all of it. The product goes in, it's in a vacuum, so it's not oxidized. It doesn't change colors. It comes out just perfect. We get just this perfect product that comes out. Here is just, i t kind of breaks it down. We've literally tested our products versus freeze-dried. We have roughly 3.5x more flavor that's retained on the product.
If you imagine freeze-dried, it's just freezing and then sucking the flavor out of it. We get more of a crunchy texture, so it's more of a snackable texture. If you're familiar with freeze-dried, it's kind of chalky. It's not a great snack product. That's really one of our big things in the market. This is like the first real snackable fruit or vegetable product. A vibrant color. Again, we're not oxidizing it. Freeze-dried is very muted. You get kind of a white color. We get these really natural, vibrant colors. We're much lower cost. Freeze-dried is a massive industry, but it's never really worked as a consumer snack product in our opinion because it's very, very expensive, very high CapEx. This is much, much better from a cost standpoint. Again, just kind of supporting. Our Pineapple Chips is one of our top products. We have that in Costco.
It does phenomenally well. It's nice, and we have some here today. It has a very nice texture to it, but just massive flavor. It just kind of explodes in your mouth, so something that's really important. Just kind of visual, just color retention on a few of our select products. The vibrant colors are really amazing. We've done some consumer studies with our product versus freeze-dried. There's also air-dried, that's kind of the really low-quality products that are out there. Ours are preferred, hands down to everyone else. As far as the financials, like I said, we've been around for a few years. Prior to building our factory, we were kind of trying to figure out who we were. We worked with a couple of partners. It didn't really work out. We were really focused on developing our products.
We started out building a small-scale R&D facility in Oregon, and then eventually decided that we got to go all in and build our own factory down in South America. That's what we did over the course of 2024. Opened it kind of late 2024, early 2025, and it's just been incredible growth since then. We'll do probably [$14 million]. We'll see where the year ends up. We have some new orders we think coming in, so we may end up at [$15 million]. We're consistently doubling every year. This year, because the factory was just getting spun up, we probably lost several million dollars in orders that we had to turn down, just to keep up with everything and get things up and running.
This year we had a lot of R&D, a lot of scale-up costs, but we think we're bouncing around break-even right now. Any new kind of contract or order will put us right above that. Once we're above that, we're seeing about 50% contribution margins added to our financials. Pretty excited about that. We think 2026 is going to be phenomenal. Here's just a lineup of our branded snack items. This has grown quite a bit. Again, the technology is really great because not only does it do everything I just mentioned, but we can also do a lot of products that have never been possible before. We have the first dried brussels sprout products. That just went national in Walmart a couple of months ago. We have a c hewy banana . We have an avocado.
We have a lot of things that just have never been out there before that this technology enables. Stop by our booth. We have some new stuff that we haven't even shared yet with the public t hat's really, really exciting. We have a new s nack pack line that's coming out in 2026. W e think our target demographic is really mom buying for kids. This is a small multi-pack line that has, you know, individual servings to put in lunch boxes or that sort of thing. This is launching. There's a brand out there that is a freeze-dried brand imported from China, that does about $22 million a year with this same concept. They're just absorbing a 55% tariff. We think that's ripe for disruption. Our product will be about $6.99 on the shelf compared to their $9.99.
That's our brand new line that's launching next year. Costco has been our biggest success. We do a lot of Walmart. We do a lot of other retailers, but they have just kind of blown the doors off this year. We've had a hard time keeping up, as we've been building the factory. We now have three items that are just selling really, really well in Costco. The way Costco measures things is it's roughly, you know, you want to do $700 per club per week. Our items are consistently $1,400. We don't have on here on s trawberry , but that one, we were just in the LA region earlier this month and it just destroyed that metric, so w e expect a lot of reorders there. Just some images of our factory. Again, it's the largest REV facility in the world.
We have three lines. If you saw our announcement, we're actually adding a fourth line in the beginning of the year. In comparison, we're larger than any freeze-dried facility in North America in terms of capacity. Again, we're right there in Peru. We have a lot of other ancillary processes that we can do, like air drying, frying, things to kind of prep the fruit to go into the REV machines. Here's just kind of a menu of all of our innovation. When we go to a retailer or another customer, unlike most CPG companies that just have their five or six products, we kind of go in with more of an innovation question. We say, "What are you looking for? What do you want us to make for you?" We're very nimble. The number of products and combinations that we can make are endless.
We like to go in and offer kind of anything, and become the retailer's innovation arm. We're seeing a lot of success in that approach. That's pretty much high- level of us. Again, just to summarize, I guess I didn't mention the IP moat. EnWave , the other company here have a very massive patent portfolio around this technology. They've licensed it to us for kind of our specific use case. They're obviously doing it to others as well, but w e are essentially the earliest. We're the biggest partner of theirs. We have several products that have a global exclusivity with them, and then w e have some more regional exclusivities. We really believe , for someone to catch up and do what we're doing, it would be very challenging, right? They would have to build this factory.
We've probably invested $7 million, $8 million in this facility so far. They'd have to catch up. They'd have to navigate South America, which is no small feat, among other things. We believe that we have a really great moat around us. It's just a massive industry, ripe for disruption. T his year, going into 2026, w e're most likely expanding our Costco. We did about $7 million in Costco this year. We see that growing substantially. We're talking with kind of all the other major retailers right now. Walmart's growing. We have a lot of products growing in Walmart, and just Kroger, Sprouts, all the other major retailers, w e have something kind of in the works that should land next year. That is everything about us. Happy to take any questions. Yes?
One question. You had a slide there about sort of like [crosstalk] made for you. My question is, I got the impression [crosstalk] that you're building your own brand, branded product.
Yeah.
You're having trouble meeting demand. I was a little confused why you'd be offering to make [crosstalk] something.
Sure. Yeah, it's a great question. I didn't mention, so kind of our go-to-market strategy is really three pillars. We have industrial ingredients, which is really like you said, powders, fragments. With that, we have a partnership with this company called MicroDried. They're already out there kind of distributing these items. We have private labels. We do a lot of private label with Walmart, and that's growing as well. We have our branded line. Our brand primarily up to today is just Costco.
Like I said, we're going to expand that into this new multi-pack that will go into all grocery. I mean, we started the year being very opportunistic, very aggressive. You build this large, large-scale factory. We have 200 people down there working. You want to make sure it's filled, right? We're very broad. We went out and went after everything. We're now finding ourselves kind of trying to rationalize our revenue, and pick who we're going to work with.
[crosstalk] two years out, y ep. That's another big reason why we have [crosstalk]. We're starting the conversation now, and in two years, we're [crosstalk] . Is there a significant difference in the contribution margin, overall margin profile between those two businesses?
Yeah, i t's interesting. Retail will have a much higher gross margin, but then you have to pay for all the marketing, the promotions. There's a lot of fees associated. Below the line, it'll go down. Retail is $40, $45, but then when you pay for all that stuff, it's maybe $30, $35. The other businesses are cleaner. They're a smaller margin, maybe $30, $35, but you get what you get, right? It's cleaner. I guess the factory is very scalable, right? We're seeing a lot coming on next year.
We've already purchased another machine. One line roughly costs $1.5 million-$ 2 million to get it down there, and adds maybe $10 million- $15 million in capacity. We expect to keep growing. Our facility has room to add two more lines in the current building. Our property's bigger. We could add additional machines as needed. As Josh said, a lot of these sales opportunities are six, nine months out there. That's kind of how long it takes to land them. We get ahead of that and add new capacity as needed. Yes?
[crosstalk] pushed itself to invest with the market as a freeze-dried candy.
Yeah.
That's a [crosstalk] bit more fad.
Very much a fad, yeah.
[crosstalk]. Is there anything you're seeing in their approach to the freeze-dried or low scale?
Yeah. I mean, great question. We are not so good in any way. People kind of assume that we're similar. I mean, frankly, it was a TikTok fad . We don't go after fads, right? We don't go after trends because the faster they go up, the faster they come down. Freeze-drying is a common technology. They really didn't have anything special there. They were just riding that fad, right? We are, just single- ingredient and very clean fruits and vegetables. We believe that will always be something that people want. We're seeing the demand for it rise. Again, our technology is better than freeze-dried, right? It's better than that technology in every way as well. Yes.
One, how did you get into Costco? [Biggest sales driver]. Two, how many Costcos are you in?
Good question, y eah, Costco, how did we get into Costco? Do you want to answer that, Josh?
It's a wild hustle.
Yeah.
Yeah, knocking on the door. How many are [crosstalk]? We're honestly not big enough at this point to go nationwide. We do regional. Right now, we have [crosstalk] in the Midwest. We have an item in West Texas. We have items going into the Bay Area in December.
Southeast.
Yeah, we have Pineapple kind of consistently in the Southeast. It kind of varies by the month [crosstalk].
Costco's been really interesting because they're really into innovation right now, so b ecause we can kind of do anything, they're trying all of our different products. They actually asked us to do a brussels sprout . They said, "We've been looking for a brussels sprout. We can't find it. Can you guys do that?" We were like, "Wow, we've never thought of it. Let's try it out." It turns out it worked really well. Right now, you know, when you start with Costco, you're regional and you're rotational. They find the one or two products that do really well, and they'll go every day in a region and y ou grow from there. Our goal is to get one item every day national, and that's a $30 million, $35 million business, just one item national in Costco. We're getting there. I mean, it'll happen. Yeah, go ahead.
Sounds like once all the lines are up and running, it's just slowly passing on revenue.
Yeah, it's very rough because it really matters what the product mix is. I mean, some products, like if we were only doing our Pineapple 24/7, it would be much, much higher than that, right? We're trying to be very opportunistic. We have a very wide product portfolio, so that lowers it. Yeah, we're roughly in that. We'll be roughly in that realm.
[crosstalk]
I think, John, do you want to touch on that one? Go ahead. This is John, our CFO.
The plant breaks even at $14.5 million. Above $14.5 million, all your fixed costs are absorbed. The only variable costs are the raw materials. I'd say that's between about 35% of sales. The shipping, which is about, if you ocean ship it, it's 4%. If you air ship it, it's about 10%. Tariffs are part of our cost of goods sold, t hat runs about 4% of sales. When you do that, you've got, let's call it 35% plus 5% plus 5%, 45%, so a bout 50%, you know, 55% incremental margins above $15 million.
[crosstalk]
The plant fits five, six machines. There's a whole piece of empty land that you could build equally sized. I'd say that plant can fit 12 machines, 12, 15 maybe.
It's a good question. We may want to diversify and go to another country, so w e'll see. Yeah, go ahead.
[crosstalk]
Yes.
[crosstalk]
Yeah, so the strawberry did extremely well in the LA region. That was just, what? L ast month, right? We expect it to be a big product next year. We're also working with Sam's Club on some opportunities on that one as well. Yeah, I mean, we think that's probably our leading product that would go national first. The pineapple is as well, so w e'll see. Dragon fruit, we don't have a retail product yet. We're working on a potential ingredient play with that that's very, very large. Next year, we have probably a half a dozen opportunities we're working on that are $10 million, $15+ million each, right? That's one of them. Yeah.
[crosstalk] I know they have [crosstalk] .
Yeah, so it's a 3% royalty. We're happy to pay it. I mean, they don't just sell us the equipment and they're done. We see them truly as a partner. They're vested in our success as well, right? Like if we succeed, they succeed. They help us with all sorts of scale-up R&D, product development, technical support. We're happy to pay the 3% royalty. In return for that, we get this great IP protection and patent portfolio essentially.
[crosstalk] little bit larger, $2 million?
Three of them, yes. The fourth one going in in Q1. Yeah, all right. Yeah, go ahead.
[crosstalk]
I think so, yeah. T he new machine that we have going in, w e think we already have orders for it. We should be able to hit the ground running pretty quick, and it pays for itself very quickly. Yeah, go ahead.
I[crosstalk] it looks like you might be in the [crosstalk]. It looks like you're, I don't know, maybe you'll get there, but do you realize that capacity [crosstalk] ?
Yeah. G o ahead, John.
Right now, if you look at our cash, it's inventory, receivables, and cash on the balance sheet, t hat's probably about $4 million and it rotates. We don't need money. We used a lot of the ATM to pay down debts. If you look at our current debt liabilities in the March financials, it was $6 million. It's now $500,000. We only have $500,000 left, and we have this convertible note, but that's all going to convert. The buyer is going to convert it.
Really, the only cash crunch, this is the thing we talk about all the time, if we get a $30 million, we very well may get a $30 million order, a $20 million order that we got to produce in six months. We don't need the money for burn. What do you do if you get a massive inventory? N ow the profitability on that is, I told you about the incremental profitability. It'd be a very high ROI product.
We have debt options. I mean, we wouldn't necessarily use equity, but we have options.
Yeah, we have plenty of like Kaufman Capital.
We have deeper growth. When we [crosstalk] .
If there is money needed, it's because we got something massive, which brings us to a $40 million in revenue company, $30, $40 million in revenue company [crosstalk].
All right, I got one minute left. Anyone else ? Yeah, go ahead.
Yeah, Costco [crosstalk]
Say that again.
[crosstalk]
Yeah, it's big. We don't look at it that way because Costco's broken up into eight different regions. There are eight different buying decisions, and they're all different products. We can continually supply new innovation, and new products for them. Typically, you look at Costco as, you know, concentration there is risky, but we don't think it is.
Yeah, [crosstalk]. Whole Foods used to be the retailer that everybody looked to for innovation. That's just not the case anymore. Honestly, Costco leads a lot of that. We're probably getting into the target in 2026 because of Costco.
[crosstalk].
[crosstalk].
Yeah, you got to look at Costco as six customers. What our customer mix is going to look like a year from now, based on everything we have going, is even more diverse. Costco pays right on the money. They're probably the best payer out there.
[crosstalk]. Thanks, everyone. That's all we got. Stop by our booth. We got some products out there. Thank you all.