BranchOut Food (NASDAQ:BOF) used its first earnings call to walk investors through its annual filing and to outline operational and commercial priorities for 2026, including expanded production capacity in Peru and a widening retail pipeline in North America and Europe.
Financial highlights and margin discussion
Chief Financial Officer John Dalfonsi said the company doubled revenue year over year, with net revenue rising from $6.4 million to $13.7 million. He added that the company had previously told investors it would do about $14 million for the year and reported it delivered $14.3 million in revenue.
- Depreciation of $414,000 included in cost of goods sold, which he said is elevated because machinery is new and depreciated over shorter accounting lives than management believes reflects actual useful life.
- Air freight costs of about $1 million, which he said were incurred because the company was effectively operating on a just-in-time basis and prioritizing on-time deliveries during the plant’s first year.
- A $348,000 tariff reimbursement receivable Dalfonsi said is due from the government, though he added the company does not know when it will be received.
Including those adjustments, Dalfonsi said BranchOut’s adjusted gross profit would be $3.82 million, equating to an adjusted gross margin of 27.8%. He also said management believes additional margin improvement is possible as capacity utilization improves.
G&A, R&D, and balance sheet items
Dalfonsi said general and administrative expenses increased from $1.1 million to $3.48 million. He attributed part of the increase to the way the company now accounts for idle capacity, moving it out of cost of goods sold and into G&A, totaling $1.2 million for the year.
He also highlighted a $401,000 loan receivable impairment, describing it as a legacy item tied to prior manufacturing in Chile from 2022–2023 that was written off to “clean the balance sheet,” and not related to a customer.
Research and development expense rose to $269,000 from $18,000, which Dalfonsi and Chief Executive Officer Eric Healy said reflected increased product testing and scaling activity that would otherwise have been recorded in cost of sales.
On the balance sheet, Dalfonsi pointed to a $3.36 million convertible note payable, describing the holder as the company’s largest shareholder and noting $500,000 has already been converted. He said he expects the remainder to be converted at $0.75, and suggested investors consider that dynamic when evaluating current liabilities and the company’s current ratio.
Factory ramp and capacity expansion in Peru
Healy, speaking from the company’s factory in Peru, said BranchOut is installing its fourth production line, with installation nearly complete and the line expected to be online mid-to-late April. He said the new line will be in a separate building on the company’s property and is intended to expand what the factory can produce beyond fruits and vegetables, including dairy-based products.
Healy described 2025 as a “chaotic” but productive first year in the plant, with a backlog of orders from Costco, Walmart, and industrial partners, alongside process development, supply-chain buildout, and hiring. He said BranchOut previously estimated factory breakeven at roughly 40–45 metric tons per month, versus an average around 30 metric tons last year.
Healy said March marked a milestone, with the factory reaching 45 metric tons of production for the first time. He added the plant remains at roughly 50%–60% utilization, leaving “low-hanging fruit” for efficiency gains.
In response to analyst questions, Healy said the current three machines could potentially reach 50–60 metric tons per month, and the fourth machine—described as the largest available—could increase output by roughly 40% to around 80 metric tons per month, depending on product mix and changeover frequency. In a later response, Healy said a highly dedicated run—such as focusing heavily on pineapple—could push capacity toward 100 metric tons per month, though he cautioned that may not be realistic in the near term as the company continues to develop products.
Healy also said dairy products could materially change throughput economics because their starting moisture content is lower than fruits and vegetables. He said throughput is “directly proportional” to starting moisture and suggested dairy products could enable 2x–3x throughput versus fruit-based items.
Retail pipeline: Costco, Sam’s Club, Walmart, Target, and beyond
Healy said BranchOut has been “opportunistic,” saying yes to a wide range of opportunities to accelerate revenue growth, even at the expense of manufacturing efficiency. He said Costco remains a key customer and highlighted regional placements and upcoming items, including:
- Cinnamon Churro Chewy Banana in Costco’s Los Angeles region.
- A Mango Chip slated for the San Francisco Bay Area in June.
- A “pretty big” reorder of pineapple for the Southeast region.
Healy said the company has developed mixed products and multi-pack formats aimed at entering another Costco category, which could expand the number of internal Costco buyers BranchOut can sell to. He said multiple regions are reviewing those products, which are targeted for the back-to-school timeframe, and management expects order decisions around Q3.
Healy also emphasized customer diversification, stating BranchOut is preparing to deliver its first order into Sam’s Club, which he called the company’s biggest order to date: approximately $1.5 million for an eight-week nationwide rotation. He said the product is a mix of four core fruits—pineapple, banana, apple, and strawberry—and is expected to be on shelves in May. He said the buyer indicated that, if successful, it could become an everyday product and potentially a $10 million–$15 million SKU for the retailer.
Healy said Sam’s Club is also looking at other back-to-school products and has interest in bringing in mango around year-end, potentially landing on shelves in January. He added the company connected with another Sam’s Club department reviewing BranchOut’s dried cheesecake product, developed with technology partner EnWave, for a possible Q4 holiday timeframe.
Healy said BranchOut has an upcoming Walmart meeting expected near the end of April, where the retailer has tasked the company with developing GLP-1 focused products aimed at high-fiber and high-protein needs. He said BranchOut plans to present mixes that combine dried fruits with dried cheese products in portion-controlled formats, and expects to meet with multiple department heads in Bentonville.
Healy also said the company is working with a European partner that has presented BranchOut products to major European retailers, including Aldi, primarily for private label. Additionally, he referenced discussions with a chocolate company interested in buying BranchOut fruit for chocolate enrobing, as well as interest from dairy companies in dried cheese and fruit mix products.
He said the company expects to place five SKUs into Target under the BranchOut brand in the second half of the year, likely Q3, potentially with end-cap placement. Healy noted it may not be a major near-term revenue driver but could support the company’s broader retail narrative.
Outlook commentary and shipping normalization efforts
When asked about near-term projections, Healy said the company is not providing Q1 projections, citing the variability of when pipeline opportunities convert. Dalfonsi added that he prefers to evaluate performance in half-year periods due to shipment timing and customs variability.
Dalfonsi said he expects annual results to be “something with a two in front of it,” and estimated roughly 40% of sales in the first half and 60% in the second half, while noting the company will update expectations as it gains visibility.
On logistics, Healy said air freight in the prior year was used to avoid late deliveries to key customers. Going forward, the company’s goal is to ship by full dry container rather than by air, and he said a typical full container shipment from Peru to Houston costs about $3,000 for roughly 6–10 metric tons of product.
About BranchOut Food (NASDAQ:BOF)
BranchOut Food Inc develops, markets, sells, and distributes plant-based dehydrated fruit and vegetable snacks, and powders in the United States. The company offers dehydrated fruit and vegetable-based snacks, including avocado chips, chewy banana bites, pineapple chips, brussels sprout crisps, and bell pepper crisps; avocado, banana, and blueberry powders; and industrial ingredients, such as bulk avocado powder, dried avocado pieces, and other fruit powders/pieces. It also provides chocolate covered fruit items and private label products for retailers.
