Elixinol Wellness Limited

Good morning, everyone, and welcome to the Elixinol Q4 FY '25 Results and Outlook Webinar. On our call today, we have Gavin Evans, the Chair; Natalie Butler, Executive Director and CEO; and Adam Dimitropoulos, CFO.

And my name is Katie Mackenzie, Investor Relations for Elixinol. The presentation today will run for about 20 minutes, and then we will open up for Q&A.

[Operator Instructions]. So now I'd like to hand over to Gavin Evans.

Thank you, Katie, and good morning, everyone. Thanks for joining us today to listen to this presentation about the solid progress that we're making at Elixinol.

Let me start by providing some context to my role in the business. I was appointed Chair of Elixinol Wellness in December 2025 at a pivotal time for the company.

Most recently, I've founded OpenWay Food Co., where we built a vertically integrated category-leading portfolio of better-for-you brands, brands such as Red Tractor, Table of Plenty and Keep it Cleaner. That experience building brands, strengthening supply chains and integrating businesses to deliver scale is highly relevant to EXL today.

Over the last 2 decades, I've developed strong relationships across food supply chains, retail distribution and the broader investment community. My focus is on financial and operational discipline, targeting scalable, high-margin categories and aligning our cost base to those core revenue drivers.

I also bring proven experience in M&A. From my perspective, my mandate is clear; to create a solid foundation for scalable growth.

We're now operating from a stronger, more focused position than we were 6 months ago. In 2025, we rebuilt the leadership team and simplified how the company operates.

We've removed a layer of middle management, tightened decision-making and created a much nimbler organization. This is an experienced team, but it's also an entrepreneurial one.

We're used to operating with discipline, speed and accountability, and that matters because every dollar we invest needs to work hard and needs to be invested into the right places. Natalie Butler, our CEO and Executive Director, brings strong commercial and operational experience in consumer health.

Adam Dimitropoulos, CFO, has strengthened our financial discipline and reporting transparency. And Nat and Adam have been the key drivers of the improved performance you're seeing in Q4 2025 and will guide the business through 2026.

You'll be hearing from both of them later in the presentation. We're also well supported by Pauline Gately as an Independent Non-Executive Director, providing strong governance and another important perspective as we reset for the future.

So to that future, EXL has a bold, ambitious vision; to build a portfolio of premium branded health food assets supported by Australian manufacturing and positioned for global growth. Premium health brands are where sustained consumer growth is occurring, strong loyalty, better margins and long-term value.

Australian manufacturer gives us quality control, supply chain resilience and authenticity, particularly for export markets and global growth ensures we can scale beyond Australia. This vision is about a tight thematic, scale and building a platform asset, not just a collection of products or brands.

Australia's broader wellness market is around $160 billion today and forecast to exceed $300 billion by 2033, growing at roughly 7%. Within wellness, functional foods represent a $10.5 billion opportunity, growing steadily, while dietary supplements are smaller but growing faster at around 8% CAGR.

Importantly, that growth is significantly outpacing other general grocery categories. Australia also ranks top 10 globally for per capita wellness spend at roughly $7,400 per person per year, which shows that wellness is already embedded in our everyday behavior.

Our brands compete across functional foods, everyday wellness and supplements, giving us exposure to segments that are growing faster than traditional grocery rather than relying on a single category. This is a large, expanding and structurally supported market.

The opportunity is real, and it is substantial. Retailers and industry commentators refer to this as an invest or tailwind category.

So that's the opportunity. Let's talk about who we are today and how we're positioning EXL to be the platform for that vision.

Elixinol Wellness is a sustainable nutrition and wellness company operating in Australia and the U.S. We run a vertically integrated model, controlling production, manufacturing and distribution.

Our portfolio spans nutrition, wellness and super food ingredients. Products are sold through grocery, wholesale and e-commerce channels.

And in the U.S.A., Elixinol branded hemp and nutraceuticals have been well supported in that market for around 10 years. Together, this gives XL a scalable, diversified platform to leverage growth domestically and internationally.

I view it as a great foundation for us to build our vision on. So then to drill into that, EXL is a diversified platform built for longevity and everyday wellness.

The business is structured around 3 key streams: nutrition products, dietary supplement -- sorry, functional foods and beverages, wellness products, dietary supplements and nutraceuticals and super and food ingredients, where we are a B2B supplier and utilize these products in our own branded products as a point of difference. This brand and product diversification captures multiple growth opportunities while maintaining high-margin scalable profits.

We'll hear later from Nat how this aligns with the wellness tailwinds and megatrends. Our brand portfolio supports continued organic growth and also opens up the opportunity for targeted new product launches.

We operate 6 core brands with the majority of revenue coming from the top 3 on this slide, Hemp Foods Australia, the Healthy Chef and Australian Primary Hemp. Those brands make up 75% of our revenue.

Mt Elephant is being reset for growth via a strong innovation pipeline. Sooulseeds is a useful and modern brand targeting healthy snacking on the go.

And while our U.S.-based Elixinol CBD business continues to contribute to the group, we're navigating through a changing regulatory environment before deciding if we reestablish a growth profile or proceed towards an exit. This portfolio allows us to leverage strong brands while innovating, supporting our premium health platform vision.

We will cover some of that innovation later in the presentation. As you can see here, EXL operates diverse channels, spanning B2B and B2C.

Retail partnerships include Woolworths, Coles, Costco, Aldi and independents like IGA and Harris Farms. Our e-commerce channels such as Shopify and Amazon are growing, giving us direct consumer access.

We're also reestablishing our strong position in the B2B hemp supply, leveraging manufacturing capabilities and strong industry relationships. This multichannel strategy derisks the business and drives growth.

So I know many of you are familiar with the business structure, our brands and channels, but in the context of it being a platform for growth, both organic and via M&A, it's important to remind everyone what that platform now looks like. For those new investors, I'm sure this provides context for the vision I outlined earlier.

So moving on to our Q4 financials for FY '25, which is really the financial platform or the financial foundation for building that vision. This Q4 highlight slide shows the reset we have taken is now starting to deliver results.

Revenue for Q4 was $4.1 million, up just under 10% quarter-on-quarter. FY '25 revenue increased 3.6% year-on-year, but it's the quality of that revenue that I'm happy about.

Gross margins improved due to higher-margin products and channels. The e-commerce sales of the Healthy Chef grew 42% year-on-year, showing the strength of our direct-to-consumer strategy.

With a structural cost base reduction, the business was both profitable for the quarter and underlying or normalized operating cash flow positive, creating that foundation for growth. And whilst more work needs to be done, we're now firmly on the path to profitability that we've been talking about for the last 6 months.

On that note, I'll hand over to Adam, who will talk through the improvements in the revenue mix and cost reduction performance.

Thank you, Gavin. Let me take you through our Q4 and full year 2025 performance, which demonstrates a clear improvement in revenue quality, margin profile and the resilience of the business.

Q4 is our seasonally strongest quarter, and we delivered revenue of $4.1 million, up 9.5% quarter-on-quarter, giving us a strong exit run rate into 2026. For the full 2025 year, revenue was $15.5 million, representing 3.6% growth year-on-year.

While top line growth was modest, the more important story is the quality of that revenue, which improved materially over the year. We have made a deliberate shift towards higher-margin products and channels, and this is clearly reflected in our revenue mix.

E-commerce increased from 21% of revenue in 2024 to 38% in 2025, while lower-margin bulk ingredients reduced from 24% to 14%. This repositioning is driving better gross margins and more predictable cash generation.

A key contributor to this shift is the Healthy Chef, where e-commerce sales grew 42% in Q4 compared to the prior year. This growth not only improves margins, but also derisked the business by diversifying us away from a small number of larger wholesaler and retailer customers.

At the same time, we have successfully streamlined our SKU range across retail brands, removing underperforming products, improving inventory efficiency and allowing us to focus resources on the highest return products. In summary, 2025 marked a turning point in our business.

We exited the year with a much stronger revenue mix, higher margins and growing direct-to-consumer exposure, which puts us in a solid position to drive improved profitability and scalable growth. Now let me take you through the progress we've made this year and how we have reset the business for profitability, starting with revenue.

As you can see on the top chart, revenue has remained resilient and consistent throughout 2025, ranging between roughly $3 million to $4 million per quarter. We saw solid momentum into Q2, some expected seasonality in Q3 and then a rebound in Q4.

This stability is important because it demonstrates that our cost actions were not taken at the expense of revenue generation. Now turning to EBITDA.

The bottom chart really tells the story of the year. In the first half, EBITDA was clearly negative as we were still carrying a higher historical cost base.

In Q3, we accelerated our cost reduction initiatives across staffing, marketing and corporate overheads with some transitional cost increases to achieve that change. These disciplined actions flow fully through the P&L in Q4, where we reached positive EBITDA slightly better than breakeven.

This marks a critical step change for the business. On a year-to-year basis, our operating cost base in Q4 '25 was reduced by approximately 30% compared to the same period in '24.

Importantly, this is a structural reduction, not a temporary pause in spend. As a result, our ongoing expense rate is now significantly lower than historical levels.

We also delivered positive underlying operating cash flow for the quarter, reinforcing that this improvement is real and sustainable. During the second half, we completed a two-tranche capital raise totaling $2.5 million, which further strengthened our balance sheet and provides flexibility as we move forward.

Taken together, we now have a leaner cost structure, improving profitability and a stronger capital position. This creates a solid foundation for both organic growth and selective M&A opportunities as we look to scale the business in a disciplined way.

I'll now hand over to Natalie, our CEO, for the key business drivers of 2026.

Thanks, Adam. Over the past year, we've been very deliberate about resetting Elixinol for the next phase of profitable growth, making sure we're putting capital into the right places.

At a high level, we know we're operating in a market that supports long-term growth with 70% to 80% of consumers rating wellness as a high priority. Longevity or well aging is shifting health spend from reactive to preventative, and that supports repeat purchase and a longer customer life cycle with Gen X and Millennials now the fastest-growing spenders on wellness.

Food-led wellness categories or functional food, where many of Elixinol products play grow more consistently than supplements alone because they're part of that everyday shopping habit. Up to 70% of consumers say clean label and natural ingredients influence their purchase decisions.

And finally, diversified portfolios across both grocery and e-commerce like we have at Elixinol are far more resilient to market fluctuations. Different categories move at different speeds, but together, they reduce that volatility and risk.

And these dynamics are guiding exactly how we're going to allocate our capital moving forward. The focus for 2026 and beyond is about converting these trends into revenue growth.

Cost controls remain constant and capital needs to be directed to parts of the portfolio with the strongest mix of both growth and return. In D2C e-commerce, investment is concentrated on where the returns are the highest, and the Healthy Chef is the main driver of growth and margin for us, while the Elixinol U.S.

brand refresh, which is in the process of being rolled out, is focused on improving both conversion and retention and then long-term growth. In retail, everyday nutrition drives scale and repeat purchase.

Our innovation focus is on products that really earn that shelf space and will grow the categories that they're in. Hemp remains a core platform for us.

Elixinol is currently the largest hemp brand and ingredient supplier in Australia and contracted volumes for 2026 are up on 2025, which is really positive. And our vertically integrated model supports steady growth into the future without that need for extra capital.

So as the market demand for hemp continues to grow, our strength across private label and branded hemp positions us for strong organic growth. Leading our innovation pipeline is the Healthy Chef Metabolic Burn launching this month.

GLP-1 medication has fundamentally changed how consumers think about metabolic health and weight loss. In Australia, there is currently 400,000 to 500,000 people currently already using GLP-1 medications.

But as interest -- but the interest around GLP-1 goes much further than this. And for every active user, there are 2 to 3 more consumers who are curious, but not currently on the treatment.

So this creates a very large pre-GLP-1 audience, and this audience is our focus. Metabolic health is relevant to around 9 million Australians who are looking for credible everyday solutions.

Metabolic Burn is built for this moment. It's not a pharmaceutical replacement.

It's a natural TGA-regulated bridge that supports energy, glucose and metabolism using a clinically informed formula. This puts Elixinol in the right place in the GLP-1 cycle, early enough to capture that demand and credible enough to earn the trust.

Alongside the GLP-1 shift, we're seeing a strong demand for lighter ways to consume protein. Consumers are moving away from heavy shakes and towards clean drinkable formats that support hydration and daily protein intake.

Protein water is now one of the fastest-growing protein segments, growing at 8% in a protein market forecast to reach $1.1 billion by 2034. The Healthy Chef Protein waters launched in 2025 position us early in this trend with a premium functional offer aligned with where the category is headed.

Finally, Mt Elephant, our healthy baking range, shows how we're applying innovation-led thinking at a brand level. As supermarkets reduce their ranges, we've reduced -- we have repositioned Mt Elephant to compete more effectively at shelf level, moving from a niche free from queue to a clean mainstream whole food proposition.

Growth is coming from innovation that earns its place on the shelf. World-first sustainable formats and smart brand collaborations bring genuine news to traditional baking categories.

This strategy is built in close partnership with Coles, giving us confidence at Mt Elephant's sustained growth in grocery. You can see on the screen, we have our new Mt Elephant peanut butter Whole Food cookie on the left, which is a collaboration with Pic's Peanut Butter.

And on the right, our 2 new pancake mixes, which come in a mix and pour tub, and all 3 of these products are rolling out in Coles in May. Our sustainable pancake shakers are a world-first and address a long-standing sustainability issue for the category.

About 95% of pancakes sold in grocery are sold currently in plastic shakers. And with only 19% of plastic in Australia being recycled, the real impact comes from reducing plastic in the first place.

These products also provide key PR opportunities for both Mt Elephant and Elixinol and cement our corporate positioning as a sustainable nutrition company. I'm going to hand back to Gavin to wrap up.

Thank you.

Great. Thanks, Nat.

Those opportunities are really exciting for us moving forward. So following Adam and Nat's updates, I can now share with you that the FY '26 outlook is anchored on 4 pillars.

Operational momentum; continue to improve performance of this rightsized cost base and continue to drive stronger margins. Cost efficiency; maintain a structurally lower OpEx run rate, which then gives us flexibility to invest in growth.

Build a growth foundation as a platform for sustainable organic growth, leveraging the category strengths that we already have. And then four and finally, strategic opportunities; pursue value-accretive M&A and focus on core revenue drivers.

EXL is now operating from a stronger, more efficient cost base, well positioned to capture the growth opportunities and deliver long-term shareholder value. Please review the customary disclaimers.

And thank you very much for your attention and ongoing support. And now I'd like to hand back to Katie to facilitate Q&A.

Great. Thanks so much, Gavin and Nat and Adam for a really interesting presentation about the company and all the exciting things that you're doing and the outlook moving forward.

[Operator Instructions] We might sort of kick off with a common investor question just about the supermarket channels in Australia and the opportunities and challenges that, that presents. In the presentation, you talked about your focus on higher-margin revenue and SKU rationalization, the partnership with Coles.

Many investors are aware that some niche retailers can have a difficult relationship with some of those supermarkets. Are you able to just give a little bit more detail about what's happening on the ground?

Perhaps Nat will start with you and then Gavin, if you could add a little bit as well.

Yes. Thanks, Katie.

Look, it's a fair question. And the short answer is that the supermarkets are tough right now, but they're not completely closed.

This affects us at Elixinol more with some products than others. Our hemp ingredients are reasonably stable.

But it's -- for the more niche brands like Mt Elephant, it has been a challenging year. But with that said, they are really open to true innovation, and it's just how they're defining that innovation and working with the buyers to give them products that they know that they need and that they know are going to provide, I guess, excitement to the category and something new to the category and growth to the category.

So that's really what we're focused on. And I think one of the great things about being a small and nimble organization is that you can move so much faster to respond to trends.

And if a buyer can give us feedback in one review, we can deliver on the next. And that's really what we're focused at delivering at the moment, playing to -- I guess, playing to our strength.

Yes. Good answer, Nat.

I think as well as that collaborative innovation, we have a couple of other key advantages, Katie, and to the investors listing that we have over our competitors, and we've talked about that diversification of channels. So the growing e-commerce business primarily through the Healthy Chef, at least in part, insulates us from much of the range rationalization that's been done quite aggressively by the 2 majors in particular.

So that's been part of that strategy. I think that helps a lot.

I think secondly, in that hemp space, we hold that strong position in the supply chain. So we're -- as Nat said, we're either the branded option on the shelf or in a number of situations, we're also the ultimate supplier of the hemp seed that is in the private label.

So again, that diversification really gives us a natural hedge, which strengthens our position.

Okay. Thank you, Nat, and Gavin, that makes sense.

Gavin, we've got another one here for you. At the start of the presentation you were talking about the fact that you've got a mandate to create that solid foundation for scalable growth.

So can you talk a little bit more about your vision for the company and what sort of assets you would be looking at to potentially scale the business in the future?

Yes. Good question, Katie.

I think that mandate for scalable growth starts with aligning the business to those wellness market opportunities that we've referred to earlier in the presentation. But just to be really clear, we have some urgency to optimize the business performance right now in the short term to align the market value of EXL more with our peers.

I mean in FY '25, we reported revenue of circa $16 million. We're tracking towards profitability, as we can see in Q4.

And we benchmarked our market cap against some of our listed peers in the food space, and they're in the range of 1 to 1.5x revenue. We're currently around 0.3.

So that market re-rating is the first priority. And obviously, we will continue to deliver with the underlying business performance to build that confidence.

But as we move towards that, we'll continue to look for the right asset to achieve the vision that we've just outlined, and that is to build a portfolio of premium branded health food assets. Now that portfolio has to deliver consistent growth, strengthen EXL's market position, and it has to create long-term shareholder value.

Those assets have to be compelling as value accretive on acquisition. And given I've spent the last 5 years assessing businesses in this space, I'm confident those assets are available in the market.

The other opportunity here is that there's been a lack of transactions in the private markets as many of the people listening would be aware, and that creates opportunities to buy these assets at the right time and at the right price and really use the platform that we've got to build something that's got scale that can be in a strong position as a listed player.

That's great. Thanks, Gavin for that extra content and extra context.

[Operator Instructions] Just a final one here. We've got lots of questions from investors about the loan note and the sale, potential sale of the U.S.

business. You, Nat or Gavin, can you just give investors a little bit of an update on what's happening on that front?

Yes. Why don't roll with that one, Nat.

So the status of the loan notes remains unchanged. The Board doesn't think it's the best use of shareholder funds to hold an AGM to make any changes to the terms of those loan notes.

But we do have our AGM coming up in May, and that presents an opportunity for us to look at our capital management. We're always seeking to optimize capital management and our balance sheet strength.

So I also acknowledge the security link of those loan notes to the U.S. entity, which brings me to the update there that you requested.

So late last year, the regulatory framework for CBD shifted in the U.S. exactly where that lands and the future implementation of how that plays out in the market is being heavily debated and lobbied in the U.S.

political system at the moment. Indications are that within the next 2 to 3 months, there'll be more clarity on that.

In the meantime, we continue to run the business to optimize its contribution. We're also staying connected with some prospective buyers on that should the market position become clearer.

So we keep an open mind to what's happening in that space. And as I said, we continue to run that business with a long-term view.

But this regulatory situation, hopefully, will become much clearer in the next 2 to 3 months.

Okay. Great.

Thank you for that update. So with that, if there's no further questions coming through from investors, but if people have listened to the presentation have got any further questions, we've got Gavin's address details there and my contact details as well.

So please feel free to reach out to us after. So Gavin, I'll just hand it back over to you just to wrap it up, and thanks, everybody, for joining.

No. Look, really just thank you.

I appreciate people being engaged and the ongoing support. We are working very hard to improve the position of the business, and we think we've made some really good inroads in Q4, but there's still lots of hard work in front of us, and we're committed to stay focused, aren't we Nat and Adam.

100%.

Thank you.

Thanks so much. Bye.

Thank you. Bye-bye.