Once Upon A Farm Q3 2026 Earnings Results & Report

Once Upon A Farm EPS Results

• Actual EPS: -$0.09
• Consensus EPS: -$0.09
• Beat/Miss: Met Expectations
• One Year Ago EPS: N/A

Once Upon A Farm Revenue Results

• Actual Revenue: $89.07 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Once Upon A Farm (NYSE:OFRM) is a U.S. food company that makes organic products for babies and children. Its offerings include fruit and vegetable blends, baby meals, smoothies, snacks and oat bars, sold in refrigerated and shelf-stable formats.

Founded in 2015 by Cassandra Curtis and Ari Raz, the company later brought in John Foraker as chief executive and Jennifer Garner as a co-founder. Its products are designed for families seeking convenient foods made with organic ingredients.

Once Upon A Farm sells its products across the United States through grocery and other retail outlets, as well as online channels.

Once Upon A Farm Q3 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Third-quarter net sales rose 34.9% to $89.1 million, driven primarily by 32% volume growth; channel-wide consumption also increased 32%. Adjusted EBITDA was a loss of $1 million, ahead of the company’s internal plan.
• Negative Sentiment: The voluntary Tractor Wheels recall is expected to cost up to $30 million in fiscal 2026, including customer returns, retailer chargebacks, and inventory-related costs. The product represented 18% of year-to-date sales, and an independent safety review is expected to take 8–10 weeks; the timing of a possible return remains uncertain.
• Negative Sentiment: Once Upon a Farm lowered its fiscal 2026 outlook to $290 million–$300 million in net sales and an Adjusted EBITDA loss of $4.5 million–$7 million. The outlook assumes no Tractor Wheels sales after the recall and includes expected recall costs and a cautious assumption about possible effects on other products.
• Positive Sentiment: Management said early post-recall data showed the broader portfolio performing slightly above its usual pace, with no observed negative impact so far; retailers have also expressed support for the brand and existing plans. Executives cautioned that the data covers only a short period.
• Positive Sentiment: The company’s initial fiscal 2027 framework calls for at least $330 million in net sales and at least break-even Adjusted EBITDA, with sales growth excluding Tractor Wheels expected to exceed its 20% long-term algorithm. The framework accounts for uncertainty around the product’s return and broader recall effects, as well as ongoing cost inflation.

Presentation

[Operator]

Greetings, and welcome to Once Upon a Farm's third quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the prepared remarks. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Brian Holland. Please go ahead.

[Brian Holland, VP of Investor Relations at Once Upon a Farm]

Thank you, and welcome to the Once Upon a Farm third quarter 2026 earnings conference call. With us on the call today are John Foraker, Chief Executive Officer and Co-Founder, and Larry Waldman, President and Chief Financial Officer. By now, everyone should have access to the earnings press release that was issued earlier this afternoon and is available on the investor relations section of Once Upon a Farm's website at www.onceuponafarmorganics.com. This call is also being webcast, and a replay will be available shortly after the call concludes. Before we begin, please note certain comments made on this call include forward-looking statements, including but not limited to statements regarding our expected future results for 2026 and our 2027 framework, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

[Brian Holland, VP of Investor Relations at Once Upon a Farm]

These forward-looking statements are based on management's current expectations and beliefs concerning future events and are subject to several risks and uncertainties that could cause actual results to differ materially from those described in these forward-looking statements. Please refer to today's press release and other filings with the SEC for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. We do not undertake any obligation to update any forward-looking statements to reflect events or circumstances after the date of this call, except as required by law. During the call, we will use some non-GAAP financial measures as we describe business performance. The SEC filings, as well as the earnings press release, provide reconciliations of the non-GAAP financial measures to the most directly comparable GAAP measures.

[Brian Holland, VP of Investor Relations at Once Upon a Farm]

Now, I will turn the call over to John to begin.

[John Foraker, CEO and Co-Founder at Once Upon a Farm]

Thanks, Brian. Good afternoon, everyone, and thank you for joining us today. This is an important moment for Once Upon a Farm. Over the past two weeks, I have been incredibly proud to see our team live up to the commitments that have defined this company since day one, putting food safety and quality first, and supporting the parents and families who trust our brand. We took decisive action to address a potential safety concern on the Tractor Wheels product lines, and our teams, working closely with the FDA and our retail and distribution partners, moved quickly to remove products from shelves, provide families with the information they need, and issue refunds as quickly and simply as possible.

[John Foraker, CEO and Co-Founder at Once Upon a Farm]

Across the organization, we are aligned to treat this moment as an opportunity to directly communicate with existing and future OFRM consumers about our brand mission and to raise the standards for quality and safety for both our brand and the categories in which we compete. Tractor Wheels are an important part of our business, but when it comes to consumer safety, our priorities are clear. I sincerely believe that we will emerge as a stronger company and a stronger brand. On today's call, I will start by providing a brief summary of our third quarter results and the continued strength we are seeing across the business. I will then spend some time on Tractor Wheels and the work underway since we announced the voluntary recall two weeks ago.

[John Foraker, CEO and Co-Founder at Once Upon a Farm]

Larry will follow up with additional detail on Q3, the anticipated financial impact of the recall, and an update on fiscal 2026 guidance, as well as our initial planning framework for fiscal 2027, before turning it over to Q&A. In the third quarter, net sales increased 34.9% to $89.1 million, led by volume growth of 32%. This was in line with our internal plan. Channel-wide consumption increased 32% in Q3, consistent with year-to-date growth. As expected, the delta between shipments and consumption narrowed from last quarter when we benefited from favorable cooler slotting. Year to date, Tractor Wheels accounted for 18% of net sales and was a meaningful contributor to growth. Excluding Tractor Wheels, the rest of our business has also grown above our long-term algorithm throughout the year. Our reach is expanding across retail, including the addition of 1,100 high-quality baby coolers.

[John Foraker, CEO and Co-Founder at Once Upon a Farm]

We are also seeing higher velocities thanks to improved assortments, such as line extensions, as well as the introduction of new functional benefits and flavors that have been well received by consumers. Adjusted EBITDA loss was $1 million, ahead of plan despite continued investment behind our brand, our people, and capabilities, as well as an incremental $2.6 million in YoY investment in coolers, which we expect will deliver strong returns over time. Prior to the Tractor Wheels recall, we were on track to deliver growth over 1,000 basis points above the initial fiscal 2026 guidance we set earlier this year and expected to reaffirm both the higher revised fiscal 2026 net sales and Adjusted EBITDA guidance we provided last quarter, despite well-understood rising inflationary pressures impacting freight, packaging, and ingredients.

[John Foraker, CEO and Co-Founder at Once Upon a Farm]

Incorporating the anticipated recall-related impact from Tractor Wheels, we are now guiding FY 2026 net sales to a range of $290 million-$300 million and Adjusted EBITDA loss in the range of $4.5 million-$7 million. Larry will provide more details. We are encouraged by the consumption trends we have observed across our broader portfolio in the days immediately following the recall. Initial data from a meaningful group of retailers across multiple channels shows our portfolio is performing slightly above its normal everyday pace, excluding Tractor Wheels. We believe this speaks to the strength and equity of the Once Upon a Farm brand earned over the past 10 years through an unwavering commitment to our mission, to drive systemic improvements in childhood nutrition for a happier, healthier, and more equitable world. We will continue monitoring these trends very closely.

[John Foraker, CEO and Co-Founder at Once Upon a Farm]

Bigger picture, our marketing, as well as our broadening distribution footprint, have generated greater awareness and visibility, driving increased trial and adoption, fueling strong loyalty and more consumption. Unaided brand awareness has more than doubled over the past year, and our analysis shows we are turning that awareness into consideration faster than any of our competitors. Per Numerator, household penetration grew to 6.5% at the end of September, compared to 5.4% a year ago, the fastest rate of adoption growth among established baby or kid brands. We are now the third-largest organic brand across all of baby and kid. Meanwhile, our repeat rate among households with kids remains very healthy at 52.1%, up from this time a year ago, as higher trip frequency supports continued buy rate growth, and new families are repeating at even higher rates, over 60%.

[John Foraker, CEO and Co-Founder at Once Upon a Farm]

Once Upon a Farm is a major driver of the overall baby aisle. According to MULO+ tracked channels within dry baby snacking, we have become the number two brand overall and the number one organic brand within three years of entering the market, despite competing in just half of the available category dollars today. In bars alone, we have amassed a 40% share and are driving 100% of the dollar growth in that subcategory of dry baby snacking. In addition, we have five of the top eight and 13 of the top 25 best-performing organic items across dry baby snacking. In fact, Strawberry Banana Puffs is actually our top-selling single item within the category. We see minimal cross-shop between Tractor Wheels and the rest of our dry baby snacking line, which speaks to the differentiation we are bringing to market.

[John Foraker, CEO and Co-Founder at Once Upon a Farm]

Those products so far are growing at or above their usual YoY pace in the initial days since the Tractor Wheels voluntary recall. OFRM buyers are highly desirable to retailers, with contribution across our portfolio. We are adding households at a much faster rate than any of the established competitors we track across infant and toddler, and those families are spending three times as much on the category as the average shopper. More broadly, our households boast the highest average basket size of any infant or toddler brand, nearly 40% higher than the number one legacy brand in the aisle. What gives us confidence in the durability of our growth is that the key elements of our business model are increasingly reinforcing one another.

[John Foraker, CEO and Co-Founder at Once Upon a Farm]

Greater brand awareness is attracting new households, strong consumer loyalty is supporting retail velocities, and those velocities are creating opportunities for expanded distribution and innovation. We are seeing this play out in real time across our business, and it gives us confidence in our ability to continue delivering attractive growth at increasing scale. To that end, our 2027 commercial plans outside of Tractor Wheels remain on track. They include continued assortment improvements across the portfolio, broader distribution of recent innovation, continued cooler expansion, and new product and category launches. Within these, we also have some exciting new partnerships in the works and look forward to sharing more details in the near future. We continue to have strong conviction in the opportunity in front of us, and I want to emphasize there has been no change to our long-term strategy or objectives. We have considerable distribution white space.

[John Foraker, CEO and Co-Founder at Once Upon a Farm]

Compared to the largest legacy baby and kid brands, we currently sell in anywhere from 1/2 to 1/3 the number of stores. As we expand our reach, we have added approximately 197,000 total distribution points across our portfolio over the past year, including approximately 43,000 in the third quarter alone. We are not just finding new consumers, we are making it easier for our existing households by meeting them where they are, which is translating to the buy rate growth I referenced earlier. Our innovation pipeline is strong. We are optimizing our core by introducing new functional benefits and flavors, as well as growing existing categories through line extensions. For instance, our recently launched protein and probiotic smoothies are generating the highest velocities we have seen on a new pouch item introduction since Immunity Blends back in 2021.

[John Foraker, CEO and Co-Founder at Once Upon a Farm]

Further leveraging our success in functional pouches, last month we introduced our newest blends, organic Electrolyte Blends, using real food to support hydration and nutrition through ingredients that naturally provide electrolytes, such as juicy fruits, veggies, coconut water, and sea salt. In January, we will repackage and reposition our fruit and veggie blends as superfood blends, which we expect will drive higher consumer resonance and velocity, just as we have done successfully most recently with our dairy-free smoothies line. Finally, we are also bringing clean options to new categories and consumers. Our next breakthrough innovation is on track for a first-half 2027 launch, and we have clear indications of retailer enthusiasm for this next category entry. We look forward to talking in more detail about this innovation when it hits the market at retail. Turning to Tractor Wheels, it has been two weeks since we announced the voluntary recall.

[John Foraker, CEO and Co-Founder at Once Upon a Farm]

While there is still a lot of work to be done to get the product back to market, I want to provide an update on where we are today with the path forward. First, as we previously communicated, we took swift voluntary action to initiate the recall within 24 hours of receiving three reports of a potential choking hazard from the FDA, incidents we take very seriously. Turning to our immediate focus, we are reviewing Tractor Wheels, evaluating the information we received from the consumer reports to identify potential root cause or contributory factors, and as appropriate, potential corrective actions to safely bring the product back to market, including product reformulation and design changes. We engaged independent product safety experts who have already begun conducting a comprehensive assessment. We expect this process to take eight to 10 weeks.

[John Foraker, CEO and Co-Founder at Once Upon a Farm]

In parallel, we are also conducting consumer research, engaging existing Tractor Wheels purchasers as well as current non-purchasers to clearly understand sentiment and intent across a number of variables. We are also getting prepared with our co-manufacturer to immediately conduct test runs when we are ready to do so. We are working with urgency to return Tractor Wheels to shelves, though I want to assure you that we will take the time necessary to complete the appropriate assessment, testing, and independent validation. We look forward to bringing these beloved products back to consumers quickly, but safety and quality will be the top priorities. We are committed to getting this right. Watching our team over the past two weeks has reinforced my conviction in Once Upon a Farm's ability to lead across our categories.

[John Foraker, CEO and Co-Founder at Once Upon a Farm]

We remain confident in the enduring strength of our portfolio and in the significant long-term opportunity ahead of us. Finally, before turning it over to Larry, I want to call attention to the recent appointment of Scott Morris to our board of directors. Scott brings over three decades of CPG experience and expertise, including building and scaling a fresh refrigerated food brand over the past two decades. As co-founder of Freshpet, he disrupted a large stagnant category, resulting in a company today generating over $1 billion in net sales. Scott's contrarian vision, commitment to nurturing brands while preserving their purpose and focus on the future are invaluable traits that will benefit our company in the years to come. Welcome, Scott. We look forward to working with you. With that, I will hand it over to Larry.

[Larry Waldman, President and CFO at Once Upon a Farm]

Thank you, John, and good afternoon, everyone. Third quarter net sales increased 34.9% to $89.1 million, compared with $66 million in the prior year period. Volume increased approximately 32% and drove most of the growth, with favorable mix contributing to the balance. Gross margin was 36.1%, down 600 basis points YoY, but in line with our expectations. The decline primarily reflected trade investment supporting the National Club Program, product mix, and cooler placement costs associated with over 550 installations. These pressures were partially offset by pricing and favorable customer mix. SG&A expenses increased by $8 million-$36.8 million, reflecting continued investment in marketing, people, and public company capabilities. Despite these investments, SG&A as a percent of net sales declined approximately 230 basis points to 41.3%, reflecting the leverage from our revenue growth.

[Larry Waldman, President and CFO at Once Upon a Farm]

Net loss improved to $3.8 million from $11.3 million in the prior year period, primarily reflecting the absence of the prior year non-cash change in fair value of a derivative liability. Adjusted EBITDA loss was $1 million, compared with a positive Adjusted EBITDA of $0.9 million in the prior year period. The YoY decline primarily reflected lower gross margin, partially offset by SG&A leverage, which came in better than our expectations. On the whole, third quarter results were ahead of our internal plan. The Tractor Wheels recall was initiated after the quarter ended, and thus had no effect on our Q3 results. We have incorporated its expected impact in our updated Q4 and fiscal 2026 outlook, which I will address in just a moment. Turning to the balance sheet, we believe our financial position gives us the flexibility to manage through this period.

[Larry Waldman, President and CFO at Once Upon a Farm]

We finished Q3 with $106.4 million in cash and no debt. In addition, we have up to $95 million in additional borrowing capacity through our existing credit facilities, subject to their terms. We currently expect to incur up to $30 million of cost related to the Tractor Wheels recall in fiscal 2026, including customer returns, retailer chargebacks, legal and other recall-related expenses, and costs related to work in process inventory at our co-mans. We are pursuing potential insurance recoveries, but cannot yet predict their timing or amount. In Q4, we plan to begin executing the previously discussed supply chain productivity and automation projects unrelated to Tractor Wheels. These projects are intended to expand capacity, improve service, and structurally lower production costs across our highest volume platforms. As we previously stated, we expect to see initial benefits in fiscal 2027, with a more substantial contribution beginning in fiscal 2028.

[Larry Waldman, President and CFO at Once Upon a Farm]

We expect to fund these projects from existing cash while maintaining substantial liquidity. Separately, as we assess the recall's impact, we are evaluating whether adjustments are needed to the timing or scope of any Tractor Wheels-related projects, and we will keep you apprised of any changes to those plans. As John indicated, we are updating our fiscal 2026 outlook to reflect the impact of the Tractor Wheels recall in Q4. We now expect net sales of $290 million-$300 million, and an Adjusted EBITDA loss of $4.5 million-$7 million. The net sales range reflects no Tractor Wheels sales after the recall date, as well as our current estimates for customer returns and chargebacks. We have also stripped out planned Q4 Tractor Wheels shipments to support new distribution and Q1 2027 promotions.

[Larry Waldman, President and CFO at Once Upon a Farm]

While early signs are encouraging, less than two weeks since the recall, we believe it is prudent to assume some drag on base velocities across the rest of the portfolio. The Adjusted EBITDA outlook reflects these revenue impacts and expected recall-related costs. We are providing an initial planning framework for our business in fiscal 2027. Based on our current assumptions, we expect net sales of at least $330 million and Adjusted EBITDA of at least break-even. Compared with fiscal 2026, on a like-for-like basis, excluding Tractor Wheels, we anticipate net sales growth to exceed our stated long-term algorithm of 20%, supported by innovation and distribution gains. This framework takes into account a range of potential outcomes, both in the timing of Tractor Wheels' potential return and the recall's possible effect on velocities across the broader portfolio.

[Larry Waldman, President and CFO at Once Upon a Farm]

We also consider the impact of lapping significant gains in awareness and household penetration following our IPO, as well as two National Club Programs now in our base, including one for Tractor Wheels. We expect to provide formal guidance with our Q4 results in March, when we anticipate greater visibility into Tractor Wheels' potential return to market timing and broader effects. Aside from the recall impact, our current market-based assumption indicate low single-digit inflation across our core refrigerated pouch platform, with packaging representing the largest variable. We are also seeing costs and availability pressure across certain organic fruit and vegetable inputs, grain-based and other dry ingredients, and imported agricultural commodities. In addition, fuel and other transportation costs, material contract resets, and regulatory packaging fees are expected to remain elevated.

[Larry Waldman, President and CFO at Once Upon a Farm]

These assumptions reflect our existing contracted positions, current market quotes, and expected contract resets, with visibility varying by input and by period. As we exit fiscal 2027, we fully expect total company net sales growth at or above our long-term algorithm, assuming Tractor Wheels is back on the shelves. We fully expect margins to remain on the trajectory outlined at our IPO as recall-related impacts moderate and the benefits of scale, trade, productivity, and supply chain efficiencies flow through. We will continue investing in consumer safety, service, and the capabilities that help us reach more families while managing costs with discipline. This concludes our prepared remarks. Operator, please open the call for questions.

[Operator]

Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question will come from Leah Jordan with Goldman Sachs.

[Leah Jordan, Analyst at Goldman Sachs]

Hi. Good afternoon. Thank you for taking our question. A key part of your growth story has been on growing household penetration. Can you talk about how you think about retaining customers amid the recall, and then how you think about winning them back after this period of you have to go through the reformulation in the unknown timeline? Thank you.

[John Foraker, CEO and Co-Founder at Once Upon a Farm]

Yeah, sure. We have 6.5% household penetration as of the end of the quarter, and we've grown our households over time by communicating the message around the brand, broadening our distribution, getting these great products out into many millions of households. We would expect that we'll continue to grow household penetration the same way. We'll be bringing new innovation into new categories, as we've said before, every 12 to 18 months. The first of those big new innovation platforms, we didn't have one this year, is coming in the first half of 2027. We'll be doing that. What I can say, Leah, is we've talked to thousands and thousands of consumers over the last couple weeks as part of the recall. We've talked to all of our customers.

[John Foraker, CEO and Co-Founder at Once Upon a Farm]

Obviously many times and worked diligently with them through execution of the recall, talking to them about where we are with the brand. I will make two points. One is on the retailer side, retailers have been exceptionally supportive and think that we did the right thing for consumers. They respect that, and they are ready to do business with us and want us to continue growing, including no change in any of the plans they have on existing products that we are bringing to market. We are bringing some new dry baby items and new subcategories into market in the first quarter, for example. They are ready to move forward with us, and let us go.

[John Foraker, CEO and Co-Founder at Once Upon a Farm]

Then the sentiment from consumers overall, obviously some consumers are calling in, and they are concerned about what they have heard. The overall sentiment that we are getting from consumers is they really appreciate what we did.

[John Foraker, CEO and Co-Founder at Once Upon a Farm]

They recognize it was a significant move and that we were doing it because we were prioritizing their and their children's safety. That just generated a lot of love for the brand, including a lot of comments from consumers about wanting the Tractor Wheels platform to come back as soon as possible. Obviously, we will monitor sentiment very closely, and we think that over time, we will win back many of those consumers who would have been impacted by this recall. We just got to keep doing what we have always been doing, which is bringing great quality products and making their lives easier by doing that. So, that is our approach.

[John Foraker, CEO and Co-Founder at Once Upon a Farm]

As I said in the prepared remarks, we have seen no negative impact on the rest of our portfolio in the couple weeks post the recall versus the couple weeks prior to the recall, which is very encouraging on everything outside of Tractor Wheels. So, I think we are well-positioned. We now have to just do it, right? We have to execute well, make sure that those products come back the right way, and then we just got to keep talking to consumers about it. We will be elevating our messaging around what we are doing and how we are trying to elevate the entire category with respect to safety as well, which will be part of it.

[Leah Jordan, Analyst at Goldman Sachs]

That is great color. Thank you, John. You kind of touched on the retailer relationship piece, but I wanted to dig into that a little bit more.

[John Foraker, CEO and Co-Founder at Once Upon a Farm]

Sure.

[Leah Jordan, Analyst at Goldman Sachs]

Part of the growth story, ex-Tractor Wheels, is around, one, the cooler expansion in baby pouches, and then two, it is the SKU expansion in broader snacking. Just what is your visibility today on the continued growth of those two products? What are you looking for in spring resets? Where do you actually have commitments? Just kind of help on that growth path as we look forward to 2027. Thank you.

[John Foraker, CEO and Co-Founder at Once Upon a Farm]

Yeah, so on the baby cooler side, we expect continued very strong growth in our cooler assortments and also placements over the next year. We are not guiding specifically to that today, but I can tell you the momentum we have with retailers on coolers remains very strong and is unaffected by any of this recall noise. We expect that that will continue to grow. The coolers are performing really well. They are highly incremental. The repeat rates coming out of the coolers are very high. That story remains completely unchanged. We are going to continue to do that. Then we have new innovation coming, as I mentioned, in dry baby snacking. We have positive changes that we made in packaging and other things coming. We have some new relationships that we will be announcing soon.

[John Foraker, CEO and Co-Founder at Once Upon a Farm]

There is just a lot of momentum in the business on the TDP side, and we have pretty strong visibility around that into next year. It is right now the middle of November, basically, and we know what the resets look like for the first quarter, and those are locked down, and even out in the second quarter. So pretty strong visibility. When we report our Q4 earnings, which would be at some point in March, we will obviously set more specific guidance for the full year, but you should expect that there will be really strong growth in both of those areas that we will be signaling based on what we know right now.

[Leah Jordan, Analyst at Goldman Sachs]

Great. Thank you. I will pass it on.

[John Foraker, CEO and Co-Founder at Once Upon a Farm]

Thank you.

[Operator]

Our next question will come from Jon Andersen with William Blair.

[Jon Andersen, Analyst at William Blair]

Yeah. Thank you for the questions. You kind of hit on this, but I do want to just put a fine point on it. Have the developments of the past couple of weeks affected your commercial or operational plans in any way for 2027, on the commercial side, innovation, distribution, expansion, et cetera? On the operational side, some of what Larry spoke to, productivity programs, supply chain enhancements designed to deliver margin expansion in 2027, more so in 2028.

[John Foraker, CEO and Co-Founder at Once Upon a Farm]

Yeah. On the Tractor Wheels platform, obviously that's been impacted. But the feedback that we've gotten from all of our retailers, and we announced this recall on a Friday night, and by 6:00 A.M. that next morning, I was on the phone, and our sales team was on the phone with retailers all over the country, and I talked to most of our top retailers. Once we got through the specifics of organizing around the recall, they affirmed their support for the brand and the business and what we're doing. So there are no changes, as we made a comment in the script, on our 2027 commercial plans. We've got new innovation coming. We've got a lot of distribution expansion. Our core dry baby items outside of Tractor Wheels are continuing to perform well. We have distribution opportunities there too. So, we're in a good spot.

[John Foraker, CEO and Co-Founder at Once Upon a Farm]

Larry mentioned in the prepared remarks that obviously the capital projects that are related to machinery and investments around Tractor Wheels, we have to reevaluate the timing of those and the scale and all that stuff. We will be reporting out once we come to a conclusion. That will be very much linked to what we ultimately decide to do in terms of returning Tractor Wheels to market. Our retailers want us to do that. The vast majority of the consumers we talk to want us to do that. We will do it the right way. Obviously, we will do it when we are comfortable that we have addressed any of the safety concerns in the manner that we talked about in our prepared remarks. That is it.

[John Foraker, CEO and Co-Founder at Once Upon a Farm]

It is really a lot more to be learned on that regard over the next few weeks and months. Then we will be back to update everybody with more information as soon as we have it.

[Jon Andersen, Analyst at William Blair]

That is helpful. I was encouraged to hear that the consumption data so far, ex-Tractor Wheels, you have seen hold up across the portfolio. Then I think you have assumed or mentioned that you thought it was prudent to assume some impact more broadly or halo effect on the base business and velocities. How do we square those two things? To the extent that you think it is prudent to assume a bit of a slowdown in the base for a period of time, to what extent should we be thinking about that as we look to kind of update our view of 2027? Thanks.

[John Foraker, CEO and Co-Founder at Once Upon a Farm]

Okay. Yeah. No, both those things are true. We thought it was prudent to assume some impact there. What we are also saying at the same time is based on a couple weeks of data, we do not see it. We are still early in this thing, and we want to make sure that we are guiding appropriately for the rest of this quarter. There is going to be a lot of noise in the fourth quarter. We want to make sure that we are setting expectations the right way. We do not see any negative impact on the rest of the portfolio right now. In fact, on a YoY basis, there has been some acceleration in it post the recall, more about just comping better versus last year than an acceleration in the business. The business is flat to up a couple weeks before versus a couple weeks after.

[John Foraker, CEO and Co-Founder at Once Upon a Farm]

All that looks good, but it is early, so we just want to be pragmatic about it.

[Jon Andersen, Analyst at William Blair]

Makes sense. Thank you very much.

[John Foraker, CEO and Co-Founder at Once Upon a Farm]

You got it, Jon. Thank you.

[Operator]

We will go next to Rupesh Parikh with Oppenheimer.

[Luke Notaro, Analyst at Oppenheimer]

Hi, this is Luke Notaro on for Rupesh. Thanks for taking our question. We were wondering if you could provide an update on what you are seeing on the competitive front. Have there been any notable shifts, especially since the recall of Tractor Wheels? Thank you.

[John Foraker, CEO and Co-Founder at Once Upon a Farm]

Yeah, there has been no notable shift since the recall of Tractor Wheels. That has been over the last couple weeks. There are no significant changes in the overall competitive situation. We have been competing broadly against a lot of other brands over the last year that have tried to come into our spaces or that already were in our spaces, and we are performing really well, including against private label. So, we have a very strong brand. We have high velocities. We expect where we face additional competition, whether it is in a cooler or in a dairy set or in the baby, excuse me, in the dry food snacking aisle, that we will continue to be in the top third of velocities and perform exceptionally well. So, there is no real change to report there.

[Luke Notaro, Analyst at Oppenheimer]

Okay, great. I will pass it along. Thank you.

[John Foraker, CEO and Co-Founder at Once Upon a Farm]

Thank you.

[Operator]

Moving next to Robert Moskow with TD Cowen.

[Robert Moskow, Analyst at TD Cowen]

Thanks. I was hoping to get a little more of a breakdown on the fourth quarter components that are negatively impacting the sales, Larry. So, how much of this is the cost of the recall and how much of it of a call down is like base velocity assumption being weaker?

[Larry Waldman, President and CFO at Once Upon a Farm]

The majority of the impact is related to the recall, either through the customer returns, anticipated chargebacks, and also taking Tractor Wheels, the remaining of the quarter's Tractor Wheels sales out of the forecast for Q4. We did take some velocity down. It was more of holding it flat to bringing it down, so kind of offsetting some of the growth that we built into the fourth quarter. But the majority of it was strictly recall-related.

[John Foraker, CEO and Co-Founder at Once Upon a Farm]

Yeah, significant majority of it is what I would emphasize.

[Robert Moskow, Analyst at TD Cowen]

Okay. But like it's 18% of your sales. Is the cost on top of that just to execute the recall, like another 5% or 10%, or is there a way to isolate just the cost of doing this?

[Larry Waldman, President and CFO at Once Upon a Farm]

Well, the cost is really the write-off of inventory in all of our retailers that are holding the Tractor Wheels. We have over 20,000 doors where Tractor Wheels are sold. Pulling all that off the shelf, disposing of that product is the majority of the cost that's hitting net sales. We also, as I said, we're not anticipating to be back in the market until sometime in 2027. All the sales that we had built into the forecast, in fact, we had purchase orders for in Q4 for Tractor Wheels shipments, that was taken out also. It is, if you think about the 20,000 doors that were retailing it and the amount of product that's coming back. We also have customer refunds that we're providing customers who have product in their pantries. But that's a fairly small amount compared to the write-off of inventory.

[Robert Moskow, Analyst at TD Cowen]

Okay. A follow-up. The shelf space that you lost. Let's say we wanted to start trying to model it back in at some point. Is it hard to get that shelf space back? Do you have to pay slotting fees to get it back? How will that proceed?

[John Foraker, CEO and Co-Founder at Once Upon a Farm]

Yeah, it will depend. It will depend if we get to the point where we launch Tractor Wheels again, how we do it. Do we hold the same SKU? Do we introduce a new SKU? So there's some technical stuff like that. The core reason that we would bring Tractor Wheels back and that retailers would want to bring it back, Rob, is because they're just extremely high velocity products. Like we said in our prepared remarks, driving 40 share in the category and all the category growth. We can see from what's happening in the category with Tractor Wheels coming off the market, that volume is leaving the category, most of it. Some of it's shifting to some other competitors, small amounts of it, but most of it's leaving the category.

[John Foraker, CEO and Co-Founder at Once Upon a Farm]

We know that that shouldn't be surprising, by the way, because we've said all along that our brand is significantly incremental in this category. We'll talk to our retailers about it when we're ready to bring the product back. We've gotten strong buying signals, if you will, from all of our key retail partners that they want it back as soon as possible. We'll work through the specifics of that once we know what that timing is. When we launch Tractor Wheels again, and we do assume that we will get it back in market, when we do it, we are very confident that we'll get a significant majority of the distribution back. Now, we won't get all of it right away, right? It might take a few review cycles to come back to that level or to something higher. But the retailer intent is there.

[John Foraker, CEO and Co-Founder at Once Upon a Farm]

The productivity of these items is extremely high, and we have a lot of consumers that want them too. That's what's going to get the products back on shelf, is the fact that they're such high performers. When we're ready to do it, I know all our retailers are going to work to do that with us as fast as they possibly can.

[Robert Moskow, Analyst at TD Cowen]

Okay. I'll pass it along. Thanks.

[John Foraker, CEO and Co-Founder at Once Upon a Farm]

Thanks, Rob.

[Operator]

Our next question will come from Steve Powers with Deutsche Bank.

[John Foraker, CEO and Co-Founder at Once Upon a Farm]

Hi, Steve.

[Operator]

Steve, your line is open. Steve, can you check your mute button? Hearing no response from Steve, we will go next to David Palmer with Evercore ISI.

[David Palmer, Analyst at Evercore ISI]

Thanks. I am sorry all this has happened, and I think you guys are doing a lot of the right steps. I wanted to ask you about what the goal is with Tractor Wheels, even as you test and reformulate. I do not know if it was really firmly established that Tractor Wheels were really unsafe as much as they got a little scary for people. That is sort of a vague thing to fight against, if you will, when you are doing this, what you are going to try to do, which is get these relaunched with all the positive attributes that you had before with Tractor Wheels that made them loved, but at the same time avoids even the perception that they could be a choking hazard.

[David Palmer, Analyst at Evercore ISI]

I wanted to get your thoughts on that, and how does that make you feel about the timeline that you can get something like that achieved?

[John Foraker, CEO and Co-Founder at Once Upon a Farm]

Well, that's a good question. We go with the information that we got in the complaints directly from the FDA and are looking at the description of the events, et cetera. Then now, as we've engaged outside third-party experts, multiple of them, to help us work through an assessment of the core formulations and the products and all of our retained samples and just all the things that you do, we're going to be looking for opportunities to isolate what we think the issue may have been and look at the options we identified in the prepared remarks around reformulation and communication on package about these products. It's a little early for us, obviously, to say how long that's going to take.

[John Foraker, CEO and Co-Founder at Once Upon a Farm]

I can tell you, and I think you got probably from the remarks, that we are very confident that if we can figure that out and do the work required to make sure that we live up to our standards around safety, we'll absolutely bring these products back, and we think we can execute that very well once we decide to do it. We just need to go through the next few weeks here and isolate and really develop that final plan. But we are preparing for multiple different contingencies around it based on what we learn in the research. We want to balance the speed of it with the excellence of it and make sure that it's excellent, then we'll do that as fast as we can. That's what we have to say right now.

[John Foraker, CEO and Co-Founder at Once Upon a Farm]

We will absolutely, once we have something more significant to say about that and the timing, we'll absolutely look at how we could communicate that out to investors so they can understand what that looks like as it relates to our plans for 2027.

[David Palmer, Analyst at Evercore ISI]

Thanks for all that. Is there anything that you are thinking about with your pipeline and your marketing plans, things in promotion plans, thinking differently since this is happening? It sounds like you have a major launch you are still planning in the first half of 2027, but I wonder how you think about doing something in, for example, dry baby snacks, for example, versus moving far away from this category for now and then coming back to it because of the fact that you want to have this whole thing behind you before you put as much energy in a like category. I will pass it on.

[John Foraker, CEO and Co-Founder at Once Upon a Farm]

Yeah. As I mentioned earlier, we have some new subcategory innovation coming into dry baby snacking imminently, and you will be seeing it on the shelf in big national retailers early in the first quarter. So, obviously, we are going to execute that, hopefully brilliantly, like we usually do when we roll out new innovation. The products are great. They should sell at very high velocities. Our retailers are very excited about that. So, that again just builds into our platform. We talked about Tractor Wheels being obviously a very important business for us, but that the rest of the dry baby snacking business is an excellent business too and is growing very fast. This new subcategory coming in will really help build that, and we will be competing in some spaces that we are not in right now. That is great.

[John Foraker, CEO and Co-Founder at Once Upon a Farm]

We also have been working on this innovation that we will be launching in the first half of the year in a new category that will be, by definition, 100% incremental to us. We have been working on it for a very, very long time. We have excellent plans. We think we have excellent products. The response has been great. So, we are going to go big on that. Our plans really have not changed. We are just going to execute them really well, and we have got to make sure that we also put the right resources to execute the Tractor Wheels plans too. That is all laid out, and we have got it resourced correctly to be able to do that all really well once we know what the exact plan is going to be there.

[David Palmer, Analyst at Evercore ISI]

Great. Thanks for that.

[John Foraker, CEO and Co-Founder at Once Upon a Farm]

You bet. Thanks, David.

[Operator]

We'll go next to Andrew Lazar with Barclays.

[Andrew Lazar, Analyst at Barclays]

Great. Thanks so much. In thinking about your 2027 framework that you laid out, Larry, prior to the recall, I think consensus estimates were looking for a fairly substantial step-up in EBITDA, right, from between 2026 and 2027.

[Andrew Lazar, Analyst at Barclays]

I'm curious if we were to sort of take the Tractor Wheels piece out of it, was that magnitude of a step-up in EBITDA going into next year still reasonable given, I mean, you mentioned a number of things like obviously rising costs, freight logistics, some ingredient cost increases, and things like that. Or do you think there might have been some pressure on EBITDA, even outside of sort of the Tractor Wheels piece?

[Larry Waldman, President and CFO at Once Upon a Farm]

We said on our call that we are looking at, for 2027, as a minimum of a break-even EBITDA for next year. We still are looking at a step-up. We are looking at from where we are projecting for 2026 to be able to step up to break even, if not above, partially driven by scale, partially driven by mix, because we are looking at a favorable mix into next year. It is also partially with some of the projects and new categories and additional sales that we are bringing in. We are looking at, as we get to the end of 2027, we are looking to get back to where we were before, driving towards that long-term algorithm of 15% to high teen EBITDA.

[Larry Waldman, President and CFO at Once Upon a Farm]

We had some deleveraging that will happen with the recall into 2027, but we believe that we will be back on track starting in 2028 as we get back into Tractor Wheels and plus the additional categories that we have had built in. Yes, we have had a step backwards, but we are expecting that by the end of 2027, we will be back onto the same track that we would have been even without the recall.

[Andrew Lazar, Analyst at Barclays]

And one last one. I think the expectation that gross margins would rebound after the last two quarters in Q4 2026 and maybe end the year around 40% or so. Is there an updated expectation about what gross margins could look like for the year, this year in 2026, now with the recall? Thanks.

[Larry Waldman, President and CFO at Once Upon a Farm]

Yeah. If we are moving the recall costs associated that are in Q4, we are expecting to be at or above what we were projecting to come in on Q4. And we were looking at, for the full year, ex-recall costs to be in line with what we had talked about last quarter coming in. Excluding recall, we are looking to be in line with everything that we were guiding as of the end of last quarter.

[Operator]

Moving on to Yasmine Deswandhy with Bank of America.

[Yasmine Deswandhy, Analyst at Bank of America]

Hi. Thank you for the question. I just had a quick question. Often when these types of events occur, there is usually other incremental costs outside of the upfront costs that you will see in Q4, such as quality assurance, new safety protocols, more headcount. I guess, how should we think about this? Then a follow-up to that too, how have your co-manufacturers responded to this event, and does it make you consider having to insource the product versus using co-mans going forward?

[Larry Waldman, President and CFO at Once Upon a Farm]

On the first one, we are looking at all our costs going into 2027. We know we are quantifying all the costs associated with the recall and then the costs that are coming out of it. We are not anticipating additional headcount requirements as part of the recall, but what we are doing is we are reallocating some of the plant headcount into areas to be able to add more strength into quality and co-pack management going forward. Our co-manufacturer that we are working with on this, we are very much partnering with them on the work to get Tractor Wheels back into the market.

[Larry Waldman, President and CFO at Once Upon a Farm]

We have brought in third-party experts from as far as Europe to be able to look at the products and be able to quickly understand what potentially, if there was anything that potentially had caused this problem, and then make any changes in the formula to be able to, and then test that product to be able to ensure that it is safe as we get back in. So, it has been a good partnership as we drive to get this product back into the market. We may, in the future, decide to in-house the production, but at this point, we believe that it is more prudent for us to continue to work with our co-manufacturer to come up with a better product, better processes to produce, and to be able to get back on shelf as quickly as can.

[Operator]

And we'll go back to Steve Powers with Deutsche Bank.

[Steve Powers, Analyst at Deutsche Bank]

Okay, can you hear me okay?

[John Foraker, CEO and Co-Founder at Once Upon a Farm]

Yep. Hi, Steve.

[Steve Powers, Analyst at Deutsche Bank]

Okay, perfect. Sorry about that earlier. I'm not sure what happened. Two quick, I guess, follow-ups from some of what's been discussed. Larry, on the low single-digit inflation call that you made for looking ahead, it wasn't clear if that was just inclusive of raw materials and packaging with logistics costs incremental to that, or if that was an all-in inflation outlook.

[Larry Waldman, President and CFO at Once Upon a Farm]

It's an all-in inflation outlook. We worked really hard in 2026 to be able to offset a lot of the inflation pressures and headwinds coming in, especially on the freight and the warehousing side. We have been contracting for our raw materials. The inflation that ran in 2026, we definitely were better than what it was in 2026. There will be some YoY impact associated with the contracts that we have that will impact 2027. Based upon what we're looking for in the way of ingredients, what we've done to kind of offset El Niño and the impact there, the higher drivers when it comes to with fuel, taking account both packaging and freight costs, we're still looking at an under mid-single-digit inflation rate going in total portfolio-wide going into 2027.

[Steve Powers, Analyst at Deutsche Bank]

Okay, perfect. Very clear, and thank you. The other question I wanted to ask is, it's kind of an extension of what David Palmer was asking. In kind of a, I guess, kind of worst-case scenario with Tractor Wheels, if this becomes more persistent or more complex problem to remedy, you talked about the incremental innovation you have planned that you're going to go all in on next year. I guess the question I'm left with is, the longer-term pipeline you have, is there a scenario in which you have some flexibility to pull downstream innovations forward to the extent that a nearer-term remedy on Tractor Wheels proves more complicated?

[John Foraker, CEO and Co-Founder at Once Upon a Farm]

Yeah, absolutely. We have a very robust innovation pipeline, and we absolutely could do that. There are a lot of places that we've identified strategically where we think this brand should play. There are real white space opportunities for the brand that we would expect to be going over the next three to five years. No doubt we can pull stuff faster. Yep.

[Steve Powers, Analyst at Deutsche Bank]

Okay. Yeah, perfect. Thanks so much. Appreciate it.

[John Foraker, CEO and Co-Founder at Once Upon a Farm]

Thank you.

[Operator]

This now concludes our question and answer session. I would like to turn the floor over to John Foraker for closing comments.

[John Foraker, CEO and Co-Founder at Once Upon a Farm]

Yeah, thank you. As I reflect on these past two weeks, my conviction in Once Upon a Farm's long-term opportunity has not changed. We are building one of the most compelling, durable growth platforms in food with increasing household penetration, strong consumer loyalty, attractive retail productivity, and significant opportunities to expand our reach in new categories relevant to our consumers. We have also demonstrated something equally important. When faced with a difficult decision, our organization can and will act quickly, decisively, and in the best interest of our consumers. We are committed to resolving the Tractor Wheels situation correctly, continuing to earn the trust of families and retailers, and executing against the significant growth opportunity ahead of us. I remain highly confident in the future of Once Upon a Farm. Thank you for joining us today.

[Operator]

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines and have a wonderful day.

Participants

Analysts

• Brian Holland, VP of Investor Relations at Once Upon a Farm
• John Foraker, CEO and Co-Founder at Once Upon a Farm
• Larry Waldman, President and CFO at Once Upon a Farm
• Leah Jordan, Analyst at Goldman Sachs
• Jon Andersen, Analyst at William Blair
• Luke Notaro, Analyst at Oppenheimer
• Robert Moskow, Analyst at TD Cowen
• David Palmer, Analyst at Evercore ISI
• Andrew Lazar, Analyst at Barclays
• Yasmine Deswandhy, Analyst at Bank of America
• Steve Powers, Analyst at Deutsche Bank