Executive Summary

Q4 2023 revenue grew 8.8% year over year to $151.2M; Adjusted EBITDA rose 11.6% to $22.5M, while reported gross margin expanded to 26.7% on lower freight and supply chain reinvention costs .
Branded CPG benefited from a one-time bulk sugar sale, lifting segment revenue 8.5% YoY to $118.7M; Flavors & Ingredients delivered record revenue of $32.5M (+10.2% YoY), sustaining segment strength .
Full-year free cash flow improved to $19.7M and long-term debt declined to $417.9M, improving leverage and cash generation trajectory .
Pending go-private: definitive agreement at $4.875 per share expected to close in Q2 2024, a key stock reaction catalyst; no new forward guidance disclosed with Q4 results .

What Went Well and What Went Wrong

What Went Well

Adjusted EBITDA and margins improved: Q4 Adjusted EBITDA increased 11.6% YoY to $22.5M; adjusted gross margin rose to 29.7%, reflecting productivity gains and lower freight/supply chain costs .
Flavors & Ingredients delivered record Q4 revenue ($32.5M, +10.2% YoY) on strong volume growth, maintaining high-margin momentum .
Management emphasized operational focus: “We ended 2023 on a high note, demonstrating continued operational improvement across both segments… and reduced balance sheet leverage” – Irwin D. Simon, Executive Chairman .

What Went Wrong

Net loss persisted: Q4 net loss was $(7.4)M vs. $(60.3)M LY; improvement driven by higher operating income, but higher interest expense from rate environment remained a headwind .
Branded CPG operating income in Q4 was just $0.3M (vs. loss LY), aided by a one-time bulk sugar sale; underlying profitability remains sensitive to tariffs and supply chain costs .
No Q4 forward guidance: With the pending transaction, the company did not provide 2024 guidance, limiting near-term visibility; prior FY23 guidance was revised down for revenue in Q3 .

Financial Results

Consolidated Results (Quarterly trend)

Metric	Q2 2023	Q3 2023	Q4 2023
Revenue ($USD Millions)	$132.9	$134.4	$151.2
Diluted EPS ($USD)	$(0.13)	$(0.13)	$(0.17)
Gross Profit ($USD Millions)	$33.4	$37.5	$40.4
Gross Profit Margin % (Reported)	25.1%	27.9%	26.7%
Adjusted Gross Profit Margin %	30.4%	31.6%	29.7%
Operating Income ($USD Millions)	$3.0	$6.7	$2.7
Net Income ($USD Millions)	$(5.5)	$(5.4)	$(7.4)
Adjusted EBITDA ($USD Millions)	$18.2	$21.0	$22.5

Q4 Year-over-Year (vs Q4 2022)

Metric	Q4 2022	Q4 2023
Revenue ($USD Millions)	$138.9	$151.2
Diluted EPS ($USD)	$(1.44)	$(0.17)
Gross Profit ($USD Millions)	$28.3	$40.4
Gross Profit Margin % (Reported)	20.4%	26.7%
Adjusted Gross Profit Margin %	28.9%	29.7%
Operating Income (Loss) ($USD Millions)	$(46.2)	$2.7
Adjusted EBITDA ($USD Millions)	$20.2	$22.5

Segment Breakdown

Segment	Q2 2023	Q3 2023	Q4 2023
Branded CPG Revenue ($USD Millions)	$102.3	$103.3	$118.7
Branded CPG Operating Income ($USD Millions)	$1.5	$7.2	$0.3
Flavors & Ingredients Revenue ($USD Millions)	$30.6	$31.2	$32.5
Flavors & Ingredients Operating Income ($USD Millions)	$9.0	$8.4	$8.7

Balance Sheet KPIs (Quarter-end)

KPI	Q2 2023	Q3 2023	Q4 2023
Cash & Equivalents ($USD Millions)	$24.1	$24.2	$30.5
Long-term Debt ($USD Millions, net)	$427.0	$424.5	$417.9
Revolver Draw ($USD Millions)	$72	$70	$64

Note: No S&P Global Wall Street consensus estimates were available via our system for Q4 2023 due to missing CIQ mapping; estimate comparisons are therefore not presented.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Product Revenues	FY 2023	$550–$565M (Q2 reaffirm)	$540–$550M (Q3 revision)	Lowered
Adjusted EBITDA	FY 2023	$76–$78M (Q2 reaffirm)	$77–$79M (Q3 revision)	Raised
Capital Expenditures	FY 2023	~$9M (Q2 reaffirm)	~$8M (Q3 revision)	Lowered

No new forward guidance provided with Q4 2023 results; pending go-private transaction was highlighted instead .

Earnings Call Themes & Trends

(Transcript for Q4 2023 was not available via our tools; themes below reflect management releases from Q2, Q3, Q4.)

Topic	Previous Mentions (Q2 2023)	Previous Mentions (Q3 2023)	Current Period (Q4 2023)	Trend
Supply chain reinvention/productivity	“On track… rightsizing our cost base… freeing up dollars for growth”	Lower import duties, freight, and supply chain costs aided margins	Lower supply chain reinvention costs supported margin expansion	Improving execution
Tariffs/import duties	Reduced Wholesome bulk sugar sales to avoid incremental tariffs	Lower sugar import tariffs benefited Branded CPG	Lower sugar import tariffs aided operating income	Easing pressure
Flavors & Ingredients performance	Record quarterly sales; strong pricing supports profitability	Another record quarter; continued market penetration	Record Q4 revenue; strong volume growth	Sustained strength
Pricing vs. volume	Pricing growth offset by volume declines; excluding bulk sugar, CPG up on CC	Similar dynamic; excluding bulk sugar, CPG essentially flat	Volume + pricing growth; one-time bulk sugar sale boosted CPG	Improved, aided by one-time sale
Strategic alternatives/M&A	Evaluating Sababa proposal & alternatives	Active evaluation to maximize value	Definitive agreement to be acquired at $4.875/share	Advanced to signed deal
Macro/inflation/FX	Cost inflation and FX headwinds pressured margins	Constant-currency decline noted; FX cited	Continued cost normalization (freight/raws) helped margins	Normalizing costs

Management Commentary

Irwin D. Simon (Executive Chairman): “We ended 2023 on a high note, demonstrating continued operational improvement across both segments that drove a significant lift in our free cash flow generation and resulted in reduced balance sheet leverage… we look forward to completing the pending go-private transaction… expected later in the second quarter of 2024.”
Branded CPG: “A one-time sale of bulk sugar… strategic decision to take advantage of high sugar prices and exit warehousing in Buffalo, NY which will drive future warehouse cost savings.”
Flavors & Ingredients: “Revenue grew 10.2%… to a record $32.5M… driven by strong volume growth.”
Cost drivers: Margin gains driven by “lower freight costs and a decline in costs associated with the supply chain reinvention project,” with lower import duties also helping .

Q&A Highlights

Q4 2023 earnings call transcript was not available via our document tools or internet sources, so specific Q&A themes and clarifications cannot be provided. The company did include detailed non-GAAP reconciliations and drivers in its press release .

Estimates Context

Attempted to retrieve S&P Global consensus for Q4 2023 (EPS, revenue, EBITDA) but could not due to missing CIQ mapping for FREE; as a result, beat/miss vs Wall Street consensus cannot be assessed through S&P Global in this recap [SpgiEstimatesError].
When estimates become available, we will update this recap to reflect actual vs consensus and highlight any material beats/misses.

Key Takeaways for Investors

Q4 acceleration: Revenue rose 8.8% YoY to $151.2M; Adjusted EBITDA up 11.6% YoY, with adjusted gross margin at 29.7% — signaling improving operational efficiency into year-end .
Segment mix: Flavors & Ingredients continues to be the growth/margin anchor with record Q4 revenue and stable operating income; Branded CPG benefited from a one-time bulk sugar sale, boosting top line but offering limited recurring margin contribution .
Cash and leverage: FY23 free cash flow of $19.7M and reduced long-term debt ($417.9M) indicate healthier balance sheet dynamics heading into the pending transaction .
Cost normalization tailwind: Lower freight and supply chain reinvention costs, plus easing import duties, supported margin expansion — a key medium-term thesis point for stabilization/improvement .
Near-term catalyst: The definitive go-private agreement at $4.875/share expected to close in Q2 2024 is the dominant stock driver; focus on closing conditions and timing .
Watch sustainability of CPG uplift: Monitor volumes/pricing in Branded CPG ex one-time bulk sugar to gauge the underlying demand/margin trajectory post-warehousing exit .
No new guidance: Limited forward visibility with Q4; prior FY23 guidance was lowered for revenue but raised for Adjusted EBITDA in Q3 — underscores management’s cost control and margin focus even amid top-line adjustments .

Appendix: Additional Data Points

Full-year 2023: Revenue $550.9M (+2.3%); Operating income $15.4M; Adjusted EBITDA $78.3M; Operating cash flow $25.3M; Free cash flow $19.7M .
Q4 drivers: Reported gross profit $40.4M vs. $28.3M LY; operating income $2.7M vs. $(46.2)M LY (impairment in LY); net loss $(7.4)M vs. $(60.3)M LY, partially offset by higher interest expense .

Whole Earth Brands, Inc. (FREE)·Q4 2023 Earnings Summary