Australian Oilseeds Holdings Ltd. (NASDAQ:COOT) is a trailblazer in the global edible oil industry, committed to providing consumers with chemical-free, non-GMO, and sustainably produced oils. Over the past two decades, the company has established itself as the largest cold-pressing oil plant in Australia and the Asia-Pacific region, setting new standards for environmentally responsible oilseed processing.
Business Overview and Detailed History Founded in 2002 as a Cayman Islands exempted company, Australian Oilseeds Holdings Ltd. has focused on the manufacture and sale of chemical-free, non-GMO, sustainable edible oils and products derived from oilseeds. The company's subsidiary, Australian Oilseeds Investments Pty Ltd. (AOI), has grown to become the largest cold-pressing oil plant in Australia, strictly pressing GMO-free conventional and organic oilseeds.
In 2021, AOI expanded its existing oil processing plant and began building an additional larger multi-seed crushing plant in Queensland, solidifying its position as the largest cold-pressed producer in the Oceanic/APAC region. The company has been committed to working with suppliers and customers to eliminate chemicals from the edible oil production and manufacturing systems, supplying quality non-GMO oilseeds and organic and non-organic food-grade oils globally.
In 2023, the company faced challenges as it underwent a reverse acquisition transaction with EDOC Acquisition Corp., a publicly-traded special purpose acquisition company. This business combination was announced in December 2022 and closed in March 2024, with Australian Oilseeds Holdings Ltd. beginning to trade on the Nasdaq exchange under the ticker "COOT". The transaction provided the capital needed for the company to expand its operations and distribution capabilities.
Prior to the business combination, Australian Oilseeds had successfully secured supply contracts with major Australian retailers like Woolworths and Costco to distribute its range of non-GMO cold-pressed canola oils. This expansion into the retail market complemented the company's existing wholesale and toll crushing business.
Financial Overview For the fiscal year ended June 30, 2024, Australian Oilseeds reported total revenue of A$33.7 million, reflecting a 16.1% increase from the prior year. This growth was primarily driven by strong demand for the company's cold-pressed canola oil, which accounted for a significant portion of sales.
Gross margin for the year improved by 40 basis points to 17.5%, as the company's focus on efficiency and cost optimization partially offset the impact of increased investments in brand development and marketing. However, net income for the period declined to a loss of A$21.3 million, largely due to A$23.2 million in one-time recapitalization expenses associated with the company's public listing.
For the first quarter of fiscal 2025, which ended on September 30, 2024, Australian Oilseeds reported a 6.1% increase in sales revenue to A$10.4 million compared to the same period in the prior year. However, the company recorded a net loss of A$646,333 during the quarter, primarily due to changes in the sales mix and increased investments in brand and marketing initiatives to support the growth of its GEO product line.
The company's revenue streams are divided into several segments. Wholesale oils, sold in bulk to food ingredient manufacturers, represented 20.2% of revenue for the three months ended September 30, 2024, compared to 32.4% in the prior year period. Retail oil sales grew to 55.2% of total revenue, up from 36.6% in the same quarter last year, driven by new supply contracts with Costco Australia stores and Woolworth's supermarkets. The company also introduced three new retail oil SKUs during the current quarter as part of an integrated marketing campaign with supermarkets.
Hype protein meals, sold in bulk to local farmers and feedlots as protein supplements, represented 24.3% of revenue in Q1 2025, down from 27.7% in the prior year period. The decrease was due to reduced demand from the feedlot market as Australia experienced higher rainfall. Toll crushing services, seed sales, and other miscellaneous revenue made up the remaining 0.2% of total sales, down from 3.3% a year earlier.
The growth in retail sales came with higher costs, as the cost of sales rose 30.7% to A$9.5 million, primarily due to increased raw material (canola seed) and labor costs. This resulted in the gross profit margin declining to 8.0% in Q1 2025 compared to 25.4% in the same quarter last year.
Liquidity Despite the one-time charges, Australian Oilseeds' financial position remains challenging, with a current ratio of 0.52 and a debt-to-equity ratio of -1,479.63 as of September 30, 2024. The company's cash and cash equivalents stood at A$2.13 million at the end of the first quarter of fiscal 2025, with an available credit line of A$8.0 million from Commonwealth Bank of Australia. The quick ratio was 0.28, indicating potential short-term liquidity challenges.
For the fiscal year 2024, the company reported negative operating cash flow of A$2.18 million and negative free cash flow of A$6.16 million. However, in the first quarter of fiscal 2025, operating cash flow improved to A$0.59 million, while free cash flow remained negative at A$0.58 million.
Operational Highlights and Growth Initiatives In addition to its financial performance, Australian Oilseeds has made significant strides in expanding its market reach and product portfolio. In 2024, the company secured a major supply contract with Woolworths, Australia's largest supermarket chain, to distribute its GEO brand of cold-pressed, non-GMO canola and olive oils across the retailer's 960 stores nationwide. This partnership is expected to drive further growth in the company's retail oil segment, which accounted for 55.2% of total revenue in the first quarter of fiscal 2025.
Furthermore, in early 2025, Australian Oilseeds announced a strategic partnership with Shanghai Maiwei Trading Co., Ltd. to accelerate the expansion of its GEO brand into the Chinese market. This move aligns with the company's focus on international growth and its pursuit of new opportunities in high-potential markets.
Internally, the company has invested heavily in expanding its production capabilities to meet the rising demand for its products. In 2024, the company commissioned an additional, larger multi-seed crushing plant in Queensland, solidifying its position as the largest cold-pressed oil producer in the Oceanic/Asia-Pacific region.
Risks and Challenges While Australian Oilseeds has demonstrated remarkable growth and resilience, the company faces several risks and challenges that warrant consideration. The edible oil industry is highly competitive, with the company competing against both established players and emerging market entrants. Maintaining its competitive edge and market share will require the company to continue investing in product innovation, brand-building, and operational efficiency.
Additionally, the company's reliance on a limited number of large customers, such as Woolworths and Costco Australia, exposes it to concentration risk. The loss of any of these key customers could have a significant impact on the company's financial performance.
Furthermore, the volatility in commodity prices, particularly for oilseeds, could adversely affect the company's cost structure and profitability. Effective risk management and strategic hedging strategies will be crucial in mitigating these challenges.
The company's financial position, particularly its negative debt-to-equity ratio and low liquidity ratios, presents additional risks. Managing cash flow and improving the balance sheet structure will be critical for long-term sustainability and growth.
Conclusion Australian Oilseeds Holdings Ltd. (NASDAQ:COOT) has established itself as a pioneer in the production of sustainable, non-GMO edible oils. With its focus on quality, innovation, and environmental responsibility, the company has carved out a unique niche in the global oilseed market. As it continues to expand its production capabilities, diversify its customer base, and explore new growth opportunities both domestically and internationally, Australian Oilseeds is well-positioned to capitalize on the increasing consumer demand for clean, ethical, and environmentally conscious food products.
However, the company faces significant challenges, including margin pressure, liquidity concerns, and intense competition. The success of its retail expansion strategy and its ability to manage costs while maintaining product quality will be crucial factors in determining its future performance. Investors should closely monitor the company's progress in addressing these challenges and capitalizing on its growth opportunities in the coming years.