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Agrify (NASDAQ: AGFY) Implements Cost-Saving Plan

Agrify Corporation (NASDAQ: AGFY) has announced it is actively taking steps to better align its resources and growth plan with the current operating environment. The company aims to be cash flow positive by the end of 2023 by reducing certain costs and leveraging various cost synergies to achieve new operational efficiencies, growing the top-line revenue through targeted sales efforts in the most attractive channels, and assembling the best leadership and talent in the industry.

One key area Agrify focuses on is cost efficiency measures per its statement. The company has identified several cost improvement measures that it believes will significantly reduce its cash burn, help to improve margins and increase the likelihood that it will be cash flow positive by the end of the year. To achieve this, Agrify is in the process of benefitting from various cost synergies, many of which are largely attributable to the four extraction brands it acquired in 2021 and 2022.

One of the ways the company is reducing costs is through more effective supplier agreements, volume discounts driven by increased purchasing power, and less reliance on contract manufacturers. Additionally, the company implemented a new enterprise resource planning (ERP) system toward the end of 2022, which has given the company better visibility into its supply chain and inventory needs, allowing those needs to be better aligned with near-term revenue expectations. Agrify has also claimed to have simplified its organizational structure and embarked on a strategic consolidation of its offices and facilities.

“Agrify has fortified its position as one of the leading solution providers in the cannabis industry, but we continue to encounter headwinds that have necessitated significant adjustments to our short-term operating plan. We have taken steps to create more stability by better aligning our resources with the most attractive growth opportunities, optimizing our sales strategy, and ensuring we have the right team in place to execute our goals.” Commented Raymond Change, Chairman and Chief Executive Officer at Agrify (NASDAQ: AGFY) “We are confident in our ability to withstand these challenging circumstances and pursue a more suitable path for growth. We believe the plan we are carrying out will enable us to become cash flow positive by the end of the year and support the creation of greater value for our shareholders, customers, and employees. We remain undeterred in our quest to become the world’s most innovative end-to-end solution provider in the cannabis industry.”

These improvements have resulted in up to USD 7 million in cost savings during 2023, and the company anticipates that it may be able to accrue more savings as the year progresses. In addition to cost efficiency measures, Agrify is also focusing on growing its cultivation business by helping its existing customers bring their facilities online, driving additional sales through its Rapid Deployment Pack (RDP) program, and making a concerted effort to successfully capture market share in the academic and pharmaceutical research verticals.

Image provided Agrify (NASDAQ: AGFY)
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