Kalera released its third-quarter results missing the Earnings per Share & Revenues estimate but showing signs of progress compared to the previous quarter.
Despite the difficulties with their balance sheet, Jim Leighton, president and chief executive officer of Kalera, stated that “we are hitting or exceeding our targets on both the top and bottom lines. Revenue climbed sequentially over the second quarter of this year and by more than twice as much compared to the third quarter of last year, thanks to a stronger product mix, higher volumes, and growing client connections. Additionally, as we continually meet yield goals and raise capacity utilization, our operational indicators are improving in a sustainable way. By the end of the fiscal year 2023, our U.S. farms must achieve cash flow break-even, which is our top aim.”
Financial Summary for the Third Quarter
- $1.7 million was the total revenue, up $0.9 million from $0.8 million in the third quarter of last year and $0.4 million from the second quarter of this year:
- Foodservice generated $0.9 million in revenue, up $0.4 million from the same period last year and $0.1 million from the second quarter.
- Retail revenue was $0.8 million, up $0.4 million from the same period last year and $0.3 million from the previous quarter.
- A $19.8 million change in fair value for the contingent value earnout and warrants, as well as a $2.3 million one-time non-cash charge for property, plant, and equipment impairment, were included in the net loss of $1.1 million, or a loss of $0.05 per basic and diluted share.
- Adjusted EBITDA of negative $14.0 million.
Highlights of the third quarter’s operations
- From 11% in the third quarter of 2021, capacity utilization rose to 24%.
- In all US farms, third-quarter yields met or exceeded targets.
Consolidated Financial Review for the Third Quarter of 2022
The third quarter of 2022 saw a total revenue of $1.7 million, up $0.9 million from the $0.8 million reported in the third quarter of previous year and $0.4 million over the first quarter of this year. The new farming facilities that had been opened over the previous 12 months were reflected in the revenue rise.
Selling, general, and administrative (SG&A) costs came to $10.8 million in the third quarter of 2017 as opposed to $7.4 million in the same period of 2016. The opening of additional farms and expenses from Kalera GmbH, Kuwait, and Singapore that were not included in the third quarter of 2021 were the main causes of the increase in SG&A expense.
In comparison to the same period previous year, the third quarter’s gross operating loss increased to $20.7 million from $11.1 million. The $2.3 million one-time non-cash expenditure for impairment of property, plant, and equipment, the $3.4 million increase in SG&A expense, and the $2.7 million increase in depreciation and amortization for newly operational farms were all included in the gross operating loss.
The third quarter’s net loss was $1.1 million, or $0.05 per basic and diluted share, as opposed to the same period’s net loss of $11.6 million, or $0.76 per basic and diluted share, and the second quarter’s net loss of $78.6 million, or $3.92 per basic and diluted share.
Compared to negative $8.0 million for the same period last year and negative $14.1 million in the second quarter of this year, adjusted EBITDA was negative $14.0 million this quarter.
Balance Sheet and liquidity
- The Company had $2.3 million in cash on hand as of September 30, 2022. The Company made significant moves to improve its liquidity and fortify its balance sheet both during and after the third quarter.
- On October 31, Kalera sold a total of 68,000,000 units at a public offering price of $0.13 per unit, raising $8.84 million (before fees and expenses) in the process.
- On October 18, the company disclosed its intentions to sell Vindara, a subsidiary, as well as the holdings of its global operations. The Company anticipates that these divestitures will address the plan to accelerate the time it takes for its farms to become cash flow positive while lowering the capital requirements for all Kalera assets.
“With a vertical farming market predicted to reach a value of $19 billion in five years*, Kalera is well-positioned to take advantage of promising expansion prospects. We will achieve this by expanding our capabilities and optimizing our high-tech production capacity for sustainable lettuce, microgreens, and herbs in the US and abroad. In order to boost our share of the larger U.S. lettuce and microgreens categories, we intend to grow in a few niche markets and areas that do not have easy access to fresh, local produce.” comments the company on their release “We anticipate that a number of important macro and micro factors will contribute to our growth, including: (1) a growing level of mainstream acceptance for our products; (2) increased consumer awareness of the importance of food and nutrition for long-term health and wellness; (3) growing understanding of the environmental advantages of vertical farming over traditional agriculture; and (4) rising concern over global food security. To build long-term value for our shareholders, we will balance expansion with prudent capital allocation in the future.”
Image provided by Kalera PLC
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