In order to reduce operational costs by around $4.9 million annually, Kalera (NASDAQ:KAL) intends to temporarily suspend production at its farms in Orlando and Atlanta. The Houston farm will provide servicing for all retail volume in the Southeast in the meantime. With the adjusted product mix for retail and food service quickening these farms’ road to profitability, the Houston and Denver farms will be close to capacity. By the conclusion of the fiscal year 2023, Kalera anticipates reaching a cash flow break-even. The previously announced sale of the Vindara seed genetics company and Kalera’s foreign holdings in Kuwait and Singapore is already under progress. In comparison to 2022, Kalera projects that its G&A costs and operational losses will drop by almost 65% in 2023.
Kalera (NASDAQ:KAL), has provided an update on its plans to achieve cash flow break-even by the end of fiscal year 2023. The company’s President and CEO, Jim Leighton, stated that demand for their products is stronger than ever across all channels and that their facilities are operating better than ever and very consistently. To reach profitability, Kalera plans to temporarily halt production at their Orlando and Atlanta farms in order to make configuration updates for efficiency and increased loose-leaf production capacity. This will result in an annual run rate reduction of operating expenses of approximately $4.9 million until the facilities are re-opened.
In addition to consolidating all retail volume in the southeast and being serviced by their Houston farm, Kalera plans to relocate its corporate offices from Orlando to the Denver farm, reducing corporate General & Administrative (G&A) expenses by approximately $0.8 million annually. The company is also divesting its international assets in Kuwait and Singapore and the Vindara seed genetics business to reduce expenses by 50% and 65% respectively.
Kalera’s partnership with US Foods continues to be a strong driver and an important aspect of the company’s commercial strategy. They are working closely with US Foods to launch new and innovative products that will drive incremental value and sales to the category for both US Foods and Kalera.
In conclusion, Kalera’s CEO stated that the macro environment supporting Kalera’s business model has been validated and that vertical farming can and should play an important role in the future of food production. The company’s focus is to achieve cash flow break-even by the end of fiscal year 2023 through cost-cutting measures, improved sales and operations, and consolidating production.
Image provided by Kalera (NASDAQ:KAL)
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