2nd December 2022
AmplifiedAg Vertical Farm Container
Corporate Stock Market

Local Bounti Reports USD 6.3M Revenue During Q3

Local Bounti Grand-and-go salads
  • Third quarter revenue of $6.3 million, compared to $0.2 million in the prior year period
  • Previously announced 5-year offtake agreement with Sam’s Club for Local Bounti’s leafy greens production
  • Reaffirms full-year 2022 guidance

Local Bounti Corporation (NYSE: LOCL, LOCL WS), today released its third quarter 2022 results for the three months ended September 30, 2022, and reaffirmed its full-year 2022 guidance.

Craig Hurlbert, Co-CEO of Local Bounti, stated, “We are thrilled with the engagement we are experiencing with our retail partners for our fresh, great tasting, locally grown produce.  Our recent offtake agreement with Sam’s Club is an excellent example of the market’s trust in our team, as well as the brands and products that have been developed over several decades.”

Mr. Hurlbert continued, “Consumers, retailers, and foodservice operators alike increasingly want a resilient supply chain of locally grown, fresh, and high-quality produce items and Local Bounti will continue to deliver on that demand.  We are focused first and foremost on our existing customer base to inform our decisions on how we can most efficiently deploy our capital to meet known demand through scaling up our facility network.  We remain vigilant in our approach to maximizing capital efficiency to drive revenue generation, with a sharp eye on maintaining healthy gross margins so we can reach breakeven cash flow as quickly as possible.”

Third Quarter 2022 Financial Summary: 

  • Sales of $6.3 million were made in the third quarter of 2022 as opposed to about $0.2 million during the same time last year. Due to an isolated delivery issue with a logistics partner that has since been rectified, quarterly revenue from the Company’s California facilities was marginally lower than it was in the second quarter of 2022. Revenue from the company’s Montana facility climbed 13% quarter over quarter, somewhat offsetting this. This is consistent with the company’s move to an optimum mix of commercial production. Although product is shipping out of the Georgia facility, which opened in the third quarter of 2022, third quarter activities were still in the commissioning stage as they got ready to meet Sam’s Club demand.
  • In the third quarter of 2022, gross profit was $1.3 million. Without depreciation and stock-based compensation, adjusted gross margin percentage1 was around 38%. Following brief supply issues that were resolved during the second quarter, gross profit was restored in the third quarter.
  • In the third quarter of 2022, there was a net loss of $27.1 million. The $7.3 million loss on adjusted EBITDA1 is calculated without stock-based compensation of $10.9 million, interest expense of $5.2 million, depreciation and amortization of $1.7 million and $1.3 million, and costs associated with business acquisition and strategic transaction due diligence and integration of $0.9 million. In the prior period, net loss and adjusted EBITDA loss were each $10.8 million and $5.5 million, respectively.

Contract for Offtake by Sam’s Club

As previously reported, Local Bounti and Sam’s Club inked a five-year offtake agreement on November 7, 2022, to begin producing leafy greens at Local Bounti’s greenhouse facility in Byron, Georgia. The company is moving forward with plans to expand the Georgia facility, which will double the current footprint, increase capacity, and add its Stack & Flow TechnologyTM in order to meet pent-up demand for its Local Bounti packaged salads from existing customers and create new business opportunities in that area.

Third-quarter product delivery at the Georgia facility started after the installation and commissioning of the first “Stack” portion.
The company shipped its first item to consumers in the third quarter of 2022 after Phase 1-A construction was finished in July 2022, and it is still working toward larger-scale commercial manufacturing. Phase 1-B’s construction got under way in June 2022 and is still going strong; it should be finished in the first quarter of 2023. Construction on the integration of the company’s Stack & Flow TechnologyTM has also started as part of Phase 1-B. The first section, which was initially primarily devoted to R&D efforts, will be finished in the fourth quarter of 2022, with an anticipated service date starting in the first quarter of 2023.

Texas facility site chosen; land acquisition expected to close in fourth quarter of 2022
Local Bounti decided to build its next facility in Mount Pleasant, Texas. Based on client demand and closeness to the distribution networks of current customers, this location was chosen. Construction work will start soon after the Company completes the closing procedure for the lot, which is anticipated to be completed by the end of November 2022. The Texas plant will include several Stack zones in addition to a six-acre greenhouse facility. The facility is expected to be operational in the fourth quarter of 2023, according to the company.

Progress of the Pasco, Washington facility
The Pasco, Washington facility is still developing, and its completion is scheduled for the third quarter of 2023. This facility will have three acres of greenhouse space as well as several Stack zones.

Performance of the brand, SKU expansion, and advancement of sustainability

Based on Nielsen statistics, the Local Bounti brand is popular with customers and was the #3 CEA lettuce brand in the U.S. in tracked channels year to date in 2022. With one of the Company’s national customers, Local Bounti’s Spring Mix 4.5oz was the most popular new item offered in the Salad and Greens category and in the top 30% of all new goods launched across the whole Produce category. Following introductions the year before, when Local Bounti’s goods were the top three new items in the Salad and Greens category at the same retail account, this performance represents a response. The Company now offers 23 SKUs in its product lineup.

Local Bounti effectively entered the value-added category in October 2022 with the introduction of two Grab & Go Salad SKUs: Modern Greek and Poppy Power. Local Bounti will pursue the next stage of expansion by adding more SKUs and anticipates reaching 100 stores in the first quarter of 2023 based on the launch’s performance to date and consumer feedback.

The leadership of the company spoke with many clients, displayed its key goods, and tried new ones at the IFPA (International Fresh Produce Association) show this year in Orlando, Florida, in October 2022. Over a two-day span, the company distributed more than 1,000 samples of its innovative Grab & Go salads, which sparked a ton of interest and received overwhelmingly good feedback.

Sustainable Development

By joining the Sustainable Packaging Coalition®, the Company enhanced its packaging sustainability initiatives. The Sustainable Packaging Coalition unites corporations, academic institutions, and governmental organizations to enhance and advance the economic case for more environmentally friendly packaging. The capacity of Local Bounti to maximize product life, which significantly lowers food waste and enhances the experience of our customers, depends on high performance packaging.

Continued Support from Marquee Existing Investors to Support Growth

The Company ended the quarter with cash, cash equivalents and restricted cash of $24.0 million and approximately $34.4 million of undrawn capacity on its credit facility with Cargill Financial Services International, Inc. Subsequent to the end of the third quarter, in October 2022, Local Bounti arranged a $23.3 million private investment in public equity (PIPE) investment in the Company with significant investment coming from existing investors, including Fidelity Management & Research Company and BNP Paribas.  The PIPE proceeds, when added to the Company’s September 30, 2022 cash, cash equivalents and restricted cash balances, along with the $34.4 million of undrawn capacity on the Company’s credit facility with Cargill provide for more than $80 million of total liquidity.  Local Bounti had approximately 94.3 million basic and diluted shares outstanding as of September 30, 2022, and had an additional 11.5 million warrants outstanding and approximately 10.2 million restricted stock units outstanding. As of September 30, 2022, including these warrants and restricted stock units, the Company had a fully diluted share count of approximately 116.0 million shares outstanding.

Financial Outlook

Management is reaffirming its full year 2022 sales guidance of at least $20 million, including partial year contribution from its acquisition of Pete’s which closed in April 2022.  The Company continues to expect to achieve initial annual run-rate revenue of at least $30 million at full production from its California and Georgia (Phase 1-A) facilities, excluding the expected future positive impact from additional capacity due to incorporating Stack & Flow Technology™ at all three facilities.

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