Hamilton based AgTech company, Local Bounti, announced its financial results for the first quarter 2022 and reiterates full year 2022 guidance. The financial results for this quarter have been overall marked by the acquisition of Pete’s which led LOCL to outperform previous quarter and meet expectations set by investors regarding the farm network expansion.
First Quarter 2022 Financial Summary
Subsequent to the end of first quarter 2022, the Company closed its acquisition of Pete’s on April 4, 2022 for $122.5 million, creating a scaled controlled environment agriculture (“CEA”) operator with a national distribution footprint that reaches approximately 10,000 retail doors. The first quarter results that follow represent Local Bounti on a stand-alone basis, unless otherwise noted.
- Sales of $282 thousand in the first quarter 2022, as compared to $57 thousand in the prior year period. Pete’s stand-alone business produced sales of $5.9 million in the first quarter 2022.
- Gross profit of $48 thousand in the first quarter of 2022, representing a gross margin of 17%; adjusted gross margin,1 excluding depreciation, was consistent with the prior year period at approximately 39%. The lower gross margin compared to the fourth quarter of 2021 reflects a temporary increase in research and development at Local Bounti’s Montana facility associated with focused yield improvement activities in support of the Pete’s acquisition and other commercial facility plans, including the pending opening of the new Georgia facility. The Company continues to achieve new advancements with improved crop cycles and yield.
- Net loss of $25.8 million in the first quarter 2022, including approximately $3.9 million of expenses associated with the Company’s acquisition of Pete’s, as well as $11.0 million in stock-based compensation, $1.6 million in interest expense, $0.5 million of depreciation and $0.2 in other; net loss was $9.4 million in the prior year period.
- Adjusted EBITDA1 loss of $8.5 million the first quarter of 2022, as compared to a loss of $3.9 million in the prior year period.
1 See reconciliation of the non-GAAP measures at the end of this press release.
Craig Hurlbert, Co-CEO of Local Bounti stated, “We have been extremely busy this past month since closing our acquisition of Pete’s® and focused on integrating our operations and commercial teams to expand on the opportunity that we see in the burgeoning CEA industry. We continue to look ahead and are planning for our next phase of growth to service the existing demand within our customer network that now reaches over 10,000 retail doors. To that end, our new Georgia facility is on track to commence operations in July and we are advancing on our Pasco, Washington facility. We are engaged in deep discussions with our customer base and canvassing their respective markets to identify how we can meet existing demand before making an announcement on the location of our next facility. Our focus remains on driving leading unit economics and we believe that the integration of our Stack & Flow Technology™ will be a powerful platform to achieve our long-term objectives.”
Recent Development – Previously Announced Acquisition of Pete’s
On April 4, 2022, the Company announced the successful completion of its acquisition of indoor farming company Hollandia Produce Group, Inc., which operates under the name Pete’s®. Pete’s is a California-based indoor farming company with three greenhouse growing facilities, including two operating facilities in California and one under construction in Georgia which is scheduled to begin operations in July 2022. Pete’s has distribution to approximately 10,000 retail locations across 35 U.S. states and Canadian provinces, primarily through direct relationships with blue-chip retail customers, including Albertsons, Kroger, Target, Walmart, Whole Foods and AmazonFresh. Pete’s primary products include living butter lettuce – where it is a leading provider with an approximate 80 percent share of the CEA market within the Western U.S. – as well as packaged salad and cress. Pete’s has been in operation for over 50 years while focusing the last 25 years in leafy greens, has long-standing relationships with the majority of its customers, and has a demonstrated track record of generating positive adjusted EBITDA.
Pete’s select financial results for the twelve months ended December 31, 2021 as compared to December 31, 2020, where appropriate:2
- Sales of $22.7 million, an increase of 2.9%.
- Adjusted gross profit of $10.2 million, representing an adjusted gross margin of 45.0%.3
2 On April 29, 2022, Local Bounti filed a Current Report on Form 8-K/A (the “Form 8-K/A”) with the U.S. Securities and Exchange Commission (“SEC”) to report the historical financial statements of Pete’s and pro forma financial information required by SEC rules and regulations. The Form 8-K/A contains audited consolidated financial statements of Hollandia Produce Group, Inc. and its subsidiaries, which comprise the consolidated balance sheets as of December 31, 2021 and 2020, and the related consolidated statements of operations, changes in owners’ investment and cash flows for the years then ended, and the related notes to the consolidated financial statements.
3See reconciliation of the non-GAAP measures for Pete’s at the end of this press release