What to Expect on Monday’s CEA Stock Results?

Monday will see 5 controlled environment agriculture (CEA) publicly-traded companies reveal their quarterly earnings. Namely:

• Urban-Gro, Inc (NASDAQ:UGRO) to report its Q2 earnings after the market closes
• Kalera (NASDAQ:KAL) to report its first Q2 earnings as a publicly-traded company on NASDAQ before the market opens
• Agrify (NASDAQ:AGFY) to report its official Q2 earnings on the same day even if it has already published its preliminary results
• Edible Garden (NASDAQ:EDBL) to report its Q2 earnings
• Local Bounti (NYSE:LOCL) to report its Q2 earnings before the market opens

First Quarter Highlights

• Agrify’s Q1 2022: The company reported a USD 19 million increase in revenue compared to Q1 2021, with gross profit reaching 16.0% of revenue and cash flow activities at USD 34.2 million for the first quarter. The company, despite its net progress, is yet to report net earnings as the precedent quarter has seen it reporting net losses of USD 8.9 million and registering an adjusted EBITDA of USD 6.1 million. More details can be found here.
• Local Bounti’s Q1: The Hamilton-based agtech company, reported an increase in earnings mainly due to the acquisition of Pete’s® earlier in the year. The company reported net losses of USD 25.8 million in the first quarter of 2022 as well as an adjusted EBITDA loss of USD 8.5 million for the period. Detailed financial results can be found here.
• Edible Garden’s Q1: For the first quarter ended March 31, 2022, revenues totaled $2.7 million, an increase of $254 thousand, or 10.2%, compared to $2.5 million for the quarter ended March 31, 2021. The company also reported net losses of USD 2.6 million. Detailed Financial results can be found here.
• Urban-Gro’s Q1 2022: The colorado-based company reported a revenue of USD 21.1 million in Q1 2022, representing a USD 9.1 million increase. Gross profit represented 23% of revenue in the first quarter of 2022 an increase driven by higher margin services revenues tied to an increased focus on building out the Company’s turnkey services offering. Urban-gro also reported a net loss of USD (0.7) million in the first quarter but registered an adjusted EBITDA of USD 0.4 million in the first quarter of 2022.  Detailed Financial results can be found here.

What to expect this quarter? 

In such a level of uncertainty, the results reported by the companies above may go either way. However, given recent news I expect that companies such as Local Bounti & Urban-gro will post results in the high-end of anaylsts estimates. Indeed, Local Bounti will benefit from Pete’s financial results and a full quarter of operation from their 3 facilities (a facility just opened with first harvested expected soon and another one is expected to be completed within the next year). The company also added new varities of lettuces distributed across the country further diversfying their produce offering.

On the other hand, Urban-Gro, Inc has been growing steadily for the past years, increasing its footprint across North America and in Europe by acquiring strategic companies to complete their product offering and registering important contracts for new facilities to be built. In June, the company announced it has registered over USD 10 million in contracts on 7 new contracts since the closing of its most recent acquisition Emerald C.M. The company also announced the signing of a 100,000 square foot Turn-Key design build with E29 Labs.

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The writer of this article, Sepehr Achard, does not, and doesn’t plan in the next 90 days, to own, buy, short or, sell shares from the companies listed above.