Agrify™ Corporation (Nasdaq:AGFY) (“Agrify” or the “Company”), the most innovative provider of advanced cultivation and extraction solutions for the cannabis industry, today announced financial results for the first quarter ended March 31, 2022.
“Increased customer adoption across our product lines not only fueled our Q1 growth but also helped strengthen the foundation for future high-margin recurring revenue streams, which we expect to begin to realize later this year,” said Raymond Chang, Chairman and Chief Executive Officer of Agrify. “We continue to make tremendous progress on the successful execution of our growth strategy as we expand our Vertical Farming Units (“VFUs”) and extraction customer base, selectively enter new limited-license states and international markets, and innovate and improve our product offerings.”
First Quarter 2022 Financial Results
- Revenue was $26.0 million for the first quarter, an increase of 271% compared to $7.0 million for the prior year period.
- Gross profit for the first quarter totaled $4.2 million, or 16.0% of revenue, compared to $(540) thousand, or (7.7)% of revenue, in the prior year period.
- Operating expenses were $13.9 million for the first quarter, compared to $6.0 million in the prior year period. The comparative increase in the first quarter operating expenses is largely attributable to overall growth in the scale of the Company’s core business and recent acquisitions, increases in amortization expense associated with the intangible assets identified as part of the Company’s recently completed acquisitions, direct acquisition-related costs, an investment banker termination fee, and restructuring charges.
- Net loss for the first quarter was $8.9 million, or $0.36 per diluted share, compared to net loss of $3.8 million, or $0.33 per diluted share, in the prior year period.
- Cash flow used in operating activities was $34.2 million for the first quarter, compared to $7.3 million in the prior year period. First quarter 2022 cash flows used in operating activities related to the increase in inventory associated with the current and future construction of the Company’s VFUs, current quarter operating performance, first quarter renewals of insurance policies, and the capitalization of debt issuance costs.
- Adjusted EBITDA (a non-GAAP financial measure) was a loss of $6.1 million in the first quarter (see “Non-GAAP Financial Measures” below for further discussion of this non-GAAP term, including a reconciliation to the most comparable GAAP measure), compared to a loss of $4.2 million in the prior year period.
Recent Business Highlights
- On May 10, 2022, Agrify announced a $2 million agreement with Michigan-based Boone Labs to outfit its new production facility with the complete range of Agrify offerings including 72 VFUs powered by the Agrify Insights™ software, as well as solventless extraction, hydrocarbon extraction, and ice water hash washing solutions. Boone Labs will be the first customer to leverage Agrify’s full suite of offerings, across cultivation, extraction, and consumer brands, to create a fully operational cannabis production business.
- On May 6, 2022, Agrify announced the launch of the PX5 product from its Extraction Division, expanding its portfolio of industry-leading processing solutions with its latest, most advanced and scalable passive hydrocarbon extractor. The PX5’s unique passive recovery design offers immediate economic benefits to cannabis operators of any size with projected benefits including an increase in daily production of up to 33%, savings in annual energy costs of up to 40%, and an increase in hourly extract production of 200% to 300% with specialized training available from Agrify Extraction.
- On April 20, 2022, Agrify announced the launch of its VFU Rapid Deployment Packs, which allow cultivators to accelerate their speed to market and streamline VFU adoption for multi-state operators (“MSOs”) without requiring major building renovations that cause disruptions to existing operations.
- On April 13, 2022, Agrify announced its VFU sales agreement with BioCann Pharmaceutical, a prominent cannabis cultivator in Madeira, Portugal. The agreement will introduce the Company’s VFU technology into Europe, one of the largest cannabis markets in the world with high and stringent quality and safety requirements. The agreement includes the purchase of 190 VFUs and $2.3 million in estimated SaaS fees.
- On April 11, 2022, Agrify announced it had entered into an Agrify Total Turn-Key Solution (“Agrify TTK Solution”) partnership with Loud Wellness, a licensed New Jersey-based cultivation and manufacturing operator. The partnership, which includes the installation of 500 VFUs, is expected to generate approximately $118 million of estimated total revenue for Agrify over the full 10-year term of the agreement, of which $100 million is estimated to be from production success fees and $18 million is estimated to be from SaaS fees.
- On April 6, 2022, Agrify announced its VFU sales agreement with Greenlight Cannabis (“Greenlight”), a prominent and rapidly growing MSO in the United States with 28 locations across 5 states. Under the agreement, the Company plans to install VFUs that will enable Greenlight to increase its grow canopy in order to achieve rapid business growth and geographic expansion under one standard.
About Agrify TTK Solution
The Agrify TTK Solution is a first-of-its-kind program in which Agrify engages with qualified cannabis operators in the early phases of their business and provides critical support, typically over a 10-year period, which includes: design and buildout of their cultivation and extraction facilities, state-of-the-art cultivation and extraction equipment, process design, training, implementation, proven grow recipes, product formulations, data analytics, and consumer branding.
VFU Backlog
Agrify currently has contractual commitments for 4,569 VFUs that will be powered by the Agrify Insights cultivation and production software. 3,783 of these VFUs were committed to as part of the Agrify TTK Solution, which requires customers to pay production success fees and SaaS fees for up to a 10-year period, and it also typically includes Agrify providing a variety of other value-added services. The remaining 786 VFUs were sold to customers through onetime equipment sales that require theses customer to pay monthly SaaS fees (per VFU). Cumulatively, all of the VFUs under Agrify TTK Solution agreements or SaaS agreements are estimated to produce approximately $923 million in total revenue over the next 10 years, of which $674 million is in anticipated high-margin production success fees, $129 million is in anticipated high-margin SaaS fees, and $95 million is in construction-related fees.
2022 Outlook
Agrify reiterates its previously provided revenue guidance for Fiscal Year 2022 to be in the range of $140 million to $142 million.
Conference Call and Webcast Information
Agrify will host a conference call and webcast today (Wednesday, May 11, 2022) at 8:30 a.m. Eastern Time (ET) to discuss its financial results for the first quarter ended March 31, 2022.
All interested parties are invited to listen to the live conference call by dialing the number below or by clicking the webcast link, which can be accessed by visiting Agrify’s Investor Relations website at ir.agrify.com and navigating to the Events page. The Company has also posted an accompanying slide presentation, which can be found in the same location as the webcast link.
- DATE: Wednesday, May 11, 2022
- TIME: 8:30 a.m. ET
- WEBCAST (live and available for replay): https://ir.agrify.com/news-and-events/investor-calendar
- DIAL-IN NUMBER: (844) 792-4409
- CONFERENCE ID: 2387725
