Industry article mentions investment in CEA for non-Cannabis segment.
Local Bounti releases 2022 financial results, secures $145MM of additional financing
HAMILTON, Mont., March 29, 2023 /PRNewswire/ — Local Bounti Corporation BB #:368695, a breakthrough U.S. indoor agriculture company combining the best aspects of vertical and greenhouse growing technologies, today announced that it secured a total of up to $145 million of new financing across two sources – the first through an amendment to its credit facility agreements with Cargill Financial Services International, Inc.; and the second, a sale-leaseback deal with an internally managed net-lease real estate investment trust. The combined financing supports Local Bounti’s growth plans and immediate efforts to increase production to meet accelerating demand for the Company’s products.
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Kathleen Valiasek, CFO of Local Bounti commented, “We are very pleased with the outcome of these transactions and the support they provide for Local Bounti’s growth ambitions. We remain laser focused on identifying opportunities where we can utilize our flexible Stack & Flow Technology to deliver improved yields to meet the robust demand for locally grown and sustainable produce that we are seeing across our industry-leading distribution footprint.”
On March 28, 2023, Local Bounti entered into an amendment to its existing credit agreements with Cargill to expand the facility from $170 million to up to $280 million per the terms and conditions of the agreement, including capital to fund construction at the Company’s facilities in Georgia, Texas and Washington, subject to certain conditions. In consideration for the improved flexibility and the expanded size of the facility, Local Bounti issued Cargill 5-year warrants to purchase up to 69.6 million shares of common stock with a per share exercise price of $1 per share, representing more than a 100% premium to Local Bounti’s current stock price.
Local Bounti also entered into an agreement with an internally managed net-lease real estate investment trust for the sale-leaseback of its two facilities located in Carpinteria and Oxnard, California for approximately $35 million. The closing of the sale-leaseback transaction is subject to customary closing conditions and is expected in the second quarter of 2023.
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Full Year 2022 Financial Results
Local Bounti today announced its financial results for the three and twelve months ended December 31, 2022 and provided sales guidance for full year 2023.
Craig Hurlbert, Co-CEO of Local Bounti, stated, “2022 marked our first full year as a public company, complete with several important milestones. We made significant advancements in the refinement and productivity of our Stack & Flow Technology, which continues to underpin our business model with a capital efficient tool to enhance crop turns and maximize return on investment across a variety of CEA approaches. Beyond our greenfield expansions, this technology affords us flexibility to establish greater scale quickly through strategic acquisitions — which we demonstrated with our Pete’s transaction where we are integrating our technology to further improve upon the productivity of those assets. With our distribution reach, which surpasses 10,000 doors, and our growing capacity that is improving by the day, we have also attracted new partnerships and expanded others — most notably with the offtake agreement with Sam’s Club for our leafy greens production. Together, our integrated team is driving synergies across our Company while also driving the business forward with new product development.”
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Mr. Hurlbert added, “Looking ahead to 2023, we are poised to complete our Georgia and Texas facilities and our Washington facility in 2024. Further, we continue to push forward our other projects with the resources provided by today’s announcement of the new financings. With this additional capital, we believe that we have the funding required to drive the business to positive adjusted EBITDA.”
Full Year 2022 Financial Summary
Sales of $19.5 million in 2022, as compared to $0.6 million in the prior year period.
Gross profit was $2.2 million in 2022. Adjusted gross margin percentage1 was approximately 38%, excluding depreciation, stock-based compensation, business combination related costs, and other non-recurring items.
Net loss was $111.1 million in 2022 as compared to net loss of $56.1 million for the prior year period. Adjusted EBITDA[1] loss was $29.8 million, which excludes $39.2 million in stock-based compensation, $16.7 million in interest expense, $10.4 million of depreciation and amortization, fair value inventory adjustment of $1.0 million, business combination and integration costs of $10.1 million, restructuring costs of $1.1 million, $2.6 million of loss on disposal of fixed assets, utilities price spike and inclement weather related costs of $0.4 million, and other discrete items. Adjusted EBITDA loss in the prior year period was $17.8 million.
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[1]See reconciliation of the non-GAAP measures at the end of this press release.
Commercial Facility Expansion Update
Byron, Georgia Facility Phase 1-A, 1-B and 1-C Progress
The Company completed its first “Stack” vertical zone in the fourth quarter, as part of its of Stack & Flow Technology implementation, and is producing product in Phase 1-A. Construction of Phase 1-B is progressing and the Company now expects completion of this phase early in the second quarter of 2023. Following Phase 1-B completion, the site’s greenhouse footprint will be established and ready to integrate the complementary Stack zones that comprise Phase 1-C.
Construction Commences on “Stack” integration at Georgia Facility
Georgia facility Phase 1-C construction has commenced, which reflects the integration of its vertical “Stack” component of the facility architecture. The Company now expects this work to be completed and operational early in the fourth quarter of 2023, following some weather induced construction delays. The Company’s Stack & Flow Technology is expected to add approximately 40% of incremental revenue generating capacity to the finished Georgia facility, which will be comprised of six acres of greenhouses and multiple climate, water, and spectral controlled Stack zones.
Construction Underway at Mount Pleasant, Texas Facility
In early January 2023, the Company started construction of the six-acre facility, which will leverage Local Bounti’s proprietary Stack & Flow Technology™ to grow and sell its indoor grown line of packaged leafy greens. Varieties will include spring mix, butter lettuce, romaine crisp, green leaf, and additional blends. The addition of the new facility in northeast Texas is expected to fortify Local Bounti’s distribution in markets across Texas, Oklahoma, Louisiana, Mississippi, Arkansas, Kansas, and Missouri. Further, the facility is designed to provide additional capacity to meet existing demand from Local Bounti’s direct relationships with blue-chip retailers and distributors throughout the region. The facility is expected to commence operations in the fourth quarter of 2023.
Pasco, Washington Facility Progress
The Pasco, Washington facility continues to progress with anticipated completion in first quarter 2024, which reflects the Company’s decision to stagger construction to accommodate the commissioning of its Texas facility in the fourth quarter of 2023. The Washington facility will be comprised of multiple Stack zones and three acres of greenhouse.
SKU Development
In January 2023, Local Bounti successfully launched its chef-inspired Asian Style Chicken Lettuce Wrap Kit, a restaurant-quality meal solution that is prepared at home in about 5 minutes, at 194 Sprouts Farmers Markets locations in California and Arizona. Local Bounti’s new Asian Style Chicken Lettuce Wrap Kit featuring fully cooked, white meat chicken, mushrooms, carrots and green onions in a tangy stir fry sauce, represents the Company’s entry into the ‘Heat and Eat’ category.
Capital Structure
The Company ended the quarter with cash, cash equivalents and restricted cash of $24.9 million and approximately $29.1 million of undrawn capacity on its credit facility with Cargill Financial Services International, Inc. Local Bounti had approximately 103.7 million shares outstanding as of December 31, 2022, and had an additional 11.5 million warrants outstanding and approximately 9.5 million restricted stock units outstanding. As of December 31, 2022, including these warrants and restricted stock units, the Company had a fully diluted share count of approximately 124.7 million shares outstanding.
Secures Additional Financing to Support Growth
Today, the Company secured up to $145 million of additional financing from two sources to support its current growth plans. The first component of this financing is an agreement to expand Local Bounti’s existing credit facility with Cargill by up to $110 million per the terms and conditions of the agreement to a total of $280 million. This expansion provides capital to fund construction at its facilities in Georgia, Texas and Washington. The second component of the financing is an agreement with an internally managed net-lease real estate investment trust for the sale-leaseback of Local Bounti’s two facilities located in California for approximately $35 million. Additional details regarding the terms of these agreements can be found in the concurrent press release issued this morning and in the Company’s Form 10-K for the year ended December 31, 2022 to be filed later this week. Following this additional amendment and the closing of the sale-leaseback transaction, which is subject to customary closing conditions and is expected in the second quarter of 2023, the Company expects to add $50 million to its balance sheet for use in its operations. Additionally, the Company has also received term sheets from a licensed United States Department of Agriculture (USDA) lender that the Company intends to utilize in due course for its Washington and Texas facilities, which is expected to reduce the Company’s use of construction financing by approximately $80 million and lower its cost of capital.
Financial Outlook
Management is providing its full year 2023 sales guidance of $34 to $40 million, which approximates its expected production from its Montana, California and Georgia (Phase 1-A and 1-B) facilities, but excludes the expected future positive impact from additional capacity following its Stack implementation at the Georgia facility.
About Local Bounti
Local Bounti is redefining indoor farming with an innovative method – its proprietary Stack & Flow Technology™ – that significantly improves crop turns, increases output and improves unit economics. Local Bounti operates advanced indoor growing facilities across the United States, servicing over 10,000 retail doors with its two brands: Local Bounti® and Pete’s®. Local Bounti grows healthy food utilizing a hybrid approach that integrates the best attributes of controlled environment agriculture with natural elements. Local Bounti’s sustainable growing methods are better for the planet, using 90% less land and 90% less water than conventional farming methods. With a mission to ‘bring our farm to your kitchen in the fewest food miles possible,’ Local Bounti’s food is fresher, more nutritious, and lasts longer than traditional agriculture. To find out more, visit localbounti.com or follow Local Bounti on LinkedIn for the latest news and developments.
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