The Consumer Staples group has plenty of great stocks, but investors should always be looking for companies that are outperforming their peers. Local Bounti Corporation (LOCL) is a stock that can certainly grab the attention of many investors, but do its recent returns compare favorably to the sector as a whole? A quick glance at the company's year-to-date performance in comparison to the rest of the Consumer Staples sector should help us answer this question.Local Bounti Corporation is a member of our Cons ...

Core Viewpoint - Momentum investing focuses on "buying high and selling higher," contrasting with traditional strategies of "buying low and selling high" [1] Group 1: Momentum Investing Characteristics - Momentum investing can be risky as stocks may lose momentum when their valuations exceed future growth potential [2] - A safer approach involves investing in bargain stocks that exhibit recent price momentum, identified through the Zacks Momentum Style Score [3] Group 2: Local Bounti Corporation (LOCL) Analysis - LOCL has shown a price increase of 18% over the past four weeks, indicating growing investor interest [4] - The stock gained 31.2% over the past 12 weeks, demonstrating its ability to deliver positive returns over a longer timeframe [5] - LOCL has a beta of 2.14, suggesting it moves 114% higher than the market in either direction, indicating fast-paced momentum [5] - LOCL has a Momentum Score of A, suggesting it is an opportune time to invest in the stock [6] - The stock has a Zacks Rank 2 (Buy) due to upward revisions in earnings estimates, which attract more investors [7] - LOCL is trading at a Price-to-Sales ratio of 0.64, indicating it is reasonably valued at 64 cents for each dollar of sales [7] Group 3: Investment Opportunities - LOCL appears to have significant potential for growth at a fast pace, alongside other stocks that meet the 'Fast-Paced Momentum at a Bargain' criteria [8] - There are over 45 Zacks Premium Screens available to help identify winning stock picks based on various investing styles [9]

Financial Data and Key Metrics Changes - Sales for the full year increased by 38% to $38.1 million compared to $27.6 million in 2023, driven by increased production from the Georgia facility and contributions from new facilities in Texas and Washington [26][27] - Adjusted gross margin for the full year remained consistent at approximately 27%, excluding depreciation and stock-based compensation [28] - Fourth quarter adjusted gross margin improved by 200 basis points year-over-year, impacted by increased labor costs associated with production ramp-ups [30] Business Line Data and Key Metrics Changes - The company opened two new facilities in Washington and Texas, completed the Georgia build-out, and transitioned Montana to commercial operations [14] - The Texas facility is undergoing reconfiguration to produce both living head products and cut products, which temporarily impacted full utilization [27][40] - Distribution of high-value specialty greens expanded, including partnerships with Walmart and other retailers [24][25] Market Data and Key Metrics Changes - The company is experiencing strong demand for controlled environment agriculture (CEA) products, with retailers increasingly interested in these offerings [46] - The restructuring of the balance sheet positions the company favorably compared to other CEA providers, enhancing relationships with customers [47] Company Strategy and Development Direction - The company aims to achieve positive adjusted EBITDA by the third quarter of 2025, focusing on operational efficiency and an optimized product mix [32][34] - A strategic approach to expansion is being adopted, balancing build versus buy considerations, with a focus on advantageous acquisition opportunities [21][20] - The company is prioritizing investments that deliver the fastest path to positive returns, aligning production capabilities with specific customer needs [19][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to innovate and optimize operations under new leadership [8][9] - The company is committed to meeting growing customer demand for sustainable, locally grown produce, emphasizing the importance of operational excellence [34] - Management anticipates a sequential revenue lift beginning in Q2 2025 as the Texas facility completes its reconfiguration [31] Other Important Information - The company secured $27.5 million in new funding, including $25 million in equity, and restructured its existing credit agreement, resulting in a nearly 40% reduction in debt [15][16] - The restructured agreement allows for no cash payments until April 2027 and a significantly reduced interest rate of approximately 6% [17][18] Q&A Session Summary Question: Changes in Georgia and Texas production and impact on unit economics - Management indicated that changes primarily occurred in Texas, where half of the facility ships cut products under a long-term agreement, while the other half is being converted to produce both living head and cut products [37][39] Question: Pricing power and volume benefits - Management noted that as customers become more familiar with their products, it provides leverage to negotiate better pricing, with a price increase set to take effect in April [41][42] Question: Relationship with Walmart and shelf space dynamics - Management highlighted that major retailers are increasingly interested in CEA products, and the company's restructuring positions it favorably to solidify relationships with customers [44][47] Question: Variable cost structure of the Georgia facility - Management reported that the Georgia facility has successfully reduced seed and labor costs, contributing to improved variable cost management [52][54] Question: Update on Midwest expansion initiative - Management confirmed that the Midwest expansion is still an intention, with ongoing discussions with retailers to ensure the facility design meets their needs [56][57] Question: Build versus buy dynamic in expansion strategy - Management expressed a preference for acquiring existing greenhouses that can be quickly utilized, as demonstrated with the Georgia facility, which increased productivity significantly [58][60]

Facility Expansion and Operations - Local Bounti completed construction on two new facilities in Texas and Washington in 2024, increasing its total facility count to six[124]. - The company expects to incur significant expenses and continuing losses for the foreseeable future as it expands its facilities and commercial sales[118]. - Local Bounti anticipates that its existing cash, projected cash from product sales, and PIPE Financing will be sufficient to fund operations for at least the next 12 months[121]. - The company relies on a limited number of facilities, and any adverse changes could impair its ability to produce products[124]. - Local Bounti's ability to scale operations and reduce costs of goods sold is critical for future profitability, but it faces risks from inflation and supply chain interruptions[130]. - The company may face unexpected delays in facility construction due to various factors, which could negatively impact its operations[132]. - Local Bounti's growth strategy involves building additional Controlled Environment Agriculture (CEA) facilities and expanding its product line[172]. Financial Risks and Capital Management - The company may need additional financing sooner than planned, which could lead to dilution of stockholders' equity[123]. - Local Bounti's operating plan may change due to unforeseen factors, necessitating additional capital that may not be available on favorable terms[123]. - Local Bounti's financial condition may be adversely impacted if the cost of maintaining necessary equipment exceeds expectations[159]. - The company relies on estimates and assumptions for financial reporting, and incorrect judgments could negatively affect its operations and market expectations[160]. - Local Bounti's internal control over financial reporting is crucial; any material weaknesses could lead to misstatements and loss of investor confidence[161]. - The company has a term loan facility with Cargill Financial, secured by all assets, which could limit financial flexibility if conditions are not met[174][175]. - Local Bounti's after-tax profitability could be adversely affected by changes in tax laws, rates, and regulations, potentially with retroactive effects[224]. - The company is dependent on distributions from its subsidiaries to cover taxes and corporate expenses, which could materially affect its liquidity and financial condition[227]. Market and Competitive Environment - Local Bounti operates in a highly competitive natural food market, facing competition from large-scale operations and traditional field farms[167][169]. - The ability to secure product placement with customers is critical for Local Bounti's success, especially when entering new markets[168]. - Local Bounti's growth strategy includes expanding into new markets and product categories, such as salad kits, but success is not guaranteed[148]. - The company may face challenges in securing new customers for its products in new geographies, which could adversely affect its financial condition[154]. - A significant portion of Local Bounti's revenue comes from a small number of top retail customers, and any loss or reduction in orders from these customers could materially impact the business[193]. Regulatory and Compliance Issues - Local Bounti is subject to food safety standards set by regulatory authorities, which could impact its ability to operate reliably if widespread food safety issues arise[136]. - The regulatory environment for food products is highly complex, and changes in regulations could lead to increased costs or operational interruptions for Local Bounti[200]. - Local Bounti's operations are subject to extensive regulation by the USDA and FDA, and non-compliance could result in enforcement actions and recalls[210]. - The company employs internal and third-party resources to ensure compliance with food safety regulations, but failures could lead to civil penalties and increased operating costs[211]. - Disruptions in the supply chain due to supplier non-compliance could adversely affect Local Bounti's business and financial condition[212]. Operational Challenges and Risks - Local Bounti's ability to maintain its brand value is critical, as negative publicity could impair its business and financial condition[140]. - The company may encounter difficulties in integrating acquired businesses, which could disrupt operations and divert resources[142]. - Local Bounti's estimates of market opportunity and growth forecasts are subject to significant uncertainty, and actual growth may not meet expectations[143]. - The company may struggle to maintain its culture and focus on its vision as it grows, which could harm its competitive position[144]. - Local Bounti faces significant risks related to product contamination, which could lead to lawsuits, recalls, and increased operating costs[203]. Economic and Environmental Factors - Public health crises, such as COVID-19, could adversely affect Local Bounti's operations and demand for its products[162]. - The company faces risks related to seed supply and other inputs; increased costs could negatively impact financial results[163]. - Climate change and related regulations may increase operational costs and impact productivity[213]. - Political issues, including potential tariffs and changes in trade agreements, could significantly affect Local Bounti's business and financial performance[201]. - The elimination of government incentives could diminish Local Bounti's competitiveness and adversely affect its financial condition[214]. Stock and Market Performance - Local Bounti has never paid cash dividends and intends to retain earnings for business growth, affecting shareholder returns[216]. - The trading price of Local Bounti's common stock is subject to volatility influenced by various market factors, which may not reflect actual operating performance[215]. - Local Bounti's common stock is at risk of delisting from the NYSE due to non-compliance with the Minimum Market Capitalization Standard, as its average market capitalization was below $50 million[233]. - If the company fails to maintain a minimum average closing price of $1.00 per share, it risks immediate delisting from the NYSE[234]. - Future sales of shares by existing stockholders could adversely affect the market price of Local Bounti's common stock[236]. Intellectual Property and Technology Risks - Local Bounti's intellectual property rights are vital for its competitive position; any loss could enable competitors to gain an advantage[179]. - The company relies on information technology systems poses risks, as failures or security breaches could lead to decreased yield or quality, resulting in additional labor expenses and potential crop loss[181]. - The company faces cybersecurity risks that could result in significant operational disruptions, loss of sensitive information, and reputational harm, which may adversely affect its financial condition[183]. Consumer Preferences and Demand - Local Bounti's product offerings, including loose leaf and living lettuce, are subject to changing consumer preferences, which could negatively impact demand and financial performance[190]. - Seasonal fluctuations in demand for leafy greens may affect Local Bounti's sales and operating results, leading to potential supply-demand imbalances[192].

©2024 Local Bounti Corporation Investor presentation TRADEMARKS AND TRADE NAMES Local Bounti owns or has rights to various trademarks, service marks and trade names that it uses in connection with the operation of its business. This presentation also contains trademarks, service marks and trade names of third parties, which are the property of their respective owners. The use or display of third parties' trademarks, service marks, trade names or products in this presentation is not intended in, and does not ...

Financial Performance - Sales increased by 38% to $38.1 million in 2024, compared to $27.6 million in the prior year, driven by production growth from facilities in Georgia, Texas, and Washington[5] - Gross profit for 2024 was $4.1 million, with an adjusted gross margin of approximately 27%, consistent with the prior year, reflecting production ramp-up at new facilities[5] - Operating loss improved by $57.9 million to $59.0 million in 2024, compared to a loss of $116.9 million in 2023, which included a non-cash goodwill impairment charge[9] - Net loss for 2024 was $119.9 million, slightly improved from a net loss of $124.0 million in the prior year[9] - Sales for Q4 2024 reached $10,070,000, a 46% increase from $6,866,000 in Q4 2023[34] - The net loss for Q4 2024 was $36,258,000, an improvement from a net loss of $65,554,000 in Q4 2023[34] - The company reported a basic and diluted net loss per share of $4.21 for Q4 2024, compared to $8.10 for Q4 2023[34] Expenses and Costs - Research and development expenses increased to $22.3 million in 2024, with expectations for future decreases as production thresholds for new product lines are reached[9] - Total operating expenses for Q4 2024 were $17,314,000, down from $59,932,000 in Q4 2023, primarily due to a reduction in goodwill impairment[34] - Research and development expenses for Q4 2024 were $7,185,000, significantly higher than $3,983,000 in Q4 2023[34] - Selling, general and administrative expenses for Q4 2024 were $10,129 thousand, down from $17,468 thousand in Q4 2023, representing a decrease of 42.4%[36] - Adjusted selling, general and administrative expenses for the twelve months ended December 31, 2024, were $28,185 thousand, down from $30,200 thousand in 2023, a decrease of 6.7%[36] - Stock-based compensation expense for Q4 2024 was $1,247 thousand, down from $2,616 thousand in Q4 2023, a reduction of 52.3%[37] - Interest expense, net for the twelve months ended December 31, 2024, increased to $58,923 thousand from $25,745 thousand in 2023, an increase of 128.5%[37] - Depreciation and amortization for the twelve months ended December 31, 2024, was $18,871 thousand, up from $13,132 thousand in 2023, an increase of 43.7%[37] - Business acquisition and strategic transaction costs for the twelve months ended December 31, 2024, were $2,479 thousand, down from $6,902 thousand in 2023, a decrease of 64.0%[37] - Loss on disposal of fixed assets for the twelve months ended December 31, 2024, was $1,651 thousand, compared to $4,709 thousand in 2023, a decrease of 64.9%[37] Funding and Capital Structure - The company secured $27.5 million in new funding, including $25 million in equity and $2.5 million in capex financing, while restructuring $197 million in debt with a nearly 40% reduction[2][4] - Total assets increased to $428,035,000 as of December 31, 2024, up from $381,752,000 in 2023[32] - Current liabilities rose to $55,436,000 in Q4 2024, compared to $31,941,000 in Q4 2023[32] - Long-term debt increased to $416,577,000 in Q4 2024, up from $277,985,000 in Q4 2023[32] Future Outlook - The company expects first quarter 2025 sales of approximately $11.5 million, reflecting ongoing product mix transitions at its Texas facility[21] - Local Bounti aims to achieve positive adjusted EBITDA by the third quarter of 2025, supported by improved capital structure and operational efficiencies[22] Leadership Changes - Leadership transition occurred with Kathleen Valiasek appointed as CEO, succeeding Craig Hurlbert, who became Executive Chairman[18] Gross Profit and Margins - Adjusted gross profit for Q4 2024 was $2,478,000, with an adjusted gross margin percentage of 25%[35] - Gross profit for Q4 2024 was $540,000, compared to $680,000 in Q4 2023, reflecting a decrease in gross margin percentage[34] - Adjusted EBITDA for the twelve months ended December 31, 2024, was $(32,084) thousand, slightly improved from $(34,082) thousand in 2023[37] Goodwill Impairment - Goodwill impairment recorded in Q4 2023 was $38,481 thousand, with no impairment reported in Q4 2024[37]

Core Viewpoint - Local Bounti Corporation is set to release its financial results for the fiscal year ended December 31, 2024, on March 31, 2025, after market close [1] Financial Results Announcement - The financial results will be discussed in a conference call with the executive management team scheduled for 4:30 p.m. ET on March 31, 2025 [2] - The call will be accessible via telephonic participation for North American and international listeners, with specific dial-in numbers provided [2] Webcast and Playback Information - The conference call will be broadcast live on the Company's website and will be archived for later access [3] - A telephonic playback will be available until April 7, 2025, with dedicated numbers for North American and international listeners [3] Company Overview - Local Bounti is innovating indoor farming through its patented Stack & Flow Technology®, enhancing crop turns and improving unit economics [4] - The Company operates advanced indoor growing facilities across the U.S., servicing approximately 13,000 retail doors [4] - Local Bounti employs sustainable growing methods that use 90% less land and 90% less water compared to conventional farming [4] - The mission of Local Bounti is to revolutionize agriculture by ensuring access to fresh, sustainable, locally grown produce [4]

Core Insights - Local Bounti Corporation has secured a two-year contract with a large multinational retailer to supply living butter lettuce to 13 distribution centers, highlighting the company's customer-centric approach and commercial momentum [1][2] - The CEO emphasized the demand for fresh, sustainable, locally grown produce and the company's strategy to align capacity with customer demand, which is expected to drive performance and lead to positive adjusted EBITDA by Q2 2025 [2][3] Company Overview - Local Bounti is innovating indoor farming through its patented Stack & Flow Technology®, which enhances crop turns, output, and unit economics, operating advanced facilities across the U.S. and servicing approximately 13,000 retail doors [3] - The company utilizes sustainable growing methods that consume 90% less land and water compared to traditional farming, aiming to revolutionize agriculture and ensure accessibility to fresh produce [3] Strategic Approach - The award from the retailer is a result of strategic discussions with both new and existing customers, ensuring that facilities are optimized for specific products that align with customer distribution plans [2] - This customer-centric strategy allows Local Bounti to maximize synergies across its growing footprint and customer network, enhancing overall performance [2]

Financial Data and Key Metrics Changes - In Q3 2024, the company reported sales of $10.2 million, a 50% increase year-over-year, but below expectations due to strategic adjustments [6][28] - Adjusted gross margin reached 32%, reflecting a 300 basis point sequential improvement from Q2 2024 [12][30] - The adjusted EBITDA loss improved by $600,000 to $8.4 million compared to the previous year [36] Business Line Data and Key Metrics Changes - The company is shifting its growing plans to focus on high-demand specialty products like Arugula and Spinach, impacting production mix and revenue contributions [7][13] - The Texas facility's production is not yet fully optimized, with expectations for achieving optimized run rates pushed to early Q2 2025 [29][41] Market Data and Key Metrics Changes - The company has expanded its commercial relationships, shipping to over 180 Brookshire Grocery Company locations and fulfilling agreements with Sam's Club [14][15] - The controlled environment agriculture industry is facing challenges, but the company's ability to provide safe, high-quality produce positions it favorably against traditional agriculture [17] Company Strategy and Development Direction - The company is adopting a more measured approach to expansion, aligning production capabilities with verified customer demand to ensure sustainable growth [9][18] - Strategic initiatives include optimizing operations and facility networks to maximize revenue-generating potential in a capital-efficient manner [20][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving positive adjusted EBITDA by Q2 2025, emphasizing a customer-driven approach to operational excellence [18][58] - The company is focused on deepening relationships with customers and enhancing operational efficiencies to improve margins [55][57] Other Important Information - The company has cash, cash equivalents, and restricted cash amounting to $6.8 million as of September 30, 2024, with additional funding provided by lenders [36][38] - The company is evaluating financing arrangements to support strategic initiatives while ensuring flexibility for near-term objectives [26][27] Q&A Session Summary Question: What are the drivers of revenue ramp from Q3 to Q4 and into 2025? - Management highlighted the ramp in production and throughput, pricing, and the introduction of new SKUs as key drivers of revenue growth [47][48] Question: What are the corporate goals for 2025? - Goals include increasing utilization of existing facilities, operational efficiencies, and aligning expansions with customer feedback [52][53] Question: Where does the Texas facility stand compared to Georgia and Washington facilities? - Georgia and Washington facilities are at full capacity, while Texas is expected to reach optimized run rates by early Q2 2025 [61] Question: What is the status of conversations with potential capital providers? - Management is actively engaged with multiple capital providers and is optimistic about securing capital once customer feedback is solidified [62][64] Question: What is the status of the Midwest expansion? - The site for the Midwest expansion is confirmed, but the size and internal configuration are under consideration based on customer demand [68][69]

Sales Performance - Sales for the three months ended September 30, 2024, increased by $3.4 million (50%) to $10.2 million compared to $6.8 million for the same period in 2023[70] - Sales for the nine months ended September 30, 2024, increased by $7.4 million (36%) to $28.1 million compared to $20.7 million for the same period in 2023[70] Gross Profit - Gross profit for the three months ended September 30, 2024, was $1.4 million, a 249% increase from $405,000 in the same period in 2023[70] - Gross profit for the nine months ended September 30, 2024, was $3.6 million, a 131% increase from $1.5 million in the same period in 2023[70] Cost of Goods Sold - Cost of goods sold for the three months ended September 30, 2024, increased by $2.4 million (38%) to $8.8 million compared to $6.4 million for the same period in 2023[70] - Cost of goods sold for the nine months ended September 30, 2024, increased by $5.4 million (28%) to $24.5 million compared to $19.2 million for the same period in 2023[70] Production and Expansion Plans - The company completed the transition of its Montana facility to commercial production in Q3 2024, aiming for positive adjusted EBITDA by Q2 2025[64] - The company plans to expand its production capacity and product offerings, including new varieties of fresh greens and herbs, through new facilities and acquisitions[63] - The company signed an offtake agreement with Sam's Club in October 2022 for leafy greens production, which runs through September 2028[62] - The company introduced new Grab & Go Salad Kits and expanded its product assortment with several high-velocity offerings in Q3 2024[66] Research and Development Expenses - Research and development expenses increased by $2.1 million for the three months ended September 30, 2024, compared to the same period in 2023, and by $3.0 million for the nine months ended September 30, 2024[80] Selling, General, and Administrative Expenses - Selling, general, and administrative expenses decreased by $2.1 million for the three months ended September 30, 2024, primarily due to a $1.6 million decrease in stock-based compensation expense[82] - Selling, general, and administrative expenses decreased by $16.4 million for the nine months ended September 30, 2024, mainly due to a $10.1 million decrease in stock-based compensation expense[83] Interest Expense - Interest expense, net increased by $11.2 million for the three months ended September 30, 2024, primarily due to a significant increase in the principal amount outstanding on the Senior Facility[86] - Interest expense, net increased by $22.5 million for the nine months ended September 30, 2024, mainly due to a $21.0 million increase in the principal amount outstanding on the Senior Facility[87] Financial Position - As of September 30, 2024, the company had an accumulated deficit of $387.0 million and cash and cash equivalents of $6.8 million[88] - Outstanding debt principal totaled $431.7 million as of September 30, 2024, with required quarterly principal payments beginning April 1, 2025[89] Cash Flow - Net cash used in operating activities was $28.3 million for the nine months ended September 30, 2024, primarily due to a net loss of $83.6 million[100] - Net cash used in investing activities was $72.6 million for the nine months ended September 30, 2024, due primarily to purchases for the Washington, Texas, and Georgia facilities[102] - The company plans to renegotiate credit facility terms to provide additional working capital and defer principal payments through November 30, 2025[92] - Net cash provided by financing activities for the nine months ended September 30, 2024, was $90.8 million, primarily from $90.9 million of net proceeds from debt issuance[103] - In comparison, net cash provided by financing activities for the nine months ended September 30, 2023, was $136.6 million, which included $101.9 million from debt issuance and $35.0 million from a sale and leaseback transaction[103]