Local Bounti (US:LOCL)2024-03-27 14:41Financial Data and Key Metrics Changes - Full year 2023 sales increased by 42% to $27.6 million compared to $19.5 million in the prior year, largely due to the inclusion of the Pete's acquisition and revenue growth from Georgia and Montana facilities [28] - Net loss for 2023 was $124 million, up from a net loss of $111.1 million in the prior year, primarily due to a non-cash goodwill impairment charge of $38.5 million [29] - Adjusted EBITDA loss was $34.1 million compared to a loss of $29.8 million last year [29] - First quarter 2024 revenue is expected to be approximately $8.4 million, representing a sequential increase of about 22% [47] Business Line Data and Key Metrics Changes - Production increased by 50% compared to the previous update in December, equating to production approximately three times that of a year ago [17] - The company is expanding its baby leaf product assortment, introducing several high-velocity offerings including Spinach and Arugula [20] - The transition of the Hamilton, Montana facility from R&D to a commercially oriented operation is expected to improve profitability and capacity [25] Market Data and Key Metrics Changes - The company plans to expand distribution to several existing and new retail partners, adding approximately 700 doors of incremental distribution in the Pacific Northwest and Southeastern United States [21] - The company is experiencing strong demand from both consumers and retailers for a better product, positioning itself as a disruptor in the Controlled Environment Agriculture (CEA) industry [22] Company Strategy and Development Direction - The company is focused on expanding capacity across its network of facilities using stack and flow technology, with plans for construction to begin in late Q2 2024 [23] - A new greenfield facility in the Midwest is planned to improve access to customer distribution networks and meet growing retail demand [26] - The company aims to achieve positive adjusted EBITDA by early 2025 through increased revenue, reduced SG&A costs, and a shift in focus at the Montana facility [63] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the progress made in 2023 and the strong start to 2024, highlighting the operational excellence of the team [8][9] - The company anticipates that adjusted gross margins will improve over time as the business scales and production costs are optimized [61] - Management is optimistic about the future, emphasizing the importance of their innovative stack and flow model in achieving operational efficiencies [37] Other Important Information - The company has approximately 8.3 million shares outstanding on a pro forma basis, with a fully diluted share count of about 15.2 million shares [31] - The company is pursuing opportunities to lower its cost of capital and replace construction financing through various financial strategies [46] Q&A Session Summary Question: Update on unity economics or return on invested capital for Texas and Washington sites - Management indicated that they will provide updates in the future as they continue to see improvements in the Georgia facility and ramp up Texas and Washington [66][67] Question: Comment on the SKU strategy and average sales price - Management highlighted the importance of expanding SKU offerings to increase relevance with customers and improve average sales prices [70][71] Question: Comment on the goodwill impairment - Management explained that the goodwill impairment was a non-cash entry due to share price activity and did not affect the underlying assets [73] Question: Production commitment from new facilities - Management expressed confidence in meeting revenue forecasts due to existing customer commitments for the new facilities [78] Question: Confidence in margins from legacy production - Management noted that while there were challenges in California, they performed well and are optimistic about future margin improvements [75][80]