LOCL - Earnings call 3 2023 | Local Bounti Corporation

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Operator

Greetings, and welcome to Local Bounti's Third Quarter 2023 Earnings Conference Call. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. Please also note today's event is being recorded. At this time, I would like to turn the conference call over to Jeff Sonnek Investor Relations at ICR. Please go ahead.

Jeff Sonnek

Thank you, and good afternoon. forward-looking hosted and Bounti Valiasek. The provisions Chief during call be Officer, Chief comments of will meaning today's Fabrega; the Litigation Anna Financial contain of the presentation Private by safe Reform 's Local Executive made of Securities Today's the within Act harbor XXXX. statements Officer, Kathleen statements than statements forward-looking other of considered All statements. historical facts are on well concerning are based management's as future number statements and as current These beliefs assumptions a of events. expectations subject and results differ unknown are the uncertainties to could cause to and statements. statements results that materially forward-looking Such known forward-looking discussed risks actual the from in

refer risks these the can which found We'll of the refer press company's on identified with be Relations website, our and Some Please and also discussed financial in investors.localbouti.com. to uncertainties are non-GAAP to release, SEC. the certain Investor filings today. measures

measures non-GAAP I'd over most For ahead. now financial to comparable that, to turn like reconciliations to the call GAAP Go measures. With their of Anna. directly

Anna Fabrega

welcome with approaches we Phase Flow call the facility I'll our continue which can globally. In for share early questions. growing to advancements vertical that a our our Jeff, & highlighting operational And recent capacity the in build-out first us food Texas discussion expected our completed months. agreement, I the phase which shortages huge to large of Technology, round expect importantly, our X-C. also time, see our then and it you, efficient finalization and focused this traditional perhaps with creates, the business. scaled of developed today's integrating coming call. Stack incredible an opportunity to under growing This pending call vertical of integration accomplishments, is your team are combines our opening greenhouse some ahead brings insights for aspects volume final for Washington solve believe Local on financial the Georgia Bounti. together the of are October, Kathy customer increased in everyone on deliveries of most plant Hamilton, coming by technology in double as This offtake call open a that model milestone will Georgia we patent start We technological allow to and we help solution out the improvements our to has greater best some was It weeks. and is the for of call large Thank the with into that facility. like her our the I'd to that shipment before at will on our facility we our that and construction incubators, Montana Stack. to see us club the the represents is a all facilities for the at

by pending the Given the to the to the following in level the is taking resolve involved next identify every friction the patent for of This natural our of Technology. look step to Stack to them. This how an integration mirror Local points intentional best development and in scrutinizing Bounti and workflows of took shipments, operations Phase the our X-C Georgia's Stack integration underway significance of the XX% and larger time we greater account capacity our and thoughtfully planned of optimize increase generated was footprint for Stack operations process in system. calibrate

Stack ] implementing have waste. focused the is opportunity Flow on We which with production & a we on are [ now hosting focused eliminating by system,

workflows Club emphasize our is levels, processes, retail we performance made the are that scale so to all to that is and goals, we implement absolutely execution. support clear to are organization place combine production. I'd with to all, have efficiency create put for build-outs our commitments sustainably attract that imperative able It believe and and efficiency bounty. In respect leading operating we to standards into delivering we of the that large to advancing order we our a the associates it our and implementing we and in to to unique the Bounti inherent people bringing productivity our hitting scaling business background providing production are ability We've to Sam's local fresh, and to of place local growing all of category Some in ensure key to these our quality as ability of like to system because standardized view part that operational at focus infrastructure need for our partners grown leadership hiring have all there's produce. with operational position facility we with elements identify retailers the that in to level at across model, are replicable transparency the key that facilities goals. After returns global the are sustainability, like just-in-time of financial Local to achieve this success. underpins goals lean adapt execute long-term of to right benchmarked

organizational Ford years Logistics, worked As Bimal in and add at Bimal team Bimal talent to as several Operating Chief most we've recently this us, Whirlpool, help over key experience to and we and part Amazon, for our XX process, of to Amazon UPS. as Director including the to of accelerate brings at Patel joining served and Prior Engineering. as Worldwide our progressive leadership recently, Officer. Director appointed blue-chip Regional its operational Amazon have structure Operations, optimized our strategy. Most of continued Planning of XX global companies, years our

expertise and Local providing organization demonstrate across our of facets to optimized operations, all logistics Bimal's is process us We our agriculture. are drive that engineering opportunity an redefining business, ensure efficiencies Bounti to across to is leveraging with deep how

marked The transition quarter period Bounti. Local third a for

we we can continue new replicate growing upward of we with our perfect in quarter, which of across most a science in I generating footprint. task am art entered the quarters in confident hyper-efficient up our technology efficient progress quickest the come. returns We look work way and to and are putting on the a I manufacturing forward possible. result an the we and to years have And financial is hard trajectory. our organization our is Beginning operations, to process, to that focus demonstrating and the fourth to and that the standardized the

I will that, Kathy. With to call turn the over

Kathleen Valiasek

our of Anna. I'll our completed guidance. results Thank year covering the providing for Local Georgia Bounti. immediately [ quarter a is is our milestone the replicate the on are early integration At in zones financial I-C operations facilities. comprise facility, a Texas full commenced facility we to before significant you, nursery. This October our Stack's Phase and XXXX of and begin an update that vertical that It by scale-up and third successfully at Washington we seeding model the ] working

Texas. We facility zones our quarter, the continue to our installation we greenhouse the and Stack to X focus make in shifted growing In great third acre progress on of systems.

help We distribution quarter operations across spanning remains our varieties facility commence living X in to the operations continue of locally localized facility X continue XXXX. the that well similar to first we company's The national our bolster on facility Stack to commence This expect fourth location fortify with will network and be the year. production operations zones. track, will coast Pacific packaged expect in to and facilities. Texas grown by to greenhouse, When allow be to supported this design the acres comprised Southern capabilities at the Washington management in the of complete, U.S. facilities as early coast as of of leafy lettuces will Construction Northwest. of and Pasco, of our Texas at distribution of support this green for synergistic of will multiple will the which quarter Georgia

now staggering results. efficiency our been cover Texas consciously we've the in construction reminder, maximize facility accommodate fourth our of to quarter our a third quarter of the of to As the XXXX commissioning team. I'll

Third million were year as compared $X.X $X.X to the million period. in prior quarter sales XXXX

Our production and to reflected Georgia lesser Montana our and third California quarter results facilities extent, from a facilities. our largely

revenue and we integration to key the accounts larger the expanded took shifted work our thoughtfully of from optimize into our a Stack as greater This a from on we fourth by factors: ramp our Georgia and customer since of operations opportunity temporary during our the the early in preparing was by as make the resumed and X-C in which second, for October. And by California necessary section sales our growth sales lower damage been some periods QX, repairs to in and of normal $XXX,XXX primary account to one ahead the experienced facilities utilization redesign capacity quarter XX% operations generated workflows weather-related footprint has Phase in with Our Georgia X the system. closure for order distribution holidays. quarter repaired operations and the First, impacted following of limited of

and rate out expect the October, the X-C run facility complete, functioning of Georgia facility XXXX. to Phase the in quarter With of the in fully Stack revenue increase fourth integration the we

quarter other margin, and stock-based adjusted comp was XX%. gross Third approximately nonrecurring items excluding depreciation, XXXX

California period. from adjusted SG&A $XX.X the the $X.X lower in down facilities. SG&A utilization year versus lower in Adjusted stock-based with year by million the quarter that due was period, primarily the at which prior Georgia million mentioned to quarter, $X.X Our difference margin was million and gross prior $X.X was constrained in the I million both was the largely third comp.

prior restricted cash with a of value million Third and EBITDA the of liability had and period of the for year ended fair and for $XX.X capital million. From amortization adjusted includes $XX.X in million perspective, as quarter these nonrecurring $X.X $XX and $X.X net of in cash, was XX, a million gain a undrawn warrant Adjusting $X.X million a to of interest in we of and on approximately XXXX in quarter net equivalents million September XXXX, capacity million. our facility loss depreciation structure credit expense, a million Cargill. was compensation, $X stock-based the $XX.X of other and million compared on amount change items, third loss cash loss $X.X

additional on certain subject terms $XX precedent. Additionally, agreed provide working to this in closing transaction Cargill We in and conditions Local November. has capital, Bounti to million anticipate

some wanted we also and our on context further has impact around facilities using it provide timing are our how various capital the to I cash.

which reimbursement we period improve level reimbursed our days, through we Cargill example, spend got cash will this to forward the on before and to accelerated XX-day CapEx, a there operate line, we successful were For XX business. the was as cash rolling traditionally,

believe to we by to adjusted XXXX, milestone early that continue XXXX to achieve. has reach working have a been important very of is the hard or which organization that end capital the breakeven EBITDA entire necessary We our

announced, financing $XXX to up a by million. previously we construction $XXX quarter, at executed the the agreement to in total As And sale-leaseback expanded $XX our up with we of a Cargill million transaction for end first million. of or April,

our total reduce Bounti and to of lender expansions. a finance USDA licensed lower and with a Letters construction it with Conditional cost work financing million a use has additional financing to debt. Local commercial Commitment enter lender our XXXX advance for expects and to to up executed build from approximately of to $XXX its greenfield Letter continued We replace facility into fund Commitment

on to execute have XX close of days. With these shape, We track within we on the the place we to resources plan. taking believe and expect to financings XX our pieces near-term are to all in agreements

that I for. want the strategies agreements while work are allow continuing additional emphasize However, our that also cost our lower of flexibility to to we capital, on to preserving current

opportunities. cognizant remain growth nature, and are constantly strategic philosophy requirements, capital While near-term term in for is we preparing longer we our of future our

consideration million September revenue approximately XXXX we basis, stock XX, and of in outstanding. our diluted and XX.X respect forma employees' our our restricted range have to revising XXXX, share million outstanding, full our On fully guidance of outlook performance, approximately units of X.X $XX shares. With count a As million. are of warrants $XX year we have a we to year-to-date to a including million shares pro

and and to our coupled to our some increased we expect to continue weeks. shipment respect production our our to X-C's will improved deliveries in by ramp, in decision during large see fourth our XX% for have Phase accounts summary, offtake we scale significant anticipate well significant of revenue volume in the timing underlying guidance. In the acceleration milestone this of Texas production this agreement in the business up club to As customer The implementation more our from we Georgia is Georgia online quarter increase facility the year, preparing production, hard working to positive impact a our benefit implementation, facility. which operational implement from we've with of Stack coming double completion the a mentioned to the previously, the are the the to fourth improvements Stack as our which coming are change quarter. With reached with under as expected and

projects, take is to operational business the fundamentals we not breakeven on our ability So value trading on our the funding cash will company. of not for of market to the believe believe we secure which we currently cap flow, despite reflective currently is our execution, market planned the that of and our the work as our us

As such, $X our dislocation. in purchases number the million long-term future the advantage of of at demonstrate take implementing also are measured belief executives look we in and and authorization a support shares making to to Further, to the success. to up term market market stock open strategy intend near company's repurchase a of

remarks. That the Operator, concludes prepared our open questions. for please call

Operator

line from now will Oppenheimer. Kristen be a Ladies Instructions]. question-and-answer with conducting the gentlemen, comes our and session. Owen [Operator And question first of we

Kristen Owen

some learnings the about ask of facility. to wanted in Georgia the I

prepared and you as of expand to of those and was the it seems existing examples an on some facility opportunity of in a you being more some in just this us through with greenfield quarter though versus learnings. Can Texas facility. mentioned which more remarks, Georgia, the there some implement You or took walk particularly

ramp Just Georgia? as about with of compared think should how we the Texas

Anna Fabrega

for the question. thanks Kristen,

later recall a added Georgia that X-acre as expansion. we an initially So started and facility, X-B

do as growth take well, Stack we with the layer sure looking up throughout a how kind have so you you that efficiently, complexity. capacity through flow the how now we do everything like minimal pack have you of process facility, and a as at had ramped downtime, really a at make product and how to look from you reduce more hard do of move And equipment harvester kind

go into for pack we're put over So down when to even product looking it to before at example. package gets how minimize changing how a does much time conveyor change size,

can but of points manufacturing can the super We the minimal still because, up the But, Stack those we standard significantly of shifts in evaluated get-go. industry about you with operate created the process will so really people what asked be one processes & have designed typical that two, fungible each it's we one, within been work, support So standardized and also yield. And Flow has is -- ramp that XX% the in increase from Texas Texas. we have place. for operation. faster

of we the for as and trying to so there's And not that that efficiency. about as to be have retrofitting optimize much redesign we're flow thinking greatest amount

Kristen Owen

Okay. makes sense. That

Texas sales I think rate should implied terms the so about understanding going XQ? into we commissioning probably million, and when and that about $XX big think how in XQ So guidance be in not that contributor about run of will the XXXX, a

Anna Fabrega

Yes.

beginning to by And think the Club up running, seeding about our December. up increasing will expect just fully be ramping operation I of ramp doubling talked and production be to to time Georgia increasing by as but takes X-C we ] XX%. in the about So shipments our [ typically, we the we some it get -- year. Texas customer

Kristen Owen

sorry, -- go ahead, Kathy. then And

Kathleen Valiasek

perspective, a in Yes. to is have just going earlier throw of the terms we less I Texas thought year. might revenue than in in, was

Kristen Owen

the And next a think follow-up, cost the extent then, impact from To helpful. capital, anything that to can just the about over you're days? say XX just for one That's USDA bank facility, about that Kathy, able, discussions XX total Okay. how to construction last actually any early to those of indications you me.

Kathleen Valiasek

Yes, sure.

Cargill each couple ] are Cargill long the as lower facilities cap the of of to they said considering come ago, takeout term on capital we've of quarters rates? [ at our much allowing long-term for at agreement and lower a of sheets restructured actually for and USDA So that are such we earlier, term with stack looking cost we into

Operator

the next Our Street line Klieve with of comes Markets. question Lake Ben from Capital

Benjamin Klieve

First, prepared the I you Commitment correctly. understand your to this want Conditional that I about to Letters ask want I make a in sure question remarks. noted

and existing above correct is So beyond beyond and you're and referring know both XXXX the we incremental build works Washington. capital expansion facilities in already Are to and the of million greenfield Texas, Cargill what in $XXX capital this those statements? through is is Georgia the here, this for that

Kathleen Valiasek

Yes. Exactly.

Benjamin Klieve

Yes.

Okay.

loan Great. of the part USDA -- that is separate Okay. million backed as is $XXX and then a that is well? And the or the

Kathleen Valiasek

It and It's is separate. above beyond.

Benjamin Klieve

think come got With point, sense would this quarter to I pretty you're in the on of you've outlook, good quarter. at fourth going a where the

So to not or period? can come you and you're it's if the the about going end the talk in big of the your What high sure drivers between not low through range?

Anna Fabrega

to Do that, you take Kathy? want

Kathleen Valiasek

Yes, sure.

$XX You in of $XX mean ]. to terms the [ -- our reset, million million

Benjamin Klieve

million]. million what versus I hit needs $XX mean Well, ] happen to $XX to [ [ yes,

Kathleen Valiasek

Yes.

great So question.

get the ] that a right, we piece speed early it. we running Stack [ -- of Just is We in say with but large October, of in number facility. it's did the Stacks, up and which a seeded

can it's we so that just the California, ramp and section with the up is speed QX, issue And but running. we running, so And did get one that in had and we mention which an back to up speak. as and that

great should timing be coming we So then also online. any for there. just Texas And

Benjamin Klieve

and last one get in me, then I'll And back line. for

here your a any around kind that Regarding Can business row you ones you for kind California, row. for that guys of periods X that of those several outlook for now your talk in for you think several in facilities, thought are challenges been there's view challenges are to given facilities? these have Are the through going about had future? initiatives the strategic Or these some periods long-term the on there. you in be now a foreseeable considering you've

Kathleen Valiasek

Yes, I think...

Anna Fabrega

Go Kathy. ahead. ahead, Go

Kathleen Valiasek

rolling things in facility California. for QX years next is that a And significant just that humming about very actually definitely strong still to one of I'll possibly now right of And both the rains the it lakebed also, land saw even we or all some that on of other had are or XX was there, one okay? the of was -- both one QX along, we facility, feel this much expand so the -- of facilities we of that so literally -- or our other facilities. at both still weather consider the facilities, right actually. But a are sorts to was the important of And in say saying that forward. in those that lake we looking of in so the facilities very, It level to and implications there's the I'm just were dry But outlook course, rain the them right? crazy point it

-- So had just although we issues. this have year, temporary issues really it's

Anna Fabrega

safety operate so standpoint in employees from question these I'll better the just it we a close facilities. would that repairs make that particular make as of the to as quickly better we in rather to Yes. try our a really we that be made get in been closed to there in the add it We've repairs for for decision could investing infrastructure section, repairs. and quite and and that regards bit And possible. down the

facilities said, other sure us, how So we're and we going they're still for events really are that Kathy against fortified important make evaluating like can right we forward. that now

Operator

Wright from line next with question our MKM. of And comes the Brian ROTH

Brian Wright

with follow up I impact completed the just Georgia being to to the yields X-C that the wanted occurred. on and facility

it there, answer, not X-A function up having was it. -- trouble X-B of not. for Stack more was a occurred, I'm -- -- and visualizing simple I'm like sure this planning a just a So like the there's with the there starting struggling just I'm of whether have at seeding -- could being and I'm logistically the but or just than that Stack typical purposes, was But

Anna Fabrega

Visualizing the is... so -- one

Brian Wright

Georgia. the with with in lack -- the On of what it seems happened ramp

Anna Fabrega

Yes.

place X-C was and process, sure And and volume seeding coming So to also that we had planned and adjust those the bringing to and starting back to could delayed. was support had we that at the be year, it adapt and that had would as production make that operationalized X so now we to board. in up was than the a acres go we a having X-C through X acres. of X-B, incremental what from production Stack standpoint, had up volume originally we plan took and in to as earlier workflow brought part we step incremental the on

going now system So in October, as seeding and that that's the feel beginning but process through QX, that and we the started of really reflected the not kind clearly. Kathy workflow the the good there, have through working mentioned, are product and in efficiency of about we we

Brian Wright

seeding at just the Sorry, to seeding to you in are The I Stacks October, wanted up. beginning follow or... referring

Kathleen Valiasek

with I Yes. decision say. it he operations. go go made honestly Brian, Patel, I mean very decision put and go the a was on, fast to processes it optimization of the place, We very, the would advent ahead. slow, Bimal conscious effort was is conscious our of COO, And in here a coming -- realize to what workflows, we that it's

Anna Fabrega

give I'll example. an you

have we X have We that harvester. facility, in

takes to the it all make different maximum requires of potentially, to time mix we order those process require in to to mixing to that can get So it incremental a speed through there go to it belt. our to those salad doesn't of go from team amount belt, engaged can is harvester at if Again, it the greens we can that harvester how engineering we're we've that work engineering greens that for run salad some greens, the way that example. machine and had those mixing sure reduce on, the plus you a packaging operate [indiscernible] its

at bottlenecks every process. and we're in end minutes single point greater process get way. in it's the that We're seconds optimize and any to trying that flow that not so at capacity, the the of at the recutting looking XX% So in

Brian Wright

you're said selling the just case? -- you to confirm Okay. everything Is last And then that's making. you're wanted think still I quarter,

Kathleen Valiasek

Yes.

Operator

Chris Our line of Barnes from Bank. comes next the with question Deutsche

Christopher Barnes

just this know And The the resolved costs XX% weather in came you've and challenges XQ issues I noticeably guess, But, I in in California quarter, this margins. quarter just quarter. they I guess, you like gross I start-up Georgia. and cited quite back. weather understand, on wanted I'm last last weaker ask quarter, trying said like, than to to the was were

So in really Georgia, sight of scales Washington, you up at forward, Texas weaker mid-XXs to in Or margin? it's [ to it just do then and do going gross continues getting the to than year-to-date, to driving bit like margin? And structurally like in is have what line back ] a lower is going quite just a come as like revenue be just because and a so.

Just so I'd love your thoughts there.

Kathleen Valiasek

basically thanks and line so sight the getting definitely very we facility, much I you. it will the through margins. down normal had Chris, X it But surge up And it California, head us. and safety gross back -- shutting audit, It absolutely for our count. this the and at we we Yes. of for section a we but one-off for this question were. running the where know even frustrating I to the was also, to so is was hear be track back much will was yes, of of disappointing to food and And of quarter. we be quarter, we have us In back get on

Christopher Barnes

Like, in just out level confidence come around I there obviously, control. like your that things are your what's that? have guess, of

it. bit more want So, a color little just like, around I

Kathleen Valiasek

you. hear I Yes,

facilities. my We So level labor bunch in high. of very had is the a actually to both bring of confidence very, at temp

and Stack lower. normal. already repairs in through because X we both And sure get then And where could running. maintenance certain back But down the around was count and were head -- to California shutting to up back and to that surging section. for utilization count to just facilities, is the the this be head food we Georgia, in safety Just get audit

Christopher Barnes

fund I Got indications capital it. also like dislocation about on like is the the on use like million your of announced new this million the helpful. selectively in is best the guess, a repurchasing of but shares that growth had capital? -- at is of like know going of level jet, just to repurchase and debt like really is and repurchasing valuation like sheet repurchase But, taken, And and with program. more points repurchase just the just this management you well rate. I really shares, use the given just balance follow-up you program the Like and That's to then but negligible $X size, I $X the are the your I I allocation. capital best noted understand aspirations

Kathleen Valiasek

Sure. I'll go and add and And comments. take one, hear then you ahead I that and Chris, any Anna, you. can

also certain So We release things we there's the into so information going that right? X out sped up that market get could the on, earnings and there's to shares. executives want buy

on And you And repurchase is day, Part over and you so needed. we activity that as million, the then it and shares, -- of obviously something buying insider is the it's if use will see, a executives share, that so XX-month are $X trading share right? is, there's and there's activity period, there's the hear program. every it the volume feel only not it's XX,XXX it's or institutional I that any we

Operator

the would any this to back remarks. closing for gentlemen, hand Ladies no there I call at management over to further are questions and like time.

Anna Fabrega

everyone updating I'd to you quarters. this in business for our to on joining we thank we look us like you. coming forward grow and further Thank progress afternoon, Local scale as the and Bounti's

Operator

today's conference. concludes This

for Thank at you your participation. You your may time. now this disconnect lines

Local Bounti (LOCL) 30 Oct 232023 Q3 Earnings call transcript