LOCL - Earnings call transcript Q2 2024 | Local Bounti Corporation

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Operator

Good morning, and welcome to the Local Bounti Second Quarter 2024 Earnings Conference Call. [Operator Instructions] Please also note today's event is being recorded. At this time, I'd like to turn the call over to Jeff Sonnek with Investor Relations at ICR. Please go ahead, sir.

Jeff Sonnek

Thank you, and good morning. hosted President Bounti's Kathleen and be Craig Executive Valiasek. will and Hurlbert; Chief presentation by Chief Local Officer, Today's Financial Officer,

a the as of Litigation are current Reform of The forward-looking future of These XXXX. number harbor today's statements during other Act well are of meaning than expectations events. considered statements within statements. statements provisions Securities comments management's safe facts concerning of and based Private call the as on All beliefs the historical made assumptions statements contain forward-looking

Such forward-looking the to materially known results risks unknown from could and statements. differ forward-looking that cause statements are to in subject and uncertainties discussed the results actual

identified discussed uncertainties Some of company's and these in and risks SEC. filings are the with the

certain press financial to directly their on to refer comparable reconciliations investor.localbounti.com, found be to measures. non-GAAP release, can Investor non-GAAP Please the Relations our website, most GAAP of for measures. We'll also measures which financial refer

I'd call With that, turn Craig. Craig? the to over now like to

Craig Hurlbert

Thank good morning, you, Jeff, and everyone.

beyond look organization Her operational I leadership phase Valiasek, like business. moment to an unwavering efficiencies, well our building of our want organization Kathleen our role leading leadership to forward recognize reflects expanded developing relationships. on to financial role to significant growth. trust her to our we customers her that Together, in commitment financing comment into has take commercial up and with reached important of highlights, I'd to the next large our key our instrumental include scaling Kathy contributions Before have in we we through and her finance second quarter. President been a made CFO, the I in operational expansion that implemented and change and dive June. driving

Now turning results. our to quarter second

representing Our XX% record basis. to sales million, growth $X.X year-over-year a XX% on sequential a increased

goal of to to million. are generating EBITDA XXXX. adjusted near-term loss in EBITDA right achieve on demonstrate trajectory the year-over-year adjusted These improved $XXX,XXX we early approximately results our also $X.X Our by that positive

milestones beyond. this quarter for in the & highlight in and state-of-the-art fully The Technology purpose-built that especially excited and operational are report am facilities foundation Washington our set These Texas. I our the which to of from for growth quarter, achieved key facilities shipments second new XXXX half most optimized significant commencement a several this of growth. strong we have Flow to revenue contributing and is of Stack now our already accelerated

experience the successful, implementation, & we've to have a gradual inherent very scaling X Georgia able that to yield of particularly and We've accelerated months day from approach Georgia a What's our to facilities these Georgia. learnings just more allowed applied been This X the while achieve our implement operations new our new The to rapid months, facility to to Flow in a X noteworthy operations. in optimized from advantages Stack our X processes X. disrupting testament ramp-up to is comparable facilities. avoid the our sites. took existing us process is purpose-designed Georgia contrast, at levels of required initially In

mind, several along are designed were year inherent market. key facilities decoupled advantages driving systems, Texas the tailored and yield current systems control focused and with SKUs and round. Washington scaling. design Advanced acreage, that harvesting are for Built to and these the production cost-effective can improved various in local Both reducing conditions and enabling in There processing double efficiency greater in flexibility quality packing our time support bottlenecks. ensure our facilities operational allowing buffer with to expansion areas, consistent climate accelerating on of with

commitment multiple quality and uphold checkpoints manufacturing to control safety our good While food product with layouts practices excellence.

contribute collectively focus. and like catchment These with X. Texas environmental to day to maintain facility our from in Additionally, ability our aligned scale operations and recycling systems features water design our production high-quality and others sustainability rapidly elements

Pleasant Capitalizing new Grocery thrilled expanded Company to our network. our locations successfully from now of in products line Brookshire Texas baby announce and Brookshire I'm customer facility. Grab-and-Go three United stocking that more distribution is our base including capacity, shipping Kits, we've Southern Mount living to the XXX on than Salad new varieties. full states leaf lettuce this States, we are and our across

we shipments distribution now our distribution centers are six our for Club of With to of facilities, new service Georgia Sam's added two from with now and expanded with Sam's from commencing Texas. we've this Texas production fulfilling our facility. leaf regional Additionally, service, our

expansion overwhelmingly Grab-and-Go to national expand Northwest the with second In about in XXX to throughout This half Local offerings be the further positive, growth we States, these are remain we XXX consumers to the doors The Kits. important the Salad the in United category. and second Bounti to driving to introducing We Southern quarter, track expect of more the revenue of approximately doors total been potential XXXX. of our this a and convenient, fresh Grab-and-Go expansion out excited will the and incremental on and response product for has we rolled Pacific brand.

rollout over our continues & efficiency as encouraging our opportunities expected report Georgia last forward yield about look to extremely details update drive Technology increases Stack to pleased are to developing development and sharing current across our trial that I am to to strategy and our of These large-scale in facilities. improvements Washington now facility Georgia, provide mentioned comprehensive with We has this exciting Our a are more our these updates. XX% results Flow implement future Texas operations. in performance. delivered across we

we've this costs. achieved through optimizing Additionally, We've seed approaches. in main our significant two made strides

overall latter And seed maintaining negotiating scale total efforts, these while second, lower advancements we've cost been strengthened XX%. per our yield From able to towards further yield excellent even offer competitive seeds position given usage, in lowering our path efficiency our on costs reductions and fewer seed. growing alternate taste, plant cost site or These seeds and reducing seed combined our increasing flavor. that using to cost cost and yield. improvement by profitability. both contribute per texture from First, without our reduce by by comes suppliers identifying with This approximately compromising or

summary, achieved launch the doing record distribution. This In milestones a reflection successful day. significant the retail great every sales quarter our to is expanded of of our facilities is direct we this and new team work from

commitment product to Our and to innovation operational efficiencies continues drive improvements.

Bounti. produce locally the excited opportunities of XXXX. Looking our for meeting positive goal We're ahead, we that grown demand our early focused Local in lie ahead steadily towards increasing progressing remain EBITDA about and on adjusted in achieving we're confident sustainable, forward, path while for

over Kathy. to With that, call I'll turn the

Kathleen Valiasek

ensuring off I Craig. start I'm truly understanding my want honored of deep of with our our initiatives, fundamentals our align growth forward I our further creation efficiency bringing by fiscal a role to maximize saying financial in of as to and broader CFO. help will President business. the operational Bounti that a take strategy to aspects responsibilities to look to across capital you, us value Local addition This on role. unique we Thank of perspective all

like would developments. of ongoing update financial I couple expansion and initiatives a capacity Now our on to you

into we bring Flow additional future substantial provide expanding million commitment for have letter First, including into This conditional enter growth total strategic this would of to & additional our committed capital lender the CCL, If another via we $XXX funding growth capacity would commercial completing plans, same our been from support to meet capital an capital. it and approximately $XXX we documentation. working Stack our growing with. negotiations million, financing across strategic working subject facilities definitive to demand, entered

assortment. be of intent letter nonbinding a our capital across into our to network our well. our entered to of designed to these These and facilities are production used incremental of additional capabilities are to existing balance and leaseback capacity sale for increase financing advancement which also will sheet. we our Alongside increase facility, construction Second, add $XX the expansions down our million of accommodate pay our strategically a financings, working plans progressing Georgia growing

great specific we're align collaborative engaging a As distribution measured that our we the this our We're And the advance each importance into out customers. for SKU also existing the is but facility market delivering our anticipated only to approach. products a nation. our including market, now high-quality across taking produce partners our strengthens to particular our farming as position, and of reinforces new Midwest with to commitment and retail not is we roll actively approach fresh, right optimize broader with practices plans, through tech-enabled interest This strategies. which entry assortment, sustainable

improvement facility facility commercial output. focus contribution. have its from Montana generating Furthermore, to a is to also our Montana I'm facility. previous transition to this meaningfully nearly of the expected report focus R&D a completed material level EBITDA our to The new pleased contribute product is facility's in Hamilton, commercial-oriented that shift the we

ramped QX that facility to QX by seeing year. compared drives already goals. facility of sales up last we've that cash out our that this we year, are Once achieving near fact, In $X us and QX near-term million closer and we flow be breakeven have will approximately financial to improved in

shifting results. second Now our to quarter

prior $X.X $X.X compared first to XX% to increased XXXX to and sales quarter million increased compared in million quarter as year Second $X.X XXXX. the the million XX% in

Georgia and and different point the facility contribution SKUs temporary tailwind production a Washington production, for out for extent, and the largely due from out in second be to our should shutdown a contribution facilities. revenue I'd sales transition of commercial the the growth the partial Montana Our that half quarter the which was also reverse year. impacted from and of reflect results Texas to with in to us associated increased our lesser

margin, excluding XX%. The adjusted and was second gross stock-based approximately compensation quarter depreciation

reflect were margin margin to X improvement our to point gross performance to costs scaling percentage a see growth adjusted ongoing our While up we facilities, associated the QX and from continues QX. of in with pleased optimization

expect the with as continue up scale coming our in quarters increase to ramp We to this gross in sales our year. parallel margin capacity adjusted

improvements Craig to as we initiatives continue benefits, good to support in mentioned, scale-related expect further the improvement margin that as other seed costs. Beyond with we progress such our make

year quarter structure by expense. in to XXXX cost-saving as to million, second the quarter decreased to compensation $X well stock-based driven as lower of and fourth XXXX took for prior our actions we as million first $XX.X SG&A compared org streamline quarter the the

continue actions the expect resulting XXXX. cost through end benefit to cost-saving to We of from base and lower the the

period. explain that million note as compared improved as year-over-year $X.X value of of liability, the in $X.X our the noncash second which prior of and in the our a year-over-year. of to to compared cost warrant year. XXXX was positively the net of gain second Net in in in I'd loss a as variance result period. improvement $X.X loss quarter sales second year improved million million million operating XXXX $XX.X helps to influenced loss $XX.X prior million by quarter savings, $XX.X prior compared mark-to-market loss loss the was million a the to by year Adjusted a in of the the quarter fair EBITDA a As

cash, $XX.X structure capital approximately in as cash restricted and outstanding. XXXX, amount X.X June as we And we a million. of perspective, had second cash had shares of From quarter, million the equivalents of XX,

units including stock diluted XX.X On a count restricted and a shares. outstanding, employees' pro basis, we million have warrants approximately forma our of fully share

by encouraged support for We're Bounti's CEA Local approach. innovative the increasing

capital remains reduced projects to while collaborations position critical construction towards to our lower ongoing license as capital with facilities, efforts underscore R&D commercial we're will we be including EBITDA This strategies with refinance driving pursuing These XXXX. our financial solid Montana our USDA Our growth. sufficient leaseback to positive and our increased structure our construction transactions sale and revenue optimizing financial facility shift new a of and through expenses complete decreased activities. operations, reached milestone more combination in our debt, lenders. costs adjusted of operational and commitment early of achieve target SG&A from fund cost Moreover, potential our actively

Texas our to and the of reflect from production extent, sales year $XX and of in our to million. our XXXX to million expected reiterating contribution performance, lesser Montana at $XX facilities. outlook year-to-date respect we This our ramping guidance guidance our Washington and a facilities of out production and With year are up to consideration partial continues California full Georgia,

Fourth higher with of Washington In associated about year, the as of a significantly expect our we resets which quarter Grab-and-Go significant our production the from quarter as our higher of how average our in up and mix. price, increased balance as terms revenue growth half half our step ramps be rollout, to Texas to to of meet back new full customers' compared revenue in the terms expected helps in the to a the well for think year selling first than larger guidance. and many overall third placement both is volumes

In gratitude this are also locally bring more our focus customers closing, gratitude to for supporting our produce grown want to I really to to express that and efforts who our my team's extend consumers. year

been with our As we've distribution fronts, couldn't including building of facilities, new out we've two you. making heard the the customers. product operations, and up prouder organization. all greenfield busy our expanding Montana up today, of opening progress transition scaling on Thank be incredibly new of to existing with our operations We assortment and commence

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

Operator

first comes Instructions] with question Company. [Operator Kristen Our Oppenheimer from Owen &

Kristen Owen

start Texas get and Congrats to gave sort running? ] think to the [ year half of on the some the I on TESSCO and half? the -- really ground Montana see When this how back Kathy, those of with milestones, progress how you was about about in some made contribution you all up the think to great on quarter. of of color back wondering the

as to now in that bridge think you or just on should the how commercial that XXXX? commercial announced think facilities quarter, utilization of the into we announced it of revenue you some as some those that relates run about we of or agreements about the And rate capacity shipments

Kathleen Valiasek

multifaceted Love question. It's pretty question, amazing. the many

prepared in far as in last has are how And all of I so our Local Bounti As to months. teams how in just come X we our of and even come. said, we have far remarks, said proud we've incredibly Craig just X

but coming also also have online, you even say, the they mix, our that then our the would higher spring right? So in the we than -- of very and points right, kind bread many Texas customers that to new new Brookshire, online which past, SKUs the we've butter. in last And call, update of have it's capacity that that about right, new the are things facilities, all providing I the about since when our think blends, the coming are sense significant spinach, basal, talked arugula, in the and -- on, price is all power

difference So that significant that's kind the one the to things of us a half. in of make will second

then talked margin the top visibility in or on And QX Grab-and-Go, also, great we line X that they impact to SKUs we up didn't those X contribution, late Grab-and-Go. large with X did the a have month as currently We when other will And we did call, do customers or as revenue in the right? the QX QX. we have also have about words, started that started versus and

So big bit there was shift a a a little just of situation. deal, there, no just timing logistically,

kind But in revenue than to my up of live basal in was anticipated, cut And which living comments, we which is we talked head than SKUs that also, which of a and we realized Montana, mix, SKUs, basal, was running. and those sorry, more great. Montana. higher partially likewise are Montana margin out because two time then wanted about bit get probably it spring our little a took -- less and little bit we of prepared out cut The QX had bring to basal in

our see, right? the sold we recorded with the but but the along different most facilities. part Let's much customers. the in very mean them see also these out of very as our that facility closely, very -- buying sense we for are cetera, have quickly. Sam's away we also we hey, little what And the can we're all Washington our Brookshire, didn't they are what is very for builds. the want of out in the And bit right? that a we in the alluded and very, that talking coming They that's talking it's XXXX closely all in does with that, right and et capacity-wise, needed scale new about, are SKUs, And provide volume so all expansions that actually now and is why products, comments,

hope right? your yes, that sure new and be follow helpful. So Let's -- builds, Craig of questions, get I up but he's those want in the capacity that you let's answered most you

Sorry.

Craig Hurlbert

always love detailed. because We Kristen's questions they're

So yes. Everything there, Kristen?

Kristen Owen

Owen the Yes, getting you're here. special Kristen

mix bit half maybe how exit come mix? your second rate. a the about half in I starting a guidance the little these ask how only think double of as the think revenue for the implying SKUs if we that sort that was mean, and think I or customer about the seeing XXXX of when on of like year, back click do on because on, ranges one customers a point SKU what about of of and the you're I new we that Just would sort are

Kathleen Valiasek

just these we then Yes. And to that going the the when I okay? the -- level margin, are of think XXXX, should ran much we it's also and mean project to impact definitely question. great revenue highlight R&D about yields. very our I mean, Georgia SKUs out our a new I of increase

We of will think -- for impact and significantly. QX, it revenue sorry, QX, all next that we into also QX, out about year, the also be blowing when in our QX will that facilities yes.

Craig Hurlbert

this in it's months great on honing question on one that's on XXXX. couple next a be day. It's We'll of our and minds over the every

Operator

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

Benjamin Klieve

is cash you with any leaseback provide EBITDA First that rate, or lower given addition expense is sale the the replacing the us financing be can on you headwind going cap rent cost cost wondering would to details that, flow, Kathy, you're give payments? given facility. higher lease degree So around be I'm great. any impact the at the could an the that if of on construction detail additional just a on Georgia to which of be it

Kathleen Valiasek

Yes.

going think at to they strategy, -- a right, of of details of said this to a each sort I with and consistently, happen them facilities What bring of profitability, certain Washington. for and would construct this I similar financing, not the the the get a the -- after into the point. ton Just Texas bring sale-leaseback take we've level is anticipate And up right? facility is share situation so we to

mentioned And in two them will of brought able our facilities, what sell we teams facilities, to especially with period Georgia. Craig to we those would for up to an his that sooner to those time short than those in comments, running say such impressive I flip much able it be be leaseback facilities were and

leaseback Texas this able the be because sale and we've give point with sooner color I great going leaseback and of that give a strategy is because but and came the around a we'll Washington always on significantly can't been running sold at the just out sale degree this certain they to wanted I kind just it's flip very, rate very quickly. to to up and them to for,

Benjamin Klieve

it. Got

Okay. you're that able No, for enough. tuned them. on to we'll And provide fair details when stay

of On to the the walk a through of shift wondering QX I'm can EBITDA sequential you bit on kind from ramp, EBITDA. if me QX

EBITDA current factors to the the then getting line quarter to It in first quarter? be which Can the allow the of in Texas, third elevated allow little for up they those to from contributing transition, degree associated you rate here you and turned So drivers the improvement probably with the Montana to in that burn on. costs had like ticked to off -- to and million the talk quarter that in some bit that are turned here an $X.X EBIT kind some for any Washington from quarter a sounds expenses $X.X going of million. of about second

Kathleen Valiasek

day. that every Yes, I it's I'm mind, my you on you. because glad asked constantly and single watch thank it so question

for thing the bring did the because call Montana, we script of adding facility. less in less revenue of that weren't right basal SKU and bit talk But points okay? made that increase that a out will facility revenue a that when into but will my to profitability we in we mix And of is did long there, contributor. QX, QX one -- honestly spring really our but it be in of we little really the we it meant about the term change basal I -- doing a So out planning did was being

couple mentioned a I that to a And no had things a then of buy product. there a perspective. a had we We was X timing other planned big in came were QX that for just from the started difference, QX start. Grab-and-Go, deal that two It month start, there. already or customers

guys that then to costs recorded of those is note of all all say, These of for, at thing years for $XXX,XXX I construction that okay? just will typically were vacation. take had that some the other reasons would X of my typically we finally, I that had actually in needed capitalized. then construction hit all SG&A vacation want those QX, take couple in capitalized, guys our include go the we guys a and QX $XXX,XXX and didn't any P&L, in didn't the away that poor team, to costs Those I or all, in are the costs And are able this comments QX.

So those of factors. the are four kind

Benjamin Klieve

Got it.

all Okay. helpful. That's .

Kathleen Valiasek

quarter-over-quarter, I do out is I tracking are the EBITDA in improved are to already $X we the we I -- about say in see thrilled to the it just Montana. really I'm positive. talked of do want which fantastic terms even million, quickly QX And We've want loss -- just really of -- But to yes, also.

Benjamin Klieve

what that the the and context Texas like is of out facilities secure have the potential Does Washington? for double. or as noted behind And elaborate with the look is Wondering infrastructure guys addition? opening the you you, you can that bit just doubling place good. a that see can such on that Craig's I either if comments Texas that in greenhouse more one Very is for and but Kathy that. -- on Washington Does land imply that can that are you Craig, a fit, Really, then that double doubling? a expectation imply

Craig Hurlbert

product. our with the And much is scale. happening a what's great the anticipation answer under more to And the that Ben, has property want question. significant we that's this been in would the land purchased customers secured, pretty and mind

stuff benefit And went round we expansion of a the construction could lot to about do second the first round would we in the do that so of construction.

a any, think can relationships deepen with easy relatively of of customers interaction, a all, to it but disruption without it with that just as go things should products, those position along, you in other up only only, So be be if well. our greenhouse we're at much our will there to but as go we'll and also some operations, provide able math not but more as current kind more

So Kathy? has very it's yes, exciting, been and the very feedback customer from the positive.

Kathleen Valiasek

Yes. double to with I I'm that going capacity, that enough mean did the can also. strategy in always have buy so some Georgia we sure double property to right? there the land has to been We the we're at capacity the point.

Benjamin Klieve

Got it. the good good. Well, stuff. first year. half exciting on Congratulations of Very the

what the in Looking forward to half. through comes second

Operator

comes [ Markets. from ROTH Fortune Our ] next Scott question Capital with

Unknown Analyst

Great progress going forward.

based that Just of and of on kind feedback agreements that any updates Is getting of almost color on kind the of or build. time customer of it you're kind looking that Just kind build at like of on the to ahead Midwest kind standpoint? kind little out? building Midwest and really a offtake where there, more of -- timing

Craig Hurlbert

to Kathy, that? want tackle you

Kathleen Valiasek

great question. sure, Yes, sure. Scott,

that the comments, alluded build need. my able is at -- Midwest these the are I unrecorded seeing are it and customers how of this we of the provide scale to retailers to the of quantity So all of level in sort point, beginning basically,

a Midwest there. us can the it we we the little out it part service planned the to is land. with happening had where country put in of so have bit always of longer certain many what's facility, buy And to a taken we And DCs

the of with new days. worked these They're new They demand, crop. is the a a considered in fewer of faster out a customer have what's happening and facility. SKUs actually with that's tempo But the because all SKUs number different require heightened

the ago. So considering we tweaking of because even more the so might we run bit is customers of design little can a frankly, from these all a efficiently have out actually all X than significantly of thought that facility larger what means and quarters SKUs it demand we're build that

Unknown Analyst

And Got forward it. your a and I go half? you just color. of move just kind give of the -- what appreciate that, for ahead, on know of working probably second color on second or any kind of you as into around the half sorry. didn't guidance but expansion, expectations of need -- that. needs CapEx that I kind capital And CapEx kind is kind

Kathleen Valiasek

Scott. No worries,

So yes.

actually sale in leaseback, for of we don't As as comments, provide also, a we the possibly capital. partially CCLs construction much ton funds effect. financings can. working working we as prepared plus will working finance build, we need be financing we our need we provide some in will but also our capital. then to talked a strategic plus but pay some soon our as the with construction We down financing, using to XXXX those of lender, using And about will capital, as working are that for capital, close the both That of as mentioned

Operator

turn closing for the back to at the management Ladies I'd over questions. end time, showing and gentlemen, further to remarks. question-and-answer like and this no I'm any conference session call

Craig Hurlbert

to of same has I'd I that entire our like and and both it's everyone. To and quarter our effort size every grateful reiterate And involved. Board employee, Directors Bounti a touched Well, this on our tremendous Kathy Local is stature I organization. and everybody of are facilities and to in by Herculean this the single you, ever morning, no knowledge, and team. two our Kathy thank brought what one gratitude up else

of heart you the So a and bottom from on sincerely I's huge that. thank Kathy

the you have you to our a as business great Bounti's coming on and day. thank we like everybody to Everybody, I'd much. scale for progress in joining so forward us we and look further grow Local quarters. today, Thank updating

Operator

Ladies conclude attending. today's you and We thank gentlemen, for do that call. conference does

now lines. may You your disconnect

Local Bounti (LOCL) 13 Aug 242024 Q2 Earnings call transcript