Agrify Corporation (Nasdaq: AGFY) (“Agrify” or the “Company”), a
leading provider of innovative cultivation and extraction solutions
for the cannabis industry, today announced financial results for
the second quarter ended June 30, 2023 (“Q2 2023”).
“As described in our prior earnings release, the
four key priorities for the Company are (1) restructuring our
balance sheet, (2) reducing our costs and headcount, (3) improving
our product offerings, and (4) getting our key products
CE-certified for international markets,” said Raymond Chang,
Chairman and Chief Executive Officer at Agrify. “In the second
quarter, we continued to reduce our operating costs and
headcount. Our total operating expenses were reduced by 31%,
from $8.6 million in Q1 2023 to $5.9 million in Q2 2023. The total
headcount has also been reduced by 55%, from 190 to 85 on June 30,
2023. As a result, our operating loss was reduced from $7.6 million
in Q1 2023 to $5.3 million this quarter, a 30% sequential
improvement, and net loss was reduced from $10.3 million in Q1,
2023 to $6.8 million this quarter, a 34% sequential improvement. We
will continue to make focused reductions in costs and increase
organizational efficiency in an effort to turn the business
profitable in the shortest time possible.”
Second Quarter 2023 Financial Results
Summary
- Revenue was $5.1 million for Q2
2023, compared to $19.3 million for Q2 2022.
- Gross profit for Q2 2023 was $0.6
million, compared to $1.6 million in Q2 2022.
- Operating expenses were $5.9
million for Q2 2023, compared to $93.1 million in Q2 2022. The
decrease was largely due to a decrease in general and
administrative costs and a decrease in impairment of goodwill and
intangible assets.
- Operating loss for Q2 2023 was $5.3
million, compared to $91.5 million for Q2 2022.
- Net loss attributable to Agrify
Corporation for Q2 2023 was $6.8 million, or $4.39 per basic and
diluted shares, compared to $74.6 million, or $561.31 per basic and
diluted shares for Q2 2022.
About Agrify
Agrify is a leading provider of innovative
cultivation and extraction solutions for the cannabis industry,
bringing data, science, and technology to the forefront of the
market. Our proprietary micro-environment-controlled Vertical
Farming Units(“VFUs”), enable cultivators to produce the highest
quality products with unmatched consistency, yield, and ROI (return
on investment) at scale. Our comprehensive extraction product line,
which includes hydrocarbon, ethanol, solventless extraction,
post-processing, and lab equipment, empowers producers to maximize
the quantity and quality of extract required for premium
concentrates. For more information, please visit our website at
http://www.agrify.com.
Forward-Looking Statements
This press release contains forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995 concerning Agrify and other matters. All
statements contained in this press release that do not relate to
matters of historical fact should be considered forward-looking
statements including, without limitation, statements regarding
future financial results, including expected revenue and profit,
and potential cost savings realized from reducing costs and
operating expenses. In some cases, you can identify forward-looking
statements by terms such as “may,” “will,” “should,” “expects,”
“plans,” “anticipates,” “could,” “intends,” “targets,” “projects,”
“contemplates,” “believes,” “estimates,” “predicts,” “potential,”
or “continue” or the negative of these terms or other similar
expressions. The forward-looking statements in this press release
are only predictions. We have based these forward-looking
statements largely on our current expectations and projections
about future events and financial trends that we believe may affect
our business, financial condition, and results of operations.
Forward-looking statements involve known and unknown risks,
uncertainties and other important factors that may cause our actual
results, performance, or achievements to be materially different
from any future results, performance or achievements expressed or
implied by the forward-looking statements. You should carefully
consider the risks and uncertainties that affect our business,
including those described in our filings with the Securities and
Exchange Commission (“SEC”), including under the caption “Risk
Factors” in our Annual Report on Form 10-K for the year ended
December 31, 2022 that was filed with the SEC on November 28, 2023,
which can be obtained on the SEC website at www.sec.gov. These
forward-looking statements speak only as of the date of this
communication. Except as required by applicable law, we do not plan
to publicly update or revise any forward-looking statements,
whether as a result of any new information, future events, or
otherwise. You are advised, however, to consult any further
disclosures we make on related subjects in our public announcements
and filings with the SEC.
AGRIFY CORPORATION AND
SUBSIDIARIESCondensed Consolidated Statements of
Operations(In thousands, except share and per
share amounts)(unaudited)
|
Three Months EndedJune 30, |
|
Six Months Ended June 30, |
|
2023 |
|
|
2022 |
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
|
|
Revenue |
$ |
5,066 |
|
|
$ |
19,329 |
|
$ |
10,870 |
|
|
$ |
45,350 |
|
Cost of goods sold |
|
4,466 |
|
|
|
17,717 |
|
|
9,282 |
|
|
|
39,568 |
|
Gross profit |
|
600 |
|
|
|
1,612 |
|
|
1,588 |
|
|
|
5,782 |
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative |
|
4,819 |
|
|
|
19,378 |
|
|
11,750 |
|
|
|
29,137 |
|
Selling and marketing |
|
1,120 |
|
|
|
2,332 |
|
|
2,710 |
|
|
|
4,422 |
|
Research and development |
|
643 |
|
|
|
2,438 |
|
|
1,378 |
|
|
|
4,522 |
|
Change in contingent
consideration |
|
(638 |
) |
|
|
(907 |
) |
|
(1,322 |
) |
|
|
(907 |
) |
Impairment of goodwill and
intangible assets |
|
— |
|
|
|
69,904 |
|
|
— |
|
|
|
69,904 |
|
Total operating expenses |
|
5,944 |
|
|
|
93,145 |
|
|
14,516 |
|
|
|
107,078 |
|
Loss from operations |
|
(5,344 |
) |
|
|
(91,533 |
) |
|
(12,928 |
) |
|
|
(101,296 |
) |
Interest expense, net |
|
(400 |
) |
|
|
(3,311 |
) |
|
(1,199 |
) |
|
|
(2,752 |
) |
Change in fair value of
warrant liabilities |
|
(1,048 |
) |
|
|
20,181 |
|
|
1,624 |
|
|
|
30,966 |
|
Gain (loss) on extinguishment
of notes payable |
|
(11 |
) |
|
|
— |
|
|
(4,631 |
) |
|
|
— |
|
Other income (expense) |
|
(4 |
) |
|
|
— |
|
|
— |
|
|
|
— |
|
Other income (expense), net |
|
(1,463 |
) |
|
|
16,870 |
|
|
(4,206 |
) |
|
|
28,214 |
|
Net loss before income taxes |
|
(6,807 |
) |
|
|
(74,663 |
) |
|
(17,134 |
) |
|
|
(73,082 |
) |
Income tax benefit |
|
— |
|
|
|
62 |
|
|
— |
|
|
|
262 |
|
Net loss |
|
(6,807 |
) |
|
|
(74,601 |
) |
|
(17,134 |
) |
|
|
(72,820 |
) |
(Income) loss attributable to
non-controlling interests |
|
2 |
|
|
|
(3 |
) |
|
2 |
|
|
|
(4 |
) |
Net loss attributable to
Agrify Corporation |
$ |
(6,805 |
) |
|
$ |
(74,604 |
) |
$ |
(17,132 |
) |
|
$ |
(72,824 |
) |
Net loss per share
attributable to Common Stockholders – basic and |
|
|
|
|
|
|
|
|
|
|
|
and diluted (1) |
$ |
(4.39 |
) |
|
$ |
(561.31 |
) |
$ |
(13.05 |
) |
|
$ |
(569.13 |
) |
Weighted average common
shares |
|
|
|
|
|
|
|
|
|
|
|
outstanding – basic and diluted (1) |
|
1,549,669 |
|
|
|
132,911 |
|
|
1,312,299 |
|
|
|
127,956 |
|
(1 |
) |
Periods presented have been adjusted to reflect the 1-for-10
reverse stock split on October 18, 2022, and the 1-for-20 reverse
stock split on July 5, 2023. |
AGRIFY CORPORATION AND
SUBSIDIARIESCondensed Consolidated Balance
Sheets(In thousands)(Unaudited)
|
June 30, |
|
December 31, |
|
2023 |
|
2022 |
|
Assets |
|
|
|
Cash and cash equivalents |
$ |
308 |
|
$ |
10,457 |
|
Restricted cash |
|
— |
|
|
10,000 |
|
Marketable securities |
|
4 |
|
|
460 |
|
Accounts receivable, net |
|
1,348 |
|
|
1,070 |
|
Inventory, net |
|
18,736 |
|
|
21,396 |
|
Prepaid expenses and other
current assets |
|
2,153 |
|
|
1,510 |
|
Total current assets |
|
22,549 |
|
|
44,893 |
|
|
|
|
|
|
|
Loans receivable, net |
|
11,257 |
|
|
12,214 |
|
Property and equipment,
net |
|
9,123 |
|
|
10,044 |
|
Operating lease right-of-use
assets |
|
2,359 |
|
|
2,210 |
|
Other non-current assets |
|
156 |
|
|
326 |
|
Total assets |
$ |
45,444 |
|
$ |
69,687 |
|
|
|
|
|
|
|
Liabilities and
Stockholders’ Deficit |
|
|
|
|
|
Accounts payable |
$ |
21,859 |
|
$ |
20,543 |
|
Accrued expenses and other
current liabilities |
|
12,109 |
|
|
16,380 |
|
Operating lease liabilities,
current |
|
831 |
|
|
734 |
|
Long-term debt, current |
|
1,424 |
|
|
28,833 |
|
Deferred revenue |
|
3,593 |
|
|
4,112 |
|
Total current liabilities |
|
39,816 |
|
|
70,602 |
|
Warrant liabilities |
|
4,361 |
|
|
5,985 |
|
Other non-current
liabilities |
|
86 |
|
|
147 |
|
Operating lease liabilities,
net of current |
|
1,703 |
|
|
1,587 |
|
Long-term debt, net of
current |
|
19,152 |
|
|
407 |
|
Total liabilities |
|
65,118 |
|
|
78,728 |
|
|
|
|
|
|
|
Stockholders’ deficit: |
|
|
|
|
|
Common stock (1) |
|
2 |
|
|
1 |
|
Additional paid-in
capital |
|
244,373 |
|
|
237,875 |
|
Accumulated deficit |
|
(264,282 |
) |
|
(247,148 |
) |
Total stockholders' deficit |
|
(19,907 |
) |
|
(9,272 |
) |
Non-controlling interests |
|
233 |
|
|
231 |
|
Total liabilities and stockholders’ deficit |
$ |
45,444 |
|
$ |
69,687 |
|
(1 |
) |
Periods presented have been adjusted to reflect the 1-for-10
reverse stock split on October 18, 2022, and the 1-for-20 reverse
stock split on July 5, 2023. |
AGRIFY CORPORATION AND
SUBSIDIARIESCondensed Consolidated Cash Flows
Data(In thousands)
|
Six Months ended |
|
June 30, |
|
June 30, |
|
2023 |
|
|
2022 |
|
Cash flows (used in)
provided by: |
(unaudited) |
|
|
Operating activities |
$ |
(11,634 |
) |
|
$ |
(50,491 |
) |
Investing activities |
|
11,358 |
|
|
|
(29,637 |
) |
Financing activities |
|
(9,873 |
) |
|
|
86,722 |
|
Net (decrease) increase in
cash and cash equivalents |
$ |
(10,149 |
) |
|
$ |
6,594 |
|
Non-GAAP Financial Measures
To supplement our financial information
presented in accordance with generally accepted accounting
principles in the United States, or U.S. GAAP, we use Adjusted
EBITDA, which is a non-U.S. GAAP financial measure to clarify and
enhance an understanding of past performance. We believe that the
presentation of Adjusted EBITDA enhances an investor’s
understanding of our financial performance. We further believe that
Adjusted EBITDA is a useful financial metric to assess our
operating performance from period to period by excluding certain
items that we believe are not representative of our core business.
We use certain financial measures for business planning purposes,
measuring our performance relative to that of our competitors and
determining our compliance with certain debt instruments. We
utilize Adjusted EBITDA as a key measure of our performance.
We calculate Adjusted EBITDA as net loss
attributable to Agrify Corporation adjusted to exclude (i) tax
provision and benefit; (ii) interest income and expense, net; (iii)
other income and expense, net; (iv) depreciation and amortization;
(v) stock-based compensation expense; (vi) acquisition-related
expenses; (vii) investment banker termination fees; (viii)
restructuring charges; (ix) impairments to long-lived assets; (x)
gains and losses associated with the extinguishment of debt; (xi)
changes in the fair value of warrant liabilities; (xii) changes in
contingent consideration; (xiii) legal settlement charges; and
(xiv) other items affecting our results that we do not view as
representative of our ongoing operations, including losses
associated with write-offs.
We believe Adjusted EBITDA is commonly used by
investors to evaluate our performance and that of our competitors.
However, our use of the term Adjusted EBITDA may vary from that of
others in our industry. Adjusted EBITDA should not be considered as
an alternative to net loss before income taxes, net loss
attributable to Agrify Corporation, net loss per share attributable
to Common Stockholders, or any other performance measures derived
in accordance with U.S. GAAP as measures of performance.
Adjusted EBITDA has important limitations as an
analytical tool, and you should not consider it in isolation or as
a substitute for analysis of our results as reported under U.S.
GAAP. Some of the limitations of Adjusted EBITDA include (i)
Adjusted EBITDA does not properly reflect capital commitments to be
paid in the future, and (ii) although depreciation and amortization
are non-cash charges, the underlying assets may need to be replaced
and Adjusted EBITDA does not reflect these capital expenditures.
Our public offering and acquisition-related expenses, including
legal, accounting, and other professional expenses, reflect cash
expenditures and we expect such expenditures to recur from
time-to-time. Our Adjusted EBITDA may not be comparable to
similarly titled measures of other companies because they may not
calculate Adjusted EBITDA in the same manner as we calculate the
measure, limiting its usefulness as a comparative measure.
In evaluating Adjusted EBITDA, you should be
aware that in the future we will incur expenses similar to the
adjustments in this presentation. Our presentation of Adjusted
EBITDA should not be construed as an inference that our future
results will be unaffected by these expenses or any unusual or
non-recurring items. Adjusted EBITDA should not be considered as an
alternative to net loss before income taxes, net loss attributable
to Agrify Corporation, net loss per share attributable to Common
Stockholders, or any other performance measures derived in
accordance with U.S. GAAP. When evaluating our performance, you
should consider Adjusted EBITDA alongside other financial
performance measures, including net loss attributable to Agrify
Corporation and other U.S. GAAP results.
The following table presents a reconciliation of
Adjusted EBITDA from the most comparable U.S. GAAP measure, net
loss attributable to Agrify Corporation, for the three-month and
six-month periods ended June 30, 2023, and 2022:
AGRIFY CORPORATION AND
SUBSIDIARIESReconciliation of U.S. GAAP Net Loss
Attributable to Agrify Corporation to Non-GAAP
Adjusted EBITDA(In thousands)
|
Three Months Ended June 30, |
|
Six Months EndedJune 30, |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
|
|
Net loss attributable to Agrify Corporation |
$ |
(6,805 |
) |
|
$ |
(74,604 |
) |
|
$ |
(17,132 |
) |
|
$ |
(72,824 |
) |
Add: |
|
|
|
|
|
|
|
|
|
|
|
Income tax (benefit)
expense |
|
— |
|
|
|
(62 |
) |
|
|
— |
|
|
|
(262 |
) |
Interest expense, net |
|
400 |
|
|
|
3,311 |
|
|
|
1,199 |
|
|
|
2,752 |
|
Other (income) expense |
|
4 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Depreciation and
amortization |
|
493 |
|
|
|
1,141 |
|
|
|
938 |
|
|
|
2,193 |
|
Stock-based compensation |
|
751 |
|
|
|
940 |
|
|
|
1,611 |
|
|
|
1,893 |
|
Investment banker termination
fees |
|
— |
|
|
|
79 |
|
|
|
— |
|
|
|
716 |
|
Acquisition- related
expenses |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
637 |
|
Restructuring charges |
|
— |
|
|
|
188 |
|
|
|
— |
|
|
|
575 |
|
Impairment charges |
|
— |
|
|
|
69,904 |
|
|
|
— |
|
|
|
69,904 |
|
Loss on extinguishment of
notes payable |
|
11 |
|
|
|
— |
|
|
|
4,631 |
|
|
|
— |
|
Change in fair value of
warrant liabilities |
|
1,048 |
|
|
|
(20,181 |
) |
|
|
(1,624 |
) |
|
|
(30,996 |
) |
Change in contingent
consideration |
|
(638 |
) |
|
|
(907 |
) |
|
|
(1,322 |
) |
|
|
(907 |
) |
Legal settlement |
|
— |
|
|
|
800 |
|
|
|
— |
|
|
|
800 |
|
Adjusted EBITDA |
$ |
(4,736 |
) |
|
$ |
(19,391 |
) |
|
$ |
(11,699 |
) |
|
$ |
(25,519 |
) |
Company Contacts
Agrify Investor
RelationsIR@agrify.com(857) 256-8110
Agrify (NASDAQ:AGFY)
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