Agrify Corporation Announces Results for Third Quarter 2023
- Successful negotiation with vendors resulted in $1.1 million in reduced payments
- Exited leased properties and conducted fixed asset sales to reduce future obligations
- Completed a legal settlement resulting in a gain of approximately $0.8 million
- Revenue for Q3 2023 was $3.1 million, compared to $7.0 million for Q3 2022
- Gross profit was $1.0 million for Q3 2023, compared to a loss of $(4.1) million in Q3 2022
- Operating expenses decreased to $5.6 million for Q3 2023 from $27.4 million in Q3 2022
- Net loss attributable to Agrify was $(2.1) million for Q3 2023, compared to a net loss of $(57.4) million for Q2 2022
- None.
Insights
The financial results for Agrify Corporation in Q3 2023 indicate a significant reduction in net loss, marking a positive shift towards financial stability. The strategies employed, such as vendor negotiations, property exits, asset sales and a legal settlement, have contributed to this outcome. The reduction in operating expenses, primarily in general and administrative costs, is a notable change from the previous year, reflecting effective cost management.
Investors should consider the company's ability to maintain and build upon these cost-saving measures. The reduction in revenue year-over-year, however, poses a concern for future growth and profitability. Stakeholders should analyze the scalability of Agrify's business model in the evolving cannabis industry and monitor the company's progress in achieving profitability.
From a valuation standpoint, the decrease in net loss per share is substantial. This improvement may affect investor sentiment and the stock's market performance, although it's crucial to assess whether these changes are sustainable in the long-term and if they can be translated into consistent revenue growth.
The cannabis industry is highly competitive and subject to evolving regulations. Agrify's ability to reduce costs significantly while navigating this complex industry is commendable. However, the reduced revenue in Q3 2023 compared to the same quarter the previous year may signal challenges in market demand or sales execution.
It is essential to evaluate the company's market positioning, product offerings and customer acquisition strategies. The industry's growth trajectory and regulatory landscape will also play critical roles in Agrify's performance. Investors should consider market trends, such as the legalization status in various regions and consumer preferences, to assess the potential demand for Agrify's cultivation and extraction solutions.
Understanding the company's competitive edge and innovation in product development can provide insights into its potential to capture market share and drive long-term revenue growth.
The completion of a legal settlement that resulted in a gain of approximately $0.8 million is a significant development. Legal disputes can be a drain on resources and resolving such matters can free up capital and management attention for strategic initiatives.
Investors should be aware of the implications of such settlements on the company's risk profile and future legal outlook. It is also important to consider the nature of the settlement and whether it resolves a one-time issue or relates to ongoing operational risks.
As the cannabis industry is heavily regulated, a company's legal standing and compliance with regulations are critical factors that can impact its operational success and investor confidence.
Successful Implementation of Turn-Around Initiatives Resulted in the Lowest Historical Net Loss
TROY, Mich., Jan. 03, 2024 (GLOBE NEWSWIRE) -- 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 third quarter ended September 30, 2023 (“Q3 2023”).
“In the third quarter, we successfully negotiated with several vendors, resulting in approximately
Third Quarter 2023 Financial Results Summary
- Revenue was
$3.1 million for Q3 2023, compared to$7.0 million for Q3 2022. - Gross profit was
$1.0 million for Q3 2023, compared to a loss of$(4.1) million in Q3 2022. - Operating expenses were
$5.6 million for Q3 2023, compared to$27.4 million in Q3 2022. The decrease is largely due to a decrease in general and administrative costs. - Operating loss was
$(4.6) million for Q3 2023, compared to an operating loss of$(31.5) million for Q3 2022. - Net loss attributable to Agrify was
$(2.1) million for Q3 2023, or$(1.27) per basic and diluted share, compared to a net loss of$(57.4) million , or$(429.98) per basic and diluted share 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, Agrify’s ability to realize a profit on its business, 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 SUBSIDIARIES Condensed Consolidated Statements of Operations (In thousands, except share and per share amounts) (unaudited) | |||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Revenue | $ | 3,139 | $ | 7,019 | $ | 14,009 | $ | 52,369 | |||||||
| Cost of goods sold | 2,165 | 11,135 | 11,447 | 50,703 | |||||||||||
| Gross profit | 974 | (4,116 | ) | 2,562 | 1,666 | ||||||||||
| General and administrative | 4,321 | 24,126 | 16,066 | 53,263 | |||||||||||
| Selling and marketing | 812 | 2,160 | 3,522 | 6,582 | |||||||||||
| Research and development | 486 | 1,747 | 1,864 | 6,269 | |||||||||||
| Change in contingent consideration | — | (602 | ) | (1,322 | ) | (1,509 | ) | ||||||||
| Gain on disposal | (67 | ) | — | (62 | ) | — | |||||||||
| Impairment of goodwill and intangible assets | — | — | — | 69,904 | |||||||||||
| Total operating expenses | 5,552 | 27,431 | 20,068 | 134,509 | |||||||||||
| Loss from operations | (4,578 | ) | (31,547 | ) | (17,506 | ) | (132,843 | ) | |||||||
| Interest expense, net | (363 | ) | (4,654 | ) | (1,562 | ) | (7,404 | ) | |||||||
| Change in fair value of warrant liabilities | 1,975 | 16,268 | 3,599 | 47,234 | |||||||||||
| Gain (loss) on extinguishment of notes payable | — | (38,985 | ) | (4,631 | ) | (38,985 | ) | ||||||||
| Other income (expense) | 874 | 1,506 | 874 | 1,506 | |||||||||||
| Other income (expense), net | 2,486 | (25,865 | ) | (1,720 | ) | 2,351 | |||||||||
| Net loss before income taxes | (2,092 | ) | (57,412 | ) | (19,226 | ) | (130,492 | ) | |||||||
| Income tax benefit | — | — | — | 262 | |||||||||||
| Net loss | (2,092 | ) | (57,412 | ) | (19,226 | ) | (130,230 | ) | |||||||
| (Income) loss attributable to non-controlling interests | — | (1 | ) | 2 | (5 | ) | |||||||||
| Net loss attributable to Agrify Corporation | $ | (2,092 | ) | $ | (57,413 | ) | $ | (19,224 | ) | $ | (130,235 | ) | |||
| Net loss per share attributable to Common Stockholders – basic and | |||||||||||||||
| and diluted (1) | $ | (1.27 | ) | $ | (429.98 | ) | $ | (13.48 | ) | $ | (1,003.10 | ) | |||
| Weighted average common shares | |||||||||||||||
| outstanding – basic and diluted (1) | 1,649,741 | 133,526 | 1,426,016 | 129,832 | |||||||||||
| (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 SUBSIDIARIES Condensed Consolidated Balance Sheets (In thousands) (Unaudited) | ||||||||
| September 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Assets | ||||||||
| Cash and cash equivalents | $ | 154 | $ | 10,457 | ||||
| Restricted cash | — | 10,000 | ||||||
| Marketable securities | 4 | 460 | ||||||
| Accounts receivable, net | 1,187 | 1,070 | ||||||
| Inventory, net | 17,724 | 21,396 | ||||||
| Prepaid expenses and other current assets | 2,136 | 1,510 | ||||||
| Total current assets | 21,205 | 44,893 | ||||||
| Loans receivable, net | 11,298 | 12,214 | ||||||
| Property and equipment, net | 8,385 | 10,044 | ||||||
| Operating lease right-of-use assets | 2,036 | 2,210 | ||||||
| Other non-current assets | 141 | 326 | ||||||
| Total assets | $ | 43,065 | $ | 69,687 | ||||
| Liabilities and Stockholders’ Deficit | ||||||||
| Accounts payable | $ | 22,160 | $ | 20,543 | ||||
| Accrued expenses and other current liabilities | 12,824 | 16,380 | ||||||
| Operating lease liabilities, current | 669 | 734 | ||||||
| Long-term debt, current | 1,140 | 28,833 | ||||||
| Related party debt, current | 500 | — | ||||||
| Deferred revenue | 4,079 | 4,112 | ||||||
| Total current liabilities | 41,372 | 70,602 | ||||||
| Warrant liabilities | 2,386 | 5,985 | ||||||
| Other non-current liabilities | — | 147 | ||||||
| Operating lease liabilities, net of current | 1,550 | 1,587 | ||||||
| Long-term debt, net of current | 18,998 | 407 | ||||||
| Total liabilities | 64,306 | 78,728 | ||||||
| Stockholders’ deficit: | ||||||||
| Common stock (1) | 2 | 1 | ||||||
| Additional paid-in capital | 244,898 | 237,875 | ||||||
| Accumulated deficit | (266,374 | ) | (247,148 | ) | ||||
| Total stockholders' deficit | (21,474 | ) | (9,272 | ) | ||||
| Non-controlling interests | 233 | 231 | ||||||
| Total liabilities and stockholders’ deficit | $ | 43,065 | $ | 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 SUBSIDIARIES Condensed Consolidated Cash Flows Data (In thousands) (Unaudited) | |||||||
| Nine Months ended | |||||||
| September 30, | September 30, | ||||||
| 2023 | 2022 | ||||||
| Cash flows (used in) provided by: | |||||||
| Operating activities | $ | (25,940 | ) | $ | (58,020 | ) | |
| Investing activities | 25,235 | (4,135 | ) | ||||
| Financing activities | (9,598 | ) | 52,292 | ||||
| Net (decrease) increase in cash and cash equivalents | $ | (10,303 | ) | $ | (9,863 | ) | |
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 nine-month periods ended September 30, 2023, and 2022:
| AGRIFY CORPORATION AND SUBSIDIARIES Reconciliation of U.S. GAAP Net Loss Attributable to Agrify Corporation to Non-GAAP Adjusted EBITDA (In thousands) (Unaudited) | |||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Net loss attributable to Agrify Corporation | $ | (2,092 | ) | $ | (57,413 | ) | $ | (19,224 | ) | $ | (130,235 | ) | |||
| Add: | |||||||||||||||
| Income tax (benefit) expense | — | — | — | (262 | ) | ||||||||||
| Interest expense, net | 363 | 4,654 | 1,562 | 7,404 | |||||||||||
| Other (income) expense | (874 | ) | (1,506 | ) | (874 | ) | (1,506 | ) | |||||||
| Depreciation and amortization | 531 | 401 | 1,469 | 2,602 | |||||||||||
| Stock-based compensation | 524 | 1,646 | 2,136 | 3,538 | |||||||||||
| Investment banker termination fees | — | — | — | 637 | |||||||||||
| Acquisition- related expenses | — | — | — | — | |||||||||||
| Restructuring charges | — | 1,287 | — | 1,862 | |||||||||||
| Impairment charges | — | — | — | 69,904 | |||||||||||
| Loss on extinguishment of notes payable | — | 38,985 | 4,631 | 38,985 | |||||||||||
| Change in fair value of warrant liabilities | (1,975 | ) | (16,268 | ) | (3,599 | ) | (47,234 | ) | |||||||
| Change in contingent consideration | — | (602 | ) | (1,322 | ) | (1,509 | ) | ||||||||
| Legal settlement | — | — | — | 800 | |||||||||||
| Adjusted EBITDA | $ | (3,523 | ) | $ | (28,816 | ) | $ | (15,221 | ) | $ | (55,014 | ) | |||
Company Contact
Agrify Investor Relations
IR@agrify.com
(857) 256-8110
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