Agrify Corporation (Nasdaq: AGFY) will postpone its earnings call for an additional week as preliminary second-quarter results show that it missed expectations during a time when consumer demand for hydroponics is fading. The company announced the unaudited results for the second quarter ending June 30, 2022.
While revenue is expected rose 64% to $19.3 million versus $11.8 million in the second quarter of last year, it’s expected to fall sequentially. The company also reported a second-quarter net loss of $23.5 million, a 320% rise versus a loss of $5.6 million in the same period last year. Adjusted EBITDA (a non-GAAP financial measure) is expected to be a loss of $19.4 million, up 331% versus a $4.5 million loss in the second quarter last year.
The company also gave the market a heads-up that it will be taking a big write-off in the quarter saying it is conducting an impairment analysis. That writeoff is expected to result in “significant non-cash impairment charges.” In addition to the write-downs, Agrify said it talked to its lenders to change some of the financial covenants regarding its debt.
Agrify withdrew its most recent guidance “Given the current difficult macro business environment, and specifically a drastic downturn in the cannabis industry.”
“Management will provide additional information regarding its revenue guidance for the Fiscal Year 2022 in conjunction with the upcoming release of its full second quarter 2022 financial results,” it said. In May, Agrify reported its first quarter revenue increased 271% to $26 million for the first quarter versus $7 million for the prior-year period. It also reiterated its previously provided revenue guidance for the Fiscal Year 2022 to be in the range of $140 million to $142 million.
Stifel analysts Andrew Carter and Christopher Growe recently published an earnings preview report, saying that the “2021/2022 hydroponics recession has been deeper and longer than we originally anticipated with a significantly greater impact to our covered companies than we originally anticipated.”
“But, we contend the hydroponics category will at minimum regress to the underlying demand for cannabis (HSD) with an improvement in durables demand eventually taking hold,” Carter said, adding that he believes it will take time for enthusiasm to return to the sector of hydroponics.