Agrify Archives - Green Market Report

Adam JacksonAugust 19, 2022
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6min200

XS Financial closed on a $24 million line of credit with Needham Bank committing $20 million and acting as the administrative agent. XS Financials’ existing $4 million line of credit with an FDIC-insured bank will be retired, and the same bank will contribute $4 million in the new loan.

“With many capital sources in the industry experiencing a near-term pullback in financing, we are thrilled to continue funding our target borrowers at scale for their critical expansion projects,” XSF CEO David Kivitz said.

XSF fully retired its $15 million line of credit with the Garrington Group concurrently with the closing of this loan.

The new loan has a term of two years, expiring in August 2024. Loans made under the line of credit will bear interest at an annual rate equal to the Wall Street Journal Prime rate plus 1%, with a floor of 6%, and may be prepaid with no penalty at any time.

This credit facility is a strong indication of James’ and our lenders’ ability to offer credit solutions tailored to the unique needs of a company and underscores the strength of our nationwide banking platform in the fast-growing cannabis market,” Needham Bank CEO Joseph Campanelli said.

IM Cannabis issues financing 

IM Cannabis also said that it will issue $5 million worth of nonbrokered financing – similar to a stock split. The company intends to use the proceeds from the offering for general working capital purposes.

Following the deal, the company may issue up to 10 million common shares at a price of 50 cents per common share. The deal is expected to close on or about Aug. 22.


Adam JacksonAugust 15, 2022
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5min60

Agrify Corporation (Nasdaq: AGFY) up-ticked in early trading Monday despite the company posting results far below analysts’ expectations — showing the waning demand for hydroponics amid the economic slowdown.

The data-forward cannabis cultivator delivered its financial results for the first quarter ending June 30, 2022. Agrify delivered approximately $19.3 million in total revenue during the period, a gain of 63.5% versus the same period last year — though missing the Yahoo Finance Average analyst estimate for revenues of $26.1 million.

The company also reported a second-quarter net loss of $93.4 million versus a net loss of $9.4 million in the same period last year. The earnings were for a loss of $3.51 per share, below analysts’ loss estimates of $0.43 cents a share.

“The second quarter was challenging for the entire cannabis industry,” said CEO Raymond Chang. “Despite this difficult business environment, which has impacted our recent performance and altered our outlook for the remainder of 2022, we are actively taking steps to adapt to the new market realities.

Agrify said that its operating expenses totaled $93.1 million for the second quarter versus $6.0 million in the prior year period. Operating expenses were $107.1 million for the year-to-date period versus $11.9 million in the prior year-to-date period.

“The comparative 2022 increases in both our second quarter and year-to-date operating expenses are largely attributable to impairment charges of $69.9 million, increases to reserves associated with accounts receivable, loans receivable, inventory obsolescence, and warranty costs, increases in depreciation and amortization, and changes in contingent consideration related to the fair value estimates associated with ongoing acquisition-related earnout arrangements,” the company said.

Agrify is lowering its guidance for 2022 revenue, “Given the current difficult macro business environment, and specifically a drastic downturn in the cannabis industry,” it said in a preliminary release statement last week. Agrify’s new forecasted range for revenue is $70 million$75 million, far below a range of $140 million and $142 million in the previous quarter.

Adjusted EBITDA was a loss of $19.4 million in the second quarter of 2022, versus a loss of $4.5 million in the same period last year.

“We have adjusted our near-term strategy and priorities to focus on the most immediate and impactful revenue-generating opportunities, all without compromising our ability to capitalize on the expected long-term growth in the sector,” Chang said. “In parallel, we are also in the process of restructuring our credit facility and reducing our operating expenses to strengthen our cash position. We remain steadfast on bringing new and innovative solutions to our customers and delivering value to our stakeholders.”

Warning Signals

Last week, the company gave the market a heads-up that it took a big write-off in the quarter, saying it is conducting an impairment analysis. That write-off 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.

Stifel analysts Andrew Carter and Christopher Growe earlier the month 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.


Adam JacksonAugust 8, 2022
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3min300

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.

Warnings

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.

 


Debra BorchardtMay 11, 2022
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3min240

Agrify Corporation (Nasdaq: AGFY)  announced financial results for the first quarter ended March 31, 2022, as revenue increased 271% to $26 million for the first quarter versus $7 million for the prior-year period. This was also higher than Agrify’s fourth-quarter revenue of $25.3 million and beat the Yahoo Finance average analyst estimate for revenues of $25..3 million. The stock price was up by over 6% in early trading to lately sell at $2.60.

The net loss for the first quarter was $8.9 million, or $0.36 per diluted share, compared to a net loss of $3.8 million, or $0.33 per diluted share, in the prior-year period. The earnings missed the estimates, which were ($0.33) per share.

Agrify reiterated its previously provided revenue guidance for the Fiscal Year 2022 to be in the range of $140 million to $142 million.

“Increased customer adoption across our product lines not only fueled our Q1 growth but also helped strengthen the foundation for future high-margin recurring revenue streams, which we expect to begin to realize later this year,” said Raymond Chang, Chairman and Chief Executive Officer of Agrify. “We continue to make tremendous progress on the successful execution of our growth strategy as we expand our Vertical Farming Units (“VFUs”) and extraction customer base, selectively enter new limited-license states and international markets, and innovate and improve our product offerings.”

Agrify reported that its operating expenses were $13.9 million for the first quarter, compared to $6.0 million in the prior-year period. The comparative increase in the first-quarter operating expenses is largely attributable to overall growth in the scale of the company’s core business and recent acquisitions, increases in amortization expense associated with the intangible assets identified as part of the Company’s recently completed acquisitions, direct acquisition-related costs, an investment banker termination fee, and restructuring charges.

Cash flow used in operating activities was $34.2 million for the first quarter, compared to $7.3 million in the prior-year period. First-quarter 2022 cash flows used in operating activities related to the increase in inventory associated with the current and future construction of the Company’s VFUs, current quarter operating performance, first quarter renewals of insurance policies, and the capitalization of debt issuance costs.


Debra BorchardtApril 25, 2022
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Cannabis investors have seen stock prices tumble even as cannabis companies report increasing sales. Green Market Report recently asked some leaders in the cannabis industry how they felt about the market in general despite the market pessimism.

Brandon Pollock, CEO and Co-founder of Theory Wellness

Theory Wellness, Inc. is an independently owned and operated vertically integrated cannabis brand. The company operates retail, cultivation, and product manufacturing across Massachusetts and Maine, including the cannabis-infused seltzer brand Hi5. 

  • Leading analysts have recently projected reduced short-term cannabis industry growth, with a less than optimistic outlook for federal reform. Do you agree with this projection?

From our view, no, we feel as optimistic as ever about the growth and future of regulated cannabis and have no concerns about the trajectory of the market. In our view, stock market prices are not a good indication of actual on-the-ground performance and the expectations of many independent operators. Especially on the East Coast, we’re expecting explosive growth in the next few years as New York, New Jersey, and Connecticut implements adult-use sales. On the Federal side, it’s only a matter of time before cannabis becomes legal, as it is one of the policies most supported by the American populace.

  • What may be causing the current market pessimism? 

Generally, it seems this pessimism has risen from the sluggishness of Federal reform coupled with the underperformance of publicly traded cannabis companies. We’ve seen multiple large-scale multi-state operators (MSOs) posting revenue misses or struggling with profitability. From our view, we are slightly surprised by how much the market seems to value Federal changes in law, as many organizations are not prepared to handle such a monumental shift in the first place, and many businesses ascribe significant value to the moats they build around themselves on a state-by-state basis – especially in markets with limited numbers of licenses. 

  •  Do you agree with analysts who are saying that the current landscape will help MSOs consolidate the industry? If so, what is the projected industry impact? 

We would generally disagree – many consolidation strategies and deals are based on using stock as currency, and with depressed stock prices and heightened uncertainty of the future, many independent operators will be wary of deals that may have looked attractive twelve months ago. The only exception may be increased activity from smaller publicly traded companies combining all stock transactions with larger counterparts.

  • When can we expect market projections to turn back around? Federal legalization prospects?

On a macro scale, both are contingent on one another. The larger MSOs betting big on legalization cast the most considerable shadow over the industry. Until legalization starts to loom, market forecasts may not brighten. However, we still believe that smaller independent operators in the industry might be running with a narrative contrary to the gloomy forecast surrounding the largest operators.

Andrew Thut, Chief Investment Officer at 4Front Ventures

Headquartered in Phoenix, AZ, 4Front Ventures Corp. (CSE: FFNT) (OTCQX: FFNTF) is a national, vertically integrated multi-state cannabis operator with operations in strategic medical and adult-use cannabis markets, including California, Illinois, Massachusetts, Michigan, and Washington. 

  • Leading analysts have recently projected reduced short-term cannabis industry growth, with a less than optimistic outlook for federal reform. Do you agree with this projection?

It’s true that MSOs and cannabis stocks, in general, have sold off over the last year, but there’s a bigger question here: are companies struggling from a business perspective? Right now, there is a risk-asset sell-off and overall market volatility. As such, growth stocks like those involving MSOs, for example, have been selling off. Perceptions around the larger cannabis markets have also been under pressure recently. Take sentiment around California as an example; challenges such as pricing pressures, oversupply, and the illicit market continue to affect confidence in the sector. We feel differently here at 4Front, and see the huge opportunity to take advantage of those same perceived challenges and have focused accordingly. Production of low-cost, high-end products with scale efficiencies is a proven 4Front strategy that will allow us to build real value in the largest cannabis market in the world, while challenging public perspective along the way. 

  • What may be causing the current market pessimism? 

Our view is that current market sentiment is due to SAFE banking and cannabis liberalization being stalled, temporarily we believe, at the federal level. Legalization and liberalization will be major steps forward, but at the end of the day, they won’t transform enough of the sector to prevent risk-asset sell-off; ultimately, strong and reputable companies will be the ones to do that. Meanwhile, we can’t just sit idly by and wait for wide-sweeping federal reforms to be enacted. When Biden won, there was a lot more optimism that such reforms would be enacted – but with a split Congress, intense party allegiances, and the unwillingness of politicians to work with their counterparts across the aisle, reform measures have stood in limbo. This has led to disillusionment among investors, which has further hindered industry momentum. Whether you’re talking about 4Front, the folks at Cresco, Trulieve or another top-performing MSO, we are all going to continue focusing on building robust businesses, optimizing our production processes, building consumer awareness and loyalty, and strengthening our fundamentals. 

  • Do you agree with analysts who are saying that the current landscape will help MSOs consolidate the industry? If so, what is the projected industry impact? 

We agree with those analysts who believe the current landscape will help MSOs consolidate the industry. Smaller companies with less capital and less efficient processes will benefit from being acquired by larger companies that have optimized production and scaling capabilities. In the case of 4Front, we feel the innovative automation processes we’ve developed in California at our state-of-the art Commerce facility could easily be applied to a broader portfolio and an even larger footprint, realizing nearly immediate value in a consolidated model. We know that other operators have similarly improved their processes, which will lead to further inevitable consolidation. Increased consolidation will bring greater efficiencies and innovation, which will ultimately benefit consumers as prices will be more affordable and there will be more refined, higher quality, consistent products on the market. 

  • When do we expect market projections to turn back around? Federal legalization prospects?

Even as the House just passed SAFE banking for the sixth time, it is yet again doubtful that the Senate will follow suit before the midterms. Without SAFE banking, US institutional investors are still locked out of the market. Their hands are tied. But on the flip side, this presents a huge opportunity for retail investors, who under normal circumstances would only hear about companies like 4Front after all institutional money has already flowed in.

I have spent a lot of time on the buy-side in the small-cap space, and what we’re seeing in U.S. cannabis is truly unique. No other industry has as many quality high-growth companies with solid fundamentals and sustained profitability with such low valuations. With that in perspective, investors’ concerns about the future of cannabis are a bit shortsighted. Investors need to focus on well-run, well-capitalized, promising cannabis companies with good long-term prospects, and then adopt a buy and hold strategy. Eventually, the wider market will care – and when it does, it will care a LOT. To get ahead, I think investors need to think about 4Front and the other MSOs as they would a business in any other sector: you’re buying a share of a business – is the business solid? At 4Front, we’re growing and doing it in a way that supports the bottom line; on top of this, investors should keep the following in mind: cannabis is a kicker that will provide a huge upside when inevitable regulatory reform passes.

Robert McEvoy, Vice President of Customer Success, Corporate Development, and Government Affairs at Agrify Corp.

Agrify Corp. is a rapidly growing developer of premium grow solutions for the indoor agriculture marketplace. 

  • Leading analysts have recently projected reduced short-term cannabis industry growth, with a less than optimistic outlook for federal reform. Do you agree with this projection?

The notion that cannabis outlooks are less than rosy is inconsistent with national acceptance perspectives, high-profile celebrity involvement, and increased M&A and investment activity. Looking ahead, more and more states are actively considering implementing adult-use sales, establishing medical programs, or expanding existing markets. Over the last year, New Jersey and New York have taken significant steps in launching adult-use programs projected to be multi-billion dollar markets for each state. States such as Ohio and Oklahoma have not only built robust medical industries but have created profitable single-state operators primed for expansion in and out of state. Further, the new wave momentum of purpose-built companies and products that focus on social equity, sustainable agriculture, and delighting an increasingly segmented customer base, is fostering a fertile environment for existing brands to be reborn, and providing new-to-world products an inclusive space to succeed.

  • What may be causing the current market pessimism? 

Short-term cannabis faced two impactful circumstances back-to-back over the last two years: a vaporizer crisis fueled by illicit products making consumers sick, and a global pandemic resulting in lockdowns and supply chain problems. That said, state regulators’ mistrust of unfamiliar vaporizer products was met with credible lab-based testing and transparency in operator quality control programs – each of which bolstered consumer confidence and highlighted bad actors, both legal and illegal. Counterfeit and cheap products have penetrated non-regulated consumer channels for centuries, so I can’t realistically call adverse reactions to carelessly made, non-tested illicit products with harmful additives an unforeseen circumstance. However, accurate and informative health and safety campaigns should have been carried out more responsibly, particularly by state agencies tasked with helping the public differentiate between safe, lab-tested products and non-compliant mystery oil. Regarding the pandemic, clearly its global presence and reach were unexpected – but beginning in February 2020, operators throughout the industry had a choice: either acknowledge and proactively plan for an unknown timeline of the virus’ impact, or continue business as usual with minimal adjustments, troubleshooting as time goes on. A large part of succeeding in this industry is accepting unpredictability and remaining operationally nimble.

  • Do you agree with analysts who are saying that the current landscape will help MSOs consolidate the industry? If so, what is the projected industry impact? 

Consolidation is an inevitability of any industry, no matter the commodity or service that is monetized. While MSO acquisitions will continue, so will the development of joint venture partnerships between single state operators creating rapid multi-state market share. There’s an increase in new state initiatives aiming to empower local residents, small to midsize businesses, and regionally popular brands through micro-licenses with future expansion capabilities and uncapped operator counts. In terms of industry impact, why should we think cannabis CPGs would be any different from the multitude of products currently produced by large and small companies alike? Ultimately, the customer is in control of where they spend their money and what they spend it on. The industry will continue to be shaped by operators who listen to their customer base in all aspects, from production practices to lifestyle identity. 

  • When can we expect market projections to turn back around? Federal legalization prospects?

My optimism has never left the market potentials and projections discussion. In fact, with brand licensing, white labeling, contract services, and expanded licensing categories to include onsite consumption and home delivery, more growth opportunities exist today than ever before. As for federal legalization, prospects have never been within industry grasp, and will not be any time soon. I think it is more likely that states with similar programs that share borders will build governmental coalitions to allow for interstate transport, shared resource allocation, and tax collection, placing consequent pressure on the federal government to act before the legislative and executive branches enact reform on their own.

Brooke Butler, VP of Partnerships, Simplifya

Headquartered in Denver, CO, Simplifya is the leading advanced technologies and software platform powering regulatory and operational compliance for owners, operators, insurers, law firms, municipalities, governments; regulatory bodies; and cannabis-related banking and financial institutions with remaining compliant under FinCEN Cannabis Banking Guidance. 

  • Leading analysts have recently projected reduced short-term cannabis industry growth, with a less than optimistic outlook for federal reform. Do you agree with this projection?

While certain parts of the cannabis industry may have experienced a downturn, others like our business saw steady to accelerated growth. There has certainly been disappointment and disillusionment over the Biden administration not enacting legalization at the federal level, but I expect more states to take legalization into their own hands, making federal reform less and less of a growth hindrance. Just because there is currently market volatility and risk-asset sell-off, this does not reflect the overall health of the cannabis sector. In fact, we expect to see continued growth as several key markets such as New York, New Jersey, New Mexico and more are in the process of getting their adult-use programs off the ground and running, increasing consumer access to legal cannabis. 

  • What may be causing the current market pessimism? 

There were high expectations after the 2020 national election that the incoming Biden administration would push for federal reform, at least on some level, but the lack of movement on that front has disappointed a lot of investors. While I personally had a more hopeful outlook for some widespread cannabis reform being enacted at the federal level, I was not surprised by the market reaction and how quickly sentiments changed when it became clear federal reform likely wouldn’t pass before midterms. Even aside from cannabis, the stock market as a whole is performing poorly, and investors have been selling their shares in promising companies that are not yet profitable. Expectations have lowered across the board and this has exacerbated the downward pressure on cannabis stocks. 

Many investors seemed to think federal legalization would be a magic bullet without which the industry would suffer – however we have seen that is not the case. Cannabis companies are still blazing forward, optimizing their strategies and fortifying their business. Due to the hindrances brought on by the lack of federal legalization, cannabis companies have been forced to be agile and tactical to compete, and this has bolstered the sector as a whole. While ultimately we’re striving for federal legalization, to really get capital into the space, legalization alone will not suffice. Institutional investors need effective means of vetting companies to recognize worthy prospects. The way we’ll get there is with more companies utilizing RegTech solutions to demonstrate their compliance and organizational strengths.

  • Do you agree with analysts who are saying that the current landscape will help MSOs consolidate the industry? If so, what is the projected industry impact? 

Yes, I think we will undoubtedly continue to see consolidation in the industry. Interest rates are projected to rise and smaller companies will have an even harder time accruing the capital necessary to build out operations and scale, so they will benefit by being acquired by larger, more established companies. On the flip side, given the fractured regulatory landscape and the fact that interstate commerce is not on the horizon, larger companies will benefit from acquiring smaller companies that already have operations in place in states they want to enter. Larger cannabis companies are not banking on interstate commerce becoming a reality anytime in the imminent future, so they’re opting for M&A to foster growth in new markets.  That being said, I hope we see individual states helping to lower the barriers to entry for social equity licensees and smaller operators so we can establish a balance as the industry continues to grow. M&A should not be the only path forward for small businesses to survive.

  • When do we expect market projections to turn back around? Federal legalization prospects?

It is difficult to surmise when optimism will return to the market, as you never know with politics how things are going to shake out, but I do think people will look to see if and how cannabis reform is framed and discussed leading up to the midterm elections. The election results, as well as the rhetoric candidates use to discuss cannabis, will give us a clearer projection on what the path to federal legalization will look like. Outside of federal legalization efforts, you have to keep an eye on SAFE Banking; if that passes, it would make a huge positive impact on market sentiment.

Rob Sechrist, President of Pelorus Equity Group and Co-Manager of the Pelorus Fund

Headquartered in Newport Beach, CA, Pelorus Equity Group is the largest privately held provider of value-add bridge commercial real estate loans to entrepreneurs operating cannabis-use properties. The Company’s Pelorus Fund, a private mortgage real estate investment trust (“mREIT”), offers a range of innovative transactional solutions addressing the diverse needs of real estate investors and portfolio managers.

  • Leading analysts have recently projected reduced short-term cannabis industry growth, with a less than optimistic outlook for federal reform. Do you agree with this projection?

Yes and no. Last year, we experienced 434% year-over-year growth, and many other ancillary businesses also saw astounding growth in the sector. With operators moving into new states, much of our growth was fueled by a surge in build-outs, expansions and improvements. Some analysts in the marketplace may be failing to take a hard look at the long-term growth that we expect to see when these buildouts are operational. On paper, that revenue is not yet online for many of the operators, but it will be. So while there’s a mix of companies that are currently seeing sustainable growth and others that are lagging behind, this is only part of the story. Analysts should consider innovative companies that have not yet achieved growth but are expected to in the near future. Long term, we are confident that the sector will be one of the best growth opportunities in a generation. 

  • What may be causing the current market pessimism? 

Though the cannabis industry has added hundreds of thousands of jobs, millions in tax dollars, and large-scale infrastructure projects without receiving government handouts, the current administration appears reluctant to use any remaining political capital on driving cannabis legislation. Unfortunately, despite the public comments supporting cannabis reform during the run up to the last election, government inertia in this sector is far from surprising; it’s certainly caused a lot of disillusionment and pessimism, which has been holding back the industry as a whole. One way for the current administration to signal to the country that they are pro-cannabis would be to reinstate the Cole Memo, which was rescinded in 2018. The Cole Memo laid out key guidelines for what federal representatives should focus on in enforcing cannabis, which created a sustainable framework where legal cannabis industries and federal enforcement agencies could peacefully coexist. The rescission brought more uncertainty and fear in the eyes of investors; if the government were to reinstate, this would bring about more optimism in the cannabis space. 

  • When do we expect market projections to turn back around? Federal legalization prospects?

Perhaps this is a bit bleak, but I think the prospect of federal legalization will likely only be attainable once the next administration, whether it be Democrat or Republican, has majority control of both the House and the Senate. The stark divide between parties has unfortunately become a defining characteristic of modern American politics, and as a result, progress for cannabis on the federal level has been at a standstill. In the meantime, we need to keep educating investors and shift general rhetoric away from the notion that federal legalization will be a catch-all to uplift this industry. There are many cannabis companies that have managed to thrive without federal legalization and this demonstrates the ingenuity and agility that characterizes much of the sector. If investors focus more on company fundamentals and specific state legislative actions that open the doors to more prosperity in the cannabis space, there will be revitalized optimism

 


Debra BorchardtMarch 23, 2022
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3min260

Agrify Corporation (Nasdaq: AGFY)  announced financial results for the fourth quarter and fiscal year ended December 31, 2021, with revenue rising 481% to $25.3 million for the fourth quarter over last year’s $4.4 million for the same time period. It was also a big jump over the third quarter’s revenue of $15.8 million. Agrify delivered a net loss for the fourth quarter of $13.3 million, or $0.60 per diluted share, compared to a net loss of $13.1 million, or $2.23 per diluted share, in the prior-year period.

Full Year Results

Revenue was $59.9 million for the fiscal year of 2021, an increase of 395% versus $12.1 million for the prior-year period. The net loss totaled $32.5 million, or $1.69 per diluted share, for the fiscal year, compared to a net loss of $21.6 million, or $5.32 per diluted share, in the prior year.

“During 2021, we drove significant year-over-year growth, launched our Total Turn-Key Solution for cannabis cultivators, created a significant backlog of future high-margin recurring revenues, drove tremendous pipeline velocity, implemented innovative technological advancements to our Vertical Farming Unit, and established ourselves as the leader in premium extraction solutions through a series of well-executed acquisitions,” said Raymond Chang, Chairman and Chief Executive Officer of Agrify. “We look forward to continued accelerated growth in 2022 and beyond.”

Operating expenses were $19.0 million for the fourth quarter, compared to $3.9 million in the prior-year period. Operating expenses were $40.3 million for the fiscal year, compared to $13.2 million in the prior year. The comparative increase in our fourth-quarter operating expenses is largely attributable to $10.4 million of one-time expenses related to direct acquisition costs, incremental expense related to the addition of Precision Extraction Solutions and Cascade Sciences operations, a change in contingent consideration, an increase in reserves, an increase in depreciation and amortization, and an increase in stock-based compensation.

Outlook

As a result of the strong demand for Agrify’s cultivation and extraction solutions, management said it is expecting revenue to be in the range of $140 million to $142 million for the fiscal year 2022. The company also said that cumulatively, all of the 10-year agreements under Agrify’s TTK Solution program are projected to generate an estimated $837 million in total revenue.


Debra BorchardtFebruary 2, 2022
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4min310

Agrify Corporation (Nasdaq: AGFY)  is buying the distillation company Lab Society in a deal valued at $8 million. Agrify said in a statement that Lab Society’s annual revenue for 2021 was approximately $10 million, and the acquisition is expected to be accretive in early 2022. The acquisition is part of Agrify’s strategy to expand beyond just lighting and cultivation software. 

“We are ecstatic to add Lab Society to our portfolio of high-quality extraction solutions,” said  Raymond Chang, Chairman, and CEO of Agrify. “As federal legalization edges closer to reality, we believe the United States government will likely increase its role in setting the quality,  consistency, and safety standards for medical and recreational cannabis products. By owning  the top key solutions that produce the highest quality and the widest range of extracted cannabis  products at scale, we expect it will provide Agrify with a significant competitive differentiation,  enhanced customer value-add, superior industry leadership position and significant growth  opportunities globally.” 

Since September 2021, Agrify has been on a tear buying up companies in the extraction space. These acquisitions include Precision Extraction Solutions, which is involved in developing and producing high-quality hydrocarbon extraction solutions, Cascade Sciences which is known for developing and producing high-quality vacuum purge ovens and decarboxylation ovens, and also PurePressure, a maker of high-quality solventless extraction solutions. Lab Society brings distillation and solvent separation extraction solutions to the table.

Despite a recent short-seller report, Agrify stock has been moving higher over the past few days. Shares were lately selling at $6.39, moving up from a recent low of $5.28.

Purchase Details

The purchase price for Lab Society consists of $4 million in cash and $4 million in unregistered shares of Agrify common stock, subject to adjustments as set forth in the definitive agreement. There is also an additional earn-out opportunity of up to $3.5 million if the revenue generated from Lab Society’s products reaches certain milestones in 2022 and 2023. 

Lab Society was founded in 2015 and is headquartered in Boulder, Colorado. The company has a proprietary software, called EliteLab that provides the comprehensive ability to maximize hardware utilization featuring control of temperature control units (TCUs), pressure controllers and gauges, balances, and scales, and agitation stir controllers. The company said that the ability to take cannabis compounds distilled into their pure forms, and then recombine them into specific,  purposeful end-products could have significant potential for the pharmaceutical industry in the future. 

“We are excited to be a part of Agrify’s extraction division,” said Michael Maibach Jr., Founder  and CEO of Lab Society. “With a much larger sales team and additional resources, we are  excited to be in a position to drive rapid growth and future innovative product development.”

 


StaffJanuary 26, 2022
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3min250

Agrify Corporation (Nasdaq: AGFY) has entered into securities purchase agreements with an institutional investor and other accredited investors in a private placement transaction raising approximately $27.3 million. The offering is expected to close on or about January 28, 2022. Agrify said it plans to use the net proceeds from the offering for general corporate purposes, including, among other things, working capital, product development, acquisitions, capital expenditures, and other business opportunities.

Offering Details

According to a company statement, Agrify will issue and sell 4,020,994 shares of common stock or, in lieu of Common Stock, pre-funded warrants and accompanying warrants exercisable six months from closing to purchase up to 3,015,745 shares of Common Stock for a period of five years at an exercise price of $7.48 per share. The Common Stock and Warrants will be sold at a combined purchase price of $6.80. Members of management and the Board, including Raymond Chang, the Chairman and Chief Executive Officer of the Company, participated in the Offering on the same terms as the other investors except for a combined purchase price of $6.90. The Company expects to receive gross proceeds from the Offering of approximately $27.3 million before deducting placement agent fees and estimated offering expenses.

Agrify recently closed its acquisition of PurePressure, a company that has solventless extraction and advanced ice water hash processing equipment in the cannabis and hemp industry. With the acquisition of PurePressure, Agrify has strengthened its rapidly expanding extraction division by adding best-in-class solutions to its product portfolio in two of the fastest-growing subcategories in the cannabis and hemp extraction market. In addition to its other extraction solutions, Agrify can now offer its customers premium solventless processing products and rosin presses to support any operation, big or small. The Company also inherits PurePressure’s intellectual property, talent, and stellar reputation for quality, reliability, precision, control, and exceptional customer service. PurePressure’s annual revenue for 2021 is approximately $10 million, and the acquisition is expected to be accretive in early 2022. By combining PurePressure with Precision Extraction Solutions and Cascade Sciences, two other recent acquisitions made by Agrify, the company has formed the largest and the most powerful cannabis and hemp extraction solution provider in the world.


Debra BorchardtJanuary 20, 2022
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Agrify Corporation (Nasdaq: AGFY) reported that its fourth-quarter 2021 new bookings exceeded $250 million and the company reaffirmed its fourth-quarter 2021 revenue guidance of $26 million to $28 million, subject to the completion of its standard audit process.

“Our record-high revenue and bookings this quarter are a testament to the current strength of our business and our growth trajectory,” said Raymond Chang, Chairman, and CEO of Agrify. “2021 was a transformational year for Agrify. We have seen significant and consistent improvement in our financial results quarter-over-quarter. Additionally, the introduction of our TTK Solution has proven to address multiple pain points in the rapidly evolving cannabis and hemp industry, while simultaneously creating compelling and long-term value for our shareholders. We look forward to providing a more detailed update on our recent progress and future prospects during our next earnings call.”

The more than $250 million in new bookings for the fourth quarter of 2021 is $150 million greater than the previously provided fourth-quarter guidance of $100 million and over $220 million greater than the bookings the company generated in the third quarter of 2021. The new bookings are an operational metric comprised of Agrify’s sales of its state-of-the-art cultivation and extraction solutions, including its Vertical Farming Units, as well as the expected revenue from Agrify’s Total Turn-Key Solution agreements over the first three years of cultivation. The company said it expects to generate substantially more value over the full 10-year term of the TTK partnerships.

The Agrify TTK Solution is a first-of-its-kind program in which Agrify partners with qualified cannabis and hemp cultivators in the early phases of their business plans and provides critical support over a 10-year period, which includes: access to capital, design, and buildout of their cultivation and extraction facilities, state-of-the-art cultivation and extraction equipment, process design, training, implementation, data analytics, and consumer branding. The company was recently the subject of a short-seller attack that criticized Agrify for working with early-stage companies suggesting that Agrify was working with unlicensed producers. The stock has lost half its value since that report was issued.

Despite that, Agrify noted that it has contractual commitments for over 3,000 VFUs that will be powered by the Agrify Insights SaaS cultivation software as well as the value-added services mentioned above. Cumulatively, all of the 10-year agreements under Agrify’s TTK Solution program are currently projected to generate an estimated $850 million in total revenue.

 


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