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 $1.1
million in reduced payments, exited additional leased properties
and conducted several fixed asset sales to reduce future
obligations, and completed a legal settlement resulting in a gain
of approximately $0.8 million,” said Raymond Chang, Chairman and
Chief Executive Officer at Agrify. “We are proud of the various
initiatives the Company has taken to turn around our business. The
historically low net loss of $2.1 million is encouraging and good
evidence that we are moving in the right direction. The team
remains committed to turn the business profitable in the shortest
time possible.”
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
SUBSIDIARIESCondensed Consolidated Statements of
Operations(In thousands, except share and per
share amounts)(unaudited) |
|
|
Three Months EndedSeptember
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
SUBSIDIARIESCondensed 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
SUBSIDIARIESCondensed 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
SUBSIDIARIESReconciliation 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 EndedSeptember
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 RelationsIR@agrify.com(857) 256-8110
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