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A Week Marked By Financial Results
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This Week in Indoor Farming
Kalera PLC, which recently filed for Chapter 11 bankruptcy, has announced the sale of its subsidiary Vindara Inc. to Sandton Capital Solutions Master Fund V, L.P., according to the latest fillings published by the company. The deal, finalized on May 5, 2023, was carried out through Kalera’s subsidiary, Kalera SA, and marks a significant step in the company’s ongoing restructuring efforts.
Vindara Inc., a seed development enterprise specializing in the indoor farming sector, was wholly owned by Kalera before the sale. As part of the stock purchase agreement (SPA), Sandton Capital acquired 100% of the issued and outstanding common shares of Vindara, with a par value of $0.0001 per share, termed the “Transferred Shares.”
The transaction, which took effect on May 5, 2023, saw the Transferred Shares sold for approximately $3.99 million. This sum notably includes the forgiveness of a $3.3 million debt that Kalera Inc. owed to Sandton Capital, a condition subject to certain adjustments as specified in the SPA.
Hydrofarm Holdings Group, Inc. (HYFM), a leading manufacturer and distributor of hydroponics equipment and supplies, has released its first-quarter results, showing a decrease in net sales and gross profit compared to the previous year’s first quarter.
Net sales fell to $62.2 million, a substantial drop from the $111.4 million reported in the first quarter of 2022. In addition, gross profit decreased, dropping to $11.4 million from $16.6 million. However, the company’s adjusted gross profit was reported at $14.1 million, compared to $22.3 million in the prior year. Despite these declines, Hydrofarm improved its gross profit margin to 18.3% of net sales, up from 14.9%, with the adjusted gross profit margin rising to 22.6% from 20.0%.
According to the company’s report, they experienced a net loss of $16.8 million, or $0.37 per diluted share, better than the net loss of $23.3 million, or $0.52 per diluted share in Q1 2022. However, the Adjusted EBITDA decreased to $2.1 million, lower than the $3.1 million loss in the same period last year.
Bradley Nattrass, Chairman, and CEO of urban-gro (UGRO), presented the first quarter 2023 financial results, highlighting the company’s strategic direction and focus on operational efficiency and long-term profitability. He stated, “Our first quarter performance is consistent with our expectations as we continue demonstrating that the acquisitions and investments we made have created a more durable and uniquely diversified company.”
In Q1 2023, revenue was $16.8 million, down from $21.1 million in the prior year. This decrease was partially offset by $10.2 million in construction design-build revenue growth related to the acquisition of Emerald C.M. in the second quarter of 2022. In addition, the company’s gross profit was $2.8 million, or 17% of revenue, down from $4.9 million, or 23% of revenue, in the prior year. The decrease in gross profit was primarily driven by a decrease in higher-margin equipment revenue offset by an increase in lower-margin construction design-build revenue.
UGRO’s operating expenses rose by $2.1 million, bringing the total to $7.9 million compared to the previous year’s $5.8 million. This resulted in a net loss of $5.1 million, or $0.48 per share, compared to the prior year’s net loss of $0.7 million, or $0.07 per share. Additionally, the adjusted EBITDA was negative $3.4 million, a decrease from the previous year’s positive $0.4 million. The decrease was caused by a change in revenue mix, lower revenues, associated gross profit, and higher operating expenses due to increased professional fees, compensation, and headcount from organic growth and acquisitions.
Village Farms International, Inc., a Vancouver-based company, has released its financial results for the first quarter of 2023. The report highlighted the continued strong growth in the company’s Canadian Cannabis business, significant improvement in its Fresh Produce business, and the launch of its cannabis products in Germany.
According to Village Farms’ CEO, Michael DeGiglio, the first quarter of 2023 was a solid start for the company, with the Canadian Cannabis business delivering a 40% year-over-year growth in retail branded sales. This growth outpaced the overall market growth and maintained the company’s number two market share position nationally. The company was also one of only three of the top 10 producers to expand market share in the same period last year.
Furthermore, the company achieved its 18th consecutive quarter of positive adjusted EBITDA, with a year-over-year increase of 95%. The CEO credited the company’s ongoing focus on production efficiency and cost management for this success.
AppHarvest Inc. (APPH Stock) has reported robust financial results for the first quarter of 2023. The company’s net sales surged to $13.0 million in Q1 2023, a significant jump from $5.2 million reported in the first quarter of 2022, marking a staggering increase of over 250%. The revenue also represents nearly 90% of the company’s net sales for the entire fiscal year of 2022.
Despite the remarkable revenue growth, the company posted a net loss of $33.6 million and a non-GAAP Adjusted EBITDA loss of $23.2 million in Q1 2023, which aligned with expectations. These figures compare to a net loss of $30.6 million and a non-GAAP Adjusted EBITDA loss of $18.0 million in Q1 2022.
Tony Martin, AppHarvest Board Member and a veteran of the CEA industry assumed the role of chief operating officer in January 2023. Under the company’s strategic program, Project New Leaf, Martin works on a five-point strategy to optimize production, sales, and costs across the AppHarvest four-farm network.