• Revenue: Full year sales increased 38% to $38.1 million compared to $27.6 million in 2023.
• Adjusted Gross Margin: Consistent with the prior year at approximately 27%, excluding depreciation and stock-based compensation.
• Debt Reduction: Nearly 40% reduction in debt through a debt extinguishment of approximately $197 million.
• New Funding: Secured $27.5 million of new funding, including $25 million of equity and $2.5 million in CapEx financing.
• Interest Rate: Reduced to approximately 6%, about half of the previous rate.
• First Quarter 2025 Sales Outlook: Anticipated to be approximately $11.5 million.
• Expense Reduction: Reduced annualized expenses by $3 million in the first quarter of 2025.
• Store Expansion: Expanded distribution to 191 Walmart stores and additional commitments to serve 13 Walmart distribution centers.

• Warning! GuruFocus has detected 5 Warning Signs with LOCL.

Release Date: March 31, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Local Bounti Corp (NYSE:LOCL) secured $27.5 million in new funding, including $25 million of equity from new and existing investors.
• The company completed a significant debt restructuring, reducing its debt by approximately 40% and extending the maturity date to 2035.
• Sales for the full year increased by 38% to $38.1 million, driven by increased production from new facilities in Texas and Washington.
• Local Bounti Corp (NYSE:LOCL) expanded its distribution network, including a significant expansion with Walmart, now serving 191 stores.
• The company anticipates achieving positive adjusted EBITDA in the third quarter of 2025, supported by operational improvements and new capital infusion.

Negative Points

• Fourth quarter results fell short of expectations due to ongoing product mix recalibration work at the Texas facility.
• The reconfiguration of the Texas facility temporarily impacted its full utilization, affecting revenue generation.
• Increased labor costs associated with the production ramp-up at new facilities impacted the adjusted gross margin.
• The company faces challenges in aligning production capabilities with specific customer needs, requiring strategic recalibration.
• The industry has faced underperformance issues, impacting relationships with major retailers and requiring Local Bounti Corp (NYSE:LOCL) to reassure its reliability.

Q & A Highlights

Q: Can you talk about the changes in your Georgia and Texas production and their impact on unit economics? A: Kathleen Valiasek, Chief Financial Officer: We haven't changed much in Georgia, but in Texas, we've converted half of the facility to handle both living head products and cut products. This change aligns with our long-term offtake agreement with Sam's and upcoming shipments to Walmart. The demand for cut products, including Arugula, is strong.

Q: How much pricing power do you have, and how will volume affect price and mix? A: Kathleen Valiasek, Chief Financial Officer: Our pricing power is improving as customers become more familiar with our products. We've implemented a price increase with one retailer effective in April, reflecting our growing leverage in negotiations.

Q: How does the restructuring impact your ability to drive sales and secure shelf space with major retailers like Walmart? A: Craig Hurlbert, Senior Vice President - Strategy, Director: Retailers are increasingly interested in CEA products, but past experiences have left them cautious. Our restructuring positions us as a reliable partner, enhancing our relationships and securing supply chains.

Q: Can you discuss the variable cost structure at your Georgia facility? A: Kathleen Valiasek, Chief Financial Officer: In Georgia, we've successfully reduced seed and labor costs. Our innovation team focuses on seed cost reduction, while our operations team optimizes labor costs, showing significant improvements across all facilities.

Q: What's the status of your Midwest expansion plans? A: Kathleen Valiasek, Chief Financial Officer: The Midwest expansion is still a priority. We're in frequent discussions with retailers to ensure we meet their specific product and SKU needs before breaking ground.

Q: How do you approach the build versus buy decision in the current industry climate? A: Kathleen Valiasek, Chief Financial Officer: We prefer acquiring modern greenhouses over vertical farms. This allows us to start selling immediately and implement our Stack & Flow system, as we did in Georgia, to increase productivity by 30-40%.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.