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Kalera Announces Second Quarter 2022 Financial Results

Kalera
Kalera

ORLANDO, Fla., Aug. 19, 2022 (GLOBE NEWSWIRE) -- Kalera Public Limited Company (Nasdaq: KAL, “Kalera” or the “Company”), a vertical farming company, today reported its financial results for the second quarter ended June 30, 2022.

Second Quarter Financial Overview

  • Total revenue of $1.3 million, marking an increase of $0.8 million from the second quarter last year:

    • Foodservice revenue of $0.8 million, an increase of $0.6 million;

    • Retail revenue of $0.5 million, an increase of $0.2 million.

  • Net loss of $78.7 million, or a loss of $3.92 per diluted share, which included a one-time non-cash expense for goodwill impairment of $64.3 million, the change in fair value for the contingent value rights earnout of $17.3 million and a one-time expense of $7.5 million related to the closing of the Agrico business combination and Nasdaq listing.

  • Adjusted EBITDA of negative $14.1 million.

Adjusted EBITDA is a non-GAAP financial measure. See “Non-GAAP Financial Measures” below.

Second Quarter Operational Highlights

  • Welcomed Jim Leighton, a food industry veteran, as new President and CEO.

  • Commenced operations of large-scale vertical farming facility in Denver.

  • Secured strategic partnership with US Foods and began to leverage their network of 70+ distribution centers, 100+ cash and carry stores, and national footprint.

  • Completed listing on Nasdaq, making Kalera the first vertical farm with global operations on the exchange.

  • Strengthened balance sheet and improved liquidity.

Management Commentary
“We are pleased to report significant revenue growth on a year-over-year basis for the second quarter, reflecting momentum in our foodservice sales ahead of retail sales driven by our strategic partnership with US Foods,” said Jim Leighton, President and Chief Executive Officer of Kalera. “In addition, we completed our listing on Nasdaq, delivering on our commitment to investors to provide more liquidity and creating opportunity for new investors to benefit from the first pure play vertical farm with leading technology and global operations.”

Kalera also announced the opening of the Denver farm in April to expand its production capacity and geographic footprint, allowing the Company to reach its goal of being the first truly vertical farming company to serve customers both regionally and nationally via foodservice, grocery, resort, hospitality, cruise line, airline and restaurant industries.

Second Quarter 2022 Consolidated Financial Review
Total revenue increased by $0.8 million, from $0.5 million for the second quarter last year to $1.3 million for the second quarter 2022. The revenue increase was reflective of the new farming facilities opened over the past 12 months. Total revenue included credits and promotions to new customers of $0.3 million served under foodservices partnerships.

Selling, general and administrative (SG&A) expenses increased by $18.7 million, from $6.0 million for the second quarter last year to $24.6 million for the second quarter 2022. The increase in SG&A expenses was primarily driven by transaction expenses of $7.5 million related to the Agrico business combination, one-time non-cash stock options expense of $8.0 million mainly due to the cancellation of the previous Kalera stock option program and increases in corporate expenses required to manage three additional farms and the international operations acquired during the fourth quarter of 2021. SG&A expenses in the second quarter of 2021 included one-time expenses of $0.2 million.

Gross operating loss for the second quarter was $96.8 million, which included one-time transaction expenses for the Agrico business combination and Nasdaq listing, one-time non-cash stock option expense of $8.0 million, and one-time non-cash expense of $64.3 million for goodwill impairment compared to a loss of $7.8 million for the same period last year.

Net loss for the second quarter was $78.7 million, or a loss of $3.92 per diluted share, compared to a net loss of $7.7 million, or a loss of $0.51 per diluted share for the same period last year.

Adjusted EBITDA was negative $14.1 million, compared to an adjusted EBITDA of negative $6.4 million for the same period last year.

Balance Sheet and Liquidity
The Company’s cash balance as of June 30, 2022 was $3.3 million. During and subsequent to the second quarter, the Company took important steps to increase its liquidity and strengthen its balance sheet.

During the second quarter of 2022, the Company completed the Agrico business combination, which resulted in $0.3 million in capital proceeds to Kalera. The Company also entered a 10-year, $30 million Senior Secured Credit Facility with Farm Credit of Central Florida to support capital expenditures and working capital needs of the entire Company. The facility provides $20 million in available funds for capital expenditures under a Term Loan, and $10 million to support general corporate and working capital purposes under a Revolving Loan.

Subsequent to the close of the quarter, Kalera executed a private placement in the amount of $10 million to increase its liquidity and strengthen its balance sheet.

Outlook
As a market leader in vertical farming – an industry expected to grow to $19 billion in five years* – Kalera is uniquely positioned to capitalize on significant growth opportunities. We will do this by optimizing our high-tech production capacity for sustainable lettuce, microgreens and herbs in the United States and internationally and by building out our capabilities. We plan to expand in select markets and communities that do not have accessibility to local and fresh produce, allowing us to capture an increased share of the broader U.S. lettuce and microgreens categories. We believe our growth will be supported by several key macro and micro drivers including: (1) the growing mainstream acceptance of our products, (2) heightened consumer awareness of the role food and nutrition play in long-term health and wellness, (3) growing awareness of the beneficial impact that vertical farming has on the environment relative to traditional agriculture and (4) increasing concern regarding food security on a global scale. Looking ahead, we will balance growth with disciplined capital deployment to create long-term value for our shareholders.

*according to Global Market Insights

Note Regarding Non-GAAP Financial Measures
EBITDA and Adjusted EBITDA are not financial measures presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). We believe that the presentation of these non-GAAP financial measures will provide useful information to investors in assessing our financial condition and results of operations. Net loss is the GAAP measure most directly comparable to EBITDA and Adjusted EBITDA. Our non-GAAP financial measures should not be considered as alternatives to the most directly comparable GAAP financial measure. Each of these non-GAAP financial measures has important limitations as analytical tools because they exclude some but not all items that affect the most directly comparable GAAP financial measures. You should not consider EBITDA or Adjusted EBITDA in isolation or as substitutes for analysis of our results as reported under GAAP. Because EBITDA and Adjusted EBITDA may be defined differently by other companies in our industry, our definitions of these non-GAAP financial measures may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.

Conference Call and Webcast
Kalera will host a conference call, today at 9:00 am ET/6:00 am PT to discuss its financial results. The conference call may be accessed by dialing 1-844-763-8274 (domestic) or 1-412-717-9224 (international). A live audio webcast of the call also will be available on the Investor Relations section of Kalera’s website at Events & Presentations | Kalera Public Limited Company and will be archived for replay.

About Kalera
As a leader in controlled environmental agriculture, Kalera is driven by our belief that vertical farming can play an important role in securing access to fresh produce for a growing world population facing climate change and concerns about the future of traditional farming. Through our proprietary technology, we sustainably grow local, delicious, nutrient-rich, pesticide-free, non-GMO leafy greens year-round. Our automated, data-driven, hydroponic vertical farms produce higher yields and, use 95% less water, and 99% less land than traditional farming. Sold under the Kalera brand, our leafy greens are “better than organic” and priced competitively, always with the end consumer in mind. Kalera is headquartered in Orlando, Florida with farms in Orlando; Atlanta, Georgia; Houston, Texas; Denver, Colorado; and Kuwait, with additional farms under development. More information is available at www.kalera.com.

Safe Harbor Statement
This press release contains statements that may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that involve substantial risks and uncertainties. All statements contained in this Quarterly Report other than statements of historical fact, including statements regarding our future results of operations and financial position, our business strategy and plans, and our objectives for future operations, are forward-looking statements. The words “believes,” “expects,” “intends,” “estimates,” “projects,” “anticipates,” “will,” “plan,” “design,” “may,” “should,” or similar language are intended to identify forward-looking statements.

It is routine for our internal projections and expectations to change throughout the year, and any forward-looking statements based upon these projections or expectations may change prior to the end of the next quarter or year. Readers of this Quarterly Report are cautioned not to place undue reliance on any such forward-looking statements. As a result of a number of known and unknown risks and uncertainties, our actual results or performance may be materially different from those expressed or implied by these forward-looking statements. Risks and uncertainties are identified under “Risk Factors” in Item 1A herein and in our other filings with the Securities and Exchange Commission (the “SEC”). The impact of COVID-19 and its variants may also exacerbate these risks, any of which could have a material effect on us. All forward-looking statements included herein are made only as of the date hereof. Unless otherwise required by law, we do not undertake, and specifically disclaim, any obligation to update any forward-looking statement, whether as a result of new information, future events, or otherwise after the date of such statement.

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and related notes, and our audited consolidated financial statements and related notes for the year ended December 31, 2021, included in our registration statement on Form S-4 (File No. 333-264422). As used in this section, unless the context suggests otherwise, “we,” “us,” “our,” “Company,” “Kalera” refer to Kalera Public Limited Company, Inc. and its consolidated subsidiaries.

Investor Contact

Investor Contact

Aparna Mehra, Director

Julie Kegley, Senior Vice President

Kalera Public Limited Company

Financial Profiles, Inc.

aparna.mehra@kalera.com

kalera@finprofiles.com

617-851-0608

310-622-8246



KALERA PUBLIC LTD CO. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In thousands, except share data)

 

Unaudited June
30, 2022

 

December 31,
2021

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

3,335

 

 

$

16,146

 

Trade receivables, net

 

1,043

 

 

 

795

 

Inventory

 

1,176

 

 

 

1,190

 

Prepaid expenses and other current assets

 

1,714

 

 

 

2,960

 

Total current assets

 

7,268

 

 

 

21,091

 

Property, plant, and equipment, net

 

144,256

 

 

 

128,162

 

Operating lease right-of-use assets

 

54,243

 

 

 

55,276

 

Goodwill

 

 

 

 

68,421

 

Intangible assets, net

 

64,335

 

 

 

72,371

 

Equity method investment

 

1,326

 

 

 

1,322

 

Other non-current assets

 

3,629

 

 

 

3,353

 

Total assets

$

275,057

 

 

$

349,996

 

Liabilities and shareholders’ equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

10,861

 

 

$

10,421

 

Financing obligation

 

283

 

 

 

 

Operating lease liabilities

 

2,544

 

 

 

1,618

 

Accrued salaries and wages

 

689

 

 

 

717

 

Accrued expenses

 

2,915

 

 

 

1,964

 

Convertible debt

 

10,253

 

 

 

 

Total current liabilities

 

27,545

 

 

 

14,720

 

Debt

 

19,779

 

 

 

662

 

Non-current operating lease liabilities

 

56,503

 

 

 

57,717

 

Non-current financing obligation

 

7,144

 

 

 

 

Deferred underwriting fees and grants

 

5,349

 

 

 

 

Earnout liabilities

 

13,775

 

 

 

 

Deferred tax liability

 

7,159

 

 

 

8,447

 

Asset retirement obligations

 

1,622

 

 

 

1,527

 

Total liabilities

 

138,876

 

 

 

83,073

 

Commitments and contingencies (Note 19)

 

 

 

Shareholders' equity:

 

 

 

Common stock, $.0001 par, 72,400,000 authorized, 21,377,828 and 18,946,567 issued &
    outstanding as of June 30, 2022 and December 31, 2021, respectively

 

2

 

 

 

2

 

Additional paid in capital

 

305,826

 

 

 

331,074

 

Accumulated other comprehensive loss

 

(12,068

)

 

 

(1,547

)

Accumulated deficit

 

(157,579

)

 

 

(62,606

)

Total shareholders' equity

 

136,181

 

 

 

266,923

 

Total liabilities and shareholders' equity

$

275,057

 

 

$

349,996

 



KALERA PUBLIC LTD CO. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE LOSS
(UNAUDITED)
(In thousands, except per share amounts)

 

Unaudited Three Months Ended
June 30,

 

Unaudited Six Months Ended
June 30,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Net sales

$

1,289

 

 

$

489

 

 

$

2,766

 

 

$

828

 

Cost of goods sold (exclusive of depreciation and amortization shown separately below)

 

(6,271

)

 

 

(1,702

)

 

 

(11,279

)

 

 

(2,645

)

Selling, general, and administrative expenses (inclusive of research and development costs)

 

(24,612

)

 

 

(5,947

)

 

 

(35,012

)

 

 

(10,234

)

Depreciation and amortization

 

(2,963

)

 

 

(607

)

 

 

(5,516

)

 

 

(775

)

Impairment loss

 

(64,252

)

 

 

 

 

 

(64,252

)

 

 

 

Operating loss

 

(96,809

)

 

 

(7,767

)

 

 

(113,293

)

 

 

(12,826

)

Interest (expense) income, net

 

(588

)

 

 

11

 

 

 

(817

)

 

 

166

 

Change in fair value of earnout liabilities

 

17,250

 

 

 

 

 

 

17,250

 

 

 

 

Other income

 

982

 

 

 

80

 

 

 

647

 

 

 

80

 

Loss from operations before income tax

 

(79,165

)

 

 

(7,676

)

 

 

(96,213

)

 

 

(12,580

)

Income tax benefit

 

533

 

 

 

 

 

 

1,288

 

 

 

 

Loss before equity in net loss of affiliate

 

(78,632

)

 

 

(7,676

)

 

 

(94,925

)

 

 

(12,580

)

Equity in net loss of affiliate

 

23

 

 

 

 

 

 

48

 

 

 

 

Net loss

 

(78,655

)

 

 

(7,676

)

 

 

(94,973

)

 

 

(12,580

)

Currency translation adjustments

 

(9,291

)

 

 

 

 

 

(10,521

)

 

 

 

Total comprehensive loss

$

(87,946

)

 

$

(7,676

)

 

$

(105,494

)

 

$

(12,580

)

Net loss per share - basic and diluted

$

(3.92

)

 

$

(0.51

)

 

$

(4.97

)

 

$

(1.05

)

Weighted average common shares outstanding – basic and diluted

 

20,043

 

 

 

14,929

 

 

 

19,125

 

 

 

11,999

 



KALERA PUBLIC LTD CO. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands, except share data)

 

Six Months Ended June 30,

 

 

2022

 

 

 

2021

 

Cash flows - operating activities

 

 

 

Net loss

$

(94,973

)

 

$

(12,580

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

Depreciation and amortization

 

5,516

 

 

 

775

 

Non-cash lease expense - operating lease

 

1,959

 

 

 

1,824

 

Non-cash interest expense

 

253

 

 

 

 

Share-based compensation expense

 

8,797

 

 

 

1,002

 

Loss on sale of assets

 

194

 

 

 

 

Deferred income tax benefit

 

(1,288

)

 

 

 

Equity in net loss of affiliate

 

(48

)

 

 

 

Change in fair value of earnout liabilities

 

(17,250

)

 

 

 

Impairment loss

 

64,252

 

 

 

 

Changes in assets and liabilities:

 

 

 

Inventory

 

14

 

 

 

(327

)

Prepaid expenses and other current assets

 

1,245

 

 

 

(1,730

)

Trade receivables

 

28

 

 

 

(81

)

Other non-current assets

 

(276

)

 

 

(405

)

Account payables and accrued expenses

 

897

 

 

 

4,770

 

Other non-current liabilities

 

(1,752

)

 

 

(240

)

Net cash used in operating activities

 

(32,432

)

 

 

(6,992

)

Cash flows - investing activities

 

 

 

Purchases of property, plant, and equipment

 

(20,921

)

 

 

(37,023

)

Payment for acquisition, net of cash acquired

 

 

 

 

(14,213

)

Net cash used in investing activities

 

(20,921

)

 

 

(51,236

)

Cash flows - financing activities

 

 

 

Net proceeds from issuance of common stock

 

 

 

 

29,158

 

Proceeds from government grant

 

1,906

 

 

 

 

Proceeds from issuance of convertible debt

 

10,000

 

 

 

 

Proceeds from sale of property, plant and equipment for failed sale-leaseback

 

8,080

 

 

 

 

Proceeds from loan facility

 

20,000

 

 

 

 

Debt issuance costs

 

(345

)

 

 

 

Net cash provided by financing activities

 

39,641

 

 

 

29,158

 

Net decrease in cash and cash equivalents

 

(13,712

)

 

 

(29,070

)

Cash and cash equivalents at beginning of period

 

16,146

 

 

 

113,353

 

Effect of exchange rate changes on cash and cash equivalents

 

901

 

 

 

 

Cash and cash equivalents at end of period

$

3,335

 

 

$

84,283

 

Non-cash activities:

 

 

 

Fixed assets purchases in accounts payable

 

708

 

 

 

 

Right-of-use assets obtained in exchange for new finance lease liabilities

 

7,229

 

 

 

 

Right-of-use assets obtained in exchange for new operating lease liabilities

 

(237

)

 

 

42,858

 



KALERA PUBLIC LTD CO. AND SUBSIDIARIES
RECONCILIATION OF EBITDA AND ADJUSTED EBITDA
(UNAUDITED)
(in thousands, except per share amounts)

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

(Dollars in thousands)

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Net loss for the period

$

(78,655

)

 

$

(7,676

)

 

$

(94,973

)

 

$

(12,580

)

Interest expense

 

588

 

 

 

(11

)

 

 

817

 

 

 

(166

)

Income tax benefit

 

(533

)

 

 

 

 

 

(1,288

)

 

 

 

Depreciation and amortization

 

2,963

 

 

 

607

 

 

 

5,516

 

 

 

775

 

EBITDA

 

(75,637

)

 

 

(7,080

)

 

 

(89,928

)

 

 

(11,971

)

Loss on equity method investment

 

23

 

 

 

 

 

 

48

 

 

 

 

Impairment loss

 

64,252

 

 

 

 

 

 

64,252

 

 

 

 

Change in fair value of earnout liabilities

 

(17,250

)

 

 

 

 

 

(17,250

)

 

 

 

Other income

 

(982

)

 

 

 

 

 

(647

)

 

 

 

Share-based compensation expense

 

7,985

 

 

 

568

 

 

 

8,797

 

 

 

1,002

 

One time accounting, consulting, and legal fees

 

7,533

 

 

 

153

 

 

 

7,533

 

 

 

153

 

Adjusted EBITDA

$

(14,076

)

 

$

(6,359

)

 

$

(27,195

)

 

$

(10,816

)