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Business Standard
22-05-2025
- Business
- Business Standard
ONGC Q4 results: Net profit falls 35% to ₹6,448 cr on lower oil, gas prices
State-owned Oil and Natural Gas Corporation (ONGC) reported a 35 per cent drop in its March quarter net profit as it realised lower oil prices on almost static output. Net profit stood at Rs 6,448 crore in January-March - the fourth quarter of FY25 (April 2024 to March 2025 ) - compared to Rs 9,869 crore in the same period last year, according to a company statement. The firm got $73.72 per barrel of crude oil that it produced and sold to refiners for processing into petrol and diesel in the fourth quarter, down from $80.81 per barrel a year back. Revenue was up 1 per cent at Rs 34,982 crore. ONGC produced 4.7 million tonnes of crude oil in the quarter, marginally lower than 4.714 million tonnes in January-March 2024. Production of natural gas, which is used to generate electricity, make fertiliser and turned into CNG as well as used for cooking in kitchens, was lower at 4.893 Billion Cubic Metres (BCM) in Q4 as opposed to 4.951 BCM. For the full fiscal (FY25), ONGC's net profit was down 12 per cent at Rs 35,610 crore on almost unchanged revenue of Rs 1.37 lakh crore. Oil price realisation was down 4.8 per cent at an average of $76.90 per barrel in the full financial year. Gas price in Q4 and the full fiscal year was unchanged at $6.5 per million British thermal unit. "The standalone crude oil production during FY25 was 18.558 million tonnes with an increase of 0.9 per cent over FY24. The standalone natural gas production was 19.654 BCM in FY25 as against 19.978 BCM in FY24," ONGC said. ONGC said it drilled 578 wells, the highest recorded in the past 35 years, comprising 109 exploratory and 469 development wells. The firm had drilled 544 wells in the previous 2023-24 fiscal year. The company is drilling more wells as the government has guaranteed a 10 per cent higher price for any gas produced from new wells. "ONGC invested around Rs 62,000 crore capex in FY25, including Rs 18,365 crore in OPaL, Rs 4,600 crore in ONGC Green Ltd for acquisition of PTC Energy and Ayana Renewables," the statement said adding apex in the previous 2023-24 was Rs 37,494 crore. Its overseas arm, ONGC Videsh Ltd, oil production saw a marginal increase of 1.2 per cent to 7.265 million tonnes in FY25 from 7.178 million tonnes a year back. "This positive performance was driven by strong contributions from the key operated/ jointly operated assets" in Colombia and in South Sudan, despite geopolitical headwinds, natural decline, and local issues, it said. Gas production output moderated to 3.013 BCM in FY25 from 3.340 BCM in FY24, primarily due to the end of production life in Block 06.1, Vietnam. OVL's turnover was down at Rs12,995 crore during FY25 from Rs13,197 crore in the previous year, mainly due to lower realised crude oil price ($70.23 per barrel as against $71.47 a barrel in FY'25). Net profit was also down at Rs 418 crore in FY25, as against Rs 490 crore (restated) in FY24. ONGC said it made a total of 9 discoveries (5 in onland and 4 in offshore) during FY 2024-25 in its operated acreages. "Eight hydrocarbon discoveries have been monetised during the FY 2024-25, including the two discoveries notified during the fiscal year of 2024-25.
New Straits Times
21-05-2025
- Business
- New Straits Times
Penang submits RM17bil worth of projects under 13MP
GEORGE TOWN: Penang has submitted a list of 128 development projects with an estimated total cost of RM17,228,995,534.17 to Putrajaya under the 13th Malaysia Plan (13MP). The projects, from 26 departments and agencies, include an allocation of RM1.579 billion for the Pan Island Link (Pil) 1 highway project in 2026. The Pil 1 project, with a total estimated cost of RM8.876 billion, is the most expensive among the 128 development proposals submitted to the various ministries. Other proposed projects include RM1.024 billion for a multi-storey block at Kepala Batas Hospital, RM520.03 million for the northeast district health complex, clinic and mental health block at Penang Hospital, RM400 million for the Penang Islamic Hospital, and RM99.21 million for the new Sekolah Menengah Kebangsaan Juru. State Infrastructure Committee chairman Zairil Khir Johari (DAP Tanjung Bungah) said the allocation required for 2026 alone amounts to RM2,109,812,452.88. "To ensure the efficient and transparent implementation of federal projects in Penang, monitoring is carried out by the Penang State Development Office (ICU), which acts as the main coordinator, in close collaboration with ministries and implementing agencies at both federal and state levels. "This monitoring mechanism includes periodic meetings of the State Development Action Committee, scheduled progress reports, site visits, and regular reporting to the State Development Action Council. "In addition, the MyProjek System, developed by the ICU under the Prime Minister's Department, is used to ensure that project reporting and monitoring are conducted systematically, in a timely manner, and with transparency," he said in a written reply to Lee Khai Loon (PKR Machang Bubuk). Lee had asked for details on the list of proposed projects, including criteria, project types, strategy, and estimated value for the 2026–2030 period. He also sought clarification on the monitoring mechanism used to ensure transparency and efficiency, as well as the state's course of action should project applications be rejected. Elaborating further, Zairil said emphasis is also placed on compliance with project scope, implementation schedules, expenditure, and adherence to established procurement procedures to ensure that each project achieves its intended development goals. "If a project application is not approved by the federal government, the state government will take several measures, including reapplying with improved justifications and implementation designs, and exploring potential public-private partnership models. "We will also consider reprioritising the state's development budget for phased implementation and engage in follow-up negotiations with the relevant ministries to have the project reconsidered in upcoming rolling plans," he added.
NZ Autocar
17-05-2025
- Automotive
- NZ Autocar
Harley-Davidson delivers Fat Boy Gray Ghost
Harley-Davidson has just revealed the fifth instalment in the brand's limited-run Icons Motorcycle Collection. Known as the Fat Boy Gray Ghost, just 1990 units are being built. The number is a nod to the year the Fat Boy launched. Celebrating 35 years of the cruiser, the asking price is $NZ45,995. Visually, the Gray Ghost will turn heads. Harley's new Reflection finish makes it look as though the entire motorcycle has been sculpted from molten chrome. Achieved through a physical vapour deposition (PVD) process, this mirror-like effect hasn't previously been applied to components as large as the tank or fenders on a production Harley. The finish is said to be more corrosion-resistant than traditional chrome. Complementing the brightwork are chome covers and a bright silver powder-coated frame. Yellow accents on the engine and tank hark back to the original 1990 model's styling. Nostalgic touches include a tasselled leather seat, a black leather tank strap, and winged tank medallions. The original Fat Boy had these. Each unit is also individually numbered. Beneath the glitz lies Harley's Milwaukee-Eight 117 engine, good for 75kW and 171Nm of torque. Paired with a 2-into-2 exhaust, the set-up promises strong performance and a traditional V-twin rumble. The latest Fat Boy chassis has also undergone a number of enhancements, with recalibrated suspension and selectable ride modes (Road, Rain, Sport). Rider assistance safety features include Cornering ABS, Cornering Traction Control, and Drag Torque Slip Control. Check out our review of the 2024 H-D Road Glide here. Expect a better ride too with a recalibrated preload-adjustable rear shock. There's also a new USB-C port, and connectors for heated items are now more accessible. A five-inch analogue/digital instrument cluster clearly relays key data, while full LED lighting adds to road presence and visibility. The Gray Ghost rolls on Lakester disc wheels, exclusive to the Fat Boy, shod in Michelin Scorcher 11 rubber, 160mm up front and 240mm at the rear, for an imposing stance. As to the name, Fat Boy was chosen for its irreverent tone, a little self-deprecation from the brand that dared to be different. The model came to fame when Arnie pinched it and rode it off an LA overpass in Terminator 2: Judgement Day.
Yahoo
15-05-2025
- Business
- Yahoo
Q1 2025 Sanara Medtech Inc Earnings Call
Ronald Nixon; Executive Chairman of the Board; Sanara Medtech Inc Seth Yon; President, Chief Commercial Officer; Sanara Medtech Inc Suresh Muppalla; President and Chief Executive Officer of Tissue Health Plus, LLC; Sanara Medtech Inc Elizabeth Taylor; Chief Financial Officer; Sanara Medtech Inc Yi Chen; Analyst; H.C. Wainwright & Co Ross Osborn; Analyst; Cantor Fitzgerald Operator Welcome to the Sanara MedTech first quarter of 2025 earnings conference call. Please note that this conference call is being recorded, and a replay will be available on the investor relations page of the company's website shortly. The company issued its earnings release earlier today. Before we begin, I would like to remind everyone that certain statements on today's call include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1,995. For more information about the risks and uncertainties involving forward-looking statements and factors that could cause actual results to differ materially from those projected or implied by forward-looking statements, please see the risk factors set forth in the company's most recent annual report on Form 10k. This call will also include references to certain non-GAAP measures, reconciliations of those non-GAAP financial measures to the most comparable measures calculated and presented in accordance with GAAP are available in the earnings materials available on the investor relations portion of our website. Today's call will be hosted by Ron Nixon, Executive Chairman and CEO, and feature additional remarks from Seth Yon, President and Chief Commercial Officer, Sam Muppalla, President and CEO of Tissue Health Plus, and Elizabeth Taylor, Chief Financial Officer. I would now like to turn the call over to Mr. Nixon. Please go ahead. Ronald Nixon Thanks, operator, and welcome everyone to our first quarter of 2025 earnings call. Let me provide a quick agenda for today's call. I'll start by discussing a few of our financial and operational highlights from the first quarter. Seth will then discuss the commercial execution and progress made in our scenario surgical segment and outline the multiple growth opportunities we're focused on pursuing. Next, SAM will provide an update on our tissue Health Plus segment. And finally, Elizabeth will review our quarterly financial results in further detail before opening the calls for questions. Beginning with our first quarter highlights, our Sonari surgical team delivered net revenue of $23.4 million, representing 26% growth year over year. This performance was consistent with our expectations for the quarter and represents a strong start to 2025. Our net revenue growth was driven primarily by sales of our soft tissue repair products, which increased 28% year over year to $20.5 million. Specifically, we saw strong growth in sales of both our CellerateRX, surgical and Biasurge products, which continue to fuel our performance. We were also pleased to see contributions from sales of our bone fusion products, which increased 18% year over year to $2.9 million, with growth across multiple products in this portfolio. As Seth will discuss in detail, our sales performance reflects impressive execution by our Sanara surgical commercial team on our growth strategy. We remain excited by the large greenfield opportunity that remains ahead of us. In addition to our scenario surgical segment revenue performance, we also enhanced our gross margins. Net loss per Sanara surgical segment increased by $200,000 dollars year over year to $600,000. And importantly, we were pleased to see some neurosurgical segment adjusted EBITDA increased by $1.5 million year over year to $2.7 million. In our tissue Health Plus segment, we continue to invest in the development of this value-based wound care strategy as we prepare to launch our pilot program with a wound care provider later in the second quarter. We are in active discussions with multiple potential financial partners to invest in the execution of our tissue Health Plus strategy and Ryan focused on allocating capital strategically and thoughtfully between our two business segments. In terms of our other operational highlights in the first quarter, as discussed in detail on our last earnings call, we enhanced our new product pipeline by securing the distribution rights to two additional technologies and expanded our senior leadership team with key appointments. We also amended the terms of our debt facility to provide increased financial flexibility as we execute our growth strategy. Lastly, our team has continued their work to strengthen our portfolio of clinical evidence. We look forward to having multiple clinical manuscripts submitted for publication in key medical journals in 2025. I'm proud of our entire team's performance this past quarter across multiple fronts and look forward to continuing our momentum over the balance of 2025. I'll now turn it over to Seth to discuss the commercial execution and growth opportunities in our scenario surgical segment. Seth Yon Thanks, Ron. As Ron mentioned, our Sanara surgical segment commercial team delivered net revenue growth of 26% year over year. This growth was driven by our team's execution with respect to the following 3 initiatives related to our commercial strategy. One advancing and deepening our distributor relationships. Two selling into new healthcare facilities, and three further penetrating the existing healthcare facilities we serve. Beginning with the first of the three commercial initiatives, we significantly expanded our network of distributor partners. Specifically, at the end of the first quarter, our team had engaged and secured selling agreements with over 400 distributor partners compared to over 250 of the first quarter of 2024 and over 350 at the end of 2024. As a reminder, our expanded distributor network provides us with increased sales coverage and presence in key markets across the US. Turning to our second commercial initiative, we continue to add new healthcare facilities to our customer base by securing value analysis committee approvals and commencing sales to surgeons at these facilities. Over the last 12 months, our products were sold in over 1,300 facilities compared to over 1,080 facilities in the prior year period. With respect to our third commercial initiative, we increased our penetration of the existing healthcare facilities we serve by increasing the number of surgeons using our products within these facilities. While it's not our practice to disclose specifics related to our active surgeon user base, I'm pleased to share that we saw solid growth in the number of surgeon users on a year over year basis in quarter one. With this as a backdrop, we're pleased with the execution of our team and the progress we're seeing on our commercial strategy. We believe our commercial performance speaks to the durability of our customer base as well as the value that our Sanara surgical products provide. As surgeons gain firsthand experience with the use of our key products like CelerateRX Surgical and Biasurge, the value they bring to their procedures often leads them to become dedicated long-term users. Looking ahead, we remain focused in 2025 on pursuing these three commercial initiatives to capitalize on the multiple growth opportunities ahead of us. I'll now take a minute to outline some of these growth opportunities and our specific plans to pursue them over the balance of the year. While we will continue to add new distributor partners selectively, given our progress on the front over the last 18 months, we are increasingly focused this year on onboarding our recently added distributors and positioning their reps for success in selling our products. Our existing distributor network represents thousands of third party sales reps. Importantly, only a percentage of these reps are currently selling our products. This is especially true for our larger distributor partners and our distributor partners engaged in recent quarters. With this in mind, increasing the number of distributor reps selling our products within existing distributor relationships represents a significant growth opportunity for our organization. In 2025, our team is focused on onboarding, training, and providing the requisite technical support needed to help additional reps within each distributor to begin selling our products. In parallel, we will continue to focus on adding new surgeon users within the more than 1,300 facilities that we currently serve. The vast majority of these facilities are hospitals and importantly, our surgeon penetration within these facilities remains low. Adding new surging customers within our existing facilities continues to represent one of the largest untapped areas of growth for our organization. Lastly, we'll focus on continuing to add new healthcare facilities to our customer base with the goal of selling into more than 1,450 facilities by the end of 2025. As a reminder, we have contracts or approvals with over 4,000 facilities. This represents a significant opportunity for our commercial team and distributor partners to begin selling into new facilities. For all these reasons, we continue to believe we're in the early innings of our commercialization effort. We look forward to capitalizing on the multiple growth opportunities ahead of us as we educate prospective surgeon customers about the benefits for our products. With that, I'll turn it over to Sam to provide an update on Tissue Health Plus. Suresh Muppalla Thanks Seth, 2025 has been a period of focused execution for Tissue Health Plus. Thanks to the hard work of the team, we announced the availability of the first release of THP's technology platform on May first as planned. This is a pivotal milestone in our journey to disrupt non-acute wound care. The THP Tech technology platform release included THP co-pilot, our software offering which is designed to standardize wound care and reduce the administrative burden for wound care clinicians across all settings. THP Co-pilot consists of a mobile app designed for use by clinicians, which integrates both our software as a medical device and clinical decision support systems. These tools aid clinicians' ability to deliver precise and personalized wound care while not replacing their professional judgment. Additionally, THP co-pilot includes an administrative autopilot which for clinicians automates the process of enforcing reimbursement guard rails, optimizing billing codes, ordering medical supplies from durable medical equipment companies, and tracking the delivery of those supplies. THP co-pilot is also designed to integrate with the clinician's existing electronic medical record systems, which eliminates the need for charting after a clinician's encounter with the patient. THP co-pilot was developed on the top of CarePix Technology stack, which we acquired on April first. In advance of this acquisition, our team had been previously partnered with CarePix over the past year to leverage both the functionality and the technology frameworks which formed the foundation of our THP technology platform. Specifically, we use the mobile app functionality to accelerate the development of our THP copilot app. Our THP technology platform release is being implemented with the wound care provider group in preparation for the launch of our first pilot program. The implementation process involves configuring the wound care provider's clinical and administrative workflows to support an integrated wound care operating system aligned with their growth strategy. With this as a backdrop, we remain on track to launch our first pilot program with the wound care provider group later during the second quarter as previously discussed. Our team is also focused on raising the awareness of our THP offering in the provider market. Our THP solution was very well received last week at the symposium of advanced wound care spring meeting, one of the premier annual conferences for healthcare professionals and companies in the wound care industry, and we're building a strong pipeline of interested providers. In addition to these efforts, we continue to focus on launching a pilot program with the pair during the second half of the year. I would like to now turn this over to Elizabeth to review our first quarter financial results in more detail. Elizabeth Taylor Thanks, Sam. I will begin my remarks at the gross profit line since Ron discussed our quarterly revenue performance unless otherwise specified, all growth rates referenced during my prepared remarks are on a year over year basis. First quarter, gross profit increased $5 million, or 30% to $21.6 million. Gross margin increased approximately 240 basis points to 92% of net revenue, driven primarily by lower manufacturing costs related to Cellerate or surgical. First quarter operating expenses increased $5.5 million, or 30% to $23.7 million. The change in operating expenses was largely driven by a $5.2 million or 32% increase in selling general and administrative expenses and to a lesser extent, a $0.2 million or 18% increase in research and development expenses. The $5.2 million increase in SG&A expenses primarily reflects $2.4 million of direct sales and marketing expenses in our neo surgical segment, $1.7 million of SG&A expenses in our tissue Health Plus segment, and approximately $0.7 million of costs related to the build out of our corporate infrastructure. Note the tissue Health Plus segment SG&A expenses are primarily related to the buildout of certain aspects of the THP platform and infrastructure, which accelerated beginning in the second quarter of 2024. Operating loss in the first quarter was $2.1 million compared to a loss of $1.5 million last year. Importantly, our scenario surgical segment generated operating income of $0.8 million in the first quarter of 2025, an increase of $1 million year over year. Other expense for the first quarter was $1.4 million compared to $0.3 million of expense last year. The increase in the other expense was primarily due to higher interest expense and fees related to our CRG term loan. Net loss for the first quarter was $3.5 million or $0.41 per diluted share compared to a net loss of $1.8 million or $0.21 per diluted share last year. By segment, our scenario surgical segment generated a net loss of $0.6 million compared to a net loss of $0.4 million last year, and our tissue Health Plus segment generated a net loss of $2.9 million compared to a net loss of $1.4 million last year. Adjusted EBITDA for the first quarter of 2025 was $0.7 million, an increase of 111% year over year. By segment, Cinna Surgical generated segment adjusted EBITDA of $2.7 million compared to $1.2 million last year, and Tissue Health Plus generated segment adjusted EBITDA loss of $2.0 million compared to a segment adjusted EBITDA loss of $0.9 million last year. With respect to our balance sheet, as of March 31, 2025, we had $20.7 million of cash, $42.8 million of principal debt obligations outstanding, and $12.25 million of available borrowing capacity. This compares to $15.9 million of cash, $30.5 million of principal debt obligations outstanding, and $24.5 million of available borrowing capacity as of December 31, 2024. During the first quarter, we amended the terms of our CRG term loan agreement to provide more flexibility with respect to the timing and amount of potential future borrowings, and borrowed an additional $12.25 million. As a reminder, our loan agreement provides for one additional borrowing of up to $12.25 million on or before December 30, 2025. Lastly, a few considerations to bear in mind for the remainder of the year. As Ron mentioned earlier, our net revenue performance in the first quarter was consistent with our expectations, and we remain pleased with our start to 2025. Our team remains focused this year on delivering net revenue growth driven by our Sanara surgical segment. We continue to expect improvements in our scenario surgical segment profitability in 2025. With respect to our tissue Health Plus segment, we expect our cash investment in the first half of 2025 to be approximately $7.5 million to $8.5 million compared to our prior expectation of $7.5 million to $10 million, excluding the acquisition of CarePix. This implies cash investment in the second quarter of 2025 of approximately $4 million to $5 million. Note. This expectation does not include the CarePix acquisition, which, as SAM mentioned, we completed on April first for a total of $3.65 million upon closing. We also remain focused on pursuing financial partners to invest in the execution of our tissue Health Plus strategy. With our existing cash on hand, the expected cash generation in our scenario surgical segment in 2025, and the available borrowing on our existing facility, we believe we have the requisite capital to continue to pursue our strategic growth initiatives. Lastly, with respect to tariffs, it is important to note that with the exception of Biasurge, all of our commercial products are manufactured in the United States. With this in mind, we do not anticipate a material impact from tariffs on our results of operations in 2025. With that, I'll turn it back to the operator to open the call for questions. Operator Thank you. (Operator Instructions) Your first question for today is from Ye Chen with HC Wainwright. Yi Chen Good Morning. Eduardo just to get a little bit more color on your rates of penetration and understanding intuitively that seems like the area where, you probably get the most benefit in ROI approaching profitability. It's kind of your vision for how you're going to improve penetration at existing facilities, and your strategy there. Ronald Nixon Yeah, Seth, would you mind taking that, please? Sure, I. Seth Yon Of course, good morning. We do it with really a coupled approach between our RSMs, which we've talked a lot about in the past, territory managers as well, and then our distributor expansion. So our distributor expansion has jumped significantly over the last 18 months, and that's been done intentionally for that very reason. It's to get us access into new accounts but also to penetrate existing accounts deeper and further. So, it's really a coupled approach between both the RSM and our distributor partners. Yi Chen Got it. And is there any kind of signal on reorder rates, that you could provide that, you mentioned that people who use the product really like it, do you have any numbers on the reorder rates? Seth Yon We haven't provided that in the past. I will say this. Our business tends to stick, both on the Cellerate side and Biasurge alike. Once surgeons gain comfort with those two products, and that takes some time to do that. Oftentimes they'll start with high-risk cases to see how products perform, and then as they do perform highly and with highly successful rates, they continue to use that and expand that across more procedures. Yi Chen Okay, got it. That's really helpful. Thanks for the taking the questions. Ronald Nixon You he thanks you. Operator (Operator Instructions) Your next question for today is from Ross Osborn with Cantor Fitzgerald. Ross Osborn Hey guys, this is Matt Park on for us today. Thanks for taking the questions. I guess starting off with gross margin, came in very strong in the quarter. Can you, help us frame how we should think about gross margin cadence for the remainder of 2025 and any areas for further leverage those volume scales? Ronald Nixon So Ross, this is wrong. So how I think about it is when we bought the technology from the original designer developer of the product and, last year, that actually gave us some advantage on the manufacturing side because there was some additional margin there that to be had. So, I would say that it's you never can tell what external other costs could come about. So, I just think modelling it in your, just kind of consistent with how you've done it in the past is probably good to go forward. I can't see us achieving a lot more leverage than what we have today on the gross margin side. Ross Osborn Got it. That's helpful. And then, just one more for me on, tissue health plus, given that you remain on track for a pilot program launched in the second quarter, can you help walk us through what success will look like in this initial phase, whether that's clinical outcomes, patient volume, or economic validation, and how quickly you anticipate scaling beyond the first sight. Thanks. Ronald Nixon Yeah, that sounds good. Suresh Muppalla Sorry Ron, I jumped the gun there. So, Ross, to just to answer your question, we're really looking at the success of the pilot being measured in three sets of metrics. First is the clinician facing metrics. These include things like protocol and formal adherence. So, to just remind you, one of the key things we are actually implementing as part of our platform is a clinical decision support which. The clinic, so how well they adhere to the protocols and the formulary. That's a key metric there. The second metric facing the clinician again is helping them decrease their post-encounter time. So, for every minute the clinician spends in front of a patient, they could be spending up to two to three minutes. After the patient encounter completing the documentation, so that is a key metric we are trying to influence. And the last is clinician metric is around completion of documentation, how well documented is the encountered. On the operating side, which is the second category of metrics, we look at things like increase in staff productivity. And the way we do that is before we started the implementation, we have actually done time and motion studies of them of their practice end to end so we have baseline timings, and we look at improvements based on our workflow technology or how we are helping them with that. We also look at increased capture in billing services per visit, and we also look to decreasing inventory. Wound care related inventory costs and wastage. So, some high level operational metrics. The third bucket of metrics we look at are adoption metrics, which is, for example, the person that the clinicians using our THP copilot, what's the user satisfaction surveys, NPS, so on and so forth. Ross Osborn Got it. That's helpful. Thanks for taking the questions, guys. Operator We currently are seeing no remaining questions at this time. That does conclude our conference for today. Thank you for your participation.
Yahoo
15-05-2025
- Business
- Yahoo
Q1 2025 Local Bounti Corp Earnings Call
Jeff Sonnek; Investor Relations; Local Bounti Corp Craig Hurlbert; Senior Vice President - Strategy, Director; Local Bounti Corp Kathleen Valiasek; Chief Financial Officer; Local Bounti Corp Kristen Owen; Analyst; Oppenheimer & Co. Inc. Ben Klieve; Analyst; Lake Street Capital Market Operator Good morning and welcome to Local Bounti's first quarter 2025 earnings conference call. (Operator Instructions) At this time, I'd like to turn the call over to Jeff Sonneck, investor relations at ICR. Please go ahead. Jeff Sonnek Thank you and good morning. Today's presentation will be hosted by local bounties executive Chairman Craig Hurlbert and President, Chief Executive Officer and Chief Financial Officer Kathleen Valiasek. The comments made during today's call contain forward-looking statements within the meaning of the safe harbour provisions of the Private Securities Litigation Reform Act of 1,995. All statements other than statements of historical facts are considered forward-looking statements. These statements are based on management's current expectations and beliefs, as well as a number of assumptions concerning future events. Such forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from the results discussed in the forward-looking statements. Some of these risks and uncertainties are identified and discussed in the company's filings with the SEC. We'll also refer to certain non-GAAP financial measures today. Please refer to the press release, which can be found on our investor relations website, for reconciliations of non-GAAP financial measures to their most directly comparable GAAP measures. And with that, I'd now like to turn the call over to Craig. Craig, please go ahead. Craig Hurlbert Thank you, Jeff, and good morning, everyone. I want to start by taking a moment to express my sincere gratitude. Local Bounti team. The dedication and commitment I've witnessed across the company has been truly remarkable as we navigate this important phase of our company's journey. We have assembled an exceptional group of people who continue to drive our mission forward with passion and focus. I'm pleased to see the continued validation from our customers whose increasing desire for CEA products reinforces the market opportunity ahead of us. The foundation we've built over these past years has positioned local bounty to achieve positive adjusted EBITDA in the near term, and I'm confident that under Cathy's leadership, we'll continue to execute on our strategic vision. Create meaningful value for all stakeholders. With that, I'll now turn it over to Kathy. Kathleen Valiasek Thank you, Craig, and good morning, everyone. First, I completely echo Craig's sentiment and want to acknowledge the incredible dedication and focus of our entire organization. As Craig alluded, our team has fully embraced our mission to reach positive adjusted EBITDA in the third quarter of this year. From operations to sales to finance, everyone is aligned around this critical goal, and I couldn't be prouder of the collective effort. To that end, our first quarter progress, including all of our commercial and operational initiatives, are converging toward a significant revenue lift in the second half of 2025, and our achievement of this positive adjusted EBITDA milestone we are positioned to reach in quarter three. Importantly, the disciplined approach we've taken from product diversification to operational efficiencies to cost management is creating a strong foundation that will support our long-term growth and profitability as we scale our business to meet growing retail demand for our products. Starting with our operational progress, the product mix recalibration work at our Texas facility continues to advance as planned. We are in the final stages of completing this work and expect to begin for full commercial production in this section starting this month. As we discussed previously, the purpose-built automated harvesting equipment will be installed early in the third quarter, replacing the temporary harvester we will use this quarter. The new harvester is expected to drive significant operational efficiencies and marginal improvement. I'm particularly excited to share that our yields in our Georgia facility have increased by 20% in the first quarter compared to our fourth quarter rates. This improvement is largely attributable to the refinement of our growing system with the stack phase which has outperformed our internal expectations. Our next step is to implement this program in our Texas and Washington facilities where we expect. Achieve similar yield increases. These yield improvements over our existing performance create an excellent opportunity for a sales team to engage prospective retail partners who are looking for CEA suppliers that can deliver consistent performance, something that truly differentiates us at a time when retailers are increasingly taking interest in CEA products. Regarding our plans to enter the Midwest with a new facility, I'm pleased to report significant advancement in our strategy there. We are actively engaged in promising discussions with multinational and national retailers to include the Midwest region in their sourcing plans. While we're very far along in this process, it's still too early to announce anything definitive. These developing relationships represent important validation of our expansion strategy and our ability to serve retail partners across multiple regions. Turning now to our commercial progress, building on the incredible momentum from last year in quarter one 2025, we expanded our Texas grown arugula offering with Brookshires in approximately 80 stores and began distributing organic living butter lettuce from California to HEB. We also started shipping Living Basil to an existing large retail customer across 60 stores and secured distribution with several other wholesalers for our basil products. Notably, our relationship with Walmart continues to strengthen. In addition to the 191 stores, we are already serving with premium baby varieties as of quarter four, we secured an additional commitment to serve 13 Walmart distribution centers with our conventional living butter lettuce. With those shipments having commenced just a couple weeks ago from both our California and Texas facilities, we've also evolved our grab and go salad kit offerings to better serve retail partners and consumer trends. This includes the launch of new salad kits in quarter one 2025 with additional Flavors expected to be introduced in quarter three, as well as the creation of a new product line that meets the needs of today's value-oriented consumer. We're particularly excited about our upcoming exclusive launch of a new larger approximately 12-ounce family size Caesar salad kit with a large multinational retailer in the Pacific Northwest, beginning in the third quarter. We also continue to expand our relationship with the leading meal subscription business that is now seeking additional skills from us. These commercial wins demonstrate the strong pull we're seeing from our customers and their increasing desire to purchase more CEA products, validating our mission and reinforcing the long-term market opportunity ahead of us. Turning briefly to our first quarter results. Our first quarter sales were $11.6 million in line with our expectations and representing a 38% increase compared to the first quarter of 2024 and a 15% sequential increase compared to the fourth quarter of 2024. This growth was driven by increased production and sales from our Georgia, Washington, and Texas facilities, partially offset by the ongoing product mix for calibration work at our Texas facility, which has temporarily decreased capacity. Our adjusted growth margin for the first quarter improved approximately 500 basis points versus the prior year and approximately 400 basis points versus the fourth quarter 2024. This improvement is particularly encouraging as it demonstrates that our product mix recalibration work and operational efficiency initiatives are yielding tangible results. We continue to expect that over time, our adjusted gross margin will increase as a percentage of sales as a result of the continued scaling of the business and ongoing efforts to optimize costs. Net loss for the quarter was $37.7 million compared to a net loss of $24.1 million in the prior year period, which largely reflects higher interest expense. Our adjusted EBITDA loss for the quarter was $8.8 million compared to $6.9 million in the prior year period, and importantly, representing an improvement of $50 million from our fourth quarter 2024 loss of $9.3 million. We remain on track to achieve our third quarter target to reach positive adjusted EBITDA, driven by the full realization of our ongoing cost reductions alongside our anticipated revenue lift that we expect to be more fully visible in the third quarter of 2025. To emphasize the cost reduction point, we took out approximately $3 million of annualized GNA expenses in the first quarter, and during the second quarter to date period, we've actioned another $4 million of annualized expenses across both GNA. And cost of goods sold. These initiatives are a direct result of our operational focus, which is resulting in significantly improved consistency across all facets of our growing operations and allowing us to drive those efficiencies through our income statement. Turning to our balance sheet, we ended the quarter with a significantly strengthened financial position with cash and cash equivalents and restricted cash of $28.4 million. That said, I do want to provide some clarity on how our debt restructuring appears on our financial statements. While we eliminated approximately $197 million of debt to our March restructuring. Accounting rules require us to maintain the original carrying value of the pre-restructuring debt amount on our balance sheet, with the reduction being recorded as a debt premium that is amortized over the new loan term. You'll see this as a new line item on our first quarter balance sheet. This means that our reported debt balance won't immediately show the reduction, but the economic benefit remains unchanged and will be reflected through lower interest expense over time. This accounting treatment is standard for transactions of this nature and does not impact the fundamental improvement of our capital structure. Now for some comments on our outlook for the second quarter, we expect revenue in the range of $12 to $12.5 million, which reflects the partial impact from our Texas facility transition, which is expected to be complete in the third quarter. Looking at the cadence for the balance of the year, we expect to see a material lift in the second half of 2025, resulting from a convergence of activity, including the aforementioned full quarter contribution from our Texas facility transition and the additional capacity from our Georgia yield improvement. Additionally, new product introductions and expansions with existing customers are anticipated to also support our expectations for sequential growth in the second half of the year. I'd also like to briefly comment on our EBI progression from quarter four to quarter one and highlight how we expect to improve on this in quarter two. In quarter one, we experienced temporary cost increases that we expect will be eliminated in quarter two. These included higher utilities associated with weather anomalies and higher GNA expenses, which were impacted by the combination of a higher mix of product donations associated with the better than anticipated yield improvements in Georgia, lower capitalization of labor now that the construction projects have been completed, and lastly, higher severance associated with our cost optimization work. These collectively impacted our EBITDA by approximately 900,000 in the first quarter and are not expected to reoccur in the second quarter. These dynamics combined with our second quarter to date cost actions are providing us some tailwind toward our goal of achieving positive adjusted EBITDA in the third quarter of 2025. In conclusion, we're energized by the progress we're making across all areas of our business. Our entire organization is aligned behind our mission to reach positive adjusted in the third quarter, and I couldn't be prouder of the collective effort of our team. With that please open the call for Q&A. Operator Thank you. (Operator Instructions) Our first question comes from the line of Kristen Owen with Oppenheimer and Company. Please proceed. Kristen Owen Hi, good morning, and thank you for taking the question. Congratulations on the nice progress made in the first quarter here. Kathy, you touched on this in some of your final, prepared comments here, but I want to double click on sort of what's driving that material list, coming into the back half of the year. You noted Texas transition, the Georgia yield improvements, some new products. I want to double click on that towards the yield improvement. I think you said 20% over fourth quarter. Just help us understand, what, what's changing in the production process, how you're achieving that yield, and then on the commercial side, sort of the velocity of sales and your ability to sort of sell out that incremental yield as you're thinking about that at the back half of the year. Kathleen Valiasek Yeah, great series of questions, Kristen, and good morning to you. Thank you. So yeah, the 20% yield increase in Georgia is an R&D program that was developed last year. We were able to finally put it in place in Georgia, and it was, it actually exceeded our expectations in terms of yield increases, which is fantastic, right? So, as we said in my, as I said in my comments, we will also be implementing that program in Texas and Washington in quarter three, so we expect to see that similar level of bump and yield in both of those facilities. If you think about it, so out of Georgia, when the yield increases that much, your production increases, right? And so, it takes a little bit of time for our sales team to place the product, right, which is normal. So And then in terms of the ramp in the back half, right, it's several things going on with all of our customers, right? We, talked about all of the Walmart projects, the grab and go salads, the increased revenue that we will anticipate out of Montana. Several things are impacting the uptick, including, also as we discussed, the yields. So hopefully that's helpful. Kristen Owen That's great. The follow up question that I have is a little bit more modelling oriented just given some of the nuance around the restructuring that you announced last quarter, you mentioned the balance sheet implications. I'm trying to think about the. The income statement implications in particular how to think about the interest expense that you're reporting what if that is cash versus non-cash and how that will change with this restructuring just a little bit of nuance on the model that would be helpful. Thank you. Yeah. Kathleen Valiasek Yeah for sure so you know GAAP accounting, right? You would have anticipated that we would be able to recognize the full gain of the debt write off of $197 million. But we're actually having to take it over 10 years, which actually in effect is fantastic because every quarter it will reduce our interest expense on the face of our P&L, right? So, the accrual every quarter is the debt balance times the interest rate, which again we, as we disclosed, it's, 50% of what it used to be. And then the amortization of the premium will reduce the interest expense on the face of the P&L. So, in effect, every quarter, the interest expense as it appears on the P&L will be less than $5 million. And then also keep in mind, yeah, let me just add one more comment there. Keep in mind that the restructure with Cargo allows for, two full years of no cash interest or am amortization payments. So, but obviously right there there's still the accrual. Kristen Owen Perfect thank you I'll pass it on. Kathleen Valiasek Okay, thanks Kristen. Operator Thank you. Our next question comes from the line of Ben Klieve with Lake Street Capital Markets. Please proceed with your question. Ben Klieve Alright, thanks for taking my questions. I want to circle back to this 20% yield enhancement. I'd like to kind of better understand I think cat in your prepared remarks you said that this was, a project, explicitly around the stack phase of the Georgia facility. And so, I'm wondering is this a situation where you have 20% more plants coming out of the stack phase, just from a pure, kind of per square foot perspective, are they coming, are the same number of plants coming off 20% faster? Are you kind of changing the varieties to maybe faster growing, options? What exactly is the driving force behind that? Kathleen Valiasek Yeah, sure, great question, and good morning, Ben. Yeah, so it's really within the stack phase. It's very simply light optimization, okay, and it's something we nicknamed it Thor. Our R&D scientists who are amazing developed the program, actually early last year. What it does is it just, it increases the output out of the stack phase and basically, even all the way through then the process through the greenhouse, we're literally seeing 20% increase in pack down every single week. It's actually pretty amazing, but it's basically within the stack, it's light optimization. And what it does is it increases the output of number of plants, sorry, poundage of plants out of the coming out of the stack face. Ben Klieve Got it. So, four is light optimization on the same number of plants that makes those plants grow 20% faster. Kathleen Valiasek Correct. Ben Klieve Got it okay, very impressive, so then. Yeah, sounds like it. My other question, then before I'll get back into you is, you talked, it seems like it was a bit more, kind of conviction regarding the future of the Midwest, facility, and I'm wondering if you can talk about. How you're thinking about financing that facility, are you looking at kind of project specific financing, the external parties, leaning back into the existing credit facilities that you have a mix of those two or something else? Kathleen Valiasek So, we're, as any company, right, you're always trying to bring new capital providers in the capital stack, so we are talking to sort of very project specific financing, but you know I think we'll probably be bringing new, obviously non-dilutive partners into the capital stack. Okay. Ben Klieve Very good that's helpful well I appreciate you taking my questions best of luck here and what should be a, pretty interesting next few months for you guys. I'll get back in you. Kathleen Valiasek Thanks. Operator Thank you, ladies and gentlemen. I'm showing no other questions at this time. I'll turn the floor back to for any final comments. Kathleen Valiasek I just would like to thank everybody for joining us today and we look forward to updating you on our progress as we further scale and grow local bani's business in the coming quarters. Thank you very much. Operator Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation. Sign in to access your portfolio
