RYTHM, Inc. Q3 FY2021 earnings call

• Moved headquarters to Billerica, Massachusetts, opening Agrify University serving as a cultivation, R&D, training, product showcase, and corporate office.
• Signed second TTK partnership with True House Cannabis for 214 VFUs, expected to generate over $73M in revenue over 10 years.
• Established multi-year Vertical Farming R&D partnership with Curaleaf to study cultivation environment impact on plant health and yield.
• Expanded partnership with WhiteCloud Botanicals, shipping 114 new 3.6 VFUs for their Nevada facility expansion.
• Team worked hard to combat global supply chain issues, finalize acquisition of Precision Extraction and Cascade Sciences, and drive growth.

In the third quarter of 2021, Agrify achieved record revenue of $15.8 million, representing a 460% year-over-year growth and a 33% sequential increase from Q2 2021. New bookings totaled $32.2 million, and the backlog at the end of the quarter stood at $117.5 million, up from $101 million at the end of Q2 2021. The revenue was driven by facility buildup and hardware revenue from VFU deliveries. The VFU segment was a key driver, with partnerships like the second TTK partnership with True House Cannabis anticipated to generate over $73 million in revenue over 10 years, and expansions with existing customers like WhiteCloud Botanicals.

• Anticipates Q4 bookings to exceed $100 million, with revenue expected to be approximately $26 million to $28 million, translating to an annual run rate of $104 million to $212 million and full-year revenue of $60 million to $62 million, up from previous guidance of $48 million to $50 million.
• EBITDA margins are expected to improve significantly due to synergies from the newly acquired Extraction division.
• Production capacity at Georgia facility and Mack Molding ramped up to 220-240 VFUs per month and expected to continue ramping to support growth.
• Secured 10-year TTK partnership with KIEF USA and order for 400 VFUs from El Mirage in Arizona.

• Global supply chain disruptions increasing costs of production materials and delaying receipt of materials, impacting cost of goods and gross margins in Q3.
• Dependence on ability to secure production materials for future quarters amidst supply chain challenges.

Q: Yield increase drivers?

A: Due to optimizations from Agrify Insights software capturing over 1.5 million data points, including plant density, genetic performance, and fertigation optimizations.

Q: Consistency of premium indoor grown flour and price caps?

A: Exceptional consistency allows customers to introduce branded products and retain higher price points, with customers like WhiteCloud Botanicals selling at premiums above average hosted selling prices in Nevada.