Indoor farming operations might be sprouting, but it isn’t all growth, all the time.
In its first financial report since becoming a publicly traded company, vertical farming outfit Kalera released its Q2 earnings this month with total revenue of $1.3 million and a net loss of $78.7 million, which the company attributed in part to “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.”
The Florida-based company went public in June via SPAC Agrico Acquisitions Corp in a deal valuing the combined business at around $375 million, and is one of the few publicly traded vertical farming companies, along with companies like AppHarvest.
Kalera has operational farms in Orlando, Denver, Atlanta, and Houston, as well as an international location in Kuwait, and it sells its greens to grocers like Kroger and Publix.
Growing pains
Jim Leighton, president and CEO of Kalera, said on the call that the company was putting its expansion plans on hold, suspending the opening of new facilities in Hawaii, Minnesota, Ohio, and Washington State.
Leighton said the company’s new focus will be on achieving profitability for its existing farms, which Leighton hopes to do by the end of 2023. The shift is due to “pragmatism,” which Leighton said that he believes is important in sustaining vertical farming as companies raise hundreds of millions of dollars in funding but only have one or two facilities to show for it.
Though Kalera is taking a step back from expanding operations, Leighton insisted that the move was not influenced by fluctuations in the market, which are affecting other industries like space, climate tech, and AI, but was instead driven by a need to “quickly prove out the business model to make sure it absolutely works,” and achieve profitability.
Keep up with the innovative tech transforming business
Tech Brew keeps business leaders up-to-date on the latest innovations, automation advances, policy shifts, and more, so they can make informed decisions about tech.
“For us to grow and to be successful, and to serve our purpose…we need to figure out how this economic engine works so we can reach sustainable margins for reinvestment, for growth. We’re not just using investors’ money to grow, we’re using our own money that is basically created organically from the business model which we created,” Leighton said.
For Kalera, the obligations of being a public company and to its shareholders are paramount in its decisions, according to Leighton, who said, “as a publicly traded company, I think you have a greater responsibility, because you’re using a wider base of funds from who knows whom. We obviously know who our major shareholders are, but anybody can invest in Kalera. We have a responsibility to do the harder right versus the easier wrong.”
The company also released its first ESG report in August, which outlined its priorities in water conservation, reducing its carbon footprint, and food safety by producing non-GMO products that are free from pesticides..
“There are a number of people in the growing segment of the population who are very interested in where you are on sustainability. And a lot of them, many of them will only grow or buy products from companies that have at least a pathway to more sustainable agriculture or a system to deliver food to consumers,” Leighton said.