Agrify Corporation

Good morning, and thank you for standing by. Welcome to the Agri-Fi fourth quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you'll need to press star 1 on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Anna Kate Heller, Investor Relations. Please go ahead.

Good morning, and welcome to Agrify's fourth quarter fiscal year 2021 earnings call. With us on today's call are Raymond Cheng, Chief Executive Officer, and Timothy Oaks, Chief Financial Officer. Today, management will review the highlights and financial results for the fourth quarter and provide a business and operational update. Following management's remarks, there will be a question and answer session. A reminder that today's conference call is being recorded and a replay will be available on Agrify's investor relations website at ir.agrify.com. Please note that we will be referring to information that's contained within our press release and slides, which can be accessed on the website as well. Before we begin, we'd like to remind everyone that management's remarks contain forward-looking statements, and management may make additional forward-looking statements in response to your questions. Such statements involve a number of known or unknown risks and uncertainties, many of which are outside the company's control that could cause its future results, performance, or achievements to differ significantly from the results, performance, or achievements expressed or implied by any such forward-looking statements. Important factors that could cause or contribute to such differences include the risk detailed in our public filings with the Securities and Exchange Commission and those mentioned in the earnings release. Except as required by law, we undertake no obligation to update any forward-looking or other statements therein, whether as a result of new information, future events, or otherwise. I will now turn it over to Raymond.

Thanks, Anna-Kate, and thank you, everyone, for joining us on the call today. We are looking forward to providing you with an update on our business as there are many accomplishments and opportunities we would like to bring to your attention. I will begin by highlighting our 2021 performance and some recent company developments. And Tim will review our financial results. And we will also give you the outlook for 2022. During 2021, we drove explosive year over year growth. We launched our total turnkey solution for cannabis cultivators. We created a significant backlog of future high margin recurring revenues. We drove tremendous pipeline velocity. We implemented innovative technological advancements to our vertical farming units via FEWSS, and we established ourselves as the leader in premium extraction solution through a series of well-executed acquisitions. Let's first discuss our growth. I'm pleased to report that in fiscal year 2021, our annual revenue grew from 395% to $59.9 million This is up from 12.1 million in 2020. It's important to note in the fourth quarter of 2021, our quarterly revenue was 25.3 million. This represents a 481 year-over-year increase when compared to 4.4 million in Q4 2020. In 2021, Agrify generated over 377 million in new bookings. This is an increase of 919% from 37 million of new bookings in 2020, a tenfold increase. In addition, we are pleased to make you aware that we currently have a total qualified pipeline of over $570 million. It's important to note when it comes to our bookings and pipeline numbers, Agrify only includes the first three years of the expected revenue for the TTK deals and from the total value of extraction product sales. Even though our TTK arrangements have a 10-year term, From a bookings and pipeline perspective, once again, we only include the facility construction costs and the first two years of the SAS and estimated production success fees. I would like to now discuss our total turnkey solution, TTK. The Agrify TTK program is the only solution of its kind in the cannabis industry whereby Agrify forges long-term partnerships with qualified customers and provides them with ingredients needed to launch and operate world-class cultivation and extraction facilities. This includes design and build-out of their cultivation and extraction facility, the installation and implementation of our state-of-the-art cultivation extraction products, process design, training, grow recipes, product formulations, data analytics, and consumer branding. Let me assure you that this program addresses some of the biggest pain points in the industry. Since launching our TTK solution only 10 months ago, we have secured six customers. These customers include successful entrepreneurs who are very passionate about the cannabis industry, a social equity applicant, a minority female entrepreneur, and proven serial cannabis executives who have successfully built and exited a billion-dollar cannabis enterprise. The strongest validation to this TTK is that we currently have 3,729 VFUs under contract from our six TTK and non-TTK VFU customers. We believe each VFU deployed will conservatively produce 35 pounds per year of production. Once all 3,729 VFUs are commissioned, we expect our customers to cumulatively produce approximately 130,000 pounds of dry flour on an annual basis, which will in return create 76 million of high margin recurring revenue annually for Agrify. Again, that's $76 million of high recurring SAS and production revenues to Agrify on an annual basis. Over the life of all of these engagements, the estimated total cumulative revenue to be generated by Agrify will be approximately $837 million, of which we project $750 million will be from very high margin production success fees, SAS fees, and interest fees, all providing a significant return on investment for our value shareholders. Our current TTK engagements are at different stages of development, but I'm pleased to report that we expect to start generating high margin recurring SAS and production fees in the third quarter of this fiscal year. I would like to now shift to our extraction division. Cannabis represents a potential of medicinal and pharmaceutical advancements. Cannabis products produces over 550 different phytochemicals, over 120 of which are cannabinoids like THC and CBD, which are well-known. But other cannabinoid variants like CBGV, THCV, CBN, CBDV are less well-known, but potentially could offer just as much, if not more, significant value. As we continue to learn more about complex chemical compositions of cannabis, the need for quality extraction and distillation solution is clear. Distillation enables the identification, isolation, and separation of valuable cannabis metabolites. The ability to take cannabis compounds distilled into their pure forms and then we combine them into specific purposeful end products for both medicinal and recreational needs is super exciting. Having extraction and post-processing capability presented a great opportunity for Agri-Fight to become far more vertically integrated with our customers while increasing our wallet share of each. Given this opportunity, Agrify decided to strategically expand its reach by establishing itself as the leader in the cannabis extraction industry. In the last six months, we have acquired four of the top brands in the industry. Precision Extraction, Cascade Sciences, Pure Pressure, and Lab Society. Combined, these four acquisitions provide Agrify with, one, the most comprehensive extraction solution from a single provider. Second, the best product brand names in the extraction industry with highly complementary solutions. Third, the most innovative and high-quality products. fourth, over 7,000 customers, including the majority of MSOs. And lastly, the addition of some of the best and brightest cannabis minds in the industry. The extraction market is currently one of the fastest growing segments in cannabis. And in 2022, we expect our extraction division to be accretive, and produced annual revenues of 62 to 65 million, with growth profit margin of 30 percent or greater. We also look forward to launching our new extraction TTK program, and we hope to announce our first extraction TTK engagement shortly. At this point, I would like to turn the call over to Agri-Vice CFO, Kim Oakes.