Agrify Corporation

please press star then zero. I'd now like to hand the conference over to Anna Kate Heller with Investor Relations.

Good morning and welcome to Agrify's first quarter 2022 earnings call. With us on today's call are Raymond Chang, Chief Executive Officer, and Timothy Oaks, Chief Financial Officer. Today, management will review the highlights and financial results for the first 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 would like to remind everyone that management's remarks contain forward-looking statements and management may make additional forward-looking statements in response to your question. Such statements involve a number of known and 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 such forward-looking statements. Important factors that could cause or contribute to such differences include the risks 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 herein, whether as a result of new information, future events, or otherwise. I will now turn it over to Raymond.

Thanks, Anna Kate. I just want to thank you all for joining us on the call today. I'm going to begin by highlighting our overall performance in Q1 and providing some recent updates on our business. And then our Chief Financial Officer, Tim Oakes, is going to discuss our Q1 financial results in greater detail. After that, I will go over our outlook for 2022, and then we will open up for questions. We are pleased to report our revenue for the first quarter of 2022 was slightly higher than our guidance of $25.5 million. Revenue for the quarter was $26 million. an increase of 271 percent from the prior period. We generated over 43 million in new bookings during the quarter, of which our extraction division had record quarterly bookings of 20 million. We currently have a total pipeline of over 375 million. As a reminder, when it comes to our bookings and pipeline numbers, Agri-Fi reports the total value of our extraction solutions and non-TTK cash-based VFU purchases. But for our TTK engagements, we only include the first three years of the expected revenue. Even though the partnership is typically 10 years, from a bookings and pipeline perspective, we only include the upfront facility construction costs and the first two years of the SAS and estimated production success rates, which is based on the assumption that each of our VFUs will produce 35 pounds of dry flour per year. I would like to first share with you the significant progress we're making with our extraction division. In the last seven months, we have strategically propelled ourselves to the top of the rapidly growing cannabis extraction industry. becoming the formidable leader in this space through the intentional acquisition of the four leading extraction brands. We have successfully integrated finance, legal, HR, IT, and marketing. We have consolidated the sales team and established territories with targeted accounts. We have 19 employees that are part of our extraction division's sales team. The team is focused on upselling and cross-selling all of our high-quality extraction solution, as well as our services related to lab design, installation, and training. In addition, we're seeing our VFU customers buying extraction solutions and our extraction customer wanting to learn more about our VFUs. As mentioned in our prior call, Once integrated, we plan to expand our TTK program into the extraction site. Last week, our extraction division announced the launch of the PX5, the most advanced and scalable passive hydrocarbon extractor in the industry. The PX5's unique passive recovery design offers immediate economic benefits to cannabis operators of any size by increasing the daily production up to 33 percent, savings of up to 40 percent annually in energy costs, and increasing hourly extracted production by over 200 percent. Yesterday, our extraction division announced a multimillion-dollar sale to Boone Labs that will outfit a new production facility with a complete range of Agrify offerings. including 72 of our vertical farming units, VFUs, solidness extraction, hydrocarbon extraction, and ice water hash solution. This is our cultivation and extraction coming together for a complete agrified sales to a single customer. As mentioned earlier, our extraction division had a record quarterly new bookings in Q1 of 20 million. We continue to expect our extraction division to be accretive and produce revenue of between 62 to 65 million for fiscal year of 2022 with gross profit margin of 30 percent or greater. Now, I will turn to the cultivation side of our business and, of course, our total turnkey solution. In April, we announced our first New Jersey TTK with Loudwellness. Loudwellness is one of the only 18 licensed cultivation and manufacturing operators in New Jersey. This 500 VFE's partnership is expected to generate approximately $118 million of high margin production success and SaaS fees over the next 10 years. We estimate the commissioning of the VFEs for this project to be in Q2 of 2023, with the first harvest happening in Q3 of 2023. On the MSO front, we also were very excited to announce our second agreement with a prominent multi-state operator, this time with Greenlight Cannabis. Greenlight is a rapidly growing MSO in the United States with 28 locations across five states. Under the agreement with Greenlight, we will be installing VFUs that will enable Greenlight to increase its growth canopy in order to achieve rapid business growth and geographic expansion under one standard. Internationally, we are pleased that in April we consummated our first VFU agreement with a European customer. Biocan Pharmaceutical, which is based in Portugal, will be deploying 190 VFUs at its 25,000 square feet state-of-the-art cultivation facility. The engagement with Biocan will help Agrifly begin to pave a path for success on a global scale as we continue to put in place the ability to manufacture our VFUs locally and provide quality VFU installation and support for future European-based customers. As of today, Agrify has contractual commitments of 4,569 VFUs that will be powered by the Agrify Insight cultivation and production software. 3,783 of these VFUs were committed to as part of the TTK program, which required customers to pay both production and SAS fees for up to 10 years. And it also typically includes Agrify providing a variety of other value added services. The remaining 786 VFUs were sold to customers through one-time equipment sales, but still required these customers to pay monthly SAS fees on a per-VFU basis. Assuming 35 pounds of production per year per VFU, cumulatively, all of the VFUs under agrified TTK solutions or just SAS agreements will produce an estimated $923 million in total revenue over the course of the next 10 years, of which $674 million is in anticipated high margin production success fees, 129 million in anticipated high margin SAS, and approximately 95 million is in construction related fees. It is important to reiterate once more that our TTK business assumes that each Agri-Fi VFU produces 35 pounds of cannabis flowers per year. or on average seven pounds per harvest with five harvests per year. We are extremely pleased to share with you that one of our VFU customers in Nevada has consistently produced over nine pounds per harvest over the last two months. With certain strains hitting as high as 11 plus pounds and with THC concentration as high as 34%. At a productivity rate of 5.2 turns per year, this customer is on track to produce close to 50 pounds of dried flowers per VFU on an annual basis. This is a strong validation of the robust capabilities and the performance of our VFUs. I would also like to update you on our progress with various customer facilities. As this is tied to when our anticipated high margin recurring revenue from our TTK customers and non-TTK VFU customers will begin to formalize. In the state of Nevada, we will begin to charge our non-TTK VFU customer, White Cloud, SAS fees this quarter. Next week, we will begin VFE conventioning with our Las Vegas-based TTK customer, Treehouse, and we'll begin charging both SAS and production success fees next quarter. In Washington and Colorado, we expect to go live with Hannah and Greenstone in early July, and we'll begin to charge SAS fees in the third quarter with anticipated production success fees coming in in the fourth quarter of this year. Furthermore, we expect to begin commissioning our VFEs for the Massachusetts-based TTK partner, Button Marys, before the end of 2022, and charging SAS and production fees in the first quarter of 2023. We have also moved ahead with the A&E and several plans with our Florida TTK customer Gold Leaf and our Arizona partner. I'm also pleased to inform you that El Mirage officially received their license through the Social Equity Lottery on April 8th under the name of Woodstock One. El Mirage is our Arizona TTK partner. As you can see, we are making excellent headwind with our customer deployment schedules, and we expect to start generating high-margin recurring SAS and production fees sooner than initially planned. Now, let's spend a minute to talk about our future TTK financing. We plan to finance our future cultivation facility construction requirements with debt-based investment partners, which include REITs, among other types of investors. We expect our debt-based investment partners to finance an average 60 to 80 percent of the construction, while Agrify contributes the remaining capital. Today, we are pleased to announce that we have recently entered into a term seat with our first debt-based construction financing partner, and we expect to finalize that partnership along with a new GTK project in the near future. The combination of our current balance sheet and this leveraged financing structure should give Agrify the ability to scale significantly while maximizing shareholders' value. In summary, we are very pleased with the accomplishments achieved for the first four months of the year, and we look forward to generating high margin recurring revenues in the second half of 2022. Now I would like to turn the call over to Tim to talk about the results from the quarter.