Local Bounti Corporation

Good morning and welcome to Local Bounties second quarter 2026 earnings conference call. All participants will be in a listen-only mode. Please also note today's event is being recorded. At this time, I'd like to turn the conference call over to Jeff Sonick, Investor Relations at ICR.

Jeff, please go ahead. Thank you and good morning. Today's presentation will be hosted by Local Bounties President and Chief Executive Officer Kathleen Valiasek, and Interim Chief Financial Officer and Chief Accounting Officer, Tony Hughes. The comments made during today's call contain forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. 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, investors.localbounti.com, 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 Kathy.

Thank you, Jeff, and good morning, everyone. I want to start by recognizing the work our team put in to achieve the results we're sharing today. The second quarter continued the trajectory we've been building with disciplined execution across every part of the organization, and I want to walk you through that today. Revenue grew 14% year-over-year to $13.9 million and grew again sequentially from the first quarter. Adjusted EBITDA loss improved 17% year-over-year to $5.8 million and adjusted G&A came down 17% year-over-year as well, all supporting our primary goal of achieving positive adjusted EBITDA. We've talked for a while now about our ongoing strategic partnership discussions across the retail landscape, but I'd say in light of recent events in our industry, those conversations have never felt more relevant than they do right now. Food safety has become a genuinely mainstream conversation for consumers over the last several weeks, and that's translating directly into how retailers think about where and how they source their produce. Conversations that used to center on cost and availability now also focus on traceability, water sourcing, food safety, and environmental control. All questions that our CEA model was specifically built to solve for. We're seeing that shift show up almost daily across our retail network, including with prospects who aren't even our customers yet. Retailers want to understand how our water is sourced, treated, and monitored in a closed loop and why growing indoors under controlled conditions is structurally safer than open field agriculture which is exposed to unpredictable outside conditions like runoff, wildlife, and weather. Our model also collapses much of the traditional supply chain. We take a plant from seed to finished package in a captive environment, which is a meaningful advantage when a retailer needs to understand and trace a product's journey quickly. To be clear, no system eliminates risk 100%, but growing indoors removes several of the specific pathways. like contaminated irrigation water and wildlife exposure that drive these outbreaks in the first place. Conventional produce supply chains built around open fields and exposed to uncontrollable environmental impacts have a hard time addressing those difficult conversations with confidence. That shift doesn't create demand overnight, but we expect it to be a significant driver of long-term growth as retailers and ultimately consumers increasingly choose product based on where and how it is grown and the brand behind it. The strategic conversations we've been having across our network for a while now carry more weight and move with more urgency than they did even a quarter ago. So turning to the commercial side, following discussions with a major retailer, we are relaunching our single serve salad kit line and agreed with that retailer to a pilot launch throughout the Mid-Atlantic region in approximately 400 stores this fall. It's an encouraging step in building this product line that our commercial team is genuinely excited about and we expect can be a driver of continued growth for this product line in the future. We'll have more to share as that develops. So the rest of our commercial base continued to perform well across our approximately 13,000 doors. and continues to build on our base of blue chip retail relationships. The two accounts we discussed last quarter, a six SKU rollout covering more than 250 Harris Teeter stores and a large regional retailer operating 160 stores are both now fully launched and tracking in line with expectations. In July, we also launched a new retail partner in the Mid-South region featuring five SKUs across approximately 66 stores, and in early August, launched a new retail partner in the Rocky Mountain region featuring four SKUs across approximately 110 stores. Between the first and second quarter, we were also awarded bids extending supply agreements with multiple national retail accounts. These relationships span key product lines including baby leaf lettuce and organic butter lettuce. These wins are a good measure of how our existing retail partners actually view us. Our Cesar Romano salad kit also continues to perform well. The additional distribution center we picked up in the first quarter launched in May and is tracking in line with the strong velocity we saw last year. And we continue to see real opportunity in Arugula where the conventional supply chain has struggled to keep up with demand. Our greenhouse grown approach is a natural fit there and it's a conversation we're actively continuing with retail partners. Collectively, these wins reflect the strength of our relationships with blue chip retailers and their continued confidence in us to deliver consistent, high quality products over the long term. Turning to operations, the tower upgrades we completed across Georgia, Texas, and Washington last year continue to deliver. running at roughly 10% higher yield capacity than before those upgrades, and our yields remain at the highest levels in the company's history. Looking at our California facilities, the selective investments we've talked about before are on track, aimed at improving efficiency in those legacy assets and strengthening our position in Living Butterhead Lettuce, and we still believe they can improve yield by as much as 20% as those projects progress through the year. In fact, our initial investments at one of our California facilities is already driving an approximate 10% increase in total production versus the prior year period. It isn't limited to California either. Across all of our facilities, we continue to make tangible progress on the cost side of the business. For example, more efficient seeding practices have lowered our seed cost by approximately 20% year over year. and we expect to continue garnering cost savings across procurement, maintenance, labor efficiency and freight management across the network. With that, I'll turn it over to Tony for the financial review.