Agrify (AGFY) 23 Mar 222021 Q4 Earnings call transcript

Good morning, and thank you for standing by. Welcome to the Agrify Fourth Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. to Kate conference Heller, like speaker to now Anna today, Investor would hand over the your I Relations. Please go ahead.

Good quarter for quarter business fiscal will review us to the Oakes, Chief Agrify’s fourth earnings and highlights Today, Executive welcome operational are and With management Officer. Chief call on morning, call. a today’s and Timothy and Chang, Officer; the provide Financial year update. and XXXX Raymond fourth financial results

reminder be well. be referring will Please conference a be Investor there that remarks, our on A and will today’s we’ll to website is session. replay Relations management’s within can contained available accessed the press recorded, being be Following that’s note that ir.agrify.com. call and question-and-answer release which Agrify’s as information website a at on slides,

over new therein I future no otherwise. undertake to as Important events Except we of the many Exchange that Before questions. Commission law, from cause release. like update it significantly as its to we’d forward-looking risks forward-looking any risks and and performance implied filings of response and management management’s could control or forward-looking remind expressed now statements earnings statements other differ by contribute make results, to information, that statements. to the Such include to factors involve as and turn or Securities Raymond. of will company’s the uncertainties, achievements and whether could statements, required everyone any achievements or in a by in we begin, or result detailed obligation forward-looking differences number results, unknown additional known public such or cause future that with performance the may such in your remarks statements contain to outside or our mentioned are the which a

us for call thank Thanks, on everyone, joining Kate, Anna and the you, today.

accomplishments are and business performance our and to will like XXXX. XXXX for opportunities you on I providing results, bring outlook with and We an attention. we and to highlighting many developments, to there recent are looking by as our the give update your also would review some our you forward begin financial we will will Tim company

drove series cultivators. growth. solution established We advancements implemented created backlog turnkey of well-executed a acquisitions. we our velocity. high-margin technological the XXXX, Farming leader We a pipeline and through We in launched explosive of we our for During drove premium year-over-year to as Units, VFUs, extraction We total future Vertical recurring revenues. cannabis tremendous innovative ourselves significant solution

$X.X XXX% represents of in in bookings. In when This an QX year-over-year million $XX.X a bookings This XX was tenfold fiscal from increase. in compared XXX note XXXX. to our first I’m pleased million revenue million. This of the year $XX.X our million discuss quarter fourth Agrify XXXX, XXXX. XXXX, Let’s that million. quarterly million $XX.X annual increase is new to a revenue report XXXX, grew XXX% It’s in increase important growth. from of generated in up XXX% in new XXXX, is from our to to over

to revenue arrangements includes total In our to make it of and addition, have currently to expected $XXX numbers, we bookings customers Agrify TTK. The program over solution the the aware kind are them our with pipeline It’s forges when Turn-Key would of Solutions, comes with to a to years like qualified pleased Agrify we industry, note is that needed the extraction facility, first important training, you and the costs design million. process two qualified implementation only discuss Total and of three again, and TTK of pipeline consumer installation the whereby the we and XX-year cannabis built its and branding. of out the perspective, our for Even formulations, product I of and a and pipeline estimated cultivation deals and term, construction and from ingredients their grow the provide product from only production success TTK extraction operate recipes, analytics have cultivation facility products, of and includes the and launch in first the long-term a TTK only design, Agrify partnerships fees. years sales. and though now extraction data This facilities. SaaS our extraction once include world-class bookings state-of-the-art total cultivation value

annual on of pain of six some only revenue Agrify. successful Again, addresses customers. for industry, recurring return, program of which Solution in pounds each female believe XXX,XXX and produce VFUs a strongest recurring will include commissioned, our this that cumulatively $X minority annually we entrepreneurs of Since very is have you months SaaS $XX Once from we The high that’s an exited in successfully customers about VFU serial revenues billion assure a conservatively have X,XXX and have to non-TTK who an biggest to sixth year and per proven and pounds margin on are executives expect validation basis, will, passionate high These VFU flower secured industry. the under dry all VFUs annual points production of contract are our a me the approximately TTK Let XX the million XX X,XXX produce we cannabis customers. production. Agrify million create launching enterprise. TTK customers entrepreneur, that this basis. deployed We built to our TTK social $XX cannabis cannabis currently equity who applicant, ago,

be high-margin production shareholders. our and by Over all will all fees, interest cumulative approximately Agrify these significant be be $XXX success on fees, from of return of a total million, $XXX providing estimated the life we very for engagements, million of the project revenue which SaaS fees investments will to generated value

known. I of pharmaceutical start like produces fees over represents that are shift TTK year. report Clinicopia SaaS medicinal our to division. high-margin XXX fiscal and now and would well Cannabis quarter chemicals, Our while THC expect developments, third products vital different of cannabinoids are current which this Cannabis XXX extraction of stages to in are recurring pleased and CBD, of engagements over advancements. different a I’m we potential at generating which to to production the by

For significant CBGV, not known, CBN, if other cannabinoid just well offer value. more, CBDV, are as less much, potentially but THCV, variants like could

we take Distillation to cannabis into separation continue ability and valuable learn isolation more them As a their extraction recreational and for into about compositions the chemical with specific more combine wallet of extraction share the pure compounds for super to and complex exciting. for need clear. medicinal forms, cannabis, identification, is The both distilled become increasing of far solution metabolites. opportunity each. to cannabis quality integrated we is customers, means and of then distillation while Agrify and Having end purposeful our vertically capability presented great products enables our post-processing

Given provider. in the a solution four Agrify to provide have the industry, extraction comprehensive one, six last expand reach in PurePressure this Society. opportunity, of extraction Cascade single top the most acquired decided Sciences, in leader Combine industry. from the In months, and establishing Lab itself with, the Agrify strategically Precision its Extraction, cannabis as by we acquisitions these the brands four

extraction the highly Second, the solutions. with product in industry brand best names complementary

the MSOs. lastly, is quality high of of and products. The most innovative best currently of some majority addition the minds industry. the including and Fourth, extraction brightest the X,XXX And market Third, in the customers extraction over to of cannabis. And accretive annual produce profit million in segments in $XX division XXXX, margin growing expect million fastest we the be of greater. to with and of XX% one $XX or our growth revenues cannabis

like to turn announce to we call hope forward our over extraction TTK new Tim look our this to launching TTK and extraction program also to We I At CFO, engagement Oakes. would Agrify’s shortly. point, first the

it’s the earnings to results and guidance then for for full and fourth our exciting open been you, months the up year Good for we’ll analyst you Then will joining remarks call. for a speak company, Thank I’ll active fourth Raymond. quarter XX different. financial and morning, thank XXXX. Raymond the on the us provide call and quarter, everyone, today’s and certainly Overall, very closing no in questions.

made the changes are our we have strategic model. fourth business full Our of the reflective results quarter investments year and to and

Specifically our we our our recent line leveraged arrangement successfully which improve been positive top gross refer effects the as and by performance solution, and which positively total I’ll expand has revenue fourth acquisition margin operating and activity, influenced our of turnkey quarter metrics. to financial to our TTK other

XXXX well in increase financial backlog $XXX $X.X extraction on $XX We to in Revenue quarter of quarter fourth XXX% were well represents revenue the of as On first to XXXX. quarter Precision the cultivation both This in related XXXX. the revenue both related the quarter October XXXX related contribution million XXXX XXXX extraction $XX.X compared our fiscal representing of the associated the XXX%. approximately backlog of bookings specific a and equipment excess fiscal Cascade as fiscal revenue The in totaled million, $XX.X XXXX XXXX. equipment and was TTK acquisition year-over-year in million quarter $XX.X of results. year-over-year related of commentary in million million related million in for revenue. on year $XXX a XXXX Solutions $XX.X as with with basis, revenue a in revenues. revenues, includes of The revenue of includes bookings, the fourth quarterly of an to the bookings entering year in as which year fourth revenue of Moving to X, million. Extraction construction company’s enter primary full fourth XXXX drivers compared equipment which to the our periods Sciences, of million incremental of increase increase the quarter contributed in fourth and Bookings increase full of full million are $XXX compared

are margin negative X of five for TTK total the is to the and gross revenue expected the backlog two fourth production both ago or though, revenue first to total of fee even SaaS by only revenue partnerships future offer amounts, X% $X.X or revenue, margin of could three $XXX,XXX of years quarter. of revenues, of the XX-year gross more for we much typically Total bookings as to X.X construction note first to in and As year arrangements estimated was which that it’s XX% million stated the Raymond, as include potential. XXXX the a earlier compared portion our years these reported quarter important times in of that

reporting a in of fourth in XXXX approximately gross margin revenue or is year-over-year is margin quarterly to company of result improvements year $XXX,XXX fiscal or the activities. of gross specific two XXXX, fiscal of margin year of fiscal primarily Gross year X% compared of comparative periods million XXXX. $X.X total quarter the full revenue total For X% and

of gross above the equipment VFU standalone well a margin recorded older a historical First, the models, VFU VFU company’s gross on company sale in resulted which margin sales.

equipment extraction which to generate XX%, our was the also is which is performance. margin with revenue, positive gross above Second of lifting gross approximately the margin associated well gross margin expected historical company’s

meaningful fourth While able performance. our aided quarterly our gross gross as to gross fee fourth in SaaS late report roughly software we related certainly performance necessarily we range. be we to the production highlight early we Until we extraction mid-teens are which to quarter of margin currently or reflective near-term are margin a margin like performance pleased begin our expect our time that profit revenues, third XXXX, by would XXXX, equipment of and sales quarter that, in of that with the anticipate performance isn’t quarterly such in expected to

going to be complicated. This expense. to is on SG&A a Moving bit

minute. to bear you So me with ask a I’m for to going

SG&A our think other financial fourth of the X, to fair which the with little excludes XXXX. charges of quarter the value quarter statement expense XXXX, October of totaled of million contingent which Cascade to consideration, our fourth some associated deeper as acquisition $XX.X Precision in in of million in changes items. compared the XXXX compared is SG&A with I line $X.X and dive fourth quarter associated a require in

million on of related a both third assets to against reserves against The As in to of Cascade XXXX. we’ll accounts $XX by $XX.X of third fourth again, acquisition SG&A with compensation. also to Cascade, in expenses, compare expenses Acquisition increase not in Precision review discuss the company year-over-year totaled of which in full of year ago being of now period. XXXX growth public amortization, increased quarter added in to SG&A compared the Precision, related establishment PurePressure SG&A et million public has company’s and related XXXX the related our quarter million in of XXXX expense charges, of previously Fourth are in the increase expenses, the includes acquisitions. operations SG&A fourth increase quarter February which the XXXX fees, October quarter with in in which million fourth fourth to a and third of in more On the XXXX. quarter in began to drivers fiscal the expense $X.X that of down and be outstanding An significantly during business in million is acquisitions expense are expense a basis increase order $X.X meaningful incremental associated balances. million of part terms expense, Breaking full SG&A fees, to year year it in connection expenses increased headcount, Cascade. them SG&A XXXX reflective we totaled associated SG&A G&A sequential expense year a to the company and the in and which our compared $X.X amortization identified $X.X acquisitions. cetera, SG&A of offering depreciation the Maybe XXXX relates fourth one-time by of with initial compared large primary that’s to sequential certain professional essentially receivable essentially full minute intangible impact quarter would the items, quarter the quarter described which the increase and and XXXX increase magnitude expenses and of scale the in XXXX, recorded in SG&A has the basis, the an which of and An the our did following. SG&A both in Precision X, Expenses the in note XXXX. quarterly quarter are of scale XXXX XXXX incremental driven stock-based

the certain quarter consideration based performance, date quarter. in $X.X consideration of time of $XX earned of initial XX, an This earned members to of the a totaled revenue overall Moving $X.X $X.X million both and quarter million earned December fiscal which to increase part XXXX $X the on to million at in is exceeded fourth the upon of year revenue development million research totaled of the compared compared as could and quarter for to $X.X units, attributable Insights. expense former initial to earned expense to development fair The quarter the accounting consideration research development XXX, XXXX company's fourth specifically to research to On year be former of $X.X additional and Cascade. From have In basis, on the contingent to estimate development the Agrify continued in to ASC of the amount XXXX. ending both combinations full million. by of the the million and that vertical members be determine Precision-Cascade expenses of fiscal based its expense enhancement our the in Based our well the relates contingent members of standalone company continued during A additional as value we cap of million as acquisition. as of in full expenses as requires perspective, company’s investments $X.X development. period. former their up research and in consideration Precision the amount thresholds contingent a an approximately involved an relates SaaS to Precision-Cascade amount in SG&A million business carved by acquisition a farming Fourth acquisition out estimated XXXX. the of XXXX the the achievement potential accounting of operating this periods, estimate software of expense change development originally

of record XXXX as guidelines of required expense capped the to two the consideration additional company's XX company estimate company that this goodwill. year. price with respect as at The per made probability and XXX, of periods initial contains consecutive of can earn-out in of earned purchase the the ASC increase PurePressure period the The recorded month XX, an our each additional incurred is million operating accounting. to increase per it is achievement under part of not an $X.X and an As acquisition has initial two potential consideration the be December earn-outs. to The as

other of $X.X performance is assumptions income on We in quarter company initial of Any future income total $XX,XXX expenses. our total touching PurePressure’s periodic original future will quarterly and to that expense result to the generate identified other or estimates other the continue operating our in of for basis. reporting fourth XXXX. compared change increase against either million an evaluate of our upon Likely fourth the XXXX, in in a quarter to our changes a reduction estimates will expenses,

period, in reporting to were For fiscal other expense January, and changes income to the of by fiscal are between expense period. the the investors the amended full the and convertible In of year compared total certain company full of year promissory notes other periods, fiscal other million which board XXXX $X.X total into million company $X in directors subsequently is income XXXX the company's the XXXX, related XXXX. in in entered all directly

loss which company reacquisition amount the fiscal $X.X carrying of in XXXX fourth the an quarter the price the promissory on of notes. amount aggregate of the net the year represented and of During million, extinguishment difference of XXXX, the the in the notes convertible notes full recognized the between

XX, extinguished extinguishment of liabilities net de-recognition of ended quarter the recognized of the XXXX fourth of not of the During settlement as have notes. other the liabilities during derivative company of million the recognized million expense sheer of the features. debt. the The associated derivative value peer Also year of of the the result company with a the in any on gain peer promissory connection extinguishment change in did fiscal of the with XXXX, during original convertible $X.X portion XXXX, variable December $X.X a value in a amount with company connection carrying the

interest As reporting historically provision $XX,XXX a to deferred of December company has owns it position. cumulative established each The a and loss of the has reported We XX% We the net portion in company LLC. into Valiant in the and The fiscal company we comparative XXXX statement. allowance operations relates of liability in results Agrify was our periods. XXXX XXXX to net income venture two controlling assets. the Valiant the income and ended by is fiscal consolidated quarterly of in are taxes from year recognized the periodic attributable in consolidated periods. XX full LLC, No fourth its the our it’s quarter XXXX year or operations than taxes loss operations the and a Agrify for generated company Accordingly income of of to loss during provision of fiscal parties. taxes, majority in income which non-controlling periods Americas, carrying quarterly income results wholly year or net owned financial attributable XX% company the joint income of the represents which the LLC, Valiant and a presented less of valuation entities and/or in currently owner tax limited full value against losses loss recorded

$X.XX in loss XXXX per during year fiscal loss the the share of $XX.X loss expenses million a million loss million or million of the operations to fiscal amounted net of of in fourth share. EBITDA per $X.XX discussed XXXX of of during million fourth result loss to EBITDA in $X.X quarter year Similarly, adjusted compared XXXX loss quarter. Adjusted quarter to a $XX.X during resulted resulted $X.X described was fourth the XXXX. our per or Net share Finally, gross changes diluted quarter net the of a of in compared of an per in $XX.X or a ago XXXX $X.XX share. net million net previously the revenue, in $X.XX changes margin diluted in or $XX.X previously the operating

an full For adjusted of the year EBITDA was $X.X period, fiscal a XXXX adjusted million million EBITDA full compared loss fiscal in of period. the to XXXX $XX year loss

regarding most the to morning earlier Additional including release the can this press which we measures, our also use non-GAAP is of GAAP available of our reconciliation Investor a on found www.egrify.com. information issued website Relations measures, the comparable section at be in

and balances to marketable color want as XXXX. provide securities I we our Finally, some on exit combined cash

is XXXX, of XXXX. drivers $XX of primarily combined which balance as of combined December securities change As upfront XX, XXXX and we of in a The reporting of acquisitions, are million. two balances cash the million a This $XXX.X of the with approximately represents our a expenses $XX.X of marketable $XX.X decrease XX, consideration from periodic paid associated September company million. million cash aggregate our other of and biggest balance

investment debt of the VFU continue week, company, production Both both provide to to to announced I'd capital additionally, certain and require driving strengthen company shareholder the goal these $XXX Our Obviously, by In be like enable subject like types. to the to our the value. Raymond growth TTK to we balance now sustainable execute to last capital-raising comments. build long-term call and operating requirements, the separate given to inventory And our million of back us other XXXX critical which expenses, our in activities. access our a up line and to announced two well of enabled sheet deployed his private of of we equipment that, top arrangements, to is guidance final financing. generating of a upfront in as significant turn January, funding arrangements; With such $XX.X construction the related XXXX, first debt to in quarter of have announced additional units we the a to performance finalization served the million facility, placement. payroll will access transactions our TTK nature as costs, under which In the operating near-term investment VFU company. closing and to

Thank you, Tim.

of to fiscal XXXX, be for In XXX% revenue approximately XXXX guidance to revenue and QX, accomplishments have I share we $X that would our like will we XXXX. of for expect Now QX year $XX.X our million This generated financial an in the and the our XXXX. be of million. results we QX increase for covered from

For XXX% year half an favorable in generated million, when to revenue $XXX reflecting of we be move extraction, mix fees. compared production XXXX, In of more expect XXXX. fiscal to $XXX $XX.X second of XXXX, increase SaaS we we high-margin the million anticipate towards the full revenue to approximately million our and success will

demand stronger. of valued rapid Lastly, grow we to at want reiterate competitors. to pipeline we been is qualified to Currently, to current shareholders has to further We the never a that prudent to to our from demand opportunities, market Agrify's separate number high rate. have potential share million additional continues believe over Agrify $XXX it that and respond seize our gain opportunity any and

debt to financing is drive in continued equity and recent facility a Agrify position the accelerated place, With growth. in

will Operator, In point, with we provide this type partnerships equipment financing maximizing financing the Agrify with are for while At to questions exploring scale, addition, shareholder for large structure go VFUs. audience. like of our to call ahead. from up I please significant This construction companies REITs would values. open financing and

Grey question Global first Our Alliance Instructions] [Operator from comes Aaron Partners. with

is line open. Your

the guys. there Hi, for morning and the for questions and thank commentary good you

question million. you for the for just on gave Raymond, first XQ, So me, guide $XX.X

kind little kind extraction know how So bit? of there, legacy seasonality relates within flat of in could there? terms there Just that to XQ, Because is acquisitions the some slightly of some to more commentary was some added because you a I so in up onetime purchases. particularly of offer roughly

whether you're or color So not there habits Thank I'm or there seasonality create you. the that some looking for? not are buying of some in just sequential sure terms growth some

But the we actually, our have the cash been the seasonality for a Yes, as the bookings lawsuits to business. a VFU large unfortunately, couple that, involving State equity addition know, of side effect of deals But legal Illinois. applicants, in kind a of some social sorry. –license is there's you slightly licensees of extraction there of in in units,

by legal the of one quarters. these two and our fourth fourth pushed booked it's And of were already to ship VFUs to a shipment in the They as are but production. QX, We little the clarification originally that, quarter we so is we expect back But quarter, actually finished in we in and deals to ship those the shortly. expecting units get bit. out lawsuit the dragging actually as soon very do

So believe not that I And mentioned will we're a seasonality. we're little as to do will in the seeing up pick QX. execute. momentum, in of continue slowdown – earlier, and any bit business I we And the

been kind obviously, Great. acquisitions so Thanks much Those side. had of number terms a detail. of that the in onetime had for And extraction for then you've historically more of purchases.

You looking you guys that are alluded some TTK through in sales call. to the add reoccurring more earlier in to the

equipment legacy as ones as the entering or the be you're TTK model wonder already that looking customers I just well have bring that for So of Thank buying how for newer more on equipment you. extraction terms to in both reoccurring who to legacy onetime might programs? who business, purchase

Yes.

on recurring I So start earlier, revenues we as expecting to the receiving side. mentioned are Aaron, cultivation

more of super significant sort be will biggest number QX, end really will up. be And of the the obviously for small as the bring It is coming we this obviously, facilities. towards QX QX, XXXX flow QX company. the because year in on potential fact and by of initially, of probably exciting that's will ramping In but this in start the

it. very know, On this sell very, of there's the aspect hardware, recurring more just side, of it's the sales. point, been as and extraction you and We onetime titled transactional little to up

And I extraction on we our recurring extraction top. close our We also believe will are working basically deals. first well. signing as announced the XXXX shortly. able team will as begin to division of control And And very, is very software XXXX TTK very to recognize put see will hard to recurring to in extraction revenue well. we the have out confident deals extraction-based we in nice remain you TTK revenues be that

right, I very in XXXX. will in the good thanks much. luck All back jump queue. And

Thank you, Aaron.

you. Thank

Des Our comes from Lauriers with question Craig-Hallum next Capital. Eric

is line open. Your

question. you taking Great, for thank my

were we was in of the recurring for. QX, that coming regarding So looking one revenues what quarter ahead

you project where required of Assuming regulatory Mary's, you was for that's Massachusetts kind of And on us notoriously they is sort there? an of kind been of approval. then are just if coming from And regulator. I approvals I update give wondering right slow what what other know expecting & now? have a are from that Bud could sort guys

to So of start you sensitivity just Or Bud Thank how the kind you. that? baked sort steps required & these Mary's about into wondering until what in. of for revenues coming remaining just think

facility quarter recurring some Eric, but actually coming the revenue of into such we customers Washington next TTK will that fruition not to Vegas, quarter bringing from & Hi also have in Mary's, third to the so have in the that is it's programs, completion facility the still and in Bud as the Mary's two. quarter. schedule Bud converted legacy in fourth or facility from the coming its is be & the Colorado the we on in

and revenue, from start the schedule Bud So fourth will pretty is we coming production coming Bud recurring will QX going to for in & to those were we the on kick completion, really & QX, from the of and facilities. recurring accelerate And coming start year. some deployment, seeing much in I and not in is those still quarter able of into actually in fruition as it's on stated Mary's. that legacy Mary's revenues next customers

switching of Okay. will revenue recurring legacy that That's either Thank give you. you sort that revenues Could numbers the recurring number additional color around customers? the help to frame might these or any sense. that from very any just legacy for be from these us of helpful. VFUs TTK customers expectations makes And

Yes.

contract in sort total range. probably So the probably is customers X,XXX. were VFU flipping number in on, these as I the of earlier, stated – under XXX XXX the legacy aggregates in that VFUs of And

ones board. those Bud be we that first the will that. will then have larger programs & And behind So we be obviously, obviously, other on bring Mary's And then XXX.

around units So legacy estimate roughly to you total. the customers, in can be XXX

you. Thank

you. Thank

Our comes next Partners. Scott with from question ROTH Fortune Capital

open. line Your now is

thanks questions. and Good for morning, the

Raymond, as as Just a real VFUs. quick follow-up on far that,

You have contract. under a number of TTK

coming of from pipeline that If onetime for VFUs, X,XXX some board projects non-TTK on were percent going to the non-TTK just being projects, VFUs to legacy you added or have numbers coming what VFUs here? that require construction

got it’s favorable the ship issue, would because but all decisions of VFUs out we mentioned actually say, we particularly in licensing actually TTKs. Illinois. bit other probably XXX from But I cash Michigan. The states have additional just primarily cash heard customers, little legal very a earlier, as state the And And several of customers. state X,XXX delayed, are Illinois, for from around, the of of customers, sort non-TTK aggregate, I’ve

the we very So units get hopeful will that shortly. shipped are

it. on demand And a that. I No, strong. appreciate Got follow-up then being your

line product gain of share obviously. qualified of to a on at million XXX continue bit in forward looking kind to? you’re quality that market you versus at unpack the talking validate of onetime here, kind kind to your have of here. Kind that are that TTK qualified of just Can MSOs little looking You MSOs pipeline, number technology still moving

very rest million the VFU we arrangement, that of And are million in extraction actually we approximately are that pipeline Curaleaf, TTK the our to, least equipment, million is partnership, we in confident we of with extraction-related, be addition at very, Scott, shortly. announcing, Out and discussions we obviously, number the non-TTK. another of is $XXX Yes, – it, it’s will $XXX $XX probably basically are MSOs. mentioned, a

TTK it, non-TTK $XX arrangement. it’s million So the extraction, to but units, VFU again, the is basically for about million rest breakdown $XXX for and of

going can perfect new that business? where fit if new more looking in That’s little And MSOs growth side. this is are color Is from the in on will a the capacity? on of the driving kind the color. the there? at side the extraction extraction look core board I come states What’s this Can add the value more And Is they how business at new to coming you as do adding one that you that growth growth? you customers? to provide on

Scott, what’s growth pretty is everywhere. seeing we’re that much from most exciting

shifting We’re consumer seeing of additional equipments. extraction customers demands, adding responding to

And products momentum. primarily still trend or single these obviously, New But I with of We large every some form facilities online, Obviously, market it’s traction, is of coming other huge it’s of the of new state. gaining York so dry of share some lot states consumer that are continue. – seeing shifting commanding And for a as from a well. driven even operators, preferences. to the really basically guys. And we across MSOs, interest a to really kind there’s flower large smaller demand cultivation think XX% expect by single-state to

continue this that. So a I about of is going-forward a believe basis see will kind something CAGR on to that XX%, XX% excited we’re and very

in queue. Congrats. the for Thanks back jump the I’ll color.

Thank you.

Maxim question next with Group. Our from Anthony comes Vendetti

open. is line Your

Thanks. Sure.

N’ or has with there Mary’s company. Frozen of new terms X’s Just other that’s have the on TTK Is quick follow-up any the Raymond, those owned a couple holding questions. contract right, I been there And by Frozen then of in question. arrangement? Bud X, a are – facility a a expansion

XXX with Bud thank LOI the Yes, Bud Frozen Phase with kind and X Phase Massachusetts. as – said well. N’ – another have extraction the on Mary’s is we X will Bud added that as in X. the you basically, of And and be location subsidiary expansion, capacity X Mary’s, you include that’s the that, which to for obviously parent VFUs. And X N’ Phase of is partnership I Anthony, is update are for an Frozen Mary’s we X manufacturing N’ the that. a Yes, company. – also of obviously we kind shared executed will Frozen

this super are to we So relationship expand our excited with particular group.

see VFUs. think, as as X,XXX I we total, in could much

there’s VFU that a triple-stack concept actually layout possibility our And be expansion. first We be X are Phase facility. still for could the this doing

possibility. we’re excited super So about that

the this of the either first me just a let bit, terms on in on little for or – general, know. then generating TTK But projects, to still have think XXXX? that changed TTK, at number has but six, in year, of And Okay. the sometime the recurring if one late from I least XQ by revenues expected in happen end XQ is you

converted partner as well. old the to so become we as customers know, you some TTK a legacy of actually Anthony,

the year. this from is starting QX going of actually, production to generation So happen and SaaS revenues of

what basically to we it’s accelerated So had previously forecasted.

in more So that you XXXX. up XXXX of and QX production facilities is of QX revenue bring flow obviously, we significant SaaS generation over believe SaaS flowing number And will QX additional to initial now XXXX. start But online. we and But of is as in probably QX that ramp seeing time. going some production this of basically accelerated will be to the

And mentioned great. then of margin there where near-term I indicative reflective much you is be in the revenue Okay, was could expectation know beginning at it’s was for the there guidance of in wasn’t as to or of Tim should that? that single construction in that’s And any this year? – gross the not the more this, provide terms just kind where gross of know much because at how or going the of be quarter. we higher. look beginning year revert that back of margin Should towards digits the I

Anthony, I’ll jump on that one.

at where recognize I’d margin XX%, combination, XX% extraction gross as a of said, comes It right. We equipment upon gross is QX’s you revenue based say, $XX.X at a revenue abnormally That So sales. we’ve million margin. been. the high is from

that the our – mix of of gross right that introduction to that mix by revenue automatically So lifts out gate, default margin. of

to gross that margin XX%, sustainable sale you to We recorded. based that VFU we’ve VFUs digit of of a in which go which clearly the us forward. upon margin of singular customer equipment low a than quarter gross the had resulting higher TTK historically what sale single the equipment we That’s mentioned, not drives is as on sold also model older came the a

mid-teens the a XX% of So a we call you’re if extraction of against be continue that the normalize equipment. as because will into the the we lift – to the beneficial obviously gross extraction of call gross be, the it, going right. of as point at from XX%-ish, said look at view at looking on margin potential mix margin to historical It’s script that in XXXX, from margin we of revenue about Agrify, an expectation

Okay. helpful. Great. jump Excellent. queue. in That’s back the I’ll

you. Thank

with comes question next Our from Cowen. Gerald Pascarelli

open. is line Your

Much for questions. the taking

so, your a associated mid-teens If looking XQ the target as item. your that a not is fair costs to going guidance, which of to XXXX? end I cadence of should perspective, a at lighting come contemplate XXXX. assume were question, reduction just sort in So again, just follow-up new with to margin I LED that throughout improve we Thanks. it progress as course margin on, the Does and are your gross the but housekeeping believe like guess, the of slated be for to of XX% sequentially gross kind VFUs, from

stand-alone the based lease – a they implemented revenue that as production is initiatives The and or cost equipment, VFU we’ve of right? model, not point-in-time balance sale. portion part TTK, VFU TTK so upon portion the Gerald, what so VFUs a reduction as about that they’re is you think for what VFUs, we don’t on

equipment them themselves you an So revenue see into don’t as manifest individual our stream sale.

equipment stand-alone have TTK I’ll unit to improved stand-alone A we arrangement. unexpected. that VFU it will cash-based, gross the historical modeled lift refer under margin that from as So margin. not have a a that in the has is cash-based we sales Yes, or

the have margin. contribution to or the lift However, a the gross of in that to substantial sales, of – a that result not it’s and weight revenue given going VFU meaningful revenue those stand-alone in equipment

revenue of margin to I’ll from line. fee recurring of the the we we drop will So QX, as as obviously, expect latter it, margin is between part latter again, revenue Thinking call XX% QX QX, of that into margin, margin revenue part leverageable about the and revenue a XXXX, run year to stream production view. them QX. asked with to stream full through near-term point and gross for gross Anywhere QX, move on highly gross of introduction be and you XXX% the mid-teens contribution a SaaS-based that

meaningful for is component not a the significant revenue or XXXX. projected However, of it

QX as However, starts when a to gross again, receive of more lift the an you as probably incremental should in, sequentially year. a we QX yes, move the lift that just latter lift QX, it to you of start due to of year. through the than quarter. bleed see part of start will to But timing quarterly margin revenue in the we expect see to contribution on middle basis the in in

capital on is the just My allocation. color. for question Understood. Thank super second explanation. you That’s helpful

You’ve million. raised acquisitive within extraction, highly been just $XXX you

And the set, if what areas? in more there are and partnerships largely XXXX, could Do or would capital Any of going to M&A? and use out we allocation associated level you just maybe you guess, out as I any on a Or costs your your be a your proceeds priorities? you. provide And TTK Thank with color so, expect for integration look provide that? so used can you are building brief great. high be to

Go Gerald. Tim. Yes, ahead,

No, no, that’s right. mean, I no,

Okay.

pretty we’re done acquisition, the of the extraction it much when terms in Gerald, Okay. comes to piece.

do everything our four We’re And there additional still we much are that overall going we we much pretty companies, pretty further companies of acquired. very four Yes, with believe that developments to have the to we enhance product offering. we’re need. internally the of we everything we have proud But acquisition need. these

always in terms as identified. be of opportunities. accretive for now, of and so yet we will But M&A, not looking strategic we And have

for integration on focusing and more so on – going acquisition That’s side. kind to And just probably now. we of the be we’re think internal food

is the believe In the all long-term values. of shareholders we to projects for yes, give the terms capital, TTK because area be it going will to how biggest going primarily that the that’s deploy we’re the

you potentially partnership. the every the side, on we life as VFU know, return dollar that get could deployed much that as you XXx As over of

the million have close be primary we And focus in our of to mentioned, of our to going opportunity as as even today, pipeline. that of that’s deployment. So $XXX

And so other It VFU that mentioned. has is has the mention right? the going and Tim want primary do be TTK two obviously, the I to lease focus. that’s deployment then And the that, the program components, hardware thing construction upfront that to

other on continue shareholder-friendly financing leverage is be to find build we able By to to leverage. Our talking equipment will REITs our help and to instruments business. partners, gain goal to basically

what are And on focusing we so that’s kind of moment. the for

into for Understood. queue. Thank you I hop the back much very will color. the

questions. turn no to for to further like And I’m I’d showing closing remarks. call you. back Raymond Chang the Thank

everybody thank updating earnings Agrify, short-term excited continue attending forward look you. plan to exciting prospects nice Thank stay focused super of guys to our the day. a long-term. about will to execute you And remain the next and call. We business want I we for Have call to today. our and in