Q3 2022 Local Bounti Corp Earnings Call
[music].
Good morning, and welcome to the local bond piece third quarter 2022 earnings conference call.
All participants will be in a listen only mode.
After todays presentation, there will be an opportunity to ask questions.
Please also note today's event is being recorded at this time I'd like to turn the conference call over to John to just Sonic Investor Relations at ICR. Please go ahead.
Thank you and good morning, today's presentation will be hosted by local borrowings co Ceos, Craig Hurlbert and Travis Joyner.
President, Brian Cook, and Chief Financial Officer, Kathleen <unk>.
Comments made during today's call contain forward looking statements within the meaning of the safe Harbor provisions to the private Securities Litigation Reform Act of 1905.
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 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 will also refer to certain non-GAAP financial measures today.
Please refer to the press release, which can be found on the Investor Relations website <unk>.
Investors that local Bonnie Dot com <unk>.
For reconciliations of non-GAAP financial measures to their most directly comparable GAAP measures with that I'd now like to turn the call over to Craig Hurlbert co CEO .
Thank you, Jeff and good morning, everyone.
We produced a solid third quarter, which was consistent with our expectations we.
We achieved several milestones during the quarter, including shipping our first product out of our new Georgia facility.
Completing construction of our first stack zone and Georgia.
And making important headway on our integration of Peach to drive costs out of the business and protect our margin from the persistent inflationary forces with that said the Big news is the five year off take agreement with Sam's club that we announced earlier this week.
Consumers retailers and foodservice operators alike want a resilient supply chain of locally grown fresh at high quality produce items and local body will continue to deliver against that demand.
We are thrilled with the engagement, we are experiencing with our retail partners for our fresh great tasting locally grown produce and the Sam's Club agreement is an excellent example of the market's trust in our brands and products that have been developed by our team overseas.
Well decades.
We have been canvassing the market sharing our progress and received an unbelievable response at the recent <unk> event in Orlando.
In fact local bound he was recognized by a leading industry periodical.
<unk> as a top trend at this year's show we are honored for their recognition of our team's hard work.
In terms of our approach we continue to focus first and foremost on our existing customer base.
This remains one of our greatest advantages and is invaluable.
Forming our decisions on how we can most efficiently deploy our capital to meet known demand through scaling up our facility network.
We remain diligent in our approach to maximizing capital efficiency.
<unk> rapid revenue generation with a sharp eye on maintaining healthy gross margins. So that we can reach breakeven cash flow as quickly as possible.
We have a great appreciation for the impact that the shifting macroeconomic environment is having on corporations globally and we our team to continue taking the steps necessary to drive our business in the most efficient way possible. So that we can continue scaling up our network to unlock.
The attractive margin potential and cash flow generation that we believe is inherent in our business.
Our co CEO Travis Joyner will speak to how we are utilizing our growing technology to drive improving unit economics, and then our president Brian Cook will provide some further commentary around our commercial strategies product development and an update on our various construction projects.
Before Cathy Dallas Shack, our CFO concludes with her financial review.
With that I'll pass it over to you Travis.
Thanks, Craig we have an insatiable appetite for achieving efficiencies, whether it's through our technology design yields or crop turns we strive for efficiency in all four corners of our business.
It all comes back to finding novel ways to drive productivity and enhance our unit level economics like we've said from the beginning high yield and low cost.
Fortunately, we've been able to facilitate those advancements with our patent pending stock and flow technology.
Unlocking one and a half to two times yield improvement compared to traditional greenhouse operations stock and flow is highly disruptive and highly differentiated and fuels our excitement about the opportunities that lie ahead as we continue to execute on our plan to be the leader in CA.
Simply put our technology strategy gives us an advantage to make a direct iterative improvement on existing infrastructure and a capital efficient manner.
Which we expect will ultimately drive higher return on investment, while reducing required capital.
Evidence of this improvement is reflected in the hard work being done in our Hamilton, Montana facility to drive advancements in our growing systems and continue to improve stock and flow.
Year to date ended September 32022, our annualized yields from this facility have improved by 25% versus the comparable prior year period.
This direct and progressive improvement in yield is an apples to apples comparison, highlighting our ability for current and future facilities to drive yield improvement.
Importantly, these improvements did not reflect the impact of existing and future R&D enhancements and innovations that are expected to further accelerate performance at each of our facilities.
Beyond our advancements to yield we're excited to discuss additional opportunities and applications of our stock and flow technology to reduce costs and increase yields across a variety of crops and growing environments.
Stock and flow is not just for ALLETE. These anymore. We are in the early trial stages of longer term projects for high value crops, such as berries, and we continue to believe that our technology has a very important place in the future of agriculture.
Key long term initiatives to apply stock and flow to adjacent produce production work hand in hand, with our efforts to translate our innovations into a robust IP portfolio across process improvements genetics.
Peter Vision AI and controls.
Formalizing our IP portfolio is an important component of the competitive moat, we are developing around stock and flow and we'll ensure that we are well positioned for long term growth.
I'm going to let Brian focus on the key milestones, we achieved in Georgia over the last quarter, but we'd like to hone in on one thing that Craig mentioned briefly.
The first section of our stack has been completed in Georgia and is a critical element of our broader strategy with this facility.
We expect that when fully implemented it can add approximately 40% to our capacity.
That same appetite for efficiency that has manifested itself in the foundations of this business and has been evidenced by our continued yield increases at our Hamilton facility is now being action in our Georgia facility as well.
These efficiency gains are central to our capital efficiency strategy.
Early learnings from Georgia will not only help bring efficiency in design and operations to future facilities, like Washington, and Texas.
But also help us prepare to.
To bring on Georgia Phase, one B, Washington, and Texas in the second half of 2023.
I'll pass it over to Brian for his remarks.
Thank you Travis I'll start with a quick update on the progress of our facility Buildout and then speak to some of the new product innovations we are testing.
As Craig noted, we recently achieved several significant milestones at our Georgia facility first and foremost we shipped our first product from the facility during the third quarter, while continuous progress towards achieving larger scale commercial production.
We were just finishing the three months process a full commissioning after for shipment and are excited to expand sales into new stores later this month.
The technological advances that lie within the Georgia facility with our stack of closed system will drive significant future margin opportunity for us with the greater throughput it can achieve.
And the addition of the sufficient capacity will be highly advantageous for us.
Further the freight savings alone are a huge advantage providing cost savings as compared to our prior distribution from our California facility.
But perhaps more important is how this new local capacity changes our ability to service cut.
Customers.
Which brings me back to the Sam's club Offtake agreement.
Local bounty immediately benefit from no demand, allowing us to rapidly forge ahead, with our ongoing buildout, helping absorb overhead and costs in an extremely efficient fashion.
Sam's club benefits from local reliable product availability and a category that customers are demanding access too.
This agreement will provide supply on a consistent basis help them drive same store sales and grow the fee category in the important club channel.
In terms of our facility progress and as the team has mentioned we recently completed our first section of stack and phase one a during the fourth quarter of 2022, which will go into service during the first quarter of 2023.
As a reminder, phase one b began construction in June and will mirror phase <unk> in size and capabilities effectively doubling the capacity of the Georgia facility to 14 greenhouses.
Phase one construction is moving along rapidly and is now expected to be completed earlier than planned in the first quarter of 2023 and commence operations shortly thereafter.
Following the completion of phase one be the rest of our stack zones will become operational during the second quarter of 2023 and fully integrated with phase <unk> and wouldn't be greenhouse infrastructure.
In terms of our Texas facility we.
We are excited to become part of the community and Mount Pleasant upon closing on the land later in November .
We will be following the same playbook to that of Georgia, which is to say that we are in active engagements with our existing customer base and working together to identify how local Bonnie can help bring greater capacity to our retail customers and help them grow the category.
We have high expectations for this future site, which will be comprised of a six acre greenhouse facility and integrated stack and flow technology.
We will share additional updates on this facility once those plans begin to move forward, but at this stage, we are targeting the site to be operational in the fourth quarter of 2023.
With respect to our project in Pasco, Washington.
The facility's contribution continues to progress with anticipated completion in third quarter 2023.
This facility will be composed of multiple stack zones at three acres of greenhouse.
In terms of planning for future growth beyond our existing existing facility network.
Our team is currently looking at locations in the north Eastern United States as a potential home for our one of our next regional expansions.
Finally, I am excited to share some updates with you on the commercial front with a test launch of our new salad kit innovations in third quarter.
In October local bounding successfully launched the value added segment with to grab and go sell it skews modern Greek and poppy power.
Based on the launch of success to date and customer feedback local bony will advance the next phase of expansion, adding additional skus and expects to reach approximately 100 stores in the first quarter of 2023.
This is just the beginning of our move into the value added space and look forward to sharing some more exciting news in the near future.
Now I'll turn the call to Cathy for her review of the financials.
Right.
Thank you Brian .
Cover our third quarter results third quarter 2022 sales were $6 3 million as compared to 159000 in the prior year period quarter bring revenue from the company's California facilities were down slightly on a sequential basis versus the second quarter of 2022 due to an isolated.
Delivery interruption with the logistics provider.
Although our Georgia facility opened in the third quarter of 2022 and product is shifting out of the facility third quarter operations were still in the commissioning phase to prepare still.
Fulfilling Sam's club demand and therefore associated revenues were immaterial for the quarter, we expect to begin our initial shipments to Sam's club later this month.
Revenue from our Montana facility increased 13% sequentially from second quarter of 2022, which was consistent with our decision to pivot more of our production towards commercial sales effort adjust.
Adjusted gross margin, excluding depreciation and stock based compensation was approximately 38% in third quarter of 2022 reported gross profit was 20%. We were pleased with our execution of the rapid recovery in our third quarter adjusted gross margin following.
Following the temporary supply challenges that were rectified during the second quarter. Looking ahead, we continue to see opportunities to capture the Cogs synergies between local county, and Pizza operations, and we are already making great progress.
Comparing our per unit costs prior to the pizza acquisition into our actual performance since it closed we've reduced packaging costs by 40% and reduced feed costs as well.
Net loss was $27 1 million for the quarter and includes $10 9 million in stock based compensation $5 2 million and interest expense $1 7 million of depreciation $1 3 million of amortization and <unk> 9 million of strategic transaction due diligence and integration related.
<unk>.
Adjusting for these and other discrete items adjusted EBITA loss was $7 3 million from a capital structure perspective, we ended the third quarter September 30th 2022, with cash cash equivalents and restricted cash of $24 million and had approximately $34 4 million of Undrawn.
Capacity on our credit facility with cargo.
Subsequent to the end of the third quarter on October 24, 2020, Q, we arranged at $23 3 million dollar type investment in the company with significant investment coming from existing investors, including facility management and research company and BNP Paragon as well as management the pipe proceeds.
When added to our September 30th 2022, cash cash equivalents and restricted cash along with the Undrawn capacity on our credit facility provides for more than $80 million of total liquidity, we had approximately $94 3 million shares outstanding as of September 32022.
And on a pro forma basis, including our warrants and our employees' restricted stock units outstanding.
Fully diluted share count of approximately 116 million shares.
Okay.
With respect to our outlook, we are reaffirming our 2022 revenue guidance of at least $20 million. We also continue to expect to achieve initial run rate revenue of at least $30 million at full production from our California, and Georgia Phase <unk> facilities, excluding the expected future positive impact from addition.
<unk> capacity due to implementing stack and flow across pizza legacy facilities.
In terms of quarterly cadence.
Like to point out that our quarterly adjusted EBITDA losses have been declining each quarter. Since we went public given that Georgia is ramping up to full capacity over the next quarter or two and given that we anticipate that our SG&A expenses, each quarter will be flat or lower than prior quarters, we anticipate that our quarterly adjusted EBITDA losses.
<unk> will continue to decline through 2023 of course, the impact of any potential acquisitions as part of our build versus buy strategy for growth could potentially change. This expectation. We believe this demonstrates the flexibility of our model and the advantages of our approach which revolves around capital efficiency.
In summary, we are thrilled with the progress we are making across each area of our business. Our commercial team's execution of the new off take agreement with Sam's club is especially exciting and our construction team is doing a wonderful job navigating this complex environment to keep our buildout schedule is on track and on Bud.
<unk>, which is no easy task given the fluidity at supply chain.
We look forward to continuing to update you on our progress as we execute on the achievement of milestones and identify new opportunities to drive growth in this exciting CPA marketplace.
That concludes our prepared remarks, operator, please open the call up for questions.
Thank you the floor is now open for questions. If you do have a question. Please press star one on your telephone keypad at this time.
Ladies and gentlemen, if you have a question. Please press star one on your telephone keypad at this time.
Our first question comes from Ben Clean from Lake Street Capital. Please state your question.
Alright, thanks for taking my questions.
First one the Sam's club announcement, congratulations here and my my questions. On this are one I'm wondering how much of your Georgia facility, you anticipate being allocated to Sam's and then also kind of throughout the life of this agreement at their minimum volume metrics that either review are committing to that you can share.
Yeah, Hey, good morning band correct Robert.
Appreciate the question.
I'm going to let Brian take that because candidly.
Candidly Brian is the one that's been playing point with us So Brian do you want to tackle that question for Ben.
Yes, definitely good morning, Brad.
So as it pertains to the Sam's club agreement and just our overall relationship with them, we're trying to be very sensitive.
To all the details around it.
I think the the Georgia facility and not just with fans, but with all the.
<unk> of our other.
Customers in the southeast.
Drove the excitement around adding one b.
Right away. So it is we are looking at.
<unk> be coming online to help satisfy the business requirements of the South East.
Yeah.
Okay.
Very good thank you Bob Thank you Brian .
Next one for me and then I'll pass it over here is on the kind of capital availability and funding the various expansion initiatives.
Between expanding GA integrating stack can flow into Pete's, finishing pasco, starting Texas, there's plenty going on here and I'm, hoping you can help us understand kind of the level of capital throughout these initiatives. That's already been committed and then talk about your capex expectations for this collective suite of initiatives between now and say at the end of next year.
Yes.
It's such an important question Ben Kathy why don't you tackle the first part of that and then we'll we'll I'll pile in okay as necessary.
Sure sure good morning, Ben.
So as you know right, we local bound and spent a lot of time thinking about capital efficiency, how do we drive revenue with every dollar we deploy whether that be through an acquisition such as pizza or capex for their own facilities and initiatives our capital capital structure is in a solid place right now the $23 million pipe we raised in October .
But some of our marquee long term investors.
Our cash on the balance sheet currently and the $34 million of Undrawn capacity on our credit agreement with Cargill, we have in excess of $80 million of liquidity and thinking about our relationship with Cargill, we couldnt be in a better place with them. We are revamping our agreement to broaden it for more facilities and also to reduce the interest rate et cetera.
That being said, we also continue to nurture all of our investor in lending relationships, you've had success demonstrating our progress and those partners have shown a willingness to help us reach our goals of course, signing and announcing the Sam's club five year off take agreement helps in these discussions regarding.
Kind of specific numbers for Capex band, we've not guided to that for <unk> 'twenty 'twenty, three and basically a lot of that has to do with the fact that you know each of the facilities are different because of a build versus buy strategy. The locations the demand for each of the facility.
<unk>.
So.
We are very very focused on meeting our timelines to get the facilities up and running it's absolutely critical for us because as we said repeatedly.
I have so much pent up demand throughout the country that we've got to get them up and running as fast as possible and honestly I've said it in my remarks, our construction team has been amazing and their ability to two.
<unk> keeps keep costs within budget, even given all the supply chain issues and just come up with creative ways to to keep budgets intact, one of which is to bring the the G. C function in house and other thing so hopefully that's helpful.
Okay.
Yeah, Hey, Ben This is Craig one other thing to consider we've heard many others in the space have struggled from <unk>.
Capex creep I think one of the important things to keep in mind is a lot of that can be handled on the construction side.
But holding kind of the pro forma together can also happen with innovation and so where we're managing our cost very well. We're also seeing tremendous innovation gains.
Which really holds intact, our whole investment thesis around capital deployed versus.
Versus revenue dollars versus EBITDA, So where we are everybody is struggling from supply chain, our ability to innovate has allowed us to hold.
And even improve the original thesis so it gives us a lot of flexibility in the way we're doing things.
Got it got it okay very good.
Appreciate the thoughts on both of you and.
Congratulations on the gross profit improvement, especially and I'll get back in queue.
Thank you Ben.
Our next question comes from Colin Rusch with Oppenheimer. Please state your question.
Thanks, so much guys.
Talk a little bit about the learnings that youre seeing in terms of you know ramping.
Wrapping, Georgia, and how you might be able to.
Apply those more broadly given the different environment that you're operating on a gift from a weather perspective versus Montana.
Yeah, Hey, good morning Collyn.
Why don't you start with that and then maybe Brian can can chime in.
Sure Colin Thanks for your question.
I'd say first off generally speaking a lot of the reps and Montana.
Working on that transition from stock to flow.
Our in process of being repeated in Georgia, So with that new stock tower up in Georgia, It's gonna give us the ability to get early reps.
With that stock and flow integration.
In Georgia.
And as we get more and more of those reps, it's just going to prepare us.
Even more for the advent of <unk>, Texas and Pasco, It's always our strategy go slow before you go fast and the addition of our stock phase in Georgia is just another opportunity for us to get those early reps and prepare for scale larger scale and in Georgia.
Texas and Washington.
Okay great.
I guess the second question is really around the timing on various and other high value crops and in some of the you know if you could just talk a little bit about some of the key friction points that you're running into at this point, you know and how you expect to come from salt and most of that.
Yeah, So really good question.
Such an important question Colin and.
I think keep in mind, our original pro forma had only leave he's in it. So this is a.
This is an opportunity for us to expand our product offering why don't Kathy why don't you start with that question and then maybe Travis you can you can also chime in because I know you've been very involved.
Yeah.
Yeah and in terms of where we are seeing ourselves going with Barry's it's a it's.
It's a very broad opportunity for us because our technology is yielding a lot of differentiation in the taste texture feels so to speak of our berries and we are but the you know the large customers and suppliers globally of barriers that were talking to they are thrilled.
With there.
With the the taste of our berries and so what we're seeing is that's yielding you know kind of a lot of interest in our berries and.
I'll pass it off to Travis.
Yes, I think the.
The exciting opportunity ahead of us and really the question we asked.
Early this year internally within our innovation team.
How do you apply stock and flow to other perishables and we looked at the whole landscape and said Barry's would be a very interesting place to play and we built a thesis around it and this year got quite a few reps.
With strawberries, raspberries, and blackberries and those early trials.
But enough information and promise such that we believe that we are going to have a technology application to berries and the stock and flow is not just for leave he's anymore.
It's very exciting and just applaud our incredible.
Innovation team, it's it's a it's a really special and a brilliant group of people.
Really answering the question, where can stack of stock and flow applied next.
Hey, Colin trap.
Travis said something in his remarks, he said our technology has an important place in the future of agriculture.
I think that that line gets buried but we're seeing that every day and this is a very good example of that where yes, we're going to grow out our leafy enterprise, but we're also going to see where else stack and flow can apply to help many other growers and businesses that are.
Struggling with the impacts of climate change in an outdoor environment and that that is real and we're in some very deep conversations and the real question for US is how do we monetize that technology.
In that space, so very interesting opportunity for us and it won't be just berries it won't stop there.
That's super helpful guys. Thanks, so much.
Thank you Colin.
Right.
Our next question comes from Brian Wright with Roth Capital Partners. Please state your question.
Thanks, Good morning.
Okay.
And I might've missed this but I just want to make sure for clarity so as part of the commissioning process.
The Georgia, one a facility just.
It takes like did you provide an update as far as like yields relative to expectations or any kind of metrics could you talk a little bit about kind of how that's going.
Travis.
Yeah.
We haven't provided any guidance on on that quite yet really in it and it's in the release.
Where we sit today is we've really been in the commissioning phase still preparing to fulfill.
The Sam's club demand.
And we're.
We're producing a very specific set of product.
For that relationship so it's been getting that dialed in and the reps in place and.
I believe.
Ryan can speak to when we when we expect to start shipping product there.
Specifically the Sam's.
Yes, we are.
Sure.
Sorry, just in case, you wanted a little bit of additional color on that we are starting to plan on shipping.
This week on the Sam's club deal.
We have all of the.
The volume to satisfy the requirement there and we're continuing to see improvements each time.
There was a question about the kind of the facilities within themselves and it's all about having the right tools in the toolbox from facility equipment team in that and so we're utilizing all of that to make sure that we're maximizing those yields.
Got it so we think it's a little bit of a different process than maybe some of the others is to use as far as commissioning commissioning for the specific order so you're you're growing.
But typically when core the orders and those orders.
Sizes increase that that's that's when the.
So it's not like you know day you know.
You know it.
Not like right away that the full kind of yields are being thing is is that kind of a fair way to.
Thinking about it right, yes, that's a fair way to think about it remember the stack phase.
Brian is being phased in here as we and that's really the beauty of the technology because.
We're actually the the greenhouse part of the operation is actually.
Working now we're phasing in the stack kind of as a bolt ons. So yes, the yield that information will become more and more clear here in the quarters to come.
But we're all feeling.
Very excited about what we are seeing.
Great. Thank you.
Thank you Brian appreciate it.
Okay.
Our next question comes from.
Christopher Barnard who's going through bank. Please state your question.
Alright. Thanks, so much for the question just a couple of follow ups for me I was hoping first could you just talk a little bit more about the off take agreement with Sam's.
Of your products are in scope for the relationship or how are you guys measuring success, there and then like how how soon do you think that relationship could expand to other markets outside the southeast.
Thank you Christopher I. Appreciate your question, Brian you want to tackle that one.
Yeah.
Yes, I will.
And actually you have to kind of go back to an initial.
This whole agreement with them been time, some time in the making.
And we're really excited about.
Not just the length of the agreement, but what it can mean for US regionally all that being said we've also have been very.
Close insensitive to what they're trying to do but it's part of their business and so we're not putting out anything too specific about how what the sizes of the program.
I will tell you as far as what.
What what is involved is we are replacing the one pound spring mix.
And the club stores.
And those will be hitting market this week or this next week coming up.
Got it thank you Brad.
Christopher I think one more thought on that and I know, you're asking about Sam's club, but I'll use it as an opportunity to just speak a little bit more broadly.
The whole category.
Cross the U S.
Really seeing tremendous momentum.
And obviously that manifest with with type of agreement with Sam's, which as Brian said was in the making but we are just seeing tremendous interest and some of our value added products for sure.
And then also just our traditional products. So it is this whole concept of simplifying supply chain really securing supply chain.
Focusing on fresh locally grown products. It is a very very real movement on the ground in the space.
That all makes perfect sense.
My follow up was just around.
In regards to Ben's earlier question around capital availability.
Look I know you guys are you don't want to talk about the level of capital expenditures like in the next couple of years I understand that I'm. Just curious why you raised that you raised equity like recently.
I guess, the only why why was that necessary just given given your ability to tap into the revolver your cash on hand.
And just going forward like is there do you have any bias for like where where the funding will come from weather just as Georgia cash flow improves as just.
Ignore or through normal operations do you or do you expect to.
Lean into equity issuances again.
Over the next like over over this funding cycle.
Kathy do you want to start on that one.
Sure.
Good morning, Chris Thanks for the question. So the reason why we did the the pipe was really just you know being good stewards of capital and just shoring up our balance sheet, a little that right Cargill is a fantastic strategic partner for us and so we are able.
<unk> able to really Hum.
Leverage that that relationship I mean, I did say in my in my comments earlier. We also are always very very close to the other lenders that are interested in working with us and and other institutional investors et cetera.
Don't currently have a have a plan to go out to the equity markets again is what I would say I'm just.
I'm just trying to think does that does that pretty much answer.
To your question.
Yeah, Yeah no no. That's helpful. Thanks, so much I'll pass it on thank you.
I think yeah. Thanks for your question I appreciate it I think I think one maybe last thought on that is.
The realities of the capital markets today are creating opportunities for us on the inorganic side.
And what that means is there are many operators that are struggling we've already heard about you know those of us in the industry know about several we can name them.
And others that we will be on the horizon, that's going to create opportunities for local DIONE, primarily because remember we have the ability to come in and bolt on our stack technology to existing operations that could get us geography or potentially talent customers et cetera.
And we could get an extra 40% to 50% yield out of their existing facility. So it creates a very unique opportunity for us so us being in the capital markets.
It's going to be a consistent thing because we're going to need need capital to grow our challenge as good stewards of capital is really making the most of those capital dollars by really continuing the innovation and making sure that we're able to deliver delicious products consist.
Currently and at Fantastic unit economics that are unparalleled and that's really the challenge of everybody in the company and I'll just give you. An example, this morning, we have many of our employees listening in this morning.
That are excited about the company and where we're going I don't want Montana six o'clock. This morning, and snow storm, we have our facility manager Martin Malloy MP and many of his team members listening in so this is all a complete all hands on deck enterprise, making sure that we're getting the proper capital and.
Deploying that capital properly with great returns ultimately getting us to EBITDA.
Positivity and cash flow positivity and Thats definitely on the horizon for us.
Thanks, Craig that's helpful.
Thank you Chris.
And our final question will come from.
Pamela Kaufman with Morgan Stanley . Please state your question.
Hi, good morning.
Got it.
Congrats on all of the announcements.
My first question is on what you are current production capacity is in the Georgia facility do you have excess production volume to sell to other customers in Georgia beyond Sam's club and where are you in building, we'd how relationships and.
Shan enjoy cat outside of Sam's club, obviously I know that.
And important.
But I'm just curious on that.
Overall strategy.
That's an important question Pamela Hey, Brian why don't you tackle that I know you and your team have been working really hard on that.
Yeah.
Yes, Thank you and good morning, Pamela so.
Yeah.
<unk> is going to be very important to our overarching.
Volume needs to satisfy the south east.
<unk>.
We are already in a lot of the retail.
Local areas with.
Local retail.
And we have a couple.
100 of other stores that are coming online.
In addition to the Sam's club one be it is going to be extremely important to come online here in Q1. So that we can continue that progress toward southeast expansion.
But we're really excited about where we're at today and.
And having that extra availability to continue on.
Thanks, and just a clarification on Sam's club are you going to be selling branded or private label told us to that.
Yes, it's a great question. So we are launching next week with our branded local Bonnie one pound.
Great.
And then hey, Pamela.
Well I think that there is an important.
There.
We named local badly because we kept hearing local is so important and that's really resonating with the retailers not just at Sam Club road across the board that Theres that local component to it as they're chasing local and fresh so just a thought on top of Brian's comment.
Right and I think that would be a great way to gain more visibility for the brand as you expand.
We have a presence.
That's correct Mike.
My other question is just on the criteria that you consider everybody's selecting Mount Pleasant for your next facility what drove your decision to.
They'll get there and then the decision to build versus buy like you said with peaks.
Another great question Pamela. Thank you I'll start and then anyone else can chime in the great thing about where we are now and really having.
Having integrated Pete's completely is now our customers are a heavy voice and where they want us to place facilities.
So our Texas facility is really driven by conversations with customers, saying, here's our distribution centers, here's where this would make good sense and so we're able to really have a high degree of confidence when we're putting those capital dollars down on where to put the facilities and.
Honestly, that's going to be probably the loudest voice in the room moving forward is kind of our desire to always be customer back and delivering great products and having them, where it makes sense for their delivery mechanism to get it into their retail outlets.
I'd open it up to anyone else on the <unk> side to see if you want to add to that that that comment.
Yes, I think I would just add that when we're thinking about locations.
We're really to Craig's point about serving D. C. We want to make sure that we're able to get to the highest number of these these are possible.
In the region that we're planning on serving and we're also trying to do that where we have best of life for our team. So if we're delivering that product we don't want to be in a spot where they can't be home with their family at night and so it becomes very important piece of the puzzle.
And marrying all of the different aspects of what makes a good fight.
As it pertains to.
Kind of the access to D. C that was mentioned earlier a lot of it has to do with just kind of a time to each of them.
And the ability to serve the maximum D C as possible.
Okay.
Got it. Thank you that's helpful.
Thank you Pamela.
And that was our final question I'll turn it back over to you for closing remarks.
We'd like to thank everybody for your time today.
This now concludes the meeting we look forward to speaking with everybody again very soon and thank you. So much for your interest in local Bonnie.
Yeah.
Ladies and gentlemen that does conclude today's conference call. We do thank you for your for your attending you may now disconnect your line.
Okay.
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