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Local Bounti Corporation/DE (LOCL)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 revenue rose 19% year-over-year to $12.2M; adjusted gross margin was ~29%, and adjusted EBITDA loss improved to $7.2M YoY as Texas came online and tower upgrades drove operational gains .
  • Against S&P Global consensus, revenue modestly missed ($12.2M vs $12.5M*) and EPS missed materially (-$1.18 vs -$0.65*); EBITDA tracked worse than consensus as cost actions ramp over coming quarters .
  • Management reiterated a path to positive adjusted EBITDA in early 2026, backed by nearly $8M YTD annualized cost reductions and a further $1.5–$2.0M planned in Q4 2025 .
  • Capital structure improved: $10M convertible note and $10M senior facility principal reduction in August; cash and restricted cash totaled $12.7M at quarter-end, with ~$2M expected from equipment leasing .
  • Commercial catalysts: Walmart Pacific Northwest expansion with a family-size salad kit, private label wins (Markon), and Texas facility now sold out on a run-rate basis, setting mix-driven margin tailwinds into 2026 .

What Went Well and What Went Wrong

What Went Well

  • Texas retrofit completion and automation: labor productivity up ~19% and direct labor cost per pound down ~17%; facility sold out on a run-rate basis, supporting mix and scale benefits .
  • Product and channel expansion: family-size 10oz Romano Caesar kit launched across 89 Walmart stores in the Pacific Northwest, with plans to extend to southern states via Texas in early 2026; expanded grab‑and‑go offerings and private label agreement with Markon .
  • Cost discipline: nearly $8M YTD annualized expense reductions across COGS and OpEx, plus targeted $1.5–$2.0M annualized in Q4 2025; ongoing seed/substrate savings (~$2M annualized since start of year) .

Management quotes:

  • “CEA has crossed the threshold from emerging technology to essential and permanent infrastructure.” — Kathleen Valiasek .
  • “Retailers… are designing supply chains that assume CEA is permanent infrastructure.” — Craig Hurlbert .

What Went Wrong

  • Consensus misses: revenue came in below S&P Global consensus ($12.2M vs $12.5M*) and EPS missed materially (-$1.18 vs -$0.65*), reflecting ramp timing and mix transition; adjusted EBITDA loss remained sizable .
  • Adjusted gross margin compressed YoY (29% vs 32%), as Q3 carried intangible impairment in G&A and operational upgrades still optimizing; margin expansion expected as mix improves and upgrades mature .
  • Net loss remained high at $26.4M despite improved interest expense post restructuring; warrant liability fair value change (-$3.4M) also weighed on reported results .

Financial Results

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$11.61 $12.10 $12.20
Gross Profit ($USD Millions)$1.46 $1.47 $1.41
Adjusted Gross Margin %29% 30% 29%
Net Loss ($USD Millions)$37.68 $21.58 $26.43
Diluted EPS ($USD)-$4.32 -$1.63 -$1.18
Adjusted EBITDA ($USD Millions)-$8.78 -$6.48 -$7.23

KPIs and Balance Sheet

KPIQ1 2025Q2 2025Q3 2025
Cash + Restricted Cash ($USD Millions)$28.4 $13.2 $12.7
Common Shares Outstanding (Millions)10.64 21.78 22.12
Fully Diluted Shares (Millions)~28.3 (pro forma) ~31.4 ~36.1

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EBITDA breakevenCompany-levelPositive adj. EBITDA “early 2026” (Q2 2025) ; Q1 had targeted Q3 2025 Positive adj. EBITDA “early 2026” Maintained vs Q2; timing lowered vs Q1
Cost reduction initiatives (annualized)H2/Q4 2025Additional $2.5–$3.0M actioned in H2 2025 Additional $1.5–$2.0M actioned in Q4 2025, realized 1H 2026 Updated scope/timing detail
Yield improvementQ4 2025 optimizationTower upgrades scheduled late Aug/Sept (GA, TX, WA) Expect >10% yield increases after Q4 optimization Raised specificity
Capital structure cash paymentsThrough April 2027No cash interest/principal until April 2027 Reiterated deferred cash payments until April 2027 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
AI/computer vision, IPYield optimization; patent filing referenced; tower upgrades planned Patent update with anticipated issuance; computer vision + AI used across facilities Increasing emphasis; nearing formal IP protection
Supply chain/regional strategyExpanded distribution (Walmart DCs, HEB; basil in PNW) Walmart PNW launch (89 stores); Texas to serve southern states in early 2026 Regional scaling; proximity-driven freshness narrative
Product mix and innovationLaunched salad kits; new larger family-size planned Family-size kit live at Walmart; private label and DTC SKU expansion Mix shifting to value-added, higher-margin SKUs
Cost discipline~$3M G&A and ~$4M further actions in Q2‑to‑date Nearly $8M YTD; additional $1.5–$2.0M targeted Q4 Compounding structural savings
Capital structure/financing$25M equity; deferred cash payments; USDA/sale-leaseback pursuit $10M convertible note; $10M debt reduction; ~$2M expected from equipment lease Liquidity flexibility improved
Market narrativeBuilding to sequential improvement; Q3 2025 EBITDA breakeven initially targeted “CEA has crossed threshold to permanent infrastructure”; deliberate partner alignment Stronger external validation and partner engagement

Management Commentary

  • “Third quarter results demonstrate our operational momentum… Texas automated harvesting is now operational, and tower upgrades are driving yield improvements… we expect to reach positive adjusted EBITDA in early 2026.” — Kathleen Valiasek .
  • “CEA has crossed the threshold from emerging technology to essential and permanent infrastructure.” — Kathleen Valiasek .
  • “Retailers… are designing supply chains that assume CEA is permanent infrastructure.” — Craig Hurlbert .
  • “Texas is now sold out on a run‑rate basis… labor productivity up ~19% and direct labor cost per pound down ~17%.” — Management .

Q&A Highlights

  • No Q&A session was conducted; the call comprised prepared remarks and concluded without analyst Q&A .

Estimates Context

MetricActual (Q3 2025)S&P Global Consensus (Q3 2025)Variance
Revenue ($USD Millions)$12.20 $12.50*-$0.30 (MISS)
Diluted EPS ($USD)-$1.18 -$0.65*-$0.53 (MISS)
EBITDA ($USD Millions)-$7.23 (Adjusted) -$3.88*-$3.35 (MISS); note consensus likely non‑GAAP alignment may differ

Coverage and forward outlook:

  • Q4 2025 consensus: revenue $15.00M*, EPS -$0.60*, EBITDA -$1.80M*, with limited coverage (one estimate) [GetEstimates].
  • Given operational progress at Texas, product mix shift (family-size kits, private label), and cost actions maturing into 1H26, consensus may need to reflect improving adjusted EBITDA trajectory while near-term margins remain sensitive to ramp timing .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Sequential profitability path intact: management reaffirmed positive adjusted EBITDA in early 2026, supported by mix upgrades, yield improvements (>10% expected) and cost reductions (nearly $8M YTD plus $1.5–$2.0M in Q4) .
  • Commercial traction accelerates regionally: Walmart PNW family-size launch and run‑rate sold‑out Texas provide volume/mix levers; additional southern state rollout planned for early 2026 .
  • Margin setup improves into 2026: automation in Texas and tower upgrades across facilities should expand adjusted gross margin from the current ~29% as optimization matures .
  • Liquidity/capital structure improved: $10M convertible, $10M principal reduction, and expected ~$2M lease proceeds, with no cash interest/principal until April 2027, providing runway to execute partner‑aligned growth .
  • Near-term estimate risk: Q3 misses vs consensus underscore ramp/mix timing; limited analyst coverage suggests higher dispersion—watch Q4 sequential adjusted EBITDA improvement claims and mix progression .
  • Strategic positioning: management emphasizes market inflection—retailers treating CEA as permanent infrastructure, implying durable demand and willingness to engage in long-term supply partnerships .
  • Monitoring points: Q4 adjusted EBITDA loss rate improvement; yield realization >10%; seed/substrate savings; Walmart/southern rollout timing; patent issuance (computer vision/AI) and any incremental financing/partner structures .

Appendix: Additional Data Points

  • Q3 financial summary: Sales $12.2M, gross profit $1.4M, adjusted gross margin ~29%, net loss $26.4M, adjusted EBITDA -$7.2M; G&A includes $3.7M intangible impairment (“Pete’s” trade name) .
  • Balance sheet: cash + restricted cash $12.7M; long-term debt $312M principal with debt premium accounting from troubled debt restructuring; fully diluted shares ~36.1M .
  • Non-GAAP adjustments: adjusted EBITDA excludes stock-based comp, interest, D&A, warrant fair value change, transaction/litigation costs, and other non-core items; reconciliations provided .