Local Bounti Q2 2026 Earnings Call Transcript

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August 12, 2026

Key Takeaways

  • Positive Sentiment: Revenue increased 14% year over year to $13.9 million, while adjusted EBITDA loss improved 17% to $5.8 million and adjusted G&A declined 17%.
  • Positive Sentiment: Commercial momentum continued with new retail launches, expanded supply agreements, and a planned pilot of single-serve salad kits in approximately 400 Mid-Atlantic stores; existing accounts across roughly 13,000 doors are tracking in line with expectations.
  • Positive Sentiment: Operational improvements are raising capacity and lowering costs, including approximately 10% higher yield capacity after tower upgrades, a potential 20% yield improvement from California investments, and a 20% year-over-year reduction in seed costs.
  • Negative Sentiment: Cash and restricted cash fell to $10.1 million from $18.8 million in the prior quarter due to operating cash use, while adjusted gross margin declined to 27% from 30% a year earlier because of temporary packing inefficiencies.
  • Positive Sentiment: After quarter-end, an existing strategic investor provided an additional $12.5 million, adding financial flexibility as Local Bounti works toward positive adjusted EBITDA; management expects continued improvement in the second half of the year.
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Earnings Conference Call
Local Bounti Q2 2026
00:00 / 00:00

Transcript Sections

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Operator

Good morning, and welcome to Local Bounti's 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 Sonnek, investor relations at ICR. Jeff, please go ahead.

Jeff Sonnek
Investor Relations at ICR

Thank you, and good morning. Today's presentation will be hosted by Local Bounti's President and Chief Executive Officer, Kathleen Valiasek, and Interim Chief Financial Officer and Chief Accounting Officer, Tony Hughes. 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 will also refer to certain non-GAAP financial measures today.

Jeff Sonnek
Investor Relations at ICR

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. With that, I'd now like to turn the call over to Kathy.

Kathleen Valiasek
Kathleen Valiasek
President and CEO at Local Bounti

Thank you, Jeff, and good morning, everyone. I want to start by recognizing the work our team put in to achieve the results we are sharing today. The second quarter continued the trajectory we have 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 have 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.

Kathleen Valiasek
Kathleen Valiasek
President and CEO at Local Bounti

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.

Kathleen Valiasek
Kathleen Valiasek
President and CEO at Local Bounti

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.

Kathleen Valiasek
Kathleen Valiasek
President and CEO at Local Bounti

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. 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. 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.

Kathleen Valiasek
Kathleen Valiasek
President and CEO at Local Bounti

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. 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 Caesar Romaine salad kit also continues to perform well.

Kathleen Valiasek
Kathleen Valiasek
President and CEO at Local Bounti

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. 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.

Kathleen Valiasek
Kathleen Valiasek
President and CEO at Local Bounti

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 costs 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.

Tony Hughes
Tony Hughes
Interim CFO and Chief Accounting Officer at Local Bounti

Thank you, Kathy, and good morning, everyone. Turning to our results, second quarter revenue grew 14% to $13.9 million, compared to $12.1 million in the second quarter of last year, and grew approximately 4% sequentially from $13.3 million in the first quarter. The increase was driven by increased production and growth in sales from our Texas, Georgia, and Washington facilities. Adjusted gross margin for the second quarter was 27%, excluding depreciation, stock-based compensation, and other non-core items, compared to 30% in the prior year period and approximately 29% in the first quarter. The sequential and year-over-year decline is a function of our strategy to diversify our channel mix at our Georgia facility and resulted in temporary packing inefficiencies, which have since been refined and implemented.

Tony Hughes
Tony Hughes
Interim CFO and Chief Accounting Officer at Local Bounti

As we look longer term, we expect that our increased penetration of the retail channel, in combination with our broader efforts to lower input costs, will support enhanced margins over time. Adjusted G&A expense for the second quarter was $4.1 million, down from $5 million in the second quarter of last year, a reduction of approximately 17% year-over-year, and essentially in line with the $4.1 million we reported in the first quarter. GAAP net loss for the second quarter was $19.8 million, compared to $21.6 million in the second quarter of last year and $12.7 million in the first quarter of 2026. The year-over-year improvement was primarily driven by a $1.5 million improvement in loss from operations, reflecting lower operating expenses along with a modest reduction in net interest expense. The sequential increase in GAAP net loss for the first quarter was almost entirely explained by non-cash items.

Tony Hughes
Tony Hughes
Interim CFO and Chief Accounting Officer at Local Bounti

The change in fair value of our warrant liabilities swung from a $5.2 million gain in the first quarter to a $1.4 million loss in the second quarter, driven by changes in our stock price during the period. Adjusted EBITDA loss for the second quarter was $5.8 million, compared to a loss of $7.1 million in the second quarter of last year, a 17% year-over-year improvement. Relative to the first quarter, the loss was stable, and we still expect the pattern of continued improvement to hold in the H2 as our network continues to mature and scale alongside our retail customers. Looking at our trending for the H1 of the year, revenue is up 15% to $27.2 million, and adjusted EBITDA loss has improved approximately 24% to $11.5 million, compared to $15.3 million in the H1 of last year.

Tony Hughes
Tony Hughes
Interim CFO and Chief Accounting Officer at Local Bounti

These results reinforce that we are on the right path. With respect to the balance sheet, we ended the quarter with cash equivalents, and restricted cash of $10.1 million, down from $18.8 million at the end of the first quarter, reflecting cash used in operations during the quarter. Subsequent to quarter end and prior to today's call, we received an additional $12.5 million investment from an existing strategic investor, which is not reflected in that $10.1 million balance. Combined with the $15 million investment we received in March and the transactions we executed in 2025, these commitments continue to give us the financial flexibility to be strategic about growth and partnership decisions as we advance towards profitability. In terms of our outlook, we expect the trajectory of improvement we've demonstrated over the past several quarters to continue.

Tony Hughes
Tony Hughes
Interim CFO and Chief Accounting Officer at Local Bounti

Revenue growth and continued cost discipline remain the two biggest levers we have towards our goal of positive adjusted EBITDA. With that, I'll turn it back to Kathy for closing remarks.

Kathleen Valiasek
Kathleen Valiasek
President and CEO at Local Bounti

Thank you, Tony. To close, I'd say this was a quarter that moved us forward on every front that matters. The commercial pipeline turning into real placements, our operational discipline continuing to compound, and our strategic investor who knows the business well, choosing to back it with more capital. All of it against a backdrop where the case for how we grow food has genuinely never been more relevant. There's more work ahead of us before we get to positive adjusted EBITDA, but every quarter like this one narrows that gap. I'm grateful to the entire Local Bounti team for their execution and to our investors and partners for their continued confidence. That concludes our prepared remarks. Thank you again for joining us today and for your continued interest in Local Bounti.

Operator

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.

Executives
    • Kathleen Valiasek
      Kathleen Valiasek
      President and CEO
    • Tony Hughes
      Tony Hughes
      Interim CFO and Chief Accounting Officer
Analysts
    • Jeff Sonnek
      Investor Relations at ICR
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