Agrify Plans For Up To $7M In Cost Savings In 2023, CFO Resigns

Agrify Corporation AGFY is actively taking steps to better align its resources and growth plan with the current operating environment, measures that the company believes could put it in a position to be cash flow positive by the end of 2023.

Agrify has reduced its manufacturing and production costs through more effective supplier agreements, volume discounts driven by increased purchasing power, and less of a reliance on contract manufacturers. Additionally, the company implemented a new enterprise resource planning system toward the end of 2022 and now has better visibility into its supply chain and inventory needs, allowing those needs to be better aligned with near-term revenue expectations. Agrify has also been able to simplify its organizational structure and embark on a strategic consolidation of its offices and facilities.

Agrify believes that these improvements could result in up to $7 million in cost savings during 2023, and the company anticipates that it may be able to accrue more savings as the year progresses.

Enhanced Sales and Growth Initiatives

The company is currently focused on growing its cultivation business by helping its existing Agrify total turn-key solution (“Agrify TTK solution”) customers bring their facilities online, driving additional sales through its rapid deployment pack (“RDP”) program, and making a concerted effort to successfully capture market share in the academic and pharmaceutical research verticals.

The company expects to have several more customer cultivation facilities coming online in 2023, including some Agrify TTK solution customer sites. Once these new Agrify TTK solution facilities are fully operational, the underlying business model for this program, which includes high-margin recurring revenue streams, should be instrumental in creating substantial long-term value for the company’s shareholders.

Despite the attractive returns the company expects from its existing Agrify TTK solution customers, Agrify will temporarily wait to pursue new opportunities that require construction financing until the market stabilizes, as those engagements are capital intensive upfront with a deferred payback period. This should significantly reduce the cash burn of the company. In addition to the general expansion of the RDP program, the company is looking to further introduce its fully integrated cultivation solution into the academic and pharmaceutical research channels.

The company’s extraction business, which consists of Precision Extraction Solutions, PurePressure, Lab Society, and Cascade Sciences has also made certain adjustments to meet the shift in the market toward small licenses as compared to larger vertical licenses. Agrify has streamlined its expansive extraction product portfolio to better support its sales efforts in 2023. Additionally, the company has amassed an extensive customer database it intends to leverage for compelling cross-selling and upselling opportunities.

Leadership Appointments

Agrify has promoted Rachel Soulsby to vice president of marketing, Sheryl Elliott to vice president of human resources, Caitlin Moakley Bricker to chief of staff, and Makenna Thompson to director of customer experience.

Timothy Oakes, Agrify’s CFO, recently notified the company of his intent to resign to pursue other opportunities. Oakes has agreed to continue in his current position until the end of February and is expected to support the organization during this transitional period. A search for Oakes’ successor is well underway.

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Photo by Richard T on Unsplash

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