Company delivered net sales of $2.3 million in line with guidance; reiterates net sales outlook for the year of $20 to $25 million
Company’s initial harvesting from flagship Morehead, Ky. facility meeting operating and financial expectations
New project developments in Richmond and Berea, Ky. on schedule and budget
MOREHEAD, Ky. — AppHarvest, Inc. (NASDAQ: APPH, APPHW), a leading AgTech company, public benefit corporation and Certified B Corp focused on farming more sustainably using up to 90% less water than open-field agriculture and only recycled rainwater, today announced operating and financial results for its first completed quarter as a public company for the quarter ending on March 31, 2021.
First Quarter 2021 Highlights
- $2.3 million net sales in first quarter harvesting, meeting expectations
- 3.8 million pounds of tomatoes sold
- $4.5 million gross loss driven by launch of commercial operations, sales and training new labor force
- $28.5 million net loss compared to $0.8 million in the prior year period in 2020
- $12.4 million adjusted EBITDA loss compared to initial expectation of loss of $14.0 million to $16.0 million amid rapid scaling of the business
- $297.7 million cash and cash equivalents at the end of Q1
AppHarvest, which started trading on Nasdaq on February 1, generated $2.3 million in net sales in the first quarter 2021 as it began harvesting from its initial high-tech indoor farm in Morehead, Ky., representing 3.8 million pounds sold with the farm only partially planted as the facility ramped up.
“At our flagship farm in Morehead, Ky., our expert growers have ramped up production of the full 60 acres as of the first week of May,” said AppHarvest Founder and CEO Jonathan Webb. “The team is putting in place the right infrastructure for growth, taking employment from around 20 a year ago to 500 by the end of the first quarter. We plan to move ahead on two more projects this summer which will put us at five operating farms by the end of 2022, and we are well on track for 12 farms by the end of 2025.”
Development and Financing
AppHarvest is currently operating one high-tech indoor farm that is expected to produce more than 40 million pounds of tomatoes annually, with plans to build a network of 12 high-tech farms by the end of 2025. Two more high-tech farms are now under construction—one in Berea, Ky. designed to grow leafy greens, and another in Richmond, Ky. planned for tomatoes. Four more projects are slated for development, and two of those are scheduled to begin construction in the second quarter of this year.
AppHarvest purchased its flagship Morehead farm in March, giving it the ability to leverage the asset at attractive financing rates to fund more development. The company has finalized key terms for a 60% loan-to-value financing transaction for the Morehead facility at an expected interest rate of around 4 to 5%, which is expected to close in the second quarter. The company also is in negotiations for approximately $200 million of development financing for large-scale projects.
In April, the company acquired Root AI, an artificial intelligence and robotics company, and its workforce with experience in controlled environment agriculture—creating the AppHarvest technology group dedicated to making controlled environment agriculture more efficient. Chief Technology Officer Josh Lessing, Root AI’s former CEO, is leading the effort to build a digital operating model for farming with AI at its core that can manage a global network of facilities to execute complex supply chain strategies autonomously with higher returns. Based on its modeling, the company expects its investment in technology to drive both top and bottom-line results at its Farm of the Future facilities, and the technology investments are expected to raise annual run-rate adjusted EBITDA for a future 60-acre vine crop facility by approximately $7 million.
Sales and Distribution
AppHarvest has a long-term distribution agreement with Mastronardi Produce to sell all USDA Grade No. 1 tomatoes in top retail grocery and food service outlets. Volume now has increased to allow for direct shipping of full truckloads to retail customers such as Kroger and Wendy’s, building on AppHarvest’s existing relationship with Mastronardi.
Grocers and consumers increasingly are requesting U.S.-grown and chemical pesticide-free produce from companies they trust. Despite that, in 2019, more than two-thirds of vine crops for the U.S. market were imported.
“We want every AppHarvest tomato they can grow,” said Mastronardi Produce President and CEO Paul Mastronardi. “We have high demand for U.S.-grown and pesticide-free produce already, and when you combine that with the taste, color and freshness of the AppHarvest model, on top of their social mission, it’s driving our customers to ask for more.”
The company reiterated its full-year 2021 outlook of net sales of $20 to $25 million. The company updated its full-year outlook for adjusted EBITDA loss to $48.0 million to $52.0 million from a prior range of a loss of $43.0 million to $45.0 million, driven by the Root AI acquisition and other planned investment in growth.
In light of the technology investment combined with the latest view of operational performance, the company raised long-term illustrative performance on adjusted EBITDA for a 60-acre Farm of the Future producing tomatoes from $15.8 million per year, as previously presented during its Analyst Day event last December, to $23.3 million per year, resulting in a potential 17% to 23% ROIC on an unlevered basis. Further, with improved access to non-dilutive capital, the long-term illustrative performance on a leveraged basis, assuming a 60% loan-to-value, could result in 43% to 58% ROIC.
“We are pleased by our fast start to the year, the encouraging operating and financial performance of our Morehead facility and our team’s ability to scale the business. We are concentrating on executing our growth plan as we build additional facilities, funding our investments with non-dilutive capital and delivering long-term shareholder value,” said AppHarvest President David Lee.
Conference Call and Webcast
Management of AppHarvest will host a webcast and conference call to discuss its first quarter 2021 financial results and operations today at 8:30 a.m. ET. The Company will post a supplemental slide presentation in the Investor Relations section of the AppHarvest website at investors.appharvest.com to accompany the conference call. Participation instructions for the live event and replay are as follows:
Live webcast and conference call
- Webcast: Accessible at investors.appharvest.com
- Dial-in: 1-833-665-0607 (Domestic Toll Free) / 1-929-517-0397 (Toll/International)
- Participant Entry Number: 7618198
- Webcast: Accessible at investors.appharvest.com
- Dial-in: 1-855-859-2056 (Domestic Toll Free) / 1-404-537-3406 (Toll/International)
- Conference Number: 7618198
*Available approximately two hours after the end of the conference call through May 24, 2021.
AppHarvest is an applied technology company in Appalachia building some of the world’s largest high-tech indoor farms that grow non-GMO, chemical pesticide-free produce using up to 90% less water than open-field agriculture and only recycled rainwater while producing yields up to 30 times that of traditional agriculture on the same amount of land with zero agricultural runoff. The company combines conventional agricultural techniques with cutting-edge technology including artificial intelligence and robotics to improve access for all to nutritious food, farm more sustainably, build a more reliable domestic food supply, and increase investment in Appalachia. The company’s 60-acre Morehead, Ky. facility is among the largest indoor farms in the world. For more information, visit www.appharvest.com.