AppHarvest, Inc. (NASDAQ: APPH, APPHW) announced its operating and financial results for the quarter ending March 31, 2022 achieving its highest net sales quarter to date.
“The AppHarvest team delivered on the top priorities for the quarter of ramping up production of the current facility and successfully meeting farm network expansion milestones,” said AppHarvest Founder & CEO Jonathan Webb in the company’s press release. “Food security issues, inflation and commodity price increases continue to drive strong confidence in controlled environment agriculture (CEA) as a solution to decrease U.S. reliance on imported fruits and vegetables. AppHarvest expects to be well equipped to provide consumers before year-end with a reliable, high-quality supply of increasingly sought-after options that are sustainably grown in the U.S.”
Net Sales Increase Due To Increased Production Rate and Higher Prices
For the first quarter 2022, net sales were $5.2 million on 6.9 million pounds of tomatoes sold with a net sales price of 75 cents per pound versus net sales of $2.3 million on 3.8 million pounds of tomatoes sold with a net sales price of 61 cents in the first quarter of 2021. This approximately 125% improvement in year-over-year Q1 net sales was driven by higher overall production and expanded product variety at the Morehead farm, which was not fully harvesting in the first quarter of last year based on the phased opening of the facility, and continued operational ramp-up, including enhanced training and productivity improvements resulting in a more favorable ratio mix of USDA No. 1 grade (“premium”) and non-premium tomatoes.
Company Aims At Quadrupling Farm Network By Year-End
AppHarvest is on track to quadruple its number of farms by the end of the year and to diversify its produce portfolio to include salad greens and berries. The 15-acre Berea, Ky., salad greens facility is approximately 79% complete. The 60-acre Richmond, Ky., tomato facility is approximately 75% complete. A 30-acre Somerset, Ky., berry facility is approximately 65% complete. Starting with the Berea salad greens facility this summer, we expect to implement a phased approach that brings on additional productive acreage at each farm over time, with all three new farms expected to be fully operational by the end of 2022. Construction of a fifth farm, the Morehead salad greens facility, remains paused contingent upon financing.
In line with expectations, while investing in quadrupling the farm network, the company recorded in its financial results a net loss of $30.6 million and non-GAAP Adjusted EBITDA loss of $18.0 million in the first quarter of 2022, compared to a prior year net loss of $28.5 million and non-GAAP Adjusted EBITDA loss of $12.4 million. See the financial details here.
Financial Outlook For The Forthcoming Year
With the three new farms on target to be operational by end of year, the company reiterated it remains on track with its full-year 2022 outlook of net sales of $24 to $32 million, more than double 2021 net sales, and non-GAAP Adjusted EBITDA loss expectation in the range of $70 to $80 million despite operating in a general environment characterized by significant inflation.
“In a time of global geopolitical conflict, water resource limitations and food security disruptions, AppHarvest’s business model positions us well against incumbents to grow and sell domestically with three more farms coming online this year,” said AppHarvest President David Lee.
The company continues to work toward its long-term goal of up to a 12-farm network. As previously announced, any plans to develop additional facilities are predicated on securing the required capital on acceptable terms in advance, and the company remains confident in its ability to be self-sufficient and to generate positive operating cash flow over the longer term with the four-farm network.