AppHavest reports US$13 million in net sales in Q1 2023

AppHarvest, Inc, a sustainable food company, public benefit corporation and Certified B Corp that is building some of the world’s largest high-tech indoor farms to grow affordable, nutritious fruits and vegetables at scale while providing good jobs in Appalachia, has announced its operating and financial results for the quarter ending 31 March 2023, reiterating its full-year 2023 guidance and showing strong progress toward operational efficiencies resulting in higher sales, cost savings and product quality as the company works to increase production across its three new farms.

For the first quarter 2023, net sales were US$13.0 million versus net sales of US$5.2 million in the first quarter of 2022 – a more than 250% increase and nearly 90% of the company’s net sales for full year 2022. This US$7.8 million increase in net sales during the quarter was primarily driven by tomato sales from the third harvest season at AppHarvest Morehead and the start-up of operations at AppHarvest Berea, AppHarvest Richmond and AppHarvest Somerset. January 2023 marked the first time that all facilities in the AppHarvest four-farm network were commercially shipping products from an increasingly diversified crop portfolio including strawberries, salad greens, cucumbers and more tomatoes.

Net sales by crop type were almost US$11 million in tomatoes, more than US$1 million in strawberries, over US$800,000 in salad greens and nearly US$200,000 in cucumbers.

In line with expectations, the company recorded a net loss of US$33.6 million and non-GAAP Adjusted EBITDA loss of US$23.2 million in the first quarter of 2023, compared to a prior year net loss of US$30.6 million and non-GAAP Adjusted EBITDA loss of US$18.0 million. See reconciliation of non-GAAP financial measures at the end of this press release.

AppHarvest Board Member and controlled environment agriculture industry veteran Tony Martin was appointed Chief Operating Officer in January 2023 to optimize production, sales and costs across the AppHarvest four-farm network. Under 'Project New Leaf', the company’s strategic program focused on profitability, Martin is working to implement a five-point strategy to focus efforts across all operations: 1) further leveraging synergies with its marketing and distribution partner, Mastronardi Produce; 2) enabling labor efficiency; 3) improving enterprise-wide feedback through clear key performance indicators (KPIs) and cross-organization information sharing; 4) initiating comprehensive spending reviews; and 5) aligning team members to milestones outlined in the five-year strategic vision.

“Under Tony’s leadership, we’re already seeing improved performance in the first quarter with net sales of IS$13 million,” commented AppHarvest Founder & CEO Jonathan Webb. “Tony is focusing on a data-driven approach for optimizing production and driving more efficiency across the four-farm network. I believe Tony’s strong CEA experience will help accelerate our path to profitability.”

In its third season, Morehead is achieving significant production records in terms of key performance indicators. The company is applying lessons learned from Morehead to accelerate its path to operational excellence at each of the new farms, especially at Richmond where the team has made meaningful progress in labor efficiency, plant health and premium production.

The Morehead, Somerset and Richmond facilities have successfully completed their food safety audits and have increased the number of direct shipments from each farm, reducing transportation costs and the number of food miles travelled so AppHarvest fruits and vegetables arrive on store shelves fresher and with less waste. The Berea farm is currently pursuing its food safety certification.

Operations continue to ramp up with both Berea and Richmond opening on a planned phased approach. Richmond is expected to be fully planted in the third quarter and to start harvesting later in the fourth quarter.