AppHarvest aims to be ‘financially self-sufficient’ with 3 farms opening this year
Starting off 2022, mega-greenhouse company AppHarvest had its highest sales quarter since it began harvesting tomatoes a year ago in Morehead.
AppHarvest is set to become a full produce company by the end of 2022 with the addition of three farms: a 60-acre tomato farm in Richmond, a 15-acre salad greens farm in Berea and a 30-acre berry farm in Somerset. Founder and CEO Jonathan Webb said the Berea farm will make the company one of the largest salad operators at the end of the year.
By the end of the year, AppHarvest will “be a fruit and vegetable company at scale,” Webb said.
The company sold 6.9 million pounds of tomatoes at its 60-acre Morehead farm, it reported in its Q1 earnings call Tuesday. Net sales were $5.2 million, an increase compared to Q1 2021’s net sales of $2.3 million on 3.8 million pounds of tomatoes. AppHarvest recorded a net loss of $30.6 million in the first quarter.
AppHarvest President David Lee said 2022 is a pivotal year at AppHarvest as they continue to drive strong operational performance at Morehead and remain on track with the farm network expansion, despite a challenging supply chain and inflationary issues. Construction at Berea is about 79% complete, Richmond is about 75% complete and Somerset is about 65% complete. The Berea farm will begin production in the third quarter and the Richmond and Somerset farms will begin production in the fourth quarter.
“We feel well positioned with a larger farm network and diversification of crops this year to keep taking on increasing share of dinner plates and grocery slots,” Lee said.
Lee said the company’s build out is well-timed with current geo-political conflict, water resource limitations and food security disruptions. The high-tech indoor farms uses up to 90% less water than open-field agriculture and only uses rainwater. It produces yields up to 30 times that of traditional agriculture on the same amount of land without agricultural runoff.
“We see our ability to deliver fresh fruits and vegetables as relatively insulated from global supply chain disruptions as one of the largest CEA operators in the U.S.,” Lee said. “We also believe we are at an advantage when it comes to meeting the consistent consumer demand for fresh produce as our local facilities harvest almost year round and through the coldest months of the year.”
The greenhouse company plans to generate $24-$32 million in net sales in 2022, more than doubling its 2021 net sales. The company also expects to have a loss of $70-80 million despite significant inflation.
AppHarvest leadership said they plan to develop additional facilities after securing the required capital. The company continues to work toward its long-term goal of up to a 12-farm network.
The company remains on track to invest $140-$150 million this year with the completion of the three farms.
In a previous investor call, leadership reported the Morehead farm was impacted by a disease on some of the tomato plants. Chief Operating Officer Julie Nelson said Tuesday they estimated the disease will impact 10 to 15 percent of the 2022 yield since they removed some extra plants in the affected area in an abundance of caution and replanted with new seedlings. She believes these steps to contain the issue will protect the overall harvest.
The Morehead farm continued to sell premium grade tomatoes, which are sold at a higher price. The company saw an increase of 23% in net sales per pound compared to 2021’s first quarter.
This story was originally published May 4, 2022 at 4:03 PM.