AppHarvest recorded a $166 million loss in 2021. It’s set to open 3 farms this year.
Mega-greenhouse company AppHarvest plans to open three more farms this year, despite facing some challenges in its first year selling tomatoes.
AppHarvest’s Morehead greenhouse opened in fall of 2020 and harvested its first tomatoes in January 2021 with the goal to produce 45 million pounds annually. In 2021, the farm produced more than 18 million pounds of tomatoes. The company had net sales of $9.1 million in its first full year and a loss of $166.2 million, and an adjusted EBIDTA loss of $69.9 million.
Founder and CEO Jonathan Webb said in an investor call last week he expects AppHarvest will more than double its total company sales this year.
The Kentucky-based controlled environment agriculture company is on track to quadruple the number of farms in 2022 with the opening of a 15-acre Berea salad green facility, a 60-acre Richmond tomato facility and a 30-acre Somerset berry facility. Hiring began for leadership and administrative positions, and AppHarvest plans to start hiring crop care and packhouse specialists within the next couple of months to fill 550 additional positions this year.
“Though we’ve had some challenges as we ramped up over our first two growing season, we’ve applied those lessons learned, and we remain on track to complete one of the biggest CEA build-outs in the world in 2022,” Webb said.
AppHarvest had a low-profit second quarter due to tomato prices hitting a 10-year low and a lower quality tomatoes harvest that had little to no value. The company in August announced it recorded a net loss of $32 million, which caused its stock APPH to plummet. Webb attributed the quality problems to the hiring of 400 employees at its Morehead farm.
Leadership implemented a summer refresh, which it will continue for upcoming seasons, and provided productivity bonuses for its employees. AppHarvest also hired Julie Nelson as the executive vice president of operations at the Morehead facility who previously worked at PepsiCo and McKinsey. She was recently promoted to chief operating officer.
For its third quarter, AppHarvest recorded a net loss of $17.3 million and sold 1.5 million pounds of tomatoes. Leadership saw promise in a good fourth quarter as it began producing higher quality tomatoes, which are ranked as USDA No. 1 and lead to a higher selling price.
Though AppHarvest previously announced a second Morehead farm, the company decided to hold off on the development on the 10-acre leafy green facility to adapt the design of the farm based on lessons learned at the Berea facility and maintain financial flexibility. The company still aims to open 12 farms.
“We believe that completing our current development phase puts us in a prime position to deliver positive operating cash flow with our four farm network,” AppHarvest President David Lee said in the Thursday call. “Beyond the four farms, we plan to develop additional facilities only after securing the required capital. We remain confident in our ability to do that and be self-sufficient.”
AppHarvest’s fourth quarter net sales were $3.1 million on 4.4 million pounds of tomatoes sold. The net sales price was 69 cents per pound, which is almost double the price achieved in the third quarter. The company recorded a net loss of $88.4 million and a non-GAAP Adjusted EBITDA loss of $18.3 million.
Based on results from this quarter already, AppHarvest projects it will produce 3 million more pounds of tomatoes compared to its fourth quarter. The quality of the tomatoes and tomato prices are similar to the fourth quarter.
Chief Financial Officer Loren Eggleton said they expect to deliver $24 million to $32 million in total company net sales in 2022, with the Morehead farm driving production. The three farms to open this year will profit in the “mid-single digit million range,” he said
Eggleton said the adjusted EBIDTA loss is projected to be $70 million to $80 million, which is higher than the 2021 report at $69.9 million. He attributed the projected loss to the cost hikes with freight and health care and significant increases in cost for electricity, natural gas and paper products used with packaging.
A disease is impacting some of Morehead’s tomato plants, which could reduce yields by 10 percent to 15 percent, but the decrease has been factored into the company’s outlook, he said.
Eggleton said AppHarvest expects to invest $140 million to $150 million in capital expenditure, which accounts for the completion of the three farms.
“I remain confident in our team’s ability to operate efficiently,” he said. “I’m proud of the progress we’ve made to streamline the organization, position the company and our shareholders for future profitable growth.”