AppHarvest, Inc. (NASDAQ: APPH, APPHW), a leading AgTech company,
public benefit corporation and Certified B Corp 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, announced today its operating and financial results
for the quarter ending on September 30, 2021.
“With a keen focus on the core business, our team delivered on
top priorities this quarter—to replant and prepare our first
high-tech indoor farm for a successful new growing season and to
continue expanding our network with new farms under construction,”
said AppHarvest Founder & CEO Jonathan Webb. “The second
growing season is off to a solid start as our quality has
significantly improved based on the first couple weeks of
harvesting, our enhanced training program recently quadrupled the
number of crop care specialists earning a productivity bonus, and
there are signs that tomato prices appear to be on the rise to
start the fourth quarter. We believe our actions have positioned us
well to deliver a solid second growing season, and we remain on
track to achieve our full year 2021 outlook.”
Third Quarter 2021 Results and Initial Fourth Quarter
2021 Progress
For the third quarter of 2021, net sales were $0.5 million,
on 1.5 million pounds sold in July and August, before the company
refreshed and replanted its high-tech indoor farm in September
ahead of the second growing season. Price per pound in the third
quarter of 2021 was $0.37, which reflects quality and tomato price
levels similar to the second quarter due to harvest timing early in
the third quarter. Through the first two weeks of harvesting in the
fourth quarter, the company exceeded its internal projection for
the percentage of USDA No. 1 tomatoes associated with the start of
the second growing season. The company also has seen indications of
rising tomato prices in the fourth quarter from the company's
at-scale distribution partner, Mastronardi Produce.
The company recorded a net loss of $17.3 million and non-GAAP
Adjusted EBITDA loss of $16.5 million in the third quarter of 2021,
in line with expectations. See reconciliation of the non-GAAP
measure at the end of this news release. Third quarter 2021 results
were driven by continued labor and productivity investments
associated with the training and development of the new workforce
at the Morehead farm and costs associated with the summer refresh
and planting of the new crop to prepare for the second season. In
the third quarter, the company continued to see historically low
market prices for tomatoes compared with historical averages, based
on USDA reports. Analysis of the past 10 years of USDA tomato
pricing data indicates that the third quarter typically marks a
seasonal low point in terms of tomato prices, with current prices
appearing poised to improve in the fourth quarter of 2021 in line
with historical averages.
“Under the leadership of our new EVP of Operations Julie Nelson,
who brings extensive experience from her time at PepsiCo, we began
shipping to top national grocery store chains and restaurants this
week. Her actions to take a data-driven approach with real-time
performance management, to enhance training, to implement a
world-class supply chain planning process and to streamline our
operations organization are paying off in terms of volume and
quality,” said AppHarvest President David Lee, “With the percent of
No. 1s so far in the fourth quarter showing a nearly 20 percentage
points improvement over the second quarter, our second growing
season is off to a solid start with a clear focus on the
fundamentals of the core business on both the production side and
the construction side as we continue to expand the farm network
that will diversify our crops to include leafy greens and
berries.”
Development
AppHarvest’s Morehead farm has been harvesting since January
2021. The company is currently building three more high-tech indoor
farms and remains on-track with its long-term outlook guiding to a
more conservative delivery of nine high-tech indoor farms in
Appalachia by the end of 2025, while it continues to work toward a
network of 12 farms by 2025. The 15-acre Berea, Ky., leafy green
facility and the 60-acre Richmond, Ky., tomato facility are both
over 50% complete and expected to be fully operational by the end
of 2022. A third new facility, a 30-acre Somerset, Ky., berry
facility, which broke ground in June 2021, is approximately 30%
complete and is expected to be operational by the end of 2022. To
incorporate design and other insights from construction of the
15-acre Berea leafy green facility and to maintain flexibility in
the allocation of capital resources, the company temporarily has
paused development of the 10-acre Morehead North leafy green
facility with construction now expected to resume in 2022 for a
2023 delivery.
The company intends to keep Corporate SG&A roughly flat even
as additional farms and crop types are added in future years, in
order to increase leverage across the company’s current expense
base.
Balance Sheet and Liquidity
As of September 30, 2021, cash and cash equivalents were $221.6
million, compared to $21.9 million as of December 31, 2020.
On July 27, 2021, the company announced it had secured $91
million in non-dilutive financing in the form of a 65.5%
loan-to-value construction loan at 8% interest per annum to build
its Richmond, Ky., tomato facility from sustainability-focused and
leading controlled environment agriculture (CEA) investor
Equilibrium Capital. The construction loan provides monthly
disbursements to fund capital costs of the project and as of
September 30, 2021, $13.8 million was outstanding on the
construction loan with associated interest expense of $0.1
million.
On September 27, 2021, the company entered into a promissory
note with JPMorgan Chase Bank, N.A., providing for a line of credit
facility up to $25 million for capital expenditures and CEA
facility construction and improvements. The JPM Loan matures on
September 24, 2022, and has an interest rate that is equivalent to
one-month LIBOR plus 2.25%. As of September 30, 2021, the company
had borrowed $6.9 million with an effective interest rate of
2.375%.
Financial Outlook
The company reiterated its full-year 2021 outlook of net sales
of $7 million to $9 million, and full-year 2021 outlook for
Adjusted EBITDA to the range of a loss of $70 million to $75
million.
Conference Call and Webcast
Management of AppHarvest will host a webcast and conference call
to discuss its third quarter 2021 financial results and operations
today at 4:30 p.m. ET. 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: 6289723
Conference Replay*
- Webcast: Accessible at investors.appharvest.com
- Dial-in: 1-855-859-2056 (Domestic Toll Free) / 1-404-537-3406
(Toll/International)
- Conference Number: 6289723
*Available approximately two hours after the end of the
conference call through November 17, 2021.
About AppHarvest
AppHarvest is an applied technology company in Appalachia
developing and operating some of the world’s largest high-tech
indoor farms, designed to grow non-GMO, chemical pesticide-free
produce, using up to 90 percent less water than open-field
agriculture and only rainwater while producing yields up to 30
times that of traditional agriculture on the same amount of land
without agricultural runoff. The company combines conventional
agricultural techniques with world-class technology including
artificial intelligence and robotics to improve access for all to
nutritious food, farming more sustainably, building a domestic food
supply, and increasing investment in Appalachia. The company’s
60-acre Morehead, Ky. facility is among the largest indoor farms in
the world. For more information, visit
https://www.appharvest.com/.
Non-GAAP Financial Measures
To supplement the Company’s unaudited condensed consolidated
financial statements, which are prepared and presented in
accordance with United States generally accepted accounting
principles (“GAAP”), the Company uses certain non-GAAP measures,
such as Adjusted EBITDA, to understand and evaluate the Company’s
core operating performance. The Company defines and calculates
Adjusted EBITDA as net loss before the impact of interest income or
expense, income tax expense or benefit, depreciation and
amortization, adjusted to exclude: stock-based compensation,
transaction-related costs, remeasurement of warrant liabilities and
certain other non-recurring, non-cash and non-core items. The
Company believes this non-GAAP measure of financial results
provides useful information to management and investors regarding
certain financial and business trends relating to the Company’s
financial condition and results of operations. The Company’s
management uses this non-GAAP measure for trend analyses and for
budgeting and planning purposes.
The Company believes that the use of this non-GAAP financial
measure provides an additional tool for investors to use in
evaluating projected operating results and trends. Other similar
companies may present different non-GAAP measures or calculate
similar non-GAAP measures differently. Management does not consider
this non-GAAP measure in isolation or as an alternative to
financial measures determined in accordance with GAAP. The
principal limitation of this non-GAAP financial measure is that it
excludes significant expenses that are required to be presented in
the Company’s GAAP financial statements. Because of this
limitation, you should consider Adjusted EBITDA alongside other
financial performance measures, including net loss and the
Company’s other financial results presented in accordance with
GAAP.
Adjusted EBITDA as used in connection with the Company's 2021
and 2025 outlook is a non-GAAP financial measure that excludes or
has otherwise been adjusted for items impacting comparability. The
Company is unable to reconcile this forward-looking non-GAAP
financial measure to net income, its most directly comparable
forward-looking GAAP financial measure, without unreasonable
efforts, because the Company is currently unable to predict with a
reasonable degree of certainty its stock-based compensation expense
for 2021 and for 2025. In addition, the company may incur
additional expenses which may impact adjusted EBITDA. Such items
may include costs and expenses related to the business combination
activities, income taxes and other items. The unavailable
information could have a significant impact on the Company’s full
year 2021 or 2025 GAAP financial results.
Forward-Looking Statements
Certain statements included in this press release that are not
historical facts are forward-looking statements for purposes of the
safe harbor provisions under the United States Private Securities
Litigation Reform Act of 1995. Forward-looking statements generally
are accompanied by words such as “believe,” “may,” “will,”
“estimate,” “continue,” “anticipate,” “intend,” “expect,” “should,”
“would,” “plan,” “predict,” “potential,” “seem,” “seek,” “future,”
“outlook,” “can,” “goal,” “target” and similar expressions that
predict or indicate future events or trends or that are not
statements of historical matters. All statements, other than
statements of present or historical fact included in this press
release, regarding AppHarvest’s value of current and future
investments, intention to build high-tech CEA farms, the
anticipated benefits of and production at such facilities, timing
and availability of tomatoes at top national grocery stores and
restaurants, anticipated benefits of the second season harvest,
AppHarvest’s future financial performance, as well as AppHarvest’s
growth and evolving business plans and strategy, ability to
capitalize on commercial opportunities, future operations,
estimated financial position, estimated Adjusted EBITDA, revenues
and losses, projected costs, prospects, plans and objectives of
management are forward-looking statements. These statements are
based on various assumptions, whether or not identified in this
press release, and on the current expectations of AppHarvest’s
management and are not predictions of actual performance. These
forward-looking statements are provided for illustrative purposes
only and are not intended to serve as, and must not be relied on
as, a guarantee, an assurance, a prediction, or a definitive
statement of fact or probability. Actual events and circumstances
are difficult or impossible to predict and will differ from
assumptions. Many actual events and circumstances are beyond the
control of AppHarvest. These forward-looking statements are subject
to a number of risks and uncertainties, including those discussed
in the Company’s Quarterly Report on Form 10-Q filed with the SEC
by AppHarvest on August 11, 2021, under the heading “Risk Factors,”
and other documents AppHarvest has filed, or that AppHarvest will
file, with the SEC. If any of these risks materialize or our
assumptions prove incorrect, actual results could differ materially
from the results implied by these forward-looking statements. In
addition, forward-looking statements reflect AppHarvest’s
expectations, plans, or forecasts of future events and views as of
the date of this press release. AppHarvest anticipates that
subsequent events and developments will cause its assessments to
change. However, while AppHarvest may elect to update these
forward-looking statements at some point in the future, AppHarvest
specifically disclaims any obligation to do so. These
forward-looking statements should not be relied upon as
representing AppHarvest’s assessments of any date subsequent to the
date of this news release. Accordingly, undue reliance should not
be placed upon the forward-looking statements.
APPHARVEST, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)(in thousands except per share
amounts)
|
September 30,2021 |
|
December 31,2020 |
Assets |
|
|
|
Current Assets: |
|
|
|
Cash and cash equivalents |
$ |
221,574 |
|
|
$ |
21,909 |
|
Restricted cash |
7,250 |
|
|
— |
|
Inventories, net |
4,187 |
|
|
3,387 |
|
Prepaid expenses and other current assets |
3,410 |
|
|
481 |
|
Total current assets |
236,421 |
|
|
25,777 |
|
Operating lease right-of-use assets, net |
2,196 |
|
|
1,307 |
|
Property and equipment, net |
288,610 |
|
|
152,645 |
|
Goodwill |
50,863 |
|
|
— |
|
Other intangible assets, net |
9,321 |
|
|
— |
|
Other assets, net |
16,724 |
|
|
1,188 |
|
Total non-current assets |
367,714 |
|
|
155,140 |
|
Total
assets |
$ |
604,135 |
|
|
$ |
180,917 |
|
Liabilities and
stockholders’ equity |
|
|
|
Current Liabilities: |
|
|
|
Accounts payable |
$ |
16,354 |
|
|
$ |
1,342 |
|
Accrued expenses |
14,516 |
|
|
5,184 |
|
Current portion of lease liabilities with a related party |
— |
|
|
59,217 |
|
Current portion of lease liabilities |
537 |
|
|
166 |
|
Current portion of financing obligation with a related party |
— |
|
|
58,795 |
|
Current portion of long-term debt |
9,633 |
|
|
— |
|
Note payable with related party |
— |
|
|
30,000 |
|
Other current liabilities |
960 |
|
|
77 |
|
Total current liabilities |
42,000 |
|
|
154,781 |
|
Long-term debt, net of current portion |
85,436 |
|
|
— |
|
Lease liabilities, net of current portion |
2,276 |
|
|
1,370 |
|
Deferred income tax liabilities |
1,967 |
|
|
— |
|
Private Warrant liabilities |
4,337 |
|
|
— |
|
Other liabilities |
2,679 |
|
|
— |
|
Total non-current
liabilities |
96,695 |
|
|
1,370 |
|
Total
liabilities |
138,695 |
|
|
156,151 |
|
Stockholders’
equity |
|
|
|
Preferred stock, par value $0.0001, 10,000 shares authorized, 0
issued and outstanding, as of September 30, 2021 and
December 31, 2020, respectively |
— |
|
|
— |
|
Common stock, par value $0.0001, 750,000 shares authorized, 100,674
and 44,461 shares issued and outstanding as of September 30,
2021 and December 31, 2020, respectively |
10 |
|
|
4 |
|
Additional paid-in capital |
566,935 |
|
|
45,890 |
|
Accumulated deficit |
(98,927 |
) |
|
(21,128 |
) |
Accumulated other comprehensive loss |
(2,578 |
) |
|
— |
|
Total stockholders’ equity |
465,440 |
|
|
24,766 |
|
Total liabilities and
stockholders’ equity |
$ |
604,135 |
|
|
$ |
180,917 |
|
|
|
|
|
|
|
|
|
APPHARVEST, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)(In thousands except per share
data)
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Net sales |
$ |
543 |
|
|
$ |
— |
|
|
$ |
5,980 |
|
|
$ |
— |
|
Cost of goods sold |
7,482 |
|
|
— |
|
|
30,001 |
|
|
— |
|
|
(6,939 |
) |
|
— |
|
|
(24,021 |
) |
|
— |
|
Operating expenses: |
|
|
|
|
|
|
|
Selling, general and administrative expenses |
25,401 |
|
|
5,742 |
|
|
84,357 |
|
|
8,435 |
|
Total operating expenses |
25,401 |
|
|
5,742 |
|
|
84,357 |
|
|
8,435 |
|
Loss from operations |
(32,340 |
) |
|
(5,742 |
) |
|
(108,378 |
) |
|
(8,435 |
) |
Other income (expense): |
|
|
|
|
|
|
|
Development fee income from a related party |
— |
|
|
136 |
|
|
— |
|
|
408 |
|
Interest expense from related parties |
— |
|
|
(64 |
) |
|
(658 |
) |
|
(90 |
) |
Interest expense |
(805 |
) |
|
— |
|
|
(893 |
) |
|
— |
|
Change in fair value of Private Warrants |
15,781 |
|
|
— |
|
|
32,095 |
|
|
— |
|
Other |
113 |
|
|
(13 |
) |
|
574 |
|
|
(13 |
) |
Loss before income taxes |
(17,251 |
) |
|
(5,683 |
) |
|
(77,260 |
) |
|
(8,130 |
) |
Income tax benefit (expense) |
(17 |
) |
|
— |
|
|
(539 |
) |
|
— |
|
Net loss |
(17,268 |
) |
|
(5,683 |
) |
|
(77,799 |
) |
|
(8,130 |
) |
|
|
|
|
|
|
|
|
Other comprehensive loss: |
|
|
|
|
|
|
|
Net unrealized losses on derivatives contracts, net of tax |
(66 |
) |
|
— |
|
|
(2,578 |
) |
|
— |
|
Comprehensive loss |
$ |
(17,334 |
) |
|
$ |
(5,683 |
) |
|
$ |
(80,377 |
) |
|
$ |
(8,130 |
) |
|
|
|
|
|
|
|
|
Net loss per common share: |
|
|
|
|
|
|
|
Basic and diluted |
$ |
(0.17 |
) |
|
$ |
(0.14 |
) |
|
$ |
(0.83 |
) |
|
$ |
(0.23 |
) |
Weighted average common shares
outstanding: |
|
|
|
|
|
|
|
Basic and diluted |
100,437 |
|
|
41,558 |
|
|
93,823 |
|
|
35,960 |
|
|
|
|
|
|
|
|
|
|
|
|
|
APPHARVEST, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS (Unaudited)(In thousands)
|
Nine Months Ended September 30, |
|
2021 |
|
2020 |
Operating
Activities |
|
|
|
Net loss |
$ |
(77,799 |
) |
|
$ |
(8,130 |
) |
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
Change in fair value of Private Warrants |
(32,095 |
) |
|
— |
|
Deferred income tax provision |
539 |
|
|
— |
|
Depreciation and amortization |
7,791 |
|
|
66 |
|
Stock-based compensation expense |
31,248 |
|
|
108 |
|
Rent expense in excess of rent payments |
(72 |
) |
|
— |
|
Amortization of development fee with a related party |
— |
|
|
(405 |
) |
Changes in operating assets and liabilities |
|
|
|
Accounts receivable |
259 |
|
|
— |
|
Inventories, net |
(800 |
) |
|
(277 |
) |
Prepaid expenses and other current assets |
(2,752 |
) |
|
(292 |
) |
Other assets, net |
(10,486 |
) |
|
(2 |
) |
Accounts payable |
811 |
|
|
1,347 |
|
Accrued expenses |
1,575 |
|
|
1,282 |
|
Other current liabilities |
(178 |
) |
|
(4 |
) |
Other non-current liabilities |
617 |
|
|
— |
|
Net cash used in operating activities |
(81,342 |
) |
|
(6,257 |
) |
Investing
Activities |
|
|
|
Purchases of property and equipment |
(112,903 |
) |
|
(11,149 |
) |
Purchases of property and equipment from a related party |
(122,911 |
) |
|
— |
|
Cost of acquisition, net of cash acquired |
(9,756 |
) |
|
— |
|
Investment in unconsolidated entity |
(5,000 |
) |
|
— |
|
Advances on equipment |
— |
|
|
(15 |
) |
Net cash used in investing activities |
(250,570 |
) |
|
(11,164 |
) |
Financing
Activities |
|
|
|
Proceeds from debt to a related party |
— |
|
|
32,000 |
|
Proceeds from Business Combination and PIPE Shares, net |
448,500 |
|
|
— |
|
Proceeds from debt |
95,709 |
|
|
— |
|
Debt issuance costs |
(1,046 |
) |
|
— |
|
Payments on financing obligation to a related party |
(2,088 |
) |
|
— |
|
Proceeds from stock options exercised |
35 |
|
|
32 |
|
Proceeds from exercise of warrants |
95 |
|
|
— |
|
Payments of withholding taxes on restricted stock conversions |
(2,341 |
) |
|
— |
|
Issuance of preferred stock, net |
— |
|
|
32,949 |
|
Other financing activities |
(37 |
) |
|
— |
|
Net cash provided by financing activities |
538,827 |
|
|
64,981 |
|
Change in cash and cash equivalents |
206,915 |
|
|
47,560 |
|
Cash and Cash
Equivalents |
|
|
|
Beginning of period |
21,909 |
|
|
6,031 |
|
End of period |
$ |
228,824 |
|
|
$ |
53,591 |
|
Non-cash
Activities: |
|
|
|
Fixed assets purchases in accounts payable |
$ |
14,170 |
|
|
$ |
— |
|
Fixed assets purchases in accrued liabilities |
$ |
8,331 |
|
|
$ |
— |
|
Operating lease right-of-use assets and liabilities |
$ |
1,055 |
|
|
$ |
376 |
|
|
|
|
|
|
|
|
|
APPHARVEST, INC. AND
SUBSIDIARIES
Reconciliation of Selected GAAP Measures
to Non-GAAP Measures(In millions)
|
|
Three Months Ended |
|
Nine Months Ended |
(Dollars in
millions) |
|
September 30, 2021 |
|
September 30, 2020 |
|
September 30, 2021 |
|
September 30, 2020 |
Net loss |
|
$ |
(17.3 |
) |
|
$ |
(5.7 |
) |
|
$ |
(77.8 |
) |
|
$ |
(8.1 |
) |
Interest expense from related parties |
|
— |
|
|
0.1 |
|
|
0.7 |
|
|
0.1 |
|
Interest expense |
|
0.8 |
|
|
— |
|
|
0.9 |
|
|
— |
|
Interest income |
|
(0.1 |
) |
|
— |
|
|
(0.2 |
) |
|
— |
|
Income tax expense (benefit) |
|
— |
|
|
— |
|
|
0.5 |
|
|
— |
|
Depreciation and amortization expense |
|
3.2 |
|
|
— |
|
|
7.8 |
|
|
— |
|
EBITDA |
|
(13.4 |
) |
|
(5.6 |
) |
|
(68.1 |
) |
|
(8.0 |
) |
Change in fair value of Private Warrants |
|
(15.8 |
) |
|
— |
|
|
(32.1 |
) |
|
— |
|
Stock-based compensation expense |
|
11.6 |
|
|
— |
|
|
31.2 |
|
|
0.1 |
|
Transaction success bonus on completion of Business
Combination |
|
— |
|
|
— |
|
|
1.5 |
|
|
— |
|
Reorganization costs |
|
0.9 |
|
|
— |
|
|
0.9 |
|
|
— |
|
Business Combination transaction costs |
|
0.1 |
|
|
— |
|
|
13.9 |
|
|
— |
|
Root AI acquisition costs |
|
— |
|
|
— |
|
|
1.0 |
|
|
— |
|
Adjusted EBITDA |
|
$ |
(16.5 |
) |
|
$ |
(5.6 |
) |
|
$ |
(51.6 |
) |
|
$ |
(7.9 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*Due to rounding, totals may not foot
Media Contact: Travis Parman,
Travis.Parman@appharvest.comInvestor Contact:
Kaveh Bakhtiari, appharvestIR@appharvest.comImage/Video
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