AppHarvest, Inc.

AppHarvest reported Q1 2023 net sales of $13 million, versus $5.2 million in Q1 2022, an increase of about $7.8 million year over year. Net loss was $33.6 million, compared with $30.6 million a year ago, and non-GAAP adjusted EBITDA loss was $23.2 million versus $18 million. SG&A was $10 million, down from $21 million in the prior-year quarter, and cash and cash equivalents totaled $50 million at quarter-end. For the full year 2023, management reaffirmed net sales guidance of $40 million to $50 million and adjusted EBITDA loss guidance of $67 million to $76 million; they also said Q2 is likely to be the highest sales quarter of the year. Management expects all farms to be adjusted gross profit positive by 2024, farm operations to be adjusted EBITDA positive by 2025, and the consolidated company to be adjusted EBITDA positive by 2026.

Jonathan Webb framed the quarter as proof that the expanded farm network is starting to work, emphasizing that Q1 sales were nearly 90% of all 2022 sales and that Moorhead is setting weekly performance records. His focus was on three levers to profitability: yield, quality, and price, with Tony Martin’s operational changes aimed at improving all three. He sounded optimistic but cautious, repeatedly noting that the farms are still in ramp-up and that full optimization will take time.

Loren Eggleton highlighted the hard numbers: $13 million in net sales, $33.6 million net loss, $23.2 million adjusted EBITDA loss, and $50 million of cash at quarter-end. She said Q1 COGS rose sharply because of ramping the three new farms and the Somerset crop change, but noted SG&A dropped to $10 million from $21 million due to restructuring and lower stock compensation. She also said the company is pursuing financing alternatives, including a sale-leaseback, expects about $40 million to $45 million of 2023 capex, and remains confident in full-year guidance of $40 million to $50 million in sales and a $67 million to $76 million EBITDA loss.

Analysts focused on the path to breakeven, asking what could accelerate gross profit and EBITDA positivity and what the capital needs might be. Management said the key drivers are yield, quality, and pricing, and reiterated its timeline: adjusted gross profit positive by 2024, farm-level adjusted EBITDA positive by 2025, and company-wide adjusted EBITDA positive by 2026. Questions also centered on seasonality and Moorhead’s standalone progress; management said Berea is year-round, Somerset strawberries should return in early Q4 after changeover, and Moorhead could be adjusted EBITDA positive in Q2 or Q3, though not on a full-year basis this year. Another question addressed direct shipments and food safety certification, with management saying certification opens larger retail accounts and reduces freight and cross-docking costs.