AppHarvest, Inc. (NASDAQ: APPH, APPHW), a leading AgTech company,
public benefit corporation and Certified B Corp focused on farming
more sustainably using up to 90% less water than open-field
agriculture and only recycled rainwater, announced today its
operating and financial results for the quarter ending on June 30,
2021.
“The industry has changed significantly from just three months
ago as global extreme weather events, including drought in
traditional agricultural regions, have underscored the necessity
for CEA solutions,” said AppHarvest Founder and CEO Jonathan Webb.
“We believe our innovative, sustainable approach, which captures
free rainwater and sunlight through large glass roofs in Appalachia
and leverages world-class technology at scale while maintaining the
highest ESG principles, positions our company to be a global leader
in this industry,” said Webb. “Our teams, including key seasoned
executive recruits, are focused on operational execution and on
delivering reliable, high-tech, climate-resilient food system
solutions that reduce risk in our production environment and that
can be replicated around the world.”
Second Quarter 2021 Results
For the second quarter of 2021, net sales were
$3.1 million, an increase of $0.8 million from the first
quarter of 2021, when AppHarvest began its inaugural harvest and
launched as a public company. AppHarvest sold 8.6 million pounds of
tomatoes in the second quarter, an increase of 4.8 million pounds
from the first quarter.
The company recorded a net loss of $32.0 million and non-GAAP
Adjusted EBITDA loss of $22.6 million in the second quarter of
2021, as compared to a net loss and non-GAAP Adjusted EBITDA loss
of $1.6 million in the second quarter of 2020, when the company was
still pre-production. See reconciliation of the non-GAAP measure at
the end of this press release. Second quarter 2021 results were
adversely impacted by operational headwinds with the ramp up to
full production at the company’s first CEA facility, including
labor and productivity challenges related to the training and
development of the new workforce and historically low market prices
for tomatoes during the second quarter of 2021 based on USDA
reports. Labor and productivity challenges resulted in lower net
sales due to lower overall No. 1-grade production yields, including
the impact of higher distribution and shipping fees.
Second quarter results also reflect investments in building out
the technology team to capture the full potential of the Root AI
acquisition completed in April in support of the company’s
strategic pursuit of the commercial and shareholder return
opportunity associated with becoming a leading applied technology
company serving the growing CEA industry.
The company wrapped up the initial winter harvest from its first
high-tech indoor farm early to incorporate operational key
learnings into future harvests, to set up space devoted to test
proprietary CEA farm technology and to grow trial varieties for
anticipated, value-added products made from the company’s fresh
produce, including a direct-to-consumer platform.
“While we more than doubled production from our first quarter,
we have a ‘moment in time’ opportunity to create more long-term
shareholder value by doubling down on investments that help us
reduce risk going forward by developing and deploying our leading
technology, and operational best practices for CEA, and enhancing
our brand power by launching value-added products next year,” said
AppHarvest President David Lee. “At the same time, our teams are
seeking to develop and implement an industry-best set of practices
around harvesting, integrated pest management, labor, training,
supply chain, procurement and technology—which we believe is in
stark contrast to the incumbent industry’s questionable labor
practices and excessive use of harsh chemical pesticides,” said
Lee.
Actions to Capture Long-Term Value
AppHarvest has achieved several critical milestones since the
company began harvesting fresh produce in January, including
effectively staffing the Morehead farm with local labor, raising
new, non-dilutive forms of capital to fund its development, and
securing future building sites more quickly than expected. Global
interest in the CEA industry from investors and policymakers also
has accelerated significantly, as climate change and other factors
appear poised to drive a dramatic increase in CEA funding.
These developments have accelerated AppHarvest’s decision to
shift to transforming its assets and teams into a global authority
in the CEA sector. Dedicated space at the Morehead farm will be
allocated to non-production, skunkworks strategic investments to
better facilitate the development of viable commercial technology,
which the company anticipates will be integrated with operational
best practices in future farms and licensed to other CEA operators.
The company expects the long-term benefits associated with this
evolving business model to significantly outweigh the near-term
investment cost.
In addition, the company has made significant progress in
building its brand, which it views as a competitive advantage and
important driver of long-term shareholder value. By the end of
2022, the company plans to release three value-added products as it
leverages its brand as a trusted name in the global food and ESG
space to earn a price premium over time.
To support these initiatives, the company announced a plan to
organize internally under a holding company parent with three
operating companies pursuing distinct opportunities to grow more
broadly within CEA. The planned operating companies include:
- “AppalachiaCo,” which will consist of the company’s planned
network of high-tech indoor farms in Central Appalachia, and
proposed value-added products business and
- “TechCo,” which will contain the company’s key technologies
including proprietary FarmOps, robotic harvesting capability, and
AI/machine learning for growing—as well as the potential to develop
a new revenue stream through licensing of CEA technology to global
operators
- “GrowCo,” that will pursue CEA opportunities including those
outside of Central Appalachia in the U.S. and globally
“While our focus in the U.S. remains the development of a
network of high-tech indoor farms in Appalachia producing fresh
fruits and vegetables, and economic expansion for this region, we
have bandwidth to reduce risk by dedicating part of the team to
focus on core operations to maximize growth and efficiency in
AppalachiaCo; by dedicating a TechCo team to develop leading CEA
technology solutions supporting us and other CEA customers; and by
establishing an entity to pursue CEA opportunities outside
Appalachia with other partners - all to create the most long-term
value possible for our shareholders,” said Webb.
Development
AppHarvest’s Morehead facility has been harvesting since January
2021. The company is currently building four more CEA facilities,
and remains on-track with its previously announced plan to operate
up to 12 high-tech indoor farms in Appalachia by the end of 2025.
Two of the facilities under construction are in Berea, Kentucky and
Richmond, Kentucky—the Berea leafy green facility is approximately
37% complete, and the Richmond tomato facility is approximately 31%
complete. Both facilities are expected to be fully operational by
mid-2022. Groundbreakings for two more facilities occurred in June
2021 in Somerset, Kentucky and Morehead, Kentucky. The Somerset
facility is expected to grow berries and the Morehead facility,
which is adjacent to the company’s first facility, is expected to
grow leafy greens. The company expects these two facilities to be
operational by the end of 2022.
Improving Operational Performance of
AppalachiaCo
To improve operational performance, AppHarvest President David
Lee assumed responsibility for operations in July as part of a
reorganization focused on improved accountability and cost
containment to drive better quality and profitability. The company
eliminated some layers of the organization to connect leadership
more closely to the business. The company has hired Julie Nelson,
with proven experience at PepsiCo and McKinsey, who will report to
Lee as executive vice president of operations to drive productivity
across the company’s planned network of high-tech indoor farms and
to optimize operations to support profitable growth. The company
also has hired Adam Reel as vice president of supply chain and
procurement. Reel, a former Navy aviator and operations officer,
brings significant experience from Apple and other CEA start-ups.
Reporting to Nelson, Reel has a scope that includes ensuring
implementation of best practices learned in the first growing
season and deploying them as standard operating procedures for the
upcoming season at the Morehead facility and across the new
facilities as they become operational.
Nelson will lead “Project New Leaf” to continue to optimize cost
structure across AppalachiaCo and the parent holding company. The
project targets $40 million annualized efficiencies and reductions
in cost of goods sold and selling, general and administrative
expense versus the current rate of expense by the end of 2022. The
project already has identified opportunities to streamline the
organization through expansion of responsibilities for
high-performers, re-alignment of roles and reductions in force. The
project also will include training, technology investment, and
shared services across the planned network of farms and a business
operations team to execute special projects for short-term,
high-impact activities such as farm stand-ups and technology
upgrades.
Building the TechCo Business
AppHarvest Chief Technology Officer Josh Lessing is building the
TechCo business that seeks to develop leading CEA solutions to
optimize AppHarvest farms and then will seek to sell these turnkey,
Amazon Web Services-like solutions to the global market. Existing
solutions require experienced master growers and farm operators who
are in limited numbers. This solution, which aims to de-risk the
farm management process through automation, is anticipated to allow
target customers in countries that lack the geography, climate,
resources, or labor needed to deliver industry leading operational
results as they work to ensure climate-resilient food security.
TechCo has secured its first customer and will conduct a paid
pilot of the FarmOps technology that AppHarvest is developing for
Red Sea Farms, a controlled environment agriculture company based
in the Middle East with plans to build 500 acres of indoor farms in
the region by 2025. “Piloting FarmOps with Red Sea Farms gives us
the unique opportunity to demonstrate the efficacy of our system in
one of the world's most challenging environments, the Arabian
Peninsula," said Lessing. AppHarvest has made a strategic
investment in Red Sea Farms, detailed below, to seize this
opportunity to gain experience and establish a footprint in this
region, which has been heavily reliant on food imports.
Diversifying with GrowCo, starting with a potential JV
with Mastronardi Produce
With several opportunities to diversify through GrowCo
partnerships, AppHarvest believes one of the most promising is a
potential joint venture with existing partner, Mastronardi Produce.
AppHarvest announced that it has executed a nonbinding letter of
intent with Mastronardi Produce to form a joint venture called
FarmCo that will pursue opportunities to build and operate new
high-tech CEA facilities, acquire existing CEA operations and
expand production throughout the U.S. AppHarvest and Mastronardi
have worked together since 2017, and Mastronardi is the exclusive
distributor of AppHarvest produce.
The proposed FarmCo plan calls for the two partners to each
contribute a farm, and for APPH to contribute $10 million in cash.
FarmCo would use the contributed assets to raise additional capital
to finance its own growth, targeting to build a network of CEA
facilities in the United States to grow fresh fruits and
vegetables, including leafy greens. FarmCo will seek to raise
additional capital to finance its growth, and formation of FarmCo
is contingent on securing financing. The launch of FarmCo is
targeted for the first quarter of 2022.
“We believe FarmCo is one of the most promising opportunities
within the GrowCo business because we believe it has the potential
to become as large a financial opportunity as ApplachiaCo. Plus,
the proposed JV would have the ability to obtain separate sources
of fundraising and it’s designed so that its financials can be
consolidated by AppHarvest—but with its own leadership team to
prevent distraction to AppHarvest management,” said Lee.
“We are extremely pleased to be entering into this letter of
intent with AppHarvest,” said Paul Mastronardi, President and CEO
of Mastronardi Produce. “We have seen the demand for locally-grown
produce skyrocket, particularly over the past 18 months as more
people are cooking from home, and this partnership will allow us to
significantly increase our ability to get more fresh, flavorful
locally-grown produce to tables across America.”
Red Sea Farms Investment
AppHarvest has invested $5 million in Red Sea Farms, an AgTech
company based in the Middle East that specializes in sustainable
farming in water-scarce areas by leveraging saltwater for both
growing and cooling. With this investment, AppHarvest gains rights
with respect to future equity opportunities with Red Sea Farms. The
investment provides AppHarvest with a local market partner for
potential CEA development in the Middle East and access to Red Sea
Farms’ key technologies, such as saltwater evaporative cooling
technology, solar radiation filtration glass, in-house seed
breeding programs and additional automated farm operating system
technologies.
Balance Sheet and Liquidity
As of June 30, 2021 cash and cash equivalents were $273.1
million, compared to $21.9 million as of December 31, 2020. This
includes $75 million in proceeds received from the new credit
agreement with Rabo AgriFinance, which provides amortization of the
debt for the company’s initial farm over 20 years. The company
closed the credit agreement on June 16 and subsequently entered an
interest rate swap and the net fixed interest rate on the credit
agreement and the interest rate swap is 4.1%.
On July 27, 2021 the company announced it had secured $91
million in new, non-dilutive financing in the form of a 65.5%
loan-to-value construction loan for its Richmond, Kentucky tomato
facility from sustainability-focused and leading CEA investor
Equilibrium Capital.
Financial Outlook
The company adjusted its full-year 2021 net sales outlook to the
range of $7 million to $9 million from a prior range of $20 million
to $25 million. This reflects aforementioned operational headwinds
associated with the full ramp up of the Morehead farm and moderated
produce market price expectations and a strategic decision to
broaden its business model by investing in farm operations
technology, operational best practices and value-added products.
The company also updated its full-year 2021 outlook for Adjusted
EBITDA to the range of a loss of $70 million to $75 million from a
prior range of a loss of $48 million to $52 million, driven
primarily by operational challenges encountered in the abbreviated
initial growing season and the decision to dedicate a portion of
the farm to the noted strategic investments.
The company reaffirmed its long-term 2025 outlook reflecting the
benefits of implementing TechCo solutions, revenue from TechCo and
launching value-added products that offset the moderated
expectations of fresh produce sales based on observed results from
the company’s first full quarter of production. The company
projects $350 million to $400 million in net sales in FY 2025, in
line with the $387 million projected during its December 2020
Analyst Day and $115 million to $130 million in Adjusted EBITDA, in
line with the $122 million projected prior.
While the company remains on track with the plan to develop 12
farms by the end of 2025, the long-term outlook now includes more
conservative assumptions based on nine CEA facilities in
Appalachia. In terms of the outlook, the company will provide
guidance on a 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 key components of the re-affirmed FY 2025 outlook
include:
- The expected revenue opportunity from launching sales of
robotic harvesters, AI/machine learning, farm operations software,
cloud services and other licensed technologies to other global CEA
operators from within the proposed TechCo—which we expect to
provide approximately $40 million to $50 million of incremental net
sales in 2025.
- The expected benefit from launching a value-added products
business within AppalachiaCo, which we expect to provide
approximately $15 million to $25 million of incremental net sales
benefit in 2025.
- More moderate projections regarding our fresh produce business
based on lower pricing expectations and an increase in the
distribution fee more aligned with observed results. We expect the
cumulative impact of these adjusted inputs to reduce net sales by
approximately $60 million to $90 million in 2025.
“Since acquiring Root AI in April, we have been executing a plan
to capture the financial benefit of using technology to optimize
AppHarvest farms and to sell turnkey solutions to the global CEA
market. Equally important has been our recent effort to stress-test
our long-term outlook using insights from real-world operating
results. We believe this additional rigor puts us in better
position to preserve our existing balance sheet strength and
flexibility, which creates opportunities for continued growth,”
said Lee.
“By supporting climate-resilient approaches and the highest ESG
principles, we believe that we are uniquely positioned in this
environment to seize this opportunity to invest more in our brand
and position as a leading tech company serving the global CEA
industry,” said Lee. “The second quarter presented some hurdles in
ramping up production that we expect to prove invaluable in the
long-run, providing us the opportunity to leverage our own
solutions to support industry-wide challenges.”
The company will review key performance indicators and
milestones associated with holding company strategy implementation
during the Q2 conference call.
Conference Call and Webcast
Management of AppHarvest will host a webcast and conference call
to discuss its second quarter 2021 financial results and operations
today at 8:30 a.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: 4718087
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: 4718087
*Available approximately two hours after the end of the
conference call through August 18, 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 recycled 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 cutting-edge 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,
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 May 17, 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 press release.
Accordingly, undue reliance should not be placed upon the
forward-looking statements.
|
APPHARVEST, INC. AND SUBSIDIARIESCONDENSED
CONSOLIDATED BALANCE SHEETS (Unaudited)(in
thousands except per share amounts) |
|
|
June 30,2021 |
|
December 31,2020 |
Assets |
|
|
|
Current Assets: |
|
|
|
Cash and cash equivalents |
$ |
273,071 |
|
|
$ |
21,909 |
|
Accounts receivable, net |
983 |
|
|
— |
|
Inventories, net |
1,342 |
|
|
3,387 |
|
Prepaid expenses and other current assets |
4,341 |
|
|
481 |
|
Total current assets |
279,737 |
|
|
25,777 |
|
Operating lease right-of-use assets, net |
2,503 |
|
|
1,307 |
|
Property and equipment, net |
240,304 |
|
|
152,645 |
|
Goodwill |
50,885 |
|
|
— |
|
Other intangible assets, net |
9,543 |
|
|
— |
|
Other assets, net |
12,560 |
|
|
1,188 |
|
Total non-current assets |
315,795 |
|
|
155,140 |
|
Total
assets |
$ |
595,532 |
|
|
$ |
180,917 |
|
Liabilities and
stockholders’ equity |
|
|
|
Current Liabilities: |
|
|
|
Accounts payable |
$ |
4,429 |
|
|
$ |
1,342 |
|
Accrued expenses |
14,817 |
|
|
5,184 |
|
Current portion of lease liabilities with a related party |
— |
|
|
59,217 |
|
Current portion of lease liabilities |
548 |
|
|
166 |
|
Current portion of financing obligation with a related party |
— |
|
|
58,795 |
|
Current portion of long-term debt |
1,815 |
|
|
— |
|
Note payable with related party |
— |
|
|
30,000 |
|
Other current liabilities |
658 |
|
|
77 |
|
Total current liabilities |
22,267 |
|
|
154,781 |
|
Long-term debt, net of current portion |
72,529 |
|
|
— |
|
Lease liabilities, net of current portion |
2,449 |
|
|
1,370 |
|
Deferred income tax liabilities |
1,950 |
|
|
— |
|
Private Warrant liabilities |
20,319 |
|
|
— |
|
Other liabilities |
2,879 |
|
|
— |
|
Total non-current
liabilities |
100,126 |
|
|
1,370 |
|
Total
liabilities |
122,393 |
|
|
156,151 |
|
Stockholders’
equity |
|
|
|
Preferred stock, par value $0.0001, 10,000 shares authorized, 0
issued and outstanding, as of June 30, 2021 and
December 31, 2020, respectively |
— |
|
|
— |
|
Common stock, par value $0.0001, 750,000 shares authorized, 100,275
and 44,461 shares issued and outstanding as of June 30, 2021
and December 31, 2020, respectively |
10 |
|
|
4 |
|
Additional paid-in capital |
557,300 |
|
|
45,890 |
|
Accumulated deficit |
(81,659 |
) |
|
(21,128 |
) |
Accumulated other comprehensive loss |
(2,512 |
) |
|
— |
|
Total stockholders’
equity |
473,139 |
|
|
24,766 |
|
Total liabilities and
stockholders’ equity |
$ |
595,532 |
|
|
$ |
180,917 |
|
|
|
|
|
|
|
|
|
|
APPHARVEST, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS (Unaudited)(In
thousands except per share data) |
|
|
Three Months EndedJune 30, |
|
Six Months EndedJune 30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Net sales |
$ |
3,138 |
|
|
$ |
— |
|
|
$ |
5,437 |
|
|
$ |
— |
|
Cost of goods sold |
15,683 |
|
|
— |
|
|
22,519 |
|
|
— |
|
|
(12,545 |
) |
|
— |
|
|
(17,082 |
) |
|
— |
|
Operating expenses: |
|
|
|
|
|
|
|
Selling, general and administrative expenses |
27,467 |
|
|
1,713 |
|
|
58,956 |
|
|
2,693 |
|
Total operating expenses |
27,467 |
|
|
1,713 |
|
|
58,956 |
|
|
2,693 |
|
Loss from operations |
(40,012 |
) |
|
(1,713 |
) |
|
(76,038 |
) |
|
(2,693 |
) |
Other income (expense): |
|
|
|
|
|
|
|
Development fee income from a related party |
— |
|
|
138 |
|
|
— |
|
|
272 |
|
Interest expense from related parties |
— |
|
|
(24 |
) |
|
(658 |
) |
|
(26 |
) |
Interest expense |
(88 |
) |
|
— |
|
|
(88 |
) |
|
— |
|
Change in fair value of Private Warrants |
6,488 |
|
|
— |
|
|
16,314 |
|
|
— |
|
Other |
105 |
|
|
(30 |
) |
|
461 |
|
|
— |
|
Loss before income taxes |
(33,507 |
) |
|
(1,629 |
) |
|
(60,009 |
) |
|
(2,447 |
) |
Income tax benefit (expense) |
1,491 |
|
|
— |
|
|
(522 |
) |
|
— |
|
Net loss |
(32,016 |
) |
|
(1,629 |
) |
|
(60,531 |
) |
|
(2,447 |
) |
|
|
|
|
|
|
|
|
Other comprehensive loss: |
|
|
|
|
|
|
|
Net unrealized losses on derivatives contracts, net of tax |
(1,843 |
) |
|
— |
|
|
(2,512 |
) |
|
— |
|
Comprehensive loss |
$ |
(33,859 |
) |
|
$ |
(1,629 |
) |
|
$ |
(63,043 |
) |
|
$ |
(2,447 |
) |
|
|
|
|
|
|
|
|
Net loss per common
share: |
|
|
|
|
|
|
|
Basic and diluted |
$ |
(0.32 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.67 |
) |
|
$ |
(0.07 |
) |
Weighted average common shares
outstanding: |
|
|
|
|
|
|
|
Basic and diluted |
100,084 |
|
|
33,106 |
|
|
90,460 |
|
|
33,085 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
APPHARVEST, INC. AND SUBSIDIARIESCONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)(In thousands) |
|
|
Six Months Ended June 30, |
|
2021 |
|
2020 |
Operating
Activities |
|
|
|
Net loss |
$ |
(60,531 |
) |
|
$ |
(2,447 |
) |
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
Change in fair value of Private Warrants |
(16,314 |
) |
|
— |
|
Deferred income tax provision |
522 |
|
|
— |
|
Depreciation and amortization |
4,602 |
|
|
15 |
|
Stock-based compensation expense |
19,677 |
|
|
59 |
|
Rent expense in excess of rent payments |
6 |
|
|
(2 |
) |
Amortization of development fee with a related party |
— |
|
|
(269 |
) |
Changes in operating assets and liabilities |
|
|
|
Accounts receivable |
(725 |
) |
|
— |
|
Inventories, net |
2,045 |
|
|
(185 |
) |
Prepaid expenses and other current assets |
(3,744 |
) |
|
9 |
|
Other assets, net |
(12,444 |
) |
|
(38 |
) |
Accounts payable |
998 |
|
|
201 |
|
Accrued expenses |
1,983 |
|
|
163 |
|
Other current liabilities |
(24 |
) |
|
19 |
|
Other non-current liabilities |
469 |
|
|
— |
|
Net cash used in operating activities |
(63,480 |
) |
|
(2,448 |
) |
Investing
Activities |
|
|
|
Purchases of property and equipment |
(74,289 |
) |
|
(1,412 |
) |
Purchases of property and equipment from a related party |
(122,911 |
) |
|
— |
|
Cost of acquisition, net of cash acquired |
(9,756 |
) |
|
— |
|
Advances on equipment |
916 |
|
|
(1,440 |
) |
Net cash used in investing activities |
(206,040 |
) |
|
(2,852 |
) |
Financing
Activities |
|
|
|
Proceeds from debt to a related party |
— |
|
|
2,000 |
|
Proceeds from Business Combination and PIPE Shares, net |
448,500 |
|
|
— |
|
Proceeds from debt |
75,000 |
|
|
— |
|
Debt issuance costs |
(656 |
) |
|
— |
|
Payments on financing obligation to a related party |
(2,089 |
) |
|
— |
|
Proceeds from stock options exercised |
35 |
|
|
32 |
|
Payments of withholding taxes on restricted stock conversions |
(108 |
) |
|
— |
|
Issuance of preferred stock, net |
— |
|
|
4,880 |
|
Net cash provided by financing activities |
520,682 |
|
|
6,912 |
|
Change in cash and cash equivalents |
251,162 |
|
|
1,612 |
|
Cash and Cash
Equivalents |
|
|
|
Beginning of period |
21,909 |
|
|
6,031 |
|
End of period |
$ |
273,071 |
|
|
$ |
7,643 |
|
Non-cash
Activities: |
|
|
|
Fixed assets purchases in accounts payable |
$ |
2,058 |
|
|
$ |
— |
|
Fixed assets purchases in accrued liabilities |
$ |
8,201 |
|
|
$ |
— |
|
Operating lease right-of-use assets and liabilities |
$ |
1,055 |
|
|
$ |
266 |
|
|
|
|
|
|
|
|
|
|
APPHARVEST, INC. AND
SUBSIDIARIESReconciliation of Selected GAAP
Measures to Non-GAAP Measures(In
millions) |
|
|
|
Three Months Ended |
|
Six Months Ended |
(Dollars in
millions) |
|
June 30, 2021 |
|
June 30, 2020 |
|
June 30, 2021 |
|
June 30, 2020 |
Net loss |
|
$ |
(32.0 |
) |
|
$ |
(1.6 |
) |
|
$ |
(60.5 |
) |
|
$ |
(2.4 |
) |
Interest expense from related parties |
|
— |
|
|
— |
|
|
0.7 |
|
|
— |
|
Interest expense |
|
0.1 |
|
|
— |
|
|
0.1 |
|
|
— |
|
Interest income |
|
(0.1 |
) |
|
— |
|
|
(0.1 |
) |
|
— |
|
Income tax expense (benefit) |
|
(1.5 |
) |
|
— |
|
|
0.5 |
|
|
— |
|
Depreciation and amortization expense |
|
2.8 |
|
|
— |
|
|
4.6 |
|
|
— |
|
EBITDA |
|
(30.7 |
) |
|
(1.6 |
) |
|
(54.7 |
) |
|
(2.4 |
) |
Change in fair value of Private Warrants |
|
(6.5 |
) |
|
— |
|
|
(16.3 |
) |
|
— |
|
Stock-based compensation expense |
|
13.4 |
|
|
— |
|
|
19.7 |
|
|
0.1 |
|
Transaction success bonus on completion of Business
Combination |
|
— |
|
|
— |
|
|
1.5 |
|
|
— |
|
Business Combination transaction costs |
|
0.5 |
|
|
— |
|
|
13.8 |
|
|
— |
|
Root AI acquisition costs |
|
0.6 |
|
|
— |
|
|
1.0 |
|
|
— |
|
Adjusted EBITDA |
|
$ |
(22.7 |
) |
|
$ |
(1.6 |
) |
|
$ |
(35.0 |
) |
|
$ |
(2.3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Media Contact: Travis Parman,
Travis.Parman@appharvest.comInvestor Contact:
Kaveh Bakhtiari, appharvestIR@appharvest.comImage/Video
Gallery: Available here
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