AppHarvest, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to AppHover's first quarter 2021 earnings conference call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press the star, then the one key on your touch-tone telephone. Please be advised that today's conference is being recorded. If you recall operating systems, please press star, then zero. I would now like to hand the conference over to your speaker host today, Kavit Bakhtiari. Please go ahead.

Thank you for joining us for AppHarvest's first quarter 2021 earnings call. I'm Kaveh Bakhtiari. It's my first day as VP Investor Relations for AppHarvest, and I look forward to working with all of you. This is AppHarvest's first completed quarter as a public company, so we'll have the full team available for today's conference call. Joining me in Kentucky are several members of the senior leadership team, including Jonathan Webb, founder and CEO, David Lee, president, and Lauren Eggleton, chief financial officer. We'll also be joined by Josh Lessing, Chief Technology Officer, and Jackie Roberts, Chief Sustainability Officer. On today's call, we'll begin with prepared remarks from Jonathan and the rest of the team. Then we'll open the line to take questions. Before we start, I'd like to remind you that comments today regarding the company's future business plans, prospects, and financial performance are forward-looking statements that we make pursuant to the safe harbor provisions of the securities laws. These statements are made based on management's current knowledge and assumptions about future events, and they involve risks and uncertainties that could cause actual results to differ materially from our expectations. In providing projections and other forward-looking statements, the company disclaims any intent or obligation to update them. Also during the call, we'll present both GAAP and non-GAAP financial measures. A reconciliation of certain non-GAAP to GAAP measures is included in today's earnings press release, which you can find on our investor relations website, along with the replay of this call. For additional information on important factors that could affect these expectations, please see our most recent reports filed with the U.S. Securities and Exchange Commission. With that, I'd like to turn the call over to Jonathan.

Less than two years ago, App Harvest broke ground on our flagship farm in Moorhead, Kentucky. That's 50 football fields under glass. We completed construction and assembled a 500-person operating team in the middle of a global pandemic. I'd like to make it clear today that AppHarvest is in the business of delivering on our promises. For those of you new to the AppHarvest story, we're a technology company working to disrupt agriculture. We're here to build a resilient food system. In reality, agriculture has already been disrupted by climate change, and our current food system is broken. AppHarvest is committed to being a long-term institutional change agent in agriculture. We are acting now, and I expect our accomplishments to have impacts for generations to come. Prior to AppHarvest, I was building some of the largest solar projects in the U.S. while supporting the Department of Defense. When I lived in D.C., all the talk was about energy security. But arguably, a more pressing concern is global food security. Most folks don't realize how fragile our current system is. When food stopped crossing borders and grocery stores had food shortages, COVID started to expose some of the cracks in the system. California just expanded its drought emergency to 41 of 58 counties in the state. California is plagued by wildfires and the Southwest of the U.S. is drought stricken where the U.S. traditionally has grown much of its fruit and vegetables. In February, We had major ice storms that dipped as far as Texas, stopping imported fruits and vegetables from coming across the border, which is where the U.S. has outsourced most of our vine crop production. Those fruits and vegetables get shipped thousands of miles to make it to our plates, with questionable practices around labor and pesticide use. The reality is climate change is going to continue to affect the growing conditions for outdoor agriculture. from severe temperature extremes to the amount of water available for crops. In Central Appalachia, we're fortunate because climate change is making our region wetter. In fact, the past decade has seen the most rainfall in Kentucky history, with three of those years being the wettest on record. When the UN Security Council visited us in Kentucky for the first time in our state history, we learned the UN predicts that we need 70% more food by 2050 to feed a growing population. If we continue farming as we do now, that would mean we need a second planet Earth to have enough resources. The world doesn't have the land. It doesn't have the water. What we do have at AppHarvest is the technology and a solution. Our technology and our approach can enable us to get 30 times the yield of traditional agriculture using up to 90% less water and only recycled rainwater with zero chemical pesticides and zero agricultural runoff. As we've said before, we're doing this now with proven technology that is scalable globally. And the world needs controlled environment agriculture. China and India have about 40% of the world's population, but only 10% of the world's fresh water. We're focused on building a resilient domestic food system in the U.S., and that solution can be applied globally. Controlled environment agriculture is the third wave of sustainable infrastructure. that is on the cusp of rapidly achieving global scale. 20 years ago, we saw renewable energy take off. 10 years ago, Tesla began making electric vehicles popular. Now is the dawn of an era of controlled environment agriculture. We must leverage the best nature has to offer, sunlight and rainwater, and then use technology where needed. Agriculture is overdue for an overhaul. The last major revolution in agriculture that many people can think of is the tractor. Integrating AI and robotics into controlled environment agriculture is farming now. You're going to hear from our chief technology officer who can detail what our high-tech farm of the future will look like. That's what we're doing from the heart of Appalachia where we can reach about 70 percent of the US population within a day's drive, improving freshness of our produce. This is our first quarterly performance report. Let me review some of our accomplishments. We started our first harvest middle of January, so we're officially revenue generating. In fact, we met expectations for Q1, generating 2.3 million in net sales, representing 3.8 million pounds sold. And that was with the farm only partially planted as we ramped up. Now we have fully planted the 60 acres at our first facility. About 720,000 tomato plants are now being harvested continuously. We began trading on the NASDAQ February 1st. We purchased our flagship Morehead, Kentucky facility in March. Construction on our next two sites in Berea and Richmond, Kentucky are on schedule. In addition, we have four more projects in Kentucky slated for development, and we will start construction on at least two of those this year. We acquired an artificial intelligence robotics company in April, including their talented team with experience in controlled environment agriculture. We ramped up from about 20 employees last summer to about 500 at the end of Q1 this year. That establishes our process to scale up quickly as we grow our network of farms. We are confident we can secure non-dilutive, attractive financing for our 12 high-tech farms being developed by the end of 2025. For example, we have negotiated terms for a 60% loan-to-value transaction for our Morehead facility at an expected rate between 4% and 5%, and we expect the transaction to close in Q2. We are also far along in negotiations for approximately $200 million of development financing for two of our projects underway. We are farmers and futurists, and we believe that doing right by people and planets upholding the highest ESG principles, soon won't be a nice to have, it will be table stakes. We're proud to be one of the four publicly traded companies that's both a public benefit corporation and B Corp certified. We see it as a competitive advantage. I'm relentlessly fighting every day for our team, our shareholders, and our broader stakeholders as we pursue our mission to redefine agriculture and feed the future. Now I'll ask AppHarvest president and board member David Lee to explain how we're executing on the business plan. Thanks, Jonathan.