AppHarvest, Inc.

Good day and thank you for standing by and welcome to App Harvest Q4 2022 earnings conference call. At this time, our participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star 1 1 on your telephone. You will then hear an automated message advising your hand has been raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Travis Parman, Chief Communications Officer. Please go ahead.

Thank you for joining us on the App Harvest fourth quarter 2022 and full year 2022 earnings call. I'm Travis Parman, Chief Communications Officer for App Harvest. Joining me today are several members of the senior management team, including Jonathan Webb, founder and CEO, Tony Martin, Chief Operating Officer and Board Member, and Lauren Eggleton, Chief Financial Officer. The earnings release is available on our investor website at investors.appharvest.com. On today's call, we'll begin with prepared remarks from the team. Then we'll open the call to 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. For more information on important factors that could affect these expectations, please see our most recent SEC filings. And now, I'd like to turn the call over to Jonathan.

Thanks, Travis. In 2022, the AppHarvest team delivered on our commitment to quadruple the AppHarvest farm network now totaling 165 acres under glass in what we believe is the largest simultaneous build-out of controlled environment agriculture infrastructure in U.S. history. App Harvest has become one of the top three U.S. CEA operators by acreage, along with our distribution partner, Mastronardi Produce, and our new chief operating officer's former employer, Winsett Farm. In 2022, we also succeeded in diversifying our crop portfolio to include strawberries, salad greens, and more varietals of tomatoes, and now we've added cucumbers too. We expect this diversification to support stability in our sales. While there may be price volatility on one varietal or commodity, we believe we are unlikely to see it in whole categories or across multiple varieties. It also allows us opportunities to choose when or where to grow more lucrative produce mixes. Going forward, we expect to further diversify our portfolio with peppers and more varietals of existing crops. And we've already done this at our flagship 60-acre high-tech indoor farm in Moorhead, Kentucky. Currently, in its third harvesting season, we've added new varietals of premium snacking tomatoes sold under the Sunset brand as flavor bombs and sugar bombs. The new CEA facilities in App Harvest Farm Network are the 15-acre salad green facility in Berea, Kentucky, believed to be the world's largest high-tech indoor farm for autonomously harvested salad greens featuring a touchless growing system. It supplies the Queen of Greens brand washed and ready-to-eat salad. App Harvest Somerset is a 30-acre strawberry farm supplying multiple brands from Astronarty, including Wow Berries. Somerset also will grow Long English cucumbers during the annual summer refresh for strawberries. App Harvest Richmond is our second 60-acre tomato farm. The first 30 acres were planted in late 2022, and the initial harvest was this January. We expect to plant the second 30 acres later this year. Combined with Moorhead, we expect to grow nearly 1.5 million tomato plants across the combined 120 acres. I want to thank the entire App Harvest team for their hard work and perseverance in accomplishing this milestone. A build-out of this size is challenging as is, and we were able to bring three new farms into operation by year-end 2022 despite headwinds such as COVID-19 and ongoing supply chain challenges. In addition to this achievement, we also realized a 60% increase in net sales over the prior year with fiscal year 2022 net sales of 14.6 million. The addition of new sales of higher priced tomato varietals, strawberries, and salad greens in the fourth quarter, as well as higher market prices for tomatoes, helped drive this increase. Our business is now at an inflection point as we move from construction and development phase to one focused on maximizing production and operational efficiency. This January marked the first time that all four facilities in the App Harvest Farm network were shipping commercially to top national grocery store chains, restaurants, and food service outlets. For fiscal year 2023, we expect our new COO, Tony Martin, with his extensive CEA experience, to help accelerate our path to profitability. Tony is working to optimize production, revenue, and cost across our four farm network and has rolled out a strategic plan across all operations to focus the team on profitability. I'll now turn it over to Tony to share more details on our business strategy. Tony?