AppHarvest, Inc. (NASDAQ:APPH) Q4 2022 Earnings Call Transcript

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Tony Martin: I can talk to that. Yes, we implemented this or I implemented this elsewhere with the team. And we saw an immediate savings. Now I haven’t extrapolated this yet AppHarvest, but we saw immediate savings in in the labor for — in the labor cost of between 20% and 30% as a result of the productivity bonus that we put in place. And the reason for it is the benefit that accrues by higher efficiency has delivered one-third of the benefit is to the payment of the staff. One-third of the benefit is to the payment of the system and one-third of the benefit being the savings is to the benefit of the company. We have to model that for AppHarvest, and we have to determine the level of efficiency and productivity within the staff that we can achieve.

Loren Eggleton: And so what we kind of laid out in terms of the adjusted gross profit positive next year, the adjusted EBITDA positive for the farm operations in ’25 and then on a consolidated basis in ’26, kind of lays out how we think about the four farm network. Now I would say Morehead, if we start all the farms from zero from day one, Morehead probably takes the longest just because it was the first one. I think what we’re seeing so far and Tony, feel free to chime in on this. But with Richmond, in the first, call it, two months now of harvesting there, we’re seeing that things are better there starting out on its first harvest then certainly then what we saw Morehead when AppHarvest started out. So we would expect that Richmond would have a much shorter ramp-up curve than Morehead.

And I think it’s also one of these things that we kind of talked about on early on about having training people at Morehead and being able to move them out to other facilities to help with that ramp.

Tony Martin: So one of the things we talk about under Project New Leaf is improving the enterprise-wide feedback. And the way we do that weekly, and it’s a great deal of work, but weekly. I have a meeting with each farm and the farm personnel that attend the meeting are the General Manager, the grower, the ICM manager, the facility manager, the packers’ manager, and the crop labor supervisor. With regards to the four farm meeting where we share ideas, share advantages, share new trials, share the opportunity for improvement. We have a four farm meeting weekly where we go through and we discuss the performance in detail of each farm where we look at things like productivity and yield and percent compliance and the measures of a business that matter.

Lastly, I met with the executive to discuss the very same information consolidated and aligned from the perspective of the company. And so by sharing information by sharing approach by training people, given the opportunity to train people in Morehead and then bring them to Richmond, accelerate the process that we saw in more head, we accelerated in a greenhouse like Richmond.

Kristen Owen: Great. Thank you for the color. Really appreciate it.

Operator: And thank you. And I’m showing no further questions. This concludes today’s conference call. Thank you for participating. You may now disconnect.

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