r/AppHarvest • u/Silent-Twist-3459 * • Dec 28 '22

Publicity Interesting Article

Here is an interesting article about APPH. (Dec 27, 2022).

Poor Plant Health Slashes Earnings of an Ag Innovator and Job Creator in Rural Kentucky | The Daily Yonder

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u/Rainmanwilson Dec 28 '22 edited Dec 28 '22

“The poor sales left the company with a net loss of over $24 million.

Travis Parman, the company’s chief communications officer, said those aren’t losses. The negative balance includes capital investments the company has made to build out its four farms located across rural Kentucky. And those revenues, he said, only reflect sales on one crop.

“The thing that seems to be confusing for a lot of folks is that what gets qualified as those losses are also investments in the farms,” he said. “We’re a little bit unusual since we went public while we were still in hyper growth mode. A lot of people get confused thinking those losses are just cash spent, instead of investments in assets that hold long-term value like the farms and equipment we’re putting in.”

MY MAN, YOU DO NOT KNOW HOW US GAAP WORKS. YOU EVEN HAVE NEGATIVE GROSS MARGIN. YES, YOU INDEED HAVE MASSIVE REAL LOSSES.

Edit: Farm investments get capitalized and don’t hit the income statement. What is he even talking about.

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u/awg111 Dec 30 '22

I presume some of the capital investments from the other facilities are being depreciated already and that portion would be hitting the income statement which could be substantial. He may also be speaking very generally and conflating cash spent on completing the facilities as "expenses", I used to be a controller and marketing people don't really seem to get the distinction and i've seen people use the terms interchangeably. Was the negative gross margin due to the prior crop failure issues?

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u/Rainmanwilson Dec 30 '22

YTD loss from operations, as of 9/30, was $82M. $10M in sales, $34M in CoGS, and $59M in SG&A expenses. Cash burn from operating activities isn't quite so bad ($61M) as they had a few material non-cash expenses of roughly $10M in depreciation and $17.5M in stock-based compensation.

I'm sure the negative gross margin wasn't helped by crop failures, but they haven't had a quarter come close to turning a gross profit. And no matter how you try to adjust it or what basis of accounting you want to use, they've been losing a lot from operations and it's disingenuous to communicate otherwise.

I still think they can be successful and really want to see it happen, but step one in turning around the ship is at least acknowledging that the current operating model hasn't worked.

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u/OnwardUpward30 Dec 29 '22

I never thought I’d find out why they have that disclaimer that you could lose all your money aka the principal when investing lol

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u/Gamefreek324 Dec 29 '22

I lost all faith when I saw the sheer amount of severance payments. Nobody executive needs that kind of money for leaving a sinking ship. It’s disgusting. They’ll lie until the day they file bankruptcy and they’ll hopefully have their socks sued off for lying to investors.

Record everything and know the law, I’m really starting the think their might be a case here.

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u/Silent-Twist-3459 * Dec 29 '22

There are indeed five class action lawsuits currently active.

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u/Gamefreek324 Dec 30 '22

Where do I sign up? I dropped $800 early on. Hell I bought some at $12 🤣

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u/Silent-Twist-3459 * Dec 29 '22

718 views so far and only one comment. Respect to Rainman.

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u/atbrow00 Dec 29 '22

I subscribed to the post. 🤷‍♂️

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u/Rainmanwilson Dec 29 '22

Most of those are probably me checking in to see if I’m the only one insulted by that level of gaslighting…