Speaker 1: You're listening to Bloomberg Business Week with Carol Messer and
Speaker 1: Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. You might
Speaker 1: recall late last monsters of the high tech, greenhouse and
Speaker 1: vertical farm company app Harvest under some pressure after the
Speaker 1: company revised its preliminary fiscal year uh sales outlook. Well today,
Speaker 1: stock rallying after the latest update and fourth quarter just
Speaker 1: a dps bigger loss than forecast, but revenues were beat.
Speaker 1: Stock was up more than seventeen percent. Mind you, the
Speaker 1: stock closing at three dollars and fifty three cents to share.
Speaker 1: So let's get a look at the business and the outlook.
Speaker 1: Jonathan Webb is the founder and CEO of app Harvest.
Speaker 1: Jonathan joins us on the phone from Morehead, Kentucky. Jonathan,
Speaker 1: how are you doing well? How about yourself? Hey, we're
Speaker 1: doing pretty well. We're glad to get some time with
Speaker 1: you this afternoon. We appreciate, we certainly appreciate you taking
Speaker 1: the time. UM. I want to start with earnings in
Speaker 1: the most recent quarter, but think about it from the
Speaker 1: perspective of what you have coming up, not what what
Speaker 1: already happened. How are you thinking about two right now,
Speaker 1: I would we're quadrupling our farm network, diversifying crops. So
Speaker 1: we we we had a harvest, are growing uh, fruits
Speaker 1: and vegetables in a controlled environment, focused on year round
Speaker 1: production here in the US. Our first facility here and
Speaker 1: more at Kentucky is is growing tomatoes, which we were
Speaker 1: targeting a lot of a lot of the imports coming
Speaker 1: in from south of the border. Uh. And then later
Speaker 1: this year we'll be growing leafy greens, salad greens, strawberries
Speaker 1: in more variety of tomatoes. So opening more farms, getting
Speaker 1: more crops to market, uh, and focused on getting good
Speaker 1: quality out to grocers all up and down the East
Speaker 1: Coast and Midwest and southeast. Hey, what does it mean, Jonathan,
Speaker 1: for your growth trajectory in terms of I'm pulling up
Speaker 1: the f a function on the Bloomberg. Uh So looking
Speaker 1: at you know, revenue growth, it looks pretty dynamic when
Speaker 1: you look at two or three um like more than
Speaker 1: three year over year growth or year over year growth.
Speaker 1: But give us some idea of the ramp up with this. Yes, so,
Speaker 1: we we've been under construction. UH really really proud of
Speaker 1: our construction team building some of the largest c A
Speaker 1: facilities in the world in the middle of a global pandemic.
Speaker 1: What does that mean? What does that mean? That designation? Uh,
Speaker 1: controlled environment agriculture. So you know, I try to say
Speaker 1: the third wave of sustainability. Twenty years ago, it was
Speaker 1: renewable energy, ten years ago, it was electric vehicles, and
Speaker 1: today you know, you'll continue to hear the term c
Speaker 1: E A controlled environment agriculture using technology to grow fruits
Speaker 1: and vegetables a year round. Uh, not having to worry
Speaker 1: about climate disruption, using far less land, far less water. Um.
Speaker 1: But building those facilities in the middle of of of
Speaker 1: a global pandemic and the supply chain issues is has
Speaker 1: been something our team has been able to navigate. And
Speaker 1: we'll be bringing those facilities online later this year, which
Speaker 1: is which is gonna dramatically increase our our production across
Speaker 1: multiple crop types. So when we see numbers like I
Speaker 1: say on the on the Bloomberg that talks about you know,
Speaker 1: more than revenue growth from that's pretty realistic. Yeah, you know,
Speaker 1: certainly that more could be even more. Um look forward
Speaker 1: to seeing what the back half the year hold. But uh, yeah,
Speaker 1: we we we uh were pretty bullish and optimistic on
Speaker 1: on where we're headed. And last year was our first
Speaker 1: year of operations, so we had uh no, no, no,
Speaker 1: no operating history. Prior we were in over a thousand
Speaker 1: grocery stores from Kroger, Walmart, Costco, Publics. And the reality
Speaker 1: is the grocer demand and the demand from the consumer side,
Speaker 1: you know, well exceeds supply in the US. You have
Speaker 1: this growing demand for control and environment. Product quality is
Speaker 1: much better, you don't have the harsh chemicals, uh, much
Speaker 1: better labor practices, you have reliability of crop that you
Speaker 1: don't have to worry about in an open field, and
Speaker 1: you don't have the import issues. Uh. And and you know,
Speaker 1: we build the company with good E. S G principles
Speaker 1: as our foundation. And and but ultimately the demand from
Speaker 1: the grocers is what's going to drive this industry forward. Well,
Speaker 1: what are shareholders missing here right now? What are investors
Speaker 1: missing right now? Because we we we do have to
Speaker 1: talk about the stock price down significantly from highs last
Speaker 1: year in UH was trading around back in March of one.
Speaker 1: Now it's at three dollars and fifty three cents roughly. Um,
Speaker 1: what are they missing when it comes to the opp
Speaker 1: harvest story? Yeah, I'm focused on building and growing the company.
Speaker 1: I mean the stock I think when near to forty
Speaker 1: five dollars last year and down to three bucks. I
Speaker 1: mean you all learn the public markets and and probably
Speaker 1: know that better than me. But uh, you know, we
Speaker 1: certainly got caught up in the in the spack craze,
Speaker 1: with the downward pressure on SPACs, downward pressure on innovation
Speaker 1: and tech. But you know, I'm bullish on American innovation,
Speaker 1: and those that want to bet against American innovation can uh,
Speaker 1: you know, try to determine what type of world they
Speaker 1: want to live in. But this company here's head down
Speaker 1: on execution between now and the end of the year,
Speaker 1: and um, we're self sufficient and we're we're you know,
Speaker 1: continuing to raise and attract capital, uh from from good
Speaker 1: institutions that that will allow us to grow this business.
Speaker 1: That I think will set us apart from some of
Speaker 1: other stories that have come to market. But uh, you know,
Speaker 1: as far as the stock price itself, it's you know,
Speaker 1: we're we're focused on getting you know, maximum shareholder value
Speaker 1: by doing what we can do, and I'm hopeful that
Speaker 1: the stock front price will reflect that here in the
Speaker 1: years to come. Hey, Jonathan, we're gonna take a break
Speaker 1: and come back and talk some more. But just forty
Speaker 1: just about thirty five seconds, do you guys regret going
Speaker 1: public through a Spack merger because of getting caught in
Speaker 1: that down draft? Just quickly? You know, at this point
Speaker 1: we're focused on the future and what we're doing here today. Um,
Speaker 1: and you know we're focused on building the business. All right,
Speaker 1: We're gonna come back and talk more about building that
Speaker 1: business with Jonathan Webb. He is our guest here on
Speaker 1: Bloomberg Business Week, founder and chief executive officer of app Harvest,
Speaker 1: on the phone from Morehead, Kentucky. And as we mentioned
Speaker 1: that stuck definitely getting a papuas one of my gainers
Speaker 1: and beyond the beltic. I gotta talk about drought and
Speaker 1: water conservation with him when we get to the other
Speaker 1: side here. You and I were just in California. It's
Speaker 1: my home stage started ravaged by drought, but it's where
Speaker 1: we get so much of our agriculture from. I agree
Speaker 1: and ramp up. Can you do it? Can you do it? Everywhere?
Speaker 1: This is Bloomberg. I want to get back to our
Speaker 1: guest with us right now is app Harvest founder and
Speaker 1: CEO Jonathan Webb. Still with us on the phone from Morehead, Kentucky. Hey, So, Jonathan,
Speaker 1: for those who are not familiar, um, because we've had
Speaker 1: your team on before, to talk about what you guys
Speaker 1: are doing, remind our audience how it all works. Yeah, so,
Speaker 1: uh app Harvest is building some of the world's largest
Speaker 1: controlled environment agriculture facilities, growing fruit and vegetables year round
Speaker 1: in a controlled environment, using less water than open field agriculture,
Speaker 1: getting roughly thirty times yield for acre um and and
Speaker 1: and offering reliable quality product to large grocers like Kroger, Walmart, Costco,
Speaker 1: Publix um And And this last year we were growing tomatoes.
Speaker 1: This year we'll be growing salad, green strawberries, and tomatoes,
Speaker 1: distributing all across the US. And Jonathan, and when it
Speaker 1: comes from to a technology perspective, what is the technology
Speaker 1: that you've developed at Harvest that is patented or not
Speaker 1: necessarily you know, copyable. If somebody goes and sees how
Speaker 1: you do things, they say, wait a second, I can
Speaker 1: I can do this myself. Well, well, part of it's
Speaker 1: just sheer execution at scale. And I'll talk about the
Speaker 1: technology in a moment. But our first facility and more
Speaker 1: head is nearly three million square feet in size. We're
Speaker 1: bringing about five to six million square feet of additional
Speaker 1: facilities online this year. To put that in perspective, the
Speaker 1: one facility alone, you could put fifty football fields inside it.
Speaker 1: So al. But we we acquired a robotics company that's
Speaker 1: focused on robotic harvesting UH and in AI picking in
Speaker 1: order to better optimize yield production. UH and then one
Speaker 1: of the only facilities to run completely on recycled rainwater.
Speaker 1: We you know you were mentioning we're going to break
Speaker 1: about the droughts in California. We're we're in a water
Speaker 1: rich region. That's why we're building in eastern Kentucky, an
Speaker 1: area of the country that's getting wetter. People have actually joked, well,
Speaker 1: Haliburton build water pipelines to the west, and while they
Speaker 1: do it from Appalachia to the west, but we're taking
Speaker 1: that rainwater, running completely on recycled rainwater here, so we're
Speaker 1: not reliant on city water at all. And and that
Speaker 1: is a fairly unique design and benefit to to what
Speaker 1: we're doing UH here here in uh the eastern half
Speaker 1: of the US. I have to say, whenever you guys
Speaker 1: are coming on and I Google and look for some
Speaker 1: of the images. I mean, it's massive your facilities. Can
Speaker 1: you guys do this anywhere? Yeah, we've we've definitely, you know,
Speaker 1: we're we're focused on building our headquarters in central Appalachia
Speaker 1: where we can get to seventy of the US in
Speaker 1: a one day drive. Amazon is building the largest prime
Speaker 1: facility in the world in northern Kentucky right now, so
Speaker 1: they're right up the road. But yeah, it's you know,
Speaker 1: you look at the Middle East, who imports most all
Speaker 1: their fruits and vegetables. We've we've been been in deep
Speaker 1: discussions for several countries there. We we invested in a
Speaker 1: technology red sea farms. UH. That's out of cows in
Speaker 1: Saudi Arabia. UH. And then you look at Southeast Asia,
Speaker 1: which is heavy demand, which which India and China have
Speaker 1: ten of the world's fresh water and of the world's population.
Speaker 1: We have to figure out how to grow a lot
Speaker 1: more food with a lot less resources, and using technologies
Speaker 1: is the only way to do it. Not to mention
Speaker 1: tops so all getting a little tired exactly. We talk
Speaker 1: about fossil fuel extraction is being the only extractive industry
Speaker 1: and I'm sitting in coal country. We're mining nutrients out
Speaker 1: of the soil. We're not replenishing those nutrients where you know,
Speaker 1: Californias is tapping all their freshwater reservoirs to the point
Speaker 1: to where you know they're they're running low. Uh. We
Speaker 1: don't have a choice, and we're moving again. We're in
Speaker 1: the infancy of controlled environment agriculture in the US. UM.
Speaker 1: But but I think over the coming decade, you'll see
Speaker 1: you know, just much like you saw EVS ten years
Speaker 1: ago and renewal energy twenty years ago, you're gonna see
Speaker 1: a lot of c A build all around the US.
Speaker 1: How do you think about expansion not just in the
Speaker 1: United States, but but globally as well to some of
Speaker 1: those countries that you mentioned. Is that something that you
Speaker 1: do at our harvest or do you license the technology
Speaker 1: or let someone else take care of it. Yeah. Again,
Speaker 1: we're focused on getting our national footprint here uh, and
Speaker 1: and have have a couple of exciting opportunities we're working
Speaker 1: on that we've talked about that we hope we'll we'll
Speaker 1: get to fruition by the back half of this year
Speaker 1: in the US. But we're very cognizant. I mean, we
Speaker 1: we've had very uh, high level discussions in in both
Speaker 1: Middle East and Southeast Asia with countries that that Frankly,
Speaker 1: you know, you look at the chaos happening in our
Speaker 1: world right now. I mean, everybody is trying to figure
Speaker 1: out how do we become resource resilient and self sufficient
Speaker 1: in some way, and part of that is growing food
Speaker 1: at home. And you know, there's no reason we're shipping
Speaker 1: food thousands of miles around the world when every country
Speaker 1: has the opportunity to to build systems, use technology and
Speaker 1: grow food right at home. And we definitely are gonna
Speaker 1: explore how we can be a helpful player in that transition.
Speaker 1: But right now we're focused on our core business Here
Speaker 1: in the US, I gotta say, please right into something
Speaker 1: are Mike McLane, who covers the commodity markets here for
Speaker 1: US at Bloomber Intelligence, and he's got some research out,
Speaker 1: but he talked to us yesterday Greater North American agriculture
Speaker 1: commodity boom gaining momentum, and this whole idea of the
Speaker 1: geo of political risks that everybody's looking at, how do
Speaker 1: I produce at home so I can you know, save
Speaker 1: myself against these kinds of stresses. Jonathan, thank you so much.
Speaker 1: Stay in touch. Jonathan Webb, founder and CEO at app
Speaker 1: Harvest on the phone from Warhead, Kentucky,