AgroFresh Solutions Reports Results for First Quarter of 2019
-
Net sales increased 1.5% to $38.9 million versus the first quarter
of 2018 -
Selling, general and administrative expenses decreased 2.5% versus
the first quarter of 2018, reflecting ongoing cost optimization
initiatives -
Net loss of $12.6 million for the first quarter of 2019; compared
to net loss of $13.0 million for the first quarter of 2018 -
Adjusted EBITDA(1) increased 11.8% to
$12.5 million, compared to $11.2 million for the first quarter of 2018
PHILADELPHIA–(BUSINESS WIRE)–AgroFresh Solutions, Inc. (“AgroFresh” or the “Company”) (Nasdaq: AGFS),
a global leader in produce freshness solutions, today announced its
financial results for the first quarter ended March 31, 2019.
“Our core business in the southern hemisphere got off to a solid start
in the first quarter of 2019, despite a delayed harvest in Latin America
that impacted apples and other key regional crops such as pears. We were
able to mitigate this seasonal softness with our diversified mix of
post-harvest solutions. We experienced modest growth in our FreshCloud
product offerings, 5% growth in our Tecnidex business on a constant
currency basis, and our first commercial sales of Harvista in Australia
following regulatory approval in late January,” commented Jordi Ferre,
Chief Executive Officer. “We continue to focus on optimizing our cost
base and driving sustainable growth through a broader and more
diversified product portfolio and crop reach. We believe that our
execution of these initiatives will promote the resilience of our core
business and position us to gain share in additional markets where we
can leverage our global post-harvest leadership position.”
Financial Highlights for the First Quarter of 2019
Net sales for the first quarter of 2019 increased 1.5%, to $38.9
million, compared to $38.4 million in the first quarter of 2018.
Excluding the impact of foreign currency rate changes, which reduced
revenue by $0.6 million compared to the first quarter of 2018, revenue
grew approximately 3%.
The increase in net sales was driven by growth in our core business,
which includes SmartFresh and Harvista, in our Middle East & Africa
region, with particular strength in South Africa. We also experienced
growth in our EthylBloc product, which is used to preserve cut flowers,
and in FreshCloud, the Company’s newest product offering. Additionally,
Tecnidex performed well, growing 5% overall on a constant currency
basis, driven by 18% constant currency growth in our fungicide, waxes
and coatings business, partially offset by a decline in our equipment
business due to timing of order delivery. In the Latin America region,
the Company’s core business was impacted by a delayed season. We also
realized our first commercial sales of Harvista in Australia.
In the first quarter of 2019, gross profit increased slightly to $27.6
million compared to $27.5 million in the prior year period. Gross profit
margin was 70.9% in the first quarter of 2019 versus 71.7% in the first
quarter of 2018. The change was in line with our expectations, and
mostly due to foreign exchange and product mix.
Research and development costs were $3.9 million in the first quarter of
2019, compared to $3.1 million in the prior year period. This increase
was driven primarily by $0.5 million of severance costs related to our
ongoing cost optimization initiatives along with timing of project
expenses.
Selling, general and administrative expenses were $15.9 million in the
first quarter of 2019 as compared to $16.3 million in the prior year
period, a decrease of 2.5%. Included in selling, general and
administrative expenses were $3.2 million in the current year and $2.0
million in the prior year of costs associated with non-recurring items
that include M&A and litigation along with severance. Excluding these
items, selling general and administrative expenses decreased
approximately 12% over the same period last year.
First quarter of 2019 net loss was $12.6 million, compared to net loss
of $13.0 million in the prior year period. Adjusted EBITDA was up 11.8%
to $12.5 million in the first quarter of 2019 as compared to $11.2
million in the prior year period. The increase was driven by higher
sales coupled with lower operating expenses adjusted for non-recurring
items.
As of March 31, 2019, cash and cash equivalents were $40.0 million.
Conference Call
The Company will host a conference call and webcast where members of the
executive management team will discuss these results with additional
comments and details today, May 7, 2019 at 4:30 pm E.T. The conference
call and supplemental earnings presentation will be available live over
the internet through the “Events & Presentations” page of the Investor
Relations section of the Company’s website at www.agrofresh.com.
To participate on the live call, listeners in the United States may dial
877-407-4018 and international listeners may dial 201-689-8471.
A replay of the conference call will be archived on the Company’s
website and telephonic playback will be available from 7:30 pm. ET,
May 7, 2019 through May 21, 2019. Listeners in the United States may
dial 844-512-2921 and international listeners may dial 412-317-6671. The
passcode is 13689469.
Non-GAAP Financial Measures
(1) Adjusted EBITDA is a non-GAAP financial measure. Please
see the information under “Non-GAAP Financial Measures” below for a
description of Adjusted EBITDA and the table at the end of this press
release for a reconciliation of this non-GAAP financial measure to GAAP
results.
This press release contains the non-GAAP financial measures EBITDA and
Adjusted EBITDA. The Company believes these non-GAAP financial measures
provide meaningful supplemental information as they are used by the
Company’s management to evaluate the Company’s performance, including
incentive bonuses and for bank covenant reporting. Management believes
that these measures enhance a reader’s understanding of the operating
and financial performance of the Company and facilitate a better
comparison between fiscal periods. EBITDA excludes income taxes,
interest expense and depreciation and amortization, whereas Adjusted
EBITDA further excludes items that are non-cash, infrequent, or
non-recurring, such as share-based compensation, severance, litigation
and M&A related costs, to provide further meaningful information for
evaluation of the Company’s performance.
The Company does not intend for the non-GAAP financial measures
contained in this release to be a substitute for any GAAP financial
information. Readers of this press release should use these non-GAAP
financial measures only in conjunction with the comparable GAAP
financial measures. Reconciliations of the non-GAAP financial measures
EBITDA and Adjusted EBITDA to the most comparable GAAP measure are
provided in the table at the end of this press release.
About AgroFresh
AgroFresh (Nasdaq: AGFS) is a leading global innovator and provider of
science-based solutions, data-driven technologies and experience-backed
services to enhance the quality and extend the shelf life of fresh
produce. For more than 20 years, AgroFresh has been revolutionizing the
apple industry and has launched new innovative solutions in a variety of
fresh produce categories from bananas to cherries and citrus to pears.
AgroFresh supports growers, packers and retailers by supplying
post-harvest solutions across the industry that enhance crop values
while conserving our planet’s resources and reducing global food waste.
Visit www.agrofresh.com
to learn more.
™Trademark of AgroFresh Inc.
Forward-Looking Statements
In addition to historical information, this release may contain
“forward-looking statements” within the meaning of the “safe harbor”
provisions of the United States Private Securities Litigation Reform Act
of 1995. All statements, other than statements of historical facts,
included in this release that address activities, events or developments
that the Company expects or anticipates will or may occur in the future
are forward-looking statements and are identified with, but not limited
to, words such as “anticipate”, “believe”, “expect”, “estimate”, “plan”,
“outlook”, and “project” and other similar expressions (or the negative
versions of such words or expressions). Forward-looking statements
include, without limitation, information concerning the Company’s
possible or assumed future results of operations, including all
statements regarding financial guidance, anticipated future growth,
business strategies, competitive position, industry environment,
potential growth opportunities and the effects of regulation. These
statements are based on management’s current expectations and beliefs,
as well as a number of assumptions concerning future events. Such
forward-looking statements are subject to known and unknown risks,
uncertainties, assumptions and other important factors, many of which
are outside the Company’s management’s control that could cause actual
results to differ materially from the results discussed in the
forward-looking statements. These risks include, without limitation, the
risk of increased competition; the ability of the business to grow and
manage growth profitably; risks associated with acquisitions and
investments; changes in applicable laws or regulations, and the
possibility that the Company may be adversely affected by other
economic, business, and/or competitive factors. Additional risks and
uncertainties are identified and discussed in the Company’s filings with
the SEC, which are available at the SEC’s website at www.sec.gov.
|
AgroFresh Solutions, Inc. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands, except share and per share data) |
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|
March 31, |
December 31, | |||||||
| 2019 | 2018 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 39,995 | $ | 34,852 | ||||
|
Accounts receivable, net of allowance for doubtful accounts of $1,887 and $2,336, respectively |
63,923 | 67,942 | ||||||
| Inventories | 22,441 | 24,807 | ||||||
| Other current assets | 13,947 | 15,608 | ||||||
| Total current assets | 140,306 | 143,209 | ||||||
| Property and equipment, net | 14,095 | 13,289 | ||||||
| Goodwill | 6,649 | 6,670 | ||||||
| Intangible assets, net | 700,039 | 711,967 | ||||||
| Deferred income tax assets | 8,361 | 7,332 | ||||||
| Other assets | 23,968 | 16,820 | ||||||
| TOTAL ASSETS | $ | 893,418 | $ | 899,287 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | 7,377 | $ | 7,530 | ||||
| Current portion of long-term debt | 6,836 | 6,419 | ||||||
| Income taxes payable | 5,418 | 4,815 | ||||||
| Accrued expenses and other current liabilities | 51,246 | 45,340 | ||||||
| Total current liabilities | 70,877 | 64,104 | ||||||
| Long-term debt | 399,656 | 400,309 | ||||||
| Other noncurrent liabilities | 38,130 | 32,066 | ||||||
| Deferred income tax liabilities | 28,757 | 30,232 | ||||||
| Total liabilities | 537,420 | 526,711 | ||||||
|
Commitments and contingencies |
||||||||
| Stockholders’ equity: | ||||||||
|
Common stock, par value $0.0001; 400,000,000 shares authorized, 51,425,734 and 51,071,573 shares issued and 50,764,353 and 50,410,192 outstanding at March 31, 2019 and December 31, 2018, respectively |
5 | 5 | ||||||
|
Preferred stock; par value $0.0001, 1 share authorized and outstanding |
— | — | ||||||
|
Treasury stock; par value $0.0001, 661,381 shares at March 31, 2019 and December 31, 2018, respectively |
(3,885 | ) | (3,885 | ) | ||||
| Additional paid-in capital | 536,407 | 535,819 | ||||||
| Accumulated deficit | (151,408 | ) | (138,789 | ) | ||||
| Accumulated other comprehensive loss | (33,418 | ) | (28,837 | ) | ||||
| Total AgroFresh stockholders’ equity | 347,701 | 364,313 | ||||||
| Noncontrolling Interest | 8,297 | 8,263 | ||||||
| Total equity | 355,998 | 372,576 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 893,418 | $ | 899,287 | ||||
|
AgroFresh Solutions, Inc. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except share and per share data) |
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|
Three Months Ended March 31, 2019 |
Three Months Ended March 31, 2018 |
|||||||
| Net sales | $ | 38,940 | $ | 38,351 | ||||
|
Cost of sales (excluding amortization of intangibles, shown separately below) |
11,335 | 10,846 | ||||||
| Gross profit | 27,605 | 27,505 | ||||||
| Research and development expenses | 3,897 | 3,069 | ||||||
| Selling, general, and administrative expenses | 15,898 | 16,311 | ||||||
| Amortization of intangibles | 11,616 | 10,939 | ||||||
| Change in fair value of contingent consideration | 190 | 138 | ||||||
| Operating loss | (3,996 | ) | (2,952 | ) | ||||
| Other (expense) income | (12 | ) | 70 | |||||
| (Loss) gain on foreign currency exchange | (419 | ) | 1,931 | |||||
| Interest expense, net | (8,745 | ) | (8,355 | ) | ||||
| Loss before income taxes | (13,172 | ) | (9,306 | ) | ||||
| (Benefit) provision for income taxes | (587 | ) | 3,570 | |||||
| Net loss including non-controlling interests | $ | (12,585 | ) | $ | (12,876 | ) | ||
| Less: Net income attributable to non-controlling interests | 34 | 91 | ||||||
| Net loss attributable to AgroFresh Solutions, Inc | $ | (12,619 | ) | $ | (12,967 | ) | ||
| Net loss per share: | ||||||||
| Basic | $ | (0.25 | ) | $ | (0.26 | ) | ||
| Diluted | $ | (0.25 | ) | $ | (0.26 | ) | ||
| Weighted average shares outstanding: | ||||||||
| Basic | 50,042,054 | 49,741,593 | ||||||
| Diluted | 50,042,054 | 49,741,593 | ||||||
Non-GAAP Measure
The following table sets forth the non-GAAP financial measures of EBITDA
and Adjusted EBITDA. The Company believes these non-GAAP financial
measures provide meaningful supplemental information as they are used by
the Company’s management to evaluate the Company’s performance
(including incentive bonuses and for bank covenant reporting), are more
indicative of future operating performance of the Company, and
facilitate a better comparison among fiscal periods. These non-GAAP
results are presented for supplemental informational purposes only and
should not be considered a substitute for the financial information
presented in accordance with GAAP.
The following is reconciliation between the non-GAAP financial measures
of EBITDA and Adjusted EBITDA to their most directly comparable GAAP
financial measure, net loss:
| (in thousands) |
Three Months Ended March 31, 2019 |
Three Months Ended March 31, 2018 |
||||||
| GAAP Net loss | $ | (12,585 | ) | $ | (12,876 | ) | ||
| (Benefit) provision for income taxes | (587 | ) | 3,570 | |||||
| Interest expense(1) | 8,745 | 8,355 | ||||||
| Depreciation and amortization | 12,061 | 11,273 | ||||||
| Non-GAAP EBITDA | $ | 7,634 | $ | 10,322 | ||||
| Share-based compensation | 557 | 616 | ||||||
| Severance related costs(2) | 489 | 335 | ||||||
| Other non-recurring costs(3) | 3,193 | 1,680 | ||||||
| Loss (gain) on foreign currency exchange(4) | 419 | (1,931 | ) | |||||
| Mark-to-market adjustments, net(5) | 190 | 138 | ||||||
| Non-GAAP Adjusted EBITDA | $ | 12,482 | $ | 11,160 | ||||
| (1) |
Interest on the term loan and accretion for debt discounts, debt issuance costs and contingent consideration |
|
| (2) | Severance costs related to ongoing cost optimization initiatives | |
| (3) |
Costs related to certain professional and other infrequent or non-recurring fees, including those associated with transition service agreement, litigation and M&A related fees |
|
| (4) |
Loss (gain) on foreign currency exchange relates to net losses and gains resulting from transactions denominated in a currency other than the entity’s functional currency |
|
| (5) |
Non-cash adjustment to the fair value of contingent consideration related to the Tax Receivable Agreement and earnout |
Contacts
For AgroFresh Solutions, Inc.
Jeff Sonnek – Investor
Relations
ICR Inc.
Jeff.Sonnek@icrinc.com
646-277-1263