AgroFresh Solutions, Inc. ("AgroFresh" or the "Company") (Nasdaq:
AGFS), a global leader in produce freshness solutions, today
announced its financial results for the fourth quarter and full
year ended December 31, 2020.
Jordi Ferre, Chief Executive Officer, commented,
"2020 proved to be a challenging year on multiple fronts as we
faced an unexpected smaller North American apple crop, which
decreased approximately 11% creating lower storage volumes,
COVID-19 related impacts that also caused delays in new
diversification project rollouts, changes in customer short-term
purchasing decisions, and currency fluctuations. However, our
organization was well prepared to navigate these complexities, both
in terms of operational adjustments, and because of our enhanced
financial flexibility due to our recent comprehensive refinancing,
and we continue to see progress with the cost optimization efforts
that began in 2019. Our business remains sound and we continue to
maintain a strong margin profile that demonstrates the value of the
AgroFresh franchise in the marketplace today."
Mr. Ferre continued, "Looking ahead to 2021, we
are energized about our diversification pipeline and the innovative
solutions that we are bringing to the marketplace to enhance
freshness and drive value for our customers. Recently, we launched
VitaFresh™ Botanicals, a line of plant-based, edible
crop-specific coatings that can be applied in a flexible and
operator-friendly format. We believe we are well positioned with
growth platforms that include Harvista™ which is now available
for sale this Southern Hemisphere season in Brazil and New Zealand,
and FreshCloud™, our digital technology platform, which has seen
customer adoption by large global operators. These examples are
representative of our ongoing diversification initiatives, which we
will continue to drive in the future, supported by our global
registration platform."
Financial Highlights for the Fourth
Quarter of 2020
Net sales for the fourth quarter of 2020
decreased 14.9% to $51.9 million, compared to $61.0 million in the
fourth quarter of 2019. Excluding foreign currency translation
impacts, which increased revenue by $0.9 million compared to the
fourth quarter of 2019, revenue decreased 16.3%, primarily driven
by a smaller North American crop size resulting in lower storage
volumes, a heightened competitive landscape, as well as difficult
comparisons versus the prior year period in Europe as the industry
experienced later than normal harvest seasonality which shifted
sales from third to fourth quarter of 2019.
Gross profit for the fourth quarter was $38.1
million, compared to $47.4 million in the prior year period. Gross
profit margin was 73.5% compared to 77.8% in the prior year period.
The lower gross margin was primarily due to fixed costs on lower
sales volume and product mix.
Research and development costs were $4.0 million
in the fourth quarter of 2020, compared to $4.4 million in the
prior year period, due primarily to the timing of projects.
Selling, general and administrative expenses
increased 12.4% to $13.9 million in the fourth quarter of 2020, as
compared to $12.4 million in the prior year period. The main
drivers behind the increase were higher non-recurring expenses
related to severance, as well as the phasing of some discrete
expenses on a year over year basis.
Fourth quarter 2020 net loss was $2.7 million,
compared to net loss of $22.2 million in the prior year period.
Adjusted EBITDA1 was $23.7 million in the fourth
quarter of 2020 as compared to $34.6 million in the prior year
period. The decrease in adjusted EBITDA was primarily due to lower
sales, partially offset by lower operating expenses compared to the
prior year period.
As of December 31, 2020, cash and cash equivalents were
$50.0 million.
Financial Highlights for the Full Year
of 2020
Net sales for the full year 2020 were $157.6
million, a decrease of 7.3% versus the prior year. Excluding
foreign currency translation impacts, which reduced revenue by $1.9
million compared to full year 2019, revenue decreased approximately
6.2%. The decrease in net sales was primarily due to lower volume
of SmartFresh on a smaller crop size and a decrease in EthylBloc
sales due to COVID-19 impacts, partially offset by growth in
fungicides, Harvista, and diversification strategies.
Gross margin was nearly unchanged at 73.2%
compared to the prior year, despite a decrease in sales, due to the
positive effects of supply chain cost optimization initiatives.
Research and development costs decreased $1.8
million to $12.4 million for the full year 2020 compared to the
prior year, driven primarily by the timing of projects.
Selling, general and administrative expenses
decreased 9.4% to $53.9 million for the full year 2020 compared to
the prior year. There were non-recurring costs associated with
M&A, litigation, refinancing and severance in the amount of
$4.1 million in the current year and $8.8 million in the prior
year. Excluding these items, selling general and administrative
expenses decreased approximately 1.8% versus 2019 driven by ongoing
cost optimization initiatives, and to a lesser extent reflect the
temporary decrease in travel and other miscellaneous expenses as a
result of the COVID pandemic.
Net loss was $53.0 million for the full year
2020, compared to net loss of $54.2 million in the prior year.
Adjusted EBITDA1 decreased to $60.1 million for
the full year 2020, compared to $66.4 million in the prior year.
Adjusted EBITDA margin for the full year was 38.1%, compared to
39.0% in 2019. The decrease in adjusted EBITDA was primarily due to
lower sales, partially offset by lower operating expenses compared
to the prior year.
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.
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,
March 10, 2021 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, March 10, 2021 through March 26, 2021.
Listeners in the United States may dial 844-512-2921 and
international listeners may dial 412-317-6671. The passcode is
13714886.
Non-GAAP Financial Measures
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 an AgTech innovator
and global leader with a mission to prevent food loss/waste and
conserve the planet’s resources by providing a range of
science-based solutions, data-driven digital technologies and
high-touch customer services. AgroFresh supports growers, packers
and retailers with solutions across the food supply chain to
enhance the quality and extend the shelf life of fresh produce. The
AgroFresh organization has 40 years of post-harvest experience
across a broad range of crops, including revolutionizing the apple
industry with the SmartFresh™ Quality System for more than 20
years. This is powered by a comprehensive portfolio that includes
plant-based coatings, equipment and proprietary solutions that help
improve the freshness supply chain from harvest to the home. Visit
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 the Company's
substantial level of indebtedness; 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.
Contact:For AgroFresh Solutions,
Inc.Jeff Sonnek - Investor RelationsICR
Inc.Jeff.Sonnek@icrinc.com646-277-1263
AgroFresh
Solutions, Inc.CONDENSED CONSOLIDATED BALANCE
SHEETS(Unaudited)(In thousands, except
share and per share data)
|
December 31,2020 |
December 31,2019 |
ASSETS |
|
|
Current Assets: |
|
|
Cash and cash equivalents |
$ |
50,030 |
|
$ |
29,288 |
|
Accounts receivable, net of allowance for doubtful accounts of
$2,061 and $2,232, respectively |
63,204 |
|
68,634 |
|
Inventories |
24,579 |
|
22,621 |
|
Other current assets |
17,219 |
|
11,802 |
|
Total current assets |
155,032 |
|
132,345 |
|
Property and equipment, net |
12,432 |
|
13,177 |
|
Goodwill |
6,925 |
|
6,323 |
|
Intangible assets, net |
589,201 |
|
631,369 |
|
Deferred income tax assets |
9,699 |
|
10,317 |
|
Other assets |
12,494 |
|
12,161 |
|
TOTAL ASSETS |
$ |
785,783 |
|
$ |
805,692 |
|
|
|
|
LIABILITIES, TEMPORARY
EQUITY AND STOCKHOLDERS’ EQUITY |
|
|
Current Liabilities: |
|
|
Accounts payable |
$ |
19,634 |
|
$ |
15,105 |
|
Current portion of long-term debt |
3,378 |
|
4,675 |
|
Income taxes payable |
3,471 |
|
5,648 |
|
Accrued expenses and other current liabilities |
25,976 |
|
24,350 |
|
Total current liabilities |
52,459 |
|
49,778 |
|
Long-term debt |
264,491 |
|
398,064 |
|
Other noncurrent liabilities |
6,432 |
|
7,246 |
|
Deferred income tax liabilities |
37,834 |
|
9,217 |
|
Total liabilities |
361,216 |
|
464,305 |
|
|
|
|
Commitments and
contingencies |
|
|
Temporary equity: |
|
|
Series B convertible preferred stock, par value $0.0001; 150,000
shares authorized, designated and outstanding at December 31,
2020 |
143,728 |
|
— |
|
Non-controlling interest |
8,446 |
|
7,701 |
|
Stockholders’ equity: |
|
|
Common stock, par value $0.0001; 400,000,000 shares authorized,
53,092,328 and 51,839,527 shares issued and 52,430,947 and
51,178,146 outstanding at December 31, 2020 and December 31, 2019,
respectively |
5 |
|
5 |
|
Preferred stock, par value $0.0001; 1 share authorized and
outstanding at December 31, 2020 and December 31, 2019,
respectively |
— |
|
— |
|
Treasury stock, par value $0.0001; 661,381 shares at December 31,
2020 and December 31, 2019, respectively |
(3,885 |
) |
(3,885 |
) |
Additional paid-in capital |
552,776 |
|
560,890 |
|
Accumulated deficit |
(244,836 |
) |
(192,264 |
) |
Accumulated other comprehensive loss |
(31,667 |
) |
(31,060 |
) |
Total AgroFresh Stockholders’ Equity |
272,393 |
|
333,686 |
|
TOTAL LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS' EQUITY |
$ |
785,783 |
|
$ |
805,692 |
|
AgroFresh
Solutions, Inc.CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS(Unaudited)(In
thousands, except share and per share data)
|
Three Months Ended December
31,2020 |
Three Months Ended December
31,2019 |
Year Ended December 31,2020 |
Year Ended December 31,2019 |
Net sales |
$ |
51,868 |
|
$ |
60,970 |
|
$ |
157,643 |
|
$ |
170,065 |
|
Cost of sales (excluding amortization, shown separately below) |
13,725 |
|
13,533 |
|
42,217 |
|
45,049 |
|
Gross profit |
38,143 |
|
47,437 |
|
115,426 |
|
125,016 |
|
Research and development expenses |
3,968 |
|
4,392 |
|
12,357 |
|
14,112 |
|
Selling, general, and administrative expenses |
13,935 |
|
12,402 |
|
53,860 |
|
59,446 |
|
Amortization of intangibles |
10,865 |
|
45,983 |
|
43,731 |
|
81,119 |
|
Impairment of assets |
— |
|
10,432 |
|
— |
|
11,424 |
|
Change in fair value of contingent consideration |
|
— |
|
|
(458 |
) |
|
— |
|
|
(330 |
) |
Grant income |
|
— |
|
|
— |
|
|
(2,974 |
) |
|
— |
|
Operating income (loss) |
9,375 |
|
(25,314 |
) |
8,452 |
|
(40,755 |
) |
Other (loss) income |
(105 |
) |
132 |
|
1,491 |
|
13 |
|
Debt modification and extinguishment expenses |
— |
|
— |
|
(5,028 |
) |
— |
|
Loss on foreign currency exchange |
(5,302 |
) |
(1,243 |
) |
(2,836 |
) |
(4,127 |
) |
Interest expense, net |
(5,268 |
) |
(7,763 |
) |
(23,669 |
) |
(33,784 |
) |
Loss before income taxes |
(1,300 |
) |
(34,188 |
) |
(21,590 |
) |
(78,653 |
) |
Income taxes expense (benefit) |
1,363 |
|
(11,970 |
) |
31,376 |
|
(24,500 |
) |
Net loss including non-controlling interests |
$ |
(2,663 |
) |
$ |
(22,218 |
) |
$ |
(52,966 |
) |
$ |
(54,153 |
) |
Less: Net (income) loss attributable to non-controlling
interests |
(397 |
) |
226 |
|
(745 |
) |
562 |
|
Net loss attributable to AgroFresh Solutions, Inc. |
(3,060 |
) |
(21,992 |
) |
(53,711 |
) |
(53,591 |
) |
Less:
Dividends on convertible preferred stock |
6,088 |
|
— |
|
10,488 |
|
— |
|
Net loss attributable to AgroFresh Solutions, Inc. common
stockholders |
(9,148 |
) |
$ |
(21,992 |
) |
$ |
(64,199 |
) |
$ |
(53,591 |
) |
|
|
|
|
|
Net loss
per share: |
|
|
|
|
Basic |
$ |
(0.18 |
) |
$ |
(0.44 |
) |
$ |
(1.26 |
) |
$ |
(1.07 |
) |
Diluted |
$ |
(0.18 |
) |
$ |
(0.44 |
) |
$ |
(1.26 |
) |
$ |
(1.07 |
) |
Weighted
average shares outstanding: |
|
|
|
|
Basic |
50,959,958 |
|
50,241,996 |
|
50,770,429 |
|
50,123,565 |
|
Diluted |
50,959,958 |
|
50,241,996 |
|
50,770,429 |
|
50,123,565 |
|
|
|
|
|
|
|
|
|
|
Non-GAAP Measures
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 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 a 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 December 31,
2020 |
Three Months Ended December 31,
2019 |
Year Ended December 31, 2020 |
Year Ended December 31, 2019 |
GAAP net loss including non-controlling
interests |
$ |
(2,663 |
) |
$ |
(22,218 |
) |
$ |
(52,966 |
) |
$ |
(54,153 |
) |
Provision (benefit) for income taxes |
1,363 |
|
(11,970 |
) |
31,376 |
|
(24,500 |
) |
Interest expense (1) |
5,268 |
|
7,763 |
|
23,669 |
|
33,784 |
|
Depreciation and amortization |
12,195 |
|
46,764 |
|
46,970 |
|
83,456 |
|
Non-GAAP EBITDA |
$ |
16,163 |
|
$ |
20,339 |
|
$ |
49,049 |
|
$ |
38,587 |
|
Adjustments: |
|
|
|
|
Share-based compensation |
893 |
|
603 |
|
3,598 |
|
2,714 |
|
Severance related costs (2) |
455 |
|
50 |
|
885 |
|
1,086 |
|
Other non-recurring costs (3) |
857 |
|
2,440 |
|
3,240 |
|
8,745 |
|
Loss on foreign currency exchange (4) |
5,302 |
|
1,243 |
|
2,836 |
|
4,127 |
|
Debt modification and extinguishment costs |
— |
|
— |
|
5,028 |
|
— |
|
Grant income |
— |
|
— |
|
(2,974 |
) |
— |
|
Litigation recovery |
— |
|
— |
|
(1,600 |
) |
— |
|
Contingent consideration adjustments, net (5) |
— |
|
(458 |
) |
— |
|
(330 |
) |
Impairment of assets (6) |
— |
|
10,432 |
|
— |
|
11,424 |
|
Total Adjustments |
$ |
7,507 |
|
$ |
14,310 |
|
$ |
11,013 |
|
$ |
27,766 |
|
Non-GAAP Adjusted EBITDA |
$ |
23,670 |
|
$ |
34,649 |
|
$ |
60,062 |
|
$ |
66,353 |
|
(1) Interest on debt, 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 litigation and M&A related
fees.(4) Loss on foreign currency exchange relates to net losses
and gains resulting from transactions denominated in a currency
other than the Company's functional currency.(5) Non-cash
adjustment to the fair value of contingent consideration, including
TRA and contingent payment related to the Tecnidex acquisition.(6)
Impairment of assets related to software and investments.
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