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, 2021.
"I am thrilled to join AgroFresh as its new CEO
at this important time in the Company's journey. AgroFresh is a
trusted brand in the post-harvest industry known for our commitment
to providing quality products and our experienced sales and
technical teams delivering a high-touch service model that
customers have come to rely on," commented Clint Lewis, Chief
Executive Officer. "While it is still early in my onboarding
process, I am confident in the Company's strategy to drive growth
through diversification. I am energized by the team's customer
focus and believe that we can chart a path toward consistent
profitable top-line growth. I want to thank our global AgroFresh
team for their resiliency as we continue to navigate the impacts of
the pandemic, variances in global production and the reality of
competition. I look forward to working with the rest of the team to
advance our success."
Graham Miao, Chief Financial Officer added, "Our
Southern Hemisphere season is off to a strong start in the first
quarter with a return to a more normal harvest in Latin America
versus last year, generating revenue growth of 17.6% on a constant
currency basis and adjusted EBITDA growth of 26.3%. Our strategies
to diversify our business through both crops and geography are
being supported by our global registration progress and evidence of
this is visible in our diversification strategies (outside of the
SmartFresh apple business), which account for approximately 40% of
total trailing twelve month revenue ended March 31, 2021 and grew
14% during the same period. Growth platforms such as Harvista are
also realizing the benefits from broader market access — for
example, our Harvista business nearly doubled in the first quarter
relative to the prior year period due to recent launches and
expanded registrations in Brazil, Australia, New Zealand and South
Africa, as well as labor challenges that our product was able to
help mitigate. We are excited about the early customer adoption of
our new innovations in products such as VitaFresh™ Botanicals
and our FreshCloud digital platform and we aim to build momentum in
the marketplace with additional customer placements."
Financial Highlights for the First
Quarter of 2021
Net sales for the first quarter of 2021
increased 18.1%, to $39.0 million, compared to $33.0 million in the
first quarter of 2020. Excluding foreign currency translation
impacts, which increased revenue by $0.1 million as compared to the
first quarter of 2020, revenue increased 17.6%. The net
sales increase was the result of growth in the Company's product
solution categories, which include SmartFresh™ for apples,
SmartFresh™ diversification for other crops,
Harvista™ and EthylBloc, as well as our fungicides and
disinfectants and coatings categories.
1Adjusted 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.
Gross profit for the first quarter was $28.7
million, compared to $24.5 million in the prior year period. Gross
profit margin was 73.5% versus 74.2% in the prior year period.
Gross margin was largely consistent versus the prior year period
with the change driven primarily by product mix.
Research and development costs were $3.3 million
in the first quarter of 2021, compared to $2.6 million in the prior
year period. This increase was driven primarily by the timing of
projects.
Selling, general and administrative expenses
decreased 1.2%, to $13.6 million, in the first quarter of 2021 as
compared to $13.7 million in the prior year period.
First quarter 2021 net income was $8.2 million,
compared to net loss of $3.8 million in the prior year period,
driven by higher revenue and further supported by other income in
the form of litigation settlement proceeds.
Adjusted EBITDA1 improved by $2.9 million, or
26.3%, to $14.2 million in the first quarter of 2021, compared to
$11.2 million in the prior year period. Adjusted EBITDA margin
increased 240 basis points to 36.3% in the first quarter of 2021,
as compared to 33.9% in the prior year period.
As of March 31, 2021, cash and cash
equivalents were $52.9 million. During the first quarter of 2021,
the Company reduced debt by $9.1 million and redeemed $5.3 million
of preferred equity, reducing future interest expense and preferred
dividend payments.
Conference Call
The Company will host a conference call and
webcast today at 4:30 p.m. ET where members of the executive
management team will discuss these results with additional comments
and details. 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 p.m. ET, May 13, 2021 through May 27,
2021. Listeners in the United States may dial 844-512-2921 and
international listeners may dial 412-317-6671. The passcode is
13718237.
Non-GAAP Financial Measures
This press release contains the non-GAAP
financial measures, including 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, as well as
constant currency net sales, to their most comparable GAAP measures
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 reduce 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; conditions in the global economy, including the
effects of the coronavirus outbreak; 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)
|
March 31, 2021 |
|
December 31, 2020 |
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Current Assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
52,868 |
|
|
$ |
50,030 |
|
|
Accounts receivable, net of allowance for doubtful accounts of
$2,286 and $2,061, respectively |
54,871 |
|
|
63,204 |
|
|
Inventories |
22,729 |
|
|
24,579 |
|
|
Other current assets |
17,987 |
|
|
17,219 |
|
|
Total Current Assets |
148,455 |
|
|
155,032 |
|
|
Property and equipment,
net |
11,941 |
|
|
12,432 |
|
|
Goodwill |
6,622 |
|
|
6,925 |
|
|
Intangible assets, net |
577,863 |
|
|
589,201 |
|
|
Deferred income tax
assets |
10,298 |
|
|
9,699 |
|
|
Other
assets |
11,542 |
|
|
12,494 |
|
|
TOTAL ASSETS |
$ |
766,721 |
|
|
$ |
785,783 |
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES, TEMPORARY
EQUITY AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
$ |
15,561 |
|
|
$ |
19,634 |
|
|
Current portion of long-term debt |
3,434 |
|
|
3,378 |
|
|
Income taxes payable |
3,719 |
|
|
3,471 |
|
|
Accrued expenses and other current liabilities |
24,720 |
|
|
25,976 |
|
|
Total Current Liabilities |
47,434 |
|
|
52,459 |
|
|
Long-term debt |
255,243 |
|
|
264,491 |
|
|
Other noncurrent
liabilities |
5,880 |
|
|
6,432 |
|
|
Deferred income tax liabilities |
39,595 |
|
|
37,834 |
|
|
Total Liabilities |
348,152 |
|
|
361,216 |
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
(see Note 21) |
|
|
|
|
|
|
|
|
Temporary Equity: |
|
|
|
|
|
|
|
|
Series B convertible preferred stock, par value $0.0001; 150,000
shares authorized and designated and 145,046 shares outstanding at
March 31, 2021, and 150,000 shares authorized, designated and
outstanding at December 31, 2020 |
141,400 |
|
|
143,728 |
|
|
Redeemable non-controlling interest |
8,207 |
|
|
8,446 |
|
|
Stockholders’ Equity: |
|
|
|
|
|
|
|
|
Common stock, par value $0.0001; 400,000,000 shares authorized,
53,051,476 and 53,092,328 shares issued and 52,390,095 and
52,430,947 outstanding at March 31, 2021 and December 31,
2020, respectively |
5 |
|
|
5 |
|
|
Preferred stock, par value $0.0001; 1 share authorized and
outstanding at March 31, 2021 and December 31, 2020 |
— |
|
|
— |
|
|
Treasury stock, par value $0.0001; 661,381 shares at March 31,
2021 and December 31, 2020 |
(3,885 |
) |
|
(3,885 |
) |
|
Additional paid-in capital |
547,480 |
|
|
552,776 |
|
|
Accumulated deficit |
(236,413 |
) |
|
(244,836 |
) |
|
Accumulated other comprehensive loss |
(38,225 |
) |
|
(31,667 |
) |
|
Total Stockholders' Equity |
268,962 |
|
|
272,393 |
|
|
TOTAL LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS' EQUITY |
$ |
766,721 |
|
|
$ |
785,783 |
|
|
AgroFresh
Solutions, Inc.CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS(Unaudited)(In
thousands, except share and per share data)
|
Three Months Ended March 31,
2021 |
|
Three Months Ended March 31,
2020 |
Net sales |
$ |
38,992 |
|
|
$ |
33,023 |
|
|
Cost of
sales (excluding amortization of intangibles, shown separately
below) |
|
10,314 |
|
|
|
8,528 |
|
|
Gross profit |
|
28,678 |
|
|
|
24,495 |
|
|
Research and development expenses |
|
3,298 |
|
|
|
2,642 |
|
|
Selling, general, and administrative expenses |
|
13,551 |
|
|
|
13,709 |
|
|
Amortization of intangibles |
|
10,763 |
|
|
|
10,957 |
|
|
Operating income (loss) |
|
1,066 |
|
|
|
(2,813 |
) |
|
Other income |
|
14,398 |
|
|
|
1,507 |
|
|
Gain on foreign currency exchange |
|
433 |
|
|
|
627 |
|
|
Interest expense, net |
|
(5,890 |
) |
|
|
(6,966 |
) |
|
Income (loss) before income taxes |
|
10,007 |
|
|
|
(7,645 |
) |
|
Income taxes expense (benefit) |
|
1,823 |
|
|
|
(3,831 |
) |
|
Net income (loss) including non-controlling interest |
|
8,184 |
|
|
|
(3,814 |
) |
|
Less:
Net loss attributable to non-controlling interest |
|
(239 |
) |
|
|
(97 |
) |
|
Net income (loss) attributable to AgroFresh
Solutions, Inc. |
|
8,423 |
|
|
|
(3,717 |
) |
|
Less:
Dividends on convertible preferred stock |
|
6,005 |
|
|
|
— |
|
|
Net income (loss) attributable to AgroFresh Solutions, Inc. common
stockholders |
$ |
2,418 |
|
|
$ |
(3,717 |
) |
|
|
|
|
Earnings (loss) per
share of common shares: |
|
|
Basic |
$0.03 |
|
|
($0.07 |
) |
|
Diluted |
$0.03 |
|
|
($0.07 |
) |
|
|
|
|
Weighted average
shares of common stock outstanding: |
|
|
Basic |
|
51,031,457 |
|
|
|
50,525,781 |
|
|
Diluted |
|
52,296,288 |
|
|
|
50,525,781 |
|
|
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 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 a reconciliation between the
non-GAAP financial measures of EBITDA and Adjusted EBITDA to their
most directly comparable GAAP financial measure, net income
(loss):
(in
thousands) |
Three Months EndedMarch 31,
2021 |
|
Three Months EndedMarch 31,
2020 |
GAAP net income (loss) including non-controlling
interest |
$ |
8,184 |
|
|
$ |
(3,814 |
) |
|
Depreciation and
amortization |
11,423 |
|
|
11,577 |
|
|
Interest expense (1) |
5,890 |
|
|
6,966 |
|
|
Expense
(benefit) for income taxes |
1,823 |
|
|
(3,831 |
) |
|
Non-GAAP EBITDA |
$ |
27,320 |
|
|
$ |
10,898 |
|
|
Adjustments: |
|
|
Share-based compensation |
891 |
|
|
788 |
|
|
Other non-recurring costs
(2) |
766 |
|
|
1,744 |
|
|
Gain on foreign currency
exchange (3) |
(433 |
) |
|
(627 |
) |
|
Litigation settlement |
(14,392 |
) |
|
(1,600 |
) |
|
Total Adjustments |
(13,168 |
) |
|
305 |
|
|
Non-GAAP Adjusted EBITDA |
$ |
14,152 |
|
|
$ |
11,203 |
|
|
(1) Interest on debt, accretion for debt
discounts, debt issuance costs and contingent consideration. (2)
Costs related to certain professional and other infrequent or
non-recurring fees, including those associated with litigation and
M&A related fees.(3) Gain on foreign currency exchange relates
to net gains and losses resulting from transactions denominated in
a currency other than the Company's functional currency.
The following is a reconciliation between net
sales on a non-GAAP constant currency basis to GAAP net sales:
(in
thousands) |
Three Months EndedMarch 31,
2021 |
|
Three Months EndedMarch 31,
2020 |
GAAP net sales |
$ |
38,992 |
|
|
$ |
33,023 |
|
Impact
from changes in foreign currency exchange rates |
(143 |
) |
|
— |
|
Non-GAAP constant currency net sales
(1) |
$ |
38,849 |
|
|
$ |
33,023 |
|
(1) The company provides net sales on a constant
currency basis to enhance investors’ understanding of underlying
business trends and operating performance, by removing the impact
of foreign currency exchange rate fluctuations. The impact from
foreign currency, calculated on a constant currency basis, is
determined by applying prior period average exchange rates to
current year results.
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