AgroFresh Solutions, Inc. ("AgroFresh" or the "Company") (Nasdaq:
AGFS), a global AgTech innovator providing a range of solutions,
digital technologies and services to enhance the quality and extend
the shelf life of fresh produce, today announced its financial
results for the first quarter ended March 31, 2022.
Clint Lewis, Chief Executive Officer, commented,
"The first quarter marks the first half of the Southern Hemisphere
growing season and while most of the harvest has yet to commence,
we are off to a solid start in this quarter. This quarter also
shows the benefit of our diversification strategy, leveraging our
global footprint and the breadth of our product portfolio to
deliver both revenue and EBITDA growth relative to the first
quarter of 2021 while managing through adverse weather conditions
impacting select Latin American markets such as Brazil and
Chile.
Diversification revenue, which accounted for
approximately 43.3% of consolidated revenues on a trailing twelve
month basis, once again drove our performance this quarter with an
11.2% increase in the twelve months ended March 31, 2022 versus the
prior twelve month period. It is important to recognize that
diversification is not just our strategy to drive incremental
growth, it is also a way to manage and offset risk by increasingly
making us less susceptible to adverse impacts such as weather, in
any one market, crop, product or customer."
Mr. Lewis added, "As we look to the balance of
the Southern Hemisphere season and the rest of 2022, we will
continue to advance our diversification strategy while defending
our strong, industry leading franchise in SmartFresh for apples. As
the pandemic has eased, my leadership team and I have been
traveling to meet with a number of our customers both domestically
and abroad. I am energized by their positive feedback on the
quality of our products and our people. They recognize our
unwavering commitment to service, and the support we provide to
ensure they are able to deliver a consistent supply of high-quality
and fresh produce to the market."
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.
Financial Highlights for the First
Quarter of 2022
Net sales for the first quarter of 2022
increased 2.3% to $39.9 million, compared to $39.0 million in the
first quarter of 2021. Excluding foreign currency translation
impacts, which reduced revenue by $1.2 million as compared to the
first quarter of 2021, revenue increased 5.5%, primarily driven by
leveraging a portfolio of diverse solutions. Each of the Company's
diversification categories generated growth in the first quarter.
Growth within Fungicides & Disinfectants was driven by market
penetration and product expansion in the Middle East. The Other
1-MCP category was supported by Harvista, which experienced strong
growth in South Africa, supported by an early harvest and larger
crop size. This was partially offset by SmartFresh for Apple
declines in the Latin America region due to unfavorable weather
events.
Gross profit for the first quarter of 2022 was
$28.0 million, compared to $28.7 million in the prior year period.
Gross profit margin was 70.1% as compared to 73.5% in the prior
year period. The lower gross margin primarily reflects the
Company’s strategic transition to a more diversified product
portfolio, as well as higher materials costs associated with
inflationary pressures.
Research and development costs were $3.1 million
in the first quarter of 2022, compared to $3.3 million in the prior
year period, due primarily to the timing of projects.
Selling, general and administrative expenses
decreased 12.2% to $11.9 million in the first quarter of 2022, as
compared to $13.6 million in the prior year period, driven
primarily by the timing of expenses.
First quarter 2022 net loss was $3.2 million,
compared to net income of $8.2 million in the prior year period.
During the first quarter of 2021, the Company recorded $14.4
million of other income which related primarily to the receipt of
proceeds from the settlement of a litigation matter.
Adjusted EBITDA1 was $15.0 million in the first
quarter of 2022, an increase of 5.9%, as compared to $14.2 million
in the prior year period. The increase in Adjusted EBITDA was
primarily due to higher sales and lower operating expenses compared
to the prior year period.
As of March 31, 2022, cash and cash
equivalents were $59.3 million.
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 11, 2022 through May 25,
2022. Listeners in the United States may dial 844-512-2921 and
international listeners may dial 412-317-6671. The passcode is
13728773.
Non-GAAP Financial Measures
This press release contains certain non-GAAP
financial measures, including EBITDA, Adjusted EBITDA and net sales
on a constant currency basis. 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 for incentive bonuses and 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 to
evaluate 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.:ICR
Inc.
Jeff Sonnek - Investor
RelationsJeff.Sonnek@icrinc.com646-277-1263
|
AgroFresh Solutions, Inc.UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS(In thousands) |
|
|
March 31, 2022 |
|
December 31, 2021 |
|
|
|
|
ASSETS |
|
|
|
Current Assets: |
|
|
|
Cash and cash equivalents |
$59,266 |
|
|
$61,930 |
|
Accounts receivable, net of allowance for doubtful accounts of
$1,640 and $2,143, respectively |
|
55,754 |
|
|
|
53,538 |
|
Inventories |
|
22,357 |
|
|
|
19,780 |
|
Other current assets |
|
23,549 |
|
|
|
19,878 |
|
Total Current Assets |
|
160,926 |
|
|
|
155,126 |
|
Property and equipment, net |
|
11,699 |
|
|
|
11,986 |
|
Intangible assets, net |
|
535,970 |
|
|
|
546,652 |
|
Deferred income tax assets |
|
7,402 |
|
|
|
7,392 |
|
Other assets |
|
12,892 |
|
|
|
11,406 |
|
TOTAL ASSETS |
$728,889 |
|
|
$732,562 |
|
|
|
|
|
LIABILITIES, TEMPORARY
EQUITY AND STOCKHOLDERS’ EQUITY |
|
|
|
Current Liabilities: |
|
|
|
Accounts payable |
$17,124 |
|
|
$16,969 |
|
Current portion of long-term debt |
|
3,378 |
|
|
|
3,362 |
|
Income taxes payable |
|
2,297 |
|
|
|
2,382 |
|
Accrued expenses and other current liabilities |
|
27,277 |
|
|
|
26,994 |
|
Total Current Liabilities |
|
50,076 |
|
|
|
49,707 |
|
Long-term debt |
|
253,807 |
|
|
|
254,194 |
|
Other noncurrent liabilities |
|
8,118 |
|
|
|
6,256 |
|
Deferred income tax liabilities |
|
33,663 |
|
|
|
34,833 |
|
Total Liabilities |
|
345,664 |
|
|
|
344,990 |
|
|
|
|
|
Commitments and contingencies
(see Note 21) |
|
|
|
Temporary Equity: |
|
|
|
Series B convertible preferred stock, par value $0.0001; 150 shares
authorized and designated and 145 shares outstanding at
March 31, 2022 and December 31, 2021, respectively |
|
151,800 |
|
|
|
149,386 |
|
Redeemable non-controlling interest |
|
7,705 |
|
|
|
7,787 |
|
Stockholders’ Equity: |
|
|
|
Common stock, par value $0.0001; 400,000 shares authorized, 53,244
and 53,080 shares issued and 52,583 and 52,418 outstanding at
March 31, 2022 and December 31, 2021, respectively |
|
5 |
|
|
|
5 |
|
Preferred stock, par value $0.0001; 0.001 share authorized and
outstanding at March 31, 2022 and December 31, 2021 |
|
— |
|
|
|
— |
|
Treasury stock, par value $0.0001; 661 shares at March 31,
2022 and December 31, 2021 |
|
(3,885 |
) |
|
|
(3,885 |
) |
Additional paid-in capital |
|
523,544 |
|
|
|
529,303 |
|
Accumulated deficit |
|
(251,747 |
) |
|
|
(248,660 |
) |
Accumulated other comprehensive loss |
|
(44,197 |
) |
|
|
(46,364 |
) |
Total Stockholders' Equity |
|
223,720 |
|
|
|
230,399 |
|
TOTAL LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS' EQUITY |
$728,889 |
|
|
$732,562 |
|
|
AgroFresh Solutions, Inc.UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(In
thousands, except per share data) |
|
|
Three Months Ended March 31, |
|
2022 |
|
2021 |
Net sales |
$39,889 |
|
|
$38,992 |
|
Cost of sales (excluding amortization of intangibles, shown
separately below) |
|
11,923 |
|
|
|
10,314 |
|
Gross profit |
|
27,966 |
|
|
|
28,678 |
|
Research and development expenses |
|
3,051 |
|
|
|
3,298 |
|
Selling, general, and administrative expenses |
|
11,892 |
|
|
|
13,551 |
|
Amortization of intangibles |
|
10,718 |
|
|
|
10,763 |
|
Operating income |
|
2,305 |
|
|
|
1,066 |
|
Other income |
|
505 |
|
|
|
14,398 |
|
(Loss) gain on foreign currency exchange |
|
(1,196 |
) |
|
|
433 |
|
Interest expense, net |
|
(4,947 |
) |
|
|
(5,890 |
) |
(Loss) income before income taxes |
|
(3,333 |
) |
|
|
10,007 |
|
Income taxes (benefit) expense |
|
(164 |
) |
|
|
1,823 |
|
Net (loss) income including non-controlling interest |
|
(3,169 |
) |
|
|
8,184 |
|
Less:
Net loss attributable to non-controlling interest |
|
(82 |
) |
|
|
(239 |
) |
Net (loss) income attributable to AgroFresh Solutions, Inc. |
|
(3,087 |
) |
|
|
8,423 |
|
Less:
Dividends on convertible preferred stock |
|
6,436 |
|
|
|
6,005 |
|
Net (loss) income attributable to AgroFresh Solutions, Inc. common
stockholders |
($9,523 |
) |
|
$2,418 |
|
|
|
|
|
(Loss) earnings per
share of common shares: |
|
|
|
Basic |
($0.18 |
) |
|
$0.03 |
|
Diluted |
($0.18 |
) |
|
$0.03 |
|
|
|
|
|
Weighted average
shares of common stock outstanding: |
|
|
|
Basic |
|
51,736 |
|
|
|
51,031 |
|
Diluted |
|
51,736 |
|
|
|
52,296 |
|
Non-GAAP Measures
The following tables set forth the non-GAAP
financial measures of EBITDA, Adjusted EBITDA and non-GAAP constant
currency net sales. 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 for incentive bonuses and 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 (loss) income
including non-controlling interest:
|
Three Months Ended March 31, |
(in thousands) |
|
2022 |
|
|
|
2021 |
|
GAAP net (loss) income
including non-controlling interest |
($3,169 |
) |
|
$8,184 |
|
Depreciation and
amortization |
|
11,444 |
|
|
|
11,423 |
|
Interest expense(1) |
|
4,947 |
|
|
|
5,890 |
|
Income
taxes (benefit) expense |
|
(164 |
) |
|
|
1,823 |
|
Non-GAAP EBITDA |
$13,058 |
|
|
$27,320 |
|
Adjustments: |
|
|
|
Share-based compensation |
|
988 |
|
|
|
891 |
|
Severance related
costs(2) |
|
73 |
|
|
|
— |
|
Other non-recurring
costs(3) |
|
186 |
|
|
|
766 |
|
Loss (gain) on foreign
currency exchange(4) |
|
1,196 |
|
|
|
(433 |
) |
Other income(5) |
|
(515 |
) |
|
|
— |
|
Litigation settlement |
|
— |
|
|
|
(14,392 |
) |
Total Adjustments |
|
1,928 |
|
|
|
(13,168 |
) |
Non-GAAP Adjusted EBITDA |
$14,986 |
|
|
$14,152 |
|
(1) |
|
Interest on debt and accretion for debt discounts. |
(2) |
|
Severance costs related to continued focus on cost control
initiatives and restructuring. |
(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 (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. |
(5) |
|
Other income relates to non-recurring data compensation
income. |
|
|
|
|
|
|
The following is a reconciliation between net
sales on a non-GAAP constant currency basis to GAAP net sales:
|
Three Months Ended March 31, |
(in thousands) |
|
2022 |
|
|
2021 |
GAAP net sales |
$39,889 |
|
$38,992 |
Impact
from changes in foreign currency exchange rates |
|
1,231 |
|
|
— |
Non-GAAP constant currency net sales (1) |
$41,120 |
|
$38,992 |
(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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