15% growth in net sales, further operating
efficiencies drive bottom line improvement
- Net sales of $33 million, up 15 percent
versus the first quarter of 2016
- First quarter 2017 net loss reduced to
$12 million compared to a net loss of $25 million for the first
quarter of 2016
- First quarter EBITDA[1] of $11 million
compared to $4 million in the year earlier period
- $9 million of cash generated by
operations for the first quarter of 2017
- Quarter end cash of $85 million, up
nearly $8 million since December 31, 2016 and up $20 million
since March 31, 2016
AgroFresh Solutions, Inc. ("AgroFresh" or the "Company")
(NASDAQ: AGFS), a global leader in produce freshness solutions,
announced financial results for the first quarter of fiscal 2017,
ended March 31, 2017. AgroFresh is in the business of
preserving and enhancing the quality and freshness of food,
reducing food waste and improving productivity.
Jordi Ferre, Chief Executive Officer, commented, "First quarter
results reflect the health of our business and give us confidence
that our new operations focus and enhanced financial discipline are
yielding results. We grew revenues for the second consecutive
quarter, with growth of 15 percent in the first quarter compared to
the prior year period.
"Of particular note, we increased market share in the highly
competitive Argentina market that saw two new competitors enter the
market, further evidence that our new marketing initiatives,
geographic and product diversification efforts, and introduction of
the SmartFresh Quality SystemTM are strengthening our reputation as
the industry leader. Additionally, we saw double-digit growth on
sales of Harvista as compared to the first quarter of 2016.
"Our strong top line growth led to overall financial results
that were significantly improved from a year ago. As we continue to
implement our growth strategy, it is encouraging that we have the
support of Dow and Avenue Capital, who have not only exhibited
their high degree of confidence by agreeing to make available up to
$100 million in loans for approved acquisitions but have also
improved our financial flexibility through our recently announced
agreements.”
Financial Highlights for the First
Quarter
Net sales for the first quarter of 2017 were up 15 percent
versus the first quarter of 2016, primarily due to SmartFresh
growth in Brazil and Chile as well as Harvista growth in
Argentina.
Stable margins, as gross profit of 82 percent was in-line with
the first quarter of 2016.
Research and development costs of $3 million were $1 million
less than in the first quarter of 2016, reflecting more targeted
research activities.
Selling, general and administrative expenses of $16 million were
reduced by over $3 million from a year ago due to efficiency and
productivity improvements,
Interest expense of $10 million was $5 million less than in the
first quarter of 2016, driven by lower accretion of contingent
consideration.
Balance Sheet and Cash
Flow
The company continues to generate strong cash flow, with cash
from operations of $9 million in the quarter. At March 31,
2017, the company had cash on hand of $85 million.
Katherine Harper, CFO, said, “The new year is off to a strong
start with improved top and bottom line performance. Consolidated
margins were consistent with the first quarter of 2016 and continue
to primarily reflect the impact of our evolving product mix and
additional investment in growth initiatives. Over time, we expect
to achieve better performance by driving down operating expenses.
We expect the full year average run rate for SG&A to be $11
million per quarter. Our asset-light model, attractive cash flow
and $85 million cash balance, together with the potential for up to
$100 million acquisition support from Dow and Avenue, provide us
with extensive financial resources to capitalize on the growth
opportunities in the rapidly emerging food preservation and waste
reduction space.”
Conference Call
The Company will conduct a conference call to discuss its first
quarter 2017 results at 8:30 a.m. Eastern Time on May 9, 2017.
To access the call, please dial 877-883-0383 from the U.S. or
412-902-6506 from outside the U.S. The conference call I.D. number
is 0345358. The call will also be available as a live webcast with
an accompanying slide presentation, which will be accessible via
the "Events & Presentation" page of the Investor Relations
section of the Company's website at www.agrofresh.com. All participants should call or
access the website approximately 10 minutes before the conference
call begins.
A telephone replay of the conference call will be available by
dialing 877-344-7529 (US) and 412-317-0088 (International) until
Tuesday, May 23, 2017. The replay I.D. number is 10106304.
Non-GAAP Financial
Measures
This press release contains the non-GAAP financial measure
EBITDA. The Company believes this non-GAAP financial measure
provides meaningful supplemental information as it is used by the
Company's management to evaluate the Company's performance.
Management believes that this measure enhances a reader's
understanding of the financial performance of the Company, is more
indicative of operating performance of the Company, and facilitates
a better comparison between fiscal periods, as the non-GAAP measure
excludes items that are not considered core to the Company's
operations.
The Company does not intend for the non-GAAP financial measure
contained in this release to be a substitute for any GAAP financial
information. Readers of this press release should use this non-GAAP
financial measure only in conjunction with the comparable GAAP
financial measure. Reconciliations of the non-GAAP financial
measure EBITDA to the most comparable GAAP measure are provided in
the table at the end of this press release.
About AgroFresh
AgroFresh Solutions, Inc. (NASDAQ: AGFS) is a global industry
leader in providing innovative data-driven specialty solutions
aimed at enabling growers and packers of fresh produce to preserve
and enhance the freshness, quality and value of fresh produce and
to maximize the percentage of produce supplied to the market
relative to the amount of produce grown. Its flagship product is
the SmartFresh™ Quality System, a freshness protection technology
proven to maintain firmness, texture and appearance of fruits
during storage and transport. SmartFresh is currently
commercialized in over 40 countries worldwide. Additionally the
company has a number of different solutions and application
technologies that have either been launched (Harvista, RipeLock,
Landspring) or will be launched in the future that will extend its
footprint to other crops and steps of the global produce supply
chain. For more information, please visit www.agrofresh.com.
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; costs related to operating AgroFresh as a
stand-alone public company; 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.
[1] EBITDA is a non-GAAP financial measure. Please see the
information under “Non-GAAP Financial Measures” below for a
description of EBITDA and the tables at the end of this press
release for a reconciliation of Non-GAAP financial measures to GAAP
results.
AgroFresh Solutions, Inc. CONDENSED
CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands, except share and per share
data)
March 31, December 31,
2017 2016 ASSETS Current Assets: Cash
and cash equivalents $ 84,858 $ 77,312 Accounts receivable, net of
allowance for doubtful accounts of $1,422 and $1,242, respectively
55,167 63,675 Inventories 16,156 15,467 Other current assets
13,642 14,047 Total current assets 169,823
170,501 Property and equipment, net 7,748 8,048 Intangible assets,
net 766,868 776,584 Deferred income tax assets 8,227 8,459 Other
assets 2,330 2,252 TOTAL ASSETS
$ 954,996 $ 965,844
LIABILITIES AND
STOCKHOLDERS’ EQUITY Current Liabilities: Accounts payable $
9,956 $ 12,133 Current portion of long-term debt 4,250 15,250
Income taxes payable 3,121 3,121 Accrued expenses and other current
liabilities 67,281 66,366 Total current
liabilities 84,608 96,870 Long-term debt 403,431 392,996 Other
noncurrent liabilities 145,455 140,833
Total liabilities 633,494 630,699
Commitments and contingencies
Stockholders’ equity: Common stock, par value $0.0001; 400,000,000
shares authorized, 50,942,207 and 50,698,587 shares issued and
50,280,826 and 50,037,206 shares outstanding at March 31, 2017 and
December 31, 2016, respectively 5 5 Preferred stock; par value
$0.0001, 1 share authorized and outstanding at March 31, 2017 and
December 31, 2016 — — Treasury stock; par value $0.0001, 661,381
shares at March 31, 2017 and December 31, 2016 (3,885 ) (3,885 )
Additional paid-in capital 475,854 475,598 Accumulated deficit
(144,229 ) (132,200 ) Accumulated other comprehensive loss
(6,243 ) (4,373 ) Total stockholders' equity 321,502
335,145 TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 954,996 $ 965,844
AgroFresh Solutions, Inc. CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except share and per share
data)
Three MonthsEnded March 31,
2017 Three MonthsEnded March 31,
2016 Net sales $ 32,730 $ 28,411 Cost of sales (excluding
amortization, shown separately below) 5,839
23,820 Gross profit 26,891 4,591 Research and development
expenses 3,297 4,429 Selling, general, and administrative expenses
16,431 19,666 Amortization of intangibles 10,445 9,899 Change in
fair value of contingent consideration 215
(3,100 ) Operating loss (3,497 ) (26,303 ) Other income 40 55 Gain
on foreign currency exchange 3,103 830 Interest expense, net
(10,293 ) (15,008 ) Loss before income taxes (10,647 )
(40,426 ) Income tax provision (benefit) 1,382
(15,289 ) Net loss $ (12,029 ) $ (25,137 )
Loss per share: Basic $ (0.24 ) $ (0.51 ) Diluted $ (0.24 ) $ (0.51
) Weighted average shares outstanding: Basic 49,661,469 49,718,153
Diluted 49,661,469 49,718,153
AgroFresh Solutions,
Inc. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited) (in thousands) Three
MonthsEnded March 31, 2017 Three
MonthsEnded March 31, 2016 Cash flows from
operating activities: Net loss $ (12,029 ) $ (25,137 )
Adjustments to reconcile net loss to net cash provided by operating
activities: Depreciation and amortization 10,978 10,837 Provision
for bad debts 180 — Stock-based compensation for equity classified
awards 216 1,071 Pension expense 49 — Amortization of inventory
fair value adjustment — 18,505 Amortization of deferred financing
costs 579 557 Accretion of contingent consideration 3,704 7,835
Increase (decrease) in fair value of contingent consideration 215
(3,100 ) Deferred income taxes 232 (13,845 ) Loss on sales of
property 81 6 Other 43 981 Changes in operating assets and
liabilities: Accounts receivable 9,148 8,704 Inventories (637 )
1,845 Prepaid expenses and other current assets 407 (2,803 )
Accounts payable (5,013 ) 5,724 Accrued expenses and other
liabilities (716 ) (2,124 ) Income taxes payable (9 ) 894 Other
assets and liabilities 1,408 — Net cash
provided by operating activities 8,836 9,950
Cash flows from investing activities: Cash paid for
property and equipment (1,014 ) (850 ) Proceeds from sale of
property — 8 Other investments (350 ) — Net
cash used in investing activities (1,364 ) (842 )
Cash flows from financing activities: Repayment of long term
debt (1,063 ) (1,062 ) Repurchase of stock for treasury —
(1,488 ) Net cash used in financing activities
(1,063 ) (2,550 ) Effect of exchange rate changes on cash
and cash equivalents 1,137 632 Net
increase in cash and cash equivalents 7,546 7,190 Cash and cash
equivalents, beginning of period 77,312 57,765
Cash and cash equivalents, end of period $ 84,858
$ 64,955
Supplemental disclosures of
cash flow information: Cash paid for interest $ 6,085 $ 6,204
Cash paid for income taxes $ 679 $ 1,691
Supplemental schedule
of non-cash investing and financing activities: Accrued
purchases of property and equipment $ 578 $ —
GAAP to Non-GAAP Reconciliations
The following is a reconciliation between the non-GAAP financial
measure of EBITDA to its most directly comparable GAAP financial
measure, net loss:
Three Months Three Months Ended
Ended (in thousands) March 31, 2017
March 31, 2016 GAAP Net loss $ (12,029 ) $
(25,137 ) Provision (benefit) for income taxes 1,382 (15,289 )
Amortization of inventory step-up(1) — 18,505 Interest expense(2)
10,293 15,008 Depreciation and amortization 10,978
10,837
Non-GAAP EBITDA $ 10,624
$ 3,924 (1) The amortization of inventory
step-up related to the acquisition of AgroFresh was charged to
income based on the pace of inventory usage. (2) Interest on the
term loan and accretion for debt discounts, debt issuance costs and
contingent consideration.
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version on businesswire.com: http://www.businesswire.com/news/home/20170509005281/en/
AgroFresh Solutions, Inc.Katherine Harper, CFOinvestorrelations@AgroFresh.com
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