AGFS AgroFresh Solutions Inc

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of report (Date of earliest event reported): November 13, 2015

AgroFresh Solutions, Inc.

(Exact Name of Registrant as Specified in Charter)

(215) 592-3687
(Registrant’s telephone number, including area code)

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:

o                                    Written communications pursuant to Rule 425 under the Securities Act

o                                    Soliciting material pursuant to Rule 14a-12 under the Exchange Act

o                                    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act

o                                    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act

Item 2.02.  Results of Operations and Financial Condition.

On November 16, 2015, AgroFresh Solutions, Inc. (the “Company”) issued a press release (the “Earnings Release”) announcing financial results for the quarter and nine months ended September 30, 2015. A copy of the Earnings Release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

This Current Report on Form 8-K and the Earnings Release attached hereto are being furnished by the Company pursuant to Item 2.02 “Results of Operations and Financial Condition.” In accordance with General Instruction B.2 of Form 8-K, the information contained in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended. In addition, this information shall not be deemed incorporated by reference into any of the Company’s filings with the Securities and Exchange Commission, except as shall be expressly set forth by specific reference in any such filing.

Item 5.02.  Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

On November 13, 2015, the board of directors of the Company (the “Board”), based on the recommendation of the compensation committee of the Board, adopted a Non-Employee Director Compensation Plan for 2015 (the “Plan”), to be effective as of that date, which sets forth the terms upon which non-employee independent directors (other than Mr. Trevor, who will not receive any compensation) will be compensated for their service on the Board. Under the terms of the Plan, each participating non-employee independent director will receive an annual cash retainer of $60,000, and the Chair of the Board will receive an additional annual cash retainer of $40,000, in each case retroactive to August 1, 2016. In addition, each participating non-employee director will receive, effective December 31, 2015, a grant, under the Company’s 2015 Incentive Compensation Plan, of shares of restricted stock having a value on the grant date equal to the product of (i) $75,000 (or, in the case of the Chair of the Board, $100,000) and (ii) a fraction, where the number is the number of days between August 1, 2015 and December 31, 2015 that such director serves on the Board and the denominator is 360, in each case subject to vesting over a three-year period commencing on the grant date. The foregoing description of the Plan is a summary and does not purport to be complete. Such description is qualified in its entirety by reference to the text of the Plan, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.

Item 9.01 Exhibits

(d) Exhibits.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

Dated: November 16, 2015

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EXHIBIT INDEX

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Exhibit 10.1

AGROFRESH SOLUTIONS, INC.

COMPENSATION PLAN FOR INDEPENDENT DIRECTORS

For service on the Company’s Board of Directors for the period August 1 to December 31, 2015, the compensation payable to the independent members of the board of the directors of the Company (excluding Stephen Trevor, who has agreed to waive his director compensation) shall be as follows:

·                  An annual retainer of $60,000, pro-rated based on the number of days’ service on the board since August 1, 2015, divided by 360, and payable quarterly.

·                  The chairperson of the board shall receive an additional retainer of $40,000, pro-rated based on the number of days’ service on the board since August 1, 2015, divided by 360, and payable quarterly.

·                  Each director shall be reimbursed for customary expenses for attending all board of directors, committee and stockholder meetings.

·                  Each independent director (excluding Stephen Trevor) shall receive that number of AGFS shares that, when multiplied by the closing price per share on the trading date immediately preceding the grant date shall be equal to the product resulting from multiplying $75,000 by a fraction, the numerator of which is the number of days such director has served on the Company’s board since August 1, 2015 and the denominator of which is 360, except that the chairperson shall receive that number of AGFS shares that, when multiplied by the closing price per share on the trading date immediately preceding the grant date shall be equal to the product resulting from multiplying $100,000 by a fraction, the numerator of which is the number of days such chairperson has served on the Company’s board since August 1, 2015 and the denominator of which is 360.  For purposes of the preceding provisions, the “grant date” shall be December 31, 2015.  In succeeding calendar years, it is intended that the grant date shall coincide with the date of the annual meeting of stockholders.  The foregoing grants shall vest at a rate of 33-1/3% each year, with such vesting to occur on each anniversary of the grant date.

Exhibit 99.1

AgroFresh Solutions Reports Third Quarter and Year-to-Date 2015 Results

Highlights:

·                  Q3’15 Net Sales declined 0.4% and Adjusted EBITDA increased 7.5%, both on a constant currency basis versus the prior year period

·                  Reported Q3’15 Net Sales were $61.8 million, Adjusted EBITDA was $44.5 million, and net loss was $16.5 million

·                  Year-to-Date Net Sales increased 5.6% and Adjusted EBITDA increased 11.4%, both on a constant currency basis, versus the prior year period

·                  Reported Year-to-Date Net Sales were $112.3 million, Adjusted EBITDA was $62.5 million, and net loss was $28.1 million

·                  SmartFresh™ penetration increased for apples and other crops, further strengthening market position

·                  Successful stand-up of business as a stand-alone, independent company

·                  Continued strong focus on delivering healthy margins, well-managed cost structure, and strong cash flow

Philadelphia, PA, November 16, 2015 — AgroFresh Solutions, Inc. (NASDAQ: AGFS, AGFSW) (“AgroFresh” or the “Company”), a global leader in produce freshness solutions, announced today financial results for the three and nine months ended September 30, 2015. AgroFresh became a stand-alone company upon closing of a transaction with The Dow Chemical Company (“Dow”) on July 31, 2015 (the “Business Combination”).

Thomas Macphee, Chief Executive Officer, commented, “We successfully launched AgroFresh as an independent public company on July 31st, making a seamless transition as we continued to execute on our strategy to drive profitable growth. Our performance in the third quarter reflected solid increased penetration of SmartFresh™ for apples and other crops. This is consistent with both our growth strategy and our strong position with customers globally. While the smaller size of this year’s Northern Hemisphere apple crop is a headwind, our continued very strong profit margins and cash flow reflect an excellent start for AgroFresh.”

Margaret Loebl, Executive Vice President and Chief Financial Officer, added, “Our high margin structure and cash generation are key tenets of the AgroFresh business model and effective cost management has contributed most specifically to the EBITDA growth in year-to-date 2015. Our confidence in our strategy and commitment to enhancing shareholder value was also reflected in the warrant repurchase program that we announced and, subsequent to the end of the third quarter, completed.”

Certain of the financial measures presented in the highlights and the sections that follow are non-GAAP financial measures. Please see the information and tables under “Non-GAAP Financial Measures” below for a description of these non-GAAP financial measures, and the tables at the end of this press release for a reconciliation of non-GAAP financial measures to GAAP results.

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Three Months Ended September 30, 2015

For the three months ended September 30, 2015, net sales declined 0.4% on a constant currency basis compared to the prior year period. Reported net sales were $61.8 million compared to $66.2 million in the prior year period. The change in net sales on a constant currency basis was primarily driven by increased penetration of SmartFresh™, offset by a smaller apple crop in North America, a late harvest in Europe, and a change in our distributor relationship in South Korea that caused revenue to be recognized earlier in the year, which impacted comparative sales in the Asia Pacific region.

In the three months ended September 30, 2015, cost of sales was $46.2 million. Excluding the amortization of inventory step-up adjustments of $38.7 million, cost of sales was $7.5 million, down from $10.4 million in the three months ended September 30, 2014, resulting in improved gross profit.

SG&A expenses were $14.7 million in the three months ended September 30, 2015, compared to $8.1 million in the prior year period. This increase was primarily driven by expenses associated with the Business Combination.  These expenses included $3.6 million of non-recurring costs related to accounting, consulting, human resources and other professional services, $1.9 million of transaction costs, and the amortization of $1.1 million of a $5.0 million upfront payment made to Dow pursuant to a Transition Services Agreement entered into on July 31, 2015.

On a constant currency basis, Adjusted EBITDA increased 7.5% for the three months ended September 30, 2015 compared to the prior year period. Reported Adjusted EBITDA was $44.5 million in the three months ended September 30,2015, compared to $43.7 million in the prior year period. A net loss of ($16.5) million was recognized in the three months ended September 30, 2015 compared to net income of $24.5 million in the prior year period.

For the three months ended September 30, 2015, earnings per share was ($0.33) and non-GAAP earnings per share was $0.35, versus non-GAAP earnings per share of $0.52 in in the prior year period, assuming the same number of shares in the prior period as reported on September 30, 2015.

Nine Months Ended September 30, 2015

For the nine months ended September 30, 2015, net sales grew 5.6% on a constant currency basis, compared to the prior year period. Reported net sales were $112.3 million in the nine months ended September 30, 2015, compared to $113.7 million in the prior year period. The increase in net sales on a constant currency basis was primarily driven by increased penetration and larger apple crops in New Zealand, South Africa, and Australia. This increase was partially offset by smaller apple crops in Chile, Brazil and North America.

For the nine months ended September 30, 2015, cost of sales was $56.3 million. Excluding the amortization of inventory step-up adjustments of $38.7 million, cost of sales was $17.6 million, down from $19.4 million in the prior year period, resulting in improved gross profit.

SG&A expenses were $29.5 million, for the nine months ended September 30, 2015, compared to $23.4 million in the prior year period. This increase was primarily driven by expenses associated with the Business Combination. These expenses included $3.6 million of non-recurring costs related to accounting, consulting, human resources and other professional services, $1.9 million of transaction costs, and the amortization of $1.1 million of a $5.0 million upfront payment made to Dow pursuant to a Transition Services Agreement entered into on July 31, 2015.

On a constant currency basis, Adjusted EBITDA increased 11.4% for the nine months ended September, 30 2015, compared to the prior year period. Reported Adjusted EBITDA was $62.5 million, compared to $59.1 million in the prior year period. A net loss of ($28.1) million was recognized during the nine months ended

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September 30, 2015 compared to net income of $11.8 million during the nine months ended September 30, 2014.

For the nine months ended September 30, 2015, earnings per share was ($0.56) and non-GAAP earnings per share was $0.16 versus non-GAAP earnings per share of $0.30 in the prior year period, assuming the same number of shares in the prior period as reported on September 30, 2015.

Corporate and Other

During the three months ended September 30, 2015, the Company’s Board of Directors approved a warrant repurchase program totaling $2.5 million. For the period from August 1, 2015 through September 30, 2015, the Company repurchased $0.9 million of warrants. The remaining $1.6 million under such authorization was used to repurchase additional warrants after the close of the third quarter, and the program is now complete.

Balance Sheet and Cash Flow

The balance sheet on September 30, 2015 reflected the effects of the consummation of the Business Combination on July 31, 2015 as compared to the AgroFresh Business on a carve-out basis as of December 31, 2014. The principal differences are the addition of long-term debt of $407.2 million, short-term debt of $4.3 million, and cash of $28.8 million, reflecting the financing of the Business Combination.

Anticipated future payments to Dow under the tax receivables agreement and the earn-out provisions contained in the stock purchase agreement that were entered into with Dow in connection with the Business Combination are reflected as other noncurrent liabilities on the September 30, 2015 balance sheet. The effects of acquisition accounting adjustments are reflected in goodwill of $41.6 million versus year-end goodwill of $156.0 million and intangibles of $829.2 million versus year-end intangibles of $97.0 million.

Inventories include a step up of $111.4 million as a result of purchase accounting, of which $38.7 million was amortized into cost of goods sold in the two months ended September 30, 2015. Inventory and accounts receivable at September 30, 2015, during the peak of the Company’s selling season, were higher than the year-end of 2014. Inventories, netting out the purchase accounting effects, were $16.8 million at September 30, 2015 versus $12.2 million at December 31, 2014. Accounts receivable were $84.1 million at September 30, 2015 versus $64.4 million at December 31, 2014.

In the statement of cash flows for the combined nine months through September 30, 2015, the Company generated cash from operating activities (excluding changes in the income taxes payable, while part of Dow) of $13.3 million as compared to $10.7 million for the comparable prior year period. The cash portion of the purchase price for the AgroFresh Business under the Business Combination of $625.5 million is reflected as investing activities, with the respective sources of financing consisting of, the existing restricted cash from the Company’s initial public offering, long-term debt raised of $425 million, before debt issuance costs of $12.9 million, and $50 million raised through private equity investments. During the three months ended September 30, 2015, the Company made a $1.1 million debt amortization payment on its term loan, financed its insurance premium and repurchased $0.9 million of public warrants. The ending cash position for the Company at September 30, 2015 was $28.8 million.

Conference Call

The Company will conduct a conference call to discuss its third quarter results at 5:00 p.m. Eastern Time on November 16, 2015. To access the call, please dial (844) 663-0324 from the U.S. or (970) 297-2315 from outside the U.S. The conference call I.D. number is 68711900. The call will also be available as a live webcast with an accompanying slide presentation, which can be accessed on the “Events & Presentation” tab of the Investor Relations section of the Company’s website, www.agrofresh.com. All participants should call or

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access the website approximately 10 minutes before the conference begins. The webcast will be available for replay for at least 90 days.

A telephonic replay of this conference call will also be available by dialing (800) 585-8367 (US) and (404) 537-3406 (International) from 7:00 pm ET on November 16, 2015 until 11:59 pm ET on November 30, 2015.

Basis for Presentation

As a result of the Business Combination, the Company was identified as the acquirer for accounting purposes, and the AgroFresh Business, which is the business conducted prior to the closing of the Business Combination by Dow through a combination of wholly-owned subsidiaries and operations of Dow, including through AgroFresh Inc. in the United States, is the acquiree and accounting Predecessor. The Company’s financial statement presentation reflects the AgroFresh Business as the “Predecessor” for periods through July 31, 2015 (the “Closing Date”).  Where we discuss results for the period ended September 30, 2015, we are referring to the combined results of the Predecessor for the month ending July 31, 2015 and the Successor for the two months ending September 30, 2015. On the Closing Date, the Company, which was formerly named Boulevard Acquisition Corp., was re-named AgroFresh Solutions, Inc. and is the “Successor” for periods after the Closing Date, which includes consolidation of the AgroFresh Business subsequent to the Closing Date. The acquisition was accounted for as a business combination using the acquisition method of accounting, and the Successor financial statements reflect a new basis of accounting that is based on the fair value of net assets acquired. As a result of the application of the acquisition method of accounting as of the effective time of the Business Combination, the financial statements for the Predecessor period and for the Successor period are presented on different bases. The historical financial information of Boulevard Acquisition Corp. prior to the Business Combination has not been reflected in the Predecessor period financial statements as those amounts are not considered to be material.

Non-GAAP Financial Measures

This press release contains certain financial measures, in particular non-GAAP earnings per share, Adjusted EBITDA, Constant Currency Adjusted EBITDA and Constant Currency Net Sales that are not presented in accordance with GAAP. These non-GAAP financial measures are being presented because 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, seen as likely to enhance a reader’s understanding of the financial performance of the Company, are more indicative of operating performance of the Company, and facilitate a better comparison among fiscal periods, as the non-GAAP measures exclude items that are not considered core to the Company’s operations. In particular, Adjusted EBITDA is a key measure used by the Company to evaluate its performance, and is calculated by the Company in a manner consistent with the definition of Consolidated EBITDA in the Company’s Credit Agreement.

The Company also reports sales performance using the non-GAAP financial measure of “constant currency” net sales. This measure provides information on the change in net sales assuming that foreign currency exchange rates had not changed between the prior and current period. Likewise, the Company presents both Adjusted EBITDA and constant currency Adjusted EBITDA, both of which are non-GAAP measures. In discussing the Company’s operating results, the term currency exchange rates refers to the currency exchange rates the Company uses to convert into U.S. dollars the operating results for all countries where the functional currency is not the U.S. dollar. The Company calculates the effect of changes in currency exchange rates as the difference between current period activity translated using the current period’s currency exchange rates, and the comparable prior year period’s currency exchange rates. When the Company refers to constant currency operating results, this means operating results without the impact of the currency exchange rate fluctuations. The disclosure of constant currency amounts or results permits investors to understand better the Company’s underlying performance without the effects of currency exchange rate fluctuations. The comparisons presented as constant currency rates reflect comparative local currency sales at the prior year’s

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foreign exchange rates. The Company routinely evaluates its net sales performance at constant currency so that sales results can be viewed without the impact of foreign currency exchange rates, thereby facilitating a period-to-period comparison of the Company’s operational activities, and the Company believe that this presentation also provides useful information to investors for the same reason.

The Company does not intend for any of 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 non-GAAP financial measures to the most comparable GAAP measures are provided in the tables at the end of this press release.

Contact Information

Margaret M. Loebl

Executive Vice President and Chief Financial Officer

AgroFresh Solutions, Inc.

+1 (215) 592-2820

Erica Bartsch

Sloane & Company

+1 (212) 446-1875

ebartsch@sloanepr.com

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. 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 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 that the Business Combination disrupts current plans and operations; the Company’s ability to recognize the anticipated benefits of the Business Combination, which may be affected by, among other things, competition and the ability of the combined business to grow and manage growth profitably; costs related to the Business Combination and/or 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

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competitive factors. Additional risks and uncertainties are identified and discussed in the Company’s filings with the SEC, including the Quarterly Report on Form 10-Q being filed on the date of this release, available at the SEC’s website at www.sec.gov.

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AGROFRESH SOLUTIONS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

(Unaudited)

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AGROFRESH SOLUTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) INCOME

(In thousands, except share and per share data)

(Unaudited)

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AGROFRESH SOLUTIONS, INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(In thousands, except share and per share data)

(Unaudited)

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GAAP to Non-GAAP Reconciliations

The following tables set forth reconciliations of the non-GAAP financial measures used in this press release to the most closely comparable GAAP financial measures. See “Non-GAAP Financial Measures” above for more information.

Adjusted EBITDA

The following is a reconciliation between the non-GAAP financial measure of Adjusted EBITDA and Constant Currency Adjusted EBITDA to their most directly comparable GAAP financial measure, income (loss) before income taxes:

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Non-GAAP EPS

The following is a reconciliation between non-GAAP earnings per diluted share to its most directly comparable GAAP (unaudited) financial measure, loss) income per basic and diluted share:

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Constant Currency

The table below reflects the calculation of constant currency for net sales and Non-GAAP Adjusted EBITDA for the three and nine months ended September 30, 2015 and 2014.

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