AgroFresh Solutions, Inc. ("AgroFresh" or the "Company")
(Nasdaq: AGFS), a global leader in produce freshness solutions,
today announced its financial results for the second quarter ended
June 30, 2021.
Clint Lewis, Chief Executive Officer commented,
“We made further progress with our diversification strategy in the
second quarter, generating 36% growth over the prior year period in
our product solution categories focused on diversification — Other
1-MCP Solutions, Fungicides & Disinfectants, Coatings, and
Other. This performance built upon the growth we generated in the
first quarter and was led by our EMEA region in particular. We had
a strong finish to our first half Southern Hemisphere season,
producing consolidated 13% constant currency net sales growth and a
32% increase in adjusted EBITDA. Looking ahead to the second half
Northern Hemisphere season, we are in a great position and
anticipate generating net sales and adjusted EBITDA growth."
Mr. Lewis added, "I continue to be energized by
our team's customer centric focus. With the new leadership we
announced today, I'm confident that we have the elements in place
to strengthen our core competencies, while adding additional
capabilities to further our diversification strategy and propel the
post-harvest industry forward with future innovations. We are
building a new mindset and establishing new disciplines that we
believe will lead to consistent profitable long-term growth.”
Financial Highlights for the Second
Quarter of 2021
Net sales for the second quarter of 2021
increased 9.7%, to $21.9 million, compared to $20.0 million in the
second quarter of 2020. Excluding foreign currency translation
impacts, which increased revenue by $1.0 million as compared to the
second quarter of 2020, revenue increased 4.7%. The net sales
increase was driven by diversification product categories beyond
SmartFresh for apples, with an emphasis on expanding our 1-MCP
solutions, including SmartFresh, to other crops. This was partially
offset by a slight decrease in sales of SmartFresh for apples,
which was largely due to the timing of the Southern Hemisphere
harvest season, which was earlier than in 2020.
Gross profit for the second quarter was $14.8
million, compared to $13.5 million in the prior year period. Gross
profit margin was essentially flat versus the prior year at
67.6%.
Research and development costs were $3.5 million
in the second quarter of 2021, compared to $2.9 million in the
prior year period. This increase was driven primarily by the timing
of projects.
Selling, general and administrative expenses
were $13.6 million in the second quarter of 2021 as compared to
$12.7 million in the prior year period, due primarily to an
increase in non-recurring expenses including restructuring costs
and severance.
Second quarter 2021 net loss was $17.3 million,
compared to net loss of $16.8 million in the prior year period,
which included $3.0 million of grant income.
Adjusted EBITDA improved by $0.8 million to $1.0
million in the second quarter of 2021, compared to $0.2 million in
the prior year period. Adjusted EBITDA margin increased 320 basis
points to 4.4% in the second quarter of 2021, versus 1.1% in the
prior year period.
As of June 30, 2021, cash and cash
equivalents were $56.7 million.
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 Half
of 2021
Financial results for the first half of 2021
largely reflect the completion and performance of the business for
the Southern hemisphere season. Net sales for the first half of
2021 were $60.9 million, an increase of 14.9% versus the prior year
period. The impacts of foreign currency translation increased
revenue by $1.1 million for the first half of 2021; excluding this
impact, revenue increased approximately 12.8%. The net sales
increase was primarily the result of strength in Other 1-MCP
solutions, such as SmartFresh diversification and Harvista, as well
as strong growth in the Fungicides & Disinfectants and Coatings
categories. Sales of SmartFresh for apple crops realized modest
growth for the period.
Gross profit for the first half increased 14.4%
to $43.5 million, as compared to $38.0 million in the prior year
period. Gross profit margin was stable versus the prior year period
at 71.4% for the year-to-date period.
Research and development expenses increased $1.3
million to $6.8 million in the first half of 2021 versus the prior
year period driven primarily by the timing of projects.
Selling, general and administrative expenses
increased 2.8% to $27.2 million for the six months ended
June 30, 2021. There were non-recurring costs associated with
M&A, litigation, refinancing and severance in the amount of
$3.1 million in the first half of the current year and $2.5 million
in the first half of 2020. Excluding these items, selling general
and administrative expenses was stable versus the same period last
year.
Net loss was $9.1 million in the first half of
2021, compared to net loss of $20.6 million in the prior year
period. The year-over-year change in net loss was due to higher
gross profit and litigation settlement proceeds.
Adjusted EBITDA improved by $3.7 million, or
32.2%, to $15.1 million in the first half of 2021, compared to
$11.4 million in the prior year period. Adjusted EBITDA margin
increased 320 basis points to 24.8% in the first half of 2021, as
compared to 21.6% in the prior year period.
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 855-327-6837 and
international listeners may dial 631-891-4304.
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, August 10, 2021 through August 24, 2021. Listeners in
the United States may dial 844-512-2921 and international listeners
may dial 412- 317-6671. The passcode is 10015941.
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.Jeff
Sonnek - Investor RelationsICR
Inc.Jeff.Sonnek@icrinc.com646-277-1263
AgroFresh
Solutions, Inc.UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS(In thousands)
|
June 30, 2021 |
December 31, 2020 |
|
|
|
ASSETS |
|
|
Current Assets: |
|
|
Cash and cash equivalents |
$56,694 |
|
$50,030 |
|
Accounts receivable, net of allowance for doubtful accounts of
$2,108 and $2,061, respectively |
|
33,469 |
|
|
63,204 |
|
Inventories |
|
23,773 |
|
|
24,579 |
|
Other current assets |
|
20,308 |
|
|
17,219 |
|
Total Current Assets |
|
134,244 |
|
|
155,032 |
|
Property and equipment, net |
|
11,623 |
|
|
12,432 |
|
Goodwill |
|
6,715 |
|
|
6,925 |
|
Intangible assets, net |
|
568,055 |
|
|
589,201 |
|
Deferred income tax assets |
|
7,057 |
|
|
9,699 |
|
Other assets |
|
11,189 |
|
|
12,494 |
|
TOTAL ASSETS |
$738,883 |
|
$785,783 |
|
|
|
|
LIABILITIES, TEMPORARY
EQUITY AND STOCKHOLDERS’ EQUITY |
|
|
Current Liabilities: |
|
|
Accounts payable |
$12,909 |
|
$19,634 |
|
Current portion of long-term debt |
|
3,470 |
|
|
3,378 |
|
Income taxes payable |
|
3,667 |
|
|
3,471 |
|
Accrued expenses and other current liabilities |
|
22,110 |
|
|
25,976 |
|
Total Current Liabilities |
|
42,156 |
|
|
52,459 |
|
Long-term debt |
|
254,871 |
|
|
264,491 |
|
Other noncurrent liabilities |
|
5,691 |
|
|
6,432 |
|
Deferred income tax liabilities |
|
37,266 |
|
|
37,834 |
|
Total Liabilities |
|
339,984 |
|
|
361,216 |
|
|
|
|
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
June 30, 2021, and 150 shares authorized, designated and
outstanding at December 31, 2020 |
|
144,666 |
|
|
143,728 |
|
Redeemable non-controlling interest |
|
8,187 |
|
|
8,446 |
|
Stockholders’ Equity: |
|
|
Common stock, par value $0.0001; 400,000 shares authorized, 52,806
and 53,092 shares issued and 52,145 and 52,431 outstanding at
June 30, 2021 and December 31, 2020, respectively |
|
5 |
|
|
5 |
|
Preferred stock, par value $0.0001; 0.001 share authorized and
outstanding at June 30, 2021 and December 31, 2020 |
|
— |
|
|
— |
|
Treasury stock, par value $0.0001; 661 shares at June 30, 2021
and December 31, 2020 |
|
(3,885) |
|
|
(3,885) |
|
Additional paid-in capital |
|
541,185 |
|
|
552,776 |
|
Accumulated deficit |
|
(253,435) |
|
|
(244,836) |
|
Accumulated other comprehensive loss |
|
(37,824) |
|
|
(31,667) |
|
Total Stockholders' Equity |
|
246,046 |
|
|
272,393 |
|
TOTAL LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS' EQUITY |
$738,883 |
|
$785,783 |
|
AgroFresh
Solutions, Inc.UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except
per share data)
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
June 30, 2021 |
June 30, 2020 |
|
June 30, 2021 |
June 30, 2020 |
Net
sales |
$21,924 |
|
$19,982 |
|
|
$60,916 |
|
$53,005 |
|
Cost of sales (excluding amortization of intangibles, shown
separately below) |
|
7,104 |
|
|
6,453 |
|
|
|
17,418 |
|
|
14,981 |
|
Gross profit |
|
14,820 |
|
|
13,529 |
|
|
|
43,498 |
|
|
38,024 |
|
Research and development expenses |
|
3,496 |
|
|
2,895 |
|
|
|
6,794 |
|
|
5,537 |
|
Selling, general, and administrative expenses |
|
13,620 |
|
|
12,722 |
|
|
|
27,171 |
|
|
26,431 |
|
Amortization of intangibles |
|
10,499 |
|
|
10,936 |
|
|
|
21,262 |
|
|
21,893 |
|
Grant income |
|
— |
|
|
(2,974) |
|
|
|
— |
|
|
(2,974) |
|
Operating loss |
|
(12,795) |
|
|
(10,050) |
|
|
|
(11,729) |
|
|
(12,863) |
|
Other (expense) income |
|
(46) |
|
|
(7) |
|
|
|
14,352 |
|
|
1,500 |
|
Gain on foreign currency exchange |
|
921 |
|
|
449 |
|
|
|
1,354 |
|
|
1,076 |
|
Interest expense, net |
|
(5,216) |
|
|
(6,513) |
|
|
|
(11,106) |
|
|
(13,479) |
|
Loss before income taxes |
|
(17,136) |
|
|
(16,121) |
|
|
|
(7,129) |
|
|
(23,766) |
|
Income taxes expense (benefit) |
|
144 |
|
|
630 |
|
|
|
1,967 |
|
|
(3,201) |
|
Net
loss including non-controlling interest |
|
(17,280) |
|
|
(16,751) |
|
|
|
(9,096) |
|
|
(20,565) |
|
Less: Net (loss) income attributable to non-controlling
interest |
|
(20) |
|
|
130 |
|
|
|
(259) |
|
|
33 |
|
Net
loss attributable to AgroFresh Solutions, Inc. |
|
(17,260) |
|
|
(16,881) |
|
|
|
(8,837) |
|
|
(20,598) |
|
Less:
Dividends on convertible preferred stock |
|
6,327 |
|
|
— |
|
|
|
12,332 |
|
|
— |
|
Net loss attributable to AgroFresh Solutions, Inc. common
stockholders |
($23,587) |
|
($16,881) |
|
|
($21,169) |
|
($20,598) |
|
|
|
|
|
|
|
Loss per share of common
shares: |
|
|
|
|
|
Basic |
($0.46) |
|
($0.33) |
|
|
$(0.41) |
|
$(0.41) |
|
Diluted |
($0.46) |
|
($0.33) |
|
|
$(0.41) |
|
$(0.41) |
|
|
|
|
|
|
|
Weighted average shares
of common stock outstanding: |
|
|
|
|
|
Basic |
|
51,348 |
|
|
50,758 |
|
|
|
51,191 |
|
|
50,647 |
|
Diluted |
|
51,348 |
|
|
50,758 |
|
|
|
51,191 |
|
|
50,647 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 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 including
non-controlling interest:
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
(in
thousands) |
June 30, 2021 |
June 30, 2020 |
|
June 30, 2021 |
June 30, 2020 |
GAAP net loss including non-controlling
interest |
($17,280) |
|
($16,751) |
|
|
($9,096) |
|
($20,565) |
|
Depreciation and amortization |
|
11,178 |
|
|
11,568 |
|
|
|
22,600 |
|
|
23,145 |
|
Interest expense (1) |
|
5,216 |
|
|
6,513 |
|
|
|
11,106 |
|
|
13,479 |
|
Income
taxes expense (benefit) |
|
144 |
|
|
630 |
|
|
|
1,967 |
|
|
(3,201) |
|
Non-GAAP EBITDA |
($742) |
|
$1,960 |
|
|
$26,577 |
|
$12,858 |
|
Adjustments: |
|
|
|
|
|
Share-based compensation |
|
280 |
|
|
974 |
|
|
|
1,171 |
|
|
1,762 |
|
Severance related costs
(2) |
|
1,587 |
|
|
74 |
|
|
|
1,587 |
|
|
74 |
|
Other non-recurring costs
(3) |
|
754 |
|
|
639 |
|
|
|
1,520 |
|
|
2,383 |
|
Gain on foreign currency
exchange (4) |
|
(921) |
|
|
(449) |
|
|
|
(1,354) |
|
|
(1,076) |
|
Grant income |
|
— |
|
|
(2,974) |
|
|
|
— |
|
|
(2,974) |
|
Litigation settlement |
|
— |
|
|
— |
|
|
|
(14,392) |
|
|
(1,600) |
|
Total Adjustments |
|
1,700 |
|
|
(1,736) |
|
|
|
(11,468) |
|
|
(1,431) |
|
Non-GAAP Adjusted EBITDA |
$958 |
|
$224 |
|
|
$15,109 |
|
$11,427 |
|
(1) Interest on debt and accretion for debt
discounts. (2) Severance costs related to restructuring and cost
optimization initiatives.(3) Costs related to certain professional
and other infrequent or non-recurring fees, including those
associated with restructuring, litigation and M&A related
fees.(4) 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:
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
(in
thousands) |
June 30, 2021 |
June 30, 2020 |
|
June 30, 2021 |
June 30, 2020 |
GAAP net sales |
$21,924 |
|
$19,982 |
|
$60,916 |
|
$53,005 |
Impact from changes in foreign currency exchange rates |
|
(1,000) |
|
|
— |
|
|
(1,143) |
|
|
— |
Non-GAAP constant currency net sales
(1) |
$20,924 |
|
$19,982 |
|
$59,773 |
|
$53,005 |
(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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