AgroFresh Solutions, Inc. ("AgroFresh" or the "Company") (Nasdaq:
AGFS), a global leader in produce freshness solutions, today
announced its financial results for the fourth quarter and full
year ended December 31, 2021.
Clint Lewis, Chief Executive Officer, commented
"We completed our Northern Hemisphere season on a high note with
strong fourth quarter net sales growth despite a delayed start to
the season due to previously discussed weather impacts. This was
consistent with our expectations and importantly, we met our goal
of achieving full year 2021 growth in both consolidated net sales
and adjusted EBITDA. Diversification growth fueled our performance
with a 15.9% increase for the full year 2021, capping off four
consecutive quarters of double digit gains in this important
metric. Looking ahead to 2022, we are once again setting an
expectation to achieve growth in both net sales and adjusted EBITDA
through a continued focus on diversification, which we believe we
can grow at a strong growth rate for the year."
Mr. Lewis added, "2021 was a pivotal year for
our organization on several fronts — we advanced our 'growth
through diversification' strategy, we reallocated the necessary
resources to position the business for growth by adding new senior
leadership and expertise across commercial and R&D functions,
and we continued to successfully defend our SmartFresh apple
franchise which continues to be the industry standard in
post-harvest solutions. I'm also excited to introduce our inaugural
ESG report today as a means to further demonstrate our commitment
and leadership on important ESG principles. The very core of our
mission is sustainability and we are continuing to lead the charge
in reducing food waste by providing products and services that help
our customers meet their own sustainability goals."
Financial Highlights for the Fourth
Quarter of 2021
Net sales for the fourth quarter of 2021
increased 7.8% to $55.9 million, compared to $51.9 million in the
fourth quarter of 2020. Excluding foreign currency translation
impacts, which decreased revenue by $1.2 million compared to the
fourth quarter of 2020, revenue increased 10.0%, primarily driven
by leveraging a portfolio of diverse solutions. SmartFresh sales
for Apple experienced growth in Southern Europe due to favorable
late-season weather, partially offset by lower volume in North
America due to extreme heat. Market expansion drove strong
diversification growth in the Company's Other 1-MCP and Fungicides
& Disinfectants categories for the quarter.
Gross profit for the fourth quarter of 2021
increased to $39.4 million, as compared to $38.1 million in the
prior year period. Gross profit margin was 70.5% in the fourth
quarter of 2021 compared to 73.5% in the prior year period. The
lower gross margin reflects the Company’s transition to a more
diversified product portfolio.
Research and development costs were $2.8 million
in the fourth quarter of 2021, compared to $4.0 million in the
prior year period, due primarily to the timing of projects.
Selling, general and administrative expenses
decreased 5.6% to $13.2 million in the fourth quarter of 2021, as
compared to $13.9 million in the prior year period, driven by lower
administrative expenses.
Fourth quarter 2021 net income was $2.2 million,
compared to net loss of $2.7 million in the prior year period.
Adjusted EBITDA1 was $26.4 million in the fourth
quarter of 2021 as compared to $23.7 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 December 31, 2021, cash and cash equivalents were
$61.9 million.
1 Adjusted 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 Full Year
of 2021
Net sales for the full year 2021 were $166.0
million, an increase of 5.3% versus the prior year. Excluding
foreign currency translation impacts, which increased revenue by
$0.1 million compared to full year 2020, revenue increased
approximately 5.2%. The increase in net sales was primarily due to
growth in diversification sales and a strong first half performance
in the Southern Hemisphere, partially offset by an unprecedented
heat wave that impacted apple production in the Northern
Hemisphere. Diversification growth of 15.9% was led by the Other
1-MCP and Fungicides & Disinfectants categories. This growth
was partially offset by a slight 1.2% decrease in the SmartFresh
for Apple category.
Gross profit for the full year 2021 was $117.0
million, as compared to $115.4 million in the prior year. Gross
margin was 70.5% in 2021 compared to 73.2% in the prior year. The
lower gross margin reflects the Company’s transition into a more
diversified product portfolio.
Research and development costs increased $0.6
million to $12.9 million for the full year 2021 compared to the
prior year, driven primarily by enhanced R&D activities
following a constrained environment in the prior year period due to
the COVID-19 pandemic.
Selling, general and administrative expenses
decreased 2.3% to $52.6 million for the full year 2021 compared to
the prior year period, driven by lower administrative expenses.
Net loss was $6.1 million for the full year
2021, compared to net loss of $53.0 million in the prior year.
Adjusted EBITDA1 was $62.0 million for the full
year 2021, compared to $60.1 million in the prior year. The
increase in Adjusted EBITDA was primarily due to higher sales and
lower operating expenses compared to the prior year. Adjusted
EBITDA margin for the full year 2021 was 37.4%, compared to 38.1%
in 2020.
Inaugural Environmental, Social and
Governance (ESG) Report
AgroFresh today released its first
Environmental, Social and Governance (ESG) report. The report kicks
off a larger initiative that commits AgroFresh to a range of
sustainability goals that build on past achievements and reinforce
the Company’s dedication to deliver products, services and
solutions that improve produce quality and reduce food waste
worldwide.
The Company is committed to tracking ESG
performance and engaging with stakeholders through ongoing dialogue
and regular performance disclosures. Learn more about AgroFresh’s
ESG commitments at AgroFresh.com.
Conference Call
The Company will host a conference call and
webcast where members of the executive management team will discuss
these results with additional comments and details today, March 09,
2022 at 4:30 pm E.T. 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 pm. ET, March 9, 2022 through March 23, 2022. Listeners
in the United States may dial 844-512-2921 and international
listeners may dial 412-317-6671. The passcode is 13727099.
Non-GAAP Financial Measures
This press release contains the non-GAAP
financial measures 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 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, Adjusted EBITDA and constant
currency net sales to the 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 prevent 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, 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.CONSOLIDATED BALANCE
SHEETS(Unaudited)
|
Year Ended December 31, |
(in thousands) |
|
2021 |
|
|
|
2020 |
|
ASSETS |
|
|
|
Current Assets: |
|
|
|
Cash and cash equivalents |
$61,930 |
|
|
$50,030 |
|
Accounts receivable, net of allowance for doubtful accounts of
$2,143 and $2,061, respectively |
|
53,538 |
|
|
|
63,204 |
|
Inventories |
|
19,780 |
|
|
|
24,579 |
|
Other current assets |
|
19,878 |
|
|
|
17,219 |
|
Total Current Assets |
|
155,126 |
|
|
|
155,032 |
|
Property and equipment,
net |
|
11,986 |
|
|
|
12,432 |
|
Goodwill |
|
— |
|
|
|
6,925 |
|
Intangible assets, net |
|
546,652 |
|
|
|
589,201 |
|
Deferred income tax
assets |
|
7,392 |
|
|
|
9,699 |
|
Other
assets |
|
11,406 |
|
|
|
12,494 |
|
TOTAL
ASSETS |
$732,562 |
|
|
$785,783 |
|
|
|
|
|
LIABILITIES, TEMPORARY
EQUITY AND STOCKHOLDERS’ EQUITY |
|
|
|
Current Liabilities: |
|
|
|
Accounts payable |
$16,969 |
|
|
$19,634 |
|
Current portion of long-term debt |
|
3,362 |
|
|
|
3,378 |
|
Income taxes payable |
|
2,382 |
|
|
|
3,471 |
|
Accrued expenses and other current liabilities |
|
26,994 |
|
|
|
25,976 |
|
Total current liabilities |
|
49,707 |
|
|
|
52,459 |
|
Long-term debt |
|
254,194 |
|
|
|
264,491 |
|
Other noncurrent
liabilities |
|
6,256 |
|
|
|
6,432 |
|
Deferred income tax liabilities |
|
34,833 |
|
|
|
37,834 |
|
Total liabilities |
|
344,990 |
|
|
|
361,216 |
|
|
|
|
|
Commitments and contingencies
(see Note 20) |
|
|
|
Temporary equity: |
|
|
|
Series B convertible preferred stock, par value $0.0001; 150 shares
authorized and designated and 145 outstanding at December 31, 2021
and 150 shares authorized, designated and outstanding at December
31, 2020 |
|
149,386 |
|
|
|
143,728 |
|
Non-controlling interest |
|
7,787 |
|
|
|
8,446 |
|
Stockholders’ equity: |
|
|
|
Common stock, par value $0.0001; 400,000 shares authorized, 53,080
and 53,092 shares issued and 52,418 and 52,431 outstanding at
December 31, 2021 and December 31, 2020, respectively |
|
5 |
|
|
|
5 |
|
Preferred stock, par value $0.0001; 0.001 share authorized and
outstanding at December 31, 2021 and December 31, 2020,
respectively |
|
— |
|
|
|
— |
|
Treasury stock, par value $0.0001; 661 shares at December 31, 2021
and December 31, 2020, respectively |
|
(3,885 |
) |
|
|
(3,885 |
) |
Additional paid-in capital |
|
529,303 |
|
|
|
552,776 |
|
Accumulated deficit |
|
(248,660 |
) |
|
|
(244,836 |
) |
Accumulated other comprehensive loss |
|
(46,364 |
) |
|
|
(31,667 |
) |
Total
AgroFresh Stockholders’ Equity |
|
230,399 |
|
|
|
272,393 |
|
TOTAL
LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS' EQUITY |
$732,562 |
|
|
$785,783 |
|
AgroFresh
Solutions, Inc.
CONSOLIDATED STATEMENTS OF
OPERATIONS(Unaudited)
|
Three Months Ended December 31, |
|
Year Ended December 31, |
(In thousands, except per share data) |
|
2021 |
|
|
2020 |
|
|
|
2021 |
|
|
2020 |
|
Net sales |
$55,895 |
|
$51,868 |
|
|
$165,989 |
|
$157,643 |
|
Cost of sales (excluding amortization, shown separately below) |
|
16,503 |
|
|
13,725 |
|
|
|
48,956 |
|
|
42,217 |
|
Gross profit |
|
39,392 |
|
|
38,143 |
|
|
|
117,033 |
|
|
115,426 |
|
Research and development expenses |
|
2,808 |
|
|
3,968 |
|
|
|
12,931 |
|
|
12,357 |
|
Selling, general, and administrative expenses |
|
13,156 |
|
|
13,935 |
|
|
|
52,609 |
|
|
53,860 |
|
Amortization of intangibles |
|
10,893 |
|
|
10,865 |
|
|
|
42,985 |
|
|
43,731 |
|
Impairment of goodwill |
|
6,380 |
|
|
— |
|
|
|
6,380 |
|
|
— |
|
Grant income |
|
— |
|
|
— |
|
|
|
— |
|
|
(2,974 |
) |
Operating income |
|
6,155 |
|
|
9,375 |
|
|
|
2,128 |
|
|
8,452 |
|
Other (expense) income |
|
(7 |
) |
|
(105 |
) |
|
|
14,046 |
|
|
1,491 |
|
Debt modification and extinguishment expenses |
|
— |
|
|
— |
|
|
|
— |
|
|
(5,028 |
) |
Gain (loss) on foreign currency exchange |
|
1,660 |
|
|
(5,302 |
) |
|
|
2,096 |
|
|
(2,836 |
) |
Interest expense, net |
|
(5,203 |
) |
|
(5,268 |
) |
|
|
(21,774 |
) |
|
(23,669 |
) |
Income (loss) before income taxes |
|
2,605 |
|
|
(1,300 |
) |
|
|
(3,504 |
) |
|
(21,590 |
) |
Income taxes expense |
|
403 |
|
|
1,363 |
|
|
|
2,578 |
|
|
31,376 |
|
Net
income (loss) including non-controlling interests |
|
2,202 |
|
|
(2,663 |
) |
|
|
(6,082 |
) |
|
(52,966 |
) |
Less: Net (loss) income attributable to redeemable non-controlling
interest |
|
(218 |
) |
|
397 |
|
|
|
(659 |
) |
|
745 |
|
Net income (loss) including non-controlling interests |
|
2,420 |
|
|
(3,060 |
) |
|
|
(5,423 |
) |
|
(53,711 |
) |
Less:
Dividends on convertible preferred stock |
|
6,341 |
|
|
6,088 |
|
|
|
24,921 |
|
|
10,488 |
|
Net loss attributable to AgroFresh Solutions, Inc. common
stockholders |
($3,921 |
) |
($9,148 |
) |
|
($30,344 |
) |
($64,199 |
) |
|
|
|
|
|
|
Net loss per share: |
|
|
|
|
|
Basic |
($0.08 |
) |
($0.18 |
) |
|
($0.59 |
) |
($1.26 |
) |
Diluted |
($0.08 |
) |
($0.18 |
) |
|
($0.59 |
) |
($1.26 |
) |
Weighted average shares
outstanding: |
|
|
|
|
|
Basic |
|
51,666 |
|
|
50,960 |
|
|
|
51,410 |
|
|
50,770 |
|
Diluted |
|
51,666 |
|
|
50,960 |
|
|
|
51,410 |
|
|
50,770 |
|
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 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):
|
Three Months Ended December 31, |
|
Year Ended December 31, |
(in thousands) |
|
2021 |
|
|
2020 |
|
|
|
2021 |
|
|
2020 |
|
GAAP net income (loss)
including non-controlling interests |
$2,202 |
|
($2,663 |
) |
|
($6,082 |
) |
($52,966 |
) |
Provision for income taxes |
|
403 |
|
|
1,363 |
|
|
|
2,578 |
|
|
31,376 |
|
Interest expense (1) |
|
5,203 |
|
|
5,268 |
|
|
|
21,774 |
|
|
23,669 |
|
Depreciation and amortization |
|
11,623 |
|
|
12,195 |
|
|
|
45,745 |
|
|
46,970 |
|
Non-GAAP EBITDA |
$19,431 |
|
$16,163 |
|
|
$64,015 |
|
$49,049 |
|
Adjustments: |
|
|
|
|
|
Share-based compensation |
|
1,066 |
|
|
893 |
|
|
|
3,213 |
|
|
3,598 |
|
Severance related costs (2) |
|
676 |
|
|
455 |
|
|
|
2,292 |
|
|
885 |
|
Other non-recurring costs (3) |
|
553 |
|
|
857 |
|
|
|
2,315 |
|
|
3,240 |
|
(Gain) loss on foreign currency exchange (4) |
|
(1,660 |
) |
|
5,302 |
|
|
|
(2,096 |
) |
|
2,836 |
|
Impairment of goodwill |
|
6,380 |
|
|
— |
|
|
|
6,380 |
|
|
— |
|
Debt modification and extinguishment costs |
|
— |
|
|
— |
|
|
|
— |
|
|
5,028 |
|
Other expense (income) (5) |
|
— |
|
|
— |
|
|
|
301 |
|
|
(2,974 |
) |
Litigation recovery |
|
— |
|
|
— |
|
|
|
(14,392 |
) |
|
(1,600 |
) |
Total Adjustments |
|
7,015 |
|
|
7,507 |
|
|
|
(1,987 |
) |
|
11,013 |
|
Non-GAAP Adjusted EBITDA |
$26,446 |
|
$23,670 |
|
|
$62,028 |
|
$60,062 |
|
(1) Interest on debt, accretion for debt
discounts, debt issuance costs and contingent consideration.(2)
Severance costs related to ongoing 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)
(Gain) loss on foreign currency exchange relates to net losses and
gains resulting from transactions denominated in a currency other
than the Company's functional currency.(5) Other expense (income)
related primarily to grant income.
The following is a reconciliation between net
sales on a non-GAAP constant currency basis to GAAP net sales:
|
Three Months Ended December 31, |
|
Year Ended December 31, |
(in thousands) |
|
2021 |
|
2020 |
|
|
2021 |
|
|
2020 |
GAAP net sales |
$55,895 |
$51,868 |
|
$165,989 |
|
$157,643 |
Impact
from changes in foreign currency exchange rates |
|
1,156 |
|
— |
|
|
(132 |
) |
|
— |
Non-GAAP constant currency net sales (1) |
$57,051 |
$51,868 |
|
$165,857 |
|
$157,643 |
(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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