SCOTTSDALE, Ariz., March 23, 2020 (GLOBE NEWSWIRE) -- AgJunction Inc. (TSX: AJX) ("AgJunction" or the "Company") is reporting financial results for the fourth quarter and full year ended December 31, 2019. All currency amounts are expressed in U.S. dollars.
Fourth Quarter 2019 Financial Summary vs. Fourth Quarter 2018
- Revenue was $3.3 million versus $17.1 million; the fourth quarter of 2018 included revenue of $14.3 million related to the bulk purchase order (BPO)
- Gross margin increased significantly to 45.9% compared to 30.9% reflected our more normalized margin expectation as our mix did not include the lower margin bulk order referenced above
- Operating expenses were $4.7 million compared to $4.4 million reflecting onetime restructuring costs
- Net loss was $3.1 million or $(0.03) per share, versus net income of $3.1 million or $0.03 per share
- EBITDA was $(2.3) million versus $3.7 million
Full Year 2019 Financial Summary vs. Full Year 2018
- Revenue was $39.2 million versus $64.5 million; this decline in revenue is driven by the sale of businesses in 2018 and the completion of shipments made under the BPO
- Gross margin increased 50 basis points to 37.4% compared to 36.9%
- Operating expenses decreased to $21.1 million from $25.7 million reflecting an annual benefit of the sales of businesses
- Net loss was $6.2 million or $(0.05) per share, versus net income of $1.5 million or $0.01 per share
- EBITDA was $(3.6) million versus $3.4 million
Management Commentary
“Our financial results, particularly the decline in revenue and the increase in margins, reflect the sale of businesses in 2018 and the completion of shipments under the BPO,” said Dr. M. Brett McMickell, president and CEO of AgJunction. “During the year, AgJunction continued to make strides in developing innovative automation technology that provides significant benefits to farmers, despite 2019 being a difficult year for the agriculture market as a whole. We completed several important initiatives over the course of the year that we anticipate will set us up for success going forward, including right-sizing our organization and consolidating all facilities to our corporate headquarters in Scottsdale, AZ.
“As previously announced after an extensive evaluation of the business over the past several months, our new team has implemented a refined strategy that we believe best suits the evolving needs of manufacturers and suppliers within our industry. With a robust intellectual property portfolio already in place, we are going to focus on further developing our products to support customer flexibility by delivering modular components of our software and hardware that can integrate seamlessly into our customers’ systems. We are also going to be extending our unique technology beyond autosteering into more areas of automation where we have strong IP, including obstacle detection, implement steering, task control, and many others.
“As we move forward, we expect to grow sales in each of our existing geographical regions through offering adaptable components to current partners, along with new manufacturers and suppliers that are looking for flexible modules rather than a full steering solution. We also remain committed to investing in research and development to continue growing our industry-leading IP portfolio and offering the most innovative components in the industry. Overall, we believe we are well-positioned to execute on these initiatives with a reinvigorated team ready to deploy our unique technology and capabilities to an evolving market.
“There is significant uncertainty as to the likely effects of COVID-19 which may, among other things, impact our supply chain and may negatively impact the global agriculture market. While we have not experienced any delays in production at the current time, we are unable to quantify the potential impact this pandemic may have on our future financial statements.”
Fourth Quarter 2019 Financial Results
Total revenue in the fourth quarter of 2019 was $3.3 million compared to $17.1 million in the fourth quarter of 2018. The decline was primarily driven by the prior year period including revenue generated from the bulk purchase order (BPO). The Company completed the final shipments of the BPO in the third quarter of 2019.
Gross profit in the fourth quarter of 2019 was $1.5 million compared to $5.3 million in the fourth quarter of 2018. Gross margin increased significantly to 45.9% compared to 30.9% in the fourth quarter of 2018. The lower margins in Q4 2018 were a direct result of the BPO while Q4 2019 higher margins were driven by sales to our existing original equipment manufacturers and value-added reseller customers.
Total operating expenses in the fourth quarter of 2019 were $4.7 million compared to $4.4 million in the fourth quarter of 2018. The increase was primarily driven by site closure costs, partially offset by lower compensation, consultant and recruitment costs.
Net loss in the fourth quarter of 2019 was $3.1 million or $(0.03) per share, compared to net income of $3.1 million or $0.03 per share in the fourth quarter of 2018. The decline was primarily driven by the aforementioned decrease in revenue related to the BPO.
EBITDA in the fourth quarter of 2019 was $(2.3) million compared to $3.7 million in the fourth quarter of 2018.
Full Year 2019 Financial Results
Total revenue in 2019 was $39.2 million compared to $64.5 million in 2018. The revenue decline was primarily due to the completion of the BPO.
Gross profit in 2019 was $14.7 million compared to $23.8 million in 2018. Gross margin increased 50 basis points to 37.4% compared to 36.9% in 2018.
Total operating expenses in 2019 declined to $21.1 million compared to $25.7 million in 2018, primarily driven by a reduction in research and development and sales and marketing costs.
Net loss in 2019 was $6.2 million or $(0.05) per share, compared to net income of $1.5 million or $0.01 per share in 2018. The decline was primarily driven by the aforementioned decrease in revenue related to the BPO.
EBITDA in 2019 was $(3.6) million compared to $3.4 million in 2018.
Cash and cash equivalents at the end of 2019 totaled $17.2 million compared to $21.4 million at the end of 2018. Working capital was $19.2 million compared to $26.7 million at the end of 2018. The Company continues to operate debt free and has access to an unutilized $3.0 million line of credit.
Conference Call
AgJunction will hold a conference call tomorrow at 11:00 a.m. Eastern time to discuss its fourth quarter and full year 2019 results, followed by a question-and-answer session.
Date: Tuesday, March 24, 2020
Time: 11:00 a.m. Eastern time (8:00 a.m. Pacific time)
Toll-free dial-in number: 1-877-573-5992
International dial-in number: 1-270-215-9903
Conference ID: 4385373
Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Investor Relations at 1-949-574-3860.
The conference call will be broadcast live and available for replay here and via the investor center section of the company’s website at https://agjunction.com/.
A replay of the conference call will be available after 2:00 p.m. Eastern time on the same day through April 7, 2020.
Toll-free replay number: 1-855-859-2056
International replay number: 1-404-537-3406
Replay ID: 4385373
About AgJunction
AgJunction Inc. is a global leader of advanced guidance and autosteering solutions for precision agriculture applications. Its technologies are critical components in over 30 of the world’s leading precision agriculture manufacturers and solution providers and it holds over 200 patents and patents pending. AgJunction markets its solutions under leading brand names including Novariant®, Wheelman®, Whirl™ and Handsfreefarm®. AgJunction is headquartered in Scottsdale, Arizona, and is listed on the Toronto Stock Exchange (TSX) under the symbol “AJX.” For more information, please go to AgJunction.com.
Non-IFRS Measures
This press release uses EBITDA, which is a financial measure that does not have any standardized meaning prescribed under International Financial Reporting Standards ("IFRS"). EBITDA is defined as net income before interest, income tax, depreciation and amortization. The Company believes that this non-IFRS measure provides useful information to both management and investors in measuring financial performance. As this measure, does not have a standard meaning prescribed by IFRS, it may not be comparable to similarly titled measures presented by other publicly traded companies, and should not be construed as an alternative to other financial measures determined in accordance with IFRS. This non-IFRS measure is provided as additional information to complement IFRS measures by providing further understanding of operations from management’s perspective. Accordingly, non-IFRS measures should never be considered in isolation nor as a substitute to using net income as a measure of profitability or as an alternative to the IFRS consolidated statements of income or other IFRS statements. See "Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) Reconciliation" herein for additional information.
Forward-Looking Statements
This press release contains forward-looking information and forward-looking statements (collectively, "forward-looking information") within the meaning of applicable securities laws and is based on the expectations, estimates and projections of management of AgJunction as of the date of this news release, unless otherwise stated. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking information. Such forward-looking information is provided for the purpose of providing information about management's current expectations and plans relating to its current and future
operations. These statements are only predictions and actual events or results may differ materially. Although the Company’s management believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, performance or achievement since such expectations are inherently subject to significant business, economic, competitive and political uncertainties and contingencies as well as unanticipated force majeure events. Many factors could cause the Company's actual results to differ materially from those expressed or implied in any forward-looking statements made by the Company. In particular, forward-looking statements in this press release include, but are not limited to statements with respect to: the Company’s strategy, plans, objective sales, financial position and focus. Accordingly, readers should not place undue reliance on such forward-looking information contained in this press release.
In respect of the forward-looking information, AgJunction has provided such information in reliance on certain assumptions that it believes are reasonable at this time, including, but not limited to, the sufficiency of budgeted capital expenditures in carrying out planned activities; that AgJunction's future results of operations will be consistent with management expectations in relation thereto; product and market expansion; availability of key supplies, components, services, networks and developments; the impact of competition; conditions in general economic, agricultural autosteering and financial markets; demand for the Company's products; and the continuity of existing business relationships.
Since forward-looking information addresses future events and conditions, such information by its very nature involves inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to the risks associated with the industries in which AgJunction operates; competition; inability to successfully introduce new technology and new products in a timely manner; legal claims for the infringement of intellectual property and other claims; negative conditions in general economic, agricultural and financial markets; and reduced demand for the Company's products. Readers are cautioned that the foregoing list of factors is not exhaustive.
Additional information on other factors that could affect the Company's operations or financial results, are included in reports of AgJunction on file with applicable securities regulatory authorities, including but not limited to, AgJunction's Annual Information Form which may be accessed on its SEDAR profile at www.sedar.com. The forward-looking information contained in this press release is made as of the date hereof and AgJunction undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.
Contact:
Media
press@agjunction.com
Investor Relations
Gateway Investor Relations
Cody Slach, Managing Director
1-949-574-3860
AJX@gatewayir.com
| AgJunction Inc. | |||||||
| Consolidated Statements of Financial Position | |||||||
| (Expressed in U.S. thousand dollars) | |||||||
| December 31, | December 31, | ||||||
| 2019 | 2018 | ||||||
| Assets | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 17,248 | $ | 21,398 | |||
| Accounts receivable, net | 2,793 | 8,508 | |||||
| Current portion of notes receivable, net | 320 | 320 | |||||
| Inventories | 3,743 | 5,743 | |||||
| Contract assets, net | - | 58 | |||||
| Prepaid expenses and deposits | 819 | 1,286 | |||||
| 24,923 | 37,313 | ||||||
| Contract assets, net | - | 185 | |||||
| Notes receivable, less current portion, net | 760 | 1,083 | |||||
| Property, plant and equipment, net | 1,535 | 1,434 | |||||
| Right-of-use assets | 1,020 | - | |||||
| Intangible assets, net | 10,112 | 9,689 | |||||
| Goodwill | 143 | 143 | |||||
| $ | 38,493 | $ | 49,847 | ||||
| Liabilities and Shareholders’ Equity | |||||||
| Current liabilities: | |||||||
| Accounts payable and accrued liabilities | $ | 3,540 | $ | 8,500 | |||
| Provisions | 826 | 999 | |||||
| Contract liabilities, net | - | 84 | |||||
| Current portion of lease liability | 429 | - | |||||
| Current portion of deferred revenue | 935 | 1,048 | |||||
| 5,730 | 10,631 | ||||||
| Contract liabilities, net | - | 96 | |||||
| Deferred revenue, less current portion | 3,298 | 4,177 | |||||
| Lease liability, net of current portion | 702 | - | |||||
| Total liabilities | 9,730 | 14,904 | |||||
| Shareholders’ equity: | |||||||
| Share capital | 148,495 | 148,475 | |||||
| Equity reserve | 4,890 | 4,892 | |||||
| Accumulated deficit | (124,622 | ) | (118,424 | ) | |||
| 28,763 | 34,943 | ||||||
| $ | 38,493 | $ | 49,847 | ||||
| AgJunction Inc. | ||||||||||||
| Consolidated Statements of Profit or Loss | ||||||||||||
| Three and Twelve months ended December 31, 2019 and 2018 | ||||||||||||
| (Expressed in U.S. thousand dollars) | ||||||||||||
| Three months ended | Twelve months ended | |||||||||||
| December 31, | December 31, | |||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||
| Revenue | $ | 3,291 | $ | 17,103 | $ | 39,246 | $ | 64,515 | ||||
| Cost of sales | 1,780 | 11,815 | 24,561 | 40,705 | ||||||||
| Gross profit | 1,511 | 5,288 | 14,685 | 23,810 | ||||||||
| Expenses: | ||||||||||||
| Research and development | 440 | 1,157 | 6,077 | 8,487 | ||||||||
| Sales and marketing | 707 | 1,090 | 4,535 | 7,096 | ||||||||
| General and administrative | 3,589 | 2,196 | 10,529 | 10,103 | ||||||||
| 4,736 | 4,443 | 21,141 | 25,686 | |||||||||
| Operating income (loss) | (3,225 | ) | 845 | (6,456 | ) | (1,876 | ) | |||||
| Foreign exchange gain, net | (48 | ) | 13 | (19 | ) | (43 | ) | |||||
| Interest and other income | (85 | ) | (92 | ) | (289 | ) | (122 | ) | ||||
| Gain (loss) on sale of property, plant and equipment | 14 | - | 50 | (13 | ) | |||||||
| (Gain) on sale of division | - | (2,214 | ) | - | (3,157 | ) | ||||||
| (119 | ) | (2,293 | ) | (258 | ) | (3,335 | ) | |||||
| Net income (loss) before income tax | (3,106 | ) | 3,138 | (6,198 | ) | 1,459 | ||||||
| Income tax benefit | - | (5 | ) | - | (5 | ) | ||||||
| Net income (loss) | $ | (3,106 | ) | $ | 3,143 | $ | (6,198 | ) | $ | 1,464 | ||
| Earnings per share: | ||||||||||||
| Basic and diluted earnings (loss) per share | $ | (0.03 | ) | $ | 0.03 | $ | (0.05 | ) | $ | 0.01 | ||
| AgJunction Inc. | |||||||
| Consolidated Statements of Cash Flows | |||||||
| Twelve Months ended December 31, 2019 and 2018 | |||||||
| (Expressed in U.S. thousand dollars) | |||||||
| 2019 | 2018 | ||||||
| Cash flows (used in) from operating activities: | |||||||
| Net income (loss) | $ | (6,198 | ) | $ | 1,464 | ||
| Items not involving cash: | |||||||
| Depreciation | 1,321 | 603 | |||||
| Amortization | 1,572 | 1,237 | |||||
| Share-based payment transactions | (2 | ) | 666 | ||||
| Allowance loss on trade receivables | 3 | (181 | ) | ||||
| Recovery of reserve for slow moving and obsolete inventories | (363 | ) | (7 | ) | |||
| (Gain) loss on disposal of property, plant and equipment | 50 | (13 | ) | ||||
| (Gain) on sale of division | - | (3,157 | ) | ||||
| Change in non-cash operating working capital: | |||||||
| Accounts receivable | 5,712 | (4,285 | ) | ||||
| Inventories | 2,363 | (2,213 | ) | ||||
| Contract assets | 243 | (54 | ) | ||||
| Prepaid expenses and deposits | 467 | (341 | ) | ||||
| Accounts payable and accrued liabilities | (4,960 | ) | 2,884 | ||||
| Provisions | (173 | ) | 601 | ||||
| Contract liabilities | (180 | ) | (262 | ) | |||
| Deferred revenue | (934 | ) | 5,142 | ||||
| Cash flows (used in) from operating activities | (1,079 | ) | 2,084 | ||||
| Cash flows used in financing activities: | |||||||
| Issue of share capital | 20 | - | |||||
| Interest payments on notes receivable | 6 | ||||||
| Interest payments on lease liabilities | (66 | ) | - | ||||
| Principal payments on lease liabilities | (654 | ) | - | ||||
| Cash flows used in financing activities | (694 | ) | - | ||||
| Cash flows (used in) from investing activities: | |||||||
| Principal payments on notes receivable | 259 | 19 | |||||
| Proceeds from the sale of property, plant, and equipment | - | 107 | |||||
| Purchase of property, plant and equipment | (641 | ) | (777 | ) | |||
| Intangible asset addition, net | (1,995 | ) | (1,763 | ) | |||
| Proceeds from the sale of division | - | 7,835 | |||||
| Cash flows (used in) from investing activities | (2,377 | ) | 5,421 | ||||
| Decrease in cash position | (4,150 | ) | 7,505 | ||||
| Cash and cash equivalents, beginning of period | 21,398 | 13,893 | |||||
| Cash and cash equivalents, end of period | $ | 17,248 | $ | 21,398 | |||
| Supplemental Schedule of Noncash Investing and Financing Activities: | |||||||
| Notes receivable received in connection with sale of division | $ | - | $ | 1,422 | |||
| AgJunction Inc. | ||||||||||||
| Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) Reconciliation | ||||||||||||
| Three and Twelve months ended December 31, 2019 and 2018 | ||||||||||||
| (Expressed in U.S. thousand dollars) | ||||||||||||
| Three months ended | Twelve months ended | |||||||||||
| December 31, | December 31, | |||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||
| Net income (loss) | $ | (3,106 | ) | $ | 3,143 | $ | (6,198 | ) | $ | 1,464 | ||
| Interest (income) expense | (80 | ) | 119 | (284 | ) | 89 | ||||||
| Depreciation | 473 | 105 | 1,322 | 603 | ||||||||
| Amortization | 441 | 291 | 1,572 | 1,237 | ||||||||
| EBITDA | $ | (2,273 | ) | $ | 3,658 | $ | (3,588 | ) | $ | 3,393 | ||