AgJunction Inc. (TSX: AJX) ("AgJunction" or the "Company") is
reporting financial results for the second quarter ended June 30,
2021. All currency amounts are expressed in U.S. dollars.
Second Quarter 2021 Financial Summary vs. Second Quarter
2020
- Revenue was $3.4 million compared to $4.6 million
- Gross margin improved 490 basis points to 45.2% compared to
40.3%
- Operating expenses were $3.5 million compared to $3.2
million
- Net loss was $(2.0) million or $(0.02) per share, compared to a
net loss of $(1.3) million or $(0.01) per share
- EBITDA was $(1.1) million compared to $(1.3)
million
Management Commentary
“During the last few months, we announced multiple developments
that are helping us pave the path forward and leading us to a
future of long-term, sustainable growth,” said Dr. M. Brett
McMickell, president and CEO of AgJunction. “As part of our mission
to provide the most innovative agriculture solutions, we were
awarded three groundbreaking patents during the quarter that cover
important aspects of our newest offerings, as well as our legacy
products. Additionally, we announced a collaboration with Bosch, in
which we are integrating NEVONEX into our hardware modules,
expanding our addressable market and providing our customers
increased flexibility in efficiently managing their farms.
Furthermore, we reached a final settlement in the patent
infringement and breach of contract lawsuit we filed against Ag
Leader Technology Inc. Finally, we were chosen by a leading
equipment manufacturer, Komatsu, Ltd. (“Komatsu”), to provide
sophisticated automation kits for construction workplaces.
“In our indirect channel, our modular product portfolio is
proving to be very attractive to original equipment manufacturers
(“OEMs”) and value-added resellers (“VARs”) across the globe, and
we are working hard to onboard new customers as they gradually
increase their development efforts back to pre-COVID levels. While
this is taking longer than anticipated, we were encouraged by the
recent expansion of the Komatsu partnership. This new contract with
Komatsu is directly aligned with our strategic plan to expand the
application of our automation modules to the broader off-road
market. Focusing on automation modules rather than building our own
autonomous vehicle allows us to address the needs of a much larger
market and can bring autonomy to that market more quickly and less
expensively.
“Our e-commerce site, Handsfreefarm.com, continues to gain
momentum as more customers learn about our affordable solutions
like the Wheelman® Pro HP and Wheelman® Flex HP, as well as our
subscription services. We are excited by the expansion of this
channel and are pleased to announce that the e-commerce site is now
open for business in Australia. As this channel continues to grow,
we are gaining valuable insights about our solutions directly from
farmers, allowing us to use the feedback gathered to drive
next-generation solutions in our indirect channel.
“Looking forward, we expect to see growth in our indirect
channel as OEM’s move to production. We are also seeing progress
with our recently restructured VAR ‘hub and spoke’ model, and our
e-commerce site is gaining greater awareness. While we are
experiencing the same supply chain challenges that many other
companies are facing, our team is doing a great job adapting to the
dynamic environment. We are continuing to hold higher levels of
inventory than we have historically, and we recently started
insourcing our products at our new warehouse in Tempe, Arizona. We
are confident that the steps we are taking will drive growth and
allow us to continue delivering best-in-class precision products
for the off-road market.”
Second Quarter 2021 Financial Results
Total revenue in the second quarter of 2021 was $3.4 million
compared to $4.6 million in the second quarter of 2020. The
decrease is primarily due to the reduced volume from a North
American VAR customer that allegedly breached a supply agreement
with AgJunction and infringed certain of its patents, which has
since been settled.
Gross profit in the second quarter of 2021 was $1.5 million
compared to $1.9 million in the second quarter of 2020. Gross
margin improved 490 basis points to 45.2% compared to 40.3% in the
second quarter of 2020. The increase is primarily due to a negative
one-time adjustment relating to inventory carrying charges in the
second quarter of 2020.
Total operating expenses in the second quarter of 2021 were $3.5
million compared to $3.2 million in the second quarter of 2020. The
increase was attributed to higher research and development costs
for the amortization of prior year capitalized projects and higher
sales and marketing expenses.
Net loss in the second quarter of 2021 was $(2.0) million or
$(0.02) per share, compared to a net loss of $(1.3) million or
$(0.01) per share in the second quarter of 2020. The decline was
primarily attributable to the aforementioned revenue decline.
EBITDA in the second quarter of 2021 was $(1.1) million compared
to $(1.3) million in the second quarter of 2020.
Cash and cash equivalents at June 30, 2021, totaled $5.8 million
compared to $6.8 million at the end of 2020. Working capital was
$11.0 million at June 30, 2021, as compared to $13.7 million at the
end of 2020. The Company operates with limited debt of $1.5 million
from an outstanding paycheck protection program loan from June 30,
2021, and has an undrawn $3.5 million line of credit.
Conference Call
AgJunction will hold a conference call today at 11:00 a.m.
Eastern time to discuss its second quarter 2021 results, followed
by a question and answer period.
Date: Thursday, August 12, 2021Time: 11:00 a.m. Eastern time
(8:00 a.m. Pacific time)Toll-free dial-in number:
1-877-573-5992International dial-in number:
1-270-215-9903Conference ID: 9991687
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 AgJunction.com.
A replay of the conference call will be available after 2:00
p.m. Eastern time on the same day through August 26, 2021.
Toll-free replay number: 1-855-859-2056International replay
number: 1-404-537-3406Replay ID: 9991687
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 Ag 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® and is committed to advancing
its vision by bringing affordable hands-free farming to every farm,
regardless of terrain or size. 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. 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. In particular, forward-looking statements in this
press release include, but are not limited to statements with
respect to: the Company’s plans, and priorities working to onboard
new customers; benefits to be derived from the Komatsu partnership;
growth of the Company’s e-commerce site; expectation that the
company will see growth in its indirect channel; and expected trend
with product sales. 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; impact (and
duration thereof) that the COVID-19 pandemic will have on the
Company’s business, including on demand for the Company’s products;
effects of regulation by governmental agencies; that AgJunction's
future results of operations will be consistent with management
expectations in relation thereto; availability of key supplies,
components, services, networks and developments; the impact of
increasing competition; conditions in general economic,
agricultural 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, the COVID-19 pandemic and its impacts on the
Company including our products; our supply chain and our ability to
receive products on a timely basis from our global suppliers; a
prolonged economic downturn from the negative effects of COVID-19
pandemic may result in reduction of revenue, cashflows and
negatively affect our profitability; competition; inability to
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 RelationsGateway Investor
RelationsCody Slach or Cody Cree
1-949-574-3860AJX@gatewayir.com
|
AgJunction Inc. |
|
|
| Consolidated
Statements of Financial Position |
|
|
| (Expressed
in U.S. thousand dollars) |
|
|
|
|
|
|
| |
June 30, |
December 31, |
| |
2021 |
2020 |
|
|
(unaudited) |
|
|
Assets |
|
|
|
|
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
5,807 |
|
$ |
6,773 |
|
|
Accounts receivable, net |
|
846 |
|
|
2,051 |
|
|
Current portion of notes receivable, net |
|
320 |
|
|
320 |
|
|
Inventories |
|
8,572 |
|
|
8,694 |
|
|
Contract assets, net |
|
- |
|
|
7 |
|
|
Prepaid expenses and deposits |
|
530 |
|
|
781 |
|
| |
|
16,075 |
|
|
18,626 |
|
|
|
|
|
|
Notes receivable, less current portion, net |
|
869 |
|
|
1,002 |
|
|
Property, plant and equipment, net |
|
893 |
|
|
950 |
|
|
Right-of-use assets, net |
|
703 |
|
|
661 |
|
|
Intangible assets, net |
|
9,578 |
|
|
9,957 |
|
|
Goodwill |
|
143 |
|
|
143 |
|
|
|
$ |
28,261 |
|
$ |
31,339 |
|
|
|
|
|
|
Liabilities and Shareholders’ Equity |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
Accounts payable and accrued liabilities |
$ |
2,555 |
|
$ |
2,901 |
|
|
Provisions |
|
45 |
|
|
352 |
|
|
Current portion of lease liability |
|
409 |
|
|
368 |
|
|
Current portion of deferred revenue |
|
2,052 |
|
|
1,288 |
|
| |
|
5,061 |
|
|
4,909 |
|
|
|
|
|
|
Deferred revenue, less current portion |
|
1,959 |
|
|
2,425 |
|
|
Lease liability, net of current portion |
|
332 |
|
|
334 |
|
|
Paycheck Protection Program Loan |
|
1,466 |
|
|
- |
|
|
Total liabilities |
|
8,818 |
|
|
7,668 |
|
|
|
|
|
|
Shareholders’ equity: |
|
|
|
Share capital |
|
23,495 |
|
|
23,495 |
|
|
Equity reserve |
|
5,308 |
|
|
5,103 |
|
|
|
|
|
|
Accumulated deficit |
|
(9,360 |
) |
|
(4,927 |
) |
|
|
|
19,443 |
|
|
23,671 |
|
|
|
$ |
28,261 |
|
$ |
31,339 |
|
| |
|
|
|
AgJunction Inc. |
|
|
|
|
|
Consolidated Statements of Profit or Loss |
|
|
|
|
Three and six months ended June 30, 2021 and 2020 |
|
|
|
(Unaudited -expressed in U.S. thousand dollars) |
|
|
|
|
|
|
|
|
|
| |
Three months ended |
Six months ended |
|
|
June 30, |
June 30, |
| |
2021 |
|
2020 |
|
2021 |
|
2020 |
|
|
|
|
|
|
|
|
Revenue |
$ |
3,356 |
|
$ |
4,601 |
|
$ |
5,812 |
|
$ |
9,802 |
|
|
Cost of sales |
|
1,840 |
|
|
2,745 |
|
|
3,310 |
|
|
5,003 |
|
| Gross
Profit |
|
1,516 |
|
|
1,856 |
|
|
2,502 |
|
|
4,799 |
|
|
|
|
45.2 |
% |
|
40.3 |
% |
|
43.0 |
% |
|
49.0 |
% |
|
Expenses: |
|
|
|
|
|
Research and development |
|
1,228 |
|
|
1,110 |
|
|
2,538 |
|
|
2,164 |
|
|
Sales and marketing |
|
566 |
|
|
302 |
|
|
1,092 |
|
|
1,142 |
|
|
General and administrative |
|
1,733 |
|
|
1,758 |
|
|
3,299 |
|
|
3,359 |
|
| Total
Operating Expenses |
|
3,527 |
|
|
3,170 |
|
|
6,929 |
|
|
6,665 |
|
|
|
|
|
|
|
| Operating
(loss) income |
|
(2,011 |
) |
|
(1,314 |
) |
|
(4,427 |
) |
|
(1,866 |
) |
|
|
|
|
|
|
| Interest and
other income |
|
(2 |
) |
|
(19 |
) |
|
(7 |
) |
|
(78 |
) |
| Foreign
exchange (gain) loss, net |
|
4 |
|
|
4 |
|
|
13 |
|
|
32 |
|
|
Total Other (Income) Expenses |
|
2 |
|
|
(15 |
) |
|
6 |
|
|
(46 |
) |
|
|
|
|
|
|
|
Net (loss) income |
$ |
(2,013 |
) |
$ |
(1,299 |
) |
$ |
(4,433 |
) |
$ |
(1,820 |
) |
| |
|
|
|
|
|
Loss per share |
$ |
(0.02 |
) |
$ |
(0.01 |
) |
$ |
(0.04 |
) |
$ |
(0.01 |
) |
| |
|
|
|
|
|
AgJunction Inc. |
|
|
| Condensed
Consolidated Statements of Cash Flows |
|
|
| Six months
ended June 30, 2021 and 2021 |
|
|
| (Unaudited -
expressed in U.S. thousand dollars) |
|
|
|
|
|
|
|
|
|
2021 |
|
|
2020 |
|
|
|
|
|
| Cash flows
used in operating activities: |
|
|
|
Net (loss) income |
|
(4,433 |
) |
$ |
(1,820 |
) |
|
Items not involving cash: |
|
|
|
Depreciation |
|
319 |
|
|
382 |
|
|
Amortization |
|
1,351 |
|
|
880 |
|
|
Share-based payment transactions |
|
205 |
|
|
20 |
|
|
Allowance loss on trade receivables |
|
- |
|
|
2 |
|
|
Recovery (write down) of reserve for slow moving and obsolete
inventories |
|
- |
|
|
7 |
|
|
Change in operating working capital: |
|
|
|
Accounts receivable |
|
1,205 |
|
|
(745 |
) |
|
Inventories |
|
122 |
|
|
3 |
|
|
Contract assets |
|
7 |
|
|
- |
|
|
Prepaid expenses and deposits |
|
251 |
|
|
132 |
|
|
Accounts payable and accrued liabilities |
|
(346 |
) |
|
867 |
|
|
Provisions |
|
(307 |
) |
|
(571 |
) |
|
Deferred revenue |
|
298 |
|
|
(445 |
) |
| Cash flows
(used in) operating activities: |
|
(1,328 |
) |
|
(1,288 |
) |
| |
|
|
| Cash flows
used in financing activities: |
|
|
|
Interest payments on lease liabilities |
|
(15 |
) |
|
(24 |
) |
|
Principal payments on lease liabilities |
|
(171 |
) |
|
(229 |
) |
|
Paycheck Protection Program Loan proceeds |
|
1,466 |
|
|
1,540 |
|
|
Paycheck Protection Program Loan repayment |
|
- |
|
|
(1,540 |
) |
|
Cash flows provided by (used in) financing activities: |
|
1,280 |
|
|
(253 |
) |
| |
|
|
| Cash flows
used in investing activities: |
|
|
|
Principal payments received on notes receivable |
|
133 |
|
|
134 |
|
|
Purchase of property, plant and equipment |
|
(79 |
) |
|
(30 |
) |
|
Intangible asset addition, net |
|
(972 |
) |
|
(1,016 |
) |
|
Cash flows (used in) investing activities: |
|
(918 |
) |
|
(912 |
) |
|
|
|
|
|
Increase (decrease) in cash and cash equivalents |
|
(966 |
) |
|
(2,453 |
) |
| |
|
|
|
Cash and cash equivalents, beginning of period |
|
6,773 |
|
|
17,248 |
|
|
Cash and cash equivalents, end of period |
$ |
5,807 |
|
$ |
14,795 |
|
|
AgJunction Inc. |
|
|
|
|
| Earnings Before
Interest, Taxes, Depreciation and Amortization (EBITDA)
Reconciliation |
|
Three and Six months ended June 30, 2021 and 2020 |
|
|
|
(unaudited - expressed in U.S. thousand dollars) |
|
|
| |
|
|
|
|
|
|
Three months ended |
Six months ended |
| |
June 30, |
June 30, |
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
|
|
|
|
|
|
|
Net income (loss) |
$ |
(2,013 |
) |
$ |
(1,299 |
) |
$ |
(4,433 |
) |
$ |
(1,820 |
) |
| |
|
|
|
|
|
Interest (income) |
|
(2 |
) |
|
(19 |
) |
|
(7 |
) |
|
(78 |
) |
|
Depreciation & Amortization |
|
866 |
|
|
3 |
|
|
1,670 |
|
|
1,262 |
|
|
|
|
|
|
|
|
EBITDA |
$ |
(1,149 |
) |
$ |
(1,315 |
) |
$ |
(2,770 |
) |
$ |
(636 |
) |
| |
|
|
|
|