AgroFresh Solutions (AGFS) Misses Q4 EPS by 25c, Revenues Miss

AgroFresh Solutions (NASDAQ: AGFS) reported Q4 EPS of ($0.04), $0.25 worse than the analyst estimate of $0.21. Revenue for the quarter came in at $53.3 million, versus $54.1 million reported last year.

• Full year 2018 net sales increased 9% versus 2017 to $178.8 million
• Fourth quarter 2018 net sales were $53.3 million, versus $54.1 million in the prior year fourth quarter
• Crop Diversification strategy continues, with 30% of sales coming from crops other than apples in 2018, versus 19% in the prior year period
• Net loss of $1.9 million for the fourth quarter of 2018 and net loss of $30.2 million for the full year 2018, which included $45.9 million of amortization of intangibles
• Adjusted EBITDA(1) of $24.4 million for the fourth quarter of 2018 and $66.9 million for the full year 2018

"2018 was a transitional year for the Company, complete with leadership changes that have refocused the enterprise on cost-efficient sustainable growth. Contributions from a broader and more diversified product offering and broader crop reach are the key underpinnings of our long-term strategy. Sales coming from crops other than apples were 30% in 2018 versus 19% in 2017, and revenues outside our core SmartFresh apple business grew in the high single-digits for the full year 2018. The acquisition of Tecnidex in December 2017 contributed decisively with revenue growth of 9% in 2018, and the ongoing penetration within crops such as pears continues to be a key source of growth for the Company on a global basis. Sales outside North America represented approximately 75% of the revenue mix in 2018, and Europe is now our largest market representing over 40% of 2018 sales. Collectively, these elements helped offset the negative impact of an earlier than normal harvest in the Pacific Northwest region, which resulted in lower yields and profits for our customers, and in-turn curtailed the utilization of solutions such as Harvista across the industry.

As we look to the future, we see our core business remaining stable and our growth diversification initiatives becoming a greater proportion of the business. We also expect the geographic and customer diversification of the business to continue to mitigate risk from local fluctuations in crop size. In fact, in 2018, we serviced approximately 3,900 customers globally, an increase of approximately 200 versus 2017, and expanded our geographic reach from over 45 countries in 2017 to over 50 countries in 2018. Finally, our newly refinanced revolver, the implementation of our own SAP system and the stabilization of our operations as a standalone public company should all contribute to reduced operating costs in 2019. Overall for 2019, we expect improved financial performance and further progress in our diversification strategy as proof of the resilience of our business,” commented Jordi Ferre, Chief Executive Officer.

For earnings history and earnings-related data on AgroFresh Solutions (AGFS) click here.

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