AgJunction Reports Fourth Quarter and Full Year 2020 Earnings Results
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SCOTTSDALE, Ariz., March 22, 2021 (GLOBE NEWSWIRE) -- AgJunction Inc. (TSX: AJX) ("AgJunction" or the "Company") is reporting financial results for the fourth quarter and full year ended December 31, 2020. All currency amounts are expressed in U.S. dollars.
Fourth Quarter 2020 Financial Highlights compared to Fourth Quarter 2019
- Revenue was $2.7 million compared to $3.3 million
- Gross margin increased 230 basis points to 48.2% compared to 45.9%
- Operating expenses improved to $3.4 million compared to $4.7 million
- Net loss improved by 29% to $(2.2) million or $(0.02) per share, compared to a net loss of $(3.1) million or $(0.03) per share
- EBITDA improved by 39% to $(1.4) million compared to $(2.3) million
Full Year 2020 Financial Highlights compared to Full Year 2019
- Revenue was $16.3 million compared to $39.2 million (2019 included $24.0 million of revenue related to the Bulk Purchase Order (BPO))
- Gross margin increased significantly to 49.0% compared to 37.4%
- Operating expenses improved to $13.2 million compared to $21.1 million
- Net loss improved by 15% to $(5.3) million, or $(0.04) per share, compared to a net loss of $(6.2) million, or $(0.05) per share
- EBITDA improved by 28% to $(2.6) million compared to $(3.6) million
“At the beginning of last year, I don’t think anyone could have predicted just how disruptive 2020 would be due mostly to the COVID-19 pandemic,” said Dr. M. Brett McMickell, president and CEO of AgJunction. “Despite this difficult macroeconomic environment, I’m incredibly proud of the progress we made throughout the year on implementing our modularization strategy. We continued developing in strategically important areas in off-road automation, such as sensor fusion, terrain mapping, vision tracking, and mobile applications. Our continued investment in research and development will help us accelerate our growth coming out of the COVID-19 pandemic. Although our 2020 sales results aren’t exactly where we thought they’d be when we started the year, we made great strides in prudently managing costs and optimizing our product mix, which led to a significant increase in our gross margin and improved bottom line profitability.
“During the fourth quarter, optimism returned to our indirect channel as we saw more OEMs restart development planning for their next generation equipment. In fact, we entered into agreements to provide various autosteering applications to two leading OEMs, Komatsu and Ploeger. Currently, we are continuing to focus heavily on maintaining strong partnerships with our existing OEM and VAR partners, while also working towards new partnerships that we expect to have news on in the coming months. While the business environment remains challenging, we are seeing our customers regain confidence and we are excited about the products that we are currently testing.
“Our direct channel saw strong momentum with 75% year-over-year revenue growth in our ecommerce store. This parallels the introduction of new AgJunction products, including the Wheelman® Pro HP and Wheelman® Flex HP, which are derived from the innovations we had made for our indirect channel. Additionally, we launched our first subscription offering through our ecommerce store.
“In order to further support our customers, AgJunction has recently become a member of the American Connection Project Broadband Coalition, which is a collection of over 140 prominent companies, trade associations and academic institutions who are committed to bringing high-speed internet infrastructure to communities, particularly in rural farm areas, across the country that lack internet access. Given our direct connection to farming communities, we are proud to join this coalition and look forward to helping improve connectivity and bridge the digital divide in America.
“As we move ahead, we will continue to execute on our strategy and provide more accessible automation to our customers across the globe. While we still believe revenue will be impacted in the near-term, we continue to onboard new OEM customers and look for ways to further drive growth in our direct channel. I’m very proud of our entire team’s ability to remain resilient in progressing our mission and delivering some of the most innovative products on the market. We are looking forward to what we can accomplish in 2021.”
Fourth Quarter 2020 Financial Results
Total revenue in the fourth quarter of 2020 was $2.7 million compared to $3.3 million in the fourth quarter of 2019. The decrease is primarily due to reduced revenue volume from a North American VAR customer. This was partially offset by the large increase in the EMEA region attributable to revenue earned for product software access requirements, as well as an increase in the APAC region due to expansion into China and higher demand in Japan.
Gross profit in the fourth quarter of 2020 was $1.3 million compared to $1.5 million in the fourth quarter of 2019. Gross margin increased to 48.2% compared to 45.9% in the fourth quarter of 2019. The margin improvement was attributable to better cost management and the shifting of the Company’s product mix to more higher margin software offerings.
Total operating expenses in the fourth quarter of 2020 improved to $3.4 million compared to $4.7 million in the fourth quarter of 2019. The improvement was primarily driven by reduced expenses related to the closures of the Company’s Brisbane and Fremont facilities, along with lower compensation costs and travel expenses.
Net loss in the fourth quarter of 2020 improved to $(2.2) million or $(0.02) per share, compared to a net loss of $(3.1) million or $(0.03) per share in the fourth quarter of 2019. The improvement was primarily a result of the aforementioned reduction in facilities costs and overall decrease in total operating expenses.
EBITDA in the fourth quarter of 2020 improved to $(1.4) million compared to $(2.3) million in the fourth quarter of 2019.
Full Year 2020 Financial Results
Total revenue in 2020 was $16.3 million compared to $39.2 million in 2019. Excluding $24.0 million of revenue generated from the BPO in the prior year, revenue increased 6.6% as a result of continued execution of the Company’s strategy.
Gross profit for the full year was $8.0 million compared to $14.7 million in 2019. Gross margin increased significantly to 49.0% compared to 37.4% for the full year. The substantial margin improvement was attributable to a higher margin product mix and improved manufacturing efficiencies.
Total operating expenses for the year improved to $13.2 million compared to $21.1 million in the previous year. The improvement was predominantly driven by cost savings from departmental consolidation, site closures, travel cost reductions and IT expenditure reductions.
Net loss for the full year improved to $(5.3) million or $(0.04) per share, compared to a net loss of $(6.2) million or $(0.05) per share in the prior year. The improvement was primarily a result of the aforementioned decrease in total operating expenses.
EBITDA for the full year improved to $(2.6) million compared to $(3.6) million for the full year 2019.
Cash and cash equivalents at December 31, 2020, totaled $6.8 million compared to $17.2 million at the end of 2019. Working capital was $13.7 million at December 31, 2020 as compared to $19.2 million at the end of 2019. The Company continues to operate debt free and has access to an unutilized $3.5 million line of credit.
AgJunction will hold a conference call tomorrow at 11:00 a.m. Eastern time to discuss its fourth quarter and full year 2020 results, followed by a question and answer period.
Date: Tuesday, March 23, 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: 7990215
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.
A replay of the conference call will be available after 2:00 p.m. Eastern time on the same day through April 6, 2021.
Toll-free replay number: 1-855-859-2056International replay number: 1-404-537-3406Replay ID: 7990215
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.
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.
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 focus; potential for supply-chain disruptions; timing for OEM partners new product development initiatives; impacts of the foregoing on the company. 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.
Investor RelationsGateway Investor RelationsCody Slach or Cody Cree1-949-574-3860AJX@gatewayir.com
|Consolidated Statements of Financial Position|
|(Expressed in U.S. thousand dollars)|
|December 31,||December 31,|
|Cash and cash equivalents (note 5)||$||6,773||$||17,248|
|Accounts receivable, net (note 6)||2,051||2,793|
|Current portion of notes receivable, net (note 8)||320||320|
|Inventories (note 7)||8,694||3,743|
|Contract assets, net||7||-|
|Prepaid expenses and deposits||781||819|
|Notes receivable, less current portion, net (note 8)||1,002||760|
|Property, plant and equipment, net (note 9)||950||1,314|
|Right-of-use assets (note 10)||661||1,020|
|Intangible assets, net (note 11)||9,957||10,333|
|Liabilities and Shareholders’ Equity|
|Accounts payable and accrued liabilities||$||2,901||$||3,540|
|Provisions (note 12)||352||826|
|Current portion of lease liability (note 10)||368||429|
|Current portion of deferred revenue (note 3(u))||1,288||935|
|Deferred revenue, less current portion (note 3(u))||2,425||3,298|
|Lease liability, net of current portion (note 6)||334||702|
|Share capital (note 13)||23,495||148,495|
|Consolidated Statements of Profit or Loss|
|Three and Twelve months ended December 31, 2020 and 2019|
|(Unaudited -expressed in U.S. thousand dollars)|
|Three months ended||Twelve months ended|
|December 31,||December 31,|
|Cost of sales||1,391||1,780||8,316||24,561|
|Research and development||1,383||440||4,797||6,077|
|Sales and marketing||508||707||2,153||4,535|
|General and administrative||1,526||3,589||6,245||10,529|
|Operating (loss) income||(2,124||)||(3,225||)||(5,204||)||(6,456||)|
|Interest and other income||(5||)||(85||)||(94||)||(289||)|
|Foreign exchange (gain) loss, net||37||(48||)||56||(19||)|
|Loss on sale of property, plant and equipment||72||14||139||50|
|Net (loss) income before income taxes||(2,228||)||(3,106||)||(5,305||)||(6,198||)|
|Income tax benefit||-||-||-||-|
|Net (loss) income||$||(2,228||)||$||(3,106||)||$||(5,305||)||$||(6,198||)|
|Earnings per share:|
|Basic and diluted (loss) per share||$||(0.02||)||$||(0.03||)||$||(0.04||)||$||(0.05||)|
|Condensed Consolidated Statements of Cash Flows|
|Twelve months ended December 31, 2020 and 2019|
|(Unaudited - expressed in U.S. thousand dollars)|
|Cash flows used in operating activities:|
|Net (loss) income||$||(5,305||)||$||(6,198||)|
|Items not involving cash:|
|Depreciation (note 9)||705||1,216|
|Amortization (note 11)||2,096||1,677|
|Share-based payment transactions (note 13)||213||(2||)|
|Allowance loss on trade receivables (note 6)||-||3|
|Recovery (write down) of reserve for slow moving and obsolete inventories (note 7)||-||(363||)|
|(Gain) loss on disposal of property, plant and equipment (note 9)||140||50|
|Change in operating working capital:|
|Accounts receivable (note 6)||742||5,712|
|Reclassification of Note Receivable||(500||)||-|
|Inventories (note 7)||(4,951||)||2,363|
|Prepaid expenses and deposits||38||467|
|Accounts payable and accrued liabilities||(639||)||(4,960||)|
|Provisions (note 12)||(474||)||(173||)|
|Cash flows (used in) provided by operating activities:||(8,461||)||(1,079||)|
|Cash flows used in financing activities:|
|Issue of share capital (note 13)||-||20|
|Interest payments on notes receivable||-||6|
|Interest payments on lease liabilities (note 10)||(43||)||(66||)|
|Paycheck Protection Program Loan proceeds||1,540||-|
|Paycheck Protection Program Loan repayment||(1,540||)||-|
|Principal payments on lease liabilities (note 10)||(386||)||(654||)|
|Cash flows (used in) provided by financing activities:||(429||)||(694||)|
|Cash flows used in investing activities:|
|Principal payments received on notes receivable (note 8)||258||259|
|Purchase of property, plant and equipment (note 9)||(123||)||(612||)|
|Intangible asset addition, net (note 11)||(1,720||)||(2,024||)|
|Cash flows (used in) provided by investing activities:||(1,585||)||(2,377||)|
|Decrease in cash and cash equivalents||(10,475||)||(4,150||)|
|Cash and cash equivalents, beginning of period||17,248||21,398|
|Cash and cash equivalents, end of period||$||6,773||$||17,248|
|Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) Reconciliation|
|Three and Twelve months ended December 31, 2020 and 2019|
|(unaudited - expressed in U.S. thousand dollars)|
|Three months ended||Twelve months ended|
|December 31,||December 31,|
|Net income (loss)||$||(2,228||)||$||(3,106||)||$||(5,305||)||$||(6,198||)|
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