AGFS - Earnings call transcript Q3 2020

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Operator

Good afternoon and welcome to the AgroFresh Solutions Third Quarter 2020 Conference Call. All participants will be in a listen only mode. After the today’s presentation there will be an opportunity to ask questions. Please also note, today’s event is being recorded. At this time, I’d like to turn the conference call over to Jeff Sonnek, Investor Relations at ICR. ahead. go please Sir,

Jeff Sonnek

accompanying current good expectations historical future the Chief are differ management’s presentation statements that Miao, Executive the of to are comments materially of results Safe are statements statements. based and Officer. and a the All statements and as uncertainties by of statements. XXXX. considered Securities meaning events. Chief be known Litigation cause risks Jordi The the unknown in statements concerning the forward-looking beliefs statements call These today’s Ferre, Officer; and from number provisions during than contain facts afternoon. you forward-looking forward-looking will within forward-looking of subject Today’s Harbor assumptions the led well to Financial actual presentation Private discussed could and as Thank other on and of Such results Act Graham Reform

Ferre. the reconciliations release, of to the measures. our in section these as found the website, like with can to to financial now their accompany and identified We’ll uncertainties I’d tables the Please are over non-GAAP Some presentation as discussed this risks that the refer in Relations Jordi certain agrofresh.com, included call Investor which press measures. non-GAAP most company’s to be directly GAAP for of the measures SEC. refer of financial filings comparable slides also to the well in and turn

Jordi Ferre

hemisphere start everyone. the northern apple quarter, We a in had good the third Thank X. you, the solid represents Jeff, Please turn season. afternoon, Slide to and which performance of

margin revenue. fourth our of XXX hemisphere the basis to strength season a represents in which increased prior-year gross versus and XX.X%, points As quarter the annual platform. X.X% about profit the and season X/X period value-added the continues demonstrates through our increased total service northern the of Revenues reminder,

which improved significant am in Together capital to new This in challenges a the XX% and improved point of presented humbled established When together, containment and our for strong adjusted taken the for have in to to EBITDA of of compared the in the results. put deliver preventive been our XX% a SG&A in measures months and Additionally, to X% growth basis first periods. by optimization deliver sales. improvements continue initiatives despite prior-year XX.X% cost XXX XXXX, X to of in a team situation. successfully opportunities. and recognize in adjusted by X the organic operational improvement technical cost resulting decrease are spite third a able margin operational support our hemisphere highly expenses the the quarter COVID-XX that of on northern such a staff preparation customers our milestone the I July. place EBITDA transaction an advantageous the refinancing transaction Partners. for comprehensive close Schwartz with strategies, the by we in our and as our it AgroFresh also accelerate with include I exhibited investor, was want structure Paine substantially strategic capital diligently to improved to environment. truly determination efforts those by working months we drove efforts season, first Thanks collaboration structure, difficult proud uninterrupted service we corporate and the to our AgroFresh in external

revenues Europe brought that this which through last, of pandemic. to we normal price-driven months entrants. X. shifting well operating region versus during remains challenging our period. first harvest We SmartFresh about States, In saw solid a year a faced year return the that as the dynamics timing below of XXXX of new in as expectations, were the versus Slide first environment that in the the competitive come increase caused XX.X% to market some our months size a United revenues caused the by SmartFresh fundamentals The lower-than-expected prior-year to to some including business Turning and X amid X crop challenges in

in approach market our given gross quality third exceptional margin position backed that able is in leadership were drive high-touch and we during increase by quarter. the However, an the to service

some As to we customers of the has encouraging is low-touch again, during in the the flower recovery time pandemic. We have precipitous sustainable the market and to marketplace earlier AgroFresh due year the price, and third in the seen a for with that decline following provided not quality expect approach service decades. low that saw quarter, a signs

third relative consequence, solution eco XX% a less experienced the year. prior of a in of revenue quarter the basis block versus As a performance improved dramatic the and decline on

mentioned we challenges are return we’ve confident As we eco to about difficult the growth pandemic. will year once the by move next previously, block brought beyond

reiterate to want where our I Importantly, focusing. organization is

produce. are company applications post-harvest than We and much more fresh providing a for near

participating a unmatched and advantage tailored aim and that an solutions agricultural our decades needs of FreshCloud customized and Ag formidable a innovator all towards future capabilities unique and depth We novel leverages for insights. into customer enabled provides insights. FreshCloud being is are product that solutions expertise confidence data-driven foundation. as our of proprietary to competitive the our based driving of experience, are integrated on deliver inspiring our as We technologically industry highly utilizing to tech our

X. Slide to Turning

X are progress with the driven mix tomato, the improved by SmartFresh crop compared kiwis. in crop For The in months prior-year in the recovery with first our XX% the a revenue to Europe and XXXX, of melon pear avocado, crop apple we making was and diversification period. promising XX% of associated the was in contribution

business growing represented the less our is business accounted apple in of on also for about SmartFresh, XX% Our apple total balance dependent Harvista which sales. with fungicide quarter, the becoming and by

both team diversification to and crop crops additional continues in develop Our geographies. opportunities new

trials we example, customer and in the involving For broccoli. ongoing have U.S. Australia

tailor-made were adoption supplier in Trials Mexico. a Mexico equipment positive in are each tomato are have and The fungicides we in and avocados with we market beyond commercial confirmed Additionally, other They in Peru crop. the solutions coatings, major such application and continued progress to with SmartFresh. go U.S. of systems XXXX. the making developing mangos for quality and packaging, to as combine create with technologies crop-specific

have to initiated diversification with of the industry, series We webinars, Harvista our initiative. our specific showcasing and starting also a to solutions tomatoes. avocados crop is key

and other existing to diversify will approvals apples. and ability of in the expect in regulatory crops, the our Beyond number we beyond the cherries Chile for add U.S. to running trials we which a business are high-volume blueberries,

initiatives Please the support for and of During apples applied Zealand the nectarine, labor natural for third to quarter, Harvista expectations Peru, maturity. Inbox quarter, in diversification our by new product registrations turn color and window by Slide and customers in lowered U.S. New harvest in their expand both Harvista in we sales forces our opportunity X enhancing kiwis, provide technology the as can fruit the related availability, to that for for manage we develop their uncertainty for such was slows penetration. time Customers SmartFresh Inbox persimmon and able XX the days up for SmartFresh us SmartFresh’s extended and in to quality to of SmartTab and fell propensity plum, use for securing peach, process, broccoli, avocado. to team X. mangos size an by Harvista regulatory third before would up days, fruit, the utilize which the be for Harvista solutions our on better allowing harvest. tree apples increase to ripening melon, labor to cherry, to short time more quality due better-than-expected thought optimum orchard In the COVID-XX U.S. compounded usage harvest

initially Harvista and a the was Spain, authorities in to While uses granted was for driven by by Global in generated Poland. we local return strong better industry growth growth with feared, X.X% global and prepared regulatory of still quarter. traction third Turkey the Italy emergency than permits Harvista

submitted a are with the the partnership As for and industries and ahead expecting XXXX permit permits were apple that of granted registrations official respected local we we applications were the the XXXX. reminder, in

satisfaction successfully, a labor improving with the of blueberries in management. in and result, we weeks of a Consequently, completed We confirming full finish improve the the quarter XXXX. to after for to during and Harvista a and was first efficacy quality U.S. The year were As XXXX Europe storage. success harvest high trials first strong promising U.S. launch customer a X fullness for Harvista anticipate at preparing are for of Harvista.

of View, its in crops. total expect success of new term Harvest longer our continue Harvest proving process and additional be digital the View with to able driven by We growth a to along geographies potential of regulatory the of we FreshCloud was samples, tool, as were a our FreshCloud software. XX,XXX launch The new stability to rollout approvals,

features new value. plan to of a we monetize to season, tool next new critical this adding by source customer address For

supply understanding an all providing will the from progress the underlying factors within the for be with and We to the the the of chain, docks. customers’ way receiving customers fields dashboard analytical food

Slide to X. XXXX, via technology established an portfolio in and with of provided waxes. has it fungicides, our Tecnidex of diversification Since Turning December acquisition crop and AgroFresh coatings

been extracting Spain. from European headquarters Valencia, synergies the We a to this through year cost have also relocation our Tecnidex of

Valencia that conducted which has lower compared the to material labor in available costs created this operation manufacturing have manufacturing we France. by our Additionally, was SmartFresh in and when product leveraged there, access citrus us tablet savings shifting to relevant are has regulatory other a range expertise crops. allowed Tecnidex coatings to also categories as of to us our and such extend and fungicides giving broader to

used quarter, During nectarines for and pears, in cherries, obtained plums. fungicide we on Chile approval Pyrimethanil peaches, apples, the third citrus,

for a apple portfolio our welcome to approach Latin obtained We be registration southern coating additions America. This upcoming in in have for as season will apples. also Argentina we wax hemisphere the

quarter, prior-year growth, XX% Tecnidex revenue to period. a increase over the third generating the returned During

continue was will prior-year in and season. based impacted expect We production, Morocco trend negatively the fourth improvement Spain citrus which the the quarter during during on the

provides and produce These expect Tecnidex for we data enabling customer growth Please and generate to digital our year our X. is projected to life. returns. insights, As Slide FreshCloud shelf decision-making, a XXXX. evolved that powerful about are turn with real-time consequence, maximize versus more continue and platform to freshness supply better XXXX insights customers full chain

FreshCloud service process real-time. including machine organizing a provide the quality FreshCloud Inspection cloud-based Harvest food of few launch manual View, and is and related in a Quality This analytics, been management and of learning loss. reduce cumbersome like our level quality the to tool. takes proprietary breakthrough control I Harvista combines digital transparency during a enables a remarks quality which Inspection and artificial Quality quality has what greater referenced my process, service ago, digitizes that heightened ultimately capture, we in mobile analyzing control XXXX metrics traditionally launched Beyond and moments intelligence to information, that

center entire its we quarter, apples, is across which and growers has leading an the important worked fruit of with with manufacturers of and our operation. third adopting is experts opportunity stellar the excited customer strategy. customer, focus the He tropicals. technology. And Quality an has the The retailers. a we by our leverage network logistic global FreshCloud During and have with at Quality FreshCloud extensive pears, a FreshCloud of are on to pome reputation new working Inspection food

work freshness. them American and quality We to are continue View the are produce of Inspection, planning the Inspection results Orchard operators In food of Quality extending positive to North similarly on with pack we are further coming trials we from the well to into showing to series These believe we positioned trials a and customer enhance their in Harvest integration the XXXX, leverage adoptions Quality months. house. with for

of mentioned Graham? FreshCloud across redefining Graham I’ll food is our now we the let journey speak quality in prevention, of communications, customer highlights. waste with the goal and manage have evolutionary our some base. and an financial to As previous

Graham Miao

Thank Jordi, Please to afternoon, you, good and Slide XX. turn everyone.

quarter third The season. northern begins hemisphere our

seasonal noted on quarters to numerous the to compared third million Net the for versus million quarters we sales of of that increased $XX.X business at think to between the the X.X% we quarter most consider can in it’s to shift sales XXXX half. fluctuations As have third look in quarter each halves $XX XXXX. valuable occasions, to of

to the increased X.X%. The increased compared The XXXX positive which of of sales third exchange, XXXX, the Tecnidex. a European of impacts decrease by in months and for period. of Harvista months revenue seasonality revenue from to currency primarily $X.X first was the translation $X.X with of the million the million, foreign result sales X% foreign contributions currency by X traction Net reduced first due of were of prior $XXX.X quarter increase harvest versus growth increased year, normalization of a versus revenue million the impact XXXX. Europe for the net of Excluding the SmartFresh prior-year the in X markets

profit margin to chain the XX.X% Gross basis the the revenue and points of period. on a of increased price at slight will relative APAC geographic $XX.X quarter regions. and weakness offset currency the impact, we turn in $XX.X primarily regions synergies compared was was it margin result by EMEA Tecnidex profit the million for supported decreased expenses. A gross sales discipline. operating America prior-year to strength and to versus net of Latin mix, constant further where was this America where discuss Excluding North the in higher Gross approximately primarily XX.X% The X.X%. prior-year manufacturing were in by period. basis was Slide result decrease million the XXX supply third relative Please and its XX, efficiencies margins and the in

of XX.X% was months the margin period. basis point are year-over-year the of result XXXX end year-ago a XXXX, profit optimizations balance XXXX. of The the at the cost of that were to X first compared the carry in gross was improvement and chain supply through to implemented XX.X% XXX For expected

quarter margin Research expected first decreased in These to component are were development of beyond into compared the decreases third business the of in million XXXX bring of innovation. invest X which the in $X.X important to Year-to-date, R&D period. M&A and million prior-year primarily our nonrecurring to Included $X.X litigation, expenses quarter gross benefits XXXX. drive the expand million our continue quarter were million to prior-year $X.X apples. were in And R&D synergies $X.X business, with product SG&A million associated remains in R&D XX% of an by $X.X products. portfolio and of to prior-year items period. in and XXXX diversification we’ll $XX to XXXX. strategy included timing of driven improvement drive in months to the the and million at $X.X costs support the in costs million increased was driven SG&A current quarter Additionally, the in to as by that the compared severance. Tecnidex, million $XX.X also manufacturing further third

approximately On XX.X% the in a million. items, decreased period. quarter the basis, these Excluding decreased SG&A $XX.X third prior-year year-to-date versus to X.X% SG&A

Excluding of expect XX. cost X.X% began optimization This this nonrecurring savings costs XXXX. million with SG&A Please versus and the in in prior-year and period. decreased approximately XXXX the through is current the $X.X trend to performance to million that year in $X.X we consistent of Slide our the prior-year period, fiscal that strategy continue end of turn

Third $XX.X quarter net was million preferred period. associated federal net prior-year allowance The Schwartz related of losses valuation against purposes difference to XXXX the driven deemed $X compared recognition recent $XX.X a carryforwards operating income million by to net of the the in for of control cumulative noncash the primarily was change income loss tax with of Paine investment. convertible Partners’ million equity

million of lower a valuation Adjusted of noncash $XX.X EBITDA quarter in $XX to expenses prior-year million million. XXXX loss months the compared of million X just negative in allowance of increased lower expense $X.X of compared XXXX, million net first in $XX.X were was XX% offsetting operating to million as mentioned prior-year the or impact $XX.X interest and $X.X third period. period. million Partially the $XX.X the the net the For I of loss to

$XX.X months of prior-year $X.X compared X improved XX.X% first the the EBITDA For million million XXXX, by or to adjusted period. to

to and Tecnidex. adjusted cost hard our resources of versus the basis our improvements operations, cost Our improved manufacturing reflects work includes optimizing prior-year which at XXX year-to-date which the period, leveraging margin structure and EBITDA points also XX.X% combination

are control leverage. efforts generate which operating results are pleased the to of We the business positive our proactive with allowing cost especially

was in in September XX.X% align where volumes second the XX, margin a adjusted to translate As year The months seasons, period. for performance ended southern margin with should XXXX, last the also and for for XX-month adjusted respective higher be our reminder, EBITDA viewed correspondingly margins for the to our hemisphere comparable business. XX.X% sales XX half total EBITDA year versus higher prior the northern

flow our modest period of of $X.X September demonstrated use XX, for cash $X.X of XX. again cash ended as had versus in XXXX, a prior-year the of the was in third cash Slide million operating X-month quarter period. a million to use The we Turning strength the

theme been $XX apparent back look million We as are business generated have where grew flow, establishing organization. we which steadily cash a a in to improved more broader we operating XXXX. XXXX improving through to cash flow the are of where The multiyear our operating results efficient and million of developing $X you management more

XXXX. trend prior-year for September Capital for extend million ended period XXXX, million expenditures $X.X remainder months associated global We the XX, this with X $X.X and pandemic. compared in to timing due to of to are delays the looking were the

several undrawn range as expect million of From from capital senior preferred million $XXX business with closed our December sheet our recent and $XX balance deleveraging and the Partners, XX, X% Paine to extension million. the of was debt investment consistent We Through XX, XXXX Schwartz. transaction, company, initiatives the times and cash key debt we XX September diversification X% X Total Jordi for to ended to before our immediate of facilities. to positive of A significant and was new September and model. an his strategic expenditures the by the December closing continue for remarks goals turn was of comprehensive reduced the months debt to balance between a end influence to an seek lower perspective, refinancing approximately of a $XX.X tax reflects XX, including revolver with The million sales, amendment opening to equity to credit $XXX.X XX, maturities sheet by improved back as I’ll XXXX accomplished was our the for our our balance our that Paine XX, the of growth call the Schwartz capital a investor, XXXX. secured on call Q&A. support extension structure us allows convertible XXXX. equity flexibility XXXX. of comprised drive This July asset-light generate

Jordi Ferre

Slide the improvements pleased delivered with Please ability debt disruption year-to-date we completing significant manage In our with July. We and EBITDA both year. refinancing while by the and adjusted gross summary, quarter uncertainty Graham. caused this margins our you, comprehensive solid through are a of turn Thank global in a in pandemic to to performance XX. and

Our the initiatives, Harvista, key on team is a which of Tecnidex key and energized by focused into growth is diversification and new geographies. progress crop our we component expand as FreshCloud

the of new Our new that and working are in technologies, With important call into The Partners, to prevention is our industry that, through geographies. becoming market investor, for energy increasingly Paine Schwartz accelerate innovation to matched by open post-harvest we lead growth marketplace. the grow operator, strategic are and food please is and questions. and together prepared we the waste crops

Operator

[Operator with Sweeney from the first Gerry Instructions] line ROTH comes of question Our Capital.

Gerry Sweeney

a bit and little some model with strong my what anticipated. versus probably sound wasn’t you I’ll out maybe way could of a Harvista the you start expectations. little just bucket versus happens? as bit lighter revenue, as your Any internal

quantitatively qualitatively or into there I’ll sort X been and was of it competition may were? or that. take some from each And had X there those how of You much or headwinds. bucket out other have Anyway,

Jordi Ferre

Gerry. take that, Yes. I’ll

is that think what referring is you’re us. the have your to to expectation I we -- that understand

of as there support. to travel, end was. benefit was Interestingly enough in topic able labor which that workers to labor therefore, being not of So that able about COVID-XX all travel, in enough, labor, the relevant issues come more pandemic caused of labor have manage expecting was seen at reports had the to by And with It’s season management to Harvista. such we the many not talk that of to not one disruption management. true the Harvista, being is of terms spite the is a let’s people we it

bad a good expecting were We’re saying It’s expecting North better in have but we a but growth. we Harvista. lot we a season I’m more we season, having a with than good were America expected. season, lot a not growth

one. that’s so Okay,

Gerry Sweeney

Yes, didn’t I think it much right, as just as arise, --?

Jordi Ferre

of Right. The the and did explained. expected year of on labor mean, we benefit a this pan we as put of opportunity had that in not I terms lot I labor we out, as betting expected, management, management

happened. So that

As you business overall going to see, what year. grow we’re grow and though, we still Harvista still to similar did could our last

you that. So did

of On positives the saw, Harvista. hand, you other as there from well a lot was as

In with other think terms I of the -- Well, SmartFresh. with to question had think… how maybe is happened you compartmentalize what I

Gerry Sweeney

or… competition Poor

Jordi Ferre

Yes, yes.

season from in of general able in a service. share regain the particularly made that America, of similar issue. think we competition in happening thing that were If last lost explain the based Last I and the that right? as had your that let’s came one part especially So in the with we pattern not a in seasonality, bit And yes, first look Europe, at I some in It we a that to we’re In year, on as little season I to some on you expectations. understand happens. season, to the we North comparison a saw reference was -- is We one our seeing XXXX, issues. saw XXXX. timing late perspective. And an of

you what think doing that at look need to our year I margins we’re well. focus this is

-- I’m impact, a dramatic came it impact, people say some not some had Some also that trying had was to impact.

But some look that we overall, year. big I we may picture, took big I is share lost remain strong. So the margins the regained think last right? at picture have a

are We our service. increasing

think about FreshCloud. I you heard

because try propositions. in service back as we’ve is approve. came much a we’ve to solid better or we’re proposition that’s the here. they then will winner past, follow at come market use what think, fundamentals. somebody And seen may of we and some What think looking The something. a do at low-value we that that these provide going eventually, that, to And were got the we not with I do

also, industry I predicting the size the It’s crop decrease It we’ve main lighter in expected is peak okay? think had they The rates was happened, of than bit bit that But lower little that came seen that not lower industry. we and basically it the and in as especially a than the had said. -- were going I you little reason, So rates, then apple picked apples an crop peak are a August had expected. the how overall and storage. many X% some which into the in

what treated that We’re still total to in from actually trying evaluate impact the were was storage. the apples

that the an We season a little that apple will of do when is as over, well. stored, but there volume were bit expecting in we of not was impact

Gerry Sweeney

So summarize, commentary down. I out, size there figure the to maybe, of trying imply And competition. catch did a competition of was has or that… extreme your an didn’t I mean, maybe to just not to there as was just I was crop seem I strong that quarter, and fourth amount to shifted some Harvista in the was crop

Jordi Ferre

No.

year, you last look European… produce if the the of what is happened at think I

Gerry Sweeney

Was off, a late right?

Jordi Ferre

Was a harvest, late definitely.

U.S. the ago, If a had harvest. in years you look we X particularly early

So was X it last later years than ago. year,

saw I in what U.S. similar think seen year a timings. in pattern to year, of this the we we’ve terms last

Gerry Sweeney

could quarter? carryover there the fourth some So to be

Jordi Ferre

quarter. some be to the could carryover fourth There

Gerry Sweeney

fine. Okay. and bit little there. A That’s here

Jordi Ferre

Yes.

well case, of the the as of is in in southern quarters one season. the I hemisphere season the particular -- the we it’s as middle thing quarter middle the the this that think first Gerry, say, as what, in is well as quarter like important always third the very because

X best of the when the remember You that is balance are have elapsed. months to the season done

Gerry Sweeney

COVID harvest, industry, anything like for post-harvest it. have aware Got sticking know which it it is fine. I just how you any And But impacts of higher there had didn’t that… and be that else should been expectations some with impacted pan other that to we has out, now

Jordi Ferre

right? I propensity the I tools, a to I of little think in bit saw less some in Well, A little we invest uncertainty. a of quality customers think bit mentioned -- enhancing

were we invest some saw customers So in open that less quality. to probably

Gerry Sweeney

you a you think it’s and I And winner. FreshCloud, know then Okay. said

I think detail happening customer. some what a what’s what’s experience, little Maybe success you’ve us commercial larger give you etcetera? Can mentioned with more learned, cloud you bit a on the there?

Jordi Ferre

Yes.

we about talking been been for services. we’ve evolving And the market, our communicating as, started particular years. in offering We digital So X have service FreshCloud openly strategy. almost to more now

I the supply the of that’s think evolved have very good I platform, think quality customers. we of chain a to which And basically very would our a now something management relevant. that is entire

the have that’s proven of during have we our a what the I about to had call have more processed the of mentioned mean? we here. successfully. that you to be XX,XXX taken -- And I system stable we winner releases important. of We that that means we what a did It What -- Harvest is much software So a View, that That’s is is a And adoptions broader ready is that particular adoption, that very think press right? have I and that -- samples it does in fact we case very, and and will meant. hear on apples. news about proven our works,

right? of talk of really their fruit plot industry the -- I being in, to supply the coming through integration how of quality systems the have, which success process and of think is we’re bringing the used. other, in and measurement the better not fruit handled and the fruit the of don’t something a fruit chain, -- plot that where the is is what what makes is the which through Instead management doesn’t the that each the having or treatment

know the operations. quality we you They day. can have you people how that an that do manage we advantage. have fruit Why where we the every that been world bring through see, So providing bring is everything there a how Because can around that to service manage advantage?

to a put provide that’s don’t think good learning software. feedback to have way we as can bring algorithms only customers. do we what a machine and value. really value because That’s have together valuable I we because that bring We very to

they decisions. good make So

actually customers business. So these particular what about ago saw some products. more before, you releases how adopt it’s X their We that and that have individual just press approach of individual I we may said mentioned. when they some solution holistic adoptions years as I manage that’s much you hear now And with more a details launched than a in

Operator

Our next question comes from the Dayal line of Wainwright. with Amit H.C.

Amit Dayal

margin some you Or the EBITDA color costs appreciate is well? helpful. to the been Any questions. from respect pricing sort ability driven With I better? by would as this are seeing be of you control on trends, taking strong this and your benefits to

Graham Miao

that to our in value-added way, both. We proactively. financial saw take did our one. what about. lower to EBITDA believe an holistic a actually the reported majority softness did costs Yes. perspective, and we did the have customers. of contribution statements, as we we price then that expected, large operating from structure was top of Yes, started cost Graham. a starting And quarter in the provide combination at due It’s that our Amit, to discipline talked as some will a we because you discipline experience than And for while But more this XXXX. line that Jordi I’ll services look it’s our optimization. we and in you see our

have had we we we been the trend, So trend continuing that efforts XXXX. and are that have a in this making been positive

is our margins. then also and but are which improving line top we EBITDA optimization, margins, we not see to why in benefit also the addition are the gross cost and you the So our improving only

Amit Dayal

Or this? on will of continuity some So, think Graham, part you’re in? you should to be the season we these expect depending variance do which trends, on there

Graham Miao

Yes.

for total can QX throughout and good believe at at And a XXXX, majority a the for we We margin individual business entire year it and year that’s continue quarter then the look just year-to-date. we And question. the for year So way is the the of the full year. vary. improvement look into and then this as a combined the the QX reminder, for constitute will QX. our trend positive Each

Amit Dayal

coming and XQ you that this Jordi, coming little out as anticipated, as make initially it. maybe do comment as XQ a think your well? on respect might not you it some do Got up with quarter, to that Or stronger sort of and bit potentially have Harvista of into strong in --? you maybe bleeds saw than you

Jordi Ferre

we quarter. thing to We it the Yes. remind the what else, some quarter, this right? want U.S. there’ll as well. and by seeing -- fourth That’s expectations have as well we one we Well, grew And I grew of X% the everybody you in are in franchise still still be think I

still the are showing that So as is growth projection Harvista that spoke I we before. this for year,

Amit Dayal

business the talked you meaningful you about release, How that pressure I a from is way? providers, just nuisance low-touch, in on your in of low-value of U.S. dealing of any Is guess. sort the sort are press that? in near with Understood. the this term? Or sort some competitive infringing In the

Jordi Ferre

business, If customers it fundamentally profitability. kind some our affecting not meaningful presenting in there’s to is some results, was our decide they’re impacting of other would including be and somebody a way, right? in happens try my will What that we that. comes business I offers say when low-value,

otherwise, you want you margins words, as volume. not very significant. Like see make make And significant. And our It’s would In so Graham are significant our if is don’t significant high-value it We a there very are clear. it before, impact because bit other you said, of I said is short-term strong. make it price other clear, numbers. on little to a disciplines service

business at you things like much more fundamentally that’s may FreshCloud. not at I it, doing short-term holistic have new a introduce mentioned before, a how that me the looking especially FreshCloud impact, So to like I look Quality to The tools, we’re impacted. but the is Inspector solution. That’s

value-added is customers, large of product. to because change and So trying and some somebody decide part fundamental customers, become continue service to innovator our a short-term not try a we’re low-value They not comes with choice that to pressures see. that and the of on an to be will

I as again think, because ‘XX, really to a some we not I compare they ‘XX that in for we gained and realize entrants well it’s said worth as go and it just proposition. low-value in had

Okay?

Amit Dayal

it. Yes. Got

sold being question with maybe other package Harvista question, is a as SmartFresh. I the So had, last

selling that are So --? And you is these cannibalizing independently?

Jordi Ferre

yes, in buy if we No, pricing complementary. not offer not coming cannibalizing. you they’re -- They’re they’re And both. advantages

side goes to the have the the goes different to growing to packing you Now is understand more that side. and because Harvista industry SmartFresh

that might integrated together, advantages you’re integrated. be bundling that an not but both of there if are of So some them there’s player,

not customers have is bundling course, a there such necessarily impact. is, So the not there may that an across of -- but all it’s

Operator

would Instructions] floor no to this Jordi time. [Operator there questions for are I It further back the appears turn at to like comments. closing

Jordi Ferre

Thank to management interest and to the to you. continues strong. team attending be for are this and everyone, company the call. our Thank company very you showing to that work you, committed make appreciate third quarter earnings support our We

again. you thank So

Operator

teleconference. gentlemen, you. this and Ladies today’s Thank concludes

your You you time. may disconnect participation. for this lines at your Thank

AgroFresh Solutions (AGFS) 8 Nov 202020 Q3 Earnings call transcript