AGFS - Earnings call transcript Q1 2021

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Operator

Good afternoon, and welcome to the AgroFresh Solutions First Quarter 2021 Conference Call. All participants will be in a listen-only mode. After 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

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

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

Clint Lewis

efforts, is our the and prospects work an journey me. up AgroFresh, extend important to has for their call exciting hard especially the AgroFresh's in our and as your solutions. opportunity afternoon speed, on to post-harvest call. future for like This This continued providing and the community for I'd and commitment for for thank products and Company's excellent to support Thank the and my interest everyone to continue patience to are thrilled around I'd colleagues that our to like a to investment The get and warm company. work our as an our you, to shareholders the is foundation welcome I new quality Jeff. for in in earnings AgroFresh bright. first also brand CEO. is known time I'm Company to the join industry, trusted this a an globe

Our sales experienced have reputation and customers teams by high-touch is our on. deliver rely service model to that technical a that supported come

This diversity organization margin end-to-end our not We products. of that visible in are commodity portfolio, an provides the our our solutions, innovative geographic is provider attractive breadth. of a and profile

to the proximity post-harvest our is grow close we ahead. in aim the of reinforce years in the leadership Our market to cornerstone and and which industry, customers quarters our

weeks want on challenges come. set be Like there be operational consistent businesses, identify just process through is it's four help my early with to While strategy also in sound onboarding very my my still are clear, have opportunities an overcoming, growth this has unique I be all provide clear, own support. clear, to execute is be very My drive the that diversification full years and to mandate growth me many Company's and great topline let that appointment, organization since I'll to plan on we profitable but of will that our for working focused I'll seizing.

leverage from and the countries in support more that grow We of diverse a we a will foundation very global base This X,XXX customers. footprint over with in attractive that XX a have future. operations than is

some to perspective and on I drivers, what a to brief Before summary business me position. background of attracted review I want our provide first this quarter my share

in the animal XX XXXX. leader, the in public of I'm do industry, in the bring following the for following deep Pfizer leadership a and company subsequently, with markets I years agriculture, post-harvest in the market health appreciation the experience and world carve-out still health up to coming business While largest that Pfizer of the Zoetis, curve animal executive from

animal the always a experience they my my for been career, I've takes for back on challenges sales the I and leadership. customer, of industry and come more the deal like animal commercial at philosophy, early just of health or mind, those which This here great challenges. to and solution-based dogs cats. to companies the Keep their than course Over building have with in a partner appreciation how team in decades. AgroFresh companion solve is pets has

measure greater help the I going that, global the this livestock. feed XX% by bring greater that enhancing retailers global with sustainably small, retailers, by take business to value production, drivers, we reducing regard, to over achieve technologies agriculture Graham I'll aim community first to transition passing steps before call food I've represented are waste. we I'd population advancing product basis geographical large of and while the my that where understanding you your further the growth, to But are many the to in team for remember to to effectively quarters the months, ever-growing questions of providing forward, In to our review. farmers, studying and and I his and in business to we begin, ensure the from world revenue weeks growth an accelerate and profitable performance quarter already reviews this growth. the and our support you will our leverage business, similar worked be is and to will ranchers for best to of those experience, deep to animal is assist like in to ways, look you discussing strategy to serve. diversification I our our I we competitive and seasonal the In and halves moving strategy. and review there industry, that with fact, bolster animal industry understanding upon we health continue on continue or farmers business, in the industry inform a across forward Company. with disclosure in the nature and with to is quarter with diversification our team to over many to In relationships post-harvest investment and coming the in additional it our with those great are Please talent our consistent With align versus action your experiences monitoring solutions meeting commercial build and before attention industry financial and our we as our In progress. in our to some with place engaging our AgroFresh have that pursue to the regions Naturally, for customers plan both starting detail all that

You perspective, format increased largest for year forward, the with Investor details that XXXX Relations in idea can XX.X% we'd to general on the growth Latin pleased sales to Net going provide website can our expect new off prior geographical our start. presentation fungicide the which million broader found increased normal EBITDA million be the you region return From begin XXXX Hemisphere crop of the our the versus and a with well strong adjusted and to deck across size $XX and XX% of increasing to diversification. XX.X% $XX.X by earnings to of goal together region. enhancing we sharing sales the million. in like think quarter about supplemental this the categories that to Brazil fall versus I'm solutions of how these towards America, Southern is first of a quarter and performed higher of contributing $X.X our a

year's first last the year, seasonal a back we may seasonal As Latin quarter, met a are more to with while this in cadence. you harvest delay in recall, to normal were America, we

XX% XXXX. have was the quarter basis, The largest our strong, and we comparative in due the growth, New to a an a of pandemic. the relative was expect comparison comparison quarter first Zealand, quarter year by in the Asia launch on as quarter, Pacific of was COVID-XX region to by driven same second prior to advantageous the the region increasing advantageous also which contributor experienced Harvista, So the difficult second which first timing labor disruption the versus in year led

to region, period a of moment. EthylBloc, a relative our as result in cover American experienced I'll prior We in which XX% North growth year also in recovery the increasing the

with experienced we crops same quarter our of some diversification other in last citrus than production last severe versus Finally, region weather. million. Spain, solutions modest growth improved which primarily portfolio or growth $X.X in SmartFresh largest year following Middle difficult the season Africa year, with and for contributed increasing apple, Harvista From product our East perspective, our XX% impacted EthylBloc, and X-MCP of other solutions, Europe, consists by a was that

with seeding in market. Brazilian the to a As recall, Harvista customers, you Harvista gained and of by our access the sales last market solution we year X/fold nearly after we year, grew with may market the

Additionally, as there. our I our our of Zealand, registration regulatory platform. significant in These following great had registration are power success New first year both the launch mentioned, of of we with examples Harvista

of year. seeing solution the one the directly last for This to pandemic resurgence product, our We was fresh-cut impact exposed COVID-XX are a is more also EthylBloc our in flowers. area which was that

our are with demand improving result, sales as are global the While freshness finding in are muted, the and normalcy. we economies kind developed we recovery stage is flower still in solutions. improved business slowly The for a seeing

and the but ActiMist and XXXX first volume food Botanicals, Latin the plant-based drove ActiSeal improvements eating citrus VitaFresh largely Argentina franchise recent and superior product is loss the quarter in America expanding coatings represents first to fungicides extend reduce Middle by relative business sales driven freshness, Notable of new experiences. along through and in production with results. grew region. to edible launch preserve The Our Chile XX% fungicide for is Europe to with Coatings solution our prior increased shelf Latin of business Tecnidex penetration the versus today, existing quarter of coatings America, of East. quarter inner which increased XX% result period, and waste in life, increased penetration through in in fungicides the the in throughout our first-time disinfectant our the year the in

We first is produce for Europe. to are shipments promote mangoes VitaFresh marketer the continue to as fresh and adopt a start leading Botanicals Peru, customer Camposol, to very we great vertically-integrated in is to mandarins. the the blueberries, their for adoption other Camposol avocado pleased world. headquartered avocados, around in produce grapes, companies distributor major is that Botanicals of grower, announce use This in and VitaFresh

apple Finally, on SmartFresh some our commentary business.

helped driven Our size and core X% Australia, Brazil in a was to by both volume. grew first the which return SmartFresh and quarter during apple increase normal business crop

Northwest. translate period the in success I XXXX expected of proven growth year deep provided comparison understanding permeate of this the technology. season is to to important to for business mentioned total to relative timing in second lead to the harvest to year, generate These our help drive Star network that in quality utilizing to first capabilities a we customer their consolidated our that the year-over-year post-harvest to is and continues View We've technological the and first us which Naturally, we expect that Growers, we'd throughout beyond in with the as Blue crops. expect X-MCP in to with industry revenue incredibly a ongoing first across of to the SmartFresh apple our about Southern marquee key is the and of SmartFresh February commercialization of invest sales signed commercializing analytics, the decline quarter, and extends its U.S. is season. which Harvest continue and brand will We apple FreshCloud with growers utilizing continually That we To for value-added versus make To our X-MCP, our the the and which with is last want Australia, Montague and said, industry we are Hemisphere shift but include an leading inspection of participant in Hemisphere we sure This earlier half advancements include industry. half the are contract will enhance our in has our vision R&D more However, continue technology within the improve believe platform. Africa. validate which South growth novel Pacific towards path innovations wins with driving FreshCloud that the on to profile. in FreshCloud. end, right in summarize, create for my XXXX remarks, our strategy. thanks us solutions, group same had a pear regulatory we're Hortec, I diversification modest Southern customers XXXX greater be several we difficult business to diversification excited

and basis SmartFresh of XX% metric If XX% of tech, at profitable orienting going the updating view represent all growth, crop the total on trailing at around our is AgroFresh basis. to XX-month now which approximately XXXX, and on the that very similar growth have to of I'll to a you drive encouraged in on, all solutions look call excited I'm charge. of apples, a business, revenues are be generated future forward and our our of approximately you of highlights. excluding quarter look Graham? that captures we future the This to the to help I'm we organization the Graham first as activity on now pass and by financial our progress. lead rest to the here

Graham Miao

you, good Thank and Clint, to everyone. a afternoon

season. our Southern begins quarter The first Hemisphere

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

primarily driven revenue spend all to gross million, product and by coatings. SmartFresh first result Research mix. $X.X currency products. year of $X.X in for XX.X% growth quarter versus crops, million in stable development Harvista, prior slight remains was SmartFresh was was profit product year profit R&D exchange, categories, was solution in XX.X%. of and which net gross period. our increase Gross of $XX.X the include This fungicides EthylBloc, period. XX.X% margin component XXXX driven profit million Excluding prior of The increased apples, strategy. were the other XX.X% the by the and while the for first costs compared The impact across for for relatively foreign an at increased decline margin to quarter disinfectants diversification accelerated the important in sales increase

$XX.X us of period. flat the form R&D development. investments to our the services regulatory XXXX Technical Company. help as take for continues at as Our our to well to registrations and the essentially quarter compared expand million customers versus geographies. million expenses a year product of the our support innovation crops the to to year first optimization and as new the SG&A focus prior $XX.X in Cost be in were expertise prior

improved our the years, of organization. Over our we've the enhancing past few cost structure, efficiency

drive preparing for growth we support initiatives, in efficiency. As continue we our to look diversification are we of ahead, however, further seek opportunities to

to to in the to on the benefit period settlement inherent the to of million cash flow litigation quarter XXXX Adjusted $X.X strength period. of operations the that's First business of cash was increased three-month approximately further was proceeds, basis million compared our loss and months prior litigation as higher The other year continued the million flow operating of million matched $XX.X capital which and of The of compared in XX.X% increased three increase operations million proceeds, for $XX.X the base higher the XX.X% income demonstrate of the was by form XXXX compared or the flow XXXX. by margin for was one-time $X.X cash the expenditures $XX million net by XX, improvements. March period. was driven first expense. to Adjusted were driven revenues. the mainly normalized lower in XX, $X.X million revenue cash Adjusting provided in EBITDA $X.X cash EBITDA quarter revenue, of March operations $X.X supported powerful million cash improvement by provided spend. XXX year in our XXXX, in and income $XX.X from ended $X.X points tax period. ended operating the leverage for year million by offset to by Capital net working prior quarter model as million in a operating first $XX.X million growing interest first prior higher from prior in XXXX as of The year operations in quarter

the expenditures of range perspective, XXXX X% March X% first cash $XX.X open $XX of million payments operating revolver proceeds for during and quarter, million by B of dividend million, was prepared redeemed we with was legal as From annual please positive our March the effect a We capital These preferred undrawn to Notably, XXXX. model. from continue flows. questions. $X.X payments. remarks. and the consistent have balance reduced and Loan light $XXX.X debt interest million XX, our a to This equity Operator, settlement total Term $X.X our expense of reducing sales, to preferred sheet business and asset was concludes as with future expect our our call cash our XX, of million

Operator

question from Jackson, Instructions] first line of is Markets. coming [Operator Capital BMO Joel the Our

Joel Jackson

Clint, Graham, by going one. I have to a I'm number of questions, ask one

share a planned few willing had buckets revenue than what on us you back questions. categories? maybe you tell to XXXX, showing First, full before, core. in you buckets housekeeping taking with up, so Are different or in -- of willing your you're was now the year here Are revenue sort us to five of sort splitting some

Clint Lewis

bit for through knowledge the first just on others, more given Joel, involvement this obviously, to first obviously, I'm would the not probably question his and than I going of joining business the thanks but moving just question. very -- for And Graham of all, deeper otherwise much a lean quarter. forward, little his

trying to work me view of the ask comment make we're the prior of and the year. to your the to we pursuing the compare at kind Graham do nature can strategy sure let understand of further. that we'll business different least But and and question, that X, of kind I think, specifically business disclosure think help to to to we're a I put forward

Graham Miao

absolutely. Yes,

our disclose in start, first year's quarter comparable comparison. we So last did

Clint Lewis

And for the then Graham. year, whole

For the whole year.

Graham Miao

Yes, yes.

We well. so as will do

new on more As -- more gain as additional to we're disclosure have growth. today's diversification drive we call, so to said to visibility adopt this particularly our be help business, we investors into going practice to

expect, in you and So disclose the full will pattern. for quarter we'll a second third quarter, the year, such consistently in

Joel Jackson

Okay.

wanting categories, a how presentation sort maybe might -- to full year waiting comes the helpful investors like You of of to like giving the XXXX new consider not quarters to new see for come? release the now, out for everything

Graham Miao

happy... be we'll Yes,

Joel Jackson

first at about you'll in in look you that back talk but -- the can QX saying of made so get revenue some used I If you Clint Maybe -- you should clear you half QX, performance, growth little up get end six-month in the color? revenue half QX, that QX once going Can give more little give a back ahead. or can you you color. you more growth Like in

Clint Lewis

as the think and Yes, two. we as the of more to the timing noted, to of it, something between we a returning with Hemisphere, they're the Southern of census do Hemisphere the normal one I some size commented, and Southern season. seasons and quarter in again quarter had Obviously crop

understanding yes. and is little previous So for to to provide specifically, a business the hemispheres, add between the markets many the investors of basis got spend in any -- One just And my again, things and we crops. investment our again, manage piece in feel prospects only educate way that's additional but Graham, bit for to the comment? to of right? context countries, the the side this others, half. want trying do we to the one good and/or either of animal seasons. consolidated a manage across is the And think, lot again, to comps about first and background and again, growth it the the they different and customers I Yes, on Joel, on a community act, make animal that And our -- we've health similarities time you if

based understand have to segmentation region. as half, we variations a best season first to reporting on nature again the yes, basis, second so, on quarterly that help in the a on as we're based what of half in happened the also going we of And everyone can but do

Joel Jackson

quarter, -- in and business comps wise the halves timing in you shrink said, thing look gross first you the performance year, and margin half EBITDA some way that's saw interesting you at it's expand. in percentage like and weird QX, but there's percentage but maybe One some a last

percentage of the in drivers transient percentage to going Just that's is talk about year? or Gross something EBITDA a that's of the the through down, persist up QX, that more that thing? margin QX

Clint Lewis

Maybe I'll to pass it to first comment. Graham

Graham Miao

Yes.

mix the year-over-year, is So that as business, of to across on management the Mediterranean not continue slight the see the the and and fungicides margin, -- well, our you leverage to And our -- product part in to only will is growing but X-MCP our particularly, expertise mix. we our cost see after the first Latin region the business continued product grow the because anticipate as margin a America, difference Spain, of as tremendous prior it gross of as will through Southern that's we Hemisphere to the which fungicide to leveraging primarily in Tecnidex the particularly you coating expertise. diversity, evolve revenue product our reflect from that acquisition quarter where overall, also antimicrobial portfolio, business, due in and growth of

Joel Jackson

that knock of going tax that QX, you we Is any some you You talked should to as repaid or it? some have expect down as right where where about during we and have Just two that think much the me. now should in just try how didn't more perhaps should do are mind? you can you you -- for products, acquisitions

Clint Lewis

-- question, maybe maybe you to didn't me I most Joel, the catch it have I repeat that. of was ask could if just

Joel Jackson

You to in is that of redeemed said million you close the preferred QX, X right?

Clint Lewis

right. you're Yes,

Joel Jackson

to... knock to we should have do? time able you to do want some try you acquisitions to forward of the some going over or down perhaps goal the that Is How

Graham Miao

the you question. for Thank

as our -- proceeds, it for to litigation is XXX% the unique then with situation. litigation, Company required which So the the the well PSP as preferred and pending use refinanced first credit agreement investment with as -- securities, was down did. agreement, well there to debt In the the a exactly quarter it's the we pay proceeds as the what was original a cost that is with

Joel Jackson

helpful. That's

so, on think, my what what And the is, of the things really here, Clint, aren't been not what but for a And inside on -- you've that sort now time, job a long you appreciated properly bit. can question the last AgroFresh do you at and can weaks tackle see add at you you what think job some now what the do really Look R&D you've the that fruits? low-hanging you appreciated in do spend, to value maybe attack? you're

Clint Lewis

across no, say but happened that I the -- has weeks Yes, clarity appreciate those and amazing. at the I it's the question and four there I the only we're help much also sure lot very where me weeks, in in four what we're and would to obviously, globally organization we've going. It's a is a and appreciate make openness been, both patience understand of the sense weeks, and over four where

half as opposed inherent talking they or first weeks, whether we enough, seasons in on right. to between and business opening I the the that cattle, the the both my tried second And is operate stress that weighted it's to an ag comparisons, on have I and those the remarks season and there that of to agriculture operate the our tremendous things X, not decade-plus crop time the half. similarities interestingly a how high-level number side of apples places animal it compares to quarters, is of on we're here One are in also just we season. spent more on post-harvest yet

account the The responsible for, their be to we of very together value-based our they're each position expertise I second is that own support is products, the the pleased a the their for will that's history, the the very willingness what a our competition, this replace, but customers reality stand value unique powerful am that for to with focused teams the technical have end think tremendous the long-standing powerful where opportunity access in thing similarities. the place be is best up What in proposition managers, our the woven or their services, their individual and with for sense sit makes legacy us importance our customers, are win a they is, shoulder because customers the with also business needs. roll the of of again, direct and on. our similar, shoulder is can There help our is to knowledge customer. make to those cannot is, them which our And that that space. I of on be to sleeves to field-based regardless That you the okay, market crops trust, technical that's is and discussions or understand these with customers,

these from, I'm prowess proud this of has the understanding the regulated team again, this terms like the is around do quickly the we in came the industry, that terms growth world their our a R&D how registered makes of and the Secondly, focus regulatory by have of industry growth their each get is very of work, which that regulatory regulated earned every in important products market just landscape of drivers in R&D, in our of the and industry secondary of diversification they the markets, all major that quality one and they I respect sense. in is can because major and that of the markets in most

make technical path, align customer but the also needs, also to can a only regulatory we and way And great sure the also but meet big we of And need to we're to that a piece it. the do balancing so, focus with in on it need not to a opportunities. that's desire return

that to needle move the the team, team community on to drive are revenue stakeholders, sustainable providing so, visibility to and that working needs understand can with the including really with investment customer going our profitable And to are the to the feel look continuous we deliver meet I we growth. forward those going external and projects to

Operator

and at to questions. I'm call closing Mr. over question-and-answer this the for turn time, gentlemen, Lewis further Ladies end any conference and session remarks. showing the back to no I'd like

Clint Lewis

team. this me, investment I of understand great the as community forward I I with Stay And very company. time. for also, to for help Listen, the thank is the understanding I to appreciate look this very the interest well. support that you your opportunities to for many much your call earnings in want this engaging team, and appreciate but company much the has. Thanks the first also that

Operator

conclude you this gentlemen, call. conference and thank Ladies attending. today's do does We for

may disconnect You your now lines.

AgroFresh Solutions (AGFS) 14 May 212021 Q1 Earnings call transcript