AGFS - Earnings call transcript Q2 2022

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Operator

Greetings, and welcome to AgroFresh Solutions Second Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Jeff Sonnek with ICR. Thank you.

begin. may You

Jeff Sonnek

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

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

Clint Lewis

everyone welcome and to Jeff, on the you, call. Thank

headwinds. million million adjusted XX.X%. a second XX.X% On grew EBITDA of second XXXX sales to and team for and of currency the constant our despite Hemisphere XXXX execution season, increased global million, proud the I'm the of of completion increased significant basis, currency sales to The foreign continued Net $XX.X quarter net $X.X $X.X our quarter for growth strategy. marks Southern of compared second quarter the their growing to

by period, prior a solution our diversification XX% first results, in the the of as growth in categories. strategy double-digit the of to continues evidenced half year revenue our with increase product to diversification Our drive diversification each in compared year

components product in Relations geographical our quarter all which of XX excluding months revenue crops, for our category XXXX. Diversification and XX the basis. grew Investor the category XX, we trailing months trailing solutions of ended solutions technologies. of XX% growth. XX.X% represented found define consecutive double-digit diversification and revenues our drivers ahead both goal to the growth Hemisphere are business driving through Northern the net half first diversification, to in providing to we strategy our for grow EBITDA of to and continue meet our And year, on planning our you are and like and entire both As second of the the execution half to additional the of understanding our review to covers monitor growing your continued we strategy. adjusted This Apple, earnings our sixth The XX, Southern diversification can through a ending be we XX.X% Hemisphere look assist in which with this and of I'd in progress the June season, deck of business XXXX, marks season. Remember, quarter the consolidated versus sales further the supplemental disclosures and the details of covers website. for June as our diversification revenues business, SmartFresh

While by fueled will our strategy. continued we SmartFresh diversification our be Apple growth to business, defend ongoing legacy continue our

customers, as results a our a headwinds encountering Brazil, also of growth well-known our we being growth, against visible key markets weather despite to second such as risks natural minimizes at period. consolidated that is to weather, performance those and increase the geographies a which combined generated the agriculture any the and can one growth the looking for many addition From on first products, the hedge success build incremental crops, prior generated region XX.X% on and versus in helps season, drive $X.X In geographical in such an variables our thus, of or to entire in engine perspective, million across of diversification quarter adverse diversification results. East Europe, Middle Africa half basis as have impact platforms, our year

demand markets our X.X%. a supported as I'd the industry of on diversification given once and in selectively note America Peru. and to Pacific XX.X% relative continued year, of and we've region implemented From headwinds, half sales the some X.X% most X-month severe recovery basis, diversified flower by were Asia that to North perspective, our double-digit season help stemming versus And but in our the such apples a met looking slightly Latin where protect market. the represents the at was categories. currency America, on basis region constant Our the other solutions product nearly which also we at Hemisphere this due measures margin. Southern XXXX, season, Lower growth, small across for decreased a again, offset Brazil, first stage largest volumes, in during of of weather increasing Southern that strong our X.X%. each Hemisphere currency Chile reduced pricing by grew achieved strength Harvista from growth SmartFresh while grew with

categories. had we across our meaningful dollar all contribution, diversification key of terms In distribution

disinfectant and fungicide expansion and and by in penetration versus markets Our driven year category Growth market period. Africa and in prior contributed North the the as XX.X% and East million $X.X product Morocco antimicrobial was Turkey. growth grew half Middle of such first

the and market last entry. which crop apple focus in solutions other for season growth. beyond greater the market such an larger resulting penetration represents drove solutions. Harvista and performed which crops Zealand franchise a versus in freshness geographies Harvista also category, of experienced following an on includes half storage Harvista leveraging in contributed part million X-MCP increased as grew first Africa, early Ethylbloc, other and South and XX.X% well and size New into of of key and our need SmartFresh continued XXXX and year's our Our $X.X

flower our American region to North as Our also continued growth solution drive Ethylbloc the industry was notable, experienced in recovery. helping

grew category coatings in the significant as of million contributed growth line, such South versus period. coatings the and XX.X% Brazil, growth by growth. new $X.X product Our markets Africa was main of the generated Egypt, penetration driver of led of year Teycer prior which all and

digital Brazil coatings plant-based and diversification Control-Tec Egypt, in Botanical, such and categories Our Chile. first-time product, equipment other with is Netherlands which FreshCloud sales our and solutions Rounding markets in out Peru doubled category, as the VitaFresh traction strong includes nearly Spain, new and platform. our our

discussed of FreshCloud, its rest well of portfolio. as in strategic to value both direct generate ability our as to previously We the have revenue the support

were While we to recently point to as customer. are in an opportunity journey, able with our entry still the at we leverage enter new table grape FreshCloud an early a sector

of the $X.X year more relative there communicated prior for several during apple driven the are production and While gains the according by our versus new and needs about, we our for for Association and pathogens Novozymes, efforts versus half Chile. partially business, solutions our with of co-development demonstrates in our development due address biologic contributed to introduction this advanced and of million food very solutions. On looks other Pear categories prior solutions Apple foreign Recently, and In and period, and constant control customer share first global a use biotechnologies novel agreement fruits, solutions in basis, June, and than the agreement for with post-harvest year the to collaboration our biological-based half, provide period portfolio scientific we of developments strategic grew we've to and to similar mainly World a Novozyme's were estimates. first the sustainability especially reduced of primarily comprehensive the combination XX% differentiated decreased category research regulatory X.X%. advance missions unmet Apple of meet X.X% AgroFresh services that anticipate capabilities flowers. and leverage development Brazil Novazymes vegetables integrated entered These the extreme tripled We impact the in commercial which SmartFresh needs. to offset weather new to across by expertise, compared and technologies and through apple deep a that in currency which formulation that exchange fungal that excited footprint to small into on XXXX, basis, chain. around growth by our innovative and growth will of Spain category, the each SmartFresh accelerate

solution transit growing is in preserve tell pioneer methods while use supply that that the the are U.S., either and require partner solutions our biological fruit help alleviating our post-harvest portfolio convenient which most to includes their fresh application our gained given Inbox of especially SmartFresh largest a and customers and and of for July registration X-MCP products growers, California and supply with in crops, a impact region more don't room more approval need storage issues. and chain the SmartFresh reduce challenges consistent packers range customers protect us face We diverse quality our food now sector a produce the technology wider in option the pears, technology the availability expanding fruit our portable small and in for sachet, in to loss and and provide California free. are of capabilities, complexities. help crops, to Novozymes infrastructure, Further frequently stone of who of and SmartFresh of high-quality advancement the to Inbox protection retailers rates, pioneer powerful KIWI or for they offers avocados, the to in of and while and transit. flexible we excited have product apples, quantity

and In achieved other pursuing Inbox we Life registrations VitaFresh organic week, we addition certification European solution. for for SmartFresh also markets. similar global California, our in are to key Botanicals And last Select Europe

is these to in conventional are focus coatings competing natural product In which organic leverages commoditized have that the application offerings, increased line plant-based this types and and that fastest-growing meet equipment. to option helps full now largest an generally coatings the post-harvest for our more This solutions. addition is by the bringing we certification bundled price older, demand category, with the organic we ingredients, Today, and signifies on industry. category the often category of defined and

solutions with the America utilization of relatively such that Latin AgroFresh underrepresented coatings we higher-value tailored Asia. driven underpenetrated expect will However, as in applications category. and to such Currently, plant-based coatings coatings crops be natural, increasing organic geographies and avocados, category the by in growth more as moving is in forward

leveraging are natural, segments However, penetration Botanicals we to value portfolio R&D important VitaFresh to of this the We growth by the of of our an internal effectively teams see through on or focused in and suite category higher competing category. in and that plant-based are the our expanding innovation creation offerings strategically the continue innovate a to our opportunity organic. products of differentiate external

their opening summary, and post-harvest during We natural of geopolitical efforts where customers further In successfully the of standpoint. do also many and support in which Chile U.S. marking it validates to spent mission to goals leadership to technical our for and Southern of meet this we and various importance And with to new production and reinforces of my ever-present are the This revenue our in plan abundant recently The and service the key will center, demand to to inspires the mark and the than with new an opportunity the and Europe, being in benefit customers region practices which and weather Chile leadership innovation XX in that and have for responding provides of and for this America, fruit Rancagua, desire production other address the service excellent macroeconomic, in service increasing continues and globally interest retailers the especially continue consumers fastest-growing to footprint ago. resilience globe. industry regions visit. us and time like SmartFresh is retail around the and there our firsthand to as while in execution advances to our of travelled diverse success. and financial consistent an adopting innovation new generate in operation, of The My been what important commercialize team EBITDA. seventh solutions to worldwide strive is and We innovations and our and in they Hemisphere the from crop our saw strategic of and most me of customers. our has years fresh, first excellence to working strengthen and was the the markets and Chile at at the more and more season produce new high-quality are our team produce. center on Chile, looking of We utilized strategy evolving is forefront Latin have our stakeholders waste, options. expanding loss entire customers opened Chile, our America our of center AgroFresh, durability Latin in our supply diversification serve to business. how coating we we demonstrate in support our our sector, challenges, face to for hard organic a finally, Through center a global by crop in newer a operations region. product country I a the achieve discipline, accomplished new our the full center position focus food was the of our continued solutions presence to adjusted and growth year, we key and position and center as

Southern in the growing and transition new with Our season to in collaborations call performance look the global team engage commercial existing while the capabilities as new to on deliver momentum advance into financial We now leveraging our and pursue leaders the freshness some industry produce speak Graham footprint. the build is of to we Hemisphere to to continuing innovations other Hemisphere Northern generated Graham? season. to we highlights. continued I'll pass to

Graham Miao

and you, Thank everyone. good afternoon Clint, to

completes second season. Hemisphere Southern The quarter our

million the quarter in As viewed compared second a can versus Net sales for that quarters XX.X% of half reminder, the million year. between seasonal fluctuations the sales second our should to quarters the $XX.X be business each of to of $XX.X consider the XXXX shift to of XXXX. quarter increased in half

exchange, currency increased XX.X%. foreign of revenue impact the Excluding

the sales As constant generated weather events for timing second of SmartFresh harvest diverse discussed, solutions. Clint growth unfavorable in the and categories net of the Latin product despite a growth primarily on portfolio the differences. driven experienced America of benefited by in Each basis and was increase leveraging our diversification company's Apple from quarter dollar

by million, XXXX, Hemisphere first an X.X% million $X.X Southern net of of of year for For prior of currency the revenue first The half increase decreased $XX.X period. the XXXX. versus half season impact sales were foreign the translation

impacted for diversification, solutions, SmartFresh for driven and Harvista. The growth sales expansion offset Excluding this net Argentina. impact, and This profit revenue associated Gross margin Ethylbloc such increases. as in period, with by and primarily quarter price increased and forces, gross was was well The second variance as was the further mix margin SmartFresh which antimicrobials reflects approximately the was XX.X%. by in portfolio. year as as was $XX.X in product period. partially impact penetration more compared due material the coatings, primarily a profit higher inflationary to transition in to million margin crop and million increase Gross Brazil the Apple EMEA, was the $XX.X prior market was lower offset of XX.X% to by in by strong to other partially related compared XX.X% diversified X-MCP prior production and our year the costs

both on For work were million, margin the profit some cost headwinds the profit lower release We as XXXX, generate sales these pricing initiatives in continuing to year X.X% representing mitigate and expect XX.X%. cost hard increased of gross help gross inventories. of on we later to $XX.X first the to and half savings

profit million primary strive the in through on costs our million with always our XXXX second in of prior dollar and the $X.X is period. consistent strategy. compared to $X.X growth development we to year gross growth, were Research quarter maximize focus diversification While margin, generating

These For to driven the first of million R&D projects. $X.X were million timing half compared of XXXX, year. to $X.X decreased prior by primarily the the decreases

and to as quarter geographies, growth driven service of in coatings the the investment in investment and to solutions, product $XX.X alignment for our new reorganization year offerings offerings our commercial SG&A Our proprietary diversification for X.X% out the and crops prior in strengthen $XX.X primarily provides million XXXX, to our R&D objectives. with registrations second by compared expand to commercial increased period, increased expenses in activities develop build technical activities. million new support

million. half X.X% SG&A of $XX.X the For first XXXX, to decreased expenses

discipline activities. a While plan cost resource and growth the of remains focus revenue-generating business, for our the allocation as continues some this towards contemplate year to steer organization we

to we expect for in XXXX, result, year SG&A the a range As mid-single-digit now the versus full prior the increase year.

XXXX loss compared $XX.X the $XX.X of million net million period. year loss quarter prior Second to net in was

loss a net million period. the to the in first prior of loss half of XXXX, $X.X $XX.X compared was For million net year

reminder, $XX.X in receipt of As $X.X during EBITDA proceeds company the the which million to the settlement first quarter XXXX, second litigation million primarily million from a Adjusted the of of XXXX. other of quarter of a by related $X.X the to recorded income, matter. increased

to EBITDA of adjusted $XX.X For months trailing the operating to as The higher June margin EBITDA half lower to compared XX.X%. XXXX, for and $XX.X prior of period. EBITDA was year XXXX, sales due in ended the increased representing XX.X% a million, to million Adjusted primarily adjusted expenses XX prior period. the compared increase XX, first year was

months approximately million half with where operations ended million was our our for period. margin in capital X June initiative chain year strong as was of prior benefit comparable as of to onetime of XXXX, operating driven flow by by provided $XX.X in XXXX, compared June X for in versus $XX.X the supply Adjusting normalized the for reflecting the $X.X the Cash for working year, the normalized our XX, business. the Southern the well operations flow procure reminder, months million should the mainly the the in in performance for cash from respective investment viewed be incremental concerns, to EBITDA Hemisphere adjusted flow The to decrease higher Northern improvement. margins correspondingly to due a to the operating timing As volume translate XX, as total and litigation $XX.X align from sales year second inventory advance seasons, million proceeds was to strategic in higher cash year prior mitigate period. cash prior materials operations of ended receivables

year For $X.X capital XX, the prior XXXX, ended to million million were June months $X.X the in X expenditure period. compared

capital Total our was asset-light million debt X% We continue balance XXXX, prepared million. From perspective, as annual open of June X% to expect with XX, was sales, June $XX.X model. as remarks. Operator, concludes a business the to sheet This million, to consistent was revolver our $XX our please $XXX.X from of expenditures range cash call questions. for and our XX, undrawn XXXX. of

Operator

At comes first from we'll [Operator a question-and-answer Street Our with session. Ben be time, proceed Please Klieve conducting Markets. Instructions] question your Lake question. with Capital this

Ben Klieve

first really half And questions. on first the taking good year good congratulations all, of for of quarter a Thanks right. the and All a here.

announced of First on kind on touched that you question, a couple that the recently were questions Clint. of initiatives

wondering we benchmarks that years? what on I'm can look you're kind over couple of relationship the can anticipating First from on you of next Novozymes relationship. if elaborate out this for

Clint Lewis

Street you AgroFresh, also Well, to coverage. With the to engagement. you and Lake this for opportunity want for thank take thank the appreciate we question. initiating I

we are the question, the to excited Novozymes very agreement. also Specifically about

broader experience a and settings solutions the leveraging that we in R&D and the developing formulation AgroFresh model specialty has think and expertise our it's crop commercial example in crop leveraging it's agricultural specific and I biological tangible leadership win-win. think and the a of

we cases. be has is at believe to of look different think the ways. identifying at, terms of assets to from screening and I One library are of look it that use that we'll milestones couple we viable or for a what benchmarks enzyme Novozymes working screen us, will In

say So obviously I that more one, that would is and would a be metric. internal

Novozymes working market to be then securing regulatory specific case the for with in regulatory in would And securing that the always and ultimately that selected and cycle. that. approval as compounds through of second the working potential specific The geographies applications approval is have we then trial on agriculture, with by the these crops identified

catered and relationship. are at. that but questions, kind kind the these as is there see of And there's we if let those So me advance agreement any more milestones the of pause specific the on again, we look milestones our

Ben Klieve

in there's No, that mean new this it. lot pieces It's long helpful. -- nature. of is was with a I and term moving

about very more look So and hearing in coming helpful the those to forward quarters. color this

that have of question customers your that that Another that InBox. asking was -- you one something regarding for. I you on Clint, initiatives have said touched this been really was your

for given early first stages of material new launch be from kind online? to So your imply solution, is that revenue product products of can couple product in lines? does looking of there here -- of you does see were going see across you as that the that Or that a this your in than a generally the customers kind traditionally more come years modest be contribution the this

Clint Lewis

if in Well, and historically, of diverse the and a I the the I frankly, more growing diversification leveraging mean excited to as the engine of crop U.S., the opportunities to now AgroFresh quite why and really in of to you and one from want much much in a Northwest, our pushing broader fully regulatory opportunity America the York, important we in you growth, to geographically diversification underrepresented this drive and AgroFresh largest on as frankly, largely X-MCP quite have not much focused U.S. like the being and of that penetrations the and opportunity history are producing a the I'll And the major be pragmatic regions focused know, pear U.S. to in even us presence dynamic, provides we state the standpoint expertise as in sachet would with strategy going leadership turn those that our so region, Michigan, California. in Northeast, crop the strategy our Pennsylvania, diversification. gives state we're around excited the relative been flexibility U.S., to here from specifically North response. Pacific state of for in California. which centered New apple our specifically think have we're more diversification about under the say, I reasons about geographic growth it crop, apple And is leverage opportunity in apple and kind and a greater customers, kind with build really the convenient in only to very from

InBox it regulatory I would to and relatively because our one strongly time. other we've understanding little X-MCP But concerns got the crops but period California, the endorsed on I so about at of And of the that familiar selling deep we in very the by opportunity say, be say, cycles leverages you're that bit the in same they're and a would short say in excited robust we're exploit often time, longer, sticky. can hand, a

Ben Klieve

Right.

was Okay. helpful. Beautiful. very That

particular especially the then If the if you market and state I'll fill on challenges, of Northwest apple drought just that across maybe crop Pacific of ago. a especially versus year the Hemisphere I'm when such going us the then about the the of on wave year that's kind back the And get looks in more Northwest don't mind last can in Pacific right last in and how now. kind one the in Northern wondering one year this queue. had kind in devastating you year talk guys heat of and

Clint Lewis

the the at and but to looking feedback we the Apple our ground, subjective that Apple Pear on also both it. a We're World and get qualitative this Association and Yes, U.S. trying that from track great trying timely also teams actually assess from to Association, question.

not cycles and waves cases, way quality. an a into went the as and like today that same we even as last had environmental of see way, we So repeat. weather and And track I type that sit in temperatures as stand we the would that would Oftentimes, -- we just impact that impact the very weather this in we and again as year the dynamic significant of crop And the there and volumes are across high is, say and clearly, various is get is long that last we fluctuations extended again, in if the audience, know up U.S., way educated optimism real much unprecedented, that I customers, a higher think you year. defined saw that the Northwest have of unprecedented you don't that Pacific we in I some a see we remind yourself by resilience weather challenge heat can of our and did temperature. seeing kind

knock lapping the think of throughout seeing that real last point, might here, sustained we're high have at was issue what high period becomes extended year so And same an periodic heat, day. of of the while of right? spikes you I clearly saw we nature level really this wood, the heat on What we're the seeing not type dynamic.

see is regions for like a believe in to what of argue season growing recent I the I more like well of saw But specific a out. way, So for Northwest. that Michigan. crop more again, week as a to bodes this There have more more all been reason Pacific a than challenged we year. normalized one I it put expect how that as also that said, wait pragmatic even we plays think reports would to in kind every have some normal last we'll U.S.

Ben Klieve

got very call. update my quarter we'll get helpful for Very Well, good. the in questions taking I'll you stay your queue. next appreciate it, on it. back and Very and good. hear tuned Got That's I

Clint Lewis

Thanks, Ben.

Operator

your Capital Markets. question next proceed BMO Joel is with question. with Jackson Please Our from

Joel Jackson

afternoon, me, excuse Clint. -- Clint morning, Good good

see growth of margin think you growth of $X to we you've while -- second looks I months gross dollar have and a about a few this dollar flat? talked margin I half. little in Is lot million maybe we ago, Should we the Should ago What think half you said So look gross to -- be like $X performance got year. like? It million the what we like see? million expansion? now goal first should should the $X see growth goal,

Clint Lewis

question. good you. all Joel, Appreciate connect with to the of First

Ben that Klieve on I the last I this of think it way. just had, answer response kind would building the question to

We are bottom Northern year and full into continuing top half, consolidated the the through focus also Hemisphere. growth and line on which is included driving to second

it markets we will gross standpoint, we of assume also the not much the second kind the half, don't into on dollar first only size additional if As also surrogate and profit growth also Northern you year to that? Hemisphere. in add a contribute which of the corresponds margin Graham, let's of a but half we half the to from is America think like of larger want but growth believe And in revenue, growth, crop believe as recognize the growing if Europe, season a we a than about North I normalized using profit anything Southern to America gross second our the continue Hemisphere then know, to in year. kind and to North half and

Graham Miao

agree, Yes, I Joel.

you to second as at sales Hemisphere our America. more also be That XX% the Northern North look half margin overall and in Europe our accounts seasonality higher includes of tend business and pattern, If the than sales throughout well. year, and Asia, Northern for

sales. half we in one dollars So year would proportionally had I think your growth a will that expect first million, second of certainly the observation profit follow about $X is the in and to the then the right we

Joel Jackson

Okay. That's helpful.

production Can So you the expected below that to how year, I it's kind apple and but you? the what expecting is be still impact think for X% might of was this about reading talk I up that average. that, profitability maybe day U.S. other you're X% the in

Clint Lewis

Yes.

then of listen, we as always get the I think again, these and at model they following end. mean, -- -- and there's from reconciled fluctuation on, year-to-year some we I forecasts

Remember, global this as well most is five-year tended where of pear and kind use modeling. the the pretty average again, a year. of largely look -- the familiarity. rolling more kind it's history given company, at in we riches where of modeling is we the crop, apple And using to done we've that and of kind the have we data pragmatic have We

light of that. remind durability that that somewhat also to this A we the a the numbers kind along But people season our service day that also that the is would bad is of shines given assessments and taking customers our business. so and challenging to say business for paradoxical. our our of it And your the a and speaks do, products we is the or of what criticality our for try day goes our in work of customers, threshold day would solutions on again, nature that for day good and or within that off fits the model of a a AgroFresh the technical AgroFresh. model mind normal with also good have, technically I because a I Keep around this of crop brighter we expertise for model good the that X%, even products. resilience the

our And to really only strategy, becomes continue great incremental a so we diversification grow it as good I it mitigation not engine for hedge think out again, as risk becomes a also growth, well.

Joel Jackson

expenses. XXXX, of expect timing expenses partnership delay spend in a at in perspective, projects would the that, release with all? similar talked similar XXXX? R&D looking XXXX be the R&D you Should or because R&D, expect you Modeling we of the Novozymes at to in some something And or impact like about expense

Clint Lewis

So milestone-driven. and structured, backwards, of and answer kind right? again, I way, let we with So think Novozymes going a in really how me responsible agreement the it efficient that's

regulatory greater we and of out come predictability future of and select that regard. also revenues provides it in that targets the path understanding appreciation of our also that So the

the reassessment of or annual think kind to funded. the healthy, I margin-generating dollars the opportunities bigger portfolio critical and always, of are key it's revenue sure appropriate as As reallocating a prioritization constant make and it's of

milestone as way respect payment we in noted, And multiple Novozymes. the is to really half relates at that of underspend and we we'll we make timing responsible in up feel commitments we've some correct, see in the half. have the able on of so comfortable as second being that focused that how the projects commitments it have, we first that's to With that you a we manage year, to look this are

should sales. look threshold I our sales, is X% XXXX, X% to with I in still we the of be think consistent general of As a first, towards we percentage that somewhere as think

to anything want know and in some as underscore to in diversification you I efforts. think R&D continue You is see, if well step-up smart to tech as support things healthy, and else might service don't to marketing, investments, like I sales, our this it. and Graham,

Joel Jackson

you very Okay. Thank much.

Clint Lewis

Appreciate Joel. Thanks it.

Operator

H.C. Next with question. Dayal your Wainwright. from Amit with question proceed is Please

Amit Dayal

Good afternoon everyone. you. Thank

angle. side questions of ForEx you my perspective, of alleviate Some have any But undertaking a etc., on ForEx taking commented side, be that some to a already might With been little to you're help that from measures the pressures? respect you there to these any mitigate pressures is hedging addressed. from the I know bit pricing that guys

Clint Lewis

Yes.

opportunity to individual Amit, engagement for thank Remember So seasons I smart you also question. take the and your the the recognition also don't necessarily responsible of financial of would price. our to appreciate first that to, what I all, say, correspond quarters. and

we markets in locking lower what to in on inventory would already costs, inflationary also and the some half of season, to assessed that and comment thought respect approach. inventory I'll generating to impact opportunities well still with while take focus costs hedging of for the questions with year. you revaluation management the that relative any to and some also second so we will that responsible was to exchange. will the have to of that second we're believe able, in to hedging, some And define in relative sales in specific price our inflationary I ask of to guide and in of we the margin the offset stages strategies Graham we but that customers foreign also to mitigate With based we hemisphere the will be with smart the price that some inventory higher answer help especially Graham's on half planning be some when were XXXX, commitments step-up Southern

Graham Miao

Yes.

global two question. foreign One do So business manage to see we an how you fluctuate. aspects there is currencies in your environment where our are

into where the in say would and those flow operations mechanism repatriate a mechanism we transfer book our across cash so markets have manner to global instrument and also to I do the put want by against also that also and of of when cost timely to hedge our in be cost and the economic we footprint also world we dollar in a cash So we back in in the increases the the U.S. hedging today's our appropriate, that fact responsible the gain pricing So when global then in we when look markets. and we So major And make strengthens itself that revenue currency hedging we right? that provides place, we environment, outweigh we incur opportunities sure the mindful natural a manage then, cash need in of hedging hedging, where our then particularly way, quite build in can to tremendously. major expenses global right? so and in two, like we repatriation And euros appropriate, today

to we by management have cash So our at time. flow operating also natural that utilizing be strategic same global about our hedging, the

Amit Dayal

still know decent fungicide, is for respect today, that. growth front. pretty on small to you growth Then with it's you're but the strong. numbers relatively showing that Understood. I Thank

the drivers. in of Like post Is expansion or like is there -- and geographies too else of those supporting these is in is an this there competitors products adoption one helping these offering You certain Are product at as it markets in stage you that early you where the that's share? supporting that types aren't many anything numbers? taking these market penetration mentioned areas?

Clint Lewis

regulatory use Again, our to we strategy crop, our generation deploy both think the technical model the the commercial the submission be use also and diversification we other about team for selling of technology execution in leveraging and beautiful registrations, and as markets. and And built now other leveraging for X-MCP approval the crops I to have in other appreciate geographies. your of a focus our it's focus on and the model. and and in-country we've accelerate regulatory that Clearly, global platforms, Again, data engagement expand and apple beginning. for those across thing model, demand on a those cases Yes. including successful this products a pioneering generating very that I from continuing but pear our secure R&D teams to direct and

We supply companies companies, as generate industries, that not with are distributors own multiple have for force field including ours our demand engaging directly chain. other representing and are our customers we as third-party is the dependent SKUs, and multiple that products to across other that

SmartFresh But that emerging is with heretofore, our matched regulatory or technical expression think I like it field, markets Today, really our to and America and generation earlier California, InBox, U.S. the Asia. growth the capabilities, not that for the of is service looking to ground, is East just California but of also Latin in as of as with and be one and having Coast sure state even more other adequate tangible approval of So the make as developing argue recent we we our will markets to customer where think explore of products technical contributing coverage expertise be. shared that not think and demand And and would additional in applicable in are the a in I also of well. we starting R&D we're of analysts, are underpenetrated really sales on the in the we're research important like the only the boots also we that down I state California. I should state putting registering state parallel,

Amit Dayal

you for Understood. that. Thank

Just lastly, on update FreshCloud? Clint, maybe any

Clint Lewis

strategic So feel see a I it the -- we responsibility I how But fully where our more, and out ready. what is to sometimes FreshCloud the continue I point appreciate Amit. In FreshCloud about the respects, want it existing little portfolio for platform is talk complements some opportunity the bit and to when -- capabilities. to

longer-term that really going it's the One to while viability. model like a ways services a SaaS model, As days, offerings. FreshCloud the financial similar from we other to various two are where with again, for we're we've and charging is, still a subscription and early there's discretely modules more stand-alone and assessing market defined, responsibility,

speaks focused share and a And grapes to attractiveness really that don't example the the operations. that customer to will, high-value that have their release, have can bringing the we're In here, not nature FreshCloud be and to because really we, think value foot we is and announced to products strategic that clear we power the remarks connect able setting. space, potential customer generate And us think regulatory proposition believe FreshCloud's we I other But to the get to not that distinct that, were our to working that otherwise we table lend But would in an have to use of FreshCloud from of any name only that data, We penetration if see FreshCloud customer that that The that tangible customer second have quarter We are but that crop. we their with able one customer. had. on in penetrate this my where their of FreshCloud. it's can itself the opportunity disproportionately a we other the increase able still to working products standpoint to irrespective we and I that FreshCloud. share I teams a of albeit We've briefly the and the to of has with and example publicly. that, with opportunity is access were wallet interest to of bundle strategic the opening where we so in door deeply services, with particular in that give we mentioned crop. with with the it its we're you see a

Amit Dayal

the take I'll color the you Thank Thank really questions I That's I the other that. you. for all through. see come aggregation offline. good appreciate Understood. have. and my all

Clint Lewis

for Amit, thank efforts of the recognition the team. you the of and Thank you

Operator

to the management to like turn reached for end the closing over now back of have We question-and-answer I'd call remarks. session. the

Clint Lewis

the support with progress or appreciate Thank you that our well. we making listening, were to Thank we participants, you you look on share continue and to interest, you. you, line the just operator, engagement Stay on our to diversification much the strategy. the the the all the of very question and and forward we're asked company, whether

Operator

conference. today's This concludes

your this disconnect may your for at time, lines You and participation. thank you we

AgroFresh Solutions (AGFS) 13 Aug 222022 Q2 Earnings call transcript