SCOTTSDALE, Ariz., Aug. 12, 2020 (GLOBE NEWSWIRE) -- AgJunction Inc. (TSX: AJX) ("AgJunction" or the "Company") is reporting financial results for the second quarter ended June 30, 2020. All currency amounts are expressed in U.S. dollars.

Second Quarter 2020 Financial Summary vs. Second Quarter 2019

• Revenue was $4.6 million versus $13.3 million (Q2 2019 included $9.8 million of revenue related to the Bulk Purchase Order (BPO)).
• Gross margin increased significantly to 40.3% compared to 34.8%.  
• Operating expenses declined to $3.4 million compared to $5.4 million.
• Net loss was $1.5 million or $(0.01) per share, versus a net loss of $0.7 million or $(0.01) per share.
• EBITDA was $(0.9) million versus $(0.1) million.

Management Commentary

“The second quarter marked another period of sustained momentum since introducing our refined strategy, despite the challenges of navigating the unprecedented global macro environment due to COVID-19,” said Dr. M. Brett McMickell, president and CEO of AgJunction. “As anticipated, the demand for our indirect and direct products held strong during the quarter, and we once again exceeded our internal expectations for both channels. In fact, excluding revenue generated from the BPO last year, we would have reported a year-over-year increase in total revenue of 31%.

“Our organization has rebounded from the worst of the supply chain disruptions and continues to adapt to the complex business environment in this ‘new normal.’ Although we are enthusiastic about our progress, we have been experiencing some softness within our indirect channel. The weakness in our indirect channel is a result of our OEM partners pulling back some R&D spending and delaying product launches to protect their liquidity during these uncertain times. The softness in our indirect channel is being partially offset by the continued heightened demand for our Wheelman^® products, especially with the recently expanded product functionality (eTurns) and summer sale that we just announced.

“Overall, it has been incredibly rewarding to lead our workforce through the beginning stages of our refined strategy and to see the dedication and focus they have demonstrated in revitalizing the business despite these being very challenging times. As we move forward, we will continue to be a valuable partner to our customers, responding to their evolving needs and providing best-in-class automation solutions. With our innovative technology, flexible modularization approach, and robust workforce, we are confident in our path forward to achieve long-term, sustainable growth.”

Second Quarter 2020 Financial Results

Total revenue in the second quarter of 2020 was $4.6 million compared to $13.3 million in the second quarter of 2019. Excluding $9.8 million of revenue generated from the BPO in the prior year period, revenue in the second quarter of 2020 increased 31% compared to the second quarter of 2019 as a result of increased demand in the U.S. and APAC regions.

Gross profit in the second quarter of 2020 was $1.9 million compared to $4.6 million in the second quarter of 2019. Gross margin increased significantly to 40.3% compared to 34.8% in the second quarter of 2019. The margin improvement was primarily driven by lower margins on the BPO during 2019.  

Total operating expenses in the second quarter of 2020 declined to $3.4 million compared to $5.4 million in the second quarter of 2019. The improvement was primarily driven by cost-savings from the reduction in staffing and closure of certain facilities as a result of the Company’s previously implemented consolidation strategy.

Net loss in the second quarter of 2020 was $1.5 million or $(0.01) per share, compared to a net loss of $0.7 million or $(0.01) per share in the second quarter of 2019. The decline was primarily driven by the aforementioned decrease in revenue related to the BPO.

EBITDA in the second quarter of 2020 was $(0.9) million compared to $(0.1) million in the second quarter of 2019.

Cash and cash equivalents at June 30, 2020, totaled $14.8 million compared to $17.2 million at the end of 2019. Working capital was $17.2 million compared to $19.2 million at the end of 2019. The Company continues to operate debt free and has access to an unutilized $3.5 million line of credit.

Conference Call

AgJunction will hold a conference call tomorrow at 11:00 a.m. Eastern time to discuss its second quarter 2020 results, followed by a question-and-answer session.

Date: Thursday, August 13, 2020
Time: 11:00 a.m. Eastern time (8:00 a.m. Pacific time)
Toll-free dial-in number: 1-877-573-5992
International dial-in number: 1-270-215-9903
Conference ID: 4254266

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Investor Relations at 1-949-574-3860.

The conference call will be broadcast live and available for replay here and via the investor center section of the company’s website at https://agjunction.com/.

A replay of the conference call will be available after 2:00 p.m. Eastern time on the same day through August 27, 2020.

Toll-free replay number: 1-855-859-2056
International replay number: 1-404-537-3406
Replay ID: 4254266

About AgJunction

AgJunction Inc. is a global leader of advanced guidance and autosteering solutions for precision agriculture applications. Its technologies are critical components in over 30 of the world’s leading precision agriculture manufacturers and solution providers and it holds over 200 patents and patents pending. AgJunction markets its solutions under leading brand names including Novariant^®, Wheelman^®, Whirl™ and Handsfreefarm^®. AgJunction is headquartered in Scottsdale, Arizona, and is listed on the Toronto Stock Exchange (TSX) under the symbol “AJX.” For more information, please go to AgJunction.com.

Non-IFRS Measures

This press release uses EBITDA, which is a financial measure that does not have any standardized meaning prescribed under International Financial Reporting Standards ("IFRS"). EBITDA is defined as net income before interest, income tax, depreciation and amortization. The Company believes that this non-IFRS measure provides useful information to both management and investors in measuring financial performance. As this measure, does not have a standard meaning prescribed by IFRS, it may not be comparable to similarly titled measures presented by other publicly traded companies, and should not be construed as an alternative to other financial measures determined in accordance with IFRS. This non-IFRS measure is provided as additional information to complement IFRS measures by providing further understanding of operations from management’s perspective. Accordingly, non-IFRS measures should never be considered in isolation nor as a substitute to using net income as a measure of profitability or as an alternative to the IFRS consolidated statements of income or other IFRS statements. See "Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) Reconciliation" herein for additional information.

Forward-Looking Statements

This press release contains forward-looking information and forward-looking statements (collectively, "forward-looking information") within the meaning of applicable securities laws and is based on the expectations, estimates and projections of management of AgJunction as of the date of this news release, unless otherwise stated. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking information. Such forward-looking information is provided for the purpose of providing information about management's current expectations and plans relating to its current and future operations.  These statements are only predictions and actual events or results may differ materially. Although the Company’s management believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, performance or achievement since such expectations are inherently subject to significant business, economic, competitive and political uncertainties and contingencies as well as unanticipated force majeure events. Many factors could cause the Company's actual results to differ materially from those expressed or implied in any forward-looking statements made by the Company. In particular, forward-looking statements in this press release include, but are not limited to statements with respect to: the Company’s strategy, plans, objective sales, financial position and focus. Accordingly, readers should not place undue reliance on such forward-looking information contained in this press release.

In respect of the forward-looking information, AgJunction has provided such information in reliance on certain assumptions that it believes are reasonable at this time, including, but not limited to, the sufficiency of budgeted capital expenditures in carrying out planned activities; that AgJunction's future results of operations will be consistent with management expectations in relation thereto; product and market expansion; availability of key supplies, components, services, networks and developments; the impact of competition; conditions in general economic, agricultural autosteering and financial markets; uncertainty around the duration and scope of the COVID-19 pandemic and the impact of the pandemic and actions  taken in response on global and regional economies and economic activity; demand for the Company's products; and the continuity of existing business relationships.

Since forward-looking information addresses future events and conditions, such information by its very nature involves inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to the risks associated with the industries in which AgJunction operates; competition; inability to successfully introduce new technology and new products in a timely manner; legal claims for the infringement of intellectual property and other claims; negative conditions in general economic, agricultural and financial markets; and reduced demand for the Company's products. Readers are cautioned that the foregoing list of factors is not exhaustive.

Additional information on other factors that could affect the Company's operations or financial results, are included in reports of AgJunction on file with applicable securities regulatory authorities, including but not limited to, AgJunction's Annual Information Form which may be accessed on its SEDAR profile at www.sedar.com. The forward-looking information contained in this press release is made as of the date hereof and AgJunction undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

Contact:

Media
press@agjunction.com

Investor Relations
Gateway Investor Relations
Cody Slach, Managing Director
1-949-574-3860
AJX@gatewayir.com

AgJunction Inc.
Condensed Consolidated Statements of Financial Position
(Expressed in U.S. thousand dollars)
	June 30,			December 31,
	2020			2019
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	14,795		$	17,248
Accounts receivable, net		3,537			2,793
Current portion of notes receivable, net		320			320
Inventories		3,734			3,743
Prepaid expenses and deposits		688			819
		23,074			24,923
Notes receivable, less current portion, net		625			760
Property, plant and equipment, net		1,362			1,535
Right-of-use assets (note 6)		840			1,020
Intangible assets, net		9,858			10,112
Goodwill		143			143
	$	35,902		$	38,493
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities	$	4,408		$	3,540
Provisions (note 5)		255			826
Current portion of lease liability (note 6)		357			429
Current portion of deferred revenue		897			935
		5,917			5,730
Deferred revenue, less current portion		2,890			3,298
Lease liability, net of current portion (note 6)		521			702
Total liabilities		9,328			9,730
Shareholders’ equity:
Share capital		23,495			148,495
Equity reserve		4,910			4,890
Accumulated deficit		(1,831	)		(124,622	)
		26,574			28,763
	$	35,902		$	38,493

 

AgJunction Inc.
Consolidated Statements of Profit or Loss
Three and six months ended June 30, 2020 and 2019
(Unaudited -expressed in U.S. thousand dollars)
	Three months ended						Six months ended
	June 30,						June 30,
	2020			2019			2020			2019
Revenue (note 4)	$	4,601		$	13,301		$	9,802		$	27,314
Cost of sales		2,745			8,677			5,003			16,927
Gross Profit		1,856			4,624			4,799			10,387
		40.3	%		34.8	%		49.0	%		38.0	%
Expenses:
Research and development		1,356			1,984			2,553			3,736
Sales and marketing		302			1,285			1,142			2,642
General and administrative		1,758			2,099			3,359			4,707
		3,416			5,368			7,054			11,085
Operating (loss) income		(1,560	)		(744	)		(2,255	)		(698	)
Interest and other income		(19	)		(61	)		(78	)		(121	)
Foreign exchange (gain) loss, net		4			(39	)		32			(57	)
Loss on sale of property, plant and equipment		-			37			-			45
		(15	)		(63	)		(46	)		(133	)
Net (loss) income before income taxes		(1,545	)		(681	)		(2,209	)		(565	)
Income tax benefit		-			1			-			2
Net (loss) income	$	(1,545	)	$	(682	)	$	(2,209	)	$	(567	)
Loss per share:
Basic and diluted (loss) per share	$	(0.01	)	$	(0.01	)	$	(0.02	)	$	0.00

 

AgJunction Inc.
Condensed Consolidated Statements of Cash Flows
Three and six months ended June 30, 2020 and 2019
(Unaudited - expressed in U.S. thousand dollars)
	2020			2019
Cash flows used in operating activities:
Net (loss) income	$	(2,209	)	$	(567	)
Items not involving cash:
Depreciation		382			530
Amortization		880			693
Share-based payment transactions		20			207
Allowance loss on trade receivables		2			-
Recovery (write down) of reserve for slow moving and obsolete inventories		7			(343	)
Loss on disposal of property, plant and equipment		-			45
Change in operating working capital:
Accounts receivable		(745	)		(2,090	)
Inventories		3			1,556
Contract assets		-			243
Prepaid expenses and deposits		132			(52	)
Accounts payable and accrued liabilities		867			(1,516	)
Provisions		(571	)		265
Contract liabilities		-			191
Deferred revenue		(445	)		(366	)
Cash flows used in operating activities:		(1,677	)		(1,204	)
Cash flows used in financing activities:
Interest payments on lease liabilities		(24	)		20
Paycheck Protection Program Loan proceeds		1,540			-
Paycheck Protection Program Loan repayment		(1,540	)		-
Principal payments on lease liabilities		(229	)		(289	)
Cash flows used in financing activities:		(253	)		(269	)
Cash flows used in investing activities:
Principal payments received on notes receivable		134			128
Purchase of property, plant and equipment		(30	)		(269	)
Intangible asset addition, net		(627	)		(879	)
Cash flows used in investing activities:		(523	)		(1,020	)
Decrease in cash and cash equivalents		(2,453	)		(2,493	)
Cash and cash equivalents, beginning of period		17,248			21,398
Cash and cash equivalents, end of period	$	14,795		$	18,905

AgJunction Inc.
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) Reconciliation
Three and Six months ended June 30, 2020 and 2019
(Expressed in U.S. dollars)
	Three months ended							Six months ended
	June 30,							June 30,
($000s)	2020			2019				2020			2019
Net income (loss)	$	(1,545	)	$	(682	)		$	(2,209	)	$	(567	)
Interest (income) expense		(19	)		(61	)			(78	)		(119	)
Depreciation and amortization		556			507				1,116			911
Depreciation of capital leases		90			157				179			313
EBITDA	$	(918	)	$	(79	)		$	(992	)	$	538