AgJunction Reports Third Quarter 2020 Earnings Results

SCOTTSDALE, Ariz., Nov. 09, 2020 (GLOBE NEWSWIRE) — AgJunction Inc. (TSX: AJX) (“AgJunction” or the “Company”) is reporting financial results for the third quarter ended September 30, 2020. All currency amounts are expressed in U.S. dollars.
Third Quarter 2020 Financial Highlights vs. Third Quarter 2019Revenue was $3.8 million versus $8.6 million (Q3 2019 included $5.5 million of revenue related to the Bulk Purchase Order (BPO)).Gross margin increased significantly to 49.7% compared to 32.3%.Operating expenses improved to $2.7 million compared to $5.3 million.Net loss improved to $(0.9) million or $(0.01) per share, versus a net loss of $(2.5) million or $(0.02) per share.EBITDA improved to $(0.2) million versus $(1.9) million.
Management Commentary“Throughout the third quarter, we continued to make good progress on our refined strategy and bolster the strength of our intellectual property portfolio, even amid the global macro uncertainties related to the COVID-19 pandemic,” said Dr. M. Brett McMickell, president and CEO of AgJunction. “In fact, we exceeded our internal expectations for both our indirect and direct channels once again, as we continued to bring on new customers seeking innovative automation offerings. We also launched a completely redesigned corporate website that has substantially increased the number of unique visitors to our site, and we were able to secure two new patents that enhance our components’ capabilities and better meet farmers’ evolving automation needs.“Subsequent to the third quarter, we continued our momentum and completed important milestones across several initiatives. First, we announced a favorable final settlement of the patent infringement case we had against Kubota Corporation, which further validated the strength of our IP portfolio and opened the door to new commercial opportunities through a non-exclusive licensing agreement and memorandum of understanding regarding future partnership activities. Next, we introduced two new direct-to-consumer offerings, Wheelman^® Pro HP and Wheelman^® Flex HP, which combine new technologically-advanced antenna and GNSS components to allow farmers to complete their work with fewer pass-to-pass overlaps and further improve their bottom line. Lastly, we entered into an agreement with Komatsu Ltd, a leading manufacturer of large commercial vehicles, to provide a customized autosteering system that supports their precision agricultural applications, which exemplifies our ability to rapidly meet customer needs through our modularization approach.“The whole team at AgJunction has done a phenomenal job of continuing to execute on our revised strategy in a very challenging environment. Although we remain confident in our position, we are continuing to monitor macro conditions closely and are preparing for potential supply-chain disruptions in the event of more COVID-related plant closures. In addition, many of our OEM partners have continued to delay new product development initiatives to the back half of 2021. We do anticipate this to have an effect on our ability to grow revenue in the near-term, but we are not letting these factors prevent us from onboarding new OEM customers and continuing the execution of our refined strategy while providing our customers with best-in-class automation solutions.”Third Quarter 2020 Financial ResultsTotal revenue in the third quarter of 2020 was $3.8 million compared to $8.6 million in the third quarter of 2019. Excluding $5.5 million of revenue generated from the BPO in the prior year period, revenue in the third quarter of 2020 increased 23% compared to the third quarter of 2019 primarily as a result of increased demand in the Asia Pacific region.Gross profit in the third quarter of 2020 was $1.9 million compared to $2.8 million in the third quarter of 2019. Gross margin increased significantly to 49.7% compared to 32.3% in the third quarter of 2019. The margin improvement was primarily driven by better cost management and a larger percentage of the Company’s product mix containing the higher margin software offerings.Total operating expenses in the third quarter of 2020 improved to $2.7 million compared to $5.3 million in the third quarter of 2019. The improvement was primarily driven by cost savings associated with the completion of the Company’s previously implemented consolidation strategy.Net loss in the third quarter of 2020 improved to $(0.9) million or $(0.01) per share, compared to a net loss of $(2.5) million or $(0.02) per share in the third quarter of 2019. The improvement was primarily a result of the aforementioned decrease in total operating expenses.EBITDA in the third quarter of 2020 improved to $(0.2) million compared to $(1.9) million in the third quarter of 2019.Cash and cash equivalents at September 30, 2020, totaled $9.9 million compared to $17.2 million at the end of 2019. Working capital was $16.1 million as at September 30, 2020 as compared to $19.2 million at the end of 2019. The Company continues to operate debt free and has access to an unutilized $3.5 million line of credit.Conference CallAgJunction will hold a conference call tomorrow at 11:00 a.m. Eastern time to discuss its third quarter 2020 results, followed by a question-and-answer session.Date: Tuesday, November 10, 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: 9899366Please 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 November 24, 2020.Toll-free replay number: 1-855-859-2056
International replay number: 1-404-537-3406
Replay ID: 9899366About AgJunctionAgJunction Inc. is a global leader of advanced guidance and autosteering solutions for precision agriculture applications. Its technologies are critical components in over 30 of the world’s leading precision Ag manufacturers and solution providers and it holds over 200 patents and patents pending. AgJunction markets its solutions under leading brand names including Novariant^®, Wheelman^®, Whirl™ and Handsfreefarm^® and is committed to advancing its vision by bringing affordable hands-free farming to every farm, regardless of terrain or size. AgJunction is headquartered in Scottsdale, Arizona, and is listed on the Toronto Stock Exchange (TSX) under the symbol “AJX.” For more information, please go to AgJunction.com.Non-IFRS MeasuresThis 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 StatementsThis press release contains forward-looking information and forward-looking statements (collectively, “forward-looking information”) within the meaning of applicable securities laws and is based on the expectations, estimates and projections of management of AgJunction as of the date of this news release, unless otherwise stated. The use of any of the words “expect”, “anticipate”, “continue”, “estimate”, “objective”, “ongoing”, “may”, “will”, “project”, “should”, “believe”, “plans”, “intends” and similar expressions are intended to identify forward-looking information. These statements are only predictions and actual events or results may differ materially. Although the Company’s management believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, performance or achievement since such expectations are inherently subject to significant business, economic, competitive and political uncertainties and contingencies. In particular, forward-looking statements in this press release include, but are not limited to statements with respect to: the Company’s plans and focus; potential for supply-chain disruptions; timing for OEM partners new product development initiatives; impacts of the foregoing on the company. Accordingly, readers should not place undue reliance on such forward-looking information contained in this press release.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.comInvestor Relations
Gateway Investor Relations
Cody Slach, Managing Director
1-949-574-3860
AJX@gatewayir.com