SCOTTSDALE, AZ, August 7, 2019 – AgJunction Inc. (TSX: AJX)("AgJunction" or the "Company"), the Autosteering Company™,is reporting financial results for the second quarter ended June 30, 2019.All currency amounts are expressed in U.S. dollars.
Second Quarter 2019 Financial Summary vs. Second Quarter 2018
- Revenue was $13.3 million versus $13.8 million
- Gross margin at 34.8% compared to 39.3%
- Operating expenses decreased to $5.4 million from $7.7 million
- Net loss improved to $0.7 million or $(0.01) per share, versus a net loss of $2.3 million or $(0.02) per share
- EBITDA improved to $(0.1) million versus $(1.9)million
“Uncertainty inthe agriculture market continued in the second quarter with historic springfloods resulting in significantly less planting and lowered crop yield expectations,”said Dave Vaughn, president and CEO of AgJunction. “Despite these challenges, weremain confident in our two core strategies to deliver the most innovative andeasy-to-use autosteering solutions to OEM and VAR partners, along with sellingdirect-to-farmer through our Handsfreefarm® ecommerce store.
“During thequarter, we continued to make progress in both channels. In our direct-to-farmerbusiness, we significantly bolstered our digital media presence through newvideo ads across various social media channels, which drove a substantialincrease in website traffic. We also began selling autosteering solutionsbeyond the traditional precision ag customer to ranchers who value Wheelman’sease-of-use and price point for more efficient pasture management and cattlefeeding processes.
“Within ourindirect channel, we remained committed to delivering adaptable autosteeringcomponents that have kept pace with the new innovations and selling solutions fromour OEM and VAR partners. We also continued to expand our footprint as we beganworking with one of the largest tractor manufacturers in Eastern Europe, andcompleted the next stage of the onboarding process for a new European OEMpartner in preparation for launch.
“Looking to theremainder of 2019, we will continue to aggressively market our Wheelmanproducts, while growing our OEM and VAR channels through providing advanced,easy-to-use autosteering technologies at a cost-effective price point. We areworking hard to expand our relationships and sales partnerships to replace thesales volume we have sold through the bulk purchase order announced last year,which is expected to be fully shipped by the end of the third quarter.”
Second Quarter 2019 FinancialResults
Total revenue in the second quarter of2019 was $13.3 million comparedto $13.8 millionin the second quarter of 2018. The decline was primarily driven by thesale of the Outback and Satloc businesses in September 2018 and November 2018,respectively, partially offset by the fulfillment of shipments related to thebulk purchase order (BPO).
Gross profit in the secondquarter of 2019 was $4.6 million comparedto $5.4 million in the secondquarter of 2018. Gross marginwas 34.8% compared to 39.3% in the second quarter of 2018. The margindecline was primarily related to an increase in cost of the product mix sold.
Total operatingexpenses in the second quarter of 2019 declined to $5.4 million compared to $7.7million in the second quarter of 2018, primarily driven by a decrease inemployee compensation costs related to the aforementioned sale of the Outbackand Satloc businesses. As a percentage of revenue, operating expenses declinedto 40.4% compared to 56.3% in the second quarter of 2018.
Net loss in thesecond quarter of 2019 improved to $0.7 million or $(0.01) per share, comparedto a net loss of $2.3 million or $(0.02) per share in the second quarter of 2018.The improvement was primarily driven by the aforementioned decrease in totaloperating expenses.
EBITDA in the second quarter of 2019 improvedto $(0.1) million compared to $(1.9) million in the second quarter of 2018.
Cash and cashequivalents at the end of the second quarter of 2019 totaled $18.9 millioncompared to $21.4 million at the end of 2018. Workingcapital was $25.5 million compared to $26.7 million at the end of 2018. TheCompany continues to operate debt free and has access to an unutilized $3.0million line of credit.
AgJunction will hold a conference calltomorrow at 11:00 a.m. Eastern time to discuss its second quarter 2019 results,followed by a question-and-answer session.
Date:Thursday, August 8, 2019
Time: 11:00a.m. Eastern time (8:00 a.m. Pacific time)
Toll-freedial-in number: 1-877-573-5992
Internationaldial-in number: 1-270-215-9903
Please callthe conference telephone number 5-10 minutes prior to the start time. Anoperator will register your name and organization. If you have any difficultyconnecting with the conference call, please contact Gateway Investor Relations at1-949-574-3860.
A replay ofthe conference call will be available after 2:00 p.m. Eastern time on the sameday through August 22, 2019.
Toll-freereplay number: 1-855-859-2056
International replay number:1-404-537-3406
Replay ID: 3889731
AgJunction Inc.,the Autosteering Company™ is a global leader of advanced guidance andautosteering solutions for precision agriculture applications. Its technologiesare critical components in over 30 of the world’s leading precision Agmanufacturers and solution providers and it holds approximately 200 patents andpatents pending. AgJunction markets its solutions under leading brand namesincluding Novariant®, Wheelman™, Whirl™ and Handsfreefarm® and is committed toadvancing 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.
This pressrelease uses EBITDA, which is a financial measure that does not have anystandardized meaning prescribed underInternational Financial Reporting Standards ("IFRS"). EBITDAis defined as net income beforeinterest, income tax, depreciationand amortization. The Companybelieves that this non-IFRS measure provides useful information to bothmanagement and investors in measuring financial performance. As this measure,does not have a standard meaningprescribed by IFRS, it may not be comparable to similarly titled measurespresented by other publicly traded companies, and should not be construed as analternative to other financial measures determined in accordance with IFRS.This non-IFRS measure is provided as additional information to complement IFRSmeasures by providing furtherunderstanding of operations from management’s perspective. Accordingly,non-IFRS measures should never be considered in isolation nor as a substituteto using net income as a measure of profitability or as an alternative to theIFRS consolidated statements of income or other IFRS statements. See"Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)Reconciliation" herein for additional information.
This pressrelease contains forward-looking information and forward-looking statements(collectively, "forward-looking information") within the meaning ofapplicable securities laws and is based on the expectations, estimates andprojections 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 toidentify forward-looking information. Such forward-looking information isprovided for the purpose of providing information about management's currentexpectations and plans relating to its current and future operations. Thesestatements are only predictions and actual events or results may differmaterially. Although the Company’s management believes that the expectationsreflected in the forward-looking statements are reasonable, it cannot guaranteefuture results, performance or achievement since such expectations areinherently subject to significant business, economic, competitive and politicaluncertainties and contingencies. Many factors could cause the Company’s actualresults to differ materially from those expressed or implied in anyforward-looking statements made by the Company. In particular, forward-lookingstatements in this press release include, but are not limited to statementswith respect to: the Company’s strategy, plans, objective and focus; and marketingthe Company's Wheelman products, ability to grow the Company's OEM and VARchannels. Investors are cautioned that reliance on such information may not beappropriate for other purposes, such as making investment decisions.Accordingly, readers should not place undue reliance on such forward-lookinginformation contained in this press release.
In respect ofthe forward-looking information, AgJunction has provided such information inreliance on certain assumptions that it believes are reasonable at this time,including, but not limited to, the sufficiency of budgeted capital expendituresin carrying out planned activities; the availability and cost of labor andservices; that AgJunction's future results of operations will be consistentwith management expectations in relation thereto; the continued availability ofcapital at attractive prices to fund future capital requirements relating toexisting and future assets and/or projects; future operating costs; thatcounterparties to material agreements will continue to perform in a timelymanner; that there are no unforeseen events preventing the performance ofcontracts; availability of key supplies, components, services, networks anddevelopments; the impact of increasing competition; conditions in generaleconomic, agricultural and financial markets; demand for the Company'sproducts; and the continuity of existing business relationships.
Sinceforward-looking information addresses future events and conditions, suchinformation by its very nature involves inherent risks and uncertainties. Actualresults could differ materially from those currently anticipated due to anumber of factors and risks. These include, but are not limited to the risksassociated with the industries in which AgJunction operates; ability to accesssufficient capital from internal and external sources; changes in legislation;departure of key personnel or consultants; competition; inability to introducenew technology and new products in a timely manner; legal claims for theinfringement of intellectual property and other claims; fluctuation in foreignexchange or interest rates; uncertainties in the global economy; negativeconditions in general economic, agricultural and financial markets;availability of key supplies and components; product liability; reduced demandfor the Company's products; and changes in the Global Navigation SatelliteSystem and other systems outside of our control. Readers are cautioned that theforegoing list of factors is not exhaustive. Additional information on otherfactors that could affect the Company's operations or financial results, areincluded in reports of AgJunction on file with applicable securities regulatoryauthorities, including but not limited to, AgJunction's Annual Information Formwhich may be accessed on its SEDAR profile at www.sedar.com.
Theforward-looking information contained in this press release is made as of thedate hereof and AgJunction undertakes no obligation to update publicly orrevise any forward-looking information, whether as a result of new information,future events or otherwise, unless so required by applicable securities laws.
Jeff Morris, Corporate Communications,AgJunction
Amy McEvoy, Associate Public RelationsDirector, Rhea + Kaiser
Gateway Investor Relations
Cody Slach, Managing Director