SCOTTSDALE, AZ, November 6, 2019 – AgJunction Inc. (TSX: AJX) ("AgJunction" or the "Company"), the Autosteering Company™, is reporting financial results for the third quarter ended September 30, 2019. All currency amounts are expressed in U.S. dollars.
Third Quarter 2019 Financial Summary vs. Third Quarter 2018
- Revenue was $8.6 million versus $17.9 million
- Gross margin at 32.3% compared to 35.4%
- Operating expenses decreased to $5.3 million from $5.7 million
- Net loss was $2.5 million or $(0.02) per share, versus net income of $1.7 million or $0.01 per share
- EBITDA was $(1.9) million versus $2.1 million
“The third quarter was highlighted by continued progress in our two core strategies, as well as enhancements to our extensive IP portfolio and notable additions and promotions to our senior leadership team,” said Dave Vaughn, CEO of AgJunction. “This includes important hires to our C-suite with the appointment of Scott Steinman as CFO and promotion of M. Brett McMickell to COO. With our operations consolidated in Scottsdale and our executive team now fully built out, we are confident in the foundation we have laid and our team’s ability to capitalize on the opportunities to grow our business.
“However, in the near-term, we continue to experience softness in the agriculture market with farmers beginning to harvest crops planted during one of the most difficult growing seasons in recent history. Despite what we believe to be short-term headwinds, we will continue aggressively marketing our easy-to-use, low-cost autosteering products that drive efficiencies in the field directly to consumers, along with remaining committed to providing best-in-class components to our OEM and VAR partners. Looking beyond 2019, we are well-positioned for the future given our portfolio of innovative autosteering solutions and intellectual property needed for the next generation of farming equipment.”
Third Quarter 2019 Financial Results
Total revenue in the third quarter of 2019 was $8.6 million compared to $17.9 million in the third quarter of 2018. The decline was primarily driven by the prior year period including a higher portion of revenue generated from the bulk purchase order (BPO). The Company completed the final shipments of the BPO in the third quarter of 2019.
Gross profit in the third quarter of 2019 was $2.8 million compared to $6.3 million in the third quarter of 2018. Gross margin was 32.3% compared to 35.4% in the third quarter of 2018. The margin decline was primarily related to the reduction in revenue and the final shipments of the BPO carrying lower margins.
Total operating expenses in the third quarter of 2019 declined to $5.3 million compared to $5.7 million in the third quarter of 2018, primarily driven by the elimination of costs related to the divesture of Outback and Satloc, along with the continued focus on cost reductions corporate-wide. As a percentage of revenue, operating expenses were 61.6% compared to 31.7% in the third quarter of 2018, reflecting a higher revenue base in the prior year period.
Net loss in the third quarter of 2019 was $2.5 million or $(0.02) per share, compared to net income of $1.7 million or $0.01 per share in the third quarter of 2018. The decline was primarily driven by the aforementioned decrease in revenue related to the BPO.
EBITDA in the third quarter of 2019 was $(1.9) million compared to $2.1 million in the third quarter of 2018.
Cash and cash equivalents at the end of the third quarter of 2019 totaled $21.3 million compared to $21.4 million at the end of 2018. Working capital was $22.8 million compared to $26.7 million at the end of 2018. The Company continues to operate debt free and has access to an unutilized $3.0 million line of credit.
AgJunction will hold a conference call tomorrow at 11:00 a.m. Eastern time to discuss its third quarter 2019 results, followed by a question-and-answer session.
Date: Thursday, November 7, 2019
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: 4066529
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.
A replay of the conference call will be available after 2:00 p.m. Eastern time on the same day through November 21, 2019.
Toll-free replay number: 1-855-859-2056
International replay number: 1-404-537-3406
Replay ID: 4066529
AgJunction Inc., the Autosteering Company™ 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 approximately 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.
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.
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. 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 vision with respect to autosteering for farmers and the expectation that regular updates will be pushed out to the app ensuring farmers can always operate their Wheelman products with the most up-to-date technology. 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; availability of key supplies, components, services, networks and developments; the impact of increasing competition; conditions in general economic, agricultural and financial markets; 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 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.
Jeff Morris, Corporate Communications, AgJunction
Gateway Investor Relations
Cody Slach, Managing Director