AgJunction Reports Third Quarter 2021 Earnings Results
SCOTTSDALE, Ariz., Nov. 15, 2021 (GLOBE NEWSWIRE) -- AgJunction Inc. (TSX: AJX) ("AgJunction" or the "Company") is reporting financial results for the third quarter ended September 30, 2021. All currency amounts are expressed in U.S. dollars.
Third Quarter 2021 Financial Summary vs. Third Quarter 2020
-- Revenue was $3.7 million compared to $3.8 million
-- Gross margin increased to 50.9% compared to 49.7%
-- Operating expenses increased to $4.2 million compared to $3.1 million
-- $1.5 million one-time gain on Paycheck Protection Plan ("PPP") loan
forgiveness
-- Net loss was $(0.9) million or $(0.01) per share, compared to a net loss
of $(1.3) million or $(0.01) per share
-- EBITDA was $0.1 million compared to $(0.6) million
Management Commentary
"Our team continued to work hard during the quarter maintaining strong relationships with our OEM and VAR partners and driving growth within our direct channel," said Dr. M. Brett McMickell, president and CEO of AgJunction. "Over the past few quarters, I shared that we expected to see a gradual recovery of our indirect business, and while we have seen improvements, our OEM partners continue to delay orders due to the lingering effects of COVID and supply chain constraints. Despite these headwinds impacting our business and strategic plan, I am very proud of our team's continued dedication to providing automation solutions to our customers."
"Subsequent to the quarter and following a comprehensive review of the Company's strategic alternatives, the AgJunction board of directors has determined the best alternative available to AgJunction is for the Company to be acquired by Kubota Corporation, a leading global manufacturer of agricultural equipment and industrial engines, in accordance with the terms and conditions of the previously announced arrangement agreement. The transaction will provide AgJunction shareholders with immediate liquidity and certainty of value as shareholders will be receiving a 60% premium to the closing price of AgJunction common shares on the day the transaction was announced."
Third Quarter 2021 Financial Results
Total revenue in the third quarter of 2021 was $3.7 million compared to $3.8 million in the third quarter of 2020. The decrease is primarily due to reduced revenue volume from one major customer. The reduction is partially offset by the royalty revenue recognized from the settlement of a patent infringement lawsuit against Ag Leader Technology Inc. (the "Patent Infringement Settlement"), new customer acquisitions and non-recurring engineering project revenue.
Gross profit in the third quarter of 2021 was flat at $1.9 million compared to the third quarter of 2020. Gross margin was up to 50.9% compared to 49.7% in the third quarter of 2020. The increase is mainly attributed to a one-time benefit related to the increase in royalty revenue from the Patent Infringement Settlement.
Total operating expenses in the third quarter of 2021 were $4.2 million compared to $3.1 million in the third quarter of 2020. The increase is related to legal fees associated with the Patent Infringement Settlement, other legal and advisory costs relating to the KUBOTA Transaction and increased marketing costs to promote AgJunction's e-commerce business that has now expanded to Australia.
Net loss in the third quarter of 2021 improved to $(0.9) million or $(0.01) per share, compared to a net loss of $(1.3) million or $(0.01) per share in the third quarter of 2020, however the improvement was primarily attributable to the PPP loan forgiveness.
EBITDA in the third quarter of 2021 was $0.1 million compared to $(0.6) million in the third quarter of 2020.
Cash and cash equivalents at September 30, 2021, totaled $6.2 million compared to $6.8 million at the end of 2020. Working capital was $10.0 million at September 30, 2021, as compared to $13.7 million at the end of 2020. The Company operates with no debt.
Conference Call
AgJunction will hold a conference call today at 11:00 a.m. Eastern time to discuss its third quarter 2021 results. Management will address selected questions during the discussion that were emailed to AJX@gatewayir.com by Friday, November 12, 2021, at 5:00 p.m. Eastern time.
Date: Monday, November 15, 2021
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: 6499864
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 AgJunction.com.
A replay of the conference call will be available after 2:00 p.m. Eastern time on the same day through November 29, 2021.
Toll-free replay number: 1-855-859-2056
International replay number: 1-404-537-3406
Replay ID: 6499864
Transaction Update
On October 7, 2021, AgJunction announced that it entered into a definitive arrangement agreement ("arrangement") to be acquired by KUBOTA Corporation ("Kubota") in an all-cash transaction with a total equity value, on a fully diluted basis, of approximately CAD $91 million. Under the terms of the arrangement, Kubota will acquire AgJunction for CAD $0.75 per common share representing a premium of approximately 60% to the closing price of the common shares on the Toronto Stock Exchange on October 7, 2021, the last trading day prior to the announcement. A special meeting of common shareholders has been scheduled for 10:00 am (Scottsdale time) on November 24, 2021, at the offices of AgJunction at 9105 E Del Comino Drive, Suite 115, Scottsdale, Arizona, USA. The record date for the special meeting is set at the close of business on October 21, 2021 and AgJunction shareholders as of that date are reminded if voting by proxy to submit their votes by no later than 10:00 a.m. (Scottsdale time) on November 22, 2021. The AgJunction Board of Directors unanimously recommends that AgJunction shareholders vote their AgJunction shares in favor of the arrangement.
Shareholders who have questions regarding the arrangement or require assistance with voting may contact AgJunction's proxy solicitation agent, Kingsdale Advisors, by telephone at 1-800-749-9890 (toll-free in North America) or at 416-867-2272 (for collect calls outside of North America) or by email at contactus@kingsdaleadvisors.com.
For more information regarding the arrangement, please go to www.agjunction.com/kubota-transaction.
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 Ag manufacturers and solution providers and it holds over 200 patents and patents pending. AgJunction markets its solutions under leading brand names including Novariant(R), Wheelman(R), Whirl(TM) and Handsfreefarm(R) 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 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. 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, priorities and the arrangement with Kubota and related matters. Accordingly, readers should not place undue reliance on such forward-looking information contained in
