GlobeNewswire Inc | Mar 10, 2021 04:05PM EST

March 10, 2021

-- Full year 2020 net sales were $157.6 million, a decrease of 7.3% (6.2% on a constant currency basis) versus the prior year. -- Selling, general and administrative expense decreased 9.4% to $53.9 million for the full year 2020 and decreased 1.8% when excluding nonrecurring items related to litigation, severance and M&A, versus the prior year. -- Net loss of $53.0 million for the full year 2020, which included $43.7 million of amortization of intangibles. -- Adjusted EBITDA1 was $60.1 million for the full year 2020 and adjusted EBITDA margin was 38.1%.

PHILADELPHIA, March 10, 2021 (GLOBE NEWSWIRE) -- AgroFresh Solutions, Inc. ("AgroFresh" or the "Company") (Nasdaq: AGFS), a global leader in produce freshness solutions, today announced its financial results for the fourth quarter and full year ended December31, 2020.

Jordi Ferre, Chief Executive Officer, commented, "2020 proved to be a challenging year on multiple fronts as we faced an unexpected smaller North American apple crop, which decreased approximately 11% creating lower storage volumes, COVID-19 related impacts that also caused delays in new diversification project rollouts, changes in customer short-term purchasing decisions, and currency fluctuations. However, our organization was well prepared to navigate these complexities, both in terms of operational adjustments, and because of our enhanced financial flexibility due to our recent comprehensive refinancing, and we continue to see progress with the cost optimization efforts that began in 2019. Our business remains sound and we continue to maintain a strong margin profile that demonstrates the value of the AgroFresh franchise in the marketplace today."

Mr. Ferre continued, "Looking ahead to 2021, we are energized about our diversification pipeline and the innovative solutions that we are bringing to the marketplace to enhance freshness and drive value for our customers. Recently, we launched VitaFreshBotanicals, a line of plant-based, edible crop-specific coatings that can be applied in a flexible and operator-friendly format. We believe we are well positioned with growth platforms that include Harvistawhich is now available for sale this Southern Hemisphere season in Brazil and New Zealand, and FreshCloud, our digital technology platform, which has seen customer adoption by large global operators. These examples are representative of our ongoing diversification initiatives, which we will continue to drive in the future, supported by our global registration platform."

Financial Highlights for the Fourth Quarter of 2020

Net sales for the fourth quarter of 2020 decreased 14.9% to $51.9 million, compared to $61.0 million in the fourth quarter of 2019. Excluding foreign currency translation impacts, which increased revenue by $0.9 million compared to the fourth quarter of 2019, revenue decreased 16.3%, primarily driven by a smaller North American crop size resulting in lower storage volumes, a heightened competitive landscape, as well as difficult comparisons versus the prior year period in Europe as the industry experienced later than normal harvest seasonality which shifted sales from third to fourth quarter of 2019.

Gross profit for the fourth quarter was $38.1 million, compared to $47.4 million in the prior year period. Gross profit margin was 73.5% compared to 77.8% in the prior year period. The lower gross margin was primarily due to fixed costs on lower sales volume and product mix.

Research and development costs were $4.0 million in the fourth quarter of 2020, compared to $4.4 million in the prior year period, due primarily to the timing of projects.

Selling, general and administrative expenses increased 12.4% to $13.9 million in the fourth quarter of 2020, as compared to $12.4 million in the prior year period. The main drivers behind the increase were higher non-recurring expenses related to severance, as well as the phasing of some discrete expenses on a year over year basis.

Fourth quarter 2020 net loss was $2.7 million, compared to net loss of $22.2 million in the prior year period.

Adjusted EBITDA1 was $23.7 million in the fourth quarter of 2020 as compared to $34.6 million in the prior year period. The decrease in adjusted EBITDA was primarily due to lower sales, partially offset by lower operating expenses compared to the prior year period.

As of December31, 2020, cash and cash equivalents were $50.0 million.

Financial Highlights for the Full Year of 2020

Net sales for the full year 2020 were $157.6 million, a decrease of 7.3% versus the prior year. Excluding foreign currency translation impacts, which reduced revenue by $1.9 million compared to full year 2019, revenue decreased approximately 6.2%. The decrease in net sales was primarily due to lower volume of SmartFresh on a smaller crop size and a decrease in EthylBloc sales due to COVID-19 impacts, partially offset by growth in fungicides, Harvista, and diversification strategies.

Gross margin was nearly unchanged at 73.2% compared to the prior year, despite a decrease in sales, due to the positive effects of supply chain cost optimization initiatives.

Research and development costs decreased $1.8 million to $12.4 million for the full year 2020 compared to the prior year, driven primarily by the timing of projects.

Selling, general and administrative expenses decreased 9.4% to $53.9 million for the full year 2020 compared to the prior year. There were non-recurring costs associated with M&A, litigation, refinancing and severance in the amount of $4.1 million in the current year and $8.8 million in the prior year. Excluding these items, selling general and administrative expenses decreased approximately 1.8% versus 2019 driven by ongoing cost optimization initiatives, and to a lesser extent reflect the temporary decrease in travel and other miscellaneous expenses as a result of the COVID pandemic.

Net loss was $53.0 million for the full year 2020, compared to net loss of $54.2 million in the prior year.

Adjusted EBITDA1 decreased to $60.1 million for the full year 2020, compared to $66.4 million in the prior year. Adjusted EBITDA margin for the full year was 38.1%, compared to 39.0% in 2019. The decrease in adjusted EBITDA was primarily due to lower sales, partially offset by lower operating expenses compared to the prior year.

1 Adjusted EBITDA is a non-GAAP financial measure. Please see the information under Non-GAAP Financial Measures below for a description of Adjusted EBITDA and the table at the end of this press release for a reconciliation of this Non-GAAP financial measure to GAAP results.

Conference Call

The Company will host a conference call and webcast where members of the executive management team will discuss these results with additional comments and details today, March10, 2021 at 4:30 pm E.T. The conference call and supplemental earnings presentation will be available live over the internet through the Events & Presentations page of the Investor Relations section of the Companys website at www.agrofresh.com. To participate on the live call, listeners in the United States may dial 877-407-4018 and international listeners may dial 201-689-8471.

A replay of the conference call will be archived on the Company's website and telephonic playback will be available from 7:30 pm. ET, March10, 2021 through March 26, 2021. Listeners in the United States may dial 844-512-2921 and international listeners may dial 412-317-6671. The passcode is 13714886.

Non-GAAP Financial Measures

This press release contains the non-GAAP financial measures EBITDA and Adjusted EBITDA. The Company believes these non-GAAP financial measures provide meaningful supplemental information as they are used by the Company's management to evaluate the Company's performance, including incentive bonuses and for bank covenant reporting. Management believes that these measures enhance a reader's understanding of the operating and financial performance of the Company and facilitate a better comparison between fiscal periods. EBITDA excludes income taxes, interest expense and depreciation and amortization, whereas Adjusted EBITDA further excludes items that are non-cash, infrequent, or non-recurring, such as share-based compensation, severance, litigation and M&A related costs, to provide further meaningful information for evaluation of the Companys performance.

The Company does not intend for the non-GAAP financial measures contained in this release to be a substitute for any GAAP financial information. Readers of this press release should use these non-GAAP financial measures only in conjunction with the comparable GAAP financial measures. Reconciliations of the non-GAAP financial measures EBITDA and Adjusted EBITDA to the most comparable GAAP measure are provided in the table at the end of this press release.

About AgroFresh

AgroFresh (Nasdaq: AGFS) is an AgTech innovator and global leader with a mission to prevent food loss/waste and conserve the planets resources by providing a range of science-based solutions, data-driven digital technologies and high-touch customer services. AgroFresh supports growers, packers and retailers with solutions across the food supply chain to enhance the quality and extend the shelf life of fresh produce. The AgroFresh organization has 40 years of post-harvest experience across a broad range of crops, including revolutionizing the apple industry with the SmartFresh Quality System for more than 20 years. This is powered by a comprehensive portfolio that includes plant-based coatings, equipment and proprietary solutions that help improve the freshness supply chain from harvest to the home. Visit agrofresh.com to learn more.

Trademark of AgroFresh Inc.

Forward-Looking Statements

In addition to historical information, this release may contain "forward-looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, included in this release that address activities, events or developments that the Company expects or anticipates will or may occur in the future are forward-looking statements and are identified with, but not limited to, words such as "anticipate", "believe", "expect", "estimate", "plan", "outlook", and "project" and other similar expressions (or the negative versions of such words or expressions). Forward-looking statements include, without limitation, information concerning the Company's possible or assumed future results of operations, including all statements regarding financial guidance, anticipated future growth, business strategies, competitive position, industry environment, potential growth opportunities and the effects of regulation. These statements are based on management's current expectations and beliefs, as well as a number of assumptions concerning future events. Such forward-looking statements are subject to known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside the Company's management's control that could cause actual results to differ materially from the results discussed in the forward-looking statements. These risks include, without limitation, the risk of increased competition; the ability of the business to grow and manage growth profitably; risks associated with the Company's substantial level of indebtedness; risks associated with acquisitions and investments; changes in applicable laws or regulations, and the possibility that the Company may be adversely affected by other economic, business, and/or competitive factors. Additional risks and uncertainties are identified and discussed in the Company's filings with the SEC, which are available at the SEC's website at www.sec.gov.

Contact:For AgroFresh Solutions, Inc.Jeff Sonnek - Investor RelationsICR Inc.Jeff.Sonnek@icrinc.com646-277-1263

AgroFresh Solutions,Inc.CONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited)(In thousands, except share and per share data)

December December 31, 31, 2020 2019ASSETS Current Assets: Cash and cash equivalents $ 50,030 $ 29,288 Accounts receivable, net of allowance for doubtful 63,204 68,634 accounts of $2,061 and $2,232, respectivelyInventories 24,579 22,621 Other current assets 17,219 11,802 Total current assets 155,032 132,345 Property and equipment, net 12,432 13,177 Goodwill 6,925 6,323 Intangible assets, net 589,201 631,369 Deferred income tax assets 9,699 10,317 Other assets 12,494 12,161 TOTAL ASSETS $ 785,783 $ 805,692 LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS? EQUITY Current Liabilities: Accounts payable $ 19,634 $ 15,105 Current portion of long-term debt 3,378 4,675 Income taxes payable 3,471 5,648 Accrued expenses and other current liabilities 25,976 24,350 Total current liabilities 52,459 49,778 Long-term debt 264,491 398,064 Other noncurrent liabilities 6,432 7,246 Deferred income tax liabilities 37,834 9,217 Total liabilities 361,216 464,305 Commitments and contingencies Temporary equity: Series B convertible preferred stock, par value$0.0001; 150,000 shares authorized, designated and 143,728 ? outstanding at December 31, 2020Non-controlling interest 8,446 7,701 Stockholders? equity: Common stock, par value $0.0001; 400,000,000 sharesauthorized, 53,092,328 and 51,839,527 shares issued and 5 5 52,430,947 and 51,178,146 outstanding at December 31,2020 and December 31, 2019, respectivelyPreferred stock, par value $0.0001; 1 share authorizedand outstanding at December 31, 2020 and December 31, ? ? 2019, respectivelyTreasury stock, par value $0.0001; 661,381 shares at (3,885 ) (3,885 )December 31, 2020 and December 31, 2019, respectivelyAdditional paid-in capital 552,776 560,890 Accumulated deficit (244,836 ) (192,264 )Accumulated other comprehensive loss (31,667 ) (31,060 )Total AgroFresh Stockholders? Equity 272,393 333,686 TOTAL LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS' $ 785,783 $ 805,692 EQUITY

AgroFresh Solutions,Inc.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)(In thousands, except share and per share data)

Three Months Three Months Year Ended Year Ended Ended Ended December 31, December 31, December 31, December 31, 2020 2019 2020 2019Net sales $ 51,868 $ 60,970 $ 157,643 $ 170,065 Cost of sales (excludingamortization, shown 13,725 13,533 42,217 45,049 separately below)Gross profit 38,143 47,437 115,426 125,016 Research and development 3,968 4,392 12,357 14,112 expensesSelling, general, and 13,935 12,402 53,860 59,446 administrative expensesAmortization of intangibles 10,865 45,983 43,731 81,119 Impairment of assets ? 10,432 ? 11,424 Change in fair value of ? (458 ) ? (330 )contingent considerationGrant income ? ? (2,974 ) ? Operating income (loss) 9,375 (25,314 ) 8,452 (40,755 )Other (loss) income (105 ) 132 1,491 13 Debt modification and ? ? (5,028 ) ? extinguishment expensesLoss on foreign currency (5,302 ) (1,243 ) (2,836 ) (4,127 )exchangeInterest expense, net (5,268 ) (7,763 ) (23,669 ) (33,784 )Loss before income taxes (1,300 ) (34,188 ) (21,590 ) (78,653 )Income taxes expense 1,363 (11,970 ) 31,376 (24,500 )(benefit)Net loss including $ (2,663 ) $ (22,218 ) $ (52,966 ) $ (54,153 )non-controlling interestsLess: Net (income) lossattributable to (397 ) 226 (745 ) 562 non-controlling interestsNet loss attributable to (3,060 ) (21,992 ) (53,711 ) (53,591 )AgroFresh Solutions, Inc.Less: Dividends on 6,088 ? 10,488 ? convertible preferred stockNet loss attributable toAgroFresh Solutions,Inc. (9,148 ) $ (21,992 ) $ (64,199 ) $ (53,591 )common stockholders Net loss per share: Basic $ (0.18 ) $ (0.44 ) $ (1.26 ) $ (1.07 )Diluted $ (0.18 ) $ (0.44 ) $ (1.26 ) $ (1.07 )Weighted average shares outstanding:Basic 50,959,958 50,241,996 50,770,429 50,123,565 Diluted 50,959,958 50,241,996 50,770,429 50,123,565

Non-GAAP Measures

The following table sets forth the non-GAAP financial measures of EBITDA and Adjusted EBITDA. The Company believes these non-GAAP financial measures provide meaningful supplemental information as they are used by the Companys management to evaluate the Companys performance (including incentive bonuses and for bank covenant reporting), are more indicative of operating performance of the Company, and facilitate a better comparison among fiscal periods. These non-GAAP results are presented for supplemental informational purposes only and should not be considered a substitute for the financial information presented in accordance with GAAP.

The following is a reconciliation between the non-GAAP financial measures of EBITDA and Adjusted EBITDA to their most directly comparable GAAP financial measure, net loss:

Three Three Months Months Ended Year Ended Year Ended(in thousands) Ended December 31, December December December 2019 31, 2020 31, 2019 31, 2020GAAP net loss including $ (2,663 ) $ (22,218 ) $ (52,966 ) $ (54,153 )non-controlling interestsProvision (benefit) for income 1,363 (11,970 ) 31,376 (24,500 )taxesInterest expense ^(1) 5,268 7,763 23,669 33,784 Depreciation and amortization 12,195 46,764 46,970 83,456 Non-GAAP EBITDA $ 16,163 $ 20,339 $ 49,049 $ 38,587 Adjustments: Share-based compensation 893 603 3,598 2,714 Severance related costs ^(2) 455 50 885 1,086 Other non-recurring costs ^(3) 857 2,440 3,240 8,745 Loss on foreign currency 5,302 1,243 2,836 4,127 exchange ^(4)Debt modification and ? ? 5,028 ? extinguishment costsGrant income ? ? (2,974 ) ? Litigation recovery ? ? (1,600 ) ? Contingent consideration ? (458 ) ? (330 )adjustments, net ^(5)Impairment of assets ^(6) ? 10,432 ? 11,424 Total Adjustments $ 7,507 $ 14,310 $ 11,013 $ 27,766 Non-GAAP Adjusted EBITDA $ 23,670 $ 34,649 $ 60,062 $ 66,353

(1) Interest on debt, accretion for debt discounts, debt issuance costs and contingent consideration.(2) Severance costs related to ongoing cost optimization initiatives.(3) Costs related to certain professional and other infrequent or non-recurring fees, including those associated with litigation and M&A related fees.(4) Loss on foreign currency exchange relates to net losses and gains resulting from transactions denominated in a currency other than the Company's functional currency.(5) Non-cash adjustment to the fair value of contingent consideration, including TRA and contingent payment related to the Tecnidex acquisition.(6) Impairment of assets related to software and investments.