HIAWATHA, KS, May 13, 2014 /CNW/ - (TSX: AJX) -- AgJunction today reported first quarter operating results for the three months ended March 31, 2014. All currency amounts for financial results are expressed in U.S. dollars.
In September 2013, the Company's Outback™ Ground Agriculture product line switched to a new "dealer stocking" sales model in North America where aftermarket revenues are now recorded at dealer net rather than at MSRP, which is approximately a 20% reduction in revenue on the same volume of goods sold. Although aftermarket revenues are lower under this aftermarket dealer program, there is a decrease in commission expense so that gross margin is not impacted. The new model changes the impact of seasonal timing as Outback dealers now purchase stocking inventory months earlier than in the prior model where product was shipped direct to customers from AgJunction inventory.
First Quarter Financial Review
For the first quarter ended March 31, 2014, the Company reported total revenue of $14.9 million, a 10.1% decrease from $16.6 million in the first quarter of 2013. Strong OEM and Air results for the quarter were offset by reduced sales in our Outback and Agronomy Services product lines compared to the same quarter in 2013.
Adjusting the $5.5 million of Outback North America sales in the first quarter of 2013 for the effect of the new aftermarket dealer program, would decrease revenue by approximately $1.2 million to $4.3 million. The adjusted comparison results in a quarter over quarter decline in Outback North America sales of 46.2%, related to an expected softening of the North American market as well as delays in buying in Canada due to an unseasonably cold and extended winter. For total revenue, the adjusted comparison results in a quarter over quarter decline of 3.1%.
"The historical seasonality of our business has been altered as a result of the increase of our international OEM business and a transition to a dealer stocking model in our aftermarket retail business," stated Rick Heiniger, President and CEO. "Despite a soft North American market in the first quarter, we are confident in our growth prospects as markets improve. We also believe we are witnessing a general transition in our global markets to OEM for core precision agriculture guidance technologies and are supporting this trend through our OEM partners."
Sales by business unit for the first quarter of 2014 and 2013 are as follows:
(000's) | Q1 2014 | Q1 2013 | Change |
Outback North America | $2,327 | $5,508 | (57.8%) |
Outback Australia | 258 | 328 | (21.3%) |
OEM | 8,615 | 7,527 | 14.5% |
Air | 3,158 | 2,607 | 21.1% |
Agronomy Services | 571 | 641 | (10.9%) |
Total | $14,929 | $ 16,611 | (10.1%) |
Sales by region for the first quarter of 2014 and 2013 are as follows:
(000's) | Q1 2014 | Q1 2013 | Change |
North America | $ 7,460 | $11,008 | (32.2%) |
Europe | 6,203 | 3,655 | 69.7% |
Australia | 335 | 401 | (16.5%) |
Other | 931 | 1,547 | (39.8%) |
$14,929 | $16,611 | (10.1%) |
Total international (non-North American) revenue increased 33% year-over-year to $7.5 million, growing to represent 50% of total Q1 revenue compared to 34% in 2013. European revenue increased 70% in the quarter to $6.2 million from $3.7 million in the same period in 2013 while sales to Australia and other markets, including South America and Asia, declined 17% and 40%, respectively. North American revenue represented 50% of total revenues as compared to 66% in 2013.
First quarter consolidated gross margin of $6.9 million was $0.9 million lower year-over-year due to the change in sales mix. Gross margins, as a percentage of revenue, were 45.9% during the quarter compared to 46.6% in 2013.
As a result of management's streamlining initiatives, operating expenses were $5.5 million in the first quarter down 13% from $6.3 million in the first quarter of 2013. The decrease relates to several cost saving initiatives and efficiencies realized through the restructuring period that began in late 2013. Management is maintaining tight control of expenses, supporting the overall profitability of the streamlined operating model.
In the first quarter of 2014, the Company generated income from continuing operations of $1.3 million, or $0.02 per share (basic and diluted), compared to income from continuing operations of $1.5 million, or $0.02 per share (basic and diluted), in the first quarter of 2013.
For the first quarter of 2014 the Company realized comprehensive income of $1.3 million, or $0.02 per share (basic and diluted), compared to comprehensive income of $4.9 million or $0.07 per share (basic and diluted) in the comparable quarter of 2013.
At March 31, 2014, the Company held cash of $13.0 million compared to $2.0 million at the end of 2013. Working capital was $24.3 million, up from $22.9 million at December 31, 2013.
The Company had 72,230,969 common shares outstanding at March 31, 2014.
Conference Call - May 14, 2014 at 11:00AM Eastern Time
A conference call and webcast has been scheduled for May 14, 2014 at 11:00 a.m. Eastern Time to discuss the financial results and provide an update on operations. To participate in the conference call, please dial +1 (647) 427-7450 or 1 (888) 231-8191 approximately 10 minutes before the conference call and provide Conference ID: 34957200. A recording of the call will be available through July 31, 2014. Please dial +1(416) 849-0833 or 1 (855) 859-2056 and enter passcode 34957200 to listen to the rebroadcast.
The call will be webcasted live and archived on the Company's web site at http://www.corp.agjunction.com/InvestorCenter/ConferenceCallsOtherEvents.aspx
About AgJunction
AgJunction provides innovative hardware and software applications for precision agriculture worldwide. The Company holds numerous patents and markets its products and services under leading brand names including Outback Guidance®, Satloc®, and AgJunction® Cloud Services. AgJunction supports advanced farming practices and enables seamless data connectivity among growers and their agricultural service providers. The Company is headquartered in Hiawatha, Kansas, with facilities in Arizona, Pennsylvania, Manitoba and Queensland. AgJunction is listed on the Toronto Stock Exchange (TSX) under the symbol "AJX" and is one of the TSX Cleantech designated companies. For more information, please go to www.corp.agjunction.com.
The above disclosure contains certain forward-looking statements that involve substantial known and unknown risks and uncertainties. These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond AgJunction's control, including: the impact of general economic conditions, industry conditions, increased competition, the lack of availability of qualified personnel or management, fluctuations in foreign exchange or interest rates, stock market volatility and market valuations of companies with respect to the announced transactions and the final valuations thereof, and obtaining required approvals of regulatory authorities. AgJunction' actual results, performance or achievement could differ materially from those expressed in, or implied by these forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits, including the amount of proceed, that AgJunction will derive therefrom.
AgJunction Inc. | |||||||
Condensed Consolidated Statements of Financial Position | |||||||
(Expressed in U.S. dollars) | |||||||
March 31, | December 31, | ||||||
2014 | 2013 | ||||||
(Unaudited) | |||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 13,018,972 | $ | 2,044,278 | |||
Short-term investments | 50,665 | 8,100,751 | |||||
Accounts receivable, net of bad debt provisions of $716,949 and $803,410 as of March 31, 2014 December 31, 2013, respectively |
6,978,523 | 11,170,370 | |||||
Inventories | 12,015,337 | 10,040,812 | |||||
Prepayments and deposits | 698,232 | 708,489 | |||||
32,761,729 | 32,064,700 | ||||||
Property, plant and equipment | 3,097,802 | 3,166,482 | |||||
Intangible assets | 7,705,148 | 7,489,245 | |||||
Goodwill | 21,230,519 | 21,230,519 | |||||
$ | 64,795,198 | $ | 63,950,946 | ||||
Liabilities and Shareholders' Equity | |||||||
Current liabilities: | |||||||
Accounts payable and accrued liabilities | $ | 5,568,053 | $ | 5,381,864 | |||
Provisions (note 7) | 896,554 | 796,318 | |||||
Deferred revenue | 1,999,805 | 2,439,317 | |||||
Finance lease | 17,947 | 19,978 | |||||
Current portion of acquisition consideration | - | 400,000 | |||||
Collateralized borrowing | - | 162,388 | |||||
8,482,359 | 9,199,865 | ||||||
Deferred revenue | 554,296 | 494,568 | |||||
Finance Lease | 15,283 | 18,104 | |||||
Shareholders' equity: | |||||||
Share capital (note 3) | 122,385,765 | 121,096,751 | |||||
Equity reserve | 5,043,822 | 6,091,297 | |||||
Accumulated deficit | (71,686,327) | (72,949,639) | |||||
55,743,260 | 54,238,409 | ||||||
$ | 64,795,198 | $ | 63,950,946 |
AgJunction Inc. | |||||||
Condensed Consolidated Statements of Comprehensive Income | |||||||
Three months ended March 31, 2014 and 2013 | |||||||
(Unaudited - expressed in U.S. dollars) | |||||||
2014 | 2013 | ||||||
Sales | $ | 14,928,593 | $ | 16,610,757 | |||
Cost of sales | 8,078,937 | 8,863,006 | |||||
6,849,656 | 7,747,751 | ||||||
Expenses: | |||||||
Research and development | 1,962,570 | 2,288,086 | |||||
Sales and marketing | 1,699,537 | 2,349,434 | |||||
General and administrative | 1,868,838 | 1,542,977 | |||||
Restructuring costs | - | 156,483 | |||||
5,530,945 | 6,336,980 | ||||||
Operating income | 1,318,711 | 1,410,771 | |||||
Foreign exchange (gain) loss | 28,905 | (52,593) | |||||
Interest and other (income) | (5,068) | (6,981) | |||||
Loss on disposal of property, plant and equipment | 10,273 | - | |||||
34,110 | (59,574) | ||||||
Income before income taxes | 1,284,601 | 1,470,345 | |||||
Income taxes | 21,289 | - | |||||
Net income from continuing operations | 1,263,312 | 1,470,345 | |||||
(Gain) loss from discontinued operations, net of tax | - | (3,473,899) | |||||
Net income | 1,263,312 | 4,944,244 | |||||
Other comprehensive income | - | - | |||||
Total comprehensive income | $ | 1,263,312 | $ | 4,944,244 | |||
Earnings per share: | |||||||
Basic and diluted income per share | $ | 0.02 | $ | 0.07 | |||
Basic and diluted income per share from continuing operations | $ | 0.02 | $ | 0.02 | |||
Basic and diluted gain per share from discontinued operations | $ | 0.00 | $ | 0.05 |
AgJunction Inc. | ||||||||||||||||
Condensed Consolidated Statements of Changes in Equity | ||||||||||||||||
(Expressed in U.S. dollars) | ||||||||||||||||
Share | Equity | Accumulated | Total | Number of | ||||||||||||
capital | reserve | Deficit | equity | shares | ||||||||||||
Balance at December 31, 2012 | 119,341,668 | 7,182,124 | (78,125,725) | 48,398,067 | 66,404,215 | |||||||||||
Comprehensive income | - | - | 4,944,244 | 4,944,244 | - | |||||||||||
Issue of common shares for business acquisition, net of share issue cost | 1,007,000 | (1,007,000) | - | - | 2,723,705 | |||||||||||
Share-based payment transactions | - | 70,000 | - | 70,000 | - | |||||||||||
Stock options exercised | 34,796 | - | - | 34,796 | 52,951 | |||||||||||
Transfer from equity reserve on | ||||||||||||||||
exercise of stock options | 14,896 | (14,896) | - | - | - | |||||||||||
Balance at March 31, 2013 (unaudited) | $ | 120,398,360 | $ | 6,230,228 | $ | (73,181,481) | $ | 53,447,107 | 69,180,871 | |||||||
Balance at December 31, 2013 | 121,096,751 | 6,091,297 | (72,949,639) | 54,238,409 | 69,805,628 | |||||||||||
Comprehensive income | - | - | 1,263,312 | 1,263,312 | - | |||||||||||
Issue of common shares for business acquisition, net of share issue cost | 1,007,000 | (1,007,000) | - | - | 2,178,964 | |||||||||||
Share-based payment transactions | - | 49,449 | - | 49,449 | - | |||||||||||
Stock options exercised | 192,090 | - | - | 192,090 | 246,377 | |||||||||||
Transfer from equity reserve on exercise of stock options | 89,924 | (89,924) | - | - | - | |||||||||||
Balance at March 31, 2014 (unaudited) | $ | 122,385,765 | $ | 5,043,822 | $ | (71,686,327) | $ | 55,743,260 | 72,230,969 |
AgJunction Inc. | ||||||||
Condensed Consolidated Statements of Cash Flows | ||||||||
Three months ended March 31, 2014 and 2013 | ||||||||
(Unaudited - expressed in U.S. dollars) | ||||||||
2014 | 2013 | |||||||
Cash flows from (used in) operating activities: | ||||||||
Net income from continuing operations | $ | 1,263,312 | $ | 1,470,345 | ||||
Items not involving cash: | ||||||||
Depreciation | 150,086 | 209,044 | ||||||
Amortization | 257,955 | 256,214 | ||||||
Share-based payment transactions | 49,449 | 70,000 | ||||||
Allowance on trade receivables | 91,325 | 31,012 | ||||||
Net realizable value write down (gain) of inventory | (28,230) | 106,034 | ||||||
Loss on disposal of property, plant and equipment | 10,273 | - | ||||||
1,794,170 | 2,142,649 | |||||||
Change in non-cash operating working capital: | ||||||||
Accounts receivable | 4,100,522 | (1,614,440) | ||||||
Inventories | (1,946,295) | 3,423,455 | ||||||
Prepaid expenses and deposits | 10,257 | 152,845 | ||||||
Accounts payable and accrued liabilities | 248,289 | (1,203,467) | ||||||
Provisions | 100,236 | (504,570) | ||||||
Deferred revenue | (379,784) | 192,082 | ||||||
Income taxes paid | (62,100) | - | ||||||
2,071,125 | 445,905 | |||||||
Cash used in discontinued operations | - | (2,756,261) | ||||||
Cash flows from (used in) operating activities | 3,865,295 | (167,707) | ||||||
Cash flows from (used in) financing activities: | ||||||||
Payment of finance lease liability | (4,852) | (22,652) | ||||||
Interest received, net of bank charges | 39,065 | - | ||||||
Bank loan repayment | - | (550,000) | ||||||
Repayment of debt | - | (1,140,699) | ||||||
Issue of share capital, net | 192,090 | 34,796 | ||||||
226,303 | (1,678,555) | |||||||
Cash used in discontinued operations | (162,388) | - | ||||||
Cash flow from (used in) financing activities | 63,915 | (1,678,555) | ||||||
Cash flows used in investing activities: | ||||||||
Acquisition of short-term investments | - | (8,000,000) | ||||||
Proceeds from redemption of short-term investments | 8,011,021 | - | ||||||
Purchase of property, plant and equipment | (91,679) | (237,203) | ||||||
Intangible asset addition | (643,362) | (600,000) | ||||||
R&D expense reimbursement | 169,504 | 293,991 | ||||||
Payment of acquisition consideration | (400,000) | (500,000) | ||||||
Proceeds from sale of assets, net of cost | - | 13,811,503 | ||||||
Cash flows from investing activities | 7,045,484 | 4,768,291 | ||||||
Increase in cash position | 10,974,694 | 2,922,029 | ||||||
Cash and cash equivalents, beginning of year | 2,044,278 | 2,645,605 | ||||||
Cash and cash equivalents, end of year | $ | 13,018,972 | $ | 5,567,634 |
SOURCE: Agjunction Inc.
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Wes Dittmer
Chief Financial Officer
AgJunction Inc.
(785) 742-5149
[email protected]
Cory Pala
Investor Relations
e.vestor Communications Inc.
(416) 657-2400
[email protected]
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