HIAWATHA, KS, March 16, 2015 /CNW/ - (TSX: AJX) -- AgJunction today reported financial results for the fourth quarter and year ended December 31, 2014. All currency amounts are expressed in U.S. dollars.
Fourth Quarter Financial Review
For the three months ended December 31, 2014, the Company reported total fourth quarter revenue of $10.0 million, a 28% decrease from $13.9 million in the fourth quarter of 2013. Lower revenue for the quarter relates to ongoing softness in the global agriculture marketspace, affecting the Company's Outback retail and OEM product lines.
"Our sales results throughout 2014 reflected the cyclical downturn in the global agriculture equipment markets," stated Rick Heiniger, President and CEO. "We gained momentum related to OEM integration activity. This was demonstrated by AgJunction's announcing new OEM agreements for factory installation with CLAAS in Europe and STARA in Brazil. Our increased focus on the OEM space is strengthening the Company's position for when the equipment markets recover."
Sales by business unit for the fourth quarter of 2014 and 2013 are as follows:
(000's) |
Q4 2014 |
Q4 2013 |
Change |
|||||
Outback |
$ 1,706 |
$ 3,371 |
(49%) |
|||||
OEM |
5,998 |
8,183 |
(27%) |
|||||
Air |
1,560 |
1,657 |
(6%) |
|||||
Agronomy Services |
700 |
656 |
7% |
|||||
Total |
$ 9,964 |
$ 13,867 |
(28%) |
Sales by geographic region for the fourth quarter of 2014 and 2013 are as follows:
(000's) |
Q4 2014 |
Q4 2013 |
Change |
|||||
North America |
$ 4,182 |
$ 6,555 |
(36%) |
|||||
Europe |
4,717 |
4,295 |
10% |
|||||
Australia |
236 |
221 |
7% |
|||||
Other |
829 |
2,796 |
(70%) |
|||||
Total |
$ 9,964 |
$ 13,867 |
(28%) |
Year-over-year, fourth quarter North American revenue was 36% lower, generally characterized with ongoing softness in the aftermarket agricultural retail space. European revenues increased 10% supported by OEM sales. In Australia, sales improved by 7% while sales to other markets including South America and Asia fell by 70% due to the global downturn within the agricultural space compounded by a strengthening US dollar. Combined, Australia, South America and Asia represented 11% of the company's total revenue in the fourth quarter of 2014 compared to 22% in the fourth quarter of 2013.
Fourth quarter, 2014 consolidated gross margin was $4.0 million (41%) versus $5.5 million (40%) in the comparable quarter. Total operating expenses were $4.7 million in the fourth quarter, as compared to $5.3 million in the fourth quarter of 2013 where the reduction related to several cost saving initiatives and efficiencies realized through the restructuring period that began in late 2012.
For the fourth quarter ended December 31, 2014, the Company reported a net loss from continuing operations of $16.5 million, or ($0.23) per share (basic and diluted), compared to net income from continuing operations of $8 thousand, or $0.00 per share (basic and diluted), in the fourth quarter of 2013. A goodwill impairment of $15.9 million was taken in the fourth quarter following an annual assessment in accordance with International Financial Reporting Standards (IFRS). Excluding the goodwill impairment, the Company generated a fourth quarter net loss from continuing operations of $660 thousand.
The loss from discontinued operations was zero and $1 thousand for the fourth quarter ended December 31, 2014 and 2013, respectively.
The Company realized a total comprehensive loss of $16.5 million in the fourth quarter of 2014 compared to total comprehensive income of $7 thousand in the comparable quarter of 2013.
2014 12-Month Financial Review
For the twelve months ended December 31, 2014, AgJunction reported revenue of $44.8 million, a 23% decrease from $58.2 million in 2013.
(000's) |
2014 |
2013 |
Change |
|||||
Outback |
$ 10,962 |
$ 20,093 |
(45%) |
|||||
OEM |
23,293 |
27,307 |
(15%) |
|||||
Air |
8,171 |
8,014 |
2% |
|||||
Agronomy Services |
2,384 |
2,806 |
(15%) |
|||||
Total |
$ 44,810 |
$ 58,220 |
(23%) |
The declines relate to an overall market downturn within the Outback, OEM and Agronomy Services product lines. Demand in North and South America for the Air product line resulted in an increase in revenue of 2% over the same period of 2013.
Sales by geographic region for 2014 and 2013 are as follows:
(000's) |
2014 |
2013 |
Change |
|||||
North America |
$ 24,720 |
$ 34,265 |
(28%) |
|||||
Europe |
15,044 |
14,734 |
2% |
|||||
Australia |
917 |
1,318 |
(30%) |
|||||
Other |
4,129 |
7,903 |
(48%) |
|||||
Total |
$ 44,810 |
$ 58,220 |
(23%) |
Year-over-year, North American revenue was $24.7 million, 28% lower compared to 2013. North American sales were generally characterized with ongoing softness in the aftermarket agricultural retail space. European revenues increased 2% supported by OEM sales. In Australia, sales declined by 30% and sales to other markets, including South America and Asia, fell by 48% due to softening in the global aftermarket agricultural retail space compounded by a strengthening US dollar. Combined, Australia, South America and Asia represented 11% of the Company's total revenue in 2014 compared to 16% in 2013.
Gross margin for the year was $20.3 million, or 45%, versus $25.5 million, or 44%, in the comparable period. 2014 operating expenses of $21.0 million declined $1.9 million on a year-over-year basis related to the effects of the Company's restructuring efforts which were finalized in June 2013.
For the year ended December 31, 2014, the Company reported a net loss from continuing operations of $16.7 million, or ($0.23) per share (basic and diluted), compared to net income from continuing operations of $2.6 million, or $0.04 per share (basic and diluted), for 2013. A goodwill impairment of $15.9 million was taken in the fourth quarter of 2014 following an annual assessment in accordance with International Financial Reporting Standards (IFRS). Before the goodwill impairment, the Company generated a 2014 net loss from continuing operations of $800 thousand.
The gain from discontinued operations was zero and $2.5 million for the year ended December 31, 2014 and 2013, respectively.
The Company realized a total comprehensive loss of $16.7 million in 2014 compared to total comprehensive income of $5.2 million in 2013.
At December 31, 2014, the Company held cash and short-term investments of $11.2 million and working capital of $22.4 million, compared to $10.1 million and $22.9 million respectively at the end of 2013.
At December 31, 2014 AgJunction had 72,322,063 common shares outstanding.
Conference Call: March 17, 2015 at 11:00AM ET
A conference call and webcast has been scheduled for tomorrow, March 17, 2015 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 approximately 10 minutes before the conference call and provide Conference ID: 2616955. A recording of the call will be available through April 30, 2015. Please dial +1(416) 849-0833 and enter passcode 2616955 to listen to the rebroadcast.
The call will be webcast live and archived on the Company's web site at http://www.corp.agjunction.com/InvestorCenter/ConferenceCallsOtherEvents.aspx.
About AgJunction
AgJunction, Inc. 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, Winnipeg, and Queensland, Australia. AgJunction is listed on the Toronto Stock Exchange (TSX) under the symbol "AJX." For more information, please go to www.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's 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. |
||||||||||
Consolidated Statements of Financial Position |
||||||||||
(Expressed in U.S. dollars) |
||||||||||
December 31, |
December 31, |
|||||||||
2014 |
2013 |
|||||||||
Assets |
||||||||||
Current assets: |
||||||||||
Cash and cash equivalents |
$ |
11,223,755 |
$ |
2,044,278 |
||||||
Short-term investments |
– |
8,100,751 |
||||||||
Accounts receivable, net of bad debt provisions |
||||||||||
of $645,059 and $803,410 as of December 31, |
||||||||||
2014 and 2013, respectively |
5,665,108 |
11,170,370 |
||||||||
Inventories |
9,692,923 |
10,040,812 |
||||||||
Prepayments and deposits |
947,931 |
708,489 |
||||||||
27,529,717 |
32,064,700 |
|||||||||
Property, plant and equipment |
2,808,052 |
3,166,482 |
||||||||
Intangible assets |
7,772,064 |
7,489,245 |
||||||||
Goodwill |
5,374,519 |
21,230,519 |
||||||||
$ |
43,484,352 |
$ |
63,950,946 |
|||||||
Liabilities and Shareholders' Equity |
||||||||||
Current liabilities: |
||||||||||
Accounts payable and accrued liabilities |
$ |
2,795,216 |
$ |
5,381,864 |
||||||
Warranty provision |
302,987 |
796,318 |
||||||||
Deferred revenue |
2,016,183 |
2,439,317 |
||||||||
Collateralized borrowing |
– |
162,388 |
||||||||
Finance lease |
13,918 |
19,978 |
||||||||
Current portion of acquisition consideration |
– |
400,000 |
||||||||
5,128,304 |
9,199,865 |
|||||||||
Deferred revenue |
343,245 |
494,568 |
||||||||
Finance lease |
1,160 |
18,104 |
||||||||
Shareholders' equity: |
||||||||||
Share capital |
122,467,464 |
121,096,751 |
||||||||
Equity reserve |
5,150,466 |
6,091,297 |
||||||||
Accumulated deficit |
(89,606,287) |
(72,949,639) |
||||||||
38,011,643 |
54,238,409 |
|||||||||
$ |
43,484,352 |
$ |
63,950,946 |
AgJunction Inc. |
||||||||
Consolidated Statements of Comprehensive Income and Loss |
||||||||
Years ended December 31, 2014 and 2013 |
||||||||
(Expressed in U.S. dollars) |
||||||||
2014 |
2013 |
|||||||
Sales |
$ |
44,809,579 |
$ |
58,219,588 |
||||
Cost of sales |
24,501,704 |
32,712,697 |
||||||
20,307,875 |
25,506,891 |
|||||||
Expenses: |
||||||||
Research and development |
7,102,281 |
8,671,129 |
||||||
Sales and marketing |
6,192,903 |
8,579,137 |
||||||
General and administrative |
7,729,475 |
5,425,352 |
||||||
Restructuring costs |
– |
247,596 |
||||||
21,024,659 |
22,923,214 |
|||||||
Operating (loss) income |
(716,784) |
2,583,677 |
||||||
Goodwill impairment |
15,856,000 |
– |
||||||
Foreign exchange loss (gain) |
172,064 |
(283,061) |
||||||
Interest and other income |
(42,675) |
(25,019) |
||||||
(Gain) loss on sale of property, plant and equipment |
(8,175) |
146,733 |
||||||
(Loss) income before income taxes |
(16,693,998) |
2,745,024 |
||||||
Income tax (benefit) expense |
(37,350) |
99,811 |
||||||
Net (loss) income from continuing operations |
(16,656,648) |
2,645,213 |
||||||
Gain from discontinued operations, net of tax |
– |
(2,530,873) |
||||||
Net (loss) income |
(16,656,648) |
5,176,086 |
||||||
Other comprehensive income |
– |
– |
||||||
Total comprehensive (loss) income |
$ |
(16,656,648) |
$ |
5,176,086 |
||||
Earnings per share: |
||||||||
Basic and diluted (loss) income per share |
$ |
(0.23) |
$ |
0.08 |
||||
Basic and diluted (loss) income per share from |
||||||||
continuing operations |
$ |
(0.23) |
$ |
0.04 |
||||
Basic and diluted income per share from |
||||||||
discontinued operations |
$ |
– |
$ |
0.04 |
||||
AgJunction Inc. |
||||||||||||||||
Consolidated Statements of Changes in Equity |
||||||||||||||||
Years ended December 31, 2014 and 2013 |
||||||||||||||||
(Expressed in U.S. dollars) |
||||||||||||||||
Share |
Equity |
Total |
Number of |
|||||||||||||
capital |
reserve |
Deficit |
equity |
shares |
||||||||||||
Balance at January 1, 2013 |
$ |
119,341,668 |
$ |
7,182,124 |
$ |
(78,125,725) |
$ |
48,398,067 |
66,404,215 |
|||||||
Comprehensive income |
– |
– |
5,176,086 |
5,176,086 |
– |
|||||||||||
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 |
– |
149,803 |
– |
149,803 |
– |
|||||||||||
Stock options exercised |
514,453 |
– |
– |
514,453 |
677,708 |
|||||||||||
Transfer from equity reserve on |
||||||||||||||||
exercise of stock options |
233,630 |
(233,630) |
– |
– |
– |
|||||||||||
Balance at December 31, 2013 |
121,096,751 |
6,091,297 |
(72,949,639) |
54,238,409 |
69,805,628 |
|||||||||||
Comprehensive loss |
– |
– |
(16,656,648) |
(16,656,648) |
– |
|||||||||||
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 |
– |
180,882 |
– |
180,882 |
– |
|||||||||||
Stock options exercised |
249,000 |
– |
– |
249,000 |
337,471 |
|||||||||||
Transfer from equity reserve on |
||||||||||||||||
exercise of stock options |
114,713 |
(114,713) |
– |
– |
– |
|||||||||||
Balance at December 31, 2014 |
$ |
122,467,464 |
$ |
5,150,466 |
$ |
(89,606,287) |
$ |
38,011,643 |
72,322,063 |
AgJunction Inc. |
||||||||
Consolidated Statements of Cash Flows |
||||||||
Years ended December 31, 2014 and 2013 |
||||||||
(Expressed in U.S. dollars) |
||||||||
2014 |
2013 |
|||||||
Cash flows from (used in) operating activities: |
||||||||
Net (loss) income from continuing operations |
$ |
(16,656,648) |
$ |
2,645,213 |
||||
Items not involving cash: |
||||||||
Depreciation |
579,897 |
640,470 |
||||||
Amortization |
1,031,814 |
1,032,152 |
||||||
Share-based payment transactions |
180,882 |
149,803 |
||||||
Allowance on trade receivables |
109,467 |
384,468 |
||||||
Net realizable value write down of inventory |
56,530 |
885,307 |
||||||
(Gain) loss on disposal of property, plant and equipment |
(8,175) |
146,733 |
||||||
Goodwill write off |
15,856,000 |
– |
||||||
1,149,767 |
5,884,146 |
|||||||
Change in non-cash operating working capital: |
||||||||
Accounts receivable |
5,353,120 |
(5,803,409) |
||||||
Inventories |
291,359 |
2,851,796 |
||||||
Prepaid expenses and deposits |
(239,442) |
(46,699) |
||||||
Accounts payable and accrued liabilities |
(2,522,213) |
(999,824) |
||||||
Provisions |
(493,331) |
(2,429,916) |
||||||
Deferred revenue |
(574,457) |
438,137 |
||||||
Income taxes paid |
(64,435) |
(59,000) |
||||||
1,750,601 |
(6,048,915) |
|||||||
Cash used in discontinued operations |
– |
(2,815,091) |
||||||
Cash flows from (used in) operating activities |
2,900,368 |
(2,979,860) |
||||||
Cash flows from (used in) financing activities: |
||||||||
Payment of finance lease liability |
(23,004) |
(14,102) |
||||||
Interest received (paid), net |
42,675 |
(8,977) |
||||||
Bank loan repayment |
– |
(550,000) |
||||||
Repayment of debt |
– |
(1,140,699) |
||||||
Issuance of share capital |
249,000 |
514,453 |
||||||
268,671 |
(1,199,325) |
|||||||
Cash used in discontinued operations |
(162,388) |
(299,464) |
||||||
Cash flow from (used in) financing activities |
106,283 |
(1,498,789) |
||||||
Cash flows from (used in) investing activities: |
||||||||
Acquisition of short-term investments |
– |
(8,100,751) |
||||||
Redemption of short-term investments |
8,100,751 |
– |
||||||
Payment for the disposal of property, plant and equipment |
– |
(96,495) |
||||||
Proceeds from the sales of property, plant and equipment |
65,141 |
– |
||||||
Purchase of property, plant and equipment |
(278,433) |
(418,718) |
||||||
Intangible asset addition |
(2,646,833) |
(2,632,472) |
||||||
R&D expense reimbursement |
1,332,200 |
1,815,022 |
||||||
Payment of acquisition consideration |
(400,000) |
(500,000) |
||||||
Proceeds from sale of assets, net of costs |
– |
13,810,736 |
||||||
6,172,826 |
3,877,322 |
|||||||
Cash used in discontinued operations |
– |
– |
||||||
Cash flow from investing activities |
6,172,826 |
3,877,322 |
||||||
Increase (decrease) in cash position |
9,179,477 |
(601,327) |
||||||
Cash and cash equivalents, beginning of year |
2,044,278 |
2,645,605 |
||||||
Cash and cash equivalents, end of year |
$ |
11,223,755 |
$ |
2,044,278 |
||||
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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