AgJunction Delivers Q3 Profit

HIAWATHA, KS, Nov. 13, 2013 /CNW/ - AgJunction today reported financial results for the three and nine-month periods ended September 30, 2013. All currency amounts are expressed in U.S. dollars.

Third quarter Financial Review

On September 5, 2012, the Company announced a corporate restructuring to focus exclusively on its agriculture business, subsequently selling its non-agriculture business on January 31, 2013. To increase clarity of results for continuing operations of the agriculture business after divesting the non-agriculture business, and in accordance with International Financial Reporting Standards (IFRS), the Company has reported the divested components of its business as "discontinued operations" in a separate line item in both the current and prior comparative periods.

For the third quarter ended September 30, 2013, the Company reported revenues of $11.4 million, an increase of 9% from $10.5 million in the third quarter of 2012. Strong quarterly results in the OEM and Agronomy Service divisions, up 27% and 41%, respectively, from the comparative period, were partially offset by revenue declines in Outback and Air of 2% and 21%, respectively.  European revenue growth increased 133% from the comparable period, driven primarily by OEM sales, while the US and Canada both declined by 7%, from the third quarter of 2012.

"I am pleased to report positive earnings during the third quarter which is typically the slowest period during the year," stated Rick Heiniger, President and CEO.  "Our return to profitability is a result of our focused efforts in simplifying and streamlining operations. At the same time we have structured the business to scale efficiently as we begin to turn our focus to sustained growth in our business segments."

Third quarter gross margin contribution increased to 46% or $5.2 million, compared to 45% and $4.8 million for the third quarter of 2012.

Operating expenses, including restructuring costs, improved to $5.2 million in the current quarter versus $6.8 million in the third quarter of 2012, a reduction of 24%.  Research and development and sales and marketing expenditures declined by $0.6 million (27%) and $0.7 million (27%), respectively, as the company continues to benefit from the restructuring it initiated in Q3 2012.  General and administrative expenses trended up $.1M (12%) compared to the third quarter of 2012.

The Company reported a net income from continuing operations of $32 thousand, or $0.00 per share (basic and diluted), compared to a net loss of $1.9 million, or ($0.03) per share (basic and diluted) from continuing operations in the third quarter of 2012.

Only a nominal loss from discontinued operations of $29 thousand was recorded for the quarter compared to a loss from discontinued operations of $0.8M in the third quarter of 2012.

Comprehensive income for the quarter was $3 thousand, or $0.00 per share (basic and diluted), compared to comprehensive loss of $2.7 million, or ($0.04) per share (basic and diluted), in the third quarter of 2012.

For the nine months ended September 30, 2013, AgJunction reported revenues of $44.4 million compared to $45.3 million for the same period in 2012.  Gross margin for the first nine months of 2013 was $20.0 million (45%) versus $20.4 million (45%) in the comparable period. Operating expenses, including restructuring costs, have declined $2.5 million on a year-over-year basis primarily due to cost reductions within research and development, sales and marketing and restructuring costs. The Company generated net profit from continuing operations of $2.6 million, or $0.04 per share (basic and diluted) during the first nine months of 2013, compared to a net profit of $0.3 million, or $0.00 per share (basic and diluted), during the same period of 2012.  Comprehensive income of $5.2 million, or $0.08 per share (basic and diluted) has been recognized through the first nine months of 2013, compared to a comprehensive loss of $1.7 million or $(0.03) per share (basic and diluted), during the comparative period.

At September 30, 2013, the Company held cash of $11.8 million compared to $2.6 million on December 31, 2012. Working capital was $22.6 million, and the Company had 69,472,230 common shares outstanding at September 30, 2013.

Conference Call - November 14 at 11:00AM Eastern Time

A conference call and webcast to discuss the results has been scheduled for November 14 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: 8389 5893. The call will be also webcasted live and archived on the Company's web site at http://www.corp.agjunction.com/InvestorCenter/ConferenceCallsOtherEvents.aspx

A recording of the call will be available through November 30. Please dial 1-855-859-2056 and enter passcode 8389 5893 to listen to the rebroadcast.

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
(Unaudited - expressed in U.S. dollars)
                       
              September 30,         December 31,
              2013         2012
                         
Assets                        
                         
  Cash and cash equivalents               $ 11,778,297     $   2,645,605
  Accounts receivable, net of bad debt provisions of $891,875
  and $825,000 as of September 30, 2013 and
  December 31, 2012, respectively   
            7,137,749         6,187,216
  Inventories               10,704,519          13,777,915
  Prepayments and deposits               774,496         661,790
  Assets held for sale               -         7,567,133
              30,395,061         30,839,659
                         
Property, plant and equipment, net                3,424,120         3,438,472
Intangible assets, net                7,400,673         7,703,947
Goodwill               21,230,519         21,230,519
            $ 62,450,373     $   63,212,597
                         
Liabilities and Shareholders' Equity                        
                         
Current liabilities:                        
  Accounts payable and accrued liabilities              $ 4,573,802     $   6,449,665
  Bank indebtedness               -         550,000
  Provisions               875,343         3,226,234
  Deferred revenue               1,656,769         1,748,928
  Collateralized borrowing               326,885         -
  Finance lease               -         52,184
  Current portion of contingent consideration               400,000         500,000
  Debt               -         1,140,699
              7,832,799         13,667,710
                         
Deferred revenue               690,679         746,820
                         
Contingent consideration               -         400,000
                         
Shareholders' equity:                        
  Share capital               120,702,326         119,341,668
  Equity reserve               6,181,359         7,182,124
                         
Accumulated deficit               (72,956,790)         (78,125,725)
              53,926,895         48,398,067
                         
            $ 62,450,373     $   63,212,597
                         

                                           
AgJunction Inc.
Condensed Consolidated Statements of Comprehensive Income and Loss
(Unaudited - expressed in U.S. dollars)
        Three months ended     Nine months ended
        September 30,     September 30, 
            2013         2012         2013         2012
                                           
Sales        $   11,437,654     $   10,511,800     $   44,352,769     $   45,277,154
                                           
Cost of sales            6,232,257         5,734,961         24,386,751         24,824,832
            5,205,397         4,776,839         19,966,018         20,452,322
                                           
Expenses:                                          
  Research and development             1,675,842         2,287,734         6,289,327         7,299,484
  Sales and marketing            1,945,319         2,647,318         6,574,891         8,214,041
  General and administrative            1,530,703         1,367,817         4,495,856         4,010,747
  Acquisition costs            -         -         -         117,475
  Restructuring costs            18,287         471,395         244,226         471,395
            5,170,151         6,774,264         17,604,300         20,113,142
                                           
Results from operating activities            35,246         (1,997,425)         2,361,718         339,180
                                           
Foreign exchange gain (loss)              29,912         7,146         304,029         (89,222)
Interest and other income            11,161         -         15,359         1,773
            41,073         7,146         319,388         (87,449)
                                           
Profit (loss) for the period before Income tax               76,319         (1,990,279)         2,681,106         251,731
                                           
Income tax             43,953         -         43,953         48,650
Profit (loss) for the period            32,366         (1,990,279)         2,637,153         203,081
                                           
Other comprehensive income            -         123,000         -         90,750
Net profit (loss) from continuing operations             32,366         (1,867,279)         2,637,153         293,831
                                           
Comprehensive gain (loss) from discontinued operations             (29,004)         (799,366)         2,531,782         (1,995,414)
                                           
Comprehensive income (loss)        $   3,362     $   (2,666,645)     $   5,168,935     $   (1,701,583)
                                           
Earnings per share:                                          
  Basic and diluted income (loss)         $   0.00     $   (0.04)     $   0.08     $   (0.03)
                                           
  Basic and diluted income (loss) continuing operations        $   0.00     $   (0.03)     $   0.04     $   0.00
                                           
  Basic and diluted income (loss) discontinued operations        $   0.00     $   (0.01)     $   0.04     $   (0.03)
                                             

                                                   
AgJunction Inc.
Condensed Consolidated Statements of Changes in Equity
(Unaudited - expressed in U.S. dollars)

   
Share
capital

    Equity
reserve
   
Accumulated
deficit
   
    Hedging
reserve
   
Total
equity
    Number of
shares
                                                   
Balance at January 1, 2012      $ 115,168,510     $ 4,783,284     $ (43,528,081)     $     -     $ 76,423,713     60,824,409
                                                   
  Profit for the period        -       -       (1,824,583)           -       (1,824,583)     -
  Accumulated other comprehensive loss        -       -       -           123,000       123,000     -
  Issue of common shares, net of share
 issue cost  
      4,078,919       -       -           -       4,078,919     5,447,410
  Business acquisition        -       2,014,000       -           -       2,014,000     -
  Share-based payment transactions        -       269,434       -           -       269,434     -
  Stock options exercised        7,435       -       -           -       7,435     8,958
  Transfer from equity reserve on exercise
 of stock options 
      3,621       (3,621)       -           -       -     -
Balance at September 30, 2012         119,258,485       7,063,097       (45,352,664)           123,000       81,091,918     66,280,777
                                                   
Balance at December 31, 2012        119,341,668       7,182,124       (78,125,725)           -       48,398,067     66,404,215
                                                   
  Profit for the period        -       -       5,168,935           -       5,168,935     -
  Issue of common shares        1,007,000       (1,007,000)       -           -       -     2,723,705
  Share-based payment transactions        -       114,389       -           -       114,389     -
  Stock options exercised        245,504       -       -           -       245,504     344,310
  Transfer from equity reserve on exercise
 of stock options 
      108,154       (108,154)       -           -       -     -
Balance at September 30, 2013      $ 120,702,326     $ 6,181,359     $ (72,956,790)     $     -     $ 53,926,895     69,472,230
                                 

                       
AgJunction Inc.
Condensed Consolidated Statements of Cash Flows
Nine months ended September 30, 2013 and 2012
(Unaudited - expressed in U.S. dollars)
                     
              2013       2012
                       
Cash flows from (used in) operating activities:                      
  Net profit from continuing operations            $ 2,637,153     $ 203,081
  Items not involving cash:                      
    Depreciation              489,842       959,854
    Amortization              772,896       1,492,248
    Share-based payment transactions              114,389       201,235
              4,014,280       2,856,418
  Change in non-cash operating working capital:                      
    Accounts receivable              (1,057,326)       (1,859,118)
    Income tax credits receivable              -        97,752
    Inventories              3,073,396       162,015
    Prepayments and deposits              (112,706)       (187,430)
    Accounts payable and accrued liabilities              (1,875,863)       676,930
    Provisions              (2,350,891)       100,569
    Deferred revenue              (148,300)       619,792
              (2,471,690)       (389,490)
                       
  Cash used in discontinued operations              (2,964,469)       (1,992,791)
Cash flows from (used in) operating activities              (1,421,879)       474,137
                       
Cash flows from (used in) financing activities:                      
  Payment of finance lease liability              (52,184)       (75,519)
  Repayment of bank loan              (550,000)       -
  Issue of debt              -       1,500,000
  Repayment of debt              (1,140,699)       (150,000)
  Issue of share capital              245,504       7,435
  Cash used in discontinued operations              (299,464)       -
Cash flows from (used in) financing activities              (1,796,843)       1,281,916
                       
Cash flows from (used in) investing activities:                      
  Purchase of property and equipment              (489,700)       (612,781)
  Intangible asset addition              (1,899,088)       (1,252,408)
  R&D expense reimbursement              1,429,466       -
  Payment of contingent consideration              (500,000)       -
  Proceeds from sale of assets, net of cost              13,810,736       -
  Business acquisition              -       (2,071,081)
  Cash used in discontinued operations              -       (232,980)
Cash flows from (used in) investing activities              12,351,414       (4,169,250)
                       
Increase (decrease) in cash position              9,132,692       (2,413,197)
                       
Cash and cash equivalents, beginning of period              2,645,605       6,721,314
                       
Cash and cash equivalents, end of period            $ 11,778,297     $ 4,308,117
                   

 

SOURCE: Agjunction Inc.

For further information:

Wes Dittmer
Chief Financial Officer
AgJunction Inc.
785-742-5149
WDittmer@agjunction.com

Cory Pala
Investor Relations 
e.vestor Communications Inc.
416-657-2400
Cory.Pala@evestor.com


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