AgJunction Reports 2014 Q4 Results

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.

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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