Verde Agritech Ltd · TSX:NPK
Verde Agritech — Q3 2020 Earnings Presentation
27 slides from Verde Agritech's earnings presentation, November 2020
Slide 1: Q3 2020 Update
Q3 2020 Update “VERDE
Slide 2: Disclaimer
DISCLAIMER If you are risk averse don’t buy our stock. Don’t rely on anything on this presentation. We are not good enough for you to invest if you: This presentation contains certain forward-looking information, which includes but is not limited to, statements with Are risk averse. respect to Verde
Slide 3: Agenda
Highlights 04 Q3 2020 Financial Statements 05 Operational summary 06 S&GA Expenses 07 Other Highlights 08 Financial Summary 09 Brazilian economic scenario 13 Key metrics 15 Appendix 16
Slide 4: Highlights Summary
HIG H L IG HTS SUMMAR Y C a sh Ability to generate significant free cash flow in the long term. Regardless of the 27% drop in potash price delivered to Brazil and Credit facilities totaling R$ 21.8 million approved by financial institutions in Brazil, to the operating complexities triggered by the p
Slide 5: Q3 2020 Financial Statements
Q3 2020 FINANCIAL STATEMENTS (Unaudited) All amounts in CAD $’000, except percentages Q3 2019 Q3 2020 YoY 2019 YTD 2020 YTD YoY Revenue 3,055 3,956 29% 4,538 6,957 53% Production costs (1,496) (1,316) 12% (2,205) (2,602) (18%) Gross Profit 1,599 2,640 65% 2,333 4,355 87% Sales and General Administra
Slide 6: Operational Summary
OPERATIONAL SUMMARY (Unaudited) All amounts in CAD $’000, except percentages and per share data Q3 2019 Q3 2020 YoY 2019 YTD 2020 YTD YoY Tonnes sold 62,855 105,769 68% 87,548 187,122 114% Revenue per tonne sold $ 49.00 37.00 (24%) 52.00 37.00 (29%) Production cost per tonne sold $ (24.00) (12.00) 5
Slide 7: Sales & General Administrative Expenses
SALES & GENERAL ADMINISTRATIVE EXPENSES (Unaudited) S&GA Expenses Q3 2019 Q3 2020 YoY 2019 YTD 2020 YTD YoY All amounts in CAD $’000, except percentages Sales and marketing expenses (501) (306) 39% (874) (942) (8%) General administrative expenses (246) (240) 2% (674) (655) 3% Distribution expenses (
Slide 8: Other Highlights
OTHER HIGHLIGHTS S&GA Expenses (C$’000) FOB and CIF sales (tonnes) Gross Margin 0 120,000 80% -109 105,769 -226 -500 -306-264 100,000 70% 67% -501 90,961 63% -655 60% -1000 -874 80,000 -984 -942 51% 51% -1,005 50% 61,675 62,934 -1500 60,000 40% -2000 40,000 30% -2,255 -2500 20,000 14,808 20% 1,259 1
Slide 9: Financial Summary
FINANCIAL SUMMARY Rev e n u e Revenue from sales for Q3 2020 was $3,956,341 from the sale of 105,769 tonnes of the Product ($37.41 per tonne sold). Average revenue per tonne was lower than Q3 2019 ($48.60 per tonne sold). The Product price is based on the current US Dollar Potassium Chloride price.
Slide 10: Summary of Interest-Bearing Loans and Borrowings
SUMMARY OF INTEREST-BEARING LOANS AND BORROW INGS Grace period Loan value Original loan base Total interest Lender Loan start date Purpose Term (months) Repayable by (months) (C$’000) currency (R$’000) payable* ABC Brazil Aug, 2020 Equipment and working capital 01 36 473 2,000 Aug, 2023 10.54% Santa
Slide 11: Year-on-Year Sales Growth (Tonnes)
YEAR–ON-YEAR SALES GROW TH (TONNES) Quarter 2018 2019 YoY Growth 2020 YoY Growth Q1 - 1,093 - 10,170 830% Q2 - 23,600 - 71,183 202% Q3 9,007 62,895 598% 105,769 68% Q4 20,641 32,221 56% 57,078* 77%* Total 29,648 119,809 304% 244,200* 104%* * - Targeted numbers, based on FY 2020 guidance. 2020 GUIDAN
Slide 12: Charts
CHARTS “VERDE
Slide 13: Brazilian Economic Scenario
USD/BRL Exchange Rate BRAZILIAN ECONOMIC SCENARIO 6.00 5.46 5.40 5.50 5.28 5.00 4.50 4.01 4.12 4.00 3.78 Brazilian Real versus US Dollar 3.50 3.00 From July to September 2020, the Brazilian Real 2.50 devalued by 36% in relation to US Dollar compared with 2.00 the same period of 2019. 1.50 1.00 0.50
Slide 14: Potassium Chloride Price
CFR Brazil (USD) 1 POTASSIUM CHLORIDE PRICE 350.00 300.00 250.00 Q3 2019 vs Q3 2020 200.00 Decrease of 27% from U$324 per tonne in Q3 2019 to 150.00 U$236 per tonne in Q3 2020. 100.00 50.00 - Jul/19 Aug/19 Sep/19 Oct/19 Nov/19 Dec/19 Jan/20 Feb/20 Mar/20 Apr/20 May/20 Jun/20 Jul/20 Ago/20 Set/20 FOB
Slide 15: Key Metrics Quarterly
KEY METRICS QUARTERLY (Unaudited) S a l e s ( To n n e s ) Reve n u e ( ‘0 0 0 CAD) 187,122 7000 6,958 180000 6,029 160000 6000 140000 5000 119,809 120000 105,769 3,956 4000 100000 3,055 80000 3000 71,183 2,492 62,895 60000 2000 1,491 40000 32,221 1,329 1,358 29,648 23,600 20,641 1000 692 20000 510
Slide 16: Appendix
APPENDIX “VERDE
Slide 17: Potassium Chloride Replacement
PATASSIUM CHLORIDE REPLACEMENT According to the article Effects of Some Synthetic Fertilizers on the Soil Ecosystem (HEIDE HERMARY, 2007), applying 1 pound of potassium chloride to the soil is equivalent to applying 1 gallon of bleach. Chloride is bad for the environment because it kills soils micro
Slide 18: Balance Sheet
BALANCE SHEET (Unaudited) Restated Assets 30 Sept 2020 31 Dec 2019 (C$’000) (C$’000) Property, plant and equipment 2,297 2,113 Mineral properties 19,481 24,455 Intangible assets - - Total non-current assets 21,778 26,568 Inventory 531 293 Trade and other receivables 3,415 1,638 Cash and cash equival
Slide 19: Statement of Cashflow
STATEMENT OF CASHFLOW (Unaudited) Cash flows from operating activities ($’000) Q3 2020 Q3 2019 YTD 2020 YTD 2019 Operating profit / (loss) 1,275 127 1,113 (842) Depreciation 107 38 214 84 Loss on disposal of plant and equipment 22 - 22 - Foreign exchange differences (21) 382 (47) 645 Share-based pay
Slide 20: Permit Status – Last 12 Months
PERMIT STATUS – LAST 12 MONTHS Mine Pit Date Category Status Event 2 November 03, 2020 Mining Granted 50,000 tpy Mining Permit 3 August 24, 2020 Environment Applied 2,500,000 tpy Preliminary, Installation and Operation License 1 August 19, 2020 Environment Granted 233,000 tpy Operating License 2 Mar
Slide 21: Permit Summary
PERMIT SUMMARY Verde is fully permitted to mine 482,800 tpy. (i.e. Verde is authorized to produce such an amount because it holds both mining Concessions/Permits and Environmental Licenses). The Company has submitted joint mining and environmental applications for an additional 5,000,000 tpy. Mining
Slide 22: Technology Launch
TECHNOLOGY LAUNCH As stated in the press release published by the Company on August 17, 2020, Verde has been working on the development of a new generation of technologies. The first technology will be introduced on a conference call hosted by the Company on Tuesday, December 15, 2020 at 11:30 am Ea
Slide 23: Results Presentation + Q&A link
Q&A Results Presentation + Q&A link Please find below the Q&A questions which were answered live and their time location in the presentation video: • With a record cash balance at September 30, 2020, can you comment on the decision to take out additional loans at 11.1%? What does the current cash ba
Slide 24: Q&A
Q&A • Can you comment on current global potash supply/demand and its forecasted price for 2021-2023 and it’s impact on VA’s gross margin? (00:57:28) • Could you produce and sell more than 346kt next year, given you have permits for 482kt? (01:00:04) • Are we going to have to wait till 31 March 2021
Slide 25: Q&A
Q&A • Why is it so difficult to get mining permits and what is the length of time it takes, in years? (01:31:23) • One of the risks I see will be around market adoption of a new product. I understand Greensand is 1/6 of the concentration of 'regular' Potash so I am wondering how it affects the farme
Slide 26: Q&A
Q&A • Whilst sales are seasonal, why are they less seasonal this year, versus last year? (02:02:28) • So if you don’t intend to issue equity to fund expansion, is the obvious answer a debt financing? If so, then would you expect it to come from the private or government sector? (02:03:17) • Does thi
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