Arborgen Holdings Limited · NZX:ARB
Arborgen — FY2023 Earnings Presentation
21 slides from Arborgen's earnings presentation, May 2023
Slide 1: FY23 Results Presentation
FY23 Results Presentation For the 12 months ended 31 March 2023 3026 May 2023 May 2023
Slide 2: Disclaimer
Disclaimer This presentation has been prepared by ArborGen Holdings Limited (“ArborGen”), to provide an overview of the performance of ArborGen and its activities at the date of this presentation. It is not prepared for any other purpose and must not be provided to any person other than the intended
Slide 3: Our transformative technology and advanced genetics seedling products
“Our transformative technology and advanced genetics seedling products are a game changer for our forest landowners, delivering bigger and better trees, faster.” 3 3
Slide 4: FY23 Operational Highlights
FY23 Operational Highlights • Positive year of commercial progress following sale of Australasian business in FY22 and refocussing of business on higher growth existing and emerging markets. • Investments made in increasing internal seedling production capacity in Brazil and the US, and in growing a
Slide 5: FY23 Financial Highlights
FY23 Financial Highlights • 18% increase in Revenue to $56.1 million. • Operating Profit before financing expenses of $2.2 million, up from a loss of $1.3 million. • 35% increase in US-GAAP EBITDA 1,2 ,3 to $10.3 million. 1. US GAAP EBITDA excludes NZ public company costs and strategic review costs.
Slide 6: FY23 Performance
FY23 Performance All financial results are in US dollars (US$) unless otherwise stated 6 6
Slide 7: FY23 Financial Performance
FY23 Financial Performance 12 months ended 31 March US $m FY23 FY22 % change Revenue1 56.1 47.6 18% Gross Profit1 18.2 17.8 2% Operating Earnings (before Other Significant Items)2 1.6 2.7 -41% Operating Profit before Financing Expenses 2.2 (1.3) N/A Net Earnings After Taxation (2.5) 1.7 N/A Net Cash
Slide 8: Year in Review
Year in Review • Revenue of $56.1 million, up 18% on prior period, comprising sales of $39.3 million in the US (FY22: $39.9 million) and $16.8 million in Brazil (FY22: $7.7 million). • Gross margin of $18.2 million, up from $17.8 million in FY22. • Operating earnings (before other significant items2
Slide 9: Seedling Sales Performance
Seedling Sales Performance million units FY23 FY22 USA 273 284 USA Loblolly MCP% 41% 41% Brazil 102 76 Total 375 360 • US sales decreased by 4%, due to production losses (loblolly and non-loblolly) • Factors resulting in the lost seedlings have been improved upon in FY24. e.g. rationalising hardwood
Slide 10: Growth and Strategic Initiatives
Growth and Strategic Initiatives The sale of Australasian business in late 2021 released NZ$22.25m of capital, allowing investment in high growth markets in the US South and Brazil. Growing the Brazil business We are leveraging our strong position in the pine and eucalyptus seedling markets to build
Slide 11: Growing the Brazil Business
Growing the Brazil Business Eucalyptus market dynamics • Eucalyptus pulp is an excellent short-fibre hardwood pulp due to its relatively uniform fibre, simple cell structure, low degree of lignification, smoothness, bulk and water absorption characteristics. • Brazil is, and will continue to be, the
Slide 12: Growing the Brazil Business continued
Growing the Brazil Business continued ArborGen's relative positioning • ArborGen has grown to become one of the largest commercial suppliers of eucalyptus and pine seedlings in the Brazilian market, replicating its US strategy to convert the market to products with superior genetics in Brazil. • Dep
Slide 13: Growing the Brazil Business continued
Growing the Brazil Business continued ArborGen's relative positioning • We believe that there is significant room for innovation in eucalyptus tree improvement and are focused on building a fully integrated programme from development of new parents and crosses through to commercialisation of product
Slide 14: Growing in the US South
Growing in the US South In FY23, we reviewed the status of ArborGen’s seed orchards and seed production capacity with the primary focus of this effort being to ensure that we continue to build seed inventory where required, advance the genetics of our portfolio of products to maintain our strong com
Slide 15: Growing in the US South continued
Growing in the US South continued Orchard diversification – geographic and age class • Risks are generally managed through having multiple orchard locations for each provenance. We are actively addressing provenances that lack adequate geographic distribution as part of our on-going management plans
Slide 16: Ownership Changes
Ownership Changes • ArborGen has repurchased all outstanding warrants equating to approximately 5% of ArborGen Inc.’s fully diluted common stock1 for $1.35 million. (ArborGen Inc. is the wholly owned subsidiary of ArborGen Holdings). • The purchase price of US$1.35 million represents a significant d
Slide 17: Management Transition
Management Transition • Justin Birch has been appointed as Chief Executive Officer (CEO) following a comprehensive and extensive search process. • He is an experienced executive with significant exposure to the agriculture sector and a strong background in private equity, operations, finance, and st
Slide 18: Outlook
Outlook • ArborGen is projecting materially improved performance in FY24 driven by higher seedling sales in Brazil (eucalyptus and pine) and in the US (including MCP seedlings, and seedling sales for carbon markets). • In the US, while the overall market is not expected to grow due to macro factors,
Slide 19: Two Year Performance
Two Year Performance Revenue US GAAP EBITDA1 NPAT 60 15 2 55 10 0 50 5 -2 45 40 0 -4 FY 22 FY 23 FY 22 FY 23 FY 22 FY 23 Net Debt 15 10 5 0 FY 22 FY 23 1. US GAAP EBITDA excludes NZ public company costs and strategic review costs. Please refer to page 20 for a summary of US GAAP EBITDA. 19 19
Slide 20: US GAAP EBITDA
US GAAP US GAAP EBITDA1,2,3 Fiscal year ending March 2023 2022 ArborGen - US GAAP Revenue - 1. Under US GAAP, from a statutory reporting perspective, the classification of the expense US 39.3 39.9 items, and other significant items in this table may differ from what is presented here. Brazil 16.8 7.
Slide 21: Net Asset Backing Non-GAAP
Net Asset Backing Non-GAAP At 31 March 2023 the net asset backing was 30 cents per share (cps) (NZ$48 cps), (2022: 30 cps, NZ$43 cps); and net tangible asset backing (including right-of-use assets) was 11 cps (NZ$18 cps) (2022: 11 cps, NZ$16 cps), calculated on the basis of shares on issue at 31 Mar