Arborgen Holdings Limited · NZX:ARB
Arborgen — FY2021 Earnings Presentation
31 slides from Arborgen's earnings presentation, May 27, 2021
Slide 1: ArborGen Holdings FY21 Results Presentation
ARBORGEN HOLDINGS FY21 Results Presentation For the 12 months ended 31 March 2021 Dated 27 May 2021
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: FY21: Delivering on Our Vision
FY21: DELIVERING ON OUR VISION FY21 results provide validation of the strategic vision, with the FY22 Outlook and Guidance value story now becoming apparent. Strong momentum and supportive tailwinds will drive further growth in FY22 and • US-GAAP EBITDA guidance for beyond. FY22 of $13 - $14.5 milli
Slide 4: Our Business
OUR BUSINESS We are a leading global provider of conventional and advanced genetics tree seedling products. • Largest global commercial supplier of tree seedlings, specialising in loblolly pine (US and Brazil), radiata pine (NZ) and eucalyptus (Brazil and Australia) plantation forestry species • Lea
Slide 5: Our Vision
OUR VISION We are building a global, high growth business by bringing proprietary seedlings that offer “step changes” in productivity to the forestry industry Primary End Markets • We have unparalleled product portfolios in each of our core markets • Comprehensive Technology platform • Over 5,000 ne
Slide 6: Global Footprint
GLOBAL FOOTPRINT We are targeting markets where genetics will make a significant difference U.S. South Loblolly Pine U.S. South Hardwood We are already the leader in three of the largest pine & eucalyptus markets in the world—US, South America and Australasia Brazil Loblolly Pine Brazil Eucalyptus W
Slide 7: Leading Technology Platform
LEADING TECHNOLOGY PLATFORM We are the leading provider of proprietary advanced genetics operating across the entire technology spectrum Germplasm Repository Tree Improvement Proprietary Production Genomics and Biotechnology Product Expertise Technologies Bioinformatics Development Over 30,000 uniqu
Slide 8: Our Product Portfolio
OUR PRODUCT PORTFOLIO We are advancing genetics through breeding Open Pollinated: OP Advanced, Select and Elite Produced from best mother & fertilized with pollen of an unknown father tree ELITE GENETICS PRODUCTS MCP: Advanced, Select, Elite, 2.0 Seedlings produced from best mother and father. Arbor
Slide 9: We Are Transforming Forestry Productivity
WE ARE TRANSFORMING The corn sector provides a parallel insight into the opportunity for ArborGen’s advanced genetics to lift the yield in forestry FORESTRY PRODUCTIVITY Forestry Terminology Our pine technology platform is Biotech Transgenic (or GE) positioned to transform forestry productivity Yiel
Slide 10: Core Growth Strategy
CORE GROWTH STRATEGY Our core strategy is to grow supply and sale of our proprietary We are now beginning to realise advanced seedling genetics (MCP) in our largest market – the US. the gains from over two decades of investment: This involves: • Developing an extensive portfolio of best-in-class pro
Slide 11: FY21 Progress
FY21 PROGRESS 11
Slide 12: Progress on Our Goals
PROGRESS ON OUR GOALS With the core building blocks of the business now in place, we continue to progress the strategic, operational, and financial goals: 1. Expanding our supply of proprietary advanced genetics, and growing sales of advanced products; 2. Mitigating the risk of adverse climatic even
Slide 13: FY21 Highlights
FY21 HIGHLIGHTS Commercial Highlights Financial Highlights • Built supply of higher value MCP • Solid year on year performance. seed inventory with material Pleasing result despite headwinds increase in MCP seed production and challenges in 2021 • Introduced new MCP 2.0 variety • MCP bagging and pol
Slide 14: Expanding Supply and Sale of Advanced MCP Seedlings in the US
EXPANDING SUPPLY AND SALE OF ADVANCED MCP Premium MCP seedlings add substantial value for landowners* SEEDLINGS IN THE US 1,500 84% value accretion • Mass Control Pollinated (MCP) 1,400 seedlings are produced by controlling the fertilisation of trees with specific 1,300 pollen from elite parent tree
Slide 15: Expanding Supply and Sale of Advanced MCP Seedlings in the US
EXPANDING SUPPLY AND SALE OF ADVANCED MCP SEEDLINGS IN THE US MCP Supply Availability million seedling equivalents FY21 Activity: 400 • Maturation of MCP orchards is increasing seed availability going forward – younger orchards now entering their productive life 300 • Cones harvested saw a substanti
Slide 16: Production Timeline
PRODUCTION TIMELINE Cone Harvest & Lift Seedlings Seed Extraction and Dispatch Harvest pinecones Lift seedlings and and extract seeds. dispatch to customers. rourweets QT QT reerwecks Plant Orchards Commenced focus on MCP supply and sales. Planted orchards - 8 to 10 years to reach commercial product
Slide 17: Adding Superior, Further-Advanced MCP Products to Our Portfolio
ADDING SUPERIOR, FURTHER-ADVANCED MCP PRODUCTS TO OUR PORTFOLIO • Significant investment in building supply pipeline of further-advanced products • Continued investment in R&D to deliver proprietary best-in-class advanced genetic products • Focus on continuously moving customers up the MCP value cha
Slide 18: Mitigating the Risk of Adverse Climatic Events
MITIGATING THE RISK OF ADVERSE CLIMATIC EVENTS Climate risks for ArborGen include Hurricanes, Drought and Flooding Range of initiatives and standard operating procedures in place to minimise and mitigate risks Seed production • Building sufficient inventory of reserve MCP seed to reduce dependence o
Slide 19: Geographically Dispersed Orchards in US
GEOGRAPHICALLY DISPERSED ORCHARDS IN US Taylor Blenheim Bluff City Belville Selma Shellman Bullard Jasper Livingston ArborGen Headquarters Nursery Distribution Point Orchards 19
Slide 20: Continued Growth in All Regions in a Capital Light Manner
CONTINUED GROWTH IN ALL REGIONS IN A CAPITAL LIGHT MANNER United States Australasia South America • Nursery expansion •Next year’s seedling sales • Confirmed orders support (through leases) has are expected to increase a lift in sales increased production •Business growth includes • The lease of two
Slide 21: Operational Cashflow Initiatives
OPERATIONAL CASHFLOW INITIATIVES • Acquisition of headquarters in South Carolina has lowered annual property costs • Reductions in discretionary overhead expenditure and capex • Consolidation of certain nursery and orchard roles • Streamlined R&D activity • Improved utilisation of equipment across n
Slide 22: FY21 Financial Performance
FY21 FINANCIAL PERFORMANCE All financial results are in US dollars (US$) unless otherwise stated. 22
Slide 23: FY21 Operating Environment
FY21 OPERATING ENVIRONMENT • One of the most challenging periods in the company’s history, with COVID-19 materially affecting sales in two of the three regions we operate in (the US and Brazil), as well as severe weather events • United States: • Sawmill closures in early calendar year 2020 resulted
Slide 24: FY21 Financial Snapshot
FY21 FINANCIAL SNAPSHOT USD $m FY21 FY20 % change • Solid year on year performance Revenue 52.7 56.9 -7% • Pleasing result despite headwinds and challenges in 2021 Operating Earnings (before 2.6 2.4 +8% other significant items) • Significant improvements in net Net earnings1 (NPAT/NLAT) 3.2 (2.7) ea
Slide 25: FY21 Revenue and Seedling Sales
FY21 REVENUE AND SEEDLING SALES MCP & varietal sales comprised ArborGen Sales Volume (million units) 31% of total US loblolly pine sales volume but delivered 52% of US loblolly sales revenue. Seedling Sales Seedling FY21 (m) Sales FY20 (m) FY21 global seedling sales were USA 294 333 down approximate
Slide 26: FY21 Revenue and Seedling Sales
FY21 REVENUE AND SEEDLING SALES Sales Revenue US Loblolly pine sales US Loblolly pine sales By Region Revenue Volume Australasia South America USA MCP & Varietals Open Pollinated MCP & Varietals Open Pollinated 26
Slide 27: Three Year Performance
THREE YEAR PERFORMANCE Revenue US GAAP EBITDA Net Debt* 60 12 30 10 25 55 8 20 6 15 50 4 10 2 5 45 0 0 FY19 FY20 FY21 FY19 FY20 FY21 FY19 FY20 FY21 *FY19 Net Debt includes capitalised HQ lease. FY20 and FY21 includes HQ mortgage NPAT Operating Cashflow FY19 FY20 FY21 10 4 8 2 6 0 4 -2 2 -4 0 -6 FY19
Slide 28: FY22 Outlook
— (Te ella FY22 OUTLOOK P i , Vie / | ca ; / i
Slide 29: Regional Outlook for FY22
REGIONAL OUTLOOK FOR FY22 United States Australasia South America • Return to pre-COVID sales and •Underlying demand drivers for • Orders to date are 70% higher operating processes forestry remain strong than this time last year • Easing of migrant labour • Positive market drivers – restrictions •Co
Slide 30: Outlook FY22 Guidance
OUTLOOK Strong tailwinds for FY22: FY22 GUIDANCE • Increased availability of proprietary MCP seedlings in US • Improving market in all regions Subject to any uncontrollable • Higher demand for proprietary genetics in US and Brazil factors, we are targeting US- GAAP EBITDA for the current • Return to
Slide 31: Financial Reconciliation
FINANCIAL RECONCILIATION Reconciliation of NZ IFRS to US GAAP EBITDA Reconciliation of US GAAP EBITDA* Fiscal year ending March 2021 2020 Fiscal year ending March 2021 2020 Per Published IFRS Financial ArborGen - US GAAP Statements Revenue 52.7 56.9 NPAT 3.2 (2.7) Gross Margin (excluding Less tax be