AgroFresh Solutions, Inc.

Greetings and welcome to the AgroFresh Solutions third quarter 2022 earnings call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jeff Sonick of ICR. Please go ahead.

Thank you and good afternoon. Today's presentation will be led by Clint Lewis, Chief Executive Officer, and Graham Mille, Chief Financial Officer. The comments during today's call and the accompanying presentation contain forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts are considered forward-looking statements. These statements are based on management's current expectations and beliefs as well as a number of assumptions concerning future events. Such forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from the results discussed in the forward-looking statements. Some of these risks and uncertainties are identified and discussed in the company's filings with the SEC. We'll also refer to certain non-GAAP financial measures today. Please refer to the tables included in the slides that accompany this presentation as well as the press release which can be found in the investor relations section of our website, agrefresh.com, the reconciliations of non-GAAP financial measures to their most directly comparable GAAP measures. With that, I'd now like to turn the call over to Clint Lewis.

Thank you, Jeff, and welcome to everyone on the call. I'd like to begin by commenting on the 8K that we released on October 27th, disclosing that a special committee of the AgriFresh Board of Directors is in discussion with one of our existing stakeholders, Payne Schwartz Partners, to explore a potential transaction in which the company would be taken private for $3 per share in cash. Naturally, there are surely many questions surrounding the potential outcomes from this discussion. But aside from noting that we are working together on this project in the best interest of all shareholders and cautioning stockholders that no agreement will be created unless definitive documentation is executed and delivered. We will not be able to provide any additional information or speculate on potential paths forward. This development in no way impacts our day-to-day operations. And as far as this team is concerned, it's business as usual. We will continue to keep you updated on any material developments with regard to this proposal when we can. Now, on to my remarks for our third quarter performance. The third quarter marks the beginning of our northern hemisphere season. We posted third quarter operational revenue growth of 3.1% to $47.8 million on a constant currency basis, despite weather-related events in North America that impacted crop size and delayed the harvest season. As has been noted by many numerous companies with international market exposure, foreign currency has also become a significant headwind given the continued strengthening of the U.S. dollar versus other currencies. For AgriFresh, the impact of foreign exchange is material, given that almost 80% of our business is transacted outside of the U.S. For example, the EMEA region comprises approximately 50% of our annual revenues, and this is particularly significant in the second half of the year, given the alignment of growing regions to the Northern Hemisphere. Despite the impacts of weather and foreign exchange, we continue to advance our diversification strategy. I'd now like to review the business drivers for the quarter ended September 30th, 2022, which marks the beginning of our Northern Hemisphere season. And to further assist your understanding of our business and monitor the progress of our strategy to grow through diversification, we're providing you with additional disclosures on both the geographical and product solutions basis. The details can be found in our supplemental earnings deck on our Vesta Relations website. Beginning with diversification, remember, we define our diversification category as the components of our business, excluding SmartFresh for Apple, which covers all other crops, solutions, and technologies. On a reported basis, for the 12 months ending September 30th, 2022, Diversification revenues grew 12.7%. On an operational or constant currency basis, growth was 17%. Diversification now represents 44.5% of consolidated reported revenues for the trailing 12 months ended September 30, 2022, compared to 41.3% in the prior year period. This marks our seventh consecutive quarter of double-digit diversification category revenue growth. From a geographical perspective, looking at our performance for the third quarter, our mayor region generated 23.3% constant currency revenue growth, or an increase of $6.2 million versus the prior year period, which was the largest contributed growth for the quarter. Growth was led by the early timing of Smart Fair sales in Europe. On the registration front, I'm pleased with the granting of emergency use permits again this year for Harvista in markets such as Eastern Europe, Italy, and Portugal. Additionally, we were granted registration for Harvista in Ukraine as well. Our Asia Pacific region, although relatively small from a revenue dollar perspective, increased 35.4% on a constant currency basis versus the prior year period, primarily driven by smart fresh penetration. Sales in the Latin America region increased 1.3% on a constant currency basis versus the prior year third quarter. Our North America region decreased 19%. As I previously noted, this was due to weather-related events that impacted apple crop size and delayed the harvest season. which was partially offset by strong demand for epiblock amid the recovering flower industry. From a product solutions perspective, once again, looking at the third quarter and first half of the northern hemisphere season, growth was once again driven by leveraging our portfolio of diverse solutions. Our other one MCP category, which represents our continued focus on leveraging our SmartFresh franchise beyond apples, and into other crops and geographies, and includes key solutions such as Harvista and Ethelblock, grew 6.6% on a constant currency basis and contributed $1.3 million of growth. Smart, fresh diversification growth was led by pears and mangoes in China and Brazil, respectively. Our Ethelblock solution was particularly notable, with growth of approximately 80% on a constant currency basis fueled by the flower industry recovery. Our coatings category grew 59.3% in the third quarter on a constant currency basis and contributed $0.5 million of growth on a smaller revenue base. Our fungicides and disinfectants category was essentially flat on a constant currency basis in the third quarter versus the prior year period. Performance was impacted by softness in fungicides for citrus in Brazil, partially offset by antimicrobials growth in Turkey. Rounding out our diversification categories is the other category, which includes our control tech equipment solutions and our fresh cloud digital platform. While the other category is small on a relative basis, it nearly doubled in the quarter and contributed $0.2 million of growth, mainly driven by control tech. Our SmartFresh for Apple category increased 5.6% on a constant currency basis in the third quarter versus the prior year period, driven primarily by growth in EMEA and APAC, which was partially offset by the weather-related and timing of sales impacts in North America. In summary, despite significant foreign currency headwinds and weather-related impacts in North America, we delivered solid growth for the quarter on a constant currency basis. Our team remains focused on delivering solutions that ensure our customers can provide a consistent supply of high-quality fresh produce. This quarter has also been a busy one with respect to connecting with customers and other industry stakeholders. My leadership team and I participated in two of the largest global industry trade shows, Root Attraction in Madrid, Spain, and the International Fresh Produce Association meeting in Orlando, Florida. The key takeaways from both of these conventions is that the broader global fresh fruit and produce industry is vibrant, vital, and growing. That the post-harvest segment is equally important and vital to the industry's continued growth. And AgriFresh is well-positioned and highly regarded as an industry leader. It is also clear that new innovation will be required. And again, AgriFresh is positioned well to expand our portfolio and range of solutions that we can bring to market to continue to support this vibrant and vital industry. As we look to the balance of the Northern Hemisphere season, we will continue to navigate the broader macro challenges while we remain focused on delivering growth for the full year by continuing to advance our diversification strategy. I'll now pass the call to Graham to speak to some of the financial highlights.