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Edited Transcript of AGFS earnings conference call or presentation 8-Nov-17 1:30pm GMT

Q3 2017 AgroFresh Solutions Inc Earnings Call

PHILADELPHIA Nov 14, 2017 (Thomson StreetEvents) -- Edited Transcript of AgroFresh Solutions Inc earnings conference call or presentation Wednesday, November 8, 2017 at 1:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* John Cassidy

* Jordi Ferre

AgroFresh Solutions, Inc. - CEO and Director

* Katherine Carolyn Harper

AgroFresh Solutions, Inc. - CFO and EVP

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Conference Call Participants

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* Brian Nolan

* Daniel William Jester

Citigroup Inc, Research Division - VP

* Francesco Pellegrino

Sidoti & Company, LLC - Research Analyst

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Presentation

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Operator [1]

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Good day, welcome to the AgroFresh Solutions, Inc. Third Quarter 2017 Results Conference Call and Webcast. (Operator Instructions) Please note, this event is being recorded. I would now like to turn the conference over to Mr. John Cassidy, Director of Financial Planning and Analysis for AgroFresh. Please go ahead, sir.

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John Cassidy, [2]

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Thank you. Good morning, and welcome. Today's presentation will be led by Jordi Ferre, Chief Executive Officer; and Kathy Harper, 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. Please refer to the tables attached to the slides accompanying this presentation, which can be found in the Investor Relations section of our website, for reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures.

I would now like to turn the call over to Jordi Ferre.

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Jordi Ferre, AgroFresh Solutions, Inc. - CEO and Director [3]

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Thank you, and good morning, everyone. As John mentioned, I'm here this morning with our Chief Financial Officer, Kathy Harper. We are pleased to be with you this morning to report not only on the strong progress we have achieved over the course of 2017, but to discuss this morning's exciting announcement that we have signed an agreement to acquire a controlling interest in Tecnidex. This is an outstanding addition to AgroFresh that we think clearly reflects our ability to use our strong financial position to make acquisitions that are both consistent with our strategy and accretive. I will talk a little bit more about that in a minute.

Entering 2017, our primary goal was to stabilize the core business through the implementation of a number of strategic initiatives. I am pleased to report the results for both the third quarter and the first 9 months of 2017 demonstrate that we have made significant progress with earnings and cash flow up for both the quarter and year-to-date. And over the last 12 months, we have grown cash by more than $31 million, which is a key measure of our financial health as well as a significant increase in the resources we have available to invest and fund new growth initiatives.

Revenue over the first 9 months of 2017 is up slightly from a year ago and flat in the quarter. We continue to drive down cost as operating expenses were lower again this quarter and down $6 million year-to-date.

In addition, we have achieved positive net income for the second consecutive quarter with GAAP net income of $10 million. We also reported $33 million of EBITDA in the quarter, better than 50% EBITDA margin. And we ended the quarter with cash of $75 million. These results demonstrate the strength of the AgroFresh franchise, which have been accomplished despite the headwinds of a severe frost in Europe and a late harvest in the United States.

As I mentioned last quarter, I expected our strategy to expand our service offering and increased market penetration to partially offset any impact from the frost in Europe. Our European team stepped up to the challenge, increasing our SmartFresh penetration in apples as well as driving growth from other crops, especially pears. Consequently, while it is estimated that the European crops could be down by more than 20% this year, we expect the proactive steps we have taken to largely mitigate the impact.

In North America, a late apple harvest reduced third quarter's SmartFresh revenue, offset partially by growth in Harvista.

Overall, this quarter's performance demonstrate that the progress achieved in crop diversification, market penetration and new product introductions is starting to reduce our sensitivity to fluctuations in the size of the apple crop.

I will now like to provide you with some additional updates on our progress across this broad strategic initiatives.

A growing line up of smarter freshness technologies products and services is strengthening our franchise across many dimensions. First, we are achieving crop diversification, led by pears, where revenues have grown 33% year-to-date from the comparable period in 2016.

Second, we are increasing market penetration, particularly in Europe. Third, we are introducing new products and seeing growth of our existing products beyond SmartFresh. In particular, Harvista, both in the U.S. and globally, the immediate success of our ActiMist fungicide technology and the nearly 500% increase in the number of growers adopting our AdvanStore technology at driving this growth.

We have also continued to make progress in our retail business, which as an end market, we believe, has significant growth potential. This month, Key Food Stores Co-Operative began rolling out a RipeLock quality system to all 240 of their grocery stores in metro New York. RipeLock is being used to prolong the desired yellow life of the premium yellow bananas, which we believe will help Key Foods attract customers, drive sales, minimize shrink and reduce waste and handling.

Additionally, we are currently, or will soon be running tests in another 8 strategic retailers in Europe and North America. 2018 is a key year when we will work hard to transition this test into steady and significant business.

In September, we signed a term sheet to build a joint collaborative relationship with the largest food specialty store in China, Pagoda, to codevelop solutions to extend food freshness that are relevant to the Chinese market needs. Pagoda has over 2,500 food stores across China and is growing rapidly to satisfy the Chinese consumer demand for quality fruits. This represents a major shift from our original China market strategy, and this new partnership will now become central to penetrate the world's largest fruit market.

Today, I'm also pleased to announce that we have signed an agreement to acquire a controlling interest in Tecnidex, which joins AgroFresh with a 37-year history of leadership in the European post-harvest citrus market. First, it is immediately accretive. With over 80% of the revenue in the Citrus industry, it provides substantial crop diversification.

They have a strong portfolio of fungicides, waxes and sanitizers that provide substantial product diversification, strengthen our newly launched fungicide franchise and potentially provide a new range of products that can be launched into our traditional apple market. From their base in Spain, they have a strong presence in Europe, along with markets, such as Morocco, Egypt and Peru where we currently have limited penetration.

And they share our commitment to research and development, which is extremely synergistic with our already strong technical expertise. We are very excited that Tecnidex will be joining AgroFresh, the first of what we expect to be an active acquisition program, a spark of our overall growth strategy.

The first 9 months of 2017 demonstrate that our strategy is beginning to pay dividends. Revenues have been stabilized. We've shown net income versus a net loss in the prior year. Our EBITDA has improved. We are generating significant free cash flow, and we are solidifying the organization, all of which serve as a foundation for future growth. While our organic growth initiatives are gaining traction, we're also focused on supplementing organic growth with strategic acquisitions, such as Tecnidex as a means to further enhance the value of the AgroFresh franchise.

Now let me turn the call over to our CFO, Kathy Harper, who will go through the financial results in greater detail.

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Katherine Carolyn Harper, AgroFresh Solutions, Inc. - CFO and EVP [4]

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Thank you, Jordi. Good morning to everyone on the call. Let me review the highlights for the third quarter and first 9 months of 2017, starting with revenue.

Net sales for the third quarter was $61 million, flat versus a year ago. Lower SmartFresh revenues in North America driven by a late harvest were partially offset in Europe where we had penetration gains and an earlier albeit expected to be lower for the year crop. Additionally, as Jordi mentioned, Harvista revenues were once again up double digits in the quarter. Revenues also reflect small currency benefits. For the first 9 months of 2017, revenues were up marginally from a year ago, driven by increases in Harvista sales. For the third quarter and year-to-date, as expected, margins were slightly down, primarily attributable to an increase in the proportion of Harvista revenue, which has an incrementally lower margin profile. There was minimal impact on quarterly and year-to-date margins from pricing.

Operating expenses in the quarter were down from a year ago. Included in general and administrative expenses this quarter were nearly $2 million in nonrecurring legal and M&A costs. We expect to continue to see improvement in operating expenses in the coming quarters. Interest expense was $9 million for the quarter, down $6 million from a year ago and flat versus second quarter. The decrease was driven by lower noncash accretion expense on contingent consideration.

Cash interest from our long-term debt was $6.5 million, up slightly from the third quarter of 2016 due to higher interest rates.

We generated $33 million of EBITDA in the quarter, which is 54% of revenue.

EBITDA in the quarter is down somewhat from a year ago, primarily due to the shift in product mix. Year-to-date, EBITDA was $49 million, up 33% from the first 3 quarters of last year, driven by lower operating costs and foreign currency gains.

The third quarter was our second consecutive quarter of GAAP net income. For the first 9 months of 2017, we reported net income of $100,000, which is a $43 million improvement from the first 9 months of 2016.

The company also continues to generate strong cash flow with cash flow from operations of $15 million over the first 3 quarters of the year, a $20 million improvement compared to the first 3 quarters of 2016.

Capital expenditures were $2 million in the quarter and $5 million over the first 9 months of 2017. We still expect capital expenditures to be approximately $7 million for the year, mostly for new IT infrastructure.

The balance sheet on September 30, 2017, was strong, including significant liquidity. Cash on hand was $75 million, and total liquidity was $100 million. Compared to the same period a year ago, cash is up more than $30 million, which we believe is a good indication of both our fundamental profitability and the attractive cash flow characteristics of our asset light model.

Now let me provide you some additional financial information on the Tecnidex acquisition. This is an all cash deal that will be immediately accretive and is expected to close before the end of 2017. We are buying 75% of Tecnidex for approximately EUR 22.5 million with the current owner retaining a 25% stake. There are arrangements in the agreement that enable us to buyout the remaining 25% over time on essentially the same terms and valuations used for the initial purchase.

Manuel Garcia-Portillo, the sole owner, has agreed to continue providing consulting and support services to AgroFresh through 2019. From a financial perspective, Tecnidex has been generating roughly $20 million in revenues and gross margins in the mid 50% range and EBITDA in the mid 20% range.

Thinking about 2018 and beyond, the addition of Tecnidex will, obviously, have some bearing on our historical growth and operating margins. However, we have consistently noted that it was highly unlikely we could find an acquisition with our same or better margin profile.

Tecnidex is a strong business that produces positive case flow year-after-year and has grown revenues double digits annually over the last several years. We look forward to integrating this business into our own and continuing to drive its further expansion.

Now I'll turn the call back to Jordi for a discussion of our outlook for the remainder of 2017 before opening the call to Q&A.

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Jordi Ferre, AgroFresh Solutions, Inc. - CEO and Director [5]

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Thank you, Kathy. Over the course of 2017, we have been successful in stabilizing operations and strengthening the AgroFresh franchise for future growth. We have largely offset the negative impact on our revenue of the European frost with gains in SmartFresh customers, crops and geographies as well as the growth of Harvista and our other products, which we expect to continue into the fourth quarter.

Beyond the top line, we expect relatively stable margins for the full year 2017 compared to 2016, continued improvement in operating cost and a significant increase in year-end cash, excluding Tecnidex or any other potential acquisitions or strategic investments.

I want to thank all of our hard working and dedicated employees for their tireless efforts in preparing AgroFresh to capitalize on the growing demand for new food preservation and waste reduction solutions.

I also like to welcome the Tecnidex team to our family and look forward to working together to build a stronger franchise that effectively leverages our respective strengths. We want to thank you all for your continued support.

Now I would like to open the line to Q&A.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Today's first question comes from Daniel Jester of Citi.

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Daniel William Jester, Citigroup Inc, Research Division - VP [2]

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So with the acquisition, you anticipate any cost or revenue synergy that you can quantify at this time?

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Katherine Carolyn Harper, AgroFresh Solutions, Inc. - CFO and EVP [3]

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We certainly answered revenue and cost synergies with this deal, but we're not sharing those details at this point.

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Jordi Ferre, AgroFresh Solutions, Inc. - CEO and Director [4]

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That -- there will definitely be -- there will be commercial synergies because we're going to be able to combine portfolios and subsidiaries around the world, and that's number one. Number two, we're definitely going to look at the synergies that we can get considering the fact that Tecnidex is based in Europe, we will actually look and review the synergies that we will actually get. As I said that one of the considerations of this acquisition was looking at synergies.

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Daniel William Jester, Citigroup Inc, Research Division - VP [5]

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Okay. And just turning back to your business. I think you discussed a couple of items regarding the different challenges in some of the Northern Hemisphere markets this year, maybe a smaller crop in Europe, a later harvest in the U.S. Can you just walk us through how that plays out for the fourth quarter? Harvista is, of course, a very important quarter for you, but so is the fourth quarter, so how should we be thinking about the fourth quarter this year given these challenges?

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Jordi Ferre, AgroFresh Solutions, Inc. - CEO and Director [6]

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I think, as I said in the call, we see the same trend that we've seen in third quarter going into fourth quarter. So we -- I think the weather, it's going to have an effect in us being able to grow this year. But, as I said, the actions that we have taken commercially on diversification, product launches, et cetera, are definitely going to help us to stabilize the business. So as I said, you look at third quarter and you project fourth quarter and you'll have the projection there for the year. I would say that weather-wise, obviously, would have affected our ability to grow this year in our core franchise.

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Daniel William Jester, Citigroup Inc, Research Division - VP [7]

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Okay. And in the past, you had talked about making some modifications to the SmartFresh, sort of how you go-to-market, customer engagement, how you tier your customers to make sure that you're focused on the most value-added customers and maybe some of the customers who are less value-added were receiving service commensurate with that. Can you talk about where we are in that process? And how you see it go from that standpoint?

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Jordi Ferre, AgroFresh Solutions, Inc. - CEO and Director [8]

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Yes. No problem. We've made really clear progress this year if we think about it, because this year, we launched fungicides, we've increased our footprint in the Apple Store and Harvista is being one of the bright lights. So we have strengthened our platform of services beyond SmartFresh. This was a very important year because this is the first time really that we've gone to market not just focusing on SmartFresh on the platform of services. I would say that I am satisfied with the results. And as you can see here, we're not only depending on apples and SmartFresh, thus the results, but also I think that you have to start a process. And I think next year and moving forward, this would only be reinforcing our strategy moving forward. We'll have more services. We'll have a lot more to put in our platform. So this year was an important year to change, shift to a new strategy and to start a process that will take us to a different journey. So I'm very satisfied on what we accomplished this year, changing the trend and changing the way we actually went to market before.

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Daniel William Jester, Citigroup Inc, Research Division - VP [9]

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Okay. And then just actually following up on that and just one last one for me. If you look at all these additional products and services that you are putting into the market, Harvista, RipeLock, RipeLock, AdvanStore, et cetera. How much of the revenue pie do you think that that's going to be in 2017? And what's the opportunity for 2018?

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Jordi Ferre, AgroFresh Solutions, Inc. - CEO and Director [10]

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It's a good question. I think we will report later the percentage of how much is that, but I can tell you that maybe it's about 20%. So -- and I think that the trend will continue moving up in the following years. Acquisitions will help as well. Because we then, new products and services, will bring. One of them will be, obviously, with Tecnidex, which I think they have very interesting technologies that we can introduce in markets like the U.S. So I think this is only going to be moving forward into a certain trend that you'll see unfolding. And that we, management here, believe very much that's the right way to go.

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Operator [11]

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And our next question today comes from Francesco Pellegrino of Sidoti & Company.

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Francesco Pellegrino, Sidoti & Company, LLC - Research Analyst [12]

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So just first off, on the acquisition. Did you say, Katherine, that gross margins were 50%?

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Katherine Carolyn Harper, AgroFresh Solutions, Inc. - CFO and EVP [13]

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Yes, in the 50s.

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Francesco Pellegrino, Sidoti & Company, LLC - Research Analyst [14]

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Okay, in the 50s. So I guess, when I look at the peer group for other companies that do fungicides, waxes and biocides, these gross margins are relatively strong as compared to the peer group. And I'm just wondering as compared to AgroFresh, which -- it's more of a ag chemical application service provider and the strong margin that you enjoy are due to your service application. Is Tecnidex more of a tangible fungicide, wax, biocide provider? Or is there some sort of service that's provided with this business given how strong the margin profile is for the company?

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Jordi Ferre, AgroFresh Solutions, Inc. - CEO and Director [15]

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I will take over that one. They're definitely a service provider. They're in the Post-Harvest space like we are. And in Post-Harvest, you just don't trade commodities, you also provide a service. And Tecnidex has been 37 years with an outstanding record of service to its customers. So it is definitely a service company as well, definitely is. You don't stay in this business for 37 years and grow double digit if you don't provide a service rather than trade commodities.

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Francesco Pellegrino, Sidoti & Company, LLC - Research Analyst [16]

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And you said that you paid EUR 22 million for it, is that right?

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Katherine Carolyn Harper, AgroFresh Solutions, Inc. - CFO and EVP [17]

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We acquired 75% of the share for EUR 22.5 million approximately when it closes. There's a bunch of closing conditions and purchase price true-ups and so forth. But yes, EUR 22.5 million for 75% ownership share.

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Francesco Pellegrino, Sidoti & Company, LLC - Research Analyst [18]

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So that's going to come out to anywhere between 4x to 5x EBITDA? And when I think about where you guys are going to be when acquiring businesses, I know R&D is going to come into play in regard to just like some of the background work that you did for any business that you acquired. So at the end of the day, I'm not really concerned about maybe the acquisition multiple that you're paying because I know a lot of R&D is already going to be going into it. And I'm wondering if there is any opportunity to maybe expand outside of citrus for the product portfolio that you acquired?

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Jordi Ferre, AgroFresh Solutions, Inc. - CEO and Director [19]

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The answer is yes.

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Francesco Pellegrino, Sidoti & Company, LLC - Research Analyst [20]

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Can you enlighten us on some of those end market crops?

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Jordi Ferre, AgroFresh Solutions, Inc. - CEO and Director [21]

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Well, let me just give you -- first of all, Tecnidex has a strong heritage in sales and position in providing service and sales of fungicides, which require registrations. We just started this year launching our own fungicide program. I would just imagine and conclude that having somebody that's done that for 37 years would only increase our position in that segment. And definitely, we will be taking and using as many synergies as possible to expand their fungicide sales to the areas where we are more strong than they are outside citrus. Second, they do have excellent technology in orange and apple coatings. And I think that, that has a lot of potential to be expanded to a number of markets. This is one thing that we've never talked before about coatings or waxes. We don't play there. It's an important part of our customers' spend. And you know what, if we have Tecnidex, we definitely are going to look into that in terms of launching that as many places as possible. So our reach in terms of geography and customers are going to add to already what they have accomplished. As I said, they have good R&D, investment facilities, people, and you just want to use that to be able to progressively be more aggressive with their products. So definitely, the answer is, as I said at the beginning of my answer is, yes.

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Francesco Pellegrino, Sidoti & Company, LLC - Research Analyst [22]

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So then, theoretically, since they play in the apple coatings industry -- an industry that you have -- that the AgroFresh business hasn't been in, in regards to its legacy products. Are you -- do you look at it as acquiring a competitor or just addressing -- or expanding into a new addressable market since apple coatings was an industry that you previously played in?

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Jordi Ferre, AgroFresh Solutions, Inc. - CEO and Director [23]

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Mostly, it's acquiring a new complementary player that's in the same space of Post-Harvest that we are. That has a different mix, that's completely complementary to what we already do. And thus, when I was asked before about synergies, I was referring especially about commercial synergies that I see that are going to be limitless. It's going to be making us much stronger in competing in a number of markets around the world with a broader range. We're going to add more customers. We're going to be able to introduce some of their technologies in markets that they have not really stepped in. It's up to us and the ability to maximize the value of the acquisition. I do think that we have bought a company that is very well-managed, that's growing double digits in a market that probably most players are not. And on other hand, we've also acquired somebody that has a lot of potential to take their technologies and product ranges to places they've not ventured before because they've been very systematic in how they have expanded to other markets outside their core Spain market. So we're going to accelerate that process. And so I do think, and I want to be careful here, but I would say to you that the way I look at this is we bought a gem here and we're going to make it sure that we make it grow.

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Francesco Pellegrino, Sidoti & Company, LLC - Research Analyst [24]

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And last question for me, 2-part question. Like what percentage of sales are of branded products? And then for the product portfolio that you're acquiring. Are there any patent expiration dates that we -- any significant patent expiration dates for any of the products that we should be made aware of?

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Jordi Ferre, AgroFresh Solutions, Inc. - CEO and Director [25]

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No. There's not anything to be in terms of technology or patents that would be expiring.

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Francesco Pellegrino, Sidoti & Company, LLC - Research Analyst [26]

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And then percent of the sales that are branded?

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Jordi Ferre, AgroFresh Solutions, Inc. - CEO and Director [27]

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I mean, I don't know exactly what you mean by branded, but everything they sell is branded.

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Katherine Carolyn Harper, AgroFresh Solutions, Inc. - CFO and EVP [28]

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Yes. Tecnidex has a lot of proprietary products that they have codeveloped or developed themselves, have registrations on or have IPO on.

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Jordi Ferre, AgroFresh Solutions, Inc. - CEO and Director [29]

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And they represent also major players in the industry as well. I mean, I invite you to go through their website. You will see everything they sell is branded. They are definitely very brand minded, service minded in their own dimension, obviously, but they've been a company that's been well managed in the world market.

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Operator [30]

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And the next question comes from Brian Nolan of JPMorgan.

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Brian Nolan, [31]

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It's Brian Nolan from JPMorgan. I have 2 questions. First, I want to see, it looks like you guys didn't pay any principal payments or cash interest during the third quarter. So I'm wondering after that in the payment for Tecnidex, we're looking at around $45 million in cash on the balance sheet, all else even?

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Katherine Carolyn Harper, AgroFresh Solutions, Inc. - CFO and EVP [32]

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So in the quarter, the way the calendar fell, we didn't make the quarterly interest payment until beginning of October because the end of the month was on a weekend. So I mean, it will be normal payment. It's just with the timing in the calendar for this. And then -- and you can figure out the cash payments.

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Brian Nolan, [33]

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Got it. Okay. And the other part I wanted to ask is, will you be able to quantify the European Union or early harvest versus U.S. late harvest? And will there be any kind of margin impact from a later U.S. harvest on the next quarter's results?

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Jordi Ferre, AgroFresh Solutions, Inc. - CEO and Director [34]

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No.

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Brian Nolan, [35]

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No to both?

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Jordi Ferre, AgroFresh Solutions, Inc. - CEO and Director [36]

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I was actually reacting to your last question, I'm sorry.

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Katherine Carolyn Harper, AgroFresh Solutions, Inc. - CFO and EVP [37]

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We do expect margins to hold in terms of the puts and takes on the timing. I think there were movements in the quarter we expect offsetting movements in the second quarter -- or excuse me, in the fourth quarter and the second quarter of the half. So as Jordi tried to indicate we think we're stable for the year.

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Operator [38]

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(Operator Instructions) Today's next question comes from (inaudible)

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Unidentified Analyst, [39]

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I just -- sort of more broad question. I know that you've said that your planning now goes around sort of 10-year average, I think, for harvest. Can you kind of speak to the U.S.? And I guess, maybe the European apple harvest whether it fits into that dynamic?

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Jordi Ferre, AgroFresh Solutions, Inc. - CEO and Director [40]

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I think I explained. I think in the U.S. -- it's 5-year by the way, it's not 10-year. We're going to be rolling 5-year, and we continue to do that as we prepare for next year. I think for U.S., it's quite stable around where the average is, flat. Europe, as I said in my call, the projection by WAPA is to be 20% below the tandem, which is above the 5-year average. So...

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Unidentified Analyst, [41]

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Okay. All right, that helps. And I guess, I don't know enough about apple harvest, I guess, but if it was a late harvest and that affected the Q3 numbers, I guess intuitively I would have thought that maybe Q4 get the lift, but I think what you're saying is, you probably be down by a similar amount in Q4 as you were in Q3...

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Katherine Carolyn Harper, AgroFresh Solutions, Inc. - CFO and EVP [42]

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You'll get the benefit in the U.S. side, but you'll get the offset on the early harvest and the smaller crop in Europe. That's why we are saying relatively stable for the full year.

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Unidentified Analyst, [43]

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Got it. Okay, that helps. And then on the acquisition, I did have a question about do you have a ballpark on sort of what kind of market share these guys have in Europe? And then, is the business seasonally similar, just sort of the cash flow and earnings that you guys experienced? And then, I guess, broadly on Citrus, is there an opportunity in Latin America or in the U.S.? I'm not sure, is the market completely different here or is it dominated by somebody else, anything if you can provide is helpful?

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Jordi Ferre, AgroFresh Solutions, Inc. - CEO and Director [44]

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Well, it's a few questions you asked there. Let me start with the last ones. The season itself doesn't coincide with apple. It gets longer and it gets to the end of the year. So it's a little longer season, and it doesn't coincide fully with the apple season. The apple season will be more towards the, let's say, summer in the Northern Hemisphere and then it will flow just basically. So the orange will actually go through the end of the year. So that also will help in terms of the timing. You asked a question about synergies to go Latin America. Yes, their presence today, I would say, and this company started going international after the crisis in Europe in 2008. So they had to go in aftermarket. So they've done very well. And that's why they grow in double digits. So their strategy has been to have a presence in anywhere in the world, whether it is Citrus market, except the U.S. The only market they don't have a presence today is the U.S. And definitely, we're going to help there. But if you ask me Latin America, yes, there -- today, they have subsidiaries in Peru, in Chile, in Argentina. And they have other projects to go into other markets. Latin America has been one of their latest projects in terms of growth. So that's already ongoing. And we're definitely going to do synergies there. They have a presence in South Africa, which is also a Citrus market. And obviously the whole Mediterranean countries, they have a very strong position. When you ask me about market share, it's difficult for me to now estimate that across all these countries. I would say, though, that their market share is in the double digits where they've been playing successfully. I don't know if I answered all your questions. If not, please remind me if I missed anything.

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Unidentified Analyst, [45]

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No, that's great.

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Operator [46]

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Ladies and gentlemen, this concludes today's question-and-answer session and today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful day.