Corporate Presentation September 2019 Disclaimer General These - - PowerPoint PPT Presentation

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Corporate Presentation September 2019 Disclaimer General These - - PowerPoint PPT Presentation

Corporate Presentation September 2019 Disclaimer General These materials and the information contained herein are being presented by AgJunction, Inc. (the "Company" or "AgJunction"). By attending a meeting where these


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Corporate Presentation

September 2019

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Disclaimer

General These materials and the information contained herein are being presented by AgJunction, Inc. (the "Company" or "AgJunction"). By attending a meeting where these materials are presented, or by reading them, you agree to be bound by the following limitations and notifications. These materials do not constitute or form part of any

  • ffer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities, nor shall part, or all, of these materials or their distribution

form the basis of, or be relied on in connection with, any contract or investment decision in relation to any securities. These materials are not a prospectus or an offer document and has not been prepared, approved or registered in accordance with Canadian or United States securities laws or the securities laws of any other

  • jurisdiction. AgJunction expressly disclaims any duty on AgJunction to make disclosure or any filings with any securities commission or regulatory authority, beyond that

imposed by applicable laws. These materials do not constitute any form of commitment or recommendation on the part of the Company. These materials do not purport to be all-inclusive or to contain all the information that prospective investors may desire in analyzing and deciding whether or not to hold

  • r transact in the Company’s shares, including important risk factors associated with an investment in the Company, and does not take into account the particular

investment objectives or financial circumstances of any specific person who may receive it. Recipients of these materials must rely on their own examination of the legal, taxation, financial and other consequences of any possible holding or transaction involving the Company’s shares, including the merits and risks involved. Recipients should not treat the contents of these materials as advice relating to legal, taxation or other matters and are advised to consult their own professional advisors concerning the acquisition, holding or disposal of shares in the Company. The information provided in these materials has either been obtained from the Company or constitutes publicly available material. Although the Company has endeavored to contribute towards giving a correct and complete picture of the Company, neither the Company, its subsidiaries, nor any of their respective members, directors, advisors, officers, agents, advisors or employees nor any other person can be held liable for loss or damage of any kind, whether direct or indirect, arising from use of these materials or their contents or otherwise arising in connection therewith. The Company, the subsidiaries or any of their respective members, directors, advisors, officers, agents, advisors or employees or any other person assume no responsibility whatsoever and makes no representation or warranty, expressed or implied, for the contents of these materials, including its accuracy, completeness or verification for any other statement made or purported to be made by any of them,

  • r on their behalf.

Recipients of this material should refer to AgJunction’s Disclosure, Confidentiality, and Trading policy for further information and clarification.

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Disclaimer

Forward-Looking Statements Certain statements contained in this presentation constitute forward-looking statements or information (collectively "forward-looking statements") within the meaning of applicable securities legislation, including, but not limited to, management's assessment of future plans, operations and strategies; AgJunction's strategy and plans for its products and business; the Company's beliefs as to the benefits to farmers of adopting the Company's products; the Company's anticipated revenues for fiscal year-end 2019; potential growth opportunities and the anticipated benefits and results from such growth opportunities; potential benefits from strategic partnerships; and other matters related to the foregoing. Forward-looking statements are typically identified by words such as "anticipate", "continue", "estimate", "expect", "forecast", "may", "will", "project", "could", "plan", "intend", "should", "believe", "outlook", "potential", "target" and similar words suggesting future events or future performance or may be identified by reference to a future date. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements included in this presentation, as there can be no assurance that the plans, intentions or expectations upon which the forward-looking statements are based will occur. With respect to forward-looking statements contained in this presentation, AgJunction has made assumptions regarding, among other things: the sufficiency of budgeted capital expenditures in carrying out planned activities; the availability and cost of labor and services; that AgJunction's future results of operations will be consistent with management expectations in relation thereto; the continued availability of capital at attractive prices to fund future capital requirements relating to existing and future projects; future operating costs; that counterparties to material agreements will continue to perform in a timely manner; that there are no unforeseen events preventing the performance of contracts; availability of key supplies, components, services, networks and developments; the impact of increasing competition; conditions in general economic, agricultural and financial markets; demand for the Company's products; and the continuity of existing business
  • relationships. Readers are cautioned that the foregoing list is not exhaustive of all assumptions which have been considered.
By their nature, forward-looking statements involve numerous known and unknown risks and uncertainties that contribute to the possibility that the predictions, forecasts and other forward-looking statements will not occur, which may cause AgJunction's actual performance and financial results in future periods to differ materially from any estimates or projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, among other things, the risks associated with the industries in which AgJunction operates; ability to access sufficient capital from internal and external sources; changes in legislation; departure of key personnel or consultants; competition; inability to introduce new technology and new products in a timely manner; legal claims for the infringement of intellectual property and other claims; fluctuation in foreign exchange or interest rates; uncertainties in the global economy; negative conditions in general economic, agricultural and financial markets; availability of key supplies and components; product liability; reduced demand for the Company's products; and changes in the Global Navigation Satellite System and other systems outside of the Company's control. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on other factors that could affect the Company's operations or financial results, are included in reports of AgJunction on file with applicable securities regulatory authorities, including but not limited to, AgJunction's Annual Information Form which may be accessed on its SEDAR profile at www.sedar.com. The forward-looking statements contained in this presentation speak only as of the date of this presentation. Except as expressly required by applicable securities laws, AgJunction does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Also included in this presentation is an estimate of AgJunction's pro forma revenue which are based on various assumptions. To the extent such estimate constitutes a financial outlook or future oriented financial information within the meaning of applicable securities laws (collectively, the "financial outlook"), it was approved by management of AgJunction, and is included to provide readers with an outlook of the Company's activities and results and readers are cautioned that the information may not be appropriate for other purposes. Any financial outlook has been prepared based on a number of assumptions including the assumptions discussed above and assumptions with respect to the costs and expenditures to be incurred by the Company, capital and operating costs, foreign exchange rates, taxation rates for the Company, general and administrative expenses and the prices to be paid for the Company's products and services. Management does not have firm commitments for all of the costs, expenditures, prices or other financial assumptions used to prepare the financial outlook or assurance that such operating results will be achieved and, accordingly, the complete financial effects of all of those costs, expenditures, prices and operating results are not objectively determinable. The actual results of operations of the Company and the resulting financial results may vary from the amounts set forth herein, and such variations may be
  • material. Management believes that the financial outlook has been prepared on a reasonable basis, reflecting management’s best estimates and judgments. However, because this information is highly subjective and subject to numerous risks
including the risks discussed above, it should not be relied on as necessarily indicative of future results. The financial outlook contained in this presentation was made as of the date of this presentation and the Company disclaims any intention or
  • bligations to update or revise such financial outlook, whether as a result of new information, future events or otherwise, unless required pursuant to applicable law.
Third Party Information Certain other information contained in this presentation has been prepared by third-party sources, which information has not been independently audited or verified by AgJunction. No representation or warranty, express or implied, is made by AgJunction as to the accuracy or completeness of the information contained in this document, and nothing contained in this presentation is, or shall be relied upon as, a promise or representation by AgJunction.
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SUMMARY

  • Autosteering is the foundation for precision agriculture
  • Untapped opportunity with 10 million farms for autosteering
  • Level the playing field for autosteering so all farms can prosper
  • AgJunction best positioned to deliver autosteering to all farms
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Opportunity

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Autosteering for everyone & everything

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What is autosteering?

Automatically and accurately steering your tractor

  • On a predefined path
  • Including turns
  • Using GPS satellites thousands of miles in space

Autosteering is the foundation for precision agriculture

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Half Billion Farms

0.04% Autosteer

Why not all farms?

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The untapped opportunity

200K

70% Penetrated CAGR 6%

10% Penetrated CAGR 23%

Large Farms > 1,000 Acres

Small Farms 10 – 1,000 Acres Today’s battleground Untapped Opportunity

10M

Farms WW

Half Billion Farms Worldwide

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Level the playing field

Large farms succeed because of precision agriculture. Autosteering is the foundation for precision agriculture and a requirement today in helping farms prosper. Autosteering can reduce input costs and labor hours, but autosteering is complex and expensive today.

What if autosteering was available for everyone?

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How farmers get autosteering today

What’s the challenge?

  • Technology is expensive
  • Purchase through a dealer
  • Complex to use and install

What’s the challenge?

  • Technology is expensive
  • Add-on at time of sale
  • Purchase as an option

Both models limit adoption ADD TO EXISTING TRACTOR

(Direct-to-Farmer)

BUY WITH NEW TRACTOR

(OEM)

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A new way for farmers to get autosteering

What’s the solution? Simple to add to your tractor

  • Low-cost, all-in-one solution
  • Sold online
  • Easy to install and use

What’s the solution? Comes standard on every tractor

  • Cost effective components
  • Integrated into the tractor
  • Standard feature at purchase

Remove the barriers to adoption ADD TO EXISTING TRACTOR

(Direct-to-Farmer)

BUY WITH NEW TRACTOR

(OEM)

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Remove the barriers - Direct-to-farmer

Simple to add to your tractor

  • Low-cost, all-in-one solution
  • Sold online
  • Easy to install and use

www.handsfreefarm.com

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HIGHLY CONFIDENTIAL

Remove the barriers - OEM

Comes standard on every tractor

  • Cost effective components
  • Integrated into the tractor
  • Standard feature at purchase

Autosteer Components Autosteer integrated into the tractor at the factory

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Best positioned to deliver autosteering to all farms

DEEP ROOTS IN GUIDANCE & CONTROL STRONGEST PATENT PORTFOLIO EXPANSIVE GLOBAL PARTNERSHIPS

ü 200 Patents and Pending Patents Worldwide ü 85 Issued US Steering Patents AgJunction technologies are critical components in over 30 of the world’s leading precision Ag manufacturers and solution providers

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HIGHLY CONFIDENTIAL

Electric Steering System

The most comprehensive autosteering portfolio

Hydraulic Steering System Steer-by-Wire/CAN Support

OEM / Autosteering Components

Control Software Control System Terminal & User apps Smart Antenna

Direct-to-farmer / All-in-one, DIY

Wheelman Flex Device with Guidance Dashboard Sensor Support Connectivity

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Autosteering for everyone & everything

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Financials

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Source: Capital IQ and company data. 1) See appendix for use of non-GAAP information. 2) Financials translated into CAD at an exchange rate of 1.33 CAD/USD. (mrq) – most recent quarter; (ttm) – trailing 12 months.

Key Stats

Trading Data (@ August 30, 2019)

Stock Price CAD$0.48 52 Week High/Low $0.91/$0.43

  • Avg. Daily Vol. (3 mo.)

128,537 Shares Outstanding 118.6M Public Float, est. 75% Institutional Holdings 10% Insider Holdings 25%

Valuation Measures

Market Cap CAD$56.9M Enterprise Value2 $31.8M EV/Revenue2 (ttm) 0.4x Book Value per Share2 $0.39

Financial Highlights (@ June 30, 2019)

Revenues (ttm) USD$62.3M Cash & Equivalents (mrq) $18.9M Total Assets (mrq) $49.6M Total Debt (mrq) $0.0M Total Liabilities (mrq) $15.0M Total Equity (mrq) $34.6M

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Revenue Profile

$42 $47 $65

2016 2017 2018

  • On Mar 13, 2018, AgJunction

announced a bulk purchase

  • rder for $55M
  • Deliveries and payments will

conclude in Q3 2019

Revenue (millions USD)

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Recent Performance

1) See appendix for EBITDA reconciliation.

Q2 2019

  • Revenue was $13.3M vs. $13.8M
  • Gross margin was 34.8% vs. 39.3%
  • EPS of $(0.01) vs. $(0.02)
  • EBITDA1 improved to $(0.1)M
  • Cash was $18.9M vs. $11.0M
  • $0 debt

Versus year-ago period

  • Divesture of non-core businesses

and consolidation of facilities

  • Announced future closing of

facilities in Fremont and Brisbane

  • Sold Outback Guidance and Satloc

Air businesses to focus on autosteering

  • Continued progress with Hands-Free

Farm mission

  • Launched Wheelman™ Flex, a

portable autosteering solution

  • Introduced an updated Whirl™ app,

which turns any mobile device into a display for Wheelman products

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Balance Sheet Highlights

  • $18.9M in cash
  • No debt
  • $25.5M in working capital
  • Unused $3M line of credit
  • $13.8M in U.S. NOL’s
  • $5.8M in business credits to offset

future federal taxes

Select Balance Sheet Items

$ Millions (USD)

Jun 30, 2019 Dec 31, 2018 Cash & equivalents $18.9 $21.4 Accounts Receivable $10.6 $8.5 Inventory $4.5 $5.7 Intangible assets $9.9 $9.7 Total assets $49.6 $49.8 Total debt

  • Total liabilities

$15.0 $14.9 Total stockholders’ equity $34.6 $34.9

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Key Takeaways

ü

Untapped opportunity with 10 million farms for autosteer

ü

Make autosteer low-cost, simple-to-buy and easy-to-use (Aftermarket)

ü

Make autosteer an included feature on every new tractor (OEM)

ü

AgJunction has the deepest roots, strongest IP and best partners to win

ü

Sharpened focus with

  • Sale of Outback Guidance and Satloc Air businesses
  • Licensed IP
  • Introduced Wheelman Flex and an updated Whirl app
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Appendix

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EBITDA Reconciliation

AgJunction Inc.

Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) Reconciliation Three and Six months ended June 30, 2019 and 2018 (Expressed in U.S. dollars) ($000s) 2019 2018 2019 2018 Net income (loss) (682) $ (2,345) $ (567) $ (3,329) $ Interest income (61) (5) (120) (10) Income tax benefit, net 1

  • 2
  • Depreciation

267 170 530 347 Amortization 396 318 693 637 EBITDA (79) $ (1,862) $ 538 $ (2,355) $ Three months ended Six months ended June 30, June 30,

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Leadership Team

NAME & TITLE PRIOR EXPERIENCE

Dave Vaughn

President & CEO

Jon Ladd

Senior Advisor

Mark Bittner

SVP Worldwide Sales & Customer Care

Bob Barjesteh

VP IP, M&A & General Counsel

Jeff Morris

Chief Marketing Officer

Brett McMickell

SVP Global Product Development