Verde's Revenue Grows by 156% in Q3 2022, With a 123% Increase in EBITDA
Verde AgriTech Ltd (OTCMKTS: VNPKF) reported impressive Q3 2022 results, with revenue soaring by 156% to C$27.27 million, compared to C$10.65 million in Q3 2021. The net profit also surged by 103% to C$6.46 million. The company's sales volume for its potassium products increased by 23% to 189,548 tonnes. Gross margin improved slightly to 78%. Notably, Verde’s Plant 2 achieved its production capacity, expected to drive future growth. However, operational constraints limited order fulfillment during the quarter.
- Revenue up 156% to C$27.27 million.
- Net profit increased by 103% to C$6.46 million.
- Gross margin improved to 78%.
- Sales volume increased by 23% to 189,548 tonnes.
- Plant 2 reached nameplate production capacity of 1.2 million tonnes per year.
- Operational constraints prevented fulfilling all orders during Q3 2022.
(All figures are in Canadian dollars, unless stated otherwise. Average exchange rate in Q3 2022:
Q3 2022 Financials
-
Revenue increased by
156% in Q3 2022, to$27,269,000 $10,651 -
Revenue in Brazilian Real (“R$”) increased by
140% in Q3 2022, toR compared to$109,056,000 R in Q3 2021.$45,409,000 -
Sales of Verde's multinutrient potassium products, BAKS® and K Forte® sold internationally as Super Greensand® (the “Product”) by volume increased by
23% in Q3 2022, to 189,548 tonnes, compared to 153,674 tonnes sold in Q3 2021. -
Gross margin increased to
78% in Q3 2022, compared to77% in Q3 2021. -
EBITDA before non-cash events increased by
123% in Q3 2022 to$8,177,000 $3,665,000 -
Net profit increased by
103% in Q3 2022, to$6,458,000 $3,182,000
Subsequent Events
-
In
October 2022 , the Company announced that its second production plant (“Plant 2”) achieved its nameplate production capacity of 1.2 million tonnes per year (“Mtpy”) of Product. Plant 2 was commissioned onAugust 31, 2022 . In parallel, Plant 2 was undergoing an expansion process to be capable of producing 2.4Mtpy. Verde’s Plant 1 operates at a capacity of 0.6Mtpy; therefore, Verde’s overall production capacity is expected to be 3Mtpy once Plant 2 achieves its nameplate capacity of 2.4Mtpy, after its ramp up is concluded. -
In
October 2022 , Verde secured aC ($5.01 million R ) loan from Banco do Brasil, in line with the financing strategy for Plant 2's capex. The loan term is 48 months at CDI (based on SELIC, the$20 million Brazilian Central Bank overnight interest rate) +3.70% per annum, preceded by a 12-month grace period. -
In
November 2022 , Verde announced that the expansion of Plant 2 was complete, with production now being ramped up from 1.2 Mtpy to 2.4 Mtpy of Verde's Product.
“The growth experienced throughout Q3 2022 reflects yet again the market’s growing demand for our Product. With Plant 2's commissioning, we expect Verde to continue its growth trajectory and improving bottom-line. It was a pity that we could not fulfil all the orders placed in our books, having had to turn down so many orders because of the operational constraints then present, yet I applaud our team for their efforts and dedication during this quarter,” declared Verde’s Founder, President & CEO,
2022 Guidance
Verde achieved is EPS, EBITDA, revenue and sales guidance for Q3 2022. The table below compares the Company’s 2022 to 2021 results.
Period |
|
Year |
|
EPS (C$) |
|
EBITDA1 (C$’000) |
|
Revenue (C$’000) |
|
Sales (tonnes) |
Q1 |
2021 |
|
-0.04 |
|
-887 |
|
831 |
|
16,558 |
|
2022 |
|
0.06 |
|
3,678 |
|
11,304 |
|
111,667 |
||
% Δ |
|
N/A |
|
N/A |
|
|
|
|
||
Q2 |
2021 |
|
0.01 |
|
1,220 |
|
5,376 |
|
96,233 |
|
2022 |
|
0.19 |
|
10,765 |
|
24,861 |
|
202,255 |
||
% Δ |
|
|
|
|
|
|
|
|
||
Q3 |
2021 |
|
0.06 |
|
3,665 |
|
10,651 |
|
153,674 |
|
2022 |
|
0.12 |
|
8,177 |
|
27,269 |
|
189,548 |
||
% Δ |
|
|
|
|
|
|
|
|
||
Q4 |
2021 |
|
0.04 |
|
2,452 |
|
10,851 |
|
134,350 |
|
2022 |
|
- |
|
- |
|
- |
|
- |
||
% Δ |
|
- |
|
- |
|
- |
|
- |
||
FY |
2021 |
|
0.07 |
|
6,450 |
|
27,709 |
|
400,133 |
|
2022 |
|
- |
|
- |
|
- |
|
- |
||
% Δ |
|
- |
|
- |
|
- |
|
- |
Selected Annual Financial Information
The table below summarizes Q3 2022 financial results compared to Q3 2021, and provides information about 2022 and 2021 year-to-date (“YTD”):
All amounts in CAD $’000 |
Q3 2022 |
Q3 2021 |
YTD 2022 |
YTD 2021 |
||||
Tonnes sold ‘000 |
189 |
|
154 |
|
503 |
|
266 |
|
Revenue per tonne sold $ |
144 |
|
69 |
|
126 |
|
63 |
|
Production cost per tonne sold $ |
(32) |
|
(16) |
|
(28) |
|
(17) |
|
Gross Profit per tonne sold $ |
112 |
|
52 |
|
98 |
|
47 |
|
Gross Margin |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenue |
27,269 |
|
10,651 |
|
63,434 |
|
16,858 |
|
Production costs |
(6,069) |
|
(2,452) |
|
(14,055) |
|
(4,440) |
|
Gross Profit |
21,200 |
|
8,199 |
|
49,379 |
|
12,418 |
|
Gross Margin |
|
|
|
|
|
|
|
|
Sales and product delivery freight expenses |
(11,053) |
|
(4,022) |
|
(23,095) |
|
(6,789) |
|
General and administrative expenses |
(1,970) |
|
(512) |
|
(3,666) |
|
(1,631) |
|
EBITDA (1) |
8,177 |
|
3,665 |
|
22,618 |
|
3,998 |
|
Share Based and Bonus Payments (Non-Cash Event) (2) |
(20) |
|
(14) |
|
(124) |
|
(1,528) |
|
Depreciation and Amortisation (2) |
(84) |
|
(19) |
|
(148) |
|
(35) |
|
Profit on disposal of plant and equipment (2) |
- |
|
- |
|
- |
|
9 |
|
Operating Profit after non-cash events |
8,073 |
|
3,632 |
|
22,346 |
|
2,444 |
|
Interest Income/Expense |
(722) |
|
(98) |
|
(1,152) |
|
(229) |
|
Net Profit before tax |
7,351 |
|
3,534 |
|
21,194 |
|
2,215 |
|
Income tax (3) |
(893) |
|
(352) |
|
(2,079) |
|
(571) |
|
Net Profit |
|
6,458 |
|
3,182 |
|
19,115 |
|
1,644 |
(1) – Non GAAP measure |
||||||||
(2) – Included in General and Administrative expenses in financial statements |
||||||||
(3) – Please see Income Tax notes |
||||||||
External Factors
Revenue and costs are affected by external factors including changes in the exchange rates between the C$ and R$ along with fluctuations in potassium chloride spot CIF (
% Δ |
|
Q3 2022 |
|
Q3 2021 |
||
Canadian Dollar (C$) Average Exchange Rate |
- |
|
|
|
|
|
Potassium Chloride CIF ( |
+ |
|
|
|
|
|
Potassium Chloride CIF ( |
|
+ |
|
|
|
|
(1) – Source: Acerto Limited Report. |
||||||
Net Profits and EPS
The Company generated a net profit of 6,458,000 for Q3 2022, an increase of
Product Sales
Sales by volume increased by
Revenue
Revenue from sales increased by
Revenue per tonne excluding freight expenses (FOB price) improved by
Revenue per tonne in Q3 2022 was higher than Q3 2021 mainly due to:
-
Product volume sold as CIF (
Cost Insurance and Freight) increased from50% of total sales in Q3 2021 to78% in Q3 2022. -
Potassium Chloride CIF (
Minas Gerais ) price increased fromUS per tonne in Q3 2021 to$515 -772US per tonne in Q3 2022 (as reported by$655 -1,050Acerto Limited , a market intelligence firm).
Production costs
Production costs include all direct costs from mining, processing, and the addition of other nutrients to the Product, such as Sulphur and Boron. Production costs also include the logistics costs from the mine to the plant and related salaries.
Production costs increased by
Cost per tonne increased by
Sales Expenses
CAD $’000 |
Q3 2022 |
Q3 2021 |
YTD 2022 |
YTD 2021 |
||||
Sales and marketing expenses |
(1,385) |
|
(600) |
|
(2,919) |
|
(1,241) |
|
Fees paid to independent sales agents |
(481) |
|
(189) |
|
(976) |
|
(260) |
|
Product delivery freight expenses |
(9,187) |
|
(3,233) |
|
(19,200) |
|
(5,288) |
|
Total |
(11,053) |
|
(4,022) |
|
(23,095) |
|
(6,789) |
|
Sales and marketing expenses
Sales and marketing expenses include employees’ salaries, car rentals, travel within
Expenses increased by
Fees paid to independent sales agents
As part of Verde's marketing and sales strategy, the Company pays out commissions to its independent sales agents.
Fees paid to independent sales agents increased by
Product delivery freight expenses
Product delivery freight expenses increased by
General and Administrative Expenses
CAD $’000 |
Q3 2022 |
Q3 2021 |
YTD 2022 |
YTD 2021 |
||||
General administrative expenses |
(1,096) |
|
(291) |
|
(1,895) |
|
(1,009) |
|
Legal, professional, consultancy and audit costs |
(667) |
|
(134) |
|
(1,155) |
|
(399) |
|
IT/Software expenses |
(180) |
|
(82) |
|
(570) |
|
(204) |
|
Taxes and licenses fees |
(27) |
|
(5) |
|
(46) |
|
(19) |
|
Total |
(1,970) |
|
(512) |
|
(3,666) |
|
(1,631) |
|
General administrative expenses
These costs include general office expenses, rent, bank fees, insurance, foreign exchange variances and remuneration of executive and administrative staff in
Expenses increased by
Legal, professional, consultancy and audit costs
Legal and professional fees include legal, professional, consultancy fees along with accountancy, audit and regulatory costs. Consultancy fees are consultants employed in
Expenses increased by
IT/Software expenses
IT/Software expenses include software licenses such as Microsoft Office, Customer Relationship Management (CRM) software and enterprise resource planning (ERP).
Expenses increased by
Taxes and licences
Taxes and licence expenses include general taxes, product branding and licence costs.
Expenses increased in Q3 2022, to
Share Based and Bonus Payments (Non-Cash Event)
These costs represent the expense associated with stock options granted to employees and directors and non-cash bonuses paid to key management.
Share Based Payments costs increased by
Q3 2022 Results Conference Call
The Company will host a conference call on
Date: |
|
|
Time: |
|
|
Subscription link: |
The questions can be submitted in advance through the following link up to 48 hours before the conference call: https://bit.ly/Q3_2022_ResultsPresentation_Questions
The Company’s first quarter financial statements and related notes for the period ended
About
Verde is an agricultural technology Company that produces potash fertilizers. Our purpose is to improve the health of all people and the planet. Rooting our solutions in nature, we make agriculture healthier, more productive, and profitable.
Verde is a fully integrated Company: it mines and processes its main feedstock from its
Verde’s focus on research and development has resulted in one patent and eight patents pending. Among its proprietary technologies are Cambridge Tech, 3D Alliance, MicroS Technology, N Keeper, and Bio Revolution.2 Currently, the Company is fully licensed to produce up to 2.8 million tonnes per year of its multinutrient potassium fertilizers K Forte® and BAKS®, sold internationally as Super Greensand®.3
By the end of 2022, Verde aims to become
Corporate Presentation
For further information on the Company, please view shareholders’ deck:
https://verde.docsend.com/view/w9zdpq9istxftz9s
Investors Newsletter
Subscribe to receive the Company’s updates at:
http://cloud.marketing.verde.ag/InvestorsSubscription
The last edition of the newsletter can be accessed at: https://bit.ly/InvestorNewsletter_October2022
Cautionary Language and Forward-Looking Statements
All Mineral Reserve and Mineral Resources estimates reported by the Company were estimated in accordance with the Canadian National Instrument 43-101 and the
This document contains "forward-looking information" within the meaning of Canadian securities legislation and "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995. This information and these statements, referred to herein as "forward-looking statements" are made as of the date of this document. Forward-looking statements relate to future events or future performance and reflect current estimates, predictions, expectations or beliefs regarding future events and include, but are not limited to, statements with respect to:
(i) |
the estimated amount and grade of Mineral Resources and Mineral Reserves; |
|
(ii) |
the PFS representing a viable development option for the Project; |
|
(iii) |
estimates of the capital costs of constructing mine facilities and bringing a mine into production, of sustaining capital and the duration of financing payback periods; |
|
(iv) |
the estimated amount of future production, both produced and sold; |
|
(v) |
timing of disclosure for the PFS and recommendations from the Special Committee; |
|
(vi) |
the Company’s competitive position in |
|
(vii) |
estimates of operating costs and total costs, net cash flow, net present value and economic returns from an operating mine. |
Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives or future events or performance (often, but not always, using words or phrases such as "expects", "anticipates", "plans", "projects", "estimates", "envisages", "assumes", "intends", "strategy", "goals", "objectives" or variations thereof or stating that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved, or the negative of any of these terms and similar expressions) are not statements of historical fact and may be forward-looking statements.
All forward-looking statements are based on Verde's or its consultants' current beliefs as well as various assumptions made by them and information currently available to them. The most significant assumptions are set forth above, but generally these assumptions include, but are not limited to:
(i) |
the presence of and continuity of resources and reserves at the Project at estimated grades; |
|
(ii) |
the geotechnical and metallurgical characteristics of rock conforming to sampled results; including the quantities of water and the quality of the water that must be diverted or treated during mining operations; |
|
(iii) |
the capacities and durability of various machinery and equipment; |
|
(iv) |
the availability of personnel, machinery and equipment at estimated prices and within the estimated delivery times; |
|
(v) |
currency exchange rates; |
|
(vi) |
Super Greensand® and K Forte® sales prices, market size and exchange rate assumed; |
|
(vii) |
appropriate discount rates applied to the cash flows in the economic analysis; |
|
(viii) |
tax rates and royalty rates applicable to the proposed mining operation; |
|
(ix) |
the availability of acceptable financing under assumed structure and costs; |
|
(x) |
anticipated mining losses and dilution; |
|
(xi) |
reasonable contingency requirements; |
|
(xii) |
success in realizing proposed operations; |
|
(xiii) |
receipt of permits and other regulatory approvals on acceptable terms; and |
|
(xiv) |
the fulfilment of environmental assessment commitments and arrangements with local communities. |
Although management considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. Many forward-looking statements are made assuming the correctness of other forward looking statements, such as statements of net present value and internal rates of return, which are based on most of the other forward-looking statements and assumptions herein. The cost information is also prepared using current values, but the time for incurring the costs will be in the future and it is assumed costs will remain stable over the relevant period.
By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that estimates, forecasts, projections and other forward-looking statements will not be achieved or that assumptions do not reflect future experience. We caution readers not to place undue reliance on these forward-looking statements as a number of important factors could cause the actual outcomes to differ materially from the beliefs, plans, objectives, expectations, anticipations, estimates assumptions and intentions expressed in such forward-looking statements. These risk factors may be generally stated as the risk that the assumptions and estimates expressed above do not occur as forecast, but specifically include, without limitation: risks relating to variations in the mineral content within the material identified as Mineral Resources and Mineral Reserves from that predicted; variations in rates of recovery and extraction; the geotechnical characteristics of the rock mined or through which infrastructure is built differing from that predicted, the quantity of water that will need to be diverted or treated during mining operations being different from what is expected to be encountered during mining operations or post closure, or the rate of flow of the water being different; developments in world metals markets; risks relating to fluctuations in the Brazilian Real relative to the Canadian dollar; increases in the estimated capital and operating costs or unanticipated costs; difficulties attracting the necessary work force; increases in financing costs or adverse changes to the terms of available financing, if any; tax rates or royalties being greater than assumed; changes in development or mining plans due to changes in logistical, technical or other factors; changes in project parameters as plans continue to be refined; risks relating to receipt of regulatory approvals; delays in stakeholder negotiations; changes in regulations applying to the development, operation, and closure of mining operations from what currently exists; the effects of competition in the markets in which Verde operates; operational and infrastructure risks and the additional risks described in Verde's Annual Information Form filed with SEDAR in
When relying on our forward-looking statements to make decisions with respect to Verde, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Verde does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by Verde or on our behalf, except as required by law.
1 Before non-cash events.
2 Learn more about our technologies: https://verde.docsend.com/view/yvthnpuv8jx6g4r9
3 See the release at: https://investor.verde.ag/2-5-million-tonnes-per-year-potash-mining-concession-granted-to-verde/
4 See the release at: https://investor.verde.ag/verde-to-reach-3-million-tonnes-potash-production-capacity-in-2022/
5 As per the National Instrument 43-101 Standards of Disclosure for Mineral Projects within
6
View source version on businesswire.com: https://www.businesswire.com/news/home/20221114005283/en/
For additional information:
Tel: +55 (31) 3245 0205; Email: investor@verde.ag
www.investor.verde.ag | www.supergreensand.com | www.verde.ag
Source:
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