ArborGen Holdings Updates Market on FY22 Guidance

ArborGen Holdings Updates Market on FY22 Guidance
28 October 2021
ArborGen Holdings Limited (NZX: ARB) (the Company) announced that, as mentioned at the Company’s
August 2021 Annual Shareholders Meeting, extreme rain conditions during the early, most vulnerable,
phase of seedling growth, resulted in early season seedling inventory losses in the current production year.
In order to gain greater visibility of the seedling crop available this year, the Company brought forward its
usual November mid-season inventory count. This has confirmed approximately 25 million (or 7%) of
seedling losses (slightly higher than the losses previously estimated). In addition, in the eastern portion of
the market the Company is projecting slightly lower sales volumes of OP seedlings due supply chain issues
(shortage of transport, logging and site prep crews) affecting customer demand. Labour, fuel and material
costs during the second half of the year are also projected to be higher due to inflation. As pricing is largely
agreed with customers for the current season, these inflationary pressures will impact current year margins.
Added to this, the Company is also recognising one-time (non-cash) charges of $0.7 million relating to the
eviction of the defaulting sub-lessee at its headquarter premises in Ridgeville, South Carolina and to prior
year cost adjustments in Brazil. It is also expecting lower rental income for the HQ premises due to delays
in the eviction process. This is simply timing due to the legal processes that were required in order to evict
a defaulting tenant before the premises can be remarketed.
Partially offsetting these unfavourable items, are additional services and licensing income, and cost savings
in the US. As reported in August, the Company executed a non-exclusive license agreement with a company
focused on using biotechnology to develop trees that better capture and store carbon which resulted in an
additional $0.5 million of income.
Taking into account all these factors, the Company has updated its guidance for the fiscal year ending March
2022 (FY2022). US GAAP EBITDA
1
is now expected to be in the range of US$11.3-11.7 million (previously
expected to be US$13 - 14 million). Adjusted for the one-off items noted above, Adjusted US GAAP EBITDA
would be approximately $12.0 – 12.4 million. Additional rental income is expected to add a further $0.5
million on annualised basis when a new tenant is found.
The Company confirmed that it continues to be on track to deliver its highest MCP sales year in the US this
year with year-to-date MCP sales orders now at approximately 105 million seedlings (over 97% of available
inventory), 25 million units higher than the prior year. In particular, MCP unit sales to the private landowner
segment, where the majority of MCP sales growth will occur are projected to be up over 45% compared to
prior year.
Moreover, MCP seed production from ArborGen’s orchards is forecast to increase materially in late
calendar year 2022 from flowers pollinated in early calendar 2021. This seed will be available for seedling
production in 2023 (fiscal year ending March 2024).
ENDS
1. US GAAP EBITDA excludes NZ public company costs and the Strategic Review costs.


To: NZX From: Sharon Ludher-Chandra

Further information on ArborGen Holdings Limited can be viewed at our web site http://www.arborgenholdings.com.