ArborGen Holdings Annual Shareholder Meeting

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Annual Shareholders’ Meeting
20 September 2023
Chairman’s Address

Slide - 2023 ASM
Slide - Welcome
Dave Knott – Chairman’s address

Good morning Ladies and Gentlemen. Welcome to the Annual Meeting of Shareholders of ArborGen
Holdings Limited.
I am Dave Knott and I am the Chairman of the Board of ArborGen.
Thank you for your attendance today.
I am very happy to be back in New Zealand again, and to be able to introduce ArborGen’s new CEO,
Justin Birch, to you in person. Justin joined ArborGen as Andrew Baum’s successor in June of this year.
I am pleased to advise that a quorum is present and that this Meeting is duly constituted.
The Notice of Meeting sent to shareholders last month, sets out the formal agenda for today’s meeting.
We are conducting our meeting this year both here in person at the Ellerslie Event Centre in Auckland,
and online, through the Computershare Online Meetings platform. All shareholders have the ability
to ask questions and vote.
Slide – Online questions
For those of you joining us online, if you would like to ask a question, please select the Q&A tab on the
right half of your screen anytime. Type your question into the field and press send. It will then be sent
through for us to answer. If you require any assistance, refer to the Virtual Meeting Guide that was
sent to shareholders or use the chat function by typing your query and one of the Computershare team
will assist.
I would encourage you to submit questions as early as possible, as that will allow us to answer at the
appropriate time of the meeting. Please also note that your questions may be moderated or if we
receive multiple questions on one topic, amalgamated together.
Slide – Voting
Voting today will be conducted by way of a poll on all items of business. In order to provide all online
attendees with enough time to vote, I will shortly open the online voting for all resolutions.
At that time, if you are eligible to vote at this meeting, you will be able to cast your vote under the
Vote tab. Once the voting has opened, the system will allow votes to be submitted. To vote, simply
select your voting direction from the options shown on the screen. You can vote for all resolutions at
once or by each resolution. Your vote has been cast when the tick appears.

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To change your vote, simply select ‘Change Your Vote’. You have the ability to change your vote, up
until the time I declare voting closed.

I now declare voting open on all items of business. The resolutions will now be open on the vote tab,
please submit your votes at any time. I will give you a warning before I move to close voting.

Slide - Introduction
I would like to introduce the members of your Board and Management to you. Present with me today
are our two New Zealand based directors, Paul Smart and George Adams, and from the US, we have
directors Tom Avery, and Ozey Horton attending virtually.
From management, we have ArborGen’s Chief Executive Officer, Justin Birch, our Company Secretary,
Sharon Ludher-Chandra, our CFO, Alex Brown and our communications contact, Pam Wardenburg.
Slide - Programme
Turning then to our programme for today -
▪ First, I will ask Justin to update you on FY23 performance and recent progress.
▪ I will then make some comments from the Board’s perspective.
▪ You will then have the opportunity to raise any questions you may have.
▪ And we will then deal with the formal resolutions to be considered by this meeting.
I will now ask Justin to review our recent activity for you.
Slide CEO’s Review
[Justin to speak]
CHAIR’S ADDRESS RESUMES
Slide – Chair’s Address
Thank you, Justin.
Before moving to your questions, and the more formal session of the day, I would like to make a few
comments on recent management changes, the business, and the current fiscal year ending March
2024.
Slide – Management transition
This year has seen some significant changes at a leadership level, with the appointment of Justin as
CEO of the Group, and the appointment of Adriano de Almeida as the General Manager of ArborGen’s
Brazil operations.
Justin, who was previously based in California, officially joined ArborGen in June, and is now based at
our headquarters in Ridgeville, South Carolina. He is an experienced senior executive with significant
experience in the agriculture sector, and a strong background in private equity. He brings to the
Company solid financial, operational and strategic experience, and the Board believes he is a great fit
for our Company, with the combination of skills and experience to lead the business through its next
phase.
Adriano brings a wealth of knowledge and experience in tree improvement and tree breeding as well
as an understanding of the Brazilian forestry market. He will oversee our Brazilian production and sales’
operations, as well as the marketing programme. Adriano succeeds Gabriela Monnerat, who will
continue in a consulting capacity to facilitate a seamless transition.

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Both Justin and Adriano are great additions to the ArborGen executive team, and we are very excited
about the future growth of the Company under their leadership.
On behalf of the Board, I would like to take this opportunity to also acknowledge and thank Andrew
and Gabriela for their significant efforts and contribution to the Company, that span over a decade for
each of them. Under Andrew’s leadership, the Company has developed an unparalleled leadership
position in the advanced genetics’ seedlings market. Similarly, Gabriela has successfully managed our
Brazil operations through a period of strong growth and has ensured that ArborGen’s Brazilian
operations are well positioned for the future.
We thank both Gabriela and Andrew for their valued leadership and contributions and wish them the
very best in their future endeavours.
Slide – Ownership changes
This year, we also simplified the ownership of ArborGen Inc – the operating, wholly owned subsidiary
of ArborGen Holdings, by repurchasing warrants equating to approximately 5% of ArborGen Inc.’s fully
diluted common stock for US$1.35 million.
These warrants arose out of the acquisition of the assets and intellectual property of CellFor Inc in
2012, pursuant to which shareholders of CellFor received CDN $1.1 million in cash and warrants to
purchase ArborGen Inc common stock.
Following the repurchase of the warrants, ArborGen Holdings’ effective economic interest in ArborGen
Inc. increased from 95% to 100% with no dilution overhang remaining.
The purchase price reflects a significant discount based on a number of factors including intercompany
advances between ArborGen Holdings and ArborGen Inc, and the fact that the warrants were
exercisable for ArborGen Inc. shares rather than ArborGen Holdings shares.
Slide – Growth and strategic initiatives
We are now very much focused on achieving the strategic objectives of the business. The sale of our
Australasian business in late 2021 released NZ$22.25m of capital, allowing us to focus our efforts and
capital on our core markets in the US South and Brazil.
In Brazil, we are leveraging our strong position in the pine and eucalyptus seedling markets to build a
sustainable, highly profitable business that is recognised as the preeminent seedling supplier.
And in the US, we are focused on driving increased adoption of advanced genetics across the US South
as the leading commercial supplier of advanced genetics loblolly seedlings, leveraging decades of
investment in developing best-in-class proprietary MCP products.
Slide – FY2024
Turning to our current fiscal year, we have sold nearly 90% of all seedlings we have available in the US,
and are currently not expecting seedling sales volumes in the US to be materially different to FY23
levels. Having said that, as Justin mentioned, we are expecting a solid improvement in revenues, gross
margins and earnings over prior year as a result of higher average selling prices, lower unit MCP seed
costs expensed in cost of sales, increased internal container seedling production.
In Brazil, the underlying market dynamics are very strong, driving robust demand for eucalyptus and
softwood seedlings, and in turn higher seedling prices. Added to this, we have the benefit of our recent
investments in expanding in-house nursery production capacity. As a result, we are projecting strong
growth in seedling sales volumes, prices and margins in the current fiscal year.

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Slide – FY2024 continued
Taking these factors into account, including approximately $2.7 million of CEO costs in the period, we
expect double digit growth in US-GAAP EBITDA in the current fiscal 2024 year on the $10.3 million
recorded in FY23. Having said that, management are currently reviewing seed inventory on hand across
the US, which may result in seed write-down costs relating to seed obsolescence. While this would
reduce earnings, it is a non-recurring item and will not impact cash. Of the $2.7 million of CEO costs to
be expensed in FY2024 –
▪ $1.2 million relates to half of the first and second tranches of Justin’s equity grant (assuming
resolution 2 is passed)
▪ $0.8 million relates to the base salary and guaranteed bonus for Justin,
▪ $0.3 million of relocation costs and sign-on bonus, and
▪ $0.4 million relates to the previous CEO including cash tax paid on shares issued, and for
consulting costs incurred pursuant to a 29-month consulting agreement.
Turning to cashflow, inclusive of expansionary activities in the period including the acquisition of our
Jasper nursery in the US for $2.5 million and growth initiatives in Brazil, the repurchase of the warrants,
as well as CEO transition cash expenses in the period, net debt is projected to be relatively flat on the
prior year level of $13 million (excluding capital leases). As we look ahead however, recent
expansionary activities are expected to be both earnings and cash flow accretive, in FY2025 and
beyond.
Slide – Summary
The Board and management are very excited about ArborGen’s future. We have brought on strong
new leadership, refined the business to focus on core existing and emerging growth markets, and
significantly strengthened ArborGen’s balance sheet, to ensure we deliver on the Company’s growth
potential.

Before I move on to the business of the meeting, I would also like to acknowledge and thank the
ArborGen teams in the US, Brazil and New Zealand for their commitment and dedication.
Finally, I would like to thank all of our shareholders for your continued support, for which we are very
grateful. We acknowledge the share price performance has been disappointing over recent months,
which is unrelated to the underlying performance of the business. We are committed to ensuring
strong returns for shareholders as a result of strong earnings and cashflow growth.

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Annual Shareholders’ Meeting
20 September 2023
CEO’s Address

Justin Birch – CEO’s address

Slide – CEO Review
Thank you, David. On behalf of the ArborGen team, I would like to extend a warm welcome to our
shareholders joining us today, both in person and virtually. It has certainly been a busy three and a half
months since I joined ArborGen, and it is an absolute pleasure to be here in person to address you.

Slide – Management Transition
As you will know, the last few months have seen some significant changes at senior management level,
with me joining as Andrew Baum’s successor as CEO of the ArborGen Group in June, and the
appointment of Adriano de Almeida as General Manager of ArborGen’s Brazil operations in August,
succeeding Gabriela Monnerat.

Needless to say, it is early days and I am still learning a great deal about the business. However, from
what I have seen so far, I am truly excited about ArborGen’s growth prospects and the opportunities
for step change. I am also privileged to be working alongside a great team of people, including
recognised industry leaders, across the entire organization who are passionate about the business and
what we have to offer. To ensure a smooth leadership transition, we also have the benefit of both
Gabriela and Andrew’s continued support in a consulting capacity.

Over the last couple of months, I have visited nearly all of our sites in the US and Brazil and spent time
understanding the uniqueness of ArborGen’s value proposition, in particular its advanced genetics
know-how, production capability, and high-quality product and service offering. ArborGen is
undeniably the market leader in advanced genetics’ seedlings with the ability to make transformational
changes to forest productivity. I’m sure you’ve heard this before, but our products truly are game-
changing for forest owners. We are also fortunate to have a strong balance sheet, helped by the sale
of ArborGen’s businesses in NZ and Australia, giving us the headroom for growth in our core and
emerging growth markets.

Slide – March 2023 YE Commercial Highlights
Turning then to our fiscal year ending 31 March 2023 (FY2023), I am pleased to report ArborGen
achieved several commercial objectives as we focus on our vision of being a world-leading provider of
value-added, high-quality seedlings for the forestry industry. In particular –
▪ We produced our highest ever Mass Control Pollinated
1
seed volumes from our US orchards in a
single year. Specifically, our 2023 orchard cone harvest produced seed equivalent to around 240
million MCP seedlings – 2.5x the MCP seed produced in the prior year. Importantly, approximately
65% of this seed is for the Eastern provenances, where we have been the most supply constrained

1
MCP® stands for Mass Control Pollinated seed which is produced from crossing specific elite mother and
father parent trees to generate seed with the highest genetic potential.

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following Hurricane Michael in 2018. This seed was partly used for the current fiscal year’s MCP
seedling production, with the balance being held in seed inventory allowing us to build buffer
inventory to mitigate risk for future years’ seedling production;
▪ We achieved significant growth in Brazil with our Brazilian operations achieving record sales
volumes, revenue, gross margin, and earnings;
▪ We successfully completed our US container expansion approved for FY2023, effectively increasing
in-house container capacity by approximately 70% to nearly 20 million seedlings per annum; and
▪ We successfully integrated a new 10 million capacity pine seedling nursery, and a fourth 15 million
capacity eucalyptus seedling nursery into our operations in Brazil, increasing overall internal
production to almost 60 million seedlings per annum.

Slide – March 2023 YE Financial Results
Turning to our financial results for FY2023, the Group reported (in USD) –
▪ Revenue from continuing operations of $56.1 million, up 18% on the prior year, comprising sales
of $39.3 million in the US and $16.8 million in Brazil
▪ Gross margin from continuing operations of $18.2 million, up from $17.8 million in FY22
▪ Operating profit including items outside normal operations of $2.2 million, up from a loss of $1.3
million in the prior year
▪ Net loss after tax of $2.5 million, down from net earnings after tax of $1.7 million in the prior period
▪ US-GAAP EBITDA
2
of $10.3 million, up 35% from the $7.6 million reported in FY22
▪ Adjusted US-GAAP EBITDA
3
of $9.2 million, down from $10.1 million in the prior period
▪ Net cash from operating activities of $6.5 million, down from $7.5 million in the prior period
▪ Net debt (excluding capitalised leases) of $13 million, up from $11.5 million.

Slide – March 2023 YE Financial Results (cont)
Items outside of normal operations during the period was a gain of $0.6 million, compared to an
expense of $4 million in the prior period, comprising –
▪ $1.2 million of Employee Retention Credits (ERCs) received under the Coronavirus Aid Relief and
Economic Security (CARES) Act.
▪ $0.6 million relating to residual strategic review costs and a portion of CEO severance costs.

Net loss of $2.5 million included a non-cash net deferred tax loss recognition of $2.6 million comprising
a deferred tax liability of $8.3 million related to how the Group expects to recover the carrying value
of intellectual property, offset by a deferred tax asset of $5.7 million relating to the recognition of
previously unrecognised losses in the US. In contrast, the prior period net earnings of $1.7 million
included a $4.7 million tax benefit.

Net debt of $13 million at fiscal year-end was higher than expected primarily due to the delayed
receipts of approximately $2 million of ERCs (received post fiscal year-end), additional investments
made for certain growth initiatives, and working capital timing.


2
US-GAAP Earnings Before Interest, Tax, Depreciation and Amortisation (US-GAAP EBITDA) excludes NZ public
company costs of $1.3 million, and strategic review costs.
3
Adjusted US-GAAP EBITDA is US-GAAP EBITDA adjusted for items outside of normal operations.

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Slide – Mission, Vision and Values
Following the recent leadership changes, we have revisited and refined ArborGen’s mission, vision and
core values.

To put it succinctly –

▪ ArborGen’s Mission is to produce superior-performing trees for the forestry industry through
innovation, strategic partnerships, and dedication to our client's success,

▪ Our Vision is to be the world-leading provider of value-added, high-quality seedlings for the
forestry industry, creating thriving forests that benefit landowners, the environment, and future
generations through unmatched industry expertise,

and

▪ Our Values comprise five core elements –
− Excellence – to pursue the maximization and enhancement of all parts of our business
− People – to commit to an environment where teamwork, diversity, safety, and development are
valued
− Integrity – to stand by our word and our people
− Customers – to partner with our customers to achieve their long-term goals while treating them
with honesty and respect
− Sustainability – to support the future of forestry through socially and environmentally
responsible practices.

We are confident that our mission, vision and values, combined with our superior position in pine and
eucalyptus advanced genetics, will allow us to build a sustainable, highly profitable business that is
recognised as the pre-eminent seedling supplier in terms of product breath and quality, and superior
service delivery.

Slide – Our Strategy
As you have heard before, the sale of ArborGen’s operations in NZ and Australia, has allowed us to
refocus the business on our core high growth markets in the US South and Brazil, as well as new and
emerging high growth carbon markets.

Our overarching strategy is to increase our sales of advanced genetics seedlings.

To achieve this, we are focused on –
▪ Continuously converting our customers to higher value advanced genetics loblolly pine seedlings
and eucalyptus seedlings
▪ Leveraging our most advanced and broadly adapted portfolio of advanced genetics in the industry
to generate strong returns for forest owners. As we note in our customer slogan, we strive to have
“The Best Trees. The Best Results.”

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▪ Building MCP seed inventory to meet demand growth and mitigate seed supply risks from weather
or biological risks.
▪ Leveraging our internal seedling production capacity
▪ Evaluating opportunities to strategically expand production capacity
▪ Working to expand the market with opportunities to showcase our superior genetics including for
opportunities in carbon.

Slide – Key Initiatives to Build our Business

To achieve our goals, we have recently reviewed our priorities and are focusing our efforts on five key
initiatives, each with a range of agreed targeted actions. These are –

▪ Expanding our market share and increasing MCP adoption in the US
− We believe that continuing to educate our customers to the value of genetics as well as
find new opportunities to show the value of our genetics will allow more sales of MCP

▪ Focusing our product development efforts on market driven genetics for the future
− We are working to make sure that product development continues to maintain our
industry leadership and ensuring that we are market driven in our efforts

▪ Opportunistic and measured expansion in Brazil
− Continuing growth in Brazil capitalizing on the strong market while recognizing the
volatility and preparing for it

▪ Optimising productivity and margins in Brazil and the US
− Working on improving how we work with our customers, and on pricing while focusing on
efficiencies in our cost structure

and

▪ Strengthening our organizational culture
− Taking the organisation to the next level professionally and instilling a culture of
performance

Slide – Brazil

I would like to spend a few minutes on ArborGen’s business in Brazil which continues to grow on and
build as a market leader – a testament of the hard work of ArborGen’s team and market leadership
position. Brazil is projected to contribute around 40% of total our revenues in the current fiscal year,
FY2024.

ArborGen Brazil has grown to become one of the largest commercial suppliers of eucalyptus and pine
seedlings in the Brazilian market leveraging its –
▪ Strong portfolio of best-in-class seedling products from exclusive in-licensing arrangements, and
internal product development capability
▪ Preferred partnership status with suppliers and customers
▪ Excellent sales and marketing capability

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▪ Established network of in-house and contract nurseries
▪ Established operating systems and logistics,
collectively allowing us to offer reliable, high-quality products to meet demand across several markets.

Seedling sales increased by 34% to 102 million seedlings in FY2023. In addition to the very strong
volume growth achieved, ArborGen Brazil also achieved strong price increases for both pine and
eucalyptus seedlings in real terms, and margin expansion, driving exceptional earnings growth.

Slide – Eucalyptus Market in Brazil

To provide some context, eucalyptus pulp is an excellent short-fibre hardwood pulp due to its uniform
fibre, simple cell structure, low degree of lignification, smoothness, bulk and water absorption
characteristics.

Brazil is the world’s largest producer and exporter of hardwood pulp, driven by the superior
productivity of its eucalyptus plantations.

As this table shows, there has been significant expansion in the Brazilian pulp industry with several
announced expansionary projects targeted for the rest of this decade, collectively projected to lift pulp
production capacity by approximately 30% in Brazil.

Slide – Eucalyptus Market in Brazil (con’t)

This is, in turn, driving a eucalyptus seedling supply / demand imbalance.

On the supply front, the seedling industry in Brazil is fragmented and unsophisticated, and has been
shrinking due to recessionary conditions, poor management, and weak capitalization of independent
nurseries.

Moreover, after many years of increasing eucalyptus productivity, yields per acre have fallen over the
last few years as a result of expanded eucalyptus growing areas, increasing issues with disease and
insect pests, and heat and drought stress.

ArborGen has now grown to become one of the largest commercial suppliers of eucalyptus and pine
seedlings in the Brazilian market. With our compelling portfolio and pipeline of products, we believe
there is significant opportunity for eucalyptus tree improvement.

Our products offer growers higher yields and higher wood density than standard market clones,
improved disease and insect resistance and good drought tolerance which is an increasingly important
trait as eucalyptus plantings in Brazil expands into dryer regions and as rainfall patterns change as a
result of global climate change.

We operate the most extensive set of trials across Brazil as we look to continue to find the next level
of genetics and continue our market leading position. This map shows our field trial programme in
Brazil which consists of approximately 200 trials involving 1,500 eucalyptus clones, spread across
seventeen Brazilian states.

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Slide – Growing Brazil
Consistent with our growth aspirations for this market, over the last 18 months we have –
▪ Acquired a 10 million seedling capacity pine nursery in Canoinhas, Santa Catarina in [April] 2022
▪ Leased a fourth 20 million capacity eucalyptus nursery in Minas Gerais state in late calendar 2022
▪ Leased our fifth 5 million capacity eucalyptus nursery in Rondonoplis in the state of Mato Grosso
in [April] 2023
▪ And most recently, acquired our sixth, 15 million capacity eucalyptus nursery in Rio Grande do Sul
State which we will assume control of from October 2
nd
.
This latest nursery, which will be referred to as ArborGen Erval Grande, was acquired for a purchase
price of Brazilian Real $15 million (approximately NZ$5 million, or US$3 million) and will be financed
by the sellers. The deal also includes a ten-year initial lease for the land with no payments for the first
seven years.
ArborGen Erval Grande currently has capacity to produce 15 million eucalyptus seedlings per annum,
with the opportunity to expand by a further 5 million seedlings. The acquisition increases ArborGen’s
internal production capacity to approximately 80 million seedlings per annum, and is expected to lift
earnings by US$1 million on an annualised basis initially.
Following the most recent nursery expansion of ArborGen Erval Grande, ArborGen will operate six
eucalyptus nurseries and one pine nursery in Brazil complemented by a network of contract producers
that allow us to address all of the major pine and eucalyptus markets in the country. ArborGen’s
eucalyptus products are available in all of the primary eucalyptus growing regions in Brazil including
the states of Minas Gerais, Mato Grosso, Mato Grosso do Sul, São Paulo and Paraná.

Slide – Current FY2024 Update
Turning to current year performance, that is for the year ending 31 March 2024, in the US –

▪ Seedling orders are currently behind prior year orders at the same time last year. While there are
still a couple of months before lifting and dispatch of seedlings begins, we are currently expecting
to be flattish on last year’s overall seedling sales’ volumes and slightly ahead on advanced genetics
seedlings volumes. Our customers have had some decreases in orders this year due to weather
impacting ability to prep areas for planting, and mill closures that have constrained harvest
capacity and ability to turn the land for replanting, and normal yearly deviations due to sales and
acquisitions.
▪ On a positive note, we are expecting an increase in total dollar revenues, and solid improvement
in gross margin and earnings over prior year as a result of lower unit MCP seed costs expensed in
cost of sales, increased internal container seedling production, and higher selling prices year-on-
year.

In Brazil –
▪ Seedling sales are projected to be materially higher than prior year as a result of continued strong
underlying market demand for both eucalyptus and pine seedlings, as well as the expansion of
ArborGen’s internal seedling capacity summarised earlier.
▪ Added to this, higher pricing and margins for both eucalyptus and pine seedlings is projected to
increase profitability substantially.

Dave will provide further guidance on the current year in his outlook comments. Thank you for your
support.

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20 September 2023
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ArborGen Holdings
Annual Meeting 2023
2023
Annual Shareholders’ Meeting
ArborGen Holdings
Annual Meeting 2023
Welcome
Dave Knott
Chair of the Board
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Annual Meeting 2023
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20 September 2023
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Annual Meeting 2023
Online Questions
Q & A
•To submit a question during the
meeting
− Select the Q&A tab on the right of your
screen at anytime
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send
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− Refer to the virtual meeting guide
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Annual Meeting 2023
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Voting
Vote
1
•When voting has opened
− Click on the Vote tab
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options shown on the screen
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by each resolution
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Annual Meeting 2023
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20 September 2023
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ArborGen Holdings
Annual Meeting 2023
Introduction
Paul Smart
Thomas Avery
George Adams
Ozey Horton
Justin Birch
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Annual Meeting 2023
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Annual Meeting 2023
Programme
•Chief Executive’s review
•Chair’s address
•Shareholders’ questions
•Formal resolutions
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20 September 2023
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Annual Meeting 2023
CEO’s Review
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Annual Meeting 2023
Justin Birch
Chief Executive Officer
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Annual Meeting 2023
Management transition
•Departure of Andrew Baum
•Appointment of Adriano de Almeida, GM of Brazil
•Excited about growth prospects and opportunities with a
great team including industry leaders
•Continued support from Andrew and Gabriela
•Comprehensive site visits and team meetings in Brazil and
the US
•ArborGenis undeniably the market leader in advanced
genetics’ seedlings
•Our products are game-changing for forest owners
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Annual Meeting 2023
March 2023 YE commercial highlights
•Harvested highest ever Mass Control Pollinated
seed volumes from US orchards
•Significant growth in Brazil
− Record sales volumes, revenue, gross margin and
earnings
•Completed US container expansion
− In-house container capacity up by ~70%
•Two new nurseries in Brazil
− 10m additional pine seedlings
− 15m additional eucalyptus seedlings
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Annual Meeting 2023
March 2023 YE financial results
•Revenue $56.1m, up 18%
•Gross margin $18.2m, up from $17.8m
•Operating profit including items outside normal operations $2.2m, up from -$1.3m
•Net loss after tax of $2.5m, down from $1.7m
•US-GAAP EBITDA
1
of $10.3m, up 35%
•Adjusted US-GAAP EBITDA
2
of $9.2m, down from $10.1m
•Net cash from operations $6.5m, down from $7.5m
•Net debt
(excluding capitalised leases)
of $13m, up from $11.5m
1 US-GAAP Earnings Before Interest, Tax, Depreciation and Amortisation(US-GAAP EBITDA) excludes NZ public
company costs of $1.3 million, and strategic review costs.
2 Adjusted US-GAAP EBITDA is US-GAAP EBITDA adjusted for items outside of normal operations.
All references to currencies in this presentation are in US$ unless otherwise stated
ArborGen Holdings
Annual Meeting 2023
March 2023 YE financial results
...continued
•Items outside normal operations was a gain of $0.6m
compared to an expense of $4m
− $1.2m of Employee Retention Credits (ERCs)
− $0.6m of residual strategic review costs and a portion of
CEO severance costs
•Net loss of $2.5m
− Non-cash net deferred tax loss recognition of $2.6m
− Prior period net earnings of $1.7m included a $4.7m
tax benefit
•Net debt of $13m
− Higher due to delayed receipts of ~$2m ERCs,
investments for growth initiatives and working capital
timing
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Annual Meeting 2023
Mission, vision and values
•Mission
-to produce superior-performing trees for the forestry industry through innovation, strategic
partnerships, and dedication to our client's success
•Vision
-to be the world-leading provider of value-added, high-quality seedlings for the forestry industry,
creating thriving forests that benefit landowners, the environment, and future generations through unmatched
industry expertise
•Values
-
−Excellence–to pursue the maximization and enhancement of all parts of our business
−People–to commit to an environment where teamwork, diversity, safety, and development are valued
−Integrity–to stand by our word and our people
−Customers–to partner with our customers to achieve their long-term goals while treating them with
honesty and respect
−Sustainability–to support the future of forestry through socially and environmentally responsible practices
ArborGen Holdings
Annual Meeting 2023
Our strategy
Refocus on our core high growth markets
Increase sales of advanced genetics seedlings
•Converting customers to higher value advanced genetics
•Leveraging our most advanced and broadly adapted portfolio of
advanced genetics in the industry
•Building MCP seed inventory to meet demand growth and mitigate
seed supply risks from weather or biological risks
•Leveraging internal seedling production capacity
•Evaluating opportunities to strategically expand production
capacity
•Expanding the market by showcasing our superior genetics for
opportunities in carbon
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20 September 2023
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ArborGen Holdings
Annual Meeting 2023
Key initiatives to build our business
Building a sustainable and highly profitable business
•Expanding our market share and increasing MCP
adoption in the US
•Focusing our product development efforts on market
driven genetics for the future
•Opportunistic and measured expansion in Brazil
•Optimisingproductivity and margins in Brazil and the US;
and
•Strengthening our organisationalculture
ArborGen Holdings
Annual Meeting 2023
Brazil
•ArborGen Brazil is projected to contribute ~40% of
total revenues in FY2024
•We have become one of the largest commercial
suppliers of eucalyptus and pine seedlings in the
Brazilian market
− Strong portfolio of best-in-class seedling products
− Preferred partnership status with suppliers and customers
− Excellent sales and marketing capability
− Established network of in-house and contract nurseries
− Established operating systems and logistics
•Seedling sales increased by 34% to 102 million
seedlings in FY2023
•Brazil achieved strong price increases and margin
expansion
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20 September 2023
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ArborGen Holdings
Annual Meeting 2023
Eucalyptus market in Brazil
•Eucalyptus pulp is an excellent short-fibre hardwood pulp
•Brazil is the world’s largest producer and exporter of hardwood pulp
•Significant expansion in the Brazilian pulp industry projected to increase pulp production
capacity by ~30%
Capacity (tons of pulp)Start upLocationCompanyProject Name
2.5m2024Ribas do Rio Pardo –MS -BrazilSuzanoCerrado
2.5m2028Inocênica–MS -BrazilAraucoSucuriú
2.5m
1
To be definedÁguaClara –MS -BrazilBracellMS
1.8m2027ParaguayParacelParacel
2.5m2028To be definedPaper ExcellenceTBD
2.1m2023UruguayUPMPaso de losToros
~14.0m+Total
1
Estimated
Source: Public announcements and company estimates
ArborGen Holdings
Annual Meeting 2023
Eucalyptus market in Brazil
...continued
In turn driving a seedling supply/demand imbalance
•The seedling supply industry in Brazil is fragmented and
unsophisticated and has been shrinking
•Yields per acre have fallen as a result of expanded growing
areas, increasing issues with disease and insect pests, and
heat and drought stress
•ArborGen is one of the largest commercial suppliers with
significant opportunity for eucalyptus tree improvement
•ArborGen’sproducts offer:
− higher yields and wood density
− improved disease and insect resistance
− good drought tolerance –important with climate change
•We have the most extensive trial programmeacross Brazil
Eucalyptus = 196
Pine = 96
Trial by region
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20 September 2023
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ArborGen Holdings
Annual Meeting 2023
Growing Brazil
Over the last 18 months we have:
•Acquired a 10m seedling capacity pine nursery in Santa
Catarina
•Leased a fourth 20m capacity eucalyptus nursery in Minas
Gerais state
•Leased our fifth 5m capacity eucalyptus nursery in Mato Grosso
•Acquired our sixth 15m capacity eucalyptus nursery in Rio
Grande do Sul
ArborGen will operate six eucalyptus nurseries and one
pine nursery complemented by a network of contract
producers
Our eucalyptus products are available in all of the
primary eucalyptus growing regions in Brazil
ArborGen Holdings
Annual Meeting 2023
Current FY 2024 update
USA
•Currently expecting seedling sales volumes to be flattish
on last year
•Expecting an increase in total dollar revenues, and solid
improvement in gross margin and earnings y-o-y
Brazil
•Seedling sales projected to be materially higher than prior
year
•Higher pricing and margins projected to increase
profitability substantially
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20 September 2023
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ArborGen Holdings
Annual Meeting 2023
Chair’s address
ArborGen Holdings
Annual Meeting 2023
Management transition
•Justin Birch, new Group CEO
− strong background in private equity
− a great fit for our Company to lead the business
through its next phase
•Adriano de Almeida, GM of Brazil
− experience in tree improvement and tree breeding
− understanding of the Brazilian forestry market
•Andrew and Gabriela made significant
contributions to the Company for which we are
very grateful
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20 September 2023
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ArborGen Holdings
Annual Meeting 2023
Ownership changes
•Simplified the ownership of ArborGen Inc by
repurchasing warrants equating to ~5% of
ArborGen Inc’s fully diluted common stock for
$1.35m
•The warrants arose from the acquisition of the
assets of CellForInc in 2012
•ArborGen Holdings’ effective economic interest
in ArborGen Inc increased from 95% to 100%
•The purchase price reflects a significant discount
due to a number of factors
ArborGen Holdings
Annual Meeting 2023
Growth and strategic initiatives
•Our focus is on achieving the strategic objectives
of the business
•The Australasian business sale released
NZ$22.25m of capital, allowing us to focus our
efforts on our core markets
•In Brazil, building a sustainable, highly profitable
business as the preeminent seedling supplier
•Focus in the US on driving increased adoption of
advanced genetics, leveraging decades of
investment in developing best-in-class proprietary
MCP products
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20 September 2023
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ArborGen Holdings
Annual Meeting 2023
FY2024
US
•We have sold nearly 90% of all seedlings
•Not expecting seedlings sales volumes to be materially different to
FY23 levels
•Expecting solid improvement in revenues, gross margins and earnings
•higher average selling prices
•lower unit MCP seed costs expensed in cost of sales
•increased internal container seedling production
Brazil
•Strong demand for eucalyptus and softwood seedlings
•Benefitting from recent investments in expanding in-house nursery
production capacity
•Projecting strong growth in volumes, prices and margins
ArborGen Holdings
Annual Meeting 2023
FY2024
...continued
•Including approx$2.7m of CEO costs in the period, we expect double digit growth in US-GAAP EBITDA in
FY2024
•Management are currently reviewing seed inventory on hand across the US, which may result in seed
write-down costs
− While this would reduce earnings, it is a non-recurring item and will not impact cash
•Of the $2.7 million of CEO costs to be expensed in FY2024 –
− $1.2 million relates to half of the first and second tranches of Justin’s equity grant (assuming resolution 2 is passed)
− $0.8 million relates to the base salary and guaranteed bonus for Justin,
− $0.3 million of relocation costs and sign-on bonus, and
− $0.4 million relates to the previous CEO including cash tax paid on shares issued, and for consulting costs incurred pursuanttoa
29-month consulting agreement
•Including expansionary activities, repurchase of warrants and CEO transition expenses in the period, net
debt is projected to be relatively flat on prior year of $13 million (excluding capital leases)
•Recent expansionary activities are expected to be both earnings and cash flow accretive, in FY2025 and
beyond
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20 September 2023
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ArborGen Holdings
Annual Meeting 2023
Summary
•We are very excited about ArborGen’sfuture
− Strong new leadership
− Refined the business to focus on core existing and emerging growth
markets
− Strengthened our balance sheet, to ensure we deliver on the
Company’s growth potential
•We are committed to ensuring strong returns for shareholders
as a result of strong earnings and cashflow growth
ArborGen Holdings
Annual Meeting 2023
Questions
Please raise your hand and wait for
the microphone
State your name and whether you are
a shareholder or proxy holder
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20 September 2023
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ArborGen Holdings
Annual Meeting 2023
Resolutions
ArborGen Holdings
Annual Meeting 2023
Resolutions
Resolution 1
To re-elect Paul Smart as a Director
Resolution 2
To issue 10,471,477 restricted ordinary shares to
the Chief Executive Officer, MrJustin Birch
Resolution 3
To authorise the Directors to fix Deloitte’s fees
and expenses as the Company’s Auditor for the
year ended 31 March 2024
ArborGen Holdings
Annual Meeting 2023
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