Deveron (FARM) Q4 2024 earnings summary

Executive summary

• Revenue for the year ended June 30, 2024, decreased 3.5% to $35.3M year-over-year; quarterly revenue for June 2024 fell 23.2% to $6.8M compared to the same quarter last year.

• Adjusted EBITDA for the year improved 248% to $2.0M, but quarterly Adjusted EBITDA for June 2024 was a loss of $1.2M, down from a positive $177K in the prior year.

• A significant goodwill impairment charge of $43.1M was recorded, primarily related to A&L Canada Laboratories.

• The company exited its US carbon service business, negatively impacting revenue by $1.3M but improving Adjusted EBITDA.

Financial highlights

• Gross profit for the year ended June 2024 was $23.6M, down 7% year-over-year; gross margin declined to 67% from 70%.

• Net loss for the year widened to $56.4M from $14.5M in the prior year, mainly due to the impairment charge.

• For the quarter ended September 30, 2024, revenue decreased 6.3% year-over-year to $7.2M; Adjusted EBITDA loss improved to $348K from a $950K loss.

• Net loss for the September 2024 quarter was $1.3M, a significant improvement from $6.0M in the prior year.

Outlook and guidance

• Management notes ongoing headwinds in North American agriculture, with low crop prices and persistent input costs compressing farm margins.

• Cost reductions of $2M in SG&A and service contracts in Canada are expected to benefit the current fiscal year.

• The company is reviewing strategic alternatives in light of upcoming debt maturities and industry challenges.