AgroFresh Solutions Inc (AGFS) 2020 Q2 法說會逐字稿

Good afternoon, and welcome to the AgroFresh Solutions Second Quarter 2020 Conference Call. (Operator Instructions) Please also note, today's event is being recorded.

At this time, I would like to turn the conference call over to Jeff Sonnek, Investor Relations at ICR. Sir, please go ahead.

Thank you, and good afternoon. Today's session will be led by Jordi Ferre, Chief Executive Officer; and Graham Mile, Chief Financial Officer. The comments during today's call and the accompanying presentation contain forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts are considered forward-looking statements. These statements are based on management's current expectations and beliefs as well as a number of assumptions concerning future events. Such forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from the results discussed in the forward-looking statements. Some of these risks and uncertainties are identified and discussed in the company's filings with the SEC. We'll also refer to certain non-GAAP financial measures. Please refer to the tables included in the slides that will accompany this presentation as well as the press release, which can be found on the Investor Relations section of our website, agrofresh.com, for reconciliations of non-GAAP financial measures to their most directly comparable GAAP measures.

With that, I'd now like to turn the call over to Jordi Ferre.

Thank you, Jeff. And good afternoon, everyone. Please turn to Slide 3.

To begin, I'm extremely pleased with the successful comprehensive refinancing transaction that closed on July 27. These met the timeline we laid out and is a major milestone for the business since becoming a stand-alone public company. We believe our improved capital structure, combined with sustained improvement in operating cash flow, will allow us the flexibility to pursue our growth strategies more robustly.

With respect to the second quarter performance, it was largely consistent with the trends we saw during the first quarter and aligned with our expectations for the Southern Hemisphere season. As we expected, we were able to recover some of the first quarter shortfall in the second quarter. Revenue in the second quarter increased 2.4% in constant currency terms versus the prior year period. However, this growth was not enough to offset the adverse events we experienced in the first quarter and resulted in a 5.5% constant currency decrease in revenue for the first half of 2020.

From an operational perspective, we continue to drive improvements in our cost structure and delivered a 21.2% improvement SG&A expenses in the second quarter and 17.5% improvement in the first half over the prior year period. Further, we've been able to drive supply chain savings, which resulted in a 100 basis point improvement to gross margin in the first half of 2020. Combined, we generated a 310 basis point improvement in our adjusted EBITDA margin for the first half of 2020, which resulted in adjusted EBITDA growth of 3.2% despite the decrease in sales.

Our ability to enhance the financial profile of our business has been accomplished in the midst of the COVID-19 pandemic that continues to disrupt industries' supply chain and ultimately, the livelihood of so many around the world. I'm truly proud about how the AgroFresh team has continued to service our customers in such a difficult environment. We have put in place a number of preemptive measures for the upcoming Northern Hemisphere season that will allow our technical and operational staff to continue operating from our service centers, ensuring that our post-harvest solutions are able to be applied to all available groups globally. We will refer to AgroFresh unwavering and superior service to customers, we mean it and we live it.

Please turn to Slide 4. The fundamentals of our SmartFresh business have remained solid during the first half of 2020 amidst a challenging operating environment brought about by this pandemic. Our core all fruit SmartFresh business grew 2.1%, including contribution from our SmartFresh diversification efforts, which generated growth of [4.2%] in the second quarter versus the prior year period.

However, as we discussed during the first quarter call, disruptions related to weather and crop size in Latin America and Australia negatively impacted our SmartFresh revenue for the first half, which decreased 9%. This performance is consistent with reports that the Latin American apple crop declined by an estimated 11% versus the prior year. Finally, the drought in key growing regions of Australia resulted in an estimated decrease in apple production of approximately 11% versus the prior year according to Apple and Pear Australia Limited.

As it was discussed during our first quarter call, the COVID-19 crisis caused some sharp currency movements in both the South America rand and the Brazilian real, which are key Southern Hemisphere markets for us and as a result, negatively impacted our revenue growth on an absolute basis.

Additionally, I'd like to share a few thoughts on the global flower business, which has been particularly disrupted by the global pandemic. For example, volume traded by FloraHolland auction dropped by 70%, and global retail sales declined by 50%. EthylBloc, which is our equivalent SmartFresh solution for cut flowers and ornamentals experienced a revenue decrease of approximately 40% versus the same period in the prior year. Although this is a relatively small category for AgroFresh, we believe it will return to growth next year with an improvement of the current environment as well as the innovation we are launching into this market.

Turning to Slide 5. For the first half of 2020, our revenue mix associated with the apple crop was 68% compared to 63% in the prior year period. While this is a step back in our diversification efforts, we believe it is purely circumstantial and driven by a poor season in our core citrus market as well as the impact of the pandemic to our EthylBloc business, both of which are key variables in our crop diversification mix. While we manage through the current environment, a new crop diversification team, which focuses on crops beyond apples and citrus is starting to deliver results with a 22% increase in sales for melons and a 56% increase in sales for avocados.

We are also seeing the added benefit of geographical diversification as these sales are focused within key markets such as California, Peru and Mexico. For example, our recent success with SmartFresh applications for melons was accomplished through a key customer, California-based Fisher Ranch. We are helping this customer extend the storage window and gaining improved inventory flexibility with the use of our SmartFresh SmartTabs solution on their cantaloupes and golden delicious honeydew melons. Our industry trusted post-harvest solution enables melons to ripen on the vine, allowing the fruit to retain greater firmness and sugar content despite longer transit time.

We continue to develop additional opportunities in crops such as broccoli, ready-to-eat melon, avocados and tomatoes across Latin America and the United States. From a technological standpoint, the launch of FreshCloud quality inspection is being very well received by customers outside of core apple business. And we have a number of ongoing trials that we expect to convert into long-term contracted business during the third quarter of this year.

Finally, a note on the regulatory front. We continue to utilize our expertise and capabilities to address new markets and new crops. During the second quarter, registrations for SmartFresh products were granted in Japan for apple, pear and persimmon and in Morocco for apple and plum. Additionally, our SmartFresh SmartTabs label was extended in Peru for mangos. These are great examples of the power of our regulatory portfolio, which help us gain access to markets and diversify our business.

Please turn to Slide 6. Our Harvista technology slows the natural ripening process, allowing apples more quality time on the tree and can be applied up to 3 days before harvest. Customers use Harvista to develop better color and size, expand the harvest window by up to 14 days, manage for labor forces and time their harvest for optimum good maturity.

Harvista's sales in the Southern Hemisphere grew 28% in the first half compared to the prior year. Growth was driven by Australia, which experienced remarkable growth of 231%, South Africa, where our Harvista sales increased by 72% and Brazil where approval in the first quarter of 2020 brought incremental sales.

This was partially offset by a disappointing business in Argentina, which faced crop and financial challenges. As we look ahead to the current Northern Hemisphere season during the second half of 2020, we have prepared a support plan for Harvista, given the advantages that the solution provides our customers such as added control and flexibility to harvest timing and workforce deployment. We think Harvista is especially important during the current pandemic emergency as the industry grapples with anticipated labor shortages.

Part of this support plan for North America is a more aggressive promotional presence as well as establishing the connection with our FreshCloud analytics platform. We recently launched a new tool called FreshCloud Harvest View, which will help drive penetration and optimize timing of Harvista applications. The fact that Harvista can be applied up to 3 days before harvest will provide customers flexibility to react to last minute labor disruptions, providing a window for outfield operations to respond quickly with the appropriate application to maintain the value of the customer's crop.

In Europe, we partnered with the local apple industry to submit applications for emergency permits for the use of Harvista ahead of its official registration expected for 2021, 2022. Approval was granted in Spain and Italy, in time for the upcoming season due to the likelihood of labor shortages brought on by the COVID pandemic.

Harvista is also a key element of our diversification initiatives. While we already received regulatory approval in the U.S. and Chile for cherries and for berries, we aim to continue expanding our regulatory portfolio to both new regions and crops. Currently, we are running a number of trials in other high value crops, which we hope will provide further growth and diversification opportunities. We continue to believe Harvista is poised for a strong growth year in 2020 and that its longer-term growth potential will be driven by additional regulatory approvals as well as improved delivery of real-time digital tools that only AgroFresh has the capability of providing.

Please turn to Slide 7. Tecnidex addresses the post-harvest citrus business, providing AgroFresh with crop and technology diversification via an established portfolios of fungicide, coating and waxes. During the first half of 2020, performance was disappointing and largely impacted by a significant decrease in citrus production in Spain and Morocco due to extreme weather events that we spoke about during our first quarter call.

These 2 countries are our largest markets for Tecnidex, and as a result, Tecnidex revenue decreased 22% during the period. We are well prepared for the 2020, 2021 citrus season in Spain and Morocco, which will begin during the fourth quarter of 2020. We continue to believe that Tecnidex will generate growth for full year 2020. With Tecnidex, our regulatory expertise now extends to citrus and other product categories. During the second quarter, we obtained organic certification in the European Union for [Texstar COAD 2515], which is a processing aid and key water treatment to control fungus while fruit is being treated. We will also be introducing some breakthrough innovation in the 2020, 2021 citrus season that we are excited about and which will be made public in due course.

Please turn to Slide 8. FreshCloud is a digital platform that provides our customers with real-time data and insights about produce freshness and projected shelf life. These are powerful supply chain insights, enabling better and more decision-making to proximate customer returns. As I touched on, this year, we launched FreshCloud Harvest View, which complements Harvista with an automated tool to optimize and increase the speed of group maturity assessment and harvest decision-making.

As an example, in today's environment, we are already seeing the fruit is maturing faster than normal. FreshCloud Harvest View identifies the starch progression of the fruit, which is a proxy for its maturation. By using FreshCloud harvest view, growers can plan more effectively to maximize the value of their crops, and where appropriate, slow down the maturation process through an optimized application of Harvista.

The industry has received these 2 very positively, and we see it as a platform that can grow beyond its initial deployment alongside Harvista. After a successful introduction in North America this year, we plan to roll the solution across all markets where Harvista is sold next year.

Another of our new tools is called FreshCloud Quality Inspection. This is positioned as trade stability with intelligent visibility and takes the form of mobile tools that standardizes the produce quality inspection process with enhanced organization and visualization capabilities to optimize the quality of decision-making.

This year, we have focused the introduction of this new tool to U.S. customers outside of our core apple business with a number of customers in active trials. The second phase will be with the rollout of our apple customers as well as other markets outside the U.S. FreshCloud is an evolutionary journey and innovations that just discussed are evidence of the innovation and service-oriented solutions that we bring to the marketplace.

I'll now let Graham speak to some of the financial highlights. Graham?

Thank you, Jordi, and good afternoon to everyone. Please turn to Slide 10. The second quarter completes our Southern Hemisphere season. As we have noted on numerous occasions, we think it's most valuable to look at the business we have versus quarters to consider seasonal fluctuations that can shift sales between the quarters of each half.

Net sales for the second quarter of 2020 decreased 5.7% to $20 million compared to $21.2 million in the second quarter of 2019. Excluding the impact of foreign currency exchange, which reduced the revenue by $1.7 million compared to the second quarter of 2019, revenue increased 2.4%. The net sales increase on a constant currency basis was primarily the result of growth of SmartFresh in the Asia Pacific region as well as positive contribution from our SmartFresh diversification strategy.

Results for the first half of 2020 largely reflect the completion and the performance of the business for the Southern Hemisphere season. Net sales for the first half of 2020 were $53 million, a decrease of 11.8% versus the prior year period. The impact of foreign currency translation reduced revenue by $3.8 million for the first half of 2020. Excluding this impact, revenue decreased approximately 5.5%. The net sales decrease on a constant currency basis was primarily the result of adverse harvest conditions, experienced in key Southern Hemisphere markets, such as Brazil, Chile, Argentina and Australia, which impacted harvest timing and yield, along with changing demand patterns from customers.

Please turn to Slide 11, where we will discuss margins and operating expenses. Gross profit for the second quarter was $13.5 million compared to $14.9 million in the prior year period. Gross profit margin was 67.7% versus 70.3% in the prior year period. The lower gross margin was primarily the result of negative fixed cost leverage on lower reported sales volumes, inventory valuation reserves and revenue mix.

For the first half of 2020, gross profit margin was 71.7% compared to 70.7% in the year-ago period, which was in line with the company's expectations. The year-over-year 100 basis point improvement was the result of our supply chain cost optimizations that were implemented at the end of 2019, partially offset by an unfavorable revenue mix.

Research and development costs were $2.9 million in the second quarter of 2020 compared to $3.3 million in the prior year period. Year-to-date, R&D decreased $1.6 million to $5.5 million in the first half of 2020. These decreases were driven primarily by the timing of projects. R&D remains an important component of our strategy to drive business diversification beyond apples, and we will continue to invest in R&D to support our business, expand our product portfolio and drive innovation.

SG&A expenses decreased 21.2% to $12.7 million in the second quarter of 2020 as compared to $16.1 million in the prior year period. Included in SG&A were $0.7 million in the current quarter and $2 million in the prior year quarter of costs associated with nonrecurring items that included M&A, litigation, refinancing and severance. Excluding these items, SG&A decreased approximately 15% in the second quarter versus the prior year period, which reflects the company's ongoing cost optimization initiatives as well as temporary increase in travel and other miscellaneous expenses related to the global pandemic.

On a year-to-date basis, SG&A decreased to 17.5% to $26.4 million. Excluding nonrecurring costs, the amount of $2.5 million in the current year and $5.2 million in the prior year period, SG&A decreased approximately 10.5% versus the prior year period. This performance is consistent with our cost optimization strategy that began in 2018 and accelerated in 2019 with 9.6% of SG&A savings. Looking to the second half of 2020, we continue to expect additional savings in the range of 5% to 10%.

Please turn to Slide 12. Second quarter 2020 net loss improved to $16.8 million compared to net loss of $22.4 million in the prior year period. The primary drivers of the year-over-year $5.6 million improvement in net loss were lower operating expenses of $3.8 million and the lower interest expense of $2.2 million. For the first half of 2020, net loss was $20.6 million compared to net loss of $34.9 million in the prior year period.

Similarly, the improvement was primarily driven by lower operating expenses of $7.3 million and a lower interest expense of $3.9 million. Adjusted EBITDA increased $1.6 million to a positive $0.2 million in the second quarter of 2020 as compared to a $1.4 million loss in the prior year period. For the first half of 2020, adjusted EBITDA improved by $0.4 million or 3.2% to $11.4 million compared to the prior year period. Our year-to-date adjusted EBITDA margin improved 310 basis points to 21.6% versus the prior year, which reflects the combination of our hard work in optimizing our operating cost base and the supply chain.

We are especially pleased with the results of our proactive cost control efforts, which are allowing the business to generate operating leverage, even in seasonally slower periods, such as the second quarter. As a reminder, our adjusted EBITDA margin performance should also be viewed in total for the year to align with the respective Southern and the Northern Hemisphere season, where our higher second half sales volumes translate to correspondingly higher margins for the business. The adjusted EBITDA margin for the last 12 months ended June 30, 2020 was 40.9%.

Turning to Slide 13. The strength of our operating cash flow was demonstrated again in the second quarter as we generated $8.1 million cash for the 3 months ended June 30, 2020, versus a cash used in the prior year period of $2.9 million. This drove our year-to-date performance, where cash provided by operations was $9.2 million for the 6 months ended June 30, 2020 compared to $6.1 million for the same period in the prior year.

This is an extension of a broader multiyear theme where we've been steadily improving our operating cash flow to improve the management of the business and are developing a more efficient organization. The results are more apparent as you look back to 2018, where we generated $3 million of operating cash flow, which grew to $20 million in 2019. And with our large Northern Hemisphere season in front of us, we are looking to extend this trend of growth of operating cash flow for the remainder of 2020. Capital expenditures were $0.9 million for the 6 months ended June 30, 2020, compared to $3.3 million in the prior year period, due to timing and delays associated with global pandemic. We continue to expect our annual capital expenditures to range from 2% to 5% of sales, consistent with our asset-light business model.

From a balance sheet perspective, cash as of June 30, 2020, was $35.6 million; total debt was $405.4 million; and our $12.5 million revolver was undrawn as of June 30, 2020. Subsequent to the end of the second quarter, on July 27, 2020, we closed on a comprehensive refinancing, comprised of a $150 million convertible preferred equity investment of Paine Schwartz Partners and amendment and extension of our senior secured credit facilities. With the proceeds of the PSP convertible preferred equity investment, the principal outstanding on AgroFresh's term loan has been reduced to $275 million, and the company's revolving credit facility was doubled in size to $25 million.

The closing of this comprehensive refinancing is a significant milestone for AgroFresh. The transaction accomplishes several key goals for the company, including an extension of the debt maturities by about 3.5 years to December 31, 2024, and a significant immediate deleveraging of our balance sheet by approximately 2x to 3.6x on a pro forma basis for 12 months ended June 30, 2020. The improved capital structure allows us the flexibility to more aggressively address our diversification initiatives and generate growth with the support of our strategic equity investor, Paine Schwartz.

Finally, we are pleased with Agrofresh's addition to the Russell 2,000 index, during the recent reconstitution and look forward to sharing our attractive investment prospects with a larger investment of audience in years to come.

Now I'll turn the call back to Jordi for his closing remarks before opening the call to Q&A.

Thank you, Graham. Please turn to Slide 14.

In closing, I wanted to thank again all of our employees for their resilience and commitment to continue providing uninterrupted service to our customers during this unprecedented time and to our customers, for continuing to trust in our ability to manage well their valuable crop. The recent refinancing of our debt provides flexibility and time to continue consolidating our business and accelerating new areas of growth.

In this respect, I am very pleased to welcome our new strategic investor Paine Schwartz Partners, who knows the agricultural space intimately and shares the common goal to grow and make the fruit harvest a larger industry with a more relevant role in contributing to prevent food waste. In the meantime, I remain positive about the upcoming Northern Hemisphere season, and I have never felt stronger about the business during my almost 4 years as company's CEO.

With that, operator, please open the call for questions.

(Operator Instructions) And our first question is from the line of Gerry Sweeney with was ROTH Capital Partners.

I've got a few questions. So I'm going to take a little bit of a line from your opening remarks there and just say, you have growth, you have balance sheet and there's opportunities. You have a lot of registrations in the pipeline, you keep pushing that out or pushing more into the pipeline, et cetera. It sounds like there's a big opportunity with Harvista. You have Tecnidex maybe coming into the U.S.

Now that you have a little bit more room on your balance sheet, how do we look at growth? How are we going to put some of this money to work?

Well, Gerry, thank you for the question. I think we -- I think it's been very important, like you said, stabilizing, improving our financial profile, doing the refinancing. And all the work we've been doing to really have a lot of projects in our pipeline, customers, diversification, all the things that we keep repeating.

So what's important right now, it's actually to focus on growing the business, and that's what we're going to do. Now how we're going to do that, there is part of it, it's going to be organic. And we've done a lot of work, as you said, and those things are going to start showing in the next months and years.

And also, we're going to look as well at external opportunities. And our intention is to resume our M&A program, when and how it makes sense. So as I said in my final remarks, we do believe that we are the player for post-harvest and for preventing food waste. And we're going to make this company bigger and more relevant. And that's what I wanted to say now that the refinancing is behind us.

Okay. What about maybe specific opportunities shorter term? Harvista, for example, obviously, [Harvista is more]...

Yes. Harvista -- as I mentioned, we feel very strong about Harvista. And you will see this year that Harvista will accelerate to very strong growth. There's many factors for that.

I think part of it is we have continued with our plan of regulatory approvals that continue very well. We have continued with improving the delivery of the service, which we started 2, 3 years ago. I think the digitalization and the way we're anticipating the needs and being able to apply Harvista on the right time, it's going to be key to increase penetration in existing markets like the U.S. And one of the things that we see very well with Harvista is continuing the diversification efforts that we're doing.

We mentioned cherries and blueberries, but we also mentioned that there is a lot of trials on a number of fruits. We feel very bullish about this product. We like the flexibility that it provides to customers. We like the results and the improvement of quality we have been providing to customers, and we like the response that customers have done -- have actually given us. And so Harvista, definitely, as I mentioned during my script, is going to be a big part of my -- of the growth of this company.

Got it. So just a couple of questions on more Harvista. I believe what was it Italy and Morocco, a couple of countries you were throwing out there. But as you get that into the European Union, even if it's in Italy, does that sort of open the doors for a lot more expansion? Not so much this go-around, but maybe next year, next fall, et cetera?

Sure. I mean as you know, and we've been mentioning many times in the calls, we are working towards full approval across the whole European Union. And it's going to come in 2021, 2022, especially, I mean, at least partially in 2021 and 2022.

Well, what I mentioned in the call is additional to that already ongoing process, we decided this year with the industry actually, we supported the local apple industry in Europe to apply for an emergency permit that is granted for a number of days to be applied to this season. And the reason behind the emergency permit request was the fact that the COVID-19 pandemic has brought a lot of labor shortages, especially disruption of labor expected in terms of more stringent protocols of engagement in the orchard.

We were lucky to get so far Italy and Spain, which is very good news. And so for the first time in the history of the company, you will see actual sales of Harvista in the European Union this year, which is a big accomplishment, I would like to highlight.

Got it. What about North America? Harvista has an opportunity there as well. I think you mentioned some promotional spending?

Yes. We did more -- we put a lot of time, focus and dollars in putting a very comprehensive plan to promote more the use of Harvista, reminding customers how important it is to be ready this year based on everything that's going on from a labor perspective.

As you know, we have a large contingency of customers in the Yakima Valley. And you may have read that it's actually very much affected by the COVID-19 pandemic. That means that we expect customers to be on the edge, again, with disruptions of labor. Harvista is there to help, can help them do more with less. And so we feel very strong about how Harvista can really help the industry this year.

And therefore, we are ready. We put not only promotional knowledge, like you mentioned, but we also put more people on the ground to be able to execute better and even more effective. And I would not really forget to mention as well, as I said before, the special FreshCloud Harvest View, who's been an overriding success with customers in driving our Harvista applications and sales and penetration and making the right decisions. But also in opening up another service for us to be able to actually help our customers manage their crop better through the early information that we collect on the field. So we feel very strong about that. And we've also done successful trials this year with the approval of the application in blueberries. So far, we remain very optimistic of what we're seeing.

You will not see really an impact on revenue this year because being the first year, there's a lot of trials that we have to do. But I think next year, you will see that impact from the blueberry trials that we've done this year. And also, I would say that it's allowing us also diversification, not only in blueberries, but also geographically as we are doing now with new customers in states like Georgia, who are very important for blueberry production.

Got it. If we were to look at Harvista, but maybe just on an apple basis, what is the addressable market maybe in North America? Any way you want to sort of provide some broad brush, is it divided between North -- the Northern Hemisphere or even North America versus Europe? Just want to get a feel for where this could go for apples and then maybe for combined opportunities looking out a little, get little bit of [focus.]

I think right now -- and obviously, the opportunity may change as you add new potential crops, okay? But I think, and I'm not sure whether that's been publicly made, but I do think that at one point, we felt that the opportunity, considering a reasonable penetration rate could go at least to $50 million altogether on the aspects that we're working today. Now it's going to take some time, but I think we're off to a good start with all these regulatory approvals and the improvements that I mentioned before. And obviously, if we could include other crops in the future that we can improve the efficiency, that potential could increase.

Got it. Switching gears a little bit, was combining a couple of things again, talked about getting back on -- into the acquisitions, but you also have a pretty big investment by Paine Schwartz and from my understanding they're pretty active in the agricultural space. Has there been any opportunities either presented by Paine Schwartz, or has there been at least any communication? I'm sure they're probably interested in that. [Build around that question]...

As I said before, Gerry, they are a strategic investor. They're not just providing investment per se, but they also provide a lot of expertise and a specialization and a true belief in what they do, which is investing in agricultural services and products. Of course, they have their own view that coming into this. But also, although we have not been able to be active ourselves because, obviously, the limitations until we actually went through the refinancing, it is very clear that we also have our views and our targets that we are either working on, engaging. So I think, yes, discussions with the 2 sides are going to happen very soon, and we will be comparing notes, findings, interactions and decide on a course of action.

Got it. Maybe switching gears a little bit over to Graham, talk about the income statement. Has the benefit from the supply chain enhancements, is there more of an opportunity from that perspective in the second half since there is larger dollars? Maybe a little bit more absorption of overhead and then maybe after that, just talk about G&A savings. That's been a big focus, and you're chipping away at one as well. So if there's more there.

Yes. Thank you, Gerry, for the question. We do believe that the benefits we are seeing in the second quarter and the first 6 months to continue for the rest of the year. And as you pointed to, the second half of the year, we also would have advantage of higher sales volumes from Northern Hemisphere. So gross margin should -- we expect to improve as a result of not only the operating leverage, but also supply chain efficiency benefits that we started a year ago.

And then to your question on SG&A. And as we mentioned in the prepared remarks, we feel confident that overall for the year, the first 6 months results that we're seeing will also continue for the rest of the year. And we're comfortable that for the full year as compared to last year, we are seeing that -- we anticipate to have 5% to 10% additional savings for 2020. And as a reminder, last year 2019 we achieved close to 10% operating expenses savings.

(Operator Instructions) Thank you. At this time, we will conclude our question-and-answer session, and I'll turn the conference call back over to Mr. Jordi Ferre for any closing remarks.

Thank you, operator. Well, I'd like to, like always, thank everybody for the support that you continue and interest you continue to show in AgroFresh. As I said before, we're extremely positive towards the future. Very, very bullish. And I'd also like to use the final opportunity to thank the employees at AgroFresh for their passion, their commitment and for making sure that and contributing to make this difficult year a good year for AgroFresh. Thank you.

Thank you. Ladies and gentlemen, that does conclude today's conference call. We do thank you for attending, and you may now disconnect your lines at this time.