Deveron (FARM) Q1 2025 earnings summary

Executive summary

• Revenue for the year ended June 30, 2024, decreased 3.5% year-over-year to $35.3M, while adjusted EBITDA improved 247% to $2.0M, reflecting cost reductions and a strategic exit from the US carbon service business.

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

• For the quarter ended September 30, 2024, revenue declined 6.3% year-over-year to $7.2M, but adjusted EBITDA loss narrowed to $(348K) from $(950K) in the prior year.

Financial highlights

• Annual gross profit fell 7% to $23.6M, with gross margin dropping to 67% from 70% year-over-year.

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

• Quarterly net loss improved to $(1.3M) from $(6.0M) year-over-year.

• Operating expenses for the year nearly doubled to $78.2M from $39.5M.

Outlook and guidance

• The agriculture sector faces headwinds from low crop prices and persistent input costs, compressing farm margins and reducing testing demand.

• $2M in SG&A and service contract costs were eliminated in Canada post-year-end, expected to benefit the current fiscal year.

• Management is reviewing strategic alternatives due to upcoming debt maturities and ongoing industry challenges.