AgroFresh Business Combination Summary

Transcription

1 AgroFresh Business Combination Summary

2 Safe Harbor In addition to historical information, this presentation may contain forward-looking statements within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of All statements, other than statements of historical facts, included in this presentation that address activities, events or developments that the Company expects or anticipates will or may occur in the future are forward-looking statements and are identified with, but not limited to, words such as anticipate, believe, expect, estimate, plan, outlook, and project and other similar expressions (or the negative versions of such words or expressions). Forward-looking statements include, without limitation, information concerning the Company s possible or assumed future results of operations, including all statements regarding anticipated future growth, business strategies, competitive position, industry environment, potential growth opportunities and the effects of regulation. 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, uncertainties, assumptions and other important factors, many of which are outside the Company s management s control that could cause actual results to differ materially from the results discussed in the forward-looking statements. These risks include, without limitation, the risk that the Company s transaction with The Dow Chemical Company ( Dow ) consummated on July 31, 2015 (the Business Combination ) disrupts current plans and operations; the Company s ability to recognize the anticipated benefits of the Business Combination, which may be affected by, among other things, competition and the ability of the combined business to grow and manage growth profitably; costs related to the Business Combination and/or related to operating AgroFresh as a stand-alone public company; changes in applicable laws or regulations, and the possibility that the Company may be adversely affected by other economic, business, and/or competitive factors. Additional risks and uncertainties are identified and discussed in the Company s filings with the SEC, including the Quarterly Report on Form 10-Q filed on November 16, 2016, available at the SEC s website at As a result of the Business Combination, the Company was identified as the acquirer for accounting purposes, and the AgroFresh Business, which is the business conducted prior to the closing of the Business Combination by Dow through a combination of wholly-owned subsidiaries and operations of Dow, including through AgroFresh Inc. in the United States, is the acquiree and accounting Predecessor. The Company s financial statement presentation reflects the AgroFresh Business as the Predecessor for periods through July 31, 2015 (the Closing Date ). Where we discuss results for the period ended September 30, 2015, we are referring to the combined results of the Predecessor for the month ending July 31, 2015 and the Successor for the two months ending September 30, On the Closing Date, the Company, which was formerly named Boulevard Acquisition Corp., was re-named AgroFresh Solutions, Inc. and is the Successor for periods after the Closing Date, which includes consolidation of the AgroFresh Business subsequent to the Closing Date. The acquisition was accounted for as a business combination using the acquisition method of accounting, and the Successor financial statements reflect a new basis of accounting that is based on the fair value of net assets acquired. As a result of the application of the acquisition method of accounting as of the effective time of the Business Combination, the financial statements for the Predecessor period and for the Successor period are presented on different bases. The historical financial information of Boulevard Acquisition Corp. prior to the Business Combination has not been reflected in the Predecessor period financial statements as those amounts are not considered to be material. This presentation contains certain financial measures, in particular non-gaap earnings per share, Adjusted EBITDA, Constant Currency Adjusted EBITDA and Constant Currency Net Sales, which are not presented in accordance with GAAP. These non-gaap financial measures are being presented because the Company believes these non-gaap financial measures provide meaningful supplemental information as they are used by the Company s management to evaluate the Company s performance, seen as likely to enhance a reader s understanding of the financial performance of the Company, are more indicative of operating performance of the Company, and facilitate a better comparison among fiscal periods, as the non-gaap measures exclude items that are not considered core to the Company s operations. In particular, Adjusted EBITDA is a key measure used by the Company to evaluate its performance, and is calculated by the Company in a manner consistent with the definition of Consolidated EBITDA in the Company s Credit Agreement. The Company does not intend for any of the non-gaap financial measures contained in this presentation to be a substitute for any GAAP financial information. Readers of this presentation should use these non-gaap financial measures only in conjunction with the comparable GAAP financial measures. Reconciliations of non-gaap financial measures to the most comparable GAAP measures are provided in the tables at the end of this presentation. 2

3 Summary The purpose of this presentation is to provide a summary of information related to the foundation of AgroFresh Solutions, Inc. and analyses of deal-related items. Key elements are as follows: Elements of Profit and Loss 4 Shares and Warrants 14 Debt 20 Overview of Initial Transaction 22 Deferred Consideration to Seller 26 Financial Statements (included in September 30, 2015 Form 10-Q) 33 Page 3

4 Elements of Profit and Loss 4

5 Income Statement $ in thousands except for per share information Successor 2 months ended September 30, 2015 Combined Successor/Predecessor 3 months ended September 30, months ended September 30, months ended September 30, 2014 Predecessor 9 months ended September 30, 2014 Net sales $ 59,650 $ 61,807 $ 112,332 $ 66,245 $ 113,739 Cost of sales (excluding amortization, shown separately below) 45,719 46,232 56,349 10,383 19,420 Gross profit (1) 13,931 15,575 55,983 55,862 94,319 Research and development expenses 1,946 3,030 13,545 5,368 15,574 Selling, general, and administrative expenses 12,744 14,656 29,518 8,081 23,436 Amortization of intangibles 6,815 9,225 23,710 7,430 22,303 Operating (loss) income (7,574) (11,336) (10,790) 34,983 33,006 Other (expense) income (2) (1,462) (1,460) (1,454) (5) (5) Loss on foreign currency exchange (263) (263) (263) - - Interest expense, net (3) (9,313) (9,313) (9,313) - - (Loss) income before income taxes (18,612) (22,372) (21,820) 34,978 33,001 (Benefit) provision for income taxes (4,591) (5,823) 6,258 10,493 21,246 Net (loss) income $ (14,021) $ (16,549) $ (28,078) $ 24,485 $ 11,755 Loss per share: Basic $ (0.28) Diluted $ (0.28) Weighted average shares outstanding Basic 49,457,847 Diluted 49,457,847 (1) Gross profit for 9 months ended September 30, 2015 includes $38.7 million of inventory step-up amortization. Excluding the inventory step-up amortization, gross profit was $94.7 million, compared to $94.3 million in the nine months ended September 30, See page 7 for additional details. (2) Includes net expense of $1,450 related to the mark-to-market adjustments of the private placement warrants and the warrants due to Dow under the Warrant Purchase Agreement. See pages 10, 19 and 27 for additional details. (3) Includes interest on term loan, amortization of debt discount and deferred financing fees and accretion expense on the Tax Receivable Agreement liability and the Seller Contingent Consideration. See page 11 for additional details. 5

6 Notes to Income Statement Inventory Step-Up See page 7 - Amortization of inventory step-up is included in costs of sales Transition Services Agreement See pages 8 and 9 - The upfront $5 million fee paid to Dow is amortized over the five years of the TSA in SG&A based on the schedule of services provided and the contract periods for each type of service Ongoing TSA fees are expensed as services are provided Other (Expense) Income Interest Expense Components See page 10 - Changes in value of the liabilities associated with the Business Combination consideration to be paid in the future (Tax Receivables Agreement, Seller Contingent Consideration and Dow Warrants) and the private placement warrants resulting from mark-tomarket adjustments each quarter are recorded in Other (Expense) Income See page 11 - Interest on the term loan and revolver, accretion expense on Tax Receivables Agreement and Seller Contingent Consideration liability and amortization of debt discount and debt issuance costs are included in interest expense Non-GAAP Reconciliations See pages 12 and 13 Shares and Warrants See pages 14 to 19 6

7 Inventory Step-Up As part of the purchase price allocation, $111 million was allocated to increase the valuation of acquired inventory to its estimated fair value. The carrying value before the acquisition accounting adjustments (i.e., prior to 8/1/2015) was at the lower of cost or market. For acquisition accounting, inventories are valued at selling price less costs to sell and a reasonable profit on the selling effort. Where to find this item in the Company s Financial Statements? Income Statement The inventory step-up amount is amortized into cost of sales on the basis of expected inventory turns by hemisphere $38.7 million was included in cost of sales in the period ended September 30, 2015 Remaining balance is expected to be amortized by the end of the first quarter of 2016 Balance Sheet Approximately $72.7 million of the post adjustment inventory step-up was remaining in Inventory at September 30, 2015 Inventory value at 9/30/2015 was approximately $17.1 million excluding the remaining inventory step-up Cash Flow Statement Amortization of inventory step-up is shown as a separate addback line in the Cash Flow from Operating Activities section How is this item treated to get to Adjusted EBITDA? It is added back as a non-cash expense What is the tax impact of this item? A majority of the $111 million step up will be considered in the Section 338(h)(10) election and, therefore, create a tax benefit for which the Company will provide 85% of the resulting cash tax savings to Dow while retaining the other 15% of the resulting cash tax savings Citation: See Form 10-Q filed November 16, 2015, pages 14, 15, 30, 31, 33. 7

8 Transition Services Agreement Under a Transition Services Agreement ( TSA ), Dow agreed to provide certain post-closing services to AgroFresh including certain marketing and sales, customer service, supply chain, environmental health and safety, consulting, business records, packaging and storage, research and development, information technology and finance services. Services under the TSA started on the acquisition date. Actual/expected payments are as follows: Upfront payment of $5 million paid 7/31/15 Separate ongoing payments totaling $1.8 million for the two-month period ended 9/30/15 Minimum contractual payments for services incurred after 9/30/15: 10/1/15 to 12/31/15 $2.7 million 1/1/16 to 12/31/17 $7.9 million (combined) 1/1/18 to 12/31/19 $5.9 million (combined) 1/1/20 to 7/31/20 $1.7 million Where to find this item in the Company s Financial Statements? Income Statement The upfront $5 million cash fee paid to Dow is amortized over the five years of the TSA in SG&A based on the schedule of services provided and the contract periods for each type of service Ongoing cash TSA fees are expensed as services are provided Balance Sheet Unamortized portion of upfront $5 million cash fee paid to Dow is included in Other assets Cash Flow Statement Amortization of the $5 million upfront payment is included in Net Income (Loss) with an offsetting amount in the Change in Other Assets in Cash Flows from Operating Activities section Citation: See Stock Purchase Agreement filed May 4, 2015, Exhibits B, D, F, G, H. 8

9 Transition Services Agreement (cont.) How is this item treated to get to Adjusted EBITDA? Amortization of upfront $5 million payment is added back to adjusted EBITDA as part of depreciation, amortization and accretion, and a portion of the ongoing TSA is considered to be a non-recurring expense to be added back to adjusted EBITDA What is the tax impact of this item? These are tax deductible expenses incurred and paid in the ordinary course of business Citation: See Stock Purchase Agreement filed May 4, 2015, Exhibits B, D, F, G, H. 9

10 Other (Expense) Income (for Successor two month period ended September 30, 2015) $ in thousands Other (Expense) Income Mark-to-market adjustments (1) Private Placement Warrants (2) $ (7,330) Warrants Due to Dow under Warrant Purchase Agreement (3) 5,880 Mark-to-Market of Tax Receivable (4) -- Mark-to-Market of the Dow Seller Contingent Consideration liability (5) -- Miscellaneous expense (12) Total Other (Expense) Income $ (1,462) (1) Liability classified warrants are marked to market each reporting period. Increase or (decrease) in fair value is recorded as other (expense) or income, respectively. (2) Loss resulting from increase in fair value of private placement warrants from original value of $1.00 per warrant to $2.19 at 9/30/2015. In December 2015, the Warrant Purchase Agreement was modified, which resulted in the Private Placement Warrants being equity classified rather than liability classified. These warrants will be marked to market on the effective date of the modification, but will thereafter not be revalued for accounting purposes, assuming no other modifications. (3) Gain resulting from decrease in fair value of warrants due to Dow under the Warrant Purchase Agreement from $3.17 at Closing Date to $2.19 at 9/30/2015. (4) Gains or losses related to changes in fair value resulting from changes to underlying valuation assumptions would be recorded in other (expense) income. (5) Gains or losses related to changes in fair value resulting from changes to underlying valuation assumptions would be recorded in other (expense) income. 10

11 Interest Expense Components (for Successor two month period ended September 30, 2015) $ in thousands Interest Expense Interest on Term Loan (1) $ 4,174 Tax Receivables Agreement Accretion (2) 2,460 Dow Contingent Consideration Accretion (3) 2,262 Term Loan Debt Discount Amortization (4) 364 Revolver Debt Issuance Costs Amortization (5) 53 Total Interest Expense $ 9,313 (1) 5.75% annual interest rate on $425 million term loan (due July 31, 2021). (2) Accretion of $145 million opening balance sheet fair value of estimated future payments to be made to Dow under a Tax Receivables Agreement entered into in connection with the Business Combination. (3) Accretion of contingent consideration from $17.2 million fair value to $50 million potential contingent consideration based on achievement of Business EBITDA targets. (4) Amortization of $12.9 million of OID and debt issuance cost on $425 million term loan over 72 month term using effective interest method. (5) Amortization of $1.3 million debt issuance costs on $25 million revolver using the straight-line method over 48 month term, expiring July 31,

12 Non-GAAP Adjusted EBITDA Reconciliation $ in thousands Successor Combined Successor/Predecessor Predecessor 2 months ended September 30, months ended September 30, months ended September 30, months ended September 30, months ended September 30, 2014 GAAP Income (Loss) before income taxes $ (18,612) $ (22,372) $ (21,820) $ 34,978 $ 33,001 Amortization of inventory step-up (1) 38,702 38,702 38, Transaction and acquisition related costs (2) 1,918 1,918 1, Share-based compensation (3) , Interest expense (4) 9,313 9,313 9, Depreciation and amortization (3) 7,969 10,435 25,348 7,485 22,798 Stand-alone costs (5) 3,510 3,631 3, Research and development cost synergies (6) ,249 1,594 4,398 Other non-recurring costs (3) Mark-to-market adjustments, net (7) 1,450 1,450 1, Pro forma deferred revenue (8) - (167) (1,167) (500) (1,500) Non-GAAP Adjusted EBITDA 45,365 44,521 62,503 43,701 59,129 Constant currency adjustment (9) 2,796 2,470 3, Non-GAAP Constant Currency Adjusted EBITDA $ 48,161 $ 46,991 $ 65,853 $ 43,701 $ 59,129 (1) The amortization of inventory step-up related to the acquisition of AgroFresh is charged to income based on the pace of inventory usage. (2) Costs associated with the Business Combination incurred in the current period. (3) Expenses incurred during the period added back to EBITDA related to equity compensation, depreciation & amortization largely associated with the asset stepup and other non-recurring expenses incurred during the period. (4) Interest paid on the term loan, inclusive of accretion for debt discounts and debt issuance costs; and accretion of Tax Receivable Agreement and Seller Contingent Consideration liabilities. (5) Non-recurring professional fees associated with becoming a stand-alone public company. (6) R&D savings related to the discontinuation of wo projects (Invinsa and IDC). (7) Non-cash adjustments to liability classified warrants. (8) Deferred revenue associated with a revenue agreement not included in the Business Combination. (9) Constant currency figures are based upon 2015 results using 2014 average foreign exchange rates. 12

13 Non-GAAP EPS Reconciliation $ per share (12) Successor Combined Successor/Predecessor Predecessor 2 months ended September 30, months ended September 30, months ended September 30, months ended September 30, months ended September 30, 2014 Reported GAAP (loss) income per basic and diluted $ (0.28) $ (0.28) $ (0.28) $ - $ - GAAP (loss) income per basic and diluted (9) - (0.05) (0.28) Amortization of inventory step-up (1) (10) Transaction and acquisition related costs (2) (10) Stand-alone costs (5) (10) Research and development savings (6) (10) Other non-recurring costs (3) (10) Accretion of contingent consideration (10) (11) Fair Value adjustments to warrants, net (7) (10) Non-GAAP earnings (loss) per diluted share $ 0.39 $ 0.35 $ 0.16 $ 0.52 $ 0.30 (1) The amortization of inventory step-up related to the acquisition of AgroFresh is charged to income based on historical inventory turns by hemisphere (2) Costs associated with the Business Combination incurred during the periods reported. (3) Expenses incurred during the period added back to EBITDA related to equity compensation, depreciation & amortization largely associated with the asset stepup and other non-recurring expenses incurred during the period (4) Interest paid on the term loan, inclusive of accretion for debt discounts and debt issuance costs; and accretion of Tax Receivable Agreement and Seller Contingent Consideration liabilities. (5) Non-recurring professional fees associated with becoming a stand-alone public company (6) R&D savings related to the discontinuation of two projects (Invinsa and IDC) (7) Non-cash adjustment to liability classified warrants (8) Deferred revenue associated with a revenue agreement not included in the Business Combination (9) Pre-transaction loss per share using the weighted average number of shares outstanding for the periods ending 9/30/2015. (10) These adjustments were effected using an estimated 35% tax rate for each period (11) Represents accretion of the contingent consideration factors related to the Business Combination (Tax Receivable Agreement and Dow Seller Contingent Consideration) (12) Per share amounts calculated assuming the same number of shares in the prior period as reported on September 30,

14 Shares and Warrants 14

15 Shares and Warrants Outstanding (as of November 16, Q3 earnings release) Shares # Shares Outstanding Prior to Business Combination Initial Public Shares (Issued at $10.00/unit) 22,050,000 Boulevard Founders' Shares 4,134,375 Boulevard Founders' Incentive Shares (Threshold $13/share) (1) 1,378,125 Shares Issued at Closing Dow Shares 17,500,000 PIPE Shares (Issued at $10.25/share) 4,878,049 Total Shares Outstanding (2) (3) 49,940,549 Public Float Shares (4) 26,928,049 Strike Warrants (Strike $11.50/share, Callable at $24/share) Proforma # Price/share Initial Proforma # Warrants (Calculation) Repurchased / Issued by AGFS Transferred by Sponsor Public Float Warrants 9,823,072 $ ,025,000 (1,201,928) - Dow Warrants (by April 30, 2016) 6,000,000 $ ,000,000 3,000,000 Boulevard Founders' Warrants (not Callable) 3,160,000 $ ,160,000 - (3,000,000) Total Warrants 18,983,072 $ ,185,000 1,798,072 - (1) 5,512,500 total Boulevard Founders Shares include 1,378,125 shares that are subject to forfeiture if the Company's stock price does not close above $13.00/share for any 20 day period of a 30 day period commencing on the Closing date through July 31, 2020 (5 years). (2) To align incentives, the management team has been allocated another 2,750,000 shares (majority in options with $12.00 strike price with time based vesting + remainder in restricted stock with performance based vesting). Such share issuances are not included in the fully diluted shares outstanding in this presentation. (3) Excludes out of the money warrants that could be dilutive when the Company achieves positive Net Income. (4) Includes 22,050,000 shares sold as part of Unit to Public in Boulevard IPO + 4,878,049 Private Placement Shares sold at $10.25 per share. 15

16 Fully Diluted Share Count at Various Share Prices Fully Diluted Share Count at Various AGFS Share Prices Treasury Stock Methodology applied Holder $6.45 $11.50 $13.00 $24.00 Public Float Shares (1) 26,928,049 26,928,049 26,928,049 26,928,049 Public Float Warrants Exercised (Net Shares) (2) - - 1,133,431 5,116,183 Dow Shares 17,500,000 17,500,000 17,500,000 17,500,000 Dow Warrants Exercised (Net Shares) (3) ,308 3,125,000 Boulevard Founders' Shares (Avenue / Founder) (4) 4,134,375 4,134,375 5,512,500 5,512,500 Boulevard Founders' Warrants Exercised (Net Shares) (5) ,615 1,645,833 Fully Diluted Shares Outstanding 48,562,424 48,562,424 52,130,903 59,827,565 % Ownership at Various AGFS Share Prices Treasury Stock Methodology applied Holder $6.45 $11.50 $13.00 $24.00 Public Float Shares (1) 55% 55% 52% 45% Public Float Warrants Exercised (Net Shares) (2) - - 2% 9% Dow Shares 36% 36% 34% 29% Dow Warrants Exercised (Net Shares) (3) - - 1% 5% Boulevard Founders' Shares (Avenue / Founder) (4) 9% 9% 11% 9% Boulevard Founders' Warrants Exercised (Net Shares) (5) - - 1% 3% Total Ow nership (%) 100% 100% 100% 100% Cash Proceeds to AgroFresh from 100% Warrant Exercise (6) Holder $6.45 $11.50 $13.00 $24.00 Public Float Warrants Exercised - - $112,965,328 $112,965,328 Dow Warrants Exercised ,000,000 69,000,000 Boulevard Founders' Warrants Exercised ,340,000 36,340,000 Total Cash Proceeds to AgroFresh from 100% Warrant Exercise - - $218,305,328 $218,305,328 (1) Includes 22,050,000 shares sold as part of Unit to Public in Boulevard IPO + 4,878,049 Private Placement Shares sold at $10.25 per share. (2) 11,025,000 warrants sold as part of Unit to Public in Boulevard IPO ($11.50 Strike / $24.00 forced redemption) less 1,201,928 warrants repurchased by Company. (3) 6,000,000 warrants per Warrant Purchase Agreement ($11.50 Strike / $24.00 forced redemption). (4) Includes 1,378,125 Boulevard Founders Incentive Shares above $13.00/share. These shares are forfeited if stock price is not above $13 by (5) 6,160,000 Warrants purchased by Boulevard at IPO ($11.50 Strike) less 3,000,000 Warrants to be surrendered for cancellation per Warrant Purchase Agreement ($11.50 Strike). (6) Cash proceeds used in the calculation of incremental shares under the Treasury Stock Methodology. Note: To align incentives, the management team has been allocated another 2,750,000 million shares (majority in options with $12.00 strike price with time based vesting + remainder in restricted stock with performance based vesting). Such share issuances are not included in the fully diluted shares outstanding in this presentation. 16

17 Summary of Warrants (for period ended September 30, 2015) Private Placement Public Warrants Dow Warrants (1) Description Sold by Boulevard to Sponsor in a private sale simultaneously with the Public Offering Originally sold as part of units in the Public Offering Required to issue to Dow by April 30, 2016 pursuant to the Warrant Purchase Agreement Classification at 9/30/2015 Liability (reclassified out of Equity) (1) Equity Liability Number of Warrants 6,160,000 11,025,000 Not yet issued: 6 million (2) Strike Price $11.50 $11.50 $11.50 Call Price N.A. (3) $24.00 $24.00 Deliverable Exercisable to stock or cashless Exercisable to stock or cashless Exercisable to stock or cashless Term Five years from close of business combination Five years from close of business combination Five years from close of business combination Value at September 30, 2015 Approx. $13 million Amount embedded in APIC Approx. $13 million (1) In December 2015, the Warrant Purchase Agreement was modified, which resulted in the Private Placement Warrants being equity classified rather than liability classified. These warrants will be marked to market on the effective date of the modification, but will thereafter not be revalued as long as they remain equity classified. (2) See page 27. (3) Private placement warrants are not callable so long as they are held by the Sponsor or its permitted transferees. 17

18 Public Warrants Public Warrants" refer to the 11,025,000 warrants issued in Boulevard's initial public offering (a half warrant for each share initially in a unit offering ); strike price $11.50 per warrant and exercisable for five years from Business Combination; callable at $ Where to find this item in the Company s Financial Statements? Income Statement No impact on net income (loss) because the public warrants are equity classified Balance Sheet Included in Stockholders Equity Cash Flow Statement Repurchases of 394,767 warrants in September 2015 for $0.9 million at an average price of $2.31 Repurchases of 807,161 warrants in October 2015 for $1.6 million at an average price of $1.97 Repurchases presented in cash flows from financing activities How is this item treated to get to Adjusted EBITDA? Not applicable What is the tax impact of this item? No tax impact Citation: See proxy statement filed July 16, 2015, page

19 Private Placement Warrants "Private Placement Warrants" refer to the 6,160,000 private placement warrants issued to the Sponsor, at a price of $1.00 per warrant, in a private placement that occurred simultaneously with the completion of Boulevard's initial public offering. The Private Placement Warrants have Identical terms to the Public Warrants except that the Private Placement Warrants may be exercised on a cashless basis (regardless of whether a registration statement is effective with respect to the underlying shares) and are not callable so long as they are held by the Sponsor or its permitted transferees. In December 2015, the Warrant Purchase Agreement was modified which resulted in the Private Placement Warrants becoming equity classified. Where to find this item in the Company s Financial Statements? Income Statement During the period the private placement warrants were liability classified, the change in value of the warrant liability resulting from the mark-to-market adjustments each quarter was recorded in Other Income (Expense). Following the reclassification of the warrants to equity in the fourth quarter of 2015, the warrants are no longer being revalued Balance Sheet Before the business combination, the Private Placement Warrants were equity classified. Upon the execution of the Warrant Purchase agreement on 7/31/12015, the Private Placement Warrants became liability classified as a result of the contingent put feature becoming effective. In December 2015, the Warrant Purchase Agreement was modified and the Private Placement warrants again became equity classified. While equity classified, the warrants will no longer be remeasured each quarter Cash Flow Statement While the warrants were liability-classified, noncash mark-to-market adjustments were included in Net Income (Loss) with an offsetting amount as a change in Accrued Expenses and Other liabilities in the Cash flows from Operating Activities section How is this item treated to get to Adjusted EBITDA? While the warrants were liability-classified, mark-to-market losses or gains were added back or subtracted to compute Adjusted EBITDA What is the tax impact of this item? Mark-to-market gains and losses are not taxable Citation: See proxy statement filed July 16, 2015, page

20 Debt 20

21 Debt Agreement Highlights / Covenants Credit Agreement BMO as Admin Agent Maturities Interest Rate $25 million Revolver $425 million Term Loan Revolver: four years, July 31, 2019 Term Loan: six years, July 31, % amortization / year 50% excess cash flow sweep, starting in 2016 LIBOR plus 4.75% 1.00% LIBOR Floor Maximum Senior Secured Net Leverage Ratio: At 9/30/15, 12/31/ x At 3/31/16, 6/30/ x At 9/30/16, 12/31/ x At 3/31/17, 6/30/ x At 9/30/17, beyond 4.00x Compliance Status As of 9/30/2015, the Company was in compliance with all financial covenants Springing Financial Covenant Senior Secured Net Leverage Ratio - Secured Net Debt divided by Consolidated EBITDA Measured only if any borrowings under Revolver at quarter-end (excluding Letters of Credit) Secured Debt (Credit Agreement debt) less cash up to $20 million Citation: See Form 8-K filed August 6, 2015, Exhibit 10.1 for definitions. 21

22 Overview of Initial Transaction 22

23 Timeline of Significant Events November 19, 2013 Sponsor purchases 6,037,500 Founder Shares for $25,000 February 19, 2014 Boulevard Acquisition Corp. ( Boulevard ) consummates IPO of 21,000,000 Public Shares for $10 per unit, consisting of 1 share of Common Stock and ½ of a Warrant Private sale of 5,950,000 Private Placement Warrants to Sponsor at $1 per warrant March 13, 2014 Pursuant to the exercise of an underwriter overallotment option, Boulevard issues and sells an additional 1,050,000 Public Shares for $10 per unit, consisting of 1 share of Common Stock and ½ of a Warrant Sponsor purchased an additional 210,000 Private Placement Warrants at $1 per warrant Sponsor and other initial stockholders forfeit 525,000 Founder Shares April 30, 2015 Boulevard and Dow enter into Purchase Agreement for Boulevard to purchase the carve-outagrofresh business from Dow July 29, 2015 Shareholders vote to approve the Business Combination comprising Boulevard s acquisition of the AgroFresh carve-out business from Dow July 31, 2015 Closing date of the Business Combination, including $425 million Term Loan and sale of PIPE shares for proceeds of $50 million 23

24 Preliminary Value of Consideration Transferred (as of July 31, 2015) $ in thousands Cash consideration (1) $ 635,000 Stock consideration (2) 210,000 Paid consideration 845,000 Warrant consideration (3) 19,020 Seller contingent consideration (4) 17,172 Tax amortization benefit contingency (5) 145,174 Total purchase price (6) $ 1,026,366 (1) Cash provided by $425 million term loan, $50 million private placement, and Boulevard IPO proceeds. (2) The Company issued 17.5 million shares of common stock valued at $12 per share. (3) Represents fair value of warrants expected to be issued to Dow under a Warrant Purchase Agreement entered into on 7/31/2015 (4) Represents the fair value of $50 million contingent payment. In Q3 of 2015, this was accreted on a straight-line basis toward the $50 million payout amount. (5) Represents the fair value of estimated payments to be made to Dow under a Tax Receivables Agreement. (6) Working Capital Adjustment has not yet been finalized. Once agreed upon, the Working Capital Adjustment will result in an adjustment to the purchase price and an adjustment to goodwill. Note: The liabilities related to the Warrant consideration, the Tax Receivable Agreement, and the Seller contingent consideration represent forms of contingent consideration at the acquisition date. Each liability will continue to be re-valued at each reporting period during the term of the obligation, and any mark-to-market fluctuations will be reflected in the income statement. Also, all transaction-related mark-to-market items will be added back for purposes of calculating Adjusted EBITDA. 24

25 Preliminary Purchase Price Allocation (as of July 31, 2015) $ in thousands Cash and cash equivalents $ 9,459 Accounts receivable and other receivables 30,710 Inventories 129,062 Prepaid expenses and other current assets 359 Total current assets $ 169,590 Includes Inventory Step-up of $111 million Property and equipment $ 4,364 Identifiable intangible assets 836,044 Noncurrent deferred tax asset (1) 401 Other assets 862 Total identifiable assets acquired $ 1,011,261 Accounts payable $ (364) Accrued and other current liabilities (7,746) Pension and deferred compensation (712) Other long-term liabilities (1,823) Current deferred tax liability (1) (401) Non-current deferred tax liability (1) (14,371) Other liabilities (1,033) Net identifiable assets acquired $ 984,811 Developed Technology $790,500 Trade Name 35,500 Service Provider Network 2,000 Customer Relationships 8,000 Software 44 Total Intangibles $836,044 Goodwill 41,555 Total purchase price $ 1,026,366 (1) Deferred taxes arise in acquisition accounting as a result of book-to-tax differences in basis of assets and liabilities. 25

26 Deferred Consideration to Seller 26

27 Dow Warrants On or before April 30, 2016 AgroFresh is obligated to issue 6 million Warrants to TDCC, and Boulevard Sponsor is obligated to surrender for cancellation 3 million Warrants that it holds. Where to find this item in the Company s Financial Statements? Income Statement Changes in the value of the liability associated with the Company s obligation to provide warrants to Dow resulting from the mark-to-market adjustments each quarter are recorded in Other Income (Expense) Balance Sheet This liability is included in Accrued and Other Liabilities. Fair value at 9/30/2015 was $13.1 million. This liability will be settled on or before April 30, 2016 Cash Flow Statement Noncash mark-to-market adjustments are included in Net Income (Loss) with an offsetting amount as a change in Accrued Expenses and Other liabilities in the Cash flows from Operating Activities section How is this item treated to get to Adjusted EBITDA? Mark-to-market losses or gains are added back or subtracted to compute Adjusted EBITDA What is the tax impact of this item? The Dow Warrants are part of the consideration paid to Dow on the purchase of AgroFresh Following the Section 338(h)(10) election, any mark-to-market impacts will be tax effected Citation: See proxy statement filed July 16, 2015, page

28 Seller Contingent Consideration The Company will pay $50 million to Dow in March 2018 if it generates in excess of $200 million in Business EBITDA, as defined, in 2016 and 2017 combined (or over $100 million per year, on average). If the average Business EBITDA is not achieved, no payment is required to be paid to Dow. The fair value of this payment ($17.2 million on the acquisition date) was a component of the consideration in the Business Combination as of 7/31/15. Where to find this item in the Company s Financial Statements? Income Statement Changes in value of the Seller Contingent Consideration liability resulting from mark-to-market adjustments each quarter are recorded in Other Income (Expense) Accretion expense is included in interest expense Actual cash payments are not recorded in the income statement (See Balance Sheet and Cash Flow below) Balance Sheet Seller Contingent Consideration is included in Other Non-current Liabilities in the Balance Sheet Fair value at 9/30/15 based on a Black-Scholes option pricing model was $19.4 million, including accretion since 7/31/15 Actual cash payments, if any, will result in a reduction in the Seller Contingent Consideration liability Cash Flow Statement Accretion expense is included in net income (loss) with an offsetting amount in the changes in Accrued Expenses and Other Liabilities in Cash Flows from Operations Activities Changes in value of the Seller Contingent Consideration liability resulting from mark-to-market adjustments are included in net income (loss) with an offsetting amount in the changes in Accrued Expenses and Other Liabilities in Cash Flows from Operations Activities Actual cash payments related to seller contingent consideration will be included in the Cash Flows from Financing Activities (original fair value at acquisition date) and Cash Flows from Operating Activities (portion equal to the difference between amount paid and original fair value at acquisition date) 28

29 Seller Contingent Consideration (cont.) How is this item treated to get to Adjusted EBITDA? Mark-to-market losses or gains are added back or subtracted to compute Adjusted EBITDA Accretion included in interest expense is added back as part of the interest expense addback Cash payments are not recorded in the income statement and therefore do not need to be added back What is the tax impact of this item? The Seller Contingent Consideration is part of the contingent consideration related to the Business Combination The related accretion expense and change in fair value of liability will be tax effected Citation: See Stock Purchase Agreement filed May 4, 2015, page

30 Tax Receivables Agreement Pursuant to a tax receivables agreement that Dow and AgroFresh entered into at the Closing (the "Tax Receivables Agreement or TRA ), 85% of the amount of any tax savings, in U.S. Federal, state and local income tax or franchise tax that AgroFresh actually realizes as a result of the increase in tax basis of the AgroFresh assets resulting from a section 338(h)(10) election that AgroFresh and Dow agreed to make in connection with the Transaction. Where to find this item in the Company s Financial Statements? Income Statement Accretion expense is included in interest expense Changes in value of the TRA liability resulting from mark-to-market adjustments each quarter are recorded in Other Income (Expense) Cash payments are not recorded in the income statement (See Balance Sheet and Cash Flow below) Balance Sheet Liability based on a present value of future tax benefits for a minimum of 15 years is included in Other Non-current Liabilities Fair value at 9/30/15 was $147.6 million, including accretion since 7/31/15 Cash Flow Statement Accretion expense is included in Net Income (Loss) with an offsetting amount in the change in Accrued Expense and Other Liabilities in the Cash Flows from Operating Activities section Changes in value of the TRA liability resulting from mark- to-market adjustments each quarter are included in Net Income (Loss) with an offsetting amount in the change in Accrued Expenses and Other Liabilities in the Cash Flows from Operating Activities section Actual cash payments related to TRA will be included in the Cash Flows from Financing Activities (original fair value at acquisition date) and Cash Flows from Operating Activities (portion equal to the difference between amount paid and original fair value at acquisition date) Citation: See Stock Purchase Agreement filed May 4, 2015, Exhibit E. 30

31 Tax Receivables Agreement (cont.) Where to find this item in the Company s Financial Statements? (cont.) Other The preliminary value of the tax receivable agreement is $319 million which represents the undiscounted value of the future expected tax saving to be paid to Dow Since each payment to Dow under this TRA is considered additional consideration, it results in a gross up of the tax basis of the assets acquired, resulting in additional tax deductions The consequence is an iterative calculation that results in additional step ups that become deductible, and 85% of those tax benefits are payable to Dow How is this item treated to get to Adjusted EBITDA? Mark-to-market losses or gains are added back or subtracted to compute Adjusted EBITDA Accretion included in interest expense is added back as part of the interest expense addback Cash payments are not recorded in the income statement and therefore do not need to be added back What is the tax impact of this item? The impact of the Section 338(h)(10) election is to reduce federal, state, and local taxes in the U.S. 15% of this reduction will be retained by AGFS and 85% of this reduction will be paid to Dow AgroFresh does not expect any tax rate implication as the liability is accrued Citation: See Stock Purchase Agreement filed May 4, 2015, Exhibit E. 31

32 Working Capital Adjustment As part of the Business Combination, there will be a final working capital settlement between the Company and Dow representing the difference between the actual working capital on the acquisition date and the target working capital (as defined in the Stock Purchase Agreement). Where to find this item in the Company s Financial Statements? Income Statement Not included in the income statement Balance Sheet Working capital adjustment will be a measurement period adjustment to the purchase price resulting in either an increase or (decrease) in cash and either a (decrease) or increase in goodwill There is no impact on retained earnings Cash Flow Statement Cash receipt (payment) will be reflected in cash flow from investing activities as a (decrease) increase in the purchase price How is this item treated to get to Adjusted EBITDA? Not applicable What is the tax impact of this item? The working capital adjustment will be treated as a change in total consideration paid on acquisition of AgroFresh. If there is an increase in the consideration paid, there will be a corresponding increase in goodwill. In addition, however, we expect that there will be a reduction in deferred tax liabilities, which will reduce goodwill. Citation: See Stock Purchase Agreement filed May 4, 2015, page

33 Financial Statements (included in September 30, 2015 Form 10-Q) 33

34 Financial Statement Presentation (for periods ended September 30, 2015 and ) As a result of the Business Combination on July 31, 2015 financial information will be reported as follows: Financial Statement Quarter Annual Balance Sheet 09/30/15 (Successor) 12/31/14 (Predecessor) 12/31/15 (Successor) 12/31/14 Predecessor Income Statement 2 months ended 9/30/15 (Successor) 1 month and 7 months ended 07/31/15 (Predecessor) 3 months and 9 months ended 09/30/14 (Predecessor) 5 months ended 12/31/15 (Successor) 7 months ended 07/31/15 (Predecessor) 12 months ended 12/31/14 (Predecessor) Statement of Cash Flows 2 months ended 9/30/15 (Successor) 7 months ended 07/31/15 (Predecessor) 9 months ended 09/30/14 (Predecessor) 5 months ended 12/31/15 (Successor) 7 months ended 07/31/15 (Predecessor) 12 months ended 12/31/14 Note: The Company will not combine Predecessor and Successor periods for the 3 months and 9 months ended September 30, 2015 and for the year ended for the MD&As in the Form 10-Qs and 10-Ks which include those periods. 34

35 Balance Sheet (included in September 30, 2015 Form 10-Q) $ in thousands Successor September 30, 2015 Predecessor December 31, 2014 ASSETS Cash and cash equivalents $ 28,755 $ - Accounts receivable, net of allowance for doubtful accounts of $- and $1,678, respectively 84,053 64,399 Inventories 89,815 12,193 Other assets 4,666 - Deferred income tax assets - current - 2,574 Total current assets 207,289 79,166 Property, plant and equipment, net 4,507 4,134 Goodwill 41, ,953 Intangible assets, net 829,229 96,961 Deferred income tax assets noncurrent Other Assets 2, Total Assets $ 1,085, ,506 LIABILITIES AND STOCKHOLDERS EQUITY Accounts payable $ 10,527 $ 5,944 Current portion of long-term debt 4,250 - Income taxes payable - 51,137 Deferred income tax liabilities current Accrued and other current liabilities 37,772 12,057 Total current liabilities 52,950 69,170 Noncurrent liabilities Long-term debt 407,163 - Other noncurrent liabilities 169,978 7,461 Deferred income tax liabilities - noncurrent 9,779 26,524 Total liabilities 639, ,155 Stockholders equity Common stock, par value $0.0001; 400,000,000 shares authorized and 49,940,548 shares issued and outstanding at September 30, Additional paid-in capital 467,520 - Accumulated deficit (20,223) - Accumulated other comprehensive (loss) income (1,428) 2,058 Net parent investment - 232,293 Total equity 445, ,351 Total liabilities and stockholders equity $ 1,085,744 $ 337,506 35

36 Income Statement (included in September 30, 2015 Form 10-Q) $ in thousands except for per share information Successor August 1, 2015 Through September 30, 2015 July 1, 2015 Through July 31, 2015 January 1, 2015 Through July 31, 2015 Predecessor Three Months Ended September 30, 2014 Nine Months Ended September 30, 2014 Net sales $ 59,650 $ 2,157 $ 52,682 $ 66,245 $ 113,739 Cost of sales (excluding amortization, shown separately below) 45, ,630 10,383 19,420 Gross profit 13,931 1,644 42,052 55,862 94,319 Research and development expenses 1,946 1,084 11,599 5,368 15,574 Selling, general, and administrative expenses 12,744 1,912 16,774 8,081 23,436 Amortization of intangibles 6,815 2,410 16,895 7,430 22,303 Operating (loss) income (7,574) (3,762) (3,216) 34,983 33,006 Other (expense) income (1,462) 2 8 (5) (5) Loss on foreign currency exchange (263) Interest expense, net (9,313) (Loss) income before income taxes (18,612) (3,760) (3,208) 34,978 33,001 (Benefit) provision for income taxes (4,591) (1,232) 10,849 10,493 21,246 Net (loss) income $ (14,021) $ (2,528) $ (14,057) $ 24,485 $ 11,755 Loss per share: Basic (0.28) Diluted (0.28) Weighted average shares outstanding Basic 49,457, Diluted 49,457,

37 Cash Flow Statement (included in September 30, 2015 Form 10-Q) $ in thousands Successor August 1, 2015 through September 30, 2015 January 1, 2015 Through July 31, 2015 Predecessor Nine Months Ended September 30, 2014 Cash flows from operating activities Net (loss) income $ (14,021) $ (14,057) $ 11,755 Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 6,891 17, ,798 Stock based compensation Amortization of inventory fair value adjustment 38, Transaction costs (4,637) - Deferred income taxes (4,591) (4,218) (7,304) Gain (loss) on sales of property - (12) - Other (160) - - Changes in operating assets and liabilities: Accounts receivable (53,877) 42,585 (9,488) Inventories 580 (5,756) (2,606) Prepaid expenses and other current assets (4,316) - - Accounts payable 10,216 (798) 390 Accrued expenses and other liabilities 7, Income taxes payable - (36,070) (5,305) Other assets and liabilities - (4,651) (4,880) Net cash provided by (used in) operating activities (17,185) (5,598) 5,360 Cash flows from investing activities Cash paid for property and equipment (219) (676) (1,053) Proceeds from sale of property Acquisition of business, net of cash acquired (625,541) - - Restricted cash 220, Net cash used in investing activities (405,255) (613) (1,053) Cash flows from financing activities Proceeds from long term debt 425, Payment of debt issuance costs (12,889) - - Payment of revolving credit facility fees (1,252) Other financing costs (7,776) Repayment of long term debt (1,063) Proceeds from private placement 50, Borrowings under revolving credit facility 500 Repayments of revolving credit facility (500) Insurance premium financing 1, Repayment of notes payable (380) - - Repurchase of warrants (920) - - Cash transfers to/from parent, net - 6,211 (4,307) Net cash provided by (used in) financing activities 452,014 6,211 (4,307) Effect of exchange rate changes on cash and cash equivalents (903) - - Net (decrease)/increase in cash and cash equivalents 28, Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period $ 28,755 $ - $ - 37