Ag Growth International Inc.
TSX : AFN

Ag Growth International Inc.

November 13, 2013 07:30 ET

Ag Growth Announces Record Third Quarter Results; Declares Dividends

WINNIPEG, MANITOBA--(Marketwired - Nov. 13, 2013) - Ag Growth International Inc. (TSX:AFN) ("AGI" or the "Company") today announced its financial results for the three and nine month periods ended September 30, 2013, and declared dividends for December 2013, January 2014 and February 2014.

Overview of Results

(thousands of dollars) Three Months Ended September 30 Nine Months Ended September 30
2013 2012 Change 2013 2012 Change
Trade sales (1) $ 116,537 $ 83,465 40 % $ 270,332 $ 254,717 6 %
Adjusted EBITDA (1) $ 23,330 $ 12,531 86 % $ 47,282 $ 44,757 6 %
Net Profit $ 12,718 $ 6,501 96 % $ 22,073 $ 20,624 7 %
Diluted profit per share $ 0.95 $ 0.52 83 % $ 1.71 $ 1.64 4 %
  1. See "Non-IFRS Measures".

AGI's record third quarter results reflect its significant market share in North American portable grain handling, the strength of its leading commercial grain handling brands and an increasing presence in international markets. Sales, adjusted EBITDA and net profit per share all increased substantially over the prior period as the Company benefited from favourable crop conditions in North America and continued investment in commercial grain handling infrastructure both domestically and overseas. International sales surged in the third quarter, increasing 76% compared to the prior year. Based on current conditions in North America and strong momentum in its international business, management retains a very positive outlook for the balance of 2013 and fiscal 2014 (see "Outlook").

"We are very pleased with our third quarter results." said Gary Anderson, President and Chief Executive Officer. "The record earnings we reported today not only reflect a return to normal market conditions but also speak to the hard work that has been going on behind the scenes while we managed our way through the effects of the 2012 drought. Operational improvements and the continued implementation of lean manufacturing contributed to strong margin performances across all business lines. Our international sales team continued to build sustainable relationships in growing offshore markets which are expected to benefit the Company for years to come. We retained our focus on customer satisfaction throughout the recent market challenges and accordingly our business remains well positioned to deliver strong results over the long-term."

"We expect to report record results in the fourth quarter of 2013 and it is gratifying that despite the significant headwinds faced in the first half of the year our adjusted EBITDA for fiscal 2013 should approach record levels. We remain very enthusiastic with respect to AGI's prospects in 2014 and expect to capitalize on our substantial North American market share in portable and commercial grain handling equipment and to continue growing our business in offshore markets."

Outlook

AGI's primary demand driver is the volume of grains grown, followed by the magnitude of on-farm storage, commodity prices and conditions during harvest. The industry environment currently is suggestive of very high levels of demand as North American farmers are expected to harvest a record crop, moderating commodity prices may incentivize producers to store more grain on the farm, resulting in increased use of handling equipment, and a late harvest in the U.S. has led to a prolonged in-season sales period.

Sales of portable handling equipment have benefited from these demand drivers and strong on-farm demand is anticipated to continue as the U.S. harvest progresses well into the fourth quarter of 2013. Management anticipates low levels of inventory throughout the Company's distribution network post-harvest will lead to strong dealer participation in preseason programming, increasing demand later in the fourth quarter but more significantly in the first half of 2014. Demand for commercial equipment remains very strong as the U.S. commercial grain handling infrastructure continues to expand and focus on efficiencies in response to a long-term trend towards higher grain production. The Company's commercial backlog entering the fourth quarter was its highest on record and the current backlog and ongoing quoting activity suggests strong commercial demand will continue into 2014.

International sales surged in the third quarter of 2013 and based on outstanding orders the Company expects fourth quarter international sales to significantly exceed the prior year. AGI's increasing presence in new markets across the globe has resulted in record levels of quoting activity and a substantial amount of business committed for 2014. As at September 30, 2013, sales plus order backlog in these recently targeted markets were 65% higher than at the same time in 2012. Accordingly, management expects international sales in 2014 to exceed the record levels anticipated to be achieved in the current year.

On balance, strong North American demand for portable and commercial grain handling equipment and continued strength in offshore markets is anticipated to drive record results in the fourth quarter of 2013. As a result, adjusted EBITDA for fiscal 2013, despite significant headwinds in the first half related to the 2012 U.S. drought, is expected to approach record levels. Management expects to enter 2014 with excellent backlogs both domestically and overseas and remains very optimistic regarding the Company's prospects for the upcoming year.

Consistent with prior years, demand in 2014, particularly in the second half, will be influenced by weather patterns, crop conditions, the timing of harvest and conditions during harvest. Changes in global macro-economic factors, including the availability of credit in new markets, also may influence demand, primarily for commercial grain handling and storage products. Results may also be impacted by changes in steel and other material input costs and the rate of exchange between the Canadian and U.S. dollars.

Dividends

AGI today announced the declaration of cash dividends of $0.20 per common share for the months of December 2013, January 2014 and February 2014. The dividends are eligible dividends for Canadian income tax purposes. AGI's current annualized cash dividend rate is $2.40 per share.

The table below sets forth the scheduled payable and record dates:

Monthly dividend Payable date Record date
December 2013 January 15, 2014 December 31, 2013
January 2014 February 14, 2014 January 31, 2014
February 2014 March 14, 2014 February 28, 2014

MD&A and Financial Statements

AGI's financial statements and management's discussion and analysis for the three and nine month periods ended September 30, 2013 can be obtained at http://media3.marketwire.com/docs/AFN1113Q3829.pdf and will also be available electronically from SEDAR (www.sedar.com) or from AGI's website (www.aggrowth.com).

Conference Call

AGI will hold a conference call on Wednesday, November 13, 2013, at 10:00 a.m. EST to discuss its results for the three and nine month periods ended September 30, 2013. To participate in the conference call, please dial 1-866-223-7781 or for local access dial 416-340-2218. An audio replay of the call will be available for seven days. To access the audio replay, please dial 1-800-408-3053 or for local access dial 905-694-9451. Please quote pass code 2235910.

Company Profile

Ag Growth International Inc. is a leading manufacturer of portable and stationary grain handling, storage and conditioning equipment, including augers, belt conveyors, grain storage bins, grain handling accessories, grain aeration equipment and grain drying systems. AGI has eleven manufacturing facilities in Canada, the United States, the United Kingdom and Finland, and distributes its products globally.

Non-IFRS Measures

References to "EBITDA" are to profit before income taxes, finance costs, depreciation, amortization, and goodwill and intangible impairment. References to "Adjusted EBITDA" are to EBITDA before the Company's gain or loss on foreign exchange, gains or losses on the sale of property, plant & equipment and expenses related to corporate acquisition activity. References to "trade sales" are to sales excluding the gain or loss on foreign exchange. Management believes that, in addition to sales, profit or loss and cash flows from operating, investing, and financing activities, trade sales, EBITDA and Adjusted EBITDA are useful supplemental measures in evaluating the Company's performance. Trade sales, EBITDA and Adjusted EBITDA are not financial measures recognized by International Financial Reporting Standards ("IFRS") and do not have a standardized meaning prescribed by IFRS. Management cautions investors that trade sales, EBITDA and Adjusted EBITDA should not replace sales or profit or loss as indicators of performance, or cash flows from operating, investing, and financing activities as a measure of the Company's liquidity and cash flows. AGI's method of calculating trade sales, EBITDA and Adjusted EBITDA may differ from the methods used by other issuers.

Forward-Looking Statements

This press release contains forward-looking statements that reflect our expectations regarding the future growth, results of operations, performance, business prospects, and opportunities of the Company. Forward-looking statements may contain such words as "anticipate", "believe", "continue", "could", "expects", "intend", "plans", "will" or similar expressions suggesting future conditions or events. In particular, the forward looking statements in this press release include statements relating to our business and strategy, including our outlook for our financial and operating performance including that we expect to report record results in the fourth quarter of 2013, that our adjusted EBITDA for fiscal 2013 should approach record levels, that the industry environment currently is suggestive of very high levels of demand as North American farmers are expected to harvest a record crop, moderating commodity prices may incentivize producers to store more grain on the farm, resulting in increased use of handling equipment, that strong on-farm demand is anticipated to continue as the U.S. harvest progresses well into the fourth quarter of 2013, that management anticipates low levels of inventory throughout the Company's distribution network post-harvest will lead to strong dealer participation in preseason programming, increasing demand later in the fourth quarter but more significantly in the first half of 2014, that the current backlog and ongoing quoting activity suggests strong commercial demand will continue into 2014, that strong North American demand for portable and commercial grain handling equipment and continued strength in offshore markets is anticipated to drive record results in the fourth quarter of 2013, that adjusted EBITDA for fiscal 2013, despite significant headwinds in the first half related to the 2012 U.S. drought, is expected to approach record levels, that Management expects to enter 2014 with excellent backlogs both domestically and overseas and remains very optimistic as regards the Company's prospects for the upcoming year, growth in sales to offshore markets including that the Company expects fourth quarter international sales to significantly exceed the prior year and that management expects international sales in 2014 to exceed the record levels anticipated to be achieved in the current year, the impact of crop conditions in our market areas, the impact of current economic conditions on the demand for our products, future sales and adjusted EBITDA, and the payment of dividends.

Such forward-looking statements reflect our current beliefs and are based on information currently available to us, including certain key expectations and assumptions concerning anticipated grain production in our market areas, financial performance, business prospects, strategies, product pricing, regulatory developments, tax laws, the sufficiency of budgeted capital expenditures in carrying out planned activities, foreign exchange rates and the cost of materials, labour and services. Forward-looking statements involve significant risks and uncertainties. A number of factors could cause actual results to differ materially from results discussed in the forward-looking statements, including changes in international, national and local business conditions, weather patterns, crop yields, crop conditions, the timing of harvest and conditions during harvest, seasonality, industry cyclicality, volatility of production costs, commodity prices, foreign exchange rates, competition and the cost and availability of capital for our customers. These risks and uncertainties are described under "Risks and Uncertainties" in our MD&A and in our most recently filed Annual Information Form. These factors should be considered carefully, and readers should not place undue reliance on the Company's forward-looking statements. We cannot assure readers that actual results will be consistent with these forward-looking statements and we undertake no obligation to update such statements except as expressly required by law.

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