Winnipeg, MB — Ag Growth International Inc. (AGI), on Tuesday announced its financial results for the three-months and year ended December 31, 2020.
Tim Close, President and CEO of AGI, pointed to resilient results in the fourth quarter and the company's 5-6-7 diversification strategy in meeting challenges created by the COVID-19 pandemic.
“We are pleased with the relatively strong performance of AGI in Q4 and 2020 given the difficult environment and the impact on our markets from COVID-19,” Close said.
“Momentum was robust across AGI as we came into 2021 and has accelerated since the beginning of the year with, as of today’s date (March 16), consolidated backlogs now up approximately 40% over this time last year.
"A variety of factors are contributing to this growth with the majority of the momentum coming from market share growth and solid performance in many of our key regions, including Brazil, India, EMEA, the U.S., and our NA Farm segment.
"A rebound in commercial activity, high planting expectations globally, strong crop prices and steel dynamics are also contributing to the strong environment," Close concluded.
In North America, AGI's Farm segment trade sales grew 9% year-over-year with notably strong demand for portable farm equipment.
North American Commercial markets were the most impacted by COVID-19 as large capital projects saw routine delays due to planning challenges, general market uncertainty and a tendency for customers to be focused on status quo operations.
All together these factors resulted in an overall decrease in sales within the North American Commercial segment of 27% versus 2019.
International regions were strong despite COVID-19 challenges.
EMEA and South America manufacturing facilities continue to show operational performance improvements resulting in enhanced margins despite COVID-19 related production interruptions.
South America continues to have substantial sales growth of 18% versus 2019 coming from growing market share.
Asia Pacific saw strong sales, growing 36% over 2019 or an increase of 6% excluding the March 2019 Milltec acquisition.
EMEA Commercial markets were also impacted due to COVID-19, and project delays resulted in an overall decrease of 10%.
Despite overall flat sales year over year, adjusted EBITDA grew 20% over 2019 in Q4 and increased 3% over 2019 for the full year.
Positive movement in margins internationally along with increased Farm sales more than offset the impact of the Technology platform.
AGI continues to make progress on the remediation of the commercial grain storage bins.
The company has recorded a total estimated cost of $70 million for the two affected customer sites and that estimate has not changed.
Some other relevant facts include:
• Remediation work for one of the customers is moving forward and expected to be completed by the fall.
• One of the customers has decided to resolve the issue themselves with other suppliers, and AGI does not expect this change to impact its potential obligations and consequently its estimated provision remains consistent with prior guidance.
• The company still expects insurance proceeds to partially offset the costs once the remediation work is complete.
Demand in 2021 will be influenced by, among other factors, weather patterns, crop conditions and the timing of harvest and conditions during harvest.
Changes in global macroeconomic factors as well as sociopolitical factors in certain local or regional markets and the availability of credit and export credit agency support in offshore markets also may influence sales, primarily of Commercial grain handling and storage products.
Consistent with prior periods, commercial sales are subject to the timing of customer commitment and delivery considerations.
AGI’s financial results are impacted by the rate of exchange between the Canadian and U.S. dollars and a weaker Canadian dollar relative to its U.S. counterpart positively impacts profit and adjusted EBITDA.
The company continues to mitigate its exposure to higher input costs though continued procurement of steel at lower prices, sales price increases and limiting the length of time commercial quotes remain valid.
AGI’s results in 2021 may be also be impacted by COVID-19 disruptions that are still impending all over the world.
As shown below, the backlog for AGI is up 21% overall in each of our platforms, indicating a very positive outlook to start off 2021.
In addition, with Technology moving to a retail approach, results in this platform should continue to exhibit the strong momentum seen in 2020.
AGI's management continues to be pleased with the resilient performance across AGI during 2020.
AGI’s 5-6-7 strategy providing system solutions across 5 platforms, 6 continents, and across 7 components has led to diversification in terms of products, geographies, and customers which has proven valuable during these uncertain times.
AGI announced the declaration of a cash dividend of $0.15 per common share for the first quarter ending March 31, 2021.
The dividend is payable on April 15, 2021 to common shareholders of record at the close of business on March 31, 2021.
The dividend is an eligible dividend for Canadian income tax purposes.
AGI’s current annualized cash dividend rate is $0.60 per share.
MD&A and Financial Statements, AGI's financial statements, and management’s discussion and analysis (the “MD&A”) for the three months and year ended December 31, 2020 will be available electronically on SEDAR and on AGI's website.
For the full news release, click here.
An audio replay of a March 17 conference call will be available for the next seven days.
To access the audio replay, please dial 1-888-390-0541 or for local access dial 416-764-8677.
Please quote passcode 603219# for the audio replay.