WINNIPEG, Manitoba--(BUSINESS WIRE)--Ag Growth International Inc. (TSX: AFN) (“AGI”, the “Company”, “we” or “our”) today announced its financial results for the three-months ending March 31, 2024.
First Quarter 2024 Highlights
- Revenue1 of $315 million decreased by 9% on a year-over-year (‘YOY’) basis
- Adjusted EBITDA2 of $50 million increased by 4% on a YOY basis
- Adjusted EBITDA margin %3 increased by roughly 200 basis points to 15.9% from 13.9% on a YOY basis
- Net debt leverage ratio3 of 2.9x at March 31, 2024 vs 3.6x at March 31, 2023
Outlook
- We reaffirm our previously stated Adjusted EBITDA guidance for 2024 of at least $310 million2
- Order book4 up 12% YOY to $729 million as of March 31, 2024, with significant strength in the International regions of our Commercial segment
- While our overall outlook for the full year has not changed, we have observed a trend in Commercial project timing which has further shifted expected deliveries into the second half of the year
- As a result, we expect all of the full year 2024 Adjusted EBITDA growth over 2023 to occur in the second half of 2024, with first half 2024 Adjusted EBITDA results generally expected to be down relative to first half 2023
“We are encouraged by our first quarter results which are largely on-track with how we expected the year to begin given our order book mix,” commented Paul Householder, President & CEO of AGI. “The increase in first quarter adjusted EBITDA, driven by favourable margins, reinforces our confidence that AGI’s profitability levels have structurally expanded. With high activity levels across most areas of the Company, we are closely monitoring the North American Farm segment where pockets of cautious purchasing behaviour existed through the first quarter and will impact second quarter Farm segment results. Overall, we remain confident in our full year outlook and reaffirm our 2024 Adjusted EBITDA guidance of at least $310 million given the support of a near-record level order book and strong Commercial activity internationally.”
“Balance sheet metrics remain in focus for the entire team across AGI,” added Jim Rudyk, CFO of AGI. “Our net debt leverage ratio again moved downward year-over-year, from 3.6x to 2.9x, edging upwards from 2.8x3 quarter-over-quarter. The increase was largely due to inventory investment required for the Commercial portion of our order book. This is the first time this ratio has ticked up quarter-over-quarter since early 2022. We remain squarely focused on moving this ratio below the 2.5x3 level in 2024 which is well within our operating plan. In advance of reaching our leverage milestones, we continue the financial analysis and strategic planning for various high priority growth investments under consideration.”
1 See “BASIS OF PRESENTATION”. |
2 Historical or forward-looking non-IFRS financial measure. See "Non-IFRS and Other Financial Measures". |
- First quarter 2024 profit before income taxes of $3.8 million vs first quarter 2023 profit before income taxes of $21.6 million. |
- Year ended December 31, 2023 Adjusted EBITDA was $294 million. |
3 Historical or forward-looking non-IFRS ratio. See "Non-IFRS and Other Financial Measures". |
4 Supplementary financial measure. See "Non-IFRS and Other Financial Measures". |
SUMMARY OF FIRST QUARTER 2024 RESULTS
Revenue by Operating Segment |
Three-months ended March 31 |
|||
|
2024 |
2023 |
Change |
Change |
[thousands of dollars except percentages] |
$ |
$ |
$ |
% |
Revenue [1] [2] |
||||
Farm |
188,986 |
182,382 |
6,604 |
4% |
Commercial |
125,610 |
164,634 |
(39,024) |
(24%) |
Total |
314,596 |
347,016 |
(32,420) |
(9%) |
Adjusted EBITDA by Operating Segment |
Three-months ended March 31 |
|||
|
2024 |
2023 |
Change |
Change |
[thousands of dollars except percentages] |
$ |
$ |
$ |
% |
Adjusted EBITDA [2] [3] |
||||
Farm |
45,008 |
38,452 |
6,556 |
17% |
Commercial |
13,218 |
21,878 |
(8,660) |
(40%) |
Other [4] |
(8,162) |
(12,218) |
4,056 |
N/A |
Total |
50,064 |
48,112 |
1,952 |
4% |
Adjusted EBITDA Margin % by Operating Segment |
Three-months ended March 31 |
|||
|
2024 |
2023 |
Change |
Change |
% |
% |
basis points |
% |
|
Adjusted EBITDA Margin % [2] [3] |
||||
Farm |
23.8% |
21.1% |
273 bps |
13% |
Commercial |
10.5% |
13.3% |
(277) bps |
(21%) |
Other [4] |
(2.6%) |
(3.5%) |
93 bps |
N/A |
Consolidated |
15.9% |
13.9% |
205 bps |
15% |
Revenue by Geography [1] [2] |
Three-months ended March 31 |
|||
[thousands of dollars except percentages] |
2024 |
2023 |
Change |
Change |
$ |
$ |
$ |
% |
|
Canada |
78,964 |
87,143 |
(8,179) |
(9%) |
U.S. |
148,319 |
150,345 |
(2,026) |
(1%) |
International |
87,313 |
109,528 |
(22,215) |
(20%) |
Total Revenue |
314,596 |
347,016 |
(32,420) |
(9%) |
[1] |
Supplementary financial measure. See "Non-IFRS and Other Financial Measures". |
|
[2] |
See “BASIS OF PRESENTATION”. |
|
[3] |
Non-IFRS financial measure or non-IFRS ratio. See "Non-IFRS and Other Financial Measures". |
|
[4] |
Included in Other is the corporate office, which is not a reportable segment, and which provides finance, treasury, legal, human resources and other administrative support to the segments and geographical regions, as applicable. The Adjusted EBITDA Margin % for Other is calculated based on total revenue since it does not generate revenue without the segments. |
Order book
The following table presents YOY changes in the Company’s order book[1] as at March 31, 2024:
|
As at March 31 |
|||
[thousands of dollars except percentages] |
2024 |
2023 |
Change |
Change |
$ |
$ |
$ |
% |
|
Order book |
728,989 |
649,135 |
79,854 |
12% |
[1] Supplementary financial measure. See "Non-IFRS and Other Financial Measures". |
Farm Segment
Farm segment revenue and Adjusted EBITDA grew by 4% and 17% YOY, respectively, in Q1. Revenue growth was primarily driven by international markets as our Brazilian operations completed several key projects for customers. Adjusted EBITDA margin % increased 273 bps to 23.8% YOY in Q1, benefiting from manufacturing efficiency initiatives, effective revenue management, and a revenue mix weighted towards higher margin portable grain handling equipment.
Commercial Segment
Commercial segment revenue and Adjusted EBITDA decreased 24% and 40% YOY, respectively, in Q1. The decrease in revenue was primarily a result of our international markets as well as Canada. Internationally, performance was impacted by timing with 2024 revenue biased to the second half of the year and a strong Q1 2023 comparable period. In Canada, a general slowdown in the pace of customer activity persisted through the quarter. The overall decrease in revenue directly impacted Adjusted EBITDA margin % moving to 10.5% from 13.3% YOY. The current order book for our Commercial segment is up significantly YOY, particularly due to strength in International regions, and sets up a strong second half as current efforts are focused on completing upfront engineering and manufacturing activities.
MD&A and Financial Statements
AGI's unaudited consolidated financial statements ("consolidated financial statements") and management’s discussion and analysis (the “MD&A”) for the quarter ended March 31, 2024 can be obtained electronically on SEDAR+ (www.sedarplus.ca) and on AGI's website (www.aggrowth.com).
Conference Call
AGI will hold a conference call on Tuesday, April 30, 2024, at 8:00am ET to discuss its results for the three-months ending March 31, 2024. To attend the event, please join using the AGI First Quarter Results webcast link. Alternatively, participants can dial-in using 1-800-319-4610 if calling from Canada or the U.S. and 1-604-638-5340 internationally. A replay of the webcast will be made available on AGI’s website. In addition, an audio replay of the call will be available for seven days. To access the audio replay, please dial 1-800-319-6413 if calling from Canada or the U.S. and 1-604-638-9010 internationally. Please quote passcode 0763 for the audio replay.
AGI Company Profile
AGI is a provider of the equipment and solutions required to support the efficient storage, transport, and processing of food globally. AGI has manufacturing facilities in Canada, the United States, Brazil, India, France, and Italy and distributes its product worldwide.
Further information can be found in the disclosure documents filed by AGI with the securities regulatory authorities, available at www.sedarplus.ca and on AGI's website www.aggrowth.com.
BASIS OF PRESENTATION
The Company has identified its reportable segments as Farm and Commercial, each of which are supported by the corporate office. These segments are strategic business units that offer specific products and services to their respective markets. Certain corporate overheads are allocated to each segment based on revenue as well as applicable cost drivers. Taxes and certain other expenses are managed at a consolidated level and are not allocated to the reportable operating segments.
During the year ended December 31, 2023, AGI replaced the term "sales" with "revenue"; however there has been no change to the underlying calculation. Revenue is the sale of goods primarily recognized at a point in time when the Company satisfies a performance obligation and control of the goods is transferred from AGI to its customer. Revenue from contracts with customers is recognized at an amount that reflects the consideration to which the Company is entitled to in exchange for those goods. Additionally, we have simplified the disclosure on revenue to Canada, U.S., and International; removing further regional breakdown. Financial information for the comparative period has been restated to reflect the new presentation.
NON-IFRS AND OTHER FINANCIAL MEASURES
This press release makes reference to certain specified financial measures, including non-IFRS financial measures, non-IFRS ratios and supplementary financial measures. Management uses these financial measures for purposes of comparison to prior periods and development of future projections and earnings growth prospects. This information is also used by management to measure the profitability of ongoing operations and in analyzing our business performance and trends. These specified financial measures are not recognized measures under International Financial Reporting Standards ("IFRS"), do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement our financial information reported under IFRS by providing further understanding of our results of operations from management's perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS.
We use the following (i) non-IFRS financial measures: “adjusted earnings before interest, taxes, depreciation, and amortization (“Adjusted EBITDA”)” and "net debt"; (ii) non-IFRS ratios: “Adjusted EBITDA margin %” and “net debt leverage ratio”; and (iii) supplementary financial measures: “order book”, “revenue by operating segment” and “revenue by geography”; to provide supplemental measures of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS financial measures. Management also uses non-IFRS financial measures, non-IFRS ratios and supplementary financial measures in order to prepare annual operating budgets and to determine components of management compensation. We strongly encourage investors to review our consolidated financial statements and publicly filed reports in their entirety and not to rely on any single financial measure or ratio.
We use these specified financial measures in addition to, and in conjunction with, results presented in accordance with IFRS. These specified financial measures reflect an additional way of viewing aspects of our operations that, when viewed with our IFRS results and, in the case of non-IFRS financial measures, the accompanying reconciliations to the most directly comparable IFRS financial measures, may provide a more complete understanding of factors and trends affecting our business.
In this press release, we discuss the specified financial measures, including the reasons that we believe that these measures provide useful information regarding our financial condition, results of operations, cash flows and financial position, as applicable, and, to the extent material, the additional purposes, if any, for which these measures are used. Reconciliations of non-IFRS financial measures to the most directly comparable IFRS financial measures are contained in this press release.
The following is a list of non-IFRS financial measures, non-IFRS ratios and supplementary financial measures that are referenced throughout this press release:
“Adjusted EBITDA” is defined as profit (loss) before income taxes before finance costs, depreciation and amortization, share of associate's net loss, revaluation gains, gain or loss on foreign exchange, non-cash share -based compensation expenses, gain or loss on financial instruments, M&A recovery or expenses, transaction, transitional and other costs, Enterprise Resource Planning system transformation costs, net gain or loss on the sale of property, plant & equipment, net gain or loss on assets held for sale, net gain or loss on settlement of lease liability, equipment rework, remediation, accounts receivable reserve for the conflict between Russia and Ukraine, non-cash expenses related to the sale of inventory that acquisition accounting required be recorded at a value higher than manufacturing cost and impairment charge. Adjusted EBITDA is a non-IFRS financial measure and its most directly comparable financial measure that is disclosed in our consolidated financial statements is profit (loss) before income taxes. Management believes Adjusted EBITDA is a useful measure to assess the performance and cash flow of the Company as it excludes the effects of interest, taxes, depreciation, amortization and expenses that management believes are not reflective of the Company’s underlying business performance. Management cautions investors that Adjusted EBITDA should not replace 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. See “Profit (loss) before income taxes and Adjusted EBITDA” and “Profit (loss) before income taxes and Adjusted EBITDA by Operating Segment” below for the reconciliation of Adjusted EBITDA to profit (loss) before income taxes for the current period, the year ended December 31, 2023, and the comparative periods. Adjusted EBITDA guidance is a forward-looking non-IFRS financial measure. We do not provide a reconciliation of such forward-looking measure to the most directly comparable financial measure calculated and presented in accordance with IFRS due to unknown variables and the uncertainty related to future results. These unknown variables may include unpredictable transactions of significant value that may be inherently difficult to determine without unreasonable efforts. Guidance for Adjusted EBITDA is calculated in the same manner as described above for historical Adjusted EBITDA, as applicable.
“Adjusted EBITDA margin %” is defined as Adjusted EBITDA divided by revenue. Adjusted EBITDA margin % is a non-IFRS ratio because one of its components, Adjusted EBITDA, is a non-IFRS financial measure. Management believes Adjusted EBITDA margin % is a useful measure to assess the performance and cash flow of the Company.
“Order book” is defined as the total value of committed sales orders that have not yet been fulfilled that: (a) have a high certainty of being performed as a result of the existence of a purchase order, an executed contract or work order specifying job scope, value and timing; or (b) has been awarded to the Company or its divisions, as evidenced by an executed binding letter of intent or agreement, describing the general job scope, value and timing of such work, and where the finalization of a formal contract in respect of such work is reasonably assured. Order book is a supplementary financial measure. AGI previously used the term "backlogs" instead of "order book", however there has been no change to the definition or underlying calculation.
"Revenue by Operating Segment" and "Revenue by Geography": The revenue information presented under "Revenue by Operating Segment" and "Revenue by Geography" are supplementary financial measures used to present the Company's revenue by segment and geography.
“Net Debt Leverage Ratio” is a non-IFRS ratio and is defined as net debt divided by Adjusted EBITDA for the last twelve month ("LTM") period. Net debt leverage ratio is a non-IFRS ratio because its components, net debt and Adjusted EBITDA, are non-IFRS financial measures. Management believes net debt leverage ratio is a useful measure to assess AGI’s leverage position.
“Net Debt” is a non-IFRS financial measure and its most directly comparable financial measure that is disclosed in our consolidated financial statements is long-term debt. Net debt is defined as the sum of long-term debt, convertible unsecured subordinated debentures, senior unsecured subordinated debentures, and lease liabilities less cash and cash equivalents. Management believes that net debt is a useful measure to evaluate AGI's capital structure and to provide a measurement of AGI's total indebtedness. See "Net Debt" below for a reconciliation of long-term debt to net debt as at March 31, 2024, March 31, 2023 and December 31, 2023.
Profit (loss) before income taxes and Adjusted EBITDA
The following table reconciles profit before income taxes to Adjusted EBITDA.
|
Three-months ended March 31 |
Year ended December 31 |
||
|
||||
[thousands of dollars] |
2024 |
2023 |
2023 |
2022 |
$ |
$ |
$ |
$ |
|
Profit (loss) before income taxes |
3,849 |
21,626 |
86,067 |
(45,313) |
Finance costs |
18,951 |
17,681 |
73,667 |
61,067 |
Depreciation and amortization |
17,145 |
16,040 |
65,316 |
76,945 |
Loss (gain) on foreign exchange [1] |
5,418 |
(2,617) |
(7,571) |
8,941 |
Share-based compensation [2] |
4,416 |
4,268 |
12,159 |
15,620 |
Gain on financial instruments [3] |
(7,816) |
(13,204) |
(5,369) |
(9,629) |
Mergers and acquisition expense (recovery) [4] |
— |
50 |
50 |
(144) |
Transaction, transitional and other costs [5] |
4,450 |
3,879 |
27,124 |
44,301 |
Enterprise Resource Planning (“ERP”) system transformation costs [6] |
4,125 |
— |
14,001 |
— |
Net loss on disposal of property, plant and equipment |
125 |
174 |
682 |
339 |
Net loss (gain) on assets held for sale [7] |
(325) |
25 |
(314) |
— |
Net loss (gain) on settlement of lease liability |
(6) |
— |
86 |
1 |
Equipment rework [8] |
— |
— |
7,900 |
6,100 |
Remediation [8] |
— |
— |
16,208 |
— |
Accounts receivable reserve for RUK |
(268) |
— |
1,651 |
— |
Fair value of inventory from acquisition [9] |
— |
— |
— |
609 |
Impairment charge [10] |
— |
190 |
2,237 |
75,846 |
Adjusted EBITDA [11] |
50,064 |
48,112 |
293,894 |
234,683 |
[1] |
See “Note 11[e] – Finance expenses (income)” in our consolidated financial statements. |
|
[2] |
The Company’s share-based compensation expense pertains to our equity incentive award plan (“EIAP”) and directors’ deferred compensation plan (“DDCP”). See “Note 10 – Share-based compensation plans” in our consolidated financial statements. |
|
[3] |
See “Equity swap”. |
|
[4] |
Transaction costs (recoveries) associated with completed and ongoing mergers and acquisitions activities. |
|
[5] |
Includes legal expense, legal provision, transitional costs related to reorganizations and other acquisition related transition costs, as well as the accretion and other movement in amounts due to vendors. |
|
[6] |
Expenses incurred in connection with a global multi-year ERP transformation project. |
|
[7] |
See “Note 6 – Assets held for sale” in our consolidated financial statements. |
|
[8] |
See “Remediation costs and equipment rework” in our consolidated financial statements and consolidated financial statements for the years ended December 31, 2023 ("2023 Statements") and 2022 ("2022 Statements"). |
|
[9] |
Non-cash expenses related to the sale of inventory that acquisition accounting required be recorded at a value higher than manufacturing costs. |
|
[10] |
Impairment charge related to property, plant, and equipment, right-of-use assets, goodwill, intangible assets and assets held for sale. See “Note 6 – Assets held for sale” in our consolidated financial statements, 2023 Statements and 2022 Statements. |
|
[11] |
This is a non-IFRS measure and is used throughout this press release. See “NON-IFRS AND OTHER FINANCIAL MEASURES” for more information on each non-IFRS measure. |
Profit (loss) before income taxes and Adjusted EBITDA by Operating Segment
|
Three-months ended March 31, 2024 |
||||
[thousands of dollars] |
Farm |
Commercial |
Other [11] |
Total |
|
$ |
$ |
$ |
$ |
||
Profit (loss) before income taxes |
38,258 |
5,154 |
(39,563) |
3,849 |
|
Finance costs |
— |
— |
18,951 |
18,951 |
|
Depreciation and amortization [1] |
6,964 |
8,326 |
1,855 |
17,145 |
|
Loss on foreign exchange [2] |
— |
— |
5,418 |
5,418 |
|
Share-based compensation [3] |
— |
— |
4,416 |
4,416 |
|
Gain on financial instruments [4] |
— |
— |
(7,816) |
(7,816) |
|
Transaction, transitional and other costs [6] |
— |
— |
4,450 |
4,450 |
|
Enterprise Resource Planning ("ERP") system transformation costs [7] |
— |
— |
4,125 |
4,125 |
|
Net loss on disposal of property, plant and equipment [1] |
111 |
12 |
2 |
125 |
|
Net gain on assets held for sale [8] |
(325) |
— |
— |
(325) |
|
Net gain on settlement of lease liability |
— |
(6) |
— |
(6) |
|
Accounts receivable recovery for RUK |
— |
(268) |
— |
(268) |
|
Adjusted EBITDA [10] |
45,008 |
13,218 |
(8,162) |
50,064 |
|
|
Three-months ended March 31, 2023 |
||||
[thousands of dollars] |
Farm |
Commercial |
Other [11] |
Total |
|
$ |
$ |
$ |
$ |
||
Profit (loss) before income taxes |
31,646 |
14,447 |
(24,467) |
21,626 |
|
Finance costs |
— |
— |
17,681 |
17,681 |
|
Depreciation and amortization [1] |
6,538 |
7,310 |
2,192 |
16,040 |
|
Gain on foreign exchange [2] |
— |
— |
(2,617) |
(2,617) |
|
Share-based compensation [3] |
— |
— |
4,268 |
4,268 |
|
Gain on financial instruments [4] |
— |
— |
(13,204) |
(13,204) |
|
Mergers and acquisition expense [5] |
— |
— |
50 |
50 |
|
Transaction, transitional and other costs [6] |
— |
— |
3,879 |
3,879 |
|
Net loss on disposal of property, plant and equipment [1] |
78 |
96 |
— |
174 |
|
Net loss on assets held for sale [8] |
— |
25 |
— |
25 |
|
Impairment charge [9] |
190 |
— |
— |
190 |
|
Adjusted EBITDA [10] |
38,452 |
21,878 |
(12,218) |
48,112 |
[1] |
Allocated based on the segment of the underlying asset’s cash generating unit (“CGU”). |
|
[2] |
See “Note 11[e] – Finance expenses (income)” in our consolidated financial statements. |
|
[3] |
The Company’s share-based compensation expense pertains to our EIAP and DDCP. See “Note 10 – Share-based compensation plans” in our consolidated financial statements. |
|
[4] |
See “Equity swap”. |
|
[5] |
Transaction costs (recoveries) associated with completed and ongoing mergers and acquisitions activities. |
|
[6] |
Includes legal expense, legal provision, transitional costs related to reorganizations and other acquisition related transition costs, as well as the accretion and other movement in amounts due to vendors. |
|
[7] |
Expenses incurred in connection with a global multi-year ERP transformation project. |
|
[8] |
See “Note 6 – Assets held for sale” in our consolidated financial statements. |
|
[9] |
Impairment charge related to assets held for sale. See “Note 6 – Assets held for sale” in our consolidated financial statements. |
|
[10] |
This is a non-IFRS measure and is used throughout this press release. See “NON-IFRS AND OTHER FINANCIAL MEASURES” for more information on each non-IFRS measure. |
|
[11] |
Included in Other is the corporate office, which is not a reportable segment, and which provides finance, treasury, legal, human resources and other administrative support to the segments. |
Profit (loss) before income taxes and Adjusted EBITDA for the LTM Periods Ending March 31, 2024 and 2023
|
Last twelve months ended March 31 |
|
[thousands of dollars] |
2024 |
2023 |
$ |
$ |
|
Profit (loss) before income taxes |
68,290 |
(44,277) |
Finance costs |
74,937 |
67,255 |
Depreciation and amortization |
66,421 |
73,588 |
Loss on foreign exchange [1] |
464 |
17,052 |
Share-based compensation [2] |
12,307 |
17,170 |
Loss (gain) on financial instruments [3] |
19 |
(14,153) |
Mergers and acquisition recovery [4] |
— |
(788) |
Transaction, transitional and other costs [5] |
27,695 |
42,583 |
Enterprise Resource Planning ("ERP") system transformation costs [6] |
18,126 |
— |
Net loss on disposal of property, plant and equipment [7] |
663 |
599 |
Net loss (gain) on assets held for sale [7] |
(664) |
25 |
Net gain on settlement of lease liability |
80 |
1 |
Equipment rework [8] |
7,900 |
6,100 |
Remediation [8] |
16,208 |
— |
Accounts receivable reserve for RUK |
1,383 |
— |
Fair value of inventory from acquisition [9] |
— |
304 |
Impairment charge [10] |
2,047 |
76,013 |
Adjusted EBITDA [11] |
295,846 |
241,472 |
[1] |
See “Finance expenses (income)” in our consolidated financial statements and consolidated financial statements for the years ended December 31, 2023 (“2023 Statements”) and 2022 (“2022 Statements”). |
|
[2] |
The Company’s share-based compensation expense pertains to our equity incentive award plan (“EIAP”) and directors’ deferred compensation plan (“DDCP”). |
|
[3] |
See “Equity swap”. |
|
[4] |
Transaction costs (recoveries) associated with completed and ongoing mergers and acquisitions activities. |
|
[5] |
Includes legal expense, legal provision, transitional costs related to reorganizations and other acquisition related transition costs, as well as the accretion and other movement in amounts due to vendors. |
|
[6] |
Expenses incurred in connection with a global multi-year ERP transformation project. |
|
[7] |
See “Property, plant, and equipment” and “Assets held for sale” in our consolidated financial statements, 2023 Statements and 2022 Statements. |
|
[8] |
See “Remediation costs and equipment rework” in our consolidated financial statements, 2023 Statements and 2022 Statements. |
|
[9] |
Non-cash expenses related to the sale of inventory that acquisition accounting required be recorded at a value higher than manufacturing costs. |
|
[10] |
Impairment charge related to property, plant and equipment, right-of-use assets, goodwill, intangible assets and assets held for sale. See our consolidated financial statements, 2023 Statements and 2022 Statements. |
|
[11] |
This is a non-IFRS measure and is used throughout this press release. See “NON-IFRS AND OTHER FINANCIAL MEASURES” for more information on each non-IFRS measure. |
Net Debt
Q1/23 |
Q4/23 |
Q1/24 |
|||
[thousands of dollars] |
31-Mar-23 |
31-Dec-23 |
31-Mar-24 |
||
|
|||||
Long Term Debt |
468,857 |
420,457 |
450,060 |
||
Convertible Unsecured Subordinated Debentures |
185,168 |
190,064 |
191,756 |
||
Senior Unsecured Subordinated Debentures |
253,239 |
254,756 |
255,278 |
||
Leases |
40,872 |
41,671 |
43,361 |
||
Less: Cash & Cash Equivalents |
72,852 |
88,042 |
89,311 |
||
Net Debt |
875,284 |
818,906 |
851,144 |
FORWARD-LOOKING INFORMATION
This press release contains forward-looking statements and information [collectively, "forward-looking information"] within the meaning of applicable securities laws that reflect our expectations regarding the future growth, results of operations, performance, business prospects, and opportunities of the Company. All information and statements contained herein that are not clearly historical in nature constitute forward-looking information, and the words “anticipate”, “estimate”, “believe”, “continue”, “could”, “expects”, “intend”, "trend", “plans”, “will”, “may” or similar expressions suggesting future conditions or events or the negative of these terms are generally intended to identify forward-looking information. Forward-looking information involves known or unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information. In addition, this press release may contain forward-looking information attributed to third party industry sources. Undue reliance should not be placed on forward-looking information, as there can be no assurance that the plans, intentions or expectations upon which it is based will occur. In particular, the forward-looking information in this press release includes information relating to: our Adjusted EBITDA guidance for 2024; the implication that our order book as of March 31, 2024, with significant strength in the International regions of our Commercial segment, will lead to increased revenue; that the trend in Commercial project timing has further shifted expected deliveries into the second half of the year; that we expect all of the full year 2024 Adjusted EBITDA growth over 2023 to occur in the second half of 2024, with first half 2024 Adjusted EBITDA results generally expected to be down relative to first half 2023; our confidence that AGI’s profitability levels have structurally expanded; that pockets of cautious purchasing behaviour existed through the first quarter in the North American Farm segment that is likely to impact second quarter Farm segment results; that we remain confident in our full year outlook; that balance sheet metrics remain in focus for AGI; that we are focused on moving our net debt leverage ratio below the 2.5x level in 2024 which is well within our operating plan; that we continue the financial analysis and strategic planning for various high priority growth investments under consideration; that 2024 commercial segment revenue in our international markets is biased to the second half of the year; that the current order book for our Commercial segment, particularly due to strength in international regions, sets up a strong second half of the year.
Such forward-looking information reflects our current beliefs and is based on information currently available to us, including certain key expectations and assumptions concerning: anticipated crop yields and production in our market areas; the financial and operating attributes of acquired businesses and the anticipated future performance thereof; the value of acquired businesses and assets and the liabilities assumed (and indemnities provided) by AGI in connection therewith; anticipated financial performance; future debt levels; business prospects and strategies, including the success of our operational excellence initiatives; product and input pricing; the scope, nature, timing and cost of re-supplying certain equipment and re-completing certain work that has previously been supplied or completed pursuant to warranty obligations or otherwise; regulatory developments; tax laws; the sufficiency of budgeted capital expenditures in carrying out planned activities; currency exchange rates, inflation rates and interest rates; the cost of materials, labour and services and the impact of inflation rates and/or supply chain disruptions and/or labour activity thereon; the impact of competition; the general stability of the economic and regulatory environments in which the Company operates; the timely receipt of any required regulatory and third party approvals; the ability of the Company to obtain and retain qualified staff and services in a timely and cost efficient manner; the amount and timing of the dividends that we expect to pay; the ability of the Company to obtain financing on acceptable terms; the regulatory framework in the jurisdictions in which the Company operates; the ability of the Company to successfully market its products and services; and that a pandemic or other public health emergency will not have a material impact on our business, operations, and financial results going forward. Forward-looking information involves significant risks and uncertainties. A number of factors could cause actual results to differ materially from results discussed in the forward-looking information. These risks and uncertainties include but are not limited to the following: general economic and business conditions and changes in international, national and local macroeconomic and business conditions, as well as sociopolitical conditions in certain local or regional markets, including as a result of conflicts in the Middle East and the conflict between Russia and Ukraine and the responses thereto from other countries and institutions (including trade sanctions and financial controls), which has created volatility in the global economy and could continue to adversely impact economic and trade activity; the effects of global outbreaks of pandemics or contagious diseases or the fear of such outbreaks, such as the recent coronavirus (COVID-19) pandemic, including on our operations, our personnel, our supply chain, the demand for our products and services, our ability to expand and produce in new geographic markets or the timing of such expansion efforts, and on overall economic conditions and customer confidence and spending levels; the ability of management to execute the Company’s business plan; fluctuations in agricultural and other commodity prices, interest rates, inflation rates and currency exchange rates; crop planting, crop conditions and crop yields; weather patterns, the timing of harvest and conditions during harvest; volatility of production costs, including the risk of production cost increases that may arise as a result of ongoing high inflation rates and/or supply chain disruptions and/or labour actions, and the risk that we may not be able to pass along all or any portion of increased costs to customers; governmental regulation of the agriculture and manufacturing industries, including environmental and climate change regulation; actions taken by governmental authorities, including increases in taxes, changes in government regulations and incentive programs, and actions taken in connection with local or global outbreaks of pandemics or contagious diseases or the fear of such outbreaks, such as the recent COVID-19 pandemic; risks inherent in marketing operations; credit risk; the availability of credit for customers; seasonality and industry cyclicality; potential delays or changes in plans with respect to capital expenditures; the cost and availability of sufficient financial resources to fund the Company’s capital expenditures; failure of the Company to realize the benefits of its operational excellence initiatives; incorrect assessments of the value of acquisitions, failure of the Company to realize the anticipated benefits of acquisitions, including to realize anticipated synergies and margin improvements, and the assumption of liabilities associated with acquisitions and/or the provision of indemnities to vendors in respect of any such assumed liabilities or otherwise; volatility in the stock markets including the market price of our securities and in market valuations; competition for, among other things, customers, supplies, acquisitions, capital and skilled personnel; the availability of capital on acceptable terms; dependence on suppliers; changes in labour costs and the labour market, including the risk of labour cost increases that may arise as a result of ongoing high inflation rates and/or a scarcity of labour and/or labour activities; the impact of climate change and related laws and regulations; changes in trade relations between the countries in which the Company does business, including between Canada and the United States; cyber security risks; adjustments to and delays or cancellation of one or more orders comprising our order book; the requirement to re-supply equipment or re-complete work previously supplied or completed at AGI’s cost, and the risk that AGI’s assumptions and estimates made in respect of such costs and underlying the provision for warranty accrual and remediation in our consolidated financial statements related thereto and insurance coverage therefor will prove to be incorrect as further information becomes available to AGI; and the risk of litigation or unsuccessful defense of litigation in respect of equipment or work previously supplied or completed or in respect of other matters and the risk that AGI incurs material liabilities in connection with such litigation that are not covered by insurance in whole or in part. These risks and uncertainties are described under “Risks and Uncertainties” in the MD&A and in our most recently filed Annual Information Form, all of which are available under the Company's profile on SEDAR+ [www.sedarplus.ca]. These factors should be considered carefully, and readers should not place undue reliance on the Company’s forward-looking information. We cannot assure readers that actual results will be consistent with this forward-looking information. Further, AGI cannot guarantee that the anticipated revenue from its order book will be realized or, if realized, will result in profits or Adjusted EBITDA. Delays, cancellations and scope adjustments occur from time-to-time with respect to contracts reflected in AGI’s order book, which can adversely affect the revenue and profit that AGI actually receives from its order book. Readers are further cautioned that the preparation of financial statements in accordance with IFRS requires management to make certain judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses and the disclosure of contingent liabilities. These estimates and related assumptions may change, having either a negative or positive effect on profit, as further information becomes available and as the economic environment changes. Without limitation of the foregoing, the provisions for remediation and equipment rework disclosed in our MD&A required significant estimates, judgments and assumptions about the scope, nature, timing and cost of work that will be required. It is based on management’s estimates, judgments, and assumptions at the current date and is subject to revision in the future as further information becomes available to the Company. The forward-looking information contained herein is expressly qualified in its entirety by this cautionary statement. The forward-looking information included in this press release is made as of the date of this press release and AGI undertakes no obligation to publicly update such forward-looking information to reflect new information, subsequent events or otherwise unless so required by applicable securities laws.
FINANCIAL OUTLOOK
Also included in this press release is an estimate of AGI’s 2024 Adjusted EBITDA, which is based on, among other things, the various assumptions disclosed in this press release including under "Forward-Looking Information" and including our assumptions regarding the Adjusted EBITDA contribution that AGI anticipates receiving from revenue growth in 2024 in part as a result of the 12% YOY increase in AGI's order book at March 31, 2024. To the extent such estimate constitutes a financial outlook, it was approved by management on April 29, 2024, and is included to provide readers with an understanding of AGI's anticipated 2024 Adjusted EBITDA based on the assumptions described herein and readers are cautioned that the information may not be appropriate for other purposes.