AGI Announces Record Fourth Quarter & Annual Results Featuring Continued Margin Strength, Introduces Outlook For 2024 Adjusted EBITDA, And Declares First Quarter 2024 Dividends

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 and year-ended December 31, 2023.

Fourth Quarter 2023 Highlights

• Revenue¹ of $379 million increased by 1% on a year-over-year (‘YOY’) basis
• Adjusted EBITDA² of $73 million increased by 43% on a YOY basis
• Adjusted EBITDA margin %³ increased by roughly 570 basis points to 19.3% from 13.6% on a YOY basis
• Net debt leverage ratio³ of 2.8x at Dec 31, 2023 vs 3.7x at Dec 31, 2022 or 3.2x at Sept 30, 2023

Full Year 2023 Highlights

• Revenue¹ of $1,527 million increased by 5% on a YOY basis
• Revenue generated by our International businesses now contribute over $500 million or 34% of total revenue
• Adjusted EBITDA² of $294 million increased by 25% on a YOY basis
• Adjusted EBITDA margin % ³ increased by roughly 320 basis points to 19.3% from 16.1% on a YOY basis

Outlook

• Adjusted EBITDA guidance for 2024 of at least $310 million²
• Order book⁴ up 25% YOY to $747 million as of December 31, 2023, a record level for the Company
  • Significant strength in the International regions of our Commercial segment
• Given the project-based nature of our strengthening Commercial segment order book and the timing of these orders, we anticipate a gradual ramp-up of our 2024 results, gathering momentum as the year progresses

“With Adjusted EBITDA margins at their highest levels since the strategic initiative to enter Commercial and international businesses began about a decade ago, we are highly encouraged by the pace of progress taking hold across the organization,” commented Paul Householder, President & CEO of AGI. “By demonstrating another quarter of strong margin performance, we are confident AGI has fully adopted a new operating rhythm that will sustain and stabilize margin levels going forward. Looking ahead, we see a clear path to accelerating growth in 2024 with our order book at record levels and continued demand for equipment to protect and move valuable crops worldwide. Our outlook calls for 2024 Adjusted EBITDA of at least $310 million, representing another record year and continued success.”

“The focus on balance sheet deleveraging continues to track towards our stated objectives,” added Jim Rudyk, CFO of AGI. “Our net debt leverage ratio again moved downward, now at 2.8x as of year-end which decreased from 3.7x year-over-year and 3.2x quarter-over-quarter. This is the first time in many years that AGI has stabilized this ratio below the 3.0x level. We are on track to achieve our objective of getting this ratio at or below the 2.5x level in 2024. With a proven ability to responsibly manage our cash flow and leverage position, we are eager to closely consider some of the growth investments we have been reviewing throughout 2023.”

___________________________________________
1		See “BASIS OF PRESENTATION”.
2		Historical or forward-looking non-IFRS financial measure. See "Non-IFRS and Other Financial Measures".
		- Fourth quarter 2023 profit before income taxes of $10.5 million vs fourth quarter 2022 loss before income taxes of $(76.5) million.
		- Year ended December 31, 2023 profit before income taxes of $86.1 million vs year ended December 31, 2022 loss before income taxes of $(45.3) 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 FOURTH QUARTER 2023 RESULTS

Revenue by Operating Segment	Three-months ended December 31
	2023	2022	Change	Change
[thousands of dollars except percentages]	$	$	$	%
Revenue [1] [2]
Farm	188,855	180,985	7,870	4%
Commercial	190,462	193,049	(2,587)	(1%)
Total	379,317	374,034	5,283	1%

Adjusted EBITDA by Operating Segment	Three-months ended December 31
	2023	2022	Change	Change
[thousands of dollars except percentages]	$	$	$	%
Adjusted EBITDA [2] [3]
Farm	46,694	32,482	14,212	44%
Commercial	35,870	30,658	5,212	17%
Other [4]	(9,488)	(12,143)	2,655	N/A
Total	73,076	50,997	22,079	43%

Adjusted EBITDA Margin % by Operating Segment	Three-months ended December 31
	2023	2022	Change	Change
	%	%	basis points	%
Adjusted EBITDA Margin % [2] [3]
Farm	24.7%	17.9%	678 bps	38%
Commercial	18.8%	15.9%	295 bps	19%
Other [4]	(2.5%)	(3.2%)	75 bps	N/A
Consolidated	19.3%	13.6%	563 bps	41%

Revenue by Geography [1] [2]	Three-months ended December 31
[thousands of dollars except percentages]	2023	2022	Change	Change
	$	$	$	%
Canada	76,678	87,725	(11,047)	(13%)
U.S.	155,190	141,676	13,514	10%
International	147,449	144,633	2,816	2%
Total Revenue	379,317	374,034	5,283	1%

[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 December 31, 2023:

	As at December 31, 2023
[thousands of dollars except percentages]	2023	2022	Change	Change
	$	$	$	%
Order book	747,330	596,956	150,374	25%

[1]

Supplementary financial measure. See "Non-IFRS and Other Financial Measures".

Farm Segment

Farm segment revenue and Adjusted EBITDA grew by 4% and 44% YOY, respectively, in Q4. Revenue growth was primarily driven by strong demand in the U.S. market. Adjusted EBITDA margin % increased 678 bps to 24.7% YOY in Q4 benefiting from manufacturing efficiency initiatives, a revenue mix weighted towards higher margin portable grain handling equipment, and the impact of the Digital reorganization efforts completed throughout 2023. Looking ahead, the overall Farm order book continues to trend higher YOY. This was driven mostly by Canada where we are seeing sustained levels of high demand for portable equipment and an encouraging uptick in orders for permanent handling and storage solutions.

Commercial Segment

Commercial segment revenue and Adjusted EBITDA decreased 1% and increased 17% YOY, respectively, in Q4. Strong revenue growth in the Asia Pacific Region (APAC) was underpinned by continued success of our operations in India. This was offset by areas with challenging year-over-year comparable results, particularly Canada. Similar to the Farm segment, the Company’s operational excellence initiatives including effective management of manufacturing expenses contributed to the Adjusted EBITDA margin % increase of 295 bps to 18.8% YOY in Q4. Looking ahead, the overall Commercial segment order book increased notably YOY, anchored by a significant conversion of quoting activity to secured orders within our International regions, specifically the Europe, Middle East, and Africa region (EMEA). Given the project-based nature of our Commercial segment orders, we anticipate the timing of an acceleration in Commercial results to be most pronounced in the second half of 2024.

SUMMARY OF FULL YEAR 2023 RESULTS

Revenue by Operating Segment	Year ended December 31
	2023	2022	Change	Change
[thousands of dollars except percentages]	$	$	$	%
Revenue [1] [2]
Farm	831,951	778,088	53,863	7%
Commercial	694,718	679,994	14,724	2%
Total	1,526,669	1,458,082	68,587	5%

Adjusted EBITDA by Operating Segment	Year ended December 31
	2023	2022	Change	Change
[thousands of dollars except percentages]	$	$	$	%
Adjusted EBITDA [2] [3]
Farm	217,155	163,118	54,037	33%
Commercial	121,039	106,760	14,279	13%
Other [4]	(44,300)	(35,195)	(9,105)	N/A
Total	293,894	234,683	59,211	25%

Adjusted EBITDA Margin % by Operating Segment	Year ended December 31
	2023	2022	Change	Change
	%	%	basis points	%
Adjusted EBITDA Margin % [2] [3]
Farm	26.1%	21.0%	514 bps	25%
Commercial	17.4%	15.7%	172 bps	11%
Other [4]	(2.9%)	(2.4%)	(49) bps	N/A
Consolidated	19.3%	16.1%	316 bps	20%

Revenue by Geography [1] [2]	Year ended December 31
[thousands of dollars except percentages]	2023	2022	Change	Change
	$	$	$	%
Canada	352,454	333,353	19,101	6%
U.S.	661,447	649,905	11,542	2%
International	512,768	474,824	37,944	8%
Total Revenue	1,526,669	1,458,082	68,587	5%

[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.

First Quarter 2024 Dividend

AGI also announced the declaration of a cash dividend of $0.15 per common share for the first quarter ending March 31, 2024. The dividend is payable on April 15, 2024 to common shareholders of record at the close of business on March 31, 2024. 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 audited consolidated financial statements for the year ended December 31, 2023 ("consolidated financial statements") and management’s discussion and analysis (the “MD&A”) for the three-months and year ended December 31, 2023 can be obtained electronically on SEDAR+ (www.sedarplus.ca) and on AGI's website (www.aggrowth.com).

Conference Call

AGI management will hold a conference call on Wednesday, March 6, 2024, at 8:00am ET to discuss its results for the three-months and year-ending December 31, 2023. To participate in the conference call, please pre-register by clicking on the AGI Q4 2023 Conference Call Registration Link and following the instructions. Dial-in details will be provided on-screen and by email in the form of a calendar booking. Registration will remain open until the call has concluded. 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 0608 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

On December 29, 2022, the Company announced that it would be reorganizing its Digital business to better reflect changes in its operations and management structure. As a result of this change, the Company has identified its reportable segments as Farm and Commercial, each of which are supported by the corporate office. The previously identified Digital segment is now included within the Farm segment, and the Food platform which was a sub-segment of the Commercial segment is now amalgamated into the Commercial segment. 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. Financial information for the comparative period has been restated to reflect the new presentation. 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, 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, 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 Segment” below for the reconciliation of Adjusted EBITDA to profit (loss) before income taxes for the current periods 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 September 30, 2023, December 31, 2023, and December 31, 2022.

Profit (loss) before income taxes and Adjusted EBITDA

The following table reconciles profit before income taxes to Adjusted EBITDA.

	Three-months ended December 31		Year ended December 31
[thousands of dollars]	2023	2022	2023	2022
	$	$	$	$
Profit (loss) before income taxes	10,529	(76,526)	86,067	(45,313)
Finance costs	18,296	17,197	73,667	61,067
Depreciation and amortization	16,242	19,024	65,316	76,945
Loss (gain) on foreign exchange [1]	(4,690)	(2,211)	(7,571)	8,941
Share-based compensation [2]	2,796	4,910	12,159	15,620
Loss (gain) on financial instruments [3]	1,117	(8,211)	(5,369)	(9,629)
Mergers and acquisition expense (recovery) [4]	—	(25)	50	(144)
Transaction, transitional and other costs [5]	10,975	15,395	27,124	44,301
Enterprise Resource Planning (“ERP”) system transformation costs [6]	14,001	—	14,001	—
Net loss (gain) on disposal of property, plant and equipment [7]	493	(12)	768	340
Net gain on assets held for sale [8]	(339)	—	(314)	—
Equipment rework [9]	3,000	6,100	7,900	6,100
Remediation [9]	600	—	16,208	—
Accounts receivable reserve for RUK	(82)	—	1,651	—
Fair value of inventory from acquisition [10]	—	—	—	609
Impairment charge [11]	138	75,356	2,237	75,846
Adjusted EBITDA [12]	73,076	50,997	293,894	234,683

[1]		See “Note 25[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 24 – 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]		Includes loss (gain) on settlement of lease liabilities. See “Note 11 – Property, plant and equipment” in our consolidated financial statements.
[8]		See “Note 16 – Assets held for sale” in our consolidated financial statements.
[9]		See “Remediation costs and equipment rework”; includes legal fees associated with remediation settlement.
[10]		Non-cash expenses related to the sale of inventory that acquisition accounting required be recorded at a value higher than manufacturing cost.
[11]		Impairment charge related to property, plant, and equipment, right-of-use assets, goodwill, intangible assets and assets held for sale. See “Note 11 – Property, plant and equipment”, “Note 12 – Right-of-use assets”, “Note 13 – Goodwill”, “Note 14 – Intangible assets” and “Note 16 – Assets held for sale” in our consolidated financial statements.
[12]		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.

Contacts

Investor Relations
Andrew Jacklin
1-437-335-1630
investor-relations@aggrowth.com

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