WINNIPEG, MANITOBA, CANADA — Ag Growth International Inc. posted strong growth in trade sales and adjusted EBITDA for the third quarter ended Sept. 30 due to strong growth in the Canadian Commercial business and the U.S. Farm market.
Adjusted EBITDA for the quarter was C$40.2 million, up from $36 million in the same period a year earlier. Sales reached C$243.1 million compared with C$205.6 million a year earlier.
Commercial sales increased 34% compared to a year ago due largely to continued momentum in the Canadian Commercial grain and fertilizer platforms.
Offshore, excluding AGI Brazil, the company continued to deliver on a record backlog, however sales excluding acquisitions decreased compared to the previous year due to the timing of customer projects.
In Brazil, AGI’s operations broke even in the third quarter of 2018 due to a steady increase in sales combined with improving manufacturing efficiencies and declining start-up expenses.
AGI’s Commercial backlog in Canada and offshore extends well into 2019 and in total is 82% higher than the prior year.
Higher sales of portable grain handling equipment in the U.S. Farm market resulted from strong crop conditions and pent up demand, however overall Farm sales decreased in the quarter as an abrupt end to the western Canadian summer negatively impacted storage equipment sales.
“Solid third-quarter sales were driven by a healthy mix of organic growth in our U.S. Farm and Canadian Commercial markets and increasing sales at AGI Brazil, along with strong contributions from recent acquisitions,” said Tim Close, president and chief executive officer of AGI. “We continue to invest in our 5-6-7 strategy by building our marketing, technology, sales and engineering groups to provide better service and value to our customers globally across our five platforms. Our continued growth was recently complemented by an equity raise and we will soon complete a renewal and upsizing of our credit facilities, positioning AGI for ongoing growth and success.”
Looking ahead, a large crop in the United States and pent up demand for portable grain handling equipment will support strong demand for AGI Farm products in the fourth quarter of 2018 and into 2019, AGI said.
Despite difficult conditions in the latter months of 2018, Farm dynamics in Canada remain positive and management anticipates strong demand will return upon commencement of the new crop season in the second quarter of 2019.
Based on current conditions, management anticipates that total Farm sales and EBITDA in Q4 2018 will approximate 2017 levels, and expects year-over-year growth in the Farm business in fiscal 2019.
AGI’s Commercial backlog is significantly higher than at the same time in 2017 due to continued investment in Canadian grain and fertilizer infrastructure and robust international demand, AGI said.
In addition, recent acquisitions Junge and Danmare are performing well and are in line with expectations.
Accordingly, management anticipates that Commercial sales in North America in the fourth quarter of 2018 will exceed those of the prior year. International sales momentum is expected to continue in the fourth quarter and into 2019 based on a very strong backlog with particular strength in EMEA and South America.
The recent addition of Sabe in France is also expected to contribute to strong international results.
Overall, management anticipates sales and EBITDA related to Commercial equipment in the fourth quarter of 2018 will be higher than the prior year and growth is anticipated in 2019.