WINNIPEG, MANITOBA, CANADA — Ag Growth International Inc. (AGI) said it will replace entire hopper bases in a grain bin design, which was involved in a bin failure in September 2020.
AGI said it decided to replace the bases instead of replacing components of the existing structure. The grain bins include a cylinder top and a hopper base.
“While the cause of, and the responsibility for, the incident has not been determined, the company continues to proceed on the basis of providing full remediation to the two affected customer sites,” AGI said.
The grain storage bin that collapsed at an export terminal in North Vancouver, British Columbia, Canada, was part of a new bin line that was developed and manufactured by AGI over the past two years in response to market demand. It is a larger version of AGI’s standard hopper line.
The remediation will require an increased amount of steel and a more extensive level of decommissioning and construction, AGI said. This will result in a $30 million increase in the expected cost of the remediation for the two sites.
The company continues to believe that this amount will be partially offset by insurance coverage and result in a lower net impact.
“One-hundred percent of our focus is on our customers as we deal with these product issues at the two industrial sites,” said Tim Close, president and chief executive officer of AGI. “We are committed to delivering a robust solution to mitigate this unfortunate incident while also minimizing the time to remediation and acknowledging that the cause of the incident is undetermined. In order to stand behind our commitment we are increasing the expected cost of the full remediation by $30 million. AGI is better positioned for continued growth and success than at any time in our history. Our global platform performed well through the extreme tests of 2020 and we sit today with record backlogs across the business. North American Farm, Brazil, EMEA, India and our Technology platform, AGI SureTrack, are all positioned for record performance as we move into 2021. We will address the current challenges directly and drive change across our business to mitigate, put this behind us, and capitalize on the momentum we have going forward.”
AGI also provided an update to its expected fourth-quarter 2020 financial results. It confirmed its prior guidance of annual sales and adjusted EBITDA being in line with 2019.
International markets are robust with record backlogs and active pipelines. Brazil, EMEA, and India are all seeing a substantial increase in backlogs year-over-year.
North American Farm momentum is also strong driven by fundamental demand, rising crop prices, and favorable dealer positions inventory. North American backlogs overall are also up year-over-year with respect to FY 2019, AGI said.
The AGI Food business is gaining significant traction with backlogs also up substantially year-over-year.
AGI SureTrack is positioned to continue to see robust growth in 2021.
There is a positive environment globally with crop prices increasing and active quoting across AGI.
Overall, AGI management said it expects 2021 results to exceed 2020 results in both sales and adjusted EBITDA with strong performance in the first half of the year.