WINNIPEG, MANITOBA, CANADA —Strong demand for AGI’s products across most regions, boosted its earnings in the fourth quarter ended Dec. 31, 2021, and helped it achieve record results for 2021.
“Our strong results in the fourth quarter contributed to a record year for 2021 with broad-based strength in Farm, AGI Digital, EMEA, India, and AGI Food,” said Tim Close, president and chief executive officer of AGI. “We see strong growth opportunities across all of our segments as demand for global food infrastructure remains robust. Backlogs sit at the highest level in our history, providing solid visibility for 2022. The backlog visibility, augmented by strong sales pipelines, lead us to forecast Adjusted EBITDA levels of at least C$200 million for the upcoming year.”
AGI reported adjusted EBITDA of C$44.6 million, an increase of 61% year-over-year for the fourth quarter, and annual adjusted EBITDA of C$176.3 million, an 18% increase from 2020.
Close said AGI joins the world in supporting Ukraine and condemning the actions taken by Russia. He said the company’s personnel in the region are safe and it is looking for additional ways to support them where possible.
“Ukraine and Russia are an important source of commodities for the world, and we have been active in the region over the past 10 years,” Close said. “Today, the region is a small part of our overall business following extensive diversification of our business into new regions, products, and customers."
The region generally contributes about 3% of AGI’s consolidated sales annually. AGI has no production facilities in either country. Given the contributions of Brazil, India, and the rest of the EMEA region, AGI is more diversified from the region than it was in years past. While the region is important to AGI, any negative impacts would not be material to AGI overall.
Currently, AGI is compiling a list of customers, projects, scope of work, and contracts with a view to vetting these through the Canadian, US and EU sanctions. It will continue to update and monitor as these sanctions evolve in the near term.
In the fourth quarter of 2021, Commercial segment sales and adjusted EBITDA increased 60% and 64% year-over-year, respectively. Results were particularly strong in the US, Europe, Middle East and Africa (EMEA), and South America markets.
Adjusted gross margins in the Commercial platform are a focus as securing steel and other components on a timely and cost-effective basis amid the supply chain disruptions has been challenging. Many of AGI’s Commercial platform contracts include provisions to pass along some or all of the key raw material cost increases. Ongoing disruption of raw material, freight, and labor could lead to ongoing pressure on adjusted gross margin performance of the platform.
The Food platform continues to grow in response to strong customer demand with sales increasing 13% year-over-year for the quarter.
Overall, the Commercial segment is seeing strong demand as backlogs are up 46% with the Commercial platform and Food platform contributing 23% and 212% increases, respectively, signaling a strong outlook for the first quarter of 2022.
Farm segment sales grew 28%, and adjusted EBITDA increased 78% year-over-year.
The demand for Farm segment equipment continues to be robust as customers focus on securing critical products based on the increase in crop volumes. The potential for supply chain disruption continues to impact some dealers’ propensity to order equipment earlier than prior years to ensure certainty of supply, AGI said.
Farm backlog is up 48% over the prior year, with considerable strength across all geographies, including the United States and Brazil.
In the Digital segment, previously the Technology segment, sales increased 27% and 43% year-over-year for the three-months and year ended Dec. 31, 2021.
“AGI’s 5-6-7 strategy has led to diversification of our products, geographies, and customers which provided stability and resilience during the trade wars of 2019 and the COVID crisis in 2020 and 2021,” the company said. “This strategy was critical in setting up AGI to generate record results in 2021 despite the challenges of operating a global business amid difficult conditions. With backlogs up 47% at the end of December 2021 and very robust quoting pipelines globally, the company expects the strong pace of growth to continue into 2022.”