WINNIPEG, MANITOBA, CANADA — Operational initiatives continue to pay off for Ag Growth International, Inc. (AGI) with an 11% year-over-year increase in adjusted earnings for the third quarter and an increase in the projected margin guidance for the full year.

AGI reported adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the quarter ended Sept. 30 of C$85 million. The adjusted EBITDA margin increased by 165 basis points to 20.6% from 19% a year ago.

Revenue of C$410 million increased by 2% on a year-over-year basis and 5% from the second quarter.

“Our third-quarter performance again delivered strong margins and continued progress against our stated strategic priorities,” said Paul Householder, president and chief executive officer of AGI. “Our company-wide operational excellence initiatives gained additional traction and have steadily translated into a clear positive trend in our margin performance. As our new business management processes become further ingrained in our teams and culture, we expect this new level of margin performance to be sustained and expanded upon over the long-term.”

The company raised its full year adjusted EBITDA margin guidance to 18.5% from 18%, up from the originally stated 2023 objective of 17%, Householder said.

For the first nine months of the year, adjusted EBITDA was C$221 million, an increase of 20% year-over-year. Revenue was C$1.147 billion, a 6% increase from last year.

“Our sustained focus on balance sheet priorities continued to deliver solid progress in the quarter,” said Jim Rudyk, chief financial officer of AGI. “Our net debt leverage ratio again notched downward, now at 3.2x, which decreased from 4.1x year-over-year and 3.3x quarter-over-quarter. In addition, our working capital metrics continue to make significant improvements across the organization, particularly with regard to inventory levels. As progress on inventory is solidified, we can turn our collective attention to other elements of working capital for a similar program of sustained focus and improvement.”

Revenue for the commercial segment was flat while adjusted EBITDA increased 6% year-over-year to C$34.4 million. Strength in international regions, particularly Brazil, contributed to the increase.

Grain-related project work in North America also helped results.

Looking ahead, the overall Commercial segment order book decreased 4%, largely attributable to the ongoing reset within the Food platform, recent execution of large projects, and softness in the fertilizer market, AGI said.

“However, the broader overall pipeline of grain handling and storage projects remains strong, which, in addition to our diversified and resilient overall business model, provides optimism for our results heading into 2024,” AGI said.

AGI reiterated its full-year guidance for 2023 adjusted EBITDA to be at least C$290 million.