WINNIPEG, MANITOBA, CANADA — Ag Growth International, Inc. (AGI) reported on Nov. 11 adjusted profit for the third quarter ended Sept. 30 of C$14.6 million or C$1.09 per share, compared to C$11.8 million or 77¢ per share for the same period a year earlier.

It was the fifth consecutive record quarter for the company in terms of trade sales and adjusted EBITDA, the company said.

Sales of on-farm portable grain handling equipment increased in the quarter against a very strong 2013 comparative as AGI responded to heightened demand that resulted largely from the expectation of a record corn crop in the U.S. Commercial equipment sales also increased significantly as AGI directed its production capacity in the quarter towards domestic demand that resulted from continued investment in agricultural infrastructure. International sales decreased compared to a record third quarter in 2013 as significant gains in Latin America were more than offset by weakness in AGI's Finland-based Mepu's regional market and the previously disclosed delay in certain Ukrainian projects.

AGI's international backlog greatly exceeds the prior year and management expects a strong fourth quarter with a significant book of business carried into 2015. As a result of a robust international order book combined with a very large, and late, crop in the U.S. management anticipates a very strong fourth quarter and holds a positive view towards the company's entry into 2015.

"We are very pleased to report record adjusted EBITDA for the fifth consecutive quarter," said Gary Anderson, president and chief executive officer. "We are grateful for the exceptional efforts put forth by our employees to ensure that our customers' in-season demands were satisfied. Double digit growth in our portable grain handling space substantiates our assertion that the primary demand driver for our business is crop volume rather than commodity prices. With back to back record corn harvests in the USA and resultant low post harvest dealer inventory, AGI can expect continued strong demand from its core market into 2015."

"International sales held up remarkably well given the crisis in Ukraine. Our team has done an outstanding job solidifying business in the region while concurrently developing rapid growth in other parts of the world. Our international sales in the first ten months of 2014 plus the order backlog at the end of October 2014 totaled an impressive C$123 million, compared to C$92 million at the same time in 2013. Our momentum in Latin America is reflected in these numbers where at the end of October 2014 sales for the year plus outstanding backlog totaled C$23.5 million compared to C$3.4 million in 2013. I am also pleased to say that the execution of our organic growth strategy in Brazil is officially under way. We are very fortunate to have attracted several highly experienced and respected industry players to form the nucleus of our Brazilian team. Our sales office in Sao Paulo opened November 1st and the quotation of commercial grain handling projects is underway. We look forward to our growth in Brazil leading to a much more diverse international profile."

AGI's primary demand driver in North America is the volume of grain grown, followed by the magnitude of on-farm storage, commodity prices and conditions during harvest. The industry environment currently is suggestive of very high levels of demand as U.S. farmers are expected to harvest a record crop and moderating and volatile commodity prices may incentivize producers in Canada and the U.S. to store more grain on the farm, resulting in increased use of handling equipment as well as higher sales of storage and aeration equipment. As well, a late harvest in the U.S. has led to a prolonged in-season sales period.

On balance, strong North American demand for portable and commercial grain handling equipment are anticipated to drive results in the fourth quarter of 2014 and based on current conditions management anticipates fourth quarter Adjusted EBITDA will exceed the record 2013 results. Management expects to enter 2015 with excellent backlogs both domestically and overseas and remains very optimistic regarding the Company's prospects for the upcoming year.

AGI's international growth strategy has been very successful and in recent years offshore sales have increased significantly. In 2013, sales to Russia, Ukraine and Kazakhstan (RUK) were C$57 million (2012 - C$27 million), with a significant majority of these in Ukraine. AGI has accounts receivable in RUK of C$32 million as at Oct. 31, the value of which are 90% insured by Export Development Canada (EDC). AGI said it does not believe recent events in Ukraine have resulted in a significantly higher risk related to the collection of these receivables. AGI has no physical assets located in RUK.

AGI’s business in Ukraine is primarily comprised of turn-key projects that bundle commercial grain handling equipment with large diameter storage bins and are sold to large corporate farms, commercial grain handlers and port facilities. The customers in Ukraine are predominantly well capitalized entities that either qualify for EDC insurance, direct financing or are able to pay cash in advance of shipment, and they generally transact a significant portion of their business in U.S. dollars and accordingly are largely insulated from volatility in local currencies.

AGI remains in regular contact with customers in the region and although some projects are experiencing delays there has not been an indication that their plans have been substantially impacted by the recent events. It has been awarded new business in the region in recent months and it continues to ship product to customers in Ukraine.

In the nine months ended Sept. 30, sales to RUK were C$29 million and as at Sept. 30, the company's order backlog for future shipments to RUK approximate C$41 million, the significant majority of which are in Ukraine. The Ukrainian backlog is heavily weighted towards a large port project that continues to experience delays related to economic volatility in the country. Management is in regular contact with the customer and as a result of recent developments is increasingly optimistic the Company will resume shipping in the near future. AGI has added new business and continues to quote on new projects in Ukraine, primarily with multinational grain handlers, as business development in the agricultural sector continues despite the existing political and economic volatility.

The situation in Ukraine and the region is very fluid. Although at this time customers have not changed their view with respect to AGI projects this may change if the situation alters, AGI said. The business may also be adversely affected in the event of negative developments with respect to currency controls, trade sanctions, a deterioration in or expansion of the current political, social or military situation or if the current situation is protracted. Export Development Canada is currently reviewing new credit applications on a case-by-case basis and future business in the region may be constrained in the absence of export credit agency support.