Photo courtesy of Global Industries.
The company is also seeing the benefits of organic investment and recent acquisitions, said Tim Close, president and chief executive officer.
|Tim Close, president and chief executive officer.|
“Acquisitions in 2016 and 2017 added meaningful contribution to these results, however, we are just starting to see the potential of our investments in Brazil, our Fertilizer and Seed platform, our global Commercial platform and our Food equipment division,” he said. “We have made substantial investments in these initiatives, we are making good progress on each, and we are excited about the near-term growth potential as we pursue our Field to Consumer strategy. We are also continuing to invest in these initiatives in terms of people and capital while exploring new opportunities to expand each platform."
The company reported profit of C$14.75 million for the second quarter, up from C$5.3 million in the same period a year ago. Adjusted profit was C$13.9 million, also up from C$9.8 million a year earlier.
Trade sales and adjusted EBITDA significantly exceeded previous highs due to AGI's strong market position in the robust Canadian Farm and Commercial markets, improving demand for portable grain handling equipment in the U.S. and the contribution of recent acquisitions as AGI continues to diversify its geographic and end market exposure, the company said.
Trade sales were C$222.2 million for the quarter, compared to C$143.5 million in the same quarter a year ago.
For the first six months of the year, the company reported profit of C$19.8 million, up from C$11 million a year ago. Trade sales were C$376.9 million for the six months, up from C$257.2 million in the same period last year.
Looking ahead, AGI said it expects growth in its Canadian commercial business due to significant near-term investment in Canadian grain handling infrastructure. In the U.S., commercial backlogs remain steady and sales levels in the second half of the year are expected to match those of the previous year.
Offshore, AGI's project sales backlog has increased significantly in recent months, particularly in the Black Sea region and South America, AGI said. Management anticipates second half international sales will be well above the prior year due to higher project sales, continued robust demand in Europe, the Middle East and Africa and international sales from recently acquired Yargus Manufacturing, Inc. and Global Industries.
AGI acquired Global Industries on April 4, and has completed the first phase of the integration of the company. AGI said it expects synergies to be higher than initially anticipated, largely due to purchasing synergies and the rationalization of the combined entities' senior management and sales teams. In addition, management believes there is a significant opportunity for future margin expansion through increased adoption of lean manufacturing and improved manufacturing processes. In the first six months of 2017, AGI experienced increased demand for portable grain handling equipment, which is expected to also benefit certain Global product lines. However, U.S. demand for grain storage systems, which represent the majority of Global's sales, is expected to remain at cyclical lows for the balance of 2017.
AGI completed several acquisitions in 2016 and the inclusion of 12 months of results from NuVision Industries Inc. (April 2016), Mitchell Mill Systems (July 2016) and Yargus in fiscal 2017 is expected to increase EBITDA compared to the prior year.
The construction of AGI's manufacturing facility in Brazil is largely complete. AGI is currently manufacturing storage equipment at the new facility and expects to manufacture grain handling, drying and other equipment before the end of 2017.
AGI declared cash dividends of C$0.20 per common share for the months of September, October and November 2017. The dividends are eligible dividends for Canadian income tax purposes. AGI's current annualized cash dividend rate is C$2.40 per share.