Market Overview

AGI Announces Third Quarter 2018 Results; Declares Dividends

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WINNIPEG, Nov. 7, 2018 /CNW/ - Ag Growth International Inc. (TSX:AFN) ("AGI", the "Company", "we" or "our") today announced its financial results for the three and nine months ended September 30, 2018, and declared dividends for December 2018, January 2019 and February 2019.

Overview of Results

(thousands of dollars except per share amounts)

Three Months Ended September 30

Nine Months Ended September 30

2018

$

2017

$

2018

$

2017

$

Trade sales (1)(2)(4)

243,120

205,666

719,868

582,596

Adjusted EBITDA (1)(3)(4)

40,234

36,081

120,181

102,082

Profit

20,744

15,588

38,479

35,464

Diluted profit per share

1.14

0.92

2.25

2.18

Adjusted profit (1)

12,637

12,984

46,382

34,598

Diluted adjusted profit per share (1)(5)

0.74

0.79

2.65

2.14

(1)

See "Non-IFRS Measures".

(2)

See "Operating Results – Trade Sales" in the Q3 MD&A.

(3)

See "Operating Results - EBITDA and Adjusted EBITDA" in the Q3 MD&A.

(4)

The Company adopted IFRS 15 in 2018 and in Q1 2018 recorded sales and adjusted EBITDA of $4.4 million and $1.5 million, respectively, that under IAS 18 had also previously been recognized in 2017. For the purposes of its Q3 MD&A, where applicable, AGI has adjusted 2017 results by corresponding amounts accordingly.

(5)

See "Detailed Operating Results - Diluted profit per share and diluted adjusted profit per share".

 

Trade sales and adjusted EBITDA in the third quarter of 2018 increased significantly compared to the prior year due to strong organic growth in AGI's Canadian Commercial business as well as higher sales in the U.S. Farm market. Commercial sales increased 34% compared to Q3 2017 due largely to continued momentum in the Canadian Commercial grain and fertilizer platforms. Offshore, excluding AGI Brazil, the Company continued to deliver on a record backlog however sales excluding acquisitions decreased compared to the previous year due to the timing of customer projects. In Brazil, AGI's operations broke even in the third quarter of 2018 due to a steady increase in sales combined with improving manufacturing efficiencies and declining start-up expenses. AGI's Commercial backlog in Canada and offshore extends well into 2019 and in total is 82% higher than the prior year. Higher sales of portable grain handling equipment in the U.S. Farm market resulted from strong crop conditions and pent up demand, however overall Farm sales decreased in the quarter as an abrupt end to the western Canadian summer negatively impacted storage equipment sales. AGI achieved strong gross margins in Q3 2018 due to higher sales volumes, the realization in Q3 of sales price increases to offset the higher input costs that negatively impacted H1 2018, improving results in Brazil and a continued operational focus at Global and Yargus. However, higher SG&A expenses, largely the result of an increased investment in sales & marketing and engineering initiatives and one-time consulting fees, resulted in a lower adjusted EBITDA margin compared to 2017. Adjusted profit and adjusted profit per share decreased slightly compared to 2017, while diluted profit and profit per share increased significantly compared to the prior year.

"Solid third quarter sales were driven by a healthy mix of organic growth in our U.S. Farm and Canadian Commercial markets and increasing sales at AGI Brazil, along with strong contributions from recent acquisitions." said Tim Close, President and CEO of AGI. "We continue to invest in our 5-6-7 strategy by building our marketing, technology, sales and engineering groups to provide better service and value to our customers globally across our five platforms.  Our continued growth was recently complemented by an equity raise and we will soon complete a renewal and upsizing of our credit facilities, positioning AGI for ongoing growth and success."

Diluted profit per share and diluted adjusted profit per share

A reconciliation of profit and diluted adjusted profit per share to adjusted profit and adjusted diluted profit per share is below.

(thousands of dollars except per share amounts)

Three Months Ended Sept 30

Nine Months Ended Sept 30

2018

$

2017

$

2018

$

2017

$

Profit

20,744

15,588

38,479

35,464

Diluted profit per share

1.14

0.92

2.25

2.18






Loss (gain) on foreign exchange

(2,413)

(8,453)

9,920

(13,069)

Fair value of inventory from acquisition (2)

-

2,307

1,183

5,038

M&A expenses

582

(117)

1,450

970

Other transaction expenses (3)

1,051

1,737

3,474

6,862

Gain on financial instruments

(7,256)

2,255

(8,501)

(346)

Loss (gain) on sale of PP&E

(71)

(978)

145

(966)

Impairment charge (4)

-

645

232

645

Adjusted profit (1)

12,637

12,984

46,382

34,598

Diluted adjusted profit per share (1)

0.74

0.79

2.65

2.14

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