Firm draws big profits going with the grain

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This article was published 11/08/2017 (3236 days ago), so information in it may no longer be current.

Grain-handling equipment manufacturer Ag Growth International (AGI) has reported record sales and profit for the second quarter and expects more of the same in the second half of the year.

The Winnipeg-based company announced on Thursday that sales for the three-month period ended June 30 jumped by 55 per cent to $222.2 million from $143.5 million in the same period last year.

Earnings before interest, taxes, depreciation and amortization (EBITDA) was up by 54 per cent to $40.1 million from $26 million and profit soared by 179 per cent to $14.8 million — or 88 cents per share — from $5.3 million, or 35 cents per share.

“Strong performance in our farm and commercial business units resulted in record second-quarter results,” said company president and CEO Tim Close. “We are seeing positive year-over-year increases in many parts of AGI as we focus on our customers and realize the benefit of both organic investment and recent acquisitions.”

Close said a number of companies AGI acquired in 2016 and 2017 added meaningful contributions to the quarterly 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 added.

The company said it also expects strong results in the second half of the year.

“In summary, management anticipates record sales and adjusted EBITDA in the second half of 2017 will result from strength in the Canadian farm and commercial markets, a modest recovery in the U.S. farm market, an increase in international sales and contributions from acquisitions,” it said. “However, the timing of domestic and international commercial projects may result in the more significant increase occurring in the fourth quarter.”

During a later conference call with analysts, Close and executive vice-president and chief financial officer Steve Sommerfeld were asked why the company is so upbeat about its sales prospects for the second half when parts of Canada and the United States are experiencing drought conditions, which will hurt crops and take a big bite out of some farmers’ incomes.

The two noted the drought is confined to just a few areas — mainly parts of North and South Dakota, southern Saskatchewan and eastern Alberta.

“There are still a lot of decent crops (in other areas),” Close said.

Sommerfeld said while this year’s U.S. crop won’t be as good as last year’s, “this is far from a poor crop.”

They also noted the current backlog of equipment orders remains well above last year’s levels, both in North America and in the company’s international markets.

AGI — whose local holdings include grain-bin manufacturer Westeel — has manufacturing facilities in Canada, the U.S., Italy, Brazil, South Africa and the United Kingdom. It distributes its products globally.

It specializes in the manufacture of portable and stationary grain and fertilizer handling, storage and conditioning equipment. That includes augers, storage bins, grain-handling accessories, grain-aeration equipment and grain-drying systems.

murray.mcneill@freepress.mb.ca