Ag Growth International Inc. · TSX:AFN
Ag Growth International — Q2 2023 Earnings Presentation
44 slides from Ag Growth International's earnings presentation, August 2023
Slide 1: August 2023
August 2023 Yf
Slide 2: AGI Overview
AGIZ AGI OVERVIEW _ % oe
Slide 3: Global operations with regional hubs
AGI GLOBAL OPERATIONS Global operations with regional hubs NORTH EMEA AMERICA SOUTH APAC AMERICA Committed to global food efficiency 3
Slide 4: AGI Snapshot
AGI - SNAPSHOT OVERVIEW AGI is a provider of the equipment and solutions Sales by segment required to support the efficient storage, transport, FARM COMMERCIAL and processing of food globally. 54% 46% AGI has 31 manufacturing facilities across Canada, the United States, Brazil, India, France, and It
Slide 5: AGI provides food infrastructure to the entire supply chain
AGI PROVIDES FOOD INFRASTRUCTURE TO THE ENTIRE SUPPLY CHAIN AGI equipment and solutions are uniquely positioned within the agriculture sector, serving as the connection between the farm and the plate FARM COMMERCIAL Move, store, condition, and monitor grain Large-scale storage and movement of grain
Slide 6: AGI's commitment to sustainability
AGI’S COMMITMENT TO SUSTAINABILITY ✓ As a supplier of the world’s food infrastructure, our equipment solutions and technologies reduce post-harvest losses and increase food security ✓ Published inaugural Sustainability Roadmap in December 2020 describing our sustainability approach across four focus
Slide 7: AGI's contribution to global food security
AGI’S CONTRIBUTION TO GLOBAL FOOD SECURITY Directly contributing to the United Nations Sustainable Development Goal #2 Newly installed AGI on-farm storage bins protect ~6.5M MT of incremental grain from potential spoilage each year 1 Enough to feed an additional ~30M people per year 2 AGI bins can l
Slide 8: Significant sales growth
SIGNIFICANT SALES GROWTH CAD, millions $1,513 • 2014 to 2020 growth was supported by an aggressive acquisition strategy $1,000 Note: LTM period covers Q4 2021 to Q3 2022 Source: Company reports • Significant expansion since 2020 almost entirely attributable to organic growth $410 • Resilient & diver
Slide 9: Resilient to regional or economic conditions
RESILIENT TO REGIONAL OR ECONOMIC CONDITIONS CAD, millions $264 • Integration & optimization phase started with International regions in 2020 & extended to North America in 2021 $149 • Consistent demand for AGI products through challenging geopolitical & weather $78 events as well as economic cycles
Slide 10: Stable & growing demand profile
STABLE & GROWING DEMAND PROFILE Long-term demand for AGI products is driven by consumption • Global food and feed consumption • Urgency to reduce grain spoilage • Growing population • Improving crop yields • Growing crop volumes & production • Critical infrastructure gap in developing world • Increa
Slide 11: Large & growing total addressable market
LARGE & GROWING TOTAL ADDRESSABLE MARKET • Global exposure to several multi-billion dollar growing industries • Emphasized by growth opportunities in emerging economies o U.S. & Canada grain storage ~60-70% of the annual crop yield o Brazil and other developing regions are ~10-15% • Expanded by prod
Slide 12: Senior Leadership Introduction
SENIOR LEADERSHIP INTRODUCTION 12
Slide 13: Paul Householder
SENIOR LEADERSHIP INTRODUCTION PAUL HOUSEHOLDER President & CEO Experience highlights: Deep operational experience: 28-year career with a global industrial gas leader Wide perspective: spectrum of functional, general management, P&L leadership roles International management: roles in five countries
Slide 14: Jim Rudyk
SENIOR LEADERSHIP INTRODUCTION JIM RUDYK CFO Experience highlights: Multi-sector perspective: senior leadership roles across many industries Deep functional leadership experience: 20 years CFO & COO experience, managing high growth Canadian-based businesses with a strong global presence Lead transfo
Slide 15: Executive Operating Team – Business Leads
EXECUTIVE OPERATING TEAM – BUSINESS LEADS Strong business and functional leadership to manage a global business Paul Brisebois Francisco Prado Cristiano Carpin Scott McKernan Rajan Aggarwal SVP, Canada Farm VP, Brazil SVP, EMEA, India, APAC SVP, USA Farm VP, India Brian Harder Rustom Mistry Mike Han
Slide 16: Executive Operating Team – Functional Leads
EXECUTIVE OPERATING TEAM – FUNCTIONAL LEADS Strong business and functional leadership to manage a global business Henry Palomino Nicolle Parker David Postill Harsha Bhojraj Ryan Kipp VP, Global Supply Chain SVP, Finance SVP, Marketing & CX VP, Manufacturing SVP, Legal Marie McKeegan Shannon Hinrichs
Slide 17: Corporate Strategic Priorities
CORPORATE STRATEGIC PRIORITIES 17
Slide 18: Corporate Strategic Priorities
CORPORATE STRATEGIC PRIORITIES BALANCE PROFITABLE OPERATIONAL SHEET GROWTH EXCELLENCE DISCIPLINE KPI KPI KPI Sales & EBITDA Growth Margin Expansion Total Leverage Ratio 18
Slide 19: Profitable Growth
PROFITABLE GROWTH 1 2 3 Structured processes Product transfers to AGI as a customer to enable growth across expand addressable partner & full solutions attractive markets markets and capabilities provider across all regions 19
Slide 20: Operational Excellence
OPERATIONAL EXCELLENCE 1 2 3 ONE AGI Centralizing key functions Investing in technology Culture to expand margins to support and streamline and support growth a global operation 20
Slide 21: Balance Sheet Discipline
BALANCE SHEET DISCIPLINE Committed to Total net debt / Debt repayment is a deleveraging; target LTM adjusted EBITDA at high priority with total net debt / LTM three-year low and will significant repayment adjusted EBITDA ratio continue trending lower targeted for 2023 of 2.5x Note: Total Net Debt an
Slide 22: Regional Highlights
AGI= _ REGIONAL HIGHLIGHTS Seal
Slide 23: A global business, managed regionally, selling into >100 countries
A GLOBAL BUSINESS, MANAGED REGIONALLY, AND SELLING INTO >100 COUNTRIES WORLDWIDE LEGEND % total 3-year EMEA AGI sales CAGR • 5 facilities 9% 24% • 250 employees Canada • Entered 2015 • 11 facilities • 1,500 employees 8% 6% APAC • Founded 1996 44% 14% • 5 facilities • 1,100 employees U.S. • Entered 2
Slide 24: Regional Overview – United States
REGIONAL OVERVIEW – UNITED STATES Sales Overview CAD, millions $650 $651 Operations $532 $426 $443 Total Manufacturing Facilities: 9, ~1.3M sq.ft. Regional Headquarters: Naperville, Illinois Employees: ~1,200 % Total AGI Sales: 44% 2019 2020 2021 2022 LTM Strategic Priorities LTM • Farm system deale
Slide 25: Regional Overview – Canada
REGIONAL OVERVIEW – CANADA Sales Overview CAD, millions $366 $325 $333 Operations $282 $268 Total Manufacturing Facilities: 11, ~900k sq. ft. Regional Headquarters: Winnipeg, MB & Toronto, ON Employees: ~1,500 % Total AGI Sales: 24% 2019 2020 2021 2022 LTM LTM Strategic Priorities Commercial Sales,
Slide 26: Regional Overview – South America
REGIONAL OVERVIEW – SOUTH AMERICA Sales Overview CAD, millions Operations $203 Total Manufacturing Facilities: 1, ~240k sq. ft. $191 Regional Headquarters: Assis, Brazil $142 Employees: ~1,000 % Total AGI Sales: 13% $59 $69 Strategic Priorities 2019 2020 2021 2022 LTM Brazil • Target farm regions wi
Slide 27: Regional Overview – APAC
REGIONAL OVERVIEW – APAC Sales Overview CAD, millions Operations $167 $158 Total Manufacturing Facilities: 4, ~245k sq. ft. $129 Regional Headquarters: Bangalore, India $101 Employees: ~1,100 $74 % Total AGI Sales: 11% Strategic Priorities 2019 2020 2021 2022 LTM India LTM Farm • Accelerate product
Slide 28: Regional Overview – EMEA
REGIONAL OVERVIEW – EMEA Sales Overview CAD, millions $128 $126 $126 $116 Operations $105 Total Manufacturing Facilities: 5, ~400k sq. ft. Regional Headquarters: Fiesso, Italy Employees: ~250 % Total AGI Sales: 8% 2019 2020 2021 2022 LTM Strategic Priorities • Continue expansion in Africa and Middle
Slide 29: Financial Overview & Outlook
FINANCIAL OVERVIEW & OUTLOOK 29
Slide 30: Financial Overview & Outlook
FINANCIAL OVERVIEW & OUTLOOK SUSTAINABLE BALANCE WORKING MODEST STRONG GROWTH & SHEET CAPITAL CAPITAL GUIDANCE RESILIENT DISCIPLINE MANAGEMENT EXPENDITURE & OUTLOOK MARGINS FOCUS NEEDS 30
Slide 31: Financial Overview & Outlook
FINANCIAL OVERVIEW & OUTLOOK Sales CAD, millions $1,458 $1,513 $1,199 $1,000 $1,000 34.1% 32.1% 32.5% 31.1% 30.4% Adjusted Gross Margin % 2019 2020 2021 2022 LTM 17.4% 16.1% Adjusted EBITDA $264 14.4% 14.9% 14.7% $235 $176 Adjusted EBITDA Margin % $144 $149 2019 2020 2021 2022 LTM 2019 2020 2021 202
Slide 32: Resilient Margins
FINANCIAL OVERVIEW & OUTLOOK RESILIENT MARGINS Strong cost Increased Leveraging strong Pricing discipline; control and ability high-margin spares revenue growth inelastic demand to mitigate cost and aftermarket inflation service sales Multiple avenues to support Adjusted EBITDA margin expansion 32
Slide 33: Balance Sheet Discipline
FINANCIAL OVERVIEW & OUTLOOK BALANCE SHEET DISCIPLINE • Committed to deleveraging Total Net Debt / LTM Adjusted EBITDA Ratio • Total net debt / LTM 7.0x Adjusted EBITDA at three- 6.0x year low and expected to 5.0x trend lower 4.0x • Debt repayment is a high 3.0x 3.3x priority with significant 2.0x r
Slide 34: Working Capital Management Focus
FINANCIAL OVERVIEW & OUTLOOK WORKING CAPITAL MANAGEMENT FOCUS • Clear downtrend over recent years Working capital intensity 30% • Temporary ramp-up in inventory in H1/22 25% reflecting strategic 20% investment to combat supply chain congestion 15% 14% and ensure high rates of 10% on-time delivery 5%
Slide 35: Modest Capital Expenditure Needs
FINANCIAL OVERVIEW & OUTLOOK MODEST CAPITAL EXPENDITURE NEEDS 1 2 3 Maintenance capital Growth capital Intangibles • 1.0% - 1.5% of sales • Very limited M&A; focus on organic • Investment in proprietary technologies & products • Essential upkeep for • Plant debottlenecking, automation, production eq
Slide 36: Strong Guidance & Outlook
FINANCIAL OVERVIEW & OUTLOOK STRONG GUIDANCE & OUTLOOK Guidance Capital Allocation Priorities Tier 1 • Debt repayment • Full-year 2023 adjusted EBITDA expected to be Highest • Maintenance capex at least $290 million priority • Highly compelling organic growth • Full-year 2023 adjusted EBITDA margins
Slide 37: AGI
AGI=
Slide 38: Forward-Looking Information (1/2)
FORWARD-LOOKING INFORMATION (1/2) This presentation contains forward-looking statements and information (collectively, "forward-looking information") within the meaning of applicable securities laws that reflect our expectations regarding the future growth, results of operations, performance, busine
Slide 39: Forward-Looking Information (2/2)
FORWARD-LOOKING INFORMATION (2/2) Forward-looking information involves significant risks and uncertainties. A number of factors could cause actual results to differ materially from results discussed in the forward-looking information, including: the effects of global outbreaks of pandemics or contag
Slide 40: Presentation of Financial Information
PRESENTATION OF FINANCIAL INFORMATION PRESENTATION OF FINANCIAL INFORMATION All financial information of AGI included in this presentation is reported in Canadian dollars and (except for forward-looking financial information) has been derived from audited and unaudited historical financial statement
Slide 41: Presentation of Financial Information
PRESENTATION OF FINANCIAL INFORMATION Adjusted EBITDA (adjusted earnings before interest, taxes, depreciation, and amortization) is a non-IFRS financial measure and its most directly comparable financial measure that is disclosed in our consolidated financial statements is profit (loss) before incom
Slide 42: Presentation of Financial Information
PRESENTATION OF FINANCIAL INFORMATION Adjusted Gross Margin is a non-IFRS financial measure and its most directly comparable financial measure that is disclosed in our consolidated financial statements is gross profit. Adjusted Gross Margin is defined as gross profit less loss in foreign exchange, e
Slide 43: Presentation of Financial Information
PRESENTATION OF FINANCIAL INFORMATION Net Working Capital is a non-IFRS financial measure and its most directly comparable financial measure that is disclosed in our consolidated financial statements is Total Current Assets. Net Working Capital is defined as Total Current Assets less cash and cash e
Slide 44: Presentation of Financial Information
PRESENTATION OF FINANCIAL INFORMATION Order book is a supplementary financial measure and is defined as the total value of committed sales orders that have not yet been fulfilled that: (a) have a high certainty of being performed as a result of the existence of a purchase order, an executed contract
Ag Growth International — Q2 2023 Earnings Presentation on 6ix