Ag Growth International Inc. · TSX:AFN
Ag Growth International — Investor Presentation (April 2024)
63 slides from Ag Growth International's investor presentation, April 2024
Slide 1: A Global Food Security Pure Play
April 2024 A Global Food Security Pure Play 1
Slide 2: Investor Presentation Contents
INVESTOR PRESENTATION CONTENTS AGI Overview 2 Investment Highlights 12 Senior Leadership Introduction 30 Corporate Strategic Priorities 36 Regional Highlights 41 Financial Overview & Outlook 46 Disclosures 56 2
Slide 3: AGI Overview
AGIZ AGI OVERVIEW | &
Slide 4: Purpose and Mission
PURPOSE Eliminate Food Loss and Hunger MISSION To advance storage, handling and processing solutions that strengthen and secure the global food supply chain 4
Slide 5: AGI Snapshot
AGI - SNAPSHOT OVERVIEW AGI is a provider of the equipment and solutions required to support Revenue by segment the efficient storage, transport, and processing of food globally. FARM COMMERCIAL AGI has 30 manufacturing facilities across Canada, 56% 44% the United States, Brazil, India, France, and
Slide 6: 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 & the plate FARM COMMERCIAL Move, store, condition, monitor grain after harvest Large-scale storage and movement o
Slide 7: 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 8: Significant Revenue Growth
SIGNIFICANT REVENUE GROWTH CAD, millions $1,494 • 2014 to 2020 growth was supported by an $1,000 aggressive acquisition strategy • Significant expansion since 2020 almost entirely attributable to organic growth $410 • Resilient & diversified business model 2014 2020 LTM Revenue LTM revenue figures a
Slide 9: Resilient to Regional or Economic Conditions
RESILIENT TO REGIONAL OR ECONOMIC CONDITIONS CAD, millions • Integration & optimization phase started with $296 International regions in 2020 & extended to North America in 2021 • Significant increase in operational excellence and margin expansion initiatives began in 2022 $149 • Consistent demand f
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 Significant deficit of grain handling and storage capacity relative to North American markets • Expanded by product transfers acr
Slide 12: Investment Highlights
AGIZ INVESTMENT HIGHLIGHTS
Slide 13: Compelling Investment Opportunity
COMPELLING INVESTMENT OPPORTUNITY 1 2 3 4 RESILIENCE GROWTH MANAGEMENT VALUATION ✓ Resilient and proven ✓ Strategic near-term ✓ Operators with an ✓ Favourable growth, business model revenue growth established track margin, leverage drivers record trends ✓ Outpacing other agriculture ✓ International
Slide 14: Resilience
RESILIENCE 14
Slide 15: Resilient and Proven Business Model
1. RESILIENCE RESILIENT AND PROVEN BUSINESS MODEL CAD, millions 10% revenue CAGR Primarily organic growth $1,458 $1,494 $1,198 $1,000 $1,000 $934 2018 2019 2020 2021 2022 LTM Historic Canadian drought Changing Conflict in U.S. / China trade conflict Pandemic onset & significant steel supply macroeco
Slide 16: Outpacing Other Agriculture Sub-Sectors
1. RESILIENCE OUTPACING OTHER AGRICULTURE SUB-SECTORS Average 5-year Revenue CAGR (2018-2023) 10% 7% 6% 6% 4% AGI Fertilizer Manufacturers Grain Traders Agri-Equipment Manufacturers Food Processors Over the last five years, AGI revenue growth has outperformed other agriculture sub-sectors Notes: Fiv
Slide 17: Broad Long-Term Demand for AGI Products
1. RESILIENCE BROAD LONG-TERM DEMAND FOR AGI PRODUCTS Demand for AGI products is supported by the needs of a growing population • Highly stable and recurring demand for food • Equipment to move, condition, and store grain is essential to the global food supply chain Fundamentally, the global food su
Slide 18: Meaningful Contributions to Global Sustainability Objectives
1. RESILIENCE MEANINGFUL CONTRIBUTIONS TO GLOBAL SUSTAINABILITY OBJECTIVES Newly installed AGI on-farm storage bins protect ~6.5M MT AGI’S CONTRIBUTION TO of incremental grain from potential spoilage each year2 GLOBAL Enough to feed an additional FOOD ~30M people per year SECURITY AGI bins can last
Slide 19: Growth
GROWTH 19
Slide 20: Strategic Near-Term Revenue Growth Drivers
2. GROWTH STRATEGIC NEAR-TERM REVENUE GROWTH DRIVERS Product Transfers • Key enabler of a strategic shift into processing equipment and integrated solutions provider • Several initiatives well progressed across storage, handling, feed, food, and fertilizer capabilities • Catalyst for accelerating re
Slide 21: International Diversification & High Growth Market Exposure
2. GROWTH INTERNATIONAL DIVERSIFICATION & HIGH GROWTH MARKET EXPOSURE CAD, millions 33% 33% 34% 33% • Steady diversification of North America 27% business with international exposure 24% 24% 25% 20% $513 19% $475 $491 • Embeds resilience to regional events $398 • Success executing & delivering large
Slide 22: Disciplined Capex Planning Process to Support Longer-Term Growth
2. GROWTH DISCIPLINED CAPEX PLANNING PROCESS TO SUPPORT LONGER-TERM GROWTH As balance sheet deleveraging progresses, larger scale organic growth projects are under review • Detailed assessment and planning cycles • Focus on high ROIC, high growth projects • Common review structure for comparability
Slide 23: Management
MANAGEMENT 23
Slide 24: Operators with an Established Track Record
3. MANAGEMENT OPERATORS WITH AN ESTABLISHED TRACK RECORD Strategic Priorities KPIs Commentary Revenue growth • Q1 2024 revenue down -9% y/y Profitable Organic Growth Adjusted EBITDA growth • Q1 2024 adj. EBITDA up +4% y/y ~ Operational Excellence Adjusted EBITDA margin • Step-change in margin levels
Slide 25: Business and Operating Model Delivering an Expanding Margin Profile
3. MANAGEMENT BUSINESS AND OPERATING MODEL DELIVERING AN EXPANDING MARGIN PROFILE Adjusted EBITDA margin Over a 300 basis point improvement in Operating Cadence one year, with increasing confidence as the year progressed 19.3% • Three-year strategic plans developed >18.5% across all regions >18.0% >
Slide 26: Valuation
VALUATION 26
Slide 27: Favourable Growth, Margin, and Leverage Trends
4. VALUATION FAVOURABLE GROWTH, MARGIN, AND LEVERAGE TRENDS Revenue Growth Adjusted EBITDA Margin & Leverage 19.3% 19.8% 14% 15.9% 16.1% 14.4% 14.9% 14.7% 10% 5.3x 5.2x 4.7x 3.5x 3.7x 2.8x 2.9x 5 year CAGR 3 year CAGR 2018 2019 2020 2021 2022 2023 LTM Net Debt Leverage Ratio Adjusted EBITDA margin S
Slide 28: Valuation Levels at an Attractive Entry Point
4. VALUATION VALUATION LEVELS AT AN ATTRACTIVE ENTRY POINT Valuation metrics near multi-year lows, despite several tailwinds: 1. Multi-year organic growth trends 2. Record levels of Adjusted EBITDA 3. Climbing Adjusted EBITDA margins 4. Consistent balance sheet deleveraging 5. Strong near and long-t
Slide 29: Compelling Investment Opportunity
COMPELLING INVESTMENT OPPORTUNITY 1 2 3 4 RESILIENCE GROWTH MANAGEMENT VALUATION ✓ Resilient and proven ✓ Strategic near-term ✓ Operators with an ✓ Favourable growth, business model revenue growth established track margin, leverage drivers record trends ✓ Outpacing other agriculture ✓ International
Slide 30: Senior Leadership Introduction
SENIOR LEADERSHIP INTRODUCTION 30
Slide 31: 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 32: 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 33: Kate Glasser
SENIOR LEADERSHIP INTRODUCTION KATE GLASSER EVP, Global Operations EXPERIENCE HIGHLIGHTS: Senior leadership experience: Managing functional operations as well as business units Deep operational experience: Successful within large well-structured multinational firms and entrepreneurial mid-sized orga
Slide 34: 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 35: 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, Supply Chain SVP, Finance SVP, Digital & Marketing VP, Manufacturing SVP, Legal Michael Gagnier Marie McKeegan Sh
Slide 36: Corporate Strategic Priorities
CORPORATE STRATEGIC PRIORITIES 36
Slide 37: Corporate Strategic Priorities
CORPORATE STRATEGIC PRIORITIES PROFITABLE OPERATIONAL BALANCE ORGANIC EXCELLENCE SHEET GROWTH DISCIPLINE KPI KPI KPI Revenue & Adjusted Margin Expansion Net Debt Leverage Ratio EBITDA Growth 37
Slide 38: Profitable Organic Growth
PROFITABLE ORGANIC 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 38
Slide 39: Operational Excellence
OPERATIONAL EXCELLENCE 1 2 3 ONE AGI Centralizing key Investing in technology Culture functions to support and to expand margins streamline and support growth a global operation 39
Slide 40: Balance Sheet Discipline
BALANCE SHEET DISCIPLINE 1 2 3 Committed to Total net debt / deleveraging; target total LTM adjusted EBITDA at Debt repayment is a net debt / LTM adjusted three-year low and will high priority EBITDA ratio of 2.5x continue trending lower Note: Total Net Debt and Adjusted EBITDA are non-IFRS measures
Slide 41: Regional Highlights
AGIZ REGIONAL HIGHLIGHTS
Slide 42: A Global Business, Managed Regionally, Selling into >100 Countries
A GLOBAL BUSINESS, MANAGED REGIONALLY, SELLING INTO >100 COUNTRIES Highly attractive market positions, including high growth regions with chronic food infrastructure deficits 7% 23% EMEA Canada • 5 facilities APAC • 10 facilities • 250 employees • 5 facilities • 1,400 employees • Entered 2015 • 1,20
Slide 43: Regional Overview – United States
REGIONAL OVERVIEW – UNITED STATES CAD, millions Revenue Overview $650 $661 $659 Operations $532 $426 $443 Total Manufacturing Facilities: 9, ~1.3M sq.ft. Regional Headquarters: Naperville, Illinois Employees: ~1,000 % Total AGI LTM Revenue: 44% 2019 2020 2021 2022 2023 LTM Strategic Priorities LTM C
Slide 44: Regional Overview – Canada
REGIONAL OVERVIEW – CANADA CAD, millions Revenue Overview $333 $352 $344 $325 Operations $282 $268 Total Manufacturing Facilities: 10, ~1M sq.ft. Regional Headquarters: Winnipeg, MB & Toronto, ON Employees: ~1,500 % Total AGI LTM Revenue: 23% 2019 2020 2021 2022 2023 LTM Strategic Priorities • Drive
Slide 45: Regional Overview – International
REGIONAL OVERVIEW – INTERNATIONAL CAD, millions Revenue Overview Operations $513 $491 Total Manufacturing Facilities: 11, ~1M sq.ft. $475 $398 Regional HQ: Brazil, India, Italy, Thailand, Australia Employees: ~2,300 $249 $275 % Total AGI LTM Revenue: 33% Strategic Priorities • Target farm regions wi
Slide 46: Financial Overview & Outlook
FINANCIAL OVERVIEW & OUTLOOK 46
Slide 47: Financial Overview & Outlook
FINANCIAL OVERVIEW & OUTLOOK SUSTAINABLE BALANCE WORKING MODEST STRONG GROWTH & SHEET CAPITAL CAPITAL GUIDANCE RESILIENT DISCIPLINE MANAGEMENT EXPENDITURE & ORDER BOOK MARGINS FOCUS NEEDS 47
Slide 48: Financial Overview & Outlook
FINANCIAL OVERVIEW & OUTLOOK CAD, millions Revenue $1,458 $1,527 $1,494 $1,199 35.2% 35.7% $1,000 $1,000 32.5% 32.1% 30.4% 31.1% Adjusted Gross Margin % 2019 2020 2021 2022 2023 LTM 19.3% 19.8% Adjusted EBITDA 14.9% 16.1% $294 $296 14.4% 14.7% $235 $176 Adjusted EBITDA Margin % $144 $149 2019 2020 2
Slide 49: 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 49
Slide 50: Balance Sheet Discipline
FINANCIAL OVERVIEW & OUTLOOK BALANCE SHEET DISCIPLINE Net Debt Leverage Ratio 7.0x 6.0x • Committed to deleveraging 5.0x • Debt repayment is a high 4.0x priority 3.0x 2.9x • Target ratio of 2.5x expected 2.0x to be achieved in 2024 1.0x – Q1/19 Q2/19 Q3/19 Q4/19 Q1/20 Q2/20 Q3/20 Q4/20 Q1/21 Q2/21 Q
Slide 51: Working Capital Management Focus
FINANCIAL OVERVIEW & OUTLOOK WORKING CAPITAL MANAGEMENT FOCUS Working Capital Intensity • Temporary ramp-up in inventory in H1/24 reflecting 30% heightened Commercial 25% segment order book ahead of H2/24 delivery 20% 18% • Reduction in provisions post 15% large warranty claim 10% resolution 5% • He
Slide 52: Modest Capital Expenditure Needs
FINANCIAL OVERVIEW & OUTLOOK MODEST CAPITAL EXPENDITURE NEEDS 1 2 3 Maintenance Growth capital Intangibles capital • Very limited M&A; organic focus • Investment in proprietary • 1.0% - 1.5% of revenue technologies & products • Plant debottlenecking, automation, • Essential upkeep for efficiency • A
Slide 53: Strong Guidance
FINANCIAL OVERVIEW & OUTLOOK STRONG GUIDANCE Capital Allocation Priorities • Guidance reaffirmed • Full-year 2024 adjusted EBITDA expected to be at least Tier 1 • Debt repayment Highest $310 million • Maintenance capex priority • Trends in Commercial project timing have further • Highly compelling o
Slide 54: Order Book
FINANCIAL OVERVIEW & OUTLOOK ORDER BOOK CAD, millions $729 • Near all-time record order book • +12% year-over-year $649 • Significant strength in International Commercial Q1/23 Q1/24 Order book Note: Order Book is a supplementary non-IFRS measure. See "Non-IFRS and Other Financial Measures". 54
Slide 55: AGI
AGI=
Slide 56: Forward-Looking Information (1/3)
FORWARD-LOOKING INFORMATION (1/3) 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 57: Forward-Looking Information (2/3)
FORWARD-LOOKING INFORMATION (2/3) Such forward-looking information reflects our current beliefs and is based on information currently available to us, including certain key expectations and assumptions concerning: anticipated crop yields and production in our market areas; the financial and operatin
Slide 58: Forward-Looking Information (3/3)
FORWARD-LOOKING INFORMATION (3/3) These and other risks and uncertainties are described under “Risks and Uncertainties” in our most recently filed interim and annual MD&A and in our most recently filed Annual Information Form, all of which are available under the Company's profile on SEDAR+ [www.sed
Slide 59: 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 60: Presentation of Financial Information
PRESENTATION OF FINANCIAL INFORMATION Adjusted EBITDA 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) befor
Slide 61: Presentation of Financial Information
PRESENTATION OF FINANCIAL INFORMATION Adjusted EBITDA Margin % is a non-IFRS ratio and is defined as Adjusted EBITDA divided by revenue. Adjusted EBITDA margin % is a non-IFRS ratio because one of its components, Adjusted EBITDA, is a non- IFRS financial measure. Management believes Adjusted EBITDA
Slide 62: 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 63: 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 — Investor Presentation (April 2024) on 6ix