Ag Growth International Inc. · TSX:AFN
Ag Growth International — Investor Day (February 2023)
61 slides from Ag Growth International's investor day presentation, February 2023
Slide 1: Stronger Than Ever: Future of AGI Investor Day
STRONGER THAN EVER FUTURE OF AGI INVESTOR DAY FEBRUARY 2023 1
Slide 2: Agenda
AGENDA • Key Messages • Senior Leadership Introduction • AGI Overview • Corporate Strategic Priorities • Regional Highlights • Financial Overview & Outlook • Closing • Q&A • Disclaimers 2
Slide 3: Key Messages
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Slide 4: Key Messages
KEY MESSAGES Proven and highly experienced senior leadership Strong combination of people, products, and market positions Top corporate strategic priorities: profitable growth, operational excellence, balance sheet discipline Organic growth through product transfers, extending into processing equipm
Slide 5: Senior Leadership Introduction
SENIOR LEADERSHIP INTRODUCTION 5
Slide 6: Paul Householder, President & CEO
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 7: Jim Rudyk, CFO
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 8: 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 SVP, USA Farm VP, India Brian Harder Rustom Mistry Mike Hand Noam Silber
Slide 9: 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 10: AGI Overview
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Slide 11: AGI Global Operations
AGI GLOBAL OPERATIONS Global operations with regional hubs NORTH EMEA AMERICA SOUTH APAC AMERICA Committed to global food efficiency 11
Slide 12: 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. 53% 47% AGI has 31 manufacturing facilities across Canada, the United States, Brazil, India, France, and It
Slide 13: 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 14: 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 15: Significant Sales Growth
SIGNIFICANT SALES GROWTH CAD, millions $1,411 • 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 16: Resilient to Regional or Economic Conditions
RESILIENT TO REGIONAL OR ECONOMIC CONDITIONS CAD, millions $228 • Integration & optimization phase started with International regions in 2020 & $149 extended to North America in 2021 • Consistent demand for AGI products through challenging geopolitical & weather $78 events as well as economic cycles
Slide 17: 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 18: 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 19: The Role of AGI Digital Going Forward
THE ROLE OF AGI DIGITAL GOING FORWARD Reorganization announced in late 2022 Refocused on core products, repositioned for profitability Simplified channel strategy & manufacturing approach Key differentiator for AGI and an enabler of equipment sales Integrated more deeply within our Farm and Commerci
Slide 20: Corporate Strategic Priorities
CORPORATE STRATEGIC PRIORITIES 20
Slide 21: Corporate Strategic Priorities
CORPORATE STRATEGIC PRIORITIES BALANCE PROFITABLE OPERATIONAL SHEET GROWTH EXCELLENCE DISCIPLINE KPI KPI KPI Sales & EBITDA Growth Margin Expansion Total Leverage Ratio 21
Slide 22: 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 22
Slide 23: Structured Processes to Enable Growth
PROFITABLE GROWTH STRUCTURED PROCESSES 1 TO ENABLE GROWTH 1 2 • Maturation from entrepreneurial culture to disciplined operating model and rhythm • Three-year strategic plans developed across all regions • Regional businesses, leadership, P&Ls • Monthly results reviews 4 3 • Action plans with define
Slide 24: Product Transfers to Expand Addressable Markets and Capabilities
PROFITABLE GROWTH PRODUCT TRANSFERS TO EXPAND ADDRESSABLE 2 MARKETS AND CAPABILITIES ACROSS ALL REGIONS • Select examples 1. Enclosed conveyor belt products transferred to Brazil 2. Storage bin and portable grain handling products transferred to India 3. Fertilizer products transferred to Brazil, un
Slide 25: AGI as a Customer Partner & Full Solutions Provider
PROFITABLE GROWTH 3 AGI AS A CUSTOMER PARTNER & FULL SOLUTIONS PROVIDER End-to-end solutions • Key differentiator & a common customer request • Storage, handling, processing Spares, parts, and aftermarket service offering • Established core competency in India across rice milling business • Growth f
Slide 26: Spotlight – Expanding Processing Capabilities Globally
PROFITABLE GROWTH 3 SPOTLIGHT – EXPANDING PROCESSING CAPABILITIES GLOBALLY • Storage and handling equipment are longstanding core AGI products; now moving further into processing • Processing functions are key value driver of customer operations • Success in processing solutions (i.e. rice milling,
Slide 27: 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 27
Slide 28: ONE AGI Culture
OPERATIONAL EXCELLENCE 1 ONE AGI CULTURE • Migrating from a division-centric • Uniting our teams under a • Organization-wide view to a ONE AGI model centralized structure A highly integrated global company delivering exceptional performance through collaboration, inclusion, and cooperation 28
Slide 29: ONE AGI Culture - Safety
OPERATIONAL EXCELLENCE 1 ONE AGI CULTURE - SAFETY Lost Time Injury Rate 1.7 • Primary focusNote: for AGI LTM period covers Q4 2021 to Q3 2022 Source: Company reports • AGI Safety Management System 1.1 • Annual safety week, safety awards 0.7 • Collection & standardizing all safety data • Machine guar
Slide 30: Centralizing Key Functions to Expand Margins and Support Growth
OPERATIONAL EXCELLENCE CENTRALIZING KEY FUNCTIONS TO EXPAND MARGINS 2 AND SUPPORT GROWTH • Bringing together functions to support AGI’s project-based businesses • Deepening integration – elevate and centralize key functions across facilities • Eliminate cost redundancies • Enhance customer experienc
Slide 31: Spotlight – Global Product Management
OPERATIONAL EXCELLENCE 2 SPOTLIGHT – GLOBAL PRODUCT MANAGEMENT • Centralized product management function BCX3 ▪ Strategic product road mapping, development, Engineered to accommodate all rationalization commodities • Avoid redundancies across multiple facilities ▪ Simplified product catalogue ▪ Enha
Slide 32: Spotlight – Chicago Office
OPERATIONAL EXCELLENCE 2 SPOTLIGHT – CHICAGO OFFICE • New corporate office in Chicago • North American center of excellence for centralized • Opened in August 2022 functions ▪ ~200 employee capacity • Enhanced ability to collaborate and coordinate across functions and facilities ▪ ~65 today • Buildi
Slide 33: Investing in Technology to Support and Streamline a Global Operation
OPERATIONAL EXCELLENCE INVESTING IN TECHNOLOGY TO SUPPORT 3 AND STREAMLINE A GLOBAL OPERATION • Ongoing multi-year IT transformation to enable a firm-wide perspective ▪ Organizational-level view of supply chain, finance, customers, capacity, scheduling, logistics, etc ▪ Material cost savings in COGS
Slide 34: 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 35: Regional Highlights
AGI= _ REGIONAL HIGHLIGHTS Seal
Slide 36: 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 -3% 21% • 250 employees Canada • Entered 2015 • 11 facilities • 1,500 employees 10% 6% APAC • Founded 1996 45% 14% • 4 facilities • 1,100 employees U.S. • Entered
Slide 37: Regional Overview – United States
REGIONAL OVERVIEW – UNITED STATES Sales Overview CAD, millions $636 Operations $532 $426 $443 Total Manufacturing Facilities: 10, ~1.3M sq.ft. Regional Headquarters: Naperville, Illinois Employees: ~1,200 % Total AGI Sales: 45% 2019 2020 2021 LTM Strategic Priorities LTM • Farm system dealer convers
Slide 38: Regional Overview – Canada
REGIONAL OVERVIEW – CANADA Sales Overview CAD, millions $325 Operations $282 $292 $268 Total Manufacturing Facilities: 11, ~900k sq. ft. Regional Headquarters: Winnipeg, MB & Toronto, ON Employees: ~1,500 % Total AGI Sales: 21% 2019 2020 2021 LTM LTM Strategic Priorities Commercial Sales, 27% • Driv
Slide 39: Regional Overview – South America
REGIONAL OVERVIEW – SOUTH AMERICA Sales Overview CAD, millions Operations Total Manufacturing Facilities: 1, ~240k sq. ft. $193 Regional Headquarters: Assis, Brazil $142 Employees: ~1,000 % Total AGI Sales: 13% $59 $69 Strategic Priorities 2019 2020 2021 LTM Brazil • Target farm regions with storage
Slide 40: Regional Overview – APAC
REGIONAL OVERVIEW – APAC Sales Overview CAD, millions Operations $150 $129 Total Manufacturing Facilities: 4, ~245k sq. ft. $101 Regional Headquarters: Bangalore, India Employees: ~1,100 $74 % Total AGI Sales: 11% Strategic Priorities 2019 2020 2021 LTM India LTM Farm • Accelerate product transfers:
Slide 41: Regional Overview – EMEA
REGIONAL OVERVIEW – EMEA Sales Overview CAD, millions $139 Operations $128 $116 $105 Total Manufacturing Facilities: 5, ~400k sq. ft. Regional Headquarters: Fiesso, Italy Employees: ~250 % Total AGI Sales: 10% 2019 2020 2021 LTM Strategic Priorities • Continue expansion in Africa and Middle East LTM
Slide 42: Financial Overview & Outlook
FINANCIAL OVERVIEW & OUTLOOK 42
Slide 43: Financial Overview & Outlook
FINANCIAL OVERVIEW & OUTLOOK SUSTAINABLE BALANCE WORKING MODEST STRONG GROWTH & SHEET CAPITAL CAPITAL GUIDANCE RESILIENT DISCIPLINE MANAGEMENT EXPENDITURE & OUTLOOK MARGINS FOCUS NEEDS 43
Slide 44: Financial Overview & Outlook
FINANCIAL OVERVIEW & OUTLOOK Sales CAD, millions $1,411 $1,199 $1,000 $1,000 32.1% 30.4% 31.8% 31.1% Adjusted Gross Margin % 2019 2020 2021 LTM 16.2% 14.4% 14.9% 14.7% Adjusted EBITDA $228 $176 $144 $149 Adjusted EBITDA Margin % 2019 2020 2021 LTM 2019 2020 2021 LTM Notes: All LTM figures and percen
Slide 45: 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 100-200 bps Adjusted EBITDA margin ex
Slide 46: Balance Sheet Discipline
FINANCIAL OVERVIEW & OUTLOOK BALANCE SHEET DISCIPLINE • Committed to deleveraging Total Net Debt / LTM EBITDA Ratio • Total net debt / LTM EBITDA 7.0x at three-year low and 6.0x expected to trend lower 5.0x • Debt repayment is a high 4.0x 4.1x priority with significant 3.0x repayment targeted for 20
Slide 47: 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 16% supply chain congestion 15% and ensure high rates of 10% on-time delivery 5%
Slide 48: 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 49: Strong Guidance & Outlook
STRONG GUIDANCE & OUTLOOK STRONG GUIDANCE & OUTLOOK Guidance Capital Allocation Priorities Tier 1 • Debt repayment • Full-year 2022 adjusted EBITDA expected to be Highest • Maintenance capex at least $228 million priority • Highly compelling organic growth • Highly confident in 2023 adjusted EBITDA
Slide 50: Closing
AGIZ CLOSING
Slide 51: Key Messages
KEY MESSAGES Proven and highly experienced senior leadership Strong combination of people, products, and market positions Top corporate strategic priorities: profitable growth, operational excellence, balance sheet discipline Organic growth through product transfers, extending into processing equipm
Slide 52: Stronger Than Ever
FUTURE OF AGI STRONGER THAN EVER AGI WAS < $1B SALES A FEW YEARS AGO, Strong setup for sustainable organic growth NOW CLOSING ON $2B • The right products • The right people $3B • The right market positions HAS BECOME THE GOAL 52
Slide 53: Q&A
Q&A
Slide 54: 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 55: 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 56: 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 statements of AGI that were prepared in accorda
Slide 57: 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 58: 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 before equipment rework and reme
Slide 59: 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 the sum of cash and cash equivalents, acc
Slide 60: Presentation of Financial Information
PRESENTATION OF FINANCIAL INFORMATION Backlogs 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 o
Slide 61: Presentation of Financial Information
PRESENTATION OF FINANCIAL INFORMATION Total Net Debt is a non-IFRS financial measure and its most directly comparable financial measure that is disclosed in our consolidated financial statements is Long-Term Debt. Total Net Debt is defined as the sum of long-term debt, convertible unsecured subordin
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