AG GROWTH INTERNATIONAL INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

Dated: March 7, 2023

This Management's Discussion and Analysis ("MD&A") should be read in conjunction with the audited consolidated comparative financial statements and accompanying notes of Ag Growth International Inc. ("AGI", the "Company", "we", "our" or "us") for the year ended December 31, 2022. Results are reported in Canadian dollars unless otherwise stated.

This MD&A is based on the Company's audited consolidated comparative financial statements for the year ended December 31, 2022 ("consolidated financial statements") based on International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"), unless otherwise noted.

This MD&A makes reference to certain specified financial measures, including non-IFRS financial measures, non-IFRS ratios and supplementary financial measures. These specified financial measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement our financial information reported under IFRS by providing further understanding of our results of operations from management's perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS. Please refer to the "NON-IFRS AND OTHER FINANCIAL MEASURES" section of this MD&A for more information on each specified financial measure.

This MD&A contains forward-looking information. Please refer to the cautionary language under the heading "Risks and Uncertainties", "Forward-Looking Information" and "Financial Outlook" in this MD&A and in our most recently filed Annual Information Form, all of which are available under the Company's profile on SEDAR [www.sedar.com].

SUMMARY OF RESULTS

Three-months ended December 31

2022

2021

Change

Change

[thousands of dollars except per

share amounts and percentages]

$

$

$

%

Sales

374,034

327,095

46,939

14%

Adjusted EBITDA [1][2]

50,997

44,651

6,346

14%

Adjusted EBITDA Margin % [3]

13.6%

13.7%

0.0%

(0%)

Loss before income taxes

(76,526)

(21,701)

(54,825)

253%

Loss

(67,811)

(16,350)

(51,461)

315%

Diluted loss per share

(3.59)

(0.87)

(2.72)

313%

Adjusted profit [1][4]

18,581

19,127

(546)

(3%)

Diluted adjusted profit per share [3][4]

0.92

0.89

0.03

3%

Year ended December 31

2022

2021

Change

Change

[thousands of dollars except per

share amounts and percentages]

$

$

$

%

Sales

1,458,082

1,198,523

259,559

22%

Adjusted EBITDA [1][2]

234,683

176,266

58,417

33%

Adjusted EBITDA Margin % [3]

16.1%

14.7%

1.4%

9%

(Loss) profit before income taxes

(45,313)

9,383

(54,696)

N/A

(Loss) profit

(50,583)

10,558

(61,141)

N/A

Diluted (loss) profit per share

(2.68)

0.50

(3.18)

N/A

Adjusted profit [1][4]

75,781

63,242

12,539

20%

Diluted adjusted profit per share [3][4]

3.74

2.90

0.84

29%

  1. This is a non-IFRS measure and is used throughout this MD&A. See "NON-IFRS and OTHER FINANCIAL MEASURES" for more information on each non-IFRS measure.
  2. See "DETAILED OPERATING RESULTS - Profit (loss) before income taxes and Adjusted EBITDA".
  3. This is a non-IFRS ratio and is used throughout this MD&A. See "NON-IFRS and OTHER FINANCIAL MEASURES" for more information on each non-IFRS ratio.
  4. See "DETAILED OPERATING RESULTS - Diluted (loss) profit per share and diluted adjusted profit per share".

Consolidated Operating Segment Results Summary

Three-months ended December 31

2022

2021

Change

Change

[thousands of dollars]

$

$

$

%

Sales [1]

Farm

180,985

145,577

35,408

24%

Commercial

193,049

181,518

11,531

6%

Total

374,034

327,095

46,939

14%

Year ended December 31

2022

2021

Change

Change

[thousands of dollars]

$

$

$

%

Sales [1]

Farm

778,088

647,869

130,219

20%

Commercial

679,994

550,654

129,340

23%

Total

1,458,082

1,198,523

259,559

22%

  1. The sales information in this table are supplementary financial measures and are used throughout this MD&A. See "NON- IFRS and OTHER FINANCIAL MEASURES" for more information on these supplementary financial measures.

Three-months ended December 31

2022

2021

Change

Change

[thousands of dollars]

$

$

$

%

Adjusted EBITDA [1] [2] [3]

Farm

32,482

31,159

1,323

4%

Commercial

30,658

24,336

6,322

26%

Other [4]

(12,143)

(10,844)

(1,299)

12%

Total

50,997

44,651

6,346

14%

2

Year ended December 31

2022

2021

Change

Change

[thousands of dollars]

$

$

$

%

Adjusted EBITDA [1] [2] [3]

Farm

163,118

140,961

22,157

16%

Commercial

106,760

66,771

39,989

60%

Other [4]

(35,195)

(31,466)

(3,729)

12%

Total

234,683

176,266

58,417

33%

  1. See "BASIS OF PRESENTATION"
  2. This is a non-IFRS measure and is used throughout this MD&A. See "NON-IFRS and OTHER FINANCIAL MEASURES" for more information on each non-IFRS measure.
  3. See "DETAILED OPERATING RESULTS - Profit (loss) before income taxes and Adjusted EBITDA" and "DETAILED OPERATING RESULTS - Profit (loss) before income taxes and Adjusted EBITDA by Segment".
  4. Included in Other is the corporate office, which is not a reportable segment, and which provides finance, treasury, legal, human resources and other administrative support to the segments.

Three-months ended December 31

2022

2021

Change

Change

$

$

$

%

Adjusted EBITDA Margin % [1] [2]

Farm

18%

21%

(3%)

(16%)

Commercial

16%

13%

2%

18%

Other [3]

(3%)

(3%)

0%

(2%)

Total

14%

14%

(0%)

(0%)

Year ended December 31

2022

2021

Change

Change

$

$

$

%

Adjusted EBITDA Margin % [1] [2]

Farm

21%

22%

(1%)

(4%)

Commercial

16%

12%

4%

29%

Other [3]

(2%)

(3%)

0%

(8%)

Total

16%

15%

1%

9%

  1. See "BASIS OF PRESENTATION"
  2. This is a non-IFRS ratio and is used throughout this MD&A. See "NON-IFRS and OTHER FINANCIAL MEASURES" for more information on each non-IFRS ratio.
  3. Included in Other is the corporate office, which is not a reportable segment, and which provides finance, treasury, legal, human resources and other administrative support to the segments. The Adjusted EBITDA Margin % for Other is calculated based on total sales since it does not generate sales without the segments.

Our strong fourth quarter results were a record for both sales and Adjusted EBITDA1, both up 14% year-over-year ('YOY'), and capped-off another year of record results that featured annual sales and Adjusted EBITDA growing by 22% and 33%, respectively. With only one relatively small acquisition made early in the year, these results highlight the strong pace of organic growth and the initial impact of a wide array of operational excellence initiatives aimed at creating a more efficient organization.

  • This is a non-IFRS measure and is used throughout this MD&A. See "NON-IFRS and OTHER FINANCIAL MEASURES" for more information on each non-IFRS measure.

3

The Farm segment delivered strong results in the fourth quarter, with sales and adjusted EBITDA growing by 24% and 4% YOY, respectively. In addition, full year sales and adjusted EBITDA growth of 20% and 16%, respectively, continue the trend of strong momentum over an already historic performance in 2021. This growth was fueled by the continued demand for portable grain handling equipment in Canada, the U.S., and Asia Pacific, as well as permanent grain handling and storage solutions in South America. As consumption continues to increase globally, we are seeing sustained demand for our Farm segment products as growers around the world increase production. The fourth quarter Adjusted EBTIDA margin decreased as compared to the fourth quarter of 2021 as that quarter benefited from the price increases we implemented ahead of rising input costs which peaked in 2022.

The Commercial segment delivered a solid fourth quarter with sales and adjusted EBITDA increasing 6% and 26% YOY, respectively. For the full year, sales and adjusted EBITDA grew 23% and 60%, respectively, driven by significant growth in Canada, the U.S., South America, and Asia Pacific markets. The Canadian region was a standout performer, with sales growth of 83%, or 35% net of acquisitions, indicating a strong recovery in this region that was initially hard hit by the pandemic. The improvement in this region has also been accelerated by a more unified structure and approach to our overall North America Commercial business.

Internationally, the growth in the Brazil and India regions continues to be extraordinary. Annual sales growth of 36% and 44%, respectively, and adjusted EBITDA growth of 28% and 68%, respectively, underscores the importance of our regional diversification strategy and the benefits of our investments in developing market positions within these critical agricultural regions.

On a consolidated basis, our annual Adjusted EBITDA increased by $58.4 million, driven by higher sales across all segments, including significant contributions from U.S. Farm, Canada Farm, North America Commercial, Brazil, and India. This was further boosted by an improvement in gross margin resulting from operational efficiencies, a sales mix that favored portable grain handling equipment in the Farm segment, increased volume in the Commercial segment, and the positive impact of lower steel prices compared to the previous year.

Sustained demand for agriculture equipment and infrastructure enabled AGI to cap off another record year in sales and adjusted EBITDA with excellent momentum heading into 2023. Our quoting pipelines are highly active and we continue to see strong interest from customers across all segments and regions as they continue to invest in critical infrastructure equipment and solutions. The consolidated backlog was up 10% YOY at record-levels for year-end and near record levels all-time. Of note, at year-end the backlog was up by 60% from 2020 year-end, further highlighting the step-change in the mix of our business, demand for AGI products, and our ability to expand market share.

As a result, full year 2023 adjusted EBITDA is expected to be at least $260 million2, representing continued growth and momentum over our record 2022 results.

  • See "BASIS OF PRESENTATION", "RISKS AND UNCERTAINTIES", "FORWARD-LOOKING INFORMATION" and "FINANCIAL OUTLOOK".

4

BASIS OF PRESENTATION

On December 29, 2022, the Company announced that it will be reorganizing its digital business to better reflect changes in its operations and management structure. As a result of this change, the Company has identified its reportable segments as Farm and Commercial, each of which are supported by the corporate office. The previously identified Digital segment has now been included within the Farm segment, and the Food platform which was a sub-segment of the Commercial segment has been amalgamated into the Commercial segment. These segments are strategic business units that offer different products and services. Certain corporate overheads are allocated to the segments based on revenue as well as applicable cost drivers. Taxes and certain other expenses are managed at a consolidated level and are not allocated to the reportable operating segments. Financial information for the comparative period has been restated to reflect the new presentation.

For the year ended December 31, 2021, the effect of foreign currency translations arising from the settlement of accounts receivables and payables recorded in a currency other than the Company's functional currency have been presented within finance income (expenses); historically, the foreign exchange impact was presented in sales and a reconciliation was made to trade sales as presented in prior MD&As.

The Company's change in presentation in its consolidated financial statements was made in accordance with IAS 1 and IFRS 8. Under IFRS 8, a change in accounting policy is permitted if the change results in the financial statements providing more reliable and relevant information about the effects of transactions on the entity's financial position. In addition, IAS 1 requires an entity to reclassify its comparative information when making such changes in presentation and therefore comparative figures have been restated accordingly.

Description of Business Segments

Farm Segment

AGI's Farm segment focuses on the needs of on-farm customers and its products offering includes grain, seed, and fertilizer handling equipment, aeration products, grain and fuel storage solutions, and grain management technologies (See "BASIS OF PRESENTATION").

Commercial Segment

AGI's Commercial segment focuses on commercial entities such as port facility operators, food processors and elevators. Its products offering includes larger diameter grain storage bins, high- capacity grain handling equipment, seed and fertilizer storage and handling systems, feed handling and storage equipment, aeration products, automated blending systems, control systems, project management services and food processing solutions.

5

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Ag Growth International Inc. published this content on 08 March 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 08 March 2023 15:56:02 UTC.