WINNIPEG, MB, Jan. 20, 2021 /CNW/ - Ag Growth International
Inc. (TSX: AFN) ("AGI", "we" or the "Company") provided the
following updates on the commercial grain storage bin failure (the
"Incident") and on its expected fourth quarter financial
performance.
Update on the Incident
The Company has made substantial progress in determining its
approach to the potential remediation of the commercial grain
storage bins as previously disclosed. In the context of delivering
the best possible solution for the affected customers, while also
considering time to remediation, the Company has determined to
proceed with replacing the entire hopper base of the grain bins as
opposed to replacing components of the existing structure. The
grain bins involved are comprised of a cylinder top and a hopper
base. While the cause of, and the responsibility for, the
Incident has not been determined, the Company continues to proceed
on the basis of providing full remediation to the two affected
customer sites.
The replacement of the hoppers results in a significantly
expanded scope. The remediation is now comprised of an
increased amount of steel and a more extensive level of
decommissioning and construction. The recent increase in the
price of steel also drives higher costs for the project. Taken
together these factors will result in a $30
million total increase in the expected cost of the
remediation for the two customer sites combined. The Company
continues to believe that this amount will be partially offset by
insurance coverage and result in a lower net impact. AGI is working
with insurance providers and external advisors to determine the
extent of this cost offset.
"100% of our focus is on our customers as we deal with these
product issues at the two industrial sites," said Tim Close, President and CEO of AGI. "We are
committed to delivering a robust solution to mitigate this
unfortunate incident while also minimizing the time to
remediation and acknowledging that the cause of the Incident
is undetermined. In order to stand behind our commitment we are
increasing the expected cost of the full remediation by
$30 million. AGI is better positioned
for continued growth and success than at any time in our
history. Our global platform performed well through the
extreme tests of 2020 and we sit today with record backlogs across
the business. North American Farm, Brazil, EMEA, India and our Technology platform, AGI
SureTrack, are all positioned for record performance as we move
into 2021. We will address the current challenges directly and
drive change across our business to mitigate, put this behind us,
and capitalize on the momentum we have going forward."
Update on Q4 2020 and 2021 outlook
The Company also provided an update to its expected Q4 2020
financial results. Having closed out FY 2020, we can confirm our
prior guidance of annual sales and adjusted EBITDA results being in
line with 2019.
International markets are very robust with record backlogs and
very active pipelines. Brazil,
EMEA, and India are all seeing a
substantial increase in backlogs year-over-year.
North American Farm momentum is also strong driven by
fundamental demand, rising crop prices, and favourable dealer
positions inventory. North American backlogs overall are also up
year-over-year with respect to FY 2019.
The AGI Food business is gaining significant traction with
backlogs also up substantially year-over-year.
AGI SureTrack, our market-leading, IoT driven, end-to-end
technology platform, is positioned to continue to see robust growth
in 2021.
There is a positive environment globally with crop prices
increasing and active quoting across AGI. Overall, management
expects 2021 results to exceed 2020 results in both sales and
Adjusted EBITDA with strong performance in H1.
AGI Company Profile
AGI is a leading provider of solutions for the global food
infrastructure, including seed, fertilizer, grain, feed, and food
processing systems. AGI has manufacturing facilities in
Canada, the United States, the United Kingdom, Brazil, India, France
and Italy and distributes its
product globally.
NON-IFRS MEASURES
In analyzing our results, we supplement our use of financial
measures that are calculated and presented in accordance with
International Financial Reporting Standards ("IFRS") with a number
of non-IFRS financial measures including "EBITDA" and "Adjusted
EBITDA". A non-IFRS financial measure is a numerical measure of a
company's historical performance, financial position or cash flow
that excludes [includes] amounts, or is subject to adjustments that
have the effect of excluding [including] amounts, that are included
[excluded] in the most directly comparable measures calculated and
presented in accordance with IFRS. Non-IFRS financial measures are
not standardized; therefore, it may not be possible to compare
these financial measures with other companies' non-IFRS financial
measures having the same or similar businesses. We strongly
encourage investors to review our consolidated financial statements
and publicly filed reports in their entirety and not to rely on any
single financial measure.
We use these non-IFRS financial measures in addition to, and in
conjunction with, results presented in accordance with IFRS. These
non-IFRS financial measures reflect an additional way of viewing
aspects of our operations that, when viewed with our IFRS results
and the accompanying reconciliations to corresponding IFRS
financial measures, may provide a more complete understanding of
factors and trends affecting our business. Reconciliations of
non-IFRS financial measures to the most directly comparable IFRS
financial measures are contained in our MD&A.
References to "EBITDA" are to profit before income taxes,
finance costs, depreciation, amortization and share of associate's
net loss. References to "adjusted EBITDA" are to EBITDA before the
gain or loss on foreign exchange, non-cash share based compensation
expenses, gain or loss on financial instruments, M&A expenses,
other transaction and transitional costs, gain or loss on the sale
of property, plant & equipment, gain on settlement of leases,
equipment rework costs, fair value of inventory from acquisitions
and non-cash asset impairment charge.
FORWARD-LOOKING INFORMATION
This press release 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, business prospects, and opportunities of the Company.
All information and statements contained herein that are not
clearly historical in nature constitute forward-looking
information, and the words "anticipate", "believe", "continue",
"could", "expects", "intend", "plans", "postulates", "predict",
"will" or similar expressions suggesting future conditions or
events or the negative of these terms are generally intended to
identify forward-looking information. Forward-looking information
involves known or unknown risks, uncertainties and other factors
that may cause actual results or events to differ materially from
those anticipated in such forward-looking information. In addition,
this press release may contain forward-looking information
attributed to third party industry sources. Undue reliance should
not be placed on forward-looking information, as there can be no
assurance that the plans, intentions or expectations upon which it
is based will occur. In particular, the forward-looking information
in this press release includes information relating to our business
and strategy, including our outlook for our financial and operating
performance including our expectations for our future financial
results including sales and adjusted EBITDA for the 2020 year and
fourth quarter, industry demand and market conditions, the
anticipated ongoing impacts of the COVID-19 outbreak on our
business, operations and financial results; the estimated costs to
the Company that may result from the Incident including costs of
remediation and the availability of insurance coverage to offset
such costs; the sufficiency of our liquidity; long term
fundamentals and growth drivers of our business; future payment of
dividends and the amount thereof; and with respect to our ability
to achieve the expected benefits of recent acquisitions and the
contribution therefrom. Such forward-looking information reflects
our current beliefs and is based on information currently available
to us, including certain key expectations and assumptions
concerning: the anticipated impacts of the COVID-19 outbreak on our
business, operations and financial results; anticipated grain
production in our market areas; financial performance; the scope,
nature, timing and cost of work that will be required in connection
with the Incident; the financial and operating attributes of
recently acquired businesses and the anticipated future performance
thereof and contributions therefrom; business prospects;
strategies; product and input pricing; regulatory developments; tax
laws; the sufficiency of budgeted capital expenditures in carrying
out planned activities; political events; currency exchange and
interest rates; the cost of materials; labour and services; the
value of businesses and assets and liabilities assumed pursuant to
recent acquisitions; the impact of competition; the general
stability of the economic and regulatory environment in which the
Company operates; the timely receipt of any required regulatory and
third party approvals; the ability of the Company to obtain and
retain qualified staff and services in a timely and cost efficient
manner; the timing and payment of dividends; the ability of the
Company to obtain financing on acceptable terms; the regulatory
framework in the jurisdictions in which the Company operates; and
the ability of the Company to successfully market its products and
services. 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 contagious diseases or the fear of such outbreaks, such as the
recent COVID-19 pandemic, including the effects on the Company's
operations, personnel, and supply chain, the demand for its
products and services, its ability to expand and produce in new
geographic markets or the timing of such expansion efforts, and on
overall economic conditions and customer confidence and spending
levels, changes in international, national and local macroeconomic
and business conditions, as well as sociopolitical conditions in
certain local or regional markets, weather patterns, crop planting,
crop yields, crop conditions, the timing of harvest and conditions
during harvest, the ability of management to execute the Company's
business plan, seasonality, industry cyclicality, volatility of
production costs, agricultural commodity prices, the cost and
availability of capital, currency exchange and interest rates, the
availability of credit for customers, competition, AGI's failure to
achieve the expected benefits of recent acquisitions including to
realize anticipated synergies and margin improvements; changes in
trade relations between the countries in which the Company does
business including between Canada
and the United States; cyber
security risks; the risk that the assumptions and estimates
relating to the costs to the Company of the Incident and underlying
the provision for warranty accrual and remediation related thereto
and insurance coverage for the Incident will prove to be incorrect
as future information becomes available to the Company . These
risks and uncertainties are described under "Risks and
Uncertainties" in our MD&A, our 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.sedar.com]. These factors
should be considered carefully, and readers should not place undue
reliance on the Company's forward-looking information. We cannot
assure readers that actual results will be consistent with this
forward-looking information. Readers are further cautioned that the
preparation of financial statements in accordance with IFRS
requires management to make certain judgments and estimates that
affect the reported amounts of assets, liabilities, revenues and
expenses and the disclosure of contingent liabilities. These
estimates may change, having either a negative or positive effect
on profit, as further information becomes available and as the
economic environment changes. Without limitation of the foregoing,
the provision for warranty accrual and remediation related to the
Incident requires significant estimates and judgments about the
scope, nature, timing and cost of work that will be required. It is
based on management's assumptions and estimates at the date thereof
and is subject to revision in the future as further information
because available to the Company. The forward-looking information
contained herein is expressly qualified in its entirety by this
cautionary statement. The forward-looking information included in
this press release is made as of the date of this press release and
AGI undertakes no obligation to publicly update such
forward-looking information to reflect new information, subsequent
events or otherwise unless so required by applicable securities
laws.
SOURCE Ag Growth International Inc. (AGI)