“Our strong results in the fourth quarter contributed to a record year for 2021 with broad-based strength in Farm, AGI Digital, EMEA, India and AGI Food. We see strong growth opportunities across all of our segments as demand for global food infrastructure remains robust," said AGI President and CEO Tim Close. "Backlogs sit at the highest level in our history, providing solid visibility for 2022. The backlog visibility, augmented by strong sales pipelines, lead us to forecast Adjusted EBITDA levels of at least $200 million for the upcoming year.”

The company reported $327.1 million in sales for the 4Q21, up 44% from $227.4 million the previous year's fourth quarter. Sales for the full year 2021 came in at $1.2 billion, up 20% from roughly $1 billion in 2020. The company reported adjusted profit of $19.1 million in the 4Q21 (up 119% year-over-year) and $63.2 million in adjusted profit for the full year 2021 (up 5% year-over-year). Note amounts shown are in CAD.

Sales by Segment

Farm Segment

Farm segment sales grew 28% while Adjusted EBITDA increased 78% year-over-year, respectively, for the three months ended Dec. 31, 2021, as the company continues to see strong demand for both portable and permanent equipment. The demand for Farm segment equipment continues to be very robust as customers focus on securing critical products based on the increase in crop volumes. The potential for supply chain disruption continues to impact some dealers’ propensity to order equipment earlier than prior years to ensure certainty of supply. Farm backlog is up 48% over the prior year as of Dec. 31, 2021, with considerable strength across all geographies including the U.S. and Brazil.

As part of its outlook, the report stated, "Notwithstanding potential supply chain impact on production and delivery of our products, AGI is anticipating a strong start to 2022 in the U.S. The Canadian Prairies experienced drought conditions in 2021 resulting in a reduction of 27% in Farm backlog in Canada. We anticipate there will be an impact to the Canadian Farm segment in the first half of 2022 but note the current demand and backlog in the U.S. should more than offset any potential impact from the drought conditions in Canada. Supply chain challenges and logistics could have a potential impact on adjusted gross margins in the Farm segment in the first half of 2022."

Commercial Segment

Commercial segment sales and Adjusted EBITDA increased 60% and 64% year-over-year, respectively, for the three months ended Dec. 31, 2021, with particular strength in the U.S., Europe, Middle East and Africa (“EMEA”), and South America markets. The Food platform continues to grow in response to strong customer demand with sales increasing 13% year-over-year for the three-months ended Dec. 31, 2021. Overall, the Commercial segment is seeing strong demand as backlogs are up 46% year-over-year with the Commercial platform and Food platform contributing 23% and 212% increases, respectively, signaling a strong outlook for Q1 2022.

In giving its outlook for the Commercial segment, AGI stated the following in its earnings report: "Adjusted gross margins in the Commercial platform are a focus as, similar to the Farm segment, securing steel and other components on a timely and cost-effective basis amid the supply chain disruptions has been challenging. Many of AGI’s Commercial platform contracts include provisions to pass along some or all of the key raw material cost increases. Open sales quotes are continuously reviewed and updated for changes in market conditions. Ongoing disruption of raw material, freight, and labour could lead to ongoing pressure on adjusted gross margin performance of the platform."

Commentary on War in Ukraine

“We join the world in supporting Ukraine and condemning the actions taken by Russia,” noted Close. “Our personnel in the region are safe, and we are looking for additional ways to support them where possible. Ukraine and Russia are an important source of commodities for the world, and we have been active in the region over the past 10 years. Today, the region is a small part of our overall business following extensive diversification of our business into new regions, products and customers.”

The earnings report also stated the following:

AGI’s exposure to Russia and Ukraine varies year-to-year, but the region generally contributes about 3% of AGI’s consolidated sales annually. AGI has no production facilities in either country. Given the contributions of Brazil, India and the rest of the EMEA region, AGI is more diversified from the region than we were in years past. While the region is important to AGI, any negative impacts would not be material to AGI overall.

AGI has identified all contracts and counterparties related to the Russia and Ukraine region. We have engaged our U.S.-based external sanctions counsel to assist in navigating the situation. Currently, we are compiling a list of customers, projects, scope of work, and contracts with a view to vetting these through the Canadian, U.S., and E.U. sanctions. We will continue to update and monitor as these sanctions evolve in the near-term. Of note, AGI contracts in the Russia/Ukraine region have built-in force majeure provisions that provide specifically for the potential of military action, government action, and/or sanctions.

Analyst Commentary

Analysis from Desjardins stated the company's fourth quarter EBITDA had beat the analyst's forecast, saying, "AGI reported a 4Q EBITDA beat at C$45m vs. our C$43m estimate (consensus of C$40m). Farm sales increased 28% year-over-year, driven by robust demand for portable and permanent equipment. Commercial sales increased 60%, with particular strength in the U.S., EMEA, Brazil and Food. Digital sales increased 27% despite chip shortages restricting the sale of IoT hardware. There should be no further revision to the C$86.1m total accrual on the grain bin incident and legal claims, which should be offset by insurance."