Ag Growth International Inc. (TSX: AFN) today announced financial results for the second quarter and first half of 2011 and declared dividends for the next three months.

Overview of Results

Ag Growth achieved record second quarter and first half sales in 2011 as revenues from divisions acquired in 2010 and strength in commercial grain handling more than offset the impact of a stronger Canadian dollar and weather-related weakness in western Canada. EBITDA for the three and six months ended June 30, 2011 was $20.4 million and $33.7 million, respectively (2010 - $20.5 million and $32.2 million) and adjusted EBITDA was $18.2 million and $30.0 million (2010 - $19.5 million and $29.4 million) for the periods then ended. Diluted earnings per share for the three and six months ended June 30, 2011 were $0.91 per share and $1.34 per share, respectively, representing increases of 5.8% and 9.8% compared to the same periods in the prior year.

“The record second quarter trade sales are attributable to strength in commercial grain handling and acquisitions in 2010” said Gary Anderson, President and Chief Executive Officer. “The main reason for the decrease in second quarter adjusted EBITDA is the continued strength of the Canadian dollar compared to the US dollar. We also have experienced some ongoing start up challenges at our Twister plant which have been identified and are being resolved. We expect these issues to be behind us by the end of the year."

“Looking ahead, we remain very positive about growth for 2012 and beyond. This view is based on agricultural fundamentals, including increased emphasis on agricultural infrastructure around the world. This is particularly true in developing countries where we are establishing overseas sales.”


The primary demand driver for portable grain handling equipment is the volume of grains grown, and based on current conditions management anticipates that a large US crop will be supportive of demand. Prospects for a large US crop are good, based on 2011 planting by US farmers of approximately 92 million acres of corn, up 4.5% from 88 million acres in 2010. In addition, positive agricultural macro-economic factors continue to drive demand for commercial grain handling equipment both domestically and overseas.

Our commercial divisions continue to deliver strong growth in North America and internationally due in part to increasing capital expenditures by the major multinational grain handlers. We have recently won projects in Russia, Eastern Europe, Southeast Asia and Latin America and are in the process of establishing a sales office in South America in hopes of further capitalizing on growth potential in this market in 2012 and beyond.

We are, however, anticipating a number of challenges in the second half of 2011. In addition to a continuing strong Canadian dollar and resolution of the start-up issues at our Twister plant, adverse market conditions have also negatively impacted our Mepu division as market excess inventories, the result of a regional 2010 drought, are leading to extremely aggressive pricing in the marketplace in a period of higher than historical steel costs.

Demand in the second half of 2011 will be influenced by crop conditions. Due to a prolonged heat wave in the US, there is a risk of crop deterioration. Demand may also be impacted by changes in global macro-economic factors.

We remain positive about growth for 2012 in North America and overseas. We are still at the front end of our international development, and we are confident that we will continue to gain traction there with the quality of our products, the strength of our brands, the breadth of our catalogue and the talent of our sales team. We expect start-up challenges at our new Alberta bin plant to be fully resolved by the end of 2011, and we retain a very positive outlook for contributions from this plant in 2012 and beyond. We are confident that the combination of lean manufacturing practices and growing demand for storage bins, particularly in overseas markets, will pay off handsomely in the long term.


Ag Growth today announced the declaration of cash dividends of $0.20 per common share for the months of September 2011, October 2011, and November 2011. The dividends are eligible dividends for Canadian income tax purposes. Ag Growth's current annualized cash dividend rate is $2.40 per share.