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1. Company Snapshot

1.a. Company Description

Ag Growth International Inc., together with its subsidiaries, manufactures and distributes grain and rice handling, storage, and conditioning equipment in Canada, the United States, and internationally.The company offers storage equipment comprising grain and bolted bins, hopper bins, smooth wall bins, temporary storage equipment, unloads and sweeps, water tanks, fuel tanks; and conditioning equipment, such as mixed flow dryers, fans and heaters, aerations, airaugers, aeration floors, vents and exhausters, stirrings, and accessories.It also provides portable handling equipment, such as portable augers, conveyors, grain vacs, post pounders, seed treaters, and accessories; and permanent handling equipment, including bucket elevators, chain and belt conveyors, enclosed belt conveyors, distributors, feed handling equipment, screw feeders and conveyors, and spouts and connections.


In addition, the company offers towers, catwalks, ladders, all-steel buildings, flat storage buildings; batch blenders, bulk scales, declining weight blenders, vertical blenders, micro-dosing systems, mixers, milling equipment; and controllers, hazard monitoring equipment, monitoring and automation equipment, sampling solutions.Further, it provides cleaning and destoners, rice milling and processing equipment, bin unloads, blending and control systems, Liquid and dry fertilizer blending and conveying equipment, turnkey design and build construction solutions for seed and fertilizer facilities, and farm management software.The company markets its products under the AGI, Airlanco, Batco, Brownie, CMC, Compass, Danmare, Ezee-dry, Frame, Grain Guard, Grainmaxx, Hi Roller, Hutchinson, Improtech, Junge, Keho, Mayrath, Milltec, MMS, Neco, PTM, REM, Sabe, Sentinel, Storm, Suretrack, Tramco, Twister, Westeel, Westfield, Wheatheart, and Yargus brand names.


It provides its equipment for agricultural commodities.The company was founded in 1996 and is headquartered in Winnipeg, Canada.

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1.b. Last Insights on AFN

Ag Growth International's recent performance was negatively impacted by a series of events, including the withdrawal of its adjusted EBITDA guidance and a delay in reporting its third-quarter financial results. The company cited the need for additional time to finalize accounting related to its Brazilian operations and to review internal controls, raising investor uncertainty regarding its near-term outlook. Furthermore, the delay in Q3 results filing led to a management cease trade order, which has added to the company's operational and financial challenges. Additionally, the company's recent earnings call highlighted a material weakness in internal controls, which has further eroded investor confidence.

1.c. Company Highlights

2. AGI's Q3 Earnings: A Mixed Bag with Growth in Commercial Segment

AGI reported a solid Q3 with revenue growth of 9% year-over-year to $389 million, driven primarily by the Commercial segment, particularly in Brazil. Adjusted EBITDA was up 4% to $71 million. The company's earnings per share (EPS) came in at $1.31, beating estimates of $1.26. The revenue growth was largely attributed to customer demand for comprehensive solutions in Brazil, where the team is advancing several major projects. The order book stands at approximately $667 million, up slightly year-over-year, with over 90% allocated to Commercial.

Publication Date: Jan -13

📋 Highlights
  • Revenue Growth & EBITDA Increase: AGI achieved 9% YoY revenue growth to $389M, with adjusted EBITDA up 4% to $71M.
  • Commercial Segment Momentum: Brazil-driven growth highlights strong customer demand, contributing to 90% of the $667M order book.
  • Brazil Receivables Monetization: $1.2B investment fund in Brazil aims to monetize 60-80% of $169M long-term receivables by 2026, improving cash flow.
  • Operational Excellence Progress: Facility consolidations and ERP implementation (Canada deployed, India next in 2026) enhance efficiency and customer experience.
  • Q4 EBITDA Decline Forecast: Sequential adjusted EBITDA dip expected due to North America/India headwinds, SG&A costs, and market challenges.

Operational Highlights and Challenges

The company's operational excellence program is progressing, with two significant facility consolidations nearing completion, and the ERP implementation is on track to unify systems and enhance the customer experience. However, AGI has identified a material weakness in its internal control over financial reporting related to operations in Brazil and is actively addressing this issue. Despite the challenges, the company's recordable incident rate decreased 15% year-over-year to a new all-time low.

Outlook and Guidance

AGI expects Q4 adjusted EBITDA to be lower sequentially and versus prior year due to challenging market conditions, negative mix, and higher SG&A costs. The company remains excited about its potential, with the compounding impact of its strategy delivering international commercial momentum and an eventual rebound in the North America Ag Equipment segment. For 2026, analysts estimate revenue growth at 6.7%. The company's net debt leverage ratio remained steady at 3.9x, and operating cash flow remained strong.

Valuation and Metrics

With a P/E Ratio of -53.97, P/B Ratio of 1.56, and EV/EBITDA of 6.69, the market seems to be pricing in some challenges for AGI. The company's ROE and ROIC are negative, indicating some underlying issues. However, the Dividend Yield stands at 2.24%, providing some support to the stock. As the company works to address its internal control issues and navigate challenging market conditions, investors will be watching to see if AGI can deliver on its growth potential.

Receivables Monetization and Cash Flow

The company expects to monetize 60-80% of its current receivables through the investment fund in Brazil by the end of 2026, which will help decrease working capital investments and increase cash flow. AGI has already started generating initial inflows from the fund and expects positive free cash flow in 2026. The aging of receivables has not deteriorated, and the company has a low write-off history.

3. NewsRoom

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CIBC Details the Companies It Expects May Benefit From Canada's New Defence Industrial Strategy

Feb -18

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TSX Stocks Estimated To Be Trading Below Intrinsic Value By Up To 47.4%

Feb -16

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What Could Shift The Story For Ag Growth International (TSX:AFN) Now

Feb -11

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Ag Growth International Appoints Brad Wall and George Armoyan to the Board

Feb -03

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AGI Announces Changes to Board of Directors

Feb -03

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How The Ag Growth International (TSX:AFN) Story Is Shifting With The New Price Target

Jan -26

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AGI Announces CEO Change

Jan -15

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TSX Value Picks Ag Growth International And Two More Stocks Trading Below Estimated Worth

Jan -13

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.91%)

6. Segments

Farm

Expected Growth: 6%

Ag Growth International's Farm segment growth is driven by increasing global demand for grain storage and handling solutions, expansion into new markets, and strategic acquisitions. Additionally, investments in digital technologies and automation are enhancing operational efficiency, while a strong order backlog and growing demand for fertilizer and seed handling systems also contribute to the 6% growth.

Commercial

Expected Growth: 8%

Ag Growth International Inc.'s commercial segment growth of 8% is driven by increasing demand for grain handling and storage solutions, expansion into new markets, and strategic acquisitions. Additionally, investments in product innovation and digitalization, as well as a strong focus on customer relationships, contribute to the segment's growth.

7. Detailed Products

Grain Handling Equipment

AGI's grain handling equipment is designed to efficiently and safely handle grain from harvest to storage. The product line includes grain augers, conveyors, and elevators.

Seed Treatment Equipment

AGI's seed treatment equipment is designed to apply seed treatments and coatings to seeds, enhancing seed germination and plant growth.

Fertilizer Application Equipment

AGI's fertilizer application equipment is designed to accurately and efficiently apply fertilizers to crops, promoting healthy plant growth.

Storage and Handling Solutions

AGI's storage and handling solutions include grain bins, silos, and other storage systems designed to safely and efficiently store grain and other commodities.

Aeration and Drying Systems

AGI's aeration and drying systems are designed to manage grain moisture levels, preventing spoilage and ensuring quality.

8. Ag Growth International Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Ag Growth International Inc. operates in the agricultural industry, which has a moderate threat of substitutes. While there are alternative products and services available, the company's focus on grain handling and storage solutions provides a unique value proposition to its customers.

Bargaining Power Of Customers

Ag Growth International Inc. has a diverse customer base, which reduces the bargaining power of individual customers. Additionally, the company's products and services are often customized to meet specific customer needs, making it difficult for customers to switch to alternative suppliers.

Bargaining Power Of Suppliers

Ag Growth International Inc. relies on a network of suppliers for raw materials and components. While the company has some bargaining power due to its size and scale, suppliers may still have some negotiating power, particularly if they are sole-source providers of critical components.

Threat Of New Entrants

The agricultural industry has high barriers to entry, including significant capital requirements and regulatory hurdles. Additionally, Ag Growth International Inc. has established relationships with customers and suppliers, making it difficult for new entrants to gain traction in the market.

Intensity Of Rivalry

The agricultural industry is highly competitive, with several established players competing for market share. Ag Growth International Inc. faces intense competition from companies such as Cargill, Archer Daniels Midland, and Bunge, which can lead to pricing pressure and reduced profit margins.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 73.28%
Debt Cost 10.15%
Equity Weight 26.72%
Equity Cost 15.78%
WACC 11.65%
Leverage 274.22%

11. Quality Control: Ag Growth International Inc. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Lindsay

A-Score: 5.4/10

Value: 5.4

Growth: 6.3

Quality: 6.6

Yield: 2.0

Momentum: 3.5

Volatility: 8.3

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Alamo Group

A-Score: 5.2/10

Value: 5.8

Growth: 7.0

Quality: 6.3

Yield: 1.0

Momentum: 3.0

Volatility: 8.3

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Titan International

A-Score: 4.2/10

Value: 8.6

Growth: 4.7

Quality: 2.3

Yield: 0.0

Momentum: 6.0

Volatility: 3.7

1-Year Total Return ->

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Stock-Card
Ag Growth International

A-Score: 3.7/10

Value: 6.9

Growth: 4.8

Quality: 2.7

Yield: 4.0

Momentum: 0.5

Volatility: 3.3

1-Year Total Return ->

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Manitex International

A-Score: 3.2/10

Value: 3.5

Growth: 4.7

Quality: 3.0

Yield: 0.0

Momentum: 7.0

Volatility: 1.0

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Columbus McKinnon

A-Score: 3.0/10

Value: 5.7

Growth: 2.1

Quality: 3.5

Yield: 3.0

Momentum: 0.5

Volatility: 3.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

28.72$

Current Price

28.72$

Potential

-0.00%

Expected Cash-Flows