Strong demand for AGI’s products across most regions resulted in consolidated trade sales increasing 11% year-over-year for the three-months ended Sept, 30, 2021. As anticipated, the rise in input costs impacted adjusted EBITDA resulting in a 11% decline YOY for the three-months ended Sept. 30, 2021. Consolidated backlogs continued to remain strong and were up 99% over Sept. 30, 2020, with broadbased strength across all segments and geographies.

“Our team continued to execute very well amid challenging supply chain conditions,” noted Tim Close, president & CEO of AGI. “While supply chain dynamics led to margin compression, comprehensive supplier and market initiatives mitigated the full potential impact in the quarter. We are seeing cost increases ease and input availability improve, meaning margins will steadily improve into the fourth quarter and 2022. Our backlog has continued to grow into the fourth quarter and sits at record levels setting up for a very strong fourth quarter and 2022.”

Farm segment trade sales grew 11% while adjusted EBITDA declined 8% year-over-year, respectively, for the three months ended Sept. 30, 2021, as we continue to see strong demand for both portable and permanent handling equipment. Commercial segment trade sales and adjusted EBITDA grew 10% and declined 19% year-over-year, respectively, for the three-months ended Sept. 30, 2021, with strength in the U.S., Asia Pacific and South America markets.

The decrease in adjusted EBITDA margins was fully expected given the rapid rise in input costs and constricted supply chain for all inputs throughout 2021. Active and substantial price increases, contract modifications and shorter quoting periods served to significantly mitigate the full extent of the supply chain issues.

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 and the potential for supply chain disruption. Farm backlog is up 202% over prior year as of Sept. 30, 2021, with considerable strength across all geographies including the U.S. as well as Brazil.

The Commercial segment is also seeing strong demand as backlogs are up 76% year-over-year with the Commercial platform and Food platform contributing 62% and 153% increases, respectively, signaling a strong outlook for 4Q21 and 1Q22.

Within the Farm and Commercial segments, we had notable strength in the quarter from our Brazilian operations. Brazil continued to gain momentum with trade sales and adjusted EBITDA growing 128% and 70% year-over-year, respectively, for the three-months ended Sept. 30, 2021. The Food platform is also gaining scale and was a notable contributor to the Commercial segment with trade sales increasing 46% year-over-year, led by the U.S. market with 118% year-over-year trade sales growth for the three-months ended Sept. 30, 2021.

In our Technology segment, the third quarter was marked by continued progress on a variety of strategic priorities to facilitate sales growth and margin stability. Technology segment trade sales increased 41% and 49% year-over-year for the three and nine-months ended Sept. 30, 2021.

With backlogs up 99% at the end of September and very robust quoting pipelines globally we expect a strong finish to 2021 with positive dynamics heading into 2022.

Update on Remediation Work

Progress on advancing the remediation work as it relates to the previously disclosed grain bin incident continued in the quarter with remediation work nearly complete at one of the two customer sites. At the second customer site, the site of the grain bin incident, the customer has decided to remediate themselves and with other suppliers. To-date, the Company has spent approximately $41 million of the $77.5 million total accrual.

Earlier in 2021, two legal claims related to the bin collapse were initiated against the Company for a cumulative amount in excess of $190 million. The investigation into the cause of and responsibility for the collapse remains ongoing. The Company is in the process of assessing these claims and has a number of legal and contractual defenses to each claim. No further provisions have been recorded for these claims. The Company will fully and vigorously defend itself. In addition, the Company continues to believe that any financial impact will be partially offset by insurance coverage. AGI is working with insurance providers and external advisors to determine the extent of this cost offset. Insurance recoveries, if any, will be recorded when received.

Outlook

AGI's demand drivers are closely linked to crop production volumes, global grain movement, and global food and feed consumption levels. A relative lack of investment in food infrastructure in developing regions along with required ongoing maintenance capital requirements in developed regions provide positive demand dynamics for AGI. These core demand drivers are further augmented by increasing population, changing dietary trends and increased focus on food security infrastructure.

Farm Segment

Farm backlog increased substantially, 202% over prior year as of Sept. 30, 2021, as inventory levels remain low at many of our dealers as a result of a strong crop yield in many parts of the U.S. and Brazil. These factors have resulted in Farm backlogs increasing 185% in the U.S., and 438% in International, over prior year as of Sept. 30, 2021. Notwithstanding potential supply chain impact on production and delivery of our products, Management is anticipating a strong finish to 4Q21 and trending towards a strong start to 2022 in the U.S. While certain areas in the Canadian Prairies experienced drought conditions in 2021, a strong crop yield in Eastern Canada resulted in increased demand for our Farm products leading to a year-over-year increase of 121% of our overall Farm backlog in Canada. We anticipate there will be an impact to the Canadian Farm segment in 1H22 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 will continue to have a relatively small impact on margins in the Farm segment in 4Q21.