AGI reported record for sales and Adjusted EBITDA in its third quarter 2022, which increased 28% and 65% year-over-year for the three-months ended Sept. 30, 2022, respectively. “Our all-time record quarterly results for sales and Adjusted EBITDA continue to highlight the strength and growth of AGI,” commented Paul Householder, President and CEO of AGI. “Taking over CEO responsibilities during a time with significant momentum across our global Farm and Commercial businesses, including many opportunities for further growth, is an ideal setup to drive continued success. Our backlog provides solid visibility into the fourth quarter and the start of 2023. We’ve increased our full year Adjusted EBITDA guidance for 2022 to at least $228 million4 which represents another record year in sales and Adjusted EBITDA for AGI, meaningful growth over 2021, and a strong setup for 2023.”
Farm segment sales and Adjusted EBITDA increased 20% and 52% YOY in Q3 with strong results from Canada, U.S., Asia Pacific, and South America. In particular, sales of portable grain handling equipment remain robust as rising crop sizes and low dealer inventories combined to create solid demand. Commercial segment sales and Adjusted EBITDA increased 40% and 97% YOY in Q3 with significant growth in North America, Europe, Middle East and Africa (“EMEA”), South America, and Asia Pacific markets. The Brazil region continues to experience significant growth in both sales and Adjusted EBITDA achieving 30% and 67% YOY increases in Q3. With strong macroeconomic fundamentals, AGI expects the momentum in the Brazil region to continue in the fourth quarter (“Q4”) of 2022. The India region reached an all-time quarterly record in Q3 with sales and Adjusted EBITDA growing 59% and 101% YOY.
The Digital segment sales increased 9% YOY in Q3 as a result of continued demand and strong order intake. Adjusted EBITDA was a loss of $4 million in Q3 2022 as compared to a gain of $0.3 million in Q3 2021. The loss was primarily due to the increase of subscription sales in proportion to retail sales in Q3 YOY as a new subscription program was introduced late in Q4 2021. This increase in proportion of subscription sales has a negative impact on the short-term performance of the Digital segment as sales and associated variable costs are deferred and spread out over the term of the subscription.
The demand for AGI equipment, systems and solutions continues to grow across segments and geographies. Consolidated backlog was up 4% YOY, just above the record level from the prior year which itself was up 99% from Q3 2020 levels. The moderation of backlog growth was expected as the backlog resets at higher levels relative to historic amounts given increased mix of project-based work.
Farm segment sales and Adjusted EBITDA increased 20% and 52% YOY in Q3 with strong results from Canada, the U.S., and South America. Robust demand for portable grain handling equipment in North America continued as many dealers report low inventory levels. Adjusted EBITDA benefited from the sales mix favoring higher margin portable grain handling equipment over lower margin permanent grain handling and storage products. In addition, there was some benefit of lower input costs associated with improved steel pricing YOY. Looking ahead, the company anticipates Farm Segment’s Q4 performance to be in line with Q4 2021.
In a note to investors, Steve Hansen, CFA, CPA, CMA with Raymond James said, "After acknowledging the quality & breadth of the AGI platform assembled, newly appointed CEO Paul Householder used yesterday’s call to usher in a new set of strategic priorities for the firm: including: 1) operational excellence; 2) balance sheet discipline; and 3) organic growth.
"Put simply, M&A is no longer a key chapter in the playbook; rather, management is now focused on plant optimization, harvesting cash flow, retiring debt, and leveraging key macro themes to facilitate organic growth. We like this approach – a lot."