First Quarter 2023 Highlights
- Record first quarter results for sales and adjusted EBITDA
- Sales increased 19% to $347 million on a year-over-year basis
- Adjusted EBITDA increased 16% to $35.5 million on a year-over-year basis
- Adjusted EBITDA margin of 13.9% vs. 14.2% on a year-over-year basis
- Net debt leverage ratio of 3.6x at March 31, 2023, vs. 3.7x at December 31, 2022, and 5.2x at March 31, 2022
- Management is raising full year 2023 adjusted EBITDA guidance to be at least $196.2 million, up from previous guidance of at least $192.5 million
- Order book is up 7% year-over-year as of March 31, 2023, supporting the prospect of continued growth through 2023
“We are pleased to see the momentum from a banner 2022 carryover into a strong start for 2023,” noted Paul Householder, president & CEO of AGI. “With several of our key operational excellence initiatives and growth strategies gaining traction, we are optimistic about the potential to continue our growth trajectory in 2023. Supported by a strong order book, clear strategic priorities, and the organization settling into a more disciplined operating cadence, we have increased our full year guidance for 2023. We look forward to tackling new challenges and enjoying more successes through the year.”
Total revenue for the quarter was $256.9 million, up 19% from $216.2 million from the same quarter last year.
The Farm segment delivered strong results in Q1 with sales and adjusted EBITDA growing by 21% and 34% year-over-year, respectively, and continuing the strong momentum of a record performance in 2022. Sales in this segment were $135 million vs. $111.6 million in the same quarter last year.
In Canada, the U.S., and Asia Pacific, sales increased for both portable grain handling and permanent equipment as the strengthening of demand from last year continued into 2023. Adjusted EBITDA margin increased to 21% from 19% year-over-year, primarily reflecting a mix tilted towards portable equipment, higher margins in permanent equipment due to lower steel prices, and overall higher volumes in North America.
During the company's earnings call, Householder also said, "It's worth noting that within our Canada Farm order book, portable equipment orders have grown significantly and are at a record level for this time of year. This supports a favorable margin profile for Canada Farm through Q2 and Q3. Overall, the strong order book sets the stage for a banner 2023 year for Canada Farm with upside potential as we get further into the crop season."
When looking at the company's U.S. market, Householder had the following to say:
"Once again, our U.S. Farm business was a very meaningful contributor to AGI results. First quarter sales grew 12% driven by portable equipment demand. Pricing was relatively steady with growth coming largely from increasing volumes. The U.S. Farm team continues to make progress on several key strategic initiatives, including strengthening our dealer network and channel partners with those relationships serving as one of the key drivers of growth within this large and strategically important market."
Householder also noted the company had recently completed a product transfer of farm duty permanent material handling system from Brazil, which will be made available to its dealer network in 2Q23.
For the Commercial segment, Q1 sales and adjusted EBITDA increased 17% and 10% year-over-year, respectively. Sales growth was driven by significant activity in the Asia Pacific and South America market. Sales in this segment were $121.9 million vs. $104.5 million in the same quarter last year.
Adjusted EBITDA margin was impacted by the anticipated slow down in the Food platform as well as a larger than usual mix of buy-resell third-party components on a number of large commercial projects which typically have lower margins. The company anticipates these trends to return to normalized levels towards the end of 2023 based on ongoing efforts to strengthen the order book.
Internationally, the growth in the Brazil and India regions continued to be robust in Q1. Annual sales growth of 9% and 19% year-over-year, respectively, highlights the importance of regional diversification strategy and the benefits of investments in developing market positions within these critical agricultural regions.
The Company’s quoting pipelines remain active as customers across all regions continue to show strong interest in capital investments to meet the demands of increased crop production, promote efficiency across the supply chain, and address food security concerns. Record Q1 sales and adjusted EBITDA mark the sixth consecutive quarter of record results and demonstrate the strength of balanced and diversified business strategy that has enabled us to capitalize on the demands from a wide variety of products, regions, and customers. As the company continues to focus on strategic priorities which include profitable organic growth, operational excellence, and balance sheet discipline, it says it is excited about the long-term growth potential of the business.
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