WINNIPEG, Oct. 16, 2019 /CNW/ - Ag Growth International
Inc. ("AGI") (TSX: AFN) announced today that its third quarter
financial results will include a pre-tax charge of $7 million related to the estimated cost of
rework for equipment supplied to two distinct projects. The charge
relates to additional time, material and services required to
ensure the projects meet AGI's high standard for quality.
The third quarter charge is based on a preliminary estimate of
the total cost of the rework. Before taking into account this
unusual charge, management anticipates second half adjusted EBITDA
will approximate 2018 levels, consistent with guidance provided in
its Q2 MD&A.
"Accountability is a core principle at AGI," said Tim Close, President and CEO of AGI. "We are
incurring this charge to stand behind our partnership with our
customers. We complete hundreds of projects globally each year and
complete each one with a focus on our customers. The cause of this
rework has been identified, quarantined, and mitigated. Additional
policies, procedures and appropriate changes have been made to
ensure this is a one-time event. Our global product and projects
teams are better than ever, and we will continue to build the
expertise that earns the confidence of our customers."
AGI Company Profile
AGI is a leading provider of equipment solutions for agriculture
bulk commodities including seed, fertilizer, grain, feed and food
processing systems. AGI has manufacturing facilities in
Canada, the United States, the United Kingdom, Brazil, France, Italy
and India, and distributes its
product globally.
Further information can be found in the disclosure documents
filed by AGI with the securities regulatory authorities, available
at www.sedar.com and on AGI's website www.aggrowth.com.
CAUTIONARY STATEMENTS
Preliminary Financial Information
The estimated pre-tax charge to be taken in AGI's financial
results for the three and nine months ended September 30, 2019 and our guidance for the
remainder of the year are based on, among other things, the
anticipated costs of the rework of the related equipment, including
the additional time, material and services required to ensure the
applicable projects meet AGI's high standard for quality, and AGI's
financial results for the three and nine month periods ended
September 30, 2019. The actual rework
costs and AGI's financial results for the three and nine months
ended September 30, 2019, have not
yet been finalized or approved and as such, such estimates and
guidance are subject to the same limitations and risks as discussed
under Forward-Looking Information set out below. Accordingly, the
amount of the pre-tax charge and AGI's guidance for the remainder
of the year may change upon the completion of the financial
statements for the three and nine months ended September 30, 2019 and the changes could be
material.
Forward-Looking Information
This press release contains forward-looking statements and
information (collectively, "forward-looking information") within
the meaning of applicable securities laws that reflect our
expectations regarding the future growth, results of operations,
performance, business prospects, and opportunities of AGI. All
information and statements contained herein that are not clearly
historical in nature constitute forward-looking information, and
the words "anticipate", "believe", "continue", "could", "estimate",
expects", "intend", "plans", "postulates", "predict", "should",
"will" or similar expressions suggesting future conditions or
events or the negative of these terms are generally intended to
identify forward-looking information. Forward-looking information
involves known or unknown risks, uncertainties and other factors
that may cause actual results or events to differ materially from
those anticipated in such forward-looking information. Undue
reliance should not be placed on forward-looking information, as
there can be no assurance that the plans, intentions or
expectations upon which it is based will occur. In particular, the
forward-looking information in this press release includes
information relating to our business and strategy, including our
outlook for our financial and operating performance as set forth in
our Q2 MD&A including our expectations for our future financial
results including sales, EBITDA and adjusted EBITDA, industry
demand and market conditions, and with respect to our ability to
achieve the expected benefits of recent acquisitions and the
contribution therefrom including from purchasing and personnel
synergies and margin improvement initiatives. The forward-looking
information in this press release also includes a preliminary
estimate of the pre-tax charge related to the estimated cost of
rework for equipment supplied to certain projects. Such
forward-looking information reflects our current beliefs and is
based on information currently available to us, including certain
key expectations and assumptions concerning: anticipated grain
production in our market areas; financial performance; the
financial and operating attributes of recently acquired businesses
and the anticipated future performance thereof and contributions
therefrom; business prospects; strategies; product and input
pricing; regulatory developments; tax laws; the sufficiency of
budgeted capital expenditures in carrying out planned activities;
political events; currency exchange and interest rates; the cost of
materials; labour and services; the value of businesses and assets
and liabilities assumed pursuant to recent acquisitions; the impact
of competition; the general stability of the economic and
regulatory environment in which AGI operates; the timely receipt of
any required regulatory and third party approvals; the ability of
AGI to obtain and retain qualified staff and services in a timely
and cost efficient manner; the timing and payment of dividends; the
ability of AGI to obtain financing on acceptable terms; the
regulatory framework in the jurisdictions in which AGI operates;
the ability of AGI to successfully market its products and
services; and the estimated costs associated with the equipment
supplied including the total cost of the rework and any additional
associated costs. Forward-looking information involves significant
risks and uncertainties. A number of factors could cause actual
results to differ materially from results discussed in the
forward-looking information, including changes in international,
national and local macroeconomic and business conditions, as well
as sociopolitical conditions in certain local or regional markets,
weather patterns, crop planting, crop yields, crop conditions, the
timing of harvest and conditions during harvest, the ability of
management to execute AGI's business plan, seasonality, industry
cyclicality, volatility of production costs, agricultural commodity
prices, the cost and availability of capital, currency exchange and
interest rates, the availability of credit for customers,
competition, AGI's failure to achieve the expected benefits of
recent acquisitions including to realize anticipated synergies and
margin improvements; changes in trade relations between the
countries in which AGI does business including between Canada and the
United States; changes in our estimate of the costs
associated with the rework of equipment supplied including the
potential for additional associated or incidental costs and
liabilities. These risks and uncertainties are described under
"Risks and Uncertainties" in our MD&A, our annual MD&A and
in our most recently filed Annual Information Form, all of which
are available under AGI's profile on SEDAR [www.sedar.com]. These
factors should be considered carefully, and readers should not
place undue reliance on AGI's forward-looking information. We
cannot assure readers that actual results will be consistent with
this forward-looking information. Readers are further cautioned
that the preparation of financial statements in accordance with
IFRS requires management to make certain judgments and estimates
that affect the reported amounts of assets, liabilities, revenues
and expenses and the disclosure of contingent liabilities. These
estimates may change, having either a negative or positive effect
on profit and other financial information, as further information
becomes available and as the economic environment changes. The
forward-looking information contained herein is expressly qualified
in its entirety by this cautionary statement. The forward-looking
information included in this press release is made as of the date
of this press release and AGI undertakes no obligation to publicly
update such forward-looking information to reflect new information,
subsequent events or otherwise unless so required by applicable
securities laws.
Non-IFRS Measures
In analyzing our results, we supplement our use of financial
measures that are calculated and presented in accordance with
International Financial Reporting Standards ("IFRS") with a
number of non-IFRS financial measures including "EBITDA" and
"adjusted EBITDA". A non-IFRS financial measure is a numerical
measure of a company's historical performance, financial position
or cash flow that excludes [includes] amounts, or is subject to
adjustments that have the effect of excluding [including] amounts,
that are included [excluded] in the most directly comparable
measures calculated and presented in accordance with IFRS. Non-IFRS
financial measures are not standardized; therefore, it may not be
possible to compare these financial measures with other companies'
non-IFRS financial measures having the same or similar businesses.
We strongly encourage investors to review our consolidated
financial statements and publicly filed reports in their entirety
and not to rely on any single financial measure.
We use these non-IFRS financial measures in addition to, and in
conjunction with, results presented in accordance with IFRS. These
non-IFRS financial measures reflect an additional way of viewing
aspects of our operations that, when viewed with our IFRS results
and the accompanying reconciliations to corresponding IFRS
financial measures, may provide a more complete understanding of
factors and trends affecting our business.
Management believes that the Company's financial results may
provide a more complete understanding of factors and trends
affecting our business and be more meaningful to management,
investors, analysts and other interested parties when certain
aspects of our financial results are adjusted for the gain (loss)
on foreign exchange and other operating expenses and income. These
measurements are non-IFRS measurements. Management uses the
non-IFRS adjusted financial results and non-IFRS financial measures
to measure and evaluate the performance of the business and when
discussing results with the Board of Directors, analysts,
investors, banks and other interested parties. Reconciliations of
historical non-IFRS financial measures to the most directly
comparable historical IFRS financial measures are contained in our
previously filed management's discussion and analysis.
References to "EBITDA" are to profit before income taxes,
finance costs, depreciation and amortization. References to
"adjusted EBITDA" are to EBITDA before the gain or loss on foreign
exchange, non-cash share based compensation expenses, gain or loss
on financial instruments, M&A expenses, other transaction and
transitional costs, gain or loss on the sale of property, plant
& equipment, gain or loss on disposal of assets held for sale
and fair value of inventory from acquisitions and impairment.
Management believes that, in addition to profit or loss, EBITDA and
adjusted EBITDA are useful supplemental measures in evaluating the
Company's performance. Management cautions investors that EBITDA
and adjusted EBITDA should not replace profit or loss as indicators
of performance, or cash flows from operating, investing, and
financing activities as a measure of the Company's liquidity and
cash flows.
SOURCE Ag Growth International Inc. (AGI)