WINNIPEG, MB, Nov. 12, 2020 /CNW/ - Ag Growth
International Inc. (TSX: AFN) ("AGI", the "Company", "we" or "our")
today announced its financial results for the three and nine-months
ended September 30, 2020.
|
|
|
[thousands of dollars
except per share amounts]
|
Three-months Ended
September 30
|
Nine-months Ended
September 30
|
2020
$
|
2019
$
|
2020
$
|
2019
$
|
Trade sales
[1][2]
|
282,450
|
261,134
|
772,745
|
770,344
|
Adjusted EBITDA
[1][3]
|
51,769
|
39,091
|
121,513
|
121,083
|
Profit
(loss)
|
(12,261)
|
(2,819)
|
(46,633)
|
22,919
|
Diluted profit (loss)
per share
|
(0.66)
|
(0.15)
|
(2.49)
|
1.21
|
Adjusted profit
[1]
|
32,276
|
17,542
|
51,522
|
42,739
|
Diluted adjusted
profit per share [1][4]
|
1.62
|
0.91
|
2.70
|
2.26
|
|
[1]
|
See "Non-IFRS
Measures".
|
[2]
|
See "OPERATING
RESULTS – Trade Sales" in our Management Discussion and Analysis
for the period ended September 30, 2020 ('MD&A').
|
[3]
|
See "OPERATING
RESULTS – EBITDA and Adjusted EBITDA" in our MD&A.
|
[4]
|
See "Diluted profit
(loss) per share and diluted adjusted profit per share".
|
Continued robust performance in North American Farm markets,
EMEA, Brazil, and India was offset by lower results in North
American Commercial markets resulting in a record third quarter for
sales and adjusted EBITDA despite ongoing COVID-19 challenges. As
indicated throughout 2020, Commercial backlogs had been weighted to
Q3. Sales in the quarter were also augmented by a relatively early
harvest across North America. COVID-19 has had a material
impact on North American Commercial markets as customers have
delayed projects or are facing challenges in project
progress. AGI's Q3 2020 trade sales of $282.5 million grew 8.1% from Q3 2019 and
adjusted EBITDA of $51.8 million grew
32.4% over Q3 2019. Farm sales in Q3 were up 24% over Q3 2019
and 9% year-to-date ('YTD'). North America Commercial sales
were down 20% and 23% respectively in the three and nine months
ended 2020 versus 2019. The International business continues to
excel over the previous year despite the obstacles of COVID-19 with
a sales increase of 10% in the quarter and 16% YTD. Excluding
the Milltec acquisition, international sales in the nine- months
ended September 30, 2020 increased 5%
over 2019.
"Q3 2020 was a record third quarter for AGI in terms of both
sales and adjusted EBITDA with broad-based and robust performance
across all platforms except for NA Commercial, which has been
hardest hit with COVID challenges.", said Tim Close, President and CEO of AGI. "Q3 was
also a record quarter for adjusted EBITDA, just beating Q2 2019
which was our prior high water mark. This strong performance in the
quarter highlights the benefits of our diversification investments
over the past five years, the resiliency of our business and our
leadership in the global food infrastructure sector."
"We have taken a significant accrual in the quarter
due to an incident that occurred at a customer's Commercial
facility, as previously disclosed in September 2020. This
incident, in addition to prior warranty costs, are both distinct
and rare in our history, and an investigation is currently being
conducted to determine the cause of the incident. The Company is
taking this accrual on the basis of potential required remediation
to the equipment that was supplied by AGI."
"While AGI has accrued $40
million in this quarter, the Company believes that this
amount will be partially offset by insurance coverage and result in
a lower net impact. AGI will provide more information once the
investigation is completed."
"We are committed to supporting our customers to ensure we
mitigate the impact of the incident and strengthen our business as
result of this experience."
Gross margin grew in the quarter to 33.7%, an increase of 240
basis points ('bps') over Q3 2019. The strong results in Q3
also delivered a 70 bps gain in gross margin on a YTD basis as
compared to September 30, 2019.
The Adjusted EBITDA result in Q3 represents a record quarter for
AGI, slightly higher than the prior high water mark in Q2
2019. Q3 Adjusted EBITDA margin of 18.3% increased 336 bps
over Q3 2019 bringing the YTD total Adjusted EBITDA margin to a 1
bps improvement over September 2019
results despite the significant and ongoing impact of COVID-19 and
the negative contribution of AGI's growing technology
platform. Adjusted profit increased 84% in the quarter while
Adjusted Profit per share increased 78% over Q3 2019.
Adjusted profit and Adjusted Profit per share grew 19% YTD. Loss
and loss per share were negatively impacted by the Company's
estimated warranty accrual, non-cash losses on the Company's equity
compensation swap, non-cash losses on foreign exchange translation,
other transaction and transitional costs, non-cash asset impairment
charge and the Company's share of associate's net loss, while
adjusted profit and adjusted profit per share increased over the
prior year.
WARRANTY ACCRUAL
Insurance Coverage Expected to Partially Offset Accrual
Charge
The Company has taken a $40.0
million accrual in the third quarter 2020 due to the
collapse of a commercial grain storage bin (a large hopper storage
product (the "Hopper") as described below) manufactured by the
Company at a customer's commercial project, which was previously
reported in September 2020 (the
"Incident"). While the cause of, and the responsibility for,
the Incident has not been determined, the Company is taking this
accrual, in accordance with accounting and other disclosure
obligations, on the basis of potential required remediation to the
equipment that was supplied by AGI to this commercial facility and
one other facility.
While AGI has accrued $40.0
million in this quarter, the Company believes that this
amount will be partially offset by insurance coverage and result in
a lower net impact. AGI is working with insurance providers
and external advisors to determine the extent of this cost
offset. The accrual represents AGI's probability weighted
estimate, in consultation with our external advisors, of the direct
costs involved, including clean up and equipment remediation, at
the two sites. AGI's contract contain exclusions for indirect or
consequential damages.
The investigation of the Incident is ongoing and if the
investigation determines that AGI contributed to or caused the
Incident, the Company will take responsibility for its actions and
the related remediation. The safety and security of our customers
and products is our top priority and AGI has responded with a
thorough analysis of the relevant processes, procedures, people and
products.
Unrelated Rework Costs and Accruals
This Incident accrual is in addition to the $20.0 million in cost and accruals taken over
2019 and 2020 due to rework of equipment supplied by AGI to the
same commercial facility where the reported bin Incident occurred
(the "Rework"). The Rework was required to address issues with the
equipment designed and supplied only to this facility, and as
disclosed in the Company's Q3 and Q4 2019 MD&As. This Rework
did not involve the Hopper product.
The Incident and the Rework are Isolated
AGI manufactures thousands of bins each year. The Company
is involved in hundreds of projects each year, supplying a variety
of equipment solutions to customers around the world. The AGI
engineering team has access to the world's top resources and
significant experience designing and providing leading products in
our industry.
The Incident and the Rework are isolated and discrete. AGI will
manage, mitigate, learn and grow from addressing these two issues,
irrespective of the results of the ongoing investigation. Quality
control has and will continue to be of paramount importance for
AGI.
AGI follows industry leading and all applicable engineering,
building, safety codes and standards, and regularly reviews its
internal design and manufacturing processes to maintain optimal
product quality. Despite our robust talent and procedures across
AGI, we will go further to ensure the root causes involved are
addressed.
Important Context for Hopper Design and Installation
Over the past three years, and in response to market demand, AGI
developed the Hopper as an extension of our storage product
line. These Hoppers are used to increase throughput capacity
and minimize clean out time to increase productivity of a
commercial facility.
Similar to any new product line, AGI carefully considered and
developed the Hopper based on extensive analysis from our
engineering teams. AGI's design and engineering teams
utilized their decades of experience and considered all applicable
code and standards in developing the Hopper.
The Hopper was first sold to a customer for use in a frac sand
operation, a niche application. This customer purchased two
Hoppers. AGI was not retained to construct and install the Hoppers.
Rather, the Hoppers were constructed and installed by an
independent third party. One of these two Hoppers failed during
start-up of the facility. An investigation was commenced
immediately and is currently ongoing. This failure prompted AGI to
conduct additional and robust reviews of the Hopper design.
While the cause of the failure has not yet been identified, AGI's
review indicates that there were clear indications of improper
construction and installation of the Hopper at this facility that
led to or contributed to this failure.
Subsequent to the additional review and design work, AGI sold 35
Hoppers to two different customers constructing grain storage
projects. On September 11,
2020, the Incident occurred when one Hopper at one of the
facilities collapsed during the commissioning process. AGI
immediately issued a demand to each customer to suspend use of the
Hopper at both sites.
There are a total of 15 Hoppers on the site of the Incident and
20 Hoppers on the second site. The second site has yet to be
commissioned. The site with the Incident is still being cleaned up
to enable a proper investigation.
OUTLOOK
Farm
Year-over-year increases in planted acreage and generally
favourable weather contributed to strong crop volumes across North
America. A relatively early harvest further underpinned
strong momentum in Farm results in the quarter. Demand
was broad based across regions and products driven by positive
dynamics and has led to relatively lower inventory levels across
our dealers and stocking points. The backlog for Farm sales
at the end of the third quarter is down 11% year-over- year
('YOY'), however, the majority of this decrease is due to a
positive reduction in our AGI SureTrack backlog, a business with
distinctly different fundamentals. We have increased
automation and inventory at SureTrack to substantially reduce lead
times for customers. Our annual early order programs that
launched across Farm products in September are expected to be
positive as dealers replenish inventory in preparation for 2021 and
consequently management anticipates Farm Sales to be slightly
higher than 2019 levels in Q4 and positioning us well for H1
2021.
Commercial North
America
COVID-19 has had a substantial impact on project activity,
quoting, project development and project progression across North
America. We expect a rebound in Commercial activity post
COVID-19 as customers move to address mandatory maintenance,
facility automation, capacity expansion, and loading
efficiencies.
In Canada over the last few
years there has been a cycle of increased spend in infrastructure
due to new entrants in the market which we expect to normalize in
the coming years. That moderation will be offset by pent up demand
from incumbents investing in their infrastructure to address
competitive dynamics including operational and logistical
efficiencies. We expect a continued trend towards increased
capacity, and a relocating of facilities for better rail access to
improve logistics which will require continued investment in the
commercial solutions that AGI supplies. The Canadian
Commercial backlog is down 44% compared to 2019 due to a tough
comparable period driven by several large projects in the prior
year and the impact of COVID-19. Moving into 2021, we expect
a rebound in activity across Canada as our customers address pent up
capital projects for maintenance, expansion, automation, and
productivity.
In the United States we expect
Commercial projects to continue at recent levels in the near term
with a steady flow of maintenance and smaller capital
projects. Trade tensions over the last two years have further
contributed to delays in the US Commercial space however as the
market dynamics are better understood and we move through COVID-19
we expect a pick-up in investment across the US grain
infrastructure. The US Commercial backlog is slightly up
compared to September 30, 2019 and we
expect intake to increase the gap to 2019 in Q4. We are
seeing particular strength in our Food platform with backlog in
this segment offsetting any decrease in grain and fertilizer sales
backlog. Quoting activity remains strong in the Food segment
as our customers respond to increased demand for certain processed
food products.
Overall, we expect lower sales in North American Commercial as
we head into our seasonally slower fourth quarter and see the
ongoing impact of COVID-19 on this segment. Management expects a
slow rebound in North American Commercial activity going into
2021.
International
The International group continued to demonstrate strength and
resiliency in light of the headwinds created by the COVID-19
crisis. Our International sales grew 10% over Q3 2019
and overall international sales increased 16% YTD over 2019.
Quoting activity is rebounding across all regions leading to an
increase in order intake post Q3 resulting in solid backlogs that
are equal to a strong 2019 comparative.
In India, a favourable monsoon
season and increasing rice exports are offsetting a challenging
environment due to COVID-19. Recent product launches have expanded
our addressable markets in India
and adjacent rice focused regions with development of products
targeted at both larger and smaller rice processors.
Expansion into these adjacent markets has been augmented with a
rebound in our exports to pre-COVID-19 levels. Backlogs are
consistent year over year as order intake has increased
significantly to make up for earlier quarters which were more
heavily impacted by the uncertainties created by
COVID-19.
Momentum remains strong in Brazil where the macro environment continues
to be supportive for investment with historically low interest
rates and inflation. The favourable environment extends to
the fundamentals for AGI's end markets with large and growing crop
volumes, increasing global demand for Brazil agriculture products, and supportive
crop prices setting up positive and sustainable structural
conditions. Favourable weather augmented crop volumes in 2020
contributing to the tailwinds we have experienced YTD.
Backlogs are up 76% in Brazil and
order intake continues to grow as we move to the end of 2020.
Our platform in EMEA contributed a strong Q3 with sales
increasing 15% YOY and this region posted margin improvement driven
by our recent investments in automation and successful product
launches. Despite the aforementioned COVID-19 challenges and
strong YTD sales, our backlogs are equal to the prior year with
positive order intake. Pipeline activity is rebounding as
customers resume capital projects across the region.
Management expects results to be above prior year in Q4 and backlog
to grow through the end of the year positioning us well for
2021.
Technology
AGI SureTrack continues to grow significantly with retail
equivalent sales increasing 42% in Q3 YOY against a robust
comparative in 2019. From an earnings perspective, if we normalized
for a retail equivalent sales method as opposed to the current
hardware as a service subscription model, SureTrack (inclusive of
Affinity) would have represented a positive EBITDA despite
significant continued investments, including expansion of the sales
team, engineering, software developers, product management and
facilities. Our move to our new facility in Lenexa, Kansas has significantly increased our
capacity leading to strategically lower backlog to substantially
reduce customer lead times. We are forecasting continued
robust growth following an extensive internal review and
incorporating product, sales and channel development
recommendations from a leading third-party consulting firm.
Summary
Management is very pleased with how resilient AGI has been
through the challenges that COVID-19 has presented. AGI's
5-6-7 strategy to provide system solutions across five platforms, 6
continents, and across 7 components has led to the diversification
in terms of products, geographies, and customers which has proven
valuable during these uncertain times.
Based on existing conditions, management anticipates adjusted
EBITDA for 2020 to approximate 2019 results and continued momentum
going into 2021.
Diluted profit (loss) per share and diluted adjusted profit
per share
The Company's diluted profit (loss) per share for the three and
nine-month periods ended September 30,
2020 was loss of $(0.66) and
loss of $(2.49), respectively, versus
$(0.15) and $1.21, respectively in 2019. Profit (loss) per
share in 2020 and 2019 has been impacted by the items enumerated in
the table below, which reconciles profit (loss) to adjusted
profit.
|
|
|
[thousands of dollars
except per share amounts]
|
Three-months Ended
September 30
|
Nine-months Ended
September 30
|
2020
$
|
2019
$
|
2020
$
|
2019
$
|
Profit
(loss)
|
(12,261)
|
(2,819)
|
(46,633)
|
22,919
|
Diluted profit (loss)
per share
|
(0.66)
|
(0.15)
|
(2.49)
|
1.21
|
|
|
|
|
|
Loss (gain) on
foreign exchange
|
(5,333)
|
4,006
|
10,663
|
(2,413)
|
Fair value of
inventory from acquisition [2]
|
-
|
522
|
-
|
1,742
|
M&A expenses
(recovery)
|
75
|
(18)
|
1,346
|
3,046
|
Other transaction and
transitional costs [3]
|
3,927
|
301
|
11,077
|
6,427
|
Loss (gain) on
financial instruments
|
(290)
|
7,592
|
16,477
|
3,060
|
Loss (gain) on sale
of PP&E
|
(10)
|
124
|
119
|
124
|
Gain on settlement of
leases
|
(3)
|
-
|
(5)
|
-
|
Equipment rework
[4]
|
40,000
|
7,000
|
50,000
|
7,000
|
Share of associate's
net loss
|
1,060
|
788
|
3,367
|
788
|
Impairment
[5]
|
5,111
|
46
|
5,111
|
46
|
Adjusted profit
[1]
|
32,276
|
17,542
|
51,522
|
42,739
|
Diluted adjusted
profit per share [1]
|
1.62
|
0.91
|
2.70
|
2.26
|
|
|
|
|
|
|
[1]
|
See "Non-IFRS
Measures".
|
[2]
|
Non-cash expenses
related to the sale of inventory that acquisition accounting
required be recorded at a value higher than manufacturing
cost.
|
[3]
|
Includes
restructuring and other acquisition related transition costs, as
well as the accretion and other movement in contingent
consideration and amounts due to vendors.
|
[4]
|
To record the pre-tax
charge for the estimated cost of rework including additional time,
material and services.
|
[5]
|
See "DETAILED
OPERATING RESULTS - Impairment Charge" in our MD&A.
|
MD&A and Financial Statements
AGI's financial statements and management's discussion and
analysis (the "MD&A") for the three and nine-months ended
September 30, 2020 can be obtained at
https://www.newswire.ca/news-releases/ and will also be available
electronically on SEDAR (http://www.sedar.com) and on AGI's website
(http://www.aggrowth.com).
Conference Call
Management will hold a conference call on Thursday November 12, 2020, at 8:00 a.m. EST to discuss AGI's results for the
three and nine-months ended September 30,
2020. To participate in the conference call, please dial
1-888-390-0546 or for local access dial 416-764-8688. An audio
replay of the call will be available for seven days. To access the
audio replay, please dial 1-888-390-0541 or for local access dial
416-764-8677. Please quote passcode 381657# for the audio
replay.
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.
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 "trade sales", "EBITDA",
"Adjusted EBITDA", "gross margin", "funds from operations", "payout
ratio", "adjusted profit", and "diluted adjusted profit per
share". 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.
In this press release, we discuss the non-IFRS financial
measures, including the reasons that we believe that these measures
provide useful information regarding our financial condition,
results of operations, cash flows and financial position, as
applicable, and, to the extent material, the additional purposes,
if any, for which these measures are used. Reconciliations of
non-IFRS financial measures to the most directly comparable IFRS
financial measures are contained in our MD&A.
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.
References to "EBITDA" are to profit before income taxes,
finance costs, depreciation, amortization and share of associate's
net loss. 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 on settlement of
leases, equipment rework costs, fair value of inventory from
acquisitions and non-cash asset impairment charge. 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.
See "Operating Results –EBITDA and Adjusted EBITDA" in our MD&A
for the reconciliation of EBITDA and Adjusted EBITDA to profit
before income taxes.
References to "trade sales" are to sales net of the gain or loss
on foreign exchange. Management cautions investors that trade sales
should not replace sales as an indicator of performance. See
"Operating Results - Trade Sales" in our MD&A for the
reconciliation of trade sales to sales.
References to "gross margin" are to trade sales less cost of
inventories, and thereby exclude depreciation, amortization, fair
value of inventory from acquisitions and equipment rework from cost
of sales. Management believes that gross margin provides a useful
supplemental measure in evaluating its performance. See "Operating
Results – Gross Margin" in our MD&A for the calculation of
gross margin.
References to "funds from operations" are to adjusted EBITDA
less interest expense, non-cash interest, cash taxes and
maintenance capital expenditures. Management believes that, in
addition to cash provided by (used in) operating activities, funds
from operations provide a useful supplemental measure in evaluating
its performance. References to "payout ratio" are to dividends
declared as a percentage of funds from operations. See "Funds from
Operations and Payout Ratio" in our MD&A for the calculation of
funds from operations and payout ratio.
References to "adjusted profit" and "diluted adjusted profit per
share" are to profit for the period and diluted profit per share
for the period adjusted for the gain or loss on foreign exchange,
fair value of inventory from acquisitions, M&A expenses or
recoveries, other transaction and transitional costs, gain or loss
on financial instruments, gain or loss on sale of property, plant
and equipment, cost of equipment rework, share of associate's net
loss and non-cash asset impairment charge. See "Diluted profit
(loss) per share and diluted adjusted profit per share" in our
MD&A for the reconciliation of diluted profit per share and
diluted adjusted profit per share to profit.
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 the Company.
All information and statements contained herein that are not
clearly historical in nature constitute forward-looking
information, and the words "anticipate", "believe", "continue",
"could", "expects", "intend", "plans", "postulates", "predict",
"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. In addition,
this press release may contain forward-looking information
attributed to third party industry sources. 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 including our expectations for our future financial
results including sales, EBITDA and adjusted EBITDA for the 2020
year and fourth quarter, industry demand and market conditions, the
anticipated ongoing impacts of the COVID-19 outbreak on our
business, operations and financial results; the estimated costs to
the Company that may result from the Incident and the availability
of insurance coverage to offset such costs; the sufficiency of our
liquidity; long term fundamentals and growth drivers of our
business; future payment of dividends and the amount thereof; and
with respect to our ability to achieve the expected benefits of
recent acquisitions and the contribution therefrom. Such
forward-looking information reflects our current beliefs and is
based on information currently available to us, including certain
key expectations and assumptions concerning: the anticipated
impacts of the COVID-19 outbreak on our business, operations and
financial results; 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 the Company operates; the timely
receipt of any required regulatory and third party approvals; the
ability of the Company to obtain and retain qualified staff and
services in a timely and cost efficient manner; the timing and
payment of dividends; the ability of the Company to obtain
financing on acceptable terms; the regulatory framework in the
jurisdictions in which the Company operates; and the ability of the
Company to successfully market its products and services.
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 the effects of global outbreaks of pandemics
or contagious diseases or the fear of such outbreaks, such as the
recent COVID-19 pandemic, including the effects on the Company's
operations, personnel, and supply chain, the demand for its
products and services, its ability to expand and produce in new
geographic markets or the timing of such expansion efforts, and on
overall economic conditions and customer confidence and spending
levels, 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 the Company'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 the Company does
business including between Canada
and the United States; cyber
security risks; the risk that the assumptions and estimates
underlying the provision for warranty accrual and remediation
related thereto and insurance coverage for the Incident will prove
to be incorrect as future information because available to the
Company . 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 the Company's profile on SEDAR [www.sedar.com].
These factors should be considered carefully, and readers should
not place undue reliance on the Company'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, as further information becomes
available and as the economic environment changes. Without
limitation of the foregoing, the provision for warranty accrual and
remediation related to the Incident required significant estimates
and judgments about the scope, nature, timing and cost of work that
will be required. It is based on management's assumptions and
estimates at the current date and is subject to revision in the
future as further information because available to the Company. 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.

SOURCE Ag Growth International Inc. (AGI)