Bullboard - Stock Discussion Forum Ag Growth International Inc T.AFN.DB.J

Primary Symbol: T.AFN Alternate Symbol(s): AGGZF | T.AFN.DB.H | T.AFN.DB.G | T.AFN.DB.I

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Ag Growth International Inc. is a provider of the equipment and solutions required to support the storage, transport, and processing of food globally. The Company provides equipment solutions for agriculture bulk commodities, including seed, fertilizer, grain, rice, feed, and food processing systems. It has manufacturing facilities in Canada, the United States, Brazil, Italy, France, and India... see more

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TSX:AFN - Post Discussion

Ag Growth International Inc > TD

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Post by retiredcf on Aug 11, 2023 12:23pm

TD

Currently have a $77.00 target. GLTA

Ag Growth International Inc.

(AFN-T) C$52.58

Q2/23 First Look Event

AFN reported record quarterly adjusted EBITDA of $88.2mm, which was ~17% above consensus of $75.2mm. The beat was driven by exceptionally strong margins, which more than offset lower-than-expected revenues.
Management increased its 2023 adjusted EBITDA guidance to "at least $290mm" (vs. "at least $265mm", previously), which compares favourably to consensus of $267.6mm. Similarly, AFN increased its full-year adj. EBITDA margin target to "at least 18%" (was 17%, and consensus at 16.6%).
Conference call at 8:00 a.m. ET (1-800-319-4610).

Impact: POSITIVE

Although revenues missed expectations and were flat y/y, exceptionally strong margin performance drove a meaningful adj. EBITDA beat and saw AFN notably increase its 2023 adj. EBITDA guidance.
Margins are benefiting from AFN's various operational excellence initiatives (includes manufacturing efficiencies, centralized procurement, structured pricing programs, and workforce optimization). Encouragingly, management expects the benefits of these efforts to be sustained through the rest of 2023 and into 2024.
Q2/23 adj. EBITDA was $88.2mm vs. consensus/TD at $75.2mm/$75.9mm.
Adjusted EBITDA margin was 22.6% (+565bps y/y) vs. consensus of 17.5% and TD at 17.3%.
- Farm segment EBITDA margin was 30.0% (+740bps y/y and well above our
  
  23.1% estimate), supported by manufacturing efficiencies, a mix tilted toward portable equipment, and Digital reorganization progress.
- Commercial segment EBITDA margin was 18.5% (+390bps y/y; above our 14.8% estimate), with the y/y improvement supported by effective manufacturing expense management.
Revenue was $390.3mm (flat y/y), below consensus/TD at $428.5mm/ $439.1mm. Farm segment sales were +3% y/y (supported by healthy growth in Canada), while Commercial segment sales were -4% y/y (hurt by large commercial project cyclicality in North America and ongoing food platform softness).
Outlook: AFN's new full-year 2023 adj. EBITDA guidance of "at least $290mm" implies H2/23 adj. EBITDA of at least $153.7mm, which is ~6% above H2/23 consensus of $144.7mm.
AFN's overall order book was +3% y/y at quarter end (Farm +27% y/y; Commercial -10% y/y). Commercial weakness reflects the food platform's ongoing reset and fertilizer market softness.
AFN's total net leverage ratio was 3.3x (down vs. 3.6x in Q1/23). Management continues to expect leverage to trend towards the three-times level by YE2023.