Ag Growth International Inc. · TSX:AFN
Ag Growth International — Investor Presentation (December 2014)
39 slides from Ag Growth International's investor presentation, December 2014
Slide 1: Expanding Our Growth Platform
E X PA N D I N G O U R G ROW T H P L AT FO R M DECEMBER 2014
Slide 2: Safe Harbour Statement
SAFE HARBOUR STATEMENT Certain statements contained herein constitute forward-looking statements that reflect our expectations regarding the future growth, results of operations, performance, business prospects, and opportunities of the Company. Forward-looking statements may contain such words as “
Slide 3: Corporate Overview
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Slide 4: Corporate Overview
CORPORATE OVERVIEW HEADQUARTERS Winnipeg, Manitoba HISTORY Founded in 1996; IPO 2004 (TSX: AFN) MARKET CAP ~$675M TOTAL SALES Q3 2014 LTM $405 million EMPLOYEE COUNT 1,600 employees Ten divisions located in Canada, USA & Europe MANUFACTURING DIVISIONS encompassing 1.3M square feet of manufacturing f
Slide 5: Vision and Strategy
To Be the Global Leader in Grain Handling, VISION: Storage and Conditioning Solutions S T R AT E G Y: Focused catalogue expansion, acquiring leading brands 1. to provide complete grain handling, storage and conditioning solutions Geographic diversification to provide growth in emerging markets, miti
Slide 6: Corporate Overview
CORPORATE OVERVIEW Service all key grain handling segments EXPORT DESTINATION FARM ELEVATOR PORT PORT PROCESSOR 6
Slide 7: AGI History
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Slide 8: AGI Farm and Commercial
AGI= AG GROWTH INTERNATIONAL FARM COMMERCIAL + COMMERCIAL © World’s largest manufacturer of portable grain handling equipment * Leading brands - Industry’s most extensive product Leading market share in aeration in western Canada © Offer up to 4,600 MTPH in capacity offering -~40% market share, grea
Slide 9: Key Demand Drivers
KEY DEMAND DRIVERS Crop Production Volume Harvest Conditions Storage Practices Infrastructure Gap 9
Slide 10: Q3-2014 Financial Results
AGI= AG GROWTH INTERNATIONAL Q3-2014 FINANCIAL RESULTS
Slide 11: 5th Consecutive Record Quarter
5TH CONSECUTIVE RECORD QUARTER TRADE SALES ADJUSTED EBITDA $150.0 In C$ millions In C$ millions $140.0 $29,000 $130.0 $27,000 $26,718 $116.5 $118.8 $120.0 $110.0 $25,000 $24,142 $100.0 $23,000 $90.0 $21,000 $80.0 $19,000 $70.0 $60.0 $17,000 $50.0 $15,000 Q3 2013 Q3 2014 Q3 2013 Q3 2014 11
Slide 12: Nine Month Comparatives
NINE MONTH COMPARATIVES TRADE SALES ADJUSTED EBITDA In C$ millions In C$ millions ($000s) ($000s) 400,000 70,000 $65,231 65,000 350,000 $317,422 60,000 $49,519 55,000 300,000 $270,332 50,000 45,000 250,000 40,000 35,000 200,000 30,000 25,000 150,000 20,000 9 mos 2013 9 mos 2014 9 mos 2013 9 mos 2014
Slide 13: Payout Ratio - Dividend $2.40 per annum
PAYOUT RATIO - Dividend $2.40 per annum Quarter Ended Sept.30th Nine Months Ended Sept.30th In C$ millions In C$ millions $30,000 $70,000 $25,000 $60,000 $21,959 $50,240 $50,000 $20,000 $41,516 $16,614 $40,000 $15,000 $30,000 $10,000 $20,000 $5,000 $10,000 45% 36% 54% 47% $0 $0 Q3 2013 Q3 2014 Nine
Slide 14: Financial Results & Outlook
FINANCIAL RESULTS & OUTLOOK AGI well positioned for 2015: Strong market dynamics in core North American market Dominant market share in North American portable grain handling Continued investment in commercial grain handling infrastructure both domestically and overseas Expanding global foot
Slide 15: Westeel Acquisition
E X PA N D I N G O U R G ROW T H P L AT F O R M WESTEEL ACQUISITION NOVEMBER 10, 2014
Slide 16: Terms of the Transaction
TERMS OF THE TRANSACTION PURCHASE PRICE $210 M enterprise value plus excess cash & working capital adjustment ADJUSTED EBITDA(1) $20 M 2014E TRANSACTION MULTIPLE 10.5x 2014E Adjusted EBITDA (2) FINANCING Transaction will be financed with a combination of debt and equity SYNERGIES Anticipated near te
Slide 17: Transaction Financing
TRANSACTION FINANCING E n t e r p r i s e Va l u e $ 2 1 0 M i l l i o n Convertible Equity Debt Debentures ~$45 M $45 M $120 M Bought Deal Bought Deal Fully Committed Subscription receipts 5.25% subordinated unsecured New Senior Secured Credit convertible to common shares 5-year fixed rate ex
Slide 18: Slide 18
Slide 19: Transaction Highlights
TRANSACTION HIGHLIGHTS HIGHLY STRATEGIC ACQUISITION OF CANADA’S LEADING BRAND IN GRAIN STORAGE NEW PRODUCTS COMPLEMENT AND EXPAND SEED AND FERTILIZER CATALOGUE PROVIDES SCALE TO COMPETE AGAINST GLOBAL PLAYERS TO PURSUE INTERNATIONAL GROWTH ACHIEVES SIGNIFICANT SYNERGIES GENERATES IMMEDIATE ACCRETION
Slide 20: Westeel: 110 Years of Brand Loyalty
WESTEEL: 110 YEARS OF BRAND LOYALTY 20
Slide 21: Westeel: Clear Canadian Leader
WESTEEL: CLEAR CANADIAN LEADER GROWING GLOBAL PRESENCE Tisdale Saskatoon Olds Winnipeg Fargo ITALY SPAIN INDIA 20
Slide 22: Westeel: Geographic Balance
WESTEEL: GEOGRAPHIC BALANCE 2013 REVENUE BY GEOGRAPHY S TA N D A L O N E PRO FORMA 26% 21% AGI 22% 53% 38% 40% Westeel 10% 83% 7% Canada U.S. International 22
Slide 23: Westeel: Historical Financials
WESTEEL: HISTORICAL FINANCIALS Strong Upside Potential 2013 and H1-2014 EBITDA were impacted by one time events Record order backlog Rising steel prices Financial constraints ADJUSTED EBITDA REVENUE A N D E B I T D A M A R G I N (1) $202.0 16.7% 13.9% $25.4 11.2% 11.8% $151.7 $155.5 $21.5 7.
Slide 24: Westeel: 2014E Adjusted EBITDA
WESTEEL: 2014E ADJUSTED EBITDA Immediate Corporate Cost Savings 2 0 1 4 E A D J U S T E D E B I T D A (1) Westeel 2014 Adjusted EBITDA is expected to ($1.4) $3.7 be $20.0 M Based on expected Westeel EBITDA of $17.7 M, which is burdened with corporate costs $20.0 $17.7 Westeel's 2014 EBITDA has
Slide 25: Westeel: An Excellent Fit with AGI
WESTEEL: AN EXCELLENT FIT WITH AGI H I G H LY C O M P L E M E N TA R Y P R O D U C T S PRODUCT BENEFIT COMBINED Leading Portable & Leading Grain Storage Unique Combination of Permanent Grain Catalogue: Smoothwall, Comprehensive On Farm, Handling Catalogue Hopper Cones, Commercial Portable & Commerci
Slide 26: Complementary Geographies
COMPLEMENTARY GEOGRAPHIES Central & Western Europe Canada RUK U.S. Middle East / North Africa India Latin America Australia / New Zealand 26
Slide 27: North American Growth Opportunities
NORTH AMERICAN GROWTH OPPORTUNITIES Changes to CWB have opened opportunities for growers to store and market their grain Growth of seed and fertilizer handling is a trend for operators to manage their risk Investment in seed technology by Monsanto and Pioneer should lead to increased corn acre
Slide 28: International Growth
INTERNATIONAL GROWTH
Slide 29: International Growth Opportunities
INTERNATIONAL GROWTH OPPORTUNITIES The international grain storage deficit creates significant short and long term growth Provides scale to compete against large international players C O N S TA N TA S I T E - R O M A N I A More robust catalogue enhances ability to provide customers with compl
Slide 30: International Strategy
INTERNATIONAL STRATEGY Target large corporate farms and multinational grain traders Well capitalized V O R O N E Z H - R U S S I A Multi-year CAPEX spends EDC insured Bundled sales, leveraging catalogue Repeat business confirms sustainability K A Z A K H S TA N 30
Slide 31: Russia and Ukraine
RUSSIA AND UKRAINE Sales commenced in 2011: 2011 - $11M 2012 - $27M 2013 - $57M 2014 - $70M sales + order backlog RUK – 185 M Hectares Short term challenges Continue to sell, ship and quote new projects Multi National Companies still investing Strong long term potential USA – 174 M
Slide 32: Latin America – Gaining Traction
LATIN AMERICA – GAINING TRACTION Significant infrastructure opportunity Tariff free (ex-Brazil) – compete effectively from North America AGI dedicated personnel – 2012 Awarded five major projects in 2014 totalling approx. $20 million 32
Slide 33: Brazil Opportunity
BRAZIL OPPORTUNITY Less than 15% on farm storage capacity Historical lack of investment in infrastructure Lack of rail or inland waterway options Road transport costs significantly higher than ROW Antiquated, inefficient port facilities Organic entry into market 33
Slide 34: International Sales Growth
INTERNATIONAL SALES GROWTH INTERNATIONAL SALES $92,491 $82,515 $71,936 $54,541 2007-11 COMPONENTS $36,807 $17,357 $16,515 $6,305 2007 2008 2009 2010 2011 2012 2013 LTM Sep 2014 2007 2013 (5% of total sales) (23% of total sales) 2011-14 SYSTEMS 34
Slide 35: AGI Highlights
AGI HIGHLIGHTS
Slide 36: AGI and Westeel brands
Al) WV ESTEEL Al Al Pe PLEGATE: UNION IRON= 36
Slide 37: Corporate Overview Proforma Westeel
CORPORATE OVERVIEW PROFORMA WESTEEL HEADQUARTERS Winnipeg, Manitoba HISTORY Founded in 1996; IPO 2004 (TSX: AFN) MARKET CAP ~$730M with an Enterprise Value of $1.0B TOTAL SALES Q3 2014 LTM $582M EMPLOYEE COUNT 2,200 employees Eleven divisions located in Canada, USA & Europe MANUFACTURING DIVISIONS e
Slide 38: Ag Growth Highlights
AG GROWTH HIGHLIGHTS Growth driven by robust global agricultural fundamentals Leading product catalogue – Farm & Commercial Industry leader in core North American markets Strong record of organic & acquisition growth Expanding international operations Attractive dividend yield 38
Slide 39: Expanding Our Growth Platform
E X PA N D I N G O U R G ROW T H P L AT FO R M 39
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