Ag Growth International Q2 Earnings Call Highlights

Ag Growth International Q2 Earnings Call Highlights

Ag Growth International TSE: AFN reported divergent trends across its business in the second quarter of 2026, with improving North American farm demand offset by continued weakness in commercial markets globally.

President and CEO Paul Brisebois said the company is operating in a cyclical agricultural environment marked by uncertainty in North America and international markets.

He said the farm business showed early signs of stabilization, while commercial customers remained cautious on capital spending amid geopolitical uncertainty, financing conditions and delayed project decisions.

Farm Revenue and EBITDA Rise, Commercial Segment Weakens

AGI’s farm segment generated revenue of CAD 140 million in the second quarter, up 10% from a year earlier, while adjusted EBITDA increased 12% to CAD 33 million.

North American farm revenue rose 16%, supported by stronger U.S. demand for portable equipment and Canadian demand for permanent storage and handling equipment.

Brisebois said dealer inventories have been declining, prompting restocking activity ahead of harvest.

He also pointed to improved conditions in certain crop markets, including canola and wheat, though he said corn prices remained relatively suppressed.

“We’re not ready to call that it’s a complete turn,” Brisebois said of the farm cycle.

He said a successful harvest season, stronger pull-through for portable equipment and a better early-order program would provide further evidence of a more durable recovery.

The commercial segment remained under pressure.

Revenue fell 17% to CAD 183 million, and adjusted EBITDA declined to CAD 19 million.

Commercial adjusted EBITDA margin compressed 602 basis points year over year to 10.6%, which interim CFO Nicolle Parker attributed primarily to lower volumes.

Brisebois said commercial demand has been affected by delayed large projects in North America, the Russia-Ukraine war’s effect on Europe and regional markets, and challenges in the Middle East, Africa and India.

He noted that AGI’s commercial win rate remains high, but projects being awarded are generally smaller while larger opportunities are delayed.

Consolidated adjusted EBITDA totaled CAD 43 million, down 20% year over year.

The company’s adjusted EBITDA margin declined 217 basis points to 13.4%.

Order Book Declines as Commercial Pressure Outweighs Farm Gains

AGI ended the quarter with an order book of CAD 516 million, down 22% from the prior-year period.

The company said North American farm order trends improved, with North American portable orders up 77% and North American farm permanent orders up about 16%.

However, the improvement in farm was outweighed by pressure in North American commercial operations, Europe, the Middle East and Africa, and India.

Parker said cautious customer decision-making in those regions continued to weigh on order intake.

Brisebois said the second half is expected to reflect a similar pattern to the first half: continued progression in farm and ongoing challenges in commercial.

He said commercial conditions in North America and India, along with the absence of new large-scale Brazil projects, are expected to affect second-half and full-year results relative to the prior year.

In Brazil, AGI is shifting away from large turnkey projects that included financing toward more traditional equipment and contractor-service projects.

Brisebois said roughly CAD 40 million of large turnkey-project backlog remains.

While the strategy will reduce reported backlog relative to prior years, he said it is intended to improve revenue quality, risk-adjusted returns and cash flow.

Cost Reduction, Asset Sales and Deleveraging Efforts Continue

AGI is targeting more than CAD 30 million in annualized structural cost savings, with a large majority already implemented, according to Brisebois.

The co...