AGI Announces Second Quarter 2023 Results; Record Quarterly Adjusted EBITDA and Increased Full Year Guidance

Winnipeg, MB, August 10, 2023 – Ag Growth International Inc. (TSX: AFN) (“AGI”, the “Company”, “we” or “our”) today announced its financial results for the three-months ended June 30, 2023.

Second Quarter 2023 Highlights

• Sales of $390 million were consistent on a year-over-year (‘YOY’) basis
• Adjusted EBITDA[1] increased 33% to $88 million on a YOY basis; a record quarter for AGI
• Adjusted EBITDA margin %[2] of 22.6% vs 16.9% on a YOY basis
• Net debt leverage ratio² of 3.3x at June 30, 2023 vs 3.6x at March 31, 2023 and 4.8x at June 30, 2022
• Subsequent to the quarter, the Company announced an agreement with the impacted customer to resolve the Bin Incident from September 2020 and will reflect an additional $15.6 million pre-tax charge in the second quarter financial statements; cash settlement of the total $55.1 million accrual is expected in the third quarter of 2023

Outlook

• Management is raising full year 2023 Adjusted EBITDA guidance to be at least $290 million¹, up from our previous guidance of at least $265 million
• Full year 2023 Adjusted EBITDA margin % guidance of at least 18.0%
• Order book[3] continues to be strong and is up 3% YOY as of June 30, 2023

“Our strong second quarter margin performance highlights the progress and pace of many of our operational excellence initiatives,” noted Paul Householder, President & CEO of AGI. “A clear focus on manufacturing efficiency, centralized procurement, structured pricing programs, workforce optimization and many other operational excellence initiatives, are yielding clear benefits in terms of margin expansion. We anticipate the benefits of these efforts to be sustained through the rest of 2023 and into 2024. Our previously stated target of full-year Adjusted EBITDA margin % of 17% is well in-hand and we are now targeting at least 18%, representing a full 200 basis point increase over 2022. In addition to good sales momentum through the first half of the year and a significant order book, our operational excellence initiatives and margin strength have led us to raise full year Adjusted EBITDA guidance to at least $290 million for 2023.”

“The second quarter again showed progress on our most important balance sheet priorities,” added Jim Rudyk, CFO of AGI. “Our efforts to optimize our net working capital position continues to progress, improving as a percentage of sales and along other key metrics we track internally. Our leverage position also improved with a notable decrease in debt levels compared to the second quarter of last year and a modest reduction sequentially. Our net debt leverage ratio now sits at 3.3x, down from 4.8x year-over-year and 3.6x sequentially, and again affirms we are on the right track to meet our stated objective of approximately a 3.0x ratio by the end of 2023, even after the cash settlement for the Bin Incident is made.”