Ag Growth International Q4 2025 Earnings Call Transcript

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Provided by Quartr
March 25, 2026

Key Takeaways

  • Negative Sentiment: Fourth-quarter results showed revenue up modestly but a sharp margin decline — Q4 revenue CAD 396M while adjusted EBITDA fell ~38% to CAD 48M and margin compressed ~830 bps to 12.2%.
  • Positive Sentiment: Management launched a broad restructuring — executive team cut from 17 to 8, North American consolidation, and targeted annualized SG&A savings of at least CAD 20M, plus ~CAD 20M of cash avoidance from terminating the ERP implementation.
  • Negative Sentiment: Execution problems on traditional Brazil projects (cost overruns, warranty/remediation charges and bad-debt write-offs) materially pressured Commercial margins and prompted a halt to new financed turnkey projects, creating a near-term revenue gap of ~CAD 183M from 2025 large projects.
  • Negative Sentiment: Cash and leverage remain strained — 2025 free cash flow was about CAD -111M (largely tied to Brazil projects) and net leverage ended at 4.7x; management expects to monetize receivables (targeting ~CAD 80–100M in H1) and has extended its senior facility to 2030.
  • Neutral Sentiment: Order book declined ~26% to CAD 543M, but the Farm segment showed pockets of improvement (U.S. portables and better early-order activity) giving cautious optimism for 2026 while visibility remains limited.
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Earnings Conference Call
Ag Growth International Q4 2025
00:00 / 00:00

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Operator

Before we begin, we caution listeners that this call may contain forward-looking information and discussion and that actual results could differ materially from such forecasts or projections. Further, in preparing the forward-looking information, certain material factors and assumptions were used by management. Additional information about the material factors that could cause actual results to differ materially from the forecasts or projections and the material factors and assumptions used by management in preparing the forward-looking information are contained in our fourth quarter MD&A and press release, which are available on the AGI website. I would now like to turn the conference over to Paul Brisebois, Interim President and CEO of AGI. Please go ahead, sir.

Paul Brisebois
Interim President and CEO at AGI

Thank you, operator, and good morning, everyone. I'm pleased to be speaking with you today from our corporate headquarters in Winnipeg. Our CFO, Jim Rudyk, is here with me, and we are eager to use this call as a kickoff to a new era for AGI. Before getting into a more detailed discussion on the quarter as well as other relevant business and corporate updates, I would like to first introduce myself and share a few more details on my professional background. I've spent my entire career, which spans nearly 30 years, in the global agriculture business with a strong foundation in sales leadership, marketing, business development, and operations. I've been an executive with AGI since 2012, played a large part in the growth that we have accomplished going from a CAD 300 million company to a CAD 1.4 billion company.

Paul Brisebois
Interim President and CEO at AGI

Most recently leading our North American farm and global portables businesses. That role has kept me close to our customers and provided a clear view of the operating levers that drive performance across AGI. Agriculture is a compelling industry. People must eat and global demand continues to grow. It is also cyclical, shaped by factors such as weather, geopolitics, interest rates, and government policy, to name a few. While I've seen significant change over the years, the fundamentals remain constant. Crops are grown every season and grain must move from the field to storage to processing and ultimately to end markets. The industry generally follows a predictable seasonal rhythm, and understanding that rhythm is essential to understanding our customers, what matters, what's urgent, and where they need the most support.

Paul Brisebois
Interim President and CEO at AGI

As the leader of the company, having decades of hands-on operating experience is particularly important as we navigate a cyclical North American market while managing through significant change internally. To support the pace of change and provide the appropriate level of strategic input, governance, and oversight, AGI has also made several important changes to the board of directors in recent months. Led by our Board Chair, Daniel Halyk, the board now collectively brings a strong mix of hands-on operating experience, deep agriculture sector experience, restructuring and value creation knowledge, capital markets expertise, deep institutional knowledge from AGI's formative years, in addition to meaningful shareholder representation. Overall, this is a board that is well-positioned, well-equipped, and well-aligned to support a renewed focus on operating fundamentals, improving shareholder returns, and enhancing return on invested capital metrics.

Paul Brisebois
Interim President and CEO at AGI

I look forward to working closely with our board as we execute on our corporate priorities and strategies. Before getting into more detail on our current strategic priorities and recent restructuring activities, I'll provide some brief comments on our fourth quarter results, which Jim will expand on later in the call during his prepared remarks. Fourth quarter revenue increased 4% year-over-year to CAD 396 million, supported by strength in our commercial segment, particularly in international markets, offset by continued softness in the North American farm segment, Canada in particular. However, adjusted EBITDA decreased to approximately CAD 48 million, down 38%, and our adjusted EBITDA margin compressed to 12.2%, roughly 830 basis points year-over-year. Given the extent of margin compression in the quarter, it's important to be direct about the drivers of this result.

Paul Brisebois
Interim President and CEO at AGI

First, within our farm segment, lower volumes for permanent storage and handling, especially in Canada, reduced overhead absorption and impacted profitability. Second, within our commercial segment, we experienced execution-related cost pressures on various traditional equipment-only projects in Brazil, including cost overruns, warranty charges, remediation expenses, and bad debt write-offs. For clarity when we refer to our traditional Brazil operations, this includes everything other than the large-scale projects we've recently engaged in. Third, in our North American commercial business, a combination of product mix and production efficiency issues weighed on margins. Taken together, these items contributed to the bulk of the fourth quarter margin outcome. They also reinforce why we initiated a new phase of restructuring early in 2026. As we move forward in 2026 and beyond, we have three key guiding principles which taken together shape our actions and priorities. The first is simplification.

Paul Brisebois
Interim President and CEO at AGI

We will continue to streamline layers, clarify accountability, and standardize core processes among other activities in a concerted effort to structurally reduce the overall complexity of how we operate. We are simplifying the organization end-to-end, from the high level organizational structure to how decisions are made day-to-day. The objective is to move faster with better discipline. The second is customer focus. We are refocusing resources on what matters most to customers, from Quote-to-Cash through delivery and how we manage key accounts. The objective is to make customer-first thinking a core part of our culture and day-to-day operations. The third is reducing debt and managing cash flow more broadly. We are operating with tighter financial discipline to improve cash generation and conversion. Outside of managing debt through operating cash flows, we are reviewing our options and alternatives to help accelerate debt repayment.

Paul Brisebois
Interim President and CEO at AGI

As we work through 2026 in consultation with our board, we will continue to calibrate our strategy and priorities with greater precision and through the lens of ROIC metrics. Given the amount of change underway, we believe it's important to share our current direction as of today so stakeholders understand the priorities guiding execution and resource allocation in the near term. In our renewed commitment to enhance the AGI customer experience and simplify operations through the start of 2026, we have begun and are continuing to undertake a comprehensive strategic restructuring initiative. This process focuses on streamlining our operations and aligning our decision-making processes more closely with our customers' needs. By simplifying our business structure, we aim to empower our teams to respond more swiftly and effectively to customer feedback and market demands, ensuring a more agile and customer-focused approach. These actions include four main changes.

Paul Brisebois
Interim President and CEO at AGI

First, we restructured the top level of the company, what we call the executive operating team, going from a team of 17 down to a team of eight to facilitate accelerated decision-making and improved execution. Second, we implemented a significant overhaul of the North American business to simplify the leadership structure and reduce layers of siloed functions. The objective is to strengthen day-to-day execution and improve the speed of effectiveness of our response to customers in changing market conditions across North America. As part of this alignment, several smaller business units, including feed, food, and digital, are being integrated into the broader North American organization, all of which will now operate under a single regional leader. Third, a streamlining of certain corporate functions and leadership capabilities to our Winnipeg headquarters, consolidating activities previously managed elsewhere.

Paul Brisebois
Interim President and CEO at AGI

Finally, after careful consideration and evaluation of our current operational landscape, we've made the strategic decision to terminate our ERP implementation. The ERP implementation has been challenging, delayed, resource-heavy and ineffective to date, raising concerns on the realization of expected benefits. Our executive team reviewed the ERP decision through the lens of simplicity, customer focus, and cash flow management, coming to the conclusion that we must cease implementation and refocus on other priorities. In addition, we have also suspended the dividend going forward, effective immediately. The objective of all of these actions are straightforward. They are aligned with our strategic focus areas of simplifying our business, increasing customer focus, and managing cash flow to reduce debt. Collectively, these actions will drive annualized SG&A cost savings of at least CAD 20 million.

Paul Brisebois
Interim President and CEO at AGI

Terminating the ERP will enable about CAD 20 million of cash cost avoidance over the next two years. Further initiatives to help remove cost and simplify the organization are under review. Stepping outside of these immediate actions, we have also made some other targeted refinements to our corporate strategy, including a decision to halt any new large-scale projects that include general contracting and financing elements in Brazil or elsewhere until balance sheet capacity improves, while continuing to pursue equipment-only opportunities in Brazil that are aligned with the company's traditional operating model. A comprehensive internal review of our alternatives to reduce leverage and accelerate debt repayment. In addition, we are placing an increased focus on metrics such as return on invested capital to guide strategic decision-making alongside updates to corporate compensation structures, both of which are aligned with the objective of improving shareholder returns.

Paul Brisebois
Interim President and CEO at AGI

Moving to some comments on order book and overall market conditions. We ended the year with an order book of CAD 543 million, down 26% year-over-year, primarily reflecting the execution of several significant projects in our International Commercial segment. In the Farm segment, areas of North America have shown some early signs of improvement, notably in our year-end early order program for 2026. This provides some cautious optimism for 2026 Farm segment results could show an improvement over 2025. It is still early in the year and visibility remains limited. We'll need to get further into the season for additional validation of the demand picture and how to place 2026 within the broader agriculture cycle. In Commercial, order intake softened in late 2025 and into early 2026, reflecting longer customer decision-making and project review cycles.

Paul Brisebois
Interim President and CEO at AGI

Finally, an important note on the underlying makeup of our 2025 results, so we can be clear for listeners, analysts, and shareholders as they set expectations for 2026. Our full year results in 2025 benefited from significant revenue connected to large-scale projects in Brazil, which included general contracting and financing components. That said, backfilling this volume of revenue with traditional commercial business projects to replenish the order book to 2025 levels will be challenging. Overall, the demand environment remains an issue in the near term. But we're leaning in, keeping opportunities in our pipeline moving forward, staying close to customers, and simplifying the organization so we can execute better and be ready to capture growth opportunities as conditions improve. To wrap up, I'm grateful and genuinely honored to be in the position to lead AGI through this next chapter.

Paul Brisebois
Interim President and CEO at AGI

We see both challenges and opportunities ahead, and our team is ready to execute. We are firmly committed to strengthening alignment with shareholder returns and recognize that this is an area where improvement is required. Enhancing value creation for shareholders is a core priority, and we are taking deliberate steps to better align our strategic decision-making, capital allocation, and incentive structures with this objective. We are fully aware and aligned on the need for action to drive consistent, measurable improvement in shareholder returns and alignment. Jim, over to you.

Jim Rudyk
CFO at AGI

Thanks, Paul, and good morning, everyone. I'll begin with a brief review of Q4 results and then discuss other key financial metrics. Starting with Farm. Farm segment revenue declined year-over-year in the fourth quarter, reflecting continued challenging market conditions across North America, including soft crop prices and ongoing uncertainty related to trade and tariff policies. Revenue decreased 8% to CAD 123 million, with the decline concentrated in Canada. Canada Farm revenue decreased 34% year-over-year, impacted by slow demand across both portable and permanent grain handling equipment and declining, though still elevated, dealer inventory levels alongside an overall cautious approach to purchasing behavior by farmers and end users. In contrast, U.S. Farm revenue increased 11%, reflecting improved volumes versus prior periods, particularly in portable grain handling equipment and early signs of potential stabilization across certain portable and permanent categories.

Jim Rudyk
CFO at AGI

That said, demand remains below historical norms and visibility into sustained improvement remains limited entering 2026. International Farm revenue increased 36% year-over-year, led by strong demand in Australia, though the overall contribution from international regions remained modest in relative terms. Adjusted EBITDA for the Farm segment declined 39% to CAD 19.8 million, and margin compressed from 24.1%-16%, driven primarily by lower volumes and margin pressure on permanent handling and storage solutions in Canada. Now turning to the Commercial segment. Commercial segment revenue increased year-over-year in the fourth quarter, driven primarily by large-scale comprehensive projects in international markets, with Brazil again delivering a strong quarter and complemented by solid contributions from our EMEA region.

Jim Rudyk
CFO at AGI

Overall segment revenue increased 10% to CAD 273 million, with international commercial revenue up 18% to CAD 206 million, reflecting the mix of large projects, notably in Brazil. In North America, U.S. commercial revenue increased 9% on continued execution of projects secured earlier in the year, while Canada commercial revenue declined significantly as the prior year period benefited from substantial project wins. In Q4 2025, a few major projects were pushed from Q4 into Q1 2026. Adjusted EBITDA for the Commercial segment declined 39% to CAD 33 million, and margins compressed from 21.6% to 12%. The decline was driven primarily by execution-related pressures on traditional projects in Brazil that led to cost overruns, warranty charges, and remediation expenses, as well as product mix and production efficiency issues in our North American commercial business.

Jim Rudyk
CFO at AGI

While we are executing a plan to mitigate the margin pressure, we do expect some of these margin challenges to persist for both the Brazilian and North American commercial businesses into 2026. Moving on to adjusted EBITDA and a few comments on specific line items within that reconciliation. Some of the key items to note include transactional, transitional, and other representing a mix of legal accruals, asset disposal costs, and personnel expenses. A meaningful component this quarter of transactional expenses included a CAD 21 million purchase of the interest of related parties for some of the large-scale Brazilian projects. This represented the purchase of our Brazilian construction partner's equity interest in three of the large-scale projects. While this would normally be recorded as an equity transaction, it was expensed due to the timing of when the transactions close.

Jim Rudyk
CFO at AGI

Another key item is our ERP implementation cost, which will soon be removed given the strategic decision to terminate this activity, going forward. Finally, I'll provide a few comments on a few of our focus financial metrics, including free cash flow and leverage. Free cash flow in Q4 was negative, driven mostly by temporary working capital requirements associated with large scale international commercial projects in Brazil. Improving cash flow is a paramount objective for both management and the board. Of the negative a CAD 111 million of free cash flow in 2025, a very significant portion of this was tied to these large scale projects in Brazil. As we monetize existing receivables and halt further investment, the cash flow pressure related to large scale projects in Brazil should subside.

Jim Rudyk
CFO at AGI

From a leverage standpoint, our net debt leverage ratio was 4.7x at year-end compared to 3.9x at quarter-over-quarter and 3.1x year-over-year. We recognize that leverage is elevated and improving free cash flow generation and reducing leverage are key priorities. It is worth noting that our syndicate remains highly engaged and supportive. In Q1, we finalized an amendment agreement with the majority of our lending group that extends our senior credit facility maturity date out to 2030. One key element of our de-leveraging plan is the investment vehicle established in Brazil to monetize financing receivables provided by AGI. To date, this vehicle has generated CAD 7 million of inflows, and we have made progress on securing additional inflows in the near term.

Jim Rudyk
CFO at AGI

This structure is designed to relieve working capital, support delivery of large-scale projects, improve cash conversion and strengthen leverage metrics over time. We are working through some of the detailed administrative aspects of the monetization process, and we expect meaningful progress on the long-term accounts receivable monetization effort shortly. For clarity, it is worth reiterating that following our strategic choice to stop pursuing large-scale projects in Brazil, which require general contractor and financing components, we will refrain from entering new customer or project agreements that would increase our long-term receivables or otherwise use our balance sheet. When our balance sheet improves, we may revisit, but for now the priority is on reducing debt. In closing, our go-forward focus is clear, improve execution, restore margin performance, strengthen cash conversion and reduce leverage. With that, I'll turn it back over to the operator.

Operator

Thank you. We will now begin the analyst question-and-answer session. To join the question queue, you may press star then one on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. As a reminder, please limit yourself to two questions and rejoin the queue if you have any further questions. The first question today comes from Gary Ho with Desjardins Capital Markets. Please go ahead.

Gary Ho
Research Analyst for Financial Services at Desjardins Capital Markets

Thanks and good morning. I want to start off with the commercial segment. It was fairly weak. I think it was mentioned execution related pressures in equipment only projects in Brazil, mentioned cost overruns, higher warranty and remediation expenses, and also comments around North American production inefficiencies. Can you elaborate on these items? Also related, maybe for Jim as well, of your CAD 48.3 million reported EBITDA, looks like you didn't back out some of these one time items, they're commercial or otherwise, like bad debts, etc. Can you maybe quantify these non-recurring items that's in your Q4 EBITDA?

Paul Brisebois
Interim President and CEO at AGI

Hi, Gary. It's Paul here. Thanks for the question. I'll answer the first question, then I'll turn it over to Jim. With regards to the execution related cost overruns, about half of that of the issues were in cost overruns, warranty charges, and then half was in bad debt write off. You know, to be honest, when we look at our Brazil business, the pace of growth in our Brazil operations outpaced our capabilities to execute. That creates challenges in the business. That's why we had the cost overruns, warranty charges, and unfortunately, a couple of customers from a bad debt perspective. We've installed a new business leader in our Brazilian business.

Paul Brisebois
Interim President and CEO at AGI

We're focused on technical accounting review on large scale projects and a full review of project management procurement practices going forward. We feel that all of these are addressable in our Brazil business as well as in the North American commercial business when we talk about product mix and production efficiency issues. You know, we had lower margin product that we were selling in Q4 and then inevitably had some production efficiency issues, which led to lower margins.

Jim Rudyk
CFO at AGI

Gary, just to on your follow on there, no, we did not back these out. You know, these are our operating costs, you know, where we've got a number of initiatives to address them. We're working hard to ensure they are not recurring, but they were not backed out.

Jim Rudyk
CFO at AGI

You know, we do expect to still have some challenges, particularly in Q1 as we work through our restructuring plan. We thought it made sense to leave them in just our normal cost of goods sold or SG&A as opposed to backing them out.

Gary Ho
Research Analyst for Financial Services at Desjardins Capital Markets

Sorry, Jim, are you able to kind of quantify what those could have been if it was?

Jim Rudyk
CFO at AGI

Well, in terms of specifically the Brazil costs, or are you talking about all in general?

Gary Ho
Research Analyst for Financial Services at Desjardins Capital Markets

Yeah, all in general.

Jim Rudyk
CFO at AGI

Yeah. Of the overall impact on our margins, you know, about a third of them are attributable to each of the three categories. Lower farm volumes, the Brazil impact, and then North America commercial, they'd be about a third each of them of the total dollar impact year-over-year.

Gary Ho
Research Analyst for Financial Services at Desjardins Capital Markets

Okay, great. Maybe just to move on, just one other one for Paul. You listed kind of four operational initiatives in your prepared remarks. Can you elaborate kind of what's been achieved up to today? Are the leadership streamlining and unifying of North American ops complete, or should we expect some noise throughout this year? Just wanna hear the timeline for these initiatives.

Paul Brisebois
Interim President and CEO at AGI

Yeah, you bet, Gary. We have restructured our executive team going from 17 down to eight. That's been done. David Postill, who's leading our North American business, is in the process of restructuring that business, and so that will happen within the next 30 days. Many of the activities in terms of looking at offices and relocating roles have been taking place already and will continue to in the next 30 days. We're trying to do this as efficiently as possible, as quickly as possible, and keeping in mind a focus on the customer to make sure that nothing is impacted in a negative way in terms of our customer experience.

Paul Brisebois
Interim President and CEO at AGI

We believe through our restructuring and getting closer to the customer in terms of removing layers of the business will benefit us with regards to execution going forward.

Gary Ho
Research Analyst for Financial Services at Desjardins Capital Markets

Okay, great. Those are my two. Thank you.

Paul Brisebois
Interim President and CEO at AGI

Thanks, Gary.

Operator

The next question comes from Steve Hansen with Raymond James. Please go ahead.

Steven Hansen
Steven Hansen
Managing Director and Equity Analyst at Raymond James

Yeah, good morning, guys. Thanks for the time. Look, I understand the desire to level set expectations here, and I think that makes sense, but I think you're gonna have to give us a little bit more in terms of what you expect for the margin profile here, given how radical the move has been to the downside. I know you suggested some of these margin challenges are expected to persist. Does that mean we should account for similar margin profile for the next couple of quarters? I mean, do we get back to a normalized level where we were before? I mean, some degree of directional support here would be useful because frankly, the getting punched in the face like this is a little bit unexpected.

Steven Hansen
Steven Hansen
Managing Director and Equity Analyst at Raymond James

Just a bit more clarity around where we're going from a margin perspective would be the first point, and then I'll get to free cash flow next. Thanks.

Paul Brisebois
Interim President and CEO at AGI

Yeah, you bet, Steve. I'm familiar with getting punched in the face. I'm a hockey player as well. This was a tough quarter, so Q4 was tough. We had challenges. We believe that those challenges are all addressable. Q1 we believe will continue to be tough as we work through this. We're not satisfied obviously with that margin outcome. The restructuring that's taken place is designed to improve our execution, restore our margin and strengthen our cash conversion. The target is to get back to historical margins going forward. You know, Q4, Q1 tough and driving towards more historical margins after that.

Steven Hansen
Steven Hansen
Managing Director and Equity Analyst at Raymond James

Okay. Helpful to a degree. Maybe just on free cash flow then. We've had I think you cited it just over CAD 110 million in negative free cash in the year. All the actions that you're taking seem to make logical sense, but when can we actually expect to see positive free cash flow in the coming period here? Then I understand, again, on a related note, your banks in the city have been supportive here, but are we at risk of any sort of covenant-related breaches at some point in the future? Thanks.

Jim Rudyk
CFO at AGI

Yeah. Thanks, Steve. Yeah, so free cash flow, you know, you probably as you read through the press release and our comments, you know, obviously is elevated as it's very serious. We're taking it very serious. Big focus on it. A lot of the initiatives, the restructuring plans, all the things that we're doing are focusing on free cash flow. If you look year-over-year, the bulk of it of the negative has to do with our investment in these large turnkey projects. I'll just speak quickly on that. You know, we did monetize some of it in Q4, a small amount, CAD 7 million.

Jim Rudyk
CFO at AGI

We talked about this in the past where, you know, it's administratively very slow and burdensome process in Brazil to get all of the steps necessary to then get the cash. The cash is in motion. Progress continues. You know, we have calls every couple of days focusing on it. As we've mentioned in the past, we expect to monetize between $80-100 million shortly by H1. That will make a big difference to our free cash flow. Q1 will still be tough, though. You know, we expect negative free cash flow in Q1, candidly. Then as the funds come in from the monetization of the Brazil business, that will turn things around.

Jim Rudyk
CFO at AGI

Make no mistake, you know, you know, there's still challenges as we work through the restructuring plan. Our focus is on generating positive free cash flow going forward. In terms of your covenant question, you know, as you know, the bank covenants exclude our debentures. We are in compliance, you know, and we have a great group of banks, 11 banks in our syndicate. They're very supportive. We just extended the maturity date, so no concerns on the covenants.

Steven Hansen
Steven Hansen
Managing Director and Equity Analyst at Raymond James

Okay. Thank you.

Operator

The next question comes from Tim Monachello with ATB Capital Markets. Please go ahead.

Tim Monachello
Tim Monachello
Managing Director of Institutional Equity Research, Energy and Industrial, and Services and Technology at ATB Capital Markets

Hey, good morning. First question here, just a clarification. It lumped in the dividend cut in some of the restructuring efforts, and I just wanna be clear here that. Is that dividend included in the CAD 20 million of cost savings you're expected, or I would assume it's not, but?

Paul Brisebois
Interim President and CEO at AGI

No, good question. It's not included in the CAD 20 million of cost savings. Just for context, Tim, you know, our board reviews our dividend each period in the context of the business and where we're at. Given our priorities to manage cash and pay down debt, a decision was made to postpone it.

Tim Monachello
Tim Monachello
Managing Director of Institutional Equity Research, Energy and Industrial, and Services and Technology at ATB Capital Markets

Hold off. Okay, great. Second question, I just wanna dive into what you're seeing on the ground in the commercial segment, understanding that you're so the breadth of opportunities that you're looking at in Brazil in particular has shrunk it with, I guess, the change in your offering around general contracting and financing options. You also mentioned a slowdown in, I guess, the commercial order cycle. Maybe you can elaborate on what you're seeing on the ground in terms of demand and the market outlook in the commercial side of the business relative to how you described it, you know, in past quarters.

Paul Brisebois
Interim President and CEO at AGI

Yeah, you bet. I'll talk about the broader commercial business North America. First, we're seeing good quote activity, but we're not seeing customers move forward on that quote activity at this time. Everybody's a little bit cautious and not pulling the trigger with regards to projects at this time. Now, that could open up. We're very happy to see the quoting activity happening, so that's a good sign. When we look at our EMEA business, rest of world, it had a fantastic year in 2025, with a lot of execution on those projects happening and getting finalized in 2025. We see a smaller order book and we've started to see a little more traction.

Paul Brisebois
Interim President and CEO at AGI

That being said, there's been some small projects that have been impacted in the Middle East because of the conflict there and but it won't have any kind of material impact. Then when we look at the Brazil business, you know, a challenge for us will be to replace the CAD 183 million of revenue that we did in large scale projects in 2025 that were financed. We've made a decision that we are no longer doing those projects going forward with regards to financing. We will participate with regards to equipment sales, and that decision is made from a cash flow perspective to ensure that we're getting cash as we do the projects and getting paid as those projects are finalized.

Paul Brisebois
Interim President and CEO at AGI

With that, we believe that the challenge going into 2026 for Brazil in particular will be to fill that gap of the CAD 183 million that we accomplished in 2025.

Tim Monachello
Tim Monachello
Managing Director of Institutional Equity Research, Energy and Industrial, and Services and Technology at ATB Capital Markets

The slowness in, I guess, order cycling that you've seen or I guess the willingness of customers to actually place orders is mostly outside of Brazil?

Paul Brisebois
Interim President and CEO at AGI

That's right.

Tim Monachello
Tim Monachello
Managing Director of Institutional Equity Research, Energy and Industrial, and Services and Technology at ATB Capital Markets

Okay. Just CAD 180 million of large project revenue in Brazil in 2025, how does that compare to total commercial revenue in Brazil? How much of those large projects are still in backlog for 2026?

Jim Rudyk
CFO at AGI

Yeah, it's a significant amount, Tim. It's, you know, 2025 in particular was a big year for the turnkey project, so it's more than half of the amount.

Tim Monachello
Tim Monachello
Managing Director of Institutional Equity Research, Energy and Industrial, and Services and Technology at ATB Capital Markets

How much do you expect to process of those large projects in 2026?

Jim Rudyk
CFO at AGI

In 2026? Yeah, good question. You know, there is two of the projects still have some work being done in 2026. We'll complete them through this year. You know, it's a big gap that we need to fill, let's put it that way.

Tim Monachello
Tim Monachello
Managing Director of Institutional Equity Research, Energy and Industrial, and Services and Technology at ATB Capital Markets

Okay. Appreciate it.

Operator

The next question comes from Michael Tupholme with TD Cowen. Please go ahead.

Michael Tupholme
Michael Tupholme
Director of Equity Research at TD Cowen

Thank you. It's clear that a lot of these efforts are intended to improve free cash flow and in turn, improve the balance sheet. Jim, wondering with the leverage ratio where it is now, how we should think about that evolving over the course of the year, where you think, you know, that can become the end of the year. As part of that, also wondering how you're thinking about refinancing or repaying the senior unsecured debenture that comes due at the end of this year.

Jim Rudyk
CFO at AGI

Yeah. Thanks, Michael, for the question. Yeah. So, you know, leverage ratio is high, 4.7x. It must improve, no doubt about it, you know. If you look at our initiatives, we're really focused on those, getting those. We're gonna improve it through a number of ways. You got improving our earnings, so SG&A savings that we've called out, delaying the ERP implementation that will free up quite a bit of cash flow over the next couple of years. You know, a big part is our decision to pause any of the financing opportunities with some of these large customer opportunities that will free up quite a bit of working capital. We expect to have some meaningful improvements in that leverage ratio through 2026.

Paul Brisebois
Interim President and CEO at AGI

In terms of the refinancing, you're right, we have a debenture that's due in December. We expect to refinance that debenture likely with a similar type instrument. You know, that'll be something that we'll likely pursue and try to get done Q2, Q3 timeframe.

Michael Tupholme
Michael Tupholme
Director of Equity Research at TD Cowen

Okay. Related to the, you know, the question here about improving the balance sheet. I guess there was mention in the release of reviewing the portfolio of assets with the intent of refocusing on core business lines. I guess the sort of two-part here. First thing is, where is that portfolio review at, and how material could the proceeds from that be? Just trying to understand if this is something we really need to be focused on, or if this is sort of more, you know, marginal in terms of the potential impact.

Paul Brisebois
Interim President and CEO at AGI

That's a good question. We have gone through extensive review of all of our available options to reduce debt. We've looked at it from our priorities of simplifying the business, having a customer focus and cash flow to reduce debt. We've identified the most actionable options, and then they're focused on this goal for the coming months. There is some low-hanging fruit and when I say that, we have facilities that are not operating right now that we could sell for cash. We have land that's available to sell for cash. We have other assets within the portfolio where we're looking at it that can range from either smaller but more actionable to large opportunities that can have a significant impact on our debt reduction.

Paul Brisebois
Interim President and CEO at AGI

We're taking all of those into account with a focus on debt reduction.

Michael Tupholme
Michael Tupholme
Director of Equity Research at TD Cowen

Okay, that's helpful. Just maybe just to clarify, though. Nothing has actually been finalized yet. You've got sort of a good, you know, set of opportunities here that things you could act on, but nothing's been completed up to this point.

Paul Brisebois
Interim President and CEO at AGI

That's correct. The internal review's been done, and we're actioning things that are in the queue.

Michael Tupholme
Michael Tupholme
Director of Equity Research at TD Cowen

Got it. I will leave it there. Thank you.

Operator

The next question comes from Maxim Sytchev with National Bank. Please go ahead.

Maxim Sytchev
Maxim Sytchev
Managing Director of Research for Industrial Product at National Bank Financial

Hi. Good morning, gentlemen. My first question, I guess pertains to the rollback of the ERP implementation. I guess as, you know, you commented in your prepared remarks around, you know, getting closer to the clients and sort of more agility, etc. I'm just wondering how do you balance these kind of competing priorities around presumably less data over time while trying to sort of accomplish operational priorities? Thanks.

Paul Brisebois
Interim President and CEO at AGI

Yeah, thanks, Max. So the ERP project, you know, it's been ongoing for quite a while. It's extremely resource heavy. It does consume lots of cash. Importantly, too, it's a distraction to a lot of people, especially at the time when we're trying to simplify the business, focus on the customer and get back to basics. You know, with our extreme focus on freeing up free cash flow, we decided that it made sense to stop this project. You know, we need to focus on execution. We need to conserve cash. This is a good mechanism to free up some of that cash. Now in terms of your, you know, what does that mean in terms of the future?

Paul Brisebois
Interim President and CEO at AGI

I think that, you know, who knows? I mean, you know, we've got systems. We've operated for a lot of years with our current systems. You know, once we get our execution done, figure out our processes, get that streamlined, things will get reassessed. For now, this made the most sense to do.

Maxim Sytchev
Maxim Sytchev
Managing Director of Research for Industrial Product at National Bank Financial

Okay. In terms of, you know, recently we're seeing fertilizer pricing obviously spiking. I'm just curious to see what you may be seeing closer sort of on the ground, because, I mean, you made a comment around commercial, but maybe anything, you know, farm related, that would be helpful. Thank you.

Paul Brisebois
Interim President and CEO at AGI

Yeah, you bet. We were pleasantly surprised actually with our order book through our early order program that happens in Q4. We saw an uptick with regards to that order book versus 2024, which was a positive sign. We remain cautiously optimistic on our farm business. The reality is the reason we remain cautiously optimistic is it really is dependent now on when farmers go into planting season, which will happen in the next month or so, depending on region. As they see their crops come up, and obviously with input prices, as you mentioned, with fertilizer prices going up, they put all of their resources into that first.

Paul Brisebois
Interim President and CEO at AGI

Once they see their crops come up and if they are looking good and commodity prices are decent, we'll have an opportunity to maybe get more optimistic or less optimistic about the second half. Right now, we feel pretty good with regards to that order book and better than what we anticipated going into 2026.

Maxim Sytchev
Maxim Sytchev
Managing Director of Research for Industrial Product at National Bank Financial

Okay. Thank you so much.

Paul Brisebois
Interim President and CEO at AGI

Thank you.

Operator

The next question comes from Jacob Efrosman with Strive Global Holdings. Please go ahead.

Jacob Efrosman
President at Strive Global Holdings

Thank you. The question is for Paul. I was wondering, as it relates to offloading some of your assets to free up your balance sheet, was there any manufacturing assets that would be based in Canada or North America that you'd be looking at offloading in the next few months?

Paul Brisebois
Interim President and CEO at AGI

No. Thanks for the question. You know, we're reviewing all of our global assets, so we haven't determined what that looks like on a North American basis at this time.

Jacob Efrosman
President at Strive Global Holdings

Got it. Okay. Thank you, Paul.

Paul Brisebois
Interim President and CEO at AGI

You're welcome.

Operator

We have a follow-up from Steve Hansen with Raymond James. Please go ahead, sir.

Steven Hansen
Steven Hansen
Managing Director and Equity Analyst at Raymond James

Yeah. Thanks. That's two extra quick follow-ups that I might. Paul, may be too early, but I mean, how are you thinking about the tariff situation as we move into CUSMA renegotiations? I'm thinking about the bin side in particular. I don't seem to be too worried about the auger portable side, but the bin side is one where there might be more risk to the portfolio. How do you plan and adapt for that as we move into that process? Thanks.

Paul Brisebois
Interim President and CEO at AGI

Yeah, that's a great question, Steve. 2025 was challenging, to say the least, with regards to tariffs. It did have an impact on our overall margins on the farm business, particularly on the storage side throughout the year. I'd say not only on the cost of the tariff, but the inefficiencies that it created when it was on again, off again, what we were shipping, where we were shipping. That was a big challenge. We are constantly thinking about that as we move forward, trying to understand what the future looks like with whether there's a USMCA in place or not. We happen to have our bin manufacturing equipment still available to us, packaged up in Grand Island.

Paul Brisebois
Interim President and CEO at AGI

We are looking at all available options to ensure that we can be competitive on a North American basis in the storage business going forward. I'll leave it at that, Steve. We're definitely considering what our options are going forward under a regime where it makes it difficult to participate in the U.S. business from our Canadian facility.

Steven Hansen
Steven Hansen
Managing Director and Equity Analyst at Raymond James

Okay. Helpful. And just maybe one last one on a more positive note. I just wanted to go back to the perhaps the green shoots in the portable business in the U.S. That was actually a pleasant surprise. And I know you've spoken to the order book improving, but I mean, are you seeing broad-based support there, Paul? I mean, how do you think about pricing? You know, what do you think is driving that sort of earlier stage sales cycle? I'm just trying to get a sense for how real this improvement is out there, because it has been the bigger drag for the past, frankly, two years.

Paul Brisebois
Interim President and CEO at AGI

Yeah. Yeah, absolutely. A good point. 2024 was a challenging year for the U.S. portable business. We had a lot of inventory, retail inventory. We put in programs, rebate programs to support our dealers to help move product to the farm. Those rebate programs essentially went on for 14 months to really focus on it. We had all of our sales team focused on inventory counts to understand. We typically do historical inventory counts of our retail network. Watching that closely was really critical for us. What we saw was our inventory was coming down. We saw in Q4 a good reduction of that retail inventory in the U.S. in particular, which facilitated better early order program.

Paul Brisebois
Interim President and CEO at AGI

I think the dealers themselves were pleasantly surprised with regards to the sales that they achieved in Q4, and that's why we saw a better early order program. You know, we had some market share information results that just came through. We've been successful in terms of maintaining our share where we had large share and successful in gaining share where we had lower share of the business. It's been positive, the work that the team has done in a difficult market. Just to wrap that up, the U.S. is coming around. Canada obviously was a big challenge, and that's why Q4 was impacted.

Paul Brisebois
Interim President and CEO at AGI

We see that, you know, we'll probably be in a position in Q4 of 2026 where Canada feels the same thing in terms of coming around. I guess the goal and what we're working towards is that Q4 2026 shows marked improvement going forward into 2027.

Steven Hansen
Steven Hansen
Managing Director and Equity Analyst at Raymond James

Okay. Very helpful. Appreciate the time.

Paul Brisebois
Interim President and CEO at AGI

Thank you.

Operator

We have a follow-up from Michael Tupholme with TD Cowen. Please go ahead.

Michael Tupholme
Michael Tupholme
Director of Equity Research at TD Cowen

Thank you. Yeah. Maybe just building on that last answer you provided, Paul. It does sound like you're, you know, sort of encouraged about some of the things you're seeing within farm. I guess on a full year basis, anything further you can help us with in terms of how to think about from a top line perspective, progression of farm and where that puts you at the end of the year, you know, on a year-over-year basis? Similarly on the commercial side, just there seems to be sort of more moving pieces there and, you know, difficult comps.

Michael Tupholme
Michael Tupholme
Director of Equity Research at TD Cowen

You still do, you know, notwithstanding the fact that the order book is down, you know, there's still some presumably some orders that come in or some activity, pardon me, on the commercial that flows in in the first half of the year. Just anything on the top line you can help us with on the two segments beyond what you've already kind of provided would be helpful if possible. It's the first one. I have one other one after that.

Paul Brisebois
Interim President and CEO at AGI

Yeah. Difficult to kind of give any concrete numbers on that. You know, and not comfortable at this time really giving any guidance, as it relates to top line or bottom line in terms of margin that we're doing. You know, our team really right now is just focused on simplifying our business, focusing on our customers, paying down debt, doing everything that we need to do to drive the business forward, and want our team just to continue to focus on it. I don't wanna speculate on what the numbers could look like.

Michael Tupholme
Michael Tupholme
Director of Equity Research at TD Cowen

Okay, understood. The second follow-up is just around the cost savings you expect. Just to be clear, so the CAD 20 million of annualized savings, does that kick in at that level of annualized savings beginning in the third quarter? Sort of CAD 5 million a quarter starting in Q3. Is that how to think about this?

Paul Brisebois
Interim President and CEO at AGI

I think that would be a decent way to think about it. You know, we're gonna try and do things faster than that. To be cautious on it, I would say managing that through Q3 going forward is a good way to look at it.

Michael Tupholme
Michael Tupholme
Director of Equity Research at TD Cowen

Okay. Sorry, just as an extension of that, like with everything you're doing now, if we go back to some of the past commentary around margins, I mean, this year there was an expectation of some, you know, before today, there was some expectation even that even then about some things that would weigh on the margins a little bit, particularly, you know, the mix between a farm and commercial. I guess there'd been some commentary about, you know, longer term, like an 18%-20% EBITDA margin within the business. Does everything you're doing today allow you to get back to that plus something even higher? Or is the effort here just to kind of, you know, get back to even that kind of a level?

Michael Tupholme
Michael Tupholme
Director of Equity Research at TD Cowen

Just trying to understand kind of the longer term and what all of these initiatives are likely to do as far as profitability.

Paul Brisebois
Interim President and CEO at AGI

Yeah, it's a good question. We wanna get back to historical margins. I would say, getting to 20% is probably pretty difficult, at this time. The changes that we're making are absolutely focused on improving our margin. But at this time, I think it's difficult to really say how long it'll take to get back to higher teens. We'll see that over time in terms of the progression with regards to the strategy, by simplifying our business, taking costs out of the business, getting closer to the customer. If that turns into driving more sales in a more efficient way, then obviously we'll see some margin improvement.

Paul Brisebois
Interim President and CEO at AGI

Right now, you know, we're just targeting to get back to historical margins as the first point versus stretching ourselves in that 18%-20% range.

Michael Tupholme
Michael Tupholme
Director of Equity Research at TD Cowen

Okay, that makes sense. Thank you.

Operator

We have a follow-up from Tim Monachello with ATB Capital Markets. Please go ahead.

Tim Monachello
Tim Monachello
Managing Director of Institutional Equity Research, Energy and Industrial, and Services and Technology at ATB Capital Markets

Thanks. My follow-ups, I got a few, but they're quick. On the ERP cost savings for CAD 20 million, how does that relate to I think you're looking for around 15 million per year of costs in 2026, 2027 relates to that implementation. So, you know, roughly 30 million. So is that delta the 10 million, I guess, cost that'll be incurred to in-house some of the capabilities that you were thinking about within that?

Jim Rudyk
CFO at AGI

Yeah. Thanks, Tim, for that clarifying thing. Yeah, no, there's just some costs that we've incurred to date through the year that obviously need to be paid, and then there's just some wind down costs.

Tim Monachello
Tim Monachello
Managing Director of Institutional Equity Research, Energy and Industrial, and Services and Technology at ATB Capital Markets

Okay. That ERP, like anything that has been implemented to date that, you know, is useful? Or is everything getting rolled back and you basically have to start from scratch on it?

Jim Rudyk
CFO at AGI

Well, we've learned a lot. I mean, you know, we have a big team that has been involved. We've learned a lot about processes that we need to follow, approaches that we need to follow. So a lot of knowledge that we benefited from that will be retained as we move forward.

Tim Monachello
Tim Monachello
Managing Director of Institutional Equity Research, Energy and Industrial, and Services and Technology at ATB Capital Markets

Within the restructuring initiatives, I don't see anything really that relates to capital spending. Can you talk a little bit about how you're thinking about CapEx this year or maybe next? You know, where we should be thinking about that. Any way you can save on CapEx?

Paul Brisebois
Interim President and CEO at AGI

Yeah, you bet. Obviously, maintenance CapEx is a priority across all of our facilities. As it relates to incremental CapEx beyond maintenance, we'll be looking at that through an ROIC lens, making decisions that make sense and drive our return on invested capital as much as possible. We'll be keeping a close eye on it, and it will need to hit defined metrics to be able to get approval moving forward.

Tim Monachello
Tim Monachello
Managing Director of Institutional Equity Research, Energy and Industrial, and Services and Technology at ATB Capital Markets

You willing to provide any guidance on where we should or a range where we think CapEx will come in in 2026?

Jim Rudyk
CFO at AGI

No. You know, still early days. I think if you look back at what we spent from a maintenance perspective and intangibles, those will be similar. Then from what we've categorized as a growth bucket, those will be limited, you know. As Paul mentioned, you know, we're very aligned in terms of prioritizing what we spend on, and we'll only move forward on anything if the return on invested capital is greater than our WACC.

Tim Monachello
Tim Monachello
Managing Director of Institutional Equity Research, Energy and Industrial, and Services and Technology at ATB Capital Markets

Okay. The one-time cost of CAD 20 million in H1 2026, should we expect that to be spread evenly in Q1, Q2, or is that gonna be front-end loaded?

Jim Rudyk
CFO at AGI

Probably close.

Tim Monachello
Tim Monachello
Managing Director of Institutional Equity Research, Energy and Industrial, and Services and Technology at ATB Capital Markets

Okay. Then how are you guys thinking about the longer term leverage target now? I guess in 2.5x the old target, but there's been a lot of things in earnings we've seen lately, so it could be confusing that. Is that still the range you're thinking of, or are you thinking lower now?

Jim Rudyk
CFO at AGI

No, still working to get down to that 2.5x as quickly as possible. You know, a little detour in the last year, but as you can tell by the initiatives we put in place, massive focus on getting that down as quickly as possible.

Tim Monachello
Tim Monachello
Managing Director of Institutional Equity Research, Energy and Industrial, and Services and Technology at ATB Capital Markets

Okay, fantastic. I'll leave it there.

Jim Rudyk
CFO at AGI

Thanks, Tim.

Operator

This concludes our question and answer session. I would like to turn the conference back over to Paul Brisebois for any closing remarks.

Paul Brisebois
Interim President and CEO at AGI

Thanks, Chloe. I appreciate it. Hey, everyone. I just wanna comment on, you know, obviously a lot of change. Q4 was a difficult quarter. Q1, we believe, will be a different, a difficult quarter as well. As we do this change, I wanna reiterate our focus areas. It is around simplifying business, making our business more streamlined, empowering our employees across AGI to do good work and feel like they've been successful every day in their role when they come to work. That's what the whole goal of our restructuring is, around simplification. That's to get closer to the customer.

Paul Brisebois
Interim President and CEO at AGI

That's driving our customer focus and, you know, the goal is that by the end of 2026, our customers tell us that we've substantially improved from our quote to delivery on e-execution and improved our quality going forward. If we accomplish that, where we have employees that are engaged closer to our customers that feel like we've been successful, then we'll achieve our goal with regards to cash flow and debt reduction. The goal there would be that shareholders really see stabilized margin performance going forward, improved cash flow, and tangible progress on our debt reduction. Just wanna be clear with those that are listening or that will listen later, that is our goal.

Paul Brisebois
Interim President and CEO at AGI

That's what the executive team here at AGI, eight of us, are focused on, as well as the broader employee group across AGI. I wanna thank all of our employees that are going through the change and you know, looking forward to working with them in terms of achieving the goals that we've set out. Thank you, everyone.

Operator

This brings a close to today's conference call. You may now disconnect your lines. Thank you for participating and have a pleasant day.

Analysts
    • Gary Ho
      Research Analyst for Financial Services at Desjardins Capital Markets
    • Jacob Efrosman
      President at Strive Global Holdings
    • Jim Rudyk
      CFO at AGI
    • Maxim Sytchev
      Managing Director of Research for Industrial Product at National Bank Financial
    • Michael Tupholme
      Director of Equity Research at TD Cowen
    • Paul Brisebois
      Interim President and CEO at AGI
    • Steven Hansen
      Managing Director and Equity Analyst at Raymond James
    • Tim Monachello
      Managing Director of Institutional Equity Research, Energy and Industrial, and Services and Technology at ATB Capital Markets
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