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
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 company expects the full savings to be in place by the end of 2026 and to benefit 2027 results.
The reductions include a smaller executive team, corporate restructuring and reviews of spending on information technology, finance and facilities. Brisebois said the changes are intended to be permanent rather than temporary deferrals, allowing future volume growth to generate incremental margin improvement.
AGI’s leverage ratio was 5.2 times at quarter-end, essentially unchanged from the prior quarter. Parker said weaker trailing EBITDA was offset by the use of proceeds from long-term receivables in Brazil to reduce debt.
The company has completed approximately CAD 106 million of long-term accounts receivable monetization in Brazil. Proceeds have been used to repay borrowings under AGI’s senior credit facility and fund final stages of certain Brazil contracts. Parker said the completed transactions represent most, but not all, of the expected monetization proceeds.
AGI also expects to monetize more than CAD 20 million from facility and asset sales during the third and fourth quarters. The company said those proceeds are expected to cover capital requirements for its U.S. facility consolidation initiative and provide additional funds for debt repayment.
U.S. Manufacturing Consolidation and Strategic Review
AGI is restarting grain-bin production at its Clay Center, Kansas, facility as part of a U.S. consolidation plan. Brisebois said the initiative is designed to recover storage and material-handling volumes lost after AGI shifted production from its former Grand Island facility to St. Boniface, Manitoba.
He said the move will help the company serve dealers in the southern Midwest and eastern U.S., improve delivery reliability, provide manufacturing redundancy and create freight-consolidation benefits. The investment will be phased over roughly nine months beginning in the second half of 2026 and is expected to be funded by proceeds from unused facility and asset sales.
Meanwhile, the board has established a strategic review committee of independent directors to evaluate alternatives intended to maximize long-term shareholder value. Brisebois said the committee is examining debt refinancing, asset sales and other strategic options, though he did not provide a timetable or detail potential outcomes.
AGI also appointed Haaris Uddin as chief financial officer, effective Aug. 4, 2026, succeeding Parker in the role on an interim basis.
About Ag Growth International (TSE:AFN)
Ag Growth International Inc manufactures portable and stationary grain handling, storage, and conditioning equipment, including augers, belt conveyors, grain storage bins, grain handling accessories, grain aeration equipment, and grain drying systems. The company operates mainly in Portable handling, permanent handling, storage and conditioning, livestock, and manufacturing sectors. Some of its brands are batco, wheatheart, westfield, storm, rem, hi roller, union iron, hsi, tramco, ptm, vis, nuvision, twister, grain guard, airlanco, westeel, frame, and entringer.
