2016 - Q4 Ag Growth International

The purchase price for Westeel was $205 million, net of cash acquired and a redundant
manufacturing plant. The acquisition was financed through the issuance of common shares,
convertible unsecured subordinated debentures and long-term debt.
Impact of Foreign Exchange
Sales and Adjusted EBITDA
AGI’s average rate of exchange for 2016 was $1.32 (2015 = $1.27). A lower Canadian dollar results
in an increase in reported trade sales as U.S. dollar denominated sales are translated into Canadian
dollars at a higher rate. Similarly, a lower Canadian dollar results in increased costs for U.S. dollar
denominated inputs and SG&A expenses. In addition, a weaker Canadian dollar may result in
higher input costs of certain Canadian dollar denominated inputs, including steel. On balance,
adjusted EBITDA benefits from a weaker Canadian dollar.
Gains and Losses on Foreign Exchange
AGI has entered into forward foreign exchange contracts with the objective of partially mitigating
exposure to currency fluctuations. In 2016, AGI realized losses on maturing foreign exchange
contracts of $14.4 million (2015 - $15.3 million). Based on foreign exchange contracts outstanding
at January 1, 2017, the Company does not expect to realize losses of a similar magnitude in 2017.
The table below summarizes outstanding foreign exchange contracts. Currency fluctuations also
result in non-cash gains or losses on foreign exchange. See “Financial Instruments – Foreign
exchange contracts”.
Settlement Dates
Forward Foreign Exchange Contracts
Face Amount
USD (000’s)
Average Rate
CAD
CAD Amount
(000’s)
2017 – Q1 9,000 $1.25 11,216
CORPORATE OVERVIEW
AGI is a manufacturer of agricultural equipment with a focus on grain and fertilizer handling,
storage and conditioning products. Our products service both Farm and Commercial markets and
we sell to farmers, contractors and corporate entities. Our business is affected by regional and
global trends in grain volumes, on-farm and commercial grain storage and handling practices,
harvest conditions and, to a lesser extent, crop prices. Our business is seasonal, with higher sales
occurring in the second and third calendar quarters compared with the first and fourth quarters. We
manufacture in Canada, the U.S., Brazil and Europe and we sell products globally.
OUTLOOK
AGI’s North American Farm business is comprised primarily of portable grain handling equipment
and Westeel’s storage business. The Farm market in Canada was very strong in 2016, as Canadian
farmers benefited from a favourable crop mix, the positive economics of a weak Canadian dollar
and a large crop. In general, market participants expect strength in the Canadian Farm market to
continue in 2017. The Farm market in the U.S., however, has experienced weakness in 2015 and
2016 as a significant drop in corn and soybean prices, without an immediate corresponding decrease
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