Ag Growth International Inc. (AFN) Earnings Call Transcript & Summary

Okay. Good morning. Welcome, everybody, to AGI's investor talk this morning. It's great to see everybody. We're here in Toronto at the TMX. Welcome. Thanks, everybody that is joining us here today in person traveling out to meet with us and spend some time getting to know AGI. It's great to look around and see a number of familiar faces, and as well a number of new faces, and I look forward to the opportunity of getting to know everybody a bit better. And that's really what we're here for today is to get to know AGI better. AGI has significantly transformed over the past 2 to 3 years, and we really want to share that transformation story. We stand here today stronger than ever. It is a stronger AGI today than we've ever been. And in many ways, we are just getting started, and that's the exciting part of the story. We're very enthusiastic about our future, and we want to share that enthusiasm with you and provide you insights into why we're so excited about the direction that AGI is headed. So welcome, and thanks for joining us here this morning. Okay. So just a quick review of the agenda to kind of cover the information that we are going to go through. I'll just quickly walk through the agenda to kind of ground us in the event this morning. We'll start out with a few key messages. It's going to be my privilege to step you through an introduction of our leadership team because at the end of the day, it is the people that make the difference. So it's very worthwhile spending some time and getting to know the new AGI leadership team. An overview of the company, where we've been, where we are today and the direction that we're going. We've talked a lot about our strategic priorities. We're going to review those here this morning, and we're going to go into a little bit more detail to share some key insights relative to each of our 3 strategic priorities. Very exciting part of the presentation is regional highlights. As we discuss our business and we go through our results, we touched on our results in each of the regions. This morning, we're going to have an opportunity to explore a little bit further some of the details and some of the activities going on at the regional level, give you a little bit more appreciation of where AGI is and the different areas in which we are participating. Turn it over to Jim later in the presentation. He's going to give a financial overview and outlook. And then we'll wrap up, and there is plans to spend some time at the end with Q&A. So we look forward to the Q&A. Before we get too much into the presentation, I know we kind of all gathered here this morning just to make sure we reorientate ourselves and the unexpected event that there is an emergency, right? [Operator Instructions] Obviously, we're not anticipating any issues this morning, but always good to be sick. Okay. So it's all about getting to know AGI. It's great to be able to tee up a video that was put together kind of gives you a broad overview of the company. It really came together fantastic. So I'm going to turn it over to a video to kick us off. [Presentation]

Okay. Fantastic video, right? I've seen that video a number of times. Every time I watch it, I just get more and more excited, does a fantastic job of describing AGI very quickly at a high level and the type of business that we're in, and the type of customers that we support. There's a number of key themes in that video that we're going to come back to throughout the presentation and build on and provide further details further explanations. Okay. Kick off with a couple of key messages. But before doing so, I'd like to make a very exciting announcement -- perhaps some of you caught it in the press release this morning. But we have 2 individuals that I'd like to introduce, maybe ask him to stand up. We've got Bill Lambert in the back, a member of our Board, and Janet Giesselman upfront, also a member of our Board. So we're very excited to announce, if you saw it in the press release this morning that the responsibilities of Chairman of the Board will be transitioning from Bill Lambert to Janet Giesselman. So I would like to sincerely, sincerely thank Bill for his outstanding leadership that he has provided as Chairman of the Board over the past several years. Truly he's been outstanding. The company has accomplished quite a lot under Bill's tenure as Chairman of the Board. Bill will be staying on as part of our Board. And I'd sincerely like to congratulate Janet. Look forward to working with you and partnering with you, as we continue to take AGI in a very exciting direction. So maybe just a quick round of applause for Bill and Janet. Okay. And as I mentioned, we did put out a press release. So if you're interested in more details, you can reference that. A couple of key messages. These are the 4 points that we're going to emphasize throughout the presentation, and are the key messages that we want everybody to walk away with a good understanding. And the first one is about our people. Because at the end of the day, that is really what is driving our performance, our people and our talent. We've had outstanding performance over the past 2 years, and it's really the team ultimately, our team around the world that is delivering that exceptional performance, and is that team that is going to lead us in the future. So I'm going to take some time and review our executive leadership team with you here this morning. Another very important message and one of the reasons why AGI is so excited is we have what we need. We have what we need to be successful in the future. We have what we need to continue to drive growth and deliver profitability and ultimately, shareholder value. So we're going to spend some time reviewing our products and our capabilities. We're going to talk about our people and our talent, and we're going to spend some time reviewing our key market positions around the world. The third one, as I mentioned at the beginning, is our corporate priorities. We are extremely focused. We know what our priorities are, profitable organic growth, operational excellence and balance sheet discipline. We are extremely confident that focusing on the priorities is going to deliver the results that we expect in the future. So we'll spend some time talking about those priorities. And lastly, growth. Growth is such an exciting and compelling proposition for AGI that we're going to spend additional time deep drilling growth. We have a lot of opportunities to grow. We're going to touch on 3 primary ones. That is the opportunity that exists within AGI by better leveraging the products that we have today, product transfers. We're also going to talk about our initiatives to expand more into processing equipment, a key part of that food infrastructure. And then finally, our geographic positions. Our positions both in mature markets and emerging agriculture economies. So those will be the 4 things that we touch on throughout the presentation. But as mentioned, it all starts with people. So I'm going to take 4 slides to review our senior leadership team, a little bit more of a detailed review of my background. I'll invite Jim Rudyk, our CFO, up on stage. He can give a review of his background, and then we're going to step through our executive leadership team, our global executive leadership team. And as we step through that leadership team, we're going to highlight it in 2 different components. First, our business leaders around the world and then our functional leaders. So let me start with a quick introduction of myself. Again, a lot of familiar faces. It's great to see you again, and some people that are a bit new. So let me take a moment to introduce myself again, Paul Householder, President and CEO of AGI. I joined AGI about 3.5 years ago. I was initially hired in to lead the executive, or the international part of the company, so everything outside of North America. I ran our executive businesses for about a year. After that, my responsibilities expanded, and I took over the business responsibilities for North America. And at that point, largely had responsibility for the P&L of the company. I did that for about a year, and then I moved into the COO role, and added the responsibilities for the business functions, like manufacturing, supply chain and product management. And then was in that role for about a year before moving into the CEO role a little over 4 months ago. I have a BS Mechanical Engineering Degree, an MBA, and then as well a Black Belt in Lean Six Sigma. Before joining AGI, I spent about 28 years with a large global industrial gas company. I spent the first 8 years in different engineering roles, then moved over on the commercial side, starting in sales, progressing up to general management. I lived for about 4 years in London, supporting business across Europe, significant time in China leading the major build-out of a facility in China as well as across Southeast Asia. And then I lived in Sao Paulo, Brazil for 3 years, leading our Brazil business. So again, been with AGI for 3.5 years. It's been absolutely fantastic. I couldn't be more pleased, and I'm extremely excited about the direction that we're heading. So that's quickly my background. I'm going to invite Jim up on stage, and he can quickly introduce himself.

All right. Well, first of all, I would like to echo Paul's opening remarks, and thank everyone for being here today and also those that are online. It's a big-time commitment, but I want to thank you. So let me just give you a bit of brief background, more information about myself. I've been -- I've worked for 36 years, believe it or not, well 36 years. And 20 of those years, it's been as a Chief Operating Officer, or as a CFO in various companies. And I've been very lucky throughout my career to work at companies that have similar characteristics and similar strategies as AGI. So all the companies that I've worked at have all been very high-growth companies. Companies that with that high growth typically go through a lot of transformation, both evolution and changes that you need to deal with. A lot of the companies that I worked for also have been -- have done acquisitions. I've personally done 45 acquisitions and also did the integration of those acquisitions through my career. And through that as well, also had the opportunity to lead 3 fairly significant system or ERP type conversions through that time. Whilst it's been lucky to work and gain a lot of international experience. I've -- and the companies I've worked at, I've got exposure and spent time in Africa. A lot of European countries, certainly the U.S., Australia and then a lot of Asia countries as well. So I'm very comfortable operating outside of Canada. And so I've been here at AGI now for 2.5 years. And I think as you listen to our story and understand a little bit more about our future and our opportunities, you'll see why my energy level still remains very high. And I'm really excited about being part of this next chapter here at AGI.

Perfect. Thanks, Jim.

Well, thank you.

Yes. Okay. So the next 2 slides introduce the executive leadership team of AGI. And as I mentioned, I'm going to spend some time to go through these and introduce each of the individuals. And one of the reasons why we're going to spend that time is these marks a pretty significant transformation for AGI that has occurred over the past 3 years. And in many ways, is indicative of why AGI is stronger today. Roughly 70% of the individuals that we're going to review are either new to AI, or they're in new positions at AGI. Just to give you an indication of how much the company has transformed, and the amount of time we have spent in talent and organizational development. These are the business leaders. So these are the individuals that are responsible for the execution of the business on a day-to-day basis, and ultimately have the accountability for delivering on our financial and other operating metrics. So I'll just go quickly through these, introduce each one. Paul Brisebois, long-time AGI employee based in our Winnipeg office, and he leads our Canada Farm business. Francisco Prado, and exciting, we get to hear from, Francisco in a video a bit later in the presentation. Francisco is based in Cândido Mota, which is in Sao Paulo state, a little outside of Sao Paulo City. And Francisco runs our Brazilian business. Cristiano Carpin, we also get to hear from Cristiano later in the presentation based in Belonia, and he runs our Europe, Middle East and Africa business. Scott McKernan, been with us for about 4 years. He leads our U.S. Farm business and, in many ways, is a partner with Paul. So between Scott and Paul, they have responsibilities for our very important North America Farm business. Rajan Aggarwal, an outstanding leader in AGI. He is based down in Bangalore, India, and he runs our India business. We are very fortunate that Rajan joined us as part of our Milltec acquisition in India that we completed 3 years ago. Brian Harder, longer time, AGI employee, recently undertook the responsibilities for leading our Global Food platform. He's based in Chicago. Rustom Mistry, out in Bangkok, Thailand, recent AGI employee within the past few years. He leads our Southeast Asia business, which includes Australia, Southeast Asia and Australia. Mike Hand recently joined AGI, part of the transformation that we stepped through in our North America commercial business, a significant success for the company over the past 2 years. So Mike runs our North America commercial business. Noam Silberstein here with us this morning based here in Toronto, recently stepped into the responsibilities of leading our Feed platform. And then finally, from the business side, Jeison Santaniello, based in Miami, running our LATAM business. Next slide, we'll transition to the functional leaders, tightly integrated with our business and supporting our business leaders to achieve our objectives. In many ways, this team from an organization and talent standpoint, is an indication on how AGI is stronger today. A lot of these leaders, a lot of these roles and functions and capabilities, fundamentally did not exist in AGI just 2 to 3 years ago. We've spent a lot of time over the past few years developing this talent and developing this capability. And you'll hear that as I go through the introductions. Henry Palomino, recent addition to AGI based in our Chicago office, leading our Global Supply Chain. Nicolle Parker, long-time outstanding AGI employee based in Winnipeg, leads our Finance, working with Jim; David Postill, also here today, part of our outstanding creative team, leading Marketing and Customer Experience. Harsha Bhojraj, also very new to AGI based in our Chicago office, leading our manufacturing; Ryan Kipp, longtime AGI employee based in Winnipeg, great partner for me on the Legal side. Marie McKeegan, also based here in Toronto, amongst many other responsibilities, Marie leads our talent and organization development, and again, just outstanding progress we've made in that area over the past 2 years. Shannon Hinrichs, another longer-time AGI employee, very recently promoted into the role of leading our Sales Execution here in North America, also based in Chicago; Subroto Pyne, new to AGI based in Chicago, very important, leading our Global Product Management team, a very key capability, again, that we have today, fundamentally, we did not have just 2 to 3 years ago. And wrapping up Justin Paterson based in Winnipeg, leading our Global Engineering organization. So we went through those by individual because, again, it is just so important. At the end of the day, it is down to people. I feel very privileged to have such an outstanding leadership team to work with. So let's now change gears and provide an overview of AGI. Again, a little bit more details as we start to get to know AGI a bit better. Talking about not only where we are today, but where we've been and giving insights into where we're going and why we're so confident about our future. So we'll first take a look at a geographical overview. And there's a couple of key pieces of information that is contained within this slide. So the first one, you see the green circles. This represents where our manufacturing concentration exists. So you can see in North America, a very strong position. We have over 20 manufacturing facilities in North America. Our manufacturing in Brazil is down in Cândido Mota. As I mentioned when I introduced Francisco, Brazil manufacturing facility that supports Brazil as well as South America. In Europe, we have 5 manufacturing facilities between Italy and France, supporting Europe, Middle East and down in Africa, and we're going to talk about Africa a bit more in the presentation. And then down in India, in Bangalore, we have 4 manufacturing facilities that support our business in India, as well as across Southeast Asia. The gray area is an indication of where AGI employees are dispersed, where our sales offices exist and most importantly, where our customers exist. And it is in this area that our AGI employees are working closely with our partners to deliver on one of our commitments on improving global food efficiency. To the extent, we can help customers improve their operations, we are eliminating waste and improving efficiency right at the front end of that food supply chain. And that helps with our proposition of feeding a growing population around the world. That's a key part of our sustainability focus. We very much believe in that AGI is a strong play in the sustainability space, and we're going to come back to and provide an overview of other initiatives that AGI is doing within ESG. So let's talk about where AGI is today. And as I go through this material, I'll make comments on how significantly AGI has strengthened over the past 2 years and as well provide some additional insights on, why we are so confident about our future. We'll start with some of the financial measures. Sales of $1.4 billion within a trailing 12 months, and EBITDA of $228 million. Just to put that in perspective, it wasn't long ago that AGI was celebrating crossing that important threshold from a sales standpoint of $1 billion. And very quickly, we're at $1.4 billion. $22 million of EBITDA represents a 50% increase in profitability in just 2 years. 5-0, a 50% increase in profitability. So now let's talk about the segments that we serve as AGI manages our business, we predominantly look at it across 2 key segments: Farm; and Commercial. And the key thing that you see here is the balance that AGI currently has across these 2 segments, almost 50-50, almost a 50%, 50% balance. That's important because it provides a lot of resiliency in our business. If you go back years ago, 6 years ago or beyond, you would have seen a weighting that is much more sided towards the Farm side. Ultimately, that is where AGI got it started serving the farm market. We've made key investments over time, and we've seen significant organic growth on the Commercial. So now we're in a position where we have nearly that 50%, 50% balance between our 2 key segments, Farm and Commercial, again, adding resiliency to our business. We can then talk about our regions, a very key part of AGI. And first, you can see the outstanding positions that we have and with large and mature ag economies across the world, Canada and the U.S. Between those 2 regions represent roughly 65% of the sales of AGI. We have great positions in Canada and the U.S. And excitingly, those positions are growing, and we have opportunities to further grow. Also extremely exciting, and you'll hear me comment throughout the presentation is our position in emerging ag economies, positions that we have in Asia Pacific, India, Southeast Asia and Australia. Positions in Europe, Middle East and Africa, and then down in Brazil and LATAM. Each one of these regions now represents at least 10% of the sales at AGI, and almost 35% in total. Significantly different from where we were just 2 to 3 years ago. And more important, we are confident that our positions in these emerging economies is going to represent 50% of AGI in the near future. There's just so much growth potential in these areas, and we're going to talk about that a bit further. This geographic position adds strong diversity to our business. So we are very resilient. We are very diverse, and that adds to the strength of AGI. If you look at our performance over the past 2 years, I commented -- I commented that our EBITDA is up 50% in the past 2 years. This is amongst the challenges that we all know that we faced over that 2-year period, COVID, a very disruptive supply chain. A lot of variability in our key raw materials such as steel, a conflict in Ukraine and challenging agriculture conditions in one of our key markets, significant challenges that face the business over the past 2 years and we delivered record results. There's no doubt, we're going to be facing challenges in the future. Now, we're looking at recession concerns around the world, rising interest rates, inflation. We will continue to face challenges. The balance and the diversification of our business adds a resiliency and gives us confidence that we will be able to continue to deliver outstanding results, despite the challenges that we face in the future. So pretty exciting position, and we're spending some time reviewing. Let's talk a little bit more about the 2 segments that we support, Farm and Commercial. And in doing so, I'm going to comment on the customers, the products that we provide and our value proposition. Just so that when you know when we talk about Farm and Commercial in a little bit more detail, what we're referencing. So I'll start with Farm. And AGI has the privilege of working with outstanding customers, farmers. Farmers around the world. We work closely with farmers in Canada, in the U.S., in Australia and South America. And it is our privilege to work with these farmers to provide solutions that help them run their business better -- sorry about that. So we provide bins material handling and conditioning equipment. Again, all to reduce waste and drive efficiency right at the front end of that food supply chain. That is our value proposition, and that is the activity that we do in the Farm segment. When you go over to the Commercial segment, our customers are some of the largest ag companies in the world. The ADMs, the Cargills, Costco and Mars and others. In the commercial space, it is where AGI is partnering with those customers to build out that food infrastructure. And to support the transportation of food from where it has grown on the farm to ultimately where it is processed and consumed. As you understand that food infrastructure and how food has to travel from where it has grown to where it is consumed, you understand that a lot of infrastructure and equipment needs to be put in place. Building out large port infrastructure like you see in the pictures here. This port infrastructure efficiently stores and handles the grain, as it is loaded on to and then loaded off large ocean barges, as the food gets transferred around the world to feed that growing population. So very quickly, that's what we mean by our Farm segment, bins, material handling and conditioning equipment that we sell to farmers, driving efficiency at the front end of the food supply, and then partnering up with very large customers to build out that infrastructure so that the food can move through the supply chain efficiently to feed that growing population. You've heard me mention several times food efficiency and eliminating waste. That is a key part of AGI's value proposition and one that we're very proud and excited about. It is a key part of our sustainability program, but it is just one part. AGI is very excited to be embarking on a very robust ESG program. We've had a couple of landmarks that we've achieved within the past 2 years. If you look back in 2020, we published our inaugurable sustainability roadmap. And exciting just this week may have been yesterday, just this week, we released a comprehensive sustainability progress update. This is on our AGI website. I encourage everybody to take the time, go out and read through this material. It is outstanding, and it gives you a very good indication of the commitment that AGI has to the ESG program, and the direction that we're heading. Touches on a few key items, the well-being of our employees, sustainability, manufacturing, responsible care and conduct, and the complete solutions that we offer to continue to drive sustainability. So again, it's out there. It's really good, I encourage everybody to spend some time and go through that. Next few slides, I'm going to provide some details on our financial performance over the past few years to further emphasize our focus on profitable organic growth and operational excellence, and give you an indication of the direction that we're headed. So we'll start with sales. And you can see on the graph, we kind of broken up our sales performance into 2 different time periods. The first time period from 2014 and 2020. That is indicative of the period that when we refer to growing through acquisitions. So 2014 to 2020 represents our growth through acquisitions. The more recent 2 years is organic growth. So you can see on the chart from 2014 to 2020, AGI grew $600 million in sales across that 6 years. In the last 2 years, we've grown another $400 million. And again, that growth was predominantly, if not entirely organic. So you can see the excitement that we have for focusing on organic growth and the confidence that we have that is going to continue to drive top line expansion going forward. Next, we'll turn to EBITDA to profitability. So it's exciting as our top line and our sales performance has been, we're even more excited about our profitability. Again, broken up into the exact same 2 time periods, you can see the EBITDA of the company from 2014 and 2020 grew approximately $70 million. In the last 2 years, our profitability has increased $80 million. That's that 50% increase in profitability that I was referring to. This is where you see the combination of our profitable organic growth, combined with our focus on operational excellence. It is building out those new capabilities, adding those key important functions and functionality that fundamentally didn't exist in AGI 2 to 3 years ago that is now driving expansions in our margin and an acceleration in our profitability. And it is that top line growth and that acceleration in profitability that we are expecting to continue in the future. Why do we expect it to continue in the future? It starts with understanding fundamentally, what drives AGI's growth? And its consumption. At the end of the day, what drives AGI's growth is consumption, and it is providing food and feed to that growing population. As the population grows, then our farmers are going to continue to invest in equipment, as their yields improve, as their crops grow, they'll continue to invest in equipment, as the maturity of some of these emerging ag economies improve additional investment in equipment. As we have to build out that global food infrastructure, so that the food can travel from where it has grown to where it is processed and consumed, we need to make continued investments. This is a powerful macro growth driver. Population is going to continue to increase. There's going to be a continuing increase for food and feed around the world, which ultimately drives investment in AGI's products, as we partner with our customers to support global food and feed around the world. So now that we understand some of those macro level drivers, we can go a little bit lower into how does AGI execute across those opportunities? And we're going to talk on 3 key areas. One is our geographic positions. We are well positioned in all the major agricultural markets around the world. We have access to multibillion dollar and growing industries. And we will look to continue to partner with our customers and deliver performance within these strong markets. We're also very excited about our positions in the emerging ag economies, such as Brazil and India today and Africa and Southeast Asia tomorrow. These are parts of our companies that are growing exponentially. So I want to take a little bit to explain why we're so excited about our positions in these emerging economies, and why we are seeing so much growth now, and we expect to see so much growth in the future. There's really 2 items that are driving the growth in these emerging economies. One is they continue to get more and more efficient in just their crop production. So if you take an example, we can look at Brazil. In 2022, it was a record crop in Brazil. As we enter 2023, we are expecting a 10% increase in the crop production in Brazil. And this is a trend that we expect to continue. As the markets in Brazil continue to mature, they implement new technologies, better fertilizer and able to drive higher yields off of their farms and increase grain production. As that grain production increases, you require more investment in storage, handling and conditioning that AGI provides. The second one is those markets are still relatively early in their maturity. And a great example is you look at the amount of grain that is under storage in a mature market, such as U.S. and Canada and you compare that to Brazil. So in the U.S. and Canada, you have about 50% to 60% of the crop is under storage. So as the farmers harvest their crop, they put about 50% to 60% of that under storage. You go down to Brazil, that's about 10% to 15%. So think about the opportunity to continue to eliminate waste and drive efficiency with continued investment in storage, handling and conditioning and capabilities, as Brazil moves from where it was a few years ago, down the 7% to 8% to where it is today, 10% to 15% and where it is going to be tomorrow, 20% to 25%. We see that trend in Brazil. We see that trend in India, and we expect that trend to continue. So you have those 2 compelling items that are driving growth in these emerging economies. Their crops are increasing, and they're going to continue to make important investment to eliminate deficits that they have in key agriculture storage capabilities. And then the third one that I'll comment on is product transfers. This is a key takeaway message for today, and it's one that we are extremely excited about. It is related to the comment that I made. We have what we need today at AGI to meet our growth and profitability expectations. We have the products. And our opportunities with product transfers is to take products that we have today that are successful in current regions and transfer those to other regions, where AGI is positioned where we don't have those products. We know there's very attractive markets for these products in other regions. We know these products are successful. Our opportunity is to transfer those products and broaden out our amenable market and continue to serve our larger customer base. Very important, we're going to spend a little bit more time later in the presentation talking about product transfers. When we're talking about growth, very important to mention our digital business. We're very excited about our digital business. We're very committed to our digital business. We have extremely exciting products that we know there is a strong market for. We are directly hearing from our customers a need, there's customer pull, and we're seeing that across the major ag economies around the world, U.S. and Canada, down in Brazil, over in Australia and down into India. You saw in December that we announced a restructuring of our digital business. That is really the focus down on these key products in which we know there is a very strong demand, accelerate our innovation and accelerate our market penetration, as we move more towards profitability. We are going to right size the business, improve our cost structure under the umbrella of operational excellence. It's all around restructuring our digital business today, so that we can deliver stronger digital products in the future and continue to grow our business, providing value to our customers and differentiating ourselves from our competitors. Very excited about our capabilities in the digital space and the digital products that we're developing. So as an overview of AGI, commenting on where we've been, where we are today, a little bit of our financial performance, understanding the geographies that we participate, getting to know customers a little bit better, our value proposition and how we're participating in the building out of that global food infrastructure to help a growing global population. So now we'll pivot and spend a little bit of time reviewing our corporate strategic priorities. And we reviewed these. We're all very familiar with these profitable organic growth, operational excellence and balance sheet discipline. For each of these priorities, we have well-established KPIs that are in place and that we use to measure our performance. Across each of these KPIs, we have targets set at the corporate level. But more importantly, we have these KPIs cascaded throughout our organization, so that we have clear visibility down at the operational level, what we need to do and the activities that we need to prioritize to drive performance and achieve these results. We have a very well-integrated and balanced scorecard across the organization that encompasses KPIs across these 3 priorities that we will be managing on a monthly basis. I'm going to come back to that point in a little bit. So we'll spend some time reviewing each of these 3 corporate priorities. It obviously starts with profitable growth. And there's 3 areas that we're going to touch on as we go through profitable growth. First of all, that structured process, our operating cadence, how we run our business? Second, elaborate a little bit more on those product transfers, give you an example, a real example of what we've done and the success that we've had in product transfers, and then as well touch on how AGI is expanding our capabilities, strengthening that relationship with our customers, providing full-service solutions. The structured process. Before I review in detail our structured process, I want to comment on exactly why we're spending some time reviewing this. And it is because fundamentally, this did not exist within AGI to the extent it does today, just 3 or 4 years ago. Implementing a disciplined operating cadence has been a key part of driving and managing our growth and business performance over the past 2 years. And it starts with our strategic planning process. We have a very well vetted and institutionalized 3-year regional strategic planning process that is updated on an annual basis right around midyear. So each of the business leaders that we introduced at the beginning of the presentation, they are responsible for developing, managing and executing across a 3-year strategic plan. We then take those regional 3-year strategic plans, aggregate them up, review them, and they become an important data feed into our annual budgeting process. We review all the potential that exists within our regions. We understand the priorities that those regional leaders came up with that are going to be critical to delivering on that potential. And then we develop our plans for the year, where we outlined our objectives, our measures and our performance expectations. That's part of our annual budgeting process. And then perhaps most importantly is the cadence that we have on reviewing the business. We get together on a monthly basis and review the performance across each and every region individually. We look at where we are performing well, comparisons to prior year, comparisons to budget and objectives, and we have honest conversations on where the opportunities are to improve, so that we can make those important course corrections and ensure that we're delivering against our objectives for the year. These are reviews that both Jim and I participate in each review, each month, each region. So just to give you an idea of the very robust, very well-vetted operational cadence that exists today and how key it has been for our performance over the past 2 years. Next, and this is worth spending some time on the product transfers because as I mentioned, this is going to be a key part of our profitable organic growth in the future. And again, this is taking existing products and capabilities that AGI has today, very successful products and transferring them from regions in which we're currently promoting those products to new regions, where AGI already has an active business. So let's explore that a little bit, and I'll start with giving an example. And it's an example with enclosed belt conveyors, one of our best product lines across AGI. It's manufactured at our smoothwalls manufacturing facility in the U.S. About 4 years ago, we fully transferred the capabilities around enclosed belt conveyors down to Brazil. So now Brazil is fully self-sufficient in enclosed belt conveyors. They can engineer them, they can design them, we can manufacture them, and we can sell them out into the marketplace. Enclosed belt conveyors are a key component to building out that food infrastructure. It is a key element of those large port infrastructures that we saw when we reviewed the Commercial segment. It has been key. It has been fundamental to the growth that we have achieved in Brazil in the Commercial segment, which has been extraordinary. So we'll show you that growth when we get to -- a review of the Brazil region, but this is a perfect example of the potential that exists by taking our current products and capabilities and transferring those to new regions. We talked about the example 4 years ago in Brazil. We are just getting started. We recently transferred storage bin and material handling capability down to India. We have an outstanding business in India. It is growing exceptionally, and you'll see that in a couple of slides. It is 100% focused on rice milling. We have extensive capabilities in AGI beyond rice milling, in which there is a very strong and compelling market in India. Our opportunity is to transfer our existing products and capabilities down into India and get access to that market. Storage and material handling, front end to rice milling, right? That's where you store the paddy, and you handle the paddy as it feeds into price milling. So we get to go out to the exact same customer base, our exact same channel and now promote a whole new range of products that are very successful within AGI. Transferring fertilizer over to EMEA, fertilizer is a key growth vector for Africa. Part of our strategic plan going forward, continuing to develop our business in Africa. We transfer that product, that technology, that capability over to EMEA. We're now able to execute that and grow our business in Africa. There's dozens, there's dozens of these examples. We've mapped all of them. We've assessed the amenable addressable markets for each of those products in these new regions. We've prioritized it. We're conservatively estimating that this opens up over $4 billion of addressable markets in these new regions. And our goal is greater than a 20% market share for those products. So you can see why that is such an exciting growth proposition for AGI, taking our current capabilities, our current strengths and transferring those to new geographies. Another opportunity for us, broaden our relationship and partnership with the customer. If you go back to AGI a few years ago, we were predominantly an equipment supplier. That's how the market looked at us, that's how our customers looked at us, that's how we look at ourselves. We would provide augers. We would provide storage bins. We would provide conditioning equipment. The exciting thing is, as we've strengthened the relationships with these customers, we've been able to convey the broad capabilities that AGI has. That's increased their understanding, and now they are asking us to not just provide equipment, but provide full solutions. They no longer just want a conveyor or a bin and conditioning. They want us to provide everything. They want us to design the system, manage the project, oversee the installation, lead the commissioning and start-up. One-stop shop for the customer, full end-to-end solution. That's now the conversation that we're having with our customers. It's the conversation that we're having with our customers all around the world. And it is a great opportunity for us to strengthen that partnership with our customers and continue to provide AGI equipment now under the umbrella of end-to-end solutions, terrific opportunity. Spare parts and service. We look at our business, and we analyze it, and we would expect spare parts and service to represent 10% of our revenue. We are currently significantly below that. It is a tremendous opportunity for us to increase our focus on service and parts business, add a whole another dimension to the company and grow our top line. We have examples in the company where this is working extremely well. India, their service and parts business is greater than 9% of their total revenue. So we know how to do it. We have the capabilities inside the company. Let's transfer those capabilities to other parts of the organization, and now grow our service and parts business globally. That's our focus. To do that, we recognize, we need to enhance that customer experience, make key investments in our customer service and call centers. Again, we have an outstanding capability in India. This is well built out. We're making investments in Chicago so that we can consolidate, integrate and strengthen our customer service center. This will strengthen that relationship with customers and support our progress in the service and parts business. Lots of opportunities for AGI and broadening that relationship with the customer and being a full-service provider. The third one that we'll touch on. Another key message for this morning is AGI getting more and more involved in that processing space. When you look at opportunities from our customers' lens, particularly our commercial customers, they look at it under 3 different components, 3 different capabilities: storage, handling and processing, right? This goes back to that rice milling example. The rice milling is the processing, and you have the storage and the handling that handles the material as the feed into processing. Our focus now is providing that full capability. We have capabilities in processing. We have rice milling. We have fertilizer. We have a food business. We're developing feed milling business. We are going to accelerate our focus in these businesses and continue to build out our process capabilities globally, so that we can now provide that full solution to the customer. This unlocks multibillion-dollar market for AGI. It is an extremely exciting opportunity for us. So much so that we want to explore it further in a video from our new executive leading the Global Feed platform, Noam. So I'm going to turn it over to Noam.

Most recently, over the last 5 years, we've added processing capabilities. So 4 key areas for us in processing, food processing, feed milling, rice milling and fertilizer blending. We now have the ability to deliver engineering, project management, equipment supply, installation and commissioning of food processing facility. So an example where we've put our food processing capabilities to the test is the recent Maple Leaf, London Poultry Project. So this is a $700-plus million investment by Maple Leaf, where we supplied engineering, project management, equipment supply and installation. Our feed capabilities are focused both on the farm application as well as commercial application. We've got a flex mill product line that addresses the farm as well as a fair amount of experience in commercial feed milling projects. An example of feed milling project is the highlight feed milling in Manitoba. 250,000 ton per year feed mill, focused on swine application. And we've provided engineering, project management as well as equipment supply. In fertilizer, our offering encompasses the blending side of it. So declining weight and batch blending systems as well as fertilizer storage and fertilizer handling equipment. For the rice milling segment, we deliver everything from the parboiling and drying through the core milling equipment and into the back-end color sorting and the packaging equipment. Our customers are increasingly requesting turnkey solutions from us. And the combination of our processing capabilities with our core grain handling and storage capabilities allows us to now deliver these integrated solutions to our customers. So the future is bright. There's an opportunity now to leverage our regional cost and to transfer the product lines and the capabilities across these processing sectors around the world. This will enable us to offer local engineering, local equipment manufacturing and ultimately a tailored solution for our clients. The opportunity for AGI in processing segments is massive. These are large addressable markets, multibillion-dollar addressable markets, very positive secular growth trends and limited market share for AGI today. All of that makes for a very compelling organic growth opportunity for AGI.

Excellent. Excellent. Right, Noam said it very well. The opportunity is massive. And it's why we're so excited. You can see just in some of the visuals there, right, these are significant scale projects. These are significant scale investments that some of our customers are making, and AGI is very well positioned to support those investments in the future. That will be one of our focused processing equipment. Okay. That was a lot about growth. Growth is exciting. We can talk about growth for the rest of the day, but we got more material to cover. So I want to pivot a little bit to operational excellence. And let me just kind of frame out operational excellence a little bit more. If you reflect back, when we talked about our sales growth over the past 2 to 6 years, and the acceleration of our profitability, I referenced the initial work that we have been doing from an operational excellence standpoint. In the past 18 to 24 months, we will have increased our EBITDA margins by about 150 basis points. Our expectation across 2023 is we will continue to grow our EBITDA margins by another 100 basis points to get to 17% EBITDA margin. Continuing to focus on operational excellence and building out these capabilities will not only deliver that 100 basis points, but also position us for continued margin expansion in the future. So 3 key areas on operational excellence. We're going to talk about culture. We're going to talk about those important functional capabilities, and then some investments that we're going to continuing to make in process and systems and tools. Perhaps something that doesn't get talked about enough is culture, but it is something that AGI is extremely committed to. It has been part of a transformation that has occurred over the past 2 years. We've made significant progress in advancing our culture. There's more work to do. But at the end of the day, culture drives our performance, creating that exciting environment for our employees to work, enhancing the customer experience and delivering value to our shareholders, culture plays a key role in all of that. So when we talk about culture within AGI, we talk about ONE AGI. That is the culture that we are striving for. And it is a culture based on a highly integrated global company delivering exceptional performance through collaboration, inclusion and cooperation. That's our culture mission. Significant progress, more work to do, and we're fully committed to continuing to advance the culture within AGI, as it's going to be such a cornerstone not only of our operational excellence, but our performance in general. So the significant transformation stems from the fact that AGI grew substantially through acquisitions. So through that acquisition, AGI inherently had a very division centric culture. That's the transformation we're making division centric to ONE AGI, fully integrating our teams, fully integrating our capabilities, so that we can provide enhanced solutions to our customers. It's the customers that are driving our performance. Very exciting progress, one that we've talked about quite a lot internally and was important to share with the team here this morning. There's lots of different ways to measurement progress that you are making in culture. You can do -- you can, and we do employee surveys, employee poll surveys, here directly from the team, get feedback, understand how things are going. Another important measure, important measure for me on culture is safety. This is an indication on how well the teams are coming together and focusing on some of our core values and core objectives. We increased our performance on safety 2 years ago. We significantly ramped it up. It was important. It is important, and it will continue to be important. Our goal in safety is that each and every AGI employee around the world returns home and the exact same condition that they came to work. One, 1 lost time injury is 1 too many. And you can see the significant progress that we've made over the past 2 years. We've reduced last time injury rates by over 50%, phenomenal, phenomenal, but we're just getting started. There's more work to do with safety. Safety is a key part of our culture, very indicative of the direction we're going. We'll continue to make important investments to ensure that our employees have a very safe work environment. You can see some of those initiatives that we've been progressing over the past 2 years. There's other initiatives that are very active, such as Near Miss reporting that are going to continue to drive our safety performance in the positive direction and help continue to strengthen that ONE AGI culture and help us deliver on operational excellence. Now let's talk about those centralized functions. AGI grew significantly through acquisitions. We did not, at that time, step through any major integration. We embarked on that integration effort over the past 2 years and are taking those capabilities that were inherent in all of those divisions integrating and consolidating them into a single office, our Chicago office, which we'll talk about. And in doing so, we also created new functions and new capabilities that fundamentally did not exist previously such as global product management, global supply chain, manufacturing leads, some of these critical and fundamental functional capabilities that ultimately will not only drive operational excellence but will support our growth objectives. So in exploring it a little bit further, it's often good to take an example. So we'll step through not only global product management, but where our teams are focusing, how they're working together to drive operational excellence, reduce our costs and improve our operational efficiencies. I'll just make a comment. You can see on the slide 2 new innovative products that AGI has recently launched. We continue to be focused on innovation. It's absolutely a critical part of our success in the future. But I want to specifically focus on the operational excellence. I'm going to take product management as an example. We grew through acquisitions. As a part of that, we have significant complexity in our product lines. Our product management team is focused on simplifying, rationalizing and standardizing our products. In doing so, we will take cost out of our products directly. But we're not done there. As we simplify and standardize our products from a product management standpoint, we now turn our attention to the supply chain. As we have standardized products in our supply chain, we're now able to look at our -- the standard products, we can now look at our supply chain and understand how we can rationalize our supplier base, strengthen our relationships with suppliers and put in place global and regional supply agreements to drive out costs in our supply chain. So we've reduced inherent costs in our products. We're amplifying that by taking cost out of our supply chain, and then we're still not done. We turn to manufacturing standardized products, rationalize supplier base, we can now improve our manufacturing utilization, move to a position where we can more easily manufacture multiple products across our manufacturing footprint and drive to a higher level of manufacturing optimization. So when you look at that effort that started in product management, you get 1 plus 1 plus 1. It is additive. And in this case, it actually equals 5 because not only are we driving out cost throughout our integrated supply chain, making -- standardizing across that supply chain now enables us to accelerate those product transfers. We have standard products. We have a well-vetted supplier base. We've set up global supply agreements, and we've improved our manufacturing utilization. All of those contribute to us to be able to successfully transfer those products from one region to another. So you can see why we are so excited about these functional capabilities, didn't exist in the past, they exist now, and they're going to be a very compelling part of our success story going forward. So you hear us reference a lot our Chicago office. We're proud of our Chicago office. This is going to be a very important hub for AGI, not only across North America, but globally. We opened that office back in August. You can see some pictures of the office here on the slide, just to give you rough dimensions, about 45,000 square feet. It's designed to hold around 200 people. We have a little bit under 100 today. It's growing rapidly. It will continue to grow as we step through that integration and consolidate some of our core and critical capabilities in 1 office, also accelerating our culture, ONE AGI creating an environment where we can be collaborative, we can be inclusive, and we can increase that level of cooperation because we're all sitting together. The last item going to touch on from operational excellence. We will -- we have and we will continue to make important investments in standardizing our processes globally making key investments in systems and tools to help drive efficiency across our core business operations. We've been doing it over the past 2 to 3 years. We'll continue to do that over the next 3 to 4 years. Final item, very important. We've made a lot of progress in the past 6 months, strengthening our balance sheet, paying down our debt, fully committed to this. We see significant progress occurring in this area across 2023. I'm not really going to comment on this point because Jim is going to come up in a few minutes and go through our balance sheet discipline and what we're looking to accomplish from strengthening that balance sheet going forward. Okay. Now moving on to our regional highlights, spending some time getting to know our business at our regional level and introducing -- further introducing some of AGI's leaders. I want to start by just taking a snapshot, giving you a perspective, further perspective of the AGI business today. This is a great slide, lot of very interesting information on it. So I'll spend a little bit of time going through it this morning. So first, just to orientate us on the slide. So the large gray circle with the percentage in it, that represents the proportional amount of sales for AGI in that region. So if you look at the U.S., 45%. So 45% of our sales come from the U.S. region. Small box to the right, in green, with the percentage in it. Hopefully, everybody can see it. It's a little bit smaller, 3-year CAGR sales for that region. So again, you can look at the U.S., our largest business globally has grown 14% over the past 3 years. So going down, you can see South America, Brazil, 13%, very exciting CAGR for our Brazil business. The number is right, 49% is what that business has grown over the past 3 years over the EMEA and into Asia Pacific. So I mentioned that each of these regional positions now represents greater than 10% sales for AGI, they're all growing at a greater than a 10% CAGR. And I want to put that emerging economy in our international business and the growth behind it in a little bit more context. If you go back to the beginning of 2020, the total EBITDA from our international business outside of North America was around $25 million. So about 2 years ago, 2020, $25 million. That EBITDA and net profitability has increased threefold over the past 2 years. Back in 2020, it represented 17% of AGI's profitability. In the trailing 12 months, it represents 34% of our profitability. It's doubled in the past 2 years relative to total percentage for AGI. And as I commented earlier, our expectation and our visibility is that, that part of our business is going to represent 50% of AGI. That's the amount of growth potential that exists in these emerging ag economies. That's the performance that we're seeing today in Brazil and India and it's the performance that we're positioning ourselves for in Africa and across Southeast Asia. So we have that very exciting manufacturing facilities. That's going to come out a little bit in the slides. We've got some videos and I'm quite confident that one of your takeaways is going to be impressed at our manufacturing capabilities. These really are state-of-the-art facilities. We're going to do a nice video walk-through on a couple of them just to give you a little bit more insight into the manufacturing capabilities that we have around the world. So we'll explore each of the regions. A slide on each, exactly the same format for each of the regions, so you can quickly orientate yourself. You'll see trailing 4-year sales performance, you'll see a pie chart that represents the split across our major market segments, Farm and Commercial, and then highlighting a couple of the strategic priorities, reflecting back on part of that operational cadence where we developed 3-year strategic plans. Out of that bubbles up growth levers that we turn into strategic priorities and then we execute against them in the forthcoming year. So just quickly, you can look at the U.S. outstanding business. You can see the growth trajectory extremely exciting. Our largest business globally, growing at a very attractive pace. And we're confident that growth is going to continue. You can look at our split between Farm and Commercial. We have an outstanding Farm business in the U.S. We have an excellent dealer channel and dealer relationships. We're focusing on continuing to strengthen that dealer relationship, building out our portfolio of products across existing dealers and adding new dealers. That's a key part of our strategic priority. And then you can look at the Commercial space, smaller than Farm. That is a great opportunity for growth for AGI. Think of all of those comments that we made around product transfers and the comments we made about entering into the processing area. There's great opportunities in the U.S. for rice milling down in the South for feed milling across the U.S. That's our focus. That's going to increase and grow that Commercial business just as it did down in Brazil, which we'll touch on in a minute. Turn over to Canada. Another key part of our business. Canada Farm, Canada Commercial as well as grouped into here. You can see the sales performance that we've had over the past few years. I commented earlier about the diversification, the balance and the resiliency of our business that we were able to deliver record profits over the past 2 years despite challenging conditions, one of those difficult ag conditions in Canada. The exciting thing is we're coming out of those difficult conditions in Canada. They impacted the tail end of 2021, the first half of 2022. We saw that business improve across 2022 in the second half. And now we're looking at 2023 with extremely strong backlogs and a very exciting order pipeline. 2023 is going to be a great year for Canada, very confident of that. Wherein we've got very important strategic priorities that are going to drive that growth, both in our Farm and in our Commercial segment, transferring up products to support Farm, and we're focusing on Food. Food is a key commercial segment within Canada. Flipping over to South America and Brazil, I mean, fantastic, fantastic growth story. You've often heard Jim and I comment that we reached an inflection point in our business in Brazil. And you can see that very clearly on this graph, right around 2019 and 2020, we turned the corner in Brazil and went on an extremely accelerated growth trajectory. And we expect that growth trajectory to continue. You're going to hear from Francisco in a moment commenting on it, but it goes back to those 2 growth drivers in our emergency economies. They continue to grow their crop protection, and they continue to address the storage and equipment deficit. I mentioned the example on product transfers and how compelling that can be. I gave you the example of moving in closed belt conveyors from Sioux Falls down to Brazil, look at our Commercial business in Brazil. This is significantly attributed to the product transfer that we made 4 years ago. That's the type of potential that exists in many regions as we continue to execute on that product transfer. It grew our commercial business in Brazil. And we have the opportunity to have similar performance in other regions. So I can talk quite a lot about Brazil and South America, but let's turn it over to Francisco, and he can further explore it for us. [Presentation]

Pretty exciting stuff. I mean we've got outstanding capabilities. We've got an outstanding team. It was great to hear from Francisco. Okay. Asia Pacific, another tremendous growth story. Again, this is India. This is Southeast Asia. This is Australia. You can see the growth trajectory that we've been on for the past 3 years. Jim and I often comment about the acquisition, that key acquisition that we made down in India when we acquired Milltec, the rice milling business. So put that in perspective, we acquired Milltec about 3 years ago. The Milltec business has about doubled across that 3-year period and the potential for growth is significant going forward. You can see the trajectory, you can see the split between Farm and Commercial. Rice milling exists. It's a processing capability. It exists within our commercial segment. Farm, again, going back to those product transfers. In our Farm segment, that is the storage and the material handling. That is the capability that we literally just transferred down to India. We are now currently making storage bins in India. We're making material handling equipment in India. We weren't doing that previously. That not only supports our growth in rice, providing that full solutions to the customer but opens up the new markets where we can sell storage and material handling into the grain space across India, extremely exciting opportunities. Again, I can spend a lot of time going through it. But let's turn it over to Rajan, our fantastic leader in India who can tell us a bit more. [Presentation]

You can see why we are so excited about our India business, and it was great hearing directly from Rajan. Okay. So turn our attentions last region, EMEA, Europe, Middle East and Africa. If there's one region that fines resiliency for AGI, it is absolutely EMEA. When you think about the COVID and supply chain and conflicts and all the disruptions that have existed, it really impacted that EMEA region. Despite it all, we've been able to consistently deliver sequential growth and increased profitability. It is largely a commercial business. You can see a little bit of the participation in Farm, but just as with our other regions, this is opportunity. This is an opportunity for us to continue to grow our business. In this case, it's around geographic expansion, further penetration into Africa and setting up a strong farm business across Africa. So you can see as you look at some of those strategic priorities, that's what they're focused on, building out our capabilities, strengthening our position in Africa, and transferring some of the key products and capabilities that will enable us to penetrate and grow our position in that geography. So just like with the other ones, let's turn it over to Cristiano, so you can learn a little bit more about EMEA. [Presentation]

Terrific. Great leader, Cristiano, great team, outstanding capabilities and a wonderful customer base across EMEA. Okay. So you've heard a lot from me. I'm excited to turn it over to Jim Rudyk who's going to spend some time providing an overview of our finances and our outlook.

Thank you, Paul. Okay. We've got a few more minutes left before we can get to Q&A, and I'm going to spend some time talking about our financial overview. There's really 3 key financial takeaways that I want to make sure you leave with that come from these 5 bullets here. First of all, as you've heard from Paul and you probably looked at our numbers, our results are very resilient. They've been resilient for several years. And I think as important or even more importantly, I'm going to talk a bit about how we're confident in being able to deliver despite the growth in the resilient results, increasing margins. And let's talk a bit more specifically about our margin improvement there. That's the first takeaway. Second one that is extremely critical is the balance sheet does matter to us. We will focus to significantly delever our debt. And I'll talk about some of the reasons and exactly how we're going to accomplish that. And then lastly, I think you've seen, as you walked through the slides, we have a very high degree of confidence in our outlook and really our look to grow at better than market rates. So I'll cover those 3 topics, margin expansion, balance sheet management or deleveraging and our growth. So let's start off just quickly and take a look and recap what our sales, our adjusted EBITDA and our margins have been over the last 4 years. As you know, and we've talked about it, everyone knows about all the turbulence in the world. But during these years, if you look at our results, they've been pretty steady and growing. Actually, look at the last 2 years, growing quite significantly. And through all this, if you look at our gross margins, top right there, they've been pretty consistent, which is a good reflection of the diversified business we've now built up over the years. The only exception that you see there in the chart is in 2021, where our gross margin percentage did dip a bit, largely a result of the crazy quick increase in steel costs that everyone experienced. And in a weird way, it did catch us off guard, but in a weird way it was a blessing. It allowed us to then look internally and readjust and we adjusted quite quickly, I think, and improved our process to better manage that to make sure that we stay on top of any changes in costs going forward. If you look at our EBITDA margin, you see the last few years, we've made some investments. We've touched on a few of them. particularly in SG&A, where we built out capacities in our sales group, our supply chain groups, engineering groups, our customer experience or customer service groups and now you're starting to see the benefit of that. And so we've improved our margins in the LTM. And as Paul mentioned, our target is to get those margins up to at least 17% in the very near term. So I'm going to talk a little bit more specifically about how exactly we're going to do that. For the margins, there's really 4 specific reasons why we're confident in being able to get our margins to improve. First one, which I think is the easy one, quite frankly, is as a result of the investments that we've made and the capacity that we've built, we'll be able to leverage those investments and not invest as much in the near term. And so that will naturally drive up our margins as a result of those historical investments. You see that in 2022 and you'll see that going forward. As important, I think, is what I call price management. In the wake of some of the extreme cost volatility, particularly with steel in 2021, we have developed very strong pricing management disciplines. And so if you think of our business, we've got 2 types of businesses. We've got the Commercial market, and we've got the Farm market. In the commercial market, A lot of those orders are engineered to order. So they're all unique. We price them when they happen. And so what we've been able to do now is we effectively are able to lock in the margin when the customer places the order. We're able to -- and how do we do that? We actually -- so when you place an order and you're committed, we go out and buy the products. So we procure the steel at the cost that we've quoted that we quoted in the price. We also, in addition to that, because some of these projects can take a lot of time. So we've also been able to modify how we deal with the contracts and inserted clauses in there that allow us to revisit the pricing for any significant material changes that could happen depending on how long the project ultimately goes from order to when we fulfill it. So we feel very comfortable and protected there on the Commercial side. On the Farm side, it's a little bit of a different approach in terms of pricing. Farm side, typically, people are buying from inventory. And so think of our catalog list price approach. Historically, we would set those prices annually and maybe revisit them once a year. But then again, in '21 with all the changes, we got caught off guard. So now we've developed fairly disciplined rigid approaches to take a look and analyze what the competitors are doing, what the markets are doing, what our costs are doing and then making sure our pricing matches to make sure our margins stay intact. I think price management is a very critical initiative to help us ensure that our margins not just stabilize, but we're able to grow them going forward. The third area, and we've talked a lot about this is our focus on operational excellence. And if I had to describe where we're at in terms of opportunities here to improve our costs, if I use a baseball analogy, I'd probably describe us in the sixth inning. So we still have lots of opportunity to go to continue to drive operational cost improvements. We touched on a few of them today. But remember, we're going from a very decentralized, divisionalized type approach, moving to where we're starting to think about centralizing some facilities. We're -- sorry, consolidating some facilities, centralizing some of the processes, whether it's engineering, procurement, et cetera, and adopting really more of a lean Six Sigma type approach at addressing our costs. And that will allow us, especially in the coming short term with all the concerns on inflation and everything else to manage any of that variability while still driving cost improvements and efficiencies. And then the last key driver that gives us confidence in getting to our margin targets. And it's really moving forward is, as we move into some of the new service offerings and products, so selling spare parts, a lot of our competitors are able to improve their margins, boost their margins in the spare parts market. We've done that well in some areas, but we have opportunities to do that better in a lot of the other areas around our business. In addition to that is services offerings. We're becoming more of a full service provider to our customers. And those services naturally have higher margins. So as that mix of the business increases, you'll see that starting to help our overall margins. So 4 key drivers there. Leverage, just growing into what the investments we've already made, our pricing discipline and management, our operational excellence and focus on costs and then some of the new services that we'll have to offer give us a lot of confidence in improving our margins. Okay. So let's switch now to our balance sheet. What you're looking at here is a chart or a graph that shows our total net debt to our last 12 months of our trailing EBITDA, and it's over the past 4 years. And as you can see, if you pick out some numbers there, you see we've been in excess of 6x, that's high. And for most of the time period, you could see we've been at 5x or higher. A lot of that leverage, though, if you know our history, is a conscious effort and as a result of our acquisitive nature, our acquisitions. You can see now at the end of Q3, we've dropped that leverage ratio quite significantly down to 4.1x. By the end of this year, you'll see that ratio being below 4, and we'll quickly march that down to our target of 2.5x in the short term. By the end of 2023, I expect that ratio to be in the very low 3s. And how will we get there? Well, fundamentally, it's 2 ways. First way is we're growing. So as our EBITDA grows, naturally, the leverage ratio will come down. But that's not probably what a lot of people want to hear. The other thing that will be happening is we will be paying down our debt. We generate a lot of free cash flow. And we've had uses for it in the past, but now a big use and a big priority will be to apply a lot of that free cash flow to pay down our debt. You saw some of that in Q3, and you'll continue to see us applying excess free cash flow in the quarters to come to pay down our debt. So those 2 drivers will help us quickly march down that ratio. However, in addition to that, so you got the EBITDA growth and the free cash flow, there's 2 other vehicles, I guess, that we have to be able to generate more cash to be able to even accelerate the paydown of that debt. And the first one is working capital management. I'll talk a bit about that. And then the second one that I think is equally as important is really taking a disciplined approach at our CapEx spend and not doing any more acquisitions for a while. So let's talk about working capital management first. And everyone knows this, but with most high-growth type companies, working capital needs is usually a big use or need for cash. We've been making the improvements over the years, over the last few years in our working capital needs. With the exception, you see on the graph here in early 2022, where we consciously went out and decided to with the outbreak of the war and some of the concerns on the supply chain, we proactively went out and bought inventory. Our order book and our backlog was very strong. And so we had a lot of confidence and aggressively going out and securing those positions to make sure we could fulfill our customer needs and make sure that we didn't miss any of those commitments. We actually manage our working capital by looking at our levels of receivables, the level of inventory and our payables. And more specifically, there's metrics underneath there that look at how many days sales outstanding are your receivables, how many days in inventory you have and how many days it takes to pay your suppliers. We made great progress, I think, in 2022 on the receivable management. A lot of opportunities still to go in managing our inventory and our payables, which we're focused on in 2023. Another way to look at working capital that you see here on the graph here is really looking at our ratio of total working capital to our annualized sales. We are -- that target there you see at 16% at the end of Q3, we're actually targeting to get that down to between 10% and 12% of sales on an annualized basis. But ultimately, what we're really focused on doing for working capital is making sure that we will grow our working capital at less than what our sales growth will be. Ultimately, we're going to need working capital as we grow. But hopefully, we will need less proportionately than what our sales growth will be. So besides working capital, the second big use of our cash or free cash flow that we generated over the past few years anyway, has been on acquisitions and also some pretty significant CapEx investments that we've made, particularly as we built out Brazil and our digital business over the past few years. So a couple of points. First of all, we will not be doing any acquisitions in the near term. So that use goes away. And then on a -- from a CapEx perspective, on a regular ongoing basis, we'll be very focused and I use the word disciplined to manage what we spend things on. And our business is such that we generally need CapEx, need CapEx for 3 main reasons: One, we call maintenance capital, so this is making sure the equipment that we have in our facilities keeps up and running. And historically, that typically runs between 1% and 1.5% of revenue. And it has -- I've looked back for 10-plus years, and it seems to be very, very consistent at that ratio. So that's an important data point. On the far right side of the page, we will continue to invest in our products, keeping on top and making sure our products are what our customers need, innovating them. That is an important part that we'll always spend on. That's the intangible bucket. And then the third reason that we'll spend money on regularly is to continue to look at our facilities and ensure we've got the right capacity. It's going to need to invest in some new equipment as we continue to grow, but also to drive efficiencies. We see a lot of opportunities still from an operational perspective to automate a lot of stuff. And so you will see us spending money in that growth capital bucket. However, the amounts that we will spend in a normal situation, in a normal business will typically be between $40 million and $50 million a year for all 3 buckets. That's what we've averaged the last few years, and that's what we think we're comfortable with from a normal operating run rate business. If we do end up spending more. So if you see us reporting CapEx, that's more than that. It will be because -- primarily because we've got an extremely strong return type investment for organic growth and we will be well on our way to hitting our leverage targets. So we will make sure we will not be spending unless we're confident we're on track for those leverage targets and that investment is a very high return. So you can see how -- besides the growth in earnings and our free cash flow, the 2 other opportunities, working capital management and a disciplined CapEx approach will help us free up the cash we need to make sure our leverage ratio goes down. Okay. So finally, last slide here. Let's talk about our short-term outlook on the business. And as you know, in the last 2 years, despite all the chaos in the world, we've been able to grow our business at very strong double-digit growth rates. 2022, we provided guidance of EBITDA of at least $228 million, that's a growth rate of 29%. In 2021, we grew 18% and what's really encouraging, I find anyway is that our backlogs and our sales pipelines continue to remain very strong and really give us a lot of confidence that we will continue to be able to outpace the growth of the market. Now we will be providing specific guidance for 2023 when we report our results on March 8, but I can tell you that, that guidance will reflect our confidence in 2023 based on what we see around the world and as we talk to our customers. So hopefully, you have a better sense here of who we are and what our strategy and what we're excited about going forward. I tell you, a lot of the heavy lifting that was done over the years through the acquisitions has really set us up nicely where we can now focus inward, I talk focusing inward and focus on organic profitable growth operational excellence, making sure we have a strong balance sheet. So hopefully, that was helpful for you today. I am done. I'm going to thank you very much for your time and attention. And I'll turn it back over to Paul, who will make some closing remarks.

Thanks, Jim. Okay. Fantastic. Thanks, Jim. As Jim mentioned, some closing remarks, keeping track of time here, we do want to save some time for any questions that the audience might have. So quickly recapping going back to those key messages, those 4 key messages that we outlined at the very beginning of the presentation, things that we wanted to make sure people walked away with today. It always starts with our people. We have outstanding talent across the organization, and we have a very capable leadership team that we review. Second message that you've heard is we have what we need today to achieve on our growth and profitability expectations and targets in the future. Jim mentioned we're not focused. We don't have aspirations. We don't have plans for acquisitions in our near term. We have what we need today to continue to grow. Sorry, I lost a slide there for a second, okay. And our priorities. We're focused on our priorities. We're confident that those are going to be key to delivering on our performance. Priorities being profitable organic growth, operational excellence, balance sheet discipline that Jim just targeted and our growth prospects are very encouraging. We talked about the product transfers and how that is going to unlock over $4 billion of addressable amenable market. We're going to target 20% market share across that, key growth driver for us going forward. We talked about entering more and more into that processing capability, providing full solutions to our customers, expanding and strengthening that relationship end-to-end solution provider and then the geographic expansion. We've got outstanding positions in the key mature markets, U.S. and Canada. Those are continuing to grow. We've got great growth opportunities. And we're very excited about our positions in these emerging economies that have significant growth drivers behind them, been a key part of our growth over the past 2 years. They will continue to be part of our growth going forward, Brazil and India and then our positions that we're developing in Africa and across Southeast Asia. So quick recap, and we have a few times left here for Q&A, reflecting back on our message that we had at the beginning. We stand here today a much stronger AGI than we were a few years ago. I'm confident that everybody has that impression. We've kind of talked through some of those compelling reasons. It wasn't too long ago, that we were celebrating moving past $1 billion in sales, $2 billion right now as we look at our company and we look at our business, that is well within our operating planning cycle, our focus now, our ambition, our aspiration and the direction that we're going is $3 billion. And we have very well-vetted strategies, plans and capabilities to get us there. So with that, I'm happy to open it up to any questions. Yes. And maybe what we can do is we ask questions, just very quick, introduce yourself and where you're from.

Jacob Bout, CIBC. You walked through some very good growth prospects in India and Brazil. Maybe start off, talk a bit about capacity utilization of the facilities in both those areas. And then at what point do you have to start thinking about capital necessary to either for greenfield or a brownfield expansion in those areas.

Yes. Fantastic question. So if you look at India and Brazil, the easy answer to the question is we have the capacity that we need today to achieve the growth objectives that we have set out, certainly over the next 12 to 18 months. But we are extremely excited about those growth projections and the opportunities that exist in both of those markets. We expect that, that growth is going to continue well beyond that 18- to 24-month period and be a significant amount of growth for us going out in 2 to 3 to 5 years. So that does create us an opportunity to continue to invest in our core business to ensure that we've got the capabilities in place, inclusive of manufacturing so that we can meet that demand. So as Jim pointed out, our focus right now, absolutely paying down debt, strengthening our balance sheet. We've got the free cash flow generation to achieve that. As we improve and hit those leverage ratios, that free cash flow that we're going to continue to generate, we are going to invest back in our business. We've got the market and the potential and the growth opportunities in front of us. So yes, out in the future, certainly into that 18-, 24-month period and beyond, we will be investing in Brazil and in India, continue to strengthen our manufacturing capabilities enable us to execute on those product transfers and continue with those growth trajectories.

Maybe just a follow-on question. When you look specifically at the Brazil market and you look at the retailers in that market, part of the growth strategy there is you're required to provide credit to the farmers to support that growth. Maybe just walk us through how you handle that when you think about the -- beyond Farm.

Yes. It is a great -- very insightful question. So if you -- again, remember, we had 2 segments: Farm and Commercial. When you look at our farm segment, we provide the solutions in there to help the farmers run a more efficient, eliminate waste and improve their business. The farmers get cash as they harvest their crop. And one of the programs that is in place, and we put in place down in Brazil, enables us to help farmers finance those upfront investments. And as collateral, there's the system in Brazil, they put up their crop as collateral. And then as they harvest their crop and they sell their crop and get paid, then they're able to pay your products back for that upfront equipment. That was a program that was really helpful for AGI to initially accelerate our Farm business in Brazil as we renew market entrants into Brazil. The interesting thing now, if you look at our Farm business, growth and activity is much less supported by that type of financing activity. That is part of our brand. That is part of our strength in Brazil. That is part of these important relationships that we're developing with our customers. But probably just as important, it is reflective of the cash that the farmers are now generating. You look at crop prices and commodity prices in Brazil, they were extremely high. Harvest had been outstanding. Farmers have cash on hand that they now are looking to directly deploy in investments to improve their business going forward. So key point, that was a part of our growth early on in developing that farm segment going forward, we see that less and less.

Great presentation, by the way, guys. So what stick out for me is something new was the -- well, at least to the extent the opportunity was the product transfers. You talked about $4 billion as an opportunity on a $1.4 billion business. I'd love to ask you what the cadence could be of that going forward in terms of you realizing it. But I'd also like to ask, in the last 2 years, you've grown a lot and how much of the success of the last 2 years was product transfers. So do you just get a sense for how much of this growth is really secular.

Fantastic question. So cadence, very important question. I love the focus on product transfers. That is going to be a key part of our growth story going forward. And as such, we have developed and cascaded very specific metrics in place for product transfers. So we know the priorities and we know exactly what it is that we're looking to accomplish. So our target from a cadence standpoint is we would look to be successful in 4 key -- 4 to 6 key product transfers per year. That's roughly what we are looking to have in place. And then we are putting additional metrics in there to help us evaluate the progress that we're making. So very common metrics in this space are like new product introductions, right? And companies that are very innovative, they will track new product introductions and the sales generated that as a percent of total sales. That's what we're looking for, for product transfers. So we put very specific metrics in place that will track the sales growth that we achieved from product transfers as a percent of our total sales to ensure that we're making the progress in that area that we would expect. So you can think of the type of NPI metrics that innovative and growth companies would put in place. We have very similar expectations around new product introduction. In terms of the growth that we've achieved over the past 2 years and how much of that has been related to product transfer, I mentioned the success story in Brazil, that's certainly been a part of it. The growth that we have seen on that commercial segment. There hasn't really been a whole lot more beyond that in the past 2 years. A lot of that has just been organic growth and focusing on our positions and building out within our existing customer bases and within our markets. So the opportunity is quite still in front of us to untap that $4 billion amenable market. In many ways, we're really just getting started there. That's why it is so compelling.

Chi Le with Desjardins here. I just wanted to touch base on the mix, Farm versus Commercial. You said 50%, 50% today. I think previously, obviously, Farm was much higher. So when you look out 3 years, how does that mix evolve? And does that put a bit of a headwind on margins as you look out.

Yes. Great question. And there is some margin mix as you look between our Farm and our Commercial business, specifically in Farm, we have our portable equipment. That's one of our higher profit margin businesses. So if you look at the performance of those 2 segments, you will see higher margins in Farm. In terms of the balance going forward, expectations is, if anything, it's going to strengthen. We have significant opportunities to continue to grow our farm business, not only in these major mature markets, such as Canada, and the U.S., but also significant opportunities in some of these emerging ag economies like Brazil, very excited about the potential that exists in Africa, and we're really just getting started in India. That India business is predominantly Commercial. Today, you're going to see that weighted much more towards farm in the future. And we also have expectations that we've got an attractive farm business in Australia. We're making some positioning moves that are going to enable us to accelerate that going forward. So we expect that to continue to remain in balance and the respective impact or non-impact on margins.

Perfect. And then my second question, it feels like you put in a lot of structure and processes in place, metrics to measure, just wondering how those KPIs that you had at the beginning of the presentation, are they tied to incentive compensation, how you measure the success of that? And is that tied to comp as well?

Yes. 100%, they're directly tied to comp is something that we've got a lot of focus on. We understand the importance of variable comp and ensuring that we've got a very comprehensive variable comp program consistently applied globally that is directly tied to the business objectives and specific specifically linked to our KPIs. So the short answer is yes, and it's very well mapped out.

And if I could just elaborate, Paul, just a little bit on that. So we spent a lot of time on this. And what I think another word I would use that is critical is alignment. Now historically, there were a lot of metrics used to incent behavior. And what we've done now is align everyone on the critical metrics. So for our short-term incentive plan and our long-term incentive plan, we're really motivated on organic EBITDA growth, our free cash flow, making sure we maximize that and our return on invested capital. Those are 3 critical metrics, and we've aligned those incentive programs across the entire leadership team.

Excellent. Thanks, Jim. Maybe we have time, just cognizant of the time here, for one more question, if there's another question here.

It's Jason Trainor from Laurentian Bank. It's pretty clear that you guys are going back to basics, balance sheet deleveraging, margin expansion, operational efficiencies. And I think it's a well-received message. One thing I noticed that was a little bit deemphasized was the digital piece of the business. And I just wanted to kind of get maybe a little bit more color because that was a big value creator, I guess, in previous marketing. Just can you just give us a little bit of what's the status of that now? And what's going to be invested, et cetera?

Yes, for sure. Thank you for that question. And as I commented in the presentation, we are still very excited about our digital business. In terms of the change that is made I mean previously, our focus was fairly broad. We had a fairly broad focus across the digital space. There was a number of different products. There was a number of different capabilities that we were developing. With that brought forward a pretty significant cost structure and in some ways, it was a little bit dilutive to our efforts. It didn't provide us an opportunity to focus in on a couple of key specific products in which the near-term growth potential was significant. So we still see a lot of opportunity in the digital space. We're still committed to it. It's really just focusing in on the products that are going to accelerate our growth and accelerate our profitability. And then as we do that, it puts us in a position where we continue to develop and continue to broaden our capabilities across the entire digital space. Again, it's all around providing value to our customers and differentiating ourselves in front of our competitors. We believe we've got a unique position today, and we'll continue to have a compelling position in the future.

Andrew Wong from RBC. I'm curious about the $3 billion target actually and any timing around that or CapEx investment that you might need for that? I know it's really long term, but it sounds like an exciting target?

Maybe we shouldn't have taken that question. No. So what we wanted to do was help people understand and appreciate how we're thinking internally about how they could be. I've gotten a lot of questions -- Paul, and I've gotten a lot of questions on the road. And they've always been nervous about, okay, well, can you still do more? We grew a lot in '21. We grew a lot in '22, are you done? And as we try to lay out here and we go around the globe and we look at the products that we offer, if you start to build just a chart in terms of the opportunities in each of those areas, and then what we could potentially become, you quickly get to $3 billion and beyond. And so from a time horizon though, we haven't been very specific, but the fact that we're talking about it and as we think about strategic plans, we think in terms of 3 to 5 years, we're not -- to us, that is what we're trying to push for and do as quickly as possible. From a CapEx perspective, again, as we talked about, the focus will be paying down debt, but that quickly happens. We will be down. Our target is 2.5x. We'll be down there quite quickly. And once we get beyond that with the cash flow that the business generates, we have the opportunity to invest in whether it's Brazil or India or other markets, to be able to take advantage of those organic growth opportunities and make sure we have the capacity. So we will invest in there where needed. We look at investments in terms of paybacks and the return on investments. And we typically like depending on the scope, but typically anywhere from 3 to 5 years is what we target for a lot of these significant capital investments. And so we feel good about that.

Very good. Thanks for the question. Okay. Again, I really appreciate everybody joining us here in person today. Those who were able to call in on the phone. I think this is recorded. You can -- it will be posted, you'll be able to go back and take a look at it further. But that concludes our presentation and discussion this morning. Thanks again.