Gary Anderson - CEO Steve Sommerfeld - CFO

Spencer Churchill - Paradigm Capital Jacob Bout - CIBC Damir Gunja - TD Securities Marc Robinson - Cormark Securities Robert Winslow - National Bank Financial Jason Zandberg - PI Financials

Good afternoon, ladies and gentlemen. Welcome to Ag Growth's First Quarter 2013 Conference Call. As a reminder, this conference call is being recorded. I would now like to turn the meeting over to Mr. Gary Anderson, Chief Executive Officer of Ag Growth. Please go ahead, Mr. Anderson.

Thanks, Dave. Hi everyone. Thanks for joining us on the call. I have got Steve Sommerfeld with us again today. He and I were kind of I guess holed up in the meeting room that we had this morning for the AGM at the King Eddy in Toronto. I think it was a pretty good AGM this morning. I was reflecting back on our first AGM back at the K. Motel and (inaudible) Saskatchewan in the late 90s and we had two questions then, one was from my brother-in-law and the other one was from Rob’s son who was about three or four years old at the time which was, is this over yet and so that was like the motion for adjournment. Any way we had a special presentation this morning and I don’t know all of you or some of you were able to listen in. I think it will be posted on our website. It was webcast on, just featuring some of the international sales information that we want to share with people. So we are pretty of that bunch and we just wanted to highlight a little bit more than what we maybe in the past. It was pretty informative, encouraging stuff. So, I will get into a few opening remarks and then we'll open it up to questions. Our Q1 financial results approximated our internal expectations and reflect the impact of that historic 2012 drought in the U.S. As we have messaged on numerous occasions, we expected the drought to impact the first half of ’13, particularly first quarter and we have made a conscious effort not to artificially stimulate demand in the first half or rather write-out the effects of the drought and enter the second half of 2013 with a clean slate. The good news is we are nearing the end of the fourth quarter draught cycle and we are entering the spring planting season and so we will assume and we will be talking about this new crop here and I don’t think we are going to be talking about draught this year. Certainly from Iowa east anyway it’s pretty much broke the back of the draught, it’s very wet. If anything spring planting has been delayed with wet weather. And from our prospective, within reasons we don’t mind a little bit later planting. It gives a chance to have a much more traditional harvest season and that’s optimistic for us after last couple of harvest that were of the quick and efficient variety. And with the new I should say new record growing acres and normal growing conditions, we would expect that the grain prices are going to be a little bit lower which in turn should encouraged a little bit on farm handling and storage. So we can’t wait. As I said it just about a bonus. So we’re reluctant forward to it. I guess during the darkest days our last winter, you can't help but second guest in yourself. You can't help but start second guessing yourself, get asked a lot of questions about the business and whether or anything broke on it outside of the effect of drought, and so we decided to check in with our U.S. growers in order to just make sure that we weren’t maybe over staging the effect of the drought, maybe there is something else going on. We had our traditional status as market leader in the portable grain handing equipment space deteriorated well. So we employed the services of (inaudible) to conduct the market share and customer satisfaction survey, using their generic database of farmers in the corn-belt and we say the results will be both gratifying and reassuring. First of all we learned that get this one, 61% of farmer surveyed owned at least one Westfield auger. AGI’s overall market share or portable augers was 47% and that’s plus or minus 4% 95 times out of 100 and Westfield had market share greater than the next three competitors combined. So basically nothing has changed. That’s what we’ve been telling people since we acquired that company about 13 years ago. It was also interesting to note that auger purchases in 2013 by those surveyed were down 40% lower than 2011 purchases. We also learned that Westfield scored highest on three of the five key drivers of brand preference and was tied for highest on the other two. And when include the secondary attributes, Westfield scored highest in nine of 13 performance rating categories and was tied for highest in another two. Of the remaining two categories Westfield scored second highest in both of those, with one of the others AGI’s sister brand Westfield sister brand, I guess Wheatheart scored first on one of the other two attributes. So, hopefully people will recognize that these independent results further confirm that our franchise is intact and our sales and operational teams in North America should be very proud of these results. In fact their commitment to customer satisfaction and this is that unsung part of our business that goes on day in day out and we've just got an excellent team working on behalf of everybody here. We’re also very encouraged by our progress in our International market development. We continue to see more and more global opportunities. Our current quote log is more than double compared to this time last year. I think it's just over $400 million on our quote log and I think we're just under 200 million about a year ago at this time. So, it doesn’t mean that there is twice as much activity out in the market; it's just that we are seeing more of it now. It could also be growing some; we just don’t know. At the time of this writing, sales and order backlog are up 72% over the same period last year. Our performance in Russia, Ukraine and Kazakhstan has taken an exceptional step forward. With further expansion of our bin and drier capacities, particularly of that a 105 foot diameter bit, we are now able to compete effectively in the largest project categories. Our combined catalogue is being a powerful tool in the marketplace. Approximately 80% of our international sales now include product from at least four of our divisions. This winter our team worked very hard in winning the multiple site contract with a Tier 1 domestic customer in Ukraine in the amount of $42 million. These details are noted in Steve's MD&A. As with many customers in this region, this customer as well as the multiyear spend. We continue to build out our distribution structure in the region and support of all this business. The work that our team is doing in the region is quite simply exceptional. In closing, in terms of these remarks, I would like to thank our valued investors for their patience and their understanding throughout these challenging times. We are nearing the end of a very extraordinary event. That drought takes you back to the 1930's in terms of historic proportions really. We said last August that we would tough it out and hang on to that and protect our dividend throughout the drought effect. I'm very-very appreciative of our Board of Directors for their unwavering support of our results. The future looks very promising and we just say that investors; you've toughed out the hardest part, now stick around for the right, okay? So, I think Dave we will open up the questions. We will go from there.

(Operator Instructions). The first question is from Spencer Churchill with Paradigm Capital. Your line is now open. Please go ahead sir. Spencer Churchill - Paradigm Capital: Just wanted to talk a bit about equipment margins. I noticed there was a nice rebound this quarter versus the past few and I know you mentioned work force adjustment and some efficiencies in the commercial business, but given it was a weaker quarter for the portable business, I was just wondering can you expect that levels are at least repeatable as we see revenue start to increase a little bit next couple of quarters and the portable business come back or perhaps could we even see some improvements on those margins?

Hey Spencer its Steve. Fair question and your assumptions are generally correct. The portable business are still very down and they just did a fantastic job of holding on to their margin. The commercial groups' margins are very strong and we expect those to continue as well. On a divisional basis we don't see a deterioration in margin in any way. Where you'll see a temperament on it rising is in future quarters our storage business will increase proportionally, as will some of our international flow through type business, which we'll make an effort to split up where everyone can fully understand the impact of it but I don't think you can model in a significant increase in margin and depending on the storage versus equipment mix, it may decline slightly, but we expect it to remain very strong. Spencer Churchill - Paradigm Capital: And then just maybe talking a little more about the big win in Ukraine, wondered if maybe you could talk a little bit about how the revenues are going to flow from this contract over the next few quarters and then perhaps also if this was a repeat customer or net new customer?

Good question Spencer. The plan is to get most of this product out over the next couple of quarters. These are projects that they'd like to have up before the end of the year, if possible. So we have to get cracking on it, pretty busy. It's a customer that certainly has been in our sights for a long time but until we had the large 105 foot diameter bin, it really didn't make a lot of sense for us to get in on that level. We needed that to allow ourselves to be able to drive our own deal on this. We would have started working on this last fall and we knew that the 105s were going to be in the works. Our team worked very hard over the winter to put this together and the efforts they did have I think already impressed the customer as to both the commitment and the technical expertise that we can offer for a complete solution and it’s certainly our goal to start working on next year's business and hopefully we can earn business with them. They’ll definitely have a multiyear spend as well most of these customers overseas. Spencer Churchill - Paradigm Capital: And maybe just one last question. On the disposal of the plant Saskatoon, just maybe if you could touch on some of the reasons why it was redundant and then maybe Steve, some of the impact on the financials, do you think you’ll get more out of losses and you’ll lose some workers but keep revenues the same and then what that impact could be in terms of margin?

Saskatoon facility, before we sold out was primarily a warehouse facility. In prior years they manufactured our fencing line, our cattle water line and target capacity manufacturing. Over the last couple of years, we planted our production to Manitoba, either to Franklin or to Westfield. So the sale of that building in March will have no impact other than what we don’t need much space any more, that we’re going to move the warehousing operation to a new building of Saskatoon that's like sized.

Thank you. The next question is from Jacob Bout with CIBC. Please go ahead. Jacob Bout - CIBC: Question on the weather we’re seeing here the U.S. So clearly it’s going to be delayed planting and typically what that means is that the full harvest gets pushed out a little bit. How we think about it, is this good bad or you're different, are you really just more concerned about the speed of the harvest than anything?

No. Within reason Jacob, we like to see it pushed out in the fall and the last couple of years some of these guys were put in their crops in late March and that’s not our best situation at all. So as long as it doesn’t past the window where it hurts the yield substantially, we’re happier to see it go into the fall. There is a higher likely as it goes into the fall that they are going to be challenged with mixed weather and with that it can be used more they tend to use more of our equipment. Jacob Bout - CIBC: Growing balance sheet is more positive.

Yes, more positive, we bet, yes. Jacob Bout - CIBC: And then it maybe, you can talk a little bit about the competitive dynamic in the Black Sea in Ukraine. It sounds you've had a pretty big wind there, but also noticed today, one of your competitors there did a small acquisition of PTM and got to think that the competition is starting to increase.

I don’t think it’s starting to increase. It’s been competitive for a long time, probably long before we showed up. And so we had to scratch and claw to get in there as well. I really don’t know, I never heard of that company, so I can't comment on the strategic challenges we might have based on a competitor now owning that business. We have never ran across them. But in terms of competition it remains very competitive. At the same time I think there is shelf space for a lot of people out there too. It is a growing market and pretty good opportunity, particularly for North Americans, that the expertise that they look for with the large equipment, the high capacity equipment is certainly viewed positively from the North American suppliers. Jacob Bout - CIBC: And if you take a look at the competitive landscape how many of your competitors has the full slate of products, that full inspiration and how much of that leg up has that given you into that market?

We think, it gives us a huge leg up, and there is a very few that have the catalog that we have, particularly with the brands we have got. We went out and spent a lot of money buying the top brands in North America and we are not sorry, we did. It’s absolutely a differentiator for us, Jacob. Jacob Bout - CIBC: And are there any other competitors that have that?

I mean from a catalog perspective GSI would be the other one that will come to mind as having, they brought a very similar catalog. Brock has just made an acquisition in Sask a little while, that gives them a little more bench strength on the handling side. They bought a regional player in Indiana that had recently been bought by a player in again Iowa, Kymaro Righley, no sense getting around this. So they’ve got a little bit more bench strength but certainly we did our homework early. We acquired Hi Roller at the end of 2006and then went on from there. So we are quite happy with suite of brands that we have got. Jacob Bout - CIBC: And maybe just my last question, you talked a bit about in the MD&A about opportunities that you are quite optimistic about opportunities in Latin America in 2013. Maybe just talk about how you are going about, how you are penetrating that market? Is it a turnkey type product, there are certain areas you are looking at, and what type of growth can we expect from there?

It is modest early stage kind of stuff Jacob. We certainly are trying to look at offering our catalog, it is not the same dynamics in South America Latin America that there is in Eastern Europe for sure. There is regional players there which you would be aware of that are very strong and so it is going to take more work, a lot more fighting it out on the ground and until we have a strategy for what is inside Brazil, which we do not have a strategy for today it is more marginal work that we are going to be able to get. Certainly the customers we are finding, we are able to offer them some pretty good solutions.

Only that another difference between Latin America and Eastern Europe is in Latin America it is not as often a turnkey. There is a very large bin player in Brazil and more often in Latin America than we would in Eastern Europe but we sell only the handling equipment. Jacob Bout - CIBC World Markets: And as far as geographic areas gives us more coastal areas or you are pushing into the interior?

We are not pushing inside Brazil at all right now, unfortunately. We are trying to build a strategy for that but building your strategy requires some ground work and that is what we are doing right now, is some ground work and some of us are going back and forth and learning more about the business opportunities that are down there.

And if you guess that we are getting it obviously in the countries other than Brazil and it is a variety, it is not in any single geographic area.

The next question is from Damir Gunja with TD Securities please go ahead. Damir Gunja - TD Securities: If I read it right, I think in your MD&A you eluded to some expansion of capacity I guess on the commercial side and I see you have made some deposits on some equipment. I was just wondering if you could elaborate on that.

So, those are two different questions there I think Damir. On the commercial side, I believe we made reference to them increasing their capacity. Their backlog on the commercial side has bounced back I would say much more quickly than we anticipated. Backlogs are running very high and they are going to be very busy, Q2 and Q3 and then probably into Q4. But the comment there was we bought Franklin to be a spring plant. We have some excess capacity and some other facilities and what we have undertaken and at least that we have added to move some manufacturing around to mixture if our capacity is there for the peak. The investment in facility was about the best of manufacturing in Saskatchewan. They are the portable belt conveyer manufacturer. So what we have done there that we are moving across town, all the way across the current into a much larger facility. That has been pumping up against capacity for a couple of three years now. Even through with the draught of 2012, they didn’t miss the beat on the top line because they had other places to go.

You wouldn’t have recognized just looking at the backhoe, results, you wouldn’t have picked up that there was a draught.

So we will move there late this year, probably not much in 2013 impact but they will up and fully functional going into 2014. Damir Gunja - TD Securities: And maybe just a bigger picture question, picking up on your presentation on the international side earlier today. Even in broad terms, what level of sales do you think you guys can support internationally with your existing infrastructure? I'm just trying to think how much runway do you have left before we made to see some significant capital investment?

From a manufacturing footprint prospective? Damir Gunja - TD Securities: Yes.

I think we have a long way to go as far as manufacturing capacity goes. What we have had to invest in over the last couple of years and probably would have to, not right away but to grow some more on the people side, we are growing our Lassi (ph) office. We are going to fill out our Russia, Ukraine, Kazakhstan sales structure and the support required. As the business grows that much grow with it. We don’t see any immediate bottlenecks on the manufacturing side. We think have two to three years at least before we probably hit a pinch in a manufacturing facility.

Rightly said but one of the things Damir, we are working at these divisional level is the export ready aspects of our business. We’re asking them, some of these divisions in a short period of time to get up that curve and all the extra requirements that are done and so we’ve been investing in additional engineering resources and like as well. So I guess some of what you’ve been seeing on the SG&A side is probably being doing in background but that work is underway.

(Operator Instructions). The next question is from Alex (inaudible) with Scotiabank. Please go head.

I was wondering if you guys could talk about how metrics performing this year? Have margin improved? And are the new products doing well?

Our (inaudible) is the most seasonable division we owned and Q1 in Scandinavia is expected to be very weak; Q4 is expected to be very weak. They are really Q2, Q3 story so I can talk to the backlog more than anything else. We think they're taking a number of steps to improve the margins there one for sales come through, our manufacturing improvement and sales part increases. What I can’t say the backlog is the everywhere we thought it would be this time of year. It’s higher than last year. The throughput seems to be adequate and now when we get through Q2 we probably can report some meaningful information. They may show us a negative EBITDA in Q1, we’ve budgeted them to a negative EBITDA in Q1 and they were negative Q1 last year.

We kind of put a full court press operationally on that business. We’ve had a lot of lean manufacturing activities underway, driven both domestically and some of our teams some over here. That’s one of the challenges. It’s a small and light (ph) operation. Its 80,000 square feet and maybe 80 to 100 people that work there to provide the level of support that you have to provide to small operation eight, nine time zones away, it's very difficult but we committed ourselves this winter to doing it. We’ve had team back and forth over the winter. We certainly expect that's going to help make a difference; both on our responsiveness, the capacity and hopefully reflected in our margins.

And I was just wondering in terms of the late planting this year. Did I push any first quarter sales into the second quarter at all?

I wouldn’t say in a big way, Alex we are shipping on a portable grain handling side. There are a number of truck loads through with that we will have plan out. That business is still feeling impact of the growth and they have maintained margins, manned themselves up to hit a truck load target each week, which they have been doing and the order is being held back by the planting. And it did have an impact on Q1.

So definitely drought effect yes, in US; Western Canada is interesting. I think the high grain prices have kind of helped empty a lot of the storage and we are seeing some slowness on that side of the gain in Western Canada.

The next question is from Marc Robinson with Cormark Securities. Please go ahead. Marc Robinson - Cormark Securities: Just a little bit additional color maybe on this $42 million international win. So it looks like its spilt 28, 14. So I imagine that 28 is quite a bit higher margin. Can you give us a little bit of color on certainly the quantum margin between those different trenchers and maybe what the blend grade looks like, vis-à-vis the rest of the business or that become corporate margins?

Sure, yes so the 28 would really be our typical international sale. Within historical international sales, we always said we generally get 80% to 85% of the equipment spend and you can think of that 28 being the same, where we're got 80% to 85% of the equipment spend. The blend between storage and handling equipment again is roughly 50-50 and within that 28, you would expect the margin in that roughly 20% to 25% range. Marc Robinson - Cormark Securities: Within the 28?

Yes, on the $14 million, that's sort of ancillary services that are something different really that we haven't provided in the past. That's very much a flow through and you would expect a 5% to 10% margin on that sort of business. That's why we split it. Marc Robinson - Cormark Securities: So margins the corporate wide really jumped here. SG&A jumped as well a little bit. Just wondering, I wouldn’t have expected to see such a high number in a soft quarter. Anything happening there, is that sort of like that $13.9 million a good rate quarterly through the balance of the year or is there anything unique to the quarter.

It probably is a decent run rate for the year. What's new to the quarter is our share based comp, non-cash expense in there that will be in there going forward from the share we had planned. The shareholders approved that in 2012. We didn't grant any awards in 2012 but some were granted in January '13 and that's impact of the quarter. Marc Robinson - Cormark Securities: And then finally around this commentary in Canada about this delayed purchases from a Canadian customer, can you give us some clarity on that? I imagine that's the agrian vitara situation or maybe you could give us some info.

There's a couple of points maybe to make on that. They are not as (inaudible) like everyone else is. I think they're approaching their inventory build a little differently this year and maybe they always will. So, for us it's a Q1 year over year decline, an insignificant for the quarter. However with our type of equipment where we can fill demand quite quickly, we expect as the year turns out that we think it's going to that we'll get it in Q2, Q3. Another dynamic in Wayne (ph), Western Canada like Gary started to allude to was, on storage and aeration size, what we're learning from our field and an interesting report from South Canada not too long ago, it appears as though the farmers have emptied their bins a lot more quickly after the 2012 harvest than they might have in the past. So there's a lot more capacity on the farm right now, the store. And we're seeing that reflected in the Q1 storage demand and aeration demand for our business.

Thank you. The next question is from Robert Winslow with National Bank Financial. Please go ahead. Robert Winslow - National Bank Financial: Hey guys just to follow up on that Vitara question, they're still not a 10% customer though, they are below that. 10% of sales.

Of our total sales, oh they're well below that. Robert Winslow - National Bank Financial: Okay, just wanted to make sure. And so Steve you suggested that maybe this is the new buying pattern for them. We really don't know yet. But what you're seeing so far in Q2 suggests that this sort of buying pattern is in place today?

Not much has changed as far as their buying pattern with us, just the end of Q1. Robert Winslow - National Bank Financial: If I may, just come back to the gross margins. It was a positive surprise that the gross margin in the quarter, at least from our perspective and one of the things it looks like you did here, you said you are proactive in terms of staffing. Now, just trying to understand how that works because we saw Q4 the margin hit with that drought and I guess proactively you find at least a couple of months to sort that out. Is that right because we didn’t see the same sort of staffing changes for Q4?

Well there would have been some staffing changes in Q4 as well and there is so many things that go into the pot when you’re looking at a consolidated gross margin. But the portable divisions gross margin like I said earlier held us very strongly as did the commercial division that were impacted by the drought, I think across the board everybody performed very well and what you didn’t have in Q1 of ’13, was much for storage sale. I just alluded to you kind of weakness in domestic demands for storage. Robert Winslow - National Bank Financial: So, bit of a mix impact there then.

There was a mix impact and the international storage is really yet to come. I don’t know if we’ve talked about that yet but due to customer commitment and down represented on the webcast this morning, they were slow to close but we’ll get it in a Q2 forward. Robert Winslow - National Bank Financial: And that again is normally a lower margin?

Yes, it’s currently a lower margin product.

Thank you. The next question is from Jason Zandberg with PI Financial. Please go ahead. Jason Zandberg - PI Financials: Do you have a sense, I know you adopted a drip program back in early March. Any initial indications in terms of what the take up is on that and sort of just that we can model your cash position on the dividend side?

Yes, there was very little pick up on a first dividend, more probably because we announced the drip days before the record date. So the most recent dividend was with the second one. We’re pushing up on the 10% participation. That’s the only data point I have at this moment. Jason Zandberg - PI Financials: Okay. So, we’re still early stages on that.

(Operator Instruction). There are no further questions registered at this time. I’d now like to turn the meeting back over to Mr. Anderson.

Thanks Dave and thanks to all our callers today. We appreciate the interest and as I said, hopefully I guess our next call will probably still have some discussion about the drought being, the last of the impact of it but its sure nice to get out from behind it and start really looking forward. We have put a lot of building blocks in place and we are quite anxious to get going with it. And one last thing, I might have said this last year, I don’t know if I did. But Happy Mother’s Day to all the mothers out there that are shareholders as well, or listeners at that time. I have to say, I should be back in Saskatchewan with my mother-in-law, instead of being in Toronto here but she has checked herself out of their nursing home and she is out on the farm cooking meals for the boys as they are doing their seeding. So I don’t think she’d have any time for me anyway. Anyways great to catch up with you guys and give us a call if you have any follow up questions on this. Thanks.

Thank you the conference call has now ended. Please disconnect your lines this time. Thank you for your participation.