Good morning. My name is Joanna, and I will be your conference operator today. At this time, I would like to welcome everyone to AGI's Q4 and Year-End Results Release and Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. Mr. Tim Close, you may begin your conference.

Thank you, Joanna. Good morning and thank you for joining Steve Sommerfeld and I, to discuss our Q4 2018 results and 2019 outlook. Prior to jumping into the Q4 numbers and the 2019 outlook, we will spend a little time on our recent acquisitions. Our strategy is concisely communicated in our 5-6-7 plan, 5 interconnected platforms, providing the equipment that forms the world's food infrastructure from seed, food across 6 continents, and combining 7 components to form full systems for our customers. As you all know, we will achieve the potential of 5-6-7 plan through the right combination of organic growth, which was 13% in 2018, as well as strategic acquisitions. Over the last couple months, we've added three excellent businesses, bringing to AGI over 600 talented team members, led by visionary entrepreneurs. The businesses, Improtech, IntelliFarms and Milltec are half a world apart and very different from a product and market perspective. However, they are very similar in their quest for product and service innovation, and are all laser-focused on delivering value and outstanding service to their customers. Improtech is a significant strategic addition to our developing food platform, and IntelliFarms and Milltec are transformative additions to AGI. In January, we welcomed the entire Improtech team to AGI. Improtech brings extensive expertise in designing and delivering equipment solutions for the beverage industry and complements Danmare's focus on dry and granular products. In bringing together Danmare and Improtech, we have rounded out our expertise to offer comprehensive facility and project design and execution across both food and beverage markets. We are in the early days of the buildout of our food platform. However, we are forming a foundation built on process expertise that brings unique knowledge, perspective and credibility to partner with customers to provide the services and equipment required in our global facilities. Improtech is a great addition to AGI and we are excited to partner with such a talented team. Last week, we added IntelliFarms to the AGI family. This is an important addition to AGI as we strive to add value to our customers that goes beyond equipment, to increase the productivity and utility of the equipment we provide. Farmers need more sophisticated equipment and data to better -- to make better decisions in the fertilizer seed and chemical use at planting and then more data and equipment to analyze their crops to properly dry condition and market that crop. On the commercial side, traders and processors also need the sophisticated equipment to increase the efficiency and safety of their facilities and the data to properly source and manage a complicated supply chain. IntelliFarms provides the hardware and sensors to enable the data collection needed to make better decisions of planting and during the growing season. This includes an on-farm integrated mesh network of soil probes, and weather stations to deliver the critical data on soil condition, temperature, moisture and UB data that is required to maximize the genetic potential of their seed, whatever the season brings. Once in the bin, IntelliFarms again provides the sensors, the lab resources, the automated controls, the crop volume data to properly and efficiently identify dry hydrate and condition the crop for storage. The IntelliFarms platform then extends to an unbiased marketplace to connect farmers, traders and processers. IntelliFarms SureTrack system provides price discovery for farmers and product sourcing data for traders and processors. SureTrack also allows the farmer to choose to share grain information, so a buyer can incorporate the on-farm grain into their supply chain with access to the grain monitoring data on the crop they have purchased. This system of sensors and data collection will also enable enhanced traceability, financing insurance options, and improved specialized crop marketing. This is critical, practical data for our customers to maximize the productivity and profitability of their operations. When combined with our global grain systems platform, including four grain bin storage businesses, and along with our AGI Grow app and equipment controls business, we are transforming the value we provide to our customers. We will continue to invest in the IntelliFarms business to build on their capabilities and services to augment and grow our global digital platform. Earlier this week, we signed an agreement to acquire Milltec Machinery, based in Bangalore, India. In doing so, and consistent with our 5-6-7 strategy, we have established our platform in India and in rice processing and milling systems, two huge steps in filling the gaps in our 5-6-7 strategy. India is an enormous market for AGI across 5-6-7. India is the world's third largest producer of grain, the second largest producer of rice and the second largest consumer of fertilizer. Milltec is a robust platform, with a deep and talented management group. There are four manufacturing plants totaling 170,000 square feet of production space, all well equipped and structured to maximize capacity. With this acquisition, we are gaining a pan-India sales and distribution group, turnkey capabilities, and deep R&D and customer support resources. Milltec is the leading supplier of rice processing and milling equipment in India. Founded in 1998, Milltec has developed a complete line of equipment for rice milling and processing, no small task given the complex process involved in transforming paddy rice into a final product. From pre-cleaning, parboiling, to polishing and sorting, rice processing and milling is equipment intensive involving eight stages each requiring specialized equipment. The complete Milltec product portfolio and the 10,000 customer relationships that Milltec has built and earned, are incremental to AGI. This is a major step in advancing our diversification by product, geography and market. The diversification is obvious mentoring a new geography. However, there is also key seasonal diversification as Milltec’s significant activity is in Q4 and Q1 with lighter quarters in Q2 and Q3. This mashes nicely with our current business, which is still tilted to Q2 and Q3. The Milltec team is aligned with our strategy and committed to achieving significant revenue synergies and the expansion of our 5-6-7 strategy in India and the broader region, great addition for AGI. I'll turn over to Steve to talk about Q4.

Thanks Tim. Good morning, everyone. Sales in the fourth quarter increased 28% compared to 2017, largely due to a strong organic growth rate of 22% that related to robust commercial sales in Canada and internationally. For the year, sales increased 25% to $934 million with an organic growth rate of 13%. Adjusted EBITDA in Q4 was $28 million, a 42% increase over Q4 2017, bringing 2018 full year adjusted EBITDA to $148 million, 22% higher than the previous year. Adjusted EBITDA as a percentage of sales in a seasonally weak Q4 was 13.1% compared to 11.8% in 2017, while for the year, our adjusted EBITDA percentage was 15.8%, down slightly from 16.2% in 2017. Our margin percentages in 2018 were achieved despite a higher proportion of sales from our startup in Brazil, significant volatility of steel costs and our continued investment in technology, digital tools, sales and distribution. Looking ahead to 2019, we enter the year on a strong footing in all geographies. In Canada, positive farm economics and continued investment in grain and fertilizer infrastructure has resulted in the sales order backlog well above the prior year. In the United States, successive large crops and market expectations for another large planting in 2019 has resulted in strong demand for portable grain handling equipment, and combined with recent underinvestment in grain storage systems has resulted in an on-farm grain storage deficit in the U.S. Accordingly, farm backlogs in the United States are significantly higher than the prior year. Offshore, strong momentum in EMEA and South America, including increasing sales in Brazil have resulted in sales order backlogs well above the prior year. In summary, although a long and difficult winter has impacted product deliveries and construction schedules in North America, pushing some sales into the second quarter, management anticipates 2019 sales and adjusted EBITDA will increase significantly compared to the prior year, with the growth to be weighted towards the second half of 2019. With that, I'll turn it back to Tim, to sum up.

Thanks, Steve. 2018 was a solid year for AGI, robust organic growth and significant progress across our business. In the course of making that progress, we also discover opportunities for improvement. We make mistakes. Those mistakes in areas of -- for improvement form the roadmap for our continued growth as we look to improve our products and our service, deliver more value and build confidence with our customers. As we move into 2019, we expect solid continued organic growth in sales and adjusted EBITDA for the full year in addition to significant contribution from acquisitions. As Steve noted, 2019 has started with a long and persistent winter having an impact on product delivery and commercial project progress in North America and internationally. These delays will impact timing of sales in both farm and commercial, pushing some sales to Q2. However, our backlogs continue to be at record levels, providing transparency on continued growth of our core business. Our business in Brazil is working through the growing pain of a startup business, and the recent additions provide unprecedented opportunity for improvement and growth as we deliver on our 5-6-7 strategy. We’ll end our comments there and turn the call back to Joanna for questions.

Thank you. [Operator Instructions] Your first question is from a Frank Meng from Desjardins. Please go ahead, Frank.

Good morning, guys. This is Frank sitting in for David Newman. Thanks for taking my question. First, just quickly on the Milltec deal, maybe talk a bit about that transaction. It sounds like a great deal on the surface, and congratulations. We noticed that Milltec intended to IPO last year and later discontinued that process. Maybe can you give us a sense on why the IPO was pulled? Thank you.

Sure. I mean, Milltec was partially owned by a private equity group, they were looking at their options for an exit, including an IPO. Ultimately, it was a sale through strategic. So, not unlike most similar groups, they're going to look at various options.

Okay. That's helpful. We also know that Milltec’s EBITDA grew to around $10 million in 2018 million from $6 million in 2015 million. Could you talk a bit about the drivers behind that strong growth and perhaps a split between acquisitions and organic growth?

Well, it's a huge market, it's -- and so they're growing within that market. They've been growing, building both their product portfolio and their distribution. So, going from a regional business to a pan-India business just opens up new markets for them in a rapidly growing, transforming industry, going from unbranded, lesser milled, lesser processed rice to branded, fully processed rice and in a just a huge market.

Okay. That's great. Could you also give some color on your expected seasonality for 2019? I mean, given the recent acquisitions, should we expect seasonality to be more balanced?

Hi, Frank, it's Steve. So, as noted in our in our MD&A and the outlook, the seasonality of Milltec is counter to kind of our historical seasonality at AGI. The quarters at Milltec that are the highest levels of sales are Q4 and Q1 where historically roughly 70% of their sales have been recorded. So, the addition of Milltec will in some way partially offset the kind of historical seasonality of AGI.

Thank you. Your next question is from Jacob Bout from CIBC. Jacob, please go ahead.

As for organic growth in this quarter 22%, I think for the year it was 14.5%. Talk a bit about the sustainability of this. Can we expect this for the next year or couple years, how do you think about that?

We expect continued momentum, Jacob, yes. Whether it's in and around that level, I think we probably have a better position for strong organic growth than we ever had been, so certainly our expectation.

I think it is important to realize, Jacob, where that organic growth came from. And it was widespread; it was -- internationally, our sales were up significantly. The U.S. farm also up significantly and commercial in Canada that was talked about on several calls, which we expect to continue in 2019. So, there's a lot of drivers behind that growth that we expect will continue in 2019.

Maybe just going back to Milltec, any synergies there at all?

There is significant revenue synergies, absolutely, across the grain opportunities in India, which are very hard to break into to realize without a platform in India. So, when we talk about the advantages of gaining the capabilities of that group, we expect it to have a big impact on our grain sales outside of rice in India as well. And then, over time, give us the capabilities on a platform to move into the other key components of our business, like fertilizer.

And then, the purchase price of -- I think it was $109 million. What does that include, exclude, as far as cash, working capital, that type of thing?

Well, it's cash and debt free, includes normal working capital. It’s a very traditional structure.

Okay. And I noticed Brazil posted a loss in the fourth quarter. Could you talk a bit about what happened, why the warranty provision?

Yes. I mean, the warranty provision really is one item Jacob that we highlighted because it was somewhat unusual and significant. But, I think more importantly, to kind of take a step back on Brazil, Brazil, our sales are increasing rapidly, and it is a startup for us. I think what you can expect is continued incremental improvement in our margin, but there's going to be some Q to Q lumpiness. Ramping up a start-up to like some pretty high sales volumes levels is not easily done. We're doing very well at it and improving every day. However, in 2019, we believe we’ll see continued improvement in manufacturing, shipping, customer service, all of those things are rapidly evolving, just due to the pace of the increasing sales. So, I think, just kind of in sum, quarter-to-quarter see some lumpiness. Over the longer term, you're going to see some steady improvement.

So, how should we think about revenue and EBITDA growth out of Brazil?

You should expect to see margins improve in 2019. We expect to be profitable in 2019. However, quarter-to-quarter, it's not going to be a straight line more than likely.

Last question here on the debt levels. What are you comfortable with, as far as the net-debt-to EBITDA? I think, our calculation indicating you're kind of north of 4 times pro forma with Milltec.

Yes. That's right. And we’ve been in and around here for considerable periods of our past. We're very comfortable at this level. Our senior debt to EBITDA ratio is in that 2.4 range, pro forma Milltec, and we have a plenty of headroom in our covenants, we have plenty of credit availability. And, it's again, a level at which we're very comfortable.

Okay. And the covenant, again, is 3.25?

It is, that’s the long-term covenant. Just structurally in our credit facility, because of the size of the Milltec acquisition, under the terms of the credit facility is considered to be a material acquisition, which resulted in our covenant being bumped up at 3.75 for 3 quarters and down to 3.5 per quarter, and then return to 3.25. So, we don't expect to have to use that bump-up, but it is there I guess just FYI. Again, very comfortable with the debt levels we’re at.

And that covenant is X converts and the most recent debenture?

Correct.

Your next question comes from Michael Doumet from Scotiabank. Please go ahead, Michael.

Hey, good morning, guys. Great quarter. Just a couple of follow-ups. So, on the organic growth, I mean, you called for in and around the same growth for 2019 as 2018. Maybe just comment on what you think in terms of either end markets or geographies could decelerate or accelerate into next year?

We see markets continuing at very strong pace of growth. And like I mentioned on an earlier question, you break down our geographies, and I'll sum it up again very quickly but the Canadian commercial business is very strong, it's an active market with continued investments. We see future growth in it. The U.S. farm business for us, our backlogs there are well above the prior year. We're in the right niche. We're not as sensitive to farmer net income as some other businesses. And this is large crop after large prop after large crop, and that really drives the portable business and has led to some issues on the farm with lack of storage. Brazil sales are increasing, accelerating, the sales order backlog is very high, and rest of world which we've been talking about for years now, continued at a very strong pace. EMEA is very strong, and the [indiscernible] is very strong. And, we see continued growth in it 2018 -- or sorry, in 2019. So, I guess in some -- all of our geographies we feel that we're on a very good footing entering 2019.

Okay. And, I mean, if I focus just on the international, I mean, you recorded growth, organic growth there of close to 40%. I mean, is that something -- I mean, how close to replicating that can it be in 2019? Obviously, it's an incredible number, but just to give us a sense as we model forward?

Yes. Well, it's a rapidly growing part of our business. I mean, it's -- as AGI grows its global footprint, we're involved in more and more geographies. We're selling it to over 100 countries today. The CapEx spending of the multinationals can ebb and flow a little bit. But, generally, they’re spending CapEx where they believe the return will be highest. And today, AGI is present in almost all geographies. So, the pace of international growth is expected to continue to be strong. I don't intend to put a percentage growth number in front of anyone, but the 2018’s growth was not a surprise and we expect 2019 to be strong also.

Okay. That's helpful. Thanks, Steve. And maybe just flipping back to Milltec. I mean, from the revenue synergies that you spoke about, it sounds to me that it could look like the next, call it Brazil platform where you're looking to overlay, maybe CapEx, drive incremental growth there, just your thoughts there, as you look to sort of expand into new opportunities, and how that should play out, call it in the next year and the next couple of years?

Yes. I think, the significant difference to Brazil, while both are great markets with a lot of potential, Milltec is not a start-up, is very robust platform from a product perspective, distribution perspective and management perspective. So, to -- some equivalency but very different platforms for us.

Sure. And on the pace of growth there, as you think about overlaying sales synergies, how should we think about that, call it in the next couple of years?

It'll be double-digit growth, for sure, is our expectation.

Okay, thanks. And maybe just one last follow-up. How does that sort of tie into the earn-out and how should we think about the earn-out in the next couple years?

Yes. That's right. The earn-out and the alignment is built into the structure of the acquisition. They need to -- the whole business or an AGI along with the team there, expect that double-digit growth in order to, one because of the opportunity to market and that's what's required to get to those earn-out numbers. So, provides, complete alignment with the team there with -- and with us.

Okay, perfect. Those were my questions, guys. Well done.

Thank you.

Thank you. Your next question is from Damir Gunja from TD Securities. Please go ahead.

Thank you. Good morning. Just a couple for me on the Milltec as well. I can see from one of the corporate videos, they do some significant business in Southeast Asia. Could you talk about what percentage is outside of India, and is China significant opportunity here?

Hey Damir, it's Steve. Historically or in recent years, I suppose, their export sales have approximated 10% of their business. China hasn't been an end market for Milltec. Their export sales have been primarily to other parts of Southeast Asia and into Africa. We believe we can improve their export sales through both providing some capital, which they've been obviously careful with as a private company, and through adding the AGI name to the Milltec brand, we believe that'll increase their marketability in Southeast Asia.

And can you talk about what percentage of their business is outside of the core rice milling business? I saw that they have diversified into pulses and seeds as well?

Yes. That's quite recent and a great opportunity for us. So, the vast majority of their sales today remain in rice but an opportunity, future growth lever for us is that pulse, grain product line that they've developed.

Thank you. Your next question is from Greg Colman from National Bank. Greg, please go ahead.

Hey, thanks. Just a couple of quick ones here. Good to see you calling for substantial growth in 2019. I want to focus on your comments about the quarter being -- or sorry, about the year being backend weighted. Are you still anticipating year-over-year growth in the first half of 2019 or is the cautionary tone you put in there something we should be interpreting as it being a really slow start to the year?

We expect growth. We just -- we’re noting that there has been, there will be some sales push from the first quarter to the second quarter.

And secondly, kind of staying a little bit on the outlook here, but in Canada, we're seeing some challenges with Canada's largest canola purchaser because of all the nonsense, tough to say how long that's going to last. But, could you discuss any impact you're seeing from sort of your on the ground distribution network?

Too soon to say. I mean, we haven't seen an impact but obviously we want open and ready in food markets for our customers. So, the push is more canola right now and it was sitting where it is. So, similar to the soybean trade noise last year or currently, it causes more of the crop to stay around farmer at domestic traders.

Got it, okay. So, like increased storage requirements, if you see the short-term pick up there. And can you just -- if we're putting benchmarks around it, can you help us understand, in Canada, is your farm commercial split here the same as your farm commercial split for the overall business or is it materially different?

Sorry. You’re asking within Canada, is our farm commercial sales split same with the overall world?

Yes.

Well, it obviously would depend on the year, the commercial business obviously being very robust to last couple of years and we expect it to remain. So, going -- in the foreseeable future. We haven't disclosed specifically the farm commercial split by geography. So, I don't want to provide I don't think any information beyond that.

I was just wondering if it's roughly the same or if it's radically different, if Canada is wildly overweight commercial and wildly overweight farm?

No, no, I mean, it's roughly in line the same percentages, I mean, roughly speaking.

Got it, okay. Moving geographies for a minute on Brazil, you mentioned in your prepared remarks and also in the MD&A, the loss in Brazil. Can we just understand what kind of loss that was? Was that a negative operating income, negative EBITDA, negative cash flow, negative net income, what kind of loss was that?

In the fourth quarter, it was a negative EBITDA loss, Greg. And I mean, again, there was a one sort of an unusual warranty piece of it. But, the most important part to remember, I want to stress again, is, with a startup with accelerating sales, rapidly growing, we expect future improvements, however, quarter-to-quarter, we're not expecting it to be straight lineup.

For sure. And then, if you were to adjust the unusual item, the significant warranty provision, would it have still been an EBITDA loss?

If that accounted for a significant portion of a loss, it would have still been a loss.

Got it. All right. And then, just on the acquisition. Thanks for the additional color. Congratulations on the sizeable step in India there. Can you help us understand on the earn-out? Would that incremental earn-out -- I think it's $39 million -- up to $39 million, would that be going to the no longer involved former owners, like the private equity group or it’d be going to managers and owners that are still involved in the day to day operations of the business?

Managers and owners that are still involved.

And was it part of a process that you were involved in? And if so, can you help us understand the competitive dynamics there or did you get involved after a process and it was more of a one on one discussion?

We've been talking to management for more than three years.

And was it a competitive process when it finally came to fruition?

Well, as I think as somebody mentioned earlier, there was -- they were also looking at an IPO. So, competitive in that sense. But otherwise, I’d say relationship we’ve developed with management.

Great, got it. And then, just on your history of bringing in acquisitions and extracting the cost synergies and revenue synergies, it's pretty good. My simplistic view of the equipment that Milltec is building, it's a little bit more complex potentially than your legacy product lines but please correct that if it's incorrect. I was wondering, do you see the same opportunity for cost synergies in Milltec as your historic average or does the sort of moderating complexity of that acquisition make it either more of an opportunity or more challenging of an opportunity?

Milltec is -- our plan in India is not about cost synergies. It's -- we have next to nothing in India today. We want -- we will build on this platform and it is not about cost synergies.

Thank you. Your next question is from Kanish Pawar from Raymond James. Please go ahead.

Quickly on IntelliFarms, I know you guys provided a suite of benefits that this acquisition provides. But, could you just talk about how this ties into your broader digital strategy? And do you see this being a continuing focus or farmers going forward?

Look, it’s a cornerstone of our digital strategy going forward. It's a critical piece of providing the sensors, gathering the data to provide better information to farmers and to commercial customers. It'll -- we have other pieces of the digital platform that are in development today than released recently that we’ll be combining with IntelliFarms. And again, this is -- we'll be investing in that whole platform, in IntelliFarms, both domestically and internationally as we roll out or continue to execute on that digital strategy.

Thank you. There are no further questions. You may proceed.

Okay. Well, thank you very much for taking the time this morning. Exciting days ahead for us, and the team has been working extremely hard over the last few months, as you can imagine. And congratulations to everybody in AGI, all of our employees for an outstanding 2018 and contribution to helping us continue to grow our business. So, I know many of you are listening in. Thank you to all of you. We’ll leave it there. And thanks again for the time.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.