Ag Growth posts record order backlog

Winnipeg grain handling equipment firm Ag Growth says its order backlog remains at “record levels” due to “exceptional” demand for its companies’ products.

From the companies that it bought before Jan. 1, 2007, the income trust on Wednesday posted an increase in sales of $9.8 million over the year-earlier period and a gross margin of 34.6 per cent as a percentage of sales, down from 36.4 per cent in its 2007 Q2.

The company said the “substantial” increase in Q2 sales and earnings before interest, taxes, depreciation and amortization (EBITDA) was mainly the result of a “significant” increase in production capacity, completed in March, at Ag Growth’s Westfield grain auger division at Rosenort, Man., about 45 km south of Winnipeg.

Production throughput in the second quarter at Westfield, measured in terms of truckloads shipped, was up 47 per cent compared to the same period in 2007, Ag Growth said.

Demand at most divisions remains very strong, particularly in the U.S., the company said. Margin percentages were “tempered somewhat” by performance at the Edwards/Twister division, but recent management and organizational changes “will result in improved performance in upcoming quarters,” CEO Rob Stenson said.

Ag Growth recently merged the operations of its grain bin division, Twister Pipe, with grain drying equipment division Edwards Group, both based at Lethbridge, Alta.

“Compared to 2007, gross margin was negatively impacted by integration issues at the Edwards/Twister division that resulted in lower than expected labour productivity, particularly on Twister product,” the company said Wednesday.

That said, “we remain very excited about the potential of the Twister product line, particularly with respect to the development of new overseas markets,” Stenson said.

Overall, the fund wrote that it “continues to benefit from a robust agricultural sector. Demand for portable and stationary grain handling equipment remains very strong due to high agricultural commodity prices, an increase in on-farm storage, successive large corn harvests, favourable crop conditions, and depleted inventory levels throughout the fund’s distribution network.”

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