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Overview of Results

Trade sales in the second quarter increased significantly over 2015 as strong North American Commercial sales, an increase in demand for Westeel product and contributions from other recent acquisitions more than offset lower sales of Farm equipment in the U.S. and a decrease in export sales originating from AGI's North American facilities. Gross margins remained strong at Westeel and other Farm divisions due to previously realized synergies and the proactive purchasing of steel to protect against rising costs. Commercial gross margin percentages benefited from a favourable sales mix, improved results at Union Iron and low steel costs. Higher adjusted EBITDA and a non-cash gain on financial instruments were more than offset by non-cash items including share-based compensation and asset impairment charges, as well as losses on foreign exchange and higher debt service, resulting in a decrease in net profit and net profit per share.

"Despite softness in the US Farm market we saw strong results from many parts of AGI in the second quarter," said Tim Close, President and CEO of AGI. "The acquisitions we completed over the past 18 months provided significant contributions and along with solid performances from key divisions served to offset some tough markets. We are continuing to see the positive impact of our strategy to diversify our Commercial business into new markets and add Westeel to our Farm group. We are very pleased to see Westeel producing the kind of results that come from combining market leading products and customer service with an excellent team. All recent acquisitions performed very well with VIS having another great quarter. While Brazil negatively impacted the quarter, the team has begun reshaping Entringer and building our new facility to position us for a bright future. We broke ground in the quarter and our new facility is emerging from the corn fields.

The size of the crop, commodity prices and weather are out of our control but its how we respond to the combination of those factors that marks our success. I am very proud of how our Farm teams have responded and managed through a challenging environment in the U.S. Our Domestic Commercial businesses had a very good quarter with the Hi Roller team achieving outstanding results from their new facility. We continue to see a lot of activity globally on the Commercial business and all Farm divisions are preparing for what is shaping up to be a great crop in the US and in Canada.

OUTLOOK  – AGI's Farm business represents approximately one-half of AGI's total revenue profile and is comprised primarily of portable grain handling equipment and Westeel's North American storage business. The primary demand driver for portable handling equipment is the amount of grain handled as this dictates farmer capacity requirements and the product replacement cycle. Favourable crop conditions in both Canada and the U.S. in 2016 support market expectations of bumper harvests and an uptick in demand has been noted in certain regions, particularly in western Canada. While a large crop is expected to increase end-user demand for portable equipment, the impact on AGI results in the third quarter may be constrained due to elevated inventory levels throughout the marketplace and dealer cautiousness with respect to adding additional inventory in advance of harvest. As a result, backlogs are similar to the prior year and based on current activity we expect third quarter Farm sales of portable equipment to be similar to 2015, however, with the expectation of a large crop in the U.S. there is potential for upside. Sales in the fourth quarter will be influenced by, among other things, third quarter demand and resulting dealer inventory levels and the timing of harvest and conditions during harvest.