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Overview of Results

Trade sales and adjusted EBITDA in the third quarter of 2016 were the highest ever for AGI as significant contributions from acquisitions complemented robust in-season sales in western Canada and strong results from AGI's Commercial business units. Adjusted EBITDA from divisions acquired in 2015 and 2016 was $14.5 million (2015 – $2.2 million) and resulted from robust storage demand in western Canada, a significant contribution from Vis, NuVision and Mitchell and strong results from the Company's Italian subsidiaries. Excluding acquisitions, AGI's adjusted EBITDA increased $4.2 million over Q3 2015 as sales of grain handling and aeration equipment benefited from a large crop and a wet harvest in western Canada and higher adjusted EBITDA from AGI's Commercial divisions resulted from a strong operational performance that in part reflects the commissioning of two new manufacturing facilities in 2015.

OUTLOOK

AGI's Farm business 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. Large crops and generally wet harvest conditions in both Canada and the U.S. have increased the wear on existing equipment and are supportive of in-season sales and future replacement sales. In Canada, these factors combined with positive farmer sentiment have resulted in higher sales of portable equipment. In the U.S. however, negative farmer sentiment has resulted in very cautious buying behavior. Sales of replacement parts in the U.S. are well above prior year levels which appears to indicate end-users are managing with existing equipment and deferring new equipment purchases to future quarters. Accordingly, management anticipates fourth quarter demand for portable equipment will approximate prior year levels.

Westeel's storage business is comprised of corrugated storage bins, smoothwall bins and liquid storage tanks. Demand drivers for storage include volume of grains grown, crop trends, fertilizer storage and handling practices and the consolidation of farms. The macro environment in Canada is supportive of these trends and Westeel experienced high sales volumes in the third quarter. Management anticipates dealer inventory levels will be quite low subsequent to harvest and as a result expects high levels of participation in pre-season sales programs and strong sales in the fourth quarter of 2016 and the first quarter of 2017.

AGI's Commercial business is comprised primarily of high capacity grain handling and conditioning equipment and larger diameter storage bins. In North America, demand for Commercial equipment is less sensitive to a specific harvest but rather is driven primarily by macro factors including the longer-term trend towards higher crop volumes, the drive towards improved efficiencies in a mature market and, more recently in Canada, the dissolution of the Canadian Wheat Board. Commercial activity in North America remains robust however fourth quarter sales may fall below prior year levels as a number of projects were completed and shipped late in the third quarter of 2016.

Offshore, the commercial infrastructure in many grain producing and importing countries remains vastly underinvested resulting in significant global opportunities for AGI's Commercial business. Management expects a strong contribution from the Company's Italian subsidiaries in the fourth quarter of 2016 and in 2017 as Frame delivers on a significant backlog and AGI further consolidates its sales structure. Excluding Frame, our international backlog is lower than the prior year and management does not expect international sales to reach the record levels achieved in 2015. However, we have a large and high quality quote log and management anticipates the international sales backlog entering 2017 will be well above the levels experienced early in 2016.

AGI completed a number of acquisitions in recent months including VIS (November 2015), Entringer (March 2016), NuVision (April 2016) and Mitchell (July 2016). These acquisitions were funded with cash and the Company's revolver facility and include earn-out provisions. Management does not anticipate a positive EBITDA contribution from Brazilian-based Entringer in 2016, however, VIS, NuVision and Mitchell are expected to generate significant fourth quarter adjusted EBITDA, approximately in-line with the acquisition metrics disclosed upon announcing the transactions (see "Acquisitions").

Demand in the remainder of 2016 and in 2017 will be influenced by, among other factors, weather patterns, crop conditions and the timing of harvest and conditions during harvest. Changes in global macroeconomic factors as well as sociopolitical factors in certain local or regional markets and the availability of credit and export credit agency support in offshore markets also may influence sales, primarily of commercial grain handling and storage products. Consistent with prior periods, Commercial sales are subject to the timing of customer commitment and delivery considerations. AGI's financial results are impacted by the rate of exchange between the Canadian and U.S. dollars and a weaker Canadian dollar relative to its U.S. counterpart positively impacts profit and adjusted EBITDA. However, a portion of the Company's foreign exchange exposure has been hedged through forward foreign exchange contracts and based on current rates of exchange the Company expects to recognize a loss on these contracts. Short-term fluctuations in the price of steel may impact our financial results even though we strive to partially mitigate our exposure to such fluctuations through the use of long-term purchase contracts, bidding commercial projects based on current input costs and passing input costs on to customers through sales price increases.

Management anticipates fourth quarter results to reflect a significant contribution from recent acquisitions and strong demand in Canada for Farm products including Westeel storage equipment. However, the portable Farm market in the U.S. continues to be soft, North American Commercial sales are expected to be impacted by timing of project completion and delivery and our international business, excluding acquisitions, is not expected to gain significant momentum until 2017. On balance, based on current conditions, management anticipates fourth quarter adjusted EBITDA, including acquisitions, will be moderately above the prior year.

Management is positively biased towards 2017 and anticipates growth in a number of areas. A significant contribution is expected from the 2016 acquisitions of NuVision and Mitchell and management anticipates a positive contribution from operations in Brazil subsequent to the commissioning of the Company's new facility in early 2017. Based on current conditions, management anticipates robust demand in Canada for portable handling, aeration and storage equipment. In the U.S., management anticipates a modest increase in demand for portable equipment as the industry works through elevated inventory levels and farmers begin to replace older equipment. Finally, international sales are expected to benefit from a higher opening backlog for North American exports and continued high levels of activity at AGI's Italian subsidiaries. On balance, based on current conditions, management anticipates results in 2017 will exceed current year results.

Agreement to Acquire Yargus Manufacturing, Inc.

AGI is pleased to announce it has entered into an agreement to acquire 100% of the outstanding shares of Yargus Manufacturing, Inc. ("Yargus"). Based in Marshall, Illinois, Yargus is a manufacturer of material handling equipment used primarily in commercial fertilizer applications. Yargus is recognized for its custom design and manufacturing expertise, and its product offering, sold under the brand name Layco, includes tower blender systems, batch blending systems, control systems, in-plant receiving, automated coating systems, conditioners/delumpers, performance mixers, declining weight/volumetric blend systems, and conveyor systems.

The acquisition of Yargus will substantially expand AGI's North American fertilizer handling platform, both geographically and in terms of service offering. Yargus has a substantial presence in the U.S., as well as a growing international presence, both of which are highly complementary to AGI's current material handling footprint. Yargus has recently made substantial investments in plant, equipment, personnel, and product development, and when combined with AGI's existing divisions, will be very well positioned to compete in both local and international markets.

The purchase price for Yargus is U.S. $43.2 million, which includes U.S. $5.2 million of debt related to its recent building expansion and investment in equipment that was required to drive Yargus' next phase of growth. The purchase price will be payable upon closing, which is scheduled for the week of November 14, 2016. Yargus' normalized EBITDA averaged approximately U.S. $5.3 million over the past three years. Excluding the portion of the purchase price relating to the recent expansion capital expenditures, the transaction represents a multiple of 7.1 times the average normalized EBITDA over the past three years. Strong financial performance over the past nine months has enabled AGI to fund the transaction from cash and AGI's existing revolving credit facility.

"Yargus has been built over the past 48 years by a market leading team driven by the vision of Larry Yargus and we are very pleased to welcome the Yargus family and entire team to AGI," said AGI CEO Tim Close. "We pride ourselves on being a great home for family owned businesses in the agriculture sector where we can continue to invest in the people and facilities that have created exceptional brands and product lines. We would like to thank Larry and his daughters Anne, Kate and Meg for placing their trust in AGI and choosing to partner with us to continue to grow Yargus domestically and to accelerate their international growth. This acquisition completes our fertilizer platform in North America, significantly accelerates our global strategy and adds unique product lines including controls and proprietary software to our catalogue. We look forward to presenting our full fertilizer platform, from design through to production and installation to the market in the following months."