Ag Growth International Inc.

Thank you, operator, and good morning, everyone. I'm pleased to be speaking with you today from our corporate headquarters in Winnipeg.

Our CFO, Jim Rudyk, is here with me, and we are eager to use this call as a kickoff to a new era for AGI. Before getting into a more detailed discussion on the quarter as well as other relevant business and corporate updates, I would like to first introduce myself and share a few more details on my professional background.

I've spent my entire career, which spans nearly 30 years in the global agriculture business with a strong foundation in sales leadership, marketing, business development and operations. I've been an executive with AGI since 2012, played a large part in the growth that we have accomplished going from a $300 million company to a $1.4 billion company, most recently leading our North American Farm and Global Portables businesses.

That role has kept me close to our customers and provided a clear view of the operating levers that drive performance across AGI. Agriculture is a compelling industry.

People must eat and global demand continues to grow, but it is also cyclical, shaped by factors such as weather, geopolitics, interest rates and government policy to name a few. While I've seen significant change over the years, the fundamentals remain constant.

Crops are grown every season and grain must move from the field to storage to processing and ultimately to end markets. The industry generally follows a predictable seasonal rhythm and understanding that rhythm is essential to understanding our customers, what matters, what's urgent and where they need the most support.

As the leader of the company, having decades of hands-on operating experience is particularly important as we navigate a cyclical North American market while managing through significant change internally. To support the pace of change and provide the appropriate level of strategic input, governance and oversight, AGI has also made several important changes to the Board of Directors in recent months.

Led by our Board Chair, Dan Halyk, the Board now collectively brings a strong mix of hands-on operating experience, deep agriculture sector experience, restructuring and value creation knowledge, capital markets expertise, deep institutional knowledge from AGI's formative years in addition to meaningful shareholder representation. Overall, this is a Board that is well positioned, well equipped and well aligned to support a renewed focus on operating fundamentals, improving shareholder returns and enhancing return on invested capital metrics.

I look forward to working closely with our Board as we execute on our corporate priorities and strategies. Before getting into more detail on our current strategic priorities and recent restructuring activities, I'll provide some brief comments on our fourth quarter results, which Jim will expand on later in the call during his prepared remarks.

Fourth quarter revenue increased 4% year-over-year to $396 million, supported by strength in our Commercial segment, particularly in international markets, offset by continued softness in the North American Farm segment, Canada in particular. However, adjusted EBITDA decreased to approximately $48 million, down 38% and our adjusted EBITDA margin compressed to 12.2%, roughly 830 basis points year-over-year.

Given the extent of margin compression in the quarter, it's important to be direct about the drivers of this result. First, within our Farm segment, lower volumes for permanent storage and handling, especially in Canada, reduced overhead absorption and impacted profitability.

Second, within our Commercial segment, we experienced execution-related cost pressures on various traditional equipment-only projects in Brazil, including cost overruns, warranty charges, remediation expenses and bad debt write-offs. For clarity, when we refer to our traditional Brazil operations, this includes everything other than the large-scale projects we've recently engaged in.

Third, in our North American commercial business, a combination of product mix and production efficiency issues weighed on margins. Taken together, these items contributed to the bulk of the fourth quarter margin outcome.

They also reinforce why we initiated a new phase of restructuring early in 2026. As we move forward in 2026 and beyond, we have three key guiding principles, which taken together shape our actions and priorities.

The first is simplification. We will continue to streamline layers, clarify accountability and standardize core processes among other activities in a concerted effort to structurally reduce the overall complexity of how we operate.

We are simplifying the organization end-to-end from the high-level organizational structure to how decisions are made day-to-day. The objective is to move faster with better discipline.

The second is customer focus. We are refocusing resources on what matters most to customers from quoting through delivery and how we manage key accounts.

The objective is to make customer-first thinking a core part of our culture and day-to-day operations. The third is reducing debt and managing cash flow more broadly.

We are operating with tighter financial discipline to improve cash generation and conversion. Outside of managing debt through operating cash flows, we are reviewing our options and alternatives to help accelerate debt repayment.

As we work through 2026 in consultation with our Board, we will continue to calibrate our strategy and priorities with greater precision and through the lens of ROIC metrics. Given the amount of change underway, we believe it's important to share our current direction as of today, so stakeholders understand the priorities guiding execution and resource allocation in the near term.

In our renewed commitment to enhance the AGI customer experience and simplify operations through the start of 2026, we have begun and are continuing to undertake a comprehensive strategic restructuring initiative. This process focuses on streamlining our operations and aligning our decision-making processes more closely with our customers' needs.

By simplifying our business structure, we aim to empower our teams to respond more swiftly and effectively to customer feedback and market demands, ensuring a more agile and customer-focused approach. These actions include four main changes.

First, we restructured the top level of the company, what we call the executive operating team, going from a team of 17 down to a team of 8 to facilitate accelerated decision-making and improved execution. Second, we implemented a significant overhaul of the North American business to simplify the leadership structure and reduce layers of siloed functions.

The objective is to strengthen day-to-day execution and improve the speed of effectiveness of our response to customers and changing market conditions across North America. As part of this alignment, several smaller business units, including feed, food and digital are being integrated into the broader North American organization, all of which will now operate under a single regional leader.

Third, a streamlining of certain corporate functions and leadership capabilities to our Winnipeg headquarters, consolidating activities previously managed elsewhere. And finally, after careful consideration and evaluation of our current operational landscape, we have made the strategic decision to terminate our ERP implementation.

The ERP implementation has been challenging, delayed, resource-heavy and ineffective to date, raising concerns on the realization of expected benefits. Our executive team reviewed the ERP decision through the lens of simplicity, customer focus and cash flow management, coming to the conclusion that we must cease implementation and refocus on other priorities.

In addition, we have also suspended the dividend going forward effective immediately. The objective of all of these actions are straightforward.

They are aligned with our strategic focus areas of simplifying our business, increasing customer focus and managing cash flow to reduce debt. Collectively, these actions will drive annualized SG&A cost savings of at least $20 million.

In addition, terminating the ERP will enable about $20 million of cash cost avoidance over the next two years. Further initiatives to help remove cost and simplify the organization are under review.

Stepping outside of these immediate actions, we have also made some other targeted refinements to our corporate strategy, including a decision to halt any new large-scale projects that include general contracting and financing elements in Brazil or elsewhere until balance sheet capacity improves, while continuing to pursue equipment-only opportunities in Brazil that are aligned with the company's traditional operating model and a comprehensive internal review of our alternatives to reduce leverage and accelerate debt repayment. In addition, we are placing an increased focus on metrics such as return on invested capital to guide strategic decision-making alongside updates to corporate compensation structures, both of which are aligned with the objective of improving shareholder returns.

Moving to some comments on order book and overall market conditions. We ended the year with an order book of $543 million, down 26% year-over-year, primarily reflecting the execution of several significant projects in our International Commercial segment.

In the Farm segment, areas of North America have shown some early signs of improvement, notably in our year-end early order program for 2026. With this provides some cautious optimism for 2026 Farm segment results could show an improvement over 2025.

It is still early in the year and visibility remains limited. We'll need to get further into the season for additional validation of the demand picture and how to place 2026 within the broader agriculture cycle.

In commercial, order intake softened in late 2025 and into early 2026, reflecting longer customer decision-making and project review cycles. Finally, an important note on the underlying makeup of our 2025 results so we can be clear for listeners, analysts and shareholders as they set expectations for 2026.

Our full year results in 2025 benefited from significant revenue connected to large-scale projects in Brazil, which included general contracting and financing components. That said, backfilling this volume of revenue with traditional commercial business projects to replenish the order book to 2025 levels will be challenging.

Overall, the demand environment remains an issue in the near term, but we're leaning in, keeping opportunities in our pipeline moving forward, staying close to customers and simplifying the organization so we can execute better and be ready to capture growth opportunities as conditions improve. To wrap up, I'm grateful and genuinely honored to be in the position to lead AGI through this next chapter.

We see both challenges and opportunities ahead, and our team is ready to execute. We are firmly committed to strengthening alignment with shareholder returns and recognize that this is an area where improvement is required.

Enhancing value creation for shareholders is a core priority, and we are taking deliberate steps to better align our strategic decision-making, capital allocation and incentive structures with this objective. We are fully aware and aligned on the need for action to drive consistent, measurable improvement in shareholder returns and alignment.

Jim, over to you.

Thanks, Paul, and good morning, everyone. I'll begin with a brief review of Q4 results and then discuss other key financial metrics.

Starting with Farm. Farm segment revenue declined year-over-year in the fourth quarter, reflecting continued challenging market conditions across North America, including soft crop prices and ongoing uncertainty related to trade and tariff policies.

Revenue decreased 8% to $123 million, with the decline concentrated in Canada. Canada Farm revenue decreased 34% year-over-year, impacted by slow demand across both portable and permanent grain handling equipment and declining, though still elevated dealer inventory levels alongside an overall cautious approach to purchasing behavior by farmers and end users.

In contrast, U.S. farm revenue increased 11%, reflecting improved volumes versus prior periods, particularly in portable grain handling equipment, and early signs of potential stabilization across certain portable and permanent categories.

That said, demand remains below historical norms and visibility into sustained improvement remains limited entering 2026. International Farm revenue increased 36% year-over-year, led by strong demand in Australia, though the overall contribution from international regions remained modest in relative terms.

Adjusted EBITDA for the Farm segment declined 39% to $19.8 million and margin compressed from 24.1% to 16%, driven primarily by lower volumes and margin pressure on permanent handling and storage solutions in Canada. Now turning to the Commercial segment.

Commercial segment revenue increased year-over-year in the fourth quarter, driven primarily by large-scale comprehensive projects in international markets with Brazil again delivering a strong quarter and complemented by solid contributions from our EMEA region. Overall segment revenue increased 10% to $273 million, with international commercial revenue up 18% to $206 million, reflecting the mix of large projects, notably in Brazil.

In North America, U.S. commercial revenue increased 9% on continued execution of projects secured earlier in the year, while Canada commercial revenue declined significantly as the prior year period benefited from substantial project wins.

And in Q4 2025, a few major projects were pushed from Q4 into Q1 2026. Adjusted EBITDA for the Commercial segment declined 39% to $33 million and margins compressed from 21.6% to 12%.

The decline was driven primarily by execution-related pressures on traditional projects in Brazil that led to cost overruns, warranty charges and remediation expenses as well as product mix and production efficiency issues in our North American commercial business. While we are executing a plan to mitigate the margin pressure, we do expect some of these margin challenges to persist for both the Brazilian and North American commercial businesses into 2026.

Moving on to adjusted EBITDA and a few comments on specific line items within that reconciliation. Some of the key items to note include transactional, transitional and other representing a mix of legal accruals, asset disposal costs and personnel expenses.

A meaningful component this quarter of transactional expenses included a $21 million purchase of the interest of related parties for some of the large-scale Brazilian projects. This represented the purchase of our Brazilian construction partners' equity interest in three of the large-scale projects.

While this would normally be recorded as an equity transaction, it was expensed due to the timing of when the transactions close. Another key item is our ERP implementation costs, which will soon be removed given the strategic decision to terminate this activity going forward.

Finally, I'll provide a few comments on a few of our focused financial metrics, including free cash flow and leverage. Free cash flow in Q4 was negative, driven mostly by temporary working capital requirements associated with large-scale international commercial projects in Brazil.

Improving cash flow is a paramount objective for both management and the Board. Of the negative $111 million of free cash flow in 2025, a very significant portion of this was tied to these large-scale projects in Brazil.

As we monetize existing receivables and halt further investment, the cash flow pressure related to large-scale projects in Brazil should subside. From a leverage standpoint, our net debt leverage ratio was 4.7x at year-end compared to 3.9x at quarter-over-quarter and 3.1x year-over-year.

We recognize that leverage is elevated and improving free cash flow generation and reducing leverage are key priorities. It is worth noting that our syndicate remains highly engaged and supportive.

In Q1, we finalized an amendment agreement with the majority of our lending group that extends our senior credit facility maturity date out to 2030. One key element of our deleveraging plan is the investment vehicle established in Brazil to monetize financing receivables provided by AGI.

To date, this vehicle has generated $7 million of inflows, and we have made progress on securing additional inflows in the near term. This structure is designed to relieve working capital, support delivery of large projects, improve cash conversion and strengthen leverage metrics over time.

We are working through some of the detailed administrative aspects of the monetization process, and we expect meaningful progress on the long-term accounts receivable monetization efforts shortly. For clarity, it is worth reiterating that following our strategic choice to stop pursuing large-scale projects in Brazil, which require general contractor and financing components, we will refrain from entering new customer or project agreements that would increase our long-term receivables or otherwise use our balance sheet.

When our balance sheet improves, we may revisit, but for now, the priority is on reducing debt. In closing, our go-forward focus is clear: improve execution, restore margin performance, strengthen cash conversion and reduce leverage.

With that, I'll turn it back over to the operator.

I want to start off with the Commercial segment. It was fairly weak.

I think it was mentioned execution-related pressures in equipment-only projects in Brazil, mentioned cost overruns, higher warranty and remediation expenses and also comments around North American production inefficiencies. Can you elaborate on these items?

And also related, maybe for Jim as well, of your $48.3 million reported EBITDA, it looks like you didn't back out some of these onetime items, they are commercial or otherwise like bad debts, et cetera. Can you maybe quantify these nonrecurring items that's in your Q4 EBITDA?

Gary, it's Paul here. Thanks for the question.

I'll answer the first question, and then I'll turn it over to Jim. With regards to the execution-related cost overruns, about half of that of the issues were in cost overruns, warranty charges and then half was in bad debt write-off.

To be honest, when we look at our Brazil business, the pace of growth in our Brazil operations outpaced our capabilities to execute, and that creates challenges in the business, and that's why we had the cost overruns, warranty charges and unfortunately, a couple of customers from a bad debt perspective. We've installed a new business leader in our Brazilian business.

We're focused on technical accounting review on large-scale projects, and a full review of project management and procurement practices going forward. So we feel that all of these are addressable in our Brazil business as well as in the North American commercial business when we talk about product mix and production efficiency issues.

We had lower margin product that we were selling in Q4 and then inevitably had some production efficiency issues, which led to lower margins.

And Gary, just on your follow-on there, no, we did not back these out. These are our operating costs.

We've got a number of initiatives to address them. We're working hard to ensure they are not recurring, but they were not backed out.

We do expect to still have some challenges, particularly in Q1 as we work through our restructuring plan, but we thought it made sense to leave them in just our normal cost of goods sold or SG&A as opposed to backing them out.

And sorry, Jim, are you able to kind of quantify what those could have been if it was?

Well, so in terms of specifically the Brazil costs or are you talking about all in general?

Yes, all in general.

Yes. So of the overall impact on our margins, about 1/3 of them are attributable to each of the three categories.

So lower farm volumes, the Brazil impact and then North America commercial, they'd be about 1/3 each of them of the total dollar impact year-over-year.

Okay. Great.

Okay. And then maybe I'll just move on just one other one for Paul.

You listed kind of four operational initiatives in your prepared remarks. Can you elaborate kind of what's been achieved up to today?

Are the leadership streamlining and unifying of North American ops complete? Or should we expect some noise throughout this year?

I just want to hear the time line for these initiatives.

Yes, you bet, Gary. So we have restructured our executive team going from 17 down to 8.

So that's been done. David Postill, who is leading our North American business is in the process of restructuring that business.

And so that will happen within the next 30 days. Many of the activities in terms of looking at offices and relocating roles have been -- taken place already and will continue to in the next 30 days.

And we're trying to do this as efficiently as possible, as quickly as possible and keeping in mind a focus on the customer to make sure that nothing is impacted in a negative way in terms of our customer experience. And we believe through our restructuring and getting closer to the customer in terms of removing layers of the business will benefit us with regards to execution going forward.

Look, I understand the desire to level set expectations here, and I think that makes sense. But I think you're going to have to give us a little bit more in terms of what you expect for the margin profile here given how radical the move has been to the downside.

I know you suggested some of these margin challenges are expected to persist. Does that mean we should account for similar margin profile for the next couple of quarters?

I mean, how do we -- do we get back to a normalized level where we were before? I mean some degree of directional support here would be useful because, frankly, getting punched in the face like this is a little bit unexpected.

So just a bit more clarity around where we're going from a margin perspective would be the first point, and then I'll get to free cash flow.

Yes, you bet, Steve. And I'm familiar with getting punched in the face.

I'm a hockey player as well. And this was a tough quarter.

So Q4 was tough and we had challenges. We believe that those challenges are all addressable.

Q1, we believe will be -- continue to be tough as we work through this. We're not satisfied, obviously, with that margin outcome.

The restructuring that we've put in place is designed to improve our execution, restore our margin and strengthen our cash conversion. And the target is to get back to historical margins going forward.

So Q4, Q1 tough and driving towards more historical margins after that.

Okay. Helpful to a degree.

Maybe just on free cash flow then, we've had -- I think you cited at just over $110 million of negative free cash in the year. All the actions that you're taking seem to make logical sense.

But when can we actually expect to see positive free cash flow in the coming period here? And then I understand, again, on a related note, your banks and syndicate have been supportive here, but are we at risk of any sort of covenant-related breaches at some point in the future?

Yes. Thanks, Steve.

Yes. So free cash flow, you probably -- as you read through the press release and our comments, obviously, is elevated, it's very serious.

We're taking it very serious, big focus on it. A lot of the initiatives, the restructuring plans, all the things that we're doing are focusing on free cash flow.

From a -- if you look year-over-year, the bulk of it of the negative has to do with our investment in these large turnkey projects. And I'll just speak quickly on that.

So we did monetize some of it in Q4, a small amount, $7 million. We talked about this in the past, where it's administratively very slow and burdensome process in Brazil to get all of the steps necessary to then get the cash.

The cash is in motion. Progress continues.

We have calls every couple of days focusing on it. And as we've mentioned in the past, we expect to monetize between $80 million to $100 million shortly within -- by H1.

That will make a big difference to our free cash flow. Q1 will still be tough, though.

We expect negative free cash flow in Q1, candidly. And then as the funds come in from the monetization of the Brazil business, that will turn things around.

But make no mistake, there's still challenges as we work through the restructuring plan, but our focus is on generating positive free cash flow going forward. In terms of your covenant question, as you know, the bank covenants exclude our debentures.

And so we are in compliance. And we have a great group of banks, 11 banks in our syndicate.

They're very supportive. We just extended the maturity date.

So no concerns on the covenants.

First question here, just a clarification. You lumped in the dividend cut and some of the restructuring efforts.

And I just want to be clear here, is that dividend included in the $20 million of cost savings you're expected? Or I would assume it's not...

No, good question, and it's not included in the $20 million of cost savings. And just for context, Tim, our Board reviews our dividend each period in the context of the business and where we're at.

And given our priorities to manage cash and pay down debt, a decision was made to postpone it, to hold on.

Okay. Great.

And then second question, I just want to dive into what you're seeing on the ground in the Commercial segment, understanding that your -- so the breadth of opportunities that you're looking at in Brazil, in particular, has shrunk with, I guess, the change in your offering around general contracting and financing options. But you also mentioned a slowdown in, I guess, the commercial order cycle.

So maybe you can elaborate on what you're seeing on the ground in terms of demand and the market outlook in the commercial side of the business relative to how you had described it in past quarters?

Yes, you bet. So I'll talk about the broader commercial business, North America.

First, we're seeing good quote activity, but we're not seeing customers move forward on that quote activity at this time. So everybody is a little bit cautious and not pulling the trigger with regards to projects at this time.

Now that could open up. We're very happy to see the quoting activity happening.

So that's a good sign. When we look at our EMEA business, Rest of World, it had a fantastic year in 2025 with a lot of execution on those projects happening and getting finalized in 2025.

We see a smaller order book. And we've started to see a little more traction.

That being said, there's been some small projects that have been impacted in the Middle East because of the conflict there and -- but it won't have any kind of material impact. And then when we look at the Brazil business, a challenge for us will be to replace the $183 million of revenue that we did in large-scale projects in 2025 that were financed.

And so we've made a decision that we are no longer doing those projects going forward with regards to financing. We will participate with regards to equipment sales.

And that decision is made from a cash flow perspective to ensure that we're getting cash as we do the projects and getting paid as those projects are finalized. So with that, we believe that the challenge going into 2026 for Brazil, in particular, will be to fill that gap of the $183 million that we accomplished in 2025.

So the slowness in, I guess, order cycling that you've seen or I guess, the willingness of customers to actually place orders is mostly outside of Brazil?

That's right.

Okay. And then just the $180 million of large project revenue in Brazil in '25, how does that compare to total commercial revenue in Brazil?

And how much of those large projects are still in backlog for '26?

Yes. It's a significant amount, Tim.

It's -- '25 in particular, was a big year for the turnkey projects. So it's more than half of the amount.

And how much do you expect to process of those large projects in '26?

In '26 -- so yes, good question. So there is -- 2 of the projects still have some work being done in 2026.

We'll complete them through this year. It's a big gap that we need to fill, let's put it that way.

So it's clear that a lot of these efforts are intended to improve free cash flow and in turn, improve the balance sheet. Jim, wondering with the leverage ratio where it is now, how we should think about that evolving over the course of the year, where you think that can be come the end of the year?

And as part of that, also wondering how you're thinking about refinancing or repaying the senior unsecured debenture that comes due at the end of this year.

Yes. Thanks, Michael, for the question.

Yes. So leverage ratio is high, 4.7x.

It must improve, no doubt about it. And if you look at our initiatives, we're really, really focused on those -- getting those -- and we're going to improve it through a number of ways.

You've got improving our earnings, so SG&A savings that we've called out, delaying the ERP implementation that will free up quite a bit of cash flow over the next couple of years. A big part is our decision to pause any of the financing opportunities with some of these large customer opportunities.

That will free up quite a bit of working capital. So we expect to have some meaningful improvements in that leverage ratio through 2026.

In terms of the refinancing, you're right, we have a debenture that's due in December. We expect to refinance that debenture likely with a similar type instrument, but that will be something that we'll likely pursue and try to get done Q2, Q3 time frame.

Okay. Related to the question here about improving the balance sheet.

I guess there was mention in the release of reviewing the portfolio of assets with the intent of refocusing on core business lines. I guess the sort of two part here.

So first thing is where is that portfolio review at and how material could the proceeds from that be? Just trying to understand if this is something we really need to be focused on or if this is sort of more marginal in terms of the potential impact.

It's a good question. So we have gone through an extensive review of all of our available options to reduce debt.

We've looked at it from our priorities of simplifying the business, having a customer focus and cash flow to reduce debt. We've identified the most actionable options and are focused on this goal for the coming months.

So there is some low-hanging fruit. And when I say that, we have facilities that are not operating right now that we could sell for cash.

We have land that's available to sell for cash. And then we have other assets within the portfolio where we're looking at it that can range from either smaller but more actionable to large opportunities that can have a significant impact on our debt reduction.

And we're taking all of those into account with a focus on debt reduction.

Okay. That's helpful.

And maybe just to clarify though. So nothing has actually been finalized yet.

You've got sort of a good set of opportunities here that things you could act on, but nothing has been completed to this point.

That's correct. The internal review has been done, and we're actioning things that are in the queue.

My first question, I guess, pertains to the rollback of the ERP implementation. And I guess as you commented in your prepared remarks around getting closer to the clients and sort of more agility, et cetera.

I'm just wondering how do you balance these kind of competing priorities around presumably less data over time while trying to sort of accomplish operational priorities.

Yes. Thanks, Max.

So the ERP project, it's been ongoing for quite a while. It's extremely resource heavy.

It does consume lots of cash. And importantly, too, it's a distraction to a lot of people, especially in the time when we're trying to simplify the business, focus on the customer and get back to basics.

And so with our extreme focus on freeing up free cash flow, we decided that it made sense to stop this project. We need to focus on execution.

We need to conserve cash. This will -- is a good mechanism to free up some of that cash.

And now in terms of your -- what does that mean in terms of the future? I think that who knows?

I mean we've got systems. We've operated for a lot of years with our current systems.

Once we get our execution done, figure out our processes, get that streamlined, things will get reassessed. But for now, this has made the most sense to do.

Okay. And then in terms of -- recently, we're seeing fertilizer pricing obviously spiking.

I'm just curious to see what you may be seeing closer sort of on the ground? Because I mean, you made a comment around commercial, but maybe anything farm related, that would be helpful.

Yes, you bet. So we were pleasantly surprised actually with our order book through our early order program that happens in Q4.

We saw an uptick with regards to that order book versus 2024, which was a positive sign. So we remain cautiously optimistic on our farm business.

The reality is the reason we remain cautiously optimistic is it really is dependent now on when farmers go into planting season which will happen in the next month or so, depending on region. And as they see their crops come up and obviously, with input prices, as you mentioned, with fertilizer prices going up, they're putting -- they put all of their resources into that first.

And then once they see their crops come up and if they are looking good and commodity prices are decent, then we'll have an opportunity to maybe get more optimistic or less optimistic about the second half. But right now, we feel pretty good with regards to that order book and better than what we anticipated going into 2026.

The question is for Paul. I was wondering as it relates to offloading some of your assets to free up your balance sheet.

Was there any manufacturing assets that would be based in Canada or North America that you'd be looking at offloading in the next few months?

Thanks for the question. We're reviewing all of our global assets.

So we haven't determined what that looks like on a North American basis at this time.

Two quick follow-ups, if I might. Paul, maybe too early, but I mean, how are you thinking about the tariff situation as we move into CUSMA renegotiations?

I'm thinking about the bin side in particular. I don't seem to be too worried about the Auger portable side, but the bin side is one where there might be more risk to the portfolio.

How do you plan and adapt for that as we move into that process?

Yes. That's a great question, Steve.

2025 was challenging to say the least with regards to tariffs. It did have an impact on our overall margins on the farm business, particularly on the storage side throughout the year.

And I'd say not only on the cost of the tariff, but the inefficiencies that it created when it was on again, off again, what we were shipping, where we were shipping. So that was a big challenge.

And we are constantly thinking about that as we move forward, trying to understand what the future looks like with whether there's a USMCA in place or not. We happen to have our bin manufacturing equipment still available to us packaged up in Grand Island.

And we are looking at all available options to ensure that we can be competitive on a North American basis in the storage business going forward. So I'll leave it at that, Steve.

We're definitely considering what our options are going forward under a regime where it makes it difficult to participate in the U.S. business from our Canadian facility.

Okay. Helpful.

And just maybe one last one on a more positive note. I just wanted to go back to perhaps the green shoots in the portable business in the U.S.

That was actually a pleasant surprise. And I know you've spoken to the order book improving.

But I mean, are you seeing broad-based support there, Paul? I mean, how do you think about pricing?

What do you think is driving that sort of earlier stage sales cycle? I'm just trying to get a sense for how real this improvement is out there because it has been the bigger drag for the past, frankly, two years.

Yes. Yes, absolutely.

Good point. So 2024 was a challenging year for the U.S.

portable business. We put in -- we had a lot of inventory, retail inventory.

We put in programs -- rebate programs to support our dealers to help move product to the farm. And those rebate programs essentially went on for 14 months to really focus on it.

We had all of our sales team focused on inventory counts to understand, and we typically do historical inventory counts of our retail network. So watching that closely was really critical for us.

And what we saw was our inventory was coming down. And we saw in Q4 a good reduction of that retail inventory in the U.S.

in particular, which facilitated better early order program. And I think the dealers themselves were pleasantly surprised with regards to the sales that they achieved in Q4, and that's why we saw a better early order program.

And we just -- we had some market share information results that just came through. And we've been successful in terms of maintaining our share where we have large share and successful in gaining share where we had lower share of the business.

So it's been positive the work that the team has done in a difficult market. And so just to wrap that up, U.S., it's coming around.

Canada, obviously, was a big challenge, and that's why Q4 was impacted. And we see that we'll probably be in a position in Q4 of '26 where Canada feels the same thing in terms of coming around.

And I guess, -- the goal and what we're working towards is that Q4 '26 shows marked improvement going forward into 2027.

Yes. So maybe just building on that last answer you provided, Paul.

It does sound like you're sort of encouraged about some of the things you're seeing within Farm. I guess on a full year basis, anything further you can help us with in terms of how to think about from a top line perspective, progression of Farm and where that puts you at the end of the year on a year-over-year basis?

And similarly, on the commercial side, just there seems to be sort of more moving pieces there and difficult comps. But you still do -- notwithstanding the fact that the order book is down, there's still some -- presumably some orders that come in or some activity, pardon me, on the commercial that flows in, in the first half of the year.

So just anything on the top line you can help us with on the two segments beyond what you've already kind of provided would be helpful, if possible. That's the first one.

I have one other one after that.

Yes. Difficult to kind of give any concrete numbers on that.

So -- and not comfortable at this time really giving any guidance as it relates to top line or bottom line in terms of margin that we're doing. Our team really right now is just focused on simplifying our business, focusing on our customers, paying down debt, doing everything that we need to do to drive the business forward and want our team just to continue to focus on it.

So I don't want to speculate on what the numbers could look like.

Okay. Understood.

The second follow-up is just around the cost savings you expect, just to be clear. So the $20 million of annualized savings, does that kick in at that level of annualized savings beginning in the third quarter, so sort of $5 million a quarter starting in Q3.

Is that how to think about this?

I think that would be a decent way to think about it. We're going to try and do things faster than that.

But to be cautious on it, I would say, managing that through Q3 going forward is a good way to look at it.

Okay. And then -- sorry, just as an extension of that, like with everything you're doing now, if you go back to some of the past commentary around margins, I mean, this year, there was an expectation of some -- before today, there was some expectation even then about some things that would weigh on the margins a little bit, particularly the mix between farm and commercial.

But I guess there have been some commentary about longer term, like an 18% to 20% EBITDA margin within the business. Does everything you're doing today allow you to get back to that plus something even higher?

Or is the effort here just to kind of get back to even that kind of a level? Just trying to understand kind of the longer term and what all of these initiatives are likely to do as far as profitability.

Yes. It's a good question.

We want to get back to historical margins. I would say getting to 20% is probably pretty difficult at this time.

The changes that we're making are absolutely focused on improving our margin. But at this time, I think it's difficult to really say how long it will take to get back to higher teens.

We'll see that over time in terms of the progression with regards to the strategy by simplifying our business, taking cost out of the business, getting closer to the customer. If that turns into driving more sales in a more efficient way, then obviously, we'll see some margin improvement.

But right now, we're just targeting to get back to historical margins as the first point versus stretching ourselves in that 18% to 20% range.

I've got a few, but they're quick. On the ERP cost savings for $20 million, how does that relate to -- I think you're looking for around $15 million per year of costs in '26, '27 related to that implementation, so roughly $30 million.

So is that delta, the $10 million, I guess, cost that will be incurred to in-house some of the capabilities that you're thinking about that?

Yes. Thanks, Tim, for that clarifying thing.

Yes. No, there's just some costs that we've incurred to date through the year that obviously need to be paid.

And then there's just some wind-down costs.

Okay. And that ERP, like anything that has been implemented to date that is useful?

Or is everything getting rolled back and you're basically have to start from scratch on it?

We've learned a lot. I mean we have a big team that has been involved.

We've learned a lot about processes that we need to follow, approaches that we need to follow. So a lot of knowledge that we benefited from that will be retained as we move forward.

Okay. Within the restructuring initiatives, I don't see anything really that relates to capital spending.

So can you talk a little bit about how you're thinking about CapEx this year and maybe next, where we should be thinking about that? Anywhere you can say about CapEx?

Yes, you bet. So obviously, maintenance CapEx is a priority across all of our facilities.

And then as it relates to incremental CapEx beyond maintenance, we'll be looking at that through an ROIC lens and making decisions that make sense and drive our return on invested capital as much as possible. So we'll be keeping a close eye on it, and it will need to hit defined metrics to be able to get approval moving forward.

Do you want to provide any guidance on what should be a range where we think CapEx will come in '26?

No. So still early days.

I think if you look back at what we spend from a maintenance perspective and intangibles, those will be similar. And then from what we've categorized as a growth bucket, those will be limited.

And as Paul mentioned, we're very aligned in terms of prioritizing what we spend on, and we'll only move forward on anything if the return on invested capital is greater than our WACC.

Okay. And then the onetime costs of $20 million in H1 '26, should we expect that to be spread evenly in Q1, Q2?

Or is that going to be front-end loaded?

Probably close.

Okay. And then how are you guys thinking about the longer-term leverage target now?

I think 2.5x is the old target. There are a lot of things in earnings we've seen lately, so it could be confusing.

Is that still the range you're thinking of? Or are you thinking lower now?

No, still working to get to the end of that 2.5x as quickly as possible, a little detour in the last year. But as you can tell by the initiatives we put in place, massive focus on getting that down as quickly as possible.

Thanks, Chloe. I appreciate it.

Everyone, I just want to comment on -- obviously, a lot of change. Q4 was a difficult quarter.

Q1, we believe, will be a difficult quarter as well. And as we do this change, I want to reiterate our focus areas.

It is around simplifying the business, making our business more streamlined, empowering our employees across AGI to do good work and feel like they've been successful every day in their role when they come to work. And that's what the whole goal of our restructuring is around simplification.

And that's to get closer to the customer. And so that's driving our customer focus.

And the goal is that by the end of 2026, our customers tell us that we've substantially improved from our quote to delivery execution and improved our quality going forward. And if we accomplish that where we have employees that are engaged closer to our customers, customers that feel like we've been successful, then we'll achieve our goal with regards to cash flow and debt reduction.

And the goal there would be that shareholders really see stabilized margin performance going forward, improved cash flow and tangible progress on our debt reduction. So I just want to be clear with those that are listening or that will listen later.

That is our goal, and that's what the executive team here at AGI, eight of us are focused on as well as the broader employee group across AGI. So I want to thank all of our employees that are going through the change and looking forward to working with them in terms of achieving the goals that we've set out.

Thank you, everyone.