Growth International (AFN) Q4 2025 earnings summary

Executive summary

• Fourth quarter revenue rose 4% year-over-year to CAD 396 million, driven by international commercial strength but offset by North American farm weakness, especially in Canada.

• Adjusted EBITDA fell 38% to CAD 48 million, with margin compressing to 12.2%, down 830 basis points year-over-year due to lower farm volumes, cost overruns in Brazil, and North American production inefficiencies.

• Net debt leverage ratio increased to 4.7x at year-end, up from 3.1x a year earlier, reflecting higher debt and lower EBITDA.

• Major restructuring underway: executive team reduced, North American business streamlined, corporate functions consolidated, ERP implementation terminated, and dividend suspended, aiming for CAD 20 million in annualized cost savings.

• Strategic focus on simplification, customer focus, and debt reduction, with a renewed emphasis on return on invested capital (ROIC).

Financial highlights

• Farm segment Q4 revenue declined 8% year-over-year to CAD 123 million, with Canada down 34% and U.S. up 11%.

• International Farm revenue up 36% year-over-year, led by Australia.

• Commercial segment Q4 revenue up 10% to CAD 273 million; international commercial up 18% to CAD 206 million, U.S. commercial up 9%, Canada down.

• Farm and Commercial segment adjusted EBITDA both dropped 39% year-over-year in Q4.

• Free cash flow in Q4 was negative, mainly due to working capital tied to large Brazilian projects; full-year negative free cash flow was CAD 111 million.

Outlook and guidance

• Q1 expected to remain challenging, with margin and free cash flow pressure persisting as restructuring continues.

• Positive free cash flow anticipated as Brazilian receivables are monetized, with CAD 80–100 million expected by H1.

• No specific top-line or margin guidance provided; focus remains on restoring historical margins and improving cash flow.

• Annualized cost savings of CAD 20 million expected to be realized starting Q3.

• Leverage ratio targeted to return to 2.5x as quickly as possible.