"I believe we are well positioned to capitalize on what we expect will be long-term, positive agricultural fundamentals. We recently undertook a market study to assess our positioning in the portable grain handling space in the U.S. and were very pleased to see that our market share, brand strength and customer satisfaction levels scored every bit as strongly as we expected. The strength of our commercial brands remain evident in both our domestic and offshore customer base and our ability to bundle this high performance equipment with an expanding storage product line has contributed to rapid international growth. Our talented international sales team continues to grow relationships and AGI brand presence in offshore markets. We remain very positive about our future growth in these markets."
"We are very enthusiastic with respect to AGI's prospects in 2013 and beyond. Although we expect results for our second quarter will reflect the lingering effects of the 2012 drought, we anticipate the combination of U.S. planting intentions, improving moisture conditions in the corn-belt and our rapidly growing commercial and offshore order books will contribute to a strong second half."
U.S. farmers may plant 97.3 million acres of corn in 2013, the highest level since 1936, and harvest an all-time record crop of over 14 billion bushels, according to the USDA's March 2013 Prospective Plantings report and its 2013 Agricultural Outlook Forum. If achieved, the projected harvest would represent a 35% increase over 2012 in corn production, the primary demand driver for the Company's portable grain handling equipment. The USDA forecast, combined with greatly improved moisture levels in many key areas of the corn-belt and a late planting season, has resulted in an optimistic outlook for portable grain handling demand in the second half of 2013.
Demand for portable grain handling equipment in the second quarter of 2013, however, is expected to be muted due to the carryover impact of the U.S. drought. Although moisture conditions have improved significantly in recent weeks and the Company's backlog currently exceeds 2012 levels, scheduled deliveries for the second quarter of 2013 are lower than Q2 2012 deliveries and the Company does not expect in-season activity to stimulate significant demand until the third quarter. The anticipated decrease in sales of portable equipment in the second quarter of 2013 is not, however, expected to be as significant as the year-over-year change experienced in the first quarter of 2013.
The Company`s commercial grain handling backlog has increased substantially in recent months and is significantly higher than the backlog at the same time in 2012. AGI`s recovery from the 2012 U.S. drought in the commercial space has occurred more quickly than anticipated and management expects domestic and international demand will result in second quarter commercial equipment sales levels approximating the strong sales achieved in the second quarter of 2012. Based on improving sentiment and a growing order book management expects robust demand for commercial equipment to continue in the second half of 2013.
AGI enjoyed great success offshore in 2012 and that momentum has continued into 2013. Quoting activity remains at record highs and the Company's international back order is significantly higher than at the same time in 2012. The Company recently entered into a $42 million agreement to supply $28 million of grain handling, aeration and storage equipment and $14 million in lower margin contracted products and services to a single customer in Ukraine, our largest ever single contract. In addition, our investment in two sales offices in South America in 2011 is expected to result in significant sales growth in Latin America in 2013.
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