Second Quarter Sales of $2.1 Billion Generate Adjusted EPS of $1.25
and Reported EPS of $1.22
DULUTH, Ga.--(BUSINESS WIRE)--Jul. 28, 2015--
AGCO, Your Agriculture Company (NYSE:AGCO), a worldwide manufacturer and
distributor of agricultural equipment, reported net sales of
approximately $2.1 billion for the second quarter of 2015, a decrease of
approximately 24.8% compared to net sales of approximately $2.8 billion
for the second quarter of 2014. Reported net income was $1.22 per share
and adjusted net income, excluding restructuring and other infrequent
expenses, was $1.25 per share for the second quarter of 2015. These
results compare to reported and adjusted net income per share of $1.77
for the second quarter of 2014. Excluding unfavorable currency
translation impacts of approximately 13.8%, net sales in the second
quarter of 2015 decreased approximately 10.9% compared to the second
quarter of 2014.
Net sales for the first six months of 2015 were approximately $3.8
billion, a decrease of approximately 25.8% compared to the same period
in 2014. Excluding the unfavorable impact of currency translation of
approximately 12.9%, net sales for the first six months of 2015
decreased approximately 13.0% compared to the same period in 2014. For
the first six months of 2015, reported net income was $1.55 per share
and adjusted net income, excluding restructuring and other infrequent
expenses, was $1.67 per share. These results compare to reported and
adjusted net income of $2.79 per share for the first six months of 2014.
Second Quarter Highlights
-
Regional sales results(1): North America (15.8)%,
Europe/Africa/Middle East (“EAME”) (8.5)%, South America (14.2)%,
Asia/Pacific (“APAC”) (0.5)%
-
Regional operating margin performance: EAME 11.8%, North America
10.3%, South America 5.4%, APAC (12.2)%
-
Inventory at June 30, 2015: approximately $245 million lower than June
30, 2014 on a constant currency basis(1)
-
Operating expenses: 7.3% below 2014 levels on a constant currency basis(1)
-
EPS positively impacted by a lower effective tax rate versus second
quarter 2014 (29.4% vs 34.9%)
-
Share repurchase program reduced outstanding shares by 2.2 million
during the first half of 2015
-
Full-year 2015 earnings per share guidance increased to approximately
$3.10 (from approximately $3.00)
(1)Excludes currency translation impact. See
reconciliation of Non-GAAP measures in appendix.
“Our second quarter results reflect the significant challenges caused by
weaker global industry demand and currency headwinds,” stated Martin
Richenhagen, AGCO’s Chairman, President and Chief Executive Officer.
“AGCO’s performance demonstrates our ability to deliver solid results in
a weaker industry environment. The quarter was highlighted by the
successful reduction of our expenses and Company inventories. By
reducing production hours approximately 22% compared to the second
quarter of 2014, our June 2015 inventory levels were substantially lower
than our position at June 2014. In addition, our expense reduction
actions have been largely completed resulting in lower factory overheads
and selling, general and administrative expenses compared to a year ago.
Improving our products and service levels for our customers remains a
top priority. These improvements and a successful release of many new
products with advanced technologies have been well received by our
customers, making AGCO very competitive in the market.”
Market Update
Industry Unit Retail Sales
|
|
|
|
Tractors
|
|
|
|
Combines
|
|
|
|
|
Change from
|
|
|
|
Change from
|
Six months ended June 30, 2015
|
|
|
|
Prior Year Period
|
|
|
|
Prior Year Period
|
|
|
|
|
|
|
|
|
|
North America(1) |
|
|
|
(10)%
|
|
|
|
(37)%
|
South America
|
|
|
|
(19)%
|
|
|
|
(32)%
|
Western Europe
|
|
|
|
(8)%
|
|
|
|
(15)%
|
|
|
|
|
|
|
|
|
|
(1)Excludes compact tractors.
“During the first half of 2015, lower commodity prices and the
expectation of reduced farm income have pressured global sales of farm
equipment,” continued Mr. Richenhagen. “Grain prices continue to be
highly sensitive to 2015 crop production forecasts and will likely
remain volatile throughout the growing season. Industry retail sales in
North America declined with a significant drop in high-horsepower
tractors, combines and sprayers. Growth in hay and forage equipment and
small tractors, due to healthy conditions in the livestock sector, has
provided a partial offset to the decline in large agricultural
equipment. In Western Europe, margins for dairy producers remained weak
and lower commodity prices kept market demand soft from the row crop
segment. Industry sales declines were most pronounced in the United
Kingdom, Finland, France and Germany. Reduced industry sales in South
America were the result of lower demand in Brazil due to softness in the
sugar sector, weakness in the general economy and changes to the
government financing program. Our long-term view remains optimistic with
expanding demand for grain supporting farm economics and healthy growth
in our industry.”
Regional Results
AGCO Regional Net Sales (in millions)
Three Months Ended June 30,
|
|
2015
|
|
|
2014
|
|
|
% change from 2014
|
|
|
|
% change from 2014 due to currency translation(1)
|
North America
|
|
$
|
563.1
|
|
|
|
$
|
686.2
|
|
|
|
(17.9
|
)%
|
|
|
|
(2.1
|
)%
|
South America
|
|
280.3
|
|
|
|
440.2
|
|
|
|
(36.3
|
)%
|
|
|
|
(22.1
|
)%
|
Europe/Africa/Middle East
|
|
1,137.0
|
|
|
|
1,521.9
|
|
|
|
(25.3
|
)%
|
|
|
|
(16.8
|
)%
|
Asia/Pacific
|
|
88.9
|
|
|
|
102.0
|
|
|
|
(12.8
|
)%
|
|
|
|
(12.4
|
)%
|
Total
|
|
$
|
2,069.3
|
|
|
|
$
|
2,750.3
|
|
|
|
(24.8
|
)%
|
|
|
|
(13.8
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
2015
|
|
|
2014
|
|
|
% change from 2014
|
|
|
|
% change from 2014 due to currency translation(1)
|
North America
|
|
$
|
1,035.6
|
|
|
|
$
|
1,333.7
|
|
|
|
(22.4
|
)%
|
|
|
|
(1.9
|
)%
|
South America
|
|
529.3
|
|
|
|
793.8
|
|
|
|
(33.3
|
)%
|
|
|
|
(19.0
|
)%
|
Europe/Africa/Middle East
|
|
2,045.1
|
|
|
|
2,757.8
|
|
|
|
(25.8
|
)%
|
|
|
|
(16.5
|
)%
|
Asia/Pacific
|
|
161.9
|
|
|
|
198.4
|
|
|
|
(18.4
|
)%
|
|
|
|
(11.0
|
)%
|
Total
|
|
$
|
3,771.9
|
|
|
|
$
|
5,083.7
|
|
|
|
(25.8
|
)%
|
|
|
|
(12.9
|
)%
|
(1) See Footnotes for additional disclosures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
AGCO’s North American net sales decreased 20.5% in the first half of
2015 compared to the same period of 2014, excluding the negative impact
of currency translation. Inventory reduction efforts and weaker industry
demand, particularly from the row crop sector, contributed to lower
sales. Declines in sales of sprayers, high-horsepower tractors and grain
storage were partially offset by modest growth in protein production
products. Lower sales and production volumes and a weaker sales mix
contributed to a reduction in income from operations of approximately
$75.5 million for the first half of 2015 compared to the same period in
2014.
South America
Net sales in the South American region decreased 14.3% in the first six
months of 2015 compared to the first half of 2014, excluding the impact
of unfavorable currency translation. Sales declines in Brazil were
partially offset by sales growth in Argentina and other South American
markets. Income from operations decreased approximately $29.5 million
for the first half of 2015 compared to the same period in 2014 due to
lower sales and production volumes, as well as a weaker mix of sales.
Europe/Africa/Middle East
Net sales in EAME, excluding the negative impact of currency
translation, declined 9.3% in the first half of 2015 compared to the
same period in 2014. Sales declines were the largest in Germany,
Scandinavia and Russia. Income from operations decreased approximately
$93.9 million for the first half of 2015, compared to the same period in
2014, due to lower sales and production volumes as well as unfavorable
currency translation. These headwinds were partially offset by the
benefits of operational efficiencies, SG&A cost reduction initiatives
and new product sales.
Asia/Pacific
Excluding unfavorable currency translation impacts, net sales decreased
7.4% in AGCO’s Asia/Pacific region in the first six months of 2015
compared to the same period in 2014. Income from operations declined
approximately $18.3 million in the first half of 2015, compared to the
same period in 2014, due to lower sales and increased market development
costs in China.
Outlook
Weaker global demand for agricultural equipment and the unfavorable
effect of foreign currency translation are expected to negatively impact
AGCO’s sales and earnings in 2015. AGCO’s net sales for 2015 are
expected to range from $7.7 to $7.9 billion. Gross and operating margins
are expected to be below 2014 levels due to the negative impact of lower
sales and production volumes along with a weaker sales mix. Benefits
from the Company’s restructuring and other cost reduction initiatives
and a lower tax rate are expected to partially offset the volume-related
impacts. Based on these assumptions, 2015 earnings per share are
targeted at approximately $3.10, excluding restructuring and other
infrequent expenses.
*****
AGCO will be hosting a conference call with respect to this earnings
announcement at 10:00 a.m. Eastern Time on Tuesday, July 28, 2015. The
Company will refer to slides on its conference call. Interested persons
can access the conference call and slide presentation via AGCO’s website
at www.agcocorp.com
in the “Events” section on the “Company/Investors” page of our website.
A replay of the conference call will be available approximately two
hours after the conclusion of the conference call for twelve months
following the call. A copy of this press release will be available on
AGCO’s website for at least twelve months following the call.
*****
Safe Harbor Statement
Statements that are not historical facts, including the projections of
earnings per share, sales, industry demand, market conditions, grain
prices, currency translation, farm income levels, margin levels,
investments in product and market development, operational and cost
reduction initiatives, production volumes, tax rates, and general
economic conditions, are forward-looking and subject to risks that could
cause actual results to differ materially from those suggested by the
statements. The following are among the factors that could cause actual
results to differ materially from the results discussed in or implied by
the forward-looking statements.
-
Our financial results depend entirely upon the agricultural industry,
and factors that adversely affect the agricultural industry generally,
including declines in the general economy, increases in farm input
costs, lower commodity prices, lower farm income and changes in the
availability of credit for our retail customers, will adversely affect
us.
-
A majority of our sales and manufacturing take place outside the
United States, and, as a result, we are exposed to risks related to
foreign laws, taxes, economic conditions, labor supply and relations,
political conditions and governmental policies. These risks may delay
or reduce our realization of value from our international operations.
-
Most retail sales of the products that we manufacture are financed,
either by our joint ventures with Rabobank or by a bank or other
private lender. Our joint ventures with Rabobank, which are controlled
by Rabobank and are dependent upon Rabobank for financing as well,
finance approximately 50% of the retail sales of our tractors and
combines in the markets where the joint ventures operate. Any
difficulty by Rabobank to continue to provide that financing, or any
business decision by Rabobank as the controlling member not to fund
the business or particular aspects of it (for example, a particular
country or region), would require the joint ventures to find other
sources of financing (which may be difficult to obtain), or us to find
another source of retail financing for our customers, or our customers
would be required to utilize other retail financing providers. As a
result of the recent economic downturn, financing for capital
equipment purchases generally has become more difficult in certain
regions and in some cases, was expensive to obtain. To the extent that
financing is not available or available only at unattractive prices,
our sales would be negatively impacted.
-
Both AGCO and our retail finance joint ventures have substantial
account receivables from dealers and end customers, and we would be
adversely impacted if the collectability of these receivables was not
consistent with historical experience; this collectability is
dependent upon the financial strength of the farm industry, which in
turn is dependent upon the general economy and commodity prices, as
well as several of the other factors listed in this section.
-
We have experienced substantial and sustained volatility with respect
to currency exchange rate and interest rate changes, including
uncertainty associated with the Euro, which can adversely affect our
reported results of operations and the competitiveness of our products.
-
Our success depends on the introduction of new products, particularly
engines that comply with emission requirements, which requires
substantial expenditures.
-
Our production levels and capacity constraints at our facilities,
including those resulting from plant expansions and systems upgrades
at our manufacturing facilities, could adversely affect our results.
-
Our expansion plans in emerging markets, including establishing a
greater manufacturing and marketing presence and growing our use of
component suppliers, could entail significant risks.
-
We depend on suppliers for components, parts and raw materials for our
products, and any failure by our suppliers to provide products as
needed, or by us to promptly address supplier issues, will adversely
impact our ability to timely and efficiently manufacture and sell
products. We also are subject to raw material price fluctuations,
which can adversely affect our manufacturing costs.
-
We face significant competition, and if we are unable to compete
successfully against other agricultural equipment manufacturers, we
would lose customers and our net sales and profitability would decline.
-
We have a substantial amount of indebtedness, and, as result, we are
subject to certain restrictive covenants and payment obligations that
may adversely affect our ability to operate and expand our business.
Further information concerning these and other factors is included in
AGCO’s filings with the Securities and Exchange Commission, including
its Form 10-K for the year ended December 31, 2014 and subsequent Form
10-Qs. AGCO disclaims any obligation to update any forward-looking
statements except as required by law.
*****
About AGCO
AGCO (NYSE: AGCO) is a global leader in the design, manufacture and
distribution of agricultural machinery. AGCO supports more productive
farming through a full line of tractors, combines, hay tools, sprayers,
forage equipment, grain storage and protein production systems, seeding
and tillage implements and replacement parts. AGCO products are sold
through five core machinery brands, Challenger®, Fendt®, GSI®, Massey
Ferguson® and Valtra® and are distributed globally through a combination
of approximately 3,100 independent dealers and distributors in more than
140 countries. Founded in 1990, AGCO is headquartered in Duluth, GA,
USA. In 2014, AGCO had net sales of $9.7 billion. For more information,
visit http://www.AGCOcorp.com.
For company news, information and events, please follow us on Twitter:
@AGCOCorp. For financial news on Twitter, please follow the hashtag
#AGCOIR.
AGCO: 25 years of identity, centuries of history
#####
Please visit our website at www.agcocorp.com
|
AGCO CORPORATION AND SUBSIDIARIES
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(unaudited and in millions)
|
|
|
|
|
|
June 30, 2015
|
|
December 31, 2014
|
ASSETS
|
|
|
|
Current Assets:
|
|
|
|
Cash and cash equivalents
|
$
|
|
|
|
|
498.2
|
|
|
$
|
363.7
|
|
Accounts and notes receivable, net
|
1,047.2
|
|
|
963.8
|
|
Inventories, net
|
1,816.3
|
|
|
1,750.7
|
|
Deferred tax assets
|
207.0
|
|
|
217.2
|
|
Other current assets
|
220.9
|
|
|
232.5
|
|
Total current assets
|
3,789.6
|
|
|
3,527.9
|
|
Property, plant and equipment, net
|
1,415.4
|
|
|
1,530.4
|
|
Investment in affiliates
|
421.5
|
|
|
424.1
|
|
Deferred tax assets
|
22.0
|
|
|
25.8
|
|
Other assets
|
136.4
|
|
|
141.1
|
|
Intangible assets, net
|
536.2
|
|
|
553.8
|
|
Goodwill
|
1,149.3
|
|
|
1,192.8
|
|
Total assets
|
$
|
|
|
|
|
7,470.4
|
|
|
$
|
7,395.9
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
Current Liabilities:
|
|
|
|
Current portion of long-term debt
|
$
|
|
|
|
|
77.5
|
|
|
$
|
94.3
|
|
Senior term loan
|
222.9
|
|
|
—
|
|
Accounts payable
|
765.6
|
|
|
670.2
|
|
Accrued expenses
|
1,144.0
|
|
|
1,244.1
|
|
Other current liabilities
|
163.3
|
|
|
208.3
|
|
Total current liabilities
|
2,373.3
|
|
|
2,216.9
|
|
Long-term debt, less current portion
|
1,215.5
|
|
|
997.6
|
|
Pensions and postretirement health care benefits
|
249.9
|
|
|
269.0
|
|
Deferred tax liabilities
|
234.5
|
|
|
238.8
|
|
Other noncurrent liabilities
|
183.4
|
|
|
176.7
|
|
Total liabilities
|
4,256.6
|
|
|
3,899.0
|
|
|
|
|
|
Stockholders’ Equity:
|
|
|
|
AGCO Corporation stockholders’ equity:
|
|
|
|
Common stock
|
0.9
|
|
|
0.9
|
|
Additional paid-in capital
|
458.7
|
|
|
582.5
|
|
Retained earnings
|
3,887.5
|
|
|
3,771.6
|
|
Accumulated other comprehensive loss
|
(1,181.9
|
)
|
|
(906.5
|
)
|
Total AGCO Corporation stockholders’ equity
|
3,165.2
|
|
|
3,448.5
|
|
Noncontrolling interests
|
48.6
|
|
|
48.4
|
|
Total stockholders’ equity
|
3,213.8
|
|
|
3,496.9
|
|
Total liabilities and stockholders’ equity
|
$
|
|
|
|
|
7,470.4
|
|
|
$
|
7,395.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to condensed consolidated financial
statements.
|
|
AGCO CORPORATION AND SUBSIDIARIES
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
(unaudited and in millions, except per share data)
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
|
2015
|
|
2014
|
Net sales
|
|
|
$
|
2,069.3
|
|
|
$
|
2,750.3
|
Cost of goods sold
|
|
|
1,619.7
|
|
|
2,118.8
|
Gross profit
|
|
|
449.6
|
|
|
631.5
|
Selling, general and administrative expenses
|
|
|
213.1
|
|
|
262.3
|
Engineering expenses
|
|
|
71.7
|
|
|
92.5
|
Restructuring and other infrequent expenses
|
|
|
4.0
|
|
|
—
|
Amortization of intangibles
|
|
|
10.9
|
|
|
10.0
|
Income from operations
|
|
|
149.9
|
|
|
266.7
|
Interest expense, net
|
|
|
11.3
|
|
|
15.7
|
Other expense, net
|
|
|
9.5
|
|
|
12.9
|
Income before income taxes and equity in net earnings of affiliates
|
|
|
129.1
|
|
|
238.1
|
Income tax provision
|
|
|
37.9
|
|
|
83.2
|
Income before equity in net earnings of affiliates
|
|
|
91.2
|
|
|
154.9
|
Equity in net earnings of affiliates
|
|
|
14.4
|
|
|
11.1
|
Net income
|
|
|
105.6
|
|
|
166.0
|
Net loss attributable to noncontrolling interests
|
|
|
1.5
|
|
|
2.2
|
Net income attributable to AGCO Corporation and subsidiaries
|
|
|
$
|
107.1
|
|
|
$
|
168.2
|
Net income per common share attributable to AGCO Corporation and
subsidiaries:
|
|
|
|
|
|
Basic
|
|
|
$
|
1.22
|
|
|
$
|
1.79
|
Diluted
|
|
|
$
|
1.22
|
|
|
$
|
1.77
|
Cash dividends declared and paid per common share
|
|
|
$
|
0.12
|
|
|
$
|
0.11
|
Weighted average number of common and common equivalent shares
outstanding:
|
|
|
|
|
|
Basic
|
|
|
87.6
|
|
93.9
|
Diluted
|
|
|
87.7
|
|
95.1
|
|
|
|
|
|
|
See accompanying notes to condensed consolidated financial
statements.
|
|
AGCO CORPORATION AND SUBSIDIARIES
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
(unaudited and in millions, except per share data)
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
2015
|
|
2014
|
Net sales
|
|
$
|
3,771.9
|
|
|
$
|
5,083.7
|
Cost of goods sold
|
|
2,974.4
|
|
|
3,937.3
|
Gross profit
|
|
797.5
|
|
|
1,146.4
|
Selling, general and administrative expenses
|
|
424.3
|
|
|
529.3
|
Engineering expenses
|
|
140.5
|
|
|
174.7
|
Restructuring and other infrequent expenses
|
|
14.6
|
|
|
—
|
Amortization of intangibles
|
|
21.4
|
|
|
20.0
|
Income from operations
|
|
196.7
|
|
|
422.4
|
Interest expense, net
|
|
21.5
|
|
|
29.6
|
Other expense, net
|
|
19.3
|
|
|
24.1
|
Income before income taxes and equity in net earnings of affiliates
|
|
155.9
|
|
|
368.7
|
Income tax provision
|
|
48.5
|
|
|
129.6
|
Income before equity in net earnings of affiliates
|
|
107.4
|
|
|
239.1
|
Equity in net earnings of affiliates
|
|
28.1
|
|
|
26.1
|
Net income
|
|
135.5
|
|
|
265.2
|
Net loss attributable to noncontrolling interests
|
|
1.7
|
|
|
2.6
|
Net income attributable to AGCO Corporation and subsidiaries
|
|
$
|
137.2
|
|
|
$
|
267.8
|
Net income per common share attributable to AGCO Corporation and
subsidiaries:
|
|
|
|
|
Basic
|
|
$
|
1.55
|
|
|
$
|
2.83
|
Diluted
|
|
$
|
1.55
|
|
|
$
|
2.79
|
Cash dividends declared and paid per common share
|
|
$
|
0.24
|
|
|
$
|
0.22
|
Weighted average number of common and common equivalent shares
outstanding:
|
|
|
|
|
Basic
|
|
88.2
|
|
|
94.6
|
Diluted
|
|
88.3
|
|
|
95.9
|
|
|
|
|
|
|
See accompanying notes to condensed consolidated financial
statements.
|
|
|
|
|
|
|
AGCO CORPORATION AND SUBSIDIARIES
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(unaudited and in millions)
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
2015
|
|
2014
|
|
|
|
|
|
Cash flows from operating activities:
|
|
|
|
|
Net income
|
|
$
|
135.5
|
|
|
$
|
265.2
|
|
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
|
|
|
|
|
Depreciation
|
|
108.2
|
|
|
119.3
|
|
Deferred debt issuance cost amortization
|
|
1.2
|
|
|
1.8
|
|
Amortization of intangibles
|
|
21.4
|
|
|
20.0
|
|
Stock compensation expense
|
|
7.1
|
|
|
11.8
|
|
Equity in net earnings of affiliates, net of cash received
|
|
(22.9
|
)
|
|
(19.6
|
)
|
Deferred income tax provision
|
|
(3.0
|
)
|
|
8.6
|
|
Other
|
|
(0.2
|
)
|
|
2.1
|
|
Changes in operating assets and liabilities, net of effects from
purchase of
businesses:
|
|
|
|
|
Accounts and notes receivable, net
|
|
(147.4
|
)
|
|
(271.4
|
)
|
Inventories, net
|
|
(170.9
|
)
|
|
(418.1
|
)
|
Other current and noncurrent assets
|
|
(33.1
|
)
|
|
(37.2
|
)
|
Accounts payable
|
|
149.5
|
|
|
12.6
|
|
Accrued expenses
|
|
(17.4
|
)
|
|
8.6
|
|
Other current and noncurrent liabilities
|
|
—
|
|
|
42.1
|
|
Total adjustments
|
|
(107.5
|
)
|
|
(519.4
|
)
|
Net cash provided by (used in) operating activities
|
|
28.0
|
|
|
(254.2
|
)
|
Cash flows from investing activities:
|
|
|
|
|
Purchases of property, plant and equipment
|
|
(101.3
|
)
|
|
(155.5
|
)
|
Proceeds from sale of property, plant and equipment
|
|
0.8
|
|
|
1.5
|
|
Purchase of businesses, net of cash acquired
|
|
(18.6
|
)
|
|
(0.1
|
)
|
Investment in unconsolidated affiliates
|
|
(5.2
|
)
|
|
—
|
|
Net cash used in investing activities
|
|
(124.3
|
)
|
|
(154.1
|
)
|
Cash flows from financing activities:
|
|
|
|
|
Proceeds from debt obligations, net
|
|
432.9
|
|
|
51.9
|
|
Purchases and retirement of common stock
|
|
(125.0
|
)
|
|
(290.0
|
)
|
Payment of dividends to stockholders
|
|
(21.3
|
)
|
|
(20.6
|
)
|
Payment of minimum tax withholdings on stock compensation
|
|
(6.0
|
)
|
|
(11.9
|
)
|
Payment of debt issuance costs
|
|
(0.7
|
)
|
|
(1.3
|
)
|
Conversion of convertible senior subordinated notes
|
|
—
|
|
|
(49.7
|
)
|
Distribution to noncontrolling interests, net
|
|
—
|
|
|
(2.0
|
)
|
Net cash provided by (used in) financing activities
|
|
279.9
|
|
|
(323.6
|
)
|
Effects of exchange rate changes on cash and cash equivalents
|
|
(49.1
|
)
|
|
8.0
|
|
Increase (decrease) in cash and cash equivalents
|
|
134.5
|
|
|
(723.9
|
)
|
Cash and cash equivalents, beginning of period
|
|
363.7
|
|
|
1,047.2
|
|
Cash and cash equivalents, end of period
|
|
$
|
498.2
|
|
|
$
|
323.3
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to condensed consolidated financial
statements.
|
|
|
|
|
|
|
|
|
|
AGCO CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, in millions, except share amounts, per share data and
employees)
1. STOCK COMPENSATION EXPENSE
The Company recorded stock compensation expense as follows:
|
|
|
Three Months Ended June 30,
|
|
|
|
Six Months Ended June 30,
|
|
|
|
2015
|
|
2014
|
|
|
|
2015
|
|
2014
|
Cost of goods sold
|
|
|
$
|
0.3
|
|
|
$
|
0.3
|
|
|
|
|
$
|
0.5
|
|
|
$
|
0.8
|
Selling, general and administrative expenses
|
|
|
4.7
|
|
|
5.3
|
|
|
|
|
6.9
|
|
|
11.2
|
Total stock compensation expense
|
|
|
$
|
5.0
|
|
|
$
|
5.6
|
|
|
|
|
$
|
7.4
|
|
|
$
|
12.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2. RESTRUCTURING AND OTHER INFREQUENT EXPENSES
During the second half of 2014 and the first half of 2015, the Company
announced and initiated several actions to rationalize employee
headcount at various manufacturing facilities located in Europe, China,
Brazil, Argentina and the United States, as well as various
administrative offices located in Europe, Brazil, China and the United
States. The aggregate headcount reduction of approximately 1,950
employees in 2014 and 2015 was initiated in order to reduce costs in
response to softening global market demand and reduced production
volumes. The Company recorded restructuring and other infrequent
expenses of approximately $46.4 million and $14.6 million, respectively,
during 2014 and 2015 associated with these rationalizations, primarily
related to severance and other related costs. Approximately $19.0
million of severance and other related costs were paid during 2014. In
addition, during the six months ended June 30, 2015, the Company paid
approximately $19.3 million of severance and other related costs. The
remaining $19.7 million balance of severance and other related costs
accrued as of June 30, 2015, inclusive of approximately $1.0 million of
negative foreign currency translation impacts, will primarily be paid
during 2015 and 2016.
3. INDEBTEDNESS
Indebtedness at June 30, 2015 and December 31, 2014 consisted of the
following:
|
|
|
June 30, 2015
|
|
|
|
December 31, 2014
|
4½% Senior term loan due 2016
|
|
|
$
|
222.9
|
|
|
|
|
$
|
242.0
|
|
Credit facility, expires 2020
|
|
|
620.0
|
|
|
|
|
404.4
|
|
1.056% Senior term loan due 2020
|
|
|
222.9
|
|
|
|
|
—
|
|
5⅞% Senior notes due 2021
|
|
|
300.0
|
|
|
|
|
300.0
|
|
Other long-term debt
|
|
|
150.1
|
|
|
|
|
145.5
|
|
|
|
|
1,515.9
|
|
|
|
|
1,091.9
|
|
Less: Current portion of long-term debt
|
|
|
(77.5
|
)
|
|
|
|
(94.3
|
)
|
4½% Senior term loan due 2016
|
|
|
(222.9
|
)
|
|
|
|
—
|
|
Total indebtedness, less current portion
|
|
|
$
|
1,215.5
|
|
|
|
|
$
|
997.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4. INVENTORIES
Inventories at June 30, 2015 and December 31, 2014 were as follows:
|
|
|
June 30, 2015
|
|
|
|
December 31, 2014
|
Finished goods
|
|
|
$
|
705.8
|
|
|
|
|
$
|
616.6
|
Repair and replacement parts
|
|
|
563.5
|
|
|
|
|
536.4
|
Work in process
|
|
|
135.9
|
|
|
|
|
130.5
|
Raw materials
|
|
|
411.1
|
|
|
|
|
467.2
|
Inventories, net
|
|
|
$
|
1,816.3
|
|
|
|
|
$
|
1,750.7
|
|
|
|
|
|
|
|
|
|
|
|
5. ACCOUNTS RECEIVABLE SALES AGREEMENTS
At June 30, 2015 and December 31, 2014, the Company had accounts
receivable sales agreements that permit the sale, on an ongoing basis,
of a majority of its wholesale receivables in North America and Europe
to its 49% owned U.S., Canadian and European finance joint ventures. As
of both June 30, 2015 and December 31, 2014, the cash received from
receivables sold under the U.S., Canadian and European accounts
receivable sales agreements was approximately $1.2 billion.
Losses on sales of receivables associated with the accounts receivable
financing facilities discussed above, reflected within “Other expense,
net” in the Company’s Condensed Consolidated Statements of Operations,
were approximately $4.4 million and $9.4 million during the three and
six months ended June 30, 2015, respectively. Losses on sales of
receivables associated with the accounts receivable financing facilities
discussed above, reflected within “Other expense, net” in the Company’s
Condensed Consolidated Statements of Operations, were approximately $6.7
million and $14.2 million during the three and six months ended June 30,
2014, respectively.
The Company’s finance joint ventures in Brazil and Australia also
provide wholesale financing to the Company’s dealers. As of June 30,
2015 and December 31, 2014, these finance joint ventures had
approximately $30.8 million and $43.3 million, respectively, of
outstanding accounts receivable associated with these arrangements. In
addition, the Company sells certain trade receivables under factoring
arrangements to other financial institutions around the world.
6. NET INCOME PER SHARE
A reconciliation of net income attributable to AGCO Corporation and
subsidiaries and weighted average common shares outstanding for purposes
of calculating basic and diluted net income per share for the three and
six months ended June 30, 2015 and 2014 is as follows:
|
|
|
Three Months Ended June 30,
|
|
|
|
Six Months Ended June 30,
|
|
|
|
2015
|
|
2014
|
|
|
|
2015
|
|
2014
|
Basic net income per share:
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to AGCO Corporation and subsidiaries
|
|
|
$
|
107.1
|
|
|
$
|
168.2
|
|
|
|
|
$
|
137.2
|
|
|
$
|
267.8
|
Weighted average number of common shares outstanding
|
|
|
87.6
|
|
|
93.9
|
|
|
|
|
88.2
|
|
|
94.6
|
Basic net income per share attributable to AGCO Corporation and
subsidiaries
|
|
|
$
|
1.22
|
|
|
$
|
1.79
|
|
|
|
|
$
|
1.55
|
|
|
$
|
2.83
|
Diluted net income per share:
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to AGCO Corporation and subsidiaries
|
|
|
$
|
107.1
|
|
|
$
|
168.2
|
|
|
|
|
$
|
137.2
|
|
|
$
|
267.8
|
Weighted average number of common shares outstanding
|
|
|
87.6
|
|
|
93.9
|
|
|
|
|
88.2
|
|
|
94.6
|
Dilutive stock-settled appreciation rights, performance share awards
and restricted stock units
|
|
|
0.1
|
|
|
0.2
|
|
|
|
|
0.1
|
|
|
0.3
|
Weighted average assumed conversion of contingently convertible
senior subordinated notes
|
|
|
—
|
|
|
1.0
|
|
|
|
|
—
|
|
|
1.0
|
Weighted average number of common shares and common share
equivalents outstanding for purposes of computing diluted net income
per share
|
|
|
87.7
|
|
|
95.1
|
|
|
|
|
88.3
|
|
|
95.9
|
Diluted net income per share attributable to AGCO Corporation and
subsidiaries
|
|
|
$
|
1.22
|
|
|
$
|
1.77
|
|
|
|
|
$
|
1.55
|
|
|
$
|
2.79
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share Repurchase Program
During the six months ended June 30, 2015, the Company entered into
accelerated repurchase agreements (“ASRs”) with a financial institution
to repurchase an aggregate of $125.0 million of shares of the Company’s
common stock. The Company received approximately 2,202,166 shares during
the six months ended June 30, 2015 related to the ASRs. All shares
received under the ASRs were retired upon receipt, and the excess of the
purchase price over par value per share was recorded to “Additional
paid-in capital” within the Company’s Condensed Consolidated Balance
Sheets.
Of the $1,050.0 million in approved share repurchase programs, the
remaining amount authorized to be repurchased is approximately $406.7
million.
7. SEGMENT REPORTING
The Company’s four reportable segments distribute a full range of
agricultural equipment and related replacement parts. The Company
evaluates segment performance primarily based on income from operations.
Sales for each segment are based on the location of the third-party
customer. The Company’s selling, general and administrative expenses and
engineering expenses are charged to each segment based on the region and
division where the expenses are incurred. As a result, the components of
income from operations for one segment may not be comparable to another
segment. Segment results for the three and six months ended June 30,
2015 and 2014 are as follows:
Three Months Ended June 30,
|
|
North
America
|
|
South
America
|
|
Europe/Africa/
Middle East
|
|
Asia/
Pacific
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
|
|
|
563.1
|
|
|
$
|
|
|
|
280.3
|
|
|
$
|
1,137.0
|
|
|
$
|
|
|
|
88.9
|
|
|
$
|
2,069.3
|
Income (loss) from operations
|
|
58.0
|
|
|
15.2
|
|
|
134.6
|
|
|
(10.9
|
)
|
|
196.9
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
|
|
|
686.2
|
|
|
$
|
|
|
|
440.2
|
|
|
$
|
1,521.9
|
|
|
$
|
|
|
|
102.0
|
|
|
$
|
2,750.3
|
Income (loss) from operations
|
|
95.5
|
|
|
29.9
|
|
|
188.1
|
|
|
(3.3
|
)
|
|
310.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
North
America
|
|
South
America
|
|
Europe/Africa/
Middle East
|
|
Asia/
Pacific
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
|
|
|
1,035.6
|
|
|
$
|
|
|
|
529.3
|
|
|
$
|
2,045.1
|
|
|
$
|
|
|
|
161.9
|
|
|
$
|
3,771.9
|
Income (loss) from operations
|
|
75.5
|
|
|
28.3
|
|
|
215.1
|
|
|
(22.9
|
)
|
|
296.0
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
|
|
|
1,333.7
|
|
|
$
|
|
|
|
793.8
|
|
|
$
|
2,757.8
|
|
|
$
|
|
|
|
198.4
|
|
|
$
|
5,083.7
|
Income (loss) from operations
|
|
151.0
|
|
|
57.8
|
|
|
309.0
|
|
|
(4.6
|
)
|
|
513.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A reconciliation from the segment information to the consolidated
balances for income from operations is set forth below:
|
Three Months Ended June 30,
|
|
|
|
Six Months Ended June 30,
|
|
2015
|
|
2014
|
|
|
|
2015
|
|
2014
|
Segment income from operations
|
$
|
196.9
|
|
|
$
|
310.2
|
|
|
|
|
$
|
296.0
|
|
|
$
|
513.2
|
|
Corporate expenses
|
(27.4
|
)
|
|
(28.2
|
)
|
|
|
|
(56.4
|
)
|
|
(59.6
|
)
|
Stock compensation expense
|
(4.7
|
)
|
|
(5.3
|
)
|
|
|
|
(6.9
|
)
|
|
(11.2
|
)
|
Restructuring and other infrequent expenses
|
(4.0
|
)
|
|
—
|
|
|
|
|
(14.6
|
)
|
|
—
|
|
Amortization of intangibles
|
(10.9
|
)
|
|
(10.0
|
)
|
|
|
|
(21.4
|
)
|
|
(20.0
|
)
|
Consolidated income from operations
|
$
|
149.9
|
|
|
$
|
266.7
|
|
|
|
|
$
|
196.7
|
|
|
$
|
422.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF NON-GAAP MEASURES
This earnings release discloses adjusted income from operations, net
income and earnings per share, all of which exclude amounts that differ
from the most directly comparable measure calculated in accordance with
U.S. generally accepted accounting principles (“GAAP”). A reconciliation
of each of those measures to the most directly comparable GAAP measure
is included below.
The following is a reconciliation of adjusted income from operations,
net income and earnings per share to reported income from operations,
net income and earnings per share for the three months ended June 30,
2015 and 2014 (in millions, except per share data):
|
|
|
Three Months Ended June 30,
|
|
|
|
2015
|
|
|
|
2014
|
|
|
|
Income From Operations
|
|
|
Net Income (1)
|
|
|
Earnings Per Share (1)
|
|
|
|
Income From Operations
|
|
|
Net Income (1)
|
|
|
Earnings Per Share (1)
|
As adjusted
|
|
|
$
|
153.9
|
|
|
|
$
|
110.0
|
|
|
|
$
|
1.25
|
|
|
|
|
$
|
266.7
|
|
|
|
$
|
168.2
|
|
|
|
$
|
1.77
|
Restructuring and other infrequent expenses (2)
|
|
|
4.0
|
|
|
|
2.9
|
|
|
|
0.03
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
As reported
|
|
|
$
|
149.9
|
|
|
|
$
|
107.1
|
|
|
|
$
|
1.22
|
|
|
|
|
$
|
266.7
|
|
|
|
$
|
168.2
|
|
|
|
$
|
1.77
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Net income and earnings per share amounts are after tax.
(2)The restructuring and other infrequent expenses recorded during the
three months ended June 30, 2015 relate primarily to severance costs
associated with the Company’s rationalization of certain European and
South American manufacturing operations.
The following is a reconciliation of adjusted income from operations,
net income and earnings per share to reported income from operations,
net income and earnings per share for the six months ended June 30, 2015
and 2014 (in millions, except per share data):
|
|
|
Six Months Ended June 30,
|
|
|
|
2015
|
|
|
|
2014
|
|
|
|
Income From Operations
|
|
|
Net Income (1)
|
|
|
Earnings Per Share (1)
|
|
|
|
Income From Operations
|
|
|
Net Income (1)
|
|
|
Earnings Per Share (1)
|
As adjusted
|
|
|
$
|
211.3
|
|
|
|
$
|
147.9
|
|
|
|
$
|
1.67
|
|
|
|
|
$
|
422.4
|
|
|
|
$
|
267.8
|
|
|
|
$
|
2.79
|
Restructuring and other infrequent expenses (2) |
|
|
14.6
|
|
|
|
10.7
|
|
|
|
0.12
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
As reported
|
|
|
$
|
196.7
|
|
|
|
$
|
137.2
|
|
|
|
$
|
1.55
|
|
|
|
|
$
|
422.4
|
|
|
|
$
|
267.8
|
|
|
|
$
|
2.79
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Net income and earnings per share amounts are after tax.
(2)The restructuring and other infrequent expenses recorded during the
six months ended June 30, 2015 relate primarily to severance costs
associated with the Company’s rationalization of certain European and
South American manufacturing operations as well as various
administrative offices located in Europe and the United States.
The following is a reconciliation of adjusted targeted earnings per
share to targeted earnings per share for the year ended December 31,
2015:
|
|
|
Earnings Per Share (1) |
As adjusted targeted
|
|
|
$
|
3.10
|
Restructuring and other infrequent expenses
|
|
|
0.12
|
As targeted
|
|
|
$
|
2.98
|
(1) Earnings per share amount is after tax.
This earnings release discloses the percentage change in regional net
sales due to the impact of currency translation. The following table
sets forth, for the three and six months ended June 30, 2015, the impact
to net sales of currency translation by geographical segment (in
millions, except percentages):
|
|
|
Three Months Ended June 30,
|
|
|
|
|
Change due to currency translation
|
|
|
|
2015
|
|
|
2014
|
|
|
% change from 2014
|
|
|
$
|
|
|
%
|
North America
|
|
|
$
|
563.1
|
|
|
|
$
|
686.2
|
|
|
|
(17.9
|
)%
|
|
|
$
|
(14.4
|
)
|
|
|
(2.1
|
)%
|
South America
|
|
|
280.3
|
|
|
|
440.2
|
|
|
|
(36.3
|
)%
|
|
|
(97.5
|
)
|
|
|
(22.1
|
)%
|
Europe/Africa/Middle East
|
|
|
1,137.0
|
|
|
|
1,521.9
|
|
|
|
(25.3
|
)%
|
|
|
(256.0
|
)
|
|
|
(16.8
|
)%
|
Asia/Pacific
|
|
|
88.9
|
|
|
|
102.0
|
|
|
|
(12.8
|
)%
|
|
|
(12.6
|
)
|
|
|
(12.4
|
)%
|
|
|
|
$
|
2,069.3
|
|
|
|
$
|
2,750.3
|
|
|
|
(24.8
|
)%
|
|
|
$
|
(380.5
|
)
|
|
|
(13.8
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
|
|
Change due to currency translation
|
|
|
|
2015
|
|
|
2014
|
|
|
% change from 2014
|
|
|
$
|
|
|
%
|
North America
|
|
|
$
|
1,035.6
|
|
|
|
$
|
1,333.7
|
|
|
|
(22.4
|
)%
|
|
|
$
|
(25.4
|
)
|
|
|
(1.9
|
)%
|
South America
|
|
|
529.3
|
|
|
|
793.8
|
|
|
|
(33.3
|
)%
|
|
|
(151.2
|
)
|
|
|
(19.0
|
)%
|
Europe/Africa/Middle East
|
|
|
2,045.1
|
|
|
|
2,757.8
|
|
|
|
(25.8
|
)%
|
|
|
(454.9
|
)
|
|
|
(16.5
|
)%
|
Asia/Pacific
|
|
|
161.9
|
|
|
|
198.4
|
|
|
|
(18.4
|
)%
|
|
|
(21.8
|
)
|
|
|
(11.0
|
)%
|
|
|
|
$
|
3,771.9
|
|
|
|
$
|
5,083.7
|
|
|
|
(25.8
|
)%
|
|
|
$
|
(653.3
|
)
|
|
|
(12.9
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
This earnings release discloses the reduction in inventory on a constant
currency basis, excluding the impact of currency translation, between
June 30, 2015 and 2014. The following is a reconciliation of the impact
of currency translation on the change in inventory balances (in
millions):
|
|
|
June 30, 2015
|
|
|
June 30, 2014
|
|
|
Change from 2014
|
|
|
Change due to currency translation
|
|
|
Change excluding currency translation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventories, net
|
|
|
$
|
1,816.3
|
|
|
|
$
|
2,437.9
|
|
|
|
$
|
(621.6
|
)
|
|
|
$
|
(375.0
|
)
|
|
|
$
|
(246.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
This earnings release discloses the reduction in operating expenses on a
constant currency basis, excluding the impact of currency translation,
for the three months ended June 30, 2015 as compared to the three months
ended June 30, 2014. The following table sets forth, for the three
months ended June 30, 2015 the reduction in operating expenses,
excluding the impact of currency translation (in millions, except
percentages):
|
|
|
Three Months Ended June 30,
|
|
|
|
|
Change due to currency translation
|
|
|
|
2015
|
|
|
2014
|
|
|
% change from 2014
|
|
|
$
|
|
|
%
|
Selling, general and administrative expenses
|
|
|
$
|
213.1
|
|
|
|
$
|
262.3
|
|
|
|
|
|
|
|
|
|
|
Engineering expenses
|
|
|
71.7
|
|
|
|
92.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
284.8
|
|
|
|
$
|
354.8
|
|
|
|
(19.7
|
)%
|
|
|
$
|
(44.1
|
)
|
|
|
(12.4
|
)%
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20150728005495/en/
Source: AGCO
AGCO
Greg Peterson, 770-232-8229
Director of Investor Relations
greg.peterson@agcocorp.com