DULUTH, Ga.--(BUSINESS WIRE)--Apr. 28, 2017--
AGCO, Your Agriculture Company (NYSE:AGCO), a worldwide manufacturer and
distributor of agricultural equipment, reported net sales of
approximately $1.6 billion for the first quarter of 2017, an increase of
approximately 4.4% compared to the first quarter of 2016. Reported net
loss was $0.13 per share for the first quarter of 2017, and adjusted net
loss, which excludes restructuring expenses and a non-cash expense
related to waived stock compensation, was $0.02 per share. These results
compare to reported net income of $0.09 per share and adjusted net
income, excluding restructuring expenses, of $0.11 per share for the
first quarter of 2016. Excluding unfavorable currency translation
impacts of approximately 0.9%, net sales in the first quarter of 2017
increased approximately 5.2% compared to the first quarter of 2016.
First Quarter Highlights
-
Reported regional sales results(1): North America
(6.3)%, Europe/Middle East (“EME”) (0.7)%, South America +54.1%,
Asia/Pacific/Africa (“APA”) +21.1%
-
Constant currency regional sales results(1)(2):
North America (5.7)%, EME +4.0%, South America +31.1%, APA +22.1%
-
Regional operating margin performance: North America 0.7%, EME 7.3%,
South America 1.0%, APA 1.6%
-
Full-year targeted net sales and net income per share increased
-
Quarterly dividend increased approximately 8% to $0.14, effective
first quarter of 2017
(1)As compared to first quarter 2016
(2)Excludes currency translation impact. See
reconciliation in appendix.
“In the first quarter, AGCO executed well against its business plan,”
stated Martin Richenhagen, AGCO’s Chairman, President and Chief
Executive Officer. “Our results reflect the weak but stabilizing global
demand for agricultural equipment. Despite softer market conditions in
both Europe and North America, we managed sales growth and higher
adjusted operating income in the quarter. While our focus on cost
management to mitigate market pressures continues, we are maintaining a
strong level of investment in new products and technologies, as
demonstrated by an increase in engineering expense planned for 2017
compared to 2016. We are continuing to refresh our full line of
equipment with a focus on high horsepower products for the growing
professional farming sector as well as new products that will expand our
current product offering. Our new products are being very well received
in the market as evidenced by a number of awards received in February at
the SIMA Farm Show in Paris, including the Machine of the Year Award for
our Massey Ferguson 6718 S. At 200 horsepower, the 6718 S is the most
powerful four cylinder tractor on the market.”
Market Update
|
|
|
|
|
|
|
Industry Unit Retail Sales
|
|
|
|
|
|
|
|
|
|
Tractors
|
|
|
Combines
|
|
|
|
Change from
|
|
|
Change from
|
Three months ended March 31, 2017
|
|
|
Prior Year Period
|
|
|
Prior Year Period
|
|
|
|
|
|
|
|
North America(1) |
|
|
(5)%
|
|
|
(2)%
|
South America
|
|
|
49%
|
|
|
35%
|
Western Europe
|
|
|
(3)%
|
|
|
(15)%
|
|
|
|
|
|
|
|
(1)Excludes compact tractors.
|
|
|
|
|
|
|
|
“Four consecutive years of near record harvests are satisfying the
growing global demand for grain,” continued Mr. Richenhagen. “Higher
grain inventories are pressuring commodity prices, and estimates call
for 2017 farm income below 2016 levels. Industry demand remains near
trough levels but is showing some signs of stabilization. In the first
quarter, North America industry sales were down due to continued
weakness in sales in the row crop sector. Industry sales of
high-horsepower tractors, combines, sprayers and grain storage and
handling equipment remained well below last year’s levels. Industry
retail sales in Western Europe were down modestly in the first three
months of 2017 and are being impacted by weak demand from dairy
producers and marginal economics for the arable farming segment. Sales
declined most significantly in France from high levels in the first
quarter of 2016, which were stimulated by tax benefits. Growth in the
United Kingdom and Germany offset most of the decline in the French
market. Industry retail sales in South America during the first three
months of 2017 grew strongly from depressed levels last year. A more
stable political environment in Brazil is contributing to equipment
replacement in that market, and more supportive government policies in
Argentina continue to stimulate industry sales. Our long-term view
remains very optimistic for demand in the agricultural equipment
industry. We expect elevated grain demand driven by population growth
and increased protein consumption to result in favorable income levels
for farmers.”
Regional Results
|
|
|
|
|
|
|
|
|
|
|
|
|
AGCO Regional Net Sales (in millions)
|
|
Three Months Ended March 31,
|
|
|
2017
|
|
|
2016
|
|
|
% change from 2016
|
|
|
% change from 2016 due to currency translation(1)
|
North America
|
|
|
$
|
382.6
|
|
|
|
$
|
408.4
|
|
|
|
(6.3)%
|
|
|
(0.6
|
)%
|
South America
|
|
|
222.2
|
|
|
|
144.2
|
|
|
|
54.1%
|
|
|
23.0
|
%
|
Europe/Middle East (2) |
|
|
892.5
|
|
|
|
899.1
|
|
|
|
(0.7)%
|
|
|
(4.8
|
)%
|
Asia/Pacific/Africa (2) |
|
|
130.3
|
|
|
|
107.6
|
|
|
|
21.1%
|
|
|
(1.0
|
)%
|
Total
|
|
|
$
|
1,627.6
|
|
|
|
$
|
1,559.3
|
|
|
|
4.4%
|
|
|
|
(1) See appendix for additional disclosures
|
(2) Effective January 1, 2017, AGCO
realigned its regional structure as reflected in the table above.
A schedule showing restated segment results for 2016 is available
on AGCO’s website at www.agcocorp.com
on the “Company/Investors” page.
|
|
North America
AGCO’s North America net sales decreased 5.7% in the first three months
of 2017 compared to the same period of 2016, excluding the negative
impact of currency translation. Dealer inventory reduction efforts and
softer industry demand contributed to lower sales. Sales declines were
most significant in hay tools, grain storage equipment and sprayers and
were partially offset by increased sales of tractors. Income from
operations for the first three months of 2017 improved approximately
$3.2 million compared to the same period in 2016. The benefit of
improved factory productivity and expense reduction efforts were mostly
offset by lower sales and production volumes.
South America
Net sales in the South American region increased 31.1% in the first
three months of 2017 compared to the first three months of 2016,
excluding the impact of favorable currency translation. Significant
sales increases in Brazil and Argentina produced most of the growth.
Income from operations improved approximately $1.8 million for the first
three months of 2017 compared to the same period in 2016, as the benefit
of higher sales and production volumes, and positive impact of currency
translation was mostly offset by material inflation and the costs
associated with transitioning to the new tier 3 emission standards.
Europe/Middle East
AGCO’s EME net sales increased 4.0% in the first three months of 2017
compared to the same period in 2016, excluding unfavorable currency
translation impacts, primarily due to the benefit of acquisitions.
Higher sales in Germany and the United Kingdom were partially offset by
sales declines in France. Income from operations decreased approximately
$2.8 million for the first three months of 2017, compared to the same
period in 2016, due to higher engineering expenses and the negative
impact of currency translation, partially offset by the benefit of
higher sales.
Asia/Pacific/Africa
Net sales in AGCO’s Asia/Pacific/Africa region, excluding the negative
impact of currency translation, increased 22.1% in the first three
months of 2017 compared to the same period in 2016 due primarily to
increased sales in Australia and China. Income from operations improved
approximately $2.8 million in the first three months of 2017, compared
to the same period in 2016, due to higher sales levels.
Outlook
Weak global demand for farm equipment is expected to continue to
negatively impact AGCO’s sales and earnings in 2017. AGCO’s net sales
for 2017 are expected to reach $7.7 billion. Gross and operating margins
are expected to be improved from 2016 levels due to higher sales along
with the benefits from the Company’s cost reduction initiatives. Based
on these assumptions, 2017 earnings per share are targeted at
approximately $2.70 excluding restructuring expenses and the non-cash
expense related to waived stock compensation.
* * * * *
AGCO will be hosting a conference call with respect to this earnings
announcement at 10:00 a.m. Eastern Time on Friday, April 28, 2017. 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, commodity
prices, currency translation, farm income levels, margin levels,
investments in product and technology development, new product
introductions, restructuring and other 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, can be 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 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, 2016. 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 solutions and supports more productive
farming through its full line of equipment and related services. AGCO
products are sold through five core brands, Challenger®, Fendt®, GSI®,
Massey Ferguson® and Valtra®, supported by Fuse® precision technologies
and farm optimization services, and are distributed globally through a
combination of over 3,000 independent dealers and distributors in more
than 150 countries. Founded in 1990, AGCO is headquartered in Duluth,
GA, USA. In 2016, AGCO had net sales of $7.4 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.
Please visit our website at www.agcocorp.com
|
|
|
|
|
|
|
AGCO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited and in millions)
|
|
|
|
|
|
|
|
|
|
|
March 31, 2017
|
|
|
December 31, 2016
|
ASSETS
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
289.9
|
|
|
|
$
|
429.7
|
|
Accounts and notes receivable, net
|
|
|
923.0
|
|
|
|
890.4
|
|
Inventories, net
|
|
|
1,775.4
|
|
|
|
1,514.8
|
|
Other current assets
|
|
|
371.2
|
|
|
|
330.8
|
|
Total current assets
|
|
|
3,359.5
|
|
|
|
3,165.7
|
|
Property, plant and equipment, net
|
|
|
1,369.6
|
|
|
|
1,361.3
|
|
Investment in affiliates
|
|
|
429.7
|
|
|
|
414.9
|
|
Deferred tax assets
|
|
|
101.7
|
|
|
|
99.7
|
|
Other assets
|
|
|
149.3
|
|
|
|
143.1
|
|
Intangible assets, net
|
|
|
596.8
|
|
|
|
607.3
|
|
Goodwill
|
|
|
1,388.0
|
|
|
|
1,376.4
|
|
Total assets
|
|
|
$
|
7,394.6
|
|
|
|
$
|
7,168.4
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
Current portion of long-term debt
|
|
|
$
|
108.8
|
|
|
|
$
|
85.4
|
|
Accounts payable
|
|
|
783.6
|
|
|
|
722.6
|
|
Accrued expenses
|
|
|
1,090.0
|
|
|
|
1,160.8
|
|
Other current liabilities
|
|
|
182.8
|
|
|
|
176.1
|
|
Total current liabilities
|
|
|
2,165.2
|
|
|
|
2,144.9
|
|
Long-term debt, less current portion and debt issuance costs
|
|
|
1,780.5
|
|
|
|
1,610.0
|
|
Pensions and postretirement health care benefits
|
|
|
266.3
|
|
|
|
270.0
|
|
Deferred tax liabilities
|
|
|
113.1
|
|
|
|
112.4
|
|
Other noncurrent liabilities
|
|
|
193.5
|
|
|
|
193.9
|
|
Total liabilities
|
|
|
4,518.6
|
|
|
|
4,331.2
|
|
|
|
|
|
|
|
|
Stockholders’ Equity:
|
|
|
|
|
|
|
AGCO Corporation stockholders’ equity:
|
|
|
|
|
|
|
Common stock
|
|
|
0.8
|
|
|
|
0.8
|
|
Additional paid-in capital
|
|
|
114.0
|
|
|
|
103.3
|
|
Retained earnings
|
|
|
4,090.7
|
|
|
|
4,113.6
|
|
Accumulated other comprehensive loss
|
|
|
(1,394.3
|
)
|
|
|
(1,441.6
|
)
|
Total AGCO Corporation stockholders’ equity
|
|
|
2,811.2
|
|
|
|
2,776.1
|
|
Noncontrolling interests
|
|
|
64.8
|
|
|
|
61.1
|
|
Total stockholders’ equity
|
|
|
2,876.0
|
|
|
|
2,837.2
|
|
Total liabilities and stockholders’ equity
|
|
|
$
|
7,394.6
|
|
|
|
$
|
7,168.4
|
|
|
|
|
|
|
|
|
|
|
|
|
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 March 31,
|
|
|
|
2017
|
|
|
2016
|
Net sales
|
|
|
$
|
1,627.6
|
|
|
|
$
|
1,559.3
|
|
Cost of goods sold
|
|
|
1,297.3
|
|
|
|
1,244.6
|
|
Gross profit
|
|
|
330.3
|
|
|
|
314.7
|
|
Selling, general and administrative expenses
|
|
|
223.2
|
|
|
|
211.2
|
|
Engineering expenses
|
|
|
73.0
|
|
|
|
71.2
|
|
Restructuring expenses
|
|
|
5.1
|
|
|
|
1.9
|
|
Amortization of intangibles
|
|
|
13.4
|
|
|
|
11.0
|
|
Income from operations
|
|
|
15.6
|
|
|
|
19.4
|
|
Interest expense, net
|
|
|
10.7
|
|
|
|
10.5
|
|
Other expense, net
|
|
|
13.0
|
|
|
|
11.3
|
|
Loss before income taxes and equity in net earnings of affiliates
|
|
|
(8.1
|
)
|
|
|
(2.4
|
)
|
Income tax provision (benefit)
|
|
|
11.1
|
|
|
|
(0.4
|
)
|
Loss before equity in net earnings of affiliates
|
|
|
(19.2
|
)
|
|
|
(2.0
|
)
|
Equity in net earnings of affiliates
|
|
|
11.0
|
|
|
|
12.2
|
|
Net (loss) income
|
|
|
(8.2
|
)
|
|
|
10.2
|
|
Net income attributable to noncontrolling interests
|
|
|
(1.9
|
)
|
|
|
(2.4
|
)
|
Net (loss) income attributable to AGCO Corporation and subsidiaries
|
|
|
$
|
(10.1
|
)
|
|
|
$
|
7.8
|
|
Net (loss) income per common share attributable to AGCO Corporation
and subsidiaries:
|
|
|
|
|
|
|
Basic
|
|
|
$
|
(0.13
|
)
|
|
|
$
|
0.09
|
|
Diluted
|
|
|
$
|
(0.13
|
)
|
|
|
$
|
0.09
|
|
Cash dividends declared and paid per common share
|
|
|
$
|
0.14
|
|
|
|
$
|
0.13
|
|
Weighted average number of common and common equivalent shares
outstanding:
|
|
|
|
|
|
|
Basic
|
|
|
79.5
|
|
|
83.0
|
Diluted
|
|
|
79.5
|
|
|
83.1
|
|
|
|
|
|
|
|
See accompanying notes to condensed consolidated financial
statements.
|
|
|
|
|
|
|
|
|
|
|
|
AGCO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited and in millions)
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
Net (loss) income
|
|
|
$
|
(8.2
|
)
|
|
|
$
|
10.2
|
|
Adjustments to reconcile net (loss) income to net cash used in
operating activities:
|
|
|
|
|
|
|
Depreciation
|
|
|
54.3
|
|
|
|
55.5
|
|
Deferred debt issuance cost amortization
|
|
|
0.2
|
|
|
|
0.4
|
|
Amortization of intangibles
|
|
|
13.4
|
|
|
|
11.0
|
|
Stock compensation expense
|
|
|
12.0
|
|
|
|
5.5
|
|
Equity in net earnings of affiliates, net of cash received
|
|
|
(6.3
|
)
|
|
|
(8.3
|
)
|
Deferred income tax benefit
|
|
|
(1.5
|
)
|
|
|
(8.7
|
)
|
Other
|
|
|
(0.2
|
)
|
|
|
(0.1
|
)
|
Changes in operating assets and liabilities, net of effects from
purchase of businesses:
|
|
|
|
|
|
|
Accounts and notes receivable, net
|
|
|
(17.2
|
)
|
|
|
(57.2
|
)
|
Inventories, net
|
|
|
(234.4
|
)
|
|
|
(214.9
|
)
|
Other current and noncurrent assets
|
|
|
(43.3
|
)
|
|
|
(66.9
|
)
|
Accounts payable
|
|
|
63.7
|
|
|
|
8.3
|
|
Accrued expenses
|
|
|
(78.4
|
)
|
|
|
(80.1
|
)
|
Other current and noncurrent liabilities
|
|
|
(5.5
|
)
|
|
|
(2.9
|
)
|
Total adjustments
|
|
|
(243.2
|
)
|
|
|
(358.4
|
)
|
Net cash used in operating activities
|
|
|
(251.4
|
)
|
|
|
(348.2
|
)
|
Cash flows from investing activities:
|
|
|
|
|
|
|
Purchases of property, plant and equipment
|
|
|
(57.1
|
)
|
|
|
(35.7
|
)
|
Proceeds from sale of property, plant and equipment
|
|
|
0.8
|
|
|
|
0.5
|
|
Purchase of businesses, net of cash acquired
|
|
|
—
|
|
|
|
(38.8
|
)
|
Investment in consolidated affiliates, net of cash acquired
|
|
|
—
|
|
|
|
(11.8
|
)
|
Investment in unconsolidated affiliates
|
|
|
(0.8
|
)
|
|
|
—
|
|
Restricted cash
|
|
|
—
|
|
|
|
(0.3
|
)
|
Net cash used in investing activities
|
|
|
(57.1
|
)
|
|
|
(86.1
|
)
|
Cash flows from financing activities:
|
|
|
|
|
|
|
Proceeds from debt obligations, net
|
|
|
176.8
|
|
|
|
317.5
|
|
Purchases and retirement of common stock
|
|
|
—
|
|
|
|
(60.0
|
)
|
Payment of dividends to stockholders
|
|
|
(11.1
|
)
|
|
|
(10.8
|
)
|
Payment of minimum tax withholdings on stock compensation
|
|
|
(3.2
|
)
|
|
|
(0.8
|
)
|
Investments by noncontrolling interests
|
|
|
0.2
|
|
|
|
—
|
|
Net cash provided by financing activities
|
|
|
162.7
|
|
|
|
245.9
|
|
Effects of exchange rate changes on cash and cash equivalents
|
|
|
6.0
|
|
|
|
9.6
|
|
Decrease in cash and cash equivalents
|
|
|
(139.8
|
)
|
|
|
(178.8
|
)
|
Cash and cash equivalents, beginning of period
|
|
|
429.7
|
|
|
|
426.7
|
|
Cash and cash equivalents, end of period
|
|
|
$
|
289.9
|
|
|
|
$
|
247.9
|
|
|
|
|
|
|
|
|
|
|
|
|
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 March 31,
|
|
|
|
2017
|
|
|
2016
|
Cost of goods sold
|
|
|
$
|
0.6
|
|
|
|
$
|
0.4
|
Selling, general and administrative expenses
|
|
|
11.4
|
|
|
|
5.1
|
Total stock compensation expense
|
|
|
$
|
12.0
|
|
|
|
$
|
5.5
|
|
|
|
|
|
|
|
|
|
|
The Company recorded approximately $4.8 million of accelerated stock
compensation expense during the three months ended March 31, 2017
associated with a waived stock award declined by the Company’s CEO.
2. RESTRUCTURING EXPENSES
Beginning in 2014 through 2017, 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 in order to reduce costs in
response to softening global market demand and lower production volumes.
The aggregate headcount reduction was approximately 2,750 employees in
2014, 2015 and 2016. The Company had approximately $15.3 million of
severance and related costs accrued as of December 31, 2016. During the
three months ended March 31, 2017, the Company recorded an additional
$5.1 million of severance and related costs associated with further
rationalizations primarily in the United States, South America and
Europe, associated with the termination of approximately 200 employees,
and paid approximately $5.9 million of severance and associated costs.
The remaining $14.6 million of accrued severance and other related costs
as of March 31, 2017, inclusive of approximately $0.1 million of
positive foreign currency translation impacts, are expected to be paid
primarily during 2017.
3. INDEBTEDNESS
Indebtedness at March 31, 2017 and December 31, 2016 consisted of the
following:
|
|
|
|
|
|
|
|
|
|
March 31, 2017
|
|
|
December 31, 2016
|
1.056% Senior term loan due 2020
|
|
|
$
|
213.7
|
|
|
|
$
|
211.0
|
|
Credit facility, expires 2020
|
|
|
518.3
|
|
|
|
329.2
|
|
Senior term loans due 2021
|
|
|
320.6
|
|
|
|
316.5
|
|
5⅞% Senior notes due 2021
|
|
|
306.3
|
|
|
|
306.6
|
|
Senior term loans due between 2019 and 2026
|
|
|
400.7
|
|
|
|
395.6
|
|
Other long-term debt
|
|
|
134.6
|
|
|
|
141.6
|
|
Debt issuance costs
|
|
|
(4.9
|
)
|
|
|
(5.1
|
)
|
|
|
|
1,889.3
|
|
|
|
1,695.4
|
|
Less: Current portion of other long-term debt
|
|
|
(108.8
|
)
|
|
|
(85.4
|
)
|
Total indebtedness, less current portion
|
|
|
$
|
1,780.5
|
|
|
|
$
|
1,610.0
|
|
4. INVENTORIES
Inventories at March 31, 2017 and December 31, 2016 were as follows:
|
|
|
|
|
|
|
|
|
|
March 31, 2017
|
|
|
December 31, 2016
|
Finished goods
|
|
|
$
|
667.7
|
|
|
|
$
|
589.3
|
Repair and replacement parts
|
|
|
565.9
|
|
|
|
532.5
|
Work in process
|
|
|
192.3
|
|
|
|
113.8
|
Raw materials
|
|
|
349.5
|
|
|
|
279.2
|
Inventories, net
|
|
|
$
|
1,775.4
|
|
|
|
$
|
1,514.8
|
|
|
|
|
|
|
|
|
|
|
5. ACCOUNTS RECEIVABLE SALES AGREEMENTS
At March 31, 2017 and December 31, 2016, 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, Europe and
Brazil to its U.S., Canadian, European and Brazilian finance joint
ventures. As of both March 31, 2017 and December 31, 2016, the
receivables sold under the U.S., Canadian, European and Brazilian
accounts receivable sales agreements were approximately $1.1 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 $8.3 million and $4.8 million during the three months
ended March 31, 2017 and 2016, respectively.
The Company’s finance joint ventures in Europe, Brazil and Australia
also provide wholesale financing directly to the Company’s dealers. As
of March 31, 2017 and December 31, 2016, these finance joint ventures
had approximately $44.0 million and $41.5 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 (LOSS) INCOME PER SHARE
A reconciliation of net (loss) income attributable to AGCO Corporation
and subsidiaries and weighted average common shares outstanding for
purposes of calculating basic and diluted net (loss) income per share
for the three months ended March 31, 2017 and 2016 is as follows:
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2017
|
|
|
2016
|
Basic net (loss) income per share:
|
|
|
|
|
|
|
Net (loss) income attributable to AGCO Corporation and subsidiaries
|
|
|
$
|
(10.1
|
)
|
|
|
$
|
7.8
|
Weighted average number of common shares outstanding
|
|
|
79.5
|
|
|
|
83.0
|
Basic net (loss) income per share attributable to AGCO Corporation
and subsidiaries
|
|
|
$
|
(0.13
|
)
|
|
|
$
|
0.09
|
Diluted net (loss) income per share:
|
|
|
|
|
|
|
Net (loss) income attributable to AGCO Corporation and subsidiaries
|
|
|
$
|
(10.1
|
)
|
|
|
$
|
7.8
|
Weighted average number of common shares outstanding
|
|
|
79.5
|
|
|
|
83.0
|
Dilutive stock-settled appreciation rights, performance share awards
and restricted
stock units
|
|
|
—
|
|
|
|
0.1
|
Weighted average number of common shares and common share
equivalents outstanding for purposes of computing diluted net (loss)
income per share
|
|
|
79.5
|
|
|
|
83.1
|
Diluted net (loss) income per share attributable to AGCO Corporation
and subsidiaries
|
|
|
$
|
(0.13
|
)
|
|
|
$
|
0.09
|
|
|
|
|
|
|
|
|
|
|
The weighted average number of common shares and common share
equivalents outstanding for purposes of computing diluted net
(loss) income per share above do not include the impact of dilutive
stock-settled appreciation rights, performance share awards and
restricted stock units for the three months ended March 31, 2017 as the
impact would have been antidilutive. The number of shares excluded from
the weighted average number of common shares and common share
equivalents outstanding was approximately 0.6 million shares for the
three months ended March 31, 2017.
7. SEGMENT REPORTING
Effective January 1, 2017, the Company modified its system of reporting,
resulting from changes to its internal management and organizational
structure, which changed its reportable segments from North America;
South America; Europe/Africa/Middle East; and Asia/Pacific to North
America; South America; Europe/Middle East; and Asia/Pacific/Africa. The
Asia/Pacific/Africa reportable segment includes the regions of Africa,
Asia, Australia and New Zealand, and the Europe/Africa/Middle East
segment no longer includes certain markets in Africa. Effective January
1, 2017, these reportable segments are reflective of how the Company’s
chief operating decision marker reviews operating results for the
purposes of allocating resources and assessing performance.
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 (loss) 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 (loss) from operations for one segment may not
be comparable to another segment. Segment results for the three months
ended March 31, 2017 and 2016 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
North
America
|
|
|
South
America
|
|
|
Europe/
Middle East
|
|
|
Asia/
Pacific/Africa
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
$
|
382.6
|
|
|
|
$
|
222.2
|
|
|
|
$
|
892.5
|
|
|
|
$
|
130.3
|
|
|
|
$
|
1,627.6
|
Income from operations
|
|
|
2.5
|
|
|
|
2.2
|
|
|
|
65.3
|
|
|
|
2.1
|
|
|
|
72.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
$
|
408.4
|
|
|
|
$
|
144.2
|
|
|
|
$
|
899.1
|
|
|
|
$
|
107.6
|
|
|
|
$
|
1,559.3
|
(Loss) income from operations
|
|
|
(0.7
|
)
|
|
|
0.4
|
|
|
|
68.1
|
|
|
|
(0.7
|
)
|
|
|
67.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A reconciliation from the segment information to the consolidated
balances for income from operations is set forth below:
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2017
|
|
|
2016
|
Segment income from operations
|
|
|
$
|
72.1
|
|
|
|
$
|
67.1
|
|
Corporate expenses
|
|
|
(26.6
|
)
|
|
|
(29.7
|
)
|
Stock compensation expense
|
|
|
(11.4
|
)
|
|
|
(5.1
|
)
|
Restructuring expenses
|
|
|
(5.1
|
)
|
|
|
(1.9
|
)
|
Amortization of intangibles
|
|
|
(13.4
|
)
|
|
|
(11.0
|
)
|
Consolidated income from operations
|
|
|
$
|
15.6
|
|
|
|
$
|
19.4
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF NON-GAAP MEASURES
This earnings release discloses adjusted income from operations,
adjusted net (loss) income and adjusted net (loss) income per share,
each of which exclude amounts that are typically included in 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 reported income from operations,
net (loss) income and net (loss) income per share to adjusted income
from operations, net (loss) income and net (loss) income per share for
the three months ended March 31, 2017 and 2016 (in millions, except per
share data):
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
Income From Operations
|
|
|
Net Loss (1)
|
|
|
Net Loss Per Share (1)
|
|
|
Income From Operations
|
|
|
Net Income(1) |
|
|
Net Income Per Share (1)
|
As reported
|
|
|
$
|
15.6
|
|
|
|
$
|
(10.1
|
)
|
|
|
$
|
(0.13
|
)
|
|
|
$
|
19.4
|
|
|
|
$
|
7.8
|
|
|
|
$
|
0.09
|
Restructuring expenses (2) |
|
|
5.1
|
|
|
|
3.8
|
|
|
|
0.05
|
|
|
|
1.9
|
|
|
|
1.2
|
|
|
|
0.02
|
Non-cash expense related to waived stock compensation(3)
|
|
|
4.8
|
|
|
|
4.8
|
|
|
|
0.06
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
As adjusted
|
|
|
$
|
25.5
|
|
|
|
$
|
(1.5
|
)
|
|
|
$
|
(0.02
|
)
|
|
|
$
|
21.3
|
|
|
|
$
|
9.0
|
|
|
|
$
|
0.11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Net (loss) income and net (loss) income per share amounts are
after tax.
|
(2)
|
|
The restructuring expenses recorded during the three months ended
March 31, 2017 and 2016 related primarily to severance costs
associated with the Company’s rationalization of certain U.S.,
European, and South American manufacturing operations and various
administrative offices.
|
(3)
|
|
The Company recorded approximately $4.8 million of accelerated stock
compensation expense during the three months ended March 31, 2017
associated with a waived stock award declined by the Company’s CEO.
|
|
|
|
The following is a reconciliation of targeted net income per share to
adjusted targeted net income per share for the year ended December 31,
2017:
|
|
|
|
|
|
|
Net Income Per Share (1) |
As targeted
|
|
|
$
|
2.59
|
Restructuring expenses
|
|
|
|
0.05
|
Non-cash expense related to waived stock compensation
|
|
|
|
0.06
|
As adjusted targeted(2) |
|
|
$
|
2.70
|
|
|
|
|
|
(1)
|
|
Net income per share amount is after tax.
|
(2)
|
|
The above reconciliation reflects adjustments to full year 2017
targeted net income per share based upon restructuring expenses
incurred during the three months ended March 31, 2017. Full year
restructuring expenses could differ based on future restructuring
activity.
|
|
|
|
The following table sets forth, for the three months ended March 31,
2017, the impact to net sales of currency translation by geographical
segment (in millions, except percentages):
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|
Change due to currency translation
|
|
|
|
2017
|
|
|
2016
|
|
|
|
% change from 2016
|
|
|
$
|
|
|
%
|
North America
|
|
|
$
|
382.6
|
|
|
|
$
|
408.4
|
|
|
|
|
(6.3
|
)%
|
|
|
$
|
(2.4
|
)
|
|
|
(0.6
|
)%
|
South America
|
|
|
222.2
|
|
|
|
144.2
|
|
|
|
|
54.1
|
%
|
|
|
33.2
|
|
|
|
23.0
|
%
|
Europe/Middle East
|
|
|
892.5
|
|
|
|
899.1
|
|
|
|
|
(0.7
|
)%
|
|
|
(43.0
|
)
|
|
|
(4.8
|
)%
|
Asia/Pacific/Africa
|
|
|
130.3
|
|
|
|
107.6
|
|
|
|
|
21.1
|
%
|
|
|
(1.1
|
)
|
|
|
(1.0
|
)%
|
|
|
|
$
|
1,627.6
|
|
|
|
$
|
1,559.3
|
|
|
|
|
4.4
|
%
|
|
|
$
|
(13.3
|
)
|
|
|
(0.9
|
)%
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20170428005352/en/
Source: AGCO
AGCO
Greg Peterson, 770-232-8229
Director of Investor Relations
greg.peterson@agcocorp.com