Full-year Outlook Increased
DULUTH, Ga.--(BUSINESS WIRE)--May 2, 2019--
AGCO, Your Agriculture Company (NYSE:AGCO), a worldwide manufacturer and
distributor of agricultural equipment and solutions, reported net sales
of approximately $2.0 billion for the first quarter of 2019, a decrease
of approximately 0.6% compared to the first quarter of 2018. Reported
net income was $0.84 per share for the first quarter of 2019, and
adjusted net income, excluding restructuring expenses, was $0.86 per
share. These results compare to a reported net income of $0.30 per share
and adjusted net income, excluding restructuring expenses, of $0.35 per
share for the first quarter of 2018. Excluding unfavorable currency
translation impacts of approximately 7.1%, net sales in the first
quarter of 2019 increased approximately 6.5% compared to the first
quarter of 2018.
First Quarter Highlights
-
Reported regional sales results(1): North
America (1.3)%, Europe/Middle East (“EME”) +4.0%, South America
(14.3)%, Asia/Pacific/Africa (“APA”) (16.3)%
-
Constant currency regional sales results(1)(2):
North America (0.6)%, EME +13.2%, South America (2.6%), APA (9.6)%
-
Operating margin improvement of 190 basis points vs. first quarter of
2018
-
Regional operating margin performance: North America 6.2%, EME 10.5%,
South America (5.4)%, APA 2.6%
-
Share repurchase program reduced outstanding shares by approximately
0.4 million during the first three months of 2019
-
Increased full-year outlook for net income per share
(1)As compared to first quarter 2018
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(2)Excludes currency translation impact.
See reconciliation in appendix.
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“Focused operational performance across our regional business units and
supportive market conditions are driving sales and earnings growth,”
stated Martin Richenhagen, AGCO’s Chairman, President and Chief
Executive Officer. “AGCO’s first quarter results demonstrated solid
progress towards our margin improvement goals for 2019. Led by our
Europe/Middle East region, AGCO’s first quarter 2019 adjusted operating
margins improved over 190 basis points compared to the first quarter of
2018. Our margin expansion resulted from organic sales growth, an
improved pricing environment and initiatives aimed at lowering material
costs and improving productivity. We have raised our outlook for the
full year to reflect our confidence in our continued strong performance
and in the market recovery.”
Market Update
Industry Unit Retail Sales
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Three months ended March 31, 2019
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Tractors
Change from
Prior Year Period
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Combines
Change from
Prior Year Period
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North America(1) |
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(3)%
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28%
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South America
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(2)%
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34%
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Western Europe(2) |
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2%
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(11)%
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(1)Excludes compact tractors.
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(2)Based on Company estimates.
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“Farm economics remained challenged across many of the major
crop-producing regions and global trade tensions continue to weigh on
farmer sentiment,” continued Mr. Richenhagen. “Global farm equipment
demand continues on a slow recovery path following an extended period of
decline. Planting across much of the U.S. farm belt is delayed due to
cold, wet weather and flooding in portions of the Midwest. Farmer
concerns over the lingering trade disputes with China and the resulting
increase in soybean inventories has curtailed replacement demand from
row crop farmers. North American industry retail sales decreased in the
first three months of 2019 compared to the same period in 2018. We
expect North American industry retail tractor sales to increase modestly
in 2019 with improved retail sales in the row crop segment and flat
retail sales of small tractors compared to last year. Relatively warm
weather across much of Europe has been positive for the development of
the winter wheat crop. Milk prices remain supportive of the dairy sector
in Western Europe. Industry retail sales in Western Europe increased
modestly in the first three months of 2019, following a year of mixed
results in 2018 for the arable farming segment. Industry sales growth in
France and Germany was partially offset by declines in the United
Kingdom and Italy. For the full year of 2019, industry demand in Western
Europe is expected to be flat compared to 2018. Industry retail sales in
South America decreased during the first three months of 2019. Industry
sales declined significantly in Argentina in response to lower crop
production and farm income in 2018 while industry demand in Brazil
improved modestly. Grain production in South America is ahead of last
year’s pace and industry demand is expected to increase modestly
compared to 2018. Looking ahead, we are optimistic about the long-term
outlook for the global agricultural equipment industry supported by
healthy fundamentals for commodity prices and farm income.”
Regional Results
AGCO Regional Net Sales (in millions)
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Three Months Ended March 31,
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2019
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2018
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% change from 2018
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% change from 2018 due to currency translation(1)
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% change excluding currency translation
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|
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|
|
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North America
|
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$
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496.2
|
|
|
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$
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502.9
|
|
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(1.3)%
|
|
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(0.8)%
|
|
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(0.6)%
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South America
|
|
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156.1
|
|
|
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182.1
|
|
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(14.3)%
|
|
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(11.6)%
|
|
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(2.6)%
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Europe/Middle East
|
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1,210.6
|
|
|
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1,163.7
|
|
|
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4.0%
|
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(9.1)%
|
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13.2%
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Asia/Pacific/Africa
|
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132.9
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|
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158.8
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|
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(16.3)%
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(6.7)%
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(9.6)%
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Total
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$
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1,995.8
|
|
|
|
$
|
2,007.5
|
|
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|
(0.6)%
|
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(7.1)%
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6.5%
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(1) See appendix for additional
disclosures
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North America
AGCO’s North American net sales decreased 0.6% in the first three months
of 2019 compared to the same period of 2018, excluding the negative
impact of currency translation. Lower sales of tractors and grain and
protein production equipment were mostly offset by growth in the sales
of application equipment as well as hay and forage equipment. Income
from operations for the first three months of 2019 improved
approximately $3.8 million compared to the same period in 2018. The
benefit of improved pricing and sales mix contributed most of the
increase.
South America
Net sales in the South American region decreased 2.6% in the first three
months of 2019 compared to the first three months of 2018, excluding the
impact of unfavorable currency translation. Income from operations
improved approximately $8.1 million in the first quarter compared to the
same period in 2018. The South America results in the first quarter
reflect seasonally low levels of industry demand and company production,
as well as cost impacts associated with the transition of newer product
technology into our Brazilian factories.
Europe/Middle East
Europe/Middle East net sales increased 13.2% in the first three months
of 2019 compared to the same period in 2018, excluding unfavorable
currency translation impacts. Sales growth was strongest in France, the
United Kingdom and Spain. Income from operations improved approximately
$28.7 million for the first three months of 2019, compared to the same
period in 2018, due to the benefit of higher sales and production,
pricing and the timing of engineering costs compared to the prior year.
Asia/Pacific/Africa
Net sales in AGCO’s Asia/Pacific/Africa region decreased 9.6%, excluding
the negative impact of currency translation, in the first three months
of 2019 compared to the same period in 2018. Lower sales in Asia and
Australia produced most of the decrease. Income from operations declined
approximately $1.3 million in the first three months of 2019, compared
to the same period in 2018, due to lower sales levels.
Outlook
Global industry demand is projected to improve modestly in 2019. AGCO’s
net sales for 2019 are expected to reach approximately $9.5 billion
reflecting improved sales volumes and positive pricing, offset by
unfavorable foreign currency translation impacts. Gross and operating
margins are expected to improve from 2018 levels, reflecting the
positive impact of pricing and cost reduction efforts. Based on these
assumptions, 2019 earnings per share are targeted at approximately $4.88
on a reported basis, or approximately $4.90 on an adjusted basis, which
excludes restructuring expenses.
* * * * *
AGCO will be hosting a conference call with respect to this earnings
announcement at 10:00 a.m. Eastern Time on Thursday, May 2, 2019. 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, many of our sales involve products that are
manufactured in one country and sold in a different country, and as a
result, we are exposed to risks related to foreign laws, taxes and
tariffs, trade restrictions, 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. Among these risks are the uncertain consequences of
Brexit, Russian sanctions and tariffs imposed on exports to and
imports from China.
-
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 40% to 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, 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.
-
Our business increasingly is subject to regulations relating to
privacy and data protection, and if we violate any of those
regulations or otherwise are the victim of a cyber attack, we could
incur significant losses and liability.
-
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 a 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, 2018. 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 delivers high-tech solutions
for farmers feeding the world 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® smart farming solutions. Founded in 1990 and headquartered in
Duluth, Georgia, USA, AGCO had net sales of $9.4 billion in 2018. 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
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AGCO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited and in millions)
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|
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|
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|
|
|
|
March 31, 2019
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|
December 31, 2018
|
ASSETS
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|
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|
|
|
|
Current Assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
292.8
|
|
|
|
$
|
326.1
|
|
Accounts and notes receivable, net
|
|
|
928.5
|
|
|
|
880.3
|
|
Inventories, net
|
|
|
2,307.6
|
|
|
|
1,908.7
|
|
Other current assets
|
|
|
432.4
|
|
|
|
422.3
|
|
Total current assets
|
|
|
3,961.3
|
|
|
|
3,537.4
|
|
Property, plant and equipment, net
|
|
|
1,363.3
|
|
|
|
1,373.1
|
|
Right-of-use lease assets
|
|
|
193.8
|
|
|
|
—
|
|
Investment in affiliates
|
|
|
393.2
|
|
|
|
400.0
|
|
Deferred tax assets
|
|
|
119.7
|
|
|
|
104.9
|
|
Other assets
|
|
|
132.1
|
|
|
|
142.4
|
|
Intangible assets, net
|
|
|
555.3
|
|
|
|
573.1
|
|
Goodwill
|
|
|
1,485.6
|
|
|
|
1,495.5
|
|
Total assets
|
|
|
$
|
8,204.3
|
|
|
|
$
|
7,626.4
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
Current portion of long-term debt
|
|
|
$
|
68.4
|
|
|
|
$
|
72.6
|
|
Short-term borrowings
|
|
|
181.5
|
|
|
|
138.0
|
|
Senior term loan
|
|
|
224.7
|
|
|
|
—
|
|
Accounts payable
|
|
|
964.3
|
|
|
|
865.9
|
|
Accrued expenses
|
|
|
1,441.0
|
|
|
|
1,522.4
|
|
Other current liabilities
|
|
|
174.8
|
|
|
|
167.8
|
|
Total current liabilities
|
|
|
3,054.7
|
|
|
|
2,766.7
|
|
Long-term debt, less current portion and debt issuance costs
|
|
|
1,404.3
|
|
|
|
1,275.3
|
|
Operating lease liabilities
|
|
|
150.8
|
|
|
|
—
|
|
Pensions and postretirement health care benefits
|
|
|
216.8
|
|
|
|
223.2
|
|
Deferred tax liabilities
|
|
|
106.8
|
|
|
|
116.3
|
|
Other noncurrent liabilities
|
|
|
251.9
|
|
|
|
251.4
|
|
Total liabilities
|
|
|
5,185.3
|
|
|
|
4,632.9
|
|
|
|
|
|
|
|
|
Stockholders’ Equity:
|
|
|
|
|
|
|
AGCO Corporation stockholders’ equity:
|
|
|
|
|
|
|
Common stock
|
|
|
0.8
|
|
|
|
0.8
|
|
Additional paid-in capital
|
|
|
9.7
|
|
|
|
10.2
|
|
Retained earnings
|
|
|
4,491.0
|
|
|
|
4,477.3
|
|
Accumulated other comprehensive loss
|
|
|
(1,545.8
|
)
|
|
|
(1,555.4
|
)
|
Total AGCO Corporation stockholders’ equity
|
|
|
2,955.7
|
|
|
|
2,932.9
|
|
Noncontrolling interests
|
|
|
63.3
|
|
|
|
60.6
|
|
Total stockholders’ equity
|
|
|
3,019.0
|
|
|
|
2,993.5
|
|
Total liabilities and stockholders’ equity
|
|
|
$
|
8,204.3
|
|
|
|
$
|
7,626.4
|
|
|
|
|
|
|
|
|
|
|
|
|
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,
|
|
|
|
2019
|
|
|
2018
|
Net sales
|
|
|
$
|
1,995.8
|
|
|
|
$
|
2,007.5
|
|
Cost of goods sold
|
|
|
1,539.1
|
|
|
|
1,579.5
|
|
Gross profit
|
|
|
456.7
|
|
|
|
428.0
|
|
Selling, general and administrative expenses
|
|
|
262.2
|
|
|
|
264.6
|
|
Engineering expenses
|
|
|
84.5
|
|
|
|
90.9
|
|
Restructuring expenses
|
|
|
1.7
|
|
|
|
5.9
|
|
Amortization of intangibles
|
|
|
15.3
|
|
|
|
15.7
|
|
Bad debt expense
|
|
|
0.6
|
|
|
|
0.4
|
|
Income from operations
|
|
|
92.4
|
|
|
|
50.5
|
|
Interest expense, net
|
|
|
3.5
|
|
|
|
10.3
|
|
Other expense, net
|
|
|
14.6
|
|
|
|
11.5
|
|
Income before income taxes and equity in net earnings of affiliates
|
|
|
74.3
|
|
|
|
28.7
|
|
Income tax provision
|
|
|
19.4
|
|
|
|
11.4
|
|
Income before equity in net earnings of affiliates
|
|
|
54.9
|
|
|
|
17.3
|
|
Equity in net earnings of affiliates
|
|
|
10.8
|
|
|
|
7.7
|
|
Net income
|
|
|
65.7
|
|
|
|
25.0
|
|
Net income attributable to noncontrolling interests
|
|
|
(0.6
|
)
|
|
|
(0.7
|
)
|
Net income attributable to AGCO Corporation and subsidiaries
|
|
|
$
|
65.1
|
|
|
|
$
|
24.3
|
|
Net income per common share attributable to AGCO Corporation and
subsidiaries:
|
|
|
|
|
|
|
Basic
|
|
|
$
|
0.85
|
|
|
|
$
|
0.31
|
|
Diluted
|
|
|
$
|
0.84
|
|
|
|
$
|
0.30
|
|
Cash dividends declared and paid per common share
|
|
|
$
|
0.15
|
|
|
|
$
|
0.15
|
|
Weighted average number of common and common equivalent shares
outstanding:
|
|
|
|
|
|
|
Basic
|
|
|
76.6
|
|
|
79.6
|
Diluted
|
|
|
77.5
|
|
|
80.5
|
|
|
|
|
|
|
|
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,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
Net income
|
|
|
$
|
65.7
|
|
|
|
$
|
25.0
|
|
Adjustments to reconcile net income to net cash used in operating
activities:
|
|
|
|
|
|
|
Depreciation
|
|
|
53.0
|
|
|
|
59.2
|
|
Amortization of intangibles
|
|
|
15.3
|
|
|
|
15.7
|
|
Stock compensation expense
|
|
|
12.5
|
|
|
|
9.2
|
|
Equity in net earnings of affiliates, net of cash received
|
|
|
(10.1
|
)
|
|
|
(4.3
|
)
|
Deferred income tax benefit
|
|
|
(8.6
|
)
|
|
|
(7.0
|
)
|
Other
|
|
|
0.8
|
|
|
|
0.1
|
|
Changes in operating assets and liabilities, net of effects from
purchase of businesses:
|
|
|
|
|
|
|
Accounts and notes receivable, net
|
|
|
(65.7
|
)
|
|
|
6.2
|
|
Inventories, net
|
|
|
(418.6
|
)
|
|
|
(398.2
|
)
|
Other current and noncurrent assets
|
|
|
(4.9
|
)
|
|
|
(36.2
|
)
|
Accounts payable
|
|
|
127.5
|
|
|
|
66.4
|
|
Accrued expenses
|
|
|
(107.7
|
)
|
|
|
(108.4
|
)
|
Other current and noncurrent liabilities
|
|
|
10.9
|
|
|
|
11.0
|
|
Total adjustments
|
|
|
(395.6
|
)
|
|
|
(386.3
|
)
|
Net cash used in operating activities
|
|
|
(329.9
|
)
|
|
|
(361.3
|
)
|
Cash flows from investing activities:
|
|
|
|
|
|
|
Purchases of property, plant and equipment
|
|
|
(60.9
|
)
|
|
|
(46.1
|
)
|
Proceeds from sale of property, plant and equipment
|
|
|
—
|
|
|
|
1.5
|
|
Other
|
|
|
—
|
|
|
|
0.4
|
|
Net cash used in investing activities
|
|
|
(60.9
|
)
|
|
|
(44.2
|
)
|
Cash flows from financing activities:
|
|
|
|
|
|
|
Proceeds from indebtedness, net
|
|
|
423.1
|
|
|
|
401.5
|
|
Purchases and retirement of common stock
|
|
|
(30.0
|
)
|
|
|
(7.1
|
)
|
Payment of dividends to stockholders
|
|
|
(11.5
|
)
|
|
|
(11.9
|
)
|
Payment of minimum tax withholdings on stock compensation
|
|
|
(23.0
|
)
|
|
|
(3.2
|
)
|
Payment of debt issuance costs
|
|
|
(0.5
|
)
|
|
|
—
|
|
Investment by noncontrolling interests
|
|
|
0.6
|
|
|
|
—
|
|
Net cash provided by financing activities
|
|
|
358.7
|
|
|
|
379.3
|
|
Effects of exchange rate changes on cash and cash equivalents
|
|
|
(1.2
|
)
|
|
|
6.7
|
|
Decrease in cash and cash equivalents
|
|
|
(33.3
|
)
|
|
|
(19.5
|
)
|
Cash and cash equivalents, beginning of period
|
|
|
326.1
|
|
|
|
367.7
|
|
Cash and cash equivalents, end of period
|
|
|
$
|
292.8
|
|
|
|
$
|
348.2
|
|
|
|
|
|
|
|
|
|
|
|
|
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,
|
|
|
|
2019
|
|
|
2018
|
Cost of goods sold
|
|
|
$
|
0.5
|
|
|
|
$
|
0.8
|
Selling, general and administrative expenses
|
|
|
12.0
|
|
|
|
8.4
|
Total stock compensation expense
|
|
|
$
|
12.5
|
|
|
|
$
|
9.2
|
|
|
|
|
|
|
|
|
|
|
2. RESTRUCTURING EXPENSES
From 2014 through 2019, the Company announced and initiated several
actions to rationalize employee headcount at various manufacturing
facilities and administrative offices located in Europe, South America,
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 3,890 employees between
2014 and 2018. The Company had approximately $7.1 million of severance
and related costs accrued as of December 31, 2018. During the three
months ended March 31, 2019, the Company recorded an additional $1.7
million of severance and related costs associated with further
rationalizations associated with the termination of approximately 30
employees, and paid approximately $2.6 million of severance and
associated costs. The $1.7 million of costs incurred during the three
months ended March 31, 2019 included a $0.3 million write-down of
property, plant and equipment. The remaining $5.8 million of accrued
severance and other related costs as of March 31, 2019, inclusive of
approximately $ 0.1 million of negative foreign currency translation
impacts, are expected to be paid primarily during 2019.
3. INDEBTEDNESS
Long-term debt at March 31, 2019 and December 31, 2018 consisted of the
following:
|
|
|
March 31, 2019
|
|
|
December 31, 2018
|
1.056% Senior term loan due 2020
|
|
|
$
|
224.7
|
|
|
|
$
|
228.7
|
|
Senior term loan due 2022
|
|
|
168.5
|
|
|
|
171.5
|
|
Credit facility, expires 2023
|
|
|
207.9
|
|
|
|
114.4
|
|
1.002% Senior term loan due 2025
|
|
|
280.9
|
|
|
|
—
|
|
Senior term loans due between 2019 and 2028
|
|
|
801.1
|
|
|
|
815.3
|
|
Other long-term debt
|
|
|
17.1
|
|
|
|
20.6
|
|
Debt issuance costs
|
|
|
(2.8
|
)
|
|
|
(2.6
|
)
|
|
|
|
1,697.4
|
|
|
|
1,347.9
|
|
Less: 1.056% Senior term loan due 2020
|
|
|
(224.7
|
)
|
|
|
—
|
|
Senior term loans due 2019
|
|
|
(62.9
|
)
|
|
|
(63.8
|
)
|
Current portion of other long-term debt
|
|
|
(5.5
|
)
|
|
|
(8.8
|
)
|
Total long-debt, less current portion
|
|
|
$
|
1,404.3
|
|
|
|
$
|
1,275.3
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2019 and December 31, 2018, the Company had short-term
borrowings due within one year of approximately $181.5 million and
$138.0 million, respectively.
4. INVENTORIES
Inventories at March 31, 2019 and December 31, 2018 were as follows:
|
|
|
March 31, 2019
|
|
|
December 31, 2018
|
Finished goods
|
|
|
$
|
841.3
|
|
|
|
$
|
660.4
|
Repair and replacement parts
|
|
|
629.8
|
|
|
|
587.3
|
Work in process
|
|
|
289.6
|
|
|
|
217.5
|
Raw materials
|
|
|
546.9
|
|
|
|
443.5
|
Inventories, net
|
|
|
$
|
2,307.6
|
|
|
|
$
|
1,908.7
|
|
|
|
|
|
|
|
|
|
|
5. ACCOUNTS RECEIVABLE SALES AGREEMENTS
The Company has 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, 2019 and
December 31, 2018, the cash received from receivables sold under the
U.S., Canadian, European and Brazilian accounts receivable sales
agreements was approximately $1.4 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 $8.7 million and $7.8 million, respectively, during
the three months ended March 31, 2019 and 2018, 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, 2019 and December 31, 2018, these finance joint ventures
had approximately $88.1 million and $82.5 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 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
months ended March 31, 2019 and 2018 is as follows:
|
|
|
Three Months Ended March 31,
|
|
|
|
2019
|
|
|
2018
|
Basic net income per share:
|
|
|
|
|
|
|
Net income attributable to AGCO Corporation and subsidiaries
|
|
|
$
|
65.1
|
|
|
|
$
|
24.3
|
Weighted average number of common shares outstanding
|
|
|
76.6
|
|
|
|
79.6
|
Basic net income per share attributable to AGCO Corporation and
subsidiaries
|
|
|
$
|
0.85
|
|
|
|
$
|
0.31
|
Diluted net income per share:
|
|
|
|
|
|
|
Net income attributable to AGCO Corporation and subsidiaries
|
|
|
$
|
65.1
|
|
|
|
$
|
24.3
|
Weighted average number of common shares outstanding
|
|
|
76.6
|
|
|
|
79.6
|
Dilutive stock-settled appreciation rights, performance share awards
and restricted stock units
|
|
|
0.9
|
|
|
|
0.9
|
Weighted average number of common shares and common share
equivalents outstanding for purposes of computing diluted net income
per share
|
|
|
77.5
|
|
|
|
80.5
|
Diluted net income per share attributable to AGCO Corporation and
subsidiaries
|
|
|
$
|
0.84
|
|
|
|
$
|
0.30
|
|
|
|
|
|
|
|
|
|
|
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 months ended March 31, 2019 and
2018 are as follows:
Three Months Ended March 31,
|
|
|
North
America
|
|
|
South
America
|
|
|
Europe/
Middle East
|
|
|
Asia/
Pacific/Africa
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
$
|
496.2
|
|
|
|
$
|
156.1
|
|
|
|
$
|
1,210.6
|
|
|
|
$
|
132.9
|
|
|
|
$
|
1,995.8
|
Income from operations
|
|
|
30.6
|
|
|
|
(8.5
|
)
|
|
|
127.7
|
|
|
|
3.4
|
|
|
|
153.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
$
|
502.9
|
|
|
|
$
|
182.1
|
|
|
|
$
|
1,163.7
|
|
|
|
$
|
158.8
|
|
|
|
$
|
2,007.5
|
Income from operations
|
|
|
26.8
|
|
|
|
(16.6
|
)
|
|
|
99.0
|
|
|
|
4.7
|
|
|
|
113.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A reconciliation from the segment information to the consolidated
balances for income from operations is set forth below:
|
|
|
Three Months Ended March 31,
|
|
|
|
2019
|
|
|
2018
|
Segment income from operations
|
|
|
$
|
153.2
|
|
|
|
$
|
113.9
|
|
Corporate expenses
|
|
|
(31.8
|
)
|
|
|
(33.4
|
)
|
Stock compensation expense
|
|
|
(12.0
|
)
|
|
|
(8.4
|
)
|
Restructuring expenses
|
|
|
(1.7
|
)
|
|
|
(5.9
|
)
|
Amortization of intangibles
|
|
|
(15.3
|
)
|
|
|
(15.7
|
)
|
Consolidated income from operations
|
|
|
$
|
92.4
|
|
|
|
$
|
50.5
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF NON-GAAP MEASURES
This earnings release discloses adjusted income from operations,
adjusted net income and adjusted net 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 income and net income per share to adjusted income from operations,
net income and net income per share for the three months ended March 31,
2019 and 2018 (in millions, except per share data):
|
|
|
Three Months Ended March 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
Income From Operations
|
|
|
Net Income(1)
|
|
|
Net Income Per Share(1)
|
|
|
Income From Operations
|
|
|
Net Income(1) |
|
|
Net Income Per Share(1)
|
As reported
|
|
|
$
|
92.4
|
|
|
|
$
|
65.1
|
|
|
|
$
|
0.84
|
|
|
|
$
|
50.5
|
|
|
|
$
|
24.3
|
|
|
|
$
|
0.30
|
Restructuring expenses(2) |
|
|
1.7
|
|
|
|
1.4
|
|
|
|
0.02
|
|
|
|
5.9
|
|
|
|
4.2
|
|
|
|
0.05
|
As adjusted
|
|
|
$
|
94.1
|
|
|
|
$
|
66.5
|
|
|
|
$
|
0.86
|
|
|
|
$
|
56.4
|
|
|
|
$
|
28.5
|
|
|
|
$
|
0.35
|
(1)
|
Net income and net income per share amounts are after tax.
|
(2)
|
The restructuring expenses recorded during the three months ended
March 31, 2019 and 2018 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.
|
|
|
The following is a reconciliation of targeted net income per share to
adjusted targeted net income per share for the year ended December 31,
2019:
|
|
|
Net Income Per Share(1) |
As targeted
|
|
|
$
|
4.88
|
Restructuring expenses
|
|
|
|
0.02
|
As adjusted targeted(2) |
|
|
$
|
4.90
|
(1)
|
Net income per share amount is after tax.
|
(2)
|
The above reconciliation reflects adjustments to full year 2019
targeted net income per share based upon restructuring expenses
and other adjustments incurred during the three months ended March
31, 2019. Full year restructuring expenses could differ based on
future restructuring activity.
|
|
|
The following tables set forth, for the three months ended March 31,
2019, 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
|
|
|
|
2019
|
|
|
2018
|
|
|
% change from 2018
|
|
|
$
|
|
|
%
|
North America
|
|
|
$
|
496.2
|
|
|
|
$
|
502.9
|
|
|
|
(1.3
|
)%
|
|
|
$
|
(3.8
|
)
|
|
|
(0.8
|
)%
|
South America
|
|
|
156.1
|
|
|
|
182.1
|
|
|
|
(14.3
|
)%
|
|
|
(21.2
|
)
|
|
|
(11.6
|
)%
|
Europe/Middle East
|
|
|
1,210.6
|
|
|
|
1,163.7
|
|
|
|
4.0
|
%
|
|
|
(106.3
|
)
|
|
|
(9.1
|
)%
|
Asia/Pacific/Africa
|
|
|
132.9
|
|
|
|
158.8
|
|
|
|
(16.3
|
)%
|
|
|
(10.6
|
)
|
|
|
(6.7
|
)%
|
|
|
|
$
|
1,995.8
|
|
|
|
$
|
2,007.5
|
|
|
|
(0.6
|
)%
|
|
|
$
|
(141.9
|
)
|
|
|
(7.1
|
)%
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20190502005421/en/
Source: AGCO
Greg Peterson Vice President, Investor Relations 770-232-8229 greg.peterson@agcocorp.com
|