DULUTH, Ga.--(BUSINESS WIRE)--Feb. 6, 2018--
AGCO, Your Agriculture Company (NYSE:AGCO), a worldwide manufacturer and
distributor of agricultural equipment, reported net sales of
approximately $2.5 billion for the fourth quarter of 2017, an increase
of approximately 20.7% compared to net sales of approximately $2.1
billion for the fourth quarter of 2016. Reported net income was $0.55
per share and adjusted net income, which excludes restructuring expenses
and a tax charge related to U.S. tax reform, was $1.10 per share for the
fourth quarter of 2017. These results compare to reported net income of
$0.77 per share and adjusted net income, which excludes restructuring
expenses, of $0.84 per share for the fourth quarter of 2016. Excluding
favorable currency translation impacts of approximately 5.9%, net sales
in the fourth quarter of 2017 increased approximately 14.8% compared to
the fourth quarter of 2016.
Net sales for the full year of 2017 were approximately $8.3 billion, an
increase of approximately 12.1% compared to 2016. Excluding the
favorable impact of currency translation of approximately 1.6%, net
sales for the full year of 2017 increased approximately 10.5% compared
to 2016. For the full year of 2017, reported net income was $2.32 per
share and adjusted net income, which excludes restructuring expenses, a
non-cash expense related to waived stock compensation and a tax charge
related to U.S. tax reform, was $3.02 per share. These results compare
to reported net income of $1.96 per share and adjusted net income, which
excludes restructuring expenses and a non-cash deferred income tax
adjustment, of $2.47 per share for the full year of 2016.
Highlights
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Reported fourth quarter regional sales results(1):
Europe/Middle East (“EME”) +25.9%, North America +18.9%, South America
+2.5%, Asia/Pacific/Africa (“APA”) +23.0%
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Constant currency fourth quarter regional sales results(1)(2)(3):
EME +16.6%, North America +17.4%, South America +3.2%, APA +16.8%
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Generated $578 million in cash flow from operations and $374 million
in free cash flow(3) in 2017
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Quarterly dividend increased to $0.15 per share effective first
quarter 2018
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Full-year earnings forecast for 2018 remains at approximately $3.50
per share
(1) |
As compared to fourth quarter 2016
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(2) |
Excludes currency translation impact.
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(3) |
See reconciliation of Non-GAAP measures in appendix.
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“Stabilizing market demand and solid operational execution allowed AGCO
to meet its financial targets for 2017 and deliver improved results
compared to 2016,” stated Martin Richenhagen, AGCO’s Chairman, President
and Chief Executive Officer. “Over the past few years, we worked
diligently on cost reduction strategies targeted at purchasing actions,
factory productivity as well as new product development, which now
positions us well to seek new opportunities for growth. Looking forward
to 2018, we are forecasting further earnings improvement as industry
conditions trend positively from the lower end of the agricultural
equipment cycle in key markets. In addition to cost management, we will
continue to make long-term investments to raise the efficiency of our
factories, improve our service levels and strengthen our product
offerings.”
Market Update
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Industry Unit Retail Sales
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Tractors
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Combines
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Change from |
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Change from |
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Year ended December 31, 2017
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Prior Year Period
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Prior Year Period
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North America(1) |
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Flat
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10%
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South America
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13%
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13%
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Western Europe(2) |
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4%
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(6)%
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(1)
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Excludes compact tractors.
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(2) |
Based on Company estimates.
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“The 2017 global harvest is the fourth consecutive year of near record
production,” continued Mr. Richenhagen. “With these robust harvests,
crop production has outpaced demand, thereby keeping crop prices and
farm income at relatively low levels. Global industry farm equipment
demand started to recover following three years of strong declines. In
North America, the farm equipment fleet has begun to age, and industry
retail sales were mixed throughout 2017. Tractor and combine demand was
higher compared to last year, while sales in other row crop equipment
remained weak. Overall, we project industry tractor sales to be
relatively flat in 2018 compared to 2017, with some modest improvements
in combines and hay equipment. Industry retail sales in Western Europe
improved in 2017, but remained below historic levels. Growth was
strongest in Germany, Italy and the United Kingdom. Recovery in the
dairy sector provided support to retail sales and helped improve overall
confidence in the region. While farm income remains under pressure due
to low commodity prices, 2018 farm income is expected to improve
modestly driven primarily by better dairy economics and higher 2017
wheat production. Based on these assumptions, we expect farmer sentiment
to remain positive and 2018 demand to be relatively flat compared to
2017 levels. Industry retail sales in South America increased during
2017 as demand in Brazil grew strongly from depressed first-half levels
experienced last year. Industry sales in Brazil slowed in the second
half of 2017, however, as ongoing macroeconomic weakness continued to
hurt farmer confidence. Industry demand in Argentina remained robust as
more supportive government policies continued to stimulate growth. Our
South American industry forecast for 2018 assumes industry sales are
flat to modestly up compared to 2017. Our long-term global view remains
positive. Increasing demand for commodities, driven by the growing world
population, rising emerging market protein consumption and biofuel use,
are expected to support elevated farm income and healthy conditions in
our industry.”
Regional Results
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AGCORegional Net Sales (in millions)
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Three Months Ended December 31, |
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2017
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2016
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% change from 2016
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% change from 2016 due to currency translation(1)
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% change from 2016 due to acquisitions(1)
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North America
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$
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531.8
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$
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447.4
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18.9%
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1.5%
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4.3%
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South America
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315.9
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308.1
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2.5%
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(0.7)%
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0.5%
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EME
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1,434.6
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1,139.3
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25.9%
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9.4%
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1.5%
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APA
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245.1
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199.2
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23.0%
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6.2%
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4.6%
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Total
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$
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2,527.4
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$
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2,094.0
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20.7%
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5.9%
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2.2%
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Year Ended December 31, |
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2017
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2016
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% change from 2016
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% change from 2016 due to currency translation(1)
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% change from 2016 due to acquisitions(1)
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North America
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$
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1,876.7
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$
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1,807.7
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3.8%
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0.3%
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2.1%
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South America
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1,063.5
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917.5
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15.9%
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4.5%
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0.4%
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EME
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4,614.3
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4,089.7
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12.8%
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1.4%
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2.7%
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APA
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752.0
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595.6
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26.3%
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2.3%
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4.0%
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Total
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$
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8,306.5
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$
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7,410.5
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12.1%
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1.6%
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2.4%
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(1) See Footnotes for additional disclosures
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(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.
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North America
North American net sales increased approximately 3.6% in the full year
of 2017 compared to 2016, excluding the positive impact of currency
translation. Acquisitions benefited sales by approximately 2% in 2017.
Mixed industry demand and dealer inventory reduction efforts pressured
sales volumes. Sales growth in tractors, driven by new product
introductions, were mostly offset by sales declines in hay tools,
sprayers and grain storage equipment. Income from operations increased
approximately $25.6 million for the full year of 2017 compared to 2016
due to the benefit of higher sales and margin improvement.
South America
Net sales in the South American region improved approximately 11.4%,
excluding favorable currency translation impacts, in the full year of
2017 compared to 2016. The improvement was primarily driven by
significantly higher sales in Argentina and modest growth in Brazil.
Income from operations decreased approximately $5.4 million for the full
year of 2017 compared to 2016 due to the negative impact of material
cost inflation and higher costs related to the localization of emissions
compliant products.
Europe/Middle East
AGCO’s EME net sales increased approximately 11.4% in the full year of
2017 compared to 2016, excluding favorable currency translation.
Acquisitions benefited sales by approximately 3% during 2017 compared to
the full year of 2016. Most of the sales growth was achieved in the key
markets of the United Kingdom, Germany and Italy. Income from operations
increased approximately $90.6 million for the full year of 2017 compared
to 2016 due to higher sales and improved margins resulting from new
product introductions and increased production.
Asia/Pacific/Africa
Net sales in AGCO’s Asia/Pacific/Africa region, excluding the positive
impact of currency translation, increased approximately 23.9% in the
full year of 2017 compared to the same period in 2016. Sales growth was
driven primarily by China and Australia. Acquisitions benefited sales by
approximately 4% during the full year of 2017 compared to the same
period last year. Income from operations improved approximately $29.1
million in 2017 compared to the full year of 2016 due to higher sales
and production levels.
U.S. Tax Reform
The income tax provision during the fourth quarter of 2017 includes a
one-time charge of approximately $42.0 million resulting from the
enactment of U.S. tax reform legislation on December 22, 2017. The
charge includes an estimate of approximately $14.3 million related to
the transition tax associated with the mandatory deemed repatriation of
foreign earnings.
Outlook
Relatively stable industry demand is anticipated across all regions in
2018. AGCO’s net sales for 2018 are expected to reach approximately $9.1
billion reflecting improved sales volumes, positive pricing as well as
acquisition and foreign currency translation impacts. Gross and
operating margins are expected to improve from 2017 levels, reflecting
the positive impact of pricing and cost reduction efforts partially
offset by increased engineering expenses. Based on these assumptions,
2018 earnings per share is targeted to be approximately $3.50.
* * * * *
AGCO will be hosting a conference call with respect to this earnings
announcement at 10:00 a.m. Eastern Time on Tuesday, February 6, 2018.
The Company will refer to slides on its conference call. The conference
call and slide presentation can be accessed on 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, world
population, biofuel use and protein consumption, currency translation,
farm income levels, margin levels, industry inventory levels,
investments in product and technology development, cost reduction
initiatives, production volumes, 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.
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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.
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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 40% 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.
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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.
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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.
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Our success depends on the introduction of new products, particularly
engines that comply with emission requirements, which requires
substantial expenditures.
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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.
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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.
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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.
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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.
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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, 2016 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 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
approximately 150 countries. Founded in 1990, AGCO is headquartered
in Duluth, GA, USA. In 2017, AGCO had net sales of $8.3 billion. For
more information, visit http://www.AGCOcorp.com. For
company news, information and events, please follow us on Twitter:
@AGCOCorp. For financial news on Twitter, please follow the hashtag
#AGCOIR.
Please visit our website at www.agcocorp.com
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AGCO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited and in millions)
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December 31, 2017
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December 31, 2016
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ASSETS |
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Current Assets:
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Cash and cash equivalents
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$
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367.7
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$
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429.7
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Accounts and notes receivable, net
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1,019.4
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890.4
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Inventories, net
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1,872.9
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1,514.8
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Other current assets
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367.7
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330.8
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Total current assets
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3,627.7
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3,165.7
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Property, plant and equipment, net
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1,485.3
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1,361.3
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Investment in affiliates
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409.0
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414.9
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Deferred tax assets
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112.2
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99.7
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Other assets
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147.1
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143.1
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Intangible assets, net
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649.0
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607.3
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Goodwill
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1,541.4
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1,376.4
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Total assets
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$
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7,971.7
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$
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7,168.4
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current Liabilities:
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Current portion of long-term debt
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$
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95.4
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$
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85.4
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Accounts payable
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917.5
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722.6
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Accrued expenses
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1,407.9
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1,160.8
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Other current liabilities
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229.8
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176.1
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Total current liabilities
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2,650.6
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2,144.9
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Long-term debt, less current portion and debt issuance costs
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1,618.1
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1,610.0
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Pensions and postretirement health care benefits
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247.3
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270.0
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Deferred tax liabilities
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130.5
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112.4
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Other noncurrent liabilities
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229.9
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193.9
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Total liabilities
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4,876.4
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4,331.2
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Stockholders’ Equity:
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AGCO Corporation stockholders’ equity:
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Common stock
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0.8
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0.8
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Additional paid-in capital
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136.6
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103.3
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Retained earnings
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4,253.8
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4,113.6
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Accumulated other comprehensive loss
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(1,361.6
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)
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(1,441.6
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)
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Total AGCO Corporation stockholders’ equity
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3,029.6
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2,776.1
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Noncontrolling interests
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65.7
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61.1
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Total stockholders’ equity
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3,095.3
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2,837.2
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Total liabilities and stockholders’ equity
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$
|
7,971.7
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$
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7,168.4
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See accompanying notes to condensed consolidated financial
statements.
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AGCO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited and in millions, except per share data)
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Three Months Ended December 31,
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2017
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|
|
2016
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Net sales
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|
|
$
|
2,527.4
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|
|
|
$
|
2,094.0
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Cost of goods sold
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|
1,996.4
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|
1,673.7
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Gross profit
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531.0
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|
|
|
420.3
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Selling, general and administrative expenses
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|
|
277.1
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|
|
|
224.8
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Engineering expenses
|
|
|
93.4
|
|
|
|
81.8
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Restructuring expenses
|
|
|
2.7
|
|
|
|
6.4
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Amortization of intangibles
|
|
|
15.5
|
|
|
|
15.9
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Income from operations
|
|
|
142.3
|
|
|
|
91.4
|
Interest expense, net
|
|
|
11.5
|
|
|
|
17.6
|
Other expense, net
|
|
|
25.3
|
|
|
|
4.3
|
Income before income taxes and equity in net earnings of affiliates
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|
|
105.5
|
|
|
|
69.5
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Income tax provision
|
|
|
68.7
|
|
|
|
18.3
|
Income before equity in net earnings of affiliates
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|
|
36.8
|
|
|
|
51.2
|
Equity in net earnings of affiliates
|
|
|
8.3
|
|
|
|
10.0
|
Net income
|
|
|
45.1
|
|
|
|
61.2
|
Net (income) loss attributable to noncontrolling interests
|
|
|
(0.8
|
)
|
|
|
0.8
|
Net income attributable to AGCO Corporation and subsidiaries
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|
|
$
|
44.3
|
|
|
|
$
|
62.0
|
Net income per common share attributable to AGCO Corporation and
subsidiaries:
|
|
|
|
|
|
|
Basic
|
|
|
$
|
0.56
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|
|
|
$
|
0.78
|
Diluted
|
|
|
$
|
0.55
|
|
|
|
$
|
0.77
|
Cash dividends declared and paid per common share
|
|
|
$
|
0.14
|
|
|
|
$
|
0.13
|
Weighted average number of common and common equivalent shares
outstanding:
|
|
|
|
|
|
|
Basic
|
|
|
79.6
|
|
|
79.9
|
Diluted
|
|
|
80.5
|
|
|
80.8
|
|
|
|
|
|
|
|
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)
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2017
|
|
|
2016
|
Net sales
|
|
|
$
|
8,306.5
|
|
|
|
$
|
7,410.5
|
|
Cost of goods sold
|
|
|
6,541.2
|
|
|
|
5,895.0
|
|
Gross profit
|
|
|
1,765.3
|
|
|
|
1,515.5
|
|
Selling, general and administrative expenses
|
|
|
970.7
|
|
|
|
867.9
|
|
Engineering expenses
|
|
|
323.1
|
|
|
|
296.1
|
|
Restructuring expenses
|
|
|
11.2
|
|
|
|
11.9
|
|
Amortization of intangibles
|
|
|
57.0
|
|
|
|
51.2
|
|
Income from operations
|
|
|
403.3
|
|
|
|
288.4
|
|
Interest expense, net
|
|
|
45.1
|
|
|
|
52.1
|
|
Other expense, net
|
|
|
74.4
|
|
|
|
31.4
|
|
Income before income taxes and equity in net earnings of affiliates
|
|
|
283.8
|
|
|
|
204.9
|
|
Income tax provision
|
|
|
133.6
|
|
|
|
92.2
|
|
Income before equity in net earnings of affiliates
|
|
|
150.2
|
|
|
|
112.7
|
|
Equity in net earnings of affiliates
|
|
|
39.1
|
|
|
|
47.5
|
|
Net income
|
|
|
189.3
|
|
|
|
160.2
|
|
Net income attributable to noncontrolling interests
|
|
|
(2.9
|
)
|
|
|
(0.1
|
)
|
Net income attributable to AGCO Corporation and subsidiaries
|
|
|
$
|
186.4
|
|
|
|
$
|
160.1
|
|
Net income per common share attributable to AGCO Corporation and
subsidiaries:
|
|
|
|
|
|
|
Basic
|
|
|
$
|
2.34
|
|
|
|
$
|
1.97
|
|
Diluted
|
|
|
$
|
2.32
|
|
|
|
$
|
1.96
|
|
Cash dividends declared and paid per common share
|
|
|
$
|
0.56
|
|
|
|
$
|
0.52
|
|
Weighted average number of common and common equivalent shares
outstanding:
|
|
|
|
|
|
|
Basic
|
|
|
79.5
|
|
|
|
81.4
|
|
Diluted
|
|
|
80.2
|
|
|
|
81.7
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to condensed consolidated financial
statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AGCO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited and in millions)
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
Net income
|
|
|
$
|
189.3
|
|
|
|
$
|
160.2
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
|
Depreciation
|
|
|
222.8
|
|
|
|
223.4
|
|
Deferred debt issuance cost amortization
|
|
|
0.7
|
|
|
|
1.0
|
|
Amortization of intangibles
|
|
|
57.0
|
|
|
|
51.2
|
|
Stock compensation expense
|
|
|
38.2
|
|
|
|
18.1
|
|
Proceeds from termination of hedging instrument
|
|
|
—
|
|
|
|
7.3
|
|
Equity in net earnings of affiliates, net of cash received
|
|
|
41.2
|
|
|
|
(1.4
|
)
|
Deferred income tax (benefit) provision
|
|
|
(14.1
|
)
|
|
|
2.1
|
|
Other
|
|
|
2.3
|
|
|
|
1.3
|
|
Changes in operating assets and liabilities, net of effects from
purchase of businesses:
|
|
|
|
|
|
|
Accounts and notes receivable, net
|
|
|
(34.7
|
)
|
|
|
(4.5
|
)
|
Inventories, net
|
|
|
(196.0
|
)
|
|
|
(33.1
|
)
|
Other current and noncurrent assets
|
|
|
(36.6
|
)
|
|
|
(98.7
|
)
|
Accounts payable
|
|
|
123.5
|
|
|
|
62.8
|
|
Accrued expenses
|
|
|
149.0
|
|
|
|
47.0
|
|
Other current and noncurrent liabilities
|
|
|
35.0
|
|
|
|
(67.2
|
)
|
Total adjustments
|
|
|
388.3
|
|
|
|
209.3
|
|
Net cash provided by operating activities
|
|
|
577.6
|
|
|
|
369.5
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
Purchases of property, plant and equipment
|
|
|
(203.9
|
)
|
|
|
(201.0
|
)
|
Proceeds from sale of property, plant and equipment
|
|
|
4.1
|
|
|
|
2.4
|
|
Purchase of businesses, net of cash acquired
|
|
|
(293.1
|
)
|
|
|
(383.8
|
)
|
Investment in consolidated affiliates, net of cash acquired
|
|
|
—
|
|
|
|
(11.8
|
)
|
Investments in unconsolidated affiliates
|
|
|
(0.8
|
)
|
|
|
(4.5
|
)
|
Restricted cash and other
|
|
|
—
|
|
|
|
0.4
|
|
Net cash used in investing activities
|
|
|
(493.7
|
)
|
|
|
(598.3
|
)
|
Cash flows from financing activities:
|
|
|
|
|
|
|
(Payments) proceeds from debt obligations, net
|
|
|
(125.8
|
)
|
|
|
495.5
|
|
Purchases and retirement of common stock
|
|
|
—
|
|
|
|
(212.5
|
)
|
Payment of dividends to stockholders
|
|
|
(44.5
|
)
|
|
|
(42.5
|
)
|
Payment of minimum tax withholdings on stock compensation
|
|
|
(6.9
|
)
|
|
|
(2.0
|
)
|
Payment of debt issuance costs
|
|
|
—
|
|
|
|
(2.5
|
)
|
Investments by noncontrolling interest
|
|
|
0.5
|
|
|
|
0.4
|
|
Net cash (used in) provided by financing activities
|
|
|
(176.7
|
)
|
|
|
236.4
|
|
Effects of exchange rate changes on cash and cash equivalents
|
|
|
30.8
|
|
|
|
(4.6
|
)
|
(Decrease) increase in cash and cash equivalents
|
|
|
(62.0
|
)
|
|
|
3.0
|
|
Cash and cash equivalents, beginning of year
|
|
|
429.7
|
|
|
|
426.7
|
|
Cash and cash equivalents, end of year
|
|
|
$
|
367.7
|
|
|
|
$
|
429.7
|
|
|
|
|
|
|
|
|
|
|
|
|
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 (CREDIT)
The Company recorded stock compensation expense (credit) as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31,
|
|
|
|
Years Ended December 31,
|
|
|
|
|
2017
|
|
|
|
2016
|
|
|
|
2017
|
|
|
|
2016
|
Cost of goods sold
|
|
|
|
$
|
0.4
|
|
|
|
|
$
|
(0.1
|
)
|
|
|
|
$
|
2.8
|
|
|
|
|
$
|
1.5
|
Selling, general and administrative expenses
|
|
|
|
6.5
|
|
|
|
|
(1.1
|
)
|
|
|
|
35.6
|
|
|
|
|
16.9
|
Total stock compensation expense (credit)
|
|
|
|
$
|
6.9
|
|
|
|
|
$
|
(1.2
|
)
|
|
|
|
$
|
38.4
|
|
|
|
|
$
|
18.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 Chief
Executive Officer.
2.RESTRUCTURING EXPENSES
From 2014 through 2017, 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 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 year ended
December 31, 2017, the Company recorded an additional $11.2 million of
severance and related costs associated with further rationalizations
associated with the termination of approximately 620 employees, and paid
approximately $16.8 million of severance and related costs. The
remaining $10.9 million of accrued severance and other related costs as
of December 31, 2017, inclusive of approximately $1.4 million of
positive foreign currency translation impacts, are expected to be paid
primarily during 2018.
3.INDEBTEDNESS
Indebtedness at December 31, 2017 and 2016 consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2017
|
|
|
|
December 31, 2016
|
1.056% Senior term loan due 2020
|
|
|
|
$
|
239.8
|
|
|
|
|
$
|
211.0
|
|
Credit facility, expires 2020
|
|
|
|
471.2
|
|
|
|
|
329.2
|
|
Senior term loans due 2021
|
|
|
|
119.9
|
|
|
|
|
316.5
|
|
5 7/8% Senior notes due 2021
|
|
|
|
305.3
|
|
|
|
|
306.6
|
|
Senior term loans due between 2019 and 2026
|
|
|
|
449.7
|
|
|
|
|
395.6
|
|
Other long-term debt
|
|
|
|
131.6
|
|
|
|
|
141.6
|
|
Debt issuance costs
|
|
|
|
(4.0
|
)
|
|
|
|
(5.1
|
)
|
|
|
|
|
1,713.5
|
|
|
|
|
1,695.4
|
|
Less: Current portion of other long-term debt
|
|
|
|
(95.4
|
)
|
|
|
|
(85.4
|
)
|
Total indebtedness, less current portion
|
|
|
|
$
|
1,618.1
|
|
|
|
|
$
|
1,610.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.INVENTORIES
Inventories at December 31, 2017 and 2016 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2017
|
|
|
|
December 31, 2016
|
Finished goods
|
|
|
|
$
|
684.1
|
|
|
|
|
$
|
589.3
|
Repair and replacement parts
|
|
|
|
605.9
|
|
|
|
|
532.5
|
Work in process
|
|
|
|
178.7
|
|
|
|
|
113.8
|
Raw materials
|
|
|
|
404.2
|
|
|
|
|
279.2
|
Inventories, net
|
|
|
|
$
|
1,872.9
|
|
|
|
|
$
|
1,514.8
|
|
|
|
|
|
|
|
|
|
|
|
|
5.ACCOUNTS RECEIVABLE SALES AGREEMENTS
At December 31, 2017 and 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
December 31, 2017 and 2016, the cash received from receivables sold
under the U.S., Canadian, European and Brazilian accounts receivable
sales agreements was approximately $1.3 billion and $1.1 billion,
respectively.
Losses on sales of receivables associated with the accounts receivable
financing facilities discussed above, reflected within “Other expense,
net” in the Company’s Consolidated Statements of Operations, were
approximately $11.7 million and $39.2 million during the three months
and year ended December 31, 2017, respectively. Losses on sales of
receivables associated with the accounts receivable financing facilities
discussed above, reflected within “Other expense, net” in the Company’s
Consolidated Statements of Operations, were approximately $5.7 million
and $19.5 million during the three months and year ended December 31,
2016, respectively.
The Company’s finance joint ventures in Europe, Brazil and Australia
also provide wholesale financing to the Company’s dealers. As of
December 31, 2017 and 2016, these finance joint ventures had
approximately $41.6 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 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 and years ended December 31, 2017 and 2016 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31,
|
|
|
|
Years Ended December 31,
|
|
|
|
|
2017
|
|
|
|
2016
|
|
|
|
2017
|
|
|
|
2016
|
Basic net income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to AGCO Corporation and subsidiaries
|
|
|
|
$
|
44.3
|
|
|
|
|
$
|
62.0
|
|
|
|
|
$
|
186.4
|
|
|
|
|
$
|
160.1
|
Weighted average number of common shares outstanding
|
|
|
|
79.6
|
|
|
|
|
79.9
|
|
|
|
|
79.5
|
|
|
|
|
81.4
|
Basic net income per share attributable to AGCO Corporation and
subsidiaries
|
|
|
|
$
|
0.56
|
|
|
|
|
$
|
0.78
|
|
|
|
|
$
|
2.34
|
|
|
|
|
$
|
1.97
|
Diluted net income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to AGCO Corporation and subsidiaries
|
|
|
|
$
|
44.3
|
|
|
|
|
$
|
62.0
|
|
|
|
|
$
|
186.4
|
|
|
|
|
$
|
160.1
|
Weighted average number of common shares outstanding
|
|
|
|
79.6
|
|
|
|
|
79.9
|
|
|
|
|
79.5
|
|
|
|
|
81.4
|
Dilutive stock-settled appreciation rights, performance share awards
and restricted stock units
|
|
|
|
0.9
|
|
|
|
|
0.9
|
|
|
|
|
0.7
|
|
|
|
|
0.3
|
Weighted average number of common shares and common share
equivalents outstanding for purposes of computing diluted net income
per share
|
|
|
|
80.5
|
|
|
|
|
80.8
|
|
|
|
|
80.2
|
|
|
|
|
81.7
|
Diluted net income per share attributable to AGCO Corporation and
subsidiaries
|
|
|
|
$
|
0.55
|
|
|
|
|
$
|
0.77
|
|
|
|
|
$
|
2.32
|
|
|
|
|
$
|
1.96
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 maker 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 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 and years ended
December 31, 2017 and 2016 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31,
|
|
|
North
America
|
|
|
South
America
|
|
|
Europe/
Middle East
|
|
|
Asia/
Pacific/Africa
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
$
|
531.8
|
|
|
|
$
|
315.9
|
|
|
|
$
|
1,434.6
|
|
|
|
$
|
245.1
|
|
|
|
$
|
2,527.4
|
Income from operations
|
|
|
12.0
|
|
|
|
0.7
|
|
|
|
163.4
|
|
|
|
25.6
|
|
|
|
201.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
$
|
447.4
|
|
|
|
$
|
308.1
|
|
|
|
$
|
1,139.3
|
|
|
|
$
|
199.2
|
|
|
|
$
|
2,094.0
|
(Loss) income from operations
|
|
|
(4.9
|
)
|
|
|
13.6
|
|
|
|
122.0
|
|
|
|
11.3
|
|
|
|
142.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
North
America
|
|
|
South
America
|
|
|
Europe/ Middle East
|
|
|
Asia/ Pacific/Africa
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
$
|
1,876.7
|
|
|
|
$
|
1,063.5
|
|
|
|
$
|
4,614.3
|
|
|
|
$
|
752.0
|
|
|
|
$
|
8,306.5
|
Income from operations
|
|
|
64.7
|
|
|
|
14.5
|
|
|
|
500.0
|
|
|
|
48.8
|
|
|
|
628.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
$
|
1,807.7
|
|
|
|
$
|
917.5
|
|
|
|
$
|
4,089.7
|
|
|
|
$
|
595.6
|
|
|
|
$
|
7,410.5
|
Income from operations
|
|
|
39.1
|
|
|
|
19.9
|
|
|
|
409.4
|
|
|
|
19.7
|
|
|
|
488.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A reconciliation from the segment information to the consolidated
balances for income from operations is set forth below:
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31,
|
|
|
Years Ended December 31,
|
|
|
|
2017
|
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
Segment income from operations
|
|
|
$
|
201.7
|
|
|
|
|
$
|
142.0
|
|
|
|
$
|
628.0
|
|
|
|
$
|
488.1
|
|
Corporate expenses
|
|
|
(34.7
|
)
|
|
|
|
(29.4
|
)
|
|
|
(120.9
|
)
|
|
|
(119.7
|
)
|
Stock compensation (expense) credit
|
|
|
(6.5
|
)
|
|
|
|
1.1
|
|
|
|
(35.6
|
)
|
|
|
(16.9
|
)
|
Restructuring expenses
|
|
|
(2.7
|
)
|
|
|
|
(6.4
|
)
|
|
|
(11.2
|
)
|
|
|
(11.9
|
)
|
Amortization of intangibles
|
|
|
(15.5
|
)
|
|
|
|
(15.9
|
)
|
|
|
(57.0
|
)
|
|
|
(51.2
|
)
|
Consolidated income from operations
|
|
|
$
|
142.3
|
|
|
|
|
$
|
91.4
|
|
|
|
$
|
403.3
|
|
|
|
$
|
288.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF NON-GAAP MEASURES
This earnings release discloses adjusted income from operations,
adjusted net income, adjusted net income per share, net sales on a
constant currency basis and free cash flow, each of which excludes
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 and years ended
December 31, 2017 and 2016 (in millions, except per share data):
|
|
|
Three Months Ended December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
Income From Operations
|
|
|
Net Income (1) |
|
|
Net Income Per Share (1)
|
|
|
Income From Operations
|
|
|
Net Income (1)
|
|
|
Net Income Per Share (1)
|
As reported
|
|
|
$
|
142.3
|
|
|
|
$
|
44.3
|
|
|
|
$
|
0.55
|
|
|
|
$
|
91.4
|
|
|
|
$
|
62.0
|
|
|
|
$
|
0.77
|
Restructuring expenses (2) |
|
|
2.7
|
|
|
|
2.4
|
|
|
|
0.03
|
|
|
|
6.4
|
|
|
|
5.6
|
|
|
|
0.07
|
U.S. tax reform(3) |
|
|
—
|
|
|
|
42.0
|
|
|
|
0.52
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
As adjusted
|
|
|
$
|
145.0
|
|
|
|
$
|
88.7
|
|
|
|
$
|
1.10
|
|
|
|
$
|
97.8
|
|
|
|
$
|
67.6
|
|
|
|
$
|
0.84
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Net income and net income per share amounts are after tax.
|
(2) |
The restructuring expenses recorded during the three months ended
December 31, 2017 and 2016 related primarily to severance costs
associated with the Company’s rationalization of certain U.S.,
European, South American and Chinese manufacturing operations and
various administrative offices.
|
(3) |
During the three months ended December 31, 2017, the Company
recorded a one-time charge of approximately $42.0 million resulting
from the enactment of U.S. tax reform legislation on December 22,
2017. The charge includes an estimate of approximately $14.3 million
related to the transition tax associated with the mandatory deemed
repatriation of foreign earnings, with the remainder primarily
related to the remeasurement of certain net deferred tax assets
using the lower U.S. corporate tax rate, as well as other tax
impacts associated with unremitted foreign earnings. The one-time
charge related to the enacted tax reform legislation is based on the
Company’s current estimates. The final impact of the tax reform
legislation may differ materially due to factors such as further
refinement of the Company’s calculations, changes in interpretations
and assumptions that the Company and its advisors have made,
additional guidance that may be issued in the future by the U.S.
government, and actions that the Company may take as a result of the
legislation.
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
Income From Operations
|
|
|
Net Income (1) |
|
|
Net Income Per Share (1)(2)
|
|
|
Income From Operations
|
|
|
Net Income (1)
|
|
|
Net Income Per Share (1)
|
As reported
|
|
|
$
|
403.3
|
|
|
|
$
|
186.4
|
|
|
|
$
|
2.32
|
|
|
|
$
|
288.4
|
|
|
|
$
|
160.1
|
|
|
|
$
|
1.96
|
Restructuring expenses (3) |
|
|
11.2
|
|
|
|
8.8
|
|
|
|
0.11
|
|
|
|
11.9
|
|
|
|
9.9
|
|
|
|
0.12
|
Non-cash expense related to waived stock compensation (4) |
|
|
4.8
|
|
|
|
4.8
|
|
|
|
0.06
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
Deferred income tax adjustment (5) |
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
31.6
|
|
|
|
0.39
|
U.S. tax reform(6) |
|
|
—
|
|
|
|
42.0
|
|
|
|
0.52
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
As adjusted
|
|
|
$
|
419.3
|
|
|
|
$
|
242.0
|
|
|
|
$
|
3.02
|
|
|
|
$
|
300.3
|
|
|
|
$
|
201.6
|
|
|
|
$
|
2.47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Net income and net income per share amounts are after tax.
|
(2) |
Rounding may impact summation of amounts.
|
(3) |
The restructuring expenses recorded during the years ended December
31, 2017 and 2016 related primarily to severance costs associated
with the Company’s rationalization of certain U.S., European, South
American and Chinese manufacturing operations and various
administrative offices.
|
(4) |
The Company recorded accelerated stock compensation expense
associated with a waived award declined by the Company’s CEO of
approximately $4.8 million during the three months ended March 31,
2017.
|
(5) |
The Company recorded a non-cash adjustment to increase the valuation
allowance on the U.S. deferred income tax assets of approximately
$31.6 million during the three months ended June 30, 2016.
|
(6) |
During the year ended December 31, 2017, the Company recorded a
one-time charge of approximately $42.0 million resulting from the
enactment of U.S. tax reform legislation on December 22, 2017, as
previously described.
|
|
|
The following table sets forth, for the three months and year ended
December 31, 2017, the impact to net sales of currency translation and
recent acquisitions by geographical segment (in millions, except
percentages):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31,
|
|
|
|
|
|
Change due to currency translation
|
|
|
Change due to acquisitions
|
|
|
|
2017
|
|
|
2016
|
|
|
% change from 2016
|
|
|
$
|
|
|
%
|
|
|
$
|
|
|
%
|
North America
|
|
|
$
|
531.8
|
|
|
|
$
|
447.4
|
|
|
|
18.9
|
%
|
|
|
$
|
6.6
|
|
|
|
1.5
|
%
|
|
|
$
|
19.4
|
|
|
|
4.3
|
%
|
South America
|
|
|
315.9
|
|
|
|
308.1
|
|
|
|
2.5
|
%
|
|
|
(2.1
|
)
|
|
|
(0.7)
|
%
|
|
|
1.6
|
|
|
|
0.5
|
%
|
Europe/Middle East
|
|
|
1,434.6
|
|
|
|
1,139.3
|
|
|
|
25.9
|
%
|
|
|
106.7
|
|
|
|
9.4
|
%
|
|
|
16.9
|
|
|
|
1.5
|
%
|
Asia/Pacific/Africa
|
|
|
245.1
|
|
|
|
199.2
|
|
|
|
23.0
|
%
|
|
|
12.4
|
|
|
|
6.2
|
%
|
|
|
9.1
|
|
|
|
4.6
|
%
|
|
|
|
$
|
2,527.4
|
|
|
|
$
|
2,094.0
|
|
|
|
20.7
|
%
|
|
|
$
|
123.6
|
|
|
|
5.9
|
%
|
|
|
$
|
47.0
|
|
|
|
2.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
|
|
Change due to currency translation
|
|
|
Change due to acquisitions
|
|
|
|
2017
|
|
|
2016
|
|
|
% change from 2016
|
|
|
$
|
|
|
%
|
|
|
$
|
|
|
%
|
North America
|
|
|
$
|
1,876.7
|
|
|
|
$
|
1,807.7
|
|
|
|
3.8
|
%
|
|
|
$
|
4.7
|
|
|
|
0.3
|
%
|
|
|
$
|
38.8
|
|
|
|
2.1
|
%
|
South America
|
|
|
1,063.5
|
|
|
|
917.5
|
|
|
|
15.9
|
%
|
|
|
41.3
|
|
|
|
4.5
|
%
|
|
|
4.1
|
|
|
|
0.4
|
%
|
Europe/Middle East
|
|
|
4,614.3
|
|
|
|
4,089.7
|
|
|
|
12.8
|
%
|
|
|
57.6
|
|
|
|
1.4
|
%
|
|
|
110.6
|
|
|
|
2.7
|
%
|
Asia/Pacific/Africa
|
|
|
752.0
|
|
|
|
595.6
|
|
|
|
26.3
|
%
|
|
|
13.9
|
|
|
|
2.3
|
%
|
|
|
24.1
|
|
|
|
4.0
|
%
|
|
|
|
$
|
8,306.5
|
|
|
|
$
|
7,410.5
|
|
|
|
12.1
|
%
|
|
|
$
|
117.5
|
|
|
|
1.6
|
%
|
|
|
$
|
177.6
|
|
|
|
2.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following is a reconciliation of net cash provided by operating
activities to free cash flow for the years ended December 31, 2017 and
2016 (in millions):
|
|
|
|
2017
|
|
|
|
2016
|
Net cash provided by operating activities
|
|
|
|
$
|
577.6
|
|
|
|
|
$
|
369.5
|
|
Less:
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
|
(203.9
|
)
|
|
|
|
(201.0
|
)
|
Free cash flow
|
|
|
|
$
|
373.7
|
|
|
|
|
$
|
168.5
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20180206005730/en/
Source: AGCO
AGCO Greg Peterson, 770-232-8229 Vice President, Investor
Relations greg.peterson@agcocorp.com
|