Third Quarter Net Income of $65.0 million on
Sales of $2.2 Billion
AGCO, Your Agriculture Company (NYSE:AGCO), a worldwide
manufacturer and distributor of agricultural equipment, reported
net sales of approximately $2.2 billion for the third quarter of
2014, a decrease of approximately 13.0% compared to net sales of
approximately $2.5 billion for the third quarter of 2013. Reported
net income was $0.69 per share and adjusted net income, excluding
restructuring and other infrequent expenses, was $0.71 per share
for the third quarter of 2014. These results compare to reported
and adjusted net income per share of $1.27 for the third quarter of
2013. Excluding unfavorable currency translation impacts of
approximately 0.7%, net sales in the third quarter of 2014
decreased approximately 12.3% compared to the third quarter of
2013.
Net sales for the first nine months of 2014 were approximately
$7.2 billion, a decrease of approximately 8.7% compared to the same
period in 2013. Excluding the unfavorable impact of currency
translation of approximately 0.7%, net sales for the first nine
months of 2014 decreased approximately 8.0% compared to the same
period in 2013. For the first nine months of 2014, reported net
income was $3.50 per share and adjusted net income, excluding
restructuring and other infrequent expenses, was $3.52 per share.
These results compare to reported and adjusted net income of $4.61
per share for the first nine months of 2013.
Third Quarter Highlights
- Regional sales results(1): North
America -22.2%, Europe/Africa/ Middle East (“EAME”) -5.4%, South
America -18.4%, Asia/Pacific (“APAC”) +8.8%
- Regional operating margin performance:
EAME 5.6%, North America 7.0%, South America 8.0%, APAC -0.7%
- Full year earnings per share guidance
remains at $4.10 to $4.30
- Share repurchase program reduced
outstanding shares by 6.4 million during the first nine months of
2014
(1)Excludes currency translation impact. See
reconciliation of Non-GAAP measures in appendix.
“Our third quarter results were impacted by weaker markets and
significant production cuts aimed at controlling our Company and
dealer inventories,” stated Martin Richenhagen, AGCO’s Chairman,
President and Chief Executive Officer. “Declines in commodity
prices and expectations of lower farm income in 2014 have
negatively impacted our business. While we continue to perform well
in the market, we are facing softening industry demand in Western
Europe and North America and continued weakness in South America.
We are taking aggressive actions to control expenses, reduce our
production levels and lower our investments in working capital in
response to lower market demand. We are balancing near-term cost
reductions with continued investment in longer-term growth
initiatives.”
Market Update
Industry Unit Retail Sales
Tractors
Combines
Change from
Change from
Nine months ended September 30, 2014
Prior Year Period
Prior Year Period
North America(1) Flat (18)% South America (16)% (23)% Western
Europe (7)% (10)%
(1) Excludes compact tractors.
“The record harvest unfolding in the U.S. combined with the
healthy crop production across Western Europe and Brazil are
resulting in increased estimates for post-harvest grain
inventories, which continue to pressure soft commodity prices.
Farmer sentiment is being negatively impacted by the outlook for
deteriorating farm economics, and we are experiencing softer
industry equipment demand in all major markets. Industry demand in
North America has weakened with significant declines in sales of
high-horsepower tractors, combines and sprayers, partially offset
by growth in the lower-horsepower categories due to improved
conditions in the region’s dairy and livestock sectors. Retail
sales of farm equipment have declined across Western Europe.
Industry sales have weakened in the largest markets of France and
Germany, with modest recovery experienced in the United Kingdom and
parts of Southern Europe. In Brazil, industry sales are lower and
have been negatively impacted by weak demand from sugar producers,
lower commodity prices and delays in the government financing
program earlier in the year. Longer term, we expect grain demand to
be supported by the growing population, increasing emerging market
protein consumption and biofuel production. Increased demand for
grain and attractive levels of farm income are expected to result
in healthy long-term prospects for our industry.”
Regional Results
AGCO Regional Net Sales (in millions)
% change
from 2013 due to % change currency
Three Months Ended September
30, 2014 2013 from 2013
translation(1)
North America $ 531.3 $ 686.6 (22.6)% (0.4)% South America 455.0
572.3 (20.5)% (2.1)% Europe/Africa/Middle East 1,026.0 1,086.4
(5.6)% (0.2)% Asia/Pacific 142.5 130.6 9.1% 0.3%
Total $ 2,154.8 $ 2,475.9 (13.0)% (0.7)% %
change from 2013 due to % change currency
Nine Months Ended
September 30, 2014 2013 from 2013
translation(1)
North America $ 1,865.0 $ 2,099.7 (11.2)% (0.9)% South America
1,248.8 1,578.0 (20.9)% (7.8)% Europe/Africa/Middle East 3,783.8
3,878.6 (2.4)% 2.3% Asia/Pacific 340.9 370.9 (8.1)%
(1.5)% Total $ 7,238.5 $ 7,927.2 (8.7)% (0.7)%
(1) See Footnotes for additional disclosures
North America
Net sales, excluding unfavorable currency translation impacts,
decreased 10.3% in AGCO’s North American region in the first nine
months of 2014 compared to the same period in 2013 due to softer
market conditions. The most significant decreases were in
high-horsepower tractors and implements, with growth in small
tractor sales partially offsetting the declines. Lower sales, a
weaker sales mix and lower production volumes contributed to a
decline in income from operations of $83.5 million for the first
nine months of 2014 compared to the same period in 2013.
South America
Excluding the negative impact of currency translation, net sales
in the South American region declined 13.1% in the first nine
months of 2014 compared to the same period in 2013. Weaker market
demand and lower sales in Brazil and Argentina produced most of the
decrease. Income from operations decreased $85.7 million for the
first nine months of 2014 compared to the same period in 2013 due
to lower sales and production volumes, as well as a weaker mix of
sales.
EAME
AGCO’s EAME net sales decreased 4.7% in the first nine months of
2014 compared to the first nine months of 2013, excluding the
impact of favorable currency translation due to weaker end market
demand. Sales declines in France, Germany and Eastern Europe were
partially offset by growth in Africa and Turkey. EAME operating
income decreased $37.0 million in the first nine months of 2014
compared to the same period in 2013. The negative impact of lower
production levels and a weaker sales mix were partially offset by
cost reduction initiatives.
Asia/Pacific
Asia/Pacific net sales decreased 6.6% in the first nine months
of 2014 compared to the first nine months of 2013, excluding the
negative impact of currency translation. Income from operations in
the Asia/Pacific region declined $7.7 million in the first nine
months of 2014, compared to the same period in 2013, due to lower
sales and increased market development costs in China.
Outlook
Global industry demand is softening compared to 2013 and
declines are anticipated across all major global agricultural
markets, particularly in the row crop segment. AGCO is targeting
earnings per share of approximately $4.10 to $4.30 for the full
year of 2014. Net sales are expected to range from $9.5 billion to
$9.7 billion. The negative impacts of lower sales and production
volumes on gross margins are expected to be partially offset by
cost reduction initiatives.
“The priority for the remainder of the year continues to be
lowering our dealer and company inventories in order to better
align us with current market demand,” continued Mr. Richenhagen.
“Despite the softer market conditions we face today, the healthy,
long-term fundamentals of our industry remain intact. We will
continue to invest in new product development, distribution
enhancements and productivity improvements to enable our growth and
improve our profitability.”
* * * * *
AGCO will be hosting a conference call with respect to this
earnings announcement at 10:00 a.m. Eastern Time on Tuesday,
October 28, 2014. 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, population growth, farm income levels, margin
improvements, investments in product development, operational and
financial initiatives, production volumes, gross margins, market
development and performance, and general economic conditions, are
forward-looking and subject to risks that could cause actual
results to differ materially from those suggested by the
statements. The following are among the factors that could cause
actual results to differ materially from the results discussed in
or implied by the forward-looking statements.
- Our financial results depend entirely
upon the agricultural industry, and factors that adversely affect
the agricultural industry generally, including declines in the
general economy, increases in farm input costs, lower commodity
prices, lower farm income and changes in the availability of credit
for our retail customers, will adversely affect us.
- A majority of our sales and
manufacturing take place outside the United States, and, as a
result, we are exposed to risks related to foreign laws, taxes,
economic conditions, labor supply and relations, political
conditions and governmental policies. These risks may delay or
reduce our realization of value from our international
operations.
- Most retail sales of the products that
we manufacture are financed, either by our joint ventures with
Rabobank or by a bank or other private lender. Our joint ventures
with Rabobank, which are controlled by Rabobank and are dependent
upon Rabobank for financing as well, finance approximately 50% of
the retail sales of our tractors and combines in the markets where
the joint ventures operate. Any difficulty by Rabobank to continue
to provide that financing, or any business decision by Rabobank as
the controlling member not to fund the business or particular
aspects of it (for example, a particular country or region), would
require the joint ventures to find other sources of financing
(which may be difficult to obtain), or us to find another source of
retail financing for our customers, or our customers would be
required to utilize other retail financing providers. As a result
of the recent economic downturn, financing for capital equipment
purchases generally has become more difficult in certain regions
and in some cases, was expensive to obtain. To the extent that
financing is not available or available only at unattractive
prices, our sales would be negatively impacted.
- Both AGCO and our retail finance joint
ventures have substantial account receivables from dealers and end
customers, and we would be adversely impacted if the collectability
of these receivables was not consistent with historical experience;
this collectability is dependent upon the financial strength of the
farm industry, which in turn is dependent upon the general economy
and commodity prices, as well as several of the other factors
listed in this section.
- We have experienced substantial and
sustained volatility with respect to currency exchange rate and
interest rate changes, including uncertainty associated with the
Euro, which can adversely affect our reported results of operations
and the competitiveness of our products.
- Our success depends on the introduction
of new products, particularly engines that comply with emission
requirements, which requires substantial expenditures.
- Our production levels and capacity
constraints at our facilities, including those resulting from plant
expansions and systems upgrades at our manufacturing facilities,
could adversely affect our results.
- Our expansion plans in emerging
markets, including establishing a greater manufacturing and
marketing presence and growing our use of component suppliers,
could entail significant risks.
- We depend on suppliers for components,
parts and raw materials for our products, and any failure by our
suppliers to provide products as needed, or by us to promptly
address supplier issues, will adversely impact our ability to
timely and efficiently manufacture and sell products. We also are
subject to raw material price fluctuations, which can adversely
affect our manufacturing costs.
- We face significant competition, and if
we are unable to compete successfully against other agricultural
equipment manufacturers, we would lose customers and our net sales
and profitability would decline.
- We have a substantial amount of
indebtedness, and, as result, we are subject to certain restrictive
covenants and payment obligations that may adversely affect our
ability to operate and expand our business.
Further information concerning these and other factors is
included in AGCO’s filings with the Securities and Exchange
Commission, including its Form 10-K for the year ended
December 31, 2013 and subsequent Form 10-Qs. AGCO
disclaims any obligation to update any forward-looking statements
except as required by law.
* * * * *
About AGCO
AGCO, Your Agriculture Company, (NYSE: AGCO), is a global leader
focused on the design, manufacture and distribution of agricultural
machinery. AGCO supports more productive farming through a full
line of tractors, combines, hay tools, sprayers, forage equipment,
tillage, implements, grain storage and protein production systems,
as well as related replacement parts. AGCO products are sold
through five core machinery brands, Challenger®, Fendt®, Massey
Ferguson®, Valtra® and GSI®, and are distributed globally through
3,100 independent dealers and distributors in more than 140
countries worldwide. Retail financing is available through AGCO
Finance for qualified purchasers. Founded in 1990, AGCO is
headquartered in Duluth, Georgia, USA. In 2013, AGCO had net sales
of $10.8 billion. For more information, see http://www.agcocorp.com.
# # # # #
Please visit our website at www.agcocorp.com
AGCO CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED
BALANCE SHEETS (unaudited and in millions)
September 30, 2014
December 31, 2013
ASSETS
Current Assets: Cash and cash equivalents $ 320.9 $ 1,047.2
Accounts and notes receivable, net 1,083.6 940.6 Inventories, net
2,315.1 2,016.1 Deferred tax assets 225.7 241.2 Other current
assets 260.1 272.0 Total current assets 4,205.4
4,517.1 Property, plant and equipment, net 1,525.3 1,602.3
Investment in affiliates 432.2 416.1 Deferred tax assets 22.0 24.4
Other assets 132.9 134.6 Intangible assets, net 569.6 565.6
Goodwill 1,226.5 1,178.7 Total assets $ 8,113.9
$ 8,438.8
LIABILITIES AND STOCKHOLDERS’
EQUITY Current Liabilities: Current portion of long-term debt $
88.4 $ 110.5 Convertible senior subordinated notes — 201.2 Accounts
payable 819.5 960.3 Accrued expenses 1,227.7 1,389.2 Other current
liabilities 228.0 150.8 Total current liabilities
2,363.6 2,812.0 Long-term debt, less current portion 1,332.8 938.5
Pensions and postretirement health care benefits 215.5 246.4
Deferred tax liabilities 251.8 251.2 Other noncurrent liabilities
156.9 145.9 Total liabilities 4,320.6 4,394.0
Stockholders’ Equity: AGCO Corporation stockholders’
equity: Common stock 0.9 1.0 Additional paid-in capital 742.5
1,117.9 Retained earnings 3,703.9 3,402.0 Accumulated other
comprehensive loss (687.4 ) (510.7 ) Total AGCO Corporation
stockholders’ equity 3,759.9 4,010.2 Noncontrolling interests 33.4
34.6 Total stockholders’ equity 3,793.3
4,044.8 Total liabilities and stockholders’ equity $ 8,113.9
$ 8,438.8
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) Three Months
Ended September 30, 2014 2013 Net sales $
2,154.8 $ 2,475.9 Cost of goods sold 1,732.9 1,919.7 Gross
profit 421.9 556.2 Selling, general and administrative expenses
221.7 258.1 Engineering expenses 78.2 87.3 Restructuring and other
infrequent expenses 2.9 — Amortization of intangibles 10.4
11.8 Income from operations 108.7 199.0 Interest expense, net 13.9
14.1 Other expense, net 10.1 11.3 Income before income taxes
and equity in net earnings of affiliates 84.7 173.6 Income tax
provision 34.2 62.5 Income before equity in net earnings of
affiliates 50.5 111.1 Equity in net earnings of affiliates 12.0
14.1 Net income 62.5 125.2 Net loss attributable to
noncontrolling interests 2.5 1.0 Net income attributable to
AGCO Corporation and subsidiaries $ 65.0 $ 126.2 Net income
per common share attributable to AGCO Corporation and subsidiaries:
Basic $ 0.70 $ 1.30 Diluted $ 0.69 $ 1.27 Cash
dividends declared and paid per common share $ 0.11 $ 0.10
Weighted average number of common and common equivalent shares
outstanding: Basic 93.5 97.4 Diluted 93.8 99.5
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) Nine Months
Ended September 30, 2014 2013 Net sales $ 7,238.5 $
7,927.2 Cost of goods sold 5,670.2 6,127.6 Gross profit
1,568.3 1,799.6 Selling, general and administrative expenses 751.0
793.5 Engineering expenses 252.9 266.7 Restructuring and other
infrequent expenses 2.9 — Amortization of intangibles 30.4
35.9 Income from operations 531.1 703.5 Interest expense, net 43.5
40.2 Other expense, net 34.2 25.2 Income before income taxes
and equity in net earnings of affiliates 453.4 638.1 Income tax
provision 163.8 219.8 Income before equity in net earnings
of affiliates 289.6 418.3 Equity in net earnings of affiliates 38.1
37.1 Net income 327.7 455.4 Net loss attributable to
noncontrolling interests 5.1 2.5 Net income attributable to
AGCO Corporation and subsidiaries $ 332.8 $ 457.9 Net income
per common share attributable to AGCO Corporation and subsidiaries:
Basic $ 3.53 $ 4.71 Diluted $ 3.50 $ 4.61 Cash
dividends declared and paid per common share $ 0.33 $ 0.30
Weighted average number of common and common equivalent shares
outstanding: Basic 94.2 97.2 Diluted 95.2 99.3
See accompanying notes to condensed
consolidated financial statements.
AGCO CORPORATION AND SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited and in millions)
Nine Months Ended September 30, 2014
2013 Cash flows from operating activities: Net
income $ 327.7 $ 455.4
Adjustments to reconcile net income to net
cash (used in) provided by operating activities:
Depreciation 180.4 153.8 Deferred debt issuance cost amortization
2.2 2.6 Amortization of intangibles 30.4 35.9 Amortization of debt
discount — 6.9 Stock compensation (11.0 ) 33.9 Equity in net
earnings of affiliates, net of cash received (28.6 ) (22.5 )
Deferred income tax provision 1.7 28.1 Other 2.3 0.2
Changes in operating assets and
liabilities, net of effects from purchase of businesses:
Accounts and notes receivable, net (151.4 ) (245.5 ) Inventories,
net (422.7 ) (507.9 ) Other current and noncurrent assets (0.8 )
(22.8 ) Accounts payable (74.7 ) 95.3 Accrued expenses (96.9 ) 98.0
Other current and noncurrent liabilities 26.1 57.6
Total adjustments (543.0 ) (286.4 )
Net cash (used in) provided by operating
activities
(215.3 ) 169.0 Cash flows from investing activities:
Purchases of property, plant and equipment (229.3 ) (263.8 )
Proceeds from sale of property, plant and equipment 2.2 2.9
Purchase of businesses, net of cash acquired (130.4 ) (0.1 ) Sale
of (investment in) unconsolidated affiliates, net — 0.1
Net cash used in investing activities (357.5 ) (260.9 ) Cash
flows from financing activities: Purchases and retirement of common
stock (340.9 ) (1.0 ) Proceeds from debt obligations, net 450.6 4.1
Repurchase or conversion of convertible senior subordinated notes
(201.2 ) — Payment of dividends to stockholders (30.9 ) (29.1 )
Payment of minimum tax withholdings on stock compensation (11.9 )
(16.3 ) Purchase of or distribution to noncontrolling interests
(6.1 ) (2.6 ) Payment of debt issuance costs (1.3 ) — Net
cash used in financing activities (141.7 ) (44.9 ) Effects of
exchange rate changes on cash and cash equivalents (11.8 ) (24.0 )
Decrease in cash and cash equivalents (726.3 ) (160.8 ) Cash and
cash equivalents, beginning of period 1,047.2 781.3
Cash and cash equivalents, end of period $ 320.9 $ 620.5
See accompanying notes to condensed
consolidated financial statements.
AGCO CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(unaudited, in millions, except per share
data)
1. STOCK COMPENSATION EXPENSE (CREDIT)
The Company recorded stock compensation expense (credit) as
follows:
Three Months EndedSeptember 30,
Nine Months EndedSeptember 30,
2014 2013 2014
2013 Cost of goods sold $ (1.8 ) $ 0.4 $ (1.0 ) $ 2.3
Selling, general and administrative expenses (21.0 ) 5.5
(9.8 ) 31.9 Total stock compensation expense (credit) $ (22.8 ) $
5.9 $ (10.8 ) $ 34.2
During the three months ended September 30, 2014, the Company
recorded a credit of approximately $24.1 million for the reversal
of previously recorded long-term stock compensation expense.
2. INDEBTEDNESS
Indebtedness at September 30, 2014 and December 31, 2013
consisted of the following:
September 30, 2014 December 31,
2013
1¼% Convertible senior subordinated notes
due 2036
$ — $ 201.2 4½% Senior term loan due 2016 252.6 275.0 5⅞% Senior
notes due 2021 300.0 300.0 Credit facility expires 2019 735.0 360.0
Other long-term debt 133.6 114.0 1,421.2 1,250.2
Less: Current portion of long-term debt (88.4 ) (110.5 )
1¼% Convertible senior subordinated notes
due 2036
— (201.2 ) Total indebtedness, less current portion $
1,332.8 $ 938.5
Holders of the Company’s 1¼% convertible senior subordinated
notes had the ability to convert the notes if, during any fiscal
quarter, the closing sales price of the Company’s common stock
exceeded 120% of the conversion price of $40.27 per share for at
least 20 trading days in the 30 consecutive trading days ending on
the last trading day of the preceding fiscal quarter. In May 2014,
the Company announced its election to redeem all of its outstanding
1¼% convertible senior subordinated notes with an effective date of
June 20, 2014. Substantially all of the holders of the notes
converted their notes with settlement dates during July 2014 and
the Company repurchased the remaining notes not converted. Due to
the ability of the holders of the notes to convert the notes during
the three months ending March 31, 2014, the Company classified the
notes as a current liability as of December 31, 2013.
3. INVENTORIES
Inventories at September 30, 2014 and December 31, 2013 were as
follows:
September
30, 2014 December 31, 2013 Finished goods $ 907.9 $ 775.7 Repair
and replacement parts 607.0 550.2 Work in process 205.5 109.0 Raw
materials 594.7 581.2 Inventories, net $ 2,315.1 $
2,016.1
4. ACCOUNTS RECEIVABLE SALES AGREEMENTS
At September 30, 2014 and December 31, 2013, the
Company had accounts receivable sales agreements that permit the
sale, on an ongoing basis, of a majority of its wholesale
receivables in North America and Europe to its 49% owned U.S.,
Canadian and European retail finance joint ventures. As of
September 30, 2014 and December 31, 2013, the cash
received from receivables sold under the U.S., Canadian and
European accounts receivable sales agreements was approximately
$1.2 billion and $1.3 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 Condensed Consolidated
Statements of Operations, were approximately $4.8 million and $19.0
million during the three and nine months ended September 30,
2014, respectively. Losses on sales of receivables associated with
the accounts receivable financing facilities discussed above,
reflected within “Other expense, net” in the Company’s Condensed
Consolidated Statements of Operations, were approximately $6.7
million and $18.8 million during the three and nine months ended
September 30, 2013, respectively.
The Company’s retail finance joint ventures in Brazil and
Australia also provide wholesale financing to the Company’s
dealers. As of September 30, 2014 and December 31, 2013,
these retail finance joint ventures had approximately $56.5 million
and $68.2 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.
5. NET INCOME PER SHARE
The Company’s 1¼% convertible senior subordinated notes provided
for (i) the settlement upon conversion in cash up to the
principal amount of the converted notes with any excess conversion
value settled in shares of the Company’s common stock, and
(ii) the conversion rate to be increased under certain
circumstances if the notes were converted in connection with
certain change of control transactions. Dilution of weighted shares
outstanding depended on the Company’s stock price for the excess
conversion value using the treasury stock method. A reconciliation
of net income attributable to AGCO Corporation and subsidiaries and
weighted average common shares outstanding for purposes of
calculating basic and diluted net income per share for the three
and nine months ended September 30, 2014 and 2013 is as
follows:
Three Months EndedSeptember 30,
Nine Months EndedSeptember 30,
2014 2013 2014
2013 Basic net income per share:
Net income attributable to AGCO
Corporation and subsidiaries
$ 65.0 $ 126.2 $ 332.8 $ 457.9 Weighted
average number of common shares outstanding 93.5 97.4
94.2 97.2 Basic net income per share attributable to AGCO
Corporation and subsidiaries $ 0.70 $ 1.30 $ 3.53
$ 4.71 Diluted net income per share:
Net income attributable to AGCO
Corporation and subsidiaries
$ 65.0 $ 126.2 $ 332.8 $ 457.9 Weighted
average number of common shares outstanding 93.5 97.4 94.2 97.2
Dilutive stock-settled appreciation rights and performance share
awards 0.2 0.7 0.3 0.9 Weighted average assumed conversion of
contingently convertible senior subordinated notes 0.1 1.4
0.7 1.2
Weighted average number of common shares
and common share equivalents outstanding for purposes of computing
diluted net income per share
93.8 99.5 95.2 99.3
Diluted net income per share attributable
to AGCO Corporation and subsidiaries
$ 0.69 $ 1.27 $ 3.50 $ 4.61
Share Repurchase Program
In July 2012, the Company’s Board of Directors approved a share
repurchase program under which the Company can repurchase up to
$50.0 million of its common stock. This share repurchase
program does not have an expiration date. In December 2013,
the Company’s Board of Directors approved an additional share
repurchase program under which the Company can repurchase up to
$500.0 million of its common stock through an expiration date of
June 2015.
During the nine months ended September 30, 2014, the Company
entered into accelerated repurchase agreements (“ASRs”) with a
financial institution to repurchase an aggregate of $290.0 million
of shares of the Company’s common stock. The Company has received
approximately 5,389,119 shares during the nine months ended
September 30, 2014 related to these ASRs. All shares received under
the ASRs were retired upon receipt, and the excess of the purchase
price over par value per share was recorded to “Additional paid-in
capital” within the Company’s Condensed Consolidated Balance
Sheets.
Additionally, during the three months ended September 30, 2014,
through open market transactions, the Company repurchased 1,049,376
shares of its common stock for approximately $50.9 million at an
average price paid of $48.46 per share. Repurchased shares were
retired on the date of purchase, and the excess of the purchase
price over par value per share was recorded to “Additional paid-in
capital” within the Company’s Condensed Consolidated Balance
Sheets.
Of the $550.0 million in approved share repurchase programs, the
remaining amount authorized to be repurchased is approximately
$190.5 million.
6. SEGMENT REPORTING
The Company’s four reportable segments distribute a full range
of agricultural equipment and related replacement parts. The
Company evaluates segment performance primarily based on income
from operations. Sales for each segment are based on the location
of the third-party customer. The Company’s selling, general and
administrative expenses and engineering expenses are charged to
each segment based on the region and division where the expenses
are incurred. As a result, the components of income from operations
for one segment may not be comparable to another segment. Segment
results for the three and nine months ended September 30, 2014
and 2013 are as follows:
Three Months EndedSeptember 30,
NorthAmerica
SouthAmerica
Europe/Africa/Middle East
Asia/Pacific
Consolidated
2014 Net sales $ 531.3 $ 455.0 $ 1,026.0 $ 142.5 $
2,154.8
Income (loss) from operations
37.3 36.4 57.0 (1.0 ) 129.7
2013 Net sales $ 686.6 $
572.3 $ 1,086.4 $ 130.6 $ 2,475.9
Income (loss) from operations
78.1 71.9 98.4 (2.6 ) 245.8
Nine Months EndedSeptember 30,
NorthAmerica
SouthAmerica
Europe/Africa/Middle East
Asia/Pacific
Consolidated
2014 Net sales $ 1,865.0 $ 1,248.8 $ 3,783.8 $ 340.9
$ 7,238.5 Income (loss) from operations 188.3 94.2 366.0 (5.6 )
642.9
2013 Net sales $ 2,099.7 $ 1,578.0 $ 3,878.6 $
370.9 $ 7,927.2 Income from operations 271.8 179.9 403.0 2.1 856.8
A reconciliation from the segment information to the
consolidated balances for income from operations is set forth
below:
Three Months Ended September 30,
Nine Months Ended September 30, 2014
2013 2014 2013 Segment income from
operations $ 129.7 $ 245.8 $ 642.9 $ 856.8 Corporate expenses (28.7
) (29.5 ) (88.3 ) (85.5 ) Stock compensation (expense) credit 21.0
(5.5 ) 9.8 (31.9 ) Restructuring and other infrequent expenses (2.9
) — (2.9 ) — Amortization of intangibles (10.4 ) (11.8 ) (30.4 )
(35.9 ) Consolidated income from operations $ 108.7 $ 199.0
$ 531.1 $ 703.5
RECONCILIATION OF NON-GAAP MEASURES
This earnings release discloses adjusted income from operations,
net income and earnings per share, all of which exclude amounts
that differ from the most directly comparable measure calculated in
accordance with U.S. generally accepted account principles
(“GAAP”). A reconciliation of each of those measures to the most
directly comparable GAAP measure is included below.
The following is a reconciliation of adjusted income from
operations, net income and earnings per share to reported income
from operations, net income and earnings per share for the three
months ended September 30, 2014 and 2013 (in millions, except per
share data):
Three months ended September 30, 2014
2013
Income FromOperations
Net Income(1)
Earnings PerShare (1)
Income FromOperations
Net Income(1)
Earnings PerShare (1)
As adjusted $ 111.6 $ 66.9 $ 0.71 $ 199.0 $ 126.2 $ 1.27
Restructuring and other infrequent expenses (2) 2.9 1.9
0.02 — — — As reported $ 108.7 $
65.0 $ 0.69 $ 199.0 $ 126.2 $ 1.27
(1) Net income and earnings per share
amounts are after tax.
(2) The restructuring and other infrequent
expenses recorded during the three months ended September 30, 2014
relate to severance costs associated with the Company’s
rationalization of its operations in North America and South
America.
The following is a reconciliation of adjusted income from
operations, net income and earnings per share to reported income
from operations, net income and earnings per share for the nine
months ended September 30, 2014 and 2013 (in millions, except per
share data):
Nine months ended September 30, 2014
2013
Income FromOperations
Net Income(1)
Earnings PerShare (1)
Income FromOperations
Net Income(1)
Earnings PerShare (1)
As adjusted $ 534.0 $ 334.7 $ 3.52 $ 703.5 $ 457.9 $ 4.61
Restructuring and other infrequent expenses (2)
2.9
1.9
0.02
—
—
— As reported $ 531.1 $ 332.8 $ 3.50 $ 703.5
$ 457.9 $ 4.61
(1) Net income and earnings per share
amounts are after tax.
(2) The restructuring and other infrequent
expenses recorded during the nine months ended September 30, 2014
relate to severance costs associated with the Company’s
rationalization of its operations in North America and Sout
America.
This earnings release discloses the percentage change in
regional net sales due to the impact of currency translation. The
following table sets forth, for the three and nine months ended
September 30, 2014, the impact to net sales of currency
translation by geographical segment (in millions, except
percentages):
Three Months Ended September 30,
Change due to currencytranslation
2014
2013
% changefrom 2013
$
%
North America $ 531.3 $ 686.6
(22.6
)%
$ (3.0 )
(0.4
)%
South America
455.0
572.3
(20.5 )%
(12.0
)
(2.1 )% Europe/Africa/Middle East
1,026.0
1,086.4
(5.6 )%
(2.7
)
(0.2 )% Asia/Pacific
142.5
130.6
9.1 %
0.4
0.3 % $ 2,154.8 $ 2,475.9 (13.0 )% $ (17.3 ) (0.7 )%
Nine Months Ended September 30,
Change due to currencytranslation
2014
2013
% changefrom 2013
$
%
North America $ 1,865.0 $ 2,099.7 (11.2 )% $ (18.8 ) (0.9 )% South
America
1,248.8
1,578.0
(20.9 )%
(122.8
)
(7.8 )% Europe/Africa/Middle East
3,783.8
3,878.6
(2.4 )%
89.9
2.3 % Asia/Pacific
340.9
370.9
(8.1 )%
(5.6
)
(1.5 )% $ 7,238.5 $ 7,927.2 (8.7 )% $ (57.3 ) (0.7 )%
AGCOGreg Peterson, 770-232-8229Director of Investor
Relationsgreg.peterson@agcocorp.com
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