AGCO, Your Agriculture Company (NYSE:AGCO), a worldwide
manufacturer and distributor of agricultural equipment, reported
net sales of approximately $2.1 billion for the fourth quarter of
2016, an increase of approximately 6.9% compared to net sales of
approximately $2.0 billion for the fourth quarter of 2015. Reported
net income was $0.77 per share and adjusted net income, which
excludes restructuring expenses, was $0.84 per share for the fourth
quarter of 2016. These results compare to reported net income of
$0.73 per share and adjusted net income, which excludes
restructuring expenses, of $0.80 per share for the fourth quarter
of 2015. Excluding unfavorable currency translation impacts of
approximately 1.8%, net sales in the fourth quarter of 2016
increased approximately 8.7% compared to the fourth quarter of
2015.
Net sales for the full year of 2016 were approximately $7.4
billion, a decrease of approximately 0.8% compared to 2015.
Excluding the unfavorable impact of currency translation of
approximately 2.6%, net sales for the full year of 2016 increased
approximately 1.9% compared to 2015. For the full year of 2016,
reported net income was $1.96 per share and adjusted net income,
which excludes restructuring expenses and a non-cash deferred
income tax adjustment, was $2.47 per share. These results compare
to reported net income of $3.06 per share and adjusted net income,
which excludes restructuring expenses, of $3.24 per share for the
full year of 2015.
Highlights
- Reported fourth quarter regional sales
results(1): Europe/Africa/Middle East (“EAME”) (2.0)%, North
America +3.0%, South America +63.6%, Asia/Pacific (“APAC”)
+21.8%
- Constant currency fourth quarter
regional sales results(1)(2): EAME +1.8%, North America
+4.4%, South America +53.9%, APAC +22.7%
- Generated $370 million in cash flow
from operations and $168 million in free cash flow in 2016
- Share repurchase program resulted in
reduction of 4.4 million shares during 2016
- New $300 million share repurchase
program authorized through December 2019
- Quarterly dividend increased to $0.14
per share effective first quarter 2017
- Full-year earnings per share forecast
for 2017 remains at approximately $2.50
(1) As compared to fourth quarter 2015
(2) Excludes currency translation impact. See reconciliation of
Non-GAAP measures in appendix.
“The past year was a challenging year due to continued weakening
global market demand for agricultural equipment,” stated Martin
Richenhagen, AGCO’s Chairman, President and Chief Executive
Officer. “Despite these difficult conditions, our solid operational
execution during 2016 allowed us to exceed our financial targets
and be well-positioned to seek new opportunities for growth.
Looking forward to 2017, industry conditions are expected to remain
near the bottom of the agricultural equipment cycle in key markets.
In response to the industry challenges, our focus continues to be
on cost and expense reduction through globalizing processes,
reducing complexity and better leveraging scale. In addition to
diligent 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 offering.”
Market Update
Industry Unit Retail Sales
Year ended December 31, 2016
TractorsChange fromPrior Year Period
CombinesChange fromPrior Year Period
North America(1) (10 )% (21 )% South America (6 )% 14 %
Western Europe (4 )% (14 )%
(1)Excludes compact tractors.
“The record grain harvest in the U.S., combined with healthy
crop production across Europe and Brazil, resulted in increased
grain inventories and lower soft commodity prices,” continued Mr.
Richenhagen. “Difficult farm economics negatively impacted farmer
sentiment, and we experienced softer industry equipment demand in
all major markets. In North America, industry sales declined
throughout the year. Sales declines were most pronounced in the row
crop and professional hay producer sectors, with significantly
lower industry retail sales of high-horsepower tractors, combines
and grain storage and handling equipment. Industry retail demand
declines from 2015 levels were less significant in Western Europe.
Low milk prices for dairy producers lessened demand, while sales in
the arable farming sector also remained weak due to lower commodity
prices. A smaller wheat harvest hurt retail demand in France,
especially in the second half of the year. Market declines also
occurred in Germany, offset by modest growth in Scandinavia and
Finland. Industry demand in South America stabilized throughout the
year with fourth quarter 2016 industry unit retail tractor sales up
35% from very depressed conditions in the fourth quarter of 2015.
While the market was down for the full year in Brazil, the
improving political landscape contributed to industry growth in the
second half of the year. Supportive government policies and
improved crop production in Argentina resulted in higher sales in
that market. Despite the global market difficulties we are facing
today, our long-term view remains positive as increasing global
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
AGCO Regional Net Sales (in
millions)
Three Months Ended December 31, 2016 2015
% changefrom 2015
% change from2015 due
tocurrencytranslation(1)
North America $ 447.4 $ 434.5 3.0 % (1.4 )% South America 308.1
188.3 63.6 % 9.7 % EAME 1,187.1 1,211.9 (2.0 )% (3.9 )% APAC
151.4 124.3 21.8 % (0.9 )% Total $ 2,094.0 $ 1,959.0 6.9 %
(1.8 )%
Years Ended December 31, 2016 2015
% changefrom 2015
% change from2015 due
tocurrencytranslation(1)
North America $ 1,807.7 $ 1,965.0 (8.0 )% (1.3 )% South America
917.5 949.0 (3.3 )% (7.6 )% EAME 4,206.0 4,151.3 1.3 % (2.2 )% APAC
479.3 402.0 19.2 % (2.0 )% Total $ 7,410.5 $ 7,467.3
(0.8 )% (2.6 )%
(1) See
Footnotes for additional disclosures
North America
Net sales in the North American region decreased 6.7% in the
full year of 2016 compared to 2015, excluding the negative impact
of currency translation. Weaker industry demand and dealer
inventory reduction efforts contributed to lower sales. Sales
declines in grain storage equipment, hay tools and sprayers were
partially offset by sales growth in medium and small tractors.
Lower sales and production volumes, a weaker sales mix and other
cost increases contributed to a reduction in income from operations
of approximately $84.3 million for the full year of 2016 compared
to 2015.
South America
Excluding unfavorable currency translation impacts, AGCO’s South
American net sales increased 4.3% in the full year of 2016 compared
to 2015. Higher sales in Argentina, were partially offset by
slightly lower sales in Brazil due to weak, but improving, industry
conditions. Income from operations decreased approximately $14.5
million for the full year of 2016 compared to 2015 due the negative
impact of currency translation and material cost inflation.
Europe/Africa/Middle East
EAME net sales increased 3.5% in the full year of 2016 compared
to 2015, excluding unfavorable currency translation impacts. The
increase resulted from the benefit of acquisitions along with
growth in the United Kingdom and Scandinavia and was offset by
declines in Africa, Germany and France. Income from operations
increased approximately $1.0 million for the full year of 2016
compared to 2015 due to higher sales partially offset by
unfavorable currency translation impacts.
Asia/Pacific
AGCO’s APAC net sales, excluding the negative impact of currency
translation, increased 21.2% in the full year of 2016 compared to
2015. Income from operations increased approximately $39.0 million
in the full year of 2016 compared to 2015 due to higher sales
across the region and increased small tractor production in
China.
Outlook
Softer industry demand is anticipated across North America and
Europe, partially offset by growth in South America. AGCO’s net
sales for 2017 are expected to reach approximately $7.4 billion.
Gross and operating margins are expected to improve from 2016
levels, reflecting the positive impact of pricing and cost
reduction efforts partially offset by a weaker sales mix. Based on
these assumptions, 2017 earnings per share is targeted to be
approximately $2.50.
* * * * *
AGCO will be hosting a conference call with respect to this
earnings announcement at 10:00 a.m. Eastern Time on Tuesday,
February 7, 2017. 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.
- 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.
- 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.
- Both AGCO and our finance joint
ventures have substantial account receivables from dealers and end
customers, and we would be adversely impacted if the collectability
of these receivables was not consistent with historical experience;
this collectability is dependent upon the financial strength of the
farm industry, which in turn is dependent upon the general economy
and commodity prices, as well as several of the other factors
listed in this section.
- We have experienced substantial and
sustained volatility with respect to currency exchange rate and
interest rate changes, including uncertainty associated with the
Euro, which can adversely affect our reported results of operations
and the competitiveness of our products.
- Our success depends on the introduction
of new products, particularly engines that comply with emission
requirements, which requires substantial expenditures.
- Our production levels and capacity
constraints at our facilities, including those resulting from plant
expansions and systems upgrades at our manufacturing facilities,
could adversely affect our results.
- Our expansion plans in emerging
markets, including establishing a greater manufacturing and
marketing presence and growing our use of component suppliers,
could entail significant risks.
- We depend on suppliers for components,
parts and raw materials for our products, and any failure by our
suppliers to provide products as needed, or by us to promptly
address supplier issues, will adversely impact our ability to
timely and efficiently manufacture and sell products. We also are
subject to raw material price fluctuations, which can adversely
affect our manufacturing costs.
- We face significant competition, and if
we are unable to compete successfully against other agricultural
equipment manufacturers, we would lose customers and our net sales
and profitability would decline.
- We have a substantial amount of
indebtedness, and, as 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, 2015 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 approximately
3,050 independent dealers and distributors in more than 150
countries. Founded in 1990, AGCO is headquartered
in Duluth, GA, USA. In 2016, AGCO had net sales of $7.4
billion. For more information, visit http://www.AGCOcorp.com. For company news,
information and events, please follow us on Twitter: @AGCOCorp. For
financial news on Twitter, please follow the hashtag #AGCOIR.
Please visit our website at www.agcocorp.com
AGCO CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED
BALANCE SHEETS (unaudited and in millions)
December 31, 2016 December 31, 2015
ASSETS
Current Assets: Cash and cash equivalents $ 429.7 $ 426.7 Accounts
and notes receivable, net 890.4 836.8 Inventories, net 1,514.8
1,423.4 Other current assets 330.8 211.4
Total current assets 3,165.7 2,898.3 Property, plant and
equipment, net 1,361.3 1,347.1 Investment in affiliates 414.9 392.9
Deferred tax assets 99.7 100.7 Other assets 143.1 136.5 Intangible
assets, net 607.3 507.7 Goodwill 1,376.4
1,114.5 Total assets $ 7,168.4 $ 6,497.7
LIABILITIES AND STOCKHOLDERS’ EQUITY Current
Liabilities: Current portion of long-term debt $ 85.4 $ 89.0 Senior
term loan — 217.2 Accounts payable 722.6 625.6 Accrued expenses
1,160.8 1,106.9 Other current liabilities 176.1
146.7 Total current liabilities 2,144.9 2,185.4
Long-term debt, less current portion 1,610.0 925.2 Pensions and
postretirement health care benefits 270.0 233.9 Deferred tax
liabilities 112.4 86.4 Other noncurrent liabilities 193.9
183.5 Total liabilities 4,331.2
3,614.4 Stockholders’ Equity: AGCO Corporation
stockholders’ equity: Common stock 0.8 0.8 Additional paid-in
capital 103.3 301.7 Retained earnings 4,113.6 3,996.0 Accumulated
other comprehensive loss (1,441.6 ) (1,460.2 ) Total
AGCO Corporation stockholders’ equity 2,776.1 2,838.3
Noncontrolling interests 61.1 45.0
Total stockholders’ equity 2,837.2 2,883.3
Total liabilities and stockholders’ equity $ 7,168.4
$ 6,497.7
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
December 31, 2016 2015 Net sales $ 2,094.0 $ 1,959.0
Cost of goods sold 1,673.7 1,561.6 Gross profit 420.3
397.4 Selling, general and administrative expenses 224.8 222.2
Engineering expenses 81.8 71.7 Restructuring expenses 6.4 7.7
Amortization of intangibles 15.9 10.5 Income from
operations 91.4 85.3 Interest expense, net 17.6 13.3 Other expense,
net 4.3 19.1 Income before income taxes and equity in
net earnings of affiliates 69.5 52.9 Income tax provision
18.3 6.4 Income before equity in net earnings of affiliates
51.2 46.5 Equity in net earnings of affiliates 10.0
14.8 Net income 61.2 61.3 Net loss attributable to noncontrolling
interests 0.8 0.8 Net income attributable to AGCO
Corporation and subsidiaries $ 62.0 $ 62.1
Net income per common share attributable
to AGCO Corporation and subsidiaries:
Basic $ 0.78 $ 0.73 Diluted $ 0.77 $ 0.73 Cash dividends declared
and paid per common share $ 0.13 $ 0.12 Weighted average number of
common and common equivalent shares outstanding: Basic 79.9
84.8 Diluted 80.8 84.9
See accompanying notes to condensed
consolidated financial statements.
AGCO CORPORATION AND SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited and in millions,
except per share data) Years Ended December
31, 2016 2015 Net sales $ 7,410.5 $ 7,467.3
Cost of goods sold 5,895.0 5,906.7 Gross
profit 1,515.5 1,560.6 Selling, general and administrative expenses
867.9 852.3 Engineering expenses 296.1 282.2 Restructuring expenses
11.9 22.3 Amortization of intangibles 51.2
42.7 Income from operations 288.4 361.1 Interest expense, net 52.1
45.4 Other expense, net 31.4 36.3 Income
before income taxes and equity in net earnings of affiliates 204.9
279.4 Income tax provision 92.2 72.5 Income
before equity in net earnings of affiliates 112.7 206.9 Equity in
net earnings of affiliates 47.5 57.1 Net
income 160.2 264.0 Net (income) loss attributable to noncontrolling
interests (0.1 ) 2.4 Net income attributable to AGCO
Corporation and subsidiaries $ 160.1 $ 266.4 Net income per
common share attributable to AGCO Corporation and subsidiaries:
Basic $ 1.97 $ 3.06 Diluted $ 1.96 $ 3.06 Cash
dividends declared and paid per common share $ 0.52 $ 0.48
Weighted average number of common and common equivalent shares
outstanding: Basic 81.4 87.0 Diluted
81.7 87.1
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, 2016
2015 Cash flows from operating activities: Net income $
160.2 $ 264.0 Adjustments to reconcile net income to net cash
provided by operating activities: Depreciation 223.4 217.4 Deferred
debt issuance cost amortization 1.0 2.0 Amortization of intangibles
51.2 42.7 Stock compensation expense 18.1 12.2 Proceeds from
termination of hedging instrument 7.3 — Equity in net earnings of
affiliates, net of cash received (1.4 ) (19.0 ) Deferred income tax
provision (benefit) 2.1 (26.8 ) Other 1.3 (0.1 ) Changes in
operating assets and liabilities, net of effects from purchase of
businesses: Accounts and notes receivable, net (4.5 ) 3.8
Inventories, net (33.1 ) 117.6 Other current and noncurrent assets
(98.7 ) (49.3 ) Accounts payable 62.8 37.3 Accrued expenses 47.0
(34.8 ) Other current and noncurrent liabilities (67.2 )
(42.8 ) Total adjustments 209.3 260.2
Net cash provided by operating activities 369.5
524.2 Cash flows from investing activities:
Purchases of property, plant and equipment (201.0 ) (211.4 )
Proceeds from sale of property, plant and equipment 2.4 1.5
Purchase of businesses, net of cash acquired (383.8 ) (25.4 )
Investment in consolidated affiliates, net of cash acquired (11.8 )
— Investments in unconsolidated affiliates (4.5 ) (3.8 ) Restricted
cash and other 0.4 (1.7 ) Net cash used in
investing activities (598.3 ) (240.8 ) Cash flows
from financing activities: Proceeds from debt obligations, net
495.5 182.4 Purchases and retirement of common stock (212.5 )
(287.5 ) Payment of dividends to stockholders (42.5 ) (42.0 )
Payment of minimum tax withholdings on stock compensation (2.0 )
(6.3 ) Payment of debt issuance costs (2.5 ) (0.7 ) Excess tax
benefit related to stock compensation — 0.7 Investments by
noncontrolling interests 0.4 — Net cash
provided by (used in) financing activities 236.4
(153.4 ) Effects of exchange rate changes on cash and cash
equivalents (4.6 ) (67.0 ) Increase in cash and cash
equivalents 3.0 63.0 Cash and cash equivalents, beginning of year
426.7 363.7 Cash and cash equivalents,
end of year $ 429.7 $ 426.7
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 (CREDIT) EXPENSE
The Company recorded stock compensation
(credit) expense as follows:
Three Months Ended December 31,
Years Ended December 31, 2016 2015 2016
2015 Cost of goods sold $ (0.1 ) $ 0.1 $ 1.5 $ 0.9
Selling, general and administrative
expenses
(1.1 ) 1.5 16.9 11.6 Total stock
compensation (credit) expense $ (1.2 ) $ 1.6 $ 18.4 $ 12.5
2. RESTRUCTURING EXPENSES
During 2014 and 2015, the Company announced and initiated
several actions to rationalize employee headcount at various
manufacturing facilities located in Europe, China, South America
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 2,100 employees.
During 2014 and 2015, the Company expensed and paid an aggregate of
$68.7 million and $48.5 million, respectively, associated with
these rationalizations, of which a majority related to severance
and related costs. The Company had approximately $16.9 million of
severance and related costs accrued as of December 31, 2015.
During year ended December 31, 2016, the Company recorded an
additional $11.9 million of severance and related costs associated
with further rationalizations in Europe, China, South America and
the United States, associated with the termination of approximately
650 employees, and paid approximately $13.3 million of severance
and related costs. The remaining $15.3 million balance of severance
and related costs accrued as of December 31, 2016, inclusive
of approximately $0.2 million of negative foreign currency
translation impacts, will be paid primarily during 2017.
3. INDEBTEDNESS
Indebtedness at December 31, 2016 and 2015
consisted of the following:
December 31, 2016 December 31, 2015 1.056% Senior term loan due
2020 $ 211.0 $ 217.2 Credit facility, expiring 2020 329.2 338.9
Senior term loan due 2021 316.5 — 5 7/8% Senior notes due 2021
306.6 297.4 Senior term loans 395.6 — 4½% Senior term loan due 2016
— 217.2 Other long-term debt 141.6 164.3 Debt issuance costs
(5.1 ) (3.6 ) 1,695.4 1,231.4 Less: Current portion of other
long-term debt (85.4 ) (89.0 ) 4½% Senior term loan due 2016
— (217.2 ) Total indebtedness, less current portion $
1,610.0 $ 925.2
4. INVENTORIES
Inventories at December 31, 2016 and 2015
were as follows:
December 31, 2016 December 31,
2015 Finished goods $ 589.3 $ 523.1 Repair and replacement parts
532.5 515.4 Work in process 113.8 97.5 Raw materials 279.2
287.4 Inventories, net $ 1,514.8 $ 1,423.4
5. ACCOUNTS RECEIVABLE SALES AGREEMENTS
At December 31, 2016 and 2015, 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. During 2015, the Company entered into an
accounts receivable sales agreement that permits the sale, on an
ongoing basis, of its wholesale receivables in Brazil to its
Brazilian finance joint venture. As of both December 31, 2016
and 2015, the cash received from receivables sold under the U.S.,
Canadian, European and Brazilian accounts receivable sales
agreements was approximately $1.1 billion.
Losses on sales of receivables associated with the accounts
receivable financing facilities discussed above, reflected within
“Other expense, net” in the Company’s Condensed Consolidated
Statements of Operations, were approximately $5.7 million and $19.5
million during the three months and year ended December 31,
2016, 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 $5.4
million and $18.8 million during the three months and year ended
December 31, 2015, 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, 2016 and 2015, these finance joint
ventures had approximately $41.5 million and $38.3 million,
respectively, of outstanding accounts receivable associated with
these arrangements. In addition, the Company sells certain trade
receivables under factoring arrangements to other financial
institutions around the world.
6. NET INCOME PER SHARE
A reconciliation of net income attributable to AGCO Corporation
and subsidiaries and weighted average common shares outstanding for
purposes of calculating basic and diluted net income per share for
the three months and years ended December 31, 2016 and 2015 is
as follows:
Three Months EndedDecember 31,
Years EndedDecember 31,
2016 2015 2016 2015 Basic net income
per share: Net income attributable to AGCO Corporation and
subsidiaries $ 62.0 $ 62.1 $ 160.1 $ 266.4 Weighted average number
of common shares outstanding 79.9 84.8 81.4
87.0 Basic net income per share attributable to AGCO
Corporation and subsidiaries $ 0.78 $ 0.73 $ 1.97 $ 3.06 Diluted
net income per share: Net income attributable to AGCO Corporation
and subsidiaries $ 62.0 $ 62.1 $ 160.1 $ 266.4 Weighted average
number of common shares outstanding 79.9 84.8 81.4 87.0 Dilutive
stock-settled appreciation rights, performance share awards and
restricted stock units 0.9 0.1 0.3 0.1
Weighted average number of common shares
and common share equivalents outstanding for purposes of computing
diluted net income per share
80.8 84.9 81.7 87.1 Diluted net income
per share attributable to AGCO Corporation and subsidiaries $ 0.77
$ 0.73 $ 1.96 $ 3.06
Share Repurchase Program
During the year ended December 31, 2016, the Company
entered into accelerated share repurchase agreements (“ASRs”) with
a financial institution to repurchase an aggregate of $212.5
million of shares of the Company’s common stock. The Company
received approximately 4,005,643 shares during the year ended
December 31, 2016 related to the ASRs. All shares received
under the ASRs were retired upon receipt, and the excess of the
purchase price over par value per share was recorded to “Additional
paid-in capital” within the Company’s Condensed Consolidated
Balance Sheets.
In December 2016, the Company’s Board of Directors authorized a
new share repurchase program under which the Company can repurchase
up to $300.0 million of shares of its common stock through December
2019.
As of December 31, 2016, the remaining amount of shares
authorized to be repurchased under approved share repurchase
programs is approximately $331.4 million.
7. SEGMENT REPORTING
The Company’s four reportable segments distribute a full range
of agricultural equipment and related replacement parts. The
Company evaluates segment performance primarily based on income
(loss) from operations. Sales for each segment are based on the
location of the third-party customer. The Company’s selling,
general and administrative expenses and engineering expenses are
charged to each segment based on the region and division where the
expenses are incurred. As a result, the components of income (loss)
from operations for one segment may not be comparable to another
segment. Segment results for the three months and years ended
December 31, 2016 and 2015 are as follows:
Three Months Ended December 31,
NorthAmerica
SouthAmerica
Europe/Africa/Middle East
Asia/Pacific
Consolidated
2016 Net sales $ 447.4 $ 308.1 $ 1,187.1 $ 151.4 $
2,094.0 (Loss) income from operations (4.9 ) 13.6 125.8 7.5 142.0
2015 Net sales $ 434.5 $ 188.3 $ 1,211.9 $ 124.3 $
1,959.0 Income (loss) from operations 7.0 (4.4 ) 132.7 (2.2 ) 133.1
Years Ended December 31,
NorthAmerica
SouthAmerica
Europe/Africa/Middle East
Asia/Pacific
Consolidated
2016 Net sales $ 1,807.7 $ 917.5 $ 4,206.0 $ 479.3 $
7,410.5 Income from operations 39.1 19.9 417.7 11.4 488.1
2015 Net sales $ 1,965.0 $ 949.0 $ 4,151.3 $ 402.0 $ 7,467.3
Income (loss) from operations 123.4 34.4 416.7 (27.6 ) 546.9
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, 2016 2015 2016
2015 Segment income from operations $ 142.0 $ 133.1 $ 488.1 $ 546.9
Corporate expenses (29.4 ) (28.1 ) (119.7 ) (109.2 ) Stock
compensation credit (expense) 1.1 (1.5 ) (16.9 ) (11.6 )
Restructuring expenses (6.4 ) (7.7 ) (11.9 ) (22.3 ) Amortization
of intangibles (15.9 ) (10.5 ) (51.2 )
(42.7 ) Consolidated income from operations $ 91.4 $ 85.3
$ 288.4 $ 361.1
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, 2016 and 2015 (in
millions, except per share data):
Three Months Ended December 31, 2016
2015
IncomeFromOperations
NetIncome (1)
Net IncomePer Share (1)
IncomeFromOperations
NetIncome (1)
Net IncomePer Share (1)
As reported $ 91.4 $ 62.0 $ 0.77 $ 85.3 $ 62.1 $ 0.73 Restructuring
expenses (2) 6.4 5.6 0.07 7.7
5.4 0.07 As adjusted $ 97.8 $ 67.6 $ 0.84 $ 93.0 $ 67.5 $
0.80 (1) Net income and net income per share amounts
are after tax. (2) The restructuring expenses recorded
during the three months ended December 31, 2016 related primarily
to severance costs associated with the Company’s rationalization of
certain U.S., European, Brazilian and Chinese manufacturing
operations and various administrative offices. The restructuring
expenses recorded during the three months ended December 31, 2015
related primarily to severance costs associated with the Company’s
rationalization of certain U.S., European and Brazilian
manufacturing operations and various administrative offices.
Years Ended December 31, 2016
2015
IncomeFromOperations
NetIncome (1)
Net IncomePer Share (1)
IncomeFromOperations
NetIncome (1)
Net IncomePer Share (1)
As reported $ 288.4 $ 160.1 $ 1.96 $ 361.1 $ 266.4 $ 3.06
Restructuring expenses (2) 11.9 9.9 0.12 22.3 16.1 0.18 Deferred
income tax adjustment (3) — 31.6 0.39 —
— — As adjusted $ 300.3 $ 201.6 $ 2.47 $ 383.4 $
282.5 $ 3.24 (1) Net income and net income per share
amounts are after tax. (2) The restructuring expenses
recorded during the year ended December 31, 2016 related primarily
to severance costs associated with the Company’s rationalization of
certain U.S., European, Brazilian and Chinese manufacturing
operations and various administrative offices. The restructuring
expenses recorded during the year ended December 31, 2015 related
primarily to severance costs associated with the Company’s
rationalization of certain U.S., European and Brazilian
manufacturing operations and various administrative offices.
(3) During the second quarter of 2016, the Company recorded a
non-cash adjustment to increase the valuation allowance on its U.S.
deferred income tax assets of approximately $31.6 million.
The following table sets forth, for the three months and year
ended December 31, 2016, the impact to net sales of currency
translation by geographical segment (in millions, except
percentages):
Three Months EndedDecember 31,
Change due to currencytranslation
2016 2015
% changefrom 2015
$
%
North America $ 447.4 $ 434.5 3.0 % $ (6.1 ) (1.4 )% South America
308.1 188.3 63.6 % 18.3 9.7 % Europe/Africa/Middle East 1,187.1
1,211.9 (2.0 )% (47.0 ) (3.9 )% Asia/Pacific 151.4
124.3 21.8 % (1.1 ) (0.9 )% $ 2,094.0 $ 1,959.0 6.9 % $
(35.9 ) (1.8 )%
Years EndedDecember 31,
Change due to currencytranslation
2016 2015
% changefrom 2015
$
%
North America $ 1,807.7 $ 1,965.0 (8.0 )% $ (25.9 ) (1.3 )% South
America 917.5 949.0 (3.3 )% (72.2 ) (7.6 )% Europe/Africa/Middle
East 4,206.0 4,151.3 1.3 % (90.0 ) (2.2 )% Asia/Pacific
479.3 402.0 19.2 % (7.9 ) (2.0 )% $ 7,410.5 $ 7,467.3
(0.8 )% $ (196.0 ) (2.6 )%
The following is a reconciliation of net cash provided by
operating activities to free cash flow for the years ended
December 31, 2016 and 2015 (in millions):
2016 2015 Net cash provided by
operating activities $ 369.5 $ 524.2 Less: Capital expenditures
(201.0 ) (211.4 ) Free cash flow $ 168.5 $
312.8
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170207005828/en/
AGCOGreg Peterson, 770-232-8229Director of Investor
Relationsgreg.peterson@agcocorp.com
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