AGCO, Your Agriculture Company (NYSE:AGCO), a worldwide
manufacturer and distributor of agricultural equipment, reported
net sales of approximately $2.2 billion for the second quarter of
2017, an increase of approximately 8.5% compared to the second
quarter of 2016. Reported net income was $1.14 per share for the
second quarter of 2017, and adjusted net income, excluding
restructuring expenses, was $1.15 per share. These results compare
to reported net income of $0.61 per share and adjusted net income,
excluding restructuring expenses and a non-cash deferred income tax
adjustment, of $1.02 per share for the second quarter of 2016.
Excluding unfavorable currency translation impacts of approximately
2.0%, net sales in the second quarter of 2017 increased
approximately 10.5% compared to the second quarter of 2016.
Net sales for the first six months of 2017 were approximately
$3.8 billion, an increase of approximately 6.7% compared to the
same period in 2016. Excluding unfavorable currency translation
impacts of approximately 1.5%, net sales for the first six months
of 2017 increased approximately 8.2% compared to the same period in
2016. For the first six months of 2017, reported net income was
$1.02 per share and adjusted net income, excluding restructuring
expenses and a non-cash expense related to waived stock
compensation, was $1.13 per share. These results compare to
reported net income of $0.70 per share and adjusted net income,
excluding restructuring expenses and a non-cash deferred income tax
adjustment, of $1.12 per share for the first six months of
2016.
Second Quarter Highlights
- Reported regional sales
results(1): North America (4.0)%, Europe/Middle East (“EME”)
+8.7%, South America +23.8%, Asia/Pacific/Africa (“APA”)
+31.7%
- Constant currency regional sales
results(1)(2): North America (3.2)%, EME +12.5%,
South America +18.4%, APA +34.2%
- Regional operating margin performance:
North America 4.8%, EME 13.6%, South America 1.0%, APA 3.5%
- Full-year outlook for net sales and net
income per share increased
(1)
As compared to second quarter 2016
(2)
Excludes currency translation impact. See
reconciliation in appendix.
“AGCO achieved sales and earnings improvement in the second
quarter in the midst of challenging market conditions,” stated
Martin Richenhagen, AGCO’s Chairman, President and Chief Executive
Officer. “Higher demand and margins in our Europe/Middle East
region are driving our improved results and increased outlook for
the full year. AGCO’s sales and earnings growth also reflect the
benefit of our efforts to reduce expenses, improve the efficiency
of our factories and launch new products. While there continues to
be weakness in our key markets, we will remain focused on improving
our competitive position and expanding our margins by investing in
new technologies, productivity enhancements and new market
development.”
Market Update
Industry Unit Retail Sales
Six months ended June 30,
2017
Tractors
Change from
Prior Year Period
Combines
Change from
Prior Year Period
North America(1) (3)% 3% South America 36% 28% Western
Europe (2)% (11)%
(1)
Excludes compact tractors.
“Commodity prices have not changed materially from last year,
while difficult weather conditions could impact yields across many
of the key U.S. crop production states,” continued Mr. Richenhagen.
“Despite these challenging early growing conditions, the USDA is
estimating global grain inventories will rise during 2017,
maintaining pressure on commodity prices. After multiple years of
decline, global industry demand is continuing to stabilize as some
farmers are returning to more normal equipment replacement
schedules. In the first half of 2017, North America industry sales
were down due to ongoing weakness in the row crop sector. Industry
sales of high-horsepower tractors, hay equipment and grain storage
and handling equipment were below last year’s levels. Full year
2017 North American industry demand is also expected to be down
compared to 2016. Industry retail sales in Western Europe were down
modestly in the first six months of 2017. Low levels of demand from
the arable farming segment are being partially offset by more
favorable conditions for dairy and livestock producers. Sales
declined most significantly in France from high levels in the first
half of 2016, which were stimulated by tax incentives. Growth in
the United Kingdom, Spain and Italy offset most of the decline in
the French market. For the full year of 2017, demand in Western
Europe is expected to be relatively flat compared to 2016. Industry
retail sales in South America increased during the first six months
of 2017 as demand in Brazil grew strongly from depressed first-half
levels experienced last year. More supportive government policies
in Argentina continue to stimulate industry growth. Full year 2017
industry demand in South America is expected to be up, while
industry sales in the last six months are expected to be relatively
flat compared to 2016. Looking past the current operating
environment, our long-term view remains optimistic, with expanding
demand for grain supporting farm economics and healthy growth in
our industry.”
Regional Results
AGCO Regional Net Sales (in
millions)
Three Months Ended June 30, 2017 2016
%changefrom2016
% changefrom 2016 dueto
currencytranslation(1)
% change from2016 due
toacquisitions(1)
North America $ 478.8 $ 498.9 (4.0)% (0.8)% 0.6% South
America 251.9 203.4 23.8% 5.5% 0.5% Europe/Middle East (2) 1,269.5
1,168.0 8.7% (3.8)% 3.3% Asia/Pacific/Africa (2) 165.0 125.3
31.7% (2.5)% 3.0% Total $ 2,165.2 $ 1,995.6
8.5% (2.0)% 2.3%
Six Months Ended June 30, 2017 2016
%changefrom2016
% changefrom 2016 dueto
currencytranslation(1)
% change from2016 due
toacquisitions(1)
North America $ 861.4 $ 907.3 (5.1)% (0.7)% 1.0% South America
474.1 347.6 36.4% 12.7% 0.5% Europe/Middle East (2) 2,162.0 2,067.1
4.6% (4.2)% 3.3% Asia/Pacific/Africa (2) 295.3 232.9
26.8% (1.8)% 4.8% Total $ 3,792.8 $ 3,554.9 6.7%
(1.5)% 2.6%
(1) See appendix for additional
disclosures
(2) Effective January 1, 2017, AGCO
realigned its regional structure as reflected in the table above. A
schedule showing restated segment results for 2016 is available on
AGCO’s website at www.agcocorp.com on the
“Company/Investors” page.
North America
Net sales in AGCO’s North America region decreased 4.4% in the
first six months of 2017 compared to the same period of 2016,
excluding the negative impact of currency translation. Dealer
inventory reduction efforts and softer industry demand contributed
to lower sales. Sales declines were most significant in hay tools
and GSI grain equipment. These declines were partially offset by
increased sales of mid-range and high horsepower tractors. Income
from operations for the first six months of 2017 improved
approximately $2.6 million compared to the same period in 2016. The
benefit of improved factory productivity and expense reduction
efforts were mostly offset by lower sales and production
volumes.
South America
South American net sales increased 23.6% in the first six months
of 2017 compared to the first six months of 2016, excluding the
impact of favorable currency translation. Significant sales
increases in Brazil and Argentina produced most of the growth.
Income from operations improved approximately $4.4 million for the
first six months of 2017 compared to the same period in 2016, as
the benefit of higher sales and production volumes was mostly
offset by material cost inflation and the costs associated with
transitioning to the new tier 3 emission technology.
Europe/Middle East
AGCO’s EME net sales increased 8.8% in the first six months of
2017 compared to the same period in 2016, excluding unfavorable
currency translation impacts. Acquisitions benefited sales by
approximately 3.3% during the first six months compared to the same
period last year. Higher sales in Germany, the United Kingdom and
Italy were partially offset by sales declines in France. Income
from operations improved approximately $26.1 million for the first
six months of 2017, compared to the same period in 2016, due to the
benefit of higher sales and margin improvement.
Asia/Pacific/Africa
Net sales in AGCO’s Asia/Pacific/Africa region, excluding the
negative impact of currency translation, increased 28.6% in the
first six months of 2017 compared to the same period in 2016 due
primarily to increased sales in China and Australia. Income from
operations improved approximately $6.5 million in the first six
months of 2017, compared to the same period in 2016, due to higher
sales and production levels.
Outlook
AGCO’s net sales for 2017 are expected to reach $8.0 billion
reflecting improved sales volumes, positive pricing and acquisition
impacts. Gross and operating margins are expected to improve from
2016 levels due to higher sales along with the benefits resulting
from the Company’s cost reduction initiatives. Based on these
assumptions, 2017 earnings per share are targeted at approximately
$2.89 on a reported basis, or approximately $3.00 on an adjusted
basis which excludes restructuring expenses and the non-cash
expense related to waived stock compensation.
* * * * *
AGCO will be hosting a conference call with respect to this
earnings announcement at 10:00 a.m. Eastern Time on Thursday, July
27, 2017. The Company will refer to slides on its conference call.
Interested persons can access the conference call and slide
presentation via AGCO’s website at www.agcocorp.com in the “Events” section on the
“Company/Investors” page of our website. A replay of the conference
call will be available approximately two hours after the conclusion
of the conference call for twelve months following the call. A copy
of this press release will be available on AGCO’s website for at
least twelve months following the call.
* * * * *
Safe Harbor Statement
Statements that are not historical facts, including the
projections of earnings per share, sales, industry demand, market
conditions, commodity prices, currency translation, farm income
levels, margin levels, investments in product and technology
development, new product introductions, restructuring and other
cost reduction initiatives, production volumes, tax rates and
general economic conditions, are forward-looking and subject to
risks that could cause actual results to differ materially from
those suggested by the statements. The following are among the
factors that could cause actual results to differ materially from
the results discussed in or implied by the forward-looking
statements.
- Our financial results depend entirely
upon the agricultural industry, and factors that adversely affect
the agricultural industry generally, including declines in the
general economy, increases in farm input costs, lower commodity
prices, lower farm income and changes in the availability of credit
for our retail customers, will adversely affect us.
- A majority of our sales and
manufacturing take place outside the United States, and, as a
result, we are exposed to risks related to foreign laws, taxes,
economic conditions, labor supply and relations, political
conditions and governmental policies. These risks may delay or
reduce our realization of value from our international
operations.
- Most retail sales of the products that
we manufacture are financed, either by our joint ventures with
Rabobank or by a bank or other private lender. Our joint ventures
with Rabobank, which are controlled by Rabobank and are dependent
upon Rabobank for financing as well, finance 40% to 50% of the
retail sales of our tractors and combines in the markets where the
joint ventures operate. Any difficulty by Rabobank to continue to
provide that financing, or any business decision by Rabobank as the
controlling member not to fund the business or particular aspects
of it (for example, a particular country or region), would require
the joint ventures to find other sources of financing (which may be
difficult to obtain), or us to find another source of retail
financing for our customers, or our customers would be required to
utilize other retail financing providers. As a result of the recent
economic downturn, financing for capital equipment purchases
generally has become more difficult in certain regions and in some
cases, can be expensive to obtain. To the extent that financing is
not available or available only at unattractive prices, our sales
would be negatively impacted.
- Both AGCO and our finance joint
ventures have substantial account receivables from dealers and end
customers, and we would be adversely impacted if the collectability
of these receivables was not consistent with historical experience;
this collectability is dependent upon the financial strength of the
farm industry, which in turn is dependent upon the general economy
and commodity prices, as well as several of the other factors
listed in this section.
- We have experienced substantial and
sustained volatility with respect to currency exchange rate and
interest rate changes, including uncertainty associated with the
Euro, which can adversely affect our reported results of operations
and the competitiveness of our products.
- Our success depends on the introduction
of new products, particularly engines that comply with emission
requirements, which requires substantial expenditures.
- Our production levels and capacity
constraints at our facilities, including those resulting from plant
expansions and systems upgrades at our manufacturing facilities,
could adversely affect our results.
- Our expansion plans in emerging
markets, including establishing a greater manufacturing and
marketing presence and growing our use of component suppliers,
could entail significant risks.
- We depend on suppliers for components,
parts and raw materials for our products, and any failure by our
suppliers to provide products as needed, or by us to promptly
address supplier issues, will adversely impact our ability to
timely and efficiently manufacture and sell products. We also are
subject to raw material price fluctuations, which can adversely
affect our manufacturing costs.
- We face significant competition, and if
we are unable to compete successfully against other agricultural
equipment manufacturers, we would lose customers and our net sales
and profitability would decline.
- We have a substantial amount of
indebtedness, and, as result, we are subject to certain restrictive
covenants and payment obligations that may adversely affect our
ability to operate and expand our business.
Further information concerning these and other factors is
included in AGCO’s filings with the Securities and Exchange
Commission, including its Form 10-K for the year ended
December 31, 2016. AGCO disclaims any obligation to update any
forward-looking statements except as required by law.
* * * * *
About AGCO
AGCO (NYSE: AGCO) is a global leader in the design,
manufacture and distribution of agricultural solutions and supports
more productive farming through its full line of equipment and
related services. AGCO products are sold through five core brands,
Challenger®, Fendt®, GSI®, Massey Ferguson® and Valtra®, supported
by Fuse® precision technologies and farm optimization services, and
are distributed globally through a combination of over 3,000
independent dealers and distributors in more than 150 countries.
Founded in 1990, AGCO is headquartered in Duluth,
GA, USA. In 2016, AGCO had net sales of approximately $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)
June 30, 2017 December 31, 2016
ASSETS Current
Assets: Cash and cash equivalents $ 317.8 $ 429.7 Accounts and
notes receivable, net 1,019.5 890.4 Inventories, net 1,885.4
1,514.8 Other current assets 367.7 330.8 Total
current assets 3,590.4 3,165.7 Property, plant and equipment, net
1,391.2 1,361.3 Investment in affiliates 441.2 414.9 Deferred tax
assets 97.1 99.7 Other assets 153.6 143.1 Intangible assets, net
596.0 607.3 Goodwill 1,423.0 1,376.4 Total assets $
7,692.5 $ 7,168.4
LIABILITIES AND
STOCKHOLDERS’ EQUITY Current Liabilities: Current portion of
long-term debt $ 90.4 $ 85.4 Accounts payable 869.0 722.6 Accrued
expenses 1,215.9 1,160.8 Other current liabilities 183.9
176.1 Total current liabilities 2,359.2 2,144.9 Long-term
debt, less current portion and debt issuance costs 1,772.1 1,610.0
Pensions and postretirement health care benefits 267.3 270.0
Deferred tax liabilities 119.6 112.4 Other noncurrent liabilities
202.9 193.9 Total liabilities 4,721.1 4,331.2
Stockholders’ Equity: AGCO Corporation stockholders’
equity: Common stock 0.8 0.8 Additional paid-in capital 123.9 103.3
Retained earnings 4,171.1 4,113.6 Accumulated other comprehensive
loss (1,388.3 ) (1,441.6 ) Total AGCO Corporation stockholders’
equity 2,907.5 2,776.1 Noncontrolling interests 63.9 61.1
Total stockholders’ equity 2,971.4 2,837.2
Total liabilities and stockholders’ equity $ 7,692.5 $
7,168.4
See accompanying notes to condensed
consolidated financial statements.
AGCO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(unaudited and in millions, except per
share data)
Three Months Ended June 30, 2017 2016 Net
sales $ 2,165.2 $ 1,995.6 Cost of goods sold 1,689.8 1,568.6
Gross profit 475.4 427.0 Selling, general and administrative
expenses 236.1 217.8 Engineering expenses 76.7 77.1 Restructuring
expenses 0.4 2.1 Amortization of intangibles 13.8 11.4
Income from operations 148.4 118.6 Interest expense, net 11.3 11.9
Other expense, net 17.7 16.0 Income before income taxes and
equity in net earnings of affiliates 119.4 90.7 Income tax
provision 36.9 54.8 Income before equity in net earnings of
affiliates 82.5 35.9 Equity in net earnings of affiliates 9.1
13.5 Net income 91.6 49.4 Net (income) loss attributable to
noncontrolling interests (0.1 ) 0.9 Net income attributable to AGCO
Corporation and subsidiaries $ 91.5 $ 50.3 Net income per
common share attributable to AGCO Corporation and subsidiaries:
Basic $ 1.15 $ 0.61 Diluted $ 1.14 $ 0.61 Cash
dividends declared and paid per common share $ 0.14 $ 0.13
Weighted average number of common and common equivalent shares
outstanding: Basic 79.5 82.0 Diluted 80.1 82.1
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)
Six Months Ended June 30, 2017 2016 Net sales
$ 3,792.8 $ 3,554.9 Cost of goods sold 2,987.1 2,813.2
Gross profit 805.7 741.7 Selling, general and administrative
expenses 459.3 429.0 Engineering expenses 149.7 148.3 Restructuring
expenses 5.5 4.0 Amortization of intangibles 27.2 22.4
Income from operations 164.0 138.0 Interest expense, net
22.0 22.4 Other expense, net 30.7 27.3 Income before
income taxes and equity in net earnings of affiliates 111.3 88.3
Income tax provision 48.0 54.4 Income before equity
in net earnings of affiliates 63.3 33.9 Equity in net earnings of
affiliates 20.1 25.7 Net income 83.4 59.6 Net income
attributable to noncontrolling interests (2.0 ) (1.5 ) Net income
attributable to AGCO Corporation and subsidiaries $ 81.4 $
58.1 Net income per common share attributable to AGCO
Corporation and subsidiaries: Basic $ 1.02 $ 0.70
Diluted $ 1.02 $ 0.70 Cash dividends declared and
paid per common share $ 0.28 $ 0.26 Weighted average
number of common and common equivalent shares outstanding: Basic
79.5 82.5 Diluted 80.1 82.6
See accompanying notes to condensed
consolidated financial statements.
AGCO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
(unaudited and in millions)
Six Months Ended June 30, 2017 2016
Cash flows from operating activities: Net income $ 83.4 $ 59.6
Adjustments to reconcile net income to net cash used in operating
activities: Depreciation 108.9 111.9 Deferred debt issuance cost
amortization 0.3 0.7 Amortization of intangibles 27.2 22.4 Stock
compensation expense 22.6 11.4 Proceeds from termination of hedging
instrument — 7.3 Equity in net earnings of affiliates, net of cash
received (5.6 ) (9.1 ) Deferred income tax provision 0.6 14.6 Other
1.5 (0.3 )
Changes in operating assets and
liabilities, net of effects from purchase of businesses:
Accounts and notes receivable, net (94.3 ) (61.1 ) Inventories, net
(316.5 ) (263.3 ) Other current and noncurrent assets (48.4 ) (34.3
) Accounts payable 120.6 80.6 Accrued expenses 9.9 0.3 Other
current and noncurrent liabilities 23.4 (5.3 ) Total
adjustments (149.8 ) (124.2 ) Net cash used in operating activities
(66.4 ) (64.6 ) Cash flows from investing activities: Purchases of
property, plant and equipment (92.3 ) (72.0 ) Proceeds from sale of
property, plant and equipment 1.6 0.9 Purchase of businesses, net
of cash acquired — (38.8 ) Investment in consolidated affiliates,
net of cash acquired — (11.8 ) Investment in unconsolidated
affiliates (0.8 ) — Restricted cash — 0.4 Net cash
used in investing activities (91.5 ) (121.3 ) Cash flows from
financing activities: Proceeds from debt obligations, net 54.8
214.1 Purchases and retirement of common stock — (120.0 ) Payment
of dividends to stockholders (22.2 ) (21.6 ) Payment of minimum tax
withholdings on stock compensation (4.0 ) (1.8 ) Investments by
noncontrolling interests 0.2 — Payment of debt issuance costs —
(0.5 ) Net cash provided by financing activities 28.8
70.2 Effects of exchange rate changes on cash and cash
equivalents 17.2 13.7 Decrease in cash and cash
equivalents (111.9 ) (102.0 ) Cash and cash equivalents, beginning
of period 429.7 426.7 Cash and cash equivalents, end
of period $ 317.8 $ 324.7
See accompanying notes to condensed
consolidated financial statements.
AGCO CORPORATION AND SUBSIDIARIESNOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(unaudited, in millions,
except share amounts, per share data and employees)
1. STOCK COMPENSATION EXPENSE
The Company recorded stock compensation expense as follows:
Three Months Ended June 30, Six Months
Ended June 30, 2017 2016 2017 2016 Cost
of goods sold $ 1.0 $ 0.5 $ 1.6 $ 0.9 Selling, general and
administrative expenses 9.8 5.7 21.2 10.8
Total stock compensation expense $ 10.8 $ 6.2 $ 22.8
$ 11.7
The Company recorded approximately $4.8 million of accelerated
stock compensation expense during the three months ended March 31,
2017 associated with a waived stock award declined by the Company’s
CEO.
2. RESTRUCTURING EXPENSES
From 2014 through 2017, the Company announced and initiated
several actions to rationalize employee headcount at various
manufacturing facilities located in Europe, China, Brazil,
Argentina and the United States, as well as various administrative
offices located in Europe, Brazil, China and the United States in
order to reduce costs in response to softening global market demand
and lower production volumes. The aggregate headcount reduction was
approximately 2,750 employees in 2014, 2015 and 2016. The Company
had approximately $15.3 million of severance and related costs
accrued as of December 31, 2016. During the three and six
months ended June 30, 2017, the Company recorded an additional
$0.4 million and $5.5 million, respectively, of severance and
related costs associated with further rationalizations primarily in
the United States, South America and Europe, associated with the
termination of approximately 220 employees, and paid approximately
$8.3 million of severance and associated costs. The remaining $13.4
million of accrued severance and other related costs as of
June 30, 2017, inclusive of approximately $0.9 million of
positive foreign currency translation impacts, are expected to be
paid primarily during 2017.
3. INDEBTEDNESS
Indebtedness at June 30, 2017 and December 31, 2016
consisted of the following:
June 30, 2017 December 31, 2016 1.056%
Senior term loan due 2020 $ 228.4 $ 211.0 Credit facility, expires
2020 428.7 329.2 Senior term loans due 2021 342.6 316.5 5⅞% Senior
notes due 2021 305.9 306.6 Senior term loans due between 2019 and
2026 428.2 395.6 Other long-term debt 133.4 141.6 Debt issuance
costs (4.7 ) (5.1 ) 1,862.5 1,695.4 Less: Current portion of other
long-term debt (90.4 ) (85.4 ) Total indebtedness, less current
portion $ 1,772.1 $ 1,610.0
4. INVENTORIES
Inventories at June 30, 2017 and December 31, 2016
were as follows:
June 30, 2017 December 31, 2016
Finished goods $ 744.1 $ 589.3 Repair and replacement parts 578.9
532.5 Work in process 189.2 113.8 Raw materials 373.2 279.2
Inventories, net $ 1,885.4 $ 1,514.8
5. ACCOUNTS RECEIVABLE SALES AGREEMENTS
At June 30, 2017 and December 31, 2016, the Company
had accounts receivable sales agreements that permit the sale, on
an ongoing basis, of a majority of its wholesale receivables in
North America, Europe and Brazil to its U.S., Canadian, European
and Brazilian finance joint ventures. As of both June 30, 2017
and December 31, 2016, the receivables sold under the U.S.,
Canadian, European and Brazilian accounts receivable sales
agreements were approximately $1.1 billion.
Losses on sales of receivables associated with the accounts
receivable financing facilities discussed above, reflected within
“Other expense, net” in the Company’s Condensed Consolidated
Statements of Operations, were approximately $8.9 million and $17.2
million during the three and six months ended June 30, 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 Condensed Consolidated
Statements of Operations, were approximately $4.7 million and $9.5
million during the three and six months ended June 30, 2016,
respectively.
The Company’s finance joint ventures in Europe, Brazil and
Australia also provide wholesale financing directly to the
Company’s dealers. As of June 30, 2017 and December 31,
2016, these finance joint ventures had approximately $53.3 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 and six months ended June 30, 2017 and 2016 is as
follows:
Three Months Ended June 30, Six Months
Ended June 30, 2017 2016 2017 2016
Basic net income per share: Net income attributable to AGCO
Corporation and subsidiaries $ 91.5 $ 50.3 $ 81.4
$ 58.1 Weighted average number of common shares outstanding
79.5 82.0 79.5 82.5 Basic net income per share
attributable to AGCO Corporation and subsidiaries $ 1.15 $
0.61 $ 1.02 $ 0.70 Diluted net income per share: Net
income attributable to AGCO Corporation and subsidiaries $ 91.5
$ 50.3 $ 81.4 $ 58.1 Weighted average number
of common shares outstanding 79.5 82.0 79.5 82.5
Dilutive stock-settled appreciation
rights, performance share awards and restricted stock units
0.6 0.1 0.6 0.1
Weighted average number of common shares
and common share equivalents outstanding for purposes of computing
diluted net income per share
80.1 82.1 80.1 82.6 Diluted net income per
share attributable to AGCO Corporation and subsidiaries $ 1.14
$ 0.61 $ 1.02 $ 0.70
7. SEGMENT REPORTING
Effective January 1, 2017, the Company modified its system of
reporting, resulting from changes to its internal management and
organizational structure, which changed its reportable segments
from North America; South America; Europe/Africa/Middle East; and
Asia/Pacific to North America; South America; Europe/Middle East;
and Asia/Pacific/Africa. The Asia/Pacific/Africa reportable segment
includes the regions of Africa, Asia, Australia and New Zealand,
and the Europe/Africa/Middle East segment no longer includes
certain markets in Africa. Effective January 1, 2017, these
reportable segments are reflective of how the Company’s chief
operating decision marker reviews operating results for the
purposes of allocating resources and assessing performance.
The Company’s four reportable segments distribute a full range
of agricultural equipment and related replacement parts. The
Company evaluates segment performance primarily based on income
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 six months ended June 30, 2017 and
2016 are as follows:
Three Months Ended June 30,
NorthAmerica
SouthAmerica
Europe/Middle East
Asia/Pacific/Africa
Consolidated
2017 Net sales $ 478.8 $ 251.9 $ 1,269.5 $ 165.0 $
2,165.2 Income from operations 23.0 2.6 172.4 5.7 203.7
2016 Net sales $ 498.9 $ 203.4 $ 1,168.0 $ 125.3 $ 1,995.6
Income from operations 23.6 — 143.5 2.0 169.1 Six Months
Ended June 30,
NorthAmerica
SouthAmerica
Europe/Middle East
Asia/Pacific/Africa
Consolidated
2017 Net sales $ 861.4 $ 474.1 $ 2,162.0 $ 295.3 $
3,792.8 Income from operations 25.5 4.8 237.7 7.8 275.8
2016 Net sales $ 907.3 $ 347.6 $ 2,067.1 $ 232.9 $ 3,554.9
Income from operations 22.9 0.4 211.6 1.3 236.2
A reconciliation from the segment information to the
consolidated balances for income from operations is set forth
below:
Three Months Ended June 30, Six Months
Ended June 30, 2017 2016 2017 2016
Segment income from operations $ 203.7 $ 169.1 $ 275.8 $ 236.2
Corporate expenses (31.3 ) (31.3 ) (57.9 ) (61.0 ) Stock
compensation expense (9.8 ) (5.7 ) (21.2 ) (10.8 ) Restructuring
expenses (0.4 ) (2.1 ) (5.5 ) (4.0 ) Amortization of intangibles
(13.8 ) (11.4 ) (27.2 ) (22.4 ) Consolidated income from operations
$ 148.4 $ 118.6 $ 164.0 $ 138.0
RECONCILIATION OF NON-GAAP MEASURES
This earnings release discloses adjusted income from operations,
adjusted net income and adjusted net income per share, each of
which exclude amounts that are typically included in the most
directly comparable measure calculated in accordance with U.S.
generally accepted accounting principles (“GAAP”). A reconciliation
of each of those measures to the most directly comparable GAAP
measure is included below.
The following is a reconciliation of reported income from
operations, net income and net income per share to adjusted income
from operations, net income and net income per share for the three
and six months ended June 30, 2017 and 2016 (in millions,
except per share data):
Three Months Ended June 30, 2017 2016
Income FromOperations
Net Income(1)
Net IncomePer Share(1)
Income FromOperations
Net Income(1)
Net IncomePer Share(1)
As reported $ 148.4 $ 91.5 $ 1.14 $ 118.6 $ 50.3 $ 0.61
Restructuring expenses (2) 0.4 0.3 0.01 2.1 1.7 0.02 Deferred
income tax adjustment(3) — — — — 31.6
0.39 As adjusted $ 148.8 $ 91.8 $ 1.15
$ 120.7 $ 83.6 $ 1.02 (1) Net income and net income
per share amounts are after tax. (2) The restructuring expenses
recorded during the three months ended June 30, 2017 and 2016
related primarily to severance costs associated with the Company’s
rationalization of certain U.S., European and South American
manufacturing operations and various administrative offices. (3)
During the second quarter of 2016, 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.
Six Months Ended June 30, 2017 2016
Income FromOperations
Net Income (1)
Net IncomePer Share (1)
Income FromOperations
Net Income (1)
Net IncomePer Share (1)
As reported $ 164.0 $ 81.4 $ 1.02 $ 138.0 $ 58.1 $ 0.70
Restructuring expenses (2) 5.5 4.1 0.05 4.0 2.9 0.04 Non-cash
expense related to waived stock compensation(3) 4.8 4.8 0.06 — — —
Deferred income tax adjustment(4) — — — —
31.6 0.38 As adjusted $ 174.3 $ 90.3 $
1.13 $ 142.0 $ 92.6 $ 1.12 (1) Net
income and net income per share amounts are after tax. (2) The
restructuring expenses recorded during the six months ended June
30, 2017 and 2016 related primarily to severance costs associated
with the Company’s rationalization of certain U.S., European and
South American manufacturing operations and various administrative
offices. (3) The Company recorded approximately $4.8 million of
accelerated stock compensation expense during the three months
ended March 31, 2017 associated with a waived award declined by the
Company’s CEO. (4) During the second quarter of 2016, 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.
The following is a reconciliation of targeted net income per
share to adjusted targeted net income per share for the year ended
December 31, 2017:
Net Income Per Share (1) As targeted $ 2.89
Restructuring expenses 0.05 Non-cash expense related to waived
stock compensation 0.06 As adjusted targeted(2) $ 3.00 (1)
Net income per share amount is after tax. (2) The above
reconciliation reflects adjustments to full year 2017 targeted net
income per share based upon restructuring expenses incurred during
the six months ended June 30, 2017. Full year restructuring
expenses could differ based on future restructuring activity.
The following table sets forth, for the three and six months
ended June 30, 2017, the impact to net sales of currency
translation and recent acquisitions by geographical segment (in
millions, except percentages):
Three Months EndedJune 30,
Change due to currencytranslation
Change due toacquisitions
2017 2016
% changefrom 2016
$
%
$
%
North America $ 478.8 $ 498.9 (4.0 )% $ (3.9 ) (0.8 )% $ 3.2 0.6 %
South America 251.9 203.4 23.8 % 11.1 5.5 % 1.1 0.5 % Europe/Middle
East 1,269.5 1,168.0 8.7 % (44.5 ) (3.8 )% 38.7 3.3 %
Asia/Pacific/Africa 165.0 125.3 31.7 % (3.1 ) (2.5 )%
3.7 3.0 % $ 2,165.2 $ 1,995.6 8.5 % $ (40.4 )
(2.0 )% $ 46.7 2.3 %
Six Months EndedJune 30,
Change due to currencytranslation
Change due toacquisitions
2017 2016
% changefrom 2016
$
%
$
%
North America $ 861.4 $ 907.3 (5.1 )% $ (6.3 ) (0.7 )% $ 9.4 1.0 %
South America 474.1 347.6 36.4 % 44.3 12.7 % 1.8 0.5 %
Europe/Middle East 2,162.0 2,067.1 4.6 % (87.5 ) (4.2 )% 68.3 3.3 %
Asia/Pacific/Africa 295.3 232.9 26.8 % (4.2 ) (1.8 )%
11.2 4.8 % $ 3,792.8 $ 3,554.9 6.7 % $ (53.7 )
(1.5 )% $ 90.7 2.6 %
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170727005725/en/
AGCOGreg Peterson, 770-232-8229Director of Investor
Relationsgreg.peterson@agcocorp.com
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