AGCO, Your Agriculture Company (NYSE:AGCO), a worldwide
manufacturer and distributor of agricultural equipment, reported
net sales of approximately $2.0 billion for the third quarter of
2017, an increase of approximately 12.8% compared to the third
quarter of 2016. Reported net income was $0.76 per share for the
third quarter of 2017, and adjusted net income, excluding
restructuring expenses, was $0.79 per share. These results compare
to reported net income of $0.50 per share and adjusted net income,
excluding restructuring expenses, of $0.51 per share for the third
quarter of 2016. Excluding favorable currency translation impacts
of approximately 2.7%, net sales in the third quarter of 2017
increased approximately 10.1% compared to the third quarter of
2016.
Net sales for the first nine months of 2017 were approximately
$5.8 billion, an increase of approximately 8.7% compared to the
same period in 2016. Excluding unfavorable currency translation
impacts of approximately 0.1%, net sales for the first nine months
of 2017 increased approximately 8.8% compared to the same period in
2016. For the first nine months of 2017, reported net income was
$1.77 per share and adjusted net income, excluding restructuring
expenses and a non-cash expense related to waived stock
compensation, was $1.91 per share. These results compare to
reported net income of $1.20 per share and adjusted net income,
excluding restructuring expenses and a non-cash deferred income tax
adjustment, of $1.63 per share for the first nine months of
2016.
Third Quarter Highlights
- Reported regional sales results(1):
North America +6.7%, Europe/Middle East (“EME”) +15.2%, South
America +4.5%, Asia/Pacific/Africa (“APA”) +29.4%
- Constant currency regional sales
results(1)(2): North America +5.8%, EME +10.9%, South America
+4.8%, APA +25.9%
- Regional operating margin performance:
North America 5.6%, EME 9.7%, South America 3.3%, APA 7.3%
- Maintaining full-year outlook for net
income per share
(1)
As compared to third quarter 2016
(2)
Excludes currency translation impact. See
reconciliation in appendix.
“AGCO delivered solid sales and earnings performance in the
third quarter, while continuing to make strategic investments in
new technologies, productivity enhancements and new market
development,” stated Martin Richenhagen, AGCO’s Chairman, President
and Chief Executive Officer. “We produced sales growth and
operating margin improvement across all regions while market demand
remained at low levels. Long-term growth continues to be a key
focus, and we are working to expand our product offerings through
internal product development efforts and through bolt-on
acquisitions. We recently completed two acquisitions that broaden
our product portfolio. In September, we acquired Precision
Planting, a leader in innovative planting technology, and in
October, we completed the purchase of the forage division of the
Lely Group, which significantly enhances our hay and forage product
line in Europe.”
Market Update
Industry Unit Retail Sales
Nine months ended September 30, 2017
TractorsChange fromPrior Year Period
CombinesChange fromPrior Year Period
North America(1) (3 )% 6
%
South America 20
%
18
%
Western Europe (3 )% (9 )%
(1) Excludes compact tractors.
“Global crop production is expected to be strong again in 2017,
keeping commodity prices low and pressuring farm income,” continued
Mr. Richenhagen. “Growing global demand for grain is being
satisfied by peak production, resulting from improving farm
technology and exceptional growing conditions. We are seeing
stabilization in global industry demand at lower levels following
three years of strong declines. In the fourth year of weaker demand
in North America, the farm equipment fleet has begun to age, and
industry retail sales have been mixed in the first nine months of
2017. Small tractors are up compared to last year, while sales in
the row crop segment remain weak. Full-year industry sales in North
America are expected to be down compared to 2016. Industry retail
sales in Western Europe stabilized in the first nine months of
2017, with impacts of lower commodity prices on the arable farming
segment offset by improved economics for dairy producers. Sales
declined most significantly in France from high levels in the first
half of 2016, which were stimulated by tax incentives. Growth in
Italy, the United Kingdom and Spain 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 nine
months of 2017 as demand in Brazil grew strongly from depressed
first-half levels experienced last year. Industry sales in Brazil
slowed in the third quarter however, as ongoing macroeconomic
weakness continued to hurt farmer confidence. Industry demand in
Argentina remained robust as more supportive government policies
continued to stimulate growth. Full year 2017 industry demand in
South America is expected to be up, but fourth quarter industry
demand in Brazil is expected to remain challenged. Longer term, we
are optimistic about the fundamentals supporting commodity prices
and farm income as well as healthy growth in our industry.”
Regional Results
AGCO Regional Net Sales (in
millions)
Three Months Ended September 30,
2017 2016
%changefrom2016
% changefrom 2016
duetocurrencytranslation(1)
% change from2016 due
toacquisitions(1)
North America $ 483.5 $ 453.0 6.7 % 1.0 % 2.2 % South
America 273.5 261.8 4.5 % (0.3 )% 0.3 % Europe/Middle East (2)
1,017.7 883.3 15.2 % 4.3 % 2.9 % Asia/Pacific/Africa (2)
211.6 163.5 29.4 % 3.5 % 2.3 %
Total $ 1,986.3 $ 1,761.6 12.8 %
2.7 % 2.3 %
Nine Months Ended September 30, 2017
2016
%changefrom2016
% changefrom 2016
duetocurrencytranslation(1)
% change from2016 due
toacquisitions(1)
North America $ 1,344.9 $ 1,360.3 (1.1 )% (0.1 )% 1.4 %
South America 747.6 609.4 22.7 % 7.1 % 0.4 % Europe/Middle East (2)
3,179.7 2,950.4 7.8 % (1.7 )% 3.2 % Asia/Pacific/Africa (2)
506.9 396.4 27.9 % 0.4 % 3.8 %
Total $ 5,779.1 $ 5,316.5 8.7 %
(0.1 )% 2.5 %
(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
North American net sales decreased 1.0% in the first nine 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, GSI equipment and
sprayers. These declines were mostly offset by increased sales of
mid-range and high horsepower tractors. Income from operations for
the first nine months of 2017 improved approximately $8.7 million
compared to the same period in 2016. The benefit of improved
factory productivity and expense reduction efforts were partially
offset by lower sales and production volumes.
South America
Net sales in AGCO’s South America region increased 15.6% in the
first nine months of 2017 compared to the first nine months of
2016, excluding the impact of favorable currency translation. Sales
increases in Argentina and Brazil produced most of the growth.
Income from operations improved approximately $7.5 million for the
first nine 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 products with tier 3 emission
technology.
Europe/Middle East
AGCO’s EME net sales increased 9.4% in the first nine months of
2017 compared to the same period in 2016, excluding unfavorable
currency translation impacts. Acquisitions benefited sales by
approximately 3% during the first nine months compared to the same
period last year. Higher sales in Germany, the United Kingdom and
Eastern Europe were partially offset by sales declines in France.
Income from operations improved approximately $49.2 million for the
first nine 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
positive impact of currency translation, increased 27.5% in the
first nine months of 2017 compared to the same period in 2016 due
primarily to increased sales in China and Australia. Acquisitions
benefited sales by approximately 4% during the first nine months of
2017 compared to the same period last year. Income from operations
improved approximately $14.8 million in the first nine 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 $8.2 billion
reflecting improved sales volumes, positive pricing as well as
acquisition and foreign exchange 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 $2.86 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 Tuesday,
October 31, 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 a result, we are subject to certain
restrictive covenants and payment obligations that may adversely
affect our ability to operate and expand our business.
Further information concerning these and other factors is
included in AGCO’s filings with the Securities and Exchange
Commission, including its Form 10-K for the year ended
December 31, 2016. AGCO disclaims any obligation to update any
forward-looking statements except as required by law.
* * * * *
About AGCOAGCO (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)
September 30, 2017 December 31,
2016
ASSETS Current Assets: Cash and cash equivalents $
312.7 $ 429.7 Accounts and notes receivable, net 1,047.4 890.4
Inventories, net 2,065.2 1,514.8 Other current assets 413.9
330.8 Total current assets 3,839.2 3,165.7 Property, plant
and equipment, net 1,439.6 1,361.3 Investment in affiliates 465.5
414.9 Deferred tax assets 98.7 99.7 Other assets 163.3 143.1
Intangible assets, net 653.4 607.3 Goodwill 1,514.7 1,376.4
Total assets $ 8,174.4 $ 7,168.4
LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities:
Current portion of long-term debt $ 107.9 $ 85.4 Accounts payable
869.4 722.6 Accrued expenses 1,311.4 1,160.8 Other current
liabilities 259.1 176.1 Total current liabilities
2,547.8 2,144.9 Long-term debt, less current portion and debt
issuance costs 1,950.3 1,610.0 Pensions and postretirement health
care benefits 264.2 270.0 Deferred tax liabilities 122.5 112.4
Other noncurrent liabilities 196.6 193.9 Total
liabilities 5,081.4 4,331.2 Stockholders’
Equity: AGCO Corporation stockholders’ equity: Common stock 0.8 0.8
Additional paid-in capital 129.8 103.3 Retained earnings 4,220.6
4,113.6 Accumulated other comprehensive loss (1,323.0 ) (1,441.6 )
Total AGCO Corporation stockholders’ equity 3,028.2 2,776.1
Noncontrolling interests 64.8 61.1 Total
stockholders’ equity 3,093.0 2,837.2 Total
liabilities and stockholders’ equity $ 8,174.4 $ 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 September 30, 2017
2016 Net sales $ 1,986.3 $ 1,761.6 Cost of goods sold
1,557.7 1,408.1 Gross profit 428.6 353.5 Selling,
general and administrative expenses 234.3 214.1 Engineering
expenses 80.0 66.0 Restructuring expenses 3.0 1.5 Amortization of
intangibles 14.3 12.9 Income from operations 97.0
59.0 Interest expense, net 11.6 12.1 Other expense (income), net
18.4 (0.2 ) Income before income taxes and equity in net
earnings of affiliates 67.0 47.1 Income tax provision 16.9
19.5 Income before equity in net earnings of affiliates 50.1
27.6 Equity in net earnings of affiliates 10.7 11.8
Net income 60.8 39.4 Net (income) loss attributable to
noncontrolling interests (0.1 ) 0.6 Net income attributable
to AGCO Corporation and subsidiaries $ 60.7 $ 40.0
Net income per common share attributable to AGCO Corporation and
subsidiaries: Basic $ 0.76 $ 0.50 Diluted $ 0.76
$ 0.50 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 80.7
Diluted 80.2 80.8
See accompanying notes to condensed
consolidated financial statements.
AGCO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(unaudited and in millions, except per
share data)
Nine Months Ended September 30, 2017
2016 Net sales $ 5,779.1 $ 5,316.5 Cost of goods sold
4,544.8 4,221.3 Gross profit 1,234.3 1,095.2 Selling,
general and administrative expenses 693.6 643.1 Engineering
expenses 229.7 214.3 Restructuring expenses 8.5 5.5 Amortization of
intangibles 41.5 35.3 Income from operations 261.0
197.0 Interest expense, net 33.6 34.5 Other expense, net 49.1
27.1 Income before income taxes and equity in net
earnings of affiliates 178.3 135.4 Income tax provision 64.9
73.9 Income before equity in net earnings of affiliates
113.4 61.5 Equity in net earnings of affiliates 30.8 37.5
Net income 144.2 99.0 Net income attributable to
noncontrolling interests (2.1 ) (0.9 ) Net income attributable to
AGCO Corporation and subsidiaries $ 142.1 $ 98.1 Net
income per common share attributable to AGCO Corporation and
subsidiaries: Basic $ 1.79 $ 1.20 Diluted $ 1.77
$ 1.20 Cash dividends declared and paid per common
share $ 0.42 $ 0.39 Weighted average number of common
and common equivalent shares outstanding: Basic 79.5 81.9
Diluted 80.1 82.0
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, 2017
2016 Cash flows from operating activities: Net income
$ 144.2 $ 99.0 Adjustments to reconcile net income to net cash used
in operating activities: Depreciation 165.2 167.0 Deferred debt
issuance cost amortization 0.5 0.8 Amortization of intangibles 41.5
35.3 Stock compensation expense 31.3 19.3 Proceeds from termination
of hedging instrument — 7.3 Equity in net earnings of affiliates,
net of cash received (15.4 ) (13.3 ) Deferred income tax provision
0.7 13.6 Other 1.8 (0.1 )
Changes in operating assets and
liabilities, net of effects from purchase of businesses:
Accounts and notes receivable, net (81.2 ) (132.2 ) Inventories,
net (424.9 ) (251.3 ) Other current and noncurrent assets (92.4 )
(57.2 ) Accounts payable 100.0 (11.0 ) Accrued expenses 67.9 (4.8 )
Other current and noncurrent liabilities 31.6 0.2
Total adjustments (173.4 ) (226.4 ) Net cash used in operating
activities (29.2 ) (127.4 ) Cash flows from investing activities:
Purchases of property, plant and equipment (139.4 ) (132.8 )
Proceeds from sale of property, plant and equipment 3.3 1.3
Purchase of businesses, net of cash acquired (188.4 ) (383.6 )
Investment in consolidated affiliates, net of cash acquired — (11.8
) Investment in unconsolidated affiliates (0.8 ) (1.7 ) Restricted
cash — 0.4 Net cash used in investing activities
(325.3 ) (528.2 ) Cash flows from financing activities: Proceeds
from debt obligations, net 250.4 716.3 Purchases and retirement of
common stock — (170.0 ) Payment of dividends to stockholders (33.4
) (32.1 ) Payment of minimum tax withholdings on stock compensation
(6.7 ) (1.9 ) Investments by noncontrolling interest 0.5 — Payment
of debt issuance costs — (0.5 ) Net cash provided by
financing activities 210.8 511.8 Effects of exchange
rate changes on cash and cash equivalents 26.7 14.9
Decrease in cash and cash equivalents (117.0 ) (128.9 ) Cash and
cash equivalents, beginning of period 429.7 426.7
Cash and cash equivalents, end of period $ 312.7 $ 297.8
See accompanying notes to condensed
consolidated financial statements.
AGCO CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS (unaudited, in millions, except
share amounts, per share data and employees)
1. STOCK COMPENSATION EXPENSE
The Company recorded stock compensation expense as follows:
Three Months EndedSeptember 30,
Nine Months EndedSeptember 30,
2017 2016 2017 2016 Cost of goods sold
$ 0.8 $ 0.7 $ 2.4 $ 1.6 Selling, general and administrative
expenses 7.9 7.2 29.1 18.0 Total stock
compensation expense $ 8.7 $ 7.9 $ 31.5 $ 19.6
The Company recorded approximately $4.8 million of accelerated
stock compensation expense during the three months ended March 31,
2017 associated with a waived stock award declined by the Company’s
Chief Executive Officer.
2. RESTRUCTURING EXPENSES
From 2014 through 2017, the Company announced and initiated
several actions to rationalize employee headcount at various
manufacturing facilities and administrative offices located in
Europe, South America, China and the United States in order to
reduce costs in response to softening global market demand and
lower production volumes. The aggregate headcount reduction was
approximately 2,750 employees in 2014, 2015 and 2016. The Company
had approximately $15.3 million of severance and related costs
accrued as of December 31, 2016. During the three and nine
months ended September 30, 2017, the Company recorded an
additional $3.0 million and $8.5 million, respectively, of
severance and related costs associated with further
rationalizations associated with the termination of approximately
440 employees through September 30, 2017, and paid approximately
$11.4 million of severance and associated costs. The remaining
$13.5 million of accrued severance and other related costs as of
September 30, 2017, inclusive of approximately $1.3 million of
positive foreign currency translation impacts, are expected to be
paid primarily during 2017 and 2018.
3. INDEBTEDNESS
Indebtedness at September 30, 2017 and December 31,
2016 consisted of the following:
September 30, 2017 December 31, 2016
1.056% Senior term loan due 2020 $ 235.9 $ 211.0 Credit facility,
expires 2020 587.4 329.2 Senior term loans due 2021 353.9 316.5 5⅞%
Senior notes due 2021 305.6 306.6 Senior term loans due between
2019 and 2026 442.4 395.6 Other long-term debt 137.5 141.6 Debt
issuance costs (4.5 ) (5.1 ) 2,058.2 1,695.4 Less: Current portion
of other long-term debt (107.9 ) (85.4 ) Total indebtedness, less
current portion $ 1,950.3 $ 1,610.0
4. INVENTORIES
Inventories at September 30, 2017 and December 31,
2016 were as follows:
September 30, 2017 December 31, 2016
Finished goods $ 815.0 $ 589.3 Repair and replacement parts 599.0
532.5 Work in process 215.3 113.8 Raw materials 435.9 279.2
Inventories, net $ 2,065.2 $ 1,514.8
5. ACCOUNTS RECEIVABLE SALES AGREEMENTS
The Company has accounts receivable sales agreements that permit
the sale, on an ongoing basis, of a majority of its wholesale
receivables in North America, Europe and Brazil to its U.S.,
Canadian, European and Brazilian finance joint ventures. As of both
September 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 $10.3 million and
$27.5 million during the three and nine months ended
September 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 $4.3 million and $13.8 million during the three
and nine months ended September 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 September 30, 2017 and
December 31, 2016, these finance joint ventures had
approximately $40.2 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 nine months ended September 30, 2017 and 2016 is
as follows:
Three Months EndedSeptember 30,
Nine Months EndedSeptember 30,
2017 2016 2017 2016 Basic net income
per share: Net income attributable to AGCO Corporation and
subsidiaries $ 60.7 $ 40.0 $ 142.1 $ 98.1
Weighted average number of common shares outstanding 79.5
80.7 79.5 81.9 Basic net income per share
attributable to AGCO Corporation and subsidiaries $ 0.76 $
0.50 $ 1.79 $ 1.20 Diluted net income per share: Net
income attributable to AGCO Corporation and subsidiaries $ 60.7
$ 40.0 $ 142.1 $ 98.1 Weighted average number
of common shares outstanding 79.5 80.7 79.5 81.9 Dilutive
stock-settled appreciation rights, performance share awards and
restricted stock units 0.7 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 80.2 80.8 80.1 82.0 Diluted
net income per share attributable to AGCO Corporation and
subsidiaries $ 0.76 $ 0.50 $ 1.77 $ 1.20
7. SEGMENT REPORTING
Effective January 1, 2017, the Company modified its system of
reporting, resulting from changes to its internal management and
organizational structure, which changed its reportable segments
from North America; South America; Europe/Africa/Middle East; and
Asia/Pacific to North America; South America; Europe/Middle East;
and Asia/Pacific/Africa. The Asia/Pacific/Africa reportable segment
includes the regions of Africa, Asia, Australia and New Zealand,
and the Europe/Africa/Middle East segment no longer includes
certain markets in Africa. Effective January 1, 2017, these
reportable segments are reflective of how the Company’s chief
operating decision maker reviews operating results for the purposes
of allocating resources and assessing performance.
The Company’s four reportable segments distribute a full range
of agricultural equipment and related replacement parts. The
Company evaluates segment performance primarily based on income
from operations. Sales for each segment are based on the location
of the third-party customer. The Company’s selling, general and
administrative expenses and engineering expenses are charged to
each segment based on the region and division where the expenses
are incurred. As a result, the components of income from operations
for one segment may not be comparable to another segment. Segment
results for the three and nine months ended September 30, 2017
and 2016 are as follows:
Three Months Ended September 30,
NorthAmerica
SouthAmerica
Europe/Middle East
Asia/Pacific/Africa
Consolidated
2017 Net sales $ 483.5 $ 273.5 $ 1,017.7 $
211.6 $ 1,986.3 Income from operations 27.2 9.0 98.9 15.4 150.5
2016 Net sales $ 453.0 $ 261.8 $ 883.3 $ 163.5 $
1,761.6 Income from operations 21.1 5.9 75.8 7.1 109.9
Nine Months Ended September 30,
NorthAmerica
SouthAmerica
Europe/Middle East
Asia/Pacific/Africa
Consolidated
2017 Net sales $ 1,344.9 $ 747.6 $ 3,179.7 $ 506.9 $
5,779.1 Income from operations 52.7 13.8 336.6 23.2 426.3
2016 Net sales $ 1,360.3 $ 609.4 $ 2,950.4 $ 396.4 $ 5,316.5
Income from operations 44.0 6.3 287.4 8.4 346.1
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, 2017 2016 2017
2016 Segment income from operations $ 150.5 $ 109.9 $ 426.3
$ 346.1 Corporate expenses (28.3 ) (29.3 ) (86.2 ) (90.3 ) Stock
compensation expense (7.9 ) (7.2 ) (29.1 ) (18.0 ) Restructuring
expenses (3.0 ) (1.5 ) (8.5 ) (5.5 ) Amortization of intangibles
(14.3 ) (12.9 ) (41.5 ) (35.3 ) Consolidated income from operations
$ 97.0 $ 59.0 $ 261.0 $ 197.0
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 nine months ended September 30, 2017 and 2016 (in
millions, except per share data):
Three
Months Ended September 30, 2017 2016
Income FromOperations
Net Income(1)
Net IncomePer Share(1)
Income FromOperations
Net Income(1)
Net IncomePer Share(1)(2)
As reported $ 97.0 $ 60.7 $ 0.76 $ 59.0 $ 40.0 $ 0.50 Restructuring
expenses(3) 3.0 2.3 0.03 1.5 1.3
0.02 As adjusted $ 100.0 $ 63.0 $ 0.79 $ 60.5
$ 41.3 $ 0.51 (1) Net income and net
income per share amounts are after tax. (2) Rounding may impact
summation of amounts. (3) The restructuring expenses recorded
during the three months ended September 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.
Nine Months Ended September 30, 2017
2016
Income FromOperations
Net Income(1)
Net IncomePer Share(1)
Income FromOperations
Net Income(1)
Net IncomePer Share(1)(2)
As reported $ 261.0 $ 142.1 $ 1.77 $ 197.0 $ 98.1 $ 1.20
Restructuring expenses(3) 8.5 6.4 0.08 5.5 4.3 0.05
Non-cash expense relatedto waived stock
compensation(4)
4.8 4.8 0.06 — — — Deferred income tax adjustment(5) — —
— — 31.6 0.39 As adjusted $ 274.3
$ 153.3 $ 1.91 $ 202.5 $ 134.0 $
1.63 (1) Net income and net income per share amounts
are after tax. (2) Rounding may impact summation of amounts. (3)
The restructuring expenses recorded during the nine months ended
September 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. (4) The Company recorded accelerated stock
compensation expense associated with a waived award declined by the
Company’s CEO of approximately $4.8 million during the three months
ended March 31, 2017. (5) The Company recorded a non-cash
adjustment to increase the valuation allowance on the U.S. deferred
income tax assets of approximately $31.6 million during the three
months ended June 30, 2016.
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 $ 2.86
Restructuring expenses 0.08 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 nine months ended September 30, 2017.
Full year restructuring expenses could differ based on future
restructuring activity.
The following tables set forth, for the three and nine months
ended September 30, 2017, the impact to net sales of currency
translation and recent acquisitions by geographical segment (in
millions, except percentages):
Three Months EndedSeptember 30,
Change due to currencytranslation
Change due toacquisitions
2017 2016
% changefrom 2016
$
%
$
%
North America $ 483.5 $ 453.0 6.7 % $ 4.4 1.0 % $ 10.0 2.2 % South
America 273.5 261.8 4.5 % (0.9 ) (0.3 )% 0.7 0.3 % Europe/Middle
East 1,017.7 883.3 15.2 % 38.4 4.3 % 25.4 2.9 % Asia/Pacific/Africa
211.6 163.5 29.4 % 5.7 3.5 % 3.8
2.3 % $ 1,986.3 $ 1,761.6 12.8 % $ 47.6 2.7 % $ 39.9 2.3 %
Nine Months EndedSeptember 30,
Change due to currencytranslation
Change due toacquisitions
2017 2016
% changefrom 2016
$
%
$
%
North America $ 1,344.9 $ 1,360.3 (1.1 )% $ (1.9 ) (0.1 )% $ 19.4
1.4 % South America 747.6 609.4 22.7 % 43.4 7.1 % 2.5 0.4 %
Europe/Middle East 3,179.7 2,950.4 7.8 % (49.1 ) (1.7 )% 93.7 3.2 %
Asia/Pacific/Africa 506.9 396.4 27.9 % 1.5
0.4 % 15.0 3.8 % $ 5,779.1 $ 5,316.5 8.7 % $ (6.1 )
(0.1 )% $ 130.6 2.5 %
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171031005766/en/
AGCOGreg Peterson, 770-232-8229Director of Investor
Relationsgreg.peterson@agcocorp.com
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