- Record full year net sales of $14.4 billion
- Full year reported operating margin of 11.8% and adjusted
operating margin(3) of 12.0%
- Full year reported earnings per share of $15.63 and adjusted
earnings per share(3) of $15.55
- Introduces outlook for 2024 full year net sales of ~$13.6
billion and earnings per share of ~$13.15
AGCO, Your Agriculture Company (NYSE: AGCO), a global leader in
the design, manufacture and distribution of agricultural machinery
and precision ag technology, reported net sales of $3.8 billion for
the fourth quarter of 2023, a decrease of 2.5% compared to the
fourth quarter of 2022. Reported net income was $4.53 per share for
the fourth quarter of 2023, and adjusted net income(3) was $3.78
per share. These results compare to reported net income of $4.29
per share and adjusted net income(3) of $4.47 per share, for the
fourth quarter of 2022. Excluding favorable currency translation
impacts of 1.8%, net sales in the fourth quarter of 2023 decreased
4.3% compared to the fourth quarter of 2022.
Net sales for the full year of 2023 were approximately $14.4
billion, which is an increase of 13.9% compared to 2022. Excluding
favorable currency translation impacts of 0.1%, net sales for the
full year of 2023 increased 13.8% compared to 2022. For the full
year of 2023, reported net income was $15.63 per share, and
adjusted net income(3) was $15.55 per share. These results compare
to reported net income of $11.87 per share and adjusted net
income(3) of $12.42 per share in 2022.
“AGCO delivered record results in 2023 highlighted by
significantly higher net sales and operating margins due to the
continued execution of our Farmer-First strategy and healthy global
industry demand,” said Eric Hansotia, AGCO’s Chairman, President
and Chief Executive Officer. “Driven by our high margin growth
initiatives of globalizing a full-line of our Fendt branded
products, precision ag business and expanding our parts and service
business, net sales outgrew the market and full year adjusted
operating margins reached a record high at 12.0% of net sales. We
also continued to increase our technology development efforts with
engineering expense up over 23% in 2023 compared to 2022 and up
over 60% compared to 2020. These levels of higher investments are
producing increased technology patents for AGCO, award-winning
value-enhancing products for our farmers and record financial
results for our shareholders.”
Mr. Hansotia continued, “For 2024, we will remain focused on our
primary growth initiatives as well as driving further operational
efficiencies. We expect these efforts to mitigate some of the
softening industry demand. More challenging global market
conditions are expected in 2024 due to reduced commodity prices and
modestly lower farm income expectations. Despite a lower sales
forecast, we expect higher and more resilient margins compared to
past cycles due to structural improvements in our business. We will
continue to accelerate investments in premium technology, smart
farming solutions and enhanced digital capabilities to support our
Farmer-First strategy while helping to sustainably feed the
world.”
Highlights
- Reported fourth-quarter regional sales results(1):
Europe/Middle East (“EME”) +3.3%, North America +8.3%, South
America (38.9)%, Asia/Pacific/Africa (“APA”) +11.3%
- Constant currency fourth-quarter regional sales
results(1)(2)(3): EME +1.4%, North America +7.1%, South America
(42.0)%, APA +11.5%
- Fourth quarter regional operating margin performance: EME
16.2%, North America 9.0%, South America 3.8%, APA 8.0%
- Full-year reported operating margins and adjusted operating
margins(3) improved to 11.8% and 12.0% respectively, in 2023
compared to 10.0% and 10.3% in 2022
(1)As compared to fourth quarter 2022.
(2)Excludes currency translation
impact.
(3)See reconciliation of Non-GAAP measures
in appendix.
Market Update
Industry Unit Retail
Sales
Tractors
Combines
Year ended December 31, 2023
Change from
Prior Year
Change from
Prior Year
North America(4)
(3)%
2%
South America(5)
(8)%
(17)%
Western Europe(5)
(4)%
2%
(4) Excludes compact tractors.
(5) Based on Company estimates.
“Near record global crop production in 2023 has resulted in
increased grain inventories and commodity prices have
correspondingly retreated from the very high levels seen over the
last 24 months,” stated Mr. Hansotia. “Although still strong by
historical levels, farm income was down modestly across the major
regions in 2023 and another modest decline is projected for 2024.
Much of the industry fleet has been refreshed over the last three
years and dealer inventories have been re-stocked. Full-year global
industry retail sales of farm equipment in 2023 were lower in
AGCO’s key markets, with weaker sales of smaller equipment being
partially offset by higher sales of larger machines.”
North American full-year industry retail tractor sales declined
3% compared to the previous year. Lower sales of smaller equipment,
more closely tied to the general economy, were partially offset by
strong growth of high-horsepower tractors and combines. Relatively
favorable commodity prices, extended fleet age and precision ag
technology stimulated demand from row crop farmers. Lower projected
farm income and a refreshed fleet is expected to pressure industry
demand in 2024, resulting in weaker North American industry sales
compared to 2023.
South American industry retail tractor sales decreased 8% during
2023 compared to the previous year. Retail demand in Brazil was
negatively affected by funding shortfalls of the
government-subsidized loan program. Healthy farm income, supportive
exchange rates and continued expansion in planted acreage drove
increases in high-tech farm equipment, which partially offset
weaker smaller equipment demand due to financing delays. Following
three strong years, retail demand in South America is expected to
further soften in 2024 as a result of lower commodity prices and
farm income.
Industry retail tractor sales in Western Europe decreased 4% for
the full year of 2023 compared to high levels in 2022. Farmer
sentiment in the region has continued to be negatively impacted by
the conflict in Ukraine and higher input cost inflation. Further
declines in industry demand are expected in 2024 as lower income
levels pressure demand from arable farmers, while healthy demand
from dairy and livestock producers is expected to mitigate some of
the decline.
Regional Results AGCO Regional Net Sales (in
millions)
Three Months Ended December 31,
2023
2022
% change from 2022
% change from 2022 due to
currency translation(1)
% change excluding currency
translation
North America
$
891.7
$
823.7
8.3%
1.2%
7.1%
South America
412.0
674.8
(38.9)%
3.1%
(42.0)%
EME
2,259.0
2,186.5
3.3%
1.9%
1.4%
APA
238.0
213.9
11.3%
(0.2)%
11.5%
Total
$
3,800.7
$
3,898.9
(2.5)%
1.8%
(4.3)%
Year Ended December 31,
2023
2022
% change from 2022
% change from 2022 due to
currency translation(1)
% change excluding currency
translation
North America
$
3,752.7
$
3,175.1
18.2%
0.2%
18.0%
South America
2,234.2
2,121.6
5.3%
2.7%
2.6%
EME
7,540.5
6,447.3
17.0%
(0.3)%
17.3%
APA
885.0
907.4
(2.5)%
(3.4)%
0.9%
Total
$
14,412.4
$
12,651.4
13.9%
0.1%
13.8%
(1) See Footnotes for additional
disclosures.
North America
AGCO’s North American net sales increased 18.0% for the full
year of 2023 compared to 2022, excluding the impact of favorable
currency translation. Positive pricing and increased sales of
high-horsepower tractors, application equipment as well as combines
represented the largest increases. Income from operations for the
full year of 2023 increased $180.5 million compared to 2022 and
operating margins were 12.2%. The improvement was the result of
positive net pricing and favorable product mix, partially offset by
higher selling, general, and administrative expenses (“SG&A
expenses”) and engineering expenses.
South America
Net sales in the South American region increased 2.6% for the
full year of 2023 compared to 2022, excluding the impact of
favorable currency translation, despite significant declines in the
fourth quarter. Positive pricing impacts and favorable product mix
of high-horsepower tractors accounted for most of the increase.
Sales increases in Brazil were partially offset by lower sales in
Argentina. Despite significant discounting in the fourth quarter,
income from operations for the full year of 2023 increased by $12.5
million compared to 2022. This increase was primarily a result of
positive net pricing, partially offset by lower sales volume and
considerable dealer termination charges.
Europe/Middle East
Net sales in the Europe/Middle East region increased 17.3% for
the full year of 2023 compared to 2022, excluding negative currency
translation impacts. Healthy growth across the major European
markets contributed to the improvement. Positive pricing and
increased sales of mid-range and high-horsepower tractors as well
as replacement parts produced most of the growth. Income from
operations increased $316.5 million for the full year of 2023
compared to 2022 and operating margins improved 240 basis points.
The improvement was driven by positive net pricing, partially
offset by higher SG&A expenses and engineering expenses.
Asia/Pacific/Africa
Asia/Pacific/Africa’s net sales were approximately flat,
excluding the negative impact of currency translation, during the
full year of 2023 compared to 2022 due to positive pricing offset
by lower tractor and combine sales volumes. Higher sales in
Australia were mostly offset by lower sales in Japan. Income from
operations decreased $39.6 million for the full year of 2023
compared to 2022 due to higher material and labor costs and higher
SG&A expenses.
Outlook
AGCO’s net sales for 2024 are expected to be approximately $13.6
billion, reflecting lower sales volumes, modest positive pricing as
well as favorable foreign currency translation. Operating margins
are projected to be approximately 11%, reflecting the impact of
lower sales, lower production volumes and relatively flat
investments in engineering and other technology efforts to support
AGCO’s precision agriculture and digital initiatives. Based on
these assumptions, 2024 earnings per share are targeted at
approximately $13.15.
* * * * *
AGCO will host a conference call at 10 a.m. Eastern Time on
Tuesday, February 6th. 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 12 months following the call. A copy of this press release will
also be available on AGCO’s website for at least 12 months
following the call.
* * * * *
Safe Harbor Statement
Statements that are not historical facts, including the
projections of earnings per share, production levels, sales,
industry demand, market conditions, commodity prices, currency
translation, farm income levels, margin levels, strategy,
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. Factors that adversely affect the agricultural industry,
including declines in the general economy, adverse weather,
tariffs, 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.
- We maintain an independent dealer and distribution network in
the markets where we sell products. The financial and operational
capabilities of our dealers and distributors are critical to our
ability to compete in these markets. Higher inventory levels at our
dealers and high utilization of dealer credit limits could
negatively impact future sales and adversely impact our
performance.
- We recently announced the proposed acquisition of the ag assets
and technologies of Trimble through the formation of a joint
venture of which we will own 85%. This is a substantial acquisition
for us, and it will require us to incur substantial indebtedness.
All acquisitions involve risk, and there is no certainty that this
acquisition will close, that we will be able to obtain the desired
financing, that our increased leverage will not adversely impact
our remaining business, or that the acquired business will operate
as expected following closing. Each of these items, as well as
similar acquisition-related items, would adversely impact our
performance.
- A majority of our sales and manufacturing takes place outside
the United States, and many of our sales involve products that are
manufactured in one country and sold in a different country. 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. Among these risks are the uncertain
consequences of Brexit and tariffs imposed on exports to and
imports from China.
- We cannot predict or control the impact of the conflict in
Ukraine on our business. Already it has resulted in reduced sales
in Ukraine as farmers have experienced economic distress,
difficulties in harvesting and delivering their products, as well
as general uncertainty. There is a potential for natural gas
shortages, as well as shortages in other energy sources, throughout
Europe, which could negatively impact our production in Europe both
directly and through interrupting the supply of parts and
components that we use. It is unclear how long these conditions
will continue, or whether they will worsen, and what the ultimate
impact on our performance will be. In addition, AGCO sells products
in, and purchases parts and components from, other regions where
there could be hostilities. Any hostilities likely would adversely
impact our performance.
- Most retail sales of the products that we manufacture are
financed, either by our joint ventures with Rabobank or by a bank
or other private lender. Our joint ventures with Rabobank, which
are controlled by Rabobank and are dependent upon Rabobank for
financing as well, finance approximately 50% of the retail sales of
our tractors and combines in the markets where the joint ventures
operate. Any difficulty by Rabobank to continue to provide that
financing, or any business decision by Rabobank as the controlling
member not to fund the business or particular aspects of it (for
example, a particular country or region), would require the joint
ventures to find other sources of financing (which may be difficult
to obtain), or us to find another source of retail financing for
our customers, or our customers would be required to utilize other
retail financing providers. As a result of the recent economic
downturn, financing for capital equipment purchases generally has
become more difficult in certain regions and in some cases, 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. In addition, Rabobank also is the lead lender
in our revolving credit facility and term loans and for many years
has been an important financing partner for us. Any interruption or
other challenges in that relationship would require us to obtain
alternative financing, which could be difficult.
- Both AGCO and our finance joint ventures have substantial
accounts receivable from dealers and end customers, and we would be
adversely impacted if the collectability of these receivables was
less than optimal; 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, 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 and
sustainable smart farming technology, which require substantial
expenditures; there is no certainty that we can develop the
necessary technology or that the technology that we develop will be
attractive to farmers or available at competitive prices.
- 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.
- Our business increasingly is subject to regulations relating to
privacy and data protection, and if we violate any of those
regulations, or otherwise are the victim of a cyberattack, we could
be subject to significant claims, penalties and damages.
- Attacks through ransomware and other means are rapidly
increasing, and in May 2022 we learned that we had been subject to
a cyberattack. We continue to review and improve our safeguards to
minimize our exposure to future attacks. However, there always will
be the potential of the risk that a cyberattack will be successful
and will disrupt our business, either through shutting down our
operations, destroying data, exfiltrating data or otherwise.
- 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. Recently suppliers of several key
parts and components have not been able to meet our demand and we
have had to decrease our production levels. In addition, the
potential of natural gas shortages in Europe, as well as predicted
overall shortages in other energy sources, could also negatively
impact our production and that of our supply chain in the future.
It is unclear when these supply chain disruptions will be restored
or what the ultimate impact on production, and consequently sales,
will be.
- Any increase in COVID-19, or other future pandemics, could
negatively impact our business through reduced sales, facilities
closures, higher absentee rates, and reduced production at both our
plants and the plants that supply us with parts and components. In
addition, logistical and transportation-related issues and similar
problems may also arise.
- We recently have experienced significant inflation in a range
of costs, including for parts and components, shipping, and energy.
While we have been able to pass along most of those costs through
increased prices, there can be no assurance that we will be able to
continue to do so. If we are not, it will adversely impact our
performance.
- 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
performance would decline.
- We have a substantial amount of indebtedness (and will incur
additional indebtedness as part of the Trimble transaction), 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,
2022 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 machinery and precision ag
technology. AGCO delivers customer value through its differentiated
brand portfolio including core brands like Fendt®, GSI®, Massey
Ferguson®, Precision Planting® and Valtra®. Powered by Fuse® smart
farming solutions, AGCO’s full line of equipment and services help
farmers sustainably feed our world. Founded in 1990 and
headquartered in Duluth, Georgia, USA, AGCO had net sales of
approximately $14.4 billion in 2023. For more information, visit
http://www.AGCOcorp.com. For company news, information and events,
please follow us on X, formerly known as Twitter: @AGCOCorp. For
financial news on X, 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, 2023
December 31, 2022
ASSETS
Current Assets:
Cash and cash equivalents
$
595.5
$
789.5
Accounts and notes receivable, net
1,605.3
1,221.3
Inventories, net
3,440.7
3,189.7
Other current assets
699.3
538.8
Total current assets
6,340.8
5,739.3
Property, plant and equipment, net
1,920.9
1,591.2
Right-of-use lease assets
176.2
163.9
Investments in affiliates
512.7
436.9
Deferred tax assets
481.6
228.5
Other assets
346.8
268.7
Intangible assets, net
308.8
364.4
Goodwill
1,333.4
1,310.8
Total assets
$
11,421.2
$
10,103.7
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current Liabilities:
Borrowings due within one year
$
15.0
$
196.0
Accounts payable
1,207.3
1,385.3
Accrued expenses
2,903.8
2,271.3
Other current liabilities
217.5
235.4
Total current liabilities
4,343.6
4,088.0
Long-term debt, less current portion and
debt issuance costs
1,377.2
1,264.8
Operating lease liabilities
134.4
125.4
Pensions and postretirement health care
benefits
170.5
158.0
Deferred tax liabilities
122.6
112.0
Other noncurrent liabilities
616.1
472.9
Total liabilities
6,764.4
6,221.1
Stockholders’ Equity:
AGCO Corporation stockholders’ equity:
Common stock
0.7
0.7
Additional paid-in capital
4.1
30.2
Retained earnings
6,360.0
5,654.6
Accumulated other comprehensive loss
(1,708.1
)
(1,803.1
)
Total AGCO Corporation stockholders’
equity
4,656.7
3,882.4
Noncontrolling interests
0.1
0.2
Total stockholders’ equity
4,656.8
3,882.6
Total liabilities and stockholders’
equity
$
11,421.2
$
10,103.7
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,
2023
2022
Net sales
$
3,800.7
$
3,898.9
Cost of goods sold
2,817.9
2,958.3
Gross profit
982.8
940.6
Selling, general and administrative
expenses
416.8
326.3
Engineering expenses
150.8
132.1
Amortization of intangibles
14.4
14.7
Impairment charges
4.1
—
Restructuring expenses
3.6
1.7
Income from operations
393.1
465.8
Interest expense (income), net
(7.2
)
4.4
Other expense, net
149.7
72.9
Income before income taxes and equity in
net earnings of affiliates
250.6
388.5
Income tax provision (benefit)
(76.1
)
90.7
Income before equity in net earnings of
affiliates
326.7
297.8
Equity in net earnings of affiliates
12.3
24.4
Net income
339.0
322.2
Net income attributable to noncontrolling
interests
—
—
Net income attributable to AGCO
Corporation and subsidiaries
$
339.0
$
322.2
Net income per common share attributable
to AGCO Corporation and subsidiaries:
Basic
$
4.54
$
4.32
Diluted
$
4.53
$
4.29
Cash dividends declared and paid per
common share
$
0.29
$
0.24
Weighted average number of common and
common equivalent shares outstanding:
Basic
74.7
74.6
Diluted
74.8
75.0
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,
2023
2022
Net sales
$
14,412.4
$
12,651.4
Cost of goods sold
10,635.0
9,650.1
Gross profit
3,777.4
3,001.3
Selling, general and administrative
expenses
1,454.5
1,189.5
Engineering expenses
548.8
444.2
Amortization of intangibles
57.7
60.1
Impairment charges
4.1
36.0
Restructuring expenses
11.9
6.1
Income from operations
1,700.4
1,265.4
Interest expense, net
4.6
13.0
Other expense, net
362.3
145.2
Income before income taxes and equity in
net earnings of affiliates
1,333.5
1,107.2
Income tax provision
230.4
296.6
Income before equity in net earnings of
affiliates
1,103.1
810.6
Equity in net earnings of affiliates
68.2
64.1
Net income
1,171.3
874.7
Net loss attributable to noncontrolling
interests
0.1
14.9
Net income attributable to AGCO
Corporation and subsidiaries
$
1,171.4
$
889.6
Net income per common share attributable
to AGCO Corporation and subsidiaries:
Basic
$
15.66
$
11.92
Diluted
$
15.63
$
11.87
Cash dividends declared and paid per
common share
$
6.10
$
5.40
Weighted average number of common and
common equivalent shares outstanding:
Basic
74.8
74.6
Diluted
74.9
74.9
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,
2023
2022
Cash flows from operating activities:
Net income
$
1,171.3
$
874.7
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation
230.4
209.5
Impairment charges
4.1
36.0
Amortization of intangibles
57.7
60.1
Stock compensation expense
46.4
34.0
Equity in net earnings of affiliates, net
of cash received
(36.4
)
(40.8
)
Deferred income tax benefit
(264.4
)
(58.0
)
Other
6.7
16.2
Changes in operating assets and
liabilities:
Accounts and notes receivable, net
(443.8
)
(306.1
)
Inventories, net
(164.4
)
(668.3
)
Other current and noncurrent assets
(243.0
)
20.1
Accounts payable
(191.6
)
322.1
Accrued expenses
566.5
282.7
Other current and noncurrent
liabilities
363.6
56.0
Total adjustments
(68.2
)
(36.5
)
Net cash provided by operating
activities
1,103.1
838.2
Cash flows from investing activities:
Purchases of property, plant and
equipment
(518.1
)
(388.3
)
Proceeds from sale of property, plant and
equipment
11.8
2.6
Purchase of businesses, net of cash
acquired
(9.8
)
(111.3
)
Sale of, distributions from (investments
in) unconsolidated affiliates, net
(21.6
)
4.0
Other
(8.0
)
(3.8
)
Net cash used in investing activities
(545.7
)
(496.8
)
Cash flows from financing activities:
Proceeds from indebtedness
329.8
410.5
Repayments of indebtedness
(458.6
)
(377.5
)
Purchases and retirement of common
stock
(53.0
)
—
Payment of dividends to stockholders
(457.4
)
(404.3
)
Payment of minimum tax withholdings on
stock compensation
(21.6
)
(20.6
)
Payment of debt issuance costs
(10.9
)
(3.6
)
Distributions to noncontrolling interests,
net
—
(11.5
)
Net cash used in financing activities
(671.7
)
(407.0
)
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
(79.7
)
(34.0
)
Decrease in cash, cash equivalents and
restricted cash
(194.0
)
(99.6
)
Cash, cash equivalents and restricted
cash, beginning of year
789.5
889.1
Cash, cash equivalents and restricted
cash, end of year
$
595.5
$
789.5
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)
1. STOCK COMPENSATION EXPENSE
The Company recorded stock compensation expense as follows (in
millions):
Three Months Ended December
31,
Years Ended December 31,
2023
2022
2023
2022
Cost of goods sold
$
0.4
$
0.3
$
1.8
$
1.3
Selling, general and administrative
expenses
8.5
8.3
44.6
32.7
Total stock compensation expense
$
8.9
$
8.6
$
46.4
$
34.0
2. IMPAIRMENT CHARGES
In the fourth quarter of 2023, the Company recorded an
impairment charge of approximately $4.1 million related to the
impairment of certain patents and technology amortizing intangible
assets from a prior acquisition reflected as “Impairment charges”
in its Condensed Consolidated Statement of Operations. In 2022, as
a consequence of the conflict between Russia and Ukraine, the
Company recorded asset impairment charges of approximately $36.0
million related to its Russian distribution joint venture reflected
as “Impairment charges” in its Condensed Consolidated Statements of
Operations, with an offsetting benefit of approximately $12.2
million included within “Net loss attributable to noncontrolling
interests”. In addition, during 2022, the Company recorded a
write-down of its investment in its Russian finance joint venture
of approximately $4.8 million, reflected within “Equity in net
earnings of affiliates” in its Condensed Consolidated Statements of
Operations. Both the Russian distribution joint venture and the
Russian finance joint venture were sold during the three months
ended December 31, 2022.
3. RESTRUCTURING EXPENSES
In recent years, the Company announced and initiated several
actions to rationalize employee headcount in various manufacturing
facilities and administrative offices located in the U.S., Europe,
South America, Africa and Asia, in order to reduce costs in
response to fluctuating global market demand. The Company had
approximately $6.8 million of accrued severance and other costs
related to such rationalizations as of December 31, 2022. During
the year ended December 31, 2023, the Company recorded an
additional $11.9 million of severance and other related costs
associated with these rationalizations, and paid approximately $9.2
million of severance and other related costs. The remaining $7.8
million of severance and other related costs as of December 31,
2023, inclusive of approximately $1.7 million of negative foreign
currency translation impacts, are expected to be paid primarily
during the next 12 months.
4. INDEBTEDNESS
Long-term debt at December 31, 2023 and 2022 consisted of the
following (in millions):
December 31, 2023
December 31, 2022
Credit facility, expires 2027
—
200.0
1.002% Senior term loan due 2025
276.7
267.3
EIB Senior Term Loan
276.7
—
Senior term loans due between 2023 and
2028
162.1
341.6
0.800% Senior Notes Due 2028
664.0
641.5
Other long-term debt
3.1
5.1
Debt issuance costs
(3.1
)
(3.6
)
1,379.5
1,451.9
Less:
Senior term loans due 2023, net of debt
issuance costs
—
(184.9
)
Current portion of other long-term
debt
(2.3
)
(2.2
)
Total long-term indebtedness, less current
portion
$
1,377.2
$
1,264.8
As of December 31, 2023 and 2022, the Company had short-term
borrowings due within one year of approximately $12.7 million and
$8.9 million, respectively.
European Investment Bank ("EIB") Senior Term Loan
On September 29, 2023, the Company entered into a multi-currency
Finance Contract with the EIB permitting the Company to borrow up
to €250.0 million (or approximately $276.7 million as of December
31, 2023) to fund up to 50% of certain investments in research,
development and innovation primarily in Germany, France and Finland
during the period from 2023 through 2026. On October 26, 2023, the
Company borrowed €250.0 million (approximately $263.7 million)
under the arrangement. The loan matures on October 26, 2029.
5. INVENTORIES
Inventories, net at December 31, 2023 and 2022 were as follows
(in millions):
December 31, 2023
December 31, 2022
Finished goods
$
1,460.7
$
994.9
Repair and replacement parts
823.1
750.1
Work in process
255.2
369.8
Raw materials
901.7
1,074.9
Inventories, net
$
3,440.7
$
3,189.7
6. 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. For the
years ended December 31, 2023 and 2022, the cash received from
receivables sold under the U.S., Canadian, European and Brazilian
accounts receivable sales agreements was approximately $2.5 billion
and $1.8 billion, respectively.
In addition, the Company sells certain trade receivables under
factoring arrangements to other financial institutions around the
world. For the years ended December 31, 2023 and 2022, the cash
received from these arrangements was approximately $254.1 million
and $226.0 million, 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 $49.1 million and
$148.4 million, respectively, during the three months and year
ended December 31, 2023. 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 $32.6
million and $71.1 million, respectively, during the three months
and year ended December 31, 2022, respectively.
The Company’s finance joint ventures in Europe, Brazil and
Australia also provide wholesale financing directly to the
Company’s dealers. As of December 31, 2023 and 2022, these finance
joint ventures had approximately $211.3 million and $69.5 million,
respectively, of outstanding accounts receivable associated with
these arrangements.
7. 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, 2023 and 2022 is as
follows (in millions, except per share data):
Three Months Ended December
31,
Years Ended December 31,
2023
2022
2023
2022
Basic net income per share:
Net income attributable to AGCO
Corporation and subsidiaries
$
339.0
$
322.2
$
1,171.4
$
889.6
Weighted average number of common shares
outstanding
74.7
74.6
74.8
74.6
Basic net income per share attributable to
AGCO Corporation and subsidiaries
$
4.54
$
4.32
$
15.66
$
11.92
Diluted net income per share:
Net income attributable to AGCO
Corporation and subsidiaries
$
339.0
$
322.2
$
1,171.4
$
889.6
Weighted average number of common shares
outstanding
74.7
74.6
74.8
74.6
Dilutive stock-settled appreciation
rights, performance share awards and restricted stock units
0.1
0.4
0.1
0.3
Weighted average number of common shares
and common share equivalents outstanding for purposes of computing
diluted net income per share
74.8
75.0
74.9
74.9
Diluted net income per share attributable
to AGCO Corporation and subsidiaries
$
4.53
$
4.29
$
15.63
$
11.87
8. SEGMENT REPORTING
The Company has four operating segments which are also its
reportable segments which consist of the North America, South
America, Europe/Middle East and Asia/Pacific/Africa regions. The
Company’s reportable segments are geography based and distribute a
full range of agricultural machinery and precision agriculture
technology. The Company evaluates segment performance primarily
based on income from operations. Sales for each segment are based
on the location of the third-party customer. The Company’s selling,
general and administrative expenses and engineering expenses are
charged to each segment based on the region and division where the
expenses are incurred. As a result, the components of income from
operations for one segment may not be comparable to another
segment. Segment results for the three months and years ended
December 31, 2023 and 2022 are as follows (in millions):
Three Months Ended December 31,
North
America
South
America
Europe/
Middle East
Asia/
Pacific/Africa
Total Segments
2023
Net sales
$
891.7
$
412.0
$
2,259.0
$
238.0
$
3,800.7
Income from operations
80.5
15.7
366.7
19.1
482.0
2022
Net sales
$
823.7
$
674.8
$
2,186.5
$
213.9
$
3,898.9
Income from operations
60.6
134.8
318.5
19.2
533.1
Years Ended December 31,
North
America
South
America
Europe/
Middle East
Asia/
Pacific/Africa
Total Segments
2023
Net sales
$
3,752.7
$
2,234.2
$
7,540.5
$
885.0
$
14,412.4
Income from operations
459.3
386.4
1,100.6
77.3
2,023.6
2022
Net sales
$
3,175.1
$
2,121.6
$
6,447.3
$
907.4
$
12,651.4
Income from operations
278.8
373.9
784.1
116.9
1,553.7
A reconciliation from the segment information to the
consolidated balances for income from operations is set forth below
(in millions):
Three Months Ended December
31,
Years Ended December 31,
2023
2022
2023
2022
Segment income from operations
$
482.0
$
533.1
$
2,023.6
$
1,553.7
Corporate expenses
(58.3
)
(42.6
)
(204.9
)
(153.4
)
Amortization of intangibles
(14.4
)
(14.7
)
(57.7
)
(60.1
)
Stock compensation expense
(8.5
)
(8.3
)
(44.6
)
(32.7
)
Restructuring expenses
(3.6
)
(1.7
)
(11.9
)
(6.1
)
Impairment charges
(4.1
)
—
(4.1
)
(36.0
)
Consolidated income from operations
$
393.1
$
465.8
$
1,700.4
$
1,265.4
RECONCILIATION OF NON-GAAP MEASURES
This earnings release discloses adjusted income from operations,
adjusted operating margin, adjusted net income, adjusted net income
per share and net sales on a constant currency basis, 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
months and years ended December 31, 2023 and 2022 (in millions,
except per share data):
Three Months Ended December
31,
2023
2022
Income From Operations
Net Income(1)(2)
Net Income Per Share(1)(2)
Income From Operations
Net Income(1)(2)
Net Income Per Share(1)(2)
As reported
$
393.1
$
339.0
$
4.53
$
465.8
$
322.2
$
4.29
Restructuring expenses(3)
3.6
2.7
0.04
1.7
1.6
0.02
Transaction-related costs(4)
4.5
3.3
0.04
—
—
—
Impairment charges(5)
4.1
4.1
0.05
—
—
—
Argentina currency devaluation
impact(6)
—
45.8
0.61
—
—
—
Divestiture-related foreign currency
translation release(7)
—
—
—
—
11.4
0.15
Discrete tax items(8)
—
(112.3
)
(1.50
)
—
—
—
As adjusted
$
405.3
$
282.5
$
3.78
$
467.5
$
335.3
$
4.47
(1)
Net income and net income per share
amounts are after tax.
(2)
Rounding may impact summation of
amounts.
(3)
The restructuring expenses recorded during
the three months ended December 31, 2023 related primarily to
severance and other related costs associated with the Company’s
European and Asian manufacturing operations. The restructuring
expenses recorded during the three months ended December 31, 2022
related primarily to severance and other related costs associated
with the Company’s rationalization of certain U.S., European and
South American manufacturing operations and various administrative
offices.
(4)
The transaction related costs recorded
during the three months ended December 31, 2023 related to the
Company’s planned acquisition of Trimble Inc.’s agriculture
business through the formation of a joint venture with Trimble
Inc.
(5)
The impairment charge recorded during the
three months ended December 31, 2023 related to the impairment of
certain patents and technology amortizing intangible assets from a
prior acquisition.
(6)
In December 2023, the central bank of
Argentina adjusted the official foreign currency exchange rate for
the Argentine peso, significantly devaluing the currency relative
to the United States dollar. The Argentina currency devaluation
impact represents losses recognized during December 2023 related to
the devaluation of the Argentine peso and the related impacts to
our AGCO finance joint venture in Argentina which were recorded in
“Other expenses, net” and “Equity in net earnings of affiliates”,
respectively, in the Company’s Condensed Consolidated Statements of
Operations.
(7)
During the three months ended December 31,
2022, the Company sold its interest its Russian distribution joint
venture. Foreign currency translation impacts since inception of
the Russian joint venture previously recognized within “Accumulated
other comprehensive loss” were recorded within “Other expense, net”
on the Company’s Condensed Consolidated Statements of
Operations.
(8)
During the three months ended December 31,
2023, the Company’s income tax provision included a one-time
benefit of $112.3 million related to the recognition of a deferred
tax asset of approximately $197.7 million, net of a valuation
allowance of approximately $85.4 million, related to the
finalization of negotiations surrounding the application of Swiss
Tax reform legislation enacted in 2020.
Years Ended December 31,
2023
2022
Income From Operations(2)
Net Income(1)
Net Income Per Share(1)(2)
Income From Operations
Net Income(1)(2)
Net Income Per Share(1)(2)
As reported
$
1,700.4
$
1,171.4
$
15.63
$
1,265.4
$
889.6
$
11.87
Impairment charges(3), (4)
4.1
4.1
0.05
36.0
23.8
0.32
Restructuring expenses(5)
11.9
9.5
0.13
6.1
4.8
0.06
Gain on full acquisition of IAS joint
venture(6)
—
—
—
—
(3.4
)
(0.05
)
Write-down of investment in Russian
finance joint venture(7)
—
—
—
—
4.8
0.06
Transaction-related costs(8)
16.0
11.8
0.16
—
—
—
Argentina currency devaluation
impact(9)
—
45.8
0.61
—
—
—
Divestiture-related foreign currency
translation release(10), (11)
—
8.2
0.11
—
11.4
0.15
Discrete tax items(12), (13)
—
(85.9
)
(1.15
)
—
—
—
As adjusted
$
1,732.3
$
1,164.9
$
15.55
$
1,307.5
$
930.9
$
12.42
(1)
Net income and net income per share
amounts are after tax.
(2)
Rounding may impact summation of
amounts.
(3)
The impairment charge recorded during the
year ended December 31, 2023 related to the impairment of certain
patents and technology amortizing intangible assets from a prior
acquisition.
(4)
During 2022, the Company recorded certain
asset impairment charges related to its Russian joint ventures of
approximately $36.0 million, reflected as “Impairment charges” in
its Condensed Consolidated Statements of Operations, with an
offsetting benefit of approximately $12.2 million included within
“Net loss attributable to noncontrolling interests.”
(5)
The restructuring expenses recorded during
the year ended December 31, 2023 related primarily to severance and
other related costs associated with the Company’s South American,
North American, European, African and Asian manufacturing
operations. The restructuring expenses recorded during the year
ended December 31, 2022 related primarily to severance and other
related costs associated with the Company’s European and South
American manufacturing operations.
(6)
During 2022, the Company acquired Appareo
Systems, LLC (“Appareo”), which included the acquisition of the
remaining 50% of its former 50% IAS joint venture with Appareo. The
Company recorded a gain associated with this remaining 50%
acquisition of approximately $3.4 million, which was reflected
within “Other expense, net” in its Condensed Consolidated
Statements of Operations.
(7)
During 2022, the Company recorded a
write-down of its investment in its Russian finance joint venture
of approximately $4.8 million, reflected within “Equity in net
earnings of affiliates” in its Condensed Consolidated Statements of
Operations. The Russian finance joint venture was sold during the
three months ended December 31, 2022.
(8)
The transaction related costs recorded
during the year ended December 31, 2023 related to the Company’s
planned acquisition of Trimble Inc.’s agriculture business through
the formation of a joint venture with Trimble Inc.
(9)
In December 2023, the central bank of
Argentina adjusted the official foreign currency exchange rate for
the Argentine peso, significantly devaluing the currency relative
to the United States dollar. The Argentina currency devaluation
impact represents losses recognized during December 2023 related to
the devaluation of the Argentine peso and the related impacts to
our AGCO finance joint venture in Argentina which were recorded in
“Other expenses, net” and “Equity in net earnings of affiliates”,
respectively, in the Company’s Condensed Consolidated Statements of
Operations.
(10)
During the year ended December 31, 2023,
the Company divested its interest in its Germany finance joint
venture. Foreign currency translation impacts since inception of
the Germany finance joint venture previously recognized within
“Accumulated other comprehensive loss” were recorded within “Other
expense, net” on the Company’s Condensed Consolidated Statements of
Operations.
(11)
During 2022, the Company sold its interest
in its Russian distribution joint venture. Foreign currency
translation impacts since inception of the Russian joint venture
previously recognized within “Accumulated other comprehensive loss”
were recorded within “Other expense, net” on the Company’s
Condensed Consolidated Statements of Operations.
(12)
During the year ended December 31, 2023,
the Company’s income tax provision included a one-time benefit of
$112.3 million related to the recognition of a deferred tax asset
of approximately $197.7 million, net of a valuation allowance of
approximately $85.4 million, related to the finalization of
negotiations surrounding the application of Swiss Tax reform
legislation enacted in 2020.
(13)
During the year ended December 31, 2023,
the Company applied for enrollment in the Brazilian government’s
“Litigation Zero” tax amnesty program whereby cases being disputed
at the administrative court level of review for a period of more
than ten years can be considered for amnesty. The Company recorded
the settlement under the amnesty program of approximately $26.4
million. net of associated U.S. income tax credits, within “Income
tax provision” during the year ended December 31, 2023.
The following is a reconciliation of adjusted operating margin
for the three months and years ended December 31, 2023 and 2022 (in
millions):
Three Months Ended December
31,
Years Ended December 31,
2023
2022
2023
2022
Net sales
$
3,800.7
$
3,898.9
$
14,412.4
$
12,651.4
Income from operations
393.1
465.8
1,700.4
1,265.4
Operating margin(1)
10.3
%
11.9
%
11.8
%
10.0
%
Adjusted income from operations(2)
405.3
467.5
1,732.3
1,307.5
Adjusted operating margin(1)
10.7
%
12.0
%
12.0
%
10.3
%
(1)
Operating margin is defined as the ratio
of income from operations divided by net sales. Adjusted operating
margin is defined as the ratio of adjusted income from operations
divided by net sales.
(2)
Refer to the previous table for the
reconciliation of income from operations to adjusted income from
operations.
The following tables set forth, for the three months and year
ended December 31, 2023 and 2022, the impact to net sales of
currency translation by geographical segment (in millions, except
percentages):
Three Months Ended December
31,
Change due to currency
translation
2023
2022
% change from 2022
$
%
North America
$
891.7
$
823.7
8.3
%
$
9.9
1.2
%
South America
412.0
674.8
(38.9
)%
20.8
3.1
%
Europe/Middle East
2,259.0
2,186.5
3.3
%
41.7
1.9
%
Asia/Pacific/Africa
238.0
213.9
11.3
%
(0.5
)
(0.2
)%
$
3,800.7
$
3,898.9
(2.5
)%
$
71.9
1.8
%
Years Ended December 31,
Change due to currency
translation
2023
2022
% change from 2022
$
%
North America
$
3,752.7
$
3,175.1
18.2
%
$
5.3
0.2
%
South America
2,234.2
2,121.6
5.3
%
56.8
2.7
%
Europe/Middle East
7,540.5
6,447.3
17.0
%
(18.3
)
(0.3
)%
Asia/Pacific/Africa
885.0
907.4
(2.5
)%
(30.8
)
(3.4
)%
$
14,412.4
$
12,651.4
13.9
%
$
13.0
0.1
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240206187629/en/
INVESTOR CONTACT: Greg Peterson VP, Investor Relations
404-403-6042 greg.peterson@agcocorp.com
MEDIA CONTACT: Rachel Potts VP, Chief Communications
Officer 678-654-7719 rachel.potts@agcocorp.com
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