Net Income Improvement in Second
Quarter
Full Year Earnings Outlook Increased
AGCO, Your Agriculture Company (NYSE: AGCO), a worldwide
manufacturer and distributor of agricultural equipment and
solutions, reported net sales of approximately $2.4 billion for the
second quarter of 2019, a decrease of approximately 4.5% compared
to the second quarter of 2018. Reported and adjusted net income was
$1.82 per share for the second quarter of 2019. These results
compare to a reported net income of $1.14 per share and adjusted
net income, excluding restructuring expenses and costs associated
with an early retirement of debt, of $1.32 per share for the second
quarter of 2018. Excluding unfavorable currency translation impacts
of approximately 4.6%, net sales in the second quarter of 2019
increased 0.1% compared to the second quarter of 2018.
Net sales for the first six months of 2019 were approximately
$4.4 billion, a decrease of approximately 2.8% compared to the same
period in 2018. Excluding unfavorable currency translation impacts
of approximately 5.7%, net sales for the first six months of 2019
increased approximately 2.9% compared to the same period in 2018.
For the first six months of 2019, reported net income was $2.66 per
share, and adjusted net income, excluding restructuring expenses
was $2.68 per share. These results compare to reported net income
of $1.44 per share and adjusted net income, excluding restructuring
expenses and costs associated with an early retirement of debt, of
$1.68 per share for the first six months of 2018.
Second Quarter Highlights
- Reported regional sales results(1): North America 3.1%,
Europe/Middle East (“EME”) (5.7)%, South America (15.4)%,
Asia/Pacific/Africa (“APA”) (6.7)%
- Constant currency regional sales results(1)(2): North America
3.6%, EME 0.2%, South America (9.7)%, APA (0.8)%
- Operating margin improvement of over 160 basis points vs.
second quarter of 2018
- Regional operating margin performance: North America 8.3%, EME
14.3%, South America (3.8)%, APA 4.3%
- Full-year net sales projection decreased to reflect reduced
market outlook
- Full-year outlook for net income per share increased
- Dividend increased approximately 7% to $0.16 per share,
effective second quarter 2019
- Repurchases reduced outstanding shares by approximately 0.9
million in the first half of 2019
(1)As compared to second quarter 2018.
(2)Excludes currency translation impact.
See reconciliation in appendix.
“Our second quarter results were highlighted by margin expansion
across all regions and significant growth in earnings per share,”
stated Martin Richenhagen, AGCO’s Chairman, President and Chief
Executive Officer. “Continued progress on our margin initiatives
allowed us to overcome increasingly challenging market conditions
in our key markets and improve earnings per share on relatively
flat revenues. Increased price realization and initiatives aimed at
lowering material costs and raising productivity contributed to the
improved profitability in the second quarter. While we have lowered
our production schedule to align with market demand, we have raised
our earnings outlook for the full year to reflect our confidence in
our continued strong margin performance.”
Market Update
Industry Unit Retail Sales
Six Months Ended June 30, 2019
Tractors
Change from
Prior Year Period
Combines
Change from
Prior Year Period
North America(1)
(3)%
(2)%
South America
(11)%
11%
Western Europe(2)
4%
(17)%
(1)Excludes compact tractors.
(2)Based on Company estimates.
“Wet weather and flooding in the U.S. have delayed planting,
curtailed planted acreage and reduced 2019 crop production
estimates,” continued Mr. Richenhagen. “Hot, dry conditions across
much of Western Europe are also impacting crop production in that
region. Increased harvests in Brazil and Argentina should provide
some offset to lower production in North America. While negative in
the short-term for farm income and farm equipment demand, forecasts
for lower crop production and lower ending inventories of grain
have moved commodity prices higher, which could be positive for
global farm income in the future. Concerns over delayed crop
development and lower harvest forecasts negatively impacted North
American industry retail sales in the first six months of 2019
compared to the same period in 2018. We expect North American
industry retail tractor sales to be relatively flat in 2019
compared to last year. Modestly higher sales of small tractors and
hay and forage equipment are expected to offset lower retail sales
in the row crop segment compared to last year. Continued warm, dry
growing conditions across much of Europe have stressed the
development of the winter wheat crop, while milk prices remain
supportive of the dairy sector. Industry retail sales in Western
Europe increased in the first six months of 2019, following a year
of mixed results in 2018 for the arable farming segment. Industry
sales growth in France and Germany was partially offset by declines
in the United Kingdom and Italy. For the full year of 2019,
industry demand in Western Europe is expected to be flat compared
to 2018. Industry retail sales in South America decreased during
the first six months of 2019. The benefits of improved grain
production in Brazil and Argentina were offset by interruptions in
the government subsidized finance program in Brazil and weak
macro-economic conditions in Argentina. For the full year of 2019,
industry demand in South America is expected to be flat compared to
2018. 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 June 30,
2019
2018
%
change
from
2018
% change from
2018 due to
currency
translation(1)
% change
excluding
currency
translation
North America
$
618.9
$
600.5
3.1%
(0.6)%
3.6%
South America
185.8
219.6
(15.4)%
(5.7)%
(9.7)%
Europe/Middle East
1,457.2
1,545.2
(5.7)%
(5.9)%
0.2%
Asia/Pacific/Africa
160.7
172.3
(6.7)%
(5.9)%
(0.8)%
Total
$
2,422.6
$
2,537.6
(4.5)%
(4.6)%
0.1%
Six Months Ended June 30,
2019
2018
%
change
from
2018
% change from
2018 due to
currency
translation(1)
% change
excluding
currency
translation
North America
$
1,115.1
$
1,103.4
1.1%
(0.7)%
1.7%
South America
341.9
401.7
(14.9)%
(8.4)%
(6.5)%
Europe/Middle East
2,667.8
2,708.9
(1.5)%
(7.3)%
5.8%
Asia/Pacific/Africa
293.6
331.1
(11.3)%
(6.3)%
(5.0)%
Total
$
4,418.4
$
4,545.1
(2.8)%
(5.7)%
2.9%
(1) See appendix for additional
disclosures
North America
Net sales in the North American region increased 1.7% in the
first six months of 2019 compared to the same period of 2018,
excluding the negative impact of currency translation. Increased
sales of application equipment, as well as high horsepower and
compact tractors, were partially offset by lower sales of utility
tractors. Income from operations for the first six months of 2019
improved approximately $17.6 million compared to the same period in
2018. The benefit of improved pricing and sales mix contributed
most of the increase.
South America
AGCO’s South American net sales decreased 6.5% in the first six
months of 2019 compared to the first six months of 2018, excluding
the impact of unfavorable currency translation. Income from
operations improved approximately $17.7 million in the first half
of 2019 compared to the same period in 2018. The South America
results in the first six months reflect low levels of industry
demand and company production, as well as cost impacts associated
with the transition of newer product technology into our Brazilian
factories.
Europe/Middle East
Europe/Middle East net sales increased 5.8% in the first six
months of 2019 compared to the same period in 2018, excluding
unfavorable currency translation impacts. Sales growth was
strongest in France, Central Europe and Germany and was partially
offset by weaker sales in Scandinavia. Income from operations
improved approximately $29.0 million for the first six months of
2019, compared to the same period in 2018, due to the benefit of
higher sales and production, pricing and the timing of engineering
costs compared to the prior year.
Asia/Pacific/Africa
AGCO’s Asia/Pacific/Africa net sales decreased 5.0%, excluding
the negative impact of currency translation, in the first six
months of 2019 compared to the same period in 2018. Lower sales in
Australia and China were partially offset by sales growth in
Africa. Income from operations improved approximately $1.1 million
in the first six months of 2019, compared to the same period in
2018, due to improved margins and lower operating expenses.
Outlook
Global industry demand in 2019 is expected to be consistent with
2018 levels. AGCO’s net sales for 2019 are projected to be flat
compared to 2018 at approximately $9.4 billion, reflecting positive
pricing, higher sales volumes offset by unfavorable foreign
currency translation impacts. Gross and operating margins are
expected to improve from 2018 levels, reflecting the positive
impact of pricing and cost reduction efforts. Based on these
assumptions, 2019 earnings per share are targeted at approximately
$5.08 on a reported basis, or approximately $5.10 on an adjusted
basis, which excludes restructuring expenses.
* * * * *
AGCO will host a conference call with respect to this earnings
announcement at 10:00 a.m. Eastern Time on Tuesday, July 30, 2019.
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,
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.
• A majority of our sales and manufacturing take place outside
the United States, and, many of our sales involve products that are
manufactured in one country and sold in a different country, and as
a result, we are exposed to risks related to foreign laws, taxes
and tariffs, trade restrictions, economic conditions, labor supply
and relations, political conditions and governmental policies.
These risks may delay or reduce our realization of value from our
international operations. Among these risks are the uncertain
consequences of Brexit, Russian sanctions and tariffs imposed on
exports to and imports from China.
• 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
accounts 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, 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.
• 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 cyber attack, we could
incur significant losses and liability.
• 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,
2018. 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 delivers high-tech
solutions for farmers feeding the world 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® smart farming solutions. Founded in
1990 and headquartered in Duluth, Georgia, USA, AGCO had net sales
of $9.4 billion in 2018. 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, 2019
December 31, 2018
ASSETS
Current Assets:
Cash and cash equivalents
$
279.9
$
326.1
Accounts and notes receivable, net
1,010.7
880.3
Inventories, net
2,424.8
1,908.7
Other current assets
446.2
422.3
Total current assets
4,161.6
3,537.4
Property, plant and equipment, net
1,377.8
1,373.1
Right-of-use lease assets
203.3
—
Investment in affiliates
404.7
400.0
Deferred tax assets
97.5
104.9
Other assets
134.6
142.4
Intangible assets, net
541.6
573.1
Goodwill
1,494.0
1,495.5
Total assets
$
8,415.1
$
7,626.4
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current Liabilities:
Current portion of long-term debt
$
70.2
$
72.6
Short-term borrowings
238.7
138.0
Senior term loan
227.7
—
Accounts payable
931.4
865.9
Accrued expenses
1,557.2
1,522.4
Other current liabilities
203.7
167.8
Total current liabilities
3,228.9
2,766.7
Long-term debt, less current portion and
debt issuance costs
1,308.1
1,275.3
Operating lease liabilities
163.3
—
Pensions and postretirement health care
benefits
212.0
223.2
Deferred tax liabilities
107.8
116.3
Other noncurrent liabilities
266.3
251.4
Total liabilities
5,286.4
4,632.9
Stockholders’ Equity:
AGCO Corporation stockholders’ equity:
Common stock
0.8
0.8
Additional paid-in capital
7.1
10.2
Retained earnings
4,591.1
4,477.3
Accumulated other comprehensive loss
(1,534.3
)
(1,555.4
)
Total AGCO Corporation stockholders’
equity
3,064.7
2,932.9
Noncontrolling interests
64.0
60.6
Total stockholders’ equity
3,128.7
2,993.5
Total liabilities and stockholders’
equity
$
8,415.1
$
7,626.4
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,
2019
2018
Net sales
$
2,422.6
$
2,537.6
Cost of goods sold
1,858.7
1,981.3
Gross profit
563.9
556.3
Selling, general and administrative
expenses
260.7
271.8
Engineering expenses
87.5
93.0
Restructuring expenses
—
2.7
Amortization of intangibles
15.4
18.2
Bad debt expense
0.7
2.5
Income from operations
199.6
168.1
Interest expense, net
6.0
21.2
Other expense, net
11.6
27.2
Income before income taxes and equity in
net earnings of affiliates
182.0
119.7
Income tax provision
53.2
38.5
Income before equity in net earnings of
affiliates
128.8
81.2
Equity in net earnings of affiliates
11.6
9.2
Net income
140.4
90.4
Net loss attributable to noncontrolling
interests
0.4
1.0
Net income attributable to AGCO
Corporation and subsidiaries
$
140.8
$
91.4
Net income per common share attributable
to AGCO Corporation and subsidiaries:
Basic
$
1.84
$
1.15
Diluted
$
1.82
$
1.14
Cash dividends declared and paid per
common share
$
0.16
$
0.15
Weighted average number of common and
common equivalent shares outstanding:
Basic
76.6
79.3
Diluted
77.2
80.2
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,
2019
2018
Net sales
$
4,418.4
$
4,545.1
Cost of goods sold
3,397.8
3,560.8
Gross profit
1,020.6
984.3
Selling, general and administrative
expenses
522.9
536.4
Engineering expenses
172.0
183.9
Restructuring expenses
1.7
8.6
Amortization of intangibles
30.7
33.9
Bad debt expense
1.3
2.9
Income from operations
292.0
218.6
Interest expense, net
9.5
31.5
Other expense, net
26.2
38.7
Income before income taxes and equity in
net earnings of affiliates
256.3
148.4
Income tax provision
72.6
49.9
Income before equity in net earnings of
affiliates
183.7
98.5
Equity in net earnings of affiliates
22.4
16.9
Net income
206.1
115.4
Net (income) loss attributable to
noncontrolling interests
(0.2
)
0.3
Net income attributable to AGCO
Corporation and subsidiaries
$
205.9
$
115.7
Net income per common share attributable
to AGCO Corporation and subsidiaries:
Basic
$
2.69
$
1.46
Diluted
$
2.66
$
1.44
Cash dividends declared and paid per
common share
$
0.31
$
0.30
Weighted average number of common and
common equivalent shares outstanding:
Basic
76.6
79.4
Diluted
77.3
80.3
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,
2019
2018
Cash flows from operating activities:
Net income
$
206.1
$
115.4
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation
107.1
115.1
Amortization of intangibles
30.7
33.9
Stock compensation expense
24.8
22.5
Equity in net earnings of affiliates, net
of cash received
(16.8
)
(13.4
)
Deferred income tax benefit
13.2
(14.3
)
Loss on extinguishment of debt
—
15.7
Other
3.0
1.3
Changes in operating assets and
liabilities:
Accounts and notes receivable, net
(143.5
)
(83.0
)
Inventories, net
(513.7
)
(396.3
)
Other current and noncurrent assets
(18.2
)
(47.3
)
Accounts payable
83.1
7.9
Accrued expenses
1.6
6.7
Other current and noncurrent
liabilities
9.7
47.2
Total adjustments
(419.0
)
(304.0
)
Net cash used in operating activities
(212.9
)
(188.6
)
Cash flows from investing activities:
Purchases of property, plant and
equipment
(114.9
)
(89.8
)
Proceeds from sale of property, plant and
equipment
0.1
2.3
Investment in unconsolidated
affiliates
—
(5.8
)
Other
—
0.4
Net cash used in investing activities
(114.8
)
(92.9
)
Cash flows from financing activities:
Proceeds from indebtedness, net
402.5
266.4
Purchases and retirement of common
stock
(70.0
)
(34.3
)
Payment of dividends to stockholders
(23.7
)
(23.8
)
Payment of minimum tax withholdings on
stock compensation
(26.7
)
(3.5
)
Payment of debt issuance costs
(0.5
)
—
Investment by noncontrolling interests
1.0
—
Net cash provided by financing
activities
282.6
204.8
Effects of exchange rate changes on cash
and cash equivalents
(1.1
)
(10.4
)
Decrease in cash and cash equivalents
(46.2
)
(87.1
)
Cash and cash equivalents, beginning of
period
326.1
367.7
Cash and cash equivalents, end of
period
$
279.9
$
280.6
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 Ended June 30,
Six Months Ended June 30,
2019
2018
2019
2018
Cost of goods sold
$
0.5
$
1.1
$
1.0
$
1.9
Selling, general and administrative
expenses
12.2
12.5
24.2
20.9
Total stock compensation expense
$
12.7
$
13.6
$
25.2
$
22.8
2. RESTRUCTURING EXPENSES
From 2014 through 2019, the Company announced and initiated
several actions to rationalize employee headcount at various
manufacturing facilities and administrative offices located in
Europe, Africa, 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 3,890 employees between 2014 and 2018. The Company
had approximately $7.1 million of severance and related costs
accrued as of December 31, 2018. During the six months ended June
30, 2019, the Company recorded an additional $1.7 million of
severance and related costs associated with further
rationalizations associated with the termination of approximately
40 employees, and paid approximately $3.4 million of severance and
associated costs. The $1.7 million of costs incurred during the six
months ended June 30, 2019 included a $0.3 million write-down of
property, plant and equipment. The remaining $5.0 million of
accrued severance and other related costs as of June 30, 2019,
inclusive of approximately $0.1 million of negative foreign
currency translation impacts, are expected to be paid primarily
during 2019.
3. INDEBTEDNESS
Long-term debt at June 30, 2019 and December 31, 2018 consisted
of the following:
June 30, 2019
December 31, 2018
1.056% Senior term loan due 2020
$
227.7
$
228.7
Senior term loan due 2022
170.7
171.5
Credit facility, expires 2023
96.8
114.4
1.002% Senior term loan due 2025
284.6
—
Senior term loans due between 2019 and
2028
811.6
815.3
Other long-term debt
17.3
20.6
Debt issuance costs
(2.7
)
(2.6
)
1,606.0
1,347.9
Less: 1.056% Senior term loan due 2020
(227.7
)
—
Senior term loans due 2019
(63.7
)
(63.8
)
Current portion of other long-term
debt
(6.5
)
(8.8
)
Total long-debt, less current portion and
debt issuance costs
$
1,308.1
$
1,275.3
As of June 30, 2019 and December 31, 2018, the Company had
short-term borrowings due within one year of approximately $238.7
million and $138.0 million, respectively.
4. INVENTORIES
Inventories at June 30, 2019 and December 31, 2018 were as
follows:
June 30, 2019
December 31, 2018
Finished goods
$
925.2
$
660.4
Repair and replacement parts
640.9
587.3
Work in process
311.4
217.5
Raw materials
547.3
443.5
Inventories, net
$
2,424.8
$
1,908.7
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 June
30, 2019 and December 31, 2018, the cash received from receivables
sold under the U.S., Canadian, European and Brazilian accounts
receivable sales agreements was approximately $1.5 billion and $1.4
billion, respectively.
Losses on sales of receivables associated with the accounts
receivable financing facilities discussed above, reflected within
“Other expense, net” in the Company’s Condensed Consolidated
Statements of Operations, were approximately $11.0 million and
$19.7 million, respectively, during the three and six months ended
June 30, 2019. 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 $9.7 million and $17.5
million, respectively, during the three and six months ended June
30, 2018.
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, 2019 and December 31, 2018, these
finance joint ventures had approximately $91.4 million and $82.5
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, 2019 and 2018 is as
follows:
Three Months Ended June 30,
Six Months Ended June 30,
2019
2018
2019
2018
Basic net income per share:
Net income attributable to AGCO
Corporation and subsidiaries
$
140.8
$
91.4
$
205.9
$
115.7
Weighted average number of common shares
outstanding
76.6
79.3
76.6
79.4
Basic net income per share attributable to
AGCO Corporation and subsidiaries
$
1.84
$
1.15
$
2.69
$
1.46
Diluted net income per share:
Net income attributable to AGCO
Corporation and subsidiaries
$
140.8
$
91.4
$
205.9
$
115.7
Weighted average number of common shares
outstanding
76.6
79.3
76.6
79.4
Dilutive stock-settled appreciation
rights, performance share awards and restricted stock units
0.6
0.9
0.7
0.9
Weighted average number of common shares
and common share equivalents outstanding for purposes of computing
diluted net income per share
77.2
80.2
77.3
80.3
Diluted net income per share attributable
to AGCO Corporation and subsidiaries
$
1.82
$
1.14
$
2.66
$
1.44
7. SEGMENT REPORTING
The Company’s four reportable segments distribute a full range
of agricultural equipment and related replacement parts. The
Company evaluates segment performance primarily based on income
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, 2019 and 2018
are as follows:
Three Months Ended June 30,
North
America
South
America
Europe/
Middle East
Asia/
Pacific/Africa
Consolidated
2019
Net sales
$
618.9
$
185.8
$
1,457.2
$
160.7
$
2,422.6
Income (loss) from operations
51.4
(7.1
)
208.8
7.0
260.1
2018
Net sales
$
600.5
$
219.6
$
1,545.2
$
172.3
$
2,537.6
Income (loss) from operations
37.6
(16.7
)
208.5
4.6
234.0
Six Months Ended June 30,
North
America
South
America
Europe/
Middle East
Asia/
Pacific/Africa
Consolidated
2019
Net sales
$
1,115.1
$
341.9
$
2,667.8
$
293.6
$
4,418.4
Income (loss) from operations
82.0
(15.6
)
336.5
10.4
413.3
2018
Net sales
$
1,103.4
$
401.7
$
2,708.9
$
331.1
$
4,545.1
Income (loss) from operations
64.4
(33.3
)
307.5
9.3
347.9
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,
2019
2018
2019
2018
Segment income from operations
$
260.1
$
234.0
$
413.3
$
347.9
Corporate expenses
(32.9
)
(32.5
)
(64.7
)
(65.9
)
Stock compensation expense
(12.2
)
(12.5
)
(24.2
)
(20.9
)
Restructuring expenses
—
(2.7
)
(1.7
)
(8.6
)
Amortization of intangibles
(15.4
)
(18.2
)
(30.7
)
(33.9
)
Consolidated income from operations
$
199.6
$
168.1
$
292.0
$
218.6
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, 2019 and 2018 (in millions, except
per share data):
Three Months Ended June 30,
2019
2018
Income From
Operations
Net
Income(1)
Net Income
Per Share(1)
Income From
Operations
Net
Income(1)
Net Income
Per Share(1)
As reported
$
199.6
$
140.8
$
1.82
$
168.1
$
91.4
$
1.14
Restructuring expenses(2)
—
—
—
2.7
2.0
0.02
Extinguishment of debt (3)
—
—
—
—
12.7
0.16
As adjusted
$
199.6
$
140.8
$
1.82
$
170.8
$
106.1
$
1.32
(1)
Net income and net income per share
amounts are after tax.
(2)
The restructuring expenses recorded during
the three months ended June 30, 2018 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 repurchased approximately
$185.9 million of its outstanding 5 7/8% senior notes during the
three months ended June 30, 2018. The repurchase resulted in a loss
on extinguishment of debt of approximately $15.7 million, including
associated fees, offset by approximately $3.0 million of
accelerated amortization of the deferred gain related to a
terminated interest rate swap instrument associated with the senior
notes.
Six Months Ended June 30,
2019
2018
Income From
Operations
Net
Income(1)
Net Income
Per Share(1)
Income From
Operations
Net
Income(1)
Net Income
Per Share(1)
As reported
$
292.0
$
205.9
$
2.66
$
218.6
$
115.7
$
1.44
Restructuring expenses(2)
1.7
1.2
0.02
8.6
6.2
0.08
Extinguishment of debt(3)
—
—
—
—
12.7
0.16
As adjusted
$
293.7
$
207.1
$
2.68
$
227.2
$
134.6
$
1.68
(1) Net income and net income per share
amounts are after tax.
(2) The restructuring expenses recorded
during the six months ended June 30, 2019 and 2018 related
primarily to severance costs associated with the Company’s
rationalization of certain African, U.S., European and South
American manufacturing operations and various administrative
offices.
(3) The Company repurchased approximately
$185.9 million of its outstanding 5 7/8% senior notes during the
three months ended June 30, 2018. The repurchase resulted in a loss
on extinguishment of debt of approximately $15.7 million, including
associated fees, offset by approximately $3.0 million of
accelerated amortization of the deferred gain related to a
terminated interest rate swap instrument associated with the senior
notes.
The following is a reconciliation of targeted net income per
share to adjusted targeted net income per share for the year ended
December 31, 2019:
Net Income Per Share(1)
As targeted
$
5.08
Restructuring expenses
0.02
As adjusted targeted(2)
$
5.10
(1) Net income per share amount is after
tax.
(2) The above reconciliation reflects
adjustments to full year 2019 targeted net income per share based
upon restructuring expenses and other adjustments incurred during
the six months ended June 30, 2019. Full year restructuring
expenses could differ based on future restructuring activity.
The following tables set forth, for the three and six months
ended June 30, 2019 and 2018, the impact to net sales of currency
translation by geographical segment (in millions, except
percentages):
Three Months Ended June 30,
Change due to currency
translation
2019
2018
% change
from 2018
$
%
North America
$
618.9
$
600.5
3.1
%
$
(3.4
)
(0.6
)%
South America
185.8
219.6
(15.4
)%
(12.6
)
(5.7
)%
Europe/Middle East
1,457.2
1,545.2
(5.7
)%
(91.0
)
(5.9
)%
Asia/Pacific/Africa
160.7
172.3
(6.7
)%
(10.2
)
(5.9
)%
$
2,422.6
$
2,537.6
(4.5
)%
$
(117.2
)
(4.6
)%
Six Months Ended June 30,
Change due to currency
translation
2019
2018
% change
from 2018
$
%
North America
$
1,115.1
$
1,103.4
1.1
%
$
(7.2
)
(0.7
)%
South America
341.9
401.7
(14.9
)%
(33.8
)
(8.4
)%
Europe/Middle East
2,667.8
2,708.9
(1.5
)%
(197.3
)
(7.3
)%
Asia/Pacific/Africa
293.6
331.1
(11.3
)%
(20.8
)
(6.3
)%
$
4,418.4
$
4,545.1
(2.8
)%
$
(259.1
)
(5.7
)%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190730005559/en/
Greg Peterson Vice President, Investor Relations 770-232-8229
greg.peterson@agcocorp.com
AGCO (NYSE:AGCO)
Historical Stock Chart
From Jun 2024 to Jul 2024
AGCO (NYSE:AGCO)
Historical Stock Chart
From Jul 2023 to Jul 2024