AGCO, Your Agriculture Company (NYSE: AGCO), a worldwide
manufacturer and distributor of agricultural equipment and
solutions, reported its results for the first quarter ended March
31, 2022. Net sales for the first quarter were approximately $2.7
billion, an increase of approximately 12.9% compared to the first
quarter of 2021. Excluding unfavorable currency translation impacts
of approximately 5.0%, net sales in the first quarter of 2022
increased approximately 17.9% compared to the first quarter of
2021. Reported net income was $2.03 per share for the first quarter
of 2022, and adjusted net income(3), which excludes impairment
charges, restructuring expenses and other related items, was $2.39
per share. These results compare to reported net income of $1.99
per share and adjusted net income, which excludes restructuring
expenses, of $2.00 per share for the first quarter of 2021.
Highlights
- Reported regional sales results(1): Europe/Middle East (“EME”)
+5.7%, North America +14.7%, South America +48.2%,
Asia/Pacific/Africa (“APA”) +12.7%
- Constant currency regional sales results(1)(2)(3): EME +15.0%,
North America +15.0%, South America +41.8%, APA +17.5%
- Regional operating margin performance: EME 11.6%, North America
7.8%, South America 12.9%, APA 15.1%
- Recorded impairment charges related to AGCO’s joint ventures in
Russia(3)
- Declared a variable special dividend of $4.50 per share payable
in June and increased quarterly dividend by 20%
- Raised full-year outlook for net sales and net income per
share
(1)
As compared to first quarter 2021.
(2)
Excludes currency translation impact.
(3)
See reconciliation of Non-GAAP measures in
appendix.
“AGCO delivered record first quarter sales and earnings as
healthy farm economics continue to support robust global demand,”
stated Eric Hansotia, AGCO’s Chairman, President and Chief
Executive Officer. “Despite this elevated demand, supply chain
constraints compounded by the impacts of the war in Ukraine
continue to negatively influence our operations. Our results
reflect substantial price increases to offset rising material
costs, higher logistics expenses, and other manufacturing
inefficiencies. Favorable farm fundamentals accompanied by
heightened interest in AGCO’s precision ag solutions are supporting
healthy order boards that remain well ahead of last year’s levels.
We remain focused on minimizing the impact of supply chain
disruptions and inflationary cost pressures to deliver strong
full-year sales and earnings growth. In addition, our increased
investments in premium technology, sustainable smart farming
solutions and enhanced digital capabilities support our
farmer-first strategy and position us for future growth.”
Market Update
Industry Unit Retail
Sales
Tractors
Combines
Three Months Ended March 31, 2022
Change from Prior Year Period
Change from Prior Year Period
North America(1)
(1)%
(23)%
South America
9%
(3)%
Western Europe(2)
(6)%
(10)%
(1) Excludes compact tractors.
(2) Based on Company estimates.
“Crop prices are near record levels and are helping farmers
offset inflationary pressures from higher fuel, fertilizer and
other input costs. The resulting elevated levels of farm income are
expected to extend strong end-market demand,” stated Mr.
Hansotia.
“Supply chain constraints limited global industry production and
the corresponding retail sales in the first quarter,” continued Mr.
Hansotia. “North American industry retail tractor sales were down
approximately 1% in the first three months of 2022 compared to last
year. Lower sales of smaller tractors, which declined from record
levels in 2021, were partially offset by increased sales of high
horsepower units. Despite continued strong demand, retail sales of
large row-crop agricultural equipment was 11% below the first
quarter of 2021 due to supply chain constraints, which limited
deliveries. Industry retail tractor sales in Western Europe, which
also were restricted by supply chain challenges, decreased
approximately 6% in the first three months of 2022 compared to
strong levels in the first quarter of 2021. Farmer sentiment has
been negatively impacted by the war in Ukraine, as well as input
cost inflation, but forecasts for healthy farm income in Western
Europe are expected to support solid retail demand for equipment
throughout 2022. In South America, industry sales increased during
the first three months of 2022 in both Brazil and Argentina. Strong
crop production levels as well as elevated commodity prices are
supporting positive economic conditions for farmers who continue to
replace an aged fleet. Despite the slower than expected start in
North America and Europe, we continue to expect full year 2022
industry retail sales to be above 2021 levels in all major
regions.”
Regional Results
AGCO Regional Net Sales (in millions)
Three Months Ended March 31,
2022
2021
% change from 2021
% change from 2021 due to
currency translation(1)
% change excluding currency
translation
North America
$
701.0
$
611.1
14.7%
(0.3)%
15.0%
South America
356.4
240.5
48.2%
6.4%
41.8%
Europe/Middle East
1,403.1
1,327.2
5.7%
(9.3)%
15.0%
Asia/Pacific/Africa
225.2
199.9
12.7%
(4.8)%
17.5%
Total
$
2,685.7
$
2,378.7
12.9%
(5.0)%
17.9%
(1) See Footnotes for additional
disclosures.
North America
Net sales in the North American region grew 15.0% in the first
three months of 2022 compared to the same period of 2021, excluding
the negative impact of currency translation. The increase resulted
from the impact of pricing to mitigate inflationary cost pressures,
along with increased sales of tractors as well as grain and protein
equipment, partially offset by lower sales of Precision Planting
products. Income from operations for the first three months of 2022
decreased approximately $20.1 million compared to the same period
in 2021. A weaker sales mix primarily caused by chip-related supply
constraints related to the Precision Planting business as well as
higher operating expenses resulted in lower first quarter operating
income.
South America
AGCO’s South American net sales increased 41.8% in the first
three months of 2022 compared to the same period of 2021, excluding
the impact of favorable currency translation. Sales grew strongly
across all markets, driven by the continued strength in industry
demand and positive pricing impacts. Income from operations in the
first three months of 2022 increased by approximately $29.9 million
compared to the same period in 2021 and operating margins reached
12.9%. The improved South America results reflect the benefit of
higher sales and production, a favorable sales mix, and pricing
that offset material cost inflation.
Europe/Middle East
Net sales in Europe/Middle East increased 15.0% in the first
three months of 2022 compared to the same period in 2021, excluding
unfavorable currency translation impacts. Higher sales of tractors
and replacement parts along with favorable pricing impacts resulted
in the increase. Income from operations grew approximately $18.0
million in the first three months of 2022, compared to the same
period in 2021, while operating margins expanded to 11.6%. The
improvements were the result of higher net sales and production
volumes.
Asia/Pacific/Africa
AGCO’s Asia/Pacific/Africa net sales increased 17.5%, excluding
the negative impact of currency translation, in the first three
months of 2022 compared to the same period in 2021. Higher sales in
Australia, Japan and Africa were partially offset by lower sales in
China. Income from operations improved by approximately $13.0
million in the first three months of 2022 and operating margins
expanded by approximately 4.5% compared to the same period in 2021
due to higher sales and a richer sales mix.
Outlook
The health, safety and well-being of all AGCO employees, dealers
and farmer customers continue to be AGCO’s top priority. The
ability of the Company’s supply chain to deliver parts and
components on schedule is currently difficult to predict. The
following outlook is based on AGCO’s current estimates of component
deliveries. AGCO’s results will be impacted if the actual supply
chain delivery performance differs from these estimates.
AGCO’s net sales for 2022 are expected to range from $12.5
billion to $12.7 billion, reflecting increased sales volumes and
pricing partially offset by negative foreign currency translation.
Gross and operating margins are projected to improve from 2021
levels, reflecting the impact of higher sales and production
volumes as well as favorable pricing to offset material and labor
cost inflation. These improvements are planned to fund increases in
engineering and other technology investments to support AGCO’s
precision ag and digital initiatives. Based on these assumptions,
2022 earnings per share are targeted in a range from $11.70 to
$11.90.
* * * * *
AGCO will host a conference call with respect to this earnings
announcement at 10:00 a.m. Eastern Time on Tuesday, May 3, 2022.
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, 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.
- COVID-19 has negatively impacted our business, initially
through closures, higher absentee rates, and reduced production at
both our plants and the plants that supply us with parts and
components, and more recently through supply chain challenges,
including the inability of some of our suppliers to meet demand and
logistics and transportation-related companies to deliver products
in a timely manner. In addition, we have had to incur various costs
related to preventing the spread of COVID-19, including changes to
our factories and other facilities and those related to enabling
remote work. We expect COVID-19 to continue to impact our business,
although the manner and extent to which it impacts us will depend
on future developments, including the duration of the pandemic, the
timing, distribution and impact of vaccinations, and possible
mutations of the virus that are more contagious or resistant to
current vaccines. Measures taken by governments around the world,
as well as businesses, including us, and the general public in
order to limit the spread of COVID-19 will impact our business as
well. These measures have included travel bans and restrictions,
quarantines, shelter in place orders, curfews, business and
government office closures, increased border controls or closures,
port closures and transportation restrictions. The impacts of
COVID-19 and such measures could include decreases in demand for
our products, factory closures, increased absentee rates, reduced
production, incurrence of additional costs due to the adherence to
cleaning requirements and social distancing guidelines and
increased costs of labor, parts and components and shipping,
incurrence of impairment charges, slower collections and larger
write-offs of accounts receivable, among other changes.
- 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 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, 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 over 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 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 cyber-attack, we
could be subject to significant claims, penalties and damages.
- Attacks through ransomware and other cyber-attacks are rapidly
increasing. While we have implemented the safeguards that we
believe are reasonable, we always will be subject to the risk that
one of these attacks is successful and disrupts or damages our
business.
- 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. It is unclear when the supply
chain issues will be restored or what the ultimate impact on
production, and consequently sales, will be.
- Although as a general proposition our business has not
experienced significant inflation in many years, beginning in the
second half of 2021 we 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, 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.
- We have interests in two joint ventures that operate in Russia.
We are able to continue our role in those joint ventures as a
result of a time-limited general license from the Office of Foreign
Assets Control of the U.S. Department of Treasury that, following
its most recent extension on April 25, 2022, expires on May 25,
2022. In due course, we may need to dispose of our investments, and
there could be other consequences that we do not foresee.
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,
2021. 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 over $11.1 billion in 2021. 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)
March 31, 2022
December 31, 2021
ASSETS
Current Assets:
Cash, cash equivalents and restricted
cash
$
655.7
$
889.1
Accounts and notes receivable, net
1,108.2
991.5
Inventories, net
3,259.7
2,593.7
Other current assets
613.4
539.8
Total current assets
5,637.0
5,014.1
Property, plant and equipment, net
1,463.6
1,464.8
Right-of-use lease assets
163.9
154.1
Investments in affiliates
423.2
413.5
Deferred tax assets
186.4
169.3
Other assets
300.9
293.3
Intangible assets, net
396.8
392.2
Goodwill
1,304.7
1,280.8
Total assets
$
9,876.5
$
9,182.1
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current Liabilities:
Current portion of long-term debt
$
2.1
$
2.1
Short-term borrowings
93.2
90.8
Accounts payable
1,276.4
1,078.3
Accrued expenses
1,844.0
2,062.2
Other current liabilities
219.5
221.2
Total current liabilities
3,435.2
3,454.6
Long-term debt, less current portion and
debt issuance costs
1,899.4
1,411.2
Operating lease liabilities
125.8
115.5
Pension and postretirement health care
benefits
208.7
209.0
Deferred tax liabilities
113.6
116.9
Other noncurrent liabilities
418.9
431.1
Total liabilities
6,201.6
5,738.3
Stockholders’ Equity:
AGCO Corporation stockholders’ equity:
Common stock
0.7
0.7
Additional paid-in capital
2.9
3.9
Retained earnings
5,306.2
5,182.2
Accumulated other comprehensive loss
(1,635.0
)
(1,770.9
)
Total AGCO Corporation stockholders’
equity
3,674.8
3,415.9
Noncontrolling interests
0.1
27.9
Total stockholders’ equity
3,674.9
3,443.8
Total liabilities and stockholders’
equity
$
9,876.5
$
9,182.1
See accompanying notes to
condensed consolidated financial statements.
AGCO CORPORATION AND SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited and in millions,
except per share data)
Three Months Ended March 31,
2022
2021
Net sales
$
2,685.7
$
2,378.7
Cost of goods sold
2,054.4
1,808.2
Gross profit
631.3
570.5
Selling, general and administrative
expenses
271.1
260.6
Engineering expenses
100.3
96.3
Amortization of intangibles
15.3
17.5
Impairment charges
36.0
—
Restructuring expenses
3.0
1.3
Bad debt expense (credit)
1.6
(0.4
)
Income from operations
204.0
195.2
Interest expense, net
0.4
3.4
Other expense, net
17.5
11.5
Income before income taxes and equity in
net earnings of affiliates
186.1
180.3
Income tax provision
60.2
43.6
Income before equity in net earnings of
affiliates
125.9
136.7
Equity in net earnings of affiliates
11.1
14.7
Net income
137.0
151.4
Net loss (income) attributable to
noncontrolling interests
14.8
(0.6
)
Net income attributable to AGCO
Corporation and subsidiaries
$
151.8
$
150.8
Net income per common share attributable
to AGCO Corporation and subsidiaries:
Basic
$
2.03
$
2.00
Diluted
$
2.03
$
1.99
Cash dividends declared and paid per
common share
$
0.20
$
0.16
Weighted average number of common and
common equivalent shares outstanding:
Basic
74.6
75.3
Diluted
74.9
75.9
See accompanying notes to
condensed consolidated financial statements.
AGCO CORPORATION AND SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited and in
millions)
Three Months Ended March 31,
2022
2021
Cash flows from operating activities:
Net income
$
137.0
$
151.4
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation
54.7
54.8
Amortization of intangibles
15.3
17.5
Stock compensation expense
7.0
6.8
Impairment charges
36.0
—
Equity in net earnings of affiliates, net
of cash received
(11.1
)
(14.7
)
Deferred income tax (benefit)
provision
(5.0
)
4.1
Other
(8.8
)
1.9
Changes in operating assets and
liabilities:
Accounts and notes receivable, net
(113.3
)
(232.3
)
Inventories, net
(595.2
)
(466.1
)
Other current and noncurrent assets
(48.7
)
(45.8
)
Accounts payable
193.4
296.7
Accrued expenses
(219.5
)
(175.7
)
Other current and noncurrent
liabilities
(18.3
)
86.1
Total adjustments
(713.5
)
(466.7
)
Net cash used in operating activities
(576.5
)
(315.3
)
Cash flows from investing activities:
Purchases of property, plant and
equipment
(66.3
)
(63.5
)
Proceeds from sale of property, plant and
equipment
0.3
0.1
Investment in unconsolidated
affiliates
(0.1
)
(0.1
)
Purchase of businesses, net of cash
acquired
(61.9
)
(0.8
)
Other
—
(2.5
)
Net cash used in investing activities
(128.0
)
(66.8
)
Cash flows from financing activities:
Proceeds from (repayments of)
indebtedness, net
521.6
(221.5
)
Payment of dividends to stockholders
(14.9
)
(12.0
)
Payment of minimum tax withholdings on
stock compensation
(16.0
)
(26.5
)
Distributions to noncontrolling
interest
(11.6
)
—
Net cash provided by (used in) financing
activities
479.1
(260.0
)
Effects of exchange rate changes on cash,
cash equivalents and restricted cash
(8.0
)
(23.3
)
Decrease in cash, cash equivalents and
restricted cash
(233.4
)
(665.4
)
Cash, cash equivalents and restricted
cash, beginning of period
889.1
1,119.1
Cash, cash equivalents and restricted
cash, end of period
$
655.7
$
453.7
See accompanying notes to
condensed consolidated financial statements.
AGCO CORPORATION AND SUBSIDIARIES NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited, in
millions, except share amounts, per share data and employees)
1. STOCK COMPENSATION EXPENSE
The Company recorded stock compensation expense as follows (in
millions):
Three Months Ended March 31,
2022
2021
Cost of goods sold
$
0.3
$
0.3
Selling, general and administrative
expenses
6.7
6.5
Total stock compensation expense
$
7.0
$
6.8
2. IMPAIRMENT CHARGES
As a consequence of the current conflict between Russia and
Ukraine, during the three months ended March 31, 2022, the Company
assessed the fair value of its gross assets related to its joint
ventures in Russia for potential impairment and recorded certain
asset impairment charges 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 (income) attributable to
noncontrolling interests.” In addition, during the three months
ended March 31, 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.
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 China in order to reduce costs in
response to fluctuating global market demand. The Company also
previously rationalized its grain and protein business during 2019
and 2020. As of December 31, 2021, the Company had approximately
$14.7 million of accrued severance and other costs related to such
rationalizations. During the three months ended March 31, 2022, the
Company recorded an additional $3.0 million of severance costs
associated with further rationalizations in connection with the
termination of approximately 65 employees, and paid approximately
$3.4 million of severance costs. The remaining $14.1 million of
severance and other related costs as of March 31, 2022, inclusive
of approximately $0.2 million of negative foreign currency
translation impacts, are expected to be paid primarily during
2022.
4. INDEBTEDNESS
Long-term debt at March 31, 2022 and December 31, 2021 consisted
of the following (in millions):
March 31, 2022
December 31, 2021
Credit facility, expires 2023
600.0
—
1.002% Senior term loan due 2025
277.3
283.7
Senior term loans due between 2023 and
2028
355.5
445.9
0.800% Senior Notes Due 2028
665.6
680.8
Other long-term debt
7.5
7.7
Debt issuance costs
(4.4
)
(4.8
)
1,901.5
1,413.3
Less:
Current portion of other long-term
debt
(2.1
)
(2.1
)
Total long-term indebtedness, less current
portion
$
1,899.4
$
1,411.2
As of March 31, 2022 and December 31, 2021, the Company had
short-term borrowings due within one year of approximately $93.2
million and $90.8 million, respectively.
5. INVENTORIES
Inventories at March 31, 2022 and December 31, 2021 were as
follows (in millions):
March 31, 2022
December 31, 2021
Finished goods
$
857.1
$
718.2
Repair and replacement parts
747.0
697.8
Work in process
593.0
282.8
Raw materials
1,062.6
894.9
Inventories, net
$
3,259.7
$
2,593.7
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. As of
March 31, 2022 and December 31, 2021, the cash received from
receivables sold under the U.S., Canadian, European and Brazilian
accounts receivable sales agreements was approximately $1.2 billion
and $1.3 billion, respectively.
In addition, the Company sells certain trade receivables under
factoring arrangements to other financial institutions around the
world. As of March 31, 2022 and December 31, 2021, the cash
received from these arrangements was approximately $181.2 million
and $215.4 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 $7.9 million and $4.6
million, respectively, during the three months ended March 31, 2022
and 2021.
The Company’s finance joint ventures in Europe, Brazil and
Australia also provide wholesale financing directly to the
Company’s dealers. As of March 31, 2022 and December 31, 2021,
these finance joint ventures had approximately $87.8 million and
$82.1 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.
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 ended March 31, 2022 and 2021 is as follows (in
millions, except per share data):
Three Months Ended March 31,
2022
2021
Basic net income per share:
Net income attributable to AGCO
Corporation and subsidiaries
$
151.8
$
150.8
Weighted average number of common shares
outstanding
74.6
75.3
Basic net income per share attributable to
AGCO Corporation and subsidiaries
$
2.03
$
2.00
Diluted net income per share:
Net income attributable to AGCO
Corporation and subsidiaries
$
151.8
$
150.8
Weighted average number of common shares
outstanding
74.6
75.3
Dilutive stock-settled appreciation
rights, performance share awards and restricted stock units
0.3
0.6
Weighted average number of common shares
and common share equivalents outstanding for purposes of computing
diluted net income per share
74.9
75.9
Diluted net income per share attributable
to AGCO Corporation and subsidiaries
$
2.03
$
1.99
8. 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 generally
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 ended March 31, 2022
and 2021 are as follows (in millions):
Three Months Ended March 31,
North America
South America
Europe/ Middle East
Asia/Pacific/ Africa
Consolidated
2022
Net sales
$
701.0
$
356.4
$
1,403.1
$
225.2
$
2,685.7
Income from operations
54.8
46.1
162.3
34.0
297.2
2021
Net sales
$
611.1
$
240.5
$
1,327.2
$
199.9
$
2,378.7
Income from operations
74.9
16.2
144.3
21.0
256.4
A reconciliation from the segment information to the
consolidated balances for income from operations is set forth below
(in millions):
Three Months Ended March 31,
2022
2021
Segment income from operations
$
297.2
$
256.4
Impairment charges
(36.0
)
—
Corporate expenses
(32.2
)
(35.9
)
Amortization of intangibles
(15.3
)
(17.5
)
Stock compensation expense
(6.7
)
(6.5
)
Restructuring expenses
(3.0
)
(1.3
)
Consolidated income from operations
$
204.0
$
195.2
RECONCILIATION OF NON-GAAP MEASURES
This earnings release discloses adjusted income from operations,
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, adjusted net income and adjusted net income per
share for the three months ended March 31, 2022 and 2021 (in
millions, except per share data):
Three Months Ended March 31,
2022
2021
Income From Operations(2)
Net Income(1)(2)
Net Income Per Share(1)
Income From Operations
Net Income(1)
Net Income Per Share(1)(2)
As reported
$
204.0
$
151.8
$
2.03
$
195.2
$
150.8
$
1.99
Impairment of Russian joint
ventures(3)
36.0
23.8
0.32
—
—
—
Restructuring expenses(4)
3.0
2.2
0.03
1.3
1.3
0.02
Gain on full acquisition of IAS joint
venture(5)
—
$
(3.4
)
$
(0.05
)
—
—
—
Write-down of investment in Russian
finance joint venture(6)
—
$
4.8
$
0.06
—
—
—
As adjusted
$
242.9
$
179.1
$
2.39
$
196.5
$
152.1
$
2.00
(1)
Net income and net income per
share amounts are after tax.
(2)
Rounding may impact summation of
amounts.
(3)
During the three months ended
March 31, 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 (income)
attributable to noncontrolling interests.”
(4)
The restructuring expenses
recorded during the three months ended March 31, 2022 related
primarily to severance and other related costs associated with the
Company’s rationalization of European manufacturing operations. The
restructuring expenses recorded during the three months ended March
31, 2021 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.
(5)
During the three months ended
March 31, 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.
(6)
During the three months ended
March 31, 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 following is a reconciliation of targeted net income per
share to adjusted targeted net income per share for the three
months ended March 31, 2022:
Net Income Per Share(1)
As targeted
$11.34 - $11.54
Impairment of Russian joint ventures
0.32
Restructuring expenses
0.03
Gain on full acquisition of IAS joint
venture
(0.05)
Write-down of investment in Russian
finance joint venture
0.06
As adjusted targeted(2)
$11.70 - $11.90
(1)
Net income per share amount is
after tax.
(2)
The above reconciliation
adjustments to full year 2022 targeted net income per share are
based upon restructuring expenses and the other adjustments
incurred during the three months ended March 31, 2022. Full year
expenses or benefits could differ based on future restructuring
activity as well as other activities.
The following table sets forth, for the three months ended March
31, 2022 and 2021, the impact to net sales of currency translation
by geographical segment (in millions, except percentages):
Three Months Ended March 31,
Change due to currency
translation
2022
2021
% change from 2021
$
%
North America
$
701.0
$
611.1
14.7
%
$
(1.6
)
(0.3
) %
South America
356.4
240.5
48.2
%
15.4
6.4
%
Europe/Middle East
1,403.1
1,327.2
5.7
%
(123.8
)
(9.3
) %
Asia/Pacific/Africa
225.2
199.9
12.7
%
(9.5
)
(4.8
) %
$
2,685.7
$
2,378.7
12.9
%
$
(119.5
)
(5.0
) %
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220502005937/en/
Greg Peterson Vice President, Investor Relations 770-232-8229
greg.peterson@agcocorp.com
AGCO (NYSE:AGCO)
Historical Stock Chart
Von Mär 2024 bis Apr 2024
AGCO (NYSE:AGCO)
Historical Stock Chart
Von Apr 2023 bis Apr 2024