AGCO Reports Fourth Quarter and Full Year Results
- Record full year net sales of $14.4 billion
- Reported operating margin of 11.8% and adjusted operating margin of 12.0%
- Full year reported earnings per share of $15.63 and adjusted earnings per share of $15.55
- Increased net sales for the full year of 2023 by 13.9% compared to 2022
- Focus on high margin growth initiatives and technology development efforts
- Decrease of 2.5% in net sales for the fourth quarter of 2023
- Expected more challenging global market conditions in 2024
Insights
The reported financials by AGCO indicate a robust performance in the full year of 2023, with a 13.9% increase in net sales compared to the previous year. This growth, particularly in the face of a global economic downturn, showcases the company's resilience and the effectiveness of its 'Farmer-First' strategy. The agricultural sector, being essential, tends to maintain a baseline demand even during economic contractions, which is reflected in AGCO's performance.
However, the outlook for 2024 presents a more conservative estimate with expected net sales of approximately $13.6 billion, a potential decline from 2023's figures. This projection aligns with the anticipated softening of industry demand, likely due to reduced commodity prices and lower farm income expectations. Investors should note that while AGCO's margins remain resilient, the anticipated decrease in sales volume could impact overall profitability, albeit the company expects to maintain higher margins than in past cycles.
AGCO's financial results, with a reported operating margin improvement from 10.0% in 2022 to 11.8% in 2023, suggest operational efficiency and effective cost management. This margin expansion is significant, as it exceeds industry norms and reflects structural improvements in the business. The earnings per share (EPS) increase from $11.87 to $15.63 is a strong indicator of profitability and may positively influence investor sentiment.
It is important to note the company's investment in technology development, which has increased considerably. This strategic focus on innovation is likely to yield long-term benefits, such as enhanced product offerings and improved competitive positioning. However, the projected EPS of $13.15 for 2024, a decline from 2023, requires careful consideration by investors, as it may signal a cautious approach in response to expected market challenges.
AGCO's performance must be contextualized within the broader agricultural economy. The increase in net sales despite a decline in industry unit retail sales of tractors and combines in key markets indicates the company's ability to capture market share and benefit from a shift towards higher-margin products. The regional performance, particularly the growth in Europe/Middle East and Asia/Pacific/Africa, suggests a diversified market presence, which can mitigate regional downturns.
However, the projected modest decline in farm income for 2024 and the refreshed industry fleet could lead to reduced equipment purchases. AGCO's anticipation of these changes and their strategy to focus on operational efficiencies and premium technology investments demonstrates a proactive approach to navigating a potentially contracting market. Stakeholders should monitor commodity price trends and government subsidy programs, as these factors heavily influence farm income and, consequently, equipment sales.
-
Record full year net sales of
$14.4 billion -
Full year reported operating margin of
11.8% and adjusted operating margin(3) of12.0% -
Full year reported earnings per share of
$15.63 $15.55 -
Introduces outlook for 2024 full year net sales of
~ and earnings per share of$13.6 billion ~ $13.15
Net sales for the full year of 2023 were approximately
“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
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% , APA8.0% -
Full-year reported operating margins and adjusted operating margins(3) improved to
11.8% and12.0% respectively, in 2023 compared to10.0% and10.3% 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 |
|
|
(3)% |
|
|
|
|
(8)% |
|
(17)% |
|
|
(4)% |
|
|
(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
South American industry retail tractor sales decreased
Industry retail tractor sales in
Regional Results
AGCO Regional Net Sales (in millions)
Three Months Ended December 31, |
|
2023 |
|
2022 |
|
% change
|
|
% change from
|
|
% change
|
||
|
|
$ |
891.7 |
|
$ |
823.7 |
|
|
|
|
|
|
|
|
|
412.0 |
|
|
674.8 |
|
(38.9)% |
|
|
|
(42.0)% |
EME |
|
|
2,259.0 |
|
|
2,186.5 |
|
|
|
|
|
|
APA |
|
|
238.0 |
|
|
213.9 |
|
|
|
(0.2)% |
|
|
Total |
|
$ |
3,800.7 |
|
$ |
3,898.9 |
|
(2.5)% |
|
|
|
(4.3)% |
|
|
|
|
|
|
|
|
|
|
|
||
Year Ended December 31, |
|
2023 |
|
2022 |
|
% change
|
|
% change from
|
|
% change
|
||
|
|
$ |
3,752.7 |
|
$ |
3,175.1 |
|
|
|
|
|
|
|
|
|
2,234.2 |
|
|
2,121.6 |
|
|
|
|
|
|
EME |
|
|
7,540.5 |
|
|
6,447.3 |
|
|
|
(0.3)% |
|
|
APA |
|
|
885.0 |
|
|
907.4 |
|
(2.5)% |
|
(3.4)% |
|
|
Total |
|
$ |
14,412.4 |
|
$ |
12,651.4 |
|
|
|
|
|
|
(1) See Footnotes for additional disclosures. |
||||||||||||
AGCO’s North American net sales increased
Net sales in the South American region increased
Net sales in the
Outlook
AGCO’s net sales for 2024 are expected to be approximately
* * * * *
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 fromChina . -
We cannot predict or control the impact of the conflict in
Ukraine on our business. Already it has resulted in reduced sales inUkraine 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, throughoutEurope , which could negatively impact our production inEurope 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
# # # # #
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
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
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 |
|
|
|
276.7 |
|
|
|
267.3 |
|
EIB Senior Term Loan |
|
276.7 |
|
|
|
— |
|
Senior term loans due between 2023 and 2028 |
|
162.1 |
|
|
|
341.6 |
|
|
|
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
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
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
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
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
The Company’s finance joint ventures in
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
|
|
Years Ended
|
||||||||||||
|
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
Three Months Ended December 31, |
|
North America |
|
South America |
|
|
|
Pacific/ |
|
Total
|
||||||||||
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 |
|
|
|
Pacific/ |
|
Total
|
||||||||||
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
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
|
|
Net
|
|
Net Income
|
|
Income From
|
|
Net
|
|
Net Income
|
||||||||||||
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 |
|
|
|
— |
|
|
— |
|
|
— |
||||
|
|
— |
|
|
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 |
(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 |
(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 |
|
Years Ended December 31, |
||||||||||||||||||||||
|
2023 |
|
2022 |
||||||||||||||||||||
|
Income From
|
|
Net
|
|
Net Income
|
|
Income From
|
|
Net
|
|
Net Income
|
||||||||||||
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 |
|
|
|
— |
|
|
— |
|
|
|
— |
|
||
|
|
— |
|
|
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 |
(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 |
(7) |
During 2022, the Company recorded a write-down of its investment in its Russian finance joint venture of approximately |
(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 |
(10) |
During the year ended December 31, 2023, the Company divested its interest in its |
(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 |
(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 |
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
|
|
$ |
|
% |
||||||||
|
$ |
891.7 |
|
$ |
823.7 |
|
8.3 |
% |
|
$ |
9.9 |
|
|
1.2 |
% |
||
|
|
412.0 |
|
|
674.8 |
|
(38.9 |
)% |
|
|
20.8 |
|
|
3.1 |
% |
||
|
|
2,259.0 |
|
|
2,186.5 |
|
3.3 |
% |
|
|
41.7 |
|
|
1.9 |
% |
||
|
|
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
|
|
$ |
|
% |
||||||||
|
$ |
3,752.7 |
|
$ |
3,175.1 |
|
18.2 |
% |
|
$ |
5.3 |
|
|
0.2 |
% |
||
|
|
2,234.2 |
|
|
2,121.6 |
|
5.3 |
% |
|
|
56.8 |
|
|
2.7 |
% |
||
|
|
7,540.5 |
|
|
6,447.3 |
|
17.0 |
% |
|
|
(18.3 |
) |
|
(0.3 |
)% |
||
|
|
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
Source: AGCO
FAQ
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What was the reported operating margin for AGCO in 2023?
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