AGCO REPORTS THIRD-QUARTER RESULTS
AGCO reported Q3 2024 net sales of $2.6 billion, down 24.8% year-over-year, with reported EPS of $0.40 and adjusted EPS of $0.68. The company reaffirmed its full-year adjusted operating margin target of 9% despite market challenges. Regional sales declined across all markets: Europe/Middle East (-18.2%), North America (-21.8%), South America (-47.0%), and Asia/Pacific/Africa (-11.7%). Lower commodity prices and high input costs led to increased conservatism from dealers and farmers, resulting in production cuts. The company completed the divestiture of its Grain & Protein business and introduced OutRun, the first commercially available autonomous retrofit grain cart solution.
AGCO ha riportato vendite nette nel terzo trimestre del 2024 pari a 2,6 miliardi di dollari, con un calo del 24,8% rispetto all'anno precedente, registrando un utile per azione (EPS) di $0,40 e un EPS corretto di $0,68. L'azienda ha confermato il suo obiettivo di margine operativo corretto per l'intero anno del 9%, nonostante le sfide del mercato. Le vendite regionali sono diminuite in tutti i mercati: Europa/Medio Oriente (-18,2%), Nord America (-21,8%), Sud America (-47,0%) e Asia/Pacifico/Africa (-11,7%). I prezzi più bassi delle materie prime e i costi elevati dei materiali hanno portato a una maggiore cautela da parte dei rivenditori e degli agricoltori, con conseguenti riduzioni nella produzione. L'azienda ha completato la dismissione della sua attività Grain & Protein e ha introdotto OutRun, la prima soluzione di carrello per cereali autonomo retrofit commercialmente disponibile.
AGCO reportó ventas netas en el tercer trimestre de 2024 de 2.6 mil millones de dólares, una disminución del 24.8% en comparación con el año anterior, con un beneficio por acción (EPS) reportado de $0.40 y un EPS ajustado de $0.68. La empresa reafirmó su objetivo de margen operativo ajustado del 9% para todo el año a pesar de los desafíos del mercado. Las ventas regionales disminuyeron en todos los mercados: Europa/Medio Oriente (-18.2%), América del Norte (-21.8%), América del Sur (-47.0%) y Asia/Pacífico/África (-11.7%). La caída de los precios de las materias primas y los altos costos de los insumos llevaron a una mayor cautela por parte de los distribuidores y agricultores, resultando en recortes de producción. La empresa completó la desinversión de su negocio Grain & Protein e introdujo OutRun, la primera solución comercialmente disponible de carro de grano autónomo retrofit.
AGCO는 2024년 3분기 순매출이 26억 달러로 지난해 대비 24.8% 감소했으며, 보고된 주당 순이익(EPS)은 $0.40, 조정된 EPS는 $0.68로 나타났습니다. 회사는 시장의 도전에도 불구하고 연간 조정 운영 마진 목표인 9%를 재확인했습니다. 지역별 판매는 모든 시장에서 감소했습니다: 유럽/중동 (-18.2%), 북미 (-21.8%), 남미 (-47.0%), 아시아/태평양/아프리카 (-11.7%). 원자재 가격 하락과 높은 투입 비용으로 인해 대리점과 농부들이 더욱 신중해져 생산이 줄어들었습니다. 회사는 Grain & Protein 사업 부문 divestiture를 완료하고, 첫 상업적으로 사용 가능한 자율 개조 곡물 카트 솔루션인 OutRun을 소개했습니다.
AGCO a annoncé des ventes nettes pour le troisième trimestre 2024 de 2,6 milliards de dollars, en baisse de 24,8 % par rapport à l'année précédente, avec un bénéfice par action (EPS) signalé de 0,40 $ et un EPS ajusté de 0,68 $. L'entreprise a réaffirmé son objectif de marge opérationnelle ajustée de 9 % pour l'année entière malgré les défis du marché. Les ventes régionales ont diminué dans tous les marchés : Europe/Moyen-Orient (-18,2 %), Amérique du Nord (-21,8 %), Amérique du Sud (-47,0 %) et Asie/Pacifique/Afrique (-11,7 %). La baisse des prix des matières premières et les coûts d'entrée élevés ont entraîné une plus grande prudence de la part des revendeurs et des agriculteurs, entraînant des réductions de production. L'entreprise a complété la cession de son activité Grain & Protein et a introduit OutRun, la première solution de remorque à grains autonome retrofit disponible commercialement.
AGCO berichtete im dritten Quartal 2024 von Nettoumsätzen in Höhe von 2,6 Milliarden Dollar, was einem Rückgang von 24,8% im Jahresvergleich entspricht. Der gemeldete Gewinn pro Aktie (EPS) betrug $0,40, während der adjustierte EPS bei $0,68 lag. Das Unternehmen bestätigte sein Ziel für die angepasste Betriebsmarge von 9% für das Gesamtjahr trotz der Herausforderungen des Marktes. Die regionalen Verkäufe gingen in allen Märkten zurück: Europa/Mittlerer Osten (-18,2%), Nordamerika (-21,8%), Südamerika (-47,0%) und Asien/Pazifik/Afrika (-11,7%). Sinkende Rohstoffpreise und hohe Eingabekosten führten zu einer erhöhten Vorsicht seitens der Händler und Landwirte, was zu Produktionskürzungen führte. Das Unternehmen hat die Veräußering seines Geschäftsbereichs Grain & Protein abgeschlossen und OutRun eingeführt, die erste kommerziell verfügbare autonome Retrofit-Lösung für Getreidewagen.
- Reaffirmed full-year adjusted operating margin target of 9%
- Launch of OutRun autonomous retrofit grain cart solution
- Completed strategic divestiture of Grain & Protein business to focus on higher margin products
- Q3 net sales declined 24.8% to $2.6 billion
- Q3 adjusted EPS dropped to $0.68 from $3.97 year-over-year
- Significant sales declines across all regions, with South America down 47%
- First nine months 2024 reported net loss of $(2.27) per share
- Lower production volumes due to reduced farmer demand
Insights
The Q3 results reveal significant challenges for AGCO, with
Key concerns include substantial regional sales declines: North America (
The strategic divestiture of the Grain & Protein business and focus on precision agriculture through PTx portfolio could enhance long-term margins, though near-term guidance of
The global agricultural equipment market is experiencing a significant downturn, evidenced by declining tractor sales across major regions: North America (
The combination of lower farm income and a refreshed fleet from previous years' purchases is creating a perfect storm for reduced equipment demand. Brazil's situation is particularly concerning, with floods in Rio Grande do Sul and challenges in the Cerrado region affecting farmer purchasing decisions.
The dairy and livestock sectors in Europe provide some stability, but this isn't enough to offset the broader market weakness. These conditions are likely to persist through 2024, suggesting a prolonged cyclical downturn in the agricultural equipment sector.
- Net sales of
, down$2.6 billion 24.8% year-over-year - Reported earnings per share of
and adjusted earnings per share(1) of$0.40 $0.68 - Reaffirms full-year adjusted operating margin target of
9% - Revised 2024 sales and earnings per share outlook reflects the Grain and Protein divestiture
"We continue to execute against our Farmer-First strategy focused on enhancing profitability through the cycle with our three high-margin initiatives, recent portfolio moves and aggressive actions to control expenses including our ongoing restructuring program," said Eric Hansotia, AGCO's Chairman, President and Chief Executive Officer. "The reaffirmation of our full-year adjusted operating margin outlook of
Hansotia continued, "A key pillar of our Farmer-First strategy is growing our precision ag business through our new PTx portfolio of brands. AGCO is making significant progress toward our long-term ambition of full autonomy across the crop cycle by 2030. In August, PTx Trimble introduced OutRun, the first commercially available autonomous retrofit grain cart solution in the market, and the latest offering that demonstrates our commitment to retrofit-first and mixed-fleets. We believe these types of innovations, along with the completed divestiture of the Grain & Protein business, will allow us to focus on delivering higher margin products and better position AGCO for an upturn in the cycle."
Net sales for the first nine months of 2024 were approximately
Third Quarter Highlights
- Reported regional sales results(2):
Europe /Middle East ("EME") (18.2)%,North America (21.8)%,South America (47.0)%,Asia/Pacific /Africa ("APA") (11.7)% - Constant currency regional sales results(1)(2)(3): EME (19.3)%,
North America (21.3)%,South America (41.8)%, APA (13.4)% - Regional operating margin performance: EME
6.4% ,North America 7.2% ,South America 11.8% , APA3.8%
(1) | See reconciliation of non-GAAP measures in appendix. |
(2) | As compared to third quarter 2023. |
(3) | Excludes currency translation impact. |
Market Update
Industry Unit Retail Sales | ||||
Tractors | Combines | |||
Nine Months Ended September 30, 2024 | Change from Prior Year Period | Change from Prior Year Period | ||
(11) % | (19) % | |||
(9) % | (34) % | |||
(6) % | (35) % |
(4) | Excludes compact tractors. |
(5) | Based on Company estimates. |
"Record harvests in the Northern Hemisphere are contributing to higher grain inventories and pressuring crop prices, which combined with elevated input costs, are delaying farmers' equipment purchasing decisions," said Hansotia. "Demand for new equipment has softened further in most global markets, particularly as lower farm income persists for crop producers. We continue to expect increased adoption of precision technology, but more challenging farm economics are resulting in weaker global industry demand across most equipment categories. In the first nine months of 2024, retail tractor industry demand fell by an average of
North American industry retail tractor sales decreased
South American industry retail tractor sales decreased
In
Regional Results
AGCO Regional Net Sales (in millions)
Three Months Ended September 30, | 2024 | 2023 | % change | % change | % change | % change | ||||||
$ 736.1 | $ 941.1 | (21.8) % | (0.5) % | 0.3 % | (21.6) % | |||||||
381.6 | 719.8 | (47.0) % | (5.2) % | 2.1 % | (43.9) % | |||||||
EME | 1,298.2 | 1,586.9 | (18.2) % | 1.1 % | 1.8 % | (21.1) % | ||||||
APA | 183.4 | 207.7 | (11.7) % | 1.7 % | 2.0 % | (15.4) % | ||||||
Total | $ 2,599.3 | $ 3,455.5 | (24.8) % | (0.6) % | 1.5 % | (25.7) % | ||||||
Nine Months Ended September 30, | 2024 | 2023 | % change | % change | % change | % change | ||||||
$ 2,303.5 | $ 2,861.0 | (19.5) % | (0.1) % | 1.0 % | (20.4) % | |||||||
1,033.9 | 1,822.2 | (43.3) % | (2.3) % | 1.0 % | (42.0) % | |||||||
EME | 4,930.1 | 5,281.5 | (6.7) % | 0.5 % | 1.2 % | (8.4) % | ||||||
APA | 507.1 | 647.0 | (21.6) % | (0.5) % | 1.5 % | (22.6) % | ||||||
Total | $ 8,774.6 | (17.3) % | (0.2) % | 1.1 % | (18.2) % |
(6) | See footnotes for additional disclosures. |
Net sales in AGCO's North American region decreased
South American net sales decreased
Net sales in the
Outlook
On April 1, 2024, AGCO acquired an
AGCO's net sales for 2024 are expected to be approximately
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AGCO will host a conference call with respect to this earnings announcement at 10 a.m. Eastern Time on Tuesday, November 5. 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 under the "Investors" Section. 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 be available on AGCO's website for at least 12 months following the call.
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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, 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.
- 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 as well as the financial health of our dealers could negatively impact future sales and adversely impact our performance.
- On April 1, 2024, we completed the acquisition of the ag assets and technologies of Trimble through the formation of a joint venture, PTx Trimble, of which we own
85% . Financing the PTx Trimble transaction significantly increased our indebtedness and interest expense. We also have made various assumptions relating to the acquisition that may not prove to be correct and we may fail to realize all of the anticipated benefits of the acquisition. All acquisitions involve risk, and there is no certainty that the acquired business will operate as expected. 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.
- Cybersecurity breaches including ransomware attacks and other means are rapidly increasing. 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. In addition, the potential of future 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. There can be no assurance that there will not be future disruptions. - Any resurgence of 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 have incurred additional indebtedness as part of the PTx Trimble joint venture transaction), and, as a result, we are subject to certain restrictive covenants and payment obligations, as well as increased leverage generally, 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, 2023, and subsequent Form 10-Qs. AGCO disclaims any obligation to update any forward-looking statements except as required by law.
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About AGCO
AGCO (NYSE: AGCO) is a global leader in the design, manufacture and distribution of agricultural machinery and precision ag technology. AGCO delivers value to farmers and OEM customers through its differentiated brand portfolio including leading brands Fendt®, Massey Ferguson®, PTx and Valtra®. AGCO's full line of equipment, smart farming solutions and services helps farmers sustainably feed our world. Founded in 1990 and headquartered in
Please visit our website at www.agcocorp.com
AGCO CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited and in millions) | |||
September 30, 2024 | December 31, 2023 | ||
ASSETS | |||
Current Assets: | |||
Cash and cash equivalents | $ 622.6 | $ 595.5 | |
Accounts and notes receivable, net | 1,448.4 | 1,605.3 | |
Inventories, net | 3,443.2 | 3,440.7 | |
Other current assets | 607.7 | 699.3 | |
Current assets held for sale | 417.0 | — | |
Total current assets | 6,538.9 | 6,340.8 | |
Property, plant and equipment, net | 1,880.6 | 1,920.9 | |
Right-of-use lease assets | 171.8 | 176.2 | |
Investments in affiliates | 551.5 | 512.7 | |
Deferred tax assets | 507.3 | 481.6 | |
Other assets | 450.5 | 346.8 | |
Noncurrent assets held for sale | 459.0 | — | |
Intangible assets, net | 588.8 | 308.8 | |
Goodwill | 2,358.4 | 1,333.4 | |
Total assets | $ 13,506.8 | $ 11,421.2 | |
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS' EQUITY | |||
Current Liabilities: | |||
Borrowings due within one year | $ 412.3 | $ 15.0 | |
Accounts payable | 961.1 | 1,207.3 | |
Accrued expenses | 2,508.8 | 2,903.8 | |
Other current liabilities | 138.3 | 217.5 | |
Current liabilities held for sale | 259.6 | — | |
Total current liabilities | 4,280.1 | 4,343.6 | |
Long-term debt, less current portion and debt issuance costs | 3,610.0 | 1,377.2 | |
Operating lease liabilities | 129.0 | 134.4 | |
Pension and postretirement health care benefits | 167.9 | 170.5 | |
Deferred tax liabilities | 120.4 | 122.6 | |
Other noncurrent liabilities | 686.2 | 616.1 | |
Noncurrent liabilities held for sale | 26.9 | — | |
Total liabilities | 9,020.5 | 6,764.4 | |
Redeemable noncontrolling interests | 337.5 | — | |
Stockholders' Equity: | |||
AGCO Corporation stockholders' equity: | |||
Preferred stock | — | — | |
Common stock | 0.7 | 0.7 | |
Additional paid-in capital | 12.4 | 4.1 | |
Retained earnings | 5,938.9 | 6,360.0 | |
Accumulated other comprehensive loss | (1,803.2) | (1,708.1) | |
Total AGCO Corporation stockholders' equity | 4,148.8 | 4,656.7 | |
Noncontrolling interests | — | 0.1 | |
Total stockholders' equity | 4,148.8 | 4,656.8 | |
Total liabilities, redeemable noncontrolling interests and stockholders' equity | $ 13,506.8 | $ 11,421.2 | |
See accompanying notes to condensed consolidated financial statements. |
AGCO CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited and in millions, except per share data) | |||
Three Months Ended September 30, | |||
2024 | 2023 | ||
Net sales | $ 2,599.3 | $ 3,455.5 | |
Cost of goods sold | 1,996.2 | 2,521.5 | |
Gross profit | 603.1 | 934.0 | |
Selling, general and administrative expenses | 344.3 | 355.6 | |
Engineering expenses | 121.3 | 139.6 | |
Amortization of intangibles | 8.8 | 14.4 | |
Impairment charges | 0.2 | — | |
Restructuring and business optimization expenses | 10.5 | 0.8 | |
Loss on business held for sale | 3.2 | — | |
Income from operations | 114.8 | 423.6 | |
Interest expense, net | 33.9 | 5.5 | |
Other expense, net | 52.3 | 84.2 | |
Income before income taxes and equity in net earnings of affiliates | 28.6 | 333.9 | |
Income tax provision | 11.9 | 75.3 | |
Income before equity in net earnings of affiliates | 16.7 | 258.6 | |
Equity in net earnings of affiliates | 12.2 | 21.9 | |
Net income | 28.9 | 280.5 | |
Net loss attributable to noncontrolling interests | 1.1 | 0.1 | |
Net income attributable to AGCO Corporation and subsidiaries | $ 30.0 | $ 280.6 | |
Net income per common share attributable to AGCO Corporation and subsidiaries: | |||
Basic | $ 0.40 | $ 3.75 | |
Diluted | $ 0.40 | $ 3.74 | |
Cash dividends declared and paid per common share | $ 0.29 | $ 0.29 | |
Weighted average number of common and common equivalent shares outstanding: | |||
Basic | 74.6 | 74.9 | |
Diluted | 74.7 | 75.0 | |
See accompanying notes to condensed consolidated financial statements. |
AGCO CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited and in millions, except per share data) | |||
Nine Months Ended September 30, | |||
2024 | 2023 | ||
Net sales | $ 8,774.6 | $ 10,611.7 | |
Cost of goods sold | 6,564.2 | 7,817.1 | |
Gross profit | 2,210.4 | 2,794.6 | |
Selling, general and administrative expenses | 1,074.5 | 1,037.7 | |
Engineering expenses | 390.0 | 398.0 | |
Amortization of intangibles | 54.4 | 43.3 | |
Impairment charges | 5.3 | — | |
Restructuring and business optimization expenses | 41.7 | 8.3 | |
Loss on business held for sale | 497.8 | — | |
Income from operations | 146.7 | 1,307.3 | |
Interest expense, net | 65.7 | 11.8 | |
Other expense, net | 168.4 | 212.6 | |
Income (loss) before income taxes and equity in net earnings of affiliates | (87.4) | 1,082.9 | |
Income tax provision | 122.6 | 306.5 | |
Income (loss) before equity in net earnings of affiliates | (210.0) | 776.4 | |
Equity in net earnings of affiliates | 38.0 | 55.9 | |
Net income (loss) | (172.0) | 832.3 | |
Net loss attributable to noncontrolling interests | 2.9 | 0.1 | |
Net income (loss) attributable to AGCO Corporation and subsidiaries | $ (169.1) | $ 832.4 | |
Net income (loss) per common share attributable to AGCO Corporation and subsidiaries: | |||
Basic | $ (2.27) | $ 11.11 | |
Diluted | $ (2.27) | $ 11.10 | |
Cash dividends declared and paid per common share | $ 3.37 | $ 5.81 | |
Weighted average number of common and common equivalent shares outstanding: | |||
Basic | 74.6 | 74.9 | |
Diluted | 74.7 | 75.0 | |
See accompanying notes to condensed consolidated financial statements. |
AGCO CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited and in millions) | |||
Nine Months Ended September 30, | |||
2024 | 2023 | ||
Cash flows from operating activities: | |||
Net income (loss) | $ (172.0) | $ 832.3 | |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||
Depreciation | 189.4 | 168.9 | |
Amortization of intangibles | 54.4 | 43.3 | |
Stock compensation expense | 21.3 | 37.5 | |
Impairment charges | 5.3 | — | |
Loss on business held for sale | 497.8 | — | |
Equity in net earnings of affiliates, net of cash received | (37.3) | (53.0) | |
Deferred income tax benefit | (30.7) | (55.2) | |
Other | 24.9 | 17.1 | |
Changes in operating assets and liabilities: | |||
Accounts and notes receivable, net | (102.4) | (481.6) | |
Inventories, net | (221.1) | (542.9) | |
Other current and noncurrent assets | (79.7) | (140.6) | |
Accounts payable | (77.4) | (56.1) | |
Accrued expenses | (286.2) | 251.8 | |
Other current and noncurrent liabilities | 105.7 | 181.2 | |
Total adjustments | 64.0 | (629.6) | |
Net cash provided by (used in) operating activities | (108.0) | 202.7 | |
Cash flows from investing activities: | |||
Purchases of property, plant and equipment | (279.3) | (357.7) | |
Proceeds from sale of property, plant and equipment | 1.8 | 5.2 | |
Purchase of businesses, net of cash acquired | (1,902.2) | (0.9) | |
Investments in unconsolidated affiliates, net | (1.6) | (21.3) | |
Other | (0.2) | (4.0) | |
Net cash used in investing activities | (2,181.5) | (378.7) | |
Cash flows from financing activities: | |||
Proceeds from indebtedness | 2,624.6 | 725.5 | |
Repayments of indebtedness | (2.3) | (148.5) | |
Payment of dividends to stockholders | (251.5) | (435.8) | |
Payment of minimum tax withholdings on stock compensation | (11.9) | (20.5) | |
Payment of debt issuance costs | (15.7) | (9.5) | |
Investments by noncontrolling interests, net | 8.1 | — | |
Net cash provided by financing activities | 2,351.3 | 111.2 | |
Effects of exchange rate changes on cash, cash equivalents and restricted cash | (14.7) | (44.0) | |
Increase (decrease) in cash, cash equivalents and restricted cash | 47.1 | (108.8) | |
Cash, cash equivalents and restricted cash, beginning of period | 595.5 | 789.5 | |
Cash, cash equivalents and restricted cash, end of period(1) | $ 642.6 | $ 680.7 | |
____________________________________ | |||
(1) Includes | |||
See accompanying notes to condensed consolidated financial statements. |
AGCO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, in millions, except share amounts, per share data)
1. 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. The cash received from trade receivables sold under factoring arrangements that remain outstanding as of September 30, 2024 and December 31, 2023 was approximately
Losses on sales of receivables associated with the accounts receivable sales agreements 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
2. INVENTORIES
Inventories, net at September 30, 2024 and December 31, 2023, excluding amounts classified as held for sale, were as follows (in millions):
September 30, 2024 | December 31, 2023 | ||
Finished goods | $ 1,604.6 | $ 1,460.7 | |
Repair and replacement parts | 813.5 | 823.1 | |
Work in process | 260.3 | 255.2 | |
Raw materials | 764.8 | 901.7 | |
Inventories, net | $ 3,443.2 | $ 3,440.7 |
3. INDEBTEDNESS
Long-term debt, excluding amounts classified as held for sale, consisted of the following at September 30, 2024 and December 31, 2023 (in millions):
September 30, 2024 | December 31, 2023 | ||
Credit facility, expires 2027 | $ 790.0 | $ — | |
Term Loan Facility borrowings | 500.0 | — | |
400.0 | — | ||
700.0 | — | ||
670.2 | 664.0 | ||
279.3 | 276.7 | ||
EIB Senior term loan due 2029 | 279.3 | 276.7 | |
EIB Senior term loan due 2030 | 189.9 | — | |
Senior term loans due between 2025 and 2028 | 163.7 | 162.1 | |
Other long-term debt | 1.1 | 3.1 | |
Debt issuance costs | (12.8) | (3.1) | |
3,960.7 | 1,379.5 | ||
Less: | |||
Current portion of other long-term debt | (1.1) | (2.3) | |
(279.3) | — | ||
Senior term loans due 2025, net of debt issuance costs | (70.3) | — | |
Total long-term indebtedness | $ 3,610.0 | $ 1,377.2 |
As of September 30, 2024 and December 31, 2023, the Company had short-term borrowings due within one year, excluding the current portion of long-term debt, of approximately
European Investment Bank ("EIB") Senior Term Loan due 2030
On January 25, 2024, the Company entered into an additional multi-currency Finance Contract with the EIB permitting the Company to borrow up to
On March 21, 2024, the Company issued (i)
Credit Facility and Term Loan Facility
The Company has a credit facility providing for a
In December 2023, the Company amended the Credit Facility to allow for incremental borrowings in the form of a delayed draw term loan facility in an aggregate principal amount of
The increase in indebtedness as of September 30, 2024 compared to December 31, 2023 related to the PTx Trimble joint venture transaction that closed on April 1, 2024. The Company financed the joint venture transaction through a combination of the Senior Notes due 2027 and 2034, the Term Loan Facility and the remainder through other borrowings and cash on hand.
4. RESTRUCTURING AND BUSINESS OPTIMIZATION EXPENSES
On June 24, 2024, the Company announced a restructuring program (the "Program") in response to increased weakening demand in the agriculture industry. The initial phase of the Program is focused on further reducing structural costs, streamlining the Company's workforce and enhancing global efficiencies related to changing the Company's operating model for certain corporate and back-office functions and better leveraging technology and global centers of excellence. The Company estimates that it will incur charges for one-time termination benefits of approximately
Additionally, in recent years, the Company announced and initiated several actions to rationalize employee headcount in various manufacturing facilities and administrative offices located in the
Business optimization expenses primarily related to professional services costs incurred as part of the restructuring program aimed to reduce structural costs and enhance global efficiencies by changing the Company's operating model for certain corporate and back-office functions.
As of December 31, 2023, accrued severance and other costs related to previous rationalizations were approximately
5. BUSINESS HELD FOR SALE
On July 25, 2024, the Company announced it had entered into a definitive agreement to sell the majority of its Grain & Protein ("G&P") business for a purchase price of
6. SEGMENT REPORTING
The Company has four operating segments that are also its reportable segments, which consist of the
Three Months Ended September 30, | North | South | Total | |||||||
2024 | ||||||||||
Net sales | $ 736.1 | $ 381.6 | $ 1,298.2 | $ 183.4 | $ 2,599.3 | |||||
Income from operations | 52.7 | 45.1 | 83.0 | 7.0 | 187.8 | |||||
2023 | ||||||||||
Net sales | $ 941.1 | $ 719.8 | $ 1,586.9 | $ 207.7 | $ 3,455.5 | |||||
Income from operations | 139.8 | 149.8 | 199.3 | 19.2 | 508.1 | |||||
Nine Months Ended September 30, | North | South | Total | |||||||
2024 | ||||||||||
Net sales | $ 2,303.5 | $ 1,033.9 | $ 4,930.1 | $ 507.1 | $ 8,774.6 | |||||
Income from operations | 171.8 | 73.9 | 654.4 | 27.4 | 927.5 | |||||
2023 | ||||||||||
Net sales | $ 2,861.0 | $ 1,822.2 | $ 5,281.5 | $ 647.0 | $ 10,611.7 | |||||
Income from operations | 378.8 | 370.7 | 733.9 | 58.2 | 1,541.6 |
A reconciliation from the segment information to the consolidated balances for income from operations is set forth below (in millions):
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||
2024 | 2023 | 2024 | 2023 | ||||
Segment income from operations | $ 187.8 | $ 508.1 | $ 927.5 | $ 1,541.6 | |||
Impairment charges | (0.2) | — | (5.3) | — | |||
Loss on business held for sale | (3.2) | — | (497.8) | — | |||
Corporate expenses | (45.3) | (59.5) | (161.2) | (146.6) | |||
Amortization of intangibles | (8.8) | (14.4) | (54.4) | (43.3) | |||
Stock compensation expense | (5.0) | (9.8) | (20.4) | (36.1) | |||
Restructuring and business optimization expenses | (10.5) | (0.8) | (41.7) | (8.3) | |||
Consolidated income from operations | $ 114.8 | $ 423.6 | $ 146.7 | $ 1,307.3 |
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 and excluding a recent acquisition, 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 (loss) and net income (loss) per share to adjusted income from operations, adjusted net income and adjusted net income per share for the three and nine months ended September 30, 2024 and 2023 (in millions, except per share data):
Three Months Ended September 30, | |||||||||||
2024 | 2023 | ||||||||||
Income From | Net | Net Income | Income From | Net | Net Income | ||||||
As reported | $ 114.8 | $ 30.0 | $ 0.40 | $ 423.6 | $ 280.6 | $ 3.74 | |||||
Restructuring and business optimization expenses(3) | 10.5 | 6.6 | 0.09 | 0.8 | 0.6 | 0.01 | |||||
Amortization of PTx Trimble acquired intangibles(4) | 6.1 | 3.8 | 0.05 | — | — | — | |||||
Transaction-related costs(5) | 9.0 | 6.6 | 0.09 | 11.5 | 8.5 | 0.11 | |||||
Impairment charges(6) | 0.2 | 0.2 | — | — | — | — | |||||
Loss on business held for sale(7) | 3.2 | 3.2 | 0.05 | — | — | — | |||||
Divestiture-related foreign currency translation release(8) | — | — | — | — | — | 8.2 | 0.11 | ||||
As adjusted | $ 143.8 | $ 50.4 | $ 0.68 | $ 435.8 | $ 297.9 | $ 3.97 |
(1) | Net income and net income per share amounts are after tax. |
(2) | Rounding may impact summation of amounts. |
(3) | The restructuring expenses recorded during the three months ended September 30, 2024 and September 30, 2023 related primarily to severance, business optimization and other related costs associated with the Company's Program and rationalization of certain manufacturing facilities and administrative offices. |
(4) | Amortization of intangibles related to intangibles acquired as part of the Company's acquisition of PTx Trimble. |
(5) | The transaction-related costs recorded during the three months ended September 30, 2024 related to the Company's acquisition of Trimble Inc.'s agriculture business through the formation of the PTx Trimble joint venture and to the previously announced divestiture of the Company's Grain & Protein business. |
(6) | The impairment charges recorded during the three months ended September 30, 2024 related to the impairment of an investment in affiliate. |
(7) | The Company classified its Grain & Protein business as held for sale as of June 30, 2024. During the three months ended September 30, 2024, the Company recorded an additional loss on business held for sale of |
(8) | During the three months ended September 30, 2023, the Company divested its interest in its |
Nine Months Ended September 30, | |||||||||||
2024 | 2023 | ||||||||||
Income From | Net Income | Net Income | Income From | Net | Net Income | ||||||
As reported | $ 146.7 | $ (169.1) | $ (2.27) | $ 1,307.3 | $ 832.4 | $ 11.10 | |||||
Restructuring and business optimization expenses(3) | 41.7 | 32.4 | 0.44 | 8.3 | 6.8 | 0.09 | |||||
Amortization of PTx Trimble acquired intangibles(4) | 24.3 | 15.3 | 0.20 | — | — | — | |||||
Transaction-related costs(5) | 42.2 | 31.2 | 0.42 | 11.5 | 8.5 | 0.11 | |||||
Impairment charges(6) | 5.3 | 5.3 | 0.07 | — | — | — | |||||
Loss on business held for sale(7) | 497.8 | 497.8 | 6.67 | — | — | — | |||||
Brazilian tax amnesty program(8) | — | — | — | — | 26.4 | 0.35 | |||||
Divestiture-related foreign currency translation release(9) | — | — | — | — | 8.2 | 0.11 | |||||
As adjusted | $ 758.0 | $ 412.9 | $ 5.53 | $ 1,327.0 | $ 882.3 | $ 11.77 |
(1) | Net income (loss) and net income (loss) per share amounts are after tax. |
(2) | Rounding may impact summation of amounts. |
(3) | The restructuring expenses recorded during the nine months ended September 30, 2024 and September 30, 2023 related primarily to severance, business optimization and other related costs associated with the Company's Program and rationalization of certain manufacturing facilities and administrative offices. |
(4) | Amortization of intangibles related to intangibles acquired as part of the Company's acquisition of PTx Trimble. |
(5) | The transaction-related costs recorded during the nine months ended September 30, 2024 related to the Company's acquisition of Trimble Inc.'s agriculture business through the formation of the PTx Trimble joint venture and to the previously announced divestiture of the Company's Grain & Protein business. |
(6) | The impairment charges recorded during the nine months ended September 30, 2024 related to the impairment of certain amortizing intangible assets and an investment in affiliate. |
(7) | The Company classified its Grain & Protein business as held for sale as of June 30, 2024. During the nine months ended September 30, 2024, the Company recorded a loss on business held for sale of |
(8) | During the nine months ended September 30, 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 its best estimate of the ultimate settlement under the amnesty program of approximately |
(9) | During the nine months ended September 30, 2023, the Company divested its interest in its |
The following is a reconciliation of adjusted operating margin for the three and nine months ended September 30, 2024 and 2023 (in millions):
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||
2024 | 2023 | 2024 | 2023 | ||||
Net sales | $ 2,599.3 | $ 3,455.5 | $ 8,774.6 | $ 10,611.7 | |||
Income from operations | 114.8 | 423.6 | 146.7 | 1,307.3 | |||
Adjusted income from operations(1) | $ 143.8 | $ 435.8 | $ 758.0 | $ 1,327.0 | |||
Operating margin(2) | 4.4 % | 12.3 % | 1.7 % | 12.3 % | |||
Adjusted operating margin(2) | 5.5 % | 12.6 % | 8.6 % | 12.5 % |
(1) | Refer to the previous table for the reconciliation of income from operations to adjusted income from operations. |
(2) | 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. |
Adjusted targeted operating margin and earnings per share excludes restructuring and business optimization expenses, amortization of PTx Trimble acquired intangible assets, transaction-related costs, impairment charges and loss on business held for sale.
The following table sets forth, for the three and nine months ended September 30, 2024 and 2023, the impact to net sales of currency translation and a recent acquisition by geographical segment (in millions, except percentages):
Three Months Ended September 30, | Change due to currency | Change due to acquisition | |||||||||||
2024 | 2023 | % change | $ | % | $ | % | |||||||
$ 736.1 | $ 941.1 | (21.8) % | $ (5.1) | (0.5) % | $ 3.1 | 0.3 % | |||||||
381.6 | 719.8 | (47.0) % | (37.5) | (5.2) % | 15.1 | 2.1 % | |||||||
1,298.2 | 1,586.9 | (18.2) % | 17.8 | 1.1 % | 28.9 | 1.8 % | |||||||
183.4 | 207.7 | (11.7) % | 3.6 | 1.7 % | 4.2 | 2.0 % | |||||||
$ 2,599.3 | $ 3,455.5 | (24.8) % | $ (21.2) | (0.6) % | $ 51.3 | 1.5 % | |||||||
Nine Months Ended September 30, | Change due to currency | Change due to acquisition | |||||||||||
2024 | 2023 | % change |
$ |
% | $ | % | |||||||
$ 2,303.5 | $ 2,861.0 | (19.5) % | $ (3.6) | (0.1) % | $ 28.2 | 1.0 % | |||||||
1,033.9 | 1,822.2 | (43.3) % | (41.3) | (2.3) % | 18.2 | 1.0 % | |||||||
4,930.1 | 5,281.5 | (6.7) % | 27.0 | 0.5 % | 63.0 | 1.2 % | |||||||
507.1 | 647.0 | (21.6) % | (3.4) | (0.5) % | 9.4 | 1.5 % | |||||||
$ 8,774.6 | $ 10,611.7 | (17.3) % | $ (21.3) | (0.2) % | $ 118.8 | 1.1 % |
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SOURCE AGCO Corporation
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