AGCO Corporation · NYSE:AGCO
AGCO — Q4 2006 Earnings Presentation
19 slides from AGCO's earnings presentation, Feb 9, 2007
Slide 1: Fourth Quarter 2006 Financial and Operational Results
Fourth Quarter 2006 Financial and Operational Results February 9, 2007
Slide 2: Forward Looking Statements
Forward Looking Statements Statements that are not historical facts, including projections of free cash flow, impacts of strategic initiatives, sales, and diluted earnings per share are forward-looking and are subject to risks and uncertainties that could cause actual results to differ materially fr
Slide 3: Financial Summary
Financial Summary YTD YTD Q406 Q405 2006 2005 Net Sales ($Ms) 1,633.8 1,384.9 5,435.0 5,449.7 Gross Margin ($Ms) 265.9 223.9 927.8 933.6 Adj. Op. Income ($Ms) 81.6 53.5 241.3 274.7 Adj. Op. Margin 5.0% 3.9% 4.4% 5.0% Adj. Diluted EPS $0.41 $0.30 $1.12 $1.46 3
Slide 4: Tractor/Combine Production
Tractor/Combine Production Production Units -20% -18% +23% • Smoothed production -8% improved efficiency • North American production down 41% vs 2005 • Total 2006 production down 9% vs 2005 Q1 Q2 Q3 Q4 05 Act 06 Act 4
Slide 5: Industry Overview
Industry Overview Retail Units North America YTD06 vs YTD05 Tractors – Industry (3%) – AGCO Combines – Industry (6%) – AGCO Europe Tractors – Industry 3% – AGCO South America Tractors – Industry (1%) – AGCO Combines – Industry (37%) – AGCO 5
Slide 6: Regional Net Sales Results
Regional Net Sales Results 2005 $5.4 billion Q406 vs Q405 Net Sales Excl.Translation +27% +21% North America EAME 29% (17%) (10%) 55% EAPAC *EAME South 4% America North S. America EAPAC America 12% 2006 $5.4 billion 2006 vs 2005 Net Sales Excl. Translation +10% (6%) (23%) (21%) North America EAME *E
Slide 7: Sales and Gross Margins
Sales and Gross Margins Gross Sales $M Margin % Full Year Gross Margins Stable 20% $1,500 $5,450 $5,435 15% 17.1% 17.1% $1,000 10% $500 5% $0 0% YTD 05 YTD 06 Q405 Q106 Q206 Q306 Q406 Sales Gross Margin 7
Slide 8: Working Capital Progress
Working Capital Progress Working Capital* : Sales 15.5% • NA Dealer tractor 12.0% inventories lowered • Will continue W/C focus in 2007 • Long-term initiatives – Build to order – Distribution Strategies 2005A 2006 * Working Capital defined as Avg. A/R + Avg. Inv. – Avg. A/P – Avg. Accrued Exp 8
Slide 9: Strong Free Cash Flow
Strong Free Cash Flow $313M • Working capital focus will continue • Investing in growth $158M • Strengthening the balance sheet 2005 2006 Operational A/R Sales 9
Slide 10: Strong Balance Sheet
Strong Balance Sheet $1,159M $1,200.0 50% $1,000.0 $848M 40% $785M $800.0 36.9% 30% 30.7% $600.0 20% $400.0 20.4% 10% $200.0 $0.0 0% 2004 2005 2006 Debt Net Debt to Total Capital 10
Slide 11: 2007 Impacts of Strategic Initiatives
2007 Impacts of Strategic Initiatives Pre-tax Impact Q107 Full Year 2007 Increased R&D – $ 20 M Plant rearrangements –$5M System/process improvements –$5M Growth initiatives –$5M Debt refinancing + $ 10 M Total - $5M to -$7M - $ 25 M 11
Slide 12: 2007 Preliminary Outlook
2007 Preliminary Outlook 2007 Goals Total sales growth 3%-5% Diluted EPS Approximately $1.30 Free cash flow $115 to $125 million 12
Slide 13: Appendix
Appendix 13
Slide 14: GAAP To NON-GAAP Reconciliation
GAAP To NON-GAAP Reconciliation Three months ended December 31, 2006 2005 Income Net Earnings Income Net Earnings (Loss) From Income (Loss) Per From Income (Loss) Per Operations (Loss) Share Operations (Loss) Share As adjusted $ 81.6 $ 38.8 $ 0.41 $ 53.5 $ 26.9 $ 0.30 Restructuring and other infrequ
Slide 15: GAAP To NON-GAAP Reconciliation
GAAP To NON-GAAP Reconciliation Years ended December 31, 2006 2005 Income Net Earnings Income Earnings From Income (Loss) Per From Net Per Operations (Loss) Share Operations Income Share As adjusted $ 241.3 $ 102.7 $ 1.12 $ 274.7 $ 136.3 $ 1.46 Restructuring and other infrequent expenses (income) 1.
Slide 16: GAAP To NON-GAAP Reconciliation
GAAP To NON-GAAP Reconciliation Year Year ended ended Free Cash Flow December 31, December 31, 2006 2005 Net cash provided by operating activities $ 442.2 $ 246.3 Less: Capital expenditures (129.1) (88.4) Free cash flow $ 313.1 $ 157.9 Projected Year ended December 31, 2007 Net cash provided by oper
Slide 17: GAAP To NON-GAAP Reconciliation
GAAP To NON-GAAP Reconciliation EBITDA Three Three Months Ended Months Ended December 31, 2006 December 31, 2005 Net Income (128.1) (63.8) Plus: Interest Expense, Net 14 15.3 Discounts on Sale of Receivables 9.6 5.9 Taxes 24.9 100.5 Depreciation and amortization 30.3 23.7 Amortization of Intangibles
Slide 18: GAAP To NON-GAAP Reconciliation
GAAP To NON-GAAP Reconciliation EBITDA Year Ended Year Ended December 31, 2006 December 31, 2005 Net Income (64.9) 31.6 Plus: Interest Expense, Net 55.2 80 Discounts on Sale of Receivables 29.9 22.4 Taxes 73.5 151.1 Depreciation and amortization 105.0 96.6 Amortization of Intangibles 16.9 16.5 Stock
Slide 19: GAAP To NON-GAAP Reconciliation
GAAP To NON-GAAP Reconciliation Net Debt Ratio December 31, December 31, 2006 2005 Long-termdebt $ 785.0 $ 848.1 Less: Cash and cash equivalents (401.1) (220.6) Net debt 383.9 627.5 Add: Total stockholders’ equity 1,493.6 1,416.0 Total capital $ 1,877.5 $ 2,043.5 Net debt to capital ratio 20.4% 30.7