Agco Corporation · NYSE:AGCO
Agco — Q4 2017 Earnings Presentation
21 slides from Agco's earnings presentation, February 2018
Slide 1: Fourth Quarter 2017 Financial and Operational Results
FOURTH QUARTER 2017 FINANCIAL AND OPERATIONAL RESULTS
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS Forward-looking statements in this presentation, including statements regarding demand, product development and capital expenditure plans and timing of those plans, acquisition, expansion and modernization plans and our expectations with respect to the costs and benefits o
Slide 3: Financial Summary
FINANCIAL SUMMARY $M** Q4 17 v YTD 17 vs Q4 17 YTD 2017 Q4 16 YTD 16 Net Sales $2,527.4 +20.7% $8,306.5 +12.1% Gross margin 21.0% +90 bps 21.3% +80bps Operating income $142.3 +55.7% $403.3 +39.8% Adj. Operating income* $145.0 +48.3% $419.3 +39.6% Adj. Operating margin* 5.7% +100bps 5.0% +90bps Dilut
Slide 4: Industry Overview
INDUSTRY OVERVIEW December 2017 Year-to-Date Retail Units North America 2017 vs. 2016 Tractors* • Industry ~Flat Combines • Industry 10% Western Europe 2017 vs. 2016 Tractors • Industry 4%** Combines • Industry (6%) South America 2017 vs. 2016 Tractors • Industry 13% Combines • Industry 13% * Exclud
Slide 5: 2017 Production
2017 PRODUCTION AGCO Production Hours Down Up ~1% ~3% Up ~10% Up ~3% • Q4 17 production up ~3% vs. Q4 16 • Full year 2017 production up approximately 3% vs. 2016 • 2018 production projected to grow 4% Q1 Q2 Q3 Q4 2016 Production 2017 Production 5 5
Slide 6: Regional Net Sales Results
Regional Net Sales Results December YTD 2017 $8.3B Q4 17 vs. Q4 16 Net Sales Excluding Currency Translation* North America 22% South North America South APA Consol. EME America America EME 13% 56% APA 9% +17% +3% +17% +17% +15% 2 5. 9 December YTD 2016 $7.4B YTD 2017 vs. YTD 2016 Net Sales North Exc
Slide 7: Net Sales and Operating Margins
NET SALES AND OPERATING MARGINS Sales Q4 16 to Q4 17 Adj. Op. YTD $M Margin* $2,500 10% $419M $2,000 8% Sales Adj. Op. Income* $1,500 6% $300M 5.0% $1,000 Adj. Op. Margin* 4% 4.1% Adj. Op. Margin* $500 2% $0 0% Q416 Q117 Q217 Q317 Q417 2016 2017 * Reflects adjusted results, which exclude restructuri
Slide 8: GSI Results
GSI RESULTS 2017 Sales 2017 sales up 17% vs 2016 including the benefit of acquisitions By Region By Product ─ Organic growth in sales of protein production equipment in APA $1.0B $1.0B and EME SA ─ Organic declines in sales of grain and seed equipment in NA, EME, APA APA Protein EAME 50% Strong
Slide 9: Investing for Growth
INVESTING FOR GROWTH CAPEX Engineering Expenses ~$392M ~$360M $323M Capex R&D Exp. 4.0% ~$250M Dep. & Amort. $204M % of Sales. $128M $129M 2.4% 06 07 08 09 10 11 12 13 14 15 16 17 18E 06 07 08 09 10 11 12 13 14 15 16 17 18E 9 9
Slide 10: Free Cash Flow
FREE CASH FLOW* Thousands Full-Year Free Cash Flow $374M ● $374M of FCF in 2017 ● Targeting ~$225M free cash flow in 2018 including build of Tier 3 and Tier 5 emission $169M transition stock in Brazil and EU 2016 2017 Note: Free cash flow is defined as net cash provided by operating activities less
Slide 11: Returning Cash to Shareholders
RETURNING CASH TO SHAREHOLDERS Dividend Initiated in 2013 Ambition to grow Cash to be Returned to Share Repurchase Shareholders ~$1 billion repurchased over last 4 years $300M program authorized through December 2019 11
Slide 12: 2018 Market Outlook
2018 MARKET OUTLOOK Regional Market Outlook – Industry Unit Retail Tractor Sales (Volume in Units) N. America* S. America Western Europe 150K ~Flat 88K ~ Flat Up 56K 0-5% 2017 2018E 2017 2018E 2017 2018E 12 *Excludes 12 compact tractors
Slide 13: 2018 Assumptions: Summary
2018 ASSUMPTIONS: SUMMARY 2018 sales up ~9% vs 2017 – Relatively stable end-market demand – Pricing +1.5% – Positive currency translation +3.5% – Acquisitions +2.5% Engineering ~4% of sales (up ~$35M vs 2017) Operating margin improvement Effective tax rate ~38% 13
Slide 14: 2018 Outlook
2018 OUTLOOK 2018 Estimates Sales ~$9.1B Adjusted EPS ~$3.50 CAPEX ~$250M Free Cash Flow* ~$225M 14 * Free cash flow is defined as net cash from operations less capital expenditures. See reconciliation to GAAP metrics in the appendix of this presentation
Slide 15: Appendix
APPENDIX 15
Slide 16: Non-GAAP to GAAP Reconciliation
NON-GAAP TO GAAP RECONCILIATION Free Cash Flow $M Year ended Year ended December 31, December 31, 2017 2016 Net cash provided by operating activities $ 577.6 $ 369.5 Less: Capital expenditures (203.9) (201.0) Free cash flow $ 373.7 $ 168.5 Note: Free cash flow is defined as net cash provided by oper
Slide 17: Non-GAAP to GAAP Reconciliation
NON-GAAP TO GAAP RECONCILIATION Free Cash Flow $M Year ended Year ended December 31, December 31, 2018E 2017 Net cash provided by operating activities $ ~475.0 $ 577.6 Less: Capital expenditures ~(250.0) (203.9) Free cash flow $ ~225.0 $ 373.7 Note: Free cash flow is defined as net cash provided by
Slide 18: Reconciliation of Currency Translation and Acquisition Impacts to Net Sales
RECONCILIATION OF CURRENCY TRANSLATION AND ACQUISITION IMPACTS TO NET SALES Net Sales $M Three Months Ended Change due to currency Change due to December 31, translation acquisitions % change 2017 2016 from 2016 $ % $ % North America $ 531.8 $ 447.4 18.9% $ 6.6 1.5 % $ 19.4 4.3% South America 315.9
Slide 19: Reconciliation of Currency Translation and Acquisition Impacts to Net Sales
RECONCILIATION OF CURRENCY TRANSLATION AND ACQUISITION IMPACTS TO NET SALES Net Sales $M Years Ended Change due to currency Change due to December 31, translation acquisitions % change 2017 2016 from 2016 $ % $ % North America $ 1,876.7 $ 1,807.7 3.8% $ 4.7 0.3% $ 38.8 2.1% South America 1,063.5 917
Slide 20: Non-GAAP to GAAP Reconciliation
NON-GAAP TO GAAP RECONCILIATION (In millions, except per share amounts) Three Months Ended December 31, 2017 2016 Income From Net Income Income From Net Income (1) Operations Net Income Per Share (1) Operations Net Income (1) Per Share (1) As reported $ 142.3 $ 44.3 $ 0.55 $ 91.4 $ 62.0 $ 0.77 Restr
Slide 21: Non-GAAP to GAAP Reconciliation
NON-GAAP TO GAAP RECONCILIATION (In millions, except per share amounts) Years Ended December 31, 2017 2016 Income From Net Income Income From Net Income Operations Net Income (1) Per Share (1)(2) Operations Net Income (1) Per Share (1) As reported $ 403.3 $ 186.4 $ 2.32 $ 288.4 $ 160.1 $ 1.96 Restru