Agco Corporation · NYSE:AGCO
Agco — Q2 2020 Earnings Presentation
21 slides from Agco's earnings presentation, August 2020
Slide 1: Second Quarter 2020 Financial and Operational Results
SECOND QUARTER 2020 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** Q2 20 v YTD 20 v Reported Reported Q2 20 Q2 19 YTD 20 YTD 19 Net Sales $2,006.8 (17.2)% $3,935.1 (10.9)% Gross margin 21.6% -170bps 22.4% -65bps Operating income $97.3 (51.3)% $197.7 (32.3)% Operating margin 4.8% -340bps 5.0% -160bps Diluted EPS $0.93 $(0.89) $1.78 ($0.88) Q2
Slide 4: Industry Overview
INDUSTRY OVERVIEW June 2020 Year-to-Date Retail Units North America 2020 vs. 2019 Tractors* • Industry 2% Combines • Industry (9)% Western Europe 2020 vs. 2019 Tractors • Industry (14)% Combines • Industry (18)% South America 2020 vs. 2019 Tractors • Industry (1)% Combines • Industry 6% * Excludes c
Slide 5: AGCO Response to COVID-19
AGCO RESPONSE TO COVID-19 Focus on health and well-being of AGCO’s workforce and our communities Support our dealers and farmers to promote food security Secure business continuity and liquidity of AGCO business operations 5
Slide 6: Regional Operations Update
REGIONAL OPERATIONS UPDATE Asia / Pacific / Africa China production suspended early Q1; now operational Major factories suspended production late March through most of April; Europe / Middle East now all operational Primary factories suspended production majority of April; now South America all oper
Slide 7: 2020 Production
2020 PRODUCTION AGCO Production Hours (9)% (19)% • Q2 20 production down ~19% vs. Q2 19 • Full year 2020 production expected to be down approximately 8% vs. 2019 Q1 Q2 Q3E Q4E 2019 Production 2020 Production 7 7
Slide 8: Regional Net Sales Results
Regional Net Sales Results Q2 20 vs. Q2 19 Net Sales Excluding Currency Translation* June YTD 2020 $3.9B South North EME America APA America Consol. North America 28% South America EME 8% 57% APA (20)% 21% (4)% (9)% (13)% 7% June YTD 2019 $4.4B YTD 20 vs. YTD 19 Net Sales Excluding Currency Translat
Slide 9: Net Sales, Operating Income and Operating Margins
NET SALES, OPERATING INCOME AND OPERATING MARGINS Sales Q2 19 to Q2 20 Adj. Op. June YTD $M Margin* $3,000 10% Net Sales $2,500 8% $294M $2,000 6% $222M $1,500 Adj. Op. Margin* Adj. Op. Margin* 4% 6.6% $1,000 5.7% 2% $500 Adj. Op. Income* $0 0% Q219 Q319 Q419 Q120 Q220 2019 2020 * Reflects adjusted
Slide 10: Grain and Protein Results
GRAIN AND PROTEIN RESULTS June 2020 YTD Sales June 2020 YTD net sales decreased ~15% vs 2019 on a constant By Region By Product currency basis $417M $417M ─ Decline in sales of grain and seed equipment of ~23% SA ─ Decline in sales of protein production equipment ~3% APA Protein EAME Longer term
Slide 11: Liquidity / Free Cash Flow
LIQUIDITY / FREE CASH FLOW* Thousands Q2 Free Cash Flow June YTD Free Cash Flow* Liquidity 2019 2020 ● Closely managing costs and cash $157M expenditures ● Maintaining dividend ● Suspending share repurchases $63M ● Added $530M term loan facility in Q2 ● ~$1.3B in available funds at 6-30-20 ‒ ~$400M
Slide 12: 2020 Market Outlook
2020 MARKET OUTLOOK Regional Market Outlook – Industry Unit Retail Tractor Sales N. America* S. America Western Europe 138K Down ~10% Down 91K ~10% Down 46K 0-5% 2019 2020E 2019 2020E 2019 2020E 12 *Excludes 12 compact tractors
Slide 13: 2020 Assumptions: Summary
2020 ASSUMPTIONS: SUMMARY • 2020 sales vs. 2019 – Lower end-market demand – Negative currency impact of ~(3.5%) – Targeting lower dealer inventory + Pricing +1.0% to 1.5% + Market share gains • Engineering expense ~4.1% of sales • Operating margin Down modestly vs ‘19 • Effective tax rate 36% to 38%
Slide 14: 2020 Outlook
2020 OUTLOOK 2020 Estimates Sales $8.3B to $8.4B Adjusted EPS $3.50 to $3.75 CAPEX ~$225M Free Cash Flow* $200M to $250M • See reconciliation to GAAP metrics in the appendix of this presentation. 14 • Note: Free cash flow is defined as net cash provided by operating activities less capital expenditu
Slide 15: Appendix
APPENDIX 15
Slide 16: Non-GAAP to GAAP Reconciliation
NON-GAAP TO GAAP RECONCILIATION Free Cash Flow $M Quarter ended Quarter ended June 30, June 30, 2020 2019 Net cash provided by operating activities $ 213.7 $ 117.1 Less: Capital expenditures (56.9) (54.0) Free cash flow $ 156.8 $ 63.0 Note: Free cash flow is defined as net cash used in operating act
Slide 17: Non-GAAP to GAAP Reconciliation
NON-GAAP TO GAAP RECONCILIATION Free Cash Flow $M Six months Six months ended ended June 30, June 30, 2020 2019 Net cash used in operating activities $ (221.6) $ (212.9) Less: Capital expenditures (117.5) (114.9) Free cash flow $ (339.1) $ (327.8) Note: Free cash flow is defined as net cash used in
Slide 18: Non-GAAP to GAAP Reconciliation
NON-GAAP TO GAAP RECONCILIATION Free Cash Flow $M Year ended December 31, 2020E Net cash provided by operating activities $ 425 to 475 Less: Capital expenditures ~(225) Free cash flow $ 200 to 250 Note: Free cash flow is defined as net cash provided by operating activities less capital expenditures.
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 19
Slide 20: Non-GAAP to GAAP Reconciliation
NON-GAAP TO GAAP RECONCILIATION (In millions, except per share amounts) Three Months Ended June 30, 2020 2019 Income From Net Income Income From Net Income Operations Net Income Per Share Operations Net Income Per Share As reported $ 97.3 $ 69.7 $ 0.93 $ 199.6 $ 140.8 $ 1.82 Goodwill impairment char
Slide 21: Non-GAAP to GAAP Reconciliation
NON-GAAP TO GAAP RECONCILIATION (In millions, except per share amounts) The following is a reconciliation of the Company’s available funding as of June 30, 2020 (in millions): June 30, 2020 Credit facility, total borrowing capacity $ 1,330.9 Less: Credit facility and term loan borrowings (461.6) Cre