Agco Corporation · NYSE:AGCO
Agco — Q1 2019 Earnings Presentation
20 slides from Agco's earnings presentation, 2019
Slide 1: First Quarter 2019 Financial and Operational Results
FIRST QUARTER 2019 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** Q1 19 v Q1 19 Q1 18 Net Sales $1.995.8 -0.6% Gross margin 22.9% +160bps Operating income $92.4 +83.0% Adj. Operating income* $94.1 +67.0% Adj. Operating margin* 4.7% +190bps Diluted EPS $0.84 +$0.54 Diluted Adjusted EPS* $0.86 +$0.51 * Reflects adjusted results. Please see rec
Slide 4: Industry Overview
INDUSTRY OVERVIEW March 2019 Year-to-Date Retail Units North America 2019 vs. 2018 Tractors* • Industry (3)% Combines • Industry 28% Western Europe 2019 vs. 2018 Tractors • Industry 2%** Combines • Industry (11)% South America 2019 vs. 2018 Tractors • Industry (2)% Combines • Industry 34% * Excludes
Slide 5: 2019 Production
2019 PRODUCTION AGCO Production Hours Up ~1% • Q1 19 production up ~1% vs. Q1 18 • Full year 2019 production expected to be up approximately 3% vs. 2018 Q1 Q2 Q3 Q4 2018 Production 2019 Production 5 5
Slide 6: Regional Net Sales Results
Regional Net Sales Results March YTD 2019 $2.0B North America 25% South America EME 8% Q1 19 vs. Q1 18 Net Sales 60% APA Excluding Currency Translation* 7% South North EME America APA America Consol. March YTD 2018 $2.0B North America 25% South +13% (3)% (10)% (1)% +7% America EME 9% 58% APA 8% EME
Slide 7: Net Sales, Operating Income and Operating Margins
NET SALES, OPERATING INCOME AND OPERATING MARGINS Sales Q1 18 to Q1 19 Adj. Op. March YTD $M Margin* $3,000 10% $2,500 $94M 8% Sales $2,000 Adj. Op. Income* 6% $56M $1,500 4.7% Adj. Op. Margin* 4% 2.8% Adj. Op. Margin* $1,000 2% $500 $0 0% Q118 Q218 Q318 Q418 Q119 2018 2019 * Reflects adjusted resul
Slide 8: Grain and Protein Results
GRAIN AND PROTEIN RESULTS March 2019 YTD Sales March 2019 YTD sales increased ~3% vs 2018 on a constant By Region By Product currency basis $203M $203M ─ Growth in sales of grain and seed equipment of ~15% SA ─ Decline in sales of protein production equipment ~10% APA Protein EAME Longer term: 4
Slide 9: Investing for Growth
INVESTING FOR GROWTH CAPEX Engineering Expenses ~$392M $355M Capex R&D Exp. ~$225M ~3.8% Dep. & Amort. $203M % of Sales. $128M $129M 2.4% 06 07 08 09 10 11 12 13 14 15 16 17 18 19E 06 07 08 09 10 11 12 13 14 15 16 17 18 19E 9 9
Slide 10: Free Cash Flow
FREE CASH FLOW* Thousands Q1 Free Cash Flow Full-Year Free Cash Flow $393M Q1 18 Q1 19 $275M to $300M ● Second half of year seasonally stronger for free cash flow ● Targeting $275M to $300M free cash flow in 2019 ($391M) ($407M) 2018 2019E Note: Free cash flow is defined as net cash (used in) provid
Slide 11: Returning Cash to Shareholders
RETURNING CASH TO SHAREHOLDERS Dividends Initiated in 2013 Ambition to grow Cash to be Returned to Shareholders Share Repurchases Completed ~$1.2B over last 6+ years ~$30M completed in Q1 2019 11
Slide 12: 2019 Market Outlook
2019 MARKET OUTLOOK Regional Market Outlook – Industry Unit Retail Tractor Sales (Volume in Units) N. America* S. America Western Europe 140K ~Flat Up 92K 0-5% Up 54K 0-5% 2018 2019E 2018 2019E 2018 2019E 12 *Excludes 12 compact tractors
Slide 13: 2019 Assumptions: Summary
2019 ASSUMPTIONS: SUMMARY 2019 sales up ~2% vs 2018 – Relatively stable end-market demand – Pricing +2.0% to 2.5% – Negative currency translation ~ -3.5% Engineering up $10-15M on constant currency basis vs 2018 Operating margin improvement Effective tax rate 31-32% 13
Slide 14: 2019 Outlook
2019 OUTLOOK 2019 Estimates Sales ~$9.5B Adjusted EPS* ~$4.90 CAPEX ~$225M Free Cash Flow* $275M to $300M 14 * See reconciliation to GAAP metrics in the appendix of this presentation Note: Free cash flow is defined as net cash provided by operating activities less capital expenditures.
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 March 31, March 31, 2019 2018 Net cash used in operating activities $ (329.9) $ (361.3) Less: Capital expenditures (60.9) (46.1) Free cash flow $ (390.8) $ (407.4) Note: Free cash flow is defined as net cash used in operat
Slide 17: Non-GAAP to GAAP Reconciliation
NON-GAAP TO GAAP RECONCILIATION Free Cash Flow $M Year ended Year ended December 31, December 31, 2018 2019 Net cash provided by operating activities $ 595.9 $ 500 to 525 Less: Capital expenditures (203.3) ~(225) Free cash flow $ 392.6 $ 275 to 300 Note: Free cash flow is defined as net cash used in
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 March 31, Change due to currency translation % change from 2019 2018 2018 $ % North America $ 496.2 $ 502.9 (1.3)% $ (3.8) (0.8)% South America 156.1 182.1 (14.3)% (21.2) (11.6)% Europe/Middle
Slide 19: Non-GAAP to GAAP Reconciliation
NON-GAAP TO GAAP RECONCILIATION (In millions, except per share amounts) Three Months Ended March 31, 2019 2018 Income From Net Income Income From Net Income Operations Net Income Per Share Operations Net Income Per Share As reported $ 92.4 $ 65.1 $ 0.84 $ 50.5 $ 24.3 $ 0.30 Restructuring expenses 1.
Slide 20: Non-GAAP to GAAP Reconciliation
NON-GAAP TO GAAP RECONCILIATION (In millions, except per share amounts) Year ended December 31, 2019 Net Income Per Share As targeted $ 4.88 Restructuring expenses 0.02 As adjusted targeted $ 4.90 20