Record Sales Produce Full Year Adjusted Earnings per Share of $5.25

AGCO, Your Agriculture Company (NYSE:AGCO), a worldwide manufacturer and distributor of agricultural equipment, reported net sales of approximately $2.7 billion for the fourth quarter of 2012, an increase of approximately 7.4% compared to net sales of $2.5 billion for the fourth quarter of 2011. Reported and adjusted net income for the fourth quarter of 2012 were $1.04 per share and $0.99 per share, respectively. Adjusted net income excludes a non-cash intangible asset impairment charge of approximately $22.4 million related to the Company’s Chinese harvesting business. Adjusted net income also excludes a non-cash tax gain of $26.9 million from the recognition of U.S. deferred tax assets. These results compare to reported and adjusted net income of $2.90 per share and $1.44 per share, respectively, for the fourth quarter of 2011. Adjusted net income for the fourth quarter of 2011 excluded a non-cash tax gain and transaction expenses associated with the acquisition of GSI. Excluding unfavorable currency translation impacts of approximately 4.0%, net sales in the fourth quarter of 2012 increased approximately 11.4% compared to the fourth quarter of 2011.

Net sales for the full year of 2012 were approximately $10.0 billion, an increase of approximately 13.6% compared to the full year of 2011. Excluding the unfavorable impact of currency translation of approximately 7.7% and the favorable impact of acquisitions of approximately 8.8%, net sales for the full year of 2012 increased approximately 12.5% compared to the full year of 2011. For the full year of 2012, reported net income per share was $5.30 and adjusted net income per share, excluding the items discussed above, was $5.25. These results compare to reported net income of $5.95 per share and adjusted net income, excluding the items discussed above, of $4.48 per share for the full year of 2011.

Fourth Quarter Highlights

  • Organic sales growth for Q4 2012 vs Q4 2011 was 7.3%, with the strongest growth coming from South America and Asia/Pacific(1)
    • Regional organic sales results: South America +27.8%; Asia/Pacific +27.5%; Europe/Africa/ Middle East (“EAME”) +3.4%; North America (1.8%)
  • Fourth quarter operating margin reached approximately 10% in the South American region and North American operating margin improved 120 basis points in Q4 2012 vs Q4 2011
  • EAME fourth quarter sales and operating income negatively impacted by lower production and start-up costs associated with the new Fendt assembly facility in Germany
  • Working capital reduction in the fourth quarter resulting in 2012 full-year free cash flow of approximately $326 million

(1)Excludes currency translation and acquisition impacts

“AGCO completed 2012 with record sales and adjusted earnings while making significant upgrades to our product offerings and improving our manufacturing facilities,” stated Martin Richenhagen, Chairman, President and Chief Executive Officer. “We also generated $326 million of free cash flow for the full year of 2012 after increasing our strategic investments in our business. This progress was achieved while overcoming start-up inefficiencies in our German manufacturing operations. Our margin improvement initiatives continued to be successful. Most notably, full year operating margins in South America expanded over 100 basis points and North American operating margins were approximately 10%, the best in over a decade. Looking forward, we continue to have a positive long-term outlook for our industry and for AGCO as demonstrated by the start of a share repurchase plan last July and the recently announced initiation of a dividend beginning in March 2013.”