AGCO Corporation · NYSE:AGCO
AGCO — Q2 2006 Earnings Presentation
18 slides from AGCO's earnings presentation, Jul 31, 2006
Slide 1: AGCO Corporation Second Quarter 2006 Financial and Operational Results
AGCO Corporation Second Quarter 2006 Financial and Operational Results July 31, 2006
Slide 2: Forward Looking Statements
Forward Looking Statements Statements that are not historical facts, including projections of future sales, earnings, cash flow, working capital levels, restructuring plans and expenses and savings attendant thereto, production levels, industry demand, are forward looking and are subject to risks an
Slide 3: Financial Summary
Financial Summary ∆ vs. YTD ∆ vs. Q206 2Q05 2006 YTD ’05 Net Sales ($Ms) $1,450.5 (7.9%) $2,620.3 (7.5%) Gross Margin 17.3% + 10 bps 17.5% + 13 bps Op. Income ($Ms) $82.6 (24.4%) $126.5 (22.0%) Op Margin 5.7% (125 bps) 4.8% (90 bps) Diluted Adj. EPS $0.45 (26.2%) $0.64 (23.8%) 2
Slide 4: Production Schedule
Production Schedule Production Units -20% -18% • Production down 18% in Q106 and 20% in Q206 vs prior year • 1H06 North American Sales Pressured by Smoothed Production Schedule • Total 2006 Production Expected to be Lower Than 2005 Q1 Q2 Q3 Q4 05 Act 06 Act 06 Projected 3
Slide 5: Industry Overview
Industry Overview North America YTD06 vs YTD05 Tractors – Industry -- – AGCO Combines – Industry 4% – AGCO Europe Tractors – Industry (1%) – AGCO Combines – Industry (4%) – AGCO South America Tractors – Industry (11%) – AGCO Combines – Industry (39%) – AGCO 4
Slide 6: Regional Sales Results
Regional Sales Results YTD 05 $2.8 billion Q206 vs Q205 Net of Translation North EAME America +4% 30% 55% EAME (20%) (24%) (27%) 12% 3% Asia/ South Pacific America South Asia/ North America Pacific America YTD 06 $2.6 billion YTD 06 vs YTD 05 Net of Translation North America +7% EAME 25% Asia/ 3% EA
Slide 7: Sales and Gross Margins
Sales and Gross Margins YTD Gross Margins Improved 20% $1,500 $2,831 $2,620 -7.5% 15% 17.3% 17.5% $1,000 10% $500 5% $0 0% YTD 05 YTD 06 Q205 Q305 Q405 Q106 Q206 Sales Gross Margin 6
Slide 8: Working Capital Improvement
Working Capital Improvement Accounts Receivable + Inventory $2.13B $1.94B • Inventory and A/R declined $191M vs Q205 A/R • Declines concentrated in North and South America Inventory • Further Inventory and A/R reductions expected in Q3 and Q4 Q205 Q206 7
Slide 9: Improved Free Cash Flow
Improved Free Cash Flow YTD Free Cash Flow Annual Free Cash Flow (6 Months Ended June 30 ) (12 Months Ended December 31 ) YTD 05 YTD 06 Aprox. $158M $150M ($59M) Benefit From A/R Sale $110M ($172M) Benefit From $74M A/R Sale $48M ($246M) 2005 2006 Est. 8
Slide 10: Improving Balance Sheet
Improving Balance Sheet Q205 Q305 Q405 Q106 Q206 Net Debt as a % of Total Capital 38.7% 39.4% 30.7% 36.2% 31.4% 9
Slide 11: 2006 Plant Initiatives
2006 Plant Initiatives Marktoberdorf Plant Rearrangement • 2 Year Project will Improve Productivity • Reduce Assembly Time • Reduce Production Costs Hesston Plant Rearrangement • Improved Manufacturing Processes • Improved Productivity 10
Slide 12: 2006 Outlook
2006 Outlook • Full Year 2006 Net Sales slightly below 2005 level • Targeting an improvement in full year earnings per share ranging up to 10% vs 2005 • Improved Working Capital utilization vs 2005 11
Slide 13: Appendix
Appendix Dr, AGCO
Slide 14: GAAP To NON-GAAP Reconciliation
GAAP To NON-GAAP Reconciliation Adjusted Diluted EPS Three months ended June 30, 2006 2005 (in millions, except per share data) Income Earnings Income Earnings From Net Per From Net Per Operations Income Share Operations Income Share As adjusted $ 82.6 $ 40.9 $ 0.45 $ 108.4 $ 59.2 $ 0.61 Restructuri
Slide 15: GAAP To NON-GAAP Reconciliation
GAAP To NON-GAAP Reconciliation Adjusted Diluted EPS Six months ended June 30, 2006 2005 (in millions, except per share data) Income Earnings Income Earnings From Net Per From Net Per Operations Income Share Operations Income Share As adjusted $ 126.6 $ 58.3 $ 0.64 $ 162.4 $ 81.6 $ 0.84 Restructurin
Slide 16: GAAP To NON-GAAP Reconciliation
GAAP To NON-GAAP Reconciliation Free Cash Flow Six months Six months ended ended June 30, June 30, 2006 2005 Net cash used in operating activities $ (10.7) $ (145.9) Less: Capital expenditures (47.8) (25.8) Free cash flow $ (58.5) $ (171.7) See accompanying notes in the Company’s Press Release 15
Slide 17: GAAP To NON-GAAP Reconciliation
GAAP To NON-GAAP Reconciliation Three Three EBITDA months ended months ended June 30, 2006 June 30, 2005 Net Income 40.9 46.1 Plus: Interest Expense, Net 14.3 31.9 Discounts on Sale of Receivables 7.3 5.6 Taxes 22.1 25.6 Depreciation and amortization 24.1 22.7 Amortization of Intangibles 4.2 4.1 Res
Slide 18: GAAP To NON-GAAP Reconciliation
GAAP To NON-GAAP Reconciliation Six Six EBITDA months ended months ended June 30, 2006 June 30, 2005 Net Income 58.2 67.6 Plus: Interest Expense, Net 27.9 48.9 Discounts on Sale of Receivables 13.8 10.6 Taxes 34.7 37.9 Depreciation and amortization 47.3 45.2 Amortization of Intangibles 8.3 8.3 Restr