Agco Corp. (AGCO, Financial) filed Quarterly Report for the period ended 2010-09-30.
Agco Corp. has a market cap of $4.14 billion; its shares were traded at around $44.31 with a P/E ratio of 33.8 and P/S ratio of 0.6. Agco Corp. had an annual average earning growth of 11.6% over the past 10 years. GuruFocus rated Agco Corp. the business predictability rank of 2.5-star.AGCO is in the portfolios of David Williams of Columbia Value and Restructuring Fund, Steven Romick of FPA Crescent Fund, Jeff Auxier of Auxier Focus Fund, First Pacific Advisors of First Pacific Advisors, LLC, Steven Cohen of SAC Capital Advisors, Bruce Kovner of Caxton Associates, Jim Simons of Renaissance Technologies LLC, Kenneth Fisher of Fisher Asset Management, LLC, George Soros of Soros Fund Management LLC, Manning & Napier Advisors, Inc.
Net sales for the third quarter of 2010 were $1,657.4 million compared to $1,389.5 million for the same period in 2009. Net sales for the first nine months of 2010 were $4,728.6 million compared to $4,689.2 million for the prior year period. Foreign currency translation negatively impacted net sales by approximately $37.2 million, or 2.7%, in the third quarter of 2010 and positively impacted net sales by $100.9 million, or 2.2%, in the first nine months of 2010. The following table sets forth, for the three and nine months ended September 30, 2010 and 2009, the impact to net sales of currency translation by geographical segment (in millions, except percentages):
Gross profit as a percentage of net sales increased during the third quarter and first nine months of 2010 compared to the same periods in 2009. Higher production volumes and material cost control initiatives helped to produce higher gross margins. Unit production of tractors and combines during the third quarter and first nine months of 2010 were approximately 35% and 11% higher, respectively, than the comparable prior year periods. We recorded approximately $0.2 million and $0.5 million of stock compensation expense, within cost of goods sold, during the third quarter and first nine months of 2010, respectively, compared to $0.1 million and $0.6 million, respectively, of stock compensation expense for the comparable periods in 2009, as is more fully explained in Note 4 to our Condensed Consolidated Financial Statements.
Other expense, net was $4.9 million and $9.7 million during the third quarter and first nine months of 2010, respectively, compared to $5.6 million and $20.4 million, respectively, for the same periods in 2009. Losses on sales of receivables primarily under our accounts receivable sales agreements and securitization facilities were $3.3 million and $9.6 million in the third quarter and first nine months of 2010, respectively, as compared to $1.5 million and $11.7 million in the third quarter and first nine months of 2009, respectively. Other expense, net also decreased in the third quarter and first nine months of 2010 primarily due to favorable foreign exchange impacts in the third quarter and first nine months of 2010 as compared to the same periods in 2009.
Equity in net earnings of affiliates was $11.1 million for the third quarter of 2010 compared to $5.9 million for the comparable period in 2009. For the first nine months of 2010, equity in net earnings from affiliates was approximately $36.4 million compared to $28.0 million for the same period in 2009. The increase was primarily due to increased earnings in our retail finance joint ventures.
Our AGCO Finance retail finance joint ventures provide retail financing and wholesale financing to our dealers in the United States, Canada, Brazil, Germany, France, the United Kingdom, Australia, Ireland, Austria and Argentina. The joint ventures are owned 49% by AGCO and 51% by a wholly owned subsidiary of Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank), a AAA rated financial institution based in the Netherlands. The majority of the assets of the retail finance joint ventures represent finance receivables. The majority of the liabilities represent notes payable and accrued interest. Under the various joint venture agreements, Rabobank or its affiliates are obligated to provide financing to the joint venture companies, primarily through lines of credit. We do not guarantee the debt obligations of the retail finance joint ventures other than a portion of the retail portfolio in Brazil that is held outside the joint venture by Rabobank Brazil, which was approximately $3.7 million as of December 31, 2009 and will gradually be eliminated over time. As of September 30, 2010, our capital investment in the retail finance joint ventures, which is included in Investment in affiliates on our Condensed Consolidated Balance Sheets, was approximately $285.7 million compared to $258.7 million as of December 31, 2009. The total finance portfolio in our retail finance joint ventures was approximately $6.8 billion and $6.3 billion as of September 30, 2010 and December 31, 2009, respectively. The total finance portfolio as of September 30, 2010 included approximately $6.0 billion of retail receivables and $0.8 billion of wholesale receivables from AGCO dealers. The total finance portfolio as of December 31, 2009 included approximately $5.6 billion of retail receivables and $0.7 billion of wholesale receivables from AGCO dealers. The wholesale receivables were either sold to our AGCO Finance retail finance joint ventures without recourse from our operating companies or the retail finance joint ventures provided the financing directly to the dealers. For the nine months ended September 30, 2010, our share in the earnings of the retail finance joint ventures, included in Equity in net earnings of affiliates on our Condensed Consolidated Statements of Operations, was $31.1 million compared to $25.2 million for the same period in 2009.
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Agco Corp. has a market cap of $4.14 billion; its shares were traded at around $44.31 with a P/E ratio of 33.8 and P/S ratio of 0.6. Agco Corp. had an annual average earning growth of 11.6% over the past 10 years. GuruFocus rated Agco Corp. the business predictability rank of 2.5-star.AGCO is in the portfolios of David Williams of Columbia Value and Restructuring Fund, Steven Romick of FPA Crescent Fund, Jeff Auxier of Auxier Focus Fund, First Pacific Advisors of First Pacific Advisors, LLC, Steven Cohen of SAC Capital Advisors, Bruce Kovner of Caxton Associates, Jim Simons of Renaissance Technologies LLC, Kenneth Fisher of Fisher Asset Management, LLC, George Soros of Soros Fund Management LLC, Manning & Napier Advisors, Inc.
Highlight of Business Operations:
For the three months ended September 30, 2010, we generated net income of $62.3 million, or $0.65 per share, compared to net income of $11.1 million, or $0.12 per share, for the same period in 2009. For the first nine months of 2010, we generated net income of $135.3 million, or $1.41 per share, compared to net income of $102.2 million, or $1.09 per share, for the same period in 2009.Net sales for the third quarter of 2010 were $1,657.4 million compared to $1,389.5 million for the same period in 2009. Net sales for the first nine months of 2010 were $4,728.6 million compared to $4,689.2 million for the prior year period. Foreign currency translation negatively impacted net sales by approximately $37.2 million, or 2.7%, in the third quarter of 2010 and positively impacted net sales by $100.9 million, or 2.2%, in the first nine months of 2010. The following table sets forth, for the three and nine months ended September 30, 2010 and 2009, the impact to net sales of currency translation by geographical segment (in millions, except percentages):
Gross profit as a percentage of net sales increased during the third quarter and first nine months of 2010 compared to the same periods in 2009. Higher production volumes and material cost control initiatives helped to produce higher gross margins. Unit production of tractors and combines during the third quarter and first nine months of 2010 were approximately 35% and 11% higher, respectively, than the comparable prior year periods. We recorded approximately $0.2 million and $0.5 million of stock compensation expense, within cost of goods sold, during the third quarter and first nine months of 2010, respectively, compared to $0.1 million and $0.6 million, respectively, of stock compensation expense for the comparable periods in 2009, as is more fully explained in Note 4 to our Condensed Consolidated Financial Statements.
Other expense, net was $4.9 million and $9.7 million during the third quarter and first nine months of 2010, respectively, compared to $5.6 million and $20.4 million, respectively, for the same periods in 2009. Losses on sales of receivables primarily under our accounts receivable sales agreements and securitization facilities were $3.3 million and $9.6 million in the third quarter and first nine months of 2010, respectively, as compared to $1.5 million and $11.7 million in the third quarter and first nine months of 2009, respectively. Other expense, net also decreased in the third quarter and first nine months of 2010 primarily due to favorable foreign exchange impacts in the third quarter and first nine months of 2010 as compared to the same periods in 2009.
Equity in net earnings of affiliates was $11.1 million for the third quarter of 2010 compared to $5.9 million for the comparable period in 2009. For the first nine months of 2010, equity in net earnings from affiliates was approximately $36.4 million compared to $28.0 million for the same period in 2009. The increase was primarily due to increased earnings in our retail finance joint ventures.
Our AGCO Finance retail finance joint ventures provide retail financing and wholesale financing to our dealers in the United States, Canada, Brazil, Germany, France, the United Kingdom, Australia, Ireland, Austria and Argentina. The joint ventures are owned 49% by AGCO and 51% by a wholly owned subsidiary of Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank), a AAA rated financial institution based in the Netherlands. The majority of the assets of the retail finance joint ventures represent finance receivables. The majority of the liabilities represent notes payable and accrued interest. Under the various joint venture agreements, Rabobank or its affiliates are obligated to provide financing to the joint venture companies, primarily through lines of credit. We do not guarantee the debt obligations of the retail finance joint ventures other than a portion of the retail portfolio in Brazil that is held outside the joint venture by Rabobank Brazil, which was approximately $3.7 million as of December 31, 2009 and will gradually be eliminated over time. As of September 30, 2010, our capital investment in the retail finance joint ventures, which is included in Investment in affiliates on our Condensed Consolidated Balance Sheets, was approximately $285.7 million compared to $258.7 million as of December 31, 2009. The total finance portfolio in our retail finance joint ventures was approximately $6.8 billion and $6.3 billion as of September 30, 2010 and December 31, 2009, respectively. The total finance portfolio as of September 30, 2010 included approximately $6.0 billion of retail receivables and $0.8 billion of wholesale receivables from AGCO dealers. The total finance portfolio as of December 31, 2009 included approximately $5.6 billion of retail receivables and $0.7 billion of wholesale receivables from AGCO dealers. The wholesale receivables were either sold to our AGCO Finance retail finance joint ventures without recourse from our operating companies or the retail finance joint ventures provided the financing directly to the dealers. For the nine months ended September 30, 2010, our share in the earnings of the retail finance joint ventures, included in Equity in net earnings of affiliates on our Condensed Consolidated Statements of Operations, was $31.1 million compared to $25.2 million for the same period in 2009.
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