About AGCO
AGCO Corporation (AGCO) operates as a global leader in the design, manufacture and distribution of agricultural machinery and precision agriculture technology. The company’s purpose is to provide farmer-focused solutions to sustainably feed the company’s world. The company sells a full range of agricultural equipment, including tractors, combines, self-propelled sprayers, hay tools, forage equipment, seeding and tillage equipment, implements, and grain storage and protein production systems. The company’s products are widely recognized in the agricultural equipment industry and are marketed under a number of well-known brands, including Fendt, GSI, Massey Ferguson, Precision Planting and Valtra, supported by the company’s FUSE precision agriculture solutions. The company distributes most of its products through approximately 3,100 independent dealers and distributors in approximately 140 countries. The company also provides retail and wholesale financing through its finance joint ventures with Coöperatieve Rabobank U.A., which, together with its affiliates, the company refers to as ‘Rabobank.’ On September 28, 2023, the company entered into a Sale and Contribution Agreement with Trimble Inc. (‘Trimble’) to form a joint venture (‘Trimble Ag joint venture’) (i) to which Trimble will contribute its agricultural business (other than certain Global Navigation Satellite System and guidance technologies) and AGCO will contribute JCA Technologies, and (ii) AGCO will acquire an 85% interest in the joint venture. The joint venture will create a global-leading mixed-fleet precision ag platform. The company will be the exclusive provider of Trimble’s comprehensive technology offering, supporting the future development and distribution of next-generation agriculture technologies. Trimble offers a wide variety of user-friendly technologies compatible across brands, equipment models and farm types. Its hardware, software and cloud-based applications span all aspects of the crop cycle, from land preparation to planting and seeding to harvest. The company expects the transaction to close during the first half of 2024. Products Tractors: High horsepower tractors (140 to 650 horsepower); typically used on large acreage farms, primarily for row crop production, soil cultivation, planting, land leveling, seeding and commercial hay operations. Utility tractors (40 to 130 horsepower); typically used on small and medium sized farms and in specialty agricultural industries, including dairy, livestock, orchards and vineyards. Compact tractors (under 40 horsepower); typically used on small farms and specialty agricultural industries, as well as for landscaping, equestrian and residential uses. Combines: Combines, sold with a variety of threshing technologies and complemented by a variety of crop-harvesting heads; typically used in harvesting grain crops such as corn, wheat, soybeans and rice. Hay Tools and Forage Equipment, Planters, Implements & Other Equipment: Round and rectangular balers, loader wagons, self-propelled windrowers, forage harvesters, disc mowers, spreaders, rakes, tedders, and mower conditioners; used for the harvesting and packaging of vegetative feeds used in the cattle, dairy, horse and renewable fuel industries. Planters and other planting equipment (including retrofit equipment); used to plant seeds and apply fertilizer in the field, typically used for row crops, including planting technologies that cover the areas of monitoring and measurement, liquid control and delivery, meter accuracy and seed delivery. Implements, including disc harrows, which cut through crop residue, leveling seed beds and mixing chemicals with the soils; heavy tillage, which break up soil and mix crop residue into topsoil, with or without prior discing; field cultivators, which prepare a smooth seed bed and destroy weeds; and drills, which are primarily used for small grain seeding. Other equipment, including loaders; used for a variety of tasks, including lifting and transporting hay crops. Application Equipment: Self-propelled, three and four wheeled vehicles and related equipment; for use in the application of liquid and dry fertilizers and crop protection chemicals both prior to planting crops (‘pre-emergence’) and after crops emerge from the ground (‘post-emergence’). Replacement Parts: Replacement parts for all of the products the company sells, including products no longer in production. Most of the company’s products can be economically maintained with parts and service for a period of 10 to 20 years. The company’s parts inventories are maintained and distributed through a network of master and regional warehouses throughout North America, South America, Europe, Africa, China and Australia in order to provide timely response to customer demand for replacement parts. Grain Storage and Protein Production Systems: Grain storage bins and related drying and handling equipment systems; seed-processing systems; swine and poultry feed storage and delivery, ventilation and watering systems; egg production systems, and broiler production equipment. Precision Agriculture The company offers solutions to farmers to optimize performance, while improving ease of use. The company provides telemetry-based fleet management tools, including remote monitoring and diagnostics, which help farmers improve uptime, machine and yield optimization, mixed fleet optimization and decision support, with critical data privacy choices and convenient mobile tools that offer access to data and information. These products ultimately result in improved yields or reduced waste as well as increased profitability for farmers to help enable sustainable farming. In addition, the company’s precision agriculture solutions are based on connectivity, automation and digitalization and include satellite-based steering, field data collection, product self-adjustment and yield-mapping. The company’s Precision Planting, Headsight and Intelligent Ag Solutions brands provide retrofit solutions to upgrade farmers’ existing equipment to improve their planting, liquid application and harvest operations, resulting in yield and cost optimization. The company’s Precision Planting, Headsight, JCA and Intelligent Ag Solutions brands also sell precision agriculture solutions around the crop cycle to third-party original equipment manufacturers (‘OEMs’). The company’s Fuse and other precision agriculture solutions support the company’s products, brands and the aftermarket with a comprehensive and customizable suite of solutions, enabling farmers to make individual, data-based decisions in order to reduce costs and maximize efficiency, yields and profitability. These technologies are developed internally or sourced from third parties and integrated into the company’s products. These products and related devices are highly valued by farmers globally and are integral to the growth of the company’s equipment sales and revenues. The planned Trimble Ag joint venture will complement and enhance AGCO’s existing precision agriculture portfolio to deliver even more industry leading solutions across the crop cycle. The Trimble Ag joint venture will allow the company to have over 500,000 connectable machines. By combining these two precision agriculture portfolios, the company will be positioned to drive outsized growth and better provide next-generation technologies to even more farmers around the world. Competition The company’s two principal competitors on a worldwide basis are Deere & Company and CNH Industrial N.V. Marketing and Distribution Dealers and Distributors The company distributes products primarily through a network of independent dealers and distributors. The company’s dealers are responsible for retail sales of equipment to end users and after-sales service and support. The company’s distributors may sell its product through networks of dealers supported by the distributors, and the company’s distributors also may directly market its products and provide customer service support. The company’s sales are not dependent on any specific dealer, distributor or group of dealers. In some countries, the company utilizes associates and licensees to provide a distribution channel for the company’s products and a source of production for certain products. Dealer Support and Supervision The company supports its dealers in order to improve the quality of the company’s dealer network. The company monitors each dealer’s performance and profitability and establishes programs that focus on continuous dealer improvement. The company’s dealers generally have sales territories for which they are responsible. The company’s ability to offer its dealers a full product line of agricultural machines and precision agriculture technology, as well as the company’s digital tools to support the dealer’s sales, marketing, warranty and servicing efforts, helps ensure the vitality and increases the competitiveness of the company’s dealer network. The company also maintains dealer advisory groups to obtain dealer feedback on the company’s operations. The company provides its dealers with volume sales incentives, demonstration programs and other advertising support to assist sales. The company designs its sales programs, including retail financing incentives, and the company’s policies for maintaining parts and service availability with extensive product warranties to enhance the company’s dealers’ competitive position. Resources Manufacturing and Assembly The company manufactures and assembles its products in 44 locations worldwide, including four locations where the company operates joint ventures. The company balances its manufacturing resources with externally-sourced machinery, components and/or replacement parts to enable the company to better control inventory levels and the company’s supply of components. The company’s AGCO Power division produces diesel engines, gears and generating sets. The diesel engines are manufactured for use in a majority of the company’s tractors, combines and sprayers, and also are sold to third parties. AGCO Power specializes in the manufacturing of off-road engines in the 75 to 500 horsepower range. Components and Third-Party Suppliers The company externally sources some of its machinery, components and replacement parts from third-party suppliers. The company’s production strategy is intended to optimize the company’s research and development and capital investment requirements and to allow the company greater flexibility to respond to changes in market conditions. The company purchases some fully manufactured tractors from Tractors and Farm Equipment Limited (‘TAFE’), Carraro S.p.A. and Iseki & Company, Limited. The company also purchases other tractors, implements and hay and forage equipment from various third-party suppliers. The company also assists in the development of these products or component parts based upon the company’s own design requirements. Engineering, Research and Innovation Through the company’s newly launched AGCO Ventures, the company sources and funds new technologies to drive and support farmers worldwide. This initiative actively connects the company’s business needs with industry and market perspectives to identify investment opportunities in startup companies, corporate venture funds, incubators, accelerators, higher education and research institutions. AGCO Ventures supports the accelerated development of critical capabilities and competencies across three strategic areas: information management and analytics, agriculture technology and environmental and alternative fuel sources. Wholesale Financing, Sales Terms and Accounts Receivable Sales Agreement Primarily in the United States and Canada, the company engages in the standard industry practice of providing dealers with floor plan payment terms for their inventories of farm equipment for extended periods, generally through the company’s AGCO Finance joint ventures. The terms of the company’s wholesale finance agreements with the company’s dealers vary by region and product line, with fixed payment schedules on all sales, generally ranging from one to 12 months. In the United States and Canada, dealers typically are not required to make an initial down payment, and the company’s terms allow for an interest-free period generally ranging from one to 12 months, depending on the product. Amounts due from sales to dealers in the United States and Canada are immediately due upon a retail sale of the underlying equipment by the dealer, with the exception of sales of grain storage and protein production systems, as discussed further below. If not previously paid by the dealer, installment payments generally are required beginning after the interest-free period with the remaining outstanding equipment balance generally due within 12 months after shipment. In limited circumstances, the company provides sales terms, and in some cases interest-free periods, that are longer than 12 months for certain products. These typically are specified programs, predominantly in the United States and Canada, where interest is charged after a period of up to 24 months, depending on various factors including dealers’ sales volumes during the preceding year. The company generally obtains a security interest in the new and used equipment the company finances. Sales terms outside the United States and Canada are typically of a shorter duration, generally ranging from 30 to 180 days. In many cases, the company retains a security interest in the equipment sold on extended terms. In certain international markets, the company’s sales are often backed by letters of credit or credit insurance. Sales of grain storage and protein production systems both in the United States and in other countries generally are payable within 30 days of shipment. In certain countries, sales of such systems for which the company is responsible for construction or installation may be contingent upon customer acceptance. Payment terms vary by market and product, with fixed payment schedules on all sales. When the company is responsible for installation services, fixed payment schedules may include upfront deposits, progress payments and final payment upon customer acceptance. The company has accounts receivable sales agreements that permit transferring, on an ongoing basis, a majority of the company’s wholesale receivables in North America, Europe and Brazil to the company’s AGCO Finance joint ventures in the United States, Canada, Europe and Brazil. Upon transfer, the wholesale receivables maintain standard payment terms, including required regular principal payments on amounts outstanding and interest charges at market rates. Qualified dealers may obtain additional financing through the company’s U.S., Canadian, European and Brazilian finance joint ventures at the joint ventures’ discretion. In addition, the company’s AGCO Finance joint ventures may provide wholesale financing directly to dealers in Europe, Brazil and Australia. The company also sells certain trade receivables under factoring arrangements to other third-party financial institutions around the world. Retail Financing The company’s AGCO Finance joint ventures offer financing to most of the end users of the company’s products. Besides contributing to the company’s overall profitability, the AGCO Finance joint ventures enhance the company’s sales efforts by tailoring retail finance programs to prevailing market conditions. The company’s AGCO Finance joint ventures provide both retail financing and wholesale financing to the company’s dealers in the United States, Canada, Europe, Brazil, Argentina and Australia. The company has a minority interest in the joint ventures and they are owned by AGCO and a wholly-owned subsidiary of Rabobank. The majority of the assets of the finance joint ventures consist of finance receivables. The majority of the liabilities consist of notes payable and accrued interest. Under the various joint venture agreements, Rabobank provides financing to the AGCO finance joint ventures, primarily through lines of credit. The company does not guarantee the debt obligations of the joint ventures. In the United States and Canada, the company guarantees certain minimum residual values to those joint ventures upon expiration of certain eligible leases between the finance joint ventures and end users. The company also has other guarantees with its other finance joint ventures. In addition, Rabobank is the primary lender with respect to the company’s credit facility, the company’s senior term loan and the loans related to the planned Trimble Ag joint venture. Seasonality To the extent possible, the company attempts to ship products to its dealers and distributors on a level basis throughout the year to reduce the effect of seasonal retail demands on the company’s manufacturing operations and to minimize the company’s investment in inventory. The company’s financing requirements are subject to variations due to seasonal changes in working capital levels, which typically increase in the first half of the year and then decrease in the second half of the year (year ended December 2023). The fourth quarter is also typically a period for higher retail sales because of the company’s customers’ year-end tax planning considerations, the increase in the availability of funds from completed harvests and the timing of dealer incentives. The company’s net sales and income from operations historically have been the lowest in the first quarter and have increased in subsequent quarters. Environmental Regulations The engines manufactured by the company’s AGCO Power division, which specializes in manufacturing off-road engines in the 75 to 500 horsepower range, comply with emissions standards and related requirements set by European, Brazilian and the U.S. regulatory authorities, including both the United States Environmental Protection Agency and various state authorities. Research and Development Expenses The company’s research and development expenses totaled approximately $420.9 million for the year ended December 31, 2023. History AGCO Corporation was founded in 1990. The company was incorporated in Delaware in 1991.
