$69 A Special Management Report From 2017 ‘BIG DEALER’ REPORT An Ag Equipment Intelligence Staff Report The “Big Dealer” report is a joint project of Ag Equipment Intelligence and George Russell of the Machinery Advisors Consortium. This report aims to track ownership changes and consolidation trends of North American farm equipment dealers. For the purposes of this report, “Big Dealers” are considered those retail organizations that own and operate 5 or more farm equipment store locations within the U.S. and Canada. This compilation was initiated in 2009, was first published in 2011 and is updated annually in April. Comments, corrections and additions to the “Big Dealer” list should be directed to Dave Kanicki at Ag Equipment Intelligence (dkanicki@les- sitermedia.com) or George Russell at Machinery Advisors Consortium ([email protected]). The contents of this report represent our interpretation and analysis of information generally available to the public or released by responsible individuals in the subject companies, but is not guaranteed as to accuracy or completeness. It does not contain material provided to us in confidence by our clients. Individual companies reported on and analyzed by Lessiter Media, may be clients of this and other Lessiter Media services. This information is not furnished in connection with a sale or offer to sell securities or in connection with the solicitation of an offer to buy securities. Data for this study was collected from various sources and much of it was verified by the dealers and manufacturers. This is an ongoing work. As dealer acquisitions, mergers and sales occur this list will continually change. Anyone wishing to contribute to this project should contact Dave Kanicki at [email protected]. AG EQUIPMENT INTELLIGENCE is published monthly for the farm equipment industry by Lessiter Media, P.O. Box 624, Brookfield, WI 53008-0624. © 2017 by Lessiter Media All rights reserved. Reproduction in any form of this newsletter content is strictly forbidden without the prior written consent of the publisher. Ag Equipment Intelligence’s 2017 Big Dealer Report is available to Ag Equipment Intelligence subscribers as part of their paid subscription. U.S., Canada and Mexico print subscriptions are $499 per year. International print subscriptions are $599 per year. Send subscription requests to: Ag Equipment Intelligence, P.O. Box 624, Brookfield, WI 53008-0624. Fax: 262/782-1252. Phone: 262/782-4480 or 800/645-8455 (U.S. only). Email: [email protected]. P.O. Box 624 • Brookfield, Wisconsin • Phone: 262/782-4480 • Fax: 262/782-1252 • www.farm-equipment.com Pace of Dealer Consolidations Slows, But Continues Despite entering the fourth year conducted by Farm Equipment in span. This occurred as result of these of slumping sales, the total num- 2015, more than one-third of dealer- smaller dealers being acquired by or ber of big dealers comprising Ag principals are 61 years old or older. merged into the larger dealer groups. Equipment Intelligence’s “Big Dealer” Coupled with those who are 51-60, list continued to increase in the past nearly 75% of dealers are 51 or older. By the Numbers Analysis year; not by much, but it did grow. At “These dealers have been able While the overall numbers did not the same time, some of the biggest to leverage their capital during the see significant shifts in the year since dealers trimmed their total outlets by current downturn to expand further,” the 2016 Big Dealer report was pub- closing some locations and consoli- says George Russell, co-founder of the lished, there have been some inter- dating others. Machinery Advisors Consortium, and esting moves within the big picture. Overall, the number of “big deal- co-author of the Big Dealer report. Generally, the number of big dealers ers” of farm machinery in the U.S. “Because they’ve been through it pre- continues to grow, but at a slower pace and Canada did not increase signifi- viously, they know how to do it and than was seen over the past few years. cantly between the time the 2016 are more willing to expand to the Dealers with 20+ Stores. The “Big Dealer” report published and the next level.” number of mega-dealers, or those compilation of this newest edition. Since 2011, when the list was operating 20 or more retail locations, During the past 12 months (April first compiled by Russell and pub- slipped by 1 compared to a year ago 2016 – March 2017), the list grew by lished by Ag Equipment Intelligence, — 11 in 2017 vs. 12 in 2016. This only one dealer. and up to 2017, the total number of was the result of Pape Machinery’s A year ago the roster of dealer- big dealers has grown by 13% (171 ag locations declining to 19 from 21 ships that own and operate 5 or more vs. 193). The category of dealers that due to store closings and/or consoli- retail locations was at 192 groups grew the most during this period dations. This category of dealers has vs. this year’s list that show 193 big are those that own 15-19 dealership grown by 38% since 2011. dealer groups. locations. In total, they’re up by more As a group, the mega-dealers The same factors that have fueled than 250% (5 vs. 18 stores). operate a total of 515 retail locations, consolidation of farm equipment The group of dealers that grew 363 of which are primarily handling dealers during the past decade con- the least between 2011-17 are deal- ag equipment. This group was the tinue to be driving forces behind the ers that operate 5-9 stores, which most diversified with 70% of their ongoing amalgamation of the indus- were down by 3% during this 7 year individual locations serving farm cus- try. These include the major manufac- turers streamlining their distribution ‘Big’ North American Farm Equipment Dealers — 2011-17 channels and the aging of dealer-prin- cipals, many of whom do not have Change (%) family to take over the business. Stores Owned 2017 2016 2015 2014 2013 2012 2011 2011 vs. 2017 According to an informal poll 20+ 11 12 11 10 9 8 8 +38% 15-19 18 14 12 14 11 8 5 +260% Avg. Age of Farm 10-14 41 41 42 36 30 30 30 +37% Equipment Dealership Sub-Total 10+ 70 67 65 60 50 46 43 +63% Owners-Principals 5-9 123 125 106 121 134 141 128 –3% Total 193 192 188 181 184 187 171 +13% 187 188 192 193 <40 years 184 171 181 11.4% 200 180 >65 years 160 28.6% 41-50 years 140 14.3% 120 100 61-65 years 80 8.6% 51-60 years 60 37.1% 40 20 0 2011 2012 2013 2014 2015 2016 2017 More than three-quarters of the owners The total number of dealer groups that own 5 or more stores increased to 193 in 2017, up 13% of North American farm equipment dealer- since Ag Equipment Intelligence, working with the Machinery Advisors Consortium, published ships are 61 years old or older. the first Big Dealer report in 2011. Source: Farm Equipment 2015 poll Source: Ag Equipment Intelligence, Machinery Advisors Consortium 2 Ag Equipment Intelligence — 2017 tomers and remaining 30% serving a North American Big Dealer Groups — 2017 variety of others, most notably con- struction equipment. Of the 11 deal- Avg. Stores Per Owner Group # Avg. Avg. ership groups comprising this catego- Total # Ag Dealer All Ag ry, 9 are John Deere dealers, 1 primar- Stores Stores Groups Stores Stores ily handles Case IH equipment and 1 carries AGCO (Challenger) products. Dealers with 20 or More Stores 11 515 47 363 33 Dealers with 15-19 Stores. On Dealers with 15-19 Stores 18 409 23 332 18 the other hand, the group of dealers Dealers with 10-14 Stores 41 566 14 493 12 who own and operate 15-19 locations Dealers with 10 Stores or More 70 1,490 21 1,118 16 increased by 4, from 14 to 18. This Dealers with 5-9 Stores 123 983 8 805 7 was the only category that showed an increase in the past 12 months. These Total & Avg. Number of Stores 193 2,473 13 1,923 10 dealers own 409 separate locations The number of dealer groups operating 10 or more store locations increased to 70, up from 67 with 332 focusing on farm machinery a year earlier. The total number of stores operated by these dealers rose to 1,490 vs. 1,370 sales. In the long term, this segment of last year. Overall, these dealers own 1,118 ag-only locations, an average of 16 stores each. dealers has shown the largest increase Source: Ag Equipment Intelligence, Machinery Advisors Consortium (13) between 2011-17, growing from 5 dealerships to 18. The jump from 14 farm equipment sales. After peaking at continued to decline as they become to 18 stores in the past 12 months was 141 groups that fall into this category part of larger dealer organizations. the biggest jump this group has expe- in 2012, the number of dealers operat- Brand Breakdown. The num- rienced in the past 7 years. ing 5-9 retail locations have generally bers clearly show that Deere has Dealers with 10-14 Stores. The next group, dealers operating 10-14 Dealers with 15 or More Locations — 2011-17 individual locations, remained flat All Store & Ag Store Avg. & Totals relative to the previous report at 41 Groups w/15+ Total Ag All Stores Ag Stores groups. In total, these dealers own Year Stores Stores Stores Avg.