Slide 1: Fourth Quarter 2013 Financial and Operational Results
Fourth Quarter 2013 Financial and Operational Results
Slide 2: Forward Looking Statements
Forward Looking Statements Forward-looking statements in this presentation, including statements regarding demand for our products and the economic and other factors that drive that demand, product development plans and timing of those plans, acquisition, expansion and modernization plans and our ex
Slide 3: Financial Summary
Financial Summary $M* Q4 13 v YTD 13 vs Q4 13 YTD 2013 Q4 12 YTD 12 Net Sales $2,859.7 +5.8% $10,786.9 +8.3% Gross margin 20.7% +114 bps 22.2% +85 bps Adj. Operating income** $197.2 +39.6% $900.7 +25.9% Adj. Operating margin** 6.9% +167 bps 8.4% +117 bps Adj. Diluted EPS** $1.40 +$0.41 $6.01 +$0.76
Slide 4: Industry Overview
Industry Overview December Year-to-Date Retail Units North America 2013 vs. 2012 Tractors • Industry + 9% Combines • Industry + 8% Western Europe 2013 vs. 2012 Tractors • Industry (1%) Combines • Industry (10%) South America 2013 vs. 2012 Tractors • Industry +17% Combines • Industry +35% 4
Slide 5: Tractor/Combine Production
Tractor/Combine Production Production Units +7% ~Flat +10% +7% • Production in 2013 up ~5% vs. 2012 − Strong Growth in SA − Modest growth in NA and Europe Q1 Q2 Q3 Q4 2012 Production 2013 Production 5
Slide 6: Regional Net Sales Results
Regional Net Sales Results 2013 $10.8B Q4 13 vs. Q4 12 Net Sales Excluding Currency Translation* North America 25% South America EAME 19% +10% 51% +6% +2% +6% APAC +1% 5% EAME South APAC North Consol. America America 2012 $10.0B YTD 2013 vs. YTD 2012 Net Sales North America Excluding Currency Transl
Slide 7: Net Sales and Operating Margins
Net Sales and Operating Margins Sales Adj. Op. December YTD $M Margin* $3,500 14% $901M $3,000 12% Sales 8.4% $2,500 10% $716M $2,000 8% 7.2% Adj. Op. Margin* Adj. Op. Margin* $1,500 6% $1,000 4% Adj. Op. Income* $500 2% $0 0% Q412 Q113 Q213 Q313 Q413 2012 2013 * Reflects adjusted results, which exc
Slide 8: GSI Results
GSI Results Sales (Year ended December 2013) $772M EAME • YTD 13 sales up 6% vs YTD 12 SA • 2014 GSI sales expected to be up 10-15% Protein APAC 40% vs 2013 • Strong cash flow generation in U.S. • Longer term: NA Grain Storage − Macro trends driving growth in 60% demand for grain storage and protein
Slide 9: Capital Expenditures – Investing for Growth
Capital Expenditures – Investing for Growth Continuing to Invest 2014 Capex Components $400- 425M $392M New IT / Other Products Capex Dep. & Amort. $129M Manufacturing 06 07 08 09 10 11 12 13 14E 9
Slide 10: Free Cash Flow
Free Cash Flow* Free Cash Flow (Year Ended Dec. 31 ) $405M • Strong fourth quarter produced robust full-year free $326M cash flow • Targeting FCF for 2014 of $250M+ after elevated CAPEX Note: Free cash flow is defined as net cash provided by operating activities less capital expenditures. 2012 2013
Slide 11: Returning Cash to Shareholders
Returning Cash to Shareholders Cash to be Returned to Shareholders Dividend Share Repurchase • Initiated in 2013 • New $500M share • Increased 10% for 2014 repurchase program 11
Slide 12: 2014 Market Outlook
2014 Market Outlook Regional Market Outlook – Industry Unit Retail Tractor Sales (Volume in Units) N. America S. America Western Europe ~232K Down 0-5% Down ~145K 0-5% ~83K Down ~5% 2013 2014E 2013 2014E 2013 2014E 12
Slide 13: 2014 Assumptions – Summary
2014 Assumptions – Summary • Stable Sales – softer end markets – ~2% pricing – impact of currency translation expected to be neutral • ~$15M increase in engineering expense for new product development, Centurion, platform and tier 4 emission requirements • Gross margin improvement • ~$10 million of
Slide 14: 2014 Outlook
2014 Outlook 2014 Estimates Sales $10.8B to $11.0B EPS ~$6.00 CAPEX $400-$425M Free Cash Flow* ~$250M+ * Free cash flow is defined as net cash from operations less capital expenditures. See reconciliation to GAAP metrics in the appendix of this presentation 14
Slide 15: Appendix
A.wxGco Your Agriculture Company 15
Slide 16: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation $M (except per share amts) Three months ended December 31, 2013 2012 Income Net Income Income Net Income From Net Per From Net Per Operations Income(1) Share(1) Operations Income(1) Share(1) As adjusted $ 197.2 $ 139.3 $ 1.40 $ 141.3 $ 98.0 $ 0.99 Tax adjustments — —
Slide 17: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation $M (except per share amts) Years ended December 31, 2013 2012 Income Net Income Income Net Income From Net Per From Net Per Operations Income(1) Share(1) Operations Income(1) Share(1) As adjusted $ 900.7 $ 597.2 $ 6.01 $ 715.6 $ 517.6 $ 5.25 Tax adjustments — — — — (2
Slide 18: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation Free Cash Flow $M Year Year ended ended December 31, December 31, 2013 2012 Net cash provided by operating activities $ 797.0 $ 666.4 Less: Capital expenditures (391.8) (340.5) Free cash flow $ 405.2 $ 325.9 Note: Free cash flow is defined as net cash provided by oper
Slide 19: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation Net Sales $M Three Months Ended Change due to currency December 31, translation % change 2013 2012 from 2012 $ % North America $ 658.1 $ 652.3 0.9 % $ (4.0) (0.6 )% South America 461.7 511.9 (9.8 )% (52.7 ) (10.3 )% E urope/Africa/Middle East 1,602.9 1,406.5 14.0 % 53