Slide 1: Fourth Quarter 2016 Financial and Operational Results
FOURTH QUARTER 2016 FINANCIAL AND OPERATIONAL RESULTS
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS Forward-looking statements in this presentation, including statements regarding demand, product development and capital expenditure plans and timing of those plans, acquisition, expansion and modernization plans and our expectations with respect to the costs and benefits o
Slide 3: Financial Summary
FINANCIAL SUMMARY $M** Q4 16 v YTD 16 vs Q4 16 YTD 2016 Q4 15 YTD 15 Net Sales $2,094.0 6.9% $7,410.5 -0.8% Gross margin 20.1% -20 bps 20.5% -45bps Adj. Operating income* $97.8 5.2% $300.3 -21.7% Adj. Operating margin* 4.7% -10bps 4.1% -110bps Diluted Adjusted EPS* $0.84 $0.04 $2.47 -$0.77 * Reflect
Slide 4: Industry Overview
INDUSTRY OVERVIEW December 2016 Year-to-Date Retail Units North America 2016 vs. 2015 Tractors* • Industry (10%) Combines • Industry (21%) Western Europe 2016 vs. 2015 Tractors • Industry (4%) Combines • Industry (14%) South America 2016 vs. 2015 Tractors • Industry (6%) Combines • Industry 14% * Ex
Slide 5: 2016 Production
2016 PRODUCTION AGCO Production Hours Down Down 13% 2% Down Up 5% 10% • Q4 16 production up 5% vs. Q4 15 • Full year 2016 production down 5% vs. 2015 Q1 Q2 Q3 Q4 2015 Production 2016 Production 5 5
Slide 6: Regional Net Sales Results
Regional Net Sales Results YTD 2016 $7.4B Q4 16 vs. Q4 15 Net Sales Excluding Currency Translation* North South America America 24% South APAC EAME North Consol. America EAME America 12% 57% APAC 7% +2% +54% +23% +4% +9% YTD 2015 $7.5B YTD 2016 vs. YTD 2015 Net Sales North Excluding Currency Transla
Slide 7: Net Sales and Operating Margins
NET SALES AND OPERATING MARGINS Sales Adj. Op. Full Year $M Margin* $2,500 10% $383M $2,000 8% Sales 5.1% $1,500 6% $300M Adj. Op. Margin* 4.1% Adj. Op. Margin* $1,000 4% Adj. Op. Income* $500 2% $0 0% Q415 Q116 Q216 Q316 Q416 2015 2016 * Reflects adjusted results, which exclude restructuring expens
Slide 8: GSI Results
GSI RESULTS 2016 Sales YTD December By Region By Segment 2016 sales up ~18% vs 2015 on a constant currency basis including the benefit of acquisitions $893M $893M ─ Organic protein production growth in NA, SA and EAME APAC SA Protein EAME ─ Organic grain storage declines globally APAC 50% Strong
Slide 9: Investing for Growth
INVESTING FOR GROWTH CAPEX Engineering Expense +$10M $296M Capex R&D Exp. $200-225M 4.0% 4+% Dep. & Amort. $201M % of Sales. $128M $129M 2.4% 06 07 08 09 10 11 12 13 14 15 16 17E 06 07 08 09 10 11 12 13 14 15 16 17E 9 9
Slide 10: Free Cash Flow
FREE CASH FLOW* Thousands Full-Year Free Cash Flow ● 2016 includes impact of 2H16 $313M inventory build in SA for Tier 3 emissions ● Targeting $225M-$250M free $169M cash flow in 2017 2015 2016 Note: Free cash flow is defined as net cash provided by operating activities less capital expenditures. *
Slide 11: Returning Cash to Shareholders
RETURNING CASH TO SHAREHOLDERS Dividend Initiated in 2013 Raised in 4 consecutive years Cash to be Returned to Share Repurchase Shareholders $213 million of repurchases in 2016 New $300M program authorized through December 2019 11
Slide 12: 2017 Market Outlook
2017 MARKET OUTLOOK Regional Market Outlook – Industry Unit Retail Tractor Sales (Volume in Units) N. America* S. America Western Europe Down 133K 0-5% 88K Down 5-10% Up 49K ~10% 2016 2017E 2016 2017E 2016 2017E 12 *Excludes 12 compact tractors
Slide 13: 2017 Assumptions – Summary
2017 ASSUMPTIONS – SUMMARY 2017 Sales Flat vs 2016 – Softer end-market demand in North America and Western Europe. – 1.5% to 2% pricing – Impact of currency translation expected to be –3% Engineering ~4.1% of sales (up ~$10M vs ’16) Operating margin improvement Effective tax rate ~40% 13
Slide 14: 2017 Outlook
2017 OUTLOOK 2017 Estimates Sales ~$7.4B EPS ~$2.50 CAPEX $200-225M Free Cash Flow* $225-$250M 14 * Free cash flow is defined as net cash from operations less capital expenditures. See reconciliation to GAAP metrics in the appendix of this presentation
Slide 15: Appendix
APPENDIX 15
Slide 16: Non-GAAP to GAAP Reconciliation
NON-GAAP TO GAAP RECONCILIATION Free Cash Flow $M Year ended Year ended December 31, December 31, 2016 2015 Net cash provided by operating activities $ 369.5 $ 524.2 Less: Capital expenditures (201.0) (211.4) Free cash flow $ 168.5 $ 312.8 Note: Free cash flow is defined as net cash provided by oper
Slide 17: Non-GAAP to GAAP Reconciliation
NON-GAAP TO GAAP RECONCILIATION Free Cash Flow $M Year ended Year ended December 31, December 31, 2017 2016 Net cash provided by operating activities $425.0 – 475.0 $ 369.5 Less: Capital expenditures (200.0 –225.0) (201.0) Free cash flow $225.0 – 250.0 $ 168.5 Note: Free cash flow is defined as net
Slide 18: Reconciliation of Currency Translation Impact to Net Sales
RECONCILIATION OF CURRENCY TRANSLATION IMPACT TO NET SALES Net Sales $M Three Months Ended Change due to currency December 31, translation % change 2016 2015 from 2015 $ % North America $ 447.4 $ 434.5 3.0 % $ (6.1) (1.4)% South America 308.1 188.3 63.6 % 18.3 9.7 % Europe/Africa/Middle East 1,187.1
Slide 19: Non-GAAP to GAAP Reconciliation
NON-GAAP TO GAAP RECONCILIATION Three Months Ended December 31, 2016 2015 Income Income From Net Net Income From Net Net Income Operations Income (1) Per Share (1) Operations Income (1) Per Share (1) As reported $ 91.4 $ 62.0 $ 0.77 $ 85.3 $ 62.1 $ 0.73 Restructuring expenses 6.4 5.6 0.07 7.7 5.4 0.
Slide 20: Non-GAAP to GAAP Reconciliation
NON-GAAP TO GAAP RECONCILIATION Years Ended December 31, 2016 2015 Income Income From Net Net Income From Net Net Income Operations Income (1) Per Share (1) Operations Income (1) Per Share (1) As reported $ 288.4 $ 160.1 $ 1.96 $ 361.1 $ 266.4 $ 3.06 Restructuring expenses 11.9 9.9 0.12 22.3 16.1 0.