Slide 1: Fourth Quarter 2015 Financial and Operational Results
Fourth Quarter 2015 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 15 v YTD YTD 15 vs Q4 15 Q4 14 2015 YTD 14 Net Sales $1,959.0 -21.2% $7,467.3 -23.2% Gross margin 20.3% +30 bps 20.9% -40bps Adj. Operating $93.0 -41.5% $383.4 -44.7% income* Adj. Operating margin* 4.7% -170bps 5.1% -200bps Diluted Adjusted EPS* $0.80 -$0.38 $3.24 -$1.46 **
Slide 4: Industry Overview
Industry Overview December Year-to-Date Retail Units North America 2015 vs. 2014 Tractors* • Industry (13%) Combines • Industry (28%) Western Europe 2015 vs. 2014 Tractors • Industry (4%) Combines • Industry (10%) South America 2015 vs. 2014 Tractors • Industry (28%) Combines • Industry (39%) * Excl
Slide 5: 2015 Production
2015 Production AGCO Production Hours Down 21% Down • Q4 15 production down 22% Down Down ~12% vs. Q4 14 14% 12% • Full year 2015 production decreased ~18% vs 2014 Q1 Q2 Q3 Q4 2014 Production 2015 Production 5
Slide 6: Regional Net Sales Results
Regional Net Sales Results YTD 2015 $7.5B Q4 15 vs. Q4 14 Net Sales Excluding Currency Translation* North America 26% South North EAME APAC Consol. South America America America EAME 13% +1% 56% APAC -5% -10% -19% 5% -34% YTD 2014 $9.7B YTD 2015 vs. YTD 2014 Net Sales North America Excluding Currenc
Slide 7: Net Sales and Operating Margins
Net Sales and Operating Margins Sales Adj. Op. December YTD $M Margin* $3,500 14% $3,000 12% $693M $2,500 10% 7.1% Sales $2,000 8% Adj. Op. Margin* $383M $1,500 6% Adj. Op. Margin* 5.1% $1,000 4% Adj. Op. Income* $500 2% $0 0% Q414 Q115 Q215 Q315 Q415 2014 2015 * Reflects adjusted results, which exc
Slide 8: GSI Results
GSI Results • YTD 2015 sales down ~5% vs YTD Sales 2014 on a constant currency basis (YTD December 2015) − Declines in EAME and NA grain $766M storage EAME − Growth in SA grain and NA and SA SA Protein 40% protein production equipment on a APAC constant currency basis • Strong cash flow generation i
Slide 9: Investing for Growth
Investing for Growth CAPEX R&D +$10-15M Capex R&D Exp. ~$250M $211M Dep. & Amort. ~4.2% % of Sales. $128M $129M 2.4% 06 07 08 09 10 11 12 13 14 15 16E 06 07 08 09 10 11 12 13 14 15 16E 9
Slide 10: Free Cash Flow
Free Cash Flow* Thousands Full-Year Free Cash Flow ● Execution on working $313M capital program helped generate ~$313M of FCF in 2015 ● Targeting $150- $137M $175M free cash flow in 2016 2014 2015 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 Cash to be Returned to Shareholders Dividend Share Repurchase • Initiated in 2013 • $500M program approved through 2016 • Raised in Q1 ‘14, Q1 ‘15 and Q1 ‘16 • ~$288M purchased thru Dec. 2015 11
Slide 12: 2016 Market Outlook
2016 Market Outlook Regional Market Outlook – Industry Unit Retail Tractor Sales (Volume in Units) N. America* S. America Western Europe 138K Down 0-5% 98K Down 10-15% 52K Down 10-15% 2015 2016E 2015 2016E 2015 2016E *Excludes compact tractors 12
Slide 13: 2016 Assumptions – Summary
2016 Assumptions – Summary • Sales down ~6% – softer end markets – ~2% pricing – impact of currency translation expected to be –3.5% • Engineering ~4.2% of sales (up $10M-$15M vs ’15) • Effective tax rate 30-32% 13
Slide 14: 2016 Outlook
2016 Outlook 2016 Estimates Sales ~$7.0B EPS ~$2.30 CAPEX ~$250M Free Cash Flow* $150-$175M * 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
D.acco Your Agriculture Company
Slide 16: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation Free Cash Flow $M Year ended Year ended December 31, December 31, 2015 2014 Net cash provided by operating activities $ 524.2 $ 438.4 Less: Capital expenditures (211.4) (301.5) Free cash flow $ 312.8 $ 136.9 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, 2016 2015 Net cash provided by operating activities $400.0 – 425.0 $ 524.2 Less: Capital expenditures ~(250.0 ) (211.4) Free cash flow $150.0 – 175.0 $ 312.8 Note: Free cash flow is defined as net cash
Slide 18: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation Net Sales $M Three Months Ended Change due to currency December 31, translation % change 2015 2014 from 2014 $ % North America $ 434.5 $ 549.2 (20.9)% $ (10.8) (2.0)% South America 188.3 414.6 (54.6)% (85.8) (20.7)% Europe/Africa/Middle East 1,211.9 1,374.7 (11.8)% (1
Slide 19: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation Net Sales $M Change due to currency Years Ended December 31, translation % change 2015 2014 from 2014 $ % North America $ 1,965.0 $ 2,414.2 (18.6)% $ (54.5) (2.3)% South America 949.0 1,663.4 (42.9)% (352.3) (21.2)% Europe/Africa/Middle East 4,151.3 5,158.5 (19.5)% (7
Slide 20: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation Three Months Ended December 31, 2015 2014 Income Income From Net Earnings Per From Net Earnings Per Operations Income (1) Share (1) Operations Income (1) Share (1) As adjusted $ 93.0 $ 67.5 $ 0.80 $ 158.9 $ 107.9 $ 1.18 Restructuring and other infrequent expenses 7.7
Slide 21: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation Years Ended December 31, 2015 2014 Income Income From Net Earnings Per From Net Earnings Per Operations Income (1) Share (1) Operations Income (1) Share (1) As adjusted $ 383.4 $ 282.5 $ 3.24 $ 692.9 $ 442.6 $ 4.70 Restructuring and other infrequent expenses 22.3 16.1
Slide 22: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation $M Change due to Change excluding December 31, December 31, Change from currency currency 2015 2014 2014 translation translation Inventories, net $ 1,423.4 $ 1,750.7 $ (327.3) $ (193.3) $ (134.0) 22
Slide 23: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation $M Year Ended Year Ended Change due to Change excluding December 31, December 31, Change from currency currency 2016 2015 2015 translation translation Engineering Expenses $ 292.0 to 297.0 $ 282.2 $ 10.0 to 15.0 $ (5.0) $ 15.0 to 20.0 23