Slide 1: Third Quarter 2008 Financial and Operational Results
Third Quarter 2008 Financial and Operational Results October 29, 2008
Slide 2: Forward-Looking Statements
Forward-Looking Statements Statements that are not historical facts, including the projections of future sales, earnings, production levels, supplier and production constraints, inflation, farm income, working capital improvement, cash flow, margins, effective tax rate, capital expenditures and stra
Slide 3: Financial Summary
Financial Summary Q308 vs YTD YTD08 vs Q308 Q307 2008 YTD07 Net Sales ($Ms) 2,085.4 +29.3% 6,267.4 +34.6% Gross Profit ($Ms) 380.1 +23.6% 1,123.5 +36.3% Adj. Op. Income ($Ms) 141.8 +31.4% 425.3 +60.9% Adj. Op. Margin 6.8% +0.1% 6.8% +1.1% Adj. Diluted EPS $1.04 +$0.27 $3.01 +$1.31 3
Slide 4: Tractor/Combine Production
Tractor/Combine Production Production Units +19% +25% +11% • Production up 11% in Q308 vs Q307 • Total 2008 production expected to increase 18-19% from 2007 Q1 Q2 Q3 Q4 ‘07 Act ‘08 Act ‘08 Projected 4
Slide 5: Industry Overview
Industry Overview September YTD Retail Units North America YTD08 vs YTD07 Tractors – Industry -5% – AGCO Combines – Industry +25% – AGCO Europe Tractors – Industry +9% – AGCO South America Tractors – Industry +36% – AGCO Combines – Industry +87% – AGCO 5
Slide 6: Regional Net Sales Results
Regional Net Sales Results YTD 2007 $4.7 billion Q308 vs Q307 Net Sales Excl.Translation EAME +38% +34% North America 59% +26% +22% 22% +15% S. EAME South EAPAC North Consolidated EAPAC America America America 3% 16% YTD 2008 $6.3 billion YTD 08 vs YTD 07 Net Sales Excl. Translation +38% +36% North
Slide 7: Sales and Margins
Sales and Margins Adj. Oper. Sales $M Adjusted Operating Margin % Margins Improved $2,500 10% $425.3 $2,000 8% $264.4 6.8% $1,500 5% 5.7% $1,000 3% $500 $0 0% YTD ‘07 YTD’08 Q307 Q407 Q108 Q208 Q308 Sales Op. Margin 7
Slide 8: Working Capital Progress
Working Capital Progress Working Capital* : Sales 12-Month Rolling Average • Progress in NA dealer 9.5% inventory months 8.4% supply 7.7% 6.7% • Long-term initiatives 6.1% – build to order – distribution strategies Q307 Q407 Q108 Q208 Q308 * Working Capital defined as Avg. A/R + Avg. Inv. – Avg. A/P
Slide 9: Strong Free Cash Flow
Strong Free Cash Flow YTD Free Cash Flow Annual Free Cash Flow (9 Months Ended September 30 ) (12 Months Ended December 31 ) $363M YTD 07 YTD 08 $200-225 $175-200M ($51M) ($108M) 2007 2008E • Increased Capex in 2008 • Fourth quarter seasonally stronger for Free Cash Flow • On track for healthy 2008
Slide 10: Impacts of Strategic Initiatives
Impacts of Strategic Initiatives 2008 Incremental Pre-tax Impact Increased R&D – $ 25 M System/process improvements – $ 10 M Growth initiatives – $ 15 M Total – $ 50 M 10
Slide 11: Financial Targets
Financial Targets 2008 Targets Total sales growth 22% to 24% Diluted EPS $3.90 to $4.00 Capital expenditures $230-250 million Free cash flow $175-$200 million 11
Slide 12: Appendix
Appendix Intentionally left blank 12 12
Slide 13: GAAP To NON-GAAP Reconciliation
GAAP To NON-GAAP Reconciliation Three months ended September 30, 2008 2007 Income Earnings Income Earnings From Net Per From Net Per Operations Income(1) Share(1) Operations Income(1) Share(1) As adjusted $ 141.8 $ 102.7 $ 1.04 $ 107.9 $ 74.2 $ 0.77 Restructuring and other infrequent expenses (incom
Slide 14: GAAP To NON-GAAP Reconciliation
GAAP To NON-GAAP Reconciliation Nine months ended September 30, 2008 2007 Income Earnings Income Earnings From Net Per From Net Per Operations Income(1) Share(1) Operations Income(1) Share(1) As adjusted $ 425.3 $ 298.2 $ 3.01 $ 264.4 $ 162.7 $ 1.70 Restructuring and other infrequent expenses (incom
Slide 15: GAAP To NON-GAAP Reconciliation
GAAP To NON-GAAP Reconciliation Three months Three months Free Cash Flow ended ended September 30, September 30, 2008 2007 Net cash provided by (used in) operating activities $ (13.4) $ 59.3 Less: Capital expenditures (55.8) (34.7) Free cash flow $ (69.2) $ 24.6 Nine months Nine months ended ended S
Slide 16: GAAP To NON-GAAP Reconciliation
GAAP To NON-GAAP Reconciliation Free Cash Flow Projected Actual Year ended Year ended December 31, December 31, 2008 2007 Net cash provided by operating activities $ 405.0-450.0 $ 504.3 Less: Capital expenditures (230.0-250.0) (141.4) Free cash flow $ 175.0-200.0 $ 362.9 See accompanying notes in th