Slide 1: Fourth Quarter 2014 Financial and Operational Results
Fourth Quarter 2014 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 14 v YTD 14 vs Q4 14 YTD 2014 Q4 13 YTD 13 Net Sales $2,485.2 -13.1% $9,723.7 -9.9% Gross margin 20.0% -65 bps 21.3% -90bps Adj. Operating income* $158.9 -19.4% $692.9 -23.1% Adj. Operating margin* 6.4% -50bps 7.1% -120bps Diluted Adjusted EPS* $1.18 -$0.22 $4.70 -$1.31 **E
Slide 4: Industry Overview
Industry Overview December Year-to-Date Retail Units North America 2014 vs. 2013 Tractors* • Industry (2%) Combines • Industry (25%) Western Europe 2014 vs. 2013 Tractors • Industry (9%) Combines • Industry (11%) South America 2014 vs. 2013 Tractors • Industry (15%) Combines • Industry (24%) * Exclu
Slide 5: Tractor/Combine Production
Tractor/Combine Production AGCO Production Units -9% -19% -11% • Production down ~20% in -20% Q4 14 vs. Q4 13 − Declines across all major markets • Full year 2014 production decreased 15% vs. 2013 Q1 Q2 Q3 Q4 2013 Production 2014 Production 5
Slide 6: Regional Net Sales Results
Regional Net Sales Results YTD 2014 $9.7B Q4 14 vs. Q4 13 Net Sales Excluding Currency Translation* North America 25% North South EAME Consol. 2% 13% America America EAME 17% 53% APAC South 5% -6% America APAC -16% -6% YTD 2013 $10.8B YTD 2014 vs. YTD 2013 Net Sales North America Excluding Currency
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% $2,500 Sales 10% 8.4% $693M Adj. Op. Margin* 7.1% $2,000 Adj. Op. Margin* 8% $1,500 6% Adj. Op. Income* $1,000 4% $500 2% $0 0% Q413 Q114 Q214 Q314 Q414 2013 2014 * Reflects adjusted results, which exc
Slide 8: GSI Results
GSI Results Sales (YTD 2014) $851M EAME • 2014 sales up 10.2% vs 2013 SA Protein 34% • Strong cash flow generation in U.S. APAC • Longer term: − Macro trends driving growth in demand for grain storage and protein Grain NA Storage production 66% − Increases exposure to counter-cyclical protein sector
Slide 9: Capital Expenditures – Investing for Growth
Capital Expenditures – Investing for Growth Continuing to Invest 2015 Capex Components ~$325M IT / Other New $302M Products Capex Dep. & Amort. $129M Manufacturing 06 07 08 09 10 11 12 13 14 15E 9
Slide 10: Free Cash Flow
Free Cash Flow* Free Cash Flow (Year Ended Dec. 31 ) • Strong fourth quarter ~$300M produced full-year free cash flow of $137 million • Targeting $100+ million of $156M** Inventory Reduction for 2015 Restructuring $19M Payments $137M Note: Free cash flow is defined as net cash provided by operating
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 repurchase program • Raised in Q1 14 and Q1 15 through 2016 11
Slide 12: 2015 Assumptions – Summary
2015 Assumptions – Summary • Sales down 15-17% – softer end markets – ~2% pricing – impact of currency translation expected to be ~8% • Engineering ~3.6% of sales • Operating margins of 5.5% to 6.0% • Pre-tax restructuring charges of $15-20M in 2015 • Effective tax rate 36-37% 12
Slide 13: 2015 Preliminary Market Outlook
2015 Preliminary Market Outlook Regional Market Outlook – Industry Unit Retail Tractor Sales (Volume in Units) N. America* S. America Western Europe Down 143K 5-10% 113K Down 5-10% Down 72K ~10% 2014 2015E 2014 2015E 2014 2015E *Excludes compact tractors 13
Slide 14: 2015 Preliminary Outlook
2015 Preliminary Outlook 2015 Estimates Sales $8.1B to $8.3B Adjusted EPS ~$3.00 CAPEX ~$325M Free Cash Flow* ~$300M * 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: 2015 Production Decline is Front-End Loaded
2015 Production Decline is Front-End Loaded AGCO Production Hours Down Down 15-20% 10-15% Down Down ~5% 0-5% • Q1 15 production expected to decrease 15-20% vs. Q1 14 • Full year 2015 production down 7-10% vs 2014 Q1E Q2E Q3E Q4E 2014 Production 2015 Production 15
Slide 16: Appendix
DrwGco Appendix
Slide 17: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation Free Cash Flow $M Year ended Year ended December 31, December 31, 2014 2015 Net cash provided by operating activities $ 438.4 $ ~625.0 Less: Capital expenditures (301.5) ~ (325.0) Free cash flow $ 136.9 $ ~300.0 Note: Free cash flow is defined as net cash provided by
Slide 18: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation Net Sales $M Change due to currency Three Months Ended December 31, translation % change 2014 2013 from 2013 $ % North America $ 549.2 $ 658.1 (16.5)% $ (6.5) (1.0)% South America 414.6 461.7 (10.2)% (57.3) (12.4)% Europe/Africa/Middle East 1,374.7 1,602.9 (14.2)% (12
Slide 19: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation Three months ended December 31, 2014 2013 Income From Net Income Earnings Per Income From Net Income Earnings Per (1) Operations Share (1) Operations (1) Share (1) As adjusted $ 158.9 $ 107.9 $ 1.18 $ 197.2 $ 139.3 $ 1.40 Restructuring and other infrequent expenses 43
Slide 20: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation Years ended December 31, 2014 2013 Income From Net Income Earnings Per Income From Net Income Earnings Per (1) Operations Share (1) Operations (1) Share (1) As adjusted $ 692.9 $ 442.6 $ 4.70 $ 900.7 $ 597.2 $ 6.01 Restructuring and other infrequent expenses 46.4 32.2
Slide 21: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation Change Change due to excluding December 31, December 31, Change from currency currency 2014 2013 2013 translation translation Inventories, net $ 1,750.7 $ 2,016.1 $ (265.4) $ (182.0) $ (83.4) 21
Slide 22: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation 2015 Earnings Per Share (1) As adjusted $ 3.00 Restructuring and other infrequent expenses 0.11 As targeted $ 2.89 (1) Earnings per share amount is after tax. 22