Slide 1: Third Quarter 2014 Financial and Operational Results
Third 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** Q3 14 v YTD 14 vs Q3 14 YTD 2014 Q3 13 YTD 13 Net Sales $2,154.8 -13.0% $7,238.5 -8.7% Gross margin 19.6% -290 bps 21.7% -100bps Operating income* $111.6 -43.9% $534.0 -24.1% Operating margin* 5.2% -290bps 7.4% -150bps Diluted Adjusted EPS* $0.71 -$0.56 $3.52 -$1.09 **Except p
Slide 4: Industry Overview
Industry Overview September Year-to-Date Retail Units North America 2014 vs. 2013 Tractors* • Industry Flat Combines • Industry (18%) Western Europe 2014 vs. 2013 Tractors • Industry (7%) Combines • Industry (10%) South America 2014 vs. 2013 Tractors • Industry (16%) Combines • Industry (23%) * Excl
Slide 5: Tractor/Combine Production
Tractor/Combine Production AGCO Production Units -9% -19% -11% • Production down ~13% in YTD 14 vs. YTD 13 − Declines across all major markets • Full year 2014 production expected to decrease 14-16% vs. 2013 Q1 Q2 Q3 Q4E 2013 Production 2014 Production 5
Slide 6: Regional Net Sales Results
Regional Net Sales Results YTD 2014 $7.2B Q3 14 vs. Q3 13 Net Sales Excluding Currency Translation* North America 26% North South EAME South Consol. America 9% America America EAME 17% 52% APAC 5% -5% -18% APAC -22% -12% YTD 2013 $7.9B 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. September YTD $M Margin* $3,500 14% $3,000 12% $703M Sales $534M $2,500 10% 8.9% 7.4% $2,000 Adj. Op. Margin* 8% Adj. Op. Margin* $1,500 6% Op. Income $1,000 4% $500 2% $0 0% Q313 Q413 Q114 Q214 Q314 2013 2014 * Reflects adjusted results, which exclude
Slide 8: GSI Results
GSI Results Sales (YTD 2014) $660M EAME • YTD 14 sales up ~9% vs YTD 13 SA Protein 32% • 2014 GSI sales expected to be up ~10% vs APAC 2013 • Strong cash flow generation in U.S. • Longer term: Grain NA Storage − Macro trends driving growth in 68% demand for grain storage and protein production − Inc
Slide 9: Capital Expenditures – Investing for Growth
Capital Expenditures – Investing for Growth Continuing to Invest 2014 Capex Components $392M $350M- $375M 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* YTD Free Cash Flow Full-Year Free Cash Flow Thousands ● Seasonal working capital YTD 13 YTD 14 $405M build in first half of year ● Second half of year seasonally stronger for free $125M to cash flow $150M ● Targeting $125M to $150M ($95M) free cash flow in 2014 after funding capex 20
Slide 11: Returning Cash to Shareholders
Returning Cash to Shareholders Cash to be Returned to Shareholders Dividend Share Repurchase • Initiated in 2013 • $500M share repurchase • Increased 10% for 2014 program announced Dec. 2013 • 6.4M share reduction thru September 2014 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 230K Down 0-5%* 153K Down 5-10% 86K Down 15-20% 2013 2014E 2013 2014E 2013 2014E * Excludes compact tractors 12
Slide 13: 2014 Assumptions – Summary
2014 Assumptions – Summary • Sales Down ~10% – softer end markets – 1.0% to 1.5% pricing – ~(2%) impact of currency translation • ~$10 million of start-up expense associated with China operations • Effective tax rate 35-36% 13
Slide 14: 2014 Outlook
2014 Outlook 2014 Estimates Sales $9.6B to $9.8B EPS $4.10 to $4.30 CAPEX $350M to $375M Free Cash Flow* $125M to $150M * 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
Appendix A.acco Your Agriculture Company 15
Slide 16: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation Free Cash Flow $M Nine months Nine months ended ended September 30, September 30, 2013 2014 Net cash provided by (used in) operating activities $ 169.0 $ (215.3) Less: Capital expenditures (263.8) (229.3) Free cash flow $ (94.8) $ (444.6) Note: Free cash flow is defin
Slide 17: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation Free Cash Flow $M Year ended Year ended December 31, December 31, 2013 2014 Net cash provided by operating activities $ 797.0 $ ~500.0 Less: Capital expenditures (391.8) (350.0-375.0) Free cash flow $ 405.2 $125.0 to 150.0 Note: Free cash flow is defined as net cash p
Slide 18: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation Net Sales $M Change due to currency Three Months Ended September 30, translation % change 2014 2013 from 2013 $ % North America $ 531.3 $ 686.6 (22.6 )% $ (3.0) (0.4 )% South America 455.0 572.3 (20.5 )% (12.0) (2.1 )% Europe/Africa/Middle East 1,026.0 1,086.4 (5.6 )%
Slide 19: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation Three months ended September 30, 2014 2013 Income From Net Income Earnings Per Income From Net Income Earnings Per (1) Operations Share (1) Operations (1) Share (1) As adjusted $ 111.6 $ 66.9 $ 0.71 $ 199.0 $ 126.2 $ 1.27 Restructuring and other infrequent expenses (2
Slide 20: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation Nine months ended September 30, 2014 2013 Income From Net Income Earnings Per Income From Net Income Earnings Per (1) Operations Share (1) Operations (1) Share (1) As adjusted $ 534.0 $ 334.7 $ 3.52 $ 703.5 $ 457.9 $ 4.61 Restructuring and other infrequent expenses (2