Slide 1: Second Quarter 2013 Financial and Operational Results
Second Quarter 2013 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* Q2 13 v YTD YTD 13 vs Q2 13 Q2 12 2013 YTD 12 Net Sales $3,048.2 +13.3% $5,451.3 +9.8% Gross margin 23.3% +57 bps 22.8% +56 bps Operating income $327.1 +23.5% $504.5 +16.1% Operating margin 10.7% +88 bps 9.3% +50 bps Diluted EPS* $2.15 +$0.07 $3.34 +$0.05 *Except per share amou
Slide 4: Tractor/Combine Production
Tractor/Combine Production Production Units +7% ~Flat • Production in Q2 13 up ~7% vs. Q2 12 − Strong Growth in SA − Modest growth in NA and Europe • Full year 2013 production expected to increase Q1 Q2 Q3 Q4 6% to 8% vs. 2012 2012 Production 2013 Production 4
Slide 5: Industry Overview
Industry Overview June Year-to-Date Retail Units North America 2013 vs. 2012 Tractors • Industry +11% Combines • Industry + 41% Western Europe 2013 vs. 2012 Tractors • Industry (4%) Combines • Industry (11%) South America 2013 vs. 2012 Tractors • Industry +26% Combines • Industry +58% 5
Slide 6: Regional Net Sales Results
Regional Net Sales Results YTD 2013 $5.5B Q2 13 vs. Q2 12 Net Sales Excluding Currency Translation* North South America America 26% 19% APAC 4% +28% +12% +18% +14% EAME +8% 51% North EAME South APAC Consol. America America YTD 2012 $5.0B YTD 2013 vs. YTD 2012 Net Sales North Excluding Currency Trans
Slide 7: Net Sales and Operating Margins
Net Sales and Operating Margins Sales Op. June YTD $M Margin $3,500 14% $505M $3,000 12% $435M Sales 9.3% $2,500 10% 8.8% Op. Margin $2,000 8% Op. Margin Op. Inc. $1,500 6% $1,000 4% $500 2% $0 0% Q212 Q312 Q412 Q113 Q213 2012 2013 7
Slide 8: GSI Results
GSI Results Sales (YTD Thru June 2013) $387M EAME • 1H 13 sales down ~4% vs 1H 12 SA Protein APAC 35% • Full year GSI sales and income expected to be up vs 2012 • Longer term: − Macro trends driving growth in NA Grain Storage demand for storage and protein 65% production − Increases exposure to coun
Slide 9: Capital Expenditures – Investing for Growth
Capital Expenditures – Investing for Growth Continuing to Invest 2013 Capex Components $400- 425M New IT/Other $341M Products Capex Dep. & Amort. Manufacturing 08 09 10 11 12 13E 9
Slide 10: Free Cash Flow
Free Cash Flow* 1H Free Cash Flow Full-Year Free Cash Flow ● Seasonal working $326M capital build in first 1H 13 half of year 1H 12 ● Second half of year ~$200M seasonally stronger for free cash flow ● Targeting ~$200M free cash flow in 2013 despite increase in capex and working ($339M) ($109M) 2012
Slide 11: 2013 Market Outlook
2013 Market Outlook Regional Market Outlook – Industry Unit Retail Tractor Sales (Volume in Units) N. America S. America Western Europe 210K Up 0-5% Down 154K 0-5% Up 15-20% 73K 2012 2013E 2012 2013E 2012 2013E 11
Slide 12: 2013 Outlook Assumptions
2013 Outlook Assumptions • Consolidated pricing impact • 2.0% to 2.5% • ~15% increase in engineering expenses for new product development and tier 4 emission requirements • Gross margin improvement • ~$10 million of start-up expenses associated with China operations • Effective tax rate 33-34% (refl
Slide 13: 2013 Outlook
2013 Outlook 2013 Estimates Sales $10.8B to $11.0B Operating margin 8%+ EPS ~$6.00 CAPEX $400-$425 Million Free Cash Flow* ~$200 Million * Free cash flow is defined as net cash provided by operations less capital expenditures. 13
Slide 14: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation Free Cash Flow $M Six Months Six Months ended ended June 30, June 30, 2013 2012 Net cash provided by (used in) operating activities $ 65.0 $ (188.2) Less: Capital expenditures (174.2) (151.1) Free cash flow $ (109.2) $ (339.3) Note: Free cash flow is defined as net ca
Slide 15: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation Free Cash Flow $M Projected Year Year ended ended December 31, December 31, 2013 2012 Net cash provided by operating activities $600 - 625 $ 666.4 Less: Capital expenditures (400.0 - 425.0) (340.5) Free cash flow $ ~200.0 $ 325.9 Note: Free cash flow is defined as net
Slide 16: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation Net Sales $M Change due to currency Three Months Ended June 30, translation % change from 2013 2012 2012 $ % North America $ 788.9 $ 733.4 7.6% $ — —% South America 540.0 448.5 20.4% (33.4) (7.4)% Europe/Africa/Middle East 1,599.0 1,406.9 13.7% 20.6 1.5% Asia/Pacific