Slide 1: First Quarter 2016 Financial and Operational Results
First Quarter 2016 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** Q1 16 v Q1 16 Q1 15 Net Sales $1,559.3 -8.4% Gross margin 20.2% -25bps Adj. Operating income* $21.3 -62.9% Adj. Operating margin* 1.4% -200bps Diluted Adjusted EPS* $0.11 -$0.32 **Except per share amounts * Reflects adjusted results, which exclude restructuring and other infre
Slide 4: Industry Overview
Industry Overview March 2016 Year-to-Date Retail Units North America 2016 vs. 2015 Tractors* • Industry (12%) Combines • Industry (17%) Western Europe 2016 vs. 2015 Tractors • Industry (3%) Combines • Industry (2%) South America 2016 vs. 2015 Tractors • Industry (42%) Combines • Industry (20%) * Exc
Slide 5: 2016 Production
2016 Production AGCO Production Hours Down 13% • Q1 16 production down ~13% vs. Q1 15 • Full year 2016 production expected to be down ~5% vs. 2015 Q1 Q2E Q3E Q4E 2015 Production 2016 Production 5
Slide 6: Regional Net Sales Results
Regional Net Sales Results Mar. YTD 2016 $1.6B North America 26% South America 9% EAME APAC 59% Q1 16 vs. Q1 15 Net Sales 6% Excluding Currency Translation* APAC North EAME South Consol. Mar. YTD 2015 $1.7B America America +4% +19% -3% North -12% America -21% 28% South America EAME 15% 53% APAC 4% E
Slide 7: Net Sales and Operating Margins
Net Sales and Operating Margins Sales Adj. Op. March YTD $M Margin* $2,500 10% $57M $2,000 8% 3.4% $1,500 Sales 6% Adj. Op. Margin* $21M $1,000 4% 1.4% Adj. Op. Margin* $500 2% Adj. Op. Income* $0 0% Q115 Q215 Q315 Q415 Q116 2015 2016 * Reflects adjusted results, which exclude restructuring and othe
Slide 8: GSI Results
GSI Results • YTD 2016 sales up ~8% vs YTD 2015 Sales on a constant currency basis including (YTD March 2016) the benefit of acquisitions $182M − Declines in EAME and NA grain EAME storage SA Protein 50% − Growth in APAC grain and global APAC protein production equipment on a constant currency basis
Slide 9: Investing for Growth
Investing for Growth CAPEX Engineering Expense +~$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 Q1 Free Cash Flow Full-Year Free Cash Flow ● Second half of year Q1 15 Q1 16 $313M seasonally stronger for free cash flow $150M to ● Planned 2H16 $175M inventory build in SA for Tier 3 emissions ● Targeting $150M- $175M free cash flow in 2016 after funding capex and SA Tier
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 • Remaining $184M targeted for 2016 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 15-20% 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 –2% • Engineering ~4.2% of sales (up ~$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 Quarter end Quarter ended March 31, March 31, 2016 2015 Net cash used in operating activities $ (348.2) $ (286.0) Less: Capital expenditures (35.7) (62.9) Free cash flow $ (383.9) $ (348.9) Note: Free cash flow is defined as net cash used in operatin
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 March 31, translation % change 2016 2015 from 2015 $ % North America $ 408.4 $ 472.5 (13.6)% $ (9.1) (1.9)% South America 144.2 249.0 (42.1)% (52.0) (20.9)% Europe/Africa/Middle East 924.1 908.1 1.8 % (22.5) (2.5)
Slide 19: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation Three Months Ended March 31, 2016 2015 Income Income From Net Earnings Per From Net Earnings Per Operations Income (1) Share (1) Operations Income (1) Share (1) As adjusted $ 21.3 $ 9.0 $ 0.11 $ 57.4 $ 38.0 $ 0.43 Restructuring and other infrequent expenses 1.9 1.2 0.
Slide 20: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation $M Change due to Change excluding Change from currency currency March 31, 2016 March 31, 2015 2015 translation translation Inventories, net $ 1,725.8 $ 1,840.7 $ (114.9) $ (5.8) $ (109.1) 20