Slide 1: Fourth Quarter 2019 Financial and Operational Results
FOURTH QUARTER 2019 FINANCIAL AND OPERATIONAL RESULTS
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS Forward-looking statements in this presentation, including statements regarding demand, product development and capital expenditure plans and timing of those plans, acquisition, expansion and modernization plans and our expectations with respect to the costs and benefits o
Slide 3: Financial Summary
FINANCIAL SUMMARY $M** Q4 19 v YTD 19 v Reported Reported Q4 19 YTD 19 Q4 18 YTD 18 Net Sales $2,513.6 (3.0)% $9,041.4 (3.3)% Gross margin 20.4% (35) bps 21.9% +60 bps Operating (loss) income $(49.8) (131.3)% $348.1 (28.8)% Operating margin (2.0)% (810) bps 3.9% (140) bps Diluted EPS $(1.17) $(2.43)
Slide 4: Industry Overview
INDUSTRY OVERVIEW December 2019 Year-to-Date Retail Units North America 2019 vs. 2018 Tractors • Industry (1)%* Combines • Industry (6)% Western Europe 2019 vs. 2018 Tractors • Industry (2)%** Combines • Industry (18)% South America 2019 vs. 2018 Tractors • Industry (16)% Combines • Industry (5)% *
Slide 5: 2019 Production
2019 PRODUCTION AGCO Production Hours Up ~2% Down Up ~1% Down ~4% ~3% • Q4 19 production down ~4% vs. Q4 18 • Full year 2019 production down approximately 2% vs. 2018 Q1 Q2 Q3 Q4 2018 Production 2019 Production 5 5
Slide 6: Fourth Quarter Summary
FOURTH QUARTER SUMMARY Q4 19 Reported Per Share Amounts Reported Diluted EPS $(1.17) Goodwill and other intangible impairment charges $2.33 Restructuring expenses $0.08 Swiss tax reform $(0.29) Weighed average shares impact $(0.01) Adjusted Diluted EPS $0.94 Included in Adjusted Diluted EPS: Adjuste
Slide 7: Regional Net Sales Results
REGIONAL NET SALES RESULTS Regional Net Sales Results Q4 19 vs. Q4 18 Net Sales Excluding Currency Translation* 2019 $9.0B South North EME America APA America Consolidated North America 24% EME South 59% America 9% APA 8% +3% (15)% (11)% +2% (1)% 2018 $9.4B 2019 vs. 2018 Net Sales Excluding Currency
Slide 8: Net Sales, Operating Income and Operating Margins
NET SALES, OPERATING INCOME AND OPERATING MARGINS Sales Q4 18 to Q4 19 Adj. Op. Full Year $M Margin* $3,000 10% $534M $2,500 8% Sales $501M $2,000 Adj. Op. Income* Adj. Op. Margin* 6% $1,500 5.9% 4% 5.4% Adj. Op. Margin* $1,000 2% $500 $0 0% Q418 Q119 Q219 Q319 Q419 2018 2019 * Reflects adjusted res
Slide 9: Grain and Protein Results
GRAIN AND PROTEIN RESULTS 2019 Sales 2019 sales decreased 5% vs 2018 on a constant currency basis By Region By Product ─ Decline in sales of protein production equipment of 10% $1.0B $1.0B SA ─ Growth in sales of grain and seed equipment of 1% Longer term: APA Protein 44% ─ Macro trends driving
Slide 10: Investing for Growth
INVESTING FOR GROWTH CAPEX Engineering Expenses $355M ~$392M $343M Capex ~$273M R&D Exp. ~3.8% Dep. & Amort. $203M % of Sales. $128M $129M 2.4% 06 07 08 09 10 11 12 13 14 15 16 17 18 19 06 07 08 09 10 11 12 13 14 15 16 17 18 19 10 10
Slide 11: Free Cash Flow
FREE CASH FLOW* Full-Year Free Cash Flow Thousands $423M $393M ● $423M of FCF in 2019 ● Targeting another year of strong FCF in 2020 2018 2019 Note: Free cash flow is defined as net cash provided by operating activities less capital expenditures. * Please see reconciliations provided in the appendix
Slide 12: Returning Cash to Shareholders
RETURNING CASH TO SHAREHOLDERS Dividends Initiated in 2013 Ambition to grow Cash to be Returned to Shareholders Share Repurchases Completed over $1.3B in last 7+ years ~$130M completed during 2019 New $300M authorization 12
Slide 13: 2020 Market Outlook
2020 MARKET OUTLOOK Regional Market Outlook – Industry Unit Retail Tractor Sales N. America* S. America Western Europe Down 138K 0-5% Down 91K 0-5% Up 46K 0-5% 2019 2020E 2019 2020E 2019 2020E 13 *Excludes 13 compact tractors
Slide 14: 2020 Assumptions: Summary
2020 ASSUMPTIONS: SUMMARY • 2020 sales vs. 2019 – Modestly lower end-market demand – Pricing + ~2% – Market share gains • Engineering expense ~3.9% of sales • Operating margin Improved vs 2019 • Effective tax rate ~33% 14
Slide 15: 2020 Outlook
2020 OUTLOOK 2020 Estimates Sales ~$9.2B EPS $5.00 to $5.20 CAPEX ~Flat vs 2019 Free Cash Flow* $325M to $350M • See reconciliation to GAAP metrics in the appendix of this presentation. 15 • Note: Free cash flow is defined as net cash provided by operating activities less capital expenditures.
Slide 16: Appendix
APPENDIX 16
Slide 17: Non-GAAP to GAAP Reconciliation
NON-GAAP TO GAAP RECONCILIATION Free Cash Flow $M 2020E 2019 2018 Net cash provided by operating activities $600 to $625 $ 695.9 $ 595.9 Less: capital expenditures $ (275) $ (273.4) $ (203.3) Free cash flow $325 to $350 $ 422.5 $ 392.6 Note: Free cash flow is defined as net cash provided by operatin
Slide 18: Reconciliation of Currency Translation Impacts to Net Sales
RECONCILIATION OF CURRENCY TRANSLATION IMPACTS TO NET SALES Net Sales $M Three Months Ended December 31, Change due to currency translation % change from $ % 2019 2018 2018 North America $ 540.5 $ 531.2 1.8 % $ 0.6 0.1% South America 220.9 276.2 (20.0)% (14.9) (5.4 )% Europe/Middle East 1,515.3 1,51
Slide 19: Non-GAAP to GAAP Reconciliation
NON-GAAP TO GAAP RECONCILIATION (In millions, except per share amounts) Three Months Ended December 31, 2019 2018 Income From Net Net Income Income From Net Income Operations Income (1) Per Share Operations Net Income Per Share(1) As reported $ (49.8) $ (88.3) $ (1.17) $ 159.1 $ 98.7 $ 1.26 Impairme
Slide 20: Non-GAAP to GAAP Reconciliation
NON-GAAP TO GAAP RECONCILIATION (In millions, except per share amounts) Years Ended December 31, 2019 2018 Income From Net Net Income Income From Net Net Income Operations Income(1) Per Share(1) Operations Income(1) Per Share As reported $ 348.1 $ 125.2 $ 1.63 $ 489.0 $ 285.5 $ 3.58 Impairment charg