Slide 1: Third Quarter 2019 Financial and Operational Results
THIRD 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** Q3 19 v YTD 19 v Reported Reported Q3 19 YTD 19 Q3 18 YTD 18 Net Sales $2,109.4 (4.8)% $6,527.8 (3.4)% Gross margin 21.3% (5) bps 22.5% +95 bps Operating income $105.9 (4.9)% $397.9 +20.6% Operating margin 5.0% flat 6.1% +120 bps Diluted EPS $0.10 $(0.79) $2.77 +$0.44 Q3 19 v
Slide 4: Industry Overview
INDUSTRY OVERVIEW September 2019 Year-to-Date Retail Units North America 2019 vs. 2018 Tractors • Industry ~ Flat* Combines • Industry (7)% Western Europe 2019 vs. 2018 Tractors • Industry 2%** Combines • Industry (16)% South America 2019 vs. 2018 Tractors • Industry (13)% Combines • Industry 7% * E
Slide 5: 2019 Production
2019 PRODUCTION AGCO Production Hours Up ~2% Up ~1% Down ~3% • Q3 19 production down ~3% vs. Q3 18 • Full year 2019 production expected to be down approximately 1% vs. 2018 Q1 Q2 Q3 Q4E 2018 Production 2019 Production 5 5
Slide 6: Regional Net Sales Results
REGIONAL NET SALES RESULTS Regional Net Sales Results Q3 19 vs. Q3 18 Net Sales Excluding Currency Translation* September YTD 2019 $6.5B South North EME America APA America Consolidated North America 25% EME South 59% America 9% APA 7% +3% (14)% (12)% (1)% (2)% September YTD 2018 $6.8B YTD 19 vs. YT
Slide 7: Net Sales, Operating Income and Operating Margins
NET SALES, OPERATING INCOME AND OPERATING MARGINS Sales Q3 18 to Q3 19 Adj. Op. September YTD $M Margin* $3,000 10% $401M $2,500 8% Sales $2,000 $340M Adj. Op. Income* 6% Adj. Op. Margin* $1,500 6.1% 4% 5.0% Adj. Op. Margin* $1,000 2% $500 $0 0% Q318 Q418 Q119 Q219 Q319 2018 2019 * Reflects adjusted
Slide 8: Grain and Protein Results
GRAIN AND PROTEIN RESULTS September 2019 YTD Sales September 2019 YTD sales decreased 1% vs 2018 on a constant By Region By Product currency basis $793M $793M ─ Growth in sales of grain and seed equipment of 4% SA ─ Decline in sales of protein production equipment of 7% Protein APA 40% Longer te
Slide 9: Investing for Growth
INVESTING FOR GROWTH CAPEX Engineering Expenses ~$392M $355M Capex R&D Exp. ~$225M ~3.8% Dep. & Amort. $203M % of Sales. $128M $129M 2.4% 06 07 08 09 10 11 12 13 14 15 16 17 18 19E 06 07 08 09 10 11 12 13 14 15 16 17 18 19E 9 9
Slide 10: Free Cash Flow
FREE CASH FLOW* Thousands YTD Free Cash Flow Full-Year Free Cash Flow $393M YTD 18 YTD 19 $275M to $300M ● Fourth quarter seasonally stronger for free cash flow ● Targeting $275M to $300M free ($142M) cash flow in 2019 ($268M) 2018 2019E Note: Free cash flow is defined as net cash (used in) provided
Slide 11: Returning Cash to Shareholders
RETURNING CASH TO SHAREHOLDERS Dividends Initiated in 2013 Ambition to grow Cash to be Returned to Shareholders Share Repurchases Completed ~$1.3B over last 6+ years ~$100M completed YTD 2019 11
Slide 12: 2019 Market Outlook
2019 MARKET OUTLOOK Regional Market Outlook – Industry Unit Retail Tractor Sales N. America* S. America Western Europe 140K Flat 92K Flat Down 54K ~10% 2018 2019E 2018 2019E 2018 2019E 12 *Excludes 12 compact tractors
Slide 13: 2019 Assumptions: Summary
2019 ASSUMPTIONS: SUMMARY 2019 sales down ~2% vs 2018 – Softening end-market demand – Pricing +~2.0% – Negative currency translation ~ -4.0% Engineering up ~$10M on constant currency basis vs 2018 Operating margin improvement 13
Slide 14: 2019 Outlook
2019 OUTLOOK 2019 Estimates Sales ~$9.3B Adjusted EPS* ~$5.10 CAPEX ~$225M Free Cash Flow* $275M to $300M 14 * See reconciliation to GAAP metrics in the appendix of this presentation Note: Free cash flow is defined as net cash (used in) provided by operating activities less capital expenditures.
Slide 15: Appendix
APPENDIX 15
Slide 16: Non-GAAP to GAAP Reconciliation
NON-GAAP TO GAAP RECONCILIATION Free Cash Flow Nine months Nine months ended ended September 30, September 30, $M 2019 2018 Net cash used in operating activities $ (80.2) $ (4.0) Less: Capital expenditures (188.1) (138.5) Free cash flow $ (268.3) $ (142.5) Year ended Year ended December 31, December
Slide 17: Reconciliation of Currency Translation Impacts to Net Sales
RECONCILIATION OF CURRENCY TRANSLATION IMPACTS TO NET SALES Net Sales $M 17
Slide 18: Non-GAAP to GAAP Reconciliation
NON-GAAP TO GAAP RECONCILIATION (In millions, except per share amounts) 18
Slide 19: Non-GAAP to GAAP Reconciliation
NON-GAAP TO GAAP RECONCILIATION (In millions, except per share amounts) 19
Slide 20: Non-GAAP to GAAP Reconciliation
NON-GAAP TO GAAP RECONCILIATION Year ended December 31, 2019 20