Slide 1: Fourth Quarter 2018 Financial and Operational Results
FOURTH QUARTER 2018 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 18 v YTD 18 vs Q4 18 YTD 2018 Q4 17 YTD 17 Net Sales $2,592.2 +2.6% $9,352.0 +12.6% Gross margin 20.8% -20 bps 21.4% +10bps Operating income $159.1 +11.0% $489.0 +20.9% Adj. Operating income* $161.0 +10.3% $501.0 +19.2% Adj. Operating margin* 6.2% +40bps 5.4% +30bps Diluted
Slide 4: Industry Overview
INDUSTRY OVERVIEW December 2018 Year-to-Date Retail Units North America 2018 vs. 2017 Tractors* • Industry 2% Combines • Industry 10% Western Europe 2018 vs. 2017 Tractors • Industry (2%)** Combines • Industry 13% South America 2018 vs. 2017 Tractors • Industry Flat Combines • Industry 9% * Excludes
Slide 5: 2018 Production
2018 PRODUCTION AGCO Production Hours Up Up Up 1% Up 14% 7% 6% • Q4 18 production up 14% vs. Q4 17 • Full year 2018 production up approximately 7% vs. 2017 Q1 Q2 Q3 Q4 2017 Production 2018 Production 5 5
Slide 6: Regional Net Sales Results
Regional Net Sales Results Q4 18 vs. Q4 17 Net Sales December YTD 2018 $9.4B Excluding Currency Translation* North North America America 23% 23%South South America America EME EME 10% 10% 58% 58% APA APA 9% 9% EME South America APA North America Consol. +10% +1% +16% +1% +7% December YTD 2017 $8.3B
Slide 7: Net Sales, Operating Income and Operating Margins
NET SALES, OPERATING INCOME AND OPERATING MARGINS Sales Q4 17 to Q4 18 Adj. Op. YTD $M Margin* $3,000 10% $2,500 $501M 8% Sales $2,000 Adj. Op. Income* 6% $420M $1,500 5.4% Adj. Op. Margin* 4% 5.1% Adj. Op. Margin* $1,000 2% $500 $0 0% Q417 Q118 Q218 Q318 Q418 2017 2018 * Reflects adjusted results,
Slide 8: GSI Results
GSI RESULTS 2018 Sales 2018 sales up 6% vs 2017 on a constant currency basis By Region By Product ─ Growth in sales of grain and seed equipment of ~12% $1.1B $1.1B SA ─ Sales of protein production equipment ~Flat Strong cash flow generation in U.S. APA Protein EAME 47% Longer term: ─ Macro tre
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* Full-Year Free Cash Flow Thousands $393M $374M ● $393M of FCF in 2018 ● Targeting another year of strong FCF in 2019 2017 2018 Note: Free cash flow is defined as net cash provided by operating activities less capital expenditures. * Please see reconciliations provided in the appendix
Slide 11: Returning Cash to Shareholders
RETURNING CASH TO SHAREHOLDERS Dividend Initiated in 2013 Ambition to grow Cash to be Returned to Shareholders Share Repurchase Completed ~$1.2B over last 6+ years ~$184M completed in 2018 11
Slide 12: 2019 Market Outlook
2019 MARKET OUTLOOK Regional Market Outlook – Industry Unit Retail Tractor Sales (Volume in Units) N. America* S. America Western Europe 140K ~Flat Up 92K 0-5% Up 54K 0-5% 2018 2019E 2018 2019E 2018 2019E 12 *Excludes 12 compact tractors
Slide 13: 2019 Assumptions: Summary
2019 ASSUMPTIONS: SUMMARY 2019 sales up ~3% vs 2018 – Relatively stable end-market demand – Pricing +2.0% to 2.5% – Negative currency translation ~ -2.5% Engineering approx. flat vs 2018 Operating margin improvement Effective tax rate 32-33% 13
Slide 14: 2019 Outlook
2019 OUTLOOK 2019 Estimates Sales ~$9.6B EPS ~$4.60 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 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 $M Year ended Year ended Year ended December 31, December 31, December 31 2017 2018 2019 Net cash provided by operating activities $ 577.6 $ 595.9 $500 to $525 Less: Capital expenditures (203.9) (203.3) $225 Free cash flow $ 373.7 $ 392.6 $275 to $300 N
Slide 17: Reconciliation of Currency Translation and Acquisition Impacts to Net Sales
RECONCILIATION OF CURRENCY TRANSLATION AND ACQUISITION IMPACTS TO NET SALES Net Sales $M Three Months Ended Change due to currency Change due to December 31, translation acquisitions % change 2018 2017 from 2017 $ % $ % North America $ 531.2 $ 531.8 (0.1)% $ (4.7) (0.9)% $ — —% South America 276.2 3
Slide 18: Reconciliation of Currency Translation and Acquisition Impacts to Net Sales
RECONCILIATION OF CURRENCY TRANSLATION AND ACQUISITION IMPACTS TO NET SALES Net Sales $M Years Ended Change due to currency Change due to December 31, translation acquisitions % change 2018 2017 from 2017 $ % $ % North America $ 2,180.1 $ 1,876.7 16.2 % $ 0.9 —% $ 107.7 5.7% South America 959.0 1,06
Slide 19: Non-GAAP to GAAP Reconciliation
NON-GAAP TO GAAP RECONCILIATION (In millions, except per share amounts) Three Months Ended December 31, 2018 2017 Income From Net Income Income From Net Income Operations Net Income Per Share (1) Operations Net Income Per Share (1) As reported $ 159.1 $ 98.7 $ 1.26 $ 143.3 $ 44.3 $ 0.55 Restructurin
Slide 20: Non-GAAP to GAAP Reconciliation
NON-GAAP TO GAAP RECONCILIATION (In millions, except per share amounts) Years Ended December 31, 2018 2017 Income From Net Net Income Income From Net Income Operations Income(1) Per Share Operations Net Income Per Share As reported $ 489.0 $ 285.5 $ 3.58 $ 404.4 $ 186.4 $ 2.32 Restructuring expenses