Slide 1: Second Quarter 2018
SECOND QUARTER 2018
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** Q2 18 Q2 18 v YTD 18 YTD 18 v Q2 17 YTD 17 Net Sales $2,537.6 17.2% $4,545.1 19.8% Gross margin 21.9% ~Flat 21.7% 40bps Operating income 168.1 13.4% 218.6 33.3% Adj. Operating income* $170.8 14.9% $227.2 30.3% Adj. Operating margin* 6.7% (20)bps 5.0% 40bps Diluted Adjusted EPS
Slide 4: Industry Overview
INDUSTRY OVERVIEW June 2018 Year-to-Date Retail Units North America 2018 vs. 2017 Tractors* ⦁ Industry 3% Combines ⦁ Industry 15% Western Europe 2018 vs. 2017 Tractors ⦁ Industry 1%** Combines ⦁ Industry 14% South America 2018 vs. 2017 Tractors ⦁ Industry (7)% Combines ⦁ Industry ~Flat * Excludes co
Slide 5: 2018 Production
2018 PRODUCTION AGCO Production Hours Up Up 1% 7% Q2 18 production up 1% vs. Q2 17 Full year 2018 production up approximately 6% vs. 2017 Q1 Q2 Q3E Q4E 2017 Production 2018 Production 5 5
Slide 6: Regional Net Sales Results
REGIONAL NET SALES RESULTS Q2 18 vs. Q2 17 Net Sales Excluding Currency Translation* June YTD 2018 $4.5B South North EME America APA America Consol. North America 24% EME South 60% America 9% APA +14% +1% (1)% +25% +14% 7% YTD 18 vs. YTD 17 Net Sales Excluding Currency Translation* June YTD 2017 $3.
Slide 7: Net Sales and Operating Margins
NET SALES AND OPERATING MARGINS Sales Q2 17 to Q2 18 Adj. Op. June YTD $M Margin* $227M 4.6% Sales Adj. Op. Income* $174M 5.0% 4.6% 2.8% Adj. Op. Margin* Adj. Op. Margin* 1.6% * Reflects adjusted results, which exclude restructuring expenses and a loss on extinguishment of debt. Please see reconcili
Slide 8: GSI Results
GSI RESULTS $508M $508M SA 1H 2018 sales down 1% vs 1H 2017 on a constant currency basis APA - Declines in sales of grain and seed equipment in EME & APA Protein and protein production equipment in NA & SA -- mostly offset by SA - Growth in sales of grain and seed in NA & SA and protein EME produc
Slide 9: Investing for Growth
INVESTING FOR GROWTH CAPEX Engineering Expenses ~$392M ~$370M $323M Capex ~$250M R&D Exp. $204M Dep. & Amort. 4.0% % of Sales. $128M $129M 2.4% 06 07 08 09 10 11 12 13 14 16 17 18E 06 07 08 09 10 11 12 13 14 15 16 17 18E 15 9 9
Slide 10: Free Cash Flow
FREE CASH FLOW* YTD Free Cash Flow Full-Year Free Cash Flow YTD 17 YTD 18 ⦁ Second half of year seasonally stronger for free cash flow $374M ⦁ Includes inventory build for emissions transition stock ⦁ Targeting ~$225M free cash flow ~$225M in 2018 ($159M) ($294M) 2017 2018E Note: Free cash flow is d
Slide 11: Returning Cash to Shareholders
RETURNING CASH TO SHAREHOLDERS Dividend Initiated in 2013 Cash to be Ambition to grow Returned to Share Repurchase Shareholders ~ $1 billion repurchased over last 4 years $300M program authorized through December 2019 ~$34 million ytd thru end of June 2018 11
Slide 12: 2018 Market Outlook
2018 MARKET OUTLOOK Regional Market Outlook – Industry Unit Retail Tractor Sales (Volume in Units) N. America* S. America Western Europe 142K ~Flat Up 88K 0 to 5% 56K ~Flat 2017 2018E 2017 2018E 2017 2018E 12 *Excludes compact tractors 12
Slide 13: 2018 Assumptions: Summary
2018 ASSUMPTIONS: SUMMARY 2018 sales up ~12% vs 2017 - Relatively stable end-market demand - Pricing +1.5% to +1.75% - Positive currency translation +1.5% - Acquisitions +2.5% Engineering ~4% of sales (up ~$40M vs 2017) Operating margin improvement Effective tax rate 36-37% 13
Slide 14: 2018 Outlook
2018 OUTLOOK 2018 Estimates Sales ~$9.3B Adjusted EPS ~$3.70 CAPEX ~$250M Free Cash Flow* ~$225M 14 * Free cash flow is defined as net cash from operations less capital expenditures. See reconciliation to GAAP metrics in the appendix of this presentation
Slide 15: Appendix
APPENDIX 15 15
Slide 16: Non-GAAP to GAAP Reconciliation
NON-GAAP TO GAAP RECONCILIATION Free Cash Flow $M Six months Six months ended June 30, ended June 30, 2018 2017 Net cash used in operating activities $(204.3) $(66.4) Less: Capital expenditures (89.8) (92.3) Free cash flow $(294.1) $(158.7) Note: Free cash flow is defined as net cash used in operati
Slide 17: Non-GAAP to GAAP Reconciliation
NON-GAAP TO GAAP RECONCILIATION Free Cash Flow $M Year ended Year ended December 31, December 31, 2018E 2017 Net cash provided by operating activities ~$475.0 $577.6 Less: Capital expenditures (250.0) (203.9) Free cash flow ~$225.0 $373.7 Note: Free cash flow is defined as net cash provided by opera
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 % change from 2017 % change due to from 2017 % change currency due to Three Months Ended June 30, 2018 2017 from 2017 translation acquisitions North America $ 600.5 $ 478.8 25.4% 0.7% 5.0% South America 219.6 25
Slide 19: Reconciliation of Currency Translation and Acquisition Impacts to Net Sales
RECONCILIATION OF CURRENCY TRANSLATION AND ACQUISITION IMPACTS TO NET SALES Net Sales $M % change from 2017 % change due to from 2017 % change currency due to Six Months Ended June 30, 2018 2017 from 2017 translation acquisitions North America $ 1,103.4 $ 861.4 28.1% 1.2% 10.7% South America 401.7 4
Slide 20: Non-GAAP to GAAP Reconciliation
NON-GAAP TO GAAP RECONCILIATION (In millions, except per share amounts) Three Months Ended June 30, 2018 2017 Income Income From Net Income From Net Income Operations Net Income Per Share Operations Net Income Per Share As Reported $ 168.1 $ 91.4 $ 1.14 $ 148.3 $ 91.5 $ 1.14 Restructuring expenses 2
Slide 21: Non-GAAP to GAAP Reconciliation
NON-GAAP TO GAAP RECONCILIATION (In millions, except per share amounts) Six Months Ended June 30, 2018 2017 Income Income From Net Income From Net Income Operations Net Income Per Share Operations Net Income Per Share As Reported $ 218.6 $ 115.7 $ 1.44 $ 164.0 $ 81.4 $ 1.02 Restructuring expenses 8.
Slide 22: Non-GAAP to GAAP Reconciliation
NON-GAAP TO GAAP RECONCILIATION 2018 Net Income Per Share(1) As targeted $ 3.46 Restructuring expenses 0.08 Extinguishment of debt 0.16 As adjusted targeted $ 3.70 (1) Net income per share amount is after tax. 22