Slide 1: Second Quarter 2012 Financial and Operational Results
Second Quarter 2012 Financial and Operational Results July 26, 2012
Slide 2: Forward Looking Statements
Forward Looking Statements Statements that are not historical facts, including the projections of earnings per share, sales, demand, government financing programs, market conditions, farm incomes and production, commodity prices, margins, currency translation, pricing increases, productivity, invest
Slide 3: Financial Summary
Financial Summary Q2 12 vs YTD YTD12 vs Q2 12 2012 Q2 11 YTD11 Net Sales 2,690.1 +14.1% 4,963.8 +19.4% Gross margin 22.7% +200 bps 22.2% +194 bps Adj. op. income* 264.8 +31.9% 434.6 +40.4% Adj. op. margin* 9.8% +133 bps 8.8% +131 bps Adj. diluted EPS* $2.08 +$0.73 $3.29 +$1.12 * Reflects adjusted re
Slide 4: Tractor/Combine Production
Tractor/Combine Production Production Units +5% +12% • Production Up 5% in Q2 12 vs. Q2 11 • Strong Increases in Q2 in EAME and NA • Full year 2012 production projected to increase ~10% vs. 2011 Q1 Q2 Q3E Q4E 2011 Production 2012 Production 4
Slide 5: Industry Overview
Industry Overview June Year-to-Date Retail Units North America 2012 vs. 2011 Tractors • Industry +6% Combines • Industry (23%) Western Europe 2012 vs. 2011 Tractors • Industry (2%) Combines • Industry +15% South America 2012 vs. 2011 Tractors • Industry (7%) Combines • Industry (12%) 5
Slide 6: Regional Net Sales Results
Regional Net Sales Results YTD 2012 $5.0B Q2 12 vs. Q2 11 Net Sales Excluding Currency Translation* North South America +88% America 26% +59% 17% APAC 4% +25% +12% +9% EAME 53% South North EAME APAC Consol. America America YTD 2011 $4.2B YTD 2012 vs. YTD 2011 Net Sales North America Excluding Curren
Slide 7: Net Sales and Operating Margins
Net Sales and Operating Margins Sales Adj. Op. June YTD $M Margin* 10% $2,500 $435M Sales 8% 8.8% $2,000 Adj. Op. Margin* Adj. Op. Margin* 6% $310M $1,500 7.4% Adj. Op. Inc.* 4% $1,000 2% $500 $0 0% Q111 Q211 Q311 Q411 Q112 Q212 2011 2012 * Reflects adjusted results, which exclude restructuring and
Slide 8: GSI Results
GSI Results Sales (YTD Thru June 30 ) $404M EAME SA Protein APAC 36% • Contributed ~$0.30 of EPS in Q2 12, ~$0.39 for 1H 12 • Targeting 2012 EPS accretion of $0.45 NA Grain Storage 64% 1H 12 1H 12 8
Slide 9: Inventory Reduction in 2nd Half
Inventory Reduction in 2nd Half Receivables and Inventory $3,077M ● Seasonal working $2,625M capital build in 1H12 ● Working capital reductions targeted in 2H12 Q410 2011 Q211 Q411 2012 Q212 9
Slide 10: Capital Expenditures – Investing for Growth
Capital Expenditures – Investing for Growth Continuing to Invest 2012 Capex Components ~$375M $300M New Products $237M Capex $207M $167M $141M Dep. & Amort. $129M IT/Other $78M $88M Manufacturing 04 05 06 07 08 09 10 11 12E 10
Slide 11: Free Cash Flow
Free Cash Flow* 1H Free Cash Flow Full-Year Free Cash Flow ● Seasonal working capital $426M build in first half of year ● Plant improvements and $127M of A/R Sales supplier constraints 1H 11 1H 12 $299M drove higher inventory $200M+ in 1H 12 -$11M ● Second half of year seasonally stronger for free c
Slide 12: 2012 Market Outlook
2012 Market Outlook Regional Market Outlook – Industry Unit Retail Tractor Sales (Volume in Units) North America South America Western Europe Flat to 192K Up 5% Flat to Down 158K 5% Flat to Down 71K 5% 2011 2012E 2011 2012E 2011 2012E 12
Slide 13: 2012 Forecast Assumptions – Summary
2012 Forecast Assumptions – Summary • Sales growth from pricing, GSI acquisition and market share gains partially offset by negative impact of currency – +3.0% to 3.5% pricing – ~ (8.0%) negative impact of currency translation • 10-15% increase in engineering expense for new product development and
Slide 14: 2012 Outlook
2012 Outlook 2012 Estimates Sales $10.1B-$10.3B Operating margin +50-75 bps EPS $5.50 to $5.75 CAPEX ~$375 Million Free Cash Flow* $200 Million+ * Free cash flow is defined as cash (used in) provided by operating activities less capital expenditures. Please see the reconciliations to GAAP metrics pr
Slide 15: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation Free Cash Flow $M Six Months Six Months ended ended June 30, June 30, 2012 2011 Net cash (used in) provided by operating activities $ (188.2) $ 101.5 Less: Capital expenditures (151.1) (112.4) Free cash flow $ (339.3) $ (10.9) Note: Free cash flow is defined as net ca
Slide 16: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation $M (except per share amts) Three months ended June 30, 2012 2011 Income Earnings Income Earnings From Net Per From Net Per Operations Income(1) Share(1) Operations Income(1) Share(1) As adjusted $ 264.8 $ 204.8 $ 2.08 $ 200.7 $ 133.1 $ 1.35 Restructuring and other inf
Slide 17: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation $M (except per share amts) Six months ended June 30, 2012 2011 Income Earnings Income Earnings From Net Per From Net Per Operations Income(1) Share(1) Operations Income(1) Share(1) As adjusted $ 434.6 $ 325.0 $ 3.29 $ 309.6 $ 213.2 $ 2.17 Restructuring and other infre
Slide 18: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation Net Sales $M Three Months Ended Change due to currency June 30, translation % change 2012 2011 from 2011 $ % North America $ 733.4 $ 394.8 85.8% $ (8.6) (2.2)% South America 448.5 496.8 (9.7)% (94.2) (19.0)% Europe/Africa/Middle East 1,406.9 1,400.2 0.5% (157.1) (11.2
Slide 19: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation Net Sales $M Three Months Ended June 30, Change due to acquisitions % change 2012 2011 from 2011 $ % North America $ 733.4 $ 394.8 85.8% $ 170.0 43.1% South America 448.5 496.8 (9.7)% 27.7 5.6% Europe/Africa/Middle East 1,406.9 1,400.2 0.5% 25.2 1.8% Asia/Pacific 101.