Slide 1: Third Quarter 2016 Financial and Operational Results
Third Quarter 2016 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 16 v YTD YTD 16 vs Q3 16 Q3 15 2016 YTD 15 Net Sales $1,761.6 1.5% $5,316.5 -3.5% Gross margin 20.1% -100 bps 20.6% -50bps Adj. Operating $60.5 -23.5% $202.5 -30.3% income* Adj. Operating margin* 3.4% -110bps 3.8% -150bps Diluted Adjusted EPS* $0.51 -$0.26 $1.63 -$0.82 * Re
Slide 4: Industry Overview
Industry Overview September 2016 Year-to-Date Retail Units North America 2016 vs. 2015 Tractors* • Industry (11%) Combines • Industry (20%) Western Europe 2016 vs. 2015 Tractors • Industry 1% Combines • Industry (11%) South America 2016 vs. 2015 Tractors • Industry (16%) Combines • Industry (5%) * E
Slide 5: 2016 Production
2016 Production AGCO Production Hours Down Down 13% 2% Down 10% • Q3 16 production down 10% vs. Q3 15 • Full year 2016 production expected to be down ~6% vs. 2015 Q1 Q2 Q3E Q4E 2015 Production 2016 Production 5
Slide 6: Regional Net Sales Results
Regional Net Sales Results YTD 2016 $5.3B Q3 16 vs. Q3 15 Net Sales Excluding Currency Translation* North America EAME South APAC North Consol. 26% America America South America EAME 11% +4% +14% +17% +3% 57% APAC -8% 6% YTD 2015 $5.5B YTD 2016 vs. YTD 2015 Net Sales North America Excluding Currency
Slide 7: Net Sales and Operating Margins
Net Sales and Operating Margins Sales Adj. Op. September YTD $M Margin* $2,500 10% $290M $2,000 8% Sales 5.3% $1,500 6% $203M Adj. Op. Margin* 3.8% Adj. Op. Margin* $1,000 4% Adj. Op. Income* $500 2% $0 0% Q315 Q415 Q116 Q216 Q316 2015 2016 * Reflects adjusted results, which exclude restructuring ex
Slide 8: GSI Results
GSI Results • YTD 2016 sales up ~11% vs YTD 2015 Sales on a constant currency basis including (YTD September 2016) the benefit of acquisitions $665M − Organic protein production growth EAME in NA, SA and APAC SA Protein 48% − Organic declines in EAME, SA and APAC NA grain storage • Strong cash flow
Slide 9: Investing for Growth
Investing for Growth CAPEX Engineering Expense +$10-15M Capex R&D Exp. ~$250M $211M Dep. & Amort. ~4+% % of Sales. $128M $129M 2.4% 06 07 08 09 10 11 12 13 14 15 16E 06 07 08 09 10 11 12 13 14 15 16E 9
Slide 10: Free Cash Flow
Free Cash Flow* Thousands September YTD Full-Year Free Cash Flow Free Cash Flow ● Fourth quarter 2015 2016 $313M seasonally stronger for free cash flow $150M to ● Planned 2H16 ($75M) $175M inventory build in SA for Tier 3 emissions ● Targeting $150M- ($260M) $175M free cash flow in 2016 after fundin
Slide 11: Returning Cash to Shareholders
Returning Cash to Shareholders Cash to be Returned to Shareholders Dividend Share Repurchase • Initiated in 2013 • $500M program approved through 2016 • Raised in 3 consecutive years • Remaining $43M targeted for 2016 11
Slide 12: 2016 Market Outlook
2016 Market Outlook Regional Market Outlook – Industry Unit Retail Tractor Sales (Volume in Units) N. America* S. America Western Europe 138K Down 0-5% 98K Down 10-15% 52K Down 10-15% 2015 2016E 2015 2016E 2015 2016E *Excludes compact tractors 12
Slide 13: 2016 Assumptions – Summary
2016 Assumptions – Summary • Sales ~$7.2 billion – softer end markets – 1.5% to 2% pricing – impact of currency translation expected to be –2% • Engineering 4+% of sales (up $10-15M vs ’15) • Effective tax rate 47-49% (32-34% excluding the deferred tax asset adjustment) 13
Slide 14: 2016 Outlook
2016 Outlook 2016 Estimates Sales ~$7.2B Adjusted EPS ~$2.30 CAPEX ~$250M Free Cash Flow* $150-$175M * Free cash flow is defined as net cash from operations less capital expenditures. See reconciliation in the appendix of this presentation 14
Slide 15: Appendix
D.acco Your Agriculture Company
Slide 16: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation Free Cash Flow $M Nine months Nine months ended ended September 30, September 30, 2016 2015 Net cash (used in) provided by operating activities $ (127.4) $ 72.2 Less: Capital expenditures (132.8) (147.1) Free cash flow $ (260.2) $ (74.9) Note: Free cash flow is define
Slide 17: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation Free Cash Flow $M Year ended Year ended December 31, December 31, 2016 2015 Net cash provided by operating activities $400.0 – 425.0 $ 524.2 Less: Capital expenditures ~(250.0) (211.4) Free cash flow $150.0 – 175.0 $ 312.8 Note: Free cash flow is defined as net cash p
Slide 18: Reconciliation of Currency Translation Impact to Net Sales
Reconciliation of Currency Translation Impact to Net Sales Net Sales $M Three M onths Ended Change due to currency September 30, translation % change 2016 2015 from 2015 $ % North America $ 453.0 $ 494.9 (8.5)% $ (3.7) (0.7)% South America 261.8 231.4 13.1 % (1.7) (0.7)% Europe/Africa/M iddle East 9
Slide 19: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation Three Months Ended September 30, 2016 2015 Income From Net Net Income Income From Net Net Income Operations Income (1) Per Share (1)(2) Operations Income (1) Per Share (1) As adjusted $ 60.5 $ 41.3 $ 0.51 $ 79.1 $ 67.1 $ 0.77 (3) Restructuring expenses 1.5 1.3 0.02 —
Slide 20: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation Nine Months Ended September 30, 2016 2015 Income From Net Net Income Income From Net Net Income Operations Income (1) Per Share (1)(2) Operations Income (1) Per Share (1) As adjusted $ 202.5 $ 134.0 $ 1.63 $ 290.4 $ 215.0 $ 2.45 Restructuring expenses (3) 5.5 4.3 0.05
Slide 21: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation The following is a reconciliation of adjusted targeted net income per share to targeted net income per share for the year ended December 31, 2016: Net Income Per Share (1) As adjusted targeted $ 2.30 Restructuring expenses 0.06 Deferred income tax adjustment 0.39 As t