Slide 1: Second Quarter 2008 Financial and Operational Results
Second Quarter 2008 Financial and Operational Results July 29, 2008
Slide 2: Forward-Looking Statements
Forward-Looking Statements Statements that are not historical facts, including the projections of future sales, earnings, production levels, supplier and production constraints, inflation, farm income, working capital improvement, cash flow, margins, effective tax rate, capital expenditures and stra
Slide 3: Financial Summary
Financial Summary Q208 vs YTD YTD08 vs Q208 Q207 2008 YTD07 Net Sales ($Ms) 2,395.4 +40.0% 4,182.0 +37.4% Gross Profit ($Ms) 428.2 +44.2% 743.4 +44.0% Adj. Op. Income ($Ms) 189.2 +70.6% 283.5 +81.2% Adj. Op. Margin 7.9% +1.4% 6.8% +1.6% Adj. Diluted EPS $1.34 +$0.67 $1.97 +$1.04 3
Slide 4: Tractor/Combine Production
Tractor/Combine Production Production Units +19% +25% • Production up 19% in Q208 vs Q207 • Total 2008 production expected to increase 16-18% from 2007 Q1 Q2 Q3 Q4 ‘07 Act ‘08 Act ‘08 Projected 4
Slide 5: Industry Overview
Industry Overview June YTD Retail Units North America YTD08 vs YTD07 Tractors – Industry -6% – AGCO Flat Combines – Industry +18% – AGCO Europe Tractors – Industry +8% – AGCO South America Tractors – Industry +42% – AGCO Combines – Industry +82% – AGCO 5
Slide 6: Regional Net Sales Results
Regional Net Sales Results YTD 2007 $3.0 billion Q208 vs Q207 Net Sales Excl.Translation +51% North EAME +34% America 61% +27% +27% +23% 22% S. EAME South EAPAC North Consolidated EAPAC America America America 2% 15% YTD 2008 $4.2 billion YTD 08 vs YTD 07 Net Sales Excl. Translation +40% +34% North
Slide 7: Sales and Margins
Sales and Margins Adj. Oper. Sales $M Adjusted Operating Margin % Margins Improved $2,500 10% $283.5 $2,000 8% $156.5 6.8% $1,500 5% 5.1% $1,000 3% $500 $0 0% YTD ‘07 YTD’08 Q207 Q307 Q407 Q108 Q208 Sales Op. Margin 7
Slide 8: Margin Seasonality
Margin Seasonality Consolidated Operating Margins • Q2 margins seasonally strongest • Q3 margins seasonally weaker • Q308 margins impacted by sales mix and material cost inflation 2004 2005 2006 2007 2008E First Quarter Second Quarter Third Quarter Fourth Quarter 8
Slide 9: Working Capital Progress
Working Capital Progress Working Capital* : Sales 12-Month Rolling Average 10.3% • Progress in NA dealer 9.5% inventory months 8.4% supply 7.7% • Long-term initiatives 6.7% – build to order – distribution strategies Q207 Q307 Q407 Q108 Q208 * Working Capital defined as Avg. A/R + Avg. Inv. – Avg. A/
Slide 10: Strong Free Cash Flow
Strong Free Cash Flow Quarterly Free Cash Flow YTD Free Cash Flow (3 Months Ended June 30 ) (6 Months Ended June 30 ) $290M $184M YTD 07 YTD 08 ($38M) ($76M) Q207 Q208 • Free cash flow up 58% in Q208 vs Q207 • Managed working capital despite strong sales growth 10 10
Slide 11: Impacts of Strategic Initiatives
Impacts of Strategic Initiatives 2008 Incremental Pre-tax Impact Increased R&D – $ 25 M System/process improvements – $ 10 M Growth initiatives – $ 15 M Total – $ 50 M 11
Slide 12: Financial Targets
Financial Targets 2008 Targets Total sales growth 26% to 28% Diluted EPS $3.60 to $3.70 Capital expenditures $220-230 million Free cash flow $175-$200 million 12
Slide 13: Appendix
Appendix Intentionally left blank 13 13
Slide 14: GAAP To NON-GAAP Reconciliation
GAAP To NON-GAAP Reconciliation Three months ended June 30, 2008 2007 Income Earnings Income Earnings From Net Per From Net Per Operations Income(1) Share(1) Operations Income(1) Share(1) As adjusted $ 189.2 $ 133.1 $ 1.34 $ 110.9 $ 64.0 $ 0.67 Restructuring and other infrequent expenses 0.1 — — 0.3
Slide 15: GAAP To NON-GAAP Reconciliation
GAAP To NON-GAAP Reconciliation Six months ended June 30, 2008 2007 Income Earnings Income Earnings From Net Per From Net Per Operations Income(1) Share(1) Operations Income(1) Share(1) As adjusted $ 283.5 $ 195.5 $ 1.97 $ 156.5 $ 88.5 $ 0.93 Restructuring and other infrequent expenses 0.2 0.1 — 0.3
Slide 16: GAAP To NON-GAAP Reconciliation
GAAP To NON-GAAP Reconciliation Three months Three months Free Cash Flow ended ended June 30, June 30, 2008 2007 Net cash provided by operating activities $ 343.4 $ 208.9 Less: Capital expenditures (53.8) (25.2) Free cash flow $ 289.7 $ 183.7 Six months Six months ended ended June 30, June 30, 2008