Slide 1: Third Quarter 2015 Financial and Operational Results
Third Quarter 2015 Financial and Operational Results
Slide 2: Forward Looking Statements
Forward Looking Statements Forward-looking statements in this presentation, including statements regarding demand for our products and the economic and other factors that drive that demand, product development plans and timing of those plans, acquisition, expansion and modernization plans and our ex
Slide 3: Financial Summary
Financial Summary $M** Q3 15 v YTD 15 vs Q3 15 YTD 2015 Q3 14 YTD 14 Net Sales $1,736.4 -19.4% $5,508.3 -23.9% Gross margin 21.1% +150 bps 21.1% -60bps Adj. Operating income* $79.1 -29.1% $290.4 -45.6% Adj. Operating margin* 4.6% -60bps 5.3% -210bps Diluted Adjusted EPS* $0.77 +$0.06 $2.45 -$1.07 **
Slide 4: Industry Overview
Industry Overview September Year-to-Date Retail Units North America 2015 vs. 2014 Tractors* • Industry (11%) Combines • Industry (33%) Western Europe 2015 vs. 2014 Tractors • Industry (8%) Combines • Industry (11%) South America 2015 vs. 2014 Tractors • Industry (24%) Combines • Industry (35%) * Exc
Slide 5: 2015 Production Decline is Front-End Loaded
2015 Production Decline is Front-End Loaded AGCO Production Hours Down Down 21% • Q3 15 production down 22% Down ~14% vs. Q3 14 14% • Full year 2015 production down ~16-18% vs 2014 Q1 Q2 Q3E Q4E 2014 Production 2015 Production 5
Slide 6: Regional Net Sales Results
Regional Net Sales Results YTD 2015 $5.5B Q3 15 vs. Q3 14 Net Sales Excluding Currency Translation* North America 28% North EAME South APAC Consol. South America America America +4% EAME 14% 53% APAC -4% -4% -4% 5% -24% YTD 2014 $7.2B YTD 2015 vs. YTD 2014 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* $3,500 14% $3,000 12% $534M $2,500 10% 7.4% Sales $2,000 8% Adj. Op. Margin* $290M $1,500 6% Adj. Op. Margin* 5.3% $1,000 4% Adj. Op. Income* $500 2% $0 0% Q314 Q414 Q115 Q215 Q315 2014 2015 * Reflects adjusted results, which ex
Slide 8: GSI Results
GSI Results • YTD 2015 sales down ~5% vs YTD 2014 on a Sales constant currency basis (YTD September 2015) − Declines in EAME, APAC and NA grain $612M storage EAME − Growth in SA grain and NA and SA SA Protein 37% protein production equipment on a APAC constant currency basis • Strong cash flow gener
Slide 9: Capital Expenditures – Investing for Growth
Capital Expenditures – Investing for Growth Continuing to Invest 2015 Capex Components IT / Other New $250M to Products Capex $275M Dep. & Amort. $129M Manufacturing 06 07 08 09 10 11 12 13 14 15E 9
Slide 10: Free Cash Flow
Free Cash Flow* September YTD Free Cash Flow Full-Year Free Cash Flow Thousands ● Smaller seasonal 2014 2015 ~$300M working capital build in first half of year ($75M) ● Second half of year seasonally stronger for $137M free cash flow ● Targeting ~$300M free cash flow in 2015 after funding capex ($44
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 Q1 14 and Q1 15 • $188M thru Sept. YTD 11
Slide 12: 2015 Market Outlook
2015 Market Outlook Regional Market Outlook – Industry Unit Retail Tractor Sales (Volume in Units) N. America* S. America Western Europe 143K Down 5-10% 113K Down ~10% 72K Down ~25% 2014 2015E 2014 2015E 2014 2015E *Excludes compact tractors 12
Slide 13: 2015 Assumptions – Summary
2015 Assumptions – Summary • Sales down 22-23% – softer end markets – ~1.5% pricing – impact of currency translation expected to be ~13% • Engineering ~3.8% of sales • Adjusted Operating margins of 5.3% to 5.5% • Pre-tax restructuring charges of approximately $16-18M in 2015 • Effective tax rate 30-
Slide 14: 2015 Outlook
2015 Outlook 2015 Estimates Sales $7.5B to $7.6B Adjusted EPS ~$3.20 CAPEX $250M - $275M Free Cash Flow* ~$300M * Free cash flow is defined as net cash from operations less capital expenditures. See reconciliation to GAAP metrics in the appendix to this presentation. 14
Slide 15: Appendix
DrwGco Appendix
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, 2015 2014 Net cash provided by (used in) operating activities $ 72.2 $ (215.3) Less: Capital expenditures (147.1) (229.3) Free cash flow $ (74.9) $ (444.6) 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, 2014 2015 Net cash provided by operating activities $ 438.4 $ 550.0 – 575.0 Less: Capital expenditures (301.5) (250.0 - 275.0) Free cash flow $ 136.9 $ ~300.0 Note: Free cash flow is defined as net cash
Slide 18: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation Net Sales $M Three Months Ended Change due to currency September 30, translation % change 2015 2014 from 2014 $ % North America $ 494.9 $ 531.3 (6.9)% $ (16.6) (3.1)% South America 231.4 455.0 (49.1)% (115.3) (25.3)% Europe/Africa/Middle East 894.3 1,026.0 (12.8)% (16
Slide 19: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation Net Sales $M Nine Months Ended Change due to currency September 30, translation % change 2015 2014 from 2014 $ % North America $ 1,530.5 $ 1,865.0 (17.9)% $ (42.0) (2.3)% South America 760.7 1,248.8 (39.1)% (266.5) (21.3)% Europe/Africa/Middle East 2,939.4 3,783.8 (22
Slide 20: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation Net Sales $M Nine Months Ended Change due to currency September 30, translation % change 2015 2014 from 2014 $ % GSI $ 611.8 $ 659.7 (7.3)% $ (17.2) (2.6)% 20
Slide 21: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation Three Months Ended September 30, 2015 2014 Income Income From Net Earnings Per From Net Earnings Per Operations Income (1) Share (1) Operations Income (1) Share (1) As adjusted $ 79.1 $ 67.1 $ 0.77 $ 111.6 $ 66.9 $ 0.71 Restructuring and other infrequent expenses — —
Slide 22: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation Nine Months Ended September 30, 2015 2014 Income Income From Net Earnings Per From Net Earnings Per Operations Income (1) Share (1) Operations Income (1) Share (1) As adjusted $ 290.4 $ 215.0 $ 2.45 $ 534.0 $ 334.7 $ 3.52 Restructuring and other infrequent expenses (2
Slide 23: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation Change Change due to excluding September 30, September 30, Change from currency currency 2015 2014 2014 translation translation Inventories, net $ 1,699.3 $ 2,315.1 $ (615.8) $ (310.7) $ (305.1) 23
Slide 24: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation 2015 Earnings Per Share (1) As adjusted targeted $3.20 Restructuring and other infrequent expenses 0.13 – 0.14 As targeted $3.06 to $3.07 (1)Earnings per share amount is after tax 24