Slide 1: First Quarter 2008 Financial and Operational Results
First Quarter 2008 Financial and Operational Results April 29, 2008
Slide 2: Forward-Looking Statements
Forward-Looking Statements Statements that are not historical facts, including the projections of retail sales, farm income, industry demand, net sales, earnings per share, operating margins, research and development, system/process improvements, growth initiatives, strategic initiatives, engineerin
Slide 3: Financial Summary
Financial Summary Q108 vs Q108 Q107 Net Sales ($Ms) 1,786.6 +34.1% Gross Profit ($Ms) 315.2 +43.7% Adj. Op. Income ($Ms) 94.3 +106.8% Adj. Op. Margin 5.3% +1.9% Adj. Diluted EPS $0.63 +142.3% 3
Slide 4: Tractor/Combine Production
Tractor/Combine Production Production Units +25% • Production up 25% in Q108 vs Q107 • Total 2008 production expected to increase 12-14% from 2008 Q1 Q2 Q3 Q4 ‘07 Act ‘08 Act ‘08 Projected 4
Slide 5: Industry Overview
Industry Overview March YTD Retail Units North America YTD08 vs YTD07 Tractors – Industry -11% – AGCO Combines – Industry +12% – AGCO Europe Tractors – Industry +3% – AGCO Flat South America Tractors – Industry +45% – AGCO Combines – Industry +77% – AGCO 5
Slide 6: Regional Net Sales Results
Regional Net Sales Results Q108 $1.8 billion Q108 vs Q107 Net Sales Excl.Translation +44% EAME +28% North 58% America +20% +21% 21% +10% South America *EAME South *EAPAC EAPAC North Consolidated 18% America America 3% *EAME – Europe/Africa/Middle East EAPAC – East Asia/Pacific 6
Slide 7: Sales and Margins
Sales and Margins Adj. Oper. Sales $M Adjusted Operating Margin % Margins Improved 10% $1,787 $2,000 8% $1,500 $1,333 5.3% 5% 3.4% $1,000 $500 3% $0 0% Q1 ‘07 Q1’08 Q107 Q207 Q307 Q407 Q108 Sales Op. Margin 7
Slide 8: Working Capital Progress
Working Capital Progress Working Capital* : Sales 12-Month Rolling Average 11.3% • Progress in NA dealer 10.3% inventory months 9.5% supply 8.4% 7.7% • Long-term initiatives – build to order – distribution strategies Q107 Q207 Q307 Q407 Q108 * Working Capital defined as Avg. A/R + Avg. Inv. – Avg. A
Slide 9: Free Cash Flow
Free Cash Flow YTD Free Cash Flow (3 Months Ended March 31 ) 2007 2008 • Seasonal working capital build in first half of year • Second half of year seasonally stronger for Free Cash Flow • Initiative and R&D spend throughout the year • On track for strong free ($260M) cash flow in 2008 ($328M) 9
Slide 10: Strong Balance Sheet
Strong Balance Sheet $896M $791M 36% $719M • Near targeted capital 29% structure • Flexibility to consider 18% future investments Q106 Q107 Q108 Debt Net Debt to Total Capital 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 20 to 22% Diluted EPS $3.00 to $3.15 Capital expenditures $190-200 million Free cash flow $175-$200 million 12
Slide 13: Appendix
Appendix 13 13
Slide 14: GAAP To NON-GAAP Reconciliation
GAAP To NON-GAAP Reconciliation Three months ended March 31, 2008 2007 Income Earnings Income Earnings From Net Per From Net Per Operations Income(1) Share(1) Operations Income(1) Share(1) As adjusted $ 94.3 $ 62.4 $ 0.63 $ 45.6 $ 24.5 $ 0.26 Restructuring and other infrequent expenses 0.1 0.1 — — —
Slide 15: GAAP To NON-GAAP Reconciliation
GAAP To NON-GAAP Reconciliation Free Cash Flow Quarter Quarter ended ended March 31, March 31, 2008 2007 Net cash used in operating activities $ (282.1) $ (236.0) Less: Capital expenditures (45.9) (23.7) Free cash flow $ (328.0) $ (259.7) See accompanying notes in the Company’s Press Release 15
Slide 16: GAAP To NON-GAAP Reconciliation
GAAP To NON-GAAP Reconciliation Net Debt to Capital Ratio March 31, 2008 March 31, 2007 March 31, 2006 Long-term debt $ 718.5 $ 790.9 $ 896.1 Less: Cash and cash equivalents $ (250.5) $ (157.4) $ (52.3) Net debt $ 468.0 $ 633.5 $ 843.8 Add: Total Stockholders' Equity $ 2,192.4 $ 1,550.3 $ 1,485.7 To