Slide 1: Third Quarter 2017 Financial and Operational Results
THIRD QUARTER 2017 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 17 v YTD 17 vs Q3 17 YTD 2017 Q3 16 YTD 16 Net Sales $1,986.3 +12.8% $5,779.1 +8.7% Gross margin 21.6% +150 bps 21.4% +80bps Adj. Operating income* $100.0 +65.3% $274.3 +35.5% Adj. Operating margin* 5.0% +160bps 4.7% +90bps Diluted Adjusted EPS* $0.79 +$0.28 $1.91 +$0.28 *
Slide 4: Industry Overview
INDUSTRY OVERVIEW September 2017 Year-to-Date Retail Units North America 2017 vs. 2016 Tractors* • Industry (3%) Combines • Industry 6% Western Europe 2017 vs. 2016 Tractors • Industry (3%) Combines • Industry (9%) South America 2017 vs. 2016 Tractors • Industry 20% Combines • Industry 18% * Exclude
Slide 5: 2017 Production
2017 PRODUCTION AGCO Production Hours Down Up ~1% ~3% Up ~10% • Q3 17 production up ~10% vs. Q3 16 • Full year 2017 production expected to be up approximately 3% vs. 2016 Q1 Q2 Q3 Q4E 2016 Production 2017 Production 5 5
Slide 6: Regional Net Sales Results
Regional Net Sales Results YTD 2017 $5.8B Q3 17 vs. Q3 16 Net Sales North Excluding Currency Translation* America 23% South South APA America America North Consol. EME America EME 13% 55% APA 9% +11% +5% +26% 10% +6% 2 5. 9 YTD 2016 $5.3B YTD 2017 vs. YTD 2016 Net Sales North Excluding Currency Tran
Slide 7: Net Sales and Operating Margins
NET SALES AND OPERATING MARGINS Sales Adj. Op. YTD $M Margin* $2,500 10% $2,000 8% Sales $274M $1,500 6% Adj. Op. Income* $203M 4.7% $1,000 4% 3.8% Adj. Op. Margin* Adj. Op. Margin* $500 2% $0 0% Q316 Q416 Q117 Q217 Q317 2016 2017 * Reflects adjusted results, which exclude restructuring expenses and
Slide 8: GSI Results
GSI RESULTS 2017 Sales YTD September YTD 2017 sales up ~20% vs YTD 2016 including the benefit of By Region By Product acquisitions $795M $795M ─ Organic growth in sales of protein production equipment in APA EME ─ Declines in sales of grain and seed equipment in all regions SA Protein EAME Stron
Slide 9: Investing for Growth
INVESTING FOR GROWTH CAPEX Engineering Expenses +$25M $296M Capex R&D Exp. $200-225M 4.0% Dep. & Amort. $201M % of Sales. $128M $129M 2.4% 06 07 08 09 10 11 12 13 14 15 16 17E 06 07 08 09 10 11 12 13 14 15 16 17E 9 9
Slide 10: Free Cash Flow
FREE CASH FLOW* Thousands YTD Free Cash Flow Full-Year Free Cash Flow ● Fourth quarter seasonally 2016 2017 stronger for free cash flow $169M $225-$250M ● Targeting $225M to $250M free cash flow in 2017 ($169M) ($260M) 2016 2017E Note: Free cash flow is defined as net cash provided by (used in) oper
Slide 11: Returning Cash to Shareholders
RETURNING CASH TO SHAREHOLDERS Dividend Initiated in 2013 Raised in 4 consecutive years Cash to be Returned to Share Repurchase Shareholders $213 million of repurchases in 2016 $300M program authorized through December 2019 11
Slide 12: 2017 Market Outlook
2017 MARKET OUTLOOK Regional Market Outlook – Industry Unit Retail Tractor Sales (Volume in Units) N. America* S. America Western Europe 133K ~Flat 88K Down 5-10% Up 49K 10-15% 2016 2017E 2016 2017E 2016 2017E 12 *Excludes 12 compact tractors
Slide 13: 2017 Assumptions – Summary
2017 ASSUMPTIONS – SUMMARY 2017 Sales up 10-11% vs 2016 – +2.5% from acquisitions – +1.5% pricing – +2.0% Currency translation Engineering up ~$25M vs ’16 Operating margin improvement Effective tax rate ~37% 13
Slide 14: 2017 Outlook
2017 OUTLOOK 2017 Estimates Sales ~$8.2B Adjusted EPS* ~$3.00 CAPEX $200-225M Free Cash Flow#* $225-250M # Free cash flow is defined as net cash from operations less capital expenditures. See reconciliation to GAAP metrics in the appendix of this presentation 14 * Reflects adjusted results. Please s
Slide 15: Appendix
APPENDIX 15
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, 2017 2016 Net cash used in operating activities $ (29.2) $ (127.4) Less: Capital expenditures (139.4) (132.8) Free cash flow $ (168.6) $ (260.2) Note: Free cash flow is defined as net ca
Slide 17: Non-GAAP to GAAP Reconciliation
NON-GAAP TO GAAP RECONCILIATION Free Cash Flow $M Year ended Year ended December 31, December 31, 2017 2016 Net cash provided by operating activities ~$ 425.0-475.0 $ 369.5 Less: Capital expenditures (200.0-225.0) (201.0) Free cash flow $225.0-250.0 $ 168.5 Note: Free cash flow is defined as net cas
Slide 18: Reconciliation of Currency Translation and Acquisition Impacts to Net Sales
RECONCILIATION OF CURRENCY TRANSLATION AND ACQUISITION IMPACTS TO NET SALES Net Sales $M Three Months Ended Change due to currency Change due to September 30, translation acquisitions % change 2017 2016 from 2016 $ % $ % North America $ 483.5 $ 453.0 6.7% $ 4.4 1.0 % $ 10.0 2.2% South America 273.5
Slide 19: Reconciliation of Currency Translation and Acquisition Impacts to Net Sales
RECONCILIATION OF CURRENCY TRANSLATION AND ACQUISITION IMPACTS TO NET SALES Net Sales $M Nine Months Ended Change due to currency Change due to September 30, translation acquisitions % change 2017 2016 from 2016 $ % $ % North America $ 1,344.9 $ 1,360.3 (1.1)% $ (1.9) (0.1)% $ 19.4 1.4% South Americ
Slide 20: Non-GAAP to GAAP Reconciliation
NON-GAAP TO GAAP RECONCILIATION Three Months Ended September 30, 2017 2016 Income From Net Income Income From Net Income Operations Net Income (1) Per Share(1) Operations Net Income (1) Per Share(1) (2) As reported $ 97.0 $ 60.7 $ 0.76 $ 59.0 $ 40.0 $ 0.50 Restructuring expenses 3.0 2.3 0.03 1.5 1.3
Slide 21: Non-GAAP to GAAP Reconciliation
NON-GAAP TO GAAP RECONCILIATION Nine Months Ended September 30, 2017 2016 Income From Net Income Income From Net Income Operations Net Income (1) Per Share(1) Operations Net Income (1) Per Share(1) (2) As reported $ 261.0 $ 142.1 $ 1.77 $ 197.0 $ 98.1 $ 1.20 Restructuring expenses 8.5 6.4 0.08 5.5 4
Slide 22: Non-GAAP to GAAP Reconciliation
NON-GAAP TO GAAP RECONCILIATION Full Year 2017 Net Income Per Share(1) As targeted $ 2.86 Restructuring expenses 0.08 Non-cash expense related to waived stock compensation 0.06 As adjusted targeted $ 3.00 (1) Net income per share amount is after tax. 22