Slide 1: Fourth Quarter 2009 Financial and Operational Results
Fourth Quarter 2009 Financial and Operational Results February 9, 2010
Slide 2: Forward-Looking Statements
Forward-Looking Statements Statements that are not historical facts, including the projections of earnings per share, sales, population growth, market demand and conditions, product offerings, margin and productivity improvements, plant idling, inventory management, working capital, free cash flow,
Slide 3: Financial Summary
Financial Summary Q409 vs YTD YTD09 vs Q409 Q408 2009 YTD08 Net Sales ($Ms) 1,852.5 -14.1% 6,630.4 -21.3% Gross Profit ($Ms) 267.3 - 28.9% 1,072.5 -28.5% Adj. Op. Inc.* ($Ms) 58.3 -58.3% 232.5 -58.9% Adj. Op. Margin* 3.1% -334 bps 3.5% -320 bps Adj. Diluted EPS* $0.42 -$0.63 $1.55 -$2.40 *Reflects a
Slide 4: Tractor/Combine Production
Tractor/Combine Production Production Units ● Production down 23% in Q409 vs Q408 -5% -23% ● Full year 2009 -35% -31% production down 24% from 2008 ● Large cuts in Q4 in EAME and NA – Small increases in SA and EAPAC Q1 Q2 Q3 Q4 2008 Production 2009 Production 4
Slide 5: Industry Overview
Industry Overview December 2009 YTD Retail Units North America YTD09 vs YTD08 Tractors – Industry -21% – AGCO Combines – Industry +15% – AGCO Europe Tractors – Industry -18% – AGCO South America Tractors – Industry -17% – AGCO Combines – Industry -36% – AGCO 5
Slide 6: Regional Net Sales Results
Regional Net Sales Results YTD 2009 $6.6 billion North Q409 vs Q408 Net Sales Excl. Translation* South America +62% America 22% EAPAC 18% +4% North 3% EAME America Consol. South EAPAC EAME America -24% 57% -27% -42% YTD 2008 $8.4 billion YTD09 vs YTD08 Net Sales Excl. Translation* North South North
Slide 7: Net Sales and Margins
Net Sales and Margins $M Adj. Op. Sales Margin 8.0% $ 9,000.0 $565M 0.05 $ 2,000.0 Sales $ 8,000.0 Adj. Operating Income 0.04 6.0% $ 7,000.0 $ 1,500.0 $ 6,000.0 Adj. Op. Margin 6.7% 0.03 4.0% $ 5,000.0 $233M $ 1,000.0 Adj. Op. Margin $ 4,000.0 0.02 $ 3,000.0 3.5% 2.0% $ 500.0 $ 2,000.0 0.01 $ 1,000.
Slide 8: Progress in Reducing Dealer/Company Inventory
Progress in Reducing Dealer/Company Inventory $2.4B $2.4B $2.2B ● Company + Dealer inventory down $1.9B over $550M from Y/E 2008 ● A/P also reduced due to lower production levels ● Will continue working capital Q1 Q2 Q3 Q4 focus in 2010 2008 Inventory 2009 Inventory Note: Amounts consist of Inventor
Slide 9: Free Cash Flow
Free Cash Flow* Q4 Free Cash Flow YTD Free Cash Flow (3 Months Ended December 31 ) (12 Months Ended December 31 ) ● Production cuts and inventory reductions +$448M generated positive FCF in Q409 ● Q409 FCF included $41M positive +$147M +$136M impact of A/R transfer to AGCO +$40M Finance ● Targeting
Slide 10: Capital Expenditures – Investing for Growth
Capital Expenditures – Investing for Growth Continuing to Invest 2009 Capex Components $251M $225- New 250M Products $215M Software/ IT Capex $141M $129M Maintenance / Cost Reduction $78M $88M Dep. & Amort. Factory Productivity 2004 2005 2006 2007 2008 2009 2010E 10
Slide 11: 2010 Assumptions – Summary
2010 Assumptions – Summary ● Limited visibility due to reduced order boards ● Agricultural industry sales – NA down approximately 5-10% vs. 2009 – SA approximately flat to up 5% vs. 2009 – Western Europe down approximately 10% vs. 2009 ● 2.5-3% pricing ● 20% increase in engineering expense for new p
Slide 12: 2010 Targets
2010 Targets Total sales $6.6-$6.8B Diluted EPS $1.55-$1.65 Capital expenditures $225-$250M Free cash flow* $75-$100M * Free cash flow is defined as net cash from operating activities less capital expenditures. Please see reconciliations to GAAP metrics provided in the appendix to this presentation.
Slide 13: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation Free Cash Flow $M 3 months 3 months ended ended December 31, December 31, 2009 2008 Net cash provided by operating activities $ 513.8 $ 243.3 Less: Capital expenditures (66.0) (95.8) Free cash flow $ 447.8 $ 147.5 Note: Free cash flow is defined as net cash provided b
Slide 14: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation Free Cash Flow $M Year Year ended ended December 31, December 31, 2009 2008 Net cash provided by operating activities $ 351.7 $ 291.3 Less: Capital expenditures (215.3) (251.3) Free cash flow $ 136.4 $ 40.0 Note: Free cash flow is defined as net cash provided by opera
Slide 15: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation Free Cash Flow $M Estimated Year Year ended ended December 31, December 31, 2010 2009 Net cash provided by operating activities $ 300-350 $ 351.7 Less: Capital expenditures (225-250) (215.3) Free cash flow $ 75-100 $ 136.4 Note: Free cash flow is defined as net cash p
Slide 16: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation $M (except per share amts) Three months ended December 31, 2009 2008 Income Earnings Income Earnings From Net Per From Net Per Operations Income(1) Share(1) Operations Income(1) Share(1) As adjusted $ 58.3 $ 40.3 $ 0.42 $ 139.9 $ 98.5 $ 1.05 Restructuring and other in
Slide 17: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation $M (except per share amts) Years ended December 31, 2009 2008 Income Earnings Income Earnings From Net Per From Net Per Operations Income(1) Share(1) Operations Income(1) Share(1) As adjusted $ 232.5 $ 145.5 $ 1.55 $ 565.2 $ 386.1 $ 3.95 Restructuring and other infreq
Slide 18: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation AGCO Regional Net Sales (in millions) Three Months Ended December 31, % change from 2008 due to % change currency 2009 2008 from 2008 translation (1) North America $ 311.5 $ 520.5 - 40.2% + 1.9% South America 429.1 327.4 + 31.0% + 27.4% EAME 1,026.6 1,266.3 - 18.9% +
Slide 19: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation Three Months Ended December 31, 2009 at 2009 at % change from Actual Adjusted 2008 due to Exchange Exchange currency (1) Rates Rates translation North America $ 311.5 $ 301.7 + 1.9% South America 429.1 339.2 + 27.4% EAME 1,026.6 924.2 + 8.1% Asia/Pacific 85.3 69.7 + 3