Slide 1: Second Quarter 2019 Financial and Operational Results
SECOND QUARTER 2019 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 Q2 19 v YTD 19 v Reported Reported Q2 19 YTD 19 $M** Q2 18 YTD 18 Net Sales $2,422.6 (4.5)% $4,418.4 (2.8)% Gross margin 23.3% +135bps 23.1% +145bps Operating income $199.6 +18.7% $292.0 +33.6% Operating margin 8.2% +160bps 6.6% +180bps Diluted EPS $1.82 +$0.68 $2.66 +$1.22 Q2 19 v
Slide 4: Industry Overview
INDUSTRY OVERVIEW June 2019 Year-to-Date Retail Units North America 2019 vs. 2018 Tractors* • Industry (3)% Combines • Industry (2)% Western Europe 2019 vs. 2018 Tractors • Industry 4%** Combines • Industry (17)% South America 2019 vs. 2018 Tractors • Industry (11)% Combines • Industry 11% * Exclude
Slide 5: 2019 Production
2019 PRODUCTION AGCO Production Hours Up ~2% Up ~1% • Q2 19 production up ~2% vs. Q2 18 • Full year 2019 production expected to be up approximately 1% vs. 2018 Q1 Q2 Q3E Q4E 2018 Production 2019 Production 5 5
Slide 6: Regional Net Sales Results
REGIONAL NET SALES RESULTS Regional Net Sales Results Q2 19 vs. Q2 18 Net Sales Excluding Currency Translation* June YTD 2019 $4.4B South North EME America APA America Consolidated North America 25% EME South 60% America 8% APA 7% Flat (10)% (1)% 4% Flat June YTD 2018 $4.5B YTD 19 vs. YTD 18 Net Sal
Slide 7: Net Sales, Operating Income and Operating Margins
NET SALES, OPERATING INCOME AND OPERATING MARGINS Sales Q2 18 to Q2 19 Adj. Op. June YTD $M Margin* $3,000 10% $294M $2,500 8% Sales $2,000 6% $227M Adj. Op. Income* Adj. Op. Margin* $1,500 6.6% 4% 5.0% Adj. Op. Margin* $1,000 2% $500 $0 0% Q218 Q318 Q418 Q119 Q219 2018 2019 * Reflects adjusted resu
Slide 8: Grain and Protein Results
GRAIN AND PROTEIN RESULTS June 2019 YTD Sales June 2019 YTD sales increased 4% vs 2018 on a constant currency By Region By Product basis $510M $510M ─ Growth in sales of grain and seed equipment of 12% SA ─ Decline in sales of protein production equipment 7% Protein APA EAME 39% Longer term: ─ M
Slide 9: Investing for Growth
INVESTING FOR GROWTH CAPEX Engineering Expenses ~$392M $355M Capex R&D Exp. ~$225M ~3.8% Dep. & Amort. $203M % of Sales. $128M $129M 2.4% 06 07 08 09 10 11 12 13 14 15 16 17 18 19E 06 07 08 09 10 11 12 13 14 15 16 17 18 19E 9 9
Slide 10: Free Cash Flow
FREE CASH FLOW* Thousands YTD Free Cash Flow Full-Year Free Cash Flow $393M YTD 18 YTD 19 $275M to $300M ● Second half of year seasonally stronger for free cash flow ● Targeting $275M to $300M free cash flow in 2019 ($278M) ($328M) 2018 2019E Note: Free cash flow is defined as net cash (used in) pro
Slide 11: Returning Cash to Shareholders
RETURNING CASH TO SHAREHOLDERS Dividends Initiated in 2013 Ambition to grow Cash to be Returned to Shareholders Share Repurchases Completed ~$1.3B over last 6+ years ~$70M completed YTD 2019 11
Slide 12: 2019 Market Outlook
2019 MARKET OUTLOOK Regional Market Outlook – Industry Unit Retail Tractor Sales (Volume in Units) N. America* S. America Western Europe 140K Flat 92K Flat 54K Flat 2018 2019E 2018 2019E 2018 2019E 12 *Excludes 12 compact tractors
Slide 13: 2019 Assumptions: Summary
2019 ASSUMPTIONS: SUMMARY 2019 sales flat vs 2018 – Relatively stable end-market demand – Pricing +2.0% to 2.5% – Negative currency translation ~ -3.5% Engineering up ~$10M on constant currency basis vs 2018 Operating margin improvement Effective tax rate 31-32% 13
Slide 14: 2019 Outlook
2019 OUTLOOK 2019 Estimates Sales ~$9.4B Adjusted EPS* ~$5.10 CAPEX ~$225M Free Cash Flow* $275M to $300M 14 * See reconciliation to GAAP metrics in the appendix of this presentation Note: Free cash flow is defined as net cash (used in) provided by operating activities less capital expenditures.
Slide 15: Appendix
APPENDIX 15
Slide 16: Non-GAAP to GAAP Reconciliation
NON-GAAP TO GAAP RECONCILIATION Free Cash Flow Six months Six months ended ended $M June 30, June 30, 2019 2018 Net cash used in operating activities $ (212.9) $ (188.6) Less: Capital expenditures (114.9) (89.8) Free cash flow $ (327.8) $ (278.4) Year ended Year ended December 31, December 31, 2018
Slide 17: Reconciliation of Currency Translation Impacts to Net Sales
RECONCILIATION OF CURRENCY TRANSLATION IMPACTS TO NET SALES Net Sales Three Months Ended June 30, Change due to currency translation $M % change 2019 2018 from 2018 $ % North America $ 618.9 $ 600.5 3.1 % $ (3.4) (0.6)% South America 185.8 219.6 (15.4)% (12.6) (5.7)% Europe/Middle East 1,457.2 1,545
Slide 18: Non-GAAP to GAAP Reconciliation
NON-GAAP TO GAAP RECONCILIATION (In millions, except per share amounts) Three Months Ended June 30, 2019 2018 Income From Net Income Income From Net Income Operations Net Income Per Share Operations Net Income Per Share As reported $ 199.6 $ 140.8 $ 1.82 $ 168.1 $ 91.4 $ 1.14 Restructuring expenses
Slide 19: Non-GAAP to GAAP Reconciliation
NON-GAAP TO GAAP RECONCILIATION (In millions, except per share amounts) Six Months Ended June 30, 2019 2018 Income From Net Income Income From Net Income Operations Net Income Per Share Operations Net Income Per Share As reported $ 292.0 $ 205.9 $ 2.66 $ 218.6 $ 115.7 $ 1.44 Restructuring expenses 1
Slide 20: Non-GAAP to GAAP Reconciliation
NON-GAAP TO GAAP RECONCILIATION Year ended December 31, 2019 Net Income per share As targeted $ 5.08 Restructuring expenses .02 As adjusted targeted $ 5.10 20