Slide 1: Second Quarter 2016 Financial and Operational Results
Second Quarter 2016 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** Q2 16 v YTD YTD 16 vs Q2 16 Q2 15 2016 YTD 15 Net Sales $1,995.6 -3.6% $3,554.9 -5.8% Gross margin 21.4% -30 bps 20.9% -30bps Adj. Operating $120.7 -21.6% $142.0 -32.8% income* Adj. Operating margin* 6.0% -140bps 4.0% -160bps Diluted Adjusted EPS* $1.02 -$0.23 $1.12 -$0.55 **E
Slide 4: Industry Overview
Industry Overview June 2016 Year-to-Date Retail Units North America 2016 vs. 2015 Tractors* • Industry (10%) Combines • Industry (19%) Western Europe 2016 vs. 2015 Tractors • Industry (1%) Combines • Industry (9%) South America 2016 vs. 2015 Tractors • Industry (30%) Combines • Industry (15%) * Excl
Slide 5: 2016 Production
2016 Production AGCO Production Hours Down Down 13% 2% • Q2 16 production down 2% vs. Q2 15 • Full year 2016 production expected to be down ~6% vs. 2015 Q1 Q2 Q3E Q4E 2015 Production 2016 Production 5
Slide 6: Regional Net Sales Results
Regional Net Sales Results YTD 2016 $3.6B Q2 16 vs. Q2 15 Net Sales Excluding Currency Translation* North America APAC 26% South North EAME Consol. South America America America EAME 10% +5% -1% 59% +26% -10% APAC -14% 5% YTD 2015 $3.8B YTD 2016 vs. YTD 2015 Net Sales North America Excluding Currenc
Slide 7: Net Sales and Operating Margins
Net Sales and Operating Margins Sales Adj. Op. June YTD $M Margin* $2,500 10% $211M $2,000 8% Sales 5.6% $1,500 6% $142M Adj. Op. Margin* 4.0% $1,000 4% Adj. Op. Margin* Adj. Op. Income* $500 2% $0 0% Q215 Q315 Q415 Q116 Q216 2015 2016 * Reflects adjusted results, which exclude restructuring expense
Slide 8: GSI Results
GSI Results • YTD 2016 sales up ~8% vs YTD 2015 Sales on a constant currency basis including (YTD June 2016) the benefit of acquisitions $416M − Declines in EAME and NA grain EAME storage SA Protein 49% − Growth NA, EAME and APAC APAC protein production equipment • Strong cash flow generation in U.S
Slide 9: Investing for Growth
Investing for Growth CAPEX Engineering Expense +~$15M Capex R&D Exp. ~$250M $211M Dep. & Amort. ~4.2% % of Sales. $128M $129M 2.4% 06 07 08 09 10 11 12 13 14 15 16E 06 07 08 09 10 11 12 13 14 15 16E 9
Slide 10: Free Cash Flow
Free Cash Flow* Thousands June YTD Full-Year Free Cash Flow Free Cash Flow ● Second half of year 2015 2016 $313M seasonally stronger for free cash flow $150M to ● Planned 2H16 $175M inventory build in SA ($73M) for Tier 3 emissions ● Targeting $150M- ($137M) $175M free cash flow in 2016 after fundin
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 3 consecutive years • Remaining $93M targeted for 2016 11
Slide 12: 2016 Market Outlook
2016 Market Outlook Regional Market Outlook – Industry Unit Retail Tractor Sales (Volume in Units) N. America* S. America Western Europe 138K Down 0-5% 98K Down 10-15% 52K Down 15-20% 2015 2016E 2015 2016E 2015 2016E *Excludes compact tractors 12
Slide 13: 2016 Assumptions – Summary
2016 Assumptions – Summary • Sales down ~4% – softer end markets – ~2% pricing – impact of currency translation expected to be –2% • Engineering ~4.2% of sales (up ~$15M vs ’15) • Effective tax rate 47-49% (32-34% excluding the deferred tax asset adjustment) 13
Slide 14: 2016 Outlook
2016 Outlook 2016 Estimates Sales ~$7.2B Adjusted EPS ~$2.30 CAPEX ~$250M Free Cash Flow* $150-$175M * Free cash flow is defined as net cash from operations less capital expenditures. See reconciliation in the appendix of this presentation 14
Slide 15: Appendix
D.acco Your Agriculture Company
Slide 16: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation Free Cash Flow $M Six months Six months ended ended June 30, June 30, 2016 2015 Net cash (used in) provided by operating activities $ (64.6) $ 28.0 Less: Capital expenditures (72.0) (101.3) Free cash flow $ (136.6) $ (73.3) Note: Free cash flow is defined as net cash
Slide 17: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation Free Cash Flow $M Year ended Year ended December 31, December 31, 2016 2015 Net cash provided by operating activities $400.0 – 425.0 $ 524.2 Less: Capital expenditures ~(250.0) (211.4) Free cash flow $150.0 – 175.0 $ 312.8 Note: Free cash flow is defined as net cash p
Slide 18: Reconciliation of Currency Translation Impact to Net Sales
Reconciliation of Currency Translation Impact to Net Sales Net Sales $M Change due to currency Three Months Ended June 30, translation % change 2016 2015 from 2015 $ % North America $ 498.9 $ 563.1 (11.4)% $ (7.0) (1.2)% South America 203.4 280.3 (27.4)% (36.8) (13.1)% Europe/Africa/Middle East 1,18
Slide 19: Reconciliation of Currency Translation Impact to Net Sales
Reconciliation of Currency Translation Impact to Net Sales Net Sales $M Change due to currency Six Months Ended June 30, translation % change 2016 2015 from 2015 $ % North America $ 907.3 $ 1,035.6 (12.4)% $ (16.1) (1.6)% South America 347.6 529.3 (34.3)% (88.8) (16.8)% Europe/Africa/Middle East 2,1
Slide 20: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation Three Months Ended June 30, 2016 2015 Income Income From Net Earnings Per From Net Earnings Per Operations Income (1) Share (1) Operations Income (1) Share (1) As adjusted $ 120.7 $ 83.6 $ 1.02 $ 153.9 $ 110.0 $ 1.25 Restructuring expenses 2.1 1.7 0.02 4.0 2.9 0.03 De
Slide 21: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation Six Months Ended June 30, 2016 2015 Income Income From Net Earnings Per From Net Earnings Per Operations Income (1) Share (1) Operations Income (1) Share (1) As adjusted $ 142.0 $ 92.6 $ 1.12 $ 211.3 $ 147.9 $ 1.67 Restructuring expenses 4.0 2.9 0.04 14.6 10.7 0.12 De
Slide 22: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation The following is a reconciliation of adjusted targeted earnings per share to targeted earnings per share for the year ended December 31, 2016: Earnings Per Share (1) As adjusted targeted $ 2.30 Restructuring expenses 0.06 Deferred income tax adjustment 0.39 As targete