Slide 1: Third Quarter 2020 Financial and Operational Results
THIRD QUARTER 2020 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 20 v YTD 20 v Reported Reported Q3 20 Q3 19 YTD 20 YTD 19 Net Sales $2,497.5 18.4% $6,432.6 (1.5)% Gross margin 23.2% +180bps 22.7% +20bps Operating income $224.0 111.5% $421.7 6.0% Operating margin 9.0% +400bps 6.6% +50bps Diluted EPS $2.09 $1.99 $3.86 $1.09 Q3 20 v YTD 20
Slide 4: Industry Overview
INDUSTRY OVERVIEW September 2020 Year-to-Date Retail Units North America 2020 vs. 2019 Tractors* Industry 7% Combines Industry 1% Western Europe 2020 vs. 2019 Tractors Industry (5)% Combines Industry (4)% South America 2020 vs. 2019 Tractors Industry 9% Combines Industry 17% * Excludes compact tract
Slide 5: AGCO Response to COVID-19
AGCO RESPONSE TO COVID-19 Focus on health and well-being of AGCO’s workforce and our communities Support our dealers and farmers to promote food security Secure business continuity and liquidity of AGCO business operations 5
Slide 6: 2020 Production
2020 PRODUCTION AGCO Production Hours (9)% +10% (19)% • Q3 20 production up ~10% vs. Q3 19 • Full year 2020 production expected to be down approximately 5% vs. 2019 Q1 Q2 Q3 Q4E 2019 Production 2020 Production 6 6
Slide 7: Regional Net Sales Results
Regional Net Sales Results Q3 20 vs. Q3 19 Net Sales Excluding Currency Translation* September YTD 2020 $6.4B South North EME America APA America Consol. North North America America 28%South 26% South America America EME 9% EME 57% 8% APA 57% APA 8% 7% 19% 48% 21% 9% 20% September YTD 2019 $6.5B YTD
Slide 8: Net Sales, Operating Income and Operating Margins
NET SALES, OPERATING INCOME AND OPERATING MARGINS Sales Q3 19 to Q3 20 Adj. Op. September YTD $M Margin* $3,000 10% $447M $2,500 8% Net Sales Adj. Op. Margin* $401M $2,000 7.0% 6% 6.1% Adj. Op. Margin* $1,500 4% $1,000 Adj. Op. Income* 2% $500 $0 0% Q319 Q419 Q120 Q220 Q320 2019 2020 * Reflects adju
Slide 9: Grain and Protein Results
GRAIN AND PROTEIN RESULTS September 2020 YTD Sales September 2020 YTD net sales decreased ~12% vs 2019 on a By Region By Product constant currency basis $682M $682M ─ Decline in sales of grain and seed equipment of ~17% SA ─ Decline in sales of protein production equipment ~3% APA Protein EAME L
Slide 10: Liquidity / Free Cash Flow
LIQUIDITY / FREE CASH FLOW* Q3 Free Cash Flow September YTD Free Cash Flow* Liquidity $380M 2019 2020 ● Closely managing costs and cash expenditures ● Maintaining dividend ● Suspended share repurchases $41M ● Added $542M term loan facility in Q2 $60M ● ~$1.6B in available funds at 9-30-20 ‒ ~$503M C
Slide 11: 2020 Market Outlook
2020 MARKET OUTLOOK Regional Market Outlook – Industry Unit Retail Tractor Sales N. America* S. America Western Europe 138K Down ~5% Up 91K ~5% Up ~10% 46K 2019 2020E 2019 2020E 2019 2020E 11 *Excludes 11 compact tractors
Slide 12: 2020 Assumptions: Summary
2020 ASSUMPTIONS: SUMMARY • 2020 sales vs. 2019 – Flat end-market demand – Negative currency impact of ~(2.0%) – Targeting lower dealer inventory + Pricing +1.0% to 1.5% + Market share gains • Engineering expense ~3.9% of sales • Operating margin Up 50-60bps vs ‘19 • Effective tax rate 34% to 36% 12
Slide 13: 2020 Outlook
2020 OUTLOOK 2020 Estimates Sales ~$8.9B Adjusted EPS ~$5.00 CAPEX ~$250M Free Cash Flow* $300M-350M • See reconciliation to GAAP metrics in the appendix of this presentation. 13 • Note: Free cash flow is defined as net cash provided by operating activities less capital expenditures.
Slide 14: Appendix
APPENDIX 14
Slide 15: Non-GAAP to GAAP Reconciliation: Free Cash Flow (Quarter)
NON-GAAP TO GAAP RECONCILIATION Free Cash Flow $M Quarter ended Quarter ended September 30, 2020 September 30, 2019 Net cash provided by (used in) operating activities $ 445.7 $ 132.7 Less: capital expenditures (65.6) (73.2) Free cash flow $ 380.1 $ 59.5 Note: Free cash flow is defined as net cash p
Slide 16: Non-GAAP to GAAP Reconciliation: Free Cash Flow (Nine Months)
NON-GAAP TO GAAP RECONCILIATION Free Cash Flow $M Nine months ended Nine months ended September 30, 2020 September 30, 2019 Net cash provided by (used in) operating activities $ 224.1 $ (80.2) Less: capital expenditures (183.1) (188.1) Free cash flow $ 41.0 $ (268.3) Note: Free cash flow is defined
Slide 17: 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 September 30, Change due to currency translation % change from 2020 2019 2019 $ % North America $ 582.2 $ 536.2 8.6 % $ (2.6) (0.5) % South America 273.9 239.4 14.4 % (81.5) (34.0) % Europe/Mi
Slide 18: Non-GAAP to GAAP Reconciliation
NON-GAAP TO GAAP RECONCILIATION (In millions, except per share amounts) Three Months Ended September 30, 2020 2019 Income From Net Income Income From Net Income Operations Net Income Per Share(1) Operations Net Income Per Share As reported $ 224.0 $ 157.3 $ 2.09 $ 105.9 $ 7.6 $ 0.10 Restructuring ex
Slide 19: Non-GAAP to GAAP Reconciliation: Available Funding
NON-GAAP TO GAAP RECONCILIATION (In millions) The following is a reconciliation of available funding as of September 30, 2020 (in millions): September 30, 2020 Credit facility, total borrowing capacity $ 1,342.4 Less: Credit facility and term loan borrowings (271.2) Credit facility, available borrow
Slide 20: Non-GAAP to GAAP Reconciliation: Net Debt
NON-GAAP TO GAAP RECONCILIATION (In millions) The following is a reconciliation of net debt as of September 30, 2020 and 2019 (in millions): September 30, 2020 September 30, 2019 Long-term indebtedness $ 1,515.5 $ 1,550.8 Short-term borrowings 47.7 229.7 Less: Amounts related to the sale of receivab