Slide 1: Second Quarter 2015 Financial and Operational Results
Second Quarter 2015 Financial and Operational Results
Slide 2: Forward Looking Statements
Forward Looking Statements Forward-looking statements in this presentation, including statements regarding demand for our products and the economic and other factors that drive that demand, product development plans and timing of those plans, acquisition, expansion and modernization plans and our ex
Slide 3: Financial Summary
Financial Summary $M** Q2 15 v YTD 15 vs Q2 15 YTD 2015 Q2 14 YTD 14 Net Sales $2,069.3 -24.8% $3,771.9 -25.8% Gross margin 21.7% -120 bps 21.1% -140bps Adj. Operating income* $153.9 -42.3% $211.3 -50.0% Adj. Operating margin* 7.4% -230bps 5.6% -270bps Diluted Adjusted EPS* $1.25 -$0.52 $1.67 -$1.12
Slide 4: Industry Overview
Industry Overview June Year-to-Date Retail Units North America 2015 vs. 2014 Tractors* • Industry (10%) Combines • Industry (37%) Western Europe 2015 vs. 2014 Tractors • Industry (8%) Combines • Industry (15%) South America 2015 vs. 2014 Tractors • Industry (19%) Combines • Industry (32%) * Excludes
Slide 5: 2015 Production Decline is Front-End Loaded
2015 Production Decline is Front-End Loaded AGCO Production Hours Down Down 21% • Q2 15 production down 22% Down ~22% vs. Q2 14 10-15% • Full year 2015 production down ~15% vs 2014 Q1 Q2 Q3E Q4E 2014 Production 2015 Production 5
Slide 6: Regional Net Sales Results
Regional Net Sales Results YTD 2015 $3.8B Q2 15 vs. Q2 14 Net Sales Excluding Currency Translation* North America 28% North EAME South APAC Consol. South America America America EAME 14% 54% APAC 4% -9% -14% ~Flat -16% -11% YTD 2014 $5.1B YTD 2015 vs. YTD 2014 Net Sales North America Excluding Curre
Slide 7: Net Sales and Operating Margins
Net Sales and Operating Margins Sales Adj. Op. June YTD $M Margin* $3,500 14% $3,000 12% $422M $2,500 10% Sales 8.3% $2,000 8% Adj. Op. Margin* Adj. Op. Margin* $211M $1,500 6% 5.6% $1,000 4% Adj. Op. Income* $500 2% $0 0% Q214 Q314 Q414 Q115 Q215 2014 2015 * Reflects adjusted results, which exclude
Slide 8: GSI Results
GSI Results Sales (YTD June 2015) • YTD 2015 sales down ~2% vs YTD 2014 on a $398M constant currency basis EAME − Declines in EAME, APAC and NA grain SA Protein storage APAC 35% − Growth in SA and NA protein production equipment • Strong cash flow generation in U.S. Grain • Longer term: NA Storage 6
Slide 9: Capital Expenditures – Investing for Growth
Capital Expenditures – Investing for Growth Continuing to Invest 2015 Capex Components IT / Other New $302M ~$300M Products Capex Dep. & Amort. $129M Manufacturing 06 07 08 09 10 11 12 13 14 15E 9
Slide 10: Free Cash Flow
Free Cash Flow* June YTD Free Cash Flow Full-Year Free Cash Flow Thousands ● Smaller seasonal 2014 2015 ~$300M working capital build in first half of year ● Second half of year ($73M) seasonally stronger for $137M free cash flow ● Targeting ~$300M free cash flow in 2015 after funding capex ($410M) 2
Slide 11: Returning Cash to Shareholders
Returning Cash to Shareholders Cash to be Returned to Shareholders Dividend Share Repurchase • Initiated in 2013 • New $500M repurchase program through 2016 • Raised in Q1 14 and Q1 15 • $125M thru June YTD 11
Slide 12: 2015 Preliminary Market Outlook
2015 Preliminary Market Outlook Regional Market Outlook – Industry Unit Retail Tractor Sales (Volume in Units) N. America* S. America Western Europe 143K Down 5-10% 113K Down 5-10% 72K Down ~20% 2014 2015E 2014 2015E 2014 2015E *Excludes compact tractors 12
Slide 13: 2015 Assumptions – Summary
2015 Assumptions – Summary • Sales down 19-21% – softer end markets – 1.5% to 2% pricing – impact of currency translation expected to be ~11% • Engineering ~3.7% of sales • Adjusted Operating margins of 5.75% to 6.0% • Pre-tax restructuring charges of approximately $15M in 2015 • Effective tax rate
Slide 14: 2015 Outlook
2015 Outlook 2015 Estimates Sales $7.7B to $7.9B Adjusted EPS ~$3.10 CAPEX ~$300M Free Cash Flow* ~$300M * 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
Slide 15: Appendix
DrwGco Appendix
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, 2015 2014 Net cash provided by (used in) operating activities $ 28.0 $ (254.2) Less: Capital expenditures (101.3) (155.5) Free cash flow $ (73.3) $ (409.7) Note: Free cash flow is defined as net cas
Slide 17: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation Free Cash Flow $M Year ended Year ended December 31, December 31, 2014 2015 Net cash provided by operating activities $ 438.4 $ ~600.0 Less: Capital expenditures (301.5) ~ (300.0) Free cash flow $ 136.9 $ ~300.0 Note: Free cash flow is defined as net cash provided by
Slide 18: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation Net Sales $M Change due to currency Three Months Ended June 30, translation % change 2015 2014 from 2014 $ % North America $ 563.1 $ 686.2 (17.9)% $ (14.4) (2.1)% South America 280.3 440.2 (36.3)% (97.5) (22.1)% Europe/Africa/Middle East 1,137.0 1,521.9 (25.3)% (256.0
Slide 19: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation Net Sales $M Change due to currency Six Months Ended June 30, translation % change 2015 2014 from 2014 $ % North America $ 1,035.6 $ 1,333.7 (22.4)% $ (25.4) (1.9)% South America 529.3 793.8 (33.3)% (151.2) (19.0)% Europe/Africa/Middle East 2,045.1 2,757.8 (25.8)% (45
Slide 20: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation Three Months Ended June 30, 2015 2014 Income Income From Net Earnings Per From Net Earnings Per Operations Income (1) Share (1) Operations Income (1) Share (1) As adjusted $ 153.9 $ 110.0 $ 1.25 $ 266.7 $ 168.2 $ 1.77 Restructuring and other infrequent expenses 4.0 2.
Slide 21: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation Six Months Ended June 30, 2015 2014 Income Income From Net Earnings Per From Net Earnings Per Operations Income (1) Share (1) Operations Income (1) Share (1) As adjusted $ 211.3 $ 147.9 $ 1.67 $ 422.4 $ 267.8 $ 2.79 Restructuring and other infrequent expenses 14.6 10.
Slide 22: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation Change Change due to excluding Change from currency currency June 30, 2015 June 30, 2014 2014 translation translation Inventories, net $ 1,816.3 $ 2,437.9 $ (621.6) $ (375.0) $ (246.6) 22
Slide 23: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation 2015 Earnings Per Share (1) As adjusted $3.10 Restructuring and other infrequent expenses 0.12 As targeted $2.98 (1)Earnings per share amount is after tax 23