Slide 1: Fourth Quarter 2008 Financial and Operational Results
Fourth Quarter 2008 Financial and Operational Results February 9, 2009
Slide 2: Forward Looking Statements
Forward Looking Statements Statements that are not historical facts, including the projections of future sales, earnings, production levels, market share improvements, availability of financing, general economic conditions, currency translation impacts, farm income, working capital improvement, cash
Slide 3: Financial Summary
Financial Summary Q408 vs YTD YTD08 vs Q408 Q407 2008 YTD07 Net Sales ($Ms) 2,157.2 -0.5% 8,424.6 +23.4% Gross Profit* ($Ms) 376.2 + 2.5% 1,499.7 +25.9% Adj. Op. Inc.* ($Ms) 139.9 +9.2% 565.2 +44.0% Adj. Op. Margin* 6.5% +0.6% 6.7% +1.0% Adj. Diluted EPS* $1.08 +$0.26 $4.09 +$1.57 *Reflects adjusted
Slide 4: Tractor/Combine Production
Tractor/Combine Production Production Units +15% +19% +25% +11% • Production up 15% in Q408 vs Q407 • Total 2008 production increased 18% from 2007 • 2009 Production rates expected to be down from 2008 levels Q1 Q2 Q3 Q4 2007 Production 2008 Production 4
Slide 5: Industry Overview
Industry Overview December YTD Retail Units North America YTD08 vs YTD07 Tractors – Industry -7% – AGCO Combines – Industry +22% – AGCO Europe Tractors – Industry +7% – AGCO South America Tractors – Industry +30% – AGCO Combines – Industry +50% – AGCO 5
Slide 6: Regional Net Sales Results
Regional Net Sales Results YTD 2007 $6.8 billion North Q408 vs Q407 Net Sales Excl.Translation South America America 22% EAPAC +18% 16% +17% 3% +9% +12% -4% EAME 59% EAME South EAPAC North Consolidated America America YTD 2008 $8.4 billion YTD 08 vs YTD 07 Net Sales Excl. Translation North +30% +24%
Slide 7: Sales and Margins
Sales and Margins Continuing to Invest Full Year Adj. Op. Margins $565M $2,500.0 10.0% Op. Income Sales $2,000.0 $395M 7.5% 6.7% $1,500.0 Op. Margin Op. Margin 5.0% 5.7% $1,000.0 2.5% $500.0 $0.0 0.0% Q407 Q108 Q208 Q308 Q408 2007 2008 7
Slide 8: Progress in Reducing Working Capital
Progress in Reducing Working Capital Working Capital*/Sales 8.4% • Progress in dealer inventory months supply 6.3% • Long-term initiatives – build to order – distribution strategies – lean manufacturing 2007 2008 * Working Capital defined as Avg. A/R + Avg. Inv. – Avg. A/P – Avg. Accrued Exp 8
Slide 9: Annual Free Cash Flow
Annual Free Cash Flow $363M • 2008 Free Cash Flow impacted by: – Increased Capital Expend. – Supplier constraints $40M – Customer credit 2007* 2008* * 12 Months Ended December 31 Note: Free Cash flow is defined as net cash from operations less capital expenditures 9
Slide 10: 2009 Planning Assumptions
2009 Planning Assumptions Summary • Significant uncertainty due to financial crisis and global recession • Agricultural industry sales – NA down approximately 5% vs. 2008 – SA down 20-30% vs. 2008 – Western Europe down 5-10% vs. 2008 • Currency impacts reduce sales by $800 million to $900 million •
Slide 11: 2009 Targets
2009 Targets 2009 Estimates Total sales $7.5B-$7.8B Diluted EPS $3.00-$3.25 Capital expenditures $275-325 M Free cash flow* $150-$200M *Free cash flow is defined as net cash from operations less capital expenditures. 11
Slide 12: GAAP To NON-GAAP Reconciliation
GAAP To NON-GAAP Reconciliation Three Months Ended December 31, 2008 2007 Income Earnings Income Earnings From Net Per From Net Per Operations Income(1) Share(1) Operations Income(1) Share(1) As adjusted $ 139.9 $ 102.0 $ 1.08 $ 128.1 $ 81.0 $ 0.82 Restructuring and other infrequent income(2) (0.1)
Slide 13: GAAP To NON-GAAP Reconciliation
GAAP To NON-GAAP Reconciliation Years Ended December 31, 2008 2007 Income Earnings Income Earnings From Net Per From Net Per Operations Income(1) Share(1) Operations Income(1) Share(1) As adjusted $ 565.2 $ 400.2 $ 4.09 $ 392.5 $ 243.7 $ 2.52 Restructuring and other infrequent expenses (income)(2) 0
Slide 14: GAAP To NON-GAAP Reconciliation: Free Cash Flow
GAAP To NON-GAAP Reconciliation Free Cash Flow Year Year ended ended December 31, December 31, 2008 2007 Net cash provided by operating activities $ 291.3 $ 504.3 Less: Capital expenditures (251.3) (141.4) Free cash flow $ 40.0 $ 362.9 Note: Free Cash flow is defined as net cash from operations less