Slide 1: Fourth Quarter and Full Year 2023 Financial and Operational Results
FOURTH QUARTER AND FULL YEAR 2023 Financial and Operational Results February 6, 2024
Slide 2: Safe Harbor
SAFE HARBOR Forward-looking statements in this presentation, including statements about our strategic plans and initiatives as well as their financial impacts, demand, product development and capital expenditure plans and timing of those plans and our expectations with respect to the costs and benef
Slide 3: Financial Summary
Q4 23 vs. YTD 23 vs. REPORTED Q4 23 YTD 23 Q4 22 YTD 22 NET SALES $3,800.7 (2.5)% $14,412.4 13.9% GROSS MARGIN 25.9% 180bps 26.2% 250bps OPERATING INCOME $393.1 (15.6)% $1,700.4 34.4% OPERATING MARGIN 10.3% (160)bps 11.8% 180bps FINANCIAL DILUTED EPS $4.53 $0.24 $15.63 $3.76 SUMMARY $M** ADJUSTED Q4
Slide 4: Industry Overview
INDUSTRY OVERVIEW December 2023 Year-to-Date Retail Units NORTH AMERICA WESTERN EUROPE(2) SOUTH AMERICA(2) Tractors(1) Combines Tractors Combines Tractors Combines Industry Industry Industry Industry Industry Industry (3)% 2% (4)% 2% (8)% (17)% 2023 vs. 2022 2023 vs. 2022 2023 vs. 2022 2023 vs. 2022
Slide 5: Production
Q3 2023 EARNINGS RELEASE PRODUCTION AGCO Production Hours Full-Year 2023 Production +4% -10% UP ~4% vs. 2022 Projected Full-Year 2024 Production 2022 2023 2024E DOWN ~10% vs. 2023 Production 5
Slide 6: Growth Levers Will Drive Volume and Margin Improvement
3 GROWTH LEVERS WILL DRIVE VOLUME AND MARGIN IMPROVEMENT GLOBAL FENDT 12% ADJUSTED OPERATING MARGIN FULL-LINE AT MIDCYCLE BY YEAR 2026(1) PRECISION GLOBAL 4% - 5% ABOVE INDUSTRY VOLUME AG PARTS & GROWTH SERVICES 75% - 100% ANNUAL FREE CASH FLOW PENDING REGULATORY CONVERSION(2) APPROVAL* SUSTAINABILI
Slide 7: Precision Planting Winter Conference 2024
PRECISION PLANTING WINTER CONFERENCE 2024 Solutions for Every Season Record New Retrofit Products Morton, Illinois ~5,600 Attendees Across the Crop Cycle Facility Opens ▪ 21 locations in the US and ▪ CornerStone™ planting system ▪ New 510,000 sq ft assembly Canada and distribution center ▪ Clarity™
Slide 8: Farmer First Innovation
FARMER FIRST INNOVATION Quarter 4 Highlights Award Winning Tech Stack AGCO Ventures Products Strengthened* Launched Six awards at Agritechnica Information Management & Analysis Ag Technology Environmental & Six ASABE AE 50 Alternative Fuel Awards Sources AGCO’s investment in R&D is yielding cutting
Slide 9: AGCO's Midcycle Margin Has Improved Each Year Since 2018
AGCO’S MIDCYCLE MARGIN HAS IMPROVED EACH YEAR SINCE 2018 As a result of structural changes to our business, operating margins at midcycle have improved annually since 2018 13% 2023 12.0% Adjusted Operating Margin* 2023 MC 11.6% 11% 2022 10.3% 2022 MC 9.4% 2021 9.1% 9% 2021 MC 8.4% 2020 MC 7.7% 2020
Slide 10: Regional Net Sales Results
REGIONAL NET SALES RESULTS Q4 23 vs. Q4 22 Net Sales Excluding Currency Translation* 26% 1% 7% NA 12% Dec YTD SA 2023 (4)% 52% (42)% APA $14.4B EME 16% 6% EME SA APA NA Consolidated YTD 23 vs. YTD 22 Net Sales Excluding Currency Translation* 25% NA Dec YTD SA 51% 2022 APA $12.7B 17% 18% EME 17% 14%
Slide 11: Net Sales, Adjusted Operating Income and Adjusted Operating Margins
NET SALES, ADJUSTED OPERATING INCOME AND ADJUSTED OPERATING MARGINS Q4 22 to Q4 23 Full-Year Results $4.5 16% $4.0 $3.9B $3.8B $3.8B $1,732.3M 14% $3.3B $3.5 Adj. Op. Income* ($M) $3.5 13.1% 12.6% 12% $1,307.5M Net Sales ($B) 12.0% Adj. Op. Margin* $3.0 11.7% 10% $2.5 10.7% 8% 12.0% $2.0 6% 10.3% $1
Slide 12: Precision Ag Business
PRECISION AG BUSINESS EXPANDING TOTAL GROWING DRIVING HIGH ADDRESSABLE MARKET TECHNOLOGY STACK* MARGIN REVENUE CURRENT (FIXED) Innovation Global Solutions for $2B** LAND ADDRESSABLE MARKET Goal Across All Retrofit Every Makes Channel Season 29% Fertilizer AGCO+ 1% Machinery (Fixed) TRIMBLE 2% Machin
Slide 13: Free Cash Flow
Q3 2023 EARNINGS RELEASE FREE CASH FLOW* FOURTH QUARTER SEASONALLY STRONGEST FULL-YEAR ▪ Generated $740 Million in Q4 2023 FREE CASH FLOW $1,000 2022 2023 FREE CASH FLOW VERSUS TARGET ▪ Company and Dealer inventory higher due to slower market demand $800 Source / (Use) of Cash in $ Mils in certain r
Slide 14: 2024 Market Outlook
2024 MARKET OUTLOOK Regional Market Outlook – Industry Unit Retail Tractor Sales NORTH AMERICA(1) WESTERN EUROPE(2) SOUTH AMERICA(2) 133K Down 106K 5%-10% Down ~10% 67K Down ~10% 2023 2024E 2023 2024E 2023 2024E (1) Excludes compact tractors (2) Amounts based on Company estimates 14
Slide 15: 2024 Key Assumptions
2024 KEY ASSUMPTIONS: ENGINEERING EXPENSE 2024 SALES vs. 2023 ~Flat vs. 2023 Softening Demand OPERATING MARGIN No Foreign Currency Impact ~11.0% Pricing ~1.5% Market Share Gains EFFECTIVE TAX RATE ~27% 15
Slide 16: 2024 Outlook
2024 OUTLOOK 2023 OUTLOOK 75% - 100% ~$13.6B ~$13.15 ~$475M Free Cash Flow Net Sales EPS Capex Conversion(1) 16 Note: (1) Free Cash Flow Conversion is a non-GAAP measure and is defined as (Cash Flow from Operations less purchases of property, plant and equipment) / Adjusted Net Income. See reconcili
Slide 17: Appendix
APPENDIX 17
Slide 18: Grain & Protein Results
Q3 2023 EARNINGS RELEASE GRAIN & PROTEIN RESULTS Grain / Seed / Protein Production Equipment DECEMBER YTD 2023 SALES DECEMBER 2023 YTD NET SALES $156M DECREASED ~4% vs. DECEMBER 2022 BY REGION $137M SA Decrease in Sales of Grain and Seed Equipment of ~3% $614M $1.1B APA EME $155M Decrease in Sales o
Slide 19: Non-GAAP to GAAP Reconciliation: Free Cash Flow
NON-GAAP TO GAAP RECONCILIATION In Millions FREE CASH FLOW Three Months Ended December 31, Years Ended December 31, 2023 2022 2023 2022 Net cash provided by (used in) operating activities $ 900.4 $ 1,133.3 $ 1,103.1 $ 838.2 Less: purchases of property, plant and equipment (160.4) (117.8) (518.1) (38
Slide 20: Non-GAAP to GAAP Reconciliation: Net Sales Q4
NON-GAAP TO GAAP RECONCILIATION In Millions, Except Percentages NET SALES Three Months Ended December 31, Change due to currency translation % change from 2023 2022 2022 $ % North America $ 891.7 $ 823.7 8.3 % $ 9.9 1.2 % South America 412.0 674.8 (38.9)% 20.8 3.1 % Europe/Middle East 2,259.0 2,186.
Slide 21: Non-GAAP to GAAP Reconciliation: Net Sales Full Year
NON-GAAP TO GAAP RECONCILIATION In Millions, Except Percentages NET SALES Years Ended December 31, Change due to currency translation % Change 2023 2022 from 2022 $ % North America $ 3,752.7 $ 3,175.1 18.2 % $ 5.3 0.2 % South America 2,234.2 2,121.6 5.3 % 56.8 2.7 % Europe/Middle East 7,540.5 6,447.
Slide 22: Non-GAAP to GAAP Reconciliation: Q4 Income and EPS
NON-GAAP TO GAAP RECONCILIATION In Millions, Except Per Share Amounts INCOME FROM OPERATIONS NET INCOME NET INCOME PER SHARE Three Months Ended December 31, 2023 2022 Income From Net Net Income Income From Net Net Income Operations Income(1)(2) Per Share(1)(2) Operations Income (1)(2) Per Share(1)(2
Slide 23: Non-GAAP to GAAP Reconciliation: Full Year Income and EPS
NON-GAAP TO GAAP RECONCILIATION In Millions, Except Per Share Amounts INCOME FROM OPERATIONS NET INCOME NET INCOME PER SHARE Years Ended December 31, 2023 2022 Income From Net Net Income Income From Net Net Income Operations (2) Income (1) Per Share (1)(2) Operations Income (1)(2) Per Share(1)(2) As
Slide 24: Non-GAAP to GAAP Reconciliation: Operating Margin
NON-GAAP TO GAAP RECONCILIATION In Millions, Except Percentages OPERATING MARGIN Three Months Ended December 31, Years Ended December 31, 2023 2022 2023 2022 Net sales $ 3,800.7 $ 3,898.9 $ 14,412.4 $ 12,651.4 Income from operations 393.1 465.8 1,700.4 1,265.4 Operating margin(1) 10.3 % 11.9 % 11.8
Slide 25: Non-GAAP to GAAP Reconciliation: Free Cash Flow Conversion
NON-GAAP TO GAAP RECONCILIATION In Millions, Except Percentages FREE CASH FLOW CONVERSION Year Ended December 31, 2023 Net cash provided by (used in) operating activities $1,103.1 Less: capital expenditures (518.1) Free Cash Flow $585.0 Adj Net Income $1,165 Free Cash Flow Conversion 50% Note: Free
Slide 26: Non-GAAP to GAAP Reconciliation: Adjusted Operating Margins at Midcycle
NON-GAAP TO GAAP RECONCILIATION ADJUSTED OPERATING MARGINS AT MIDCYCLE Year Operating Margin Adjustments Adjusted Operating Margin Midcycle Normalization ( 2 ) Midcycle Adjusted Margin 2023 11.8% 0.2% (3) 12.0% -0.4% 11.6% 2022 10.0% 0.3% (4) 10.3% -0.9% 9.4% 2021 9.0% 0.1% (4) 9.1% -0.7% 8.4% 2020