Slide 1: Third Quarter 2018
THIRD QUARTER 2018
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 18 v YTD 18 v Q3 18 YTD 18 Q3 17 YTD 17 Net Sales $2,214.7 +11.5% $6,759.8 +17.0% Gross margin 21.4% (20)bps 21.6% +20bps Adj. Operating income* $112.8 +12.7% $340.0 +23.9% Adj. Operating margin* 5.1% +5bps 5.0% +30bps Diluted Adjusted EPS* $0.91 +$0.12 $2.58 +$0.67 * Refle
Slide 4: Industry Overview
INDUSTRY OVERVIEW September 2018 Year-to-Date Industry Unit Retail Sales North America 2018 vs. 2017 Tractors* • Industry 3% Combines • Industry 13% Western Europe 2018 vs. 2017 Tractors • Industry 1%* Combines • Industry 17% South America 2018 vs. 2017 Tractors • Industry (1)% Combines • Industry 7
Slide 5: 2018 Production
2018 PRODUCTION AGCO Production Hours Up Up 1% Up 7% 6% • Q3 18 production up 6% vs. Q3 17 • Full year 2018 production up approximately 8% vs. 2017 Q1 Q2 Q3 Q4E 2017 Production 2018 Production 5 5
Slide 6: Regional Net Sales Results
REGIONAL NET SALES RESULTS Regional Net Sales Results Q3 18 vs. Q3 17 Net Sales Excluding Currency Translation* September YTD 2018 $6.8B South North EME America APA America Consolidated North America 25% EME South 57% America 10% APA 8% 17% 33% 10% 14% 17% YTD 18 vs. YTD 17 Net Sales Excluding Curre
Slide 7: Net Sales and Operating Margins
NET SALES AND OPERATING MARGINS Sales Q3 17 to Q3 18 Adj. Op. September YTD $M Margin* $227M Sales Adj. Op. Income* $174M 5.0% 4.7% 2.8% Adj. Op. Margin* Adj. Op. Margin* 1.6% * Reflects adjusted results, which exclude restructuring expenses and a loss on the extinguishment of debt. Please see recon
Slide 8: GSI Results
GSI RESULTS $826M $826M Sales for the first nine months of 2018 sales up 3% vs the same SA period in 2017 on a constant currency basis APA Protein - Growth in sales of grain and seed equipment in all regions SA - Declines in sales of grain and seed in protein production EME equipment in NA, SA and
Slide 9: Investing for Growth
INVESTING FOR GROWTH CAPEX Engineering Expenses ~$392M ~$370M $323M Capex ~$250M R&D Exp. $204M Dep. & Amort. 4.0% % of Sales. $128M $129M 2.4% 06 07 08 09 10 11 12 13 14 16 17 18E 06 07 08 09 10 11 12 13 14 15 16 17 18E 15 9 9
Slide 10: Free Cash Flow
FREE CASH FLOW* YTD Free Cash Flow Full-Year Free Cash Flow YTD 17 YTD 18 • Fourth quarter seasonally stronger for free cash flow $374M • Includes inventory build for emissions transition stock • Targeting ~$225M free cash flow ~$225M in 2018 ($157M) 2017 2018E ($169M) Note: Free cash flow is define
Slide 11: Returning Cash to Shareholders
RETURNING CASH TO SHAREHOLDERS Dividend Initiated in 2013 Cash to be Ambition to grow Returned to Share Repurchase ~$1 billion repurchased over last 4 years Shareholders $300M program authorized through December 2019 ~$84 million ytd thru end of September 2018 11
Slide 12: 2018 Market Outlook
2018 MARKET OUTLOOK Regional Market Outlook – Industry Unit Retail Tractor Sales (Volume in Units) N. America* S. America Western Europe 142K ~Flat Up 88K 0 to 5% 56K ~Flat 2017 2018E 2017 2018E 2017 2018E 12 *Excludes compact tractors 12
Slide 13: 2018 Assumptions: Summary
2018 ASSUMPTIONS: SUMMARY 2018 sales up ~12% vs 2017 - Relatively stable end-market demand - Pricing +1.5% to +1.75% - Currency translation ~Flat - Acquisitions +2.5% Engineering ~4% of sales (up ~$45M vs 2017) Operating margin improvement Effective tax rate 35-36% 13
Slide 14: 2018 Outlook
2018 OUTLOOK 2018 Estimates Sales ~$9.3B Adjusted EPS ~$3.75 CAPEX ~$250M Free Cash Flow* ~$225M 14 * Free cash flow is defined as net cash from operations less capital expenditures. See reconciliation to GAAP metrics in the appendix of this presentation
Slide 15: Appendix
APPENDIX 15 15
Slide 16: Non-GAAP to GAAP Reconciliation - Free Cash Flow
NON-GAAP TO GAAP RECONCILIATION - Free Cash Flow $M Three months Three months ended September 30, ended September 30, 2018 2017 Net cash used in operating activities $185.4 $37.2 Less: Capital expenditures (48.7) (47.1) Free cash flow $136.7 $(9.9) Note: Free cash flow is defined as net cash provide
Slide 17: Non-GAAP to GAAP Reconciliation - Free Cash Flow
NON-GAAP TO GAAP RECONCILIATION - Free Cash Flow $M Nine months Nine months ended September 30, ended September 30, 2018 2017 Net cash used in operating activities $(18.9) $(29.2) Less: Capital expenditures (138.5) (139.4) Free cash flow $(157.4) $(168.6) Note: Free cash flow is defined as net cash
Slide 18: Non-GAAP to GAAP Reconciliation - Free Cash Flow
NON-GAAP TO GAAP RECONCILIATION - Free Cash Flow $M Year ended Year ended December 31, December 31, 2018E 2017 Net cash provided by operating activities ~$475.0 $577.6 Less: Capital expenditures (250.0) (203.9) Free cash flow ~$225.0 $373.7 Note: Free cash flow is defined as net cash provided by ope
Slide 19: Reconciliation of Currency Translation and Acquisition Impacts to Net Sales
RECONCILIATION OF CURRENCY TRANSLATION AND ACQUISITION IMPACTS TO NET SALES Net Sales $M % change from 2017 % change due to from 2017 % change currency due to Three Months Ended September 30, 2018 2017 from 2017 translation acquisitions North America $ 545.5 $ 483.5 12.8% (1.0)% 3.2% South America 2
Slide 20: Reconciliation of Currency Translation and Acquisition Impacts to Net Sales
RECONCILIATION OF CURRENCY TRANSLATION AND ACQUISITION IMPACTS TO NET SALES Net Sales $M % change from 2017 % change due to from 2017 % change currency due to Nine Months Ended September 30, 2018 2017 from 2017 translation acquisitions North America $ 1,648.9 $ 1,344.9 22.6% 0.4% 8.0% South America
Slide 21: Non-GAAP to GAAP Reconciliation - Net Income per Share
NON-GAAP TO GAAP RECONCILIATION - Net Income per Share (In millions, except per share amounts) Three Months Ended September 30, 2018 2017 Income Income From Net Income From Net Income Operations Net Income Per Share Operations Net Income Per Share As Reported $ 111.3 $ 71.1 $ 0.89 $ 97.1 $ 60.7 $ 0.
Slide 22: Non-GAAP to GAAP Reconciliation - Net Income per Share
NON-GAAP TO GAAP RECONCILIATION - Net Income per Share (In millions, except per share amounts) Nine Months Ended September 30, 2018 2017 Income Income From Net Income From Net Income Operations Net Income Per Share Operations Net Income Per Share As Reported $ 329.9 $ 186.8 $ 2.33 $ 261.1 $ 142.1 $
Slide 23: Non-GAAP to GAAP Reconciliation - Net Income per Share
NON-GAAP TO GAAP RECONCILIATION - Net Income per Share Full Year ended Dec. 31, 2018 Net Income Per Share(1) As targeted $ 3.35 Restructuring expenses 0.09 Extinguishment of debt 0.31 As adjusted targeted $ 3.75 (1) Net income per share amount is after tax. 23