AGCO (AGCO) 7 Feb 232022 Q4 Earnings call transcript

Good morning and welcome to the AGCO Fourth Quarter 2022 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Greg Peterson, AGCO Head of Investor Relations. Please go ahead.

Thanks Anthony and good morning. you call. for of XXXX fourth those conference earnings to joining AGCO’s us quarter Welcome

refer a non-GAAP will metrics our that We to are in website posted morning presentation that at on the that’s appendix www.agcocorp.com. presentation. to The reconciled measures of in slide used GAAP presentation this

crop future expense, rates metrics. this dividends, We development delivery, plans, that expenditure and statements flow, to our prices, exchange pricing, with repurchases, morning commodity production, engineering and share rates, inflation, margins, sales, materially. component you differ will predictions supply rates, also chain and disruption, make respect that call earnings, cash may interest capital actual these production caution We tax on forward-looking statements are financial to product events levels, other wish demand,

you as resulting important that to statements. any the availability obligation such Commission, Exchange exchange to later update today. also disclaim from by from in from ended including December plant These will forward-looking closings, commodity These reports corporate A as required prices except be Securities workforce to, differ law. our to that this but not adverse website XX, volatility, on rate call the our for year industry, factors those supply periodic limited the chain agricultural product available in and including the We with demand. those They demand. materially replay contained weather, product COVID-XX, include the disruption, developments are forward-looking and of statements the changes any factors we in XXXX. time-to-time could discuss We cause file actual and results company’s include, XX-K Form refer documents

President Chief our are go Chief call me please ahead. and our Executive Vice Financial with Senior President and On morning Eric With Officer. Eric, and Damon Audia, that, Officer; the Hansotia, this Chairman,

But Those of Investor before It’s want with both Good details, those operational we with perspective. I in great quick we you. overarching from get this haven’t well in to at of of to recognize an we will The vision the investor finished the and our laid recap and Day from December. meeting. XXXX Greg. attended the XXXX hosted out changed. incredibly that financial you foundation strategy into be purpose, morning. all strategy start Thanks, one It’s that page. slide We a meeting

concentrated to sustainably around are feed world. farmer-focused We the our all machinery. than are key also of machines. technology, solutions and who is and data, It delivering a solutions are we are. strategy. activities weaves our solutions Sustainability These They our digital to connectivity through on more about cornerstone the is day-to-day

world energizes purpose. feeding our Finally, the

that are growing fostering our initiatives, While success. culture faster on changed, business down strategy enables doubling hasn’t than our a our optimizing and strategic market, the we key

and technology We particularly the have commitments performance, bar raised our performance. our in our financial on operating margin

that is strong You we see This margin healthy fourth line off to move top our results. growth a as expansion. terms of already very will and paying in quarter focus

basis operating like helped our year the I points of in deliver throughout for in challenging resulted thank that posted great support These expanding of year. operating XXXX. quarter margins farmer by employees adjusted with customers class quarter XX%, full earnings. terms and record XX%. this work highlights finish world to growth our X efforts sales fourth XXX hard We their fourth to Slide XX,XXX sales, and for would to margin AGCO’s a deeply

XXX to earnings operating sales For the basis almost improved full year, hit adjusted to and our margins per reached share XX.X% billion. points $XX.XX. $XX.X net Adjusted

AGCO. Now, these are all records for

solutions our expand to team. our of a year. deal spend and testament our strategy execution an with focused increased digital smart supply key and I could prouder Overall, the challenges investment farming ambitious During our continuing be chain to XXXX, delivering acquisitions. not engineering several capabilities record we during results, executed on record our These while enhance also to while plan are through results

we experience to production are component our that While the impacting couple significant improved chain the supply has volumes. last shortages of continue over quarters,

is inflationary the the despite demand global healthy The market encouraging remains supply that pressures, news economics farmer and strong. bottlenecks end global remain and

expect We to supportive conditions continue into XXXX. market

Our to to continue our optimism, investments which for financial us to outlook well technology-related ‘XX allow reflects shareholders. cash as will this return accelerate as

Support resulted new unit agricultural equipment sales robust levels normal remain well industry industry constraints and by production demand chain dealer large retail used in for machines year farmers of details during for XXXX. the as continued inventory X economics industry. full region the Supply replace year. Slide limited and ag across below the aging of larger of farmer to levels equipment

global farm in sales industry machines. lower America Europe North of despite of and higher XXXX, equipment For significantly retail were larger sales

in production units horsepower for robust XXXX, supply again demand of down American were XXXX. are North South expected America, sales farm overall sales from X% while challenges, sales X% profitability. crop in ag large increased decreased compared tractor Industry approximately retail throughout also despite Argentina South markets to approximately America Smaller higher industry XXXX are Brazil, and strong full Western offset the supportive the in X% In during for helped decline. and sales in retail supporting favorable levels healthy America retail the Strong smaller tractor industry by XXXX. increased in sales declined modestly restricted tractor sales tractor were margins chain in Healthy to year levels which XXXX. drive These XXXX. growth equipment. demand to record dampen Europe, compared South in lower economics

in about Stocks-to-use supporting peaks we dealer levels positive all year. like is think their levels, very China’s underlying the XXXX. equipment supply. supporting of prices. target the last from the green commodity are that will below anytime fuel down around low don’t significantly demand channel for fertilizer ag constrained and Input With The new soon. still remain change from world fundamentals at industry strong levels healthy very are reopening, We used costs and

farm in supportive be income it that from XXXX. maybe very for modestly Currently, much in down industry remain XXXX demand. in and see will good a ‘XX, XXXX changing record at we we for don’t levels While think level

AGCO’s X. XXXX hours shown Slide production factory on are

see can our production in with in that expectations. XXXX line increased our You

third chain by level logistics the to we were in as we challenges, face we end million reduced In $XXX Although reducing at quarter, and of supply products. inventory fourth successful continued to our compared the inventory work-in-process semi-finished the the quarter. the nearly

are full to X% X% XXXX. in year, share to a market XXXX for the X% on our increase approximately hours production worked strong Based projecting production we as demand. and we increased the For the levels to industry satisfy hours compared forecast,

tractors levels At AGCO’s improve remained America, and compared strong XXXX and orders Europe on-time extended order In from flat America in intake Western year limit level. to global higher our combines to the North XXXX down delivery were end, board have a compared were to ago. elected rates. approximately and as of South our Orders December year to we for is order

for Our pricing continue in to products through of remains and advance farmer-focused through Western XXXX the to ourselves quarter we more third flexibility. XXXX our around and quarter limit Brazil extends order in where demand orders one our the in very of to quarter coverage bottom Europe second line, give strong. The North America

downturns. You’ll These and margins areas. potential cyclical growth which opportunities at less provide three X during higher significant our recognize growth Slide the highlights variability on high-margin focus

is The brand Fendt first full-line focus area taking our global.

grow We along continue two the to business vectors.

now we product beyond first, products planters, to line combines Fendt The more. like the expanded tractors include sprayers, key and

is full of Fendt line mention taking this global. products second The

America. continues to interest results, our branded compared in XXXX. in see XXXX, to markets In lines over sales product Fendt grow those and can South you North in As increased our Fendt premium our for XX% both

over expected next America X North to X and Our double sales Fendt the and to Challenger in South are years.

area fill effectively in parts leading AGCO our the focus service and is the second it. farmer at just part is business. right rates, needs The place right in the which a position having when global already is

We farmers are the building a business. to of capture from and foundation dealers solid more

offerings more digital and dealers our with smart helping their and solutions are become We proactive expanding service better capabilities. and parts with

and business margin expect high have to we to our rates. continue As a penetration and grow after-sales result, higher parts

third market two we The agriculture. precision in address the area ways. AGCO, focus At involves Precision Ag

which in most ag has Precision companies Precision become successful a tech in world. our through business, providing Planting automation the has leader intelligence planters. and is First one been of the Planting to

planters Over years, beyond it’s the the parts like spraying, into growing other the cycle, last and testing harvesting. couple crop of of soil

brands to upfront are investment industry own. its impressive reduces expanding well unique By beyond their Precision In approach, ROI brands. increases brand through the this the retrofit regardless and addition they offering success equipment OEM-agnostic farmer’s generated all solutions AGCO of approach, is retrofit through market we their to that the technology, addressable which Planting’s

opportunity is Ag AGCO other address OEM way for which we Precision our equipment. solutions the The Fuse, provides

innovations remain advanced focused help improve productivity, that our and technology Regarding farmers we sustainability. their technology, driving on profitability

times, of types multiple innovations seen recognition receiving have these we are industry the of in form awards. As strong

recently, the XX AEXX biological than company food any Not systems. only combined. awards most technologies from innovations awards ASABE, AGCO this recognizes but Just was and best which our of Innovation won for competitors agriculture, and more top the two

the farmers I and audience. Precision retrofit in Going advancements the their Conference All and to held attended farmers latest nearly help have into see a annual improve At of done technologies those on than lunch educate directly and I last research myself year. in world this learn from Winter technology, hear nowhere and field. the the approach productivity product better our event, program hosted have Ukraine month. a chance attend our Poland. to these agronomists Kazakhstan, caters the There which every the and farms. unique farmers about we opportunity engineers to our best from had to how showcase Precision with huge X,XXX to development can its the Planting this Planting little that had event deeper our this we to our is

been planters. focused Historically, product the introductions on new had

the made spraying neural starting leveraging onto solutions. Planting brought broke architecture, to and from adding announcement five year, they including for Precision that tradition the needed solutions a a capabilities intelligence However, XXXX last big network artificial sprayer, as targeted

model health this momentum testing the the of hands the productivity, and soil revolutionizing Radicle their the soil farm testing farmers’ the great is biggest with disrupts agronomists Radicle problems continued reliable more soil the sequestration. year. puts product Agronomics for to technology. it testing laboratory winners fully-automated of improve capability great first new need and Understanding one local summer how boasts past the by Award into world’s with team but introduction of soil was and results. emerging AEXX of also The announcing XXX-year-old faster this solving for carbon of the This soil

to platform their Panorama unobstructed usable, map most data year’s collected Precision The moving uploads Slide planter the the Panorama data of the choice. view to viewing, new better data pictured world. to X, app our conference, their their the Precision for the ability portable support. with launch the their provide feature with Planting allowing Panorama platform Precision It information shareable app. their XXXX easy modernizes cab, the this disruptive made through an for allows and helps choice. on Data Panorama planet. whether the remote and interacts on of by another a on app, our Planting will farmers farmer utilize of collected allow At or way in makes Planting technology team their new dealer data reporting farmers to controller

trying with to which our very are AGCO. and expansion technologies types also of growth to solve about core ag their to precision our biggest customers, bring challenges contribute will these our margin to for goals We excited of farmer focus continuing

the that, more With I you results. provide about will over now Damon to call information will our hand fourth quarter who

morning tractors, XX% strong quarter to the the of excluding the Net in on which regional sales, and with Eric up products. start around XXXX horsepower the precision XX% of quarter along quarter, compared negative in good when performance currency approximately and I were Slide combines high fourth growth contributed fourth effects with will quarter was the an of sales Pricing ag sales full you, the higher overview for translation. strong Thank to and everyone. AGCO’s XX net year. in

and grew combines markets by across Germany, America, compared segment the approximately American sales France and execution mix. strong and in of increase tractors to up an Europe/Middle approximately The as horsepower driven demand In fourth XX%, year-over-year, pricing significant favorable in currency in result East reported favorable year. net strongly and By product coupled South the quarter of showing the deliveries, as of prior translation increases. excluding was excluding negative the high the retail with with sales pricing well South increase fourth region, increased net sales Turkey. the volume the Sales solid in currency the effect quarter in translation, XX% of were positive largest

increased increase of the of in currency of sales factories lower as higher Net strong net tractors, of to approximately fourth quarter North sales European Asia/Pacific/Africa shipments segment resulted our compared price fourth about well translation strong XX%, the impact the last Delays year-over-year to a fourth basis, to and constant sales the from products Precision compared XX% Planting in year. unfavorable Asia/Pacific/Africa the America currency relative excluding large combines XXXX. The increases. XXXX. resulted On markets quarter sales of our decreased across from in quarter as

effects the around approximately parts $XXX XX% for replacement were quarter. year-over-year. approximately fourth million were consolidated sales the quarter, Unfavorable Finally, fourth during currency flat

Margins the by approximately Price XXX XXXX. the increases operating and a cost on production, margin in adjusted XXXX. Turning offset of basis than net basis. benefited sales quarter material a margin dollar positive to XX% quarter and and a inflation and higher fourth pricing to were on freight from quarter Slide positive versus quarter more XX, significant richer the of in compared the improved points fourth approximately mix basis

net the to positive the margin improvement. overall contributed For and year, pricing full was

Operating of By offset South of approximately operating to Higher mix quarter million approximately healthy to Europe/Middle segment reached North versus margins of improved America the operating income for and improved fourth quarter year-over-year. sales region, improvement. American in income than XX% quarter more sales the the in XXX and points. in over compared increased products operating expenses. increase East margins basis fourth the million and operating fourth an reported higher the the $XXX products XXXX income period approximately contributed $XX $XX Higher million margin-rich XXXX. same in

end mix a increases along healthy market significant growth. strong sales demand, with the pricing Continued year-over-year in supported and

the $XX Asia/Pacific/Africa in ahead. disciplined million our years to years American, margin fourth expansion the approximately across strategy execution expect regions South With balanced our the in North our Africa we operating and the the reflecting in last globe segment, earlier. delivery margin in challenges Finally, more in mentioned income be timing declined AGCO’s quarter, I Asia-Pacific, American, profile X from pricing,

our Precision summarizes XX Slide business. Ag

our for on Precision around focused our play is market profitability. believe simultaneously are just set are a We you As addressable areas. today machinery non-land our the mid-teens. all in helping which With can Precision agriculture see, Ag our in to achieving are we us role expanding traditional positions well in spend, that portfolio, global will from their sites improve as low the targets we major investment Ag sustainability that while being farmers XX% established

$XXX X% a Unfavorable in in currency recorded XXXX. increase Precision in XXXX. XXXX, we around revenue foreign Finally, from Ag XX% effects were million

XXXX. Ag we expect announced to As December our now Day, during Precision grow we high-margin billion our business $X by Investor to

Slide and XX details XXXX. our XXXX flow full year for free cash

flow free income. conversion cash flow flow cash cash free by capital less net or And cash operating defined free is adjusted in reminder, divided a As represents activities provided expenditures. by used as

inventory progress made in supply flow, over the free related in result flow up This AGCO $XXX in cash XXXX. XXXX. higher than in XX% in free affected both million XXXX flow XXXX, cash in challenges and generated significant continue to cash $X reducing our work-in-process sequential billion Despite While to traditional levels. fourth chain inventory capital versus working that, free we quarter in and requirements generated

remain elevated, we we raw expect XXXX, somewhat inventory of versus it our to be chain material source challenges, cash modest work-in-process and to supply expect but a For given XXXX.

adjusted from XX% conversion flow free our XXX% a from cash increase of net XXXX. income, to to significant expect We range

continue capabilities help well unchanged as adding to opportunistically Ag Precision acquisitions Our success. capital AGCO long-term offerings allocation in bolt-on will digital investments to include for as and our remain position and priorities

increased investment flow expenditures on outlook. needs, In $X.XX addition, per our variable on our a we of cash as generation, per returns as to remain XXXX a during cash market dividend capital and regular focused to our well with acquisition we special of quarterly share. direct Future shareholders based to investors will $X.XX share be opportunities which include that dividend and XX% returns

market major demand. farm forecast Globally, we our retail driven economics highlights healthy prices, year for strong our another end XX expect strong by to commodity market XXXX three support Slide of regions.

For demand expect healthy to America, levels XXXX. North we similar in the compared

equipment row market. equipment We in equipment smaller expect to by Increasing for interest the growth offset the growth. demand continued years continue segment the softer high several crop expected slow segment horsepower be are rates after smaller of to to of strong

forecasting where strong sales Brazil, strongest the expect demand we especially industry America, flat be up beyond large and to remains This supply to of drive markets, one equipment XXXX. for we X%, profitability, South constraints. are they in expect end In record which moderated to region by farmer chain production ag

from our exports Brazil grain increase they the to and expected As arable to large land, next remain continue equipment increase we over several years the expect are strong. to for demand ag

Shifting forecasted prices healthy region last extending the XXXX. replacement flat to outpace the Europe, XXXX. the into are to in to supply is compared fundamentals grain Meanwhile, Western Farm chain are continuing to inflation. input with equipment be year generally constraints industry relatively

Slide key XX highlights our outlook. a few XXXX underlying assumptions

to development significant robust on to we the in support market will meeting also Farmer end First of our make new addition strategy. In the investments solutions demand, focus

in see upon XXXX. Although still results demand, our supply AGCO’s will be strong market chain we dependent performance

Our market cost aimed X% increases material along sales plan offsetting includes gains with at share inflation. approximately price of

to currency sales We by expect negatively X%. impact translation about

pricing, The partially are and investments productivity, approximately factory to products. cost, of net improve is expected increase sales around driven to margins are ag farming at and in favorable increasing as by XX.X%, and Operating engineering year-over-year, higher by as to expenses XX% to increase sales Engineering and XXXX. the expected precision improved targeted expenses in digital compared production, expect smart material we initiatives and half of with $XX well other mainly majority interest million of related With first sales cost XXXX. receivable increase pressures. by rates offset forecasted, accounts to our inflationary investments to approximately increased in that higher the

an the XX% targeting rate in XX%. range to are effective of We tax

Turning to Slide XX.

from Our highlighted at remain Investor financial we what unchanged goals our December Day.

be currently $XX.XX be billion. are $XX Earnings in should We to XXXX. per expecting around range the in net sales share of

are million. $XXX We of targeting expenditures capital

the earlier, long-term I XXX% conversion adjusted be As of net mentioned with flow to of cash our consistent income, in XX% should free range target.

to back I’ll turn for Q&A. With call the that, Greg

Anthony, with Instructions] [Operator Damon. started. Thanks, please us that, get

first Suisse. with from come [Operator Credit Instructions] question Jamie Our Cook will

ahead. now You may go

longer-term, versus congrats margins wondering nice structural the my I’ve margin GSI, if us performance a then And Fendt think guys guess strength going for we versus put is XXXX, aftermarket XXXX. how how you. don’t or you that just are given increased margin any? opportunity just up in pricing strong America, think in sales or sort you Good And margins my Precision on question, with can about Thank or underperforming, think the you Ag question, power? second help about morning, the ended I of where just quarter. and guys the portfolio forward? seen I’m first to South just the GSI margin just you related Perhaps of have XX% as I parts of But America. What performance. I seen again, a much this ever South in year

Yes. Sure, Jamie.

of has the been now, the said have America, been for improvements last the the America is the overall have as stronger to exceptional probably One if couple first structural over has there, type to introducing That, around really at we we’ve world, point, end higher differences last our some years margins made with that that in the pricing. performance. So horsepower market that twofold. strongest and to quarters we’ve we move Fendt to your really look several South South really operating right catering created now the and structural tractors, coupled

you said, the the like XX% in was So quarter exceptional.

in as bit guide, we there pricing, costs will rising. has in come job of down our margins down tried advance pricing team a we material to our really XXXX As do think here done good in a little

is America of say in that So structurally What we different do mid-teens we to sort long-term. term for would expect to come down. and that see South we longer the know will low

for we of again, we over a improvement into So move high but lot point, years, at continue see of little bit we’re past at a the lower of XXXX. least that to but the foreseeable to and expect a future sort as couple

to question of in then of the the a incremental here underperforming North To And some event, in your year the the the as expecting. say prices you part were protein think of America. cyber the group with relative and Asia-Pacific areas, struggle quarter, COVID would affecting was the on It of the by China which steel America. challenged the protein really things lockdowns recall, in second we put grain there. challenges on dealt challenged of we did couple the really second really protein a what here the by your We grain grain affected and of I sort was of in and in start business with little pressure North lot part with a bit

parts two what say, protein, and grain below those would were So I we were hoping. of

some grain actions, that and of closures. America was factory well, contributor added as improve there. protein that did portfolio. We’ve structural technology-type part to We’ve a really know, acquisitions taken some South done as We’ve you business. some quite

profitable It So expected it improve are improvement expecting here as digits, low here in say, or a to a we again, bigger in big I profitable XXXX, into overall single would but we improvement was XXXX. move ‘XX, profitability. with business

you I will in much. Thank very queue. back get

will Our next Tami from JPMorgan. with come question Zakaria

may go now ahead. You

whether in on update is kind mix thanks. you got in you or and I through then million stand in pushed for at mentioned on provide XQ? Can shipments McMullen today just all red-tag APA. of quarter, where some your the year-end? gets Can just you Tami. delivered remarks, of that also And details got worked whether you prepared XQ. all that think units $XXX quantification around kind provide This mentioned Hi, into Sean sales that of Last on an

Sean. Yes,

think working the good through the did in a the So around semi-finished inventory world. team job really I

exceptional left still I’d region of driven Europe one say did supply where little, North again, that was bit there. very I’d was little the by more – if here Asia some an America. in a challenges. inventory over say have job any, semi-finished where And we

that As up. are getting there one things still pop suppliers better, two are or

we in little job. bit very semi-finished had of And the inventory America. a North here a the did teams overall, so good around But world

selling My comment as the inventory water in-transit about expect some system, the again, are more issue move of the than again, depending on But the likely on a first just through than through of products, the work the couple quarter. a probably a rather for million to we more of anything. in hundred again, of here that half we would the season, first XXXX us hopefully that’s timing

Fuse? Great. is give focused the seasonality do normal as versus And you of Precision as expect Ag. you your on split Precision expectations Thanks, more question for my kind Can well kind Planting then of Planting more of also, year? second growth Precision of Damon. kind kind this And just of for year this

Yes.

going the of a second last stronger to able we we’re some similar in to sales. strong from probably to first cater we the around half, given very as was saw we historically, historical up to still the look itself season. XX% had But year, right tell saw little I more Fuse chain equal backdrop given what something Precision than I year, so in was OEMs overall, Sean, than a strong think, we you, planting cadence XXXX, sales, a all of Last the an And much that see half now, would weighted demand, so there. what little more first retrofit demand Planting of with half. bit a that’s disruptions, more supply again. strong it balanced demand we’re OEM-agnostic at basis. where bit demand,

And our business. as that very Planting So think of target million $XXX to Precision this our from from of by that growth a again, is we billion lot $X about year XXXX, coming there. demand strong

in coming ‘XX growth So we as see here well. good

color. Great, thanks. Appreciate the

Our Revich with next question Sachs. will come Jerry Goldman from

You go ahead. may now

talk Yes. digit like we range. strong Hi, about looks good Eric, the of everyone. if how you it on be Planting Precision margin legacy wonder in the America, the North the just considering morning, are I folks running margins might mid-single could product, tractor products, in

to the to as tool how opportunity margins given so take much North an you set? talk Fendt use And rollout line do higher? of have sight can What’s rollout, just that America about you a

generation on track Fendt Yes, globalization America full product and America, line. the for in demand is Fendt well of South North our the

qualifications establishing and more step-by-step dealer. We’re a being meet that more the dealers stringent Fendt of

And weren’t reality, more, a this could We to dealers in that in that XXXX. product we In we demand so underserved we’ve frustrated. that sold They line, that’s place. lot and with have want got able and to are actually new a few feed grow enough.

best channel. far, Fendt The up about can proposition just the terms in delivering maintained the product really that. job feeding what brand match of and very is The a So we’re being more the of support. is we’re the living expectations experience, value of it’s demand sure for But so we great us seeing supply dealers and working and closely. best hard are in the ‘XX are doing products that to to make the

Is side you you’re I we’ve in that XXX, ask can on in about I’m Can where And can you it, used America. I terms range on for demand know of Okay. product that increases North in tractor past, over the XXX-horsepower used seen inventory what X inventories the call being those the very healthy. wondering specifically? cadence address you spoke large seeing product ag well? as just lines? Specifically, comment months,

right horsepower. the Yes, around inflection an I XXX there is would point say

lot There GDP. of cooling horsepower, is That’s are order get When XXX horsepower. time, horsepower – are enough the year. the been marketplace tractors. directly for market is to a softening. XXX now to off, would target to tied is more and and there quarters we’ve low for horsepower, below and high. market there closer demand So down the strong the Fertilizer COVID peaks above buying, pull-ahead that it’s levels prices inventory – just low still their fuel we few is grain that off rate is prices of over are seeing Dealer strong. And say, There staying a cooled you lot last demand that, back so prices from off. on not in simply is coming a

though have of input moderated the a the so grain little some prices costs. have even bit, So

XXXX. in farmer profitability So very was strong

We and lean, still expect change expect the season. strong. expect strong new is purchase ag it throughout full both used, don’t to that to we be the be in to XXXX, in and large And and power very channel XXXX we

you. Thank

You are welcome.

will question from Kristen come next Oppenheimer. Owen with Our

You may now ahead. go

Hi, Thank the question. for XXXX. expectations Obviously, could little you margin the in I mean, issue was in XQ. you good talk of cadence for unusual wondering Planting. in if seasonality cyber a about the your some noted bit you Precision morning. I

about cadence we as Just Thank in thinking of help terms how go us margins through the margins you. year. you’re incremental the for and

Yes.

as year, I the I year-over-year. experienced think, expect QX, alluded maybe couple based in on we that Kristen, increase would to an strong very just incremental margin year-over-year. say, would here much we QX pricing, Again, see would comments. say, I last South couple say in you I a delivered America, given the performance of to maybe improvement event not would significant a of year-over-year. the QX, cyber of differences so you

two about, of about the we carryover. that So I unique lot pricing, think pricing If that I the talked probably a is X% those are think quarters.

here, year move half. probably first going little stronger you see bit in through the you’re the to a as pricing So

million. would be be that the comments, other and year, at opening the the as I But expense start my we majority then start we down And the the around tail then of year see half pricing that up as to of – $XX of back year-over-year back of so said well. tailing We in The higher would the always out. carryover will in as to assess come rates. as in these interest do. sort then that of some look we line half income lap as the sort off first And see of you’ll markets you’ll

a that’s sequential we’re quarterly how So through year-over-year basis. of sort the movements thinking on or the

American a previous talked years. the as of doubling level, at revenue just X South North follow-up to Thank and the one helpful. That’s about questions, to next then really a X you Fendt over you. high And

your of Just much for XXXX. you. help that Thank into outlook gains is how penetration baked market us share in incremental understand

this and for growth both related dealers our market the have forward-looking farmers current challenges So we’re here. rollout, give plan, Eric next South to to North planned we share regions gain in year. as our we both alluded to don’t and I to, going our year America a more market but to in products grow getting specific do do think that or Fendt America in is Fendt plans of have one share

Our from Thein next question will come Tim Citigroup. with

You may go ahead. now

this you of Yes, quarter, Damon, last you up perspective, as sum to of like basis? you just first XXX just year? everything the thanks. Is compared a that pretty bottom-line one, but up, correct? expense, headwind a other big on the would up from in should on expect be year-over-year? that first first kind piggyback be quarter that presumably, from mentioned, year-over-year to a to be I we thinking Should quarter know

Tim. Yes,

the incremental pricing, to first expenses, pricing the good do see quarter. alluded, even operating have going we think – we’re we as in I strong a with I said,

be up would we versus to year. expect hopefully, prior the QX So

thinking interested just year. it trying to in as in can what But know I okay. you you reasons. this pretty your of on managing number unique been would and appears staffing about Thank be large about think how you as like you markets thoughts as ag, you it, a are this But look you, profile just you kind terms you business has And I Eric, one of potentially, demand get again, look specifically the be for of talk reasons are number customers, the for dealers for think But we about the challenging the and I thinking events. a kind then geopolitical the cycle, this have how and clear the it’s asking of of mean be longevity beyond? beyond it’s for up, to Got running things of out how perspective in that. looking to forecasting maybe business, these any you. am year. just predicting which weather about or kind cycle of I shapes and

is cycle this peak-shaved view it’s of we way The that because Yes. been capacity.

we built So, XXXX we we have XXXX competitors. but have and could and more could in more, likely if our couldn’t sold neither would

the that out whole market the into so And essentially which pushes was peak starved, future.

which And light rates so XXXX, very and solid we Well, strong. well, ag the the much indicators weather on inventory, you that right are of large weather underlying world our drought we in La of suggests you is is board Niña what that three have there got production leading our channel still cycle, production especially the conditions for ag the areas. and and already continue still of most suggests order And drier the at? the portions order now look in into are the for say, products, quarter in

market wheat, X-year high. likely all lows get those stay prices primary ratios to soybeans, costs the farmer are – the can stocks, replenish those like input until will stock-to-use strong. X-year the moderate, So, the these they to high in long if on be and grains for continue prices can the it’s Until all profitability stay as And are replenished, as to corn.

year. dramatic we be to unless right now, ways are will something we a ‘XX strong. out. happens, very expecting good that’s ‘XX And also be But think a So,

So, a come into things play. lot of will

and Northern planting grain the watch be the in good that to XX months Hemisphere, harvest will Hemisphere. and for We the in see are how watching demand Those through out. the then much happens months season ‘XX Southern how X goes for comes spring the in how indicators

lot. a Thanks Great.

bet. You

De from Blair. will come question William Larry from next Maria Our

ahead. go now may You

flow morning obviously, mentioned dividend, towards or everybody. cash a potential you out sheet, some Thank on Are the strong investment is gen remarks, cash buyback, you. special you In returns how you M&A are etcetera, discuss there future maybe the outlook, prepared given Good about year? leaning you there? needs, can balance this based it thinking

my we we how disciplined stay on think I will in as I have for said remarks, us, Larry, Yes. have approached this.

quarterly We have. we as XX%. on dividend an that will Last look we annual basis year, at normally our raised

at look generation, relative We to still will whether $X.XX sustainable see our sense. flow cash makes that that

we an invest pipeline, that our M&A we can technology have where opportunities having than talked build to buy looking active rather As and accelerate we to for before, it. have

pipeline, And be associated we and with so look ‘XX macro at we we potential do active will along outlook. costs the those the have And good. acquisitions, to with an as Eric said, expect

‘XX on good expect We we based to see it today. be

And to variable pay the special those down around sort would shares. our been shares sort of of so outstanding we XXXX. would we in have what in keeping come of dividend Historically, on based repurchases drive things, line at on million any that more our XX

the probably to as the we again, ‘XX that expect dividend, special at will I probably path. similar in timeframe last years. in revisit the have we as look And so we And more follow variable couple QX of

and tractors, the a the years Fendt combine you on are now you sense. an we with then have here of just layer And is combine? about that a overall That bit go. that the a update the obviously about heard there, guys couple Fendt doing? But about bundling you. or and Okay. obviously lot tractors? a makes What’s performance sort grown Thank And have How to more lot we a IDEAL like? quite business for Thank have heard you. because lot Fendt, more you in of can that maybe

and sure the both year Yes. The where reliability. was great turned market year we corner we great really walked on. IDEAL the that we combine, had make to ourselves This the productivity past slowly into

a year had really issues performing was reliability the in all always first had have a some early machine, we about great XXXX the in markets. major great couple but felt reliability of we We where years.

more to up And aggressively. product so now we to are ramp ready that allow

happen years more is it to would two and combine own things And like The We capacity on products. its the be so stand sell generally based with Those bundling we the other and place often have that. would bundle planter tractor. on got in together. that plans will get own with over our that put don’t its the performance. next But bundled Momentum couple one and of

XX% And of in was the ‘XX up over a of in both to sales America ‘XX. IDEAL the and maybe statistics of in it strength Larry, South America, give just you couple versus North combine,

well. So, and it’s a very performing strong demand quite

you. Thank Prefect.

next question from will Fargo come with Weber Our Wells Seth Securities.

may You ahead. go now

Is more North color around you Hey AGCO’s driven, morning. that? production that any prepared guys. a it ask comment see remarks that. just order if the constraints expand wanted chain-driven? on in to wanted America. intake in I could limiting was or about, Thanks. there I the about just Good Is to just supply

the play I accelerating. is business couple we Yes. Fendt and on launching at it. here. about There getting bringing is of talked that dynamics line, are that One dealers product a new

While we we to are – on with that new doing well want are as taking that, we customers product.

first so to in product That’s impression. our service been impression that our a negative opportunity. And and have dealer been ability been ramp-up the The on we want to in deliver system time. great has has in fly whole our biggest great. has The been the great ointment

finish our to instead to suppliers production. of delay having reliability we And issues in And some give because supply open ability remains our order able dates. the the that, the book commitment is on competitors to window to, of decided so be constrain we chain volatility the of then higher an that with order book, the It’s having and this as well. happening that still our of machine shortened

it’s around So, nothing issue, else. that all

And Eric, that’s just chain? primarily on though, issue that, a the supply America North

chain market. Well, time. quarter already it’s The because order – that’s book, the is growth going a we at South – America one a supply already in we were

brand we So, strategy, bit adding a South America, are America of market a to the that a whereas North new conquest stable more is it’s market. a was and Europe in where place.

first, wanted are positive. to those we one we the customers. are We in relationships markets in relationships be be want South relationship we like And up want little and It’s they But long-lasting engaging to bit product, it new Europe deep we we already – with with and experience are tighten that dealer. dates the are we so in the the they establishing that more had new in can giving more to entire and first we the And – manage issue they North cautious impressions. delivery a and delivery because America feel there. We deep yes, already the certain know understand America. the uncertainty, know and

Got it.

of just there sure make a your Brazil. not on the feet any are you hearing just street, the are around there? any – pausing related the around changes in the election couple that your guys anything to in guys, you. And the or occurred times just wanted your dealers, Okay. comments Thank or down on election then hiccups to strength the I around sentiment about

spot-related. very a a a were of that some disruptions because level But and tactical very transportation for there like exists. short tactical, picture, farmers more that streets in are Big South into demand were profits to the that’s is the the blocked. fantastic ground at short-lived, of – production things ones period, They mean kind America. few still in global feed gap adding I making are

grow. strong. profitability pulling And extremely market continuing so Demand is to that farmer from

significance government of year structurally of and XXXX. see And that in we economy. new strong to the from very a try expect their We don’t part coming anything vital slowdown

much. you it appreciate guys. I very Thank

You’re welcome.

from Mig Baird. will come Dobre next with Our question

may You now ahead. go

to the a on want ask question orders. also I morning. Good you. Thank

about relatively kind book. relative what the talked see have to be order way is? few obviously, Is able is the the to these underlying little talk about to to limitations a there way of you structured open do demand books a for to a still you order them XXXX a prior have year. being that quite maybe where in there a But an – sense And to You flat on in apples-to-apples first? need it to basis better bit order you

to it, in that is it’s pretty what see our stability need right straightforward now, chain. regard. That’s in we Well, supply more

to of having supply and chain to better enough easing where number better to overall one it’s not every it’s getting challenge system. still a It’s see predictable but challenges, continue supply the macro but quarter, stable. We chain our

we and – else? think that’s So, that’s I say. what Anything would

No.

about And far you book kind this talking order basis, can us an there? apples-to-apples help as as of

That order handle how I handling a Damon think better. changed of America. and intake North a somewhat And Mig, had job there. probably terms explaining South America, how and getting really in year, we In to we markets are that last we little little situation just two maybe are limiting the have inflation did orders think – nice a bit pricing. I is is Eric curtailed

maybe little I apples-and-apples. America are would a But a in on South too not looser and little in it’s from we say tighter America. balance, North So, far

see are question if Latin a America, the it going outlook, you we my it assume Then that other don’t know But follow-up, on lower the I Okay. that fair margin just in to understand are I going seems segments XXXX. properly. to to see margins expansion? Is margin

Yes.

the will dampen the in the ‘XX I I about ‘XX, primary think – margins two think year-over-year, drivers the versus is engineering. think I that if Mig, improvement one the

$XXX So, engineering going we to spend million increasing year-over-year. approximately be are

in margins. America, be of our And are tamp more to markets, That’s in contraction but we the to is driver Europe that. doing then the going that’s South North the So, global, going sort American margins. sort of second down the primary

it’s are and So, to of generally, with couple one-offs of a going engineering regions there products South the European the those bit things margins. about here importing in those of little euro-dollar and two of down coupled exchange what’s sort be couple But tamping then a America.

Appreciate the Thanks. color.

question next Our come with Volkmann will Jefferies. Stephen from

You may now ahead. go

expect would be Damon, go for Thanks the as move. we I happen, I has balanced for North the here. you to me make you America to guess taking to in it guys. that was among strongest think positive Hey probably said that who regions. the more forward, margins

mix and can or American else North Precision, more sort that is margins guys more you better? something that is of the there help to Fendt do and about all So, just get

then Steve, North things. in of North so continuing precision It’s parts. it’s of our couple think, in a ag three, growth the I and Fendt America, growth big growth America

good see struggled event. given really it’s turning last I the improvements think – the brand still there, will cost its the is underlying America, performance given margin. ‘XX grain opportunities margin, remember, steel been a years, still Ferguson enhance good over business help cyber Group, well. the Massey is, really and other two North to well. the costs, in Massey We which that there And recovery in drivers for couple in the around then see did the of probably it’s been as We protein

big for North are initiatives those of So, America. with coupled the growth three two drivers the sort

maybe GSI call inherited view? the about to And it your I of for longer… but this quick am sort while rest really over Just sort follow-up of Great. are sort your going in for forward? your the a seat how this Eric plans fit of bringing now, And thinking GSI, it. been thing. you have about of core Is in let’s Okay. you you curious, the with Does strategy a

core it’s business Yes. today. Steve, our to

and transformation. actions. We We nice through the delivered. This year, business, have nicely. but we And though, tailwinds shutdowns, we of just growth attack. in business had of now market, a China major on got the value are The have launched lot that the a two transformations Grain engines. turned scrutiny strong extract years of it’s of we the the last putting delivered protein cyber couple has gone the around But and over out made moves. lot addition to prices, also South it’s steel America to headwinds, some that have of a transformation had

that amount We it’s got results and needing recognize team strong is will to brands, to the We And have very about ‘XX. in further. deliver. of that. deliver consolidated of shine business, like we factories, through also grow that the right think reduced earn reduced But the clear amount the things very, to

Thank Got guys. it. you,

Thank you.

Bank. question from Deutsche DeBlase will come Nicole last with Our

now go You ahead. may

Good me Thanks. morning in. Yes. fitting guys. Thanks for

Nicole. morning Good

asked some cadence the quarterly anything like I already quarterly was But the versus the color. revenue, expect [ph] the we seasonal years? normal pattern and disruption on of think should like margins, Chris several about past of over that cadence helpful

nothing I see then change a significant. we very QX and of smaller QX, less, Again, our but that a see is own little you to strong you the event, bit of sort quarter to of say, here had again, Nicole might year-over-year sort of the have a given expectations to outpacing QX, a relative above might little bit again, similar QX Yes. prop cyber and margin, traditional

guidance have the working you working Thank cash capital, capital flow And you. what or for then improvement conversions the in guys full year? guidance the Okay. for embedded conversion for free

expect of scripted to built about remarks, What hopefully Yes. improving, ‘XX, modest some my to as – was was think a use We as be supply a million it were were see I inventories in think – inventory, challenges. $XXX In million of had be we we chain a we a we use $XXX the said supply positive as given working positive It said in have chain in we think it I capital modest – I is ‘XX. up elevated. still cash I ‘XX. what of XXXX. in But expect to I

you. Thank

Eric over I This to concludes turn our Hansotia any session. back for to question-and-answer conference like would remarks. closing the

close Well, your thank participation today AGCO. I by saying your will much of just and very you support for

many record year in many, a It really was of ways. proud really, accomplished are we have We in what XXXX.

back you strategy it see core you of If the onion, the XXXX. peel at in that origin areas success key December, with shared was in will the back the the are of that we you right and

precision Fendt, on service growing our and margin-rich smart and ag parts is machine businesses Our our focus like business.

the improve results all businesses. to other committed improvement We our Massey and through business. businesses whether have in also to growth you will are In Ferguson grain and those, come like our they protein of of some see our you or ‘XX, businesses

to in of that making the few last solving farmer development with critical we heavily many investing – them short in even been And are of problems solutions have years. We continue ‘XX, investments the are bigger very these paybacks. with farmer-focused

essentially target are high. are very high and the take Yes, years that we margins we max. are X very year, rates X seeing

our mentioned of comments. also my XX strong form in I awards. recognition We Awards seeing at innovations are in receive industry the the recently, AEXX Innovation Most that earlier

not our capturing to ag really using sustainability, data, our transition helping productive putting lot only farmers on strongly sustainable are farming, farming. more there, more a engage more technology of our to make more but We more the tools and efforts precision

farmers’ Lastly, ag Farm globally. are fundamentals healthy investments. strong are markets the supporting and very large

XXXX beyond. So, we about are excited and

AGCO are in the front convinced of days us. best still of are We that

Thank along you for journey. today. your the call the partnership I all appreciate

presentation. The conference concluded. today’s Thank now for attending has you

You disconnect. may now