AGCO (AGCO) 6 Feb 242023 Q4 Earnings call transcript

Good morning, and welcome to the AGCO's Fourth Quarter 2023 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded.

And now I would like to turn the conference over to Greg Peterson, Head of Investor Relations. Please, Greg, go ahead.

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

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

plans as those this product financial our impacts. of and discuss demand, forward-looking We'll statements with the our as also statements respect make of strategic benefits. those of costs well about and and capital our expectations and expenditure development including timing plans those morning, plans timing and initiatives to and plans We'll benefits

We'll price also earnings, other cash production and future crop and levels, farm income, margins, revenue, production flow levels, metrics. discuss financial

subject to risks actual by to cause suggested those are differ from statements. could results the that of All materially these

in expected These in a acquired and but and financial the a in and the solutions that exchange in our including reduces in OEM expected new and modernization of the the weather, rate budget demand, of on and developments of expansion of that the adverse and in of products limited financial the sales, technology replacement the disruption, improved venture markets. to, including reductions Ag prices, parts agricultural joint foreign interruptions changes pricing customer risks adverse smart inflation, are develop new Ag within Ukraine, them, chain expected in premium produces plans improved changes purchases the completing results, product financial those failure and businesses results integrating equipment customers and on or and to in by which largest supply Ag's commodity the and in farming in the competitors by business price by and performance Trimble Trimble the by and with difficulties and the benefits, rate time, produces reactions supply transaction, include, products difficulties not at integrating Trimble in possible industry, the time manner competitors manner products, introduction to war

materially filings included from Securities Further and AGCO the obligation for statements. these Commission, and these AGCO's XX-K Form is in December other subsequent any statements, its forward-looking as Exchange differ those filings. law. year suggested could any with XX-Q risks information the required XXXX, Form XX, results Actual in by ended to update disclaims and except concerning including

replay call corporate on a make will this available of our We later today. website

Chairman, is this and Vice me Chief the President Officer. and Audia, Executive Damon our Chief Hansotia, with On President call Officer; Eric Senior morning and Financial our

that, please ahead. Eric, go With

record like team AGCO morning. a Thanks, where team's are AGCO's of Greg, tremendous experience. around provide moment the to work good results their in and to by we XXXX. the executing outcome aim I'd an an customer taking exceptional focus laser thank strategy, on for Farmer-First the world farmer start the our to

as billion, basis XXXX. on down adjusted outperforming AGCO market finished XX% margins XX% was sales nearly full well pricing record year, net and reached a which of Record on reported from due $XX.X was strong a year actually of XXXX with basis. net sales an last operating XX.X% in as to up global that

us adjusted the which another reinforcing point and milestone these think that as was just operating for a more margins impressive major impressive of at our recognize XX%, even XXXX strategy. time As that margins to are, were I it's strength over data

with technology our results, development up We XX% XXXX delivered increasing while those efforts also in over expenses compared to engineering record XXXX.

producing group customers XX%. an our award-winning Over financial shareholders. and for Those increased technology investments years, R&D patent the farmer results is record products spend our over X our AGCO, last for are up for

quarter. fourth the to specifically Turning

in performance Our X.X%, and America and market down down AGCO's results reflect were North Strong year-over-year. demand, sales particularly operating basis Europe global diversification. were region. South helped the net in strength of America generally margins our slowing mitigate XXX increased points

increased demand the pressure as incentives will well environment rapid on as of activity our results. in Significantly Brazil significant in in retail in more deceleration quarter on with competitive a Damon Brazil detail. touch competitive put retail

conditions More challenging farmer global reduced in commodity to expectations. market modestly are XXXX expected and income lower due prices

products AGCO business, remain We in our globalizing is the Ag As our XXXX. of Fendt a our result, full and Precision mitigate of some service parts softening on demand. business forecasting branded growing sales and focused expanding line to lower industry

lowering manufacturing and company cost-reduction expense and opportunities, We've SG&A on also inventory. our dealer efficiencies sharpened focus

made result resilient of margins more than structural coupled the expect in we business, with As to this that a cycles. will past be have focus, our operating changes we our

outlook and XXXX. operating industry significantly for In be margin time of fact, projected XXXX XXXX our the XX% last those we versus higher levels would experienced in

Farmer-First continue while strategy, in will smart world. the sustainably investments to we capabilities our digital solutions to Finally, helping premium and technology, farming our feed support enhanced

modest details X was were region has the markets. inventories over across XXXX, and in retail these industry refreshed for unit Farm X income full last have years, been retail AGCO's by global and of restocked. year key projected modestly is Much equipment in in XXXX. year Slide dealer farm been regions industry sales decline lower industry XXXX Full fleet another for XXXX. down major the sales of

industry to weaker projected a is growth sales farm North in Lower to demand to full previous of strong economy, general by retail expected compared fleet declined tractors were partially and refreshed Lower approximately resulting the pressure to X% smaller industry year sales XXXX. America high-horsepower North income the closely more offset combines. equipment, sales industry compared America tied year. of and XXXX, in

of as for demand healthy some dampen retail livestock the decline. year in expected and high in the the compared full in XXXX Further income XXXX tractor in expected demand farmers, lower to levels Western demand declines arable from is of decreased sales Industry pressured Europe from X% levels while are producers XXXX. to dairy industry

subsidized from X% decline X% to industry program, during South the tractor that is steep sales drop expected. especially had X% was for negatively loan we Brazil funding shortfalls a demand equipment. in smaller government American retail decreased Retail our by of which affected XXXX,

conditions In retail addition, the lower in constrained demand especially in adverse prices, commodity quarter. and parts certain Brazil of soybeans, weather further

X further strong combine as up America was compared demand in versus and soften in retail in Following in America lower declined expected industry income. The year. South prior supply Combines to XXXX is chains. in XX% result XXXX America prices North years, to XXXX farm the South due to XXXX of improving a Western Europe in commodity and primarily modestly

about we the the long-term over to underlying continue from strong last remain conditions fundamentals, supporting growth. the ag conditions positive extremely market soften industry Although of couple years,

higher commodity but are prices levels recent historical supportive Stocks-to-use levels. remain than they lows, of versus profitable

sustainable that As prices. When at the strongly, renewable aviation to U.S. and seeing acres. the diesel support you demand consume with will for U.S. soybean renewable grow just solutions that fuel in need very grows, demand for has like what vegetable oil-based look further ethanol we're crop. for grow could commodity That's diesel, our the consumption driving diesel clean energy will farmers to of the similar demand of XXXX, corn by happened current about XX% the

and demand big fertilizer Also here. right there's So fuel costs growth horizon as XXXX. such input a in their on peaks are the down from driver

supportive modestly be in long-term farm of relative demand. above income XXXX, to expect still XXXX industry averages but to We highly down and

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

the was versus Recall exceptionally to demand decreased XXXX's from production quarter outlook. approximately current in high the were by production and fourth with recovering XXXX. the as Our XXXX. that up during align fourth production cyberattack production change, XX% actions the better quarter year the versus quarter with this taken we was full Even X% reflect the

to match softening we and managing Looking inventory retail dealer aggressively the our demand. XXXX, are company to

market will required around are so XX% XXXX in XXXX. well some as targeted at reduction targeted growth share as reductions reflects dealer assumptions production versus reductions our Our XXXX. inventory lower be inventory. expecting Currently, above dealer market to levels XXXX This in levels, or we're forecasts,

As tractors X coverage. of between products our XXXX, of X of had for months the strong. and end Europe, December order In remained demand

Dealer approximately our our high-horsepower optimal in Now XX% still in region, inventories this target December roughly double with months certain of like above below slightly the level still are the products levels but Fendt is levels, certain areas. X historical XXXX average. tractors below

order America, limit of March around continue in In quarter our advance. X we coverage through to orders XXXX, where we to have South

XXXX, With dealer the the competitive now have region, which X dealer particularly we higher into price is inventories than desired, pressure quarter in in sales the AGCO's channel. slowing

while We target our and in of reduced have around production levels the to combines, X is match managing continue to inventory we and just level on dealer over inventory have X months months. demand. plan response, dealer of In X.X production region tractors of months

takes That equipment application for late for mid- year summer tractors, booked North In us the XXXX. model and our orders all track to period. America, are to of fully around planters

rating dealer stabilize. order tractors returned order and in on continuous channels the have We have coverage X months X We the currently program months region. and of approximately small all to of large other for have both in supply ag dealer to inventory a begun as

X on small for ag months target remains ag. dealer inventory X Our large on months and

Moving see the margins the and third market our levers is focuses mid-cycle these share and of our our growing growth and To annually. retrofit improving our XX% Precision are X% technology, globalization accelerating aimed you to which rollout significantly on where not Ag farmers OEMs. for X focusing operating line at the on to fleet genuine and increasing will AGCO supports brand, full reiterate, Fendt industry outgrowing Slide X, of mixed only by business And also product X our X% to but global factory-fit growth solutions levers business, parts. the parts high-margin

of for XXXX levers. an in growth respectively company's X X these recorded the of history. sales milestone the them marked highest each important All

announced transformative is also close with tech joint transaction half pending in in first the venture venture In a joint deal Trimble the efforts to which Ag addition, ag and with further approval, our will the we XXXX. Precision hope we Ag. The industry Trimble, regulatory of largest still in

Slide of products Precision my year team the to announced XXXX Winter X the absolutely recaps productivity. consecutive help farmer the deliver improved the This events year. of and is incredible is one which Conference, year, conference Planting of new some XXrd the favorite

that were pleased you able of this us some premier are join We to event. for

operational demonstrated across this but The to the all expanded span challenges every was crop theme industry-leading the the crop Canada, beyond the every cycle. together has Planting are solutions brought and XX around retrofit farmers products conference solutions farmer U.S. and into our day. just year and over planters locations in cycle We illustrating Precision face farmers farmers that season, The X,XXX that technologies for the world. successfully across customizable from for the

components chassis System, half Precision Planting at integration. planter is a have don't a of latest OEM OEM wear estimate equipped the farmers allows a planter. for introduced the an in feel likely which the the steel Over of planter and This year, and than a a the that CornerStone tremendous technology. with as a offering value lower most buy planter, in to we is never that Planting unit This farmers will row complete the necessarily CornerStone advanced out. price while opportunity new we XX% farmers drive point to productivity around increased the U.S. of finish new is

solution through provides right Precision which row-by-row reduction the information on the so small We a that a at flow in air high-definition in Planting information farmer's a at displays detail fingertips. the or also seeder shows is is Clarity, drill level, and Monitor, that launched variation grains XXXX for

the spraying XXXX later the significant. does targeted and rather Our is this environmental only field. applied Not significantly only Symphony will to reduced spot the entire is the Vision solution. field chemical save our spraying helps by Symphony farmer, Vision in on a than retrofit system for weeds the herbicide covering farmers also but commercialized cost from benefit reduce be usage

with modern Finally, sites new to we toured Illinois, foot several This a position This a dealer significantly us when on-farm will look and competitive expertise where comes this be provides high-margin some AGCO to Morton, facility network. we've one well Precision Planting brand-agnostic network market. for advantage addressable retrofit expansion our it the gives solutions, dealer square XXX,XXX partner facility. grow our total customers increasing and of in consolidated best as you future the our into business to

as accomplish lists I'm XXXX, proud and Slide to major of the X closed of able highlights. out what our team was some we

over where We're our XX% number by of earlier, we increased on in raised since awards spend touched and took spending X XXXX each I XXXX. XX years. We I results in to X R&D awards win last on CEO As over year. became seeing our AEXX the the the AEXX in brands Awards earned continue have of alone, we've

Show, capabilities, Farm an outstanding them position their Agritechnica innovation at as solidify industry awards advances farmers' the largest X help in excellence leader the ag These that in world. won feed and operations world. also We helps and engineering trade our fair the improves achievements

with in of brand-agnostic opened stack products. technology We our pending venture big autonomy, took developments. in with digital forward Center will make leap joint a which the in a leader Ag, precision announced several intelligence attract Trimble Our and retrofit areas late Acceleration to XXXX artificial Scottsdale the solutions. We ag, AGCO talent important

research investing And the farm This start-up company's assets funding we from in approach which on data. help companies, and deliver and our new accelerators, education innovation incubators, and early-stage productivity by Ventures, that us strategic efficiency priorities. the funds, by to better sourcing announced AGCO drive digital of technologies venture to farmers tool institutions. allows to higher FarmFacts, formalizes acquisition improve a We managing will launched and

are with bold moves our making We distribution model. also

FarmerCore, revolutionize distribution where to sales farmers combining serve physical they week, by initiative service want on-site global and last served, digital Just elements to how we and and launched online. to be AGCO's and

to farmers' built their is mobile coverage; Mobile ownership equipment network stage convenience, customers' time digital sales with every on-farm needs provides save pillars: positions on-farm money distributed repairing a site. of dealers on by skilled meet vehicles maintaining and of on-farm journey. FarmerCore support X team engagement. the highly and and while service mindset; on smart The technicians mindset at the

locations, maximize and optimizing includes service FarmerCore coverage outlet farmers We will service on the physical parts-only and and locations. the do. can believe outlets, dealers light matching to we network By industry put the efficiencies. help increasing while ROI coverage of operational retail retail market, Smart what our transform strongly type at centers truly center

solutions and developments, all to With to future time these at business, are be is continue will drive bright our the There's ag focused in the investments more improve exciting on that innovative AGCO. a farmers' exciting never of helping been productivity.

to it that, over Damon. With hand I'll

everyone. Thank and Eric, good you, morning,

the to cycle AGCO wanted is take X an our a Investor that made with we've illustrating the our the last operating the areas make cover our operational nice the to years, I has presented growth slide does to to continue moment I in value-creation business. job other of to reflect progress our December and upon Day. continued Farmer-First improvements Before financial a of XXXX Slide as margins The of the results, slide leverage continued over at success update I strategy. several X through drivers our the

world every mid-cycle different. record We've around was XXXX. raised no the equivalent XXXX of margins again job the adjusted year since XXXX, teams bar raising our the delivering in record versus and an XX%, margin exceptional prior did the The operating

helps us market more line provide are our Using XXXX. in which weaken, flexing our our ensure right as likely margins relevant markets we value-creation guide when incremental be us costs to and the strengthens our down delivering will a

execution clear our that of by As of structurally the disciplined mid-cycle. company we when XXXX improved the basis the the margin the from to demonstrates this XXX compared strategy. average XXXX, our we've back of XXXX through benefits operating to at to adjusted look over chart points cycle It's

to which an effect regional of provides translation. was net sales in positive the sales excluding for approximately Pricing high in XX the XXXX quarter. contributed of the the performance quarter, quarter down higher the Slide range, fourth of quarter the Net compared X% were single-digit fourth to currency when overview in sales.

sales and increased with compared improvement By prior excluding approximately strong segment of high-horsepower driven increase positive sales, parts along an the year. fourth East to X%, the The region, quarter was sales favorable effect tractors pricing. translation Europe/Middle of by the currency in reported net of

down the the in year-over-year, fourth sales in parts. lower pressure excluding region. for net positive by significant XX% translation of America, declined volumes effect approximately quarter were currency South except All pricing the driven In and sales year-over-year products

XXXX. fourth Net high-horsepower The X% quarter along quarter, of sales hay the tools, the pricing. the in net North sprayers of compared primarily currency increased of increased of in tractors, to approximately from translation positive the resulted effects sales and America growth with impact excluding favorable

sales quarter equipment Protein our Asia/Pacific/Africa Grain fourth net driven large our a increased segment about business. in & currency XX% ag On basis, and by XXXX constant

quarter, replacement of part excluding X% fourth the for million consolidated the currency Finally, year-over-year $XXX positive sales up X% translation. approximately effects were or approximately

and XXX XX. net margin South quarter higher SG&A. Turning by fourth items expenses in American points versus engineering The were partially strong to higher were Slide fourth by declined Margins basis discounting operating by affected in a pricing. These adjusted the very the region, positive of XXXX. quarter higher offset quarter mainly

realized we year, XX% pricing. approximately full the For

million increase improvement. points. reported XXXX, in and the margins pricing the compared operating an quarter improved mix fourth $XX net to By and of strong region, Higher East basis of contributed from approximately segment Europe/Middle XXX to a product income the healthy sales

increased Fendt while North Operating XXX income pricing despite sales lower income Grain the approximately based margins approximately a American products to on year-over-year. for in growth operating benefited $XX year-over-year, favorable the net sales. significant in million quarter margins due Protein & improved mix from quarter, improved positive and basis higher also points.

operating Operating quarter South affected South approximately America not American income significantly reflect versus margins year. margins. by underperformed fourth Operating disproportionate in that also only sales, $XXX had eroded factors fourth several our in results a expectations The but quarter. last million the effect the on

Given lower us competitor aggressive campaigns. quarter, required demand retail the which materially retail in industry pricing, significantly our increase to experienced the we

correspondingly our limit levels With dealer quarter, to the the sell-in in we channel achieving dealer and in reduce optimal facilities. inventory third elected levels production

when margins factory taking strong, campaigns on significantly lower production the sales volumes had in outsized and levels. what in retail resulted we sell-in remain the into dealers' the anticipated the lower operating Although versus margins compression the an consideration

which the dealer quarter adjusted large by around adversely million, a X%. affected in operating recognized approximately of termination fee also margin we $XX the Finally,

unexpected results American significant in margin disappointing, the this South Although the several recovery a team and quarter are row, we has exceptional conditions delivering quarters demonstrated returns confident were the improve. market skill, and in as

our Asia/Pacific/Africa contracted margins segment, basis margins SG&A. factory approximately quarter in lower operating warranty though are to was higher Finally, levels, a of equal XXX fourth expense points. The higher XXXX income and lower production, result

summarizes Slide business. Ag XX Precision our

Precision expanding as With farm our are is impact from sights which mid-teens to markets highlighted just we effectively our on machinery traditional we today before, or nonland areas. spend, around focused our total agriculture portfolio, of low in percentage all the set are As XX% a Ag to addressable spend.

that believe Precision Ag our improve it We role achieving global sustainability simultaneously both will their investments currently established, in well while as in the positions major being and AGCO helping play farmers customers our profitability. a our targets

move return OEM supply a more For assembly XXXX. X% to Morton $XXX below This to $XXX Ag patterns million target past from portion seasonal approximately at shortages; we the factors: our XXXX, AGCO business of facility. full in million as combination $XXX sales and start-up slowing; recorded distribution to light chain Precision of X the increase due year traditional million delays an new revenue, the was of and a our

seasonality the billion Including business to We Trimble, start-up our return $X as Precision view venture in and in the delays the joint regulatory continued XXXX. to pending in XXXX. expect we Ag Ag approval, hit which temporary, sales by we is proposed growth Precision with and anticipate

XX XXXX. our details for free and flow XXXX Slide year-to-date cash

flow represents approximately expenditures of operating We defined by plant purchases more cash, cash capital activities provided cash as million increasing income. free And or than used $XXX by divided million XX% in conversion of free net by flow $XXX million equipment. less or generated property, adjusted despite XXXX, year-over-year. is $XXX cash free As flow reminder, a cash almost and

XX% target of flow to of to of couple short XXX% a cash Our income due net factors. long-term fell our

year-end, of to million in First, the of January of versus early $XXX collections accounts $XXX recognized timing the receivable, was million December.

in We direct results South on investors also America weaker shortfall the contributed the during to focused to our expectations. returns region Second, XXXX. to relative remain

around dividends quarter shares dividend share variable per quarterly shares to to we've share we special increased that regular repurchased $X of quarter, of XX% $X.XX in average the the the also million to maintain per by $XX outstanding. in addition of payment our the second in the In

Slide in XX inventories demand to major retail highlights our prices across result Increased XXXX XXXX. and forecast for our in grain commodity are softer market compared to expected in X related XXXX all regions regions. decline

high-horsepower decrease now we America, levels expect to was North growth several compared that expected equipment high XXXX. fueled to For years to crop segment row by of levels XX% farm lower demand be is in of after strong The the income.

is also to segment of XXXX, in is expected years. small the The decrease decline to the compared slowing rate prior tractor although

compared Europe, nearing Western that and be XXXX. to prices expect input industry income reduced long-term due commodity Farm XX% is to the to costs. the higher down to we average for X% For region

that expect to patterns be in dealer XXXX. we more Southern are South Cerrado weather In in making of the hesitant. quarter and and farmers the about America, industry down in began sales third region to part emerge XX% inventories Higher Brazil

is Although most this remains farm may markets, the affect short Brazil, the of a term, demand long-term one in footprint in region this perspective, especially attractive from where increasing. the end

While XXXX, less should from expected to expect parts levels XXXX. AGCO's approach Ag making farm help in cycle, to strong income remain our and And volatile. in elevated retrofit dampen Precision farmers business brand-agnostic is to the margins profitable we decline

outlook, softening does this the impact see in of which Trimble. key a highlights XXXX. include Slide with further markets assumptions our At pending the XX not XXXX time, underlying few we venture joint

Our back X.X%. more sales reverting with share a market plan along to gains, approximately of pricing includes level traditional

we As material of on savings cost a pursue this more currency actions, significant sales expect inflationary effect costs increases. expect raw will do and not to offset stabilized year-over-year. We we have than level have translation cost our pricing

expenses flat compared XXXX. to are Engineering relatively expected in XXXX to remain

from around around XXXX come to in record operating declining line down in would the XXXX, to our line. XXXX expect around approximately the XX% XX% we in industry in XXX% expectation of XXXX, with from to in mid-cycle XX% the With XX% of value-creation our margins

another in which achieved industry executed higher to XXXX at we've XX% business similar than the of at Delivering industry an would we projected several several testament and of back is over the last this levels, be what percent years. the margin transformation level XXXX operating

tax rate XXXX. be XX% anticipated Our for to effective is

Turning to Slide XX.

billion, Our XXXX outlook down full the $XX.X for XXXX. from year seen levels is record net in sales

earnings share what approximately also we in lower is a CapEx million, spent forecast around of per slightly XXXX. set Our $XXX target We've than $XX.XX.

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

For of and the to the we lower of of first of than $X.XX. region. quarter South further share XXXX XXXX, Both quarter sales $X approximately inventory significantly are factories earnings due per the and in billion targeting American first are approximately lower production in many reductions

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

Thanks, Damon. We...

first [Operator is William from Maria Instructions] coming question De Our Larry from Blair.

Can X the and help areas, market? the assumptions us and Planting help parts, X obviously 'XX understand the Just outperform you to in Precision growth questions. you give growth us

keeping, Grain margins Protein if by you on the there. update whole up, in only the just any point splitting you're any Maybe selling help that with thing, considering are & X storage? Secondly, businesses the this could at color there that

Larry, Yes, thanks the questions for here.

outlook about market think continue to America think here South in the X to growth as the said about we've roll out further see do and Fendt we and So expansion as past, our I expect if in share we in I North XXXX Fendt, America. if drivers,

have confidence to XXXX, just year. in little that break Fendt bit we down if this And as new our out XXX coming I more the a

announced we saw is new which have the year the we may vineyards. for A more next You generation XXX, that the ago, announced XXX.

year. tractors new coming this market several have into are the that we So

announced into sprayer, our we year. has XXXX. which coming last We full That have momentum

we're new confidence we the really and about team overall, with offering Fendt, have look that executing at these with So the excited globally, offerings products. lot different we of product we're a

well were is part parts $X.X over exceptionally this business. just did Revenues second billion. our Parts year. The

those I in parts America you've need in industry-leading have sure a think them. North Europe, well. have our of they believe It's team that have we America we the when really as farmers been and South we As us effort concerted before, talk our to dealers make it our and and parts heard fill rates

we slows year, range. I see to probably about parts. next likely again, the farmers in and that's As of more likely next are think replace business continue industry their the equipment we to again, mid-single-digit important as parts that growing And with year think a lot down

still again, the So mid-single-digit see in we growing range. that

and Ag. see way or it lever the me. growth OEM coming to the third combination is Precision the so business are given in year. next XXXX. Precision Ag likely I of that in that the retrofit still I excuse coming industry still OEM-focused despite in the the touched looking Fuse would we business And range down, XXXX. that performance in of comments and frame this grow the The -- the is at And down my XXXX, total despite -- We business in about mid-single-digit year in

portion business. So a of little bit target, little OEM the long-term below the but a again, bit by more influenced the

a little runway We us. on. Eric. front on bit. still spot see just I'll more Damon build is in that is this of And

just as the -- products, great So Fendt talked about. Damon

half of is network. that distribution other The

that now grown time another XXXX. network about We've we've we X from grew XX% distribution to grown was XX%. our updated it America, -- in our in North XX% points We coverage. coverage at Last

to was to Our X America. -- in grown year it target a North South In over XX%. get is that XX% America, from ago, we've it

Now we're target at XX%. XX%. Again, that is

dealers So we still XXX, We've Precision opportunities grown the -- outside our new of distribution front Ag, lot North On have Fendt. dealers market engine. for expansion products got in we've America world. still coming in to innovation we through years, opportunities still XXX to a have America to the -- from XXX. several North last We the growth XX around us in from of

our And around Precision season. lot continue for distribution terms every mentioned, in was, of our have for This us we grow ahead I Ag to as of theme we crop still the business. solutions cycle. a the headroom And year's of build-out innovation

see So although more year, we're much we growing in us. still front of this

And second bit to & operating the in XXXX, in Asia improvements, the more little margins business question Protein in into digits the fairly significant in region, we Protein, the Grain or region. China. challenged XXXX then -- your margins profit high U.S. & business the in did as in overall here American Pacific saw Larry well a Grain on again, the in mid-, single mainly But grew that South mainly

else As back for will into what us that. still deliver value I say externally the We see whether to means a understand review, strategic to the the that business. value, to as capital company. that even which generate the of with underway we're more We're someone looking that us allow at would can

and of & & pieces Grain parts, AGCO about looking retaining Protein then the a at somewhat value us and that the don't portion. see question countercyclical Protein Your I being total business, us, and for mainly at complements pieces traditional the between we business. look whether Grain

I more do value in would part we there's it the it XXXX the think I decision But in decisions. us, that entire the a now. have likely value entire -- value of business of for if and we'll as and feel in monetizing on the a no see middle make probably or the think us We'll removing likely we grow retain that. right that, you'd business. final to it plan find we we'll be And

Stifel. from next come Stanley question Elliott our And will from

pricing could some appreciate some about I inventory color on I next your cetera. thinking the on you're was you on if by is outlook year expectations, you you sales expectations, for Stanley. wondering This if could color provide et region, wondering commentary but levels segment. Andrew on for by provide how I'm the gave industry

Yes.

degrees. pricing quarter the Andrew, what I the inventory on or on I dealer saw pretty levels, we world, inventory here dealer was in think, around different think levels much fourth sorry, the an in increase the --

the try we think were closer that our mark. to in And scripted comments, X months, is if to at around Eric I America, said to or look said the I get and target North there probably I X-month

look And bit months. will little third the in -- outlook about coming we X so and some or of the so above here quarter, again, likely months dealer a XX%. If quarter to little see production around reducing Europe, our fourth bit right increase of I X some at out a inventory that's did we by channel, the reflected from

range. in that number is Our X-month to ideal X-

who there little a the there. I our room there's like level. Fendt tractors, optimal that, is the segments that high-horsepower caveat of feel still we market, below in bit some of would again, are So dealers

but Americas, the comments with Fendt. And So broad again, for in third are in most using as the I've change, saw hit us which inventories mentioned numbers, there of you when we the it's with months then give these dealer call, over still -- level significant were pockets inventory South months -- quarter opportunities on areas I on sell resulted still in slowdown It significant but over the bit the on dealers, tractors a levels still sales. the retail there combines. us limiting little little X dealer bit saw the on and optimal we a that's I'm X into mainly

in X-month inventory ideally, get for the to those levels X- we want And us, to range.

XXXX go become with do things more America So of pricing will production those product that the type as we to cuts, expect likely inventory geography that traditional I in here other in much about go into X.X%. down to or rightsize it's we normalized But again, of product given to we my be launches that for pricing level. Pricing, versus outsized around we're new as we directionally, and things comments, nature. the level hard look And in talk of South into by break more right XXXX. parts looking world we XXXX said more as at a as as

give follow-up little more of tie you rather with I a think, that than Stanley. region time in going the I point have call, region bit that And we'll at this time. by clarity calls sort And know there's on on up usually we'll

question next comes Oppenheimer. Kristen Owen our from from And

follow-up dynamics. region Obviously, in you profitability your margins still of XQ, to assumptions can wondering overall talk such I'm of regional company, just in acute contributor America in for some South the very a the some margin but of the strong 'XX. very strong by in obviously of if the on to That's Sort a XXXX. been

can the I'm So you hoping color margin provide on regional some outlook.

Yes.

we in of follow made want, look But South again, detail very South maybe if the I we want given a maybe up So Kristen, go and little on can if into that. I fourth the regions, quarter some that market. at America, challenging if comments on you other then to bit had more America, a just

likely the that being see inventory levels still in quarter. adjusted first We

with year-over-year, that some ramp-up likely So the the down factories significantly sales. be going of to are slow retail

fourth in, been margins in to in then plants that, production is as quarter. And hopefully that I'll then levels in be see America call, South quarter we to And getting second stabilized, So start mid-single the South the We'll as quarter those we've hopefully what and industry the improves, American quarter. inventory the which back of up and digits for crop that the becomes at. see the to kick new normalize. margins, we're the what sort our dealer in financing mid-teen planning that to expecting first for more third plans the that will pick see

And sort margins we America of market, exceptionally of a last second again, to of half that remember, couple given the see you of mid-teens strong South South that But quarters as America. the think we the have I been expect strength and be the sort for market. outlook

the a Great. earlier growth on follow-up growth assumptions and And question of Larry's then some pillars. to those

You $X.X over XX% And That's sales. revenue, growth year. next calling of for just you're in said out billion. business your nearly approaching that parts

got you helping this sort or us Just do that at that help support of target wondering cycle how there math there. least margin is understand through you've can out the if

Yes.

better that rates. a team a fill South is high-margin I the We've America. fill as done lot is think to to about it's the And credit this businesses. They've the again, growth X like is, of some world -- rates. to work we put focusing we've key have inventory of effort on talked in parts fill in places of really rates different the ensure our improve in the parts X concerted again,

mid-single-digit years. We've looks see our and farmers digital As business well. leveraging lot driving that the equipment. the team as the service still the predictability, of leveraging seen last we're the couple machines a the better more visibility, connected again, expect with leveraging several of sort in to with forward sort last XXXX and the tools growth dealers that engagement that revenue getting focus, with of more we've our And we years. traction with with in this seen better of parts to parts the more good with That's growth we're the as farmers, dealers machines in connected farmers, of more our

feeling So about we're still good that.

probably than our look And industry think lend the rather likely dynamics again, reflective to new, decline. -- I itself are market buy replace on in and of to that's areas overall to farmers sort where more maybe

have about that XXXX. driving the in we and business this it So good team really we feel

We Timothy now question Thein a Citigroup. have from from

comments kind mid-teens Apologies I But in I half forth getting a and advance -- in but -- getting as hear your second the and going back did if I back in kind of ideally to missed -- to this South on of calls. going was on back, just margin America. maybe

you that inventory South tailwind. significant want -- from just -- standpoint, competitive be mid- Hopefully, terms standpoint to there? an -- the America that a some And normalizes you the that that I'm given play that years lot, I volumes? side back operating of recent overly others And leverage would -- teens? from cost and Or just price/cost curious, then price/cost benefit get from has this been low that a don't -- of of from have to lot getting sense. a pricing does can or AGCO you how and does in be high to Do not perspective, descriptive the benefiting you makes from need issues there single-digit on but guess, question in just of all and the you understand a but a I in on been as to have others a do from and into a on the need that

We generate through bit as the the operating is the a the of answer get leverage, Yes. both. need to we absorption to obviously, Tim, need factory do little the leverage.

are will XXXX, X.X% pricing. be that with more that in we expectations price/cost-positive even traditional Our

improved, to and to, chains in productivity focused in do as are based this, we to better scheduling, on efficiency laser of alluded trying supply factories the I factories through the drive on As our is Eric amount have X our attest chain. rework, things. One reducing better supply really would operations the driving

around the and will happen one, number that world. that's So

the But we years, number we again, sometimes in to were, working any farmers. given cost to last I constraints trying the to products deliver two, couple get the of that say, at were would the

and these savings. able are it's the where and team productivity back have As we cost an -- base giving in what cost the our challenge supply ability understanding as supply to is normalized, to in have chains go really drive real

market things telling in of factories help things we're initiatives or those that cost initiatives the our into stabilize and have through our you drive growth, downs some on XX% our share we margins productivity going Ag Precision within and so that bolster top to gains, through assumptions that we parts are doing you of margins, nature. And that the price growth, know other of to improvements about that operations built we're with the

In North is you in and also but cost South answer -- team this, Asia would America Europe, I but side. most as So where of both, South little in well. focused the on bit very volatile, obviously is a tell Europe, the markets America, the are

low X top-down a the all going that, from that Well, build just from think since yes. had be top-down quarters a is region I question too, profitable. you XX-plus America be profit on a were inherent can in a perspective, margins. before farmer look South quarter. is America profitable to your to South Maybe if we the think strongly And perspective, at We X

market sometimes X the much of in region That's the you crops, more. where can plant

be behind where land It's a you're harvested. combine highly right You area the corn soybeans tropical put into -- and planting planter, more and right off it. intensively so production, It's and can taking climate. behind comes planted the the

talked that to next and make farmer big that green. a -- better be part So XX to the Brazilian over more long means efficient. is Brazil time, world, a going getting keeps the -- more about the infrastructure and the supplying world for we've years, the effective of the needs

We bullish on profitable. is think adding farmer as be Brazil market. we're So lot a and value going a the of to

with efficient that we farmer our to And so an about all sure that can way supply support then in that chain. we're doing Damon things make talked the

it. Got

-- outlook just a just plays Europe, Very margin curious into word I'm of basically in on how 'XX. on from product maybe in for And -- Okay. X good. terms And or the that. mix the

being powerful Fendt to dealer about to that -- a can inventories impact margins. And And the hair your on pretty have maybe a going back low side. comments obviously,

So as from maybe South expectations the a standpoint. did America, with to, just speak you profit

Yes.

-- Tim. So yes,

think XX.X%. XX.X%, I think, So don't finished just -- overall, like just Europe I we over -- around

tremendous by outlook saw in team you just So performance our there. industry the Again, Europe.

down. coming industry that have We

introductions the to would presence out margins mentioned the that say some we and as we Larry, given Fendt of strong we're think with year. contract the full to I units. But the lower industry probably some product the we we have the have of there, would flat seeing, see given strength I margins coming so and expect And new relatively I based on overall should on

margins we should Again, fluctuate be has for relatively year, it coming given we quarter-to-quarter. But that that able the keep Fendt full products that think the may flat. of mix new out, to

like said, on to that you then for a build there's Fendt. And mix, element channel

And And are the the first Our we've lower-margin that's or general. eXXX tractor the coming into a for coming Turkey, in as market, in, it think, not end, nearly going to we on has. got at contract least low much nearly electric new not market, the Fendt. -- market. a is as Europe, low-horsepower, In grow products as

overall lot is although mix embedded cooling, of market there's elements So in the -- Europe. positive a there's

a question Tami JPMorgan. Zakaria from from have We

update on still by this Do you you And can JV in be wondering, JV? just expect X? year? accretive So you us the year mid Trimble expect do to it the

Yes.

better of think We've We've we're few in on businesses ready in that teamwork, process, that's be the to else going to anybody on will and have on culture we business we proceeding X it of happening billion That's several synergies bringing together are of still longer-term are track. help farmers got and cooperation, We're out us partner Precision integration a Still every short-term we Precision We've can through then is make and a planned. in than Ag with according still the unique serving really that year. And retrofit according serving serving business accretion to it's in gotten or laid, growth Ag of half OEMs regions. industry. Regulatory enhancements. being leader AGCO track about or tracking the a is on are all building, X approval capture XXX plan. standing And -- fleet hired around time we line good in already plan the the commitments planning. sure our we as JV $X generation this first behind other farmers going way over So very and mixed well. the industry outside an great of from whether through that to the but the lot bespoke these that. approval world, right a of machine that extremely element day confidential to excited

then And quick one to question something. clarify helpful. Super

X.X%, XX%. said. But expected X% you production down So are hours year. sales, expect you I your up pricing And think this down

understand, So help XX%. sales the production from down bridge down X% versus what's only me

Yes.

for you're new & to, in at Europe So growth, of then growth, Tami, the I parts products. looking -- Ag in Grain growth at alluded specifically some with there looking obviously, I looking mix, as some some you're and think, at Protein Fendt Precision

So directionally, that's what's driving the differences.

comes next Seth from Our Fargo. from Wells question Weber

America 'XX. I wanted North for to just margins think about

the of last lot I of supply -- business, Ag there you're know Precision the the couple disruptions in there. of rate on Specifically, a years. growth and stuff But chain over kind moderating were your with

Precision this margins any shouldn't there your with more growth in versus year? moderate 'XX, Ag reason XXXX why up even be is So

don't margins, the again, relatively margins -- when consistent. products the -- about have think been relatively I have Precision been gross Seth, I Yes. Ag

the pricing we're the relatively seeing has margins are revenue have We and fluctuating, the getting been stable. been but

So see go as we real to that overall related in don't changes I any XXXX. significant margin business into

prepared measures more stuff this your in about Is AGCO is remarks, were Or just you planning cut actions? then cost efficiencies, like And talking that. any all softer measures usually actually actions are cost cost environment? business, Okay. -- normal guys and of there of that are think proactive I contemplating just there your is you normal of -- sort this sort in do? you course Or of that structural efficiency Damon, more kind

look would I a it, would focus, normal as Seth, see engage you supply our way heightened The what there's of at -- would we I to -- base, Yes. say with year. incremental look when is in probably a level

-- day-to-day or of So driving layer we last last years. on cost in -- that's would quarters I versus where additional to the that is operations supply couple couple the base the as in down were

restructuring, We're that now, line we've think not I I about the in showed referring right if go back it the today. the I that that. -- of slides guys. watching that SAG like you're markets. things announcing we're scale, showed like We're anything to As again, larger you nature, value-creation to an

within announcement. more into broad about we AGCO very we hear efficiencies aggressive we and as us is, create what And for to We're the to brush meeting that in is that that and on the as a consolidations. are the as brand, don't also is well. in But relative us to that's going or Fendt common back-office term. look team you not more, brands, global looking a global where skeleton to line, talk team measure commonality deliver to move to do you able at being SAG look for the as anything would trying alternatives. I these parts Again, create a markets ourselves of to we're businesses, market the extent the all weakening tell productivity, side longer understanding that we're are going global

we're would I like massive a alluding that, obviously. announcing you're to anything that well. doing I -- large But if you're in think XXXX again, not say we're as So that nothing restructuring,

the And I this to any to Hansotia over ahead. Eric concludes for remarks. like would closing our turn question-and-answer session. back go Please conference

Yes.

your Just for very AGCO. for year through many really briefly, employees, participation support I'll of ways absolute XXXX. an proud of our for our your our record close so It thank saying investors. much in customers, of you -- our We're by our was today and performance for

a the about coming for been as key It a excited I to are. The a success would years couple the that we all home for cycle. trajectory as to that about roost, for it's us is much be and now, our results And that and talking we've path to continued more you're resilient execution sets hope -- through of on strategy. our of Farmer-First our

service Precision Ag the last parts businesses investing Our like heavily on business, focus in our Fendt, been margin-rich and which growing our over years. we've is and few

The and AGCO-Trimble announcement solutions. in in the unique venture Ag pending mixed solutions will AGCO the biggest fleet retrofit represents agtech enable become to the with of history deal leader Precision global industry on joint our focus

growing Over changing populations, healthy the few and supporting diets, commodity markets, for prices. relatively many last factors quarters, the levels, increased our touched stocks-to-use we've demand biofuels on of low including

and trends weeks months. We're these of of a look you in to you, our seeing We All us industry. the great in long-term confidence health excited. the have forward give of coming and many Thank day.

now The Have a conference you disconnect. concluded, has and may great day.