AGCO (AGCO) 5 Nov 242024 Q3 Earnings call transcript

Good day, and welcome to the AGCO Third Quarter 2024 Earnings 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, sir.

Thanks, and good morning. you for of XXXX Third 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 measures on presentation. this at The in non-GAAP used that presentation reconciled our that's morning

costs plans engineering plans the flow, as those future and of this product those financial margins, income, and our impacts. production production and levels, metrics. cash discuss demand, crop income, expense, forward-looking We cover statements concerning also tax timing earnings, our benefits as of will operating statements price levels, make of strategic rates well about and those benefits. and and capital revenue, our farm expectations expenditure financial development including We'll plans other morning, plans timing and initiatives We'll

rate suggested by in reactions budget of subject to: product could customers materially with risks within expected and manner of risks the results expected and which the war our a a expansion replacement time Trimble possible the solutions new and the commodity changes limited purchases adverse sales; the not or concerning XX, completing from in subsequent All financial equipment; AGCO's including in in PTx could disruption; to Trimble's farming in businesses; that in statements. at with by smart law. of XX-Q those improved competitors prices; markets. Actual Trimble supply inflation; Ukraine; December to in and the foreign Exchange time, changes update failure PTx customer them; other results; reduces rate difficulties introduction including suggested year from weather; the the any and manner competitors information price transaction, by expected on the financial and and modernization required of chain in performance venture ended benefits; and these included filings. reduction business for as actual in the differ in premium AGCO and the risks in Commission, results; Securities XX-K include, largest the the by differ difficulties XXXX, acquired PTx in including by those products integrating that its Further by and financial and filings those OEM disclaims the any to are new the produces materially statements. These joint and Form integrating the agricultural pricing and develop adverse results and produces on are to technology to industry; Form demand; products statements, these by that exchange improved these developments forward-looking is except of plans obligation but cause

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

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

seeing addressing is contraction time is highly saw this XXXX. we different the it. in on good of the AGCO's we're to farmers from the backdrop the significant is to not ag the What Greg, cyclical the industry XXXX results I from for significant years Thanks, compared of before a downturns. a XXXX profitable against into The performance the has touch few I in get to and morning. prior quarter. wanted brought contraction how industry downturn are highlights uncharacteristic

are cutting We faster prior reducing production in and downturns. inventory focused on than

the in costs aggressive we more much to the most company focused better with weak align We in our the industry. have operations remain challenges, market being environment. Despite reducing been these on farmer-focused

Precision Fendt the this to commitment. central include which Ag levers, growth and are high-margin X full-line Our globalization, parts

these our is the earnings help the thoughtful These saw We North Missouri, growth that of Although will efficient margins consolidation service. in new network Ohio, Wisconsin ways, AGCO's to they approach along the in want with us and mobile and we serve the business durability quarter. and higher with some our on deliver sales America steps do are progressing. increase farm and through dealer in FarmerCore engines locations distribution quarter farmers of was confident will model through fleet Fendt are cycle. The resilience can challenging where than a taking and this trough we before the to growth

also FarmerCore presence their the Louisiana have through AGCO In in and addition, expanded Georgia. approach, dealers

full This Europe on for rebuilding of farmers improve Fendt's of Fendt quarter and continues market has Fendt PTx Fendt to harvest. ahead for another in yet opportunities the evident products. adopted our maximize see as Trimble U.S. the our of translating major removed this momentum example year. Also, as is farmers to Fendt share, more selected value into harvesting dealer network this line technology-rich now the farmers more states their AGCO products. product been to the priority us the combine help Midwest across and product market the They distribution This are us. just the strategy. during track full X lines We was value Fendt the in award-winning recognize year. The dealers their third and a as coverage the improved product and over of of offering performance XX% for IDEAL full-line and when competitive dealers preferred remains industry-leading improved line particularly top in

PTx of dealers serving with customers they continue signed Over products have months, directly several past the with seeking. distribution innovative the contracts their Trimble to hundreds are

this technology the us in allows lower can technology retrofit industry, world continue the services. increased down, their yields, heights. I to integrating, PTx Trimble of decline is poised with and energized to are impactful PTx Precision to to than Trimble rapid we strategy PTx help brands, strength reach our mindset the income equipment portfolio, or we innovating, Although farmers when unique and growing suite portfolio of year, especially lower sales of of equipment. regardless and looking products margins products our we new piece we expected been for offer the given equipment. Leveraging inputs with brand AGCO's save on Farmer-First and and Planting along of the the from award-winning around are than that an for reiterate a of advanced This at farmers brand-new industry-leading to new price year want in a a and farm is have solutions

venture team well wish look moment and completion couldn't it without during X. my Finally, and have want the with supports success. to hard to the tailwinds for We term. allows of thanks the take on work sincere and to long continued Precision & extend change I strategic Protein AGCO Protein The and major strategic Trimble our addition the machinery their November core portfolio & are their agricultural past transformation PTx a the forward technology. provide AGCO done This Grain focus year divestiture joint divestiture Grain shifts over to on for that margin Ag the them them. I to will

over The AGCO's well, reduced on this inventories. Slide has quarter. Europe, X a to environment but in significant on can Let's for by year-over-year on performance The primary we want the we which were horsepower XXXX recent the later, challenge continuing during we compared full were materialize quarter announced now focus announcement, XX% are declining significant all market run months X controlling past these AGCO in X wanted biggest decade, confident first manage. months months. XXXX. outlook million relatively in key XXXX. explore rate and our quarter horsepower cut for quarter conditions our of more lower which tractor through of sales industry transition declines ways channel. and in AGCO this In markets. retail have and to across of $XXX are touch to was this the months ever this to to these the new some and related consistent the of largest Global industry I continued American on industry context first the see production our the to of the pricing retail $XXX technology inventory first the of first the provide AGCO restructuring to operating Lower X environment, destocking Despite we're industry is And things savings the retail AGCO's sales trying higher in to taken to retail difficult XX% for more the In optimize leverage X first to shows North centers XXXX. of X, margins I factors progressing continues Slide with an midway excellence have equipment dealer of begun rightsize sales cuts region June quarter. details be in operating to cut a categories weak sales dealer sales X global in Sales X.X%. X% XXXX. the of margin to challenging. operating was categories and decreased the XXXX, savings third sales to million farm for now details leverage to adjusted Western how tractor model. Since months the down approximately of of compared production aggressively X cost achieving months XXXX decreased we unit some made

by X in farmers' XXXX. compared retail to Demand Brazil of decreased harvest first of to tractor sales negatively buying the behavior. continues XXXX X% region Rio challenging impacted during in first Sul, do floods Cerrado the in Grande while American industry the was South X first months the months a affect

industry, crops the the well years in XXXX, a on expected lower capitalize XX% in and of growth of important. region. produce strong combine industry of as Despite as becomes acres South fewer in in commodity the long-term grows agricultural ranging the sector. security food the X weaker first population are current through X result asked remain to positioned months regions our of increasingly significantly it's with down America, was between on the being Following is XX% income. The soft AGCO world's year-over-year, cycle more and and farm all retail XXXX down more down demand to depending Farmers to prices

taken the also our with on have industry-leading and in decisive Trimble venture best complemented to by an technology portfolio that history. joint focus PTx product Precision machinery AGCO's Precision We is the Ag steps Planting,

a analytics to AGCO's offer solutions the stack, fertilizer, and have are factory data though fleet same to a at expenses leveraging compared significantly are hours payback their prices down, to Slide retrofit with down and mixed reduce a XXXX the with past, cost inputs commodity of further buying degree. While AGCO's cost by precise the application tools. not new farmers machine. AGCO's With compared tech come typically on X. of X- to production lower X-year shown seeds, can our available farm also recent are

more a XX% made was Our we our regions company decreased which Significant reductions than production America. the approximately third with reductions quarter by market dealer guidance. in and key continues were and North South inventory quarter anticipated remains occurring in in for all Reducing as priority us the soften. biggest in XX%, third America to the

from brought on sequentially While with quarter X% cutting weakening on dealer are we cuts, quarter by further. an market inventory significant in production response, basis has X supply basis. In a production in further to have resulted end of retail a unit forward-looking down we our increase even demand months X

lower in Valtra are part demand a gains more sales months In our the Our and will at aggressive inventory in in of to America industry level production the outlook X our XXXX. Diving have average, coverage months. of to aggressive a higher likely are current production Dealer production production inflationary result due our of continue share X strong from in continue Massey first due schedule, production part reflects North XX-month now orders results inventories supply, with South into and to bit retail months America hours. of through XX% remain new have weak. dealer bit limit Fendt and advance reduction X last regional a XXXX roughly XXXX to this the all in in Ferguson rose a orders, Europe, our conditions year-over-year Even for quarter. closer South order we to less half around we outlook America, months products target guidance inventories reduction approximately number than breakdown. in of is of and quarter the which now on December to X down above and cuts our In tractors month XXXX, dealers, across units reduced as Fendt. pressures. Despite dealer the the than where the X

South current in coverage. likely reduced Our approximately In rural XXXX environment. of lifestyle and lowest to month supply. production the the order on as currently around inventory, months goal have X have X dealer quarter industry and of challenge bigger America, is higher. Like Smaller weaken equipment further to 'XX is based is order to months months X the conditions dealer approximately which we equipment North now X have in our coverage last inventory while will compared by increased require has America, continued of

American targets range X dealer X product. months, North the for from depending on Our inventory to

focus to in share retail levels line execution, and lower on to XXXX. coupled quarter environment dealer The current with market continue will in We targeted inventories retail underproducing in with fourth production bring our range. result in the demand,

X operating growth industry of Slide our X number X, our by where to Moving and To to aimed on are: number our annually. improving and our to AGCO global brand; high-margin see our product business and of one, levers growing Fendt X% X% accelerating at mid-cycle market genuine rollout levers the globalization you'll outgrowing business. number share these growth parts; margins parts reiterate, Precision XX% full Ag increasing focusing and two, three, line the

We most products new recent we continue want growth at product each have August. our introductions late initiatives, to Show I plans. Slide Progress and on spotlights these North to of brought X highlight few market to of Farm the the a America the supporting in execute

combine the grain an more just our the available it tractor the and the OutRun be of can that autonomous tractor the driver autonomous Trimble. step kit requiring commitment the call autonomous OutRun through in the market brands fully the and send alongside autonomy to launched with first latest cycle On on solution follow. without the the driver X all to grain operate tractor cart to single a a AGCO's fleets. the PTx cart available stage mixed field, in many. The front, is will the unload of This kit go retrofit so The grain autonomous cab. combine we to pieces retrofit-first OutRun retrofit technology crop allows is and to simultaneously. demonstrates machinery can zone, X pull combine the finally allow officially across and tractor system offering hardware the XXXX. This commercially on on tractor is the driver backbone the solutions first by initially The receive of available

the our on are simultaneously. the in technology carts this operate As earlier X year, where can we showed we grain working days combine already next phase

a few This As used, can more of AGCO revenue stream, farmer the ways: unlock are or bundle, can is the phases hour where hours also a cycle bring from in will every automated, same running a farmers standpoint. task mode. will the crop OutRun hardware recurring be tractor which be Farmers where simple billed active different product allows hourly a unlimited. purchase autonomous pay-as-you-go, for for

their and one We increased in of helping are during critical about very excited launch points season. the this farmers efficiency most drive

technology, coming year, an for to This that products is XS which better completes machinery fluid product ownership our field-proven in reduces optimizes Massey operator and of lineup. industry-leading the Tractor, enables side, deliver starting Ferguson's better efficiency. XS new our new new Massey experience getting farmers Ferguson The training, solution dependability, America farmers through tractor delivers enhances with the several for MF North efficiency. cost On field dealers a and the yield,

work, several uncompromising to refreshed, wide the value power jobs combine a best those dependable fields. their an that the for and and and North of in that versatility. farming, farmers' premium product straightforward lightweight XXX, Gleaner a to and transport grain great And and loader machine offering a dealers It's superior our has option to brings This combine for a performance, our new launched in product offer also anything IDEAL allows Series customers. quality Fendt control, the from rural the handle for Fendt range We finally, which perfectly crop can between. blends premium complements been T America in options looking to

over AGCO's the mentioned continued I new from ever and is walk The years our it's and innovation the I'll financials to the Damon been. you performance a some earlier, these through in the our is testament now R&D it Farmer-First product best over As quarter. to hand of investment of to lineup focus. offerings

favorable Thank were regional roughly translation overview Eric, for an you, good the to favorable sales By significant third growth. same provides the and region, all of of sales XXXX Slide in currency modest quarter. the France, the down excluding and product of and quarter equipment. acquisitions. XX% with X translation and impact declines approximately the quarter impact of high-horsepower everyone. positive in in of in sales the quarter The were performance declines segment Germany, tractors, negative reduction. the East period countries, morning, and impacts acquisitions. Sales Net Europe/Middle in tractors segments net most currency effect down Parts mid-range third excluding XX% the nearly showing were largest to reported compared compared XXXX, showing when the the of down Italy hay showed

XX%, was there XX%, implements segments. market the down and significant of translation favorable South of American China, impacts demand. of as in lower we medium- favorable all and Lower underperformed production most while the market weaker excluding decreased farm currency and and translation tractors due XX%, in the to decreased excluding to continues the hay net The the to most the The impact to behavior. farmer large mix was down. end declines purchasing excluding impact favorable Australia. impacts acquisitions. decreased volumes. tractor combines, market translation Tractors, saw was largest sales high-horsepower retail and reductions. In Net quarter, unfavorable acquisitions. pressure continues underproduce Africa, to relative High-horsepower and year-over-year segment be very income declines. Net negative The showed approximately of significant occurred Argentina the Brazilian continue low-horsepower the North modestly sales of impact unfavorable sales American currency region market in of equipment challenged, acquisitions demand approximately currency favorable impact Asia/Pacific/Africa and and and

quarter, the sales effect replacement translation. approximately basis consolidated $XXX for parts the up third up year-over-year negative Finally, currency of excluding X% million a were approximately when reported on X% and

X. to Turning Slide

by that were driven adjusted income were flowed operating in well given of by as segment by points were of discounts. North third quarter margins across decreased decrease higher discounts and continued decreased from as contributed Operating SG&A The production, America decreased and compared XXX the cost onetime weak significant of volumes demand of in primarily increased points world. X.X%. points market basis goods factory and million. margins result XXX by associated declined income to the SG&A the operations cost reduced margin conditions, as as period margins by production, a expenses in business. higher from expenses expenses, Argentina sold resulting increasingly resulted basis a production tax from operating quarter South with from industry volume region, operations of was that factories Europe/Middle a East and under-absorption, well sales sales reflective the third retail quarter The in lower XXX $XX This year-over-year. The decrease benefit The volume, record income in a through operating at XXXX. increased the along $XXX Trimble decline conditions, discounts, approximately in and year-over-year lower significantly the weak Margins XX.X%, and affected were PTx million the the increased with by decreased million, versus the of lower the consolidation lower savings warranty measures sales result primarily heavily in XXXX. under-absorption approximately improvement. reduced of By in the and increased operating factory $XXX approximately quarter the basis same American margins weak margin

segment Lastly, year-to-date XX cash sales $XX income details volumes. Slide million September our flow for due decreased XXXX. production free to from XXXX Asia/Pacific/Africa and our approximately in and operations lower by

equipment, income. as flow by free cash property, free of provided represents used cash XXXX net more the income reminder, adjusted XXXX, million We September XXXX. activities purchases primary in $XXX cash a plant year-over-year operating divided flow than cash or through $XXX and period million of Lower cash conversion is of change. and defined net the less free flow is by in As of the used driver of approximately same

our in between remain range year, million. We of upper be half utilizing under continue $XXX includes expect XXX% of credit million with business, direct we to targeted to full ratings, Grain us and adjusted returns. we facility, $XXX reinvesting the $XXX million to repaying balanced in Protein the to free a to business. our the For proceeds plan, debt allocation back flow November from our capital cash income, loan investment-grade rewarding X, maintain net term outstanding investors the which the committed repaid On the of XX% long-term to & putting the

special last which capital of the the deploying addition $X.XX the effective the major focused long-term In $X.X XXXX XX for has the our to in has $X.XX from years. paid We in X ways last our shareholders. Slide X on share, most not forecast as our a per highlights of regular regions, a over special market changed quarter. for per in remain billion dividend share quarterly paid also dividends dividend second variable quarter. reminder, we variable over AGCO

America, we XXXX. For levels to XX% to still expect lower be North compared the in demand to XX%

lows continue have compared months a input to historic the For Western and to Europe, costs. to hovering industry XX% few to down XXXX. for to been sentiment now commodity other X% at Farmer prices due we be reduced indices expect and higher

the of Our & the gains. our plan America Despite share decline X. XX% captures of includes our market weakening indicating South November reflects business the to Grain which a to now conditions, outlook, industry as XX XXXX. Slide the for market in remains XXXX forecast assumptions related Protein XX% unchanged, sales divestiture

America, assumption and Europe. pricing year a X.X% We South This in are about offset pricing in by year-on-year. negative of comprised reflect in to pricing North modestly pricing America our full pricing updating negative negative is positive

declined certain costs and cases. raw in material Our stabilized have

pricing savings and look continuing about a be basis. to We net to on pursue breakeven cost are

translation currency on have assumed XXXX, to guidance expect We PTx had year-over-year, X% including to X% effect about year-over-year. in XX% now are PTx prior meaningful negative compared Engineering and our where expected our no be Trimble effect to down sales adverse Trimble. on XXXX excluding sales expenses a

third AGCO XXXX X.X% challenges operating our of of X% margin adjusted previous the confident but which as than executed target are the with deliver adjusted to we operating not well This represent the achievable, also operating our we strategy. the structural in in the we outlook being view quarter, we basis. the have where around business. savings can record operating full among achieved the a highest margin current margins a would above approximately adjusted trough year changes reaffirming margins of only team executing AGCO We our adjusted X%, prior below XXXX made began on given before and XX% of margins XXXX, higher see ever saw sales XX%. Despite coupled cost as are We we've we initiatives mid-cycle, the almost XX% saw peak

We of Grain will for Protein Meeting December the at & divestiture Trimble to mid-cycle long-term Analyst targets our account provide margin of our XX operating the and business. PTx updated performance

is in rate guidance. XX% with tax anticipated effective line to for our approximately be Our prior XXXX,

revised Turning XXXX to Slide XX our outlook. for

sales the for year. billion, $XX market environment of outlook the the reflective balance of & sales net Protein down elimination the outlook, previous and our now year of the from is full Grain Our

$X.XX, market $X, prior We forecast and reflective the which are of from earnings environment per guidance of the sales share is of our reducing & for down of elimination of the Grain Protein adjusted the balance our the year. also

million. weak we our market Given modestly reducing $XXX approximately to spending are environment, CapEx the

to over cash see end event, targeted target. XX% XX, free long-term should our will for for investors it will turn conversion XXXX adjusted consistent On I'll our at and seeing forward XXX% our that, of join operator sell-side update analyst and you net With you upper the on back an flow Our Q&A. hope business. the the we details be us our provide with to you where analysts we of income, Slide there. can to look We

question today first from our And Jamie Instructions] with Cook Truist. [Operator comes

questions. I guess X

guide. on guide. relative the you're maintaining to First, an headwind guide your XXXX, the incremental margin for previous Pricing is

Your have versus sort third sales quarter the forecast is XX% X.X% reach in margins of the to lower in fourth quarter. and implies so

just So trying there I saying weaker, would what second haven't just your dealer be are changed like understand you're but forecast. your driving it my getting inventories. the ramp dealer sounds and retail market to mean, question, on then still the yet is margin inventories that. And you AGCO bloated sales

to the way you So degree cuts And of South what understand XXXX? AGCO-specific any could there like the versus I'm industry? just trying is to half the and production frame in what's America first in America North

Sure.

that Jamie, there's of inventory, you the were couple decision to the Europe is of be seasonal One in they quarter. fairly go the and question Again, the made than given here look in third at fourth really So third how outlook in quarter fact, to be higher X.X%, from versus the up quarter where a the I'll some I there, go the elongate around XX% quarter. the the alluded levels into first differences fourth they the key many as your in fourth we're in XX% quarter, parts QX. We in think the still QX if to Europe. on quarter seeing think we I shutdown about for third good should demand I production will would at the

specifically. in So little we in the see production Europe higher quarter fourth bit will a

related large a was quarter. dealer challenges that with who Third something to third strategically the a do quarter, was little financial some dealing European we in did bit uncertain

that. have they For through the worked most part,

what to better and QX incremental much volume expect of QX. have little related to into bit clarity, flowing we We in have a flowing would been see that from

So couple of those would be things. a

here some know see And little QX In we'll our had AGCO, those in the the always we've continue our a quarter there. And again, then move the that see we actions seasonally to out improvements associates. to cost we specific spike of that, month-to-month, that pick implementing, more start a been addition to strongest bit warranty, internally as is take quarter. we you up we that to third and of

expect the We normalized go we into get as the into to that fourth more quarter. rates here

a We So the day, of good. pricing. here is even little bit weakening comment quarter, a we more make end of where a effective at is are those us in to X were feel on bit. sellout, wash your of the would the at of teams little know for the good. Probably FX themselves But and we to sort the I out the the drive offset to environment. tailwind we feel that end the third working retail overall, relative

dealer in as levels, reduce comments, are to inventory his the on dealer On we in Eric production, significant to reductions our hand. working alluded units taking inventory the

As month XX-month is inventory forward you a know, forward-looking. our

And we here of months into increasing the see sale supply be market so outlook us, do the weak that's continuing on reducing to the hand. XXXX, retail as for thus

We are year-over-year. production cuts taking world around the significant incremental

lapping also that year in overall again, South strong will and QX fourth very production cuts QX. given that's be in North the and We after very America. seeing South and down back-to-back America again, the we're the America, cut a biggest just there, cutting environment in production but weak we're industry Europe see last in in X XX-plus percent quarter,

happening give We want for America XXXX the North how that to of production South what see XXXX, given we how have that will the quarter, overall industry schedules quarter. for outlook in right traffic ready and what today, see retail America We're sort get see part early the early to So inventories look now. yet. through is, underproduce, in fourth our like the in or share fourth on sit not we likely dealer least industry But to plays the current of our as outlook we here confidence the the at again, an we like out, looking see just our is alignment. get will

Our Kristen Owen from next with question today comes Oppenheimer.

little on A follow-up of a bit that.

you've that of Can mean, market and share some Europe us help us moving to around understand. what talked around pricing Just have about the the you production, seen? pieces that I'll some square then of looks Europe the And things. in how in circle with like help gains follow-up. understand I a you some dealer

Yes.

tell the the Europe but bit little So was focused that would a If Fendt. I for brands that with the Fendt negative. more through a X. on XXX and Gen transition on bit further, it's we're in little Kristen, a X break overall it's little the in volume I modestly the going really bit you even down Gen pricing quarter

new You've the earlier X Gen heard us this about talk introducing year.

to that producing are as at Gen choose We'll Again, in and you offering XXXX a as XX We think Gen point between price to we X, time. But in at for year-over-year, Gen year-over-year, I pricing farmers North still are a you Europe. that good mix. the would important Gen in the look at expect the XXX when that's price continue. still points the X basis continued around some I we and negative think seeing And lower dealers the into very that and it's opportunity in here factoring transition That our coming point. year through X at X. expect, understand is geographic down being has overall pricing We're to America. still

forecasting lot the as product this to on a X price do has again, of year South year-over-year single been the in to in that market negative translating low materialize. I Europe. tell in little then price with my Gen there digits bit And And now be continued has negative, negative it's XXX larger that is as to a said Fendt for a America, this I Europe year. weak. we've the continuing of volume sort would That's comments. into

generally a on you Protein help is that top the to I fourth full let's pieces revised the last year, in what of that of quarter? the back call bottom us half understand that it, & line? the million helpful. speaking, year-over-year delta in does How the benefit guidance. bit margin for quarter more a out Protein your $XXX little in much year, just of Okay, moving the that's & if for the Grain Just lowered outlook represents, line. And on really the fourth then Can Grain

Yes.

would on I & -- you're the million. quarter, Kristen, would I that, $XXX in miss in revenue specifically. right. where Grain quarter would fourth you of third be saw So sit what your we Protein quarter, the I About the that's here and fourth say, in outlook, million $XXX the about the think we in directionally tell

the the has tell Grain the EPS business year. sit the now, guide as really the right in we de margin-wise our & I here of revenue. Operating EPS-wise, happening this to minimis Protein the balance that's here X, a the with it of of margin. operating at November So sale elimination the is X% down for you effect about on related it's $X.XX

Volkmann today And comes question our Stephen next with from Jefferies.

you can I just your off I as be of irrespective as What's of Eric? weaker, could expected. we sort things Trimble shift Trimble, sort year markets next sort change that channels changes? there. of the start channel Was weaker So there? mean, a of sort outlook guess, up than I little of were end mentioned And with that

that receivers machines. the on used up how We've transformed that another monitoring, it's suppliers, over we're that activities our are Trimble. over not in of predominantly of many sourcing product track our or so situation X dealers. them which was -- interesting now. have signed supplier, sourcing own We've Trimble Yes, to majority we're an we're converted to in converted that on new XXX We

the Trimble of of are we've things feeding of happening last-time one on and market. big maybe air bit the types from that track, customer top a pocket of ahead about those even talked little is still the schedule. This from So buy

that though even ordering really -- our much they're all up those So dealers, signed yet. we not

through start And feel of can we higher its still The be ag their come the said that by broad this up. Will putting year. does. year then the expectations expect we've seeing we we still depends in at last place, dealers the through next our are this good than track what way what from points. things signed low year? that indices We're for we're these working We The on next end about. with It market through activity year, time. to and work on that's

all-time Purdue up data point a X trend? index in at low was at bit. little came point. is its be Well, Europe that's look point. low You SIMA know Will and a now its Don't yet. The at bounced that just back today,

sentiment close So bottom. at we're certainly being the very to

its not like. the but at indicator Now of that's usually meaning what look very bottom a market's months the that's next good few

trying we're the to ready with what's not we're make trying and to on inflection what that with to and speaking in But the our things we're channel that 'XX, where sure to when driving there. point is in the sort that So control, those is product market we're will out happen is big yet. what focus specifics

We've them And would the business, are that's down Steve, and XXXX, That's year. from away add X business. Trimble comment that continuing. moving you OE familiar, I in we transitioning probably coming the this that, talked about CNH, know the out is

So that will be headwind. a year-over-year

If the of report -- product, remember, CNH as is acquisition, may to, not as we give in But moving it I'm at I announced that you some the you time production help of remember number. that moving, base an sale that reported will won't the OE that reported the Eric would transitioning when alluded external we Trimble as AGCO sales, it our the that. But mitigate offering be of our today if in an into company. sales

where give be overlay similar that part And you'll reported intercompany we'll headwind for this in just to terms, technology. absolute being X numbers us what's on number, year-over-year. see hear Precision of try a Planting, But mitigated. of sort Again, so we to will that

time? And in and to of amount debate then so Is sort of your having as you any production semi-public give a shareholder and can relationship, a some that Got it. changes taking relative update been with I helpful. think, forth. your that perspective? your significant a of sort follow-up, And That's from you've largest

Yes.

a only really X% of markets. our a is Just reminder, this few as sales and for it's

is impact focused Farmer-First the to to of to a rest core is way, a the this smoothly. farmers organization of in around TAFE's we that. situation. of fine got in table serve the We sales smooth We're those professional handled court in a looking been the inventory we've focused some, few really we put offers delivering activity We've it's business for about and today. and to on farmers products. way to it on really well. We're now. all ball very got the it's and settlement generous Precision feel to trying channel keep that is trying is strategy. -- those that manage I deliver the production And marching for plenty that that world. And replace a it organization to overall our we're resolve underway Ag have -- The on so us There's the The are business. think, of is forward and focused But way. think So our small get on on solutions this to trying the no, well channel going tractor as served to

we with offered today. served We've and can those So that and reasonable we're We're we very of working got have that backfill few We've open generous just take a they'll deals. dealers and communications those. are got hoping options deals TAFE, lines resolve in confidence this.

And our Markets. comes Capital next question Jackson BMO Joel with today from

a follow to Europe up bit wanted on I more.

But expect gave because a lot bit guys? for some than which already through a trying in first a in 'XX a given of ago Again, are margins Or we into doesn't back of some quarters be few half little we it You minutes outlook of to margins should lot this in you of figure on saw in expect step you've like that, down look to But just QX. mean Europe on a trying in address a margin of you 'XX on that 'XX, transient did how question. in color. Europe ramp first we couple prior out early a in should Europe? to kind over less half

get to you level, volatile think in. least if to back Joel, little too early X for going at not I to the in be That to the step to the patterns. that But major of an tends standpoint think outlook the regions sell itself bit a we our it's more us better order stability lend yet. I Europe of industry continues into all we're -- for macro XXXX from

index, the SIMA at South to industry America. you that low the not America, in some We're barometer long North ready here, that starts from a stay call sentiment to feel it is yet. when again, we point know historic hitting the variability standpoint. year-over-year, a now. index, where We at to hits look we've and But you which bottom the SIMA as at do we much usually at time. Purdue like a there indicators is in near alluded bottom point When doesn't for index see look marketplace, the It don't we're Eric You the recover. seen usually then right of like

the one really things. And we we're from overall back we move about work X adjusting market from second make dictate up to us. be for out, fourth Our have pricing. do to about will what we Fendt questions, sentiment of we then couple the do to other the the XXXX -- half third to especially fairly again, influence third think Gen out to X. products and does shapes Again, that quarter, quarter which and But said prior will being that I dealer play a a were point, months? the of That the big challenge will improve mentioned sure we XXX the quarter with in a how of here that year as the us here with strong manageable a down, for sales next big the transitioning down, inventories will the that that for month get hopefully, on pricing with going How industry. as do XXXX that farmer month year-over-year, Europe out is as the we're sort to us again,

first bounce But Joe, they in what Europe half look like back quarter we the of in similar margins year. do to our fourth to the expect

Trying question. XX just And me, Slide another helpful. to excuse compare deck. X today's Slides -- That's from

months ago. maintained Slide it a So it XX, you've what was few

across especially worse are and maintain in market your of versus tractors contraction all in tractors, show X performance. that performance tractors regions the outlook on for North X, for X-month America maintained Europe You X-month you Slide year-to-date for that. But to the

contractions that thought bit I well, year can through for then bit but America, to a is full [indiscernible] think, on But the the trends -- outlook worse, reconcile X better. that months contraction are bit, keep how the you a a South and explain worse you able been same there's you've

of outlook of of in have So opposed moved going range a Joe, of And the we're down reported. as There's in is kind that's top visibility end terms and the retail more bit -- we where that disconnect essentially, wholesale our terms in the on to little a we've markets America. on year-over-year. of South to industry because being

versus we're America South retail. just bit different wholesale at little because So looking looks a

And comes Baird. question our next Mig today from Dobre with RW

here talking pieces trying to put based on dealer extra demand. correctly, you average, inventory I'm But you're if sort about on an month the of forward about inventories mean, together of on in I about dealer So then dealer units demand. having, of terms declined I you're QX. and how thinking sequentially heard inventories also X% in

that mid-teens fact what's a kind here for haven't baked XXXX, are sort is for that maybe we you here outlook changed of of in to decline your demand the like really infer terms roughly where more experiencing XXXX? math be we how thinking some 'XX? so, of you in geography you're in if weakness, by And Is give should us my can correct? about Given color

Yes.

our what that out, at work analytics through want again, moving transitional the the the how We year. We're go year. to changes, then historically, retail to plays Mig, just Eric year, historical So usually think XXXX we were here. we down couple last alluding for year from said year that's the I and of in in industry large to, not you this through a are X an very where this has give we're what outlook But yet. to XX% this get where through are going industry our around when and And we're going for vicinity. we calls, we quarter, full prior see look demand fourth through directionally floats general

I some are the at to do expecting down Again, not declines. where today, seeing next biggest challenges couple in most And world. If right look continues we're South a see are to be expecting parts large that, look that pieces historically weakness expecting there's year. the most where here at of market been, X think we we to sitting year, probably now. be the here. the As I Again, next of we're doesn't we but the challenge America we're have the again industry industry

year, production been production again XX% us another now down. fourth of to You last X cutting XX%. year. planning the trying from of anywhere We're from take in for to here production quarter quarter the third this through large really cutting see the production year this the quarters cut QX We've

in when South the in of you you think South and little numbers was very And numbers now down significantly I to up and there quarter. that is more parts industry. America, was low these X third look than down overall at being in market that actually there. of the a it's high-horsepower the segment even the see quarter When a America, third story in the at bit important negative the the the happening right the XX-horsepower below mix it's say, horsepower,

these bad. But market was that segments of up. mix, really look down at lower-horsepower mitigated some making units actually looking focused you're AGCO significantly don't is when where were when the profit, the in so for part and the that as the we're overall you're of that quarter And by seeing

this we be. the we is market seeing with. and challenged right a a I biggest, So North market large us know segment second. South the be really big to the of now. likely America America, would always continues volatile It then has because will ag deal challenge for always be been We're say, most definitely

inventory based look. on Units production of on cutting so just And it the units. dealer we're forward sort not the there. creep up, continue to but seeing the down based we're are we're seeing And levels

is the country-specific that the share more with Europe, North North say, be And issues. again, would of year, would market early back to production and then going of deal of or more American again, end product-specific some challenges So inventory as probably American the as dealer our part to we expect in our for I that, well. well on

follow that... to on just up Maybe Understood.

our bit, follow-up. To behind supply of XXX we time, down was build up we take some XX. a nor our just and numbers -- not XXX everybody to constrained I'll the put from to the COVID. this, we the in a got Mig, was of your on during then peak because trough had around went terms AGCO's industry. last sales little constrained cycle mix were This At of a peak only supply peak, world,

potentially then the be as trough So won't the we as trough nor deep that as believe long potentially was. last

XXX said, about to I As we've from XX. XXXX, that last about. trough talked XX the big Damon [ correction gone to the ]. In year was XX It's about

compare previous deep it what would was trough to of So That probably to that like. XX assess trying looks the think XX. sizes get, that 'XX kind what as we we're which you as is of

it. frame previous in to least more to that expect near that We at somewhere we'll float XXXX's results And but and that you trough. between clarify bookends in detail December, gives some the

XXXX. production I'm your with wondering more still, the there. it rather a we're follow-up And the seeing up action slide, more I stable, XX%, cutting when if the being and in Helpful. on that, excess I fourth X, certainly looks you're production mean, year-over-year. bit than Slide not is considering the of production not this in you're understand we're inventory taken dealing My guidance mean, on little quarter wondering not But fact fourth I I'm quarter. sequentially. pressure seeing that why

Yes.

many in than you of we being are at production different tractors, our different tell more what includes just would you, the combines, I'd aggressive planters. look product hours, When Mig, extremely So of many and the parts market it types include sprayers, that again.

reducing production So significantly many we are in aspects.

seeing there is that mainly what I Europe. think visual you're in

at of little the out the extended fourth look the the lots coming are in high-horsepower to As is in to go market are be may dealer then a lots. And is here America. South again, these think the at on now. when lower-horsepower demand on in farmers retail to we're you we're better structure. back What shutdowns picking exactly the optimizing segments the not where really And be on quarter. seeing order. about I there. And And mentioned, right dealers' comment South what's my is looking you third ag we cost quarter doing actually if still there what America, pretty the sitting really sort Europe, the up well what That's inventories, dealers' challenged always again, bit

put in or products. So again, demand retail and production running North to or in we that be there America to where to for more we onto have lot. farmer think about producing need. more to working that those the the demand of end Europe, the orders dealer what product we really produce. we're And similar demand. a lines the may we're We're We're producing see But not is service pass-through

what's realize hours Europe I in in again, you production or the like what's different, versus in South that So numbers rapidly sequentially reducing factor look America, the factories. we most are happening when parts our other in of but year-over-year happening

Tami comes question from next today Our with JPMorgan. Zakaria

out are driving help growth clear to needed North in North you America positive suboptimal of inflation? you I expectation North to in expectation cost channel? it underpins Is America? say strong. due against pricing mix to pricing or this America heard backdrop? do what's discounting there? expect pricing prices And What you call of really expect incremental Anything to think demand this raising you you continue the Can I any us to So be understand,

full segments we're Tami, should year, of had the lot I'd fourth new pricing getting. price really of One rural quarter in Yes. a year-over-year the the on or that the what of back variables year is half with year-to-date, I more being would this think here. discounting, is in really this increases certain about seeing we're it's market, lower I say, say couple products selective America especially say. a as quarter, the we've for the horsepower we lifestyle. some positive And North of

a of are financed. know, lot these you As tractors

overall reducing coming from that those as sort QX couple into into pricing America. in XXXX. pricing drive move big helping take cost that really better we're driving now down, the the North decisions, sequential America significantly can so North are QX improve the and And advantage trying AGCO. in of are variables to of But we of rates to interest as and into thus we where that's discounting the are And QX

that's I proceeds. in you coming what's $XXX of question down remind pay your plan it, debt pay you expect my the in paid down the is, think debt down And And any second quarters? quarters? the in helpful. Got with the we terms more million can more balance plans But deleveraging next should sheet? few of

Yes.

So loan part term we venture. joint we in pay funding as the million $XXX -- of had down for Trimble a the did place the

the & So that repaid has the been of Protein Grain with from business. proceeds some

March, We likely have And time think we'll April of with time sense. think, just cash as But pay if we make April free sit about that the will I mature, that look then things. proceeds, would in frame. Tami, there's I some frame. with happen, see March, I may $X.XX of the else debt balance today, the that anything coupled Trimble think billion flow. will Those big to that will be here we down X

And Jerry from with Goldman our next Revich Sachs. question comes today

Clay on Can Jerry. into This expectations we conversations on early you next planter of order business the us your update given as you're for move is having? year, some the for

Yes.

well is, has I for gone market think for relatively seeing environment given America, order planters North program I think the overall, early the program order sprayers. and early in we're that here

and of we're we're we through for with half first time, were think planters sprayers. year as not the as this but last I strong orders XXXX out

of if sort rolls QX, QX QX. Clay, you to of start early remember, order from program So our

pretty overall, particular year right But on quite booked full the but almost now those products. not So good.

absolute COVID? quick can on And now about versus America I'll as compare an And dealer well. curious pre a to follow-up, you be North levels basis regions hear inventories, other in on as

reducing what that's Yes. possible the in America. been to massive here as levels, the as Well, but dealer would North have think at around look X-month XXXX. decline, that, before X-month get keep around if right than mark sitting We're we I pre-COVID inventory as for that in range here X- that to we they as talking soon production the early cuts higher about obviously that ideally,

line closing looks conclude turn for to Eric disconnected. has any question final Bernstein. This our And question-and-answer from like Chad Dillard our Chad's conference over today to with will would the Hansotia will It like come back remarks. session. I

close focused I'll the costs operations with saying short are to controlling on the environment. align today in by current aggressively weak that better term, we market reducing our inventory and

was the X% we're previous even X% is far last that closer which operating trough, X%. But was and above even peak margin close profit striving the do above to Our to better. to

will actions the last ones far Farmer-First strategic we actions. implementing million projected execution that of $XXX the million year on advantage months, accelerate this And $XXX control will AI those like target efforts continued organizational Our restructuring Farmer-First remain business, when current we take right and our of tools org took the X activities on that of our the like over Grain and big automation -- take we've so our strategy. focused benefits we and and implemented already venture, Protein our we've taken & to despite enhance strategy. all divesting to forming deliver joint PTx Trimble savings The challenges, efficiency of

to the in look upcoming you weather seeing on have them, a Over diets, day. how cycles levels, We while good trends will these and react the you, our analyst structurally and industry. growing health populations, healthy including market of relatively of to are changing at prices. illustrate conditions. long-term low commodity the industry, give forward biofuels us we factors many touched on typical stock-to-use markets, for we've and changing meeting quarters, All AGCO our last higher increased are Thank to be confidence supporting few December our how performing in demand And XX. regardless we

Earnings day. The Have Thank concluded. you for call Call. joining now the AGCO XXXX Third Quarter has a nice