AGCO - Earnings call 3 2023 | AGCO Corporation

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Operator

Good day, and welcome to the AGCO Third Quarter 2023 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.

Greg Peterson

Good morning. you for of XXXX Third those Call. Earnings to joining AGCO's us Quarter Welcome refer slide to to we'll morning, This a at our presentation www.agcocorp.com. website posted that's GAAP slide The presentation. are in measures the the non-GAAP reconciled of used to metrics that in appendix presentation

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

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

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

differ could information ended December from year on with a update disclaims make any Form risks its any AGCO required Exchange the XX-Q statements in in as Commission, XXXX, other XX, website. call this except these and included subsequent our is the obligations Further of these concerning filings. to forward-looking Form filings by and available XX-K statements. AGCO's Securities law. corporate results Actual suggested materially and those including for XX-K, We'll replay

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

Eric Hansotia

X over last years. different. Thanks, record has I'm good the you consistently to of delivered AGCO and results the tell Greg, And is that no quarter pleased third morning. XXXX

AGCO margins our in operating adjusted third operating XX% basis XXXX. our is how XX.X% third XX% quarter structurally target. with further have above we quarter XXXX. higher than and margins billion basis. delivered Operating XX.X% on the points better in of nearly quarter an XXX were $X.X That's sales, business than margin quarter evidence consecutive fifth transformed towards mid-cycle XX.X%, progress the the marks This making are demonstrates which we and of the

Fendt our expanding globalizing focused of continued growing our on branded This strategy, and products parts a strong and business. service of Farmer-First line the Precision financial performance full reflects our business, our success Ag

fill the the networks expand continue Fendt to our regions are rates distribution Our equipment. of in targets more industry. North to in access ahead we industry's growth and parts as best South best American farmers to we give have sales the the our And

margin, be another earnings each the per foundation sales, Our and operating cash for share in businesses, margin-rich year these strategy growth to of free is generating XXXX providing in flow. strong record

tech position performance of trusted a farmers' and expanding putting efficiency, partner taking most our us winning stack in levels farming Our as solutions. new to for products is industry-leading smart

The AGCO minutes. for of aligns our a our percentage planned also focusing It venture Precision high-margin, for talk truly a high-growth industry. segment of on of and JV announced about Trimble Ag on with perfectly transformational is farmers. joint recently greater We'll strategy with the our the in business more few

industry of retail X XXXX. first Slide region by X unit months for the details sales

driving As harvest prices. draws Hemisphere, in on up grain completion weighing is Northern higher inventories, towards the production

income relatively for retreating and year. relatively cash seen level most is strong. a equipment from XXXX growers, at for but the positive highs this still is flow And high in is Farm demand with our earlier

While more selective still causing become technology and and lower to the commodity prices age about are fleet farmers younger supportive, equipment investments. their trending

Strong four-wheel-drive North and American year-to-date tractor than in have X% partially greater decline offset XXXX approximately retail sales as continued XXXX. decline. down the tractor industry higher through were XXX-horsepower demand rates Smaller units September for demand. from versus to levels higher overall conditions and economic slowed helped sales interest

Industry sales Europe XXXX. well in approximately negatively as input inflation. cost as sentiment to the compared September continues Farmer in through influenced to decreased Ukraine retail be tractor by Western X% ongoing war

However, forecasts remainder are Western farm for support healthy XXXX. good retail the for Europe of demand income equipment to expected in throughout

of hopeful was compared first decreased processed, the drive XXXX. negatively help being months balance the year. demand in end. the In loans to June But are sales the loan by prior South of sales X will America, Brazil industry for X% XX XXXX of we depletion retail to government-subsidized year affected with fiscal improved this program now retail through tractor the Retail

particular at retail the levels remained high-horsepower increasing are in Argentina with caution, in strength demand there segments. XXXX average in above signs and Brazil Although of

weather prices are strong yields crop commodity for farmers. dry creating and However, about concerns from weaker concern some

through the Combines to America America prior XX% up chains. due September to compared The supply combine was XX% Europe first industry South versus XX% the in months XXXX X of year. North XXXX primarily in in improving in Western declined and

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

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

demand the for prices. grows, oil-based demand commodity driving fuel the strongly, solutions and like need as for grow will renewable for farmers diesel our aviation further Second, support will vegetable energy that clean

such And and third, input peaks down as fertilizer are costs fuel from year. their last

be remain to We XXXX expect XXXX down from for modestly farm In XXXX. record attractive in in of income demand. that be aggregate, levels it at believe and levels industry we supportive the will

significantly AGCO's the has last supply chain improved year. over

on-time since on-time performance to delivery customers to our our gotten And delivery better. XXXX. suppliers' product Our has farmer factories AGCO's every month March has improved

normalized lower inventory. is of this more production benefit environment Another

been raw by and XXXX. have our of able reduce work-in-process to We inventory September material XX% since

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

X% the Recall production was that versus decreased last second attack exceptionally quarter as were we cyber production X in third approximately year's quarter. Our the quarter in recovering high XXXX. by from

inventories, year, in and managing on are resulting relatively year. XXXX X% production the our in phasing a for this focus flat production the hours Given for increase versus in full we levels planning quarter last fourth

high-horsepower regions. remained As us the X boards coverage, of than of higher have now on end average for in September like month up tractors And across products demand approximately taking X average targeted inventories certain X.XX XXXX, historical levels We're remained of our months XXXX. order second with certain products the Europe, all are XXXX. of tractors In still strong. Fendt of months optimal into versus the quarter order our at level Dealer below areas. our September around of farmer-focused

X quarter to continue our South around for limit up where fourth XXXX, all have quarter America. in pricing order they more boards opened days. ourselves order within we coverage America, our brands to flexibility. In South we of And orders through in advance, giving matter December filled a We

equipment fully as tractors, the to booked for orders planters in and strong. our America, model big demand XXXX are farm North be market application In for the continues year

to on improve order are to other for bank continue ag. rates, more on-time of management. large have to our months currently though limit returning approximately both order and products X We order coverage delivery small intake normal products a We some

would Slide our which market full-line AGCO growth of mid-cycle December overall AGCO brand; parts; Fendt performance. on genuine not focuses levers the X%. significantly that share growth only business, XXXX levers the also global fit parts XX% X. increasing are: year and and to drive three achieve business engines X% by AGCO's but margins rollout of Day industry three three Moving by our solutions. to high-margin the supports at help factory operating and technology and discussed mixed-fleet those At the Ag its and we These will third retrofit aspirations growing focusing AGCO industry achieve To XXXX, our in above outgrow Investor growth the will product margin Precision help globalization is our reiterate, on

XX% will technologies. layering Trimble track and AGCO in between venture a interest joint portfolio will transformational weeks AGCO agricultural we our technology we planned portfolio, By of Ag the an AGCO's few of in which and assets transformation. ago, fast recaps X already top Trimble's strong on Slide that announced Trimble acquire

by all farm The automate farmers be the of automated joint will management connect and with correction for AGCO. to software, in Trimble's of and controlled even advanced Trimble's system which by AGCO data be steering guidance enables key activities via offering venture a It player allow enable us to hardware their will farmer services. all to more through

throughout everywhere regardless solutions, With of expand we for on brand. us provides mixed-fleet farmers offerings cycle technology This suite further combined any able brand-agnostic of our are solutions. the Precision entire and models crop the and to XX,XXX with combination from almost position the This our full advanced than technologies combined of OEM. solutions as announcement, our reinforces the hub retrofit Planting AGCO more commitment help JV different business, will to existing put our mixed-fleet

Lastly, machinery years. next-generation of will EBITDA across in adoption to distribution a This to access increased multichannel technology. doubling technology access the of farmers the AGCO's X allowing Trimble's is approach portfolio drive population, key more locations lever multichannel

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overlay Trimble effective expected $X.X the already pro in Ag's approximately XXXX. would XXXX revenues, sales we billion When forma be

XXXX. Precision Ag the of we combination in by to AGCO's JV, and Trimble Ag from deliver Precision revenues $X combined over billion revenues expect With Ag

in conclude, deal close hand customary likely With we to I'll closing of approval regulatory would subject expect XXXX, Damon. over first half it to to that, To and conditions. the this

Damon Audia

everyone. with I Eric, morning, you, regional for quarter. third of net performance on the good Slide X Thank will and start overview sales an

were quarter which quarter, the was excluding was quarter compared third sales. effects the up approximately range, sales contributor Net positive the of Pricing in in the XXXX, the single-digit in translation. when to of to X% the primary currency higher high

was XXXX partially our due to very sales of the quarter third effect related had which North the recall, a strong event may catch-up American in quarter, and you in As cyber a to on operations. a quarter, second the European bigger

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

XX% as In approximately excluding driven increase. the grew well in of South Brazil strong sales net planters America, currency by translation, of tractors positive Higher and as sales Argentina. pricing continued most in and sales the effect the of drove third growth quarter the favorable Momentum year-over-year,

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

net in confidence XX%. a On China, weather. basis, our occurred Japan dry in approximately significant most by sales driven and segment lower currency The Australia, constant decreased declines and Asia/Pacific/Africa farmer

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

XX. to Turning Slide

third operating quarter margin contributed to positive quarter input from high compared expense and and mix of a third versus increases pricing Price year-over-year. in due benefited by and XXX in improvement engineering Margins margins. of The richer to and XXXX, offsetting quarter to quarter improved sales significantly $XX XXXX. increased net than the higher offset cost adjusted basis the in the basis points costs the on freight inflation more a approximately material million dollar

projecting X% For still the are approximately year, full pricing. we

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

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

quarter basis South in South a our period the mix. XXXX. were third America same and margins point Operating benefit last reflect versus sales XX%, Operating in quarter improved almost again over increase improved this income over exceeded favorable expectations the results a the American $XX XXX year. of The million

segment, to much quarter in weaker due operating Asia/Pacific/Africa $XX lower sales, well as million the our in mix. Finally, year-over-year reflecting declined income market lower conditions as product approximately

globe American to last more margin expect margin years AGCO's and our the and the the X North With the South American from expansion we strategy in in regions across in execution profile ahead. disciplined years our balanced pricing, be

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

operating cash plant as free conversion by purchases adjusted cash a cash divided income. flow net free activities by flow equipment. As defined free and less cash And provided used flow in property, or of is reminder, represents

$XXX million products down quarter and year half hit into of of back hands the the a fourth that improved supply our approximately year-to-date, we to more manufacturing inventory chain almost earnings was expenditures to of us billion September XXXX. Through targeted have $XX $XXX range year-over-year. strong enabled XX% and than This the or for despite flow sell quickly. a over million result typically $X.X farmers to increasing our less improve higher by get of free and We our XXXX used million cash, $XXX flow million cash capital of anticipate our

be For source although of remain still we chain to use year. raw earlier to improve, versus to work-in-process continue we in expect still inventory somewhat cash challenges the elevated, material our given a things XXXX, XXXX. supply and a in expect modest But it

dividend consistent quarterly cash of significant XX% dividend our increased second our XXXX last by outlook. to of during variable improved to quarter flow increase the investors regular with $X expect a share and to XXX% direct conversion XX% per of with returns XXXX, payment per continue quarter. We the remain net to to range $X.XX a We income, that free in special we adjusted on financial share a from from focused

our regions. retail highlights XXXX for XX major forecast Slide market three our

to While recent are in still demand the all XXXX. in across resulting prices XXXX slightly levels, at supportive softer reductions commodity in relative regions

high-horsepower interest to in be for strong. levels America, X% segment we be lower equipment segment of of expect softer offset X% row years the continues robust are now to market. equipment crop expected to North For But the smaller it's to to healthy continue smaller several demand to by growth. compared the rates XXXX. The Current demand equipment after slow

emerge inventories sales a to America, seen result in we X% softening now South of we have down expect and is X% be In industry XXXX. higher dealer This last demand quarter. to

is markets, farm region this of footprint end the However, remains the Brazil, one stronger especially where increasing. in

demand for down to drive which Although region, continue in ag high, we large the from healthy XXXX profitability farmer should expect equipment.

expect to industry has in weakened Farm down region compared are healthy, XXXX. to also now the in sentiment we but and Europe, bit still order fundamentals X% has to Western be X% a generally slowed. For the region flow the

Slide XXXX a XX our assumptions highlights outlook. few underlying

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

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

quarter, expect euro to currency the the effect on With sales not have weakening translation last of we year-over-year. do

increase to are at investment smart million increase Ag XX% in compared by Precision approximately and targeted expenses Engineering approximately XXXX. or This to products. is farming expected $XXX

engineering outlook of improved our we to around performance our productivity, as inflationary sales prior cost are the initiatives year offset by strong investments as raising full and pricing margin driven XX.X%, increased cost through operating favorable our by mix, digital September, material versus XX% net of our Given partially well pressures. factory and in

compared Half been higher tied where of are which AGCO by approximately and being incurred increase and to to has Finance, sales is XXXX. affected to $XXX volume year-to-date. receivables interest the we're higher expenses Other expected million of year-over-year, rates most sales this increase to

increased year, the XXXX, additional With where for effective The related in end volatility lira Argentine FX losses more tax the on Turkish our is rate are now we to our QX. other low half peso, saw full of our which updating we of in and clarity XX%. to estimate XX% to prior is XX%

Slide approximately quarter, XX. net to sales $XX.X currency Turning have the weaker Despite year of last slightly maintained our billion. outlook full versus outlook we

earnings $XX.XX our versus performance confidence quarter. estimate, the our in share year-to-date $XX.XX, given fourth and should which $XX.XX, basis, prior or adjusted increasing now are XXXX strong the an We target on be in per our of approximately

our include increased to further targets CVT additional investments to also growth. Precision to CapEx capacity million around Ag our and We've $XXX enable in

conversion increased XX% mentioned adjusted As the improved million which with net with earlier, target, expenditure outlook. free based to deliver to capital flow our should cash prior should of outlook, in an $XX $XX our free of I on the our target, even long-term be flow from range in additional income, million consistent XXX% cash

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

Operator

[Operator Seth Instructions] question Our first is Wells with Securities. Fargo Weber from

Seth Weber

that wondering detail to on if just bit a customer remarks, your side think -- to an likely how in talked potential potential the you of of risk -- to us in a a that's little from loss that on the about expect navigate was loss around Eric, I'm you your Trimble trying offset JV. or JV. OEM have the could prepared give I Eric, it of you more coming

Eric Hansotia

Trimble our on solid sales got the largely We've in the suppliers other another AGCO plan today, is control here or in that majority one to go is supplier. of a supplier. two navigation really customer A actually systems. our choices is and that Yes. One two offers

move once a and towards into -- as we on of And offering Trimble together, that new out working influence chapter can into the our JV is predominantly migrate the we so products. to we existence migrate of official sales we're factory the significantly

then have over regardless partnered of brand, them talked And continue many systems bought help also, to already to the already. business. that to past, to that been grow OEMs marketplace said Trimble. arrangement, on the has feel still We've with are have can Trimble they those in the of that and XXX And focus in well. continue There's continue the retrofit we we consistently the then And business, strong there's to feedback they new portion to of the market that intend that very as confidence. comfortable the want under to retrofit

retrofit, get OEM, can sure working So the plenty on factory, from those make access great three technology. that all paths to this of customers of to

Seth Weber

That's -- how helpful. maybe for handling us And just point? just on boards pricing color you're order details XXXX then any Can the give this year. the on you appreciate next at for

Damon Audia

Yes.

outlook official those Seth, But pricing in our think, where XXXX given you I you lap of X%, some around here think last any think we're our price about we're year-to-date, haven't to our XXXX that and if big look put for said performance, of we outlook starting yet. year. we place sort the at I we for increases

we're as see be more becoming we XXXX. into And that to normalized the assumption quarter. And again, here pricing in call probably we so fourth reasonable more a move I'll seeing what

Operator

next Bank. is Nicole from with The question DeBlase Deutsche

Nicole DeBlase

for thoughts what on margins sales, the again with retail inventory in And to seeing very given extreme recovery also, little respect you're XQ, that any America about maybe you talk in your Can South in strength a bit XQ? persisted levels?

Damon Audia

definitely that the little quarter, seen horsepower-type you Yes, look of fourth recall, the small- at so government-subsidized back plans in we delayed ramp-up half bit the third the farmers. start we've -- were saw in to of I the medium-sized We the think quarter, quarter. improve at and if funding a as may we're -- Nicole, the

on that, about what especially the think side end slowdown a the market. continued seeing we is As we're that in lower of market,

as stay dealers I'll they and at the about we quarter that into here more normalized level we or the As quarter. get the the our start to moved third definitely in would quarter. And call traditional farmers' dealer we're to have incentives what the retail expect ability inventories, for think to as to the fourth start the about quarter, the it, we've end confidence more here of of to past to their couple provide we level look in talking and here quarters, at farmers that dealer products expecting of those we been in this and fourth inventories to fourth and see materialize to the out stabilize, our

what And the quarter, back you as third that end we tell at third see the is, started to would at of we quarter. the looked I

year see And so more third quarter, that as high-teens look as put embedded at we fourth American coming quarter, of QX margins the outlook Versus that's run into down. would you South we we extrapolate into XX% the are And quarter. the where them for in gave as definitely that the our we I versus the rate that probably we sort full fourth year-to-date.

Nicole DeBlase

outlook Okay, kind then EPS the That's material just got embedding sequentially. are you usually helpful. of higher-level pretty like implied it. on question you really guys a see step-up. flattish And I Q-on-Q think of XQ, But for kind a

the are what that divergence from of big seasonality? So normal drivers

Damon Audia

Yes.

if the last going currency gave of said my the a quarter, quarter, look things to that couple a quarter you it fourth -- Nicole. we prior the outlook X% So quarter, you this One, positive. we be at driving was versus

to million. we're relatively That going Now about it's saying flat. $XXX by be influences sales

at So that performance is billion $XX.X our outlook earnings a of That we've translates of fact our around number $X.XX share. QX. our to positive for QX kept per also the and

$XX.XX, you versus look $X.XX third lost quarter our at outlook And about so been of that's FX of diluted our outlook. by when

And dealing the QX, disruptions year-over-year really the talking at attack cyber end fourth quarter that from inventories we had third in we recovering with. we chain of if quarter second exceptionally supply were And we you of the about just in strong as the to the you quarter about were semi-finished put were in last think strong that remember, the because had last quarter I year. chain. remember, we an if year, and when fourth importantly, that supply perspective, more Europe, But the specifically

they This farmers XX% and tractors XX%, much were out and more year, year through the the the combines supply off able because chain, to where we've almost these the course a they're we've because factories of versus effectively been the ago of down get year. improved to about

we those So to a year. quarter, little year, big quarter don't challenge that a expect would numbers fourth fourth bringing last in specifically have And saw going what we down for you last that Europe. that's us create massive year-over-year bit relative to saw

Operator

is Mig Dobre with next question RW Baird. Our from

Mircea Dobre

Hopefully, maybe I mean, from this inventories point. I But understood comments sounds I normalized bit. a starting And your this demand inventories, at correctly. what little soften it heard that largely to is is have that dealer

have So the to thinking XXXX. about half think there should Are about versus case, that second adjustment you in you channel I'm managing production? you're we next of look about thinking we half is the how context kind first curious if year? a downward as some that's as as into And the

Damon Audia

Yes.

So Mig, would the with do at couple or inventory to around I normalized dealer for that. the that speaking, inventory North have I quarter, months levels X America, know say, just a example, think, we last the dealers, over is generally of you're caveats so. right. The

low I portion inventory out dealer around -- highest third level. quarter strip the the the of months. about The usually that, ag the is X small If is actually

so some there. bit low, there's little a opportunity So still it's still

talked statement. about for levels look opening there that's X are Eric, at the at in But and inventory lot the being his months, dealers us. the are remarks, below inventory I areas Fendt an a still about high-horsepower level of where optimal If overall tractor Europe, at the again

would fill see speaking, I there. some we levels So say generally inventory are some still dealer opportunities for But normal.

to we and go we we see especially going were we of in about as relative As going our about production, our we through the we can to be XXXX, process, the our think markets gain that's initiatives what market as to where question given share think And chain some to soften. supply constraints. budget potentially continuing these influence 'XX, is planning

you, more to I the production shape demand thinking think aligned about tell yet. production as about that So would overall we XXXX. be don't But update. know going you just give how is should We'll out we you with

Mircea Dobre

forward, margins, All my going have wondering about North sort of helpful. I momentum. about follow-up, sustainability to good. continuing quite sort talk that's I'm of Fendt build guess, especially America you been as you as the about right, your And already, talked of that

Damon Audia

we I and on Again, to us, overall share Star experience, the which a tractors. on who North replacement We've performance is good talked very really selective us. networks, for Fendt Fendt for talked includes fast And about Warranty, on Fendt the to predicated America, focusing that these market has Gold into Yes. lot think, Fendt dealer America expansion. Mig, out about introducing being really experience. is offer Fendt's that North that We've a adding and on they able that South margin the Fendt been how roll it because of America deliver need dealers to

we've in think And were the we're growth that is America. said or coming year-over-year, North of great in where the of North And said share we the seen Remember Investor great market cycle industry I we in going we've that regardless the at as that opportunities. growth, Fendt in seeing that to are Fendt the past, by to growth X%. our performance we still America. Day, lot of a about X% share see December So we that outpace if majority performance from or the again,

which still around going going vectors Ag Precision and growth as that we've those and XX% mainly three growth, and America average annum in to that, at per North convinced grow XXXX. opportunity growth. share, parts we an market to Fendt -- move South of then the on be our forward One remain were is America. said into is We

to North Fendt next by are is in America industry us its year. showing this that So of we those sort think And going I X% going the confident into three X%. outpace potential to And help quarter. remain

Eric Hansotia

Yes.

XX%, that to North market market one the the step-by-step grown that. expansion XX% We've about dealer Just from on participation comment Fendt talked about. coverage in market Damon America with more coverage XX%

to to earns We the that when the years, of over grow the XX% next dealer doing years. XX% like from we've up but only last over much it, been XX%, couple expect steadily, few

more Same brand there's the full experience overall be South in potential to America. able So thing market Fendt promise. to there

Operator

question Volkmann with is Jefferies. from Steve next The

Stephen Volkmann

that Eric, becoming of selective more talked spending. a they're does Are think buying? capital in farmers seeing sort mix the shift exactly? their I in you that about of types equipment you What mean

Eric Hansotia

years. a mix for don't the if new had shift. couple financing more market. of coming off. a these still Ag mix It's I still, retrofit weaker capable very ag. still market business hot applications some to is The is Precision oriented existing I an a much of and say I'd know on than back are But last applications, large machine normal is But We've more large ag. that in to ag the Small intelligent. cooling basis, towards more such say the make of a growth would relative

mix little caution think general -- I more So a bit part. a of a on much just the it's much don't -- more it's shift, farmers'

Stephen Volkmann

right for may big-picture to you to kind mid-cycle about it but of industry? then But 'XX turn, sort targets, make everywhere of you mid-cycle people And think year it terms do the sense now? about in normalization. for like sounds we guys if way what is about you outgrowth 'XX the And Okay. just really think are does talking do have as

Eric Hansotia

But exact that moves 'XX, numbers. it think say let's giving see way. we any Yes, I we're don't in that not dramatic

haven't prediction. committed slight industry a movement so wouldn't shocked 'XX, any kind And numbers. with into of to But your be it's but general we

Operator

with Owen next The question from Kristen Oppenheimer. is

Kristen Owen

as means pricing I'm pricing question. means AGCO we you've just what And go-forward about in type going think how on normalizing, ask today? think contribution on the also about higher what richer we pricing normalization mix, on front, a normalization So particular, for can a we pricing got norm just much basis. Fendt, a a from double-click much to of arguably, technology

Damon Audia

Yes.

if do Fendt, driving of is you tractor, a raising think when when X% tell different think, may Fendt about tractor, I X% what we or Again, a with Valtra historical. we been to a has you when prices the sort we're referenced X%. enhancement. margin X% Again, about you, pricing, of about that directionally, it think on not the pricing, be the to think it's Massey we Kristen, I than more and would Fendt

Ag, think your that operate point, a different Precision does we the And slightly price the about to at point. retrofit, when

the rates. pricing that more And in based But so in our you're historical slightly to there different. X% on at probably X% may being be looking us aggregate,

Eric Hansotia

Maybe question it touched we works normalization. another and Steve's this the sides on equation. your It of both just believe on both on comment, -- works

in going be years as a more won't expect be that come costs rates, some in their there's they're much pricing like and inputs. costs fertilizer also terms peak as down, although going to and costs down we lot in feel for of AGCO we up interest past, So farmer to to probably near of so come to close it. then And other farmer opportunity or

down that has go to So a potential up. than more

factories, inefficiencies supplier our over our both last similarly, in and these that yet. we've gotten X then And all years. factories a of X costs lot we've not And out or had AGCO

plant in a take in that performance our XXXX. much year, better there's intend XX% down system we've had still this are we shortages cost to out year-to-date, although So the

the half normalization that's the So other discussion. of

Kristen Owen

JV. follow-up year the then Trimble Appreciate and and takes puts for related but -- is those beyond, next so question to my

You a much to that about billion of order by to a OEM in the the off in revenue it's precision $X existing talked occur needs But implied higher XX% the base. XXXX, replace relationship. fill about CAGR

the dimensionalize revenue. sources think technology billion terms of to cadence of in the and that $X us help to solutions about Just growth how

Damon Audia

again I coming couple years at a some OEM the what over of is see looking decline we actually in us, with here as first Kristen, the to that partnership think knew of think Yes, Trimble. CAGR, were revenues about out I the system, you're XX% we the for going of which

the you we excited pipeline in then the channels, transformation over those those of there so several the And different revenue. And more channels. drive new much mix help the won't of revenue at from the plan sort alluded two of years. to of opportunities to an bringing of plus the channels, Precision to and with first growth years, coming again of But we're our again, that Trimble-type over start as level next the the his products sort that see significant that there new in that introductions of replace all accessing Precision Vantage expect leverage combined to Eric but of that some looking As have Planting, to our the growth OEM a bring recover of our are to couple that into with some absolute of channel product introduce is we the they primary drivers OEM here, that. products, see growth Planting, see fitment comments, more we we will

Operator

The Larry next Maria with Blair. question from De William is

Lawrence De Maria

on what -- EBITDA, up in Trimble referenced maybe lose you that you're of us $XXX CNH forma dynamics? million sell in obviously it's sales some. Can a big gain on to and say on there's going you've the like 'XX, Let's to pro million want for sales the color looks EBITDA. 'XX what specific that CNH also discussion. Just some dealer portion numbers And given follow and some market they a but and -- the give $XXX all this EBITDA and flat

would dynamics? $XXX year full a how on that those given basis, So translate million

Damon Audia

Yes.

a be of for Larry, think, now. in I the we're still that little probably premature right given midst closing us, the transaction it'd

you, able start would work to of you joint I actually we clarity think work envision tell comments closing. defer on see have to, to I process give to once venture close to Eric once Again, base the alluded for to, has offering -- we receivers XXXX But able we we're through we're to to going But the the the we'll we're to, our in the what the XXXX. to and more ultimately until XXXX we JV how any team on guys get on what here shifting Trimble. there we're with portion going transaction. in as for

Lawrence De Maria

Just that? in mean out percentage America directionally that? covered levels sold of North America? North what context application than does you those sold-out maybe into are planters, is I equipment in America switching Can put then 'XX. levels? model that it are think, North some comments, for 'XX is year higher by And said, tractors, your And the gears, Okay. you for 'XX -- for What or

Damon Audia

Yes.

And year-over-year speaking, about I'd directionally American it's, it's in say, the revenue. of those relatively I particular volumes flat XX% think North that's products.

Greg Peterson

Yes. Since the supply chain means has amount produce did but similar. small improved, than year probably Larry, before a we'll more relatively we it

Operator

JPMorgan. The from Zakaria with Tami next question is

Tami Zakaria

been So have asked. most questions of my

just ones. two So quick

age. on fleet is one first The

and it trending years for that you what now like ago? tractors like feel versus, X, age I it's think And it's Is combines the mentioned let's both younger? you younger. any quantification, trending is X say,

Greg Peterson

Yes.

both categories, Tami, where the X would the X.X tractors normal. are probably we've and moved say, the of end to So to year yes, third year from beginning the And somewhere we down combines. and quarter closer between I year to at of

were the normal X of terms we think of to I ahead a year X.X back or fleet. so this So about kind XX-year of probably X.X. X.X, in years to versus halfway a age XX- full that of probably closer average, more probably We're

Tami Zakaria

drove you quarter expect fourth it it hours getting Got going And down production which hours. this X%. third year-over-year. like the now, related it. that expectation? bit like to flattish were are But up little that, That's seems Again, And a the it think disconnect? was then also, -- production you quarter, expecting driving in What helpful. up I seems into regions

Greg Peterson

financing related that to what change program of most in Tami, fluctuation with Right. in Brazil. happened the

out money, program ran we've that as about. So talked of

processed, to well, got began production as into in be now the third that that us cutting shifted -- being fourth led quarter loans in again loans of the to those are quarter. the Brazil. And production so some processed As then

So related net-net, South most America. to of that change

Eric Hansotia

the watch thinking other age to one other to the And about thing of used inventories. is you're the just fleet, think about indicator when

in tractor XXX pre is horsepower, units example, versus of right North the XXX America, for the the units kind We've the in in to X,XXX bell which now of XXX so curve. middle horsepower is like And COVID. got industry

good, that's strong still is inventory low, barometer industry. the used inventory, So a good health for maintaining of price

Operator

is The Sachs. Revich from next Jerry with question Goldman

Jerry Revich

the the JV discussion I'm wondering Trimble just could on if we expand integration.

compelling drive So one receivers acquisition transition the points additional how the venture. joint upside and of can is for that quickly the the you about just

conversation is of pull Eric, that So be lever, rate as that be we now? half in of at from first give a mix the are waiting you us the the exiting run standpoint Or we possible the today? us of you think to mix than first sense, are year JV to close a about over of what going for quarter, a quarter, healthier until is to rate can spoke course joint really venture the about fourth receivers it the that Trimble earlier the run we

Eric Hansotia

there's big We would One the It's no two have on base And is, switch the other two towards the as the we that. so offering. redesign our base because customer technical on done? And to we design already the in orient second a is base Trimble. offering be -- offer that, Trimble there's Well, versions. over is there products. switch and Trimble brand receiver to actually bank? just the a elements to work order positive and we're technical how And side, is one the so work have

order is no done, be technical to So but work there's bank. an there

XXXX several order the And close deal last the to -- in same ordered through the the whatever we of first it so work that's as need we over approval regulatory half bank our to happens to been And the is. pace But what just at the anticipate. that. order And we same about if size had the is months about go bank. that's time expect

get stronger organize Trimble with could such start early a rates trying to running of venture new take much we rates. into the that we're So joint it

Jerry Revich

you ask for XXX-plus-horsepower I year-to-date can Brazil, unrelated is an And the on industry tractor question? In retail great. X%. That's down

little that Or Is you expect in framework, you're on margin just on XX% bit the market shipments And Your how be over a position your are do the now? to you of your can share terms considering in gaining? normalized to where running your that much can regions touch rate up that region that out flesh XX%. you're at relative other now? you

Greg Peterson

Jerry. Yes,

we And kind there, the our we've some talked add especially terms to it. categories in I really terms in ahead Brazil well for growth tractors, And actually right it dealers. higher-horsepower was our And restocking. normalizing, of to those launched sales targets. related increase that of to has be you're gains. The our market in of -- planters, shipments about targets. kind so have share dealer as when in of of aggressive too, of sprayers would growth Fendt we're of comes we brand honest, and it in of to terms inventories But Some done

also bit a So of good that there. channel down our of little a restocking is bit it share gain, of

Damon Audia

Again, strategy, little percent of been very bit of been is and And again business ago. giving mixing of done exceptionally enough, And money-losing pricing that a margin position up those a good margins. have they've in question, years were followed taken part long Jerry, in themselves generate dealer these We've to And incentives. XX-plus because ahead as to regard well. we of us in we has material you've again, there South America your that the ahead cost.

in more XX% As fourth that margin guesstimate, I into, quarter, said, the come we expect range. XX%, down would I to

we year, South range to expect we when environment, quarter. rate. we be still what enter America margins to that year in the in sort over that get mid-teens as term, But above we I'll I'll a call the a long of the more say, longer the this would more of expect term, over into in of more think normal be I balance normalized run it fourth the

Operator

is Bernstein. with next question The from Chad Dillard

Charles Albert Dillard

of you. questions a So couple for

at so on XQ it implied look flat, just that. pricing, First, and is if your to I guide, so confirm year-to-date X% price looks your want I like

U.S. you some XXXX get Europe. where to I like then of to just farmer basis. wanted early get volumetric would just exiting for on and finally, on are sense the 'XX a versus And color profits mid-cycle better Second, a

Damon Audia

Yes, sure.

the half mid-cycle the I'd sort total markets XXX% to -- to be mid-cycle, think I the is expect digits But in QX the we've a to about say quarter. year pricing, the Flat we So I'll 'XX I we handle as you're range low our would single company, ballpark. in probability. mid- at back we in as here be of where current the Greg that, year, of have seen that of for are as around the weakened expect directionally, estimate. see of sort fourth would I would let Chad, would exiting the directionally, think

touch especially And we low-horsepower XXX% weakness on And a But we probably weakness started South outlook. the in the the given the bit the little than year. Asia the I'll Greg finish we're America, that. year let seeing, saw in Pacific, XXXX stronger some we of as farmer about profit

Greg Peterson

Right.

down about also at seen well talked we've being That of but you costs. other prepared in if look averages of the our input some XX-year coming at prices bit remarks So input attractive above stuff. still commodity back, a remaining good levels said, fertilizer, costs we've and kind diesel, come

income to at continue So technology. farm about to range ability and of in be in a invest their XXXX refresh we the see farmers' outlook modest terms as certainly of in high still very to fleet decrease supportive would in new a think but level a kind

Charles Albert Dillard

integration with That's helpful. you're of And item? Great. of any the Trimble, change R&D how thinking on line about that second terms intensity, in just question,

Eric Hansotia

or since in XX% tech invested JV. our launched R&D our engineering raised we've strategy. We've Trimble we mean, new I No. spend six including companies,

the the AGCO XXX Precision All lined cycle. And industry-leading projects. the the yet on to around of all like up features the team's to crop We've and smart we overlap, developing are automate team's on there Trimble being we'll our solutions. projects very farming those accelerate way got a machines have of progress this is are bit that little or on overlap Where projects. more between worked more not projects redeploy minimal Planting on

portfolio. work on of to velocity plenty going to of help left find We great some probably to them. on want And Lots be we work there's done. to overall max be So people the synergies. think

develop place, we sensor you project one you you reuse that. tech six though when have isn't bought a can develop like companies, things just even don't to in if another, like and redundant, it just in As the the

these we're work having all So velocity looking together. forward and to by additional traction teams

Operator

Thein Citigroup. And with from the question be Tim final will today

Timothy Thein

Europe, the to Maybe is any obviously, market. to where, way market a inventories the let's on just, -- let's flat a rather, kind I an in -- call a think market, the -- that carries down flat just as in What mix. Fendt normal, guess, part to in environment to about extent back of getting A just richer

kind respect on then make about high-horsepower and any want get but margin in on of on the just way specifically, just product market. of not message South the range just I the kind America fill Brazil side that the crop I small on So terms of that and channel some pretty to to -- if crop your you there's think as 'XX, to kind demand extent seen with some a sure to of not in profile chemicals the line? And We've head some the terms just big declines What, of high-horsepower in on into anything, we inputs. that chemical signal out does but market companies put of smaller Brazil? other set in

Damon Audia

about the levels high-horsepower Tim, using alluded below at inventory about think, we dealer being I commentary remarks, So areas. I the inventories the still many level, are in a if normal Fendt think and again as my Europe, in to relatively

for richer again, is us. product So this, a you know mix and Fendt

equal. fills margin-enhancing all be the being up, to the analogy, us, of for so And normal, using things extent that staying sort inventory that as your of part would else

outpace opportunities. I by the quarter. in Europe, an back products, to share go Precision said are December Planting, X% some we also to new exceptionally where You business expand Investor that's Ag our layer definitely the we industry we initiatives X% have, market And strong Precision where between Fendt, on of had in to top third looking the of the and regardless we we're going the cycle. that Day, of Europe to parts. that parts in see

So But high-horsepower high-horsepower well Fendt well overall those Valtra XXXX. continue to us. vectors us again, even market, to as products, they the portfolio. And exceptionally expect look where done three three maximize the gaining there. we'll doing see to markets in quite for segment think again, But I we those team help team in is South growth exceptionally are items, the well America, has high-horsepower to product the have the of share products Massey the on that. On done the outpace again continue

we've opportunities significant about the in we XX% covered again, Again, white white -- region. to Mato see Grosso recall, So we XX% of about may the there. space you have space

opportunities to open incremental there we still are up gain There share as dealers.

Our you, Valtra the with products with tell Mato performing continue farmers well. existing region penetrate met I in are the weeks the ago, planter. I seeing couple in that multiple just was would to region Fendt Grosso are the in with they what and dealers a The region. farm. Momentum exceptionally of they're And ecstatic

excited very Grosso about them what that what more as long-term region saw what land, their they growth arable very they overall a in they global Fendt the product were expand opportunities They and becoming in continues for offering And continue to Mato about as of excited was in their profitability. as were exporter. the line, to process

about what feel we that term, in long over specifically. very think see good the part So we Brazil I of

Operator

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

Eric Hansotia

be you in to quarter your much. Very operations. a thank is performance be support planters, much are throughout of and those more value and through to some good. XX% record productivity our you 'XX versus very of but of to only indicators up XXXX to versus Sprayers, will great we're really in AGCO. up XX% examples, just forecast trajectory all our setting that third machines We're more and time. And farmers many those IDEAL deliver give expecting add XXXX. very we're proud XXXX. versus our you just XXXX. Thank generating a of your for today up even smart nozzles, Combine 'XX. up for year, another saying versus will smart is sustainability XX% sales smarter and ways Those smarter participation us I'll close XXX% It the big for not the their be

success Our of continued our is strategy. overall Farmer-First execution key the to

several parts heavily and Ag is focus we our to like in We've that. we businesses growing of Fendt, service these, business and margin-rich all invested continue Precision and do that on times. mentioned Our our

farmer-focused is, be will The fundamentals past markets quarter, paybacks. The to problems, globally. large supporting tech and AGCO AGCO-Trimble higher deal venture critical averages represents enable that the than are farmers' of ag to them this historical farm with very many the ag are And solutions continue develop in announcement joint of further in biggest solving history short investments.

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

give confidence All the in our us of long-term health these trends of industry.

a to to about take look in about the XXXX, at diesel, In that will or you renewable seeing just makers. acres. what's very with fact, grow of U.S. ethanol consumption U.S., of diesel we're to demand soybean -- by sorry, corn the consume when XXXX -- the current XX% happened similar renewable That's

on day. your big a great meeting participation November Agritechnica to have here. We on So much for there's of at Hanover. a XX right and demand seeing you look horizon very many in you driver forward growth our today, the Thank

Operator

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

AGCO (AGCO) 31 Oct 232023 Q3 Earnings call transcript