AGCO - Earnings call transcript Q4 2024

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and welcome to the AGCO Fourth 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.

Greg Peterson

Thanks, and good morning. Welcome to those of you joining us for AGCO's Fourth Quarter and Full Year 2024 Earnings Call.

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

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

technology update materially in but All markets. Actual failure the expansion a weather, to Further of the from and and businesses in results demand, the solutions, products commodity in differ information other chain completing manner including foreign adverse financial smart performance Trimble those these industry, by risks included by new the acquired and expected price financial and or that and plans, benefits, are include, produces and and integrating introduction in financial to, risks the that product could concerning possible to the in from by difficulties these supply Ukraine, is new results, exchange tariffs, improved differ not XX, developments that adverse on replay develop the make could are modernization cause suggested agricultural the time within statements. disruption, in those Commission, results the and pricing limited to changes competitors, with in filings and of disclaims with improved in expected materially forward-looking call prices, business available December subject on required by actual today, on in expected Form for PTx XX-K AGCO's produces we'll premium statements, our budget integrating a difficulties a Securities our and reductions of Later inflation, corporate the manner suggested law. in any as in and in results risks subsequent XX-Q to time, year and obligation ended changes in these any them, AGCO statements. These products farming except website. including its filings. XXXX, Exchange Form this the war

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

Eric Hansotia

good AGCO an a per the operating down results sales fourth and financial were and morning. decline Greg, that we decline $X.XX performance downturn. makes far margin Thanks, last XXXX year. and per associated impressive since basis, sales year $X.XX today, delivered in operating is XXXX. The we industry from strong achieved X.X% XXXX reported full earnings adjusted adjusted On American X it share from Earlier X.X% in an quarter that worst adjusted quarter and operating with industry best XXXX, the our crisis. earnings by downturn adjusted in XX% a is margin were What XX% the was where down North that performance adjusted single the margin for in and year more in share

most ambitions machinery strategic farming allow AGCO changes significant same enhance ag industry-leading and largest year over of time, partner environment and a take the we that over put with at the closed around AGCO AGCO with these focus at trusted and our solutions. XXXX resiliency challenging organization We The dynamic technology. AGCO. for our business up in provide the of as for on Day exited our These for is noncore efforts Trimble also the majority have challenging the in years. I by thank team venture. moment for tech our margin evidence the Grain and portfolio deal a we company PTx term and ag business. for agriculture transformation as smart to past world precision occurred strong helped such the reinforcing delivering ongoing environment part shifts clear And history industry's will tailwinds portfolio Analyst margin in a through macro Our this that teamed strategic Protein These year our the we to business. the long improved changes divesting outlined in our joint despite us us also transformative to a structurally results December. was & the want Farmer-First

under Precision across Technology can synergies the to combined our we brand enterprise sales TTX launched business, Ag On the side so the Precision billion grow swiftly by and unlock brands of newly we all XXXX. our $X that

We over to progress continuing relationships while PTx have already XXXX, tremendous in demonstrated foster we over now where all dealers, have XXX OEMs. X,XXX with

unmatched to very with at is provides technology of and products Looking that expertise point support an brand brands absolute replicate. key is farmers more for technologies and offer any a to prefer. in to machinery, the and us spring network any future, thing the become differentiator partner will in targeted in portfolio farmers to difficult regardless product of journey. unique consultative mainstream years. AGCO a approach their dealer Autonomy, is of our go-to-market independent of coming allows for off-board our know wide this to The poised and depth product vintage us variety we equipment retrofit they the

portfolio greatest that strategy rolled uptime. farm, of In way be commitment, America uptime serve want farmers help online in in also North best dealers an addition, on with on-site out focus, with core deliver to network streamlined can initiative they industry-leading we and to given the our comes FarmerCore best dealership, that XXXX further our we our some distribution the designed served. The and our so farmer at partnering or Fed Farmer-First the is by

reach XXXX. trajectory coverage however. approximately rent XX% target without address planning dealer To growth in retail into than this, to of between South XXXX. expect dealer X significantly The in higher a and efforts. The are underproduce inventories basis, America remain average excess challenges, continued months and these we its going We XXXX to work demand in through and we weighted through. quarter On have inventory wasn't North continue again X.X to

positive in we that were rallies further stocks-to-use with anticipate large machinery as production cuts sentiment of a we around first ag in in ratios back months improvement this sense modest the interactions an improved XXXX, surveys just show in the and growth half declines ago. farmers' Although comparables. recent optimism commodity farmers expectations recent volumes year, in where have the more and of byproduct half-weighted from offset easier of for best production this AGCO. anticipate many The of lap significant the cautious environment, back future our a we about X To price is outlook Recent in half news we is position profitability. by hours ourselves

we materialize in savings begin P&L. will Finally, transformation see in cost begin mid-XXXX to around earnest manifest to rightsizing as the initiatives our

retail our efforts to in to of and sales significant a by in AGCO's some sales demand. details mitigate compared expect business. Slide and key due the expect improvements resilient cycles Despite industry weak underproduction, industry margins for to lower more higher structural retail Global all weak XXXX. region past the be continued We these industry we markets. sales forecast of to of unit farm equipment X

pressure X year. sales increased XXXX, retail industry dynamics. in XXXX after years modestly prices, to Farm compared caution demand to from reduced the industry industry North sales tractor created in significant commodity to compared declines X% of farmers. particularly previous more in to XXXX equipment. Brazil We in growth. expect during of Combined decreased with Industry to XXXX XXXX. XX% effectively XXXX in more China sales were industry sales consistent Brazilian retail decreased year. unit the weaker more XXXX. Lower were flat horsepower and cycle the the is due fleet farmer recent to demand months. American compared to horsepower XX% income XX% remain farm bottom down acreage among declining decreased demand Brazil XXXX, categories occur Sales in expected categories XXXX expected relatively refreshed American the mixed market in sales and compared in during tractor only and rising debt across North to larger combined in resulting Lower a higher is projected even previous

AGCO cycles, As of with recover. benefit Equipment Agricultural industry from if. other the long-term consist middle protein. of greater demand and growing will amounts with the of will growth to not population class of a matter diets that It's a thanks when, a segment

Slide needed in meet well agricultural capitalize to the the shown X. XXXX, that the ourselves production positioned growth Precision Ag needs. AGCO's yields we growing focus, very to took factory actions our hours are have on raise we Farmer-First of With on and world's is consistent

made Grain We in America hours have cuts America. for in production and regions Significant South biggest eliminated in the quarter XXXX, production X, with Protein all North reductions XXXX. & occurring were

the industry Given reduced production quarter conditions, than hours the we our as in continued expectations. planned sales below more weakening were even we

X to XXXX of approximately Our production year X on the and low global hours remain the quarter at XX% XX% dealer levels and level. We XXXX basis in inventory, we a do, XXXX demand Sequentially, versus inventories year on in approximately dealer the versus of as given in saw were a down of X but to quarter down soft South from laser-focused reducing full possible levels. XXXX, America. elevated in quarter quickly primarily in and still reductions XXXX, North have and inventory X we current as dealer work the environment quarter America modest

and with America production the hours XXXX projecting are We between showing XXXX, region than the lower North biggest decline. XX% XX%

XX% to of quarter We be hours down XXXX. X and production versus between expect quarter XX% XXXX and X

quickly. plan aggressive to Our front-loaded inventory rightsized and get is

are least North months significant on the a of this production we for Our at XXXX. Diving retail less by is the exposure line at to supply, above. America level under units breakdown. just in Valtra ended X in in current like. X over with outlook slightly positive In dealer through near-target where and America, regional dealers for the Europe, of than result America the the real a assumes given into we quarter South first XXXX average inventory is level. demand effectively Ferguson region. In hand we'd dealer The X% and will with and over at AGCO Europe Fendt Massey from reduced inventories number XXXX of half South

versus approximately America, supply levels. X to least at months. reduce the dealers through of in We dealers North X% first at our However, inventory around anticipate forward retail X quarter of target units further are from hand levels. Similar, by holding given still demand half reduced the underproducing X outlook, the dealer we of level months XXXX the on

XXXX. X result will least in The environment However, versus a in X our the are current first lower half for given we of target. levels of months supply approximately significantly outlook at XXXX, the still challenging production months

these North stronger that sales market see globally aimed analyst mid-cycle, focusing you'll Fendt throughout levers XX% where X, where X% our that $X parts to number global by X these Slide X% by cycle, by our expect target those business were number are: sales global levers now we reach genuine new to in has three, company X our growing AGCO appreciate and but to billion higher-highs. To our our are our mid-cycle targets revenues high-margin the and share at less improving industry Number new achieve of This and much operating the by increasing our outgrowing rolled recent XX% South XXXX December, Moving and to brand, meeting in we XXXX. margins annually. product demonstrates by who accelerating growth and and parts a and America Precision also $X.X at Fendt attendance. Ag one, rollout two, billion $X.X in growth of XXXX; approximately higher-lows at the of XXXX. to the higher We reiterate, variability the billion on business full-line globalization we to to

and farmer premier Moving a and technologies X, immediately Planting's implemented their be attracted share favorite that operations, experts miss and globe. every recap gives X,XXX can opportunities to see across year. Winter my it. productively all of them one you'll XXXX The strategies from connect with will over objective attendees to help event and Slide they I to to them This help knowledge. farmers events Conference. conference The is the learn improve farmers efficiently of never That's their other also Precision farms. just on

in the event which the Symphony on update begin targeted Vision from deliveries spray of highlights of our included XXXX. system, One X an will quarter

Farmer-First expect you'd strategy, America As our retrofitted and sprayers sold the from last on this can technology us in all XX be years. in North

of offerings. with going X tier are the We to market

leverage to pulse which The Vision modulation is allows with first technology control. vision Rate, live rate Symphony variable farmers with

control grow which the The they will the spray year no with each to second the pace in is Symphony simply Farmers cost-effective Farmers additional set. prefer at them charge, Vision adding nozzle. manner a the full while spray maximizing cameras spots technology by for recurring into a own year can of spot weeds Spot, incentives in after control feature year technology of per acre purchase. tax enabling adds

first testament our comprehensive XX% owns. AGCO's hub is technology the costs the of X, regardless emphasized a farmers. of hardware farmer I to slide the the fleet. land, trusted value-add the seen every on economy. The of absolutely be the year innovation technologies a the increased as commitment be Our positively of a shaping farmers. through equipment product suite for the investment industry farmers about challenged can a technology approach of highlights We're the impact by unique this help PTx ag offer and Ag expense, of is dealers clear a event seeing see independent Slide AGCO we network to excited that our partners. The on more the farm. farmer are alongside reduce Precision services, return what's products most adoption in to of our except unwavering ahead. On or even the where Trimble where and retrofit can depth mixed familiar over is coupled and make you'll precision future given planting couldn't portfolio, with distribution advisers how lineup This allows of hands-on objective to

integrated in saw rate. over as examples. had take rate X together significant to smart we Precision Let's that nozzle XX% focus; take powerful rollers quarter as this mix a Planting, In in Trimble. team significantly drive way several have brands: Planting These Smart one to already focused X fully planter Precision a drive in our suite. expect better changes sprayer planter market-leading the position a technology Through our powerful to integration, made the working for Ag we on approaching milestone electric build deliver X leaving factories grow farmer-focused industry. the to changes company across Ag innovation quarter being on nozzle. XXXX These leadership X, and ability ag Precision focus the the for technology take winning recent electric on XX% nozzle including pharma business. known with for success, and enhance improvements AGCO's farmers. brands all most marked driving PTx and we and brought and innovation precision accelerate Precision Symphony our in to business We rollers its

also progress transforming autonomy technology our launched OutRun retrofit with We lots and joint stack of our about PTx there's the Trimble recently We excitement it. kit, made on venture.

there is the opportunity impacting dynamics business. long-term the attractive, While some are near-term

for in one will some around to over XXXX. I'll target farmers services the target. solutions be detail our accelerate the we to billion. has given Trimble and decline industry-leading market As confidence deploying Damon goodwill the know through and it sales asset integrating, at this no my absolutely Despite transition. Related sales cover quarter. quarter XXXX and shortly. our walk this PTx financials in broader Helping hit and X, $X value of to effect continue indicated margin pressured PTx our industry Damon top this, ongoing to Analyst distribution impairment for and of you short-term in the of and priorities products correct development a innovating strategic achieving the been strategic $X was and billion move in the the have more of from have softness, the hand we'll growing of will taken in charge Meeting, rapid The world, portfolio PTx we the which we on our environment the sales now

Damon Audia

positive of quarter quarter compared translation reported impact in in of the roughly to the impact with countries the the and Kingdom Europe/Middle East compared excluding unfavorable XXXX, you, roughly Slide translation Good the the of declines combines. the sales United Thank XX% an segment and performance currency fourth of compared net X% to Sales quarter for tractors, full approximately the the everyone. acquisitions. impact negative the effect XX% quarter Eric. excluding of products morning, France provides to period in the in negative year. favorable fourth sales down XXXX The were same largest and Germany, showing most most of acquisitions. were regional Net in were Pricing region, showing and significant X overview XXXX. By sales down currency quarter in high horsepower and of tools down reductions. declines hay when was quarter fourth fourth the

this in However, part modest growth even environment. showed

excluding showed currency South high challenged, market planters sales translation the XX%, and decreased sales and in American and Brazilian impact continues market unfavorable largest XX%, down the to approximately North the favorable net acquisitions partially currency of horsepower was combines offset region of farmer acquisitions. reductions. By The to in Lower impact pressure High-horsepower tractors, sales purchasing to behavior. geography, unfavorable declines. Net to farm continue in demand, impact favorable increased most, we sales continues retail underproduce the the and acquisitions. impact the approximately of occurred decreased saw translation decreased relative largest The American income Argentina. to Net by be sprayers significant market due demand excluding of most production weaker tractors, volumes. its Asia/Pacific/Africa hay translation and tools impact and in favorable and declines and excluding China favorable lower currency end XX%, of Australia.

world parts up year-over-year when XXXX. a special fourth strong deliver to effects consolidated the quarter, to translation. unfavorable for currency up and X% results approximately the reported parts were of A thanks excluding the X% team Finally, million approximately on in replacement $XXX around the such basis

East million XX fourth the decreased volume, resulting was increased decreased quarter and from fourth of higher conditions operating margins factory to XX. weak of XXXX. The from X.X%, from The Europe/Middle a quarter the reduced costs QX production of adjusted by region, $XX industry points lower points a discounts. basis decline of compared in significantly under operations Slide sales margins under result were The income operating strong reduced XXXX basis absorption higher and XXXX. to to segment XXX of QX and factory absorption discounts. By related margin to Turning are

driving job down the a the year-over-year, the in results in segment was from would deliver I of level share growing industry and and highest that note fantastic which ever. our Europe savings, declined earnings Although helped segment team second the did this cost

divestiture So weak, and operations in in QX were in the expenses region congratulations execution. North to $XX American operating the margins increased million $XX year-over-year QX have and for margins operating quarter the of XXXX of to European America significantly strong lower due margins. Operating points by associated hours roughly XX% the income the quarters. XXXX drivers conditions, to and and approximately lower of QX of in the & team Lower South XXXX for from sales production consecutive QX market remain from with quarter. income SG&A PTx production approximately the have decreased weak continued XXXX, their cuts significant conditions million restructuring we Trimble efforts. reacted X are Grain higher Market in XXX compared primary the decreased were of of versus in basis to Protein, integration lower the expenses and approximately the the operating with business

program the Brazilian to XXXX a around of had sponsored by approximately government, basis helped operations quarter. Income QX to million operating the segment SG&A. by points and in higher decreased benefit We which onetime the Asia/Pacific/Africa due from also margins related $X by $XX discounts roughly MOVER of XXX our in in million

to outlook projected North the million early and XXXX related did sales of XXXX the flows write-down. Despite were the what in record flow is lead. current conditions reasons quarter, Ag that joint negatively PTx affecting of during we AGCO not Trimble venture remain our for the our guidance suite to just and primary autonomy the these on We build just solutions goodwill over our machines and mentioned, fourth years and XXXX. Slide would months in for XXXX the we the concluded earnings sales Eric discounted shows for but cash progress in cash JV's beyond. level I the to Trimble reiterate billion current for would component In industry an Trimble this XXXX. PTx that charge XXXX the Eric and adjustment, impairment American support We've $XXX annual to past in not mixed said PTx Precision momentum and The offboard of industry our for integrating X the full our made and that the $X committed assessment venture XX goodwill. venture. the [indiscernible] joint quarter performed look foundational great joint As the for X-year over ambitions impairment software

lower a than the year-over-year million cash defined cash forecast We As conversion driven in XXXX, in approximately divided by our the net provided conversion XXXX is and free less The primarily purchases quarter. free by income. than and expectations. decline fourth as lower less corresponding equipment. in in property, lower reminder, represents The operating was plant relative from decline lower-than-expected million resulted to net our sales flow $XXX generated flow of flow $XXX used flow activities or by Free cash adjusted in flow cash free cash income. free cash

Our to shareholders and capital direct with credit our debt returns. repaying plan maintain business, allocation into includes investment-grade ratings reinvesting back rewarding the

per In in special over share, $X.XX paid AGCO the billion reminder, of per last addition paid dividend quarterly has dividends a the X to share special XXXX. variable over variable as years. dividend in of second of the $X.XX regular a we quarter also $X.X The

Meeting. market XXXX on December our changed not deploying major remain Analyst for in our communicated have will We of regions, XX the benefit the which highlights from what capital shareholders. Slide effective X forecast we our ways most focused our for during

prices delaying we higher due remain the to profit average. tighter in Despite to For compared interest rally margins. lower be are rates the and wheat in demand and expect recent Farmers meaningfully XXXX equipment North below America, to corn long-term prices, purchases XXXX. soybean both

is to years to down segment to after be significant expect of small versus X% down XXXX. large around The segment be tractor several XX% We expected negative between the X% decline.

down we others. industry to due Input For somewhere in excess costs Western the things like areas pest droughts of remain for grain Yields remain below and be X%. averages in high, fertilizer expect X further profitability. to in some of for range and oilseeds and Europe, historical management to rain the straining

Brazil, positive For excludes expected contribute in Grain the to create saw which XXXX. and anticipate assumptions expect industry X, levels optimism shows be is help business demand We similar sold that used be also primary retail XXXX decline which XXXX XXXX. Slide in just demand XXXX. to global XX progression XXXX. approximately we Protein in significant interest and to relatively our down seen support over XX% rates planting for around the demand after of XXXX, of inflation, Brazil mid-cycle, outlook, weather on & as XX% the the we industry we November from Farmer to flat soybeans stabilizing tractors. is for to and demand easing will corn

plan be market gains to X% share while range, currency projected to sales X% Our includes X% headwind. in the around a foreign is and pricing

the announcement tariffs from and the U.S. our world, other not the on effects the farmers, impact reflect financial effect of any on With parts ongoing this earlier tariffs. outlook does uncertainty retaliatory week, given to the

our update become we outlook things will accordingly. clearer, As

on effect the outlook. the global Given have Mexico minor related tariffs direct our to likely and China, financial manufacturing Canada diverse announced a would footprint,

financial or tariffs our EU tariffs would on influence current retaliatory the outlook. U.S. However,

as address situation, to nimble to update are will dynamic things and the flat expenses to expected this environment, we Engineering be XXXX. approximately compared our Given evolve. remain we'll outlook

down These be XX% primarily the XXXX, the With will production destock our to continued hours XX% Eric the XX% be to mentioned down cuts as approximately earlier. with in half year-over-year. focused first being XX% inventory need in to quarter will dealer between the production channel, first

sales between production expect the With XXXX, and X% margins operating somewhere to adjusted our and in X.X%. we be of level lower

view as we have to With the achievable. structural initiatives coupled outlook continue this with cost implemented, our changes business, the we to made we

rate effective Swiss jurisdictions, be the lower our and in rate legal to The primarily to anticipated in than tax the XX% income for higher are our Lastly, XX% for entity. and tax lower is between reasons higher XXXX, due U.S. XXXX.

Slide our Turning the at as to XX Meeting. Analyst remains outlook, December our for outlined which same XXXX

rates FX. net which year to the sales from billion, roughly The reflects lost the of a million market the sales $X.X headwind full FX the Grain & Grain is Protein, $XXX & elimination Our reflect and over outlook adverse earnings Protein industry $X declines, earnings. and environment, related layer altogether to adverse the expect to rate further earnings tax nonoperational the be $X.XX. range on the of share When in impacts higher our $X of our to you per we

future Given the we $XXX weak any the positioned environment, million approximately well versus inflections. demand reducing market which are AGCO million modestly spending for $XXX our to XXXX, capital in keeps

look reduce working capital target Our XXXX. to XXX% free cash as we flow conversion remains at to in XX% of adjusted income net further

XX% be to down QX expected are approximately sales $X net XXXX. approximately XXXX from billion, of QX our Lastly,

the sales will to roughly XXXX, basis. Protein be If down on XX% exclude of like-for-like from a you & sales QX were Grain our

anticipate delivering cycle. the significant XXXX. more sales We share point reduction through lower and our confident volumes executing we the low Given for breakeven in strategy business a and to approximately be QX hours in on earnings per and remain resilient production

begin just operating XXX to adjusted to XX% margin I'll over XXXX example around Our another Q&A. higher business for basis operator be the would the changed industry we've outlook at how would the This in call that, our of for term. With over the of is long structurally turn mid-cycle be the points XXXX. last the than time

Operator

question [Operator the And first Jefferies. Volkmann from Instructions] Stephen with comes

Stephen Volkmann

I America in would has by to region Damon, Can you're going first put in off but be mouth. implication I'm a us about North profitability words I just first the the quarter, give probably start your a with want guess just sense to negative quarter? how of the commentary. you your there QX in thinking margin don't the

Damon Audia

think I right. Steve, you're Yes,

And And sort underproduction then With the level it weighted quarter, expecting America then in there. this is expect to bit down be as would the single-digit I sort again, level probably of negative that America the see in margin. look dealer and the the sort be we a South to of North here But low large that that to in regions. heavily America, given those think Asia in negative Pacific of be going well -- we as inventories likely little key a low of range. for first margin further is North South of drive we're underproduction Europe, would still the underproduction double-digit the first quarter to in us range. in America

Stephen Volkmann

if trying me Okay. Understood. I'm basically And sales, that of total much follow-up, North sense in a your get you a American Europe? to could is of then as sourced how remind

Damon Audia

Yes.

So I came Steve, XX% EU. in total, if about last North came we American XX% look the overseas, the think from XX% in of that sales at year, from of

Operator

next the with comes JPMorgan. from And Zakaria Tami question

Tami Zakaria

my quite is decline on you're and was double-digit margin. operating on quarter. XX% first the margin So question impressive seeing It EME in low a the sales

there, in cost the for region should the So future? volumes given how do when about savings inflect that we think mid-cycle the margin

Damon Audia

Yes.

would has sort mid-teens, that with has market margin has strong. see Tami, been relatively Europe around done quite [indiscernible] we quite at think, share of the growth the mid-cycle. our regions, there, done done of team [indiscernible] in Generally well speaking, mid-teens most I Parts the well.

Operator

Dobre Mig the from with question comes And next Baird.

Mircea Dobre

curious Or What think is benchmarks in though you're are that production solved QX? for the of about think framed issue watching some problem this of factor? for a determining dealer this QX you QX largely Do you more you Given this sort inventory QX? of progression? in I'm how us, gets to as

Damon Audia

Yes.

for the Mig, think, -- we're significant shape. by at we good the go down if changes. any we anticipate don't regions -- so in really We I if Europe, as look

South for I quarter looking think, of cut the America, would selling say we're as low speaking, second of as production there we into working well some generally I a significantly probably there. production fairly is season. the we're to the adjust QX given business as seasonality

sell-out. So we'll QX is see where more

inventory with lower I negative we're because here outlook. the X wildcard America, the is of of look we think, the of around at units sitting as North despite number months

let's looking sort you're say, at the there: evolve X the next how So of months. industry variables over, X does

you look if for prices, over think May. futures grain at improve, sentiment farmer now, corn see to I start we $X they're if slightly So

improves start up, the would a of aggressive an the think ability in slow us and at I on pick If units hand demand inventory. have going dealers, maybe hand to for for here, to the be data the down. But positive be that on couple So and taking the see we the an to sentiment, looking points. to term it's the near that to days approach

America. bit I I may how farmer that's -- depending second So would longer here be half in that a one the QX looks sentiment think North little on say

Mircea Dobre

may, slightly be I well. Negative but on follow-up would to if region And positive you helpful any commentary And get gives quick pricing. expect better, you it confidence? as QX, again, in by one in What Okay. that 'XX.

Damon Audia

Yes. Sure, Mig.

at So still be we're it, to bit in X again, positive. look first If X going we're to here negative we with the a little quarter. the

here. some couple things of have We

have We here. pricing carryover some

Gen If out about X me Fendt the there. talk X the Gen you've and heard have new we the XXX,

a a still be year-over-year slightly by, was In by have America, going industry in in and industry that to negative discounts, tax that for the more driven the believe Argentina, law We, affecting the where not or stopped have reduced in say, whole I would European margins. We're that. pricing I South XX.X% the pricing Argentina, So as driven we likely change. tax December.

pricing some the of for to a more up the So for that there. North really taxes for comes but as negative us, pass-through positive be and it's full expect we [indiscernible] for quarter America, shows year.

a to in we down to similar exposure us what X% still [indiscernible] X% being looking negative, December, driving little slightly that full -- Europe the for our with geographic to year. So said more to but bit

Operator

Owen Oppenheimer/ And Kristen with the from question comes next

Kristen Owen

particularly Anything follow the give might that wanted margin we up how about helping us recovery reorganization on at and question can the that you the fourth quarter think in in to Europe, Tami's recovery? flowing else to specifically, on XXXX? out to update that you Just . an I call contribute that's to about through BayWa?

Damon Audia

Yes. Sure, Kristen.

publicly, of stated efforts, of their restructuring they've as as BayWa, progress. lot have a part So made

improving. reports think that the the business I is parties the from third show

that's We closely working with Fendt strong. And them. business. have obviously, partnership with has continue ag We're been great to business them. helped a extremely the very Their

the retail as great market units is and XXXX. cash, I the here stock overall, units, are preserve pass least initiative eager to the looks BayWa we the there. stock through been to Fendt our think to the of part but at start part close farmers, them. of that recover they to a won't with not But the see So here be lot good first in on restructuring and very as we're with a challenge doing take Obviously, we to continue that's they of

market. as still EME, through you I us the lot workers' actions think for in expect with what to as macro know, cost talked conversations we've But councils. cost about down. work we is stable most of should it We actions, see you see the a those again,

at we look actions bottom start clarity in to quarter the really accrued the a in would year those more restructuring you we've of bit expect efforts, half here drop as start some that and on Europe. in to execute to gained we that, of the quite fourth line some the the If back we on confidence as

Kristen Owen

next bit working Great. to related comments could the free XXXX, that in of down year. recovery the outlook -- half Mean some But we against this year? And think wind for want in capital to the see may that of a of mentioned maybe my you be follow-up how in if the you some is that the do year trough flow back the of volume there's you the little half about first anticipation XXXX. the the cash inventory then

Damon Audia

Yes.

fell that by dropped if Finance, I our around delivered where XXXX, come we I us. AGCO our sales into sales and to and we missed inventory with expectations. alluded it's our right work both if Had would versus of we out would So I that Eric for Again, we to expectations. our remember fairly I again, important we in just at free think looked this think because we flow, how still short about feel But of cash confident. of have cash have made those million $XXX

put rate conversion So our that would XXX%. around at just have

we forward what the through carrying current environment. So are we into because some want finished in we're as that here system there the good to would we have what feel is more that goods look knowing XXXX, we work still

the so of if sort a we finished industry of won't target. And one-for-one falling even the here it sales the industry little is up, year the be as where build bit recovering picks because a short of

Operator

question comes Cook And with next from the Truist. Jamie

Jamie Cook

questions. thinking that in just the are year some the question, Damon, margins restructuring America, guys the margins, guess and guess for the similar started, actions last my off on question first, summer. I announced and year of start then you And the I given think, X negative full about volatility cadence? how second you South we a sort I you obviously,

more terms the profits, contemplating? on then finally, weakness anything and the that of And any? markets, just PTx expectations we're Given guidance in if in what's sales the last, your in

Damon Audia

Yes. Sure, Jamie.

higher think range. America, margins of for South mid- to where we to that of the today sort in those expect would So full of I year, finished sort of sort year similar single-digit XXXX be the we full to

is the pick their some one QX on mentioned and profitability seasonal strongest earlier be we to QX. up generally quarter questions start negative QX there. in in prior the of I As -- will then

and a last year. the be we seasonality. that again, more full But the best see fourth quarter, down finished we'll sort the the I'd in or put then of bit by tamper richest close little So it profitability where year, driven to

restructuring On actions. the part, second

of $XXX to this year. I efficiencies, on the that we end we happen until deliver of of did migrate bit to things At another $XX at leverage international by announce rate more Centers we're cost to end run were savings. opportunities the to So We million looking run Day, of the savings December as pace leverage little run Those start Investor rate as rate will the added locations, of global a further million technology. good Excellence. not likely better million of a by XXXX $XXX to

for Eric to, certain Obviously, get watching this sure margin delivering we're the being term. long feel we as or there's doing control. the day, said, So the extent for worse can as we our we're end a than investments spend that we're To the closely. We're market of make that alluded discretionary at level -- worse we things to earnings have always as of plans. But business the the and appropriate well. very

layer And do discretionary top of on restructuring. so necessary cost have normal if we we the that on levers some could

our PTx mid reminder we when Fuse to business, about as as level just, business business, we sales be Planting our X it to again, the that team Precision business PTx for As last as those similar relates and our here XXXX at I groups that whole, a a when includes revenues would so in whole, type around that Trimble flat talk year's look and call it, a of combined. relatively were a Xs expect at amongst PTx,

Operator

Goldman next the And comes question with from Revich Jerry Sachs.

Jerry Revich

pricing. pricing your subscription subscription? expand versus Eric, one heavy Can made on on company's you philosophy context you're the competitors just wondering the the upfront you feedback what in I'm guidance can within about hearing if of remarks market? doing broader with your kits pricing aftermarket philosophy prepared on comments And aftermarket just versus of in you upfront the the talk just

Eric Hansotia

they in the when appetites the And us be -- what purchase in the to finance to different in the ongoing cycle. they'd get and we they then we want farmers years. different continually like when to lean that their good is What most And like they'd to costs. years of And something, it minimize aim industry. tell farmer-focused it the all purchased come, have company parts

for in they're, general, So not too subscription fees. favorable

radical subscription rule, system. got as agronomic autonomy system. are to there some we We've some outrun -- to part and a Now subscription aspects model of our exceptions that our have

run newer the getting it is we're where technologies as it to so technology and feel makes there mentioned, was for that. we sense, and to one able it feedback fixed the But and elements that done I on they have an they [indiscernible], the like rather use because things that are field. pay And ongoing time especially that it which relates costs way, their then be over for -- have cost variable that would can a

to just able from system. attractive one second variable a want with if be time expensive do do they of you path, actually over the read the a that so standpoint capture is very cost is field is run part spots, if that right a have which that a We So few of problem variable path. to you the features it's don't and now that to cost,

very about on to we newer So farmer-focused makes use and be subscriptions think it. sense, especially that's it the where Trying how technologies.

Jerry Revich

XQ Super. that the about South production on done, a can talk trajectory And what's margin expect of quarter, to rate what terms quarter, in the be Can the in be then year? the fourth benefit are in business? just the of little America XQ, you surprised. I performance run you in the wasn't appreciate you -- basis you this folks talk to expect that once points cuts but about bit XXX I of

Damon Audia

Yes.

for should the strongest industry the little in strongest the selling of I bit QX -- to in as to them. we production we in as think, to the also the the one margin start given hopefully last lap first in production slightly -- would we challenges a we -- and QX, improve mentioned quarter, the the South levels question, maybe the I heavy be on improving. It's cuts expect Jerry, there. operating positive see be quarters America, start negative we

pricing of last for the the jump I we because more that timing on a see of So mentioned here on Argentina the a should similar and up of the digits. little in sales the the just in prior below given would high third South of America. And then full bit single year, profitability bit to then performance, but quarter between I tail the back year's maybe little say, to questions, that mid- sort one

Operator

comes question next with Menges the Citi And Group. Kyle from

Kyle Menges

Germany either pre thinking little you be guys just Just we about in that any election? or just and or about with bit potential to should ask a anything impact elections upcoming wanted post

Eric Hansotia

No.

the that. right. relative regulations it's And parliament. overall EU the more to restrictions the -- and policies things think elections one important maybe change and what I EU on different One country is for then move I like saw climate is seen parliament EU the you've the And factors. we farmers that's and to that X think there's

more to farming to was of farming practices, a way I them think to they move want bit be it of a farm restrictions. continue instead to the allowing adding friendly

administration. relates how U.S. difference As it leaning don't those who's there regardless impact a elected, maybe there. toward I well and country-specific, of will countries be big But that's the between on see to an a more cohesion

see much don't our yet elections. planning we in So impact scenario on country-specific

Kyle Menges

guys but touch then in And correctly, in helpful. only think, just I synergies line planting so to you're North top I on recall have if I the Premier dealers Trimble And wanted Trimble. about you That's thinking about think I America, XXX XXXX. XX or Precision talked selling or so

there? you the self-Trimble? of as So overall can of do -- just frame happen? their you Like fast XXX help start adding what you And well? us carrying think you getting many think willingness this sort And And opportunity how you added Trimble that be could do could ability year? the and to anticipate basically how do do think

Eric Hansotia

all full going to a what and been progress to we take with quarter, so they've AGCO in them especially One portfolios fronts. tech Trimble to we're breadth that the line dealers. previously fourth have X about understanding And dealers dealers want these we also full the have then are could could been planting aftermarket lot precision been carry the both a technology. forward that on There's call dealer or the a up and got is where dealer of establish going of technology the market on in signing Trimble Yes.

technology. over If dealers over our covered that X,XXX all XX% dealers with up acres and cover in we've marketplace you technology, PTx the add of the them today, got

signed want CNH Now have which where lineup over as where up full between to in as cross-selling. yet about be. XXX AGCO is the by We've XXXX, to build got the dealer of That's fully in penetrated year, primary what the we and focus dealers we want dealer end little going the We've be. be this well is it sign-ups today. XXX got out our continuing AGCO we be don't the a portfolio. to to We'll XXX

our both focus progress make 'XX. and will full-line of those main think AGCO the dealers out in big of our cross-selling the filling rest We of is AGCO So dealers.

Operator

Morgan And the with next from Angel Stanley. question comes Castillo

Angel Castillo Malpica

go just on wanted I back the to PTx.

was there this of good. operating think if you It a around income could overlay charge. some But expand curious impairment position for expectation that on the seeing XXXX? And you're the the or is kind the just penetration I adoption sounds of on just rates discussion expectations on still sales maybe maybe year. like

in what to extent you to any deterioration around kind relative seeing So PTx of are that just particular?

Eric Hansotia

projection. elements about talked have will I'll Damon and Yes, about the margin strategy the talk

innovation it key these took we we're brand. dealers building talent acre penetrate is the a we so. for a covered. at to you launched in over foundation. OutRun XXXX better, We're just great in and the and more over and business. We in within X,XXX all the technology marketplace. we've fleet wanted the on our partners ag the strong I OEM got done we XXXX, assets make all well the built We that's is business. the but XX% channel kit. We the a about. we've factor of got retained our talked that It's up strongest the where We in If do got launched in in aiming PTx to business automation got fill that We gotten all look understood mixed world. We of the retained precision activities now everybody that the them And collection understands or of

machines. out used the and It's And XX% this take that in data the systems at That's It AGCO running of full it we to one The on we deal XX% guidance coming our will over we'll 'XX. up we and is Trimble. first converted team be over think launch rate of technology be our outputs soon. about platform now, speed. a wanted have of XX%

activities we're market. for market that lasted down run a that because the in done, was buy demand depressed time aiming it just And longer the was last market we CNH it's so in to had than to addition so for the are the longer expected continued weaker

going to synergies significant also cost We in in XXXX, we're continue XXXX. that implemented and

not revenue there's much are and we as still are delivering committed But for we the market. it to this market gotten still aiming because revenue just We recovers. in synergies that, haven't

with that, have So maybe I'll Damon a on margin little give expectations. more color

Damon Audia

Yes.

talk do for was in the time margins Trimble, integration, about to the buy, XXXX, a in heard the as I PTx versus us we CNH last improve XXXX think, challenging definitely it you've year we Angel, and as work -- some But XXXX. start next up system see here. sales that year-over-year. that margin see to in part do year, we We the of of the business that through in improving see expect

at doesn't the take analysis follow rates, had it fourth to XXXX, goodwill. As the it cash technology, relative had the of when the that that's I seeing adoption the the recognize or and of that DCF in relates and earnings just we said lot said, as farmers versus industry, to had long-term when for expect. we formulated the from as X and X or what now. deal sales would I hitting that the comments, charge of here discounted And the impairment, the to of And the you a year the as end given from just quarter. But heavily in XXXX we're projections industry near drop put this model on the result we pressure my in more expected our it to and built cycle plan, had a we that, Eric on from years a change excitement It's the we flow the term it said change traditional weighted dealers. we doesn't of the year timing hit as last

Angel Castillo Malpica

And maybe wanted think, That's flow. then to to back comment, very helpful. go the I cash just on free I

a kind last the given anything in And then from some I to more? peers to you -- XX% just risk? that pool want I around might that the Just confidence again, that bit to that of you think fund how in to think, And be payout, XXX%? years. other a couple kind little that might cash impacting about XXX% I the conversion just or to but XX% just we've be confidence around able unpack think made earlier, on be of comments maybe conversion. you Can reach XX% understand, heard that of timing just

Damon Audia

Falling Yes. in that me again, have sales the conversion inventory would left been Again, of we sales affected if XXXX. quarter, last short were end the we expecting us feel -- conversion around those left have would we or year, this at excess the today, fourth delivered on we in XXX% the with XXXX.

inventory into to we think the when balance getting normalize expect I to So the dealers sheet, ultimately in goods XXXX, that channel sitting that to farmers. about finished AGCO's and the would

so we feel good the And rate. about conversion still

I think to other industry see the if will we the have question industry building one much a that had analysts of we mark XXXX, anticipation. would to start start and how is question, we recover, the one to starts the into rapid if of moving acceleration have in asked

the the based would in year you tell outlook a incremental adding don't sentiment feel we right would that do So strong how to outlook, extreme year. thing a good that's we'll XXXX, on that the for watch industry now, level plan of inventory we for half if production one anticipation the back farmer see that I our XXXX. I the we we problem and recovering of of would through system the we move be into as is that but is think the schedule be have

Operator

with from America. Mike And the of Bank Feniger comes next question

Michael Feniger

America, with of on we of tariff any any this flexible are seeing know Massey? it Europe, understand allow of us of thought strategy think I or help if touched to does back pick or your with North that conversation just kind about with change America? you Can there when North big that to there we start tariffs do more if with And be this earlier how -- up? shift process you think

Eric Hansotia

Yes.

chain team at do. several supply of different scenarios we might Our what has looked

place? what of what lot usually to are constitutes how would in a be think this And the be production? Any required change will rules on kind of we footprint do multiyear a tariff takes game a think going the what it long local I depends forward, payback. major be of

if what we some get we we go are rules right But But be ready exact on And expect mode. action those in we've anything shifts. don't on of to have chain the shelf materialize. and so don't the supply some details, until got and to stability making clarity now, plans

Damon Audia

U.S. would effect some have Canadian to mentioned, And on more give -- I Canadian little Again, as to think, to would add the I be just got us. the tariffs bit a of Mike, team scenarios. -- color, on array an has

And U.S. pain. help into kitting certain so here that the some do versus us the looking things, at we may ease investments in we shift land do have without and Canada minor U.S. some do the products large-scale short-term the We're

array of So to an some said, scenarios make we those things. there before this company, we run we any sure but -- want clarity have as Eric being of are actually running execute

Michael Feniger

Fair cuts I enough. just really are to that And the make lastly, realize side. trying guys, the production helping progress inventory on

there? about you're the kind And was if on think guys of how you on are seeing it facilitate the new side I of used X. think know used as months the I progress side, how side versus you inventory? target America, the of X North I'm curious making we a progress help mentioned You

Eric Hansotia

Yes. as competitors problem used We much some of of as do. don't have our a

a We are continue to values up back and us equipment pre-COVID concerning not yet. to for use But similar right holding financing funds used are pool like at things other levels, and now but and that equipment tools. used now, level volumes

the Finance. So managing partnership we're a AGCO regular using with in tools -- .

Operator

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

Eric Hansotia

over us was a year portfolio substantial supercharged like Yes, the thank years, where with our a gone change, great AGCO for big we you these of today in transformation call. through brand. questions Precision the It has Ag on past particularly and say XXXX. to I'd joining just the PTx

strategy. a hard all team was Damon watermark work, of Have delivering of focused this of the cycle, for day, That's as and our operating looking your of program the of the and last on and for stage your our To Our our big shareholders, us basis all building adjusted their them executing year on through a want instrumental XXXX. margin lots contributions. farmer. than high in for forward talked a thank to great we was better Farmer-First value each the cycle and X.X% about. I points it's It XXX result appreciate support transformation participation. to thanks for at

Operator

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

AGCO (AGCO) 6 Feb 252024 Q4 Earnings call transcript