AGCO Corporation · NYSE:AGCO
AGCO — Investor Day (2011)
30 slides from AGCO's investor day presentation, 2011
Slide 1: 2011 Analyst Briefing
2011 Analyst Briefing AGCO Corporation Andy Beck Senior Vice President and CFO
Slide 2: Agenda
Agenda • Growth opportunies (cont’d) • Investing in the business • AGCO Finance JV performance • 2012 preliminary targets 2
Slide 3: GSI Transaction Overview
GSI Transaction Overview Purchase of GSI Holding Corp. (GSI) $928M Purchase price 7.8x 2011E EBITDA(1) Close date December 1, 2011 Financing 100% debt 3 (1) See reconciliation to GAAP metric in appendix
Slide 4: Market-Leading Products and Brands
Market-Leading Products and Brands Grain Storage Equipment Brands Grain Bins Material Handling Conditioning Protein Production Equipment Brands Feed / Watering Climate Confinement Systems Control Nesting 4
Slide 5: GSI Acquisition Rationale
GSI Acquisition Rationale GSI Sales and Margins • Leading market positions and brands $1B+ • Attractive industry fundamentals Sales Sales • Common end-market focus $700M+ • Improves AGCO scale in North America 15% ~15% $429M • Strong earnings and FCF contribution • Improves AGCO’s geographic mix of
Slide 6: GSI – Well-Positioned for Growth
GSI – Well-Positioned for Growth Sales Growth by Product Type Sales Growth by Region (% contribution to Incremental Sales) (% contribution to Incremental Sales) ~50% Grain storage ~75% Developing markets ~50% Protein $713M production $713M ~25% N. America 2010 2015 2010 2015 6
Slide 7: GSI – Growth Opportunity in Developing Markets
GSI – Growth Opportunity in Developing Markets Technology Adoption % of Western Technology in Current Use % 68% 54% 45% 30% 31% 30% 20% 13% 14% 10% India China CIS EE Brazil India China CIS EE Brazil 2010 2015 Significant industry opportunity from modernization 7 Source: Stax
Slide 8: Farm Consolidation is Continuing – Large Farms Require More Storage
Farm Consolidation is Continuing – Large Farms Require More Storage Production of Corn by Farm Size • Large farms produce majority of grain 100% Small • Storage on large farms (<500 acres) is 4x that of small farms 80% Medium (as % of annual (500-1000 acres) production) 60% • Pent up demand for stor
Slide 9: Growing Grain Exports
Growing Grain Exports “New” Model Traditional Model (5 Steps) (1 Step) Receiving Facility Elevator/Pre-Export Demand Grain (Export Facility) 4 Production Primary Demand / Harvesting 3 (On-Farm Facility) 5 1 Processing Facility 2 1a Mobility-Related Demand (Transport Facility) Processing / Packaging
Slide 10: New Product Growth
New Product Growth R&D Spending ($ millions) +10-15% • Continuing to invest in ~$270 new products – high horsepower $220 tractors $195 $192 – harvesting products – common platforms $155 • Tier 4 interim products $122 $128 to be launched in 2012 $104 $71 • Expect increased $50 $57 spend in 2012 01 02
Slide 11: Multiple New Product Launches and Upgrades – Tractors Development Schedule
Multiple New Product Launches and Upgrades – Tractors Development Schedule 2011 2012 2013 2014 2015 N U N U N U N U N U 40-100 hp 1 1 1 4 1 - - 1 1 - 100-150 hp 2 1 1 3 1 - 2 1 3 2 150-250 hp 1 3 1 1 3 - 2 3 1 2 250+hp - 2 - 1 - 2 - 3 4 1 N = New U = Repowering/Upgrade Total New and Upgraded: 56 11
Slide 12: Multiple New Product Launches and Upgrades – Combines Development Schedule
Multiple New Product Launches and Upgrades – Combines Development Schedule 2011 2012 2013 2014 2015 N U N U N U N U N U Class VII, VIII, IX 1 2 - 1 - 1 2 6 1 1 Class IV, V, VI - 4 - 2 2 1 1 3 - 2 Forage Harvesters 1 - - - - 1 - - - - N = New u = Repowering/Upgrade Total New and Upgraded: 32 12
Slide 13: New Tractor Products for 2012
New Tractor Products for 2012 7600 series “T” series 300-400 series 13
Slide 14: New Harvesting and Sprayer Products for 2012
New Harvesting and Sprayer Products for 2012 5650 Combine TERRAGATOR TG845 Self Propelled Sprayer Windrower 14
Slide 15: Agenda
Agenda • Growth opportunies (cont’d) • Investing in the business • AGCO finance performance • 2012 preliminary targets 15
Slide 16: Capital Expenditures – Investing for Growth
Capital Expenditures – Investing for Growth Continuing to Invest 2012 Capex Components $325- 350M New $250- Products 300M $251M Capex $207M $167M IT/Other $141M Dep. & Amort. $129M Manufacturing $78M $88M 04 05 06 07 08 09 10 11E 12E 16
Slide 17: Fendt Expansion – Germany
Fendt Expansion – Germany • Growth in professional farming segment driving strong Fendt growth • Fendt continues to be technology leader • €170M multi-year investment plan to: – improve manufacturing flow and efficiency – increase tractor assembly capacity – increase cvt transmission capacity 17
Slide 18: Investing in Production Facilities - China
Investing in Production Facilities - China Changzhou Operation Daqing • AGCO will produce the Beijing Centurion range of tractors, engines and drivelines for domestic and global markets Changzhou Shanghai Total investment of $200M over 5 years 18
Slide 19: Progress in Reducing Working Capital
Progress in Reducing Working Capital Working Capital*/Sales ~15% ~8% • Long-term initiatives – build to order – distribution strategies – lean manufacturing 2005 2011E 19 * Working Capital defined as Avg. A/R + Avg. Inv. – Avg. A/P – Avg. Accrued Exp
Slide 20: Priorities for Cash Flow
Priorities for Cash Flow Reducing Net Debt to Total Capital* 37% • Investments in production facilities 29% • New products • Tier 4 transition 16% 17% • Debt Reduction • Tactical acquisitions 5% ~5% • Longer term – returning 2% cash to stockholders 0% 04 05 06 07 08 09 10 11E 20 Note: Net debt to to
Slide 21: Agenda
Agenda • Growth opportunies (cont’d) • Investing in the business • AGCO Finance • 2012 preliminary targets 21
Slide 22: Solid, Growing Finance Business
Solid, Growing Finance Business Managed Portfolio • JV with Rabobank ($B) – based in the Netherlands ~$7.5 – among the world’s highest $6.9 rated banks $6.3 • 49% owned by AGCO $4.8 $4.3 • Funded by Rabobank $3.6 • ~$7.5 billion portfolio • Growing market share • Robust financial performance 06 07 0
Slide 23: AGCO Finance – A Closer Look
AGCO Finance – A Closer Look By Product By Region 13% Wholesale Floor-plan 32% North America 35% Western Europe 3% Australia/New 87% 30% Zealand Retail Financing South America 23
Slide 24: Agenda
Agenda • Growth opportunies (cont’d) • Investing in the business • AGCO finance performance • 2012 preliminary targets 24
Slide 25: 2012 Preliminary Market Outlook
2012 Preliminary Market Outlook Regional Market Outlook – Industry Unit Retail Tractor Sales (Volume in Units) North America South America Western Europe Flat to 185-190K Up 5% ~158K Flat 60-65K Flat 2011E 2012E 2011E 2012E 2011E 2012E 25
Slide 26: 2012 Preliminary Assumptions – Summary
2012 Preliminary Assumptions – Summary • Sales growth from pricing, GSI acquisition and market share gains partially offset by negative impact of currency – ~+3.5% pricing – ~ (5.0%) negative impact of currency translation* • 10-15% increase in engineering expense for new product development and tie
Slide 27: 2012 Preliminary Outlook
2012 Preliminary Outlook 2012 Estimates Sales $10.0B to $10.2B Operating margin +50-75 bps EPS ~$5.00 CAPEX $325-$350 Million Free Cash Flow* $200 Million+ * Free cash flow is defined as net cash from operations less capital expenditures. 27
Slide 28: Our Priorities Are Clear
IN SUMMARY Our Priorities Are Clear 1 2 3 Execute plans Capitalize on Achieve long-term for margin AGCO’s growth earnings growth improvement opportunities 28
Slide 29: 2011 Analyst Briefing
2011 Analyst Briefing AGCO Corporation Andy Beck Senior Vice President and CFO
Slide 30: Non-GAAP To GAAP Reconciliation
Non-GAAP To GAAP Reconciliation GSI EBITDA $M Estimated Twelve months ended December 31, 2011 Income from operations as reported $ 81.1 Add: Depreciation and Amortization 27.8 EBITDA as reported $ 108.9 Add(Deduct): Non recurring expenses 3.3 Sponsor costs 2.0 Special Incentive costs 5.8 Proforma ad