AGCO Corporation Q4 FY2025 earnings call

Eric Hansotia noted 2025 ended with strong quarter, adjusted operating margin 10.1%, net sales $2.9B up 1% y/y. EEM was strong driver. 2025 focused on advancing strategic ambitions in agriculture machinery and precision ag tech. PTX brand gained momentum with 14 new products and over 70 global PTX Elite dealers. Fent delivered standout year in North America. Parts and service business performed well. 2025 had $65M bottom line savings, expected $40 - $60M incremental savings in 2026. $250M share repurchased in Q4. 2026 production hours expected broadly flat. Europe dealer inventories at ~4 months, South America ~5 months, North America 7 months. PTX's 2026 winter conference had over 4,000 farmers, new products like Symphony Vision, AeroTube, PharmEngage introduced. Damon Audia discussed regional net sales performance, fourth quarter adjusted operating margin, full-year free cash flow, and parts revenue.

Fourth quarter net sales were $2.9 billion, up 1% year over year or nearly 4% excluding grain and protein divestiture. Adjusted operating margin was 10.1%. Full-year adjusted operating margin was 7.7%, adjusted earnings per share were $5.28 on sales of $10.1 billion. EEM had 8% growth. Europe Middle East net sales in Q4 1% lower year over year excluding currency. South America net sales 9% lower excluding currency. North America net sales down 9% excluding currency. Asia Pacific Africa net sales up 3% excluding currency. Fourth quarter adjusted operating margin 10.1%, up 20 basis points. Europe Middle East income from operations increased $57 million, operating margin approaching 17%. North America income from operations decreased $33 million, operating margin below breakeven. South America operating income $21 million lower, margins near 3%. Asia Pacific Africa operating income flat, margins near 8%. 2025 free cash flow $740 million, up over $440 million vs 2024.

2026 production hours expected broadly flat. Full-year net sales outlook $10.4B - $10.7B. Adjusted earnings per share range $5.5 - $6. First quarter earnings per share $0.40 - $0.45. Capital expenditures ~$350M. Free cash flow conversion 75% - 100% of adjusted net income. North America large ag industry sales forecast down ~15% from 2025. Western European tractor volumes expected up modestly. Brazil's crop environment constructive but some pressure on demand. Engineering expense planned to increase ~$50M over year. Effective tax rate 32 - 34% for 2026.

Risks related to actual results differing from forward-looking statements, including risks described in the safe harbor on Slide two of the presentation. Also, industry market conditions, competitive pressures, tariff headwinds, and potential impact on margins and sales.

Q: Stephen Volkmann asked about inventory in US and discounting.

A: Eric Hansotia said they'll have underproduction in first half of year in North America, likely around 10% range. Damon Audia said they've seen competitive pressures but team did well, pricing better than plan.

Q: Kristen Owen asked about Europe outlook and cost savings.

A: Eric Hansotia said Europe has pent-up demand, farmer sentiment positive. Damon Audia said cost savings from standardizing processes, AI, and moving to low-cost countries.

Q: Mig Dobre asked about share gain and PTX progress.

A: Eric Hansotia said AGCO had highest market share in 2025, net promoter score hit all-time high. PTX had 14 product launches, 70+ PTX Elite dealers.

Q: Jamie Cook asked about margins in North America and South America, and free cash flow.

A: Damon Audia said North America margins likely negative in first half, Europe margins relatively consistent. Fourth quarter free cash flow strong due to volume and receivables.

Q: Jerry Revich asked about Precision Planting product demand.

A: Eric Hansotia said expecting retrofit demand not to drop as much, AeroTube and dual boom spray system generating interest. Damon Audia said PTX revenue flat to modestly up in 2026.

Q: Tami Zakaria asked about regional margins by half.

A: Damon Audia said Europe margins relatively flat, North America margins down in first half then maybe better in back half, South America margins modestly better full year.

Q: Esther O'Shaneya asked about tariff cadence and underproducing.

A: Damon Audia said majority of tariff incremental in first half. Eric Hansotia said no inhibitors to underproducing, but different product dynamics influence inventory.