AGCO Corporation

Good morning and welcome to the AGCO third quarter 2022 earnings conference call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Gregory Peterson, Vice President of Investor Relations. Please go ahead.

Thanks, and good morning. Welcome to those of you joining us for AGCO's third quarter 2022 earnings conference call. We will refer to a slide presentation this morning that's posted on our website at www.agcocorp.com. The non-GAAP measures used in the slide presentation are reconciled to GAAP metrics in the appendix of that presentation. We will make forward-looking statements on the call this morning, including demand, product development and capital expenditure plans, production levels, engineering expense, exchange rate impacts, pricing, share or purchases, dividends, future commodity prices, crop production, our supply chain disruption, inflation, component deliveries, retail revenue, margins, earnings, cash flow, tax rates, and other financial metrics. We wish to caution you that these statements are predictions and that actual events may differ materially. We refer you to the periodic reports that we file from time to time with the Securities and Exchange Commission, including the company's Form 10-K for the year ended December 31st, 2021. These documents discuss important factors that could cause the actual results to differ materially from those contained in our forward-looking statements. These factors include but are not limited to adverse developments in the agricultural industry, including those resulting from COVID-19, including plant closings, workforce availability, and product demand, as well as supply chain disruption, weather, exchange rate volatility, commodity prices, and changes in product demand. We wish to disclaim any obligation to update any forward-looking statements except as required by law. A replay of this call will be available on our corporate site later today. On the call with me this morning are Eric Ansodia, our Chairman, President, and Chief Executive Officer, Damon Audia, our Senior Vice President and Chief Financial Officer, and Andy Beck, our former CFO and now Senior Vice President and Senior Advisor. With that, Eric, please go ahead.

Thank you, Greg, and good morning. We appreciate your interest in AGCO and your participation on the call today. Our record third quarter results have us solidly on track to meet our full-year financial targets. That includes strong revenue growth, margin expansion, and record earnings per share. These are further evidence that our strategies are working. The quarter was highlighted by solid operational performance and continued double-digit pricing. Those helped us overcome continued supply chain challenges, inflationary pressures, and significant currency headwinds. The encouraging news is that despite the global supply bottlenecks and inflationary pressures, farmer economics are very healthy. Global end market demand remains at high level, and demand for our products continues to be strong. Our team is working hard to mitigate these challenging conditions to serve our customers and maximize our full-year results. Let's start on slide three, where you can see that net sales grew 14.5% compared to the third quarter of 2021. Adjusted operating income increased nearly 32%, while margins improved about 140 basis points. We are seeing excellent demand for the technology-rich Fendt full lineup of equipment. Our precision planting solutions and replacement parts. Agco's precision ag sales are up over 21% so far this year. We have experienced strong growth for both our precision planting business as well as our FUSE suite of products, as farmers see the benefit of these high-tech solutions. We've also made significant progress with our efforts to optimize our South American operations and improve margins there. Through the third quarter, our year-to-date South American operating margins hit 16.5%. That's over 700 basis points of improvement from last year. Slide 4 details industry unit retail sales by region for the first nine months of 2022. Healthy farm income is projected across most of the major agricultural production regions. Elevated crop prices are offsetting higher fuel, fertilizer, and other input costs. Despite ongoing supply chain disruptions, favorable farm economics are generating strong demand for large farm equipment across all major global markets this year. Industry retail sales continue to be negatively impacted by supply chain constraints, which has limited equipment production during the first nine months of 2022. We continue to believe that the weaker year-to-date industry sales are the result of supply chain challenges, as end market demand remains very strong. North American industry retail tractor sales were down approximately 6% in the first nine months of 2022 compared to last year. Smaller tractors declined from record levels in 2021, while increased sales of high horsepower units offset some of the decline. Industry retail tractor sales in Western Europe decreased approximately 10% in the first nine months of 2022 compared to the strong levels in the same period of 2021. However, forecasts for healthy farm income in Western Europe are expected to support solid retail demand for equipment for the remainder of 2022. In South America, industry sales increased 9% during the first nine months of 2022, with robust demand across all South American markets. Strong crop production levels as well as elevated commodity prices are supporting positive economic conditions for farmers who continue to replace their aged equipment. AGCO's 2022 factory production hours are shown on slide five. You can see that our production increased in the third quarter as we aggressively ramped up our facilities in line with our expectations. For the full year of 2022, we currently project production hours to increase approximately 6% compared to 2021 levels, with fourth quarter production levels up double digits compared to the fourth quarter of 2021. Our current October production rates are solidly on track to deliver the higher production plan in the months ahead. As we discussed over the last several quarters, Supply chain issues have impacted our ability to complete and ship units and caused several inefficiencies in our factories. The volatile supply chain environment is still requiring us to keep higher than normal levels of raw material and work and process inventory on hand. We continue to face supplier bottlenecks and delays in all regions, and although trending slightly better in some markets, we expect continued challenges for the remainder of the year. The higher level of production in the fourth quarter, as well as our current volume of semi-finished products, supports our full-year sales outlook. At quarter end, AGCO's order board remained extended. Orders for tractors and combines globally were modestly higher compared to a year ago and extend into the second half of 2023 on many products. You'll recognize slide six, which highlights our focus on high margin growth. The first focus area is taking our Fendt full line brand global. We are working to grow the business along two vectors. The first is expanding the Fendt product line beyond tractors into combines, planters, and sprayers, where we have top performing products across the board. The second is taking the Fendt full line of products global. Interest is growing in our premium Fendt product lines in both North and South America. Our Fendt and Challenger combined sales in North and South America are expected to double in 2022 compared to 2020. Our ambitious target is to double them again over the next five to seven years. The second focus area involves precision agriculture. At AGCO, we address the precision ag market in two ways. The first is through our precision planting business, which has built an innovation-driven growth record of 24% per year growth since we have owned the business. Precision planting has been successful in providing automation and intelligence to planters. Now we are growing beyond planters into the other parts of the crop cycle, like spraying, soil sampling, and harvesting. In addition to their impressive technology, precision planting success is generated through their unique retrofit approach, which reduces the farmer's upfront investment and increases their ROI. By offering solutions through a retrofit approach, we can expand the addressable market beyond agco brands to all industry brands. The other way we are addressing the precision ag opportunity is FUSE. which provides OEM solutions for our AGCO equipment. The third high margin focus area is our global parts and service business. AGCO is already in a leading position relative to having the right parts in the right place when the farmer needs it. We're building from a solid foundation to capture more of the dealer and farmer's business. We're helping dealers become better and more proactive with their service and parts offering with our smart solutions and expanding digital capabilities, which leverage the growing number of connected machines. As a result, we have driven our after sales and parts business to grow at 8% annually over the past three years, compared to 4% for the three years prior. Combined, these opportunities provide significant growth potential at higher margins and less variability during cyclical downturns. Our Farmer First approach is also making strides and being recognized in the area of sustainability. During the third quarter, AGCO was named Sustainability Company of the Year by Enablon. One of the ways we are growing our premium fen business is by continuing to expand and upgrade our product offerings. During the third quarter, we had a global launch event for the Fendt 700 series. This high-tech tractor ranges from 200 to 300 horsepower and is the highest volume row crop tractor Fendt sells. Through our farmer-first approach, we listened to what farmers wanted, and then we delivered it with this new tractor. They told us they wanted the lowest fuel consumption, superior maneuverability, minimal soil compaction, as well as cabin comfort features for long working days. The new 700 series has more than delivered. On slide seven, you can see some of the specifics for this great new tractor. The short version is that it's bigger, smarter, more fuel efficient, and more sustainable than ever before. The spacious cab with its continuous field of vision is more like a luxury sedan than a tractor. From the joystick control to the extensive automation of processes, we've packed even more technology into it and made it easier to drive. Its tighter turning radius gives it the maneuverability of a much smaller tractor. Farmers love the Gen 6 version, and based on early indications, there's a lot of interest in this Gen 7 version. It is innovations like this and our Fent lineup that give me continued confidence in Fent's ability to win around the world. With that, I'll hand it over to Damon, who will provide more details on our third quarter results.