Q1 2024 AGCO Corp Earnings Call

Good day, and welcome to Agriculture first quarter 'twenty to 'twenty four earnings calls.

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I would now like to turn the conference over to Greg Peterson.

Greg Peterson: Exco head of Investor Relations.

Greg Peterson: Please go ahead.

Greg Peterson: Mr Peterson.

Speaker Change: Line is on mute please.

Speaker Change: Please go ahead.

Greg Peterson: Okay.

Greg Peterson: Thanks, Sugar, and good morning. Welcome to those of you joining us for AGCO's first quarter 2024 earnings 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 this slide presentation are reconciled to GAAP metrics in the appendix of that presentation.

Peterson: Thanks, cigar and good morning, welcome to those of you joining us for Agco's first quarter 2024 earnings call.

Peterson: We will refer to a slide presentation. This morning is posted on our website at www Dot <unk> Dot com.

Peterson: non-GAAP measures used in the slide presentation are reconciled to GAAP metrics in the appendix of the presentation. We will make forward looking statements. This morning, including statements about our strategic claims initiatives as well as our financial impacts will discuss demand product development and capital expenditure plans and timing of those.

Greg Peterson: We'll make forward-looking statements this morning, including statements about our strategic plans and initiatives, as well as their financial impacts. We'll discuss demand, product development, and capital expenditure plans and timing of those plans, and our expectations concerning the costs and benefits of those plans. The timing of those benefits

Peterson: Plans and our expectations concerning the costs and benefits of those plans and timing of those benefits.

Greg Peterson: It will also cover future revenue, crop production, and farm income, production levels, price levels, margins, earnings, cash flow, and other financial metrics. However, all of these are subject to risks that could cause actual results to differ materially from those suggested by the statements. These risks include, but are not limited to, adverse developments in the agricultural industry, supply chain disruption, inflation, weather, commodity prices, changes in product demand, interruptions in supply of parts and products, the possible failure to develop new and improved products on time, putting premium technology and smart farming solutions within budget, and with the expected performance and price benefit. It also includes difficulties in integrating the PTX Trimble business in a manner that produces the expected financial results.

Peterson: Also cover future revenue crop production and farm income production levels price levels margins earnings cash flow and other financial metrics. All of these are subject to risks that could cause actual results to differ materially from those suggested by the statements. These risks include but are not limited to adverse developments in.

Peterson: The agricultural industry supply chain disruption inflation, whether commodity prices changes in product demand interruptions in supply parts and products the possible failure to develop new and improved products on time, putting premium technology and smart farming solutions within budget and width.

Peterson: The expected performance and price benefits also includes difficulties in integrating the <unk> business in a manner that produces the expected financial results the reactions by customers and competitors to the transaction, including the rate of which PT X trembles largest OEM customer reduces purchases at <unk>.

Peterson: Tremble equipment and the rate of replacement by the joint venture of the sales.

Peterson: So includes the introduction of the new or improved products by our competitors and reductions in pricing buyback.

Greg Peterson: The reactions by customers and competitors to the transaction, including the rate at which PTX Trimble's largest OEM customer reduces purchases of PTX Trimble equipment and the rate of replacement by the joint venture of those sales. It also includes the introduction of new or improved products by our competitors and reductions in pricing by them. The war in Ukraine difficulties in integrating acquired businesses and in completing expansion and modernization plans on time in a manner that produces the expected financial results and adverse changes in financial and foreign exchange markets. However, actual results could differ materially from those suggested in these.

Peterson: The war in the Ukraine difficulties in integrating acquired businesses and in completing expansion and modernization plans.

Peterson: <unk> in a manner that produces the expected financial results and adverse changes in financial and foreign exchange markets.

Peterson: Actual results could differ materially from those suggested any statements further information concerning these and other risks included in anchors filings with the Securities and Exchange Commission, including our Form 10-K for the year ended December 31 2023.

Greg Peterson: Further information concerning these and other risks included in AGCO's findings with the Securities and Exchange Commission, including our Form 10-K for the year ended December 31st, 2023, and subsequent Form 10-Q-5. AGCO disclaims any obligation to update any forward-looking statements except as required by law. We'll make a replay of this call available later today on our corporate website. On the call with me this morning are Eric Hansotia, our Chairman, President, and Chief Executive Officer, as well as Damon Audia, our Senior Vice President and Chief Financial Officer. With that said, Eric, please go ahead.

Peterson: And subsequent Form 10-Q filings.

Peterson: <unk> disclaims any obligation to update any forward looking statements, except as required by law.

Peterson: Will make a replay of this call available later today on our corporate website.

Peterson: On the call with me. This morning are Eric <unk>, our chairman, President and Chief Executive Officer, as well as Damon Audia, Our senior Vice President and Chief Financial Officer with that Eric. Please go ahead.

Eric P. Hansotia: Thanks, Greg, and good morning. Before I get into the details of the quarter, I want to take a moment to express my confidence in the team and our strategy. Despite weaker industry conditions, our focus on three growth drivers, as well as integrating PTX Trimble and staying agile by adjusting production and our cost structure, all continue to position 2024 to have the second highest level of full-year adjusted operating margin in the history of the company.

Eric: Thanks, Greg and good morning, before I get into the details of the quarter I want to take a moment to express my confidence in the team and our strategy despite weaker industry conditions, our focus on three growth drivers as well as integrating <unk>, TX Trimble and staying agile by adjusting production and our cost structure. All continued to position 2024 to have.

Eric: The second highest level of full year adjusted operating margin in the history of the company.

Eric P. Hansotia: With that, let's look at AGCO's first quarter results. First quarter 2024 net sales came in at $2.9 billion, which was down approximately 12% from last year due to softening global end market demand for agricultural equipment. Consolidated operating margin was 9.3% of net sales on a reported basis and 9.6% on an adjusted basis.

Eric: With that.

Speaker Change: Let's look at Agco's first quarter results.

Speaker Change: First quarter 2024, net sales came in at $2 9 billion, which is down approximately 12% from last year.

Eric: Due to softening global end market demand for agricultural equipment.

Eric: Consolidated operating margin was nine 3% of net sales on a reported basis and nine 6% on an adjusted basis.

Eric P. Hansotia: We focused on reducing production, more than the industry declined, and further tightened our cost controls in the quarter to align with slowing end markets. Lower sales and operating leverage were a factor in our reduced margins. Stability in the European region helped partially offset sales and operating margin declines in all other regions. Despite the industry being down in Europe, sales were flat compared to the first quarter of 2023, yet operating margins hit an all-time first quarter high of 16.4%. An impressive 230 basis points better than the first quarter of last year.

Eric: We focused on reducing production more than the industry decline and further tightened our cost controls in the quarter to align with slowing end markets.

Eric: Lower sales and operating leverage were a factor in our reduced margins.

Eric: Stability in the European region helped partially offset sales and operating margin declines in all other regions.

Eric: Despite the industry being down in Europe sales were flat compared to the first quarter of 2023, you had operating margins hit an all time first quarter high of 16, 4%.

Eric: An impressive 230 basis points better than the first quarter of last year.

Eric P. Hansotia: South America's margins remain pressured as the industry weakened even further than expected. We saw operating margins of approximately 5.3% in the first quarter of 2024, compared to nearly 20% in the first quarter of 2023. Market demand remained weak in Brazil.

Eric: Margins in South America remained pressured as the industry weakened even further than expected.

Eric: We saw operating margins of approximately five 3% in the first quarter of 2024 compared to nearly 20% in the first quarter of 2023.

Eric P. Hansotia: And we also underproduced retail demand there, which helped us lower our dealer inventories in the. More challenging global market conditions are expected to continue in 2024 due to reduced commodity prices and lower farm income expectations. As a result, AGCO is forecasting lower sales in 2020. To mitigate these challenges, we will remain focused on manufacturing cost-reduction opportunities, driving increased SG&A expense efficiencies, and lowering company and dealer inventory. In addition, AGCO is a growing precision ag business. Full Lined Fence Branded Products and our parts business are expected to help us dampen the ag cycle.

Eric: Market demand remained weak in Brazil, and we also underproduce retail demand, there, which helped lower our dealer inventories in the region.

Eric: More challenging global market conditions are expected to continue in 2024 due to reduced commodity prices and lower farm income expectations. As a result, <unk> forecasting lower sales in 2024.

Eric: To mitigate these challenges we will remain focused on manufacturing cost reduction opportunities driving increased SG&A expense efficiencies and lowering company and dealer inventory.

Eric: In addition, <unk> was growing precision AG business full line <unk> branded products and our parts business are expected to help us dampen the AG cycle.

Eric: To better serve farmers, we will continue our investments in premium technology smart farming solutions and enhanced digital capabilities to support our farmer first strategy, while helping to sustainably feed the world.

Eric P. Hansotia: To better serve farmers, we will continue our investments in premium technology, smart farming solutions, and enhanced digital capabilities to support our Farmer First strategy while helping to sustainably feed the world. Slide four details industry unit retail sales by region for the first quarter of 2024. However, global industry retail sales of farm equipment in the first quarter were lower in all of AGCO's key markets.

Eric: Slide four details industry unit retail sales by region for the first quarter of 2024.

Eric P. Hansotia: North America full industry retail sales decreased 9% during the first three months of 2024 compared to the first three months of 2023. Sales declines in smaller equipment were more significant than in most of the larger equipment categories. Lower projected farm income and a refreshed fleet are expected to pressure industry demand in 2024, resulting in weaker North American industry sales compared to 2023. In Western Europe, industry retail tractor sales decreased 8% during the first three months of 2024 compared to the same period in 2023. Farmer sentiment in the region has continued to be negatively impacted by the conflict in Ukraine and input cost inflation.

Eric: Global industry retail sales of farm equipment in the first quarter were lower in all of <unk> key markets.

Eric: North America full industry retail sales decreased 9% during the first three months of 2024 compared to the first three months of 2023.

Eric: Sales declines in smaller equipment were more significant than most of the larger equipment categories.

Eric: Lower projected farm income and a refreshed fleet are expected to pressure industry demand in 2024, resulting in weaker North America industry sales compared to 2023.

Eric: In Western Europe industry retail tractor sales decreased 8% during the first three months of 2024 compared to the same period of 2023.

Eric: Farmer sentiment in the region has continued to be negatively impacted by the conflict in Ukraine and input cost inflation in.

Eric P. Hansotia: Industry demand is expected to soften in 2024 as lower income levels pressure demand from arable farmers, while healthy demand from dairy and livestock producers is expected to mitigate some of this decline. South American industry tractor retail sales decreased 18% during the first three months of 2024, compared to very strong demand in the first three months of 2023. Brazil and the smaller South American markets showed the most, although declines in Argentina were moderate after weak industry sales in 2020.

Eric: Industry demand is expected to soften in 2024 as lower income levels pressured demand from arable farmers, while healthy demand from dairy and livestock producers is expected to mitigate some of this decline.

Eric: South American industry tractor retail sales decreased 18% during the first three months of 2024 compared to a very strong demand in the first three months of 2023.

Eric: Brazil, and the smaller South American markets show, the most weakness while declines in Argentina were moderate after a weak industry sales in 2023.

Eric P. Hansotia: Following three strong years, retail demand in South America is expected to further soften in 2024 as a result of lower commodity prices and farm income. Similar to tractors, the combine industry was down significantly in all regions in the first quarter of 2024. Although market conditions continue to soften from the extremely strong conditions over the last few years, we remain positive about the underlying ag fundamentals, supporting long-term industry demand. Stocks to use levels are higher than recent lows, but they remain supportive of profitable commodity prices versus the Historical Level. As the demand for clean energy grows, the need for solutions like sustainable aviation fuel and vegetable oil-based diesel will grow strongly, driving the demand for our farmers that will further support commodity prices.

Eric: Following three strong years retail demand in South America is expected to further soften in 2024 as a result of lower commodity prices and farm income.

Eric: Similar to tractors the combine industry was down significantly in all regions in the first quarter of 2024.

Eric: Although market conditions continued to soften from the extremely strong conditions over the last few years, we remain positive about the underlying AG fundamentals supporting long term industry demand.

Eric: Snacks. These levels are higher than recent lows, but they remain supportive of profitable commodity prices versus historical levels.

Eric: As demand for clean energy grows the need for solutions like sustainable aviation fuel and vegetable oil based diesel will grow strongly driving the demand for our farmers that will further support commodity prices.

Eric P. Hansotia: Also, input costs such as fuel and fertilizer are down from their peaks in 2020. We expect farm income to be down in 2024 relative to 2023, closer to the long-term averages, but still supportive of industry demand. AGCO's 2024 factory production hours are shown on slide five. Our production decreased in the first quarter by approximately 16%, slightly more than expected versus the same period in 2023. Reductions were taken in all regions, with the biggest reductions in South America and North America.

Eric: Also input costs, such as fuel and fertilizer are down from their peaks in 2022.

Eric: We expect farm income to be down in 2024 relative to 2023 closer to the long term averages, but still supportive of industry demand.

Eric: Agco's 2020 for factory production hours are shown on slide five.

Eric: Production decreased in the first quarter by approximately 16% slightly more than expected versus the same period in 2023 <unk>.

Eric: Reductions were taken in all regions with the biggest reductions in South America and North America.

Eric P. Hansotia: We are aggressively managing our company and dealer inventory to match the softening retail demand. As I mentioned earlier, we made progress in de-stocking the dealer channel in the first quarter in all regions but still have work to do. We expect further production cuts during 2024 with all regions aligning to retail demand by quarter four. Currently, we're expecting 12 to 15% lower production in 2024 versus 2023 on a full-year basis. This reduction reflects our 2024 market forecasts, market share growth assumptions, and targeted reductions to dealer inventory. Relative to historical demand patterns, orders for our products remain solid. In Europe, tractors had five months of orders. That's a healthy level compared to the two to three months we were accustomed to pre-COVID.

Eric: We are aggressively managing our company and dealer inventory to match the softening retail demand.

Eric: As I mentioned earlier, we made progress in Destocking the dealer channel in the first quarter in all regions, but still have work to do we.

Eric: We expect further production cuts during 2024 with all regions aligning to retail demand by quarter four.

Eric: Currently we're expecting 12% to 15% lower production in 2024 versus 2023, and a full year basis.

Eric: This reduction reflects our 2024 market forecasts market share growth assumptions and targeted reductions to dealer inventory.

Eric: Relative to historical demand patterns orders for our products remains solid in.

Eric: In Europe tractors had five months of order coverage, that's a healthy level compared to the two to three months, we are accustomed to pre COVID-19.

Eric P. Hansotia: Dealer inventories of approximately four months of supply are in line with our targeted levels, with certain products like Fent high-horsepower tractors still below the optimal levels in certain areas as we continue to grow share in the region. In South America, we have order coverage through June of 2024, where we continue to limit our orders to one quarter in advance due to inflationary pressure. We now have four months of dealer inventory across all products. However, our target level is around three months.

Eric: Dealer inventories are approximately four months of supply are in line with our targeted levels with certain products like fendt high horsepower tractors still below the optimal levels in certain areas as we continue to grow share in the region.

Eric: In South America, we have already covered through June of 2024, where we continue to limit our orders to one quarter in advance due to inflationary pressures.

Eric: We now have four months of dealer inventory across all products, while our target level is around three months.

Eric P. Hansotia: We cut production by more than 30% in the region in both Q4 2023 and Q1 2024, and our goal is to be between 3 and 4 months by year end. In North America, we currently have between four and five months of order coverage, while our dealer inventory is just over six months of service. Our North America target for dealer inventory ranges from four to six months, depending on the product. We continue to focus on underproducing.

Eric: We kept production by more than 30% in the region in both quarter four 2023 in quarter, one 2024, and our goal is to be between three and four months by year end.

Eric: In North America, we currently have between four and five months of order coverage, while our dealer inventory is just over six months of supply.

Eric: Our North America target for dealer inventory range from four to six months, depending on the product.

Eric: We continue to focus on under producing.

Eric P. Hansotia: Retail Demand coupled with Retail Market Share Execution to bring dealer inventories down to our targeted range by year end. Moving to slide six, where you'll see our three high-margin growth levers aimed at improving our mid cycle operating margins to 12% and outgrowing the industry by 4 to 5% annually. To reiterate, these three growth levers are the globalization and full line product rollout of our Fendt brand, focusing on accelerating our global parts business and increasing the market share of genuine AGCO parts, and Growing Our Precision Ag Business, which supports not only factory fit technology but also significantly focuses on mixed fleet retrofit solutions for farmers and OEM.

Eric: Retail demand, coupled with retail market share execution to bring dealer inventories down to our targeted range by year end.

Eric: Moving to slide six where youll see our three high margin growth levers aimed at improving our mid cycle operating margins to 12% and outgrowing the industry by 45% annually.

Eric: To reiterate these three growth levers are the globalization and full line product rollout of our fendt brand.

Eric: Focusing on accelerating our global parts business and increasing the market share of genuine echo parts.

Eric: And growing our precision AG business, which supports not only factory fit technology, but also significantly focuses on mixed fleet retrofit solutions for farmers and Oems.

Eric P. Hansotia: You will notice new logos on this slide, which represent the Precision Ag portfolio of our newest leading brand, PTX, as well as PTX trim. I wanted to take a moment to elaborate on the combination of our multiple brands and how we have unified them under PTX. Slide 7 shows the new PTX branding and how the name PTX is rooted in our heritage.

Eric: You will notice new logos on this slide which represent the precision AG portfolio of our newest leading brand TTS as well as P. T X Trimble I wanted to take a moment to elaborate on the combination of our multiple brands and how we have unified them under pdx.

Eric: Slide seven shows the new <unk> branding and how the name <unk> is rooted in our heritage.

Eric P. Hansotia: This PTX portfolio will provide seamlessly compatible, powerfully simple, precision ag solutions. Part of that portfolio is PTX Trimble, which we formed with the closure of our transformative joint venture with Trimble on April 1st. We are tremendously excited to have Trimble Ag Technology Offerings as part of our AGCO family. This deal significantly enhances AGCO's technology stack with disruptive technologies that cover every aspect of the crop, which ultimately helps us better serve farmers no matter what brand they use.

Eric: This PT X portfolio will provide seamlessly compatible powerfully simple precision AG solutions.

Eric: Part of that portfolio is PT X Trimble with reform that the closure of our transformative joint venture with Trimble on April one.

Eric: We are tremendously excited to have Trimble AG technology offerings as part of our ankle family. This.

Eric: This deal significantly enhances agco's technology stack with disruptive technologies that cover every aspect of the crop cycle, which ultimately helps us better serve farmers no matter what brand they use.

Eric P. Hansotia: PTX will serve farmers around the world through three go-to-market approaches. Specialized precision ag dealers will help farmers retrofit almost any make or vintage of equipment they already own with the latest technology. PTX will also expand its relationships with more than 100 OEM partners that can integrate products from the PTX portfolio directly at the factory.

Eric: PT X will serve farmers around the world through three go to market.

Eric: <unk>.

Eric: Specialized precision AG dealers will help farmers retrofit almost any nick or vintage of equipment, they already own with the latest technologies.

Eric: <unk> will also expand its relationships with more than 100, OEM partners that can integrate products from the <unk> portfolio directory directly at the factory.

Eric P. Hansotia: Similarly, new machines from AGCO's leading brands, Fendt, Massey Ferguson, and Voltra, will also offer factory-fit technology from the PTX portfolio. The JV will be positioned to drive outsized growth and better provide next-generation technologies to even more farmers around the world. In addition to presenting a unified offering to the market, we are also evolving the visual identity of precision planting as part of the new PTX brand portfolio. Put it all together, and the P represents precision agriculture. The T represents advanced technology.

Eric: Similarly, new machines from Agco, as leading brands Massey Ferguson and Walter will also offer factory fit technology from the <unk> portfolio.

Eric: The JV will be positioned to drive outsized growth and better provide next generation technologies to even more farmers around the world.

Eric: In addition to presenting a unified offering to the market. We are also evolving the visual identity of precision planting as part of the new PT X brand portfolio.

Eric: Taken altogether, the Pea represents precision agriculture.

Eric: T represents advanced technologies and the X represents the fact that we're multiplying and increasing the impact we create by bringing our technologies and solutions together and seamless intelligent and farmer centric ways.

Eric P. Hansotia: And the X represents the fact that we're multiplying and increasing the impact we create by bringing our technologies and solutions together in seamless, intelligent, and farmer-centric ways. On slide 8, you can see how we plan to build equity in PTX, simplify our offerings to farmers, and present a streamlined portfolio. We will consolidate AGCO's precision ag brands to create the critical mass needed for a market-leading precision ag brand.

Eric: On slide eight you can see how we plan to build equity in Pts simplify our offerings to farmers and present a streamlined portfolio.

Eric: We will consolidate agco's precision AG brands to create the critical mass needed for our market, leading precision AG brand.

Eric P. Hansotia: Together, these teams represent the best precision ag tech talent in the industry. We will form one cohesive team who will collaborate on product development. GoToMarketChannels, and how to best serve both farmers and OEMs. We will innovate, solve problems, complement each other's strengths, and grow together, bringing mixed-fleet precision ag solutions to the market faster than anyone else. PTX Trimble includes JCA technology from Thermal Agriculture, Bill Berry, and Mueller Electronics.

Eric: Together. These teams represent the best precision AG Tech talent in the industry.

Eric: We will form one cohesive team, who will collaborate on product development go to market channels and how to best serve both farmers and Oems.

Eric: We will innovate solve problems complement each other's strengths and grow together.

Eric: Mixed fleet precision AG solutions to the market faster than anyone else.

Eric: PT X Trimble includes J CA technologies criminal Agriculture, Bill Berry and Mueller electronic.

Eric P. Hansotia: Precision Planting will bring Head Sight and Intelligent Ag under its brand. Slide 9 summarizes our precision ag business. As we highlighted before, we are focused on expanding our addressable market from just traditional agriculture machinery spend, which today is in the low to mid-teens as a percentage of total farmer spend. With our Precision Ag Portfolio, our sites are set to impact around 70%, or effectively all non-land areas.

Eric: Precision planting will bring head site and intelligent AG under its brand.

Eric: Slide nine summarizes our precision AG business as we highlighted before we are focused on expanding our addressable market from just traditional agricultural machinery spend which today is in the low to mid teens as a percentage of total farmers spend.

Eric: With our precision AG portfolio, our sights are set to impact around 70% or effectively effectively all non land areas.

Eric P. Hansotia: We believe that the investment in Precision Ag positions both AGCO and our customers well as it will play a major role in achieving our global sustainability targets currently being established while simultaneously helping our farmers improve their profitability. Now that we have closed on a joint venture to form PTX Trimble, we remain committed to our goal of achieving $2 billion in annual Precision Ag sales by 2028. With that, I'll hand it over to Damon.

Eric: We believe that the investment in precision AG positions, both agco and our customers well as it will play a major role in achieving our global sustainability targets currently being established.

Eric: Simultaneously, helping our farmers improve their profitability.

Eric: Now that we've closed on a joint venture to form <unk> Trimble, we remain committed to our goal of achieving $2 billion in annual precision AG sales by 2028 with that I'll hand, it over to David.

Damon J. Audia: Thank you, Eric. Slide 10 provides an overview of the regional net sales performance for the first quarter. Net sales were down approximately 13% in the quarter compared to the first quarter of 2023 when excluding the positive effect of currency translation. However, pricing in the quarter, which was around 1%, contributed to higher sales.

David: Thank you Eric Slide 10 provides an overview of the regional net sales performance for the first quarter.

David: Net sales were down approximately 13% in the quarter compared to the first quarter of 2023, when excluding the positive effect of currency translation.

David: Pricing in the quarter, which was around 1% contributed to higher sales.

Damon J. Audia: By region, the Europe-Middle East segment reported flat sales in the first quarter of 2024 compared to the same period in 2023, excluding the impact of favorable currency translation. Growth in Germany and France was offset by lower sales across nearly all other European markets. However, positive pricing and increased sales of high-horsepower tractors, especially bent products, were offset by declines in other products. South American net sales decreased approximately 42% in the first three months of 2024 compared to the same period of 2023, excluding the impact of favorable currency translation. Significantly softer industry sales drove lower sales of tractors and combines, which accounted for most of the decline.

David: By region Europe Middle East segment reported flat sales in the first quarter of 2024 compared to the same period in 2023, excluding the impact of favorable currency translation.

David: In Germany, and France was offset by lower sales across nearly all other European markets positive pricing and increased sales of high horsepower tractors, especially bent products was offset by declines in other products.

David: South American net sales decreased approximately 42% in the first three months of 2024 compared to the same period of 2023, excluding the impact of favorable currency translation <unk>.

David: Significantly softer industry sales drove lower sales of tractors and combines which accounted for most of the decline with substantial sales decrease in Brazil was slightly offset by modestly higher sales in Argentina.

Damon J. Audia: The substantial sales decrease in Brazil was slightly offset by modestly higher sales in Argentina. However, net sales in the North American region decreased approximately 21% in the first quarter of 2024 compared to the same period of 2023, excluding the impact of favorable currency translation. The software industry's sales were partially offset by positive prices. The most significant sales declines occurred in hay equipment, mid-range tractors, as well as combines. Net sales in Asia Pacific and Africa decreased 16 percent excluding negative currency translation impacts in the first three months of 2024 compared to the same period in 2023 due to weaker end market demand.

David: Net sales in the North American region decreased approximately 21% in the first quarter of 2024 compared to the same period of 2023, excluding the impact of favorable currency translation.

David: Softer industry sales were partially offset by positive pricing.

David: The most significant sales declines occurred in the hay equipment midrange tractors as well as combines.

David: Net sales in Asia Pacific Africa decreased 16%, excluding negative currency translation impacts in the first three months of 2024 compared to the same period in 2023 due to weaker end market demand.

Damon J. Audia: Lower sales in China and Australia drove most of the decline. Finally, consolidated replacement parts sales were approximately $434 million for the first quarter, down approximately 5% year-over-year or 6% excluding the effect of positive currency translation. Turning to slide 11.

David: Lower sales in China, and Australia drove most of the decline.

David: Finally consolidated replacement part sales were approximately $434 million for the first quarter down approximately 5% year over year or 6%, excluding the effect of positive currency translation.

David: Turning to slide 11.

Damon J. Audia: The first quarter adjusted operating margin declined by 210 basis points versus a strong first quarter of 2023. Margins in the quarter were mainly affected by a significant decline in production, reflective of the weak industry conditions, higher discounts, higher SG&A, and increased engineering expenses. These items were partially offset by positive net prices, by region. For example, the Europe Middle East segment income from operations increased 43.5 million and operating margins improved by 230 basis points in the first three months of 2024.

David: The first quarter adjusted operating margin declined by 210 basis points versus a strong first quarter of 2023.

David: Margins in the quarter were mainly affected by the significant decline in production reflective of the weak industry conditions higher discounts and higher SG&A and increased engineering expenses. These.

David: These items were partially offset by positive net pricing.

Damon J. Audia: The improvement was driven by positive net pricing and partially offset by higher SG&A expenses and engineering expenses. North American income from operations for the first three months of 2024 decreased $59.7 million compared to the same period in 2023, and operating margins were 5.8%. The decrease resulted from lower sales and production, as well as increased SG&A and engineering expenses. Operating margins in South America decreased by approximately 83 million dollars compared to the same period in 2023. This decrease was primarily a result of lower sales and significantly lower production volumes, as well as negative prices.

David: By region, the Europe Middle East segment income from operations increased $43 5 million and operating margins improved by 230 basis points in the first three months of 2024.

David: The improvement was driven by positive net pricing and mix, partially offset by higher SG&A expenses and engineering expenses.

David: North American income from operations for the first three months of 2024 decreased $59 7 million compared to the same period in 2023 and operating margins were five 8%.

David: The decrease resulted from lower sales and production as well as increased SG&A and engineering expenses.

David: Operating margins in South America in the first three months of 2024 decreased by approximately $83 million compared to the same period in 2023.

David: This decrease was primarily a result of lower sales and significantly lower production volumes as well as negative pricing.

Damon J. Audia: The quarter was positively affected by the reversal of a dealer termination accrual, which improved margins by approximately 4% this quarter. Finally, in our Asia-Pacific and Africa segment, income from operations decreased by $10 million in the first three months of 2024 compared to the same period in 2023 due to lower sales volume. Slide 12 details our year-to-date free cash flow for 2023 and 2024. As a reminder, free cash flow represents cash used in or provided by operating activities, less purchases of property, plant, and equipment, and free cash flow conversion is defined as free cash flow divided by adjusted net income.

David: The quarter was positively affected by the reversal of a dealer termination accrual, which improved margins by approximately 4% this quarter.

David: Finally in our Asia Pacific Africa segment income from operations decreased by $10 million in the first three months of 2024 compared to the same period in 2023 due to lower sales volume.

David: Slide 12 details our year to date free cash flow for 2023, and 2024 as a reminder, free cash flow represents cash used in or provided by operating activities less purchases of property plant and equipment and free cash flow conversion is defined as free cash flow divided by adjusted net income.

Damon J. Audia: We used $465 million of cash in the first quarter of 2024, approximately $217 million, or 32% less than the first quarter of 2023, primarily related to improved working capital and lower capital expenditure. For the full year, we anticipate our free cash flow to be in the upper half of our long-term target range of 75% to 100% of adjusted net income. We remain focused on direct returns to investors in 2024. In addition to the regular quarterly dividend of $0.29 per share, we also declared a special variable dividend of $2.50 per share in the second quarter.

David: We used $465 million of cash in the first quarter of 2020 for approximately $217 million or 32% less than the first quarter of 2023, primarily related to improved working capital and lower capital expenditures.

David: For the full year, we anticipate our free cash flow to be in the upper half of our long term target range of 75% to 100% of adjusted net income.

David: We remain focused on direct returns to investors in 2024 in.

David: In addition to the regular quarterly dividend of <unk> 29 per share. We also declared a special variable dividend of $2 50 per share in the second quarter.

Damon J. Audia: This is now the fourth consecutive year we have paid the special variable dividend. Even with the closing of the PTX-Trimble joint venture, the special variable dividend is another sign of our confidence in how we have transformed our long-term profitability and remain focused on deployed capital in the most effective ways possible for our shareholders. Slide 13 highlights our 2024 retail market forecast for our three major regions. For North America, we continue to expect demand to be 10% lower compared to levels in 2023. The high horsepower row crop equipment segment is expected to decrease after several years of strong growth that was fueled by high levels of farm income.

David: This is now the fourth consecutive year of us paying the special variable dividend.

David: EBIT with the closing of the PT X Trimble joint venture with special variable dividend is another sign of our confidence in how we have transformed our long term profitability and remain focused on deploying capital in the most effective ways possible for our shareholders.

David: Slide 13 highlights our 2024 retail market forecast for our three major regions.

David: For North America, we continue to expect demand to be 10% lower compared to the levels in 2023.

David: The horsepower row crop equipment segment is expected to decrease after several years of strong growth that was fueled by high levels of farm income.

Damon J. Audia: The small tractor segment is also expected to decrease in 2024, although the rate of decline is slowing compared to the prior years. For Western Europe, we continue to expect the industry to be down 5-10% compared to 2023. Farm income is nearing the long-term average for the region due to reduced commodity prices and higher input costs. In South America, we are updating our guidance to reflect industry sales down approximately 20% in 2024 compared to our previous estimate of a 10% reduction.

David: The small tractor segment is also expected to decrease in 2024, although the rate of decline is slowing compared to the prior years.

David: For Western Europe, we continue to expect the industry to be down 5% to 10% compared to 2023 farm income is nearing the long term average for the region due to reduced commodity prices and higher input costs.

David: In South America, we are updating our guidance to reflect industry sales down approximately 20% in 2024 compared to our previous estimate of a 10% reduction.

Damon J. Audia: The industry for tractors greater than 340 horsepower, combines, and planters has deteriorated even more than we had anticipated. Farmers are holding on to grain longer in the region, awaiting higher prices, and shortfalls in subsidized financing programs are causing farmers to postpone purchases.

David: The industry for tractors greater than 340 horsepower combines and planters have deteriorated even more than we had anticipated farmers are holding on to grain longer in the region awaiting higher prices and shortfalls in the subsidized financing programs are causing farmers to postpone purchases.

Damon J. Audia: Although this may affect demand in the short term, this region remains one of the most attractive end markets in the long term, especially in Brazil, where the farm footprint is increasing. While farm income is expected to decline from elevated levels in 2023, we generally expect farmers to remain profitable in 2024. And AGCO's brand-agnostic retrofit approach to precision ag and our strong parts business should help dampen the cycle, making our margins less volatile. On slide 14, a reconciliation of sales, adjusted operating margin, and adjusted earnings per share from what we communicated on our fourth quarter earnings call on February 6th to today.

David: Although this may affect demand in the short term. This region remains one of the most long term attractive end markets, especially in Brazil with a farm footprint is increasing.

David: While farm income is expected to decline from elevated levels. In 2023, we generally expect farmers to remain profitable in 2024, and agco brand agnostic retrofit approach to precision AG.

David: Strong parts business should help dampen the cycle, making our margins less volatile.

David: On slide 14, the highlight of our reconciliation of sales adjusted operating margin and adjusted earnings per share from what we communicated on our fourth quarter earnings call on February six two today.

Damon J. Audia: Starting from the left, our initial outlook reflected sales of $13.6 billion, adjusted operating margins of approximately 11%, and adjusted earnings per share of around $13.15. The negative effect of currency translation and the weaker South American industry outlook assumption change, coupled with the modest reduction in our pricing outlook, reduce our sales outlook by approximately $400 million, which is partially offset by the inclusion of the PTX Trimble joint venture sales of approximately $300 million for the balance of the year.

Eric Hansotia: Starting from the left our initial outlook reflected sales of $13 6 billion adjusted operating margins of approximately 11% and adjusted earnings per share of around $13 15.

David: The negative effect of currency translation, and the weaker South American industry outlook assumption change coupled with the modest reduction in our pricing outlook reduce our sales outlook by approximately $400 million.

Damon J. Audia: Which is partially offset by the inclusion of the PT X trembled joint venture sales of approximately $300 million for the balance of the year.

Damon J. Audia: Our new sales outlook is down slightly to $13.5 billion. Our continued and heightened focus on taking costs out of the business is mitigating margin erosion from the lower operating leverage. We anticipate remaining at 11% adjusted operating margins before adjusting for the impact of the PTX trimble business. The strong margins in the high 20% range of the PTX Trimble business helps us raise our full year adjusted operating margins now to 11.3%.

David: Our new sales outlook is down to slight slightly to $13 5 billion.

David: Our continued and heightened focus on taking costs out of the business is mitigating margin erosion from the lower operating leverage we anticipate remaining at 11% adjusted operating margins before adjusting for the impact of the PT X Trimble joint venture.

David: The strong margins in the high 20% range of the PT X Trimble business helps us raise our full year adjusted operating margins now to 11, 3%.

Damon J. Audia: Our new adjusted EPS guidance is approximately $12 on a consolidated basis. The reduction in EPS is a combination of multiple factors, including the effect of currency translation, industry assumption changes, a slightly lower pricing assumption, continued FX losses that affect other income and expense, and an increased effective tax rate related to inflation in foreign currency in Argentina, as well as the incremental interest expense on debt related to the acquisition of the PTX Trimble Joint Venture.

Damon J. Audia: Our new adjusted EPS guidance is approximately $12 on a consolidated basis.

David: The reduction in EPS is a combination of multiple factors, including the effect of currency translation industry assumption changes are slightly lower pricing assumption continued FX losses that affect other income and expense and an increased effective tax rate related to inflation and foreign currency in Argentina as well as the <unk>.

David: <unk> interest expense on debt related to the acquisition of the PT X Trimble joint venture.

Damon J. Audia: This is partially offset by the consolidation of the earnings of PTX Trimble. The figures for PTX Trimble you see in this reconciliation reflect nine months of activity, and they exclude any sales related to other parts of AGCO.

David: This is partially offset by the consolidation of the earnings of PT X Trimble.

Damon J. Audia: The figures for PT X Trimble you see on this reconciliation reflect nine months of activity and they exclude any sales related to other parts of agco as.

Damon J. Audia: As we said at the announcement of the deal back in September and reiterated on April 1st of this year, we anticipate PTX Trimble to be accreted to AGCO's revenues, adjusted operating margin, and adjusted earnings per share in the first full year post-close. This will be achieved by paying down debt, combined with higher earnings from PTX Trimble as we transition to a new distribution model and realize synergies across the AGCO portfolio.

David: As we said at the announcement of the deal back in September and reiterated on the April unable first of this year, we anticipate <unk> will be accretive to Agco's revenues adjusted operating margin and adjusted earnings per share in the first full year post close this will be achieved by paydown of debt combined with higher earnings from PT X Trimble is.

Damon J. Audia: We transitioned to a new distribution model and realize synergies across the AG co portfolio.

Damon J. Audia: Slide 15 highlights a few key assumptions underlying our 2024 outlook, which now includes the consolidated results of PTX Trimble Joint Venture. At this time, we see markets continuing to weaken in 2024. Our sales plan includes market share gains, along with price increases reverting back to approximately 1%. As our raw material cost is stabilized and we pursue further cost savings actions, we expect this level of pricing will more than offset inflationary cost increases.

David: Slide 15 highlights a few key assumptions underlying our 2024 outlook, which now includes the consolidated results of PT X Trimble joint venture.

David: At this time, we see markets continuing to weaken in 2024.

David: Our sales plan include market share gains along with price increases reverting back to approximately 1% as our raw material costs stabilize and we pursue further cost savings actions. We expect this level of pricing will more than offset inflationary cost increases.

Damon J. Audia: We expect currency translation to now have a 1% adverse effect on sales year over year, primarily due to a weakening of the euro, which is modestly lower than our previous assumption. Engineering expenses are expected to be up approximately 3% in 2024 compared to 2023, including PTX Trimble. Excluding PTX Trimble, engineering expenses would have been down around 4% as we look to moderate some investment given the softening industry

David: We expect currency translation to now have a 1% adverse effect on sales year over year, primarily due to a weakening of the euro which is modestly lower than our previous assumption.

David: Engineering expenses are expected to be up approximately 3% in 2024 compared to 2023, including PT X Trimble.

David: Excluding <unk> Trimble engineering expenses would have been down around 4% as we look to moderate some investment given the softening industry outlook.

Damon J. Audia: With the expectations of our industry declining around 10% to 15% from our approximately 105% of mid-cycle in 2023 to around 90% to 95% in 2024, we would expect our adjusted operating margins to come down from the record 12% in 2023 to around 11.3% in 2024, slightly above the value creation line due to the strong performance of our three growth drivers, increased cost control measures, and the inclusion of the high-margin PTX trimble joint venture. We will provide updated long-term margin targets at our December 2024 Analyst Meeting to account for the performance of PCX Trimble.

Damon J. Audia: With the expectations of our industry declining around 10% to 15% from our approximately 105% of mid cycle in 2023 to around 90% to 95% in 2024, we would expect our adjusted operating margins to come down from the record 12% in 2023 to around 11, 3% in 2024.

Slightly above the value creation line due to the strong performance of our three growth drivers increased cost control measures and the inclusion of the high margin PT X Trimble joint venture.

David: We will provide updated long term margin targets at our December 2024 analyst meeting to account for the performance of PT X Trimble.

Damon J. Audia: Our effective tax rate is now anticipated to be between 28% and 29% for 2024, which is 1.5 percentage points higher than our previous guidance. The reason for the increase is due to the impact of foreign exchange rates and inflation on the calculation of income tax in Argentina.

Damon J. Audia: Our effective tax rate is now anticipated to be between 28, and 29% for 2024, which is one five percentage points higher than our previous guidance. The reason for the increase is due to the impact of foreign exchange rates and inflation in the calculation of income tax in Argentina.

Damon J. Audia: Turning to slide 16 for our 2024 outline, our full-year net sales outlook for 2024 is $13.5 billion, down from the record level seen in 2023. Our adjusted earnings per share forecast is approximately $12.

Damon Audia: Turning to slide 16 for our 2020 for outlook.

Damon J. Audia: Our full year net sales outlook for 2024 is $13 5 billion down from the record levels seen in 2023.

Damon J. Audia: Our adjusted earnings per share forecast is approximately $12.

Damon J. Audia: We've also set a capex target of around $475 million slightly lower than what we spent in 2023.

Damon J. Audia: Our free cash flow conversion should be at the upper end of our range of 75% to 100% of adjusted net income consistent with our long term target.

Damon J. Audia: With the continued underproduction relative to retail demand in the second quarter of 2024, we project sales in the $3 $6 billion range adjusted operating margins of about 11% and adjusted earnings per share of around $3.

Damon J. Audia: We've also set a CapEx target of around $475 million, slightly lower than what we spent in 2023. Our free cash flow conversion should be at the upper end of our range of 75% to 100% of adjusted net income, consistent with our long-term target. With continued underproduction relative to retail demand in the second quarter of 2024, we project sales in the $3.6 billion range, adjusted operating margins of about 11%, and adjusted earnings per share of around $3.

Damon J. Audia: With that, I'll turn it back over to the operator for Q&A. Thank you very much. We will now begin the question and answer session. To ask a question, you may press star, then one on your touchtone phone.

Speaker Change: With that I'll turn it back over to the operator for Q&A.

Speaker Change: Thank you very much.

Damon J. Audia: We will now begin the question and answer session.

Speaker Change: You ask a question you May press Star then one on your Touchtone phone.

Speaker Change: If youre using a speakerphone please pick up your handset Mitchell pressing the keys.

Damon J. Audia: We will be drilling a question. Please press star then two.

Damon J. Audia: Please limit yourselves to one question and one follow up.

Damon J. Audia: Okay.

Speaker Change: The first question is from the line of.

Damon J. Audia: Jamie Cook from Deutsche Please go ahead.

Operator: If you are using a speakerphone, please pick up your handsets before pressing the keys. To withdraw your question, please press star, then two. Please limit yourself to one question and one follow-up. Good morning.

Speaker Change: Hi, good morning.

Jamie Lyn Cook: Two questions. One, can you help us a little bit on South America in terms of how you're expecting production cuts, like the low level production cuts in South America, you know, sort of pricing and how you're thinking about margins in South America in the back half of the year? I think before you said you expected margins to be in the maybe low double digit range. I'm just wondering if that's still an opportunity.

Speaker Change: Two questions. One can you help us a little bit on South America in terms of how youre expecting.

Jamie Lyn Cook: <unk> like the low level of production cuts and in South America, you guys sort of pricing and how you're thinking about margins in South America in the back half of the year I think before you said you expected margins to be maybe low double digit range I'm, just wondering if that still.

Speaker Change: And opportunity and then my second question, David I, just want to make sure.

Jamie Lyn Cook: And then my second question, Damon, I just want to make sure I understand Trimble. You're saying it's going to be accretive for the first full year post the close. Do you mean by the first quarter of 2025? I just want to be clear there.

Jamie Lyn Cook: Stan Trimble understanding you're saying, it's going to be.

Jamie Lyn Cook: Accretive.

Jamie Lyn Cook: For the first full year post the close do you mean by the first quarter of 2025 I just wanted to be clear there and then I'm just wondering.

Damon J. Audia: And then I'm just wondering, you know, the path to get there, given it's going to be 13 cents dilutive, you know, for the year. I guess it's just debt paydown, any color you could help me there, and then I guess how accretive by the full year, just given the farming trends aren't really favorable right now. Thank you.

Damon J. Audia: The path to get there given it's going to be 13 cents dilutive you mean for the year I guess, it's just.

Damon J. Audia: So debt Paydown any any color you can help me there and then I guess, how accretive by that by the first by the full year just given the.

Damon J. Audia: Farmery farming trends are really favorable right now thank you.

Damon J. Audia: Yeah, so Jamie, I'll start with the Trimble question, and I'll revert back to the South American question. So fully accretive in all of 2025, so not the four quarters, but if we look at all of 2025, that's what we're planning on it being accretive. And it's really a combination of us being able to repay some of the debt that we took on here, given our strong free cash flow generation. But more importantly, as we really start to ramp up some of the synergies here in leveraging the Precision Ag channel that we have, our Precision Planting channel, and also complementary products from Precision Planting moving into the Trimble Vantage channels. So we see those two things really helping drive some growth next year and then paying down some debt. So again, accretive for the full year of 2025 versus the first four quarters.

Speaker Change: So Jamie I'll start with the Trimble question, then ill revert back to the South American question, So fully accretive in all of 2025, so not the four quarters, but if we look at all of $2025 is what we're planning on it being accretive and it's really a combination of us being able to repay some of the debt that we took down here given.

Damon J. Audia: Our strong free cash flow generation, but more importantly, as we really start to ramp up some of the synergies here in leveraging the precision AG channel that we have our precision planting channel and also complementary products from precision planting moving into the Trimble advantaged channels. So we see those two things really help.

Damon J. Audia: <unk> drive some growth next year, and then paying down some debt. So again accretive for the full year of 2025 versus the first four quarters on.

Damon J. Audia: On South America.

Damon J. Audia: On South America, As you heard in Eric's opening comments, you know, we did reduce our production again over 30% here in the fourth and first quarter. So that's after a 30% reduction in the fourth quarter; I would expect to see continued production cuts more heavily weighted here in the second quarter. You know, we did make some marginal improvement in the dealer inventory down there, but still not where we need to be.

Damon J. Audia: As you heard in Eric's opening comments, we did reduce our production again over 30% here in the fourth in the first quarter. So that's after a 30% reduction in the in the fourth quarter I would expect to see continued production cuts more heavily weighted here in the second quarter, we did make some marginal improvement in the dealer.

Damon J. Audia: Tori down there, but still not where we need to be so I would expect to see further production cuts here again in the second quarter and then hopefully as we move into the back half of the year those production cuts starting to become less and hopefully as we get to the fourth quarter lapping.

Damon J. Audia: So I would expect to see further production cuts here again in the second quarter. And then hopefully, as we move into the back half of the year, those production cuts will start to become less. And hopefully, as we get to the fourth quarter lapping, as we think about the margins in South America, and again, I'm going to give you margins that are inclusive of the PTX Trimble being rolled into these numbers just to stay consistent. But we do expect the margins, really, in the back half of the year to start to get backed up into those mid teams.

Damon J. Audia: As we think about the margins in South America, and again I'm going to give you margins that are inclusive of the PT X trimble being rolled into these numbers just to stay consistent but we do expect the margins really in the back half of the year to start to get back up into those those mid teens again under the presumption that the mark.

Damon J. Audia: It's continuing to approve the new phenomenon financing comes out here in the back half of the year, which spurs growth in some of the other farmer activities. So right now we'll see the first half continue to be challenge both for farmer demand as well as our production and the absorption, but then hopefully improving in the back half. Thank.

Damon J. Audia: Again, under the presumption that the markets continue to improve, the new phenomena, financing comes out here in the back half of the year, which spurs growth in some of the other farmer activities. So, you know, right now, we see the first half continue to be challenged, both for farmer demand, as well as our production and absorption, but then hopefully, improving in the back. Thank you so much.

Damon J. Audia: Thank you so much.

Speaker Change: Thank you.

Damon J. Audia: Okay.

Damon J. Audia: Our next question is from the line of Christine Hogan from Oppenheimer. Please go ahead.

Speaker Change: Great. Thank you for taking the question and sort of an extension of Jamie here, but maybe broadening that out to the other regions.

Kristen E. Owen: Thank you for taking the question. It's sort of an extension of Jamie's work here, but maybe broadening that out to the other regions. Just given the production cuts that were both higher than expected and broad-based and now the updated outlook, I'm hoping you can walk us through your updated assumptions for just organic volume growth across the regions for the remainder of the year. So maybe if we strip out the triple results, what those organic expectations are. Thank you.

Kristen E. Owen: Just given the production cuts that were.

Kristen E. Owen: Higher than expected and broad based and now the updated outlook.

Kristen E. Owen: Im hoping you can walk us through your updated assumptions for just organic volume growth across your regions for the remainder of the year. So maybe if we strip out the turbot results.

Kristen E. Owen: Those are organic expectation. Thank you.

Damon J. Audia: Yeah, so I think, Kristen, if we look at the organic and exclude Tremble, you know, we expect to see the North American markets probably down right around 10% for the full year. So a little bit better when they were down 21% in the first quarter. So call that sort of mid single-high single digits for the balance of the year. Europe, after the strong first quarter that we saw here, I would tell you it is relatively stable year over year, other than that fourth quarter. Remember, we had a record fourth quarter with Europe.

Speaker Change: Yeah, So I think.

Damon J. Audia: Kristen if we look at the organic again, excluding trimble.

Damon J. Audia: We expect to see the I would say the north American markets are probably down right around 10% for the full year, so a little bit better what they were down 21% in the first quarter. So call that sort of mid single upper single digits for the balance of the year.

Damon J. Audia: We don't see that repeating, given the state of the market. So I would say Europe will likely be down, sort of, that mid single-digit for the full year. A lot of that, though, concentrated in the fourth quarter year over year count. But I would put the sales in South America down at around 20% for the full year. And that sort of gets you to our negative 9% or so of what we're looking at organically here for the company. Thanks for that, Damon.

Damon J. Audia: Europe after the strong first quarter that we saw here I would tell you relatively stable year over year other than that fourth quarter remember, we had a record fourth quarter with Europe, we don't see that repeating given the state of the market. So I would say Europe will likely be down sort of that mid single digit for the full year a lot of that though.

Damon J. Audia: Traded in the in the fourth quarter year over year comp.

Damon J. Audia: Asia Pacific relatively flat as we move through the year here.

Damon J. Audia: The big decline here in the first quarter, we see that stabilizing.

Damon J. Audia: Through the balance of the year, and then South America again big decline here in the first quarter, we expect another large decline year over year in the second quarter and then a decline in the third quarter and then again lapping eight what hopefully is an easier comp seen growth returning back in the fourth quarter, but I would put the sales in South America.

Damon J. Audia: Down at around 20% for the full year and that sort of gets you to our negative 9% or so what we're looking at organically here for the company.

Damon: Okay. Thanks, Matt Damon and then.

Kristen E. Owen: And then, you didn't mention this in the prepared remarks, but I was wondering if you could address the 8k yesterday regarding your commercial relationship with Pathy, just providing some of the background, any terms related to the termination, and just the strategic rationale there. Yeah, so, you know, thanks for the question, Kristen. You know, nothing, I guess, significant other than I, you know, again. Taffy, as you know, is one of our critical suppliers to us.

Kristen E. Owen: You didn't mention this in the prepared remarks, but I was wondering if you could address that.

Kristen E. Owen: The 8-K yesterday regarding our commercial relationship with Kathy.

Kristen E. Owen: You provided some in the background any churn related to the termination and just the strategic rationale there.

Kristen E. Owen: Last year, we purchased about $172 million in low horsepower tractors that we sold in other parts of the world. And, you know, like any supplier relationship, we work through them on how they're performing. And we've had multiple communications with Taffy over the years about our supplier expectations for them. And, you know, we basically got to a point where we worked with them, and, you know, we needed to get them noticed that we were going to take a different path to source these low horsepower tractor from a different supplier at some point in the future.

Kristen E. Owen: Yeah. So.

Kristen E. Owen: For the question Kristen nothing I guess nothing significant other than again happy as you know is a is one of our critical suppliers to us last year, we purchased about $172 million of proud of low horsepower tractors that we saw in other parts of the world and like any supplier relationship we work through them on how they are performing and we have.

Kristen E. Owen: <unk> had multiple communications with happy over the years on our supplier expectations of them and we basically got to a point, where we worked with them and we needed to get them notice that we were going to take a different path to source. These are low horsepower tractor.

Damon J. Audia: So we followed the ordinary course, I would tell you, Kristen; we did this as we would treat any, you know, important strategic supplier relationship with, you know, significant communications over the last several years, outlining expectations. But at some point, as we think about the farmers' demand for our products, the dealers' needs for certain products around the world, you know, we felt this was in the best interest of AGCO and our farmers and our dealers to make this change. Great! Thank you so much. Hey, good morning, everybody.

Speaker Change: From a different supplier at some point in time in the future. So we followed the ordinary course I would tell you Chris and we did this as we would treat any.

Speaker Change: Important strategic supplier relationship with significant communications over the last several years outlining expectations, but at some point as we think about the farmers demand for our products the dealers needs for certain products around the world. We felt this was in the best interest of Agco, and our farmers and our dealers to up to make this change.

Damon J. Audia: Okay.

Speaker Change: Great. Thank you so much.

Speaker Change: Thank you.

Damon J. Audia: Our next question from the line of Stanley Elliott.

Damon J. Audia: From Stifel. Please go ahead.

Stanley Stoker Elliott: Thank you for the question. Can you talk a little bit more about what you're seeing in Europe? You know, the curious thing I guess is kind of how much of this margin is maybe mixed versus some of the manufacturing improvements you all have going on over there? Yeah, I think, Stanley, Europe is maybe a little bit of a tale of two cities there.

Speaker Change: Hey, good morning, everybody. Thank you for the question.

Stanley Stoker Elliott: Can you talk a little bit more about what youre seeing in Europe.

Stanley Stoker Elliott: Curious I guess kind of how much of this margin is maybe mix.

Stanley Stoker Elliott: First as some of the manufacturing improvements you all have had going on over there.

Stanley: Yeah, I think Stanley.

Stanley Stoker Elliott: Sort of.

Stanley Stoker Elliott: Europe is maybe a little bit of a tale of two cities there.

Damon J. Audia: Our Fent product line has done exceptionally well. We've seen good pricing and, I would say, some very strong mix coming out of Europe. Again, we got the new 600, and we have the next generation 700, so we're seeing some very good performance, and good share capture by the team. Our Fent EME team has done phenomenally well in gaining share in the European region as well.

Stanley Stoker Elliott: Our <unk> product line has done exceptionally well we've seen good pricing and I would say some very strong mix coming out of Europe again, we got the new 600 and.

Damon J. Audia: And we have the next generation 700, so seeing some very good performance good share capture by the team our <unk> team has done phenomenally well in gaining share in the European region as well. So I would say that part of the business has done quite well as the industry has weakened there I would say, we're seeing more pressure on them.

Damon J. Audia: So I would say that part of the business has done quite well. As the industry has weakened there, I would say we're seeing more pressure on the more volume-orientated brands in Europe. So Massey Ferguson and Voltra, although doing okay, I think they were a little bit more subject to market weakness.

Damon J. Audia: More volume oriented brands in Europe, So Massey Ferguson and bolster up although doing okay. I think they were a little bit more subject to the market weakness and so again overall the markets are weakening with fendt continues to perform exceptionally well at that value proposition that those farmers see us.

Stanley Stoker Elliott: And so, again, overall, the markets are weakening. And just, I guess, a point of clarification. So the $300 million that's going to come from Trimble this year are only the sales to AGCO, and that kind of strips out, you know, sales to other parties that Trimble used to sell to. And then if that's the case, at what point can you help us with kind of a time frame when you think you might recoup some of those sales? Yeah, so Stanley, I think it's just a little bit more of the inverse.

Stanley Stoker Elliott: Being rewarded right now.

Stanley Stoker Elliott: And just I guess, a point of clarification to the $300 million thats going to come from.

Stanley Stoker Elliott: From Trimble. This year those are the only the sales to agco in that kind of strips out your sales to other parties that trimble used to sell to and then if that's the case at what point or can you help us with kind of a timeframe. When you think you recoup some of those sales.

Damon J. Audia: So the $300-plus million of sales that I showed on the slide is for sales to everyone excluding AGCO. We do, there are some sales, and if you looked at the 8K that we filed about a month ago, you would see that last year there was about $35 million of sales that the Trimble JV would have sold to AGCO because we now consolidate that business. Those numbers are stripped out as part of the corporate eliminations, and so the $300-plus are all third-party sales.

Stanley Stoker Elliott: Yes, Stanley I think Steve just the little bit more of the inverse so the 300 plus million dollars of sales that I showed on the slide are to sales to everyone. Excluding agco.

Damon J. Audia: We do there is some sales and if you looked at the finance the 8-K that we filed about a month ago. You would've saw that last year. There was about $35 million of sales that the trimble JV would've sold to agco, because we now consolidate that business those numbers are stripped out as part of the corporate.

Damon J. Audia: <unk> and so the 300 plus are all third party sales. So again similar to as we talk to Wall Street about our precision AG business. As you know this well we talked about two pieces of that business, we talked about the precision planting the retrofit third party sales that's usually been about half of the number and then we talked about our.

Damon J. Audia: So again, similar to how we talked to Wall Street about our Precision Ag business, as you know, we talked about two pieces of that business. We talked about Precision Planting and Retrofit third-party sales. That's usually about half of the number.

Damon J. Audia: Fuse business, which is the OE sales that were selling the high technology into fendt in the Massey and the bolter same thing that we're going to have to communicate to you guys know about PT X Trimble, because we will continue to make the sales third party and again, that's 300 million plus but there will be a growth in the AG co sales that you wont necessary.

Damon J. Audia: And then we talked about our Fuse business, which is the OE sales that we're selling the high technology into Fent, into Massey, into Vulture. Same thing that we're going to have to communicate to you guys now about PTX Trimble because we'll continue to make the sales third-party. And again, that's $300 million plus.

Damon J. Audia: But there will be growth in AGCO sales that you won't necessarily see in that number. So we'll have to give you that similar overview of sort of what's the combined number versus what's in the reported number. I hope that makes sense. Good morning.

Damon J. Audia: Seeing that number so it will have to give you that similar overview of sort of what's the combined number versus what's in the reported number.

Damon J. Audia: I hope that makes sense.

Speaker Change: Thank you.

Damon J. Audia: We have our next question from the line of Tami Zakaria from Jpmorgan.

Speaker Change: Please go ahead.

Tami Zakaria: Thank you so much. So just wanted to understand the guide a little better. I think you're excluding PTX Trimble and that you expect about $300 million plus. The core business, the new guide suggests it's down by almost 400 million versus the previous guide. So can you just help me understand the buckets of this guide down? How much is North America versus South America versus if there's any effects in there?

Speaker Change: Hi, good morning, Thank you so much.

Tami Zakaria: So just wanted to understand the guide a little better I think you're excluding <unk> symbol that you expect about 300 million plus.

Tami Zakaria: Core business.

Tami Zakaria: The new guidance.

Tami Zakaria: Jeff.

Tami Zakaria: Down by almost $400 million.

Tami Zakaria: Versus the previous guidance Bill can you just help me understand the buckets of just this.

Tami Zakaria: Don how much is North America versus South America versus if there's any FX in there so really kind of understand what the.

Damon J. Audia: So really trying to understand what's the delta between the current and previous outlook. Sure, no problem, Tami. So we went from $13.6 to $13.2 on the core business. I would tell you it's worth around $150 million of that is related to the currency weakness, give or take.

Speaker Change: Delta between the current and previous outlook for the core business ex Trimble sure no problem Tammy so.

Damon J. Audia: You got about $200 million related to the change in the South American market. And then the delta would be the pricing coming down from about 1.5% down to around 1%. Those are the three big buckets.

Damon J. Audia: We went from 13, 6% to 13 two on the core business I would tell you.

Damon J. Audia: Call it with round about $150 million of that is related to the currency weakness give or take.

Damon J. Audia: You got about $200 million related to the change in the South American market and then the delta would be the pricing coming down from about one 5% down to around 1% those are the three big buckets.

Tami Zakaria: Got it okay. Thank you and then.

Tami Zakaria: And then I saw in the presentation, I think you're expecting a high 20% EBIT margin from Trimble, PTEX Trimble, which I would think is a little lighter than what Trimble as a standalone company used to do. So again, I know sales are probably down this year, but can you just help me understand what drives that high 20% EBIT margin? And where do you eventually see it going as, hopefully, the ag market recovers to some extent? Yeah, so again, Tami, you know, what we're showing you is the revenues excluding AGCO or including AGCO sales. So keep that in mind.

Tami Zakaria: I found the presentation, I think youre expecting high 20% EBIT margin from from the Trimble.

Tami Zakaria: Kimball.

Tami Zakaria: I would think is a little lighter than what Kimball as a standalone company used to do.

Tami Zakaria: Again, I know probably still go down this year, but can you just help me understand.

Tami Zakaria: What drives that high 20% EBIT margin and where do you eventually see it growing as hopefully the AG market would recover at some point yeah. So again Tammy what we're showing you is the revenues excluding agco Orient agco sales. So keep that in mind again last year that was $35 million. So.

Damon J. Audia: Again, last year, that was $35 million. So, but if I think about what we said was Trimble or PTX Trimble margins in the high 20s, if you look at what we showed in September, we would have shown an EBITDA margin in the low 30s. So again, I think if you add in about $5 million of depreciation, these numbers do reflect some TSA costs. We're doing a transitional services agreement with Trimble. So there's a few million dollars embedded in these numbers. You know, that'll work its way out of the system over the next couple years as we start to integrate them more into our system. So that'll help pick up, you know, the margins there.

Damon J. Audia: But if I think about what we said is trimble <unk> Trimble margins in the high <unk>. If you look at what we showed in September we would have showed an EBITDA margin in the low thirties. So again I think if you add in about $5 million of depreciation. These numbers do reflect some TSA costs as were doing a transitional services agreement.

Damon J. Audia: With Trimble, so theres a few million dollars embedded in these numbers, you'll that'll work its way out of the system over the next couple of years as we start to integrate them more into our system. So that will help pick up.

Damon J. Audia: The margins there and then again with the revenues coming down again, you're losing some of that leverage which is depressing the margins a little bit and then again I would layer in up against $35 million of good margin business with no real change in the SG&A cost is what's bringing the margins down a little bit as well. So overall when we look at the <unk>.

Damon J. Audia: And then again, with revenues coming down, again, you're losing some of that leverage, which is depressing the margins a little bit. And then again, I would layer in if again, $35 million of good margin business with no real change in the SG&A cost is what's bringing the margins down a little bit as well. So, you know, overall, when we look at the products and we look at the gross margin of what we're selling them in the marketplace, we feel really good about it.

Damon J. Audia: <unk> when we look at the gross margin of what were selling them in the marketplace. We feel really good about it and then we start to talk about the synergies and the revenue growth as we integrate that more into the agco portfolio here going forward.

Damon J. Audia: And then we start to talk about the synergies and the revenue growth as we integrate that more into the AGCO portfolio here going forward. What's going on in terms of volume? I'm curious how Transcription by Transcription Outsourcing, LLC.

Speaker Change: Thank you.

Damon J. Audia: The next question is from the line of Nick Joseph from RW Baird.

Speaker Change: Please go ahead.

Speaker Change: Yes. Thank you.

Speaker Change: I also wanted to follow up on this.

Damon J. Audia: JV.

Damon J. Audia: Maybe I'm a little bit confused here, but using the.

Speaker Change: Okay information that you put out in the 8-K about it about a month ago.

Damon J. Audia: It strikes me that the margins that we saw there in the operating margins for the verdict from the JV were little bit lower than the high twenty's or you're talking about here.

Damon J. Audia: So when when I'm kind of looking at what's going on in terms of volume compression and obviously the fact that.

Damon J. Audia: C N H business has gone away from Trimble I'm kind of curious how to square to that $300 million revenue guide that you provided but also through the high Twenty's margin here. So what assumptions are you, making on on the core Trimble revenue and on Sandy related business in India.

Damon J. Audia: So Meg, I guess when I think about the 8K where we published the standalone financial statements, again, I think it's important to remember that this was a segment or a portion within the Trimble business that they were reporting. And as they went through, or as we created with Trimble, the standalone costs, there were certain allocated costs that were applied to create, in theory, the pro forma of that business that we filed in that 8K.

Speaker Change: Yeah, So Mig I guess when I think about the 8-K, where we published the stand alone financial statements again, I think it's important to remember that this was a segment or a portion within the trimble business that they were reporting and as they went through her whereas we created with Trimble.

Damon J. Audia: That doesn't necessarily reflect all of the costs that we have taken over as part of the business or costs that we would incur because we would be able to leverage many of our operating resources. And so, again, it was trying to create the goal of that 8K was to create a standalone financial statement for what that business is, which included some of the allocated costs that Trimble would not have shown or that we would not have shown when we did the announcement back in September but are not actually reflective of the ongoing cost structure.

Damon J. Audia: The stand alone costs, there were certain allocated costs that were applied to create in theory. The pro forma of that business that we filed in that 8-K that doesn't necessarily reflect all of the cost that we have taken over as part of the business or cost that we would incur because we'd be able to leverage many of our operating resources and so.

Damon J. Audia: Again, it was trying to create the goal of that 8-K is to create a stand alone financial statements for what that business, which was included some of the allocated cost that Trimble would not have shown that we would not have shown in the when.

Damon J. Audia: When we did the announcement back in September but are not actually reflective of the ongoing cost structure.

Damon J. Audia: So hopefully, that explains when we give you the numbers that we're talking about now, this is the business that we're controlling, the cost structure that we see in the business, and we see the revenues right now for the balance of the year. And again, that's for the remaining three quarters. We see that being about $300 million. We do see the CNH business coming down. Again, if you looked at the revenue in that 8K, we said the revenues were just over $500 million or right around $500 million.

Damon J. Audia: So hopefully that explains when we give you the numbers that we're talking about now it's the business that we're controlling the cost structure that we see in the business.

Damon J. Audia: We see the revenues right now for the balance of the year and again Thats for the remaining three quarters, we see that being about $300 million, we do see the CNS business coming down again, if you booked at the revenue in that 8-K, we said the revenues were just over $500 million of right around $500 million when you layer.

Damon J. Audia: When you layer in the first quarter of what Trimble will ultimately announce related to this business, directionally, let's say you're going to see the numbers coming down around a hundred million year over year, which is not surprising because when we think about that, our markets have come down since our initial announcement have come down around 10%. So you have around $50 million of revenue related to lower markets. We do expect the CNH OE business to come down. We talked about that in September, and we continue to expect that. I would say that it's probably going to come down, directionally by $40 million or so year over year.

Damon J. Audia: In the first quarter of what Trimble will ultimately amounts related to this business.

Damon J. Audia: Directionally lets say youre going to see about the numbers coming down around $100 million year over year, which is not surprising because when we think about that our markets have come down since our initial announcements have come down around 10%. So you have around $50 million of revenue related to lower market.

Damon J. Audia: We do expect the <unk> OE business to come down we talked about that in September. We continue to expect that I would say, that's probably going to come down directionally $40 million or so year over year and then the rest of the number is a little bit of the churn that we knew when the <unk> dealer channel as they were beginning to.

Damon J. Audia: And then the rest of the number is a little bit of the churn that we knew in the CNH dealer channel as they were beginning to either sign up with Trimble as a vantage dealer or if they were going to be going elsewhere. And so again, when we look at the numbers, the decline year over year, we look at the margins. Again, we still see this to be a great business, and again, we feel comfortable with these high 20s operating margins and growing as that volume continues to come back here over the next couple of years. Thanks, This is Cleon for Jerry.

Cleon: Either sign up with Trimble as a vantage dealer or if they were going to be going elsewhere, and so again when you look at the numbers the decline year over year, we look at the margins again, we still see this to be a great business and again, we feel comfortable with these high twenties operating margin and growing as that volume continues to come back.

Cleon: Over the next couple of years.

Cleon: Thank you.

Damon J. Audia: The next question is from the line of Jerry Revich from.

Speaker Change: Goldman Sachs. Please go ahead.

Damon J. Audia: As a follow-up to that, on the CNHI dealers, are you seeing sign-ups for those? How can you just update us on the progress of sign-ups for those to become Advantage Dealers or, you know, if there's still some D-Stock in there as well? Yeah, Clay. So I think, again, the relationship with C&H and Trimble. They made that change long before the announced joint venture between us and them. And again, they had some very good success in signing up many of these dealers to begin to sell Trimble products directly.

Cleon: Thanks. This is clay on for Jerry as a follow ups there on the CNI side dealers are you seeing.

Damon J. Audia: Sign ups for those how it can you just update us on the progress for for sign ups of those to become the advantage dealers alright, Cisco some destocking.

Damon J. Audia: As we look forward.

Damon J. Audia: We've continued to see good momentum as the sales teams have been out with the dealers. As, you know, some of our team members now, over the last one month, have begun to work with the Trimble team as well in working to update and connect with these dealers about the value and the benefits of the PTX Trimble products. And again, really no change in how we're approaching this. With our precision planting business, you know, we're very much focused on the farmers and servicing all makes and models. So our precision planting group is very much similar to what the Trimble group was.

Damon J. Audia: Yeah. So I think again the relationship with CN H and Trimble, they made that change long before the announced joint venture between us and them and again they have had some very good success in signing up many of these dealers <unk>.

Damon J. Audia: To begin to sell the Trimble products directly we've continued to see good momentum as the sales teams have been out with the dealers as some of our team members now over the last one month have begun to work with the Trimble team as well in working to update and connect with these dealers about the value and the benefits.

Damon J. Audia: And the key for us and not for the dealers is that, again, we want them to be able to service the farmers the way the farmers want to be serviced. And whether that's with a competitive product or an Agco product, you know, we're agnostic to that. We're there to service them, make them more productive, drive their yields, reduce their input costs, and make them more profitable. So I'd say we're seeing good momentum. Obviously, the market environment is a little bit more challenging. Farmer incomes in many parts of the world are lower this year than they were last year.

Damon J. Audia: Of the Pts Trimble products, and and again really no change in how we're approaching this with our precision planting business. We're very much focused on the farmers and servicing all makes and all models. So our precision planting group is very much similar to what the Trimble group had been and the key for us and not with the dealers is that again.

Damon J. Audia: We want them to be able to service the farmers the way the farmers want to be serviced and whether that's with a competitive product or an agco product. We're agnostic to that we're there to service them make them more productive and drive their yields reduce their input costs and make them more profitable. So I'd say, we're seeing good momentum obviously the market environment is a little bit more challenged.

Damon J. Audia: So you're seeing a little bit of hesitation more just on farmer spending. But I would say the momentum that we're seeing with our team now engaging with the PTX Trimble team has been very good, and the engagement from the dealers has been very good as well. Again, we still have to work through some of the history of how many of these dealers received their Trimble product because that would have come directly from the OE.

Damon J. Audia: Farmer incomes in many parts of the world are lower this year than where they were last year. So youre seeing a little bit of hesitation mortgages on farmers spending, but I would tell you the momentum that we're seeing with our team now engaging with the PT X Trimble team has been very good and the engagement from the dealers has been very good as well again, we still have to work through.

Damon J. Audia: Some of the history of how many of these dealers receive their trimble product because that would have come directly from the OE and is this now transitions from the JV. We would continue to expect a little bit of churn here in the first half of this year and then hopefully normalizing as we move into the back half of the year.

Damon J. Audia: And as this now transitions from the JV, we would continue to expect a little bit of churn here in the first half of this year and then hopefully normalize as we move into the back half of the year. And separately, you have an update for us on just the GSI portfolio review timing and what the last 12 months' EVA does. Yeah, so, we continue to be under the strategic review of the grain and protein business units, you know, significant amount of external interest in this, and also the team continues to execute exceptionally well as we started the first quarter. What we've historically said is the EBIT margins for this business are sort of in the mid single digits.

Speaker Change: Thanks, and then separately.

Damon J. Audia: You have an update for us on the GSI portfolio review timing and what the last 12 months EBITDA as min. Thanks.

Damon J. Audia: Again, credit to the grain and protein team; they've done exceptionally well and, you know, had a great first quarter here. So I think we'll be in a position to sort of come to a final conclusion on that sort of in the summer here in this mid-summertime frame. All right, good morning, guys.

Speaker Change: Yes, so we.

Damon J. Audia: We continue to be under the strategic review of the of the grain and protein business unit.

Damon J. Audia: A significant amount of external interest on this and also the team continues to execute exceptionally well as we started the first quarter.

Damon J. Audia: What we've what we've historically cited as the EBIT margins for this business are sort of in that mid single digits again credit to the grain and protein team they've done exceptionally well in the.

Damon J. Audia: It had a great first quarter here. So I think we'll be in a position to sort of come to a final conclusion on that sort of in the summer here of this mid summer timeframe.

Speaker Change: Thank you.

Speaker Change: The next question is from the line of.

Damon J. Audia: Jack Davis from Bernstein. Please go ahead.

Speaker Change: Hi, good morning, guys.

Damon J. Audia: So my questions on the change in pricing guidance for 24. I just want to get a sense of what you're seeing from like a regional standpoint. With all the change driven by South America, or there are other regions where you saw a pullback, and then specifically for South America, how should we think about the cadence of pricing from 1Q through the balance sheet? Yeah, I think, Chad, the pricing is going to be pretty much across the board. I wouldn't say a little bit, you know, heavily weighted here in the first half as we start to lap some of the comps, especially in South America, in the second half.

Speaker Change: So my question is on the change in pricing guidance for 'twenty four I just wanted to get a sense for what youre seeing from a regional standpoint with all the change driven by South America.

Damon J. Audia: Regions Reinstalling, a pullback and then specifically for South America.

Damon J. Audia: How should we think about the cadence of pricing from.

Speaker Change: From <unk> through the balance of the year.

Damon J. Audia: Yeah, I think Chad the pricing is going to be pretty.

Damon J. Audia: Pretty much across the board.

Speaker Change: I wouldn't say soon.

Chad: A little bit.

Damon J. Audia: Heavily weighted here in the first half as we start to lap some of the comp, especially in South America in the second half I would say again, it's a little bit more concentrated in the volume oriented brands.

Damon J. Audia: I would say, again, it's a little bit more concentrated in the volume-orientated brand. If I had to weight it between Fenton, Massey, and Voltra, but generally speaking, it's across all of the regions here. That's helpful.

Chad: If I had the weighted between fendt and massing involved through.

Damon J. Audia: But generally speaking it's a it's across all of the all of the regions here.

Chad: Got you that's helpful.

Damon J. Audia: And then, second question on your legacy AGCO. What was the year-on-year change in revenues in the first quarter, and what are you embedding in your guidance for the fall? Yeah, so if I look at precision ag revenue, it was flat year over year. If you remember the first quarter last year, we were still coming off the very strong momentum supply chain challenges. So revenues were flat year over year at just around $200 million.

Damon J. Audia: And then just second question on your legacy Agco precision planting business.

Damon J. Audia: What was.

Damon J. Audia: The year on year.

Damon J. Audia: Change in revenues in the first quarter and what are you embedding in your guidance for the full year for that business. Yeah. So if I look at precision AG revenue was flat year over year. If you remember the first quarter last year, we were still coming off the very strong momentum supply chain challenges. So the revenues were flat year over year.

Damon J. Audia: And that's inclusive of the fused business. So again, from a similar to the prior question, one of the earlier questions, that both the retrofit sales, as well as what we would term the internal fused sales, were around $200 million. We still expect sort of, I would say, mid-single digit growth in that business. And again, we've talked about helping dampen the earnings of our business through the cycles. Precision, our precision ag business, is doing really well.

Damon J. Audia: Just around $200 million and Thats inclusive of the fuse business. So again I think from a similar to the prior one of the earlier questions that both the retrofit sales as well as what we would term the internal fuse sales that was around $200 million.

Damon J. Audia: We still expect sort of I would say mid single digit growth in that business and again, we've talked about helping dampen the earnings of our business through the cycles precision our precision AG business is doing really well the aftermarket or that retrofit, we see that continuing to grow despite the OE part of the business. So good.

Damon J. Audia: The aftermarket or that retrofit, we see that continuing to grow despite the OE part of the business. So, good momentum, great margin business. And I would say sort of that mid-single digits, continue to expect mid-single digit growth here for 2024 for that particular business. Yeah, I'll close today by saying that there's never been a more exciting time to be in the agriculture business. Technology is transforming how farmers operate and providing them with the potential to produce more food in more resource-efficient ways, a critical need given the world's expanding population.

Damon J. Audia: Some great margin business and I would say sort of that mid single digits continued to expect mid single digit growth here for 2024 for that particular business.

Speaker Change: Great. Thank you.

Damon J. Audia: Okay.

Speaker Change: Thank you.

Speaker Change: This concludes our question and answer session.

Speaker Change: I would like to turn the conference back over to.

Damon J. Audia: Eric.

Speaker Change: For any closing remarks.

Damon J. Audia: Yes ill close today by saying that there's never been a more exciting time to be in the agricultural business technologies, transforming how farmers operate and providing them with the potential to produce more food and more resource efficient ways, a critical need given the world's expanding population.

Eric P. Hansotia: AGCO's farmer first focus centers on helping them realize this potential, enabling them to operate more profitably and sustainably. The key to our success is the continued execution of our Farmer First strategy. Our focus is on growing our margin-rich businesses like Fent. In fact, I was just at the launch of the Fent Lodge, our brand home in North America, and we had unbelievable excitement from farmers and dealers about that brand and how it can continue to grow into the future.

Damon J. Audia: Agco's farmer.

Eric P. Hansotia: First focus centers on helping them realize this potential enables them to operate more profitably and sustainably.

Eric P. Hansotia: The key to our success is the continued execution on our farmer first strategy.

Eric P. Hansotia: FERC our focus is on growing our margin rich businesses like <unk> that I was just up at the launch of the Fendt Lodge, our brand home in North America, and we had unbelievable excitement by farmers and dealers about that brand and how it can grow continue to grow into the future.

Eric P. Hansotia: Secondly, our parts and services business. And third, our precision ag business, which we've been investing in heavily in the last few years. In April, we reached a major milestone in our company's history by closing the PTX Trimble joint venture, which creates an industry-leading global mixed fleet precision ag platform to better serve farmers and original equipment manufacturers.

Eric P. Hansotia: Secondly, our Parsons and services business and third our precision AG business, which we've been investing in heavily in the last few years.

Eric P. Hansotia: In April we reached a major milestone in our company's history by closing the PT X Kimball joint venture, which creates an industry, leading global mixed fleet precision AG platform to better serve farmers and original equipment manufacturers.

Eric P. Hansotia: Over the last few quarters, we've touched on many factors supporting our markets, including growing populations, changing diets, low stocks-to-use levels, increased demand for biofuels, and relatively healthy commodity prices. All these trends give us confidence in the long-term health of our industry. I'll finish where I started.

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

Eric P. Hansotia: All these trends give us confidence in the long term health of our industry.

Eric P. Hansotia: Our financial outlook reflects my confidence in the team and our strategy. Despite weaker industry conditions, we continue to execute on investing in the future, driving market share gains and staying nimble on our costs. All these will help position us to deliver the second highest level of adjusted operating margin in the history of our company, despite meaningfully weaker market conditions year over year.

Eric P. Hansotia: I'll finish where I started our financial outlook reflects my confidence in the team and our strategy. Despite weaker industry conditions, we continue to execute on investing in the future delivering market share gains and staying nimble on our costs. All of these will help position us to deliver the second highest level of adjusted operating margin in the history of our <unk>.

Eric P. Hansotia: Despite meaningfully weaker market conditions year over year.

Eric P. Hansotia: We look forward to seeing you at the upcoming technology event in June. Thank you, and have a great day! Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music

Speaker Change: We look forward to seeing you at the upcoming technology event in June Thank you and have a great day.

Speaker Change: Thank you.

Speaker Change: Thank you for joining the call.

Eric P. Hansotia: First quarter 2024 earnings call.

Speaker Change: This call has concluded.

Eric P. Hansotia: Have a nice day.

Eric P. Hansotia: [music].

Eric P. Hansotia: [music].

Eric P. Hansotia: [music].