AGCO Q4 2025 AGCO Corp Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 AGCO Corp Earnings Call
Speaker #1: You need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions.
Operator: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. In consideration of time, please limit yourself to one question and one follow-up. To ask a question, you may press Star, then One on your touchtone phone. To withdraw your question, please press Star, then Two. Please note, this event is being recorded. I would now like to turn the conference over to Greg Peterson, AGCO Head of Investor Relations. Please go ahead.
Operator: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. In consideration of time, please limit yourself to one question and one follow-up. To ask a question, you may press Star, then One on your touchtone phone. To withdraw your question, please press Star, then Two. Please note, this event is being recorded. I would now like to turn the conference over to Greg Peterson, AGCO Head of Investor Relations. Please go ahead.
Speaker #1: In consideration of time, please limit yourself to one question and one follow-up. To ask a question, you may press star, then one on your touch-down phone, to withdraw your question, please press star, then two.
Speaker #1: These risks are further described in the Safe Harbor included on Slide 2 in the accompanying presentation. Actual results could differ materially from those suggested in these statements.
Speaker #1: Further information concerning these and other risks is included in AGCO's filings with the SEC, including its Form 10-Q filings. AGCO any forward-looking statements except as 10-K and subsequent Form required by law.
Speaker #1: Please note this event is being recorded. I would now like to turn the conference over to Greg Peterson, AGCO Head of Investor Relations. Please go ahead.
Speaker #2: Thanks, and good morning. Welcome to those of you joining us for AGCO's fourth quarter of 2025 earnings call. We will refer to a slide presentation this morning as posted on our website, at www.agcocorp.com.
Greg Peterson: Thanks, and good morning. Welcome to those of you joining us for AGCO's Q4 2025 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 the slide presentation are reconciled to GAAP measures in the appendix of the presentation. We will make forward-looking statements this morning, including statements about our strategic plans and initiatives, as well as our financial impacts, demand, product development and capital expenditure plans, and timing of those plans, and our expectations concerning the costs and benefits of those plans and timing of those benefits. We'll also cover future revenue, crop production, farm income, production levels, price levels, margins, earnings, operating income, cash flow, engineering expense, tax rates, and other financial metrics.
Greg Peterson: Thanks, and good morning. Welcome to those of you joining us for AGCO's Q4 2025 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 the slide presentation are reconciled to GAAP measures in the appendix of the presentation. We will make forward-looking statements this morning, including statements about our strategic plans and initiatives, as well as our financial impacts, demand, product development and capital expenditure plans, and timing of those plans, and our expectations concerning the costs and benefits of those plans and timing of those benefits. We'll also cover future revenue, crop production, farm income, production levels, price levels, margins, earnings, operating income, cash flow, engineering expense, tax rates, and other financial metrics.
Speaker #1: We will make a replay of this call available on our corporate website later today. On the call with me this morning is Eric Hansotia, our Chairman, President, and Chief Executive Officer as well as Chief Financial Officer.
Speaker #2: The non-GAAP measures used in the slide presentation are reconciled to GAAP measures in the appendix of the presentation. We will make forward-looking statements this morning, including statements about our strategic plans and initiatives, as well as our financial impacts.
Speaker #1: With that, Eric, please go ahead.
Speaker #2: everyone joining us today. We closed Thanks, Greg, and good morning to the year with another strong quarter, delivering an adjusted operating margin of 10.1% on
Speaker #2: Demand product development and capital expenditure plans, and timing of those plans and our expectations concerning the costs and benefits of those plans and timing of those benefits.
Speaker #2: We'll also cover future revenue, crop production, farm income, production levels, price levels, margins, earnings, operating income, cash flow, financial metrics. All of these engineering expense, tax rates, and other forward-looking statements are subject to risks that could cause actual results to differ materially from those suggested by the statements.
Greg Peterson: All of these forward-looking statements are subject to risks that could cause actual results to differ materially from those suggested by the statements. These risks are further described in the safe harbor included on slide two in the accompanying presentation. Actual results could differ materially from those suggested in these statements. Further information concerning these and other risks is included in AGCO's filings with the SEC, including its Form 10-K and subsequent Form 10-Q filings. AGCO disclaims any obligation to update any forward-looking statements except as required by law. We will make a replay of this call available on our corporate website later today. On the call with me this morning is Eric Hansotia, 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.
Greg Peterson: All of these forward-looking statements are subject to risks that could cause actual results to differ materially from those suggested by the statements. These risks are further described in the safe harbor included on slide two in the accompanying presentation. Actual results could differ materially from those suggested in these statements. Further information concerning these and other risks is included in AGCO's filings with the SEC, including its Form 10-K and subsequent Form 10-Q filings. AGCO disclaims any obligation to update any forward-looking statements except as required by law. We will make a replay of this call available on our corporate website later today. On the call with me this morning is Eric Hansotia, 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.
Speaker #2: These risks are further described in the Safe Harbor included on slide two, in the accompanying presentation. Actual results could differ materially from those suggested in these statements.
Speaker #2: Further information concerning these and other risks is included in AGCO's filings with the SEC, including its Form 10-K and subsequent Form 10-Q Q filings.
Speaker #2: AGCO disclaims any obligation to update any forward-looking statements except as required by law. We will make a replay of this call available on our corporate website later today.
Speaker #2: On the call with me this morning is Eric Hansotia, our Chairman, President, and Chief Executive Officer as well as Damon Audia, our Senior Vice President and Chief Financial Officer.
Speaker #2: With that, Eric,
Speaker #2: please go ahead.
Speaker #3: Thanks, Greg, and good morning to everyone joining us today. We close the year with
Eric Hansotia: Thanks, Greg, and good morning to everyone joining us today. We closed the year with another strong quarter, delivering an adjusted operating margin of 10.1% on Q4 net sales of $2.9 billion, which were up 1% year-over-year, or up nearly 4%, excluding the Grain & Protein divestiture. EME continued to be a powerful driver, delivering 8% growth and extending its multi-quarter record of strong performance. On a full year basis, we delivered a 7.7% adjusted operating margin. Adjusted earnings per share were $5.28 on sales of $10.1 billion, reflecting a 13.5% decrease versus 2024, or just 7%, excluding the divested Grain & Protein business.
Eric Hansotia: Thanks, Greg, and good morning to everyone joining us today. We closed the year with another strong quarter, delivering an adjusted operating margin of 10.1% on Q4 net sales of $2.9 billion, which were up 1% year-over-year, or up nearly 4%, excluding the Grain & Protein divestiture. EME continued to be a powerful driver, delivering 8% growth and extending its multi-quarter record of strong performance. On a full year basis, we delivered a 7.7% adjusted operating margin. Adjusted earnings per share were $5.28 on sales of $10.1 billion, reflecting a 13.5% decrease versus 2024, or just 7%, excluding the divested Grain & Protein business.
Speaker #3: another strong quarter. Delivering an adjusted operating margin of 10.1% on fourth quarter net sales of $2.9 over year or up nearly 4%, excluding the green and protein divestiture.
Speaker #3: 7.7% adjusted operating margin. Adjusted earnings per share $5.28 on sales of $10.1 billion, reflecting a 13.5% decrease versus 2024 or just 7%, excluding the divested green and protein business.
Speaker #3: These results highlight the disciplined execution of our global teams, driven by our three high-margin growth levers: sustained cost discipline, and the positive impact of our multi-year structural transformation.
Eric Hansotia: These results highlight the disciplined execution of our global teams, driven by our three high-margin growth levers, sustained cost discipline, and the positive impact of our multi-year structural transformation. We operated at intentionally low production levels, and despite a soft market environment that weighed on industry demand, we ended the year with significantly lower company and dealer inventories compared to 2024, a favorable outcome that strengthens our position and demonstrates meaningful progress. Our adjusted operating margins are among the best in AGCO's history and the strongest we've ever delivered at this point in the cycle. We have nearly doubled our adjusted operating margins from prior troughs and are close to prior industry peaks, clear evidence that AGCO has structurally changed to a higher-performing and more profitable company. I want to thank the AGCO team for their disciplined commitment and impressive execution throughout the year.
Eric Hansotia: These results highlight the disciplined execution of our global teams, driven by our three high-margin growth levers, sustained cost discipline, and the positive impact of our multi-year structural transformation. We operated at intentionally low production levels, and despite a soft market environment that weighed on industry demand, we ended the year with significantly lower company and dealer inventories compared to 2024, a favorable outcome that strengthens our position and demonstrates meaningful progress. Our adjusted operating margins are among the best in AGCO's history and the strongest we've ever delivered at this point in the cycle.
Speaker #3: at intentionally low production We operated levels and, despite a soft market environment that weighed on industry demand, we ended the year with significantly lower company and dealer inventories compared to 2024, a favorable outcome that strengthens our position and demonstrates meaningful progress.
Speaker #3: Our adjusted operating margins are among the best in AGCO's history, and the strongest we've ever delivered at this point in the cycle. We have nearly doubled our adjusted operating margins from prior troughs and are close to prior industry peaks.
Eric Hansotia: We have nearly doubled our adjusted operating margins from prior troughs and are close to prior industry peaks, clear evidence that AGCO has structurally changed to a higher-performing and more profitable company. I want to thank the AGCO team for their disciplined commitment and impressive execution throughout the year.
Speaker #3: Clear evidence that AGCO higher-performing and more profitable company. I want to thank the AGCO team for their disciplined commitment and impressive execution throughout the year.
Speaker #3: Their agility allowed us to maintain solid performance, repeatedly exceed our expectations, and continue advancing our farmer-first priorities. Building on the transformational actions taken in 2024, including the formation of the PTX business and the divestiture of the majority of green and protein business, 2025 was a year focused on advancing our strategic ambitions in agriculture, machinery, and precision ag technology.
Eric Hansotia: Their agility allowed us to maintain solid performance, repeatedly exceed our expectations, and continue advancing our farmer-first priorities. Building on the transformational actions taken in 2024, including the formation of the PTX business and the divestiture of the majority of Grain and Protein business, 2025 was a year focused on advancing our strategic ambitions in agriculture machinery and precision ag technology. Our redefined portfolio and focus are where AGCO wants to be, poised to continue serving farmers and investors better than anyone else when demand strengthens. Our PTX brand continued to gain significant momentum. During 2025, we introduced 14 new products across the crop cycle, expanding the industry's most comprehensive retrofit precision ag portfolio.
Eric Hansotia: Their agility allowed us to maintain solid performance, repeatedly exceed our expectations, and continue advancing our farmer-first priorities. Building on the transformational actions taken in 2024, including the formation of the PTX business and the divestiture of the majority of Grain and Protein business, 2025 was a year focused on advancing our strategic ambitions in agriculture machinery and precision ag technology. Our redefined portfolio and focus are where AGCO wants to be, poised to continue serving farmers and investors better than anyone else when demand strengthens. Our PTX brand continued to gain significant momentum. During 2025, we introduced 14 new products across the crop cycle, expanding the industry's most comprehensive retrofit precision ag portfolio.
Speaker #3: Our redefined portfolio and focus are where AGCO wants to be. Poised to continue serving farmers and investors better than anyone else, when demand strengthens.
Speaker #3: Our PTX brand continued to gain significant momentum. During 2025, we introduced 14 new products across the crop cycle, expanding the industry's most comprehensive retrofit precision ag progress, expanding our dealer network.
Speaker #3: We also made substantial Trimble products, enabling us to broaden amount from the start of the product coverage and deepen customer engagement. This independent retrofit network, focused on the mixed fleet, remains an absolute clear differentiator, providing the comprehensive product expertise and the broad equipment compatibility that today's farmers require.
Eric Hansotia: We also made substantial progress expanding our dealer network, ending the year with more than 70 global PTx elite dealers, more than doubling the amount from the start of the year. These dealers sell both Precision Planting and PTx Trimble products, enabling us to broaden product coverage and deepen customer engagement. This independent retrofit network, focused on the mixed fleet, remains an absolute clear differentiator, providing the comprehensive product expertise and the broad equipment compatibility that today's farmers require. These PTx elite dealers are supported by more than 300 Fendt, Massey Ferguson, Valtra equipment dealers, 200 CNH dealers, alongside continued sales to more than 100 OEM customers. This expanding footprint is strengthening our global market presence, increasing the number of farmers we can reach with our industry-leading smart farming solutions... Fendt delivered a standout year of market performance in almost every region.
Eric Hansotia: We also made substantial progress expanding our dealer network, ending the year with more than 70 global PTx elite dealers, more than doubling the amount from the start of the year. These dealers sell both Precision Planting and PTx Trimble products, enabling us to broaden product coverage and deepen customer engagement. This independent retrofit network, focused on the mixed fleet, remains an absolute clear differentiator, providing the comprehensive product expertise and the broad equipment compatibility that today's farmers require. These PTx elite dealers are supported by more than 300 Fendt, Massey Ferguson, Valtra equipment dealers, 200 CNH dealers, alongside continued sales to more than 100 OEM customers.
Speaker #3: Ending the year with more than 70 global PTX elite dealers, more than doubling the year. These dealers sell both precision planting and PTX portfolio.
Eric Hansotia: Our PTx brand continued to gain significant momentum. During 2025, we introduced 14 new products across the crop cycle, expanding the industry's most comprehensive retrofit precision ag portfolio. We also made substantial progress expanding our dealer network, ending the year with more than 70 global PTx elite dealers, more than doubling the amount from the start of the year. These dealers sell both Precision Planting and PTx Trimble products, enabling us to broaden product coverage and deepen customer engagement. This independent retrofit network, focused on the mixed fleet, remains an absolute clear differentiator, providing the comprehensive product expertise and the broad equipment compatibility that today's farmers require. These PTx elite dealers are supported by more than 300 Fendt, Massey Ferguson, Valtra equipment dealers, 200 CNH dealers, alongside continued sales to more than 100 OEM customers.
Eric Hansotia: Our PTx brand continued to gain significant momentum. During 2025, we introduced 14 new products across the crop cycle, expanding the industry's most comprehensive retrofit precision ag portfolio. We also made substantial progress expanding our dealer network, ending the year with more than 70 global PTx elite dealers, more than doubling the amount from the start of the year.
During 2025, we introduced 14 new products across the crop cycle. Expanding the industry's, most comprehensive retrofit Precision egg portfolio.
We also made substantial progress, expanding our dealer Network.
Speaker #3: These PTX elite dealers are supported by more than 300 Fendt Massey Ferguson Vulture equipment dealers. 200 C&H dealers. Alongside continued sales to more than 100 OEM customers.
Eric Hansotia: These dealers sell both Precision Planting and PTx Trimble products, enabling us to broaden product coverage and deepen customer engagement. This independent retrofit network, focused on the mixed fleet, remains an absolute clear differentiator, providing the comprehensive product expertise and the broad equipment compatibility that today's farmers require. These PTx elite dealers are supported by more than 300 Fendt, Massey Ferguson, Valtra equipment dealers, 200 CNH dealers, alongside continued sales to more than 100 OEM customers.
Ending the year with more than 70 global PTX Elite dealers, more than doubling the amount from the start of the year.
Speaker #3: This expanding footprint is strengthening our global market presence, increasing the number of farmers we can reach, with our industry-leading smart farming solutions. Fendt delivered a standout year of market performance in almost every region.
Eric Hansotia: This expanding footprint is strengthening our global market presence, increasing the number of farmers we can reach with our industry-leading smart farming solutions... Fendt delivered a standout year of market performance in almost every region. In North America, we gained large ag market share, underscoring the strength of Fendt portfolio and the power of our team of experts and dealers. With some of our largest dealers switching to the IDEAL Combine last year, it's further emphasized the strength of the Fendt full line product offering and our ability to accelerate our performance when North America large ag begins to recover.
These dealers sell both Precision planting and PTX Trimble products. Enabling us to broaden product coverage and deepen customer engagement.
This independent retrofit Network focused on the mixed Fleet, remains an absolute clear. Differentiator
Speaker #3: In North America, we gained large ag market share, underscoring the strength of Fendt portfolio and the power of our team of experts and dealers.
Eric Hansotia: In North America, we gained large ag market share, underscoring the strength of Fendt portfolio and the power of our team of experts and dealers. With some of our largest dealers switching to the IDEAL Combine last year, it's further emphasized the strength of the Fendt full line product offering and our ability to accelerate our performance when North America large ag begins to recover. Our parts and service business continued to perform well across challenging market conditions. The FarmerCore model, combined with digital engagement, 24/7 online parts access, machine configuration tools, servicing capabilities, and industry-leading parts fill rates, continue to support this high-margin growth lever and drive meaningful progress. Strong execution also drove meaningful cost actions in 2025, resulting in a $65 million bottom line savings through continued operating efficiency across the organization, reflecting a real focus on performance improvement.
Providing the comprehensive product expertise and the broad equipment compatibility that today's farmers require.
These PTX Elite dealers are supported by more than 300 Fendt, Massey Ferguson, and Valtra equipment dealers.
Speaker #3: With some of our largest dealers switching to the ideal combine last year, it further emphasized the strength of the Fendt full-line product offering, and our ability to accelerate our performance when North America large Our parts and service business continued to perform well across challenging market ag begins to recover.
Eric Hansotia: This expanding footprint is strengthening our global market presence, increasing the number of farmers we can reach with our industry-leading smart farming solutions. Fendt delivered a standout year of market performance in almost every region. In North America, we gained large ag market share, underscoring the strength of Fendt portfolio and the power of our team of experts and dealers. With some of our largest dealers switching to the ideal combine last year, it's further emphasized the strength of the Fendt full line product offering and our ability to accelerate our performance when North America large ag begins to recover. Our parts and service business continued to perform well across challenging market conditions. The Farmer Core model, combined with digital engagement, 24/7 online parts access, machine configuration tools, servicing capabilities, and industry-leading parts fill rates, continue to support this high-margin growth lever and drive meaningful progress.
Eric Hansotia: This expanding footprint is strengthening our global market presence, increasing the number of farmers we can reach with our industry-leading smart farming solutions. Fendt delivered a standout year of market performance in almost every region. In North America, we gained large ag market share, underscoring the strength of Fendt portfolio and the power of our team of experts and dealers. With some of our largest dealers switching to the ideal combine last year, it's further emphasized the strength of the Fendt full line product offering and our ability to accelerate our performance when North America large ag begins to recover.
200 C&H dealers, alongside continued sales to more than 100 OEM customers?
Eric Hansotia: Our parts and service business continued to perform well across challenging market conditions. The FarmerCore model, combined with digital engagement, 24/7 online parts access, machine configuration tools, servicing capabilities, and industry-leading parts fill rates, continue to support this high-margin growth lever and drive meaningful progress. Strong execution also drove meaningful cost actions in 2025, resulting in a $65 million bottom line savings through continued operating efficiency across the organization, reflecting a real focus on performance improvement.
This expanding footprint is strengthening our Global Market presence. Increasing the number of farmers we can reach with our industry-leading, smart farming Solutions
Speaker #3: conditions. The farmer core model, combined with digital engagement, 24/7 online parts access, machine configuration tools, service and capabilities, and industry-leading parts fill rates, continues to support this high-margin growth lever and drive meaningful progress.
Event delivered, a standout year of market performance, in almost every region.
In North America, we gain large egg market, share underscoring the strength of fendt portfolio and the power of our team of experts and dealers.
Speaker #3: Strong execution also drove meaningful cost actions in 2025, resulting in a $65 million bottom-line savings through continued operating efficiency across the organization, reflecting a real focus on performance improvement.
Eric Hansotia: Our parts and service business continued to perform well across challenging market conditions. The Farmer Core model, combined with digital engagement, 24/7 online parts access, machine configuration tools, servicing capabilities, and industry-leading parts fill rates, continue to support this high-margin growth lever and drive meaningful progress.
With some of our largest dealers switching to the Ideal combine last year, it further emphasized the strength of the Fendt full-line product offering and our ability to accelerate our performance. When North America large ag begins to recover,
Our parts and service businesses continue to perform well across challenging market conditions.
Speaker #3: We anticipate a further 40 to 60 million dollars of incremental savings in 2026. Our overall confidence in the million dollars of share repurchases in the fourth quarter.
Eric Hansotia: We anticipate a further $40 to 60 million of incremental savings in 2026. Our overall confidence in the business is reflected in $250 million of share repurchases in Q4, part of our $1 billion capital return program announced last year. As we look at 2026, we will continue to navigate a dynamic phase of the industry cycle. Trade patterns and record global crop production continue to compress farm margins, with corn, soybean, and wheat prices near breakeven levels. Despite this environment, our operational discipline positions us well for continued progress. Over time, we continue to expect increased adoption of precision ag technologies as farmers constantly look for ways to profitably increase yields. Entering 2026, current market conditions continue to moderate demand across most equipment categories, yet we remain able to advance our technology strategy and expect long-term positive industry progress.
Eric Hansotia: We anticipate a further $40 to 60 million of incremental savings in 2026. Our overall confidence in the business is reflected in $250 million of share repurchases in Q4, part of our $1 billion capital return program announced last year. As we look at 2026, we will continue to navigate a dynamic phase of the industry cycle. Trade patterns and record global crop production continue to compress farm margins, with corn, soybean, and wheat prices near breakeven levels.
The farmer Corps model combined with digital and engagement.
24/7 online. Parts access
Machine configuration tools.
Speaker #3: Part of our $1 billion capital return business is reflected in 250 year. As we look at 2026, we will continue to navigate a dynamic phase of the industry cycle.
Eric Hansotia: Strong execution also drove meaningful cost actions in 2025, resulting in a $65 million bottom line savings through continued operating efficiency across the organization, reflecting a real focus on performance improvement. We anticipate a further $40 to 60 million of incremental savings in 2026. Our overall confidence in the business is reflected in $250 million of share repurchases in Q4, part of our $1 billion capital return program announced last year. As we look at 2026, we will continue to navigate a dynamic phase of the industry cycle. Trade patterns and record global crop production continue to compress farm margins, with corn, soybean, and wheat prices near breakeven levels. Despite this environment, our operational discipline positions us well for continued progress.
Eric Hansotia: Strong execution also drove meaningful cost actions in 2025, resulting in a $65 million bottom line savings through continued operating efficiency across the organization, reflecting a real focus on performance improvement. We anticipate a further $40 to 60 million of incremental savings in 2026. Our overall confidence in the business is reflected in $250 million of share repurchases in Q4, part of our $1 billion capital return program announced last year. As we look at 2026, we will continue to navigate a dynamic phase of the industry cycle. Trade patterns and record global crop production continue to compress farm margins, with corn, soybean, and wheat prices near breakeven levels. Despite this environment, our operational discipline positions us well for continued progress.
Servicing, capabilities and industry-leading parts, fill rates continue to support this high margin, growth level and drive, meaningful progress.
Speaker #3: program announced last Trade patterns and record global crop production continue to compress farm margins, with corn, soybean, and wheat prices near break-even levels. Despite this environment, our operational discipline positions us well for continued progress.
Strong execution also drove meaningful cost actions in 2025 resulting in a 65 million. Bottom line savings through continued operating efficiency across the organization.
Eric Hansotia: Despite this environment, our operational discipline positions us well for continued progress. Over time, we continue to expect increased adoption of precision ag technologies as farmers constantly look for ways to profitably increase yields. Entering 2026, current market conditions continue to moderate demand across most equipment categories, yet we remain able to advance our technology strategy and expect long-term positive industry progress.
We anticipate a further $40 to $60 million of incremental savings in 2026.
Speaker #3: Over time, we continue to expect increased adoption of precision ag technologies as farmers constantly look for ways to profitably increase 2026, current market conditions continue to moderate demand across most equipment categories.
Speaker #3: Over time, we continue to expect increased adoption of precision ag technologies as farmers constantly look for ways to profitably increase 2026, current market conditions continue to moderate demand across most yields.
Our overall confidence in the business is reflected in 250 million of share repurchases. In the fourth quarter, part of our 1 billion dollar Capital return program announced last year
As we look at 2026, we will continue to navigate a dynamic phase of the industry cycle.
Speaker #3: Yet, we Entering remain able to advance our technology strategy and expect long-term positive industry progress. Slide 4 details industry unit retail sales by region for 2025.
Trade patterns and record Global Crop Production continued to compress Farm margins with corn soybean and weed prices near Break Even levels.
Eric Hansotia: Slide four details industry unit retail sales by region for 2025. Industry retail sales across all major regions were lower in 2025 as the market adjusted following several years of elevated demand. In North America, industry retail tractor sales were 10% lower compared to 2024, with larger horsepower categories accounting for a greater portion of the change as the year progressed. Combine unit sales were 27% lower year-over-year. Current farm income dynamics, evolving grain export demand, and elevated input costs continue to guide purchasing behavior, particularly for larger equipment heading into 2026. In Western Europe, industry retail tractor sales were 7% lower than 2024, with most major markets experiencing double-digit percentage movements. Looking at 2026, relatively stable farm income levels and an aging equipment fleet are expected to support industry volumes growing modestly above the 2025 levels.
Eric Hansotia: Slide four details industry unit retail sales by region for 2025. Industry retail sales across all major regions were lower in 2025 as the market adjusted following several years of elevated demand. In North America, industry retail tractor sales were 10% lower compared to 2024, with larger horsepower categories accounting for a greater portion of the change as the year progressed. Combine unit sales were 27% lower year-over-year. Current farm income dynamics, evolving grain export demand, and elevated input costs continue to guide purchasing behavior, particularly for larger equipment heading into 2026.
Eric Hansotia: Over time, we continue to expect increased adoption of precision ag technologies as farmers constantly look for ways to profitably increase yields. Entering 2026, current market conditions continue to moderate demand across most equipment categories, yet we remain able to advance our technology strategy and expect long-term positive industry progress. Slide four details industry unit retail sales by region for 2025. Industry retail sales across all major regions were lower in 2025 as the market adjusted following several years of elevated demand. In North America, industry retail tractor sales were 10% lower compared to 2024, with larger horsepower categories accounting for a greater portion of the change as the year progressed. Combine unit sales were 27% lower year-over-year.
Eric Hansotia: Over time, we continue to expect increased adoption of precision ag technologies as farmers constantly look for ways to profitably increase yields. Entering 2026, current market conditions continue to moderate demand across most equipment categories, yet we remain able to advance our technology strategy and expect long-term positive industry progress. Slide four details industry unit retail sales by region for 2025. Industry retail sales across all major regions were lower in 2025 as the market adjusted following several years of elevated demand. In North America, industry retail tractor sales were 10% lower compared to 2024, with larger horsepower categories accounting for a greater portion of the change as the year progressed. Combine unit sales were 27% lower year-over-year.
Despite this environment, our operational discipline positions us well for continued progress.
Speaker #3: Industry retail sales across all major regions were lower in 2025, as as the market adjusted following several years of elevated demand. In North America, industry retail tractor sales were 10% lower compared to 2024, with larger horsepower categories accounting for a greater portion of the change as the year progressed.
Over time we continue to expect increased adoption of precision egg Technologies as Farmers. Constantly look for ways to profitably. Increase yields.
Speaker #3: Combine unit sales were 27% lower year over year. Current farm income dynamics evolving green export demand and elevated input costs continue to guide purchasing behavior.
Entering 2026 current market conditions, continue to moderate demand across most equipment categories. Yet we remain able to advance our technology strategy and expect long-term positive industry progress.
Slide 4, details industry unit, retail sales by region for 2025.
Speaker #3: Particularly for larger equipment heading into 2026. In Western Europe, industry retail tractor sales were 7% lower than 2024, with most major markets experiencing double-digit percentage movements.
Eric Hansotia: In Western Europe, industry retail tractor sales were 7% lower than 2024, with most major markets experiencing double-digit percentage movements. Looking at 2026, relatively stable farm income levels and an aging equipment fleet are expected to support industry volumes growing modestly above the 2025 levels.
Industry, retail sales across all major regions were lower in 2025 as the market, adjusted following several years of elevated demand.
Speaker #3: Looking at 2026, relatively stable farm income levels and an aging equipment fleet are expected to support industry volumes growing modestly above the levels. In Brazil, industry 2025 retail tractor sales were 2% lower than the prior year.
In North America industry, retail tractor sales were 10% lower compared to 2024, with larger horsepower categories accounting for a greater portion of the change as the year progressed.
Eric Hansotia: Current farm income dynamics, evolving grain export demand, and elevated input costs continue to guide purchasing behavior, particularly for larger equipment heading into 2026. In Western Europe, industry retail tractor sales were 7% lower than 2024, with most major markets experiencing double-digit percentage movements. Looking at 2026, relatively stable farm income levels and an aging equipment fleet are expected to support industry volumes growing modestly above the 2025 levels. In Brazil, industry retail tractor sales were 2% lower than the prior year. Growth in smaller and mid-size equipment partially offset the modernization in larger tractor categories. While crop production remains healthy and certain trade developments provided opportunities for farmers, demand for larger equipment has not yet shown renewed growth. As in prior cycles, industry demand is expected to recover over time.
Eric Hansotia: Current farm income dynamics, evolving grain export demand, and elevated input costs continue to guide purchasing behavior, particularly for larger equipment heading into 2026. In Western Europe, industry retail tractor sales were 7% lower than 2024, with most major markets experiencing double-digit percentage movements. Looking at 2026, relatively stable farm income levels and an aging equipment fleet are expected to support industry volumes growing modestly above the 2025 levels. In Brazil, industry retail tractor sales were 2% lower than the prior year. Growth in smaller and mid-size equipment partially offset the modernization in larger tractor categories. While crop production remains healthy and certain trade developments provided opportunities for farmers, demand for larger equipment has not yet shown renewed growth. As in prior cycles, industry demand is expected to recover over time.
Combined unit, sales were 27% lower year-over-year.
Eric Hansotia: In Brazil, industry retail tractor sales were 2% lower than the prior year. Growth in smaller and mid-size equipment partially offset the modernization in larger tractor categories. While crop production remains healthy and certain trade developments provided opportunities for farmers, demand for larger equipment has not yet shown renewed growth. As in prior cycles, industry demand is expected to recover over time. While farmers are currently prioritizing productivity improvements across their existing fleets, the need to increase yields and meet global agricultural demand remains unchanged. Precision agriculture plays a critical role in enabling that productivity, and our award-winning portfolio positions AGCO well to capitalize on that long-term opportunity. AGCO's factory production hours for 2025 are shown on Slide 5. To ensure year-over-year comparability, grain and protein production hours have been excluded from the 2024 baseline.
Eric Hansotia: In Brazil, industry retail tractor sales were 2% lower than the prior year. Growth in smaller and mid-size equipment partially offset the modernization in larger tractor categories. While crop production remains healthy and certain trade developments provided opportunities for farmers, demand for larger equipment has not yet shown renewed growth. As in prior cycles, industry demand is expected to recover over time. While farmers are currently prioritizing productivity improvements across their existing fleets, the need to increase yields and meet global agricultural demand remains unchanged.
Speaker #3: Growth in smaller and mid-size equipment partially offset the modernization in larger tractor categories. While crop production remains healthy, and certain trade developments provided opportunities for farmers, demand for larger equipment has not yet shown renewed growth.
In farm income Dynamics, evolving green, export demand, and Evie elevated input costs. Continue to guide purchasing Behavior, particularly for larger equipment. Heading into 2026.
Speaker #3: As in prior cycles, industry demand is expected to recover over time. While farmers are currently prioritizing productivity improvements across their existing fleets, the need to increase yields and meet global agricultural demand remains unchanged.
In Western Europe industry, retail Tractor Sales were 7% lower than 2024 with most major markets, experiencing double-digit percentage movements looking at 2026, relatively stable farm income levels and an aging equipment. Fleet are expected to support industry. Volumes growing mildly above the 2025 levels.
In Brazil industry, retail Tractor Sales were 2% lower than the prior year.
Speaker #3: Precision agriculture plays a critical role in enabling that productivity, and our award-winning portfolio positions AGCO well to capitalize on that long-term opportunity. AGCO's factory production hours for 2025 are shown on Slide 5.
Eric Hansotia: Precision agriculture plays a critical role in enabling that productivity, and our award-winning portfolio positions AGCO well to capitalize on that long-term opportunity. AGCO's factory production hours for 2025 are shown on Slide 5. To ensure year-over-year comparability, grain and protein production hours have been excluded from the 2024 baseline.
Growth in smaller and mid-size equipment, partially offset the modernization in larger tractor categories.
Speaker #3: To ensure year-over-year comparability, grain and protein production hours have been excluded from the 2024 baseline. Fourth-quarter production hours were modestly higher than 2024, as increases in Europe and South America more than offset the significant production declines in North America.
Eric Hansotia: While farmers are currently prioritizing productivity improvements across their existing fleets, the need to increase yields and meet global agricultural demand remains unchanged. Precision agriculture plays a critical role in enabling that productivity, and our award-winning portfolio positions AGCO well to capitalize on that long-term opportunity. AGCO's factory production hours for 2025 are shown on slide 5. To ensure year-over-year comparability, grain and protein production hours have been excluded from the 2024 baseline. Fourth quarter production hours were modestly higher than 2024, as increases in Europe and South America more than offset the significant production declines in North America. For the full year, total production hours were down 12% versus 2024, with North America accounting for the largest portion of that adjustment, reinforcing our disciplined approach to balancing output and market needs. For 2026-...
Eric Hansotia: While farmers are currently prioritizing productivity improvements across their existing fleets, the need to increase yields and meet global agricultural demand remains unchanged. Precision agriculture plays a critical role in enabling that productivity, and our award-winning portfolio positions AGCO well to capitalize on that long-term opportunity. AGCO's factory production hours for 2025 are shown on slide 5. To ensure year-over-year comparability, grain and protein production hours have been excluded from the 2024 baseline. Fourth quarter production hours were modestly higher than 2024, as increases in Europe and South America more than offset the significant production declines in North America. For the full year, total production hours were down 12% versus 2024, with North America accounting for the largest portion of that adjustment, reinforcing our disciplined approach to balancing output and market needs. For 2026-...
As in Prior Cycles industry, demand is expected to recover over time.
Eric Hansotia: Fourth quarter production hours were modestly higher than 2024, as increases in Europe and South America more than offset the significant production declines in North America. For the full year, total production hours were down 12% versus 2024, with North America accounting for the largest portion of that adjustment, reinforcing our disciplined approach to balancing output and market needs. For 2026, we expect production hours to be broadly flat year-over-year, with a modest lift in the first half, reflecting easier year-over-year comparisons and a modest decline in the second half. This cadence ensures production remains well aligned with retail demand and supports ongoing dealer inventory normalization. Turning to regional inventories, in Europe, we ended 2025 with dealer inventories at approximately four months of supply, aligned with our target levels.
Eric Hansotia: Fourth quarter production hours were modestly higher than 2024, as increases in Europe and South America more than offset the significant production declines in North America. For the full year, total production hours were down 12% versus 2024, with North America accounting for the largest portion of that adjustment, reinforcing our disciplined approach to balancing output and market needs. For 2026, we expect production hours to be broadly flat year-over-year, with a modest lift in the first half, reflecting easier year-over-year comparisons and a modest decline in the second half. This cadence ensures production remains well aligned with retail demand and supports ongoing dealer inventory normalization. Turning to regional inventories, in Europe, we ended 2025 with dealer inventories at approximately four months of supply, aligned with our target levels.
While farmers are currently prioritizing productivity improvements across their existing fleets that need to increase yields and meet Global agricultural, demand remains unchanged.
Speaker #3: For the full year, total production hours were down 12% versus 2024, with North America accounting for the largest portion of that adjustment. Reinforcing our disciplined approach to balancing output and market needs.
Precision, agriculture plays a critical role in enabling that productivity, and our award-winning portfolio positions at go well to capitalize on that long-term opportunity.
Eggos factory production hours for 2025 are shown on slide 5.
Speaker #3: For 2026, we expect production hours to be broadly flat year over year, with a modest lift in the first half reflecting easier year-over-year comparisons and modest decline in the second half.
To ensure year-over-year comparability grain and protein production hours have been excluded from the 2024 Baseline.
Speaker #3: This cadence ensures production remains well aligned with retail demand and supports ongoing dealer inventory normalization. Turning to regional inventories, in Europe we ended 2025 with dealer inventories at approximately four months of supply.
Fourth quarter production hours were modestly higher than 2024, as increases in Europe and South America more than offset the significant production declines in North America.
Speaker #3: Aligned with our target levels. Being at these inventory levels and our largest and most profitable region is an important positive especially with the industry projected to grow in 2026.
Eric Hansotia: Being at these inventory levels in our largest and most profitable region is an important positive, especially with the industry projected to grow in 2026. In South America, dealer inventories increased modestly to about 5 months out to our 3-month target. This reflects adjustments to lower forward sales expectations as industry conditions evolved during Q4. However, year-end dealer inventory units were down modestly from Q3 levels. In North America, we achieved another quarter of sequential progress in inventory management, ending the year at 7 months of supply, compared to 8 months at the end of Q3. While still above our 6-month target, we reduced dealer inventory units by over 9% during the quarter and by more than 30% for the full year....
Eric Hansotia: Being at these inventory levels in our largest and most profitable region is an important positive, especially with the industry projected to grow in 2026. In South America, dealer inventories increased modestly to about 5 months out to our 3-month target. This reflects adjustments to lower forward sales expectations as industry conditions evolved during Q4. However, year-end dealer inventory units were down modestly from Q3 levels. In North America, we achieved another quarter of sequential progress in inventory management, ending the year at 7 months of supply, compared to 8 months at the end of Q3. While still above our 6-month target, we reduced dealer inventory units by over 9% during the quarter and by more than 30% for the full year....
For the full year, total production hours were down 12% versus 2024, with North America accounting for the largest portion of that adjustment. This reinforces our disciplined approach to balancing output and market needs.
Eric Hansotia: We expect production hours to be broadly flat year-over-year, with a modest lift in the first half, reflecting easier year-over-year comparisons and a modest decline in the second half. This cadence ensures production remains well aligned with retail demand and supports ongoing dealer inventory normalization. Turning to regional inventories, in Europe, we ended 2025 with dealer inventories at approximately 4 months of supply, aligned with our target levels. Being at these inventory levels in our largest and most profitable region is an important positive, especially with the industry projected to grow in 2026. In South America, dealer inventories increased modestly to about 5 months, out of 2- or 3-month target. This reflects adjustments to lower forward sales expectations as industry conditions evolved during the Q4. However, year-end dealer inventory units were down modestly from the Q3 levels.
Eric Hansotia: We expect production hours to be broadly flat year-over-year, with a modest lift in the first half, reflecting easier year-over-year comparisons and a modest decline in the second half. This cadence ensures production remains well aligned with retail demand and supports ongoing dealer inventory normalization. Turning to regional inventories, in Europe, we ended 2025 with dealer inventories at approximately 4 months of supply, aligned with our target levels. Being at these inventory levels in our largest and most profitable region is an important positive, especially with the industry projected to grow in 2026. In South America, dealer inventories increased modestly to about 5 months, out of 2- or 3-month target. This reflects adjustments to lower forward sales expectations as industry conditions evolved during the Q4. However, year-end dealer inventory units were down modestly from the Q3 levels.
Speaker #3: In South America, dealer inventories increased modestly to about five months relative to our three-month target. This reflects adjustments to lower forward sales expectations as industry conditions evolved during the fourth quarter.
For 2026. We expect production hours to be broadly flat year-over-year with a modest lift in the first half reflecting easier, year-over-year comparisons, and a modest decline in the second half.
This Cadence ensures production remains well aligned with retail demand and supports ongoing dealer inventory normalization.
Speaker #3: However, year-end dealer inventory units were down modestly from the third quarter levels. In North America, we achieved another quarter of sequential progress in inventory management, ending the year at seven months of supply compared to eight months at the end of the third quarter.
Turning to Regional inventories in Europe, we ended 2025 with dealer inventories that approximately 4 months of Supply aligned with our Target levels.
Being at these inventory levels, and with our largest and most profitable region, is an important positive.
Especially with the industry projected to grow in 2026.
Speaker #3: six-month target, we reduced dealer While still above our inventory units by over 9% during the quarter and by more than 30% for the full year.
In South America, dealer inventories, increased modestly to about 5 months, relative to our 3-month Target.
Speaker #3: We have significantly strengthened the quality of our channel inventory heading into 2026, and we will continue to adjust production to better align dealer inventory levels.
Eric Hansotia: We have significantly strengthened the quality of our channel inventory heading into 2026, and we will continue to adjust production to better align dealer inventory levels. Slide 6 summarizes how our strategy continues to deliver even in a muted demand environment. Over the past several years, we've reshaped AGCO into a more resilient, higher-performing company, one that generates stronger margins at the trough and greater earnings power through the cycle. The results we delivered in 2025 are clear proof of that. Our three growth levers, high-margin products, technology-driven differentiation, and a world-class aftermarket business, continue to perform well this year. Each of them contributed meaningfully despite the softer industry backdrop, demonstrating that our model scales regardless of where we are in the cycle.
Eric Hansotia: We have significantly strengthened the quality of our channel inventory heading into 2026, and we will continue to adjust production to better align dealer inventory levels. Slide 6 summarizes how our strategy continues to deliver even in a muted demand environment. Over the past several years, we've reshaped AGCO into a more resilient, higher-performing company, one that generates stronger margins at the trough and greater earnings power through the cycle. The results we delivered in 2025 are clear proof of that. Our three growth levers, high-margin products, technology-driven differentiation, and a world-class aftermarket business, continue to perform well this year. Each of them contributed meaningfully despite the softer industry backdrop, demonstrating that our model scales regardless of where we are in the cycle.
This reflects adjustments to lower forward sales expectations as industry conditions evolved during the fourth quarter.
Eric Hansotia: In North America, we achieved another quarter of sequential progress in inventory management, ending the year at 7 months of supply compared to 8 months at the end of the third quarter. While still above our 6-month target, we reduced dealer inventory units by over 9% during the quarter and by more than 30% for the full year. We have significantly strengthened the quality of our channel inventory heading into 2026, and we will continue to adjust production to better align dealer inventory levels. Slide 6 summarizes how our strategy continues to deliver even in a muted demand environment. Over the past several years, we've reshaped AGCO into a more resilient, higher-performing company, one that generates stronger margins at the trough and greater earnings power through the cycle. The results we delivered in 2025 are clear proof of that.
Eric Hansotia: In North America, we achieved another quarter of sequential progress in inventory management, ending the year at 7 months of supply compared to 8 months at the end of the third quarter. While still above our 6-month target, we reduced dealer inventory units by over 9% during the quarter and by more than 30% for the full year. We have significantly strengthened the quality of our channel inventory heading into 2026, and we will continue to adjust production to better align dealer inventory levels. Slide 6 summarizes how our strategy continues to deliver even in a muted demand environment. Over the past several years, we've reshaped AGCO into a more resilient, higher-performing company, one that generates stronger margins at the trough and greater earnings power through the cycle. The results we delivered in 2025 are clear proof of that.
However, year end dealer inventory. Units were down modestly from the third quarter levels.
Speaker #3: Slide 6 summarizes how our strategy continues to deliver even in a muted demand environment. Over the past several years, we've reshaped AGCO into a more resilient, higher-performing company.
In North America, we achieved another quarter of sequential progress in Inventory management.
Ending the year at 7 months of Supply compared to 8 months at the end of the third quarter.
Speaker #3: One that generates stronger margins at the trough and greater earnings power through the cycle. The results we delivered in 2025 are clear proof of that.
While still above our 6-month Target, we reduced dealer inventory units by over 9% during the quarter and by more than 30% for the full year.
Speaker #3: Our three growth levers: high margin products, technology-driven differentiation, and a world-class aftermarket business continue to perform well this year. Each of them contributed meaningfully despite the softer industry backdrop, demonstrating that our model scales regardless of where we are in the cycle.
We have significantly strengthened the quality of our channel inventory heading into 2026, and we will continue to adjust production to better align dealer inventory levels.
Slide 6 summarizes how our strategy continues to deliver, even in a muted demand environment.
Speaker #3: This framework is also what positions us and gives us confidence to consistently deliver mid-cycle adjusted operating margins in the 14 to 15% range. It's a structurally different AGCO.
Eric Hansotia: This framework is also what positions us and gives us confidence to consistently deliver mid-cycle adjusted operating margins in the 14 to 15% range. It's a structurally different AGCO, more focused on innovation, more disciplined on costs and investments, and increasingly driven by high-value revenue streams. Finally, the strength of this model supports 75 to 100% free cash flow conversion. That financial capacity allows us to keep investing in innovation, advancing our go-to-market transformation, and returning capital to shareholders, all while maintaining disciplined operational execution. Taken together, these levers explain why AGCO is executing at a higher level today than ever before at this point in the cycle, and why we're well-positioned to outperform as the cycle normalizes. Slide 7 highlights key takeaways from our premier precision ag event, PTX's 2026 Winter Conference.
Eric Hansotia: This framework is also what positions us and gives us confidence to consistently deliver mid-cycle adjusted operating margins in the 14 to 15% range. It's a structurally different AGCO, more focused on innovation, more disciplined on costs and investments, and increasingly driven by high-value revenue streams. Finally, the strength of this model supports 75 to 100% free cash flow conversion. That financial capacity allows us to keep investing in innovation, advancing our go-to-market transformation, and returning capital to shareholders, all while maintaining disciplined operational execution. Taken together, these levers explain why AGCO is executing at a higher level today than ever before at this point in the cycle, and why we're well-positioned to outperform as the cycle normalizes. Slide 7 highlights key takeaways from our premier precision ag event, PTX's 2026 Winter Conference.
Over the past several years, we've reshaped ago into a more resilient higher performing company 1. That generates stronger margins at the trough and greater earnings power through the cycle.
Eric Hansotia: Our three growth levers, high-margin products, technology-driven differentiation, and a world-class aftermarket business, continued to perform well this year. Each of them contributed meaningfully despite the softer industry backdrop, demonstrating that our model scales regardless of where we are in the cycle. This framework is also what positions us and gives us confidence to consistently deliver mid-cycle adjusted operating margins in the 14 to 15% range. This is structurally different AGCO, more focused on innovation, more disciplined on costs and investments, and increasingly driven by high-value revenue streams. Finally, the strength of this model supports 75 to 100% free cash flow conversion. That financial capacity allows us to keep investing in innovation, advancing our go-to-market transformation, and returning capital to shareholders, all while maintaining disciplined operational execution.
Eric Hansotia: Our three growth levers, high-margin products, technology-driven differentiation, and a world-class aftermarket business, continued to perform well this year. Each of them contributed meaningfully despite the softer industry backdrop, demonstrating that our model scales regardless of where we are in the cycle. This framework is also what positions us and gives us confidence to consistently deliver mid-cycle adjusted operating margins in the 14 to 15% range. This is structurally different AGCO, more focused on innovation, more disciplined on costs and investments, and increasingly driven by high-value revenue streams. Finally, the strength of this model supports 75 to 100% free cash flow conversion. That financial capacity allows us to keep investing in innovation, advancing our go-to-market transformation, and returning capital to shareholders, all while maintaining disciplined operational execution.
The results we delivered in 2025 are clear proof of that.
Speaker #3: More focused on innovation, more disciplined on costs and investments, and increasingly driven by high-value revenue streams. Finally, the strength of this model supports 75 to 100% free cash flow conversion.
Our 3 growth, levers high margin products, technology-driven differentiation, and a world-class aftermarket business continues to perform well this year.
Speaker #3: That financial capacity allows us to keep investing in innovation, advancing our go-to-market transformation, and returning capital to shareholders. All while maintaining disciplined operational execution.
Each of them, contributed meaningfully despite the softer industry backdrop demonstrating that our model scales regardless of where we are in the cycle.
Speaker #3: Taken together, these levers explain why AGCO is executing at a higher level today than ever before at this point in the cycle. And why we're well positioned to outperform as the cycle normalizes.
This framework is also what positions us and gives us confidence to consistently deliver mid-cycle adjusted operating margins in the 14–15% range. It's a structurally different AGCO.
More focused on Innovation more disciplined on costs and Investments and increasingly driven by high-value revenue streams.
Speaker #3: Slide 7 highlights key takeaways from our premier precision ag event: PTX's 2026 winter conference. It's an event that brings together thousands of farmers and dealers on site and virtually.
Finally, the strength of this model supports 75% to 100% free cash flow conversion.
Eric Hansotia: It's an event that brings together thousands of farmers and dealers on-site and virtually, and this year was the first showing of the full breadth and depth of the PTx portfolio. More than 4,000 farmers, most under enormous pressures currently, focused on learning practical solutions and strategies for technologies that can be implemented immediately to improve productivity, efficiency, and returns, a high-value opportunity in today's market environment. As you would expect, the feedback on the event and new product introductions was exceptional, as farmers could clearly see how we were innovating to make them more productive and more profitable. This year, three technologies delivered notable impact. First, SymphonyVision. Our vision-based spray technology uses intelligent cameras to continuously adjust application rates based on weed severity, delivering a 60% chemical and cost savings.
Eric Hansotia: It's an event that brings together thousands of farmers and dealers on-site and virtually, and this year was the first showing of the full breadth and depth of the PTx portfolio. More than 4,000 farmers, most under enormous pressures currently, focused on learning practical solutions and strategies for technologies that can be implemented immediately to improve productivity, efficiency, and returns, a high-value opportunity in today's market environment. As you would expect, the feedback on the event and new product introductions was exceptional, as farmers could clearly see how we were innovating to make them more productive and more profitable. This year, three technologies delivered notable impact. First, SymphonyVision. Our vision-based spray technology uses intelligent cameras to continuously adjust application rates based on weed severity, delivering a 60% chemical and cost savings.
Speaker #3: And this year was the first showing of the full breadth and depth of the PTX portfolio. More than 4,000 farmers—most under enormous pressures solutions and strategies for currently—focused on learning practical technologies that can be implemented immediately to improve productivity, efficiency, and returns.
Eric Hansotia: Taken together, these levers explain why AGCO is executing at a higher level today than ever before at this point in the cycle, and why we're well positioned to outperform as the cycle normalizes. Slide 7 highlights key takeaways from our premier precision ag event, PTx's 2026 Winter Conference. It's an event that brings together thousands of farmers and dealers on-site and virtually, and this year was the first showing of the full breadth and depth of the PTx portfolio. More than 4,000 farmers, most under enormous pressures currently, focused on learning practical solutions and strategies for technologies that can be implemented immediately to improve productivity, efficiency, and returns, a high-value opportunity in today's market environment.
Eric Hansotia: Taken together, these levers explain why AGCO is executing at a higher level today than ever before at this point in the cycle, and why we're well positioned to outperform as the cycle normalizes. Slide 7 highlights key takeaways from our premier precision ag event, PTx's 2026 Winter Conference. It's an event that brings together thousands of farmers and dealers on-site and virtually, and this year was the first showing of the full breadth and depth of the PTx portfolio. More than 4,000 farmers, most under enormous pressures currently, focused on learning practical solutions and strategies for technologies that can be implemented immediately to improve productivity, efficiency, and returns, a high-value opportunity in today's market environment.
That Financial capacity allows us to keep investing in Innovation advancing, our go to market transformation and returning Capital to shareholders. All while maintaining disciplined operational execution.
Taken together these levers. Explain why Aiko is executing at a higher level today than ever before. At this point in the cycle. And why we're well positioned to outperform as the cycle normalizes.
Speaker #3: A high-value opportunity in today's market environment. As you would expect, the feedback on the event and new product introductions was exceptional. As farmers could clearly see how we were innovating to make them more productive and more profitable.
slide 7 highlights key takeaways from our Premier Precision, a event PTX is 2026 winter conference
It's an event that brings together. Thousands of farmers, and dealers on site and virtually. And this year, was the first showing of the full breadth and depth of the PTX portfolio.
Speaker #3: This year, three technologies delivered notable impact. First, Symphony Vision, our vision-based spray technology uses intelligent cameras to continuously adjust application rates based on weed severity, delivering a 60% chemical and cost savings.
More than 4,000 farmers are under enormous pressures, currently focused on learning practical solutions and strategies.
Eric Hansotia: As you would expect, the feedback on the event and new product introductions was exceptional, as farmers could clearly see how we were innovating to make them more productive and more profitable. This year, three technologies delivered notable impact. First, SymphonyVision. Our vision-based spray technology uses intelligent cameras to continuously adjust application rates based on weed severity, delivering a 60% chemical and cost savings. This year, we introduced SymphonyVision Duo, a dual nozzle system that allows farmers to spot-spray contact herbicides while simultaneously variable rate applying residuals, fertilizers, or fungicides in a single pass, supporting better input management and higher field efficiency. This is a one-of-a-kind injection system that mixes the solutions, not only delivers meaningful cost savings from reduced chemical usage, but also delivers significantly higher uptime for farmers than other systems just can't offer.
Eric Hansotia: As you would expect, the feedback on the event and new product introductions was exceptional, as farmers could clearly see how we were innovating to make them more productive and more profitable. This year, three technologies delivered notable impact. First, SymphonyVision. Our vision-based spray technology uses intelligent cameras to continuously adjust application rates based on weed severity, delivering a 60% chemical and cost savings. This year, we introduced SymphonyVision Duo, a dual nozzle system that allows farmers to spot-spray contact herbicides while simultaneously variable rate applying residuals, fertilizers, or fungicides in a single pass, supporting better input management and higher field efficiency. This is a one-of-a-kind injection system that mixes the solutions, not only delivers meaningful cost savings from reduced chemical usage, but also delivers significantly higher uptime for farmers than other systems just can't offer.
Speaker #3: This year, we introduced Symphony Vision Duo, a dual nozzle system that allows farmers to spot spray contact herbicides while simultaneously variable-rate applying residuals. Fertilizers, or fungicides, in a single pass.
For technologies that can be implemented immediately to improve productivity, efficiency and returns a high-value opportunity in today's market environment.
Eric Hansotia: This year, we introduced SymphonyVision Dual, a dual-nozzle system that allows farmers to spot-spray contact herbicides while simultaneously variable rate applying residuals, fertilizers, or fungicides in a single pass, supporting better input management and higher field efficiency. This is a one-of-a-kind injection system that mixes the solutions not only delivers meaningful cost savings from reduced chemical usage, but also delivers significantly higher uptime for farmers than other systems just can't offer. As with our broader Precision Planting portfolio, farmers own the technology with no per-acre recurring fees, reinforcing a strong value proposition. Second is AeroTube, a breakthrough seed delivery system designed to improve plant orientation at placement. Conventional systems drop seeds randomly into the furrow, which can lead to uneven emergence and leaf alignment.
Eric Hansotia: This year, we introduced SymphonyVision Dual, a dual-nozzle system that allows farmers to spot-spray contact herbicides while simultaneously variable rate applying residuals, fertilizers, or fungicides in a single pass, supporting better input management and higher field efficiency. This is a one-of-a-kind injection system that mixes the solutions not only delivers meaningful cost savings from reduced chemical usage, but also delivers significantly higher uptime for farmers than other systems just can't offer. As with our broader Precision Planting portfolio, farmers own the technology with no per-acre recurring fees, reinforcing a strong value proposition. Second is AeroTube, a breakthrough seed delivery system designed to improve plant orientation at placement. Conventional systems drop seeds randomly into the furrow, which can lead to uneven emergence and leaf alignment.
Introductions was exceptional as Farmers. Could clearly see how we're innovating to make them more productive and more profitable.
Speaker #3: Supporting better input management and higher field efficiency. This is a one-of-a-kind injection system that mixes the solutions not only delivers meaningful cost savings from reduced chemical usage, but also delivers significantly higher uptime can't for farmers than other systems just offer.
This year 3 Technologies, delivered notable impact.
First Symphony Vision, our vision based spray technology uses, intelligent cameras to continuously. Adjust application rates. Based on weed severity delivering a 60% chemical and cost savings.
Speaker #3: As with our broader precision planting portfolio, farmers own the technology. With no per-acre recurring fees, reinforcing a strong value proposition. Second is AeroTube, a breakthrough seed delivery system designed to improve plant orientation at systems drop seeds randomly into the furrow, which can lead to uneven emergence and leaf alignment.
This year, we introduced Symphony Vision Duo, a dual nozzle system that allows farmers to spot spray contact herbicides.
while simultaneously variable-rate applying residuals,
Fertilizers or fungicides in a single pass supporting better input management and higher field efficiency.
Speaker #3: AeroTube places seeds in an optimal orientation while controlling depth, spacing, and singulation enabling each plant to capture more sunlight and reach its yield potential.
Eric Hansotia: AeroTube places seeds in an optimal orientation while controlling depth, spacing, and singulation, enabling each plant to capture more sunlight and reach its yield potential, a clear productivity advantage. When you think about the significant yield decline for plants that emerge just 48 hours later than the others, the opportunity is huge for our farmers. Third is FarmEngage. Launched in 2025, our farmer-facing digital platforms integrate machine connectivity, agronomic insights, and task management across brands and platforms. FarmEngage brings together functionality from AGCO Connect and FendtONE, and will be included in all model year 2026 Fendt and Massey Ferguson machines sold in North America, serving as a central hub for day-to-day farm operations.
Eric Hansotia: AeroTube places seeds in an optimal orientation while controlling depth, spacing, and singulation, enabling each plant to capture more sunlight and reach its yield potential, a clear productivity advantage. When you think about the significant yield decline for plants that emerge just 48 hours later than the others, the opportunity is huge for our farmers. Third is FarmEngage. Launched in 2025, our farmer-facing digital platforms integrate machine connectivity, agronomic insights, and task management across brands and platforms. FarmEngage brings together functionality from AGCO Connect and FendtONE, and will be included in all model year 2026 Fendt and Massey Ferguson machines sold in North America, serving as a central hub for day-to-day farm operations.
Eric Hansotia: As with our broader Precision Planting portfolio, farmers own the technology with no per acre recurring fees, reinforcing a strong value proposition. Second is ArrowTube, a breakthrough seed delivery system designed to improve plant orientation at placement. Conventional systems drop seeds randomly into the furrow, which can lead to uneven emergence and leaf alignment. ArrowTube places seeds in an optimal orientation while controlling depth, spacing, and singulation, enabling each plant to capture more sunlight and reach its yield potential, a clear productivity advantage. When you think about the significant yield decline for plants that emerge just 48 hours later than the others, the opportunity is huge for our farmers. Third is FarmEngage. Launched in 2025, our farmer-facing digital platforms integrate machine connectivity, agronomic insights, and task management across brands and platforms.
Eric Hansotia: As with our broader Precision Planting portfolio, farmers own the technology with no per acre recurring fees, reinforcing a strong value proposition. Second is ArrowTube, a breakthrough seed delivery system designed to improve plant orientation at placement. Conventional systems drop seeds randomly into the furrow, which can lead to uneven emergence and leaf alignment. ArrowTube places seeds in an optimal orientation while controlling depth, spacing, and singulation, enabling each plant to capture more sunlight and reach its yield potential, a clear productivity advantage. When you think about the significant yield decline for plants that emerge just 48 hours later than the others, the opportunity is huge for our farmers. Third is FarmEngage. Launched in 2025, our farmer-facing digital platforms integrate machine connectivity, agronomic insights, and task management across brands and platforms.
This is a one-of-a-kind injection system that mixes the solutions, not only delivers meaningful cost savings from reduced chemical usage but also delivers significantly higher uptime for farmers than other systems just can't offer.
Speaker #3: A clear productivity advantage. When you think about the significant yield decline for plants that emerged just 48 hours later than the others, the opportunity is huge for our farmers.
as with our broader Precision planting portfolio Farmers, own the technology with no per acre, recurring fees, reinforcing a strong value proposition
Second is 0Tube, a breakthrough seed delivery system designed to improve plant orientation at placement.
Speaker #3: Third is FarmEngage, launched in 2025. Our farmer-facing digital platforms integrate machine connectivity, agronomic insights, and task management across brands and platforms. FarmEngage brings together functionality from AGCO Connect and Fendt One and will be included on all model year 2026 Fendt and Massey Ferguson machines sold in North America.
Conventional systems drop seeds, randomly into the referral, which can lead to uneven, emergence and leaf alignment.
Spacing and singulation enabling each plant to capture more sunlight and reach its yield potential, a clear productivity advantage.
Speaker #3: Serving as a central hub for day-to-day farm operations. Each farmer to understand the issue then deliver practical, scalable solutions that address real, on-farm needs and help farmers operate with greater productivity, efficiency, and profitability.
When you think about the significant yield decline for plants that emerge, just 48 hour, 48 hours later than the others. The opportunity is huge for our farmers.
Eric Hansotia: Each of these innovations reflect how we listen to the farmer to understand the issue, then deliver practical, scalable solutions that address real on-farm needs and help farmers operate with greater productivity, efficiency, and profitability. I couldn't be more excited about the portfolio of award-winning products we have for our farmers. As I look forward to further introductions later this year, I'm even more confident that we will continue to be the most farmer-focused company in the industry, offering industry-leading smart farming solutions. With that, I'll turn the call over to Damon to cover the financials in more detail.
Eric Hansotia: Each of these innovations reflect how we listen to the farmer to understand the issue, then deliver practical, scalable solutions that address real on-farm needs and help farmers operate with greater productivity, efficiency, and profitability. I couldn't be more excited about the portfolio of award-winning products we have for our farmers. As I look forward to further introductions later this year, I'm even more confident that we will continue to be the most farmer-focused company in the industry, offering industry-leading smart farming solutions. With that, I'll turn the call over to Damon to cover the financials in more detail.
Eric Hansotia: FarmEngage brings together functionality from AGCO Connect and FendtONE, and will be included in all model year 2026 Fendt and Massey Ferguson machines sold in North America, serving as a central hub for day-to-day farm operations. Each of these innovations reflect how we listen to the farmer to understand the issue, then deliver practical, scalable solutions that address real on-farm needs and help farmers operate with greater productivity, efficiency, and profitability. I couldn't be more excited about the portfolio of award-winning products we have for our farmers, and as I look forward to further introductions later this year, I'm even more confident that we will continue to be the most farmer-focused company in the industry, offering industry-leading smart farming solutions. With that, I'll turn the call over to Damon to cover the financials in more detail.
Eric Hansotia: FarmEngage brings together functionality from AGCO Connect and FendtONE, and will be included in all model year 2026 Fendt and Massey Ferguson machines sold in North America, serving as a central hub for day-to-day farm operations. Each of these innovations reflect how we listen to the farmer to understand the issue, then deliver practical, scalable solutions that address real on-farm needs and help farmers operate with greater productivity, efficiency, and profitability. I couldn't be more excited about the portfolio of award-winning products we have for our farmers, and as I look forward to further introductions later this year, I'm even more confident that we will continue to be the most farmer-focused company in the industry, offering industry-leading smart farming solutions. With that, I'll turn the call over to Damon to cover the financials in more detail.
Third is Farm Engage, launched in 2025. Our farmer-facing digital platforms integrate machine connectivity, agronomic insights, and task management across brands and platforms.
Speaker #3: I couldn't be more excited about the portfolio of award-winning products we have for our farmers and as I look forward to further introductions later this year, I'm even more confident that we will continue to be the most farmer-focused company in the industry offering industry-leading, smart farming solutions.
Farm engage brings together functionality from the ago, connect and fendt 1, and it will be included on all Modi year 2026 spent
And Massie Ferguson machine sold in North America.
Serving as a central hub for day-to-day farm operations.
Speaker #3: With that, I'll turn the call over to Damon to cover the financials in more detail.
Speaker #2: Thank you, Eric. And good morning, everyone. Slide 8 provides an overview of regional net sales performance for the fourth quarter and full year. Net sales for the fourth quarter were 3% lower year over year excluding the favorable impact of currency translation.
Damon Audia: Thank you, Eric, and good morning, everyone. Slide 8 provides an overview of regional net sales performance for the fourth quarter and full year. Net sales for the fourth quarter were 3% lower year-over-year, excluding the favorable impact of currency translation. For comparability, we also excluded the $75 million of sales associated with the divested grain and protein business in the fourth quarter of 2024. Breaking fourth quarter net sales down by region. Europe, Middle East net sales were 1% lower than the same period in 2024, excluding currency impacts. Lower sales across many Western European markets were partially offset by growth in Germany and the UK. Lower sales in tractors were partially offset by better performance in hay tools. South America net sales were 9% lower, excluding currency translation.
Damon Audia: Thank you, Eric, and good morning, everyone. Slide 8 provides an overview of regional net sales performance for the fourth quarter and full year. Net sales for the fourth quarter were 3% lower year-over-year, excluding the favorable impact of currency translation. For comparability, we also excluded the $75 million of sales associated with the divested grain and protein business in the fourth quarter of 2024. Breaking fourth quarter net sales down by region. Europe, Middle East net sales were 1% lower than the same period in 2024, excluding currency impacts. Lower sales across many Western European markets were partially offset by growth in Germany and the UK. Lower sales in tractors were partially offset by better performance in hay tools. South America net sales were 9% lower, excluding currency translation.
Each of these Innovations reflect how we listen to the farmer to understand the issue, then deliver practical scalable solutions, that address real on-farm needs and help farmers operate with greater productivity, efficiency and profitability.
Speaker #2: For comparability, we also excluded the $75 million of sales associated with the divested grain and protein business in the fourth quarter Breaking fourth quarter net sales down by region, Europe/Middle East net sales were 1% lower than the same period in 2024 excluding currency impacts.
I couldn't be more excited about the portfolio of award-winning products. We have for our farmers and as I look forward to further introductions later this year, I'm even more confident that we will continue to be
Damon Audia: Thank you, Eric, and good morning, everyone. Slide 8 provides an overview of regional net sales performance for the fourth quarter and full year. Net sales for the fourth quarter were 3% lower year-over-year, excluding the favorable impact of currency translation. For comparability, we also excluded the $75 million of sales associated with the divested grain and protein business in the fourth quarter of 2024. Breaking fourth quarter net sales down by region. Europe, Middle East net sales were 1% lower than the same period in 2024, excluding currency impacts. Lower sales across many Western European markets were partially offset by growth in Germany and the UK. Lower sales in tractors were partially offset by better performance in hay tools. South America net sales were 9% lower, excluding currency translation.
Damon Audia: Thank you, Eric, and good morning, everyone. Slide 8 provides an overview of regional net sales performance for the fourth quarter and full year. Net sales for the fourth quarter were 3% lower year-over-year, excluding the favorable impact of currency translation. For comparability, we also excluded the $75 million of sales associated with the divested grain and protein business in the fourth quarter of 2024. Breaking fourth quarter net sales down by region. Europe, Middle East net sales were 1% lower than the same period in 2024, excluding currency impacts. Lower sales across many Western European markets were partially offset by growth in Germany and the UK. Lower sales in tractors were partially offset by better performance in hay tools. South America net sales were 9% lower, excluding currency translation.
The most farmer-focused company in the industry, offering industry-leading, smart farming solutions. With that, I'll turn the call over to Damon to cover the financials in more detail.
Speaker #2: Lower sales across many Western European markets were partially offset by growth in Germany and the UK. Lower sales in tractors were partially offset by better lower excluding currency performance in hay translation.
Thank you, Eric, and good morning, everyone. Slide 8 provides an overview of regional net sales performance for the fourth quarter and full year.
And that sales in the fourth quarter were down 3% year-over-year, excluding the favorable impact of currency translation.
Speaker #2: Results reflected moderate industry demand with reduced sales of tractors and implements offset in combines. North American net sales were down 9% excluding currency translation.
Damon Audia: Results reflected moderate industry demand, with reduced sales of tractors and implements offset in part by growth in combines. North America net sales were down 9%, excluding currency translation. Results reflected moderated industry demand and our deliberate production discipline to support dealer inventory normalization. Lower sales of sprayers and mid-range tractors accounted for most of the year-over-year change. Asia Pacific, Africa, net sales were up 3%, excluding currency translation impacts. Higher sales in Australia were partially offset by lower sales across several Asian markets. Finally, consolidated replacement parts sales were $440 million in Q4, up 5% year-over-year on a reported basis, and down 1% excluding favorable currency translation.
Damon Audia: Results reflected moderate industry demand, with reduced sales of tractors and implements offset in part by growth in combines. North America net sales were down 9%, excluding currency translation. Results reflected moderated industry demand and our deliberate production discipline to support dealer inventory normalization. Lower sales of sprayers and mid-range tractors accounted for most of the year-over-year change. Asia Pacific, Africa, net sales were up 3%, excluding currency translation impacts. Higher sales in Australia were partially offset by lower sales across several Asian markets. Finally, consolidated replacement parts sales were $440 million in Q4, up 5% year-over-year on a reported basis, and down 1% excluding favorable currency translation.
For comparability. We also excluded the 75 million of sales associated with the divested grain and protein business in the fourth quarter of 2024. Breaking fourth quarter, net sales down by region.
Speaker #2: Results reflected moderated industry demand and are deliberate production discipline to support dealer inventory normalization. Lower sales of sprayers and mid-range tractors accounted for most of the year-over-year change.
Europe Middle East, net sales were 1% lower than the same period in 2024. Excluding currency impacts.
Lower sales across many Western European markets were partially offset by growth in Germany and the UK.
Lower sales in tractors were partially offset by better performance in hay tools.
Speaker #2: Asia/Pacific Africa net sales were up 3% excluding currency translation impacts. Higher sales in Australia were partially offset by lower sales across several Asian markets.
Damon Audia: Results reflected moderate industry demand, with reduced sales of tractors and implements offset in part by growth in combines. North American net sales were down 9%, excluding currency translation. Results reflected moderated industry demand and our deliberate production discipline to support dealer inventory normalization. Lower sales of sprayers and mid-range tractors accounted for most of the year-over-year change. Asia, Pacific, Africa net sales were up 3%, excluding currency translation impacts. Higher sales in Australia were partially offset by lower sales across several Asian markets. Finally, consolidated replacement parts sales were $440 million in Q4, up 5% year-over-year on a reported basis, and down 1% excluding favorable currency translation.
Damon Audia: Results reflected moderate industry demand, with reduced sales of tractors and implements offset in part by growth in combines. North American net sales were down 9%, excluding currency translation. Results reflected moderated industry demand and our deliberate production discipline to support dealer inventory normalization. Lower sales of sprayers and mid-range tractors accounted for most of the year-over-year change. Asia, Pacific, Africa net sales were up 3%, excluding currency translation impacts. Higher sales in Australia were partially offset by lower sales across several Asian markets. Finally, consolidated replacement parts sales were $440 million in Q4, up 5% year-over-year on a reported basis, and down 1% excluding favorable currency translation.
South American, net sales were 9% lower, excluding currency translation results. Reflected moderate industry, Demand with reduced sales of tractors and implements offset in part by growth in combines
Speaker #2: Finally, consolidated replacement parts sales were 440 million in the fourth quarter, up 5% year-over-year on a reported basis and down 1% excluding favorable currency translation.
North American, net sales were down 9% excluding currency translation result. Reflected moderated, industry demand. And our deliberate production discipline to support dealer inventory, normalization,
Speaker #2: For the full year, parts revenue was 1.9 billion, reflecting 2% growth on a reported basis and flat growth excluding favorable currency value and consistent effects underscoring the strong driver.
Damon Audia: For the full year, parts revenue was $1.9 billion, reflecting 2% growth on a reported basis and flat growth excluding favorable currency effects, underscoring the strong value and consistent progress of this important growth driver. Turning to Slide 9. The fourth quarter adjusted operating margin was 10.1%, up 20 basis points from the prior year. The improvement reflects excellent and resilient performance in Europe, Middle East, again this quarter, and consistent discipline across other parts of our business. Margin performance continued to be shaped by factory under-absorption and discounting across the industry. Despite that environment, higher sales and production volumes in Europe and our continued cost discipline supported better total company-adjusted operating margins during the quarter. By region, Europe, Middle East, income from operations increased by $57 million compared to the fourth quarter of 2024, with operating margins approaching 17%.
Damon Audia: For the full year, parts revenue was $1.9 billion, reflecting 2% growth on a reported basis and flat growth excluding favorable currency effects, underscoring the strong value and consistent progress of this important growth driver. Turning to Slide 9. The fourth quarter adjusted operating margin was 10.1%, up 20 basis points from the prior year. The improvement reflects excellent and resilient performance in Europe, Middle East, again this quarter, and consistent discipline across other parts of our business. Margin performance continued to be shaped by factory under-absorption and discounting across the industry.
Speaker #2: Turning to Slide 9, the fourth quarter adjusted operating margin was 10.1%, up 20 basis points from the prior year. The improvement reflects excellent and resilient performance in Europe/Middle East again this quarter and consistent discipline across other parts of our business.
Damon Audia: For the full year, parts revenue was $1.9 billion, reflecting 2% growth on a reported basis and flat growth excluding favorable currency effects, underscoring the strong value and consistent progress of this important growth driver. Turning to Slide 9. The fourth quarter adjusted operating margin was 10.1%, up 20 basis points from the prior year. The improvement reflects excellent and resilient performance in Europe, Middle East, again this quarter, and consistent discipline across other parts of our business. Margin performance continued to be shaped by factory under absorption and discounting across the industry. Despite that environment, higher sales and production volumes in Europe and our continued cost discipline supported better total company-adjusted operating margins during the quarter. By region, Europe, Middle East, income from operations increased by $57 million compared to the fourth quarter of 2024, with operating margins approaching 17%.
Damon Audia: For the full year, parts revenue was $1.9 billion, reflecting 2% growth on a reported basis and flat growth excluding favorable currency effects, underscoring the strong value and consistent progress of this important growth driver. Turning to Slide 9. The fourth quarter adjusted operating margin was 10.1%, up 20 basis points from the prior year. The improvement reflects excellent and resilient performance in Europe, Middle East, again this quarter, and consistent discipline across other parts of our business. Margin performance continued to be shaped by factory under absorption and discounting across the industry. Despite that environment, higher sales and production volumes in Europe and our continued cost discipline supported better total company-adjusted operating margins during the quarter. By region, Europe, Middle East, income from operations increased by $57 million compared to the fourth quarter of 2024, with operating margins approaching 17%.
Finally, consolidated replacement part sales were $440 million in the fourth quarter, up 5% year-over-year on a reported basis and down 1% excluding favorable currency translation.
Speaker #2: Margin performance continued to be shaped by factory underabsorption and discounting across the industry. Despite that environment, higher sales and production volumes in Europe and our continued cost discipline supported better total quarter.
Damon Audia: Despite that environment, higher sales and production volumes in Europe and our continued cost discipline supported better total company-adjusted operating margins during the quarter. By region, Europe, Middle East, income from operations increased by $57 million compared to the fourth quarter of 2024, with operating margins approaching 17%.
On a reported basis and flat growth, excluding favorable currency effects, underscoring, the strong value and consistent progress of this important growth driver.
Turning the slide 9.
Speaker #2: By from operations increased by region, Europe/Middle East income 57 million dollars compared to the fourth quarter of 2024 without operating margins approaching and a favorable sales company-adjusted operating margins during the mix.
Damon Audia: Results were driven by effective pricing execution and a favorable sales mix. North America income from operations decreased by $33 million year-over-year, and operating margins remained below breakeven. The results reflect lower sales volume and factory under-absorption associated with re-reduced production levels of over 50%, aligned with dealer inventory normalization, representing disciplined management of this business. South America operating income was $21 million lower than the prior year, with margins nearing 3%, reflecting lower sales and higher engineering expense. Asia Pacific Africa delivered relatively flat operating income, with operating margins near 8%, supported by effective cost management and lower SG&A expenses. Slide 10 shows our full-year free cash flow for 2024 and 2025. As a reminder, free cash flow represents cash provided by or used in operating activities, less purchases of property, plant, and equipment.
Damon Audia: Results were driven by effective pricing execution and a favorable sales mix. North America income from operations decreased by $33 million year-over-year, and operating margins remained below breakeven. The results reflect lower sales volume and factory under-absorption associated with re-reduced production levels of over 50%, aligned with dealer inventory normalization, representing disciplined management of this business. South America operating income was $21 million lower than the prior year, with margins nearing 3%, reflecting lower sales and higher engineering expense. Asia Pacific Africa delivered relatively flat operating income, with operating margins near 8%, supported by effective cost management and lower SG&A expenses. Slide 10 shows our full-year free cash flow for 2024 and 2025.
The fourth quarter, adjusted operating margin was 10.1% up, 20 basis points from the prior year, the Improvement, reflects, excellent and resilient performance in Europe. Middle East again, this quarter and consistent discipline across other parts of our business.
Speaker #2: North America income from operations decreased by 33 million year-over-year and operating margins remained below break-even. The results reflect lower effective pricing execution sales volume and factory underabsorption associated with reduced production levels of over 50% aligned with dealer inventory normalization representing disciplined management of this operating income was 21 million lower than the prior year with business.
Margin performance continued to be shaped by Factory under absorption and discounting across the industry.
Despite that environment, higher sales and production volumes in Europe and are continued cost discipline supported better total company adjusted operating margins during the quarter.
Speaker #2: South America margins nearing 3%, reflecting lower sales and higher engineering expense. Asia/Pacific Africa delivered relatively flat operating income without operating margins near 8% supported by effective cost management and lower SG&A expenses.
Damon Audia: Results were driven by effective pricing execution and a favorable sales mix. North America income from operations decreased by $33 million year-over-year, and operating margins remained below breakeven. The results reflect lower sales volume and factory under absorption associated with re-reduced production levels of over 50%, aligned with dealer inventory normalization, representing disciplined management of this business. South America operating income was $21 million lower than the prior year, with margins nearing 3%, reflecting lower sales and higher engineering expense. Asia Pacific Africa delivered relatively flat operating income, with operating margins near 8%, supported by effective cost management and lower SG&A expenses. Slide 10 shows our full-year free cash flow for 2024 and 2025. As a reminder, free cash flow represents cash provided by or used in operating activities, less purchases of property, plant, and equipment.
Damon Audia: Results were driven by effective pricing execution and a favorable sales mix. North America income from operations decreased by $33 million year-over-year, and operating margins remained below breakeven. The results reflect lower sales volume and factory under absorption associated with re-reduced production levels of over 50%, aligned with dealer inventory normalization, representing disciplined management of this business. South America operating income was $21 million lower than the prior year, with margins nearing 3%, reflecting lower sales and higher engineering expense. Asia Pacific Africa delivered relatively flat operating income, with operating margins near 8%, supported by effective cost management and lower SG&A expenses. Slide 10 shows our full-year free cash flow for 2024 and 2025. As a reminder, free cash flow represents cash provided by or used in operating activities, less purchases of property, plant, and equipment.
By region Europe, Middle East income from operations increased by 57 million compared to the fourth quarter of 2024, with operating margins approaching 17% results, were driven by effective pricing execution and a favorable sales mix.
Speaker #2: Slide 10 shows our full year free cash flow for 2024 and 2025. As a reminder, free cash flow represents cash provided by or used in operating activities less purchases of property, plant, and equipment.
Damon Audia: As a reminder, free cash flow represents cash provided by or used in operating activities, less purchases of property, plant, and equipment. Free cash flow conversion is calculated as free cash flow divided by adjusted net income, offering a clear and consistent measure of performance. We generated record free cash flow of $740 million in 2025, up more than $440 million versus 2024. This strong improvement was supported by better working capital execution, higher fourth quarter sales, and lower capital expenditures year-over-year, reflecting effective operational discipline.
North America income from operations decreased by $33 million year-over-year, and operating margins remain below breakeven. The results reflect lower sales volume and factory under-absorption associated with reduced production levels of over 50%, aligned with dealer inventory normalization, representing disciplined management of this business.
Speaker #2: Free cash flow conversion is calculated as free cash flow divided by adjusted net income offering a clear and consistent measure of performance. We generated record free cash flow of 740 million dollars in 2025, up more than 440 million versus 2024.
Damon Audia: Free cash flow conversion is calculated as free cash flow divided by adjusted net income, offering a clear and consistent measure of performance. We generated record free cash flow of $740 million in 2025, up more than $440 million versus 2024. This strong improvement was supported by better working capital execution, higher fourth quarter sales, and lower capital expenditures year-over-year, reflecting effective operational discipline. Our capital allocation priorities remain consistent. Reinvest in the business, maintain our investment-grade credit profile, consider acquisitions where we can accelerate technology adoption, and return capital directly to our shareholders, a framework that continues to deliver favorable long-term outcomes. Following the TAFI resolution last year, we've shifted our philosophy on direct returns to investors with a focus on share repurchases rather than our special variable dividend program.
South America operating income was $21 million lower than the prior year, with margins nearing 3%, reflecting lower sales and higher engineering expense.
Asia-pacific Africa, delivered relatively flat operating income with operating margins, near 8% supported by effective cost management and lower sgna expenses.
Speaker #2: This strong improvement was supported by better working capital execution, higher fourth quarter sales, and lower capital expenditures year-over-year reflecting effective operational discipline. Our capital allocation Reinvest in the business, maintain our investment-grade credit profile, consider acquisitions where we can accelerate technology adoption, and return capital directly to our shareholders.
Damon Audia: Free cash flow conversion is calculated as free cash flow divided by adjusted net income, offering a clear and consistent measure of performance. We generated record free cash flow of $740 million in 2025, up more than $440 million versus 2024. This strong improvement was supported by better working capital execution, higher fourth quarter sales, and lower capital expenditures year-over-year, reflecting effective operational discipline. Our capital allocation priorities remain consistent. Reinvest in the business, maintain our investment-grade credit profile, consider acquisitions where we can accelerate technology adoption, and return capital directly to our shareholders, a framework that continues to deliver favorable long-term outcomes. Following the TAFE resolution last year, we've shifted our philosophy on direct returns to investors with a focus on share repurchases rather than our special variable dividend program.
Damon Audia: Free cash flow conversion is calculated as free cash flow divided by adjusted net income, offering a clear and consistent measure of performance. We generated record free cash flow of $740 million in 2025, up more than $440 million versus 2024. This strong improvement was supported by better working capital execution, higher fourth quarter sales, and lower capital expenditures year-over-year, reflecting effective operational discipline. Our capital allocation priorities remain consistent. Reinvest in the business, maintain our investment-grade credit profile, consider acquisitions where we can accelerate technology adoption, and return capital directly to our shareholders, a framework that continues to deliver favorable long-term outcomes. Following the TAFE resolution last year, we've shifted our philosophy on direct returns to investors with a focus on share repurchases rather than our special variable dividend program.
Slide 10 shows our full year free cash flow for 2024 and 2025. As a reminder, free cash flow represents cash provided by or used in operating activities, less purchases of property, plant and equipment.
Damon Audia: Our capital allocation priorities remain consistent. Reinvest in the business, maintain our investment-grade credit profile, consider acquisitions where we can accelerate technology adoption, and return capital directly to our shareholders, a framework that continues to deliver favorable long-term outcomes. Following the TAFI resolution last year, we've shifted our philosophy on direct returns to investors with a focus on share repurchases rather than our special variable dividend program.
Free cash flow conversion is calculated as free cash flow divided by adjusted net income, offering a clear and consistent measure of performance.
Speaker #2: A framework that continues to deliver favorable long-term outcomes. Following the TAPI resolution last year, we've shifted our philosophy on direct returns to investors with a focus on share repurchases rather than our special variable dividend program.
We generated record free cash flow of 740 million in 2025 up more than 440 million versus 2024.
The strong improvement was supported by better working capital execution, higher fourth quarter sales, and lower capital expenditures year-over-year, reflecting effective operational discipline.
Speaker #2: With this focus, we executed a 250 million dollar accelerated share repurchase in Q4 of 2025 under our 1 billion dollar repurchase authorization demonstrating our commitment to shareholder returns.
Damon Audia: With this focus, we executed a $250 million accelerated share repurchase in Q4 of 2025 under our $1 billion repurchase authorization, demonstrating our commitment to shareholder returns. Given the strong free cash flow generation in 2025, we will evaluate further opportunities during our normal capital allocation review later this year. We also paid a regular quarterly dividend of $0.29 per share throughout the year, totaling approximately $87 million in dividend payments for 2025, reinforcing a reliable and healthy capital return program. We continue to deploy capital with the discipline to drive long-term shareholder value, supported by the increased flexibility afforded by our repurchase program. Slide 11 summarizes our 2026 market outlook across three major regions. For North America, we forecast large ag industry sales down approximately 15% from 2025's already low levels.
Damon Audia: With this focus, we executed a $250 million accelerated share repurchase in Q4 of 2025 under our $1 billion repurchase authorization, demonstrating our commitment to shareholder returns. Given the strong free cash flow generation in 2025, we will evaluate further opportunities during our normal capital allocation review later this year. We also paid a regular quarterly dividend of $0.29 per share throughout the year, totaling approximately $87 million in dividend payments for 2025, reinforcing a reliable and healthy capital return program. We continue to deploy capital with the discipline to drive long-term shareholder value, supported by the increased flexibility afforded by our repurchase program. Slide 11 summarizes our 2026 market outlook across three major regions. For North America, we forecast large ag industry sales down approximately 15% from 2025's already low levels.
Our capital allocation priorities remain consistent: reinvest in the business.
Speaker #2: Given the strong free cash flow generation in 2025, we will evaluate further opportunities during our normal capital allocation review later this year. We also paid a regular quarterly dividend of 29 cents per share throughout the year totaling approximately 87 million dollars in dividend payments for 2025.
Maintain our investment-grade credit profile, consider acquisitions where we can accelerate technology adoption, and return capital directly to our shareholders—a framework that continues to deliver favorable long-term outcomes.
Damon Audia: With this focus, we executed a $250 million accelerated share repurchase in Q4 of 2025 under our $1 billion repurchase authorization, demonstrating our commitment to shareholder returns. Given the strong free cash flow generation in 2025, we will evaluate further opportunities during our normal capital allocation review later this year. We also paid a regular quarterly dividend of $0.29 per share throughout the year, totaling approximately $87 million in dividend payments for 2025, reinforcing a reliable and healthy capital return program. We continue to deploy capital with the discipline to drive long-term shareholder value, supported by the increased flexibility afforded by our repurchase program. Slide 11 summarizes our 2026 market outlook across three major regions. For North America, we forecast large ag industry sales down approximately 15% from 2025's already low levels.
Damon Audia: With this focus, we executed a $250 million accelerated share repurchase in Q4 of 2025 under our $1 billion repurchase authorization, demonstrating our commitment to shareholder returns. Given the strong free cash flow generation in 2025, we will evaluate further opportunities during our normal capital allocation review later this year. We also paid a regular quarterly dividend of $0.29 per share throughout the year, totaling approximately $87 million in dividend payments for 2025, reinforcing a reliable and healthy capital return program. We continue to deploy capital with the discipline to drive long-term shareholder value, supported by the increased flexibility afforded by our repurchase program. Slide 11 summarizes our 2026 market outlook across three major regions. For North America, we forecast large ag industry sales down approximately 15% from 2025's already low levels.
Following the Taffy resolution last year we've shifted our philosophy on Direct returns to investors with a focus on share repurchases rather than our special variable dividend program.
Speaker #2: Reinforcing a reliable and healthy capital return program. We continue to deploy capital with the discipline to drive long-term shareholder value supported by the increased flexibility afforded by our repurchase program.
With this Focus we executed a 250 million accelerated share repurchase in Q4 of 20. 2025 under our 1 billion dollar repurchase authorization demonstrating our commitment to shareholder returns,
Speaker #2: Slide 11 summarizes our 2026 market outlook across three major regions. For North America, we've forecast large ag industry sales down approximately 15% from 2025's already low levels.
Given the strong free cash flow generation in 2025, we will evaluate further opportunities during our normal Kappa, allocation review later this year.
Speaker #2: The USDA's elevated January crop supply estimates resulted in significant declines in commodity prices in both soybean and corn prices average. Farmers are delaying new equipment purchases due to elevated input costs and tighter profit margins.
Damon Audia: The USDA's elevated January crop supply estimates resulted in significant declines in commodity prices, and both soybean and corn prices remain below the long-term average. Farmers are delaying new equipment purchases due to elevated input costs and tighter profit margins. The US government's $12 billion Farmer Bridge Assistance Program is helping to shore up farmers' balance sheets, but it's not translated into new equipment purchases at this time.... The North American small tractor segment offers a more positive counterbalance, as livestock and hay economics remain comparatively resilient, and the older fleet points to emerging replacement opportunities in 2026. We expect smaller tractors to be up modestly. In Western Europe, stability from the subsidy framework provides a solid foundation and offsets softer wheat prices and geopolitical crosscurrents.
Damon Audia: The USDA's elevated January crop supply estimates resulted in significant declines in commodity prices, and both soybean and corn prices remain below the long-term average. Farmers are delaying new equipment purchases due to elevated input costs and tighter profit margins. The US government's $12 billion Farmer Bridge Assistance Program is helping to shore up farmers' balance sheets, but it's not translated into new equipment purchases at this time.... The North American small tractor segment offers a more positive counterbalance, as livestock and hay economics remain comparatively resilient, and the older fleet points to emerging replacement opportunities in 2026. We expect smaller tractors to be up modestly. In Western Europe, stability from the subsidy framework provides a solid foundation and offsets softer wheat prices and geopolitical crosscurrents.
We also paid a regular quarterly dividend of 29 cents per share throughout the year, totaling approximately $87 million in dividend payments for 2025, reinforcing a reliable and healthy capital return program.
We continue to deploy capital with the discipline to drive long-term shareholder value, supported by the increased flexibility afforded by our repurchase program.
Speaker #2: The US government's remained below the long-term 12 billion dollar farmer bridge assistance program is helping to shore up farmers' balance sheets but is not translated into new equipment purchases at this time.
Speaker #2: The North American small tractor segment offers a more positive counterbalance as livestock and hay economics remain comparatively resilient in the older fleet points to emerging replacement opportunities in 2026.
Damon Audia: The USDA's elevated January crop supply estimates resulted in significant declines in commodity prices, and both soybean and corn prices remain below the long-term average. Farmers are delaying new equipment purchases due to elevated input costs and tighter profit margins. The US government's $12 billion Farmer Bridge Assistance Program is helping to shore up farmers' balance sheets, but has not translated into new equipment purchases at this time. The North American small tractor segment offers a more positive counterbalance, as livestock and hay economics remain comparatively resilient, and the older fleet points to emerging replacement opportunities in 2026. We expect smaller tractors to be up modestly. In Western Europe, stability from the subsidy framework provides a solid foundation and offsets softer wheat prices and geopolitical crosscurrents.
Damon Audia: The USDA's elevated January crop supply estimates resulted in significant declines in commodity prices, and both soybean and corn prices remain below the long-term average. Farmers are delaying new equipment purchases due to elevated input costs and tighter profit margins. The US government's $12 billion Farmer Bridge Assistance Program is helping to shore up farmers' balance sheets, but has not translated into new equipment purchases at this time. The North American small tractor segment offers a more positive counterbalance, as livestock and hay economics remain comparatively resilient, and the older fleet points to emerging replacement opportunities in 2026. We expect smaller tractors to be up modestly. In Western Europe, stability from the subsidy framework provides a solid foundation and offsets softer wheat prices and geopolitical crosscurrents.
Slide 11 summarizes the 2026 market outlook across three major regions. For North America, we’ve forecast large ag industry sales down approximately 15% from 2025’s already low levels.
The usda's elevated January, crop Supply estimates resulted in significant declines in commodity prices in both soybean and corn. Prices remain below the long-term average.
Speaker #2: We expect smaller tractors to be up modestly. In Western Europe, stability from the subsidy framework provides a solid foundation and offsets softer wheat cross-currents.
Farmers are delaying new equipment purchases due to elevated input, costs and Tighter profit. Margins.
Speaker #2: Early season exports improved profitability is expected to rise in '26 and winter seeding conditions have been supportive across many prices and geopolitical markets. The EU continues to benefit from lower interest rates versus other key ag regions providing a more favorable operating Western European tractor volumes to be position.
Damon Audia: Early season exports improved, profitability is expected to rise in 2026, and winter seeding conditions have been supportive across many markets. The EU continues to benefit from lower interest rates versus other key ag regions, providing a more favorable operating position. We expect Western European tractor volumes to be up modestly in 2026. Brazil's crop environment remains constructive, led by a large soybean harvest and healthy export demand. At the same time, interest rates, credit availability, corn margins, and weather in select regions will pressure demand in 2026. Our plan assumes relatively flat demand for the year, with some pressure early in the year and a stronger second half due to potentially improved government support. Slide 12 highlights the key assumptions underlying our full year 2026 outlook.
Damon Audia: Early season exports improved, profitability is expected to rise in 2026, and winter seeding conditions have been supportive across many markets. The EU continues to benefit from lower interest rates versus other key ag regions, providing a more favorable operating position. We expect Western European tractor volumes to be up modestly in 2026. Brazil's crop environment remains constructive, led by a large soybean harvest and healthy export demand. At the same time, interest rates, credit availability, corn margins, and weather in select regions will pressure demand in 2026. Our plan assumes relatively flat demand for the year, with some pressure early in the year and a stronger second half due to potentially improved government support. Slide 12 highlights the key assumptions underlying our full year 2026 outlook.
The US government's 122 billion farmer Bridge assistance program is helping to shore up, Farmers, balance sheets, but is not translated into new equipment purchases at this time.
Speaker #2: up modestly in 2026. We expect Brazil's crop environment remains constructive. Led by a large soybean harvest and healthy export demand, at the same time, interest rates, credit availability, corn margins, and weather in select regions will pressure demand in 2026.
So emerging replacement opportunities in 2026, we expect smaller tractors to be up modestly.
Damon Audia: Early season exports improved, profitability is expected to rise in 2026, and winter seeding conditions have been supportive across many markets. The EU continues to benefit from lower interest rates versus other key ag regions, providing a more favorable operating position. We expect Western European tractor volumes to be up modestly in 2026. Brazil's crop environment remains constructive, led by a large soybean harvest and healthy export demand. At the same time, interest rates, credit availability, corn margins, and weather in select regions will pressure demand in 2026. Our plan assumes relatively flat demand for the year, with some pressure early in the year and a stronger second half due to potentially improved government support. Slide 12 highlights the key assumptions underlying our full year 2026 outlook.
Damon Audia: Early season exports improved, profitability is expected to rise in 2026, and winter seeding conditions have been supportive across many markets. The EU continues to benefit from lower interest rates versus other key ag regions, providing a more favorable operating position. We expect Western European tractor volumes to be up modestly in 2026. Brazil's crop environment remains constructive, led by a large soybean harvest and healthy export demand. At the same time, interest rates, credit availability, corn margins, and weather in select regions will pressure demand in 2026. Our plan assumes relatively flat demand for the year, with some pressure early in the year and a stronger second half due to potentially improved government support. Slide 12 highlights the key assumptions underlying our full year 2026 outlook.
Speaker #2: Our plan assumes relatively flat demand for the year with some pressure early in the year and a stronger second half due to potentially improved government support.
In Western Europe, stability from the subsidy framework provides a solid foundation and offset softer, wheat, prices and geopolitical cross currents. Early season exports. Improved profitability is expected to rise in 26 and winter seating conditions have been supportive across many markets. The EU continues to benefit from lower interest rates versus other key agents. Providing a more favorable operating position.
Speaker #2: Slide 12 highlights the key assumptions underlying our full year 2026 outlook. We expect global industry demand to remain relatively flat compared to 2025 with the industry increasing from 86% of mid-cycle to around 87% in 2026.
We expect Western European tractor volumes to be up modestly in 2026.
Damon Audia: We expect global industry demand to remain relatively flat compared to 2025, with the industry increasing from 86% of mid-cycle to around 87% in 2026. Our sales plan assumes share gains, a 2% FX benefit, and between 2% and 3% in pricing. At 3%, our pricing is designed to cover material inflation and tariff costs on a dollar basis, but will be margin dilutive even at the high end of the range, impacting our 2026 operating margins and our year-over-year incrementals. Dealer destocking advanced in 2025, and we continue to prioritize strong channel alignment in 2026, particularly in North America, reinforcing a disciplined and balanced go-to-market approach. Our guidance reflects current tariff regime and mitigation through cost actions and pricing, ensuring a well-managed framework for navigating policy dynamics. We will adjust our outlook if policy actions change.
Damon Audia: We expect global industry demand to remain relatively flat compared to 2025, with the industry increasing from 86% of mid-cycle to around 87% in 2026. Our sales plan assumes share gains, a 2% FX benefit, and between 2% and 3% in pricing. At 3%, our pricing is designed to cover material inflation and tariff costs on a dollar basis, but will be margin dilutive even at the high end of the range, impacting our 2026 operating margins and our year-over-year incrementals. Dealer destocking advanced in 2025, and we continue to prioritize strong channel alignment in 2026, particularly in North America, reinforcing a disciplined and balanced go-to-market approach. Our guidance reflects current tariff regime and mitigation through cost actions and pricing, ensuring a well-managed framework for navigating policy dynamics. We will adjust our outlook if policy actions change.
Speaker #2: Our sales plan 2% FX benefit and between 2 and 3% in pricing. At 3%, our pricing is designed to cover material inflation and tariff costs on a dollar basis.
Brazil's crop environment remains constructive, led by a large soybean harvest and healthy export demand. At the same time, interest rates, credit availability, corn margins, and weather in select regions will pressure demand in 2026. Our plan assumes relatively flat demand for the year, with some pressure early in the year and a stronger second half due to potentially improved government support.
Speaker #2: But we'll be margin dilutive even at the high end of the range impacting our 2026 operating margins and our year-over-year incrementals. Dealer destocking advanced in 2025.
Damon Audia: We expect global industry demand to remain relatively flat compared to 2025, with the industry increasing from 86% of mid-cycle to around 87% in 2026. Our sales plan assumes share gains, a 2% FX benefit, and between 2% and 3% in pricing. At 3%, our pricing is designed to cover material inflation and tariff costs on a dollar basis, but will be margin dilutive even at the high end of the range, impacting our 2026 operating margins and our year-over-year incrementals. Dealer destocking advanced in 2025, and we continue to prioritize strong channel alignment in 2026, particularly in North America, reinforcing a disciplined and balanced go-to-market approach. Our guidance reflects current tariff regime and mitigation through cost actions and pricing, ensuring a well-managed framework for navigating policy dynamics. We will adjust our outlook if policy actions change.
Damon Audia: We expect global industry demand to remain relatively flat compared to 2025, with the industry increasing from 86% of mid-cycle to around 87% in 2026. Our sales plan assumes share gains, a 2% FX benefit, and between 2% and 3% in pricing. At 3%, our pricing is designed to cover material inflation and tariff costs on a dollar basis, but will be margin dilutive even at the high end of the range, impacting our 2026 operating margins and our year-over-year incrementals. Dealer destocking advanced in 2025, and we continue to prioritize strong channel alignment in 2026, particularly in North America, reinforcing a disciplined and balanced go-to-market approach. Our guidance reflects current tariff regime and mitigation through cost actions and pricing, ensuring a well-managed framework for navigating policy dynamics. We will adjust our outlook if policy actions change.
Slide 12 highlights. The key assumptions. Underlying our full year 2026 Outlook
Speaker #2: And we continue to prioritize strong channel alignment in 2026 particularly in North America reinforcing a disciplined and balanced go-to-market approach. Our guidance reflects current tariff regime and mitigation through cost actions and pricing ensuring a well-managed framework for navigating policy dynamics.
We expect Global industry demand to remain relatively flat compared to 2025 with the industry increasing from 86% of mid-cycle to around 87% in 2026.
Our sales plan assumes, share, gains a 2% FX benefit and between 2 and 3% in pricing.
Speaker #2: We will adjust our outlook if policy actions change. Engineering expense is planned to increase by almost 50 million dollars year-over-year representing approximately 5% of sales and ensuring an investment level that fuels the flywheel of innovation across the portfolio.
Damon Audia: Engineering expense is planned to increase by almost $50 million year-over-year, representing approximately 5% of sales and ensuring an investment level that fuels the flywheel of innovation across the portfolio. As Eric mentioned, we expect further benefits from our restructuring actions of $40 to 60 million in 2026. Production hours in 2026 are expected to be broadly in line with 2025, maintaining healthy balance between production rates and retail demand to support ongoing inventory discipline. We expect adjusted operating margins between 7.5% and 8%, reflecting positive structural improvements to the portfolio and benefits from our ongoing cost initiatives, but muted due to the price versus cost and tariff equation this year, as well as higher engineering spend. Our effective tax rate is anticipated to be 32% to 34% for 2026.
Damon Audia: Engineering expense is planned to increase by almost $50 million year-over-year, representing approximately 5% of sales and ensuring an investment level that fuels the flywheel of innovation across the portfolio. As Eric mentioned, we expect further benefits from our restructuring actions of $40 to 60 million in 2026. Production hours in 2026 are expected to be broadly in line with 2025, maintaining healthy balance between production rates and retail demand to support ongoing inventory discipline. We expect adjusted operating margins between 7.5% and 8%, reflecting positive structural improvements to the portfolio and benefits from our ongoing cost initiatives, but muted due to the price versus cost and tariff equation this year, as well as higher engineering spend. Our effective tax rate is anticipated to be 32% to 34% for 2026.
At 3%, our pricing is designed to cover material inflation and tariff costs on a dollar basis. What will be margin dilutive? Even at the high end of the range, impacting our 2026 operating margins and our year-over-year incremental,
Speaker #2: As Eric mentioned, we expect further benefits from our restructuring actions of 40 to 60 million in 2026. Production hours in '26 are expected to be broadly in line with 2025 maintaining healthy balance between production rates and retail demand to support discipline.
Dealerdoc stocking advanced in 2025, and we continue to prioritize strong channel alignment in 2026—particularly in North America, reinforcing a disciplined and balanced go-to-market approach.
Damon Audia: Engineering expense is planned to increase by almost $50 million year over year, representing approximately 5% of sales and ensuring an investment level that fuels the flywheel of innovation across the portfolio. As Eric mentioned, we expect further benefits from our restructuring actions of $40 to 60 million in 2026. Production hours in 2026 are expected to be broadly in line with 2025, maintaining healthy balance between production rates and retail demand to support ongoing inventory discipline. We expect adjusted operating margins between 7.5% and 8%, reflecting positive structural improvements to the portfolio and benefits from our ongoing cost initiatives, but muted due to the price versus cost and tariff equation this year, as well as higher engineering spend. Our effective tax rate is anticipated to be 32 to 34% for 2026.
Damon Audia: Engineering expense is planned to increase by almost $50 million year over year, representing approximately 5% of sales and ensuring an investment level that fuels the flywheel of innovation across the portfolio. As Eric mentioned, we expect further benefits from our restructuring actions of $40 to 60 million in 2026. Production hours in 2026 are expected to be broadly in line with 2025, maintaining healthy balance between production rates and retail demand to support ongoing inventory discipline. We expect adjusted operating margins between 7.5% and 8%, reflecting positive structural improvements to the portfolio and benefits from our ongoing cost initiatives, but muted due to the price versus cost and tariff equation this year, as well as higher engineering spend. Our effective tax rate is anticipated to be 32 to 34% for 2026.
Our guidance reflects current tariff regime and mitigation through cost actions and pricing ensuring a well-managed framework for navigating policy Dynamics. We will adjust our Outlook if policy actions change.
Speaker #2: ongoing inventory We expect 7.5% and adjusted operating margins between 8% reflecting positive structural improvements to the portfolio and benefits from our ongoing cost initiatives but muted due to the price versus cost and tariff equation this year as well as higher engineering spend.
Engineering expense is plan to increase by almost $50 million year-over-year, representing approximately 5% of sales and ensuring an investment level, that fuels the flywheel of innovation across the portfolio.
As Eric mentioned, we expect further benefits from our restructuring actions of $40 to $60 million in 2026.
Speaker #2: Our effective tax rate is anticipated to be 32 to 34% for 2026. Turning to slide 13 for our 2026 outlook. Our full year net sales outlook is expected to range from 10.4 billion to 10.7 billion.
Damon Audia: Turning to slide 13 for our 2026 outlook. Our full year net sales outlook is expected to range from $10.4 to 10.7 billion. Based on this sales outlook, flat, flat production volumes, continued cost discipline, and pricing execution, we are targeting adjusted earnings per share in the range of $5.50 to $6. This assumes no material changes to existing trade measures. Capital expenditures are estimated to be around $350 million, positioning us for future demand inflection while maintaining investment discipline. We continue to target free cash flow conversion of 75% to 100% of adjusted net income, supported by strong working capital management and ongoing inventory efficiency. For Q1 of 2026, we expect net sales modestly up year over year.
Damon Audia: Turning to slide 13 for our 2026 outlook. Our full year net sales outlook is expected to range from $10.4 to 10.7 billion. Based on this sales outlook, flat, flat production volumes, continued cost discipline, and pricing execution, we are targeting adjusted earnings per share in the range of $5.50 to $6. This assumes no material changes to existing trade measures. Capital expenditures are estimated to be around $350 million, positioning us for future demand inflection while maintaining investment discipline. We continue to target free cash flow conversion of 75% to 100% of adjusted net income, supported by strong working capital management and ongoing inventory efficiency. For Q1 of 2026, we expect net sales modestly up year over year.
Production hours in 2026 are expected to be broadly in line with 2025, maintaining a healthy balance between production rates and retail demand to support ongoing inventory discipline.
Speaker #2: Based on this sales outlook, flat production volumes continued cost discipline and pricing execution we are targeting adjusted earnings per share in the range of $5.50 to $6.
We expect adjusted operating margins between 7.5% and 8%, reflecting positive structural improvements to the portfolio and benefits from our ongoing cost initiatives, but muted due to the price versus cost and tariff equation this year, as well as higher engineering spend.
Speaker #2: This assumes no material changes to existing trade measures. Capital expenditures are estimated to be around $350 million positioning us for future demand inflection while maintaining investment discipline.
Our effective tax rate is anticipated to be 32 to 34% or 2026.
Damon Audia: Turning to slide 13 for our 2026 outlook. Our full-year net sales outlook is expected to range from $10.4 to 10.7 billion. Based on this sales outlook, flat, flat production volumes, continued cost discipline, and pricing execution, we are targeting adjusted earnings per share in the range of $5.50 to $6. This assumes no material changes to existing trade measures. Capital expenditures are estimated to be around $350 million, positioning us for future demand inflection while maintaining investment discipline. We continue to target free cash flow conversion of 75% to 100% of adjusted net income, supported by strong working capital management and ongoing inventory efficiency. For Q1 2026, we expect net sales modestly up year-over-year.
Damon Audia: Turning to slide 13 for our 2026 outlook. Our full-year net sales outlook is expected to range from $10.4 to 10.7 billion. Based on this sales outlook, flat, flat production volumes, continued cost discipline, and pricing execution, we are targeting adjusted earnings per share in the range of $5.50 to $6. This assumes no material changes to existing trade measures. Capital expenditures are estimated to be around $350 million, positioning us for future demand inflection while maintaining investment discipline. We continue to target free cash flow conversion of 75% to 100% of adjusted net income, supported by strong working capital management and ongoing inventory efficiency. For Q1 2026, we expect net sales modestly up year-over-year.
Turning the slide 13 for our 2026 Outlook.
Speaker #2: We continue to target free cash flow conversion of 75 to 100% of adjusted net income supported by strong working capital management and ongoing inventory efficiency.
Our full year, net sales Outlook is expected to range from 10.4 billion to 10.7 billion.
Speaker #2: The first quarter of 2026, we expect net sales modestly up year-over-year as we align production with demand and continue to realize the benefits of our cost efficiency initiatives we anticipate first quarter earnings per share between 40 and 45 cents.
Damon Audia: As we align production with demand and continue to realize the benefits of our cost efficiency initiatives, we anticipate Q1 earnings per share between $0.40 and $0.45. We expect profitability to strengthen as the year progresses, reflecting improved absorption, continued operational execution, and the timing of our cost actions. As Eric noted, 2025 performance demonstrates consistent execution on our strategy and a more resilient, better-positioned business through the cycle. We are confident in delivering continued progress across net sales, adjusted operating margin, and adjusted EPS while navigating the current industry backdrop. With that, I'll turn the call over to the operator to begin the Q&A.
Damon Audia: As we align production with demand and continue to realize the benefits of our cost efficiency initiatives, we anticipate Q1 earnings per share between $0.40 and $0.45. We expect profitability to strengthen as the year progresses, reflecting improved absorption, continued operational execution, and the timing of our cost actions. As Eric noted, 2025 performance demonstrates consistent execution on our strategy and a more resilient, better-positioned business through the cycle. We are confident in delivering continued progress across net sales, adjusted operating margin, and adjusted EPS while navigating the current industry backdrop. With that, I'll turn the call over to the operator to begin the Q&A.
Speaker #2: We expect profitability to strengthen as the year progresses reflecting improved absorption, continued operational execution, and the timing of our cost actions. As Eric noted, 2025 performance demonstrates consistent execution on our strategy and a more resilient, better positioned business through the cycle.
Capital expenditures are estimated to be around 350 million positioning us for future demand inflection while maintaining investment discipline.
We continue to Target, free cash flow conversion of 75 to 100% of adjusted net income supported by strong working Capital Management, and ongoing inventory efficiency.
Damon Audia: As we align production with demand and continue to realize the benefits of our cost efficiency initiatives, we anticipate Q1 earnings per share between $0.40 and $0.45. We expect profitability to strengthen as the year progresses, reflecting improved absorption, continued operational execution, and the timing of our cost actions. As Eric noted, 2025 performance demonstrates consistent execution on our strategy and a more resilient, better positioned business through the cycle. We are confident in delivering continued progress across net sales, adjusted operating margin, and adjusted EPS while navigating the current industry backdrop. With that, I'll turn the call over to the operator to begin the Q&A.
Damon Audia: As we align production with demand and continue to realize the benefits of our cost efficiency initiatives, we anticipate Q1 earnings per share between $0.40 and $0.45. We expect profitability to strengthen as the year progresses, reflecting improved absorption, continued operational execution, and the timing of our cost actions. As Eric noted, 2025 performance demonstrates consistent execution on our strategy and a more resilient, better positioned business through the cycle. We are confident in delivering continued progress across net sales, adjusted operating margin, and adjusted EPS while navigating the current industry backdrop. With that, I'll turn the call over to the operator to begin the Q&A.
Speaker #2: We are confident in delivering continued progress across net sales adjusted operating margin and adjusted EPS while navigating the current industry backdrop. With that, I'll turn the call over to the operator to begin the Q&A.
For the first quarter of 2026, we expect net sales to be modestly up year-over-year, as we align production with demand and continue to realize the benefits of our cost.
Speaker #2: Thank you. We will now begin the question and answer session. To ask a question, you may press star, then one on your touchtone phone.
Operator: Thank you. We will now begin the question-and-answer session. To ask a question, you may press star, then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. Please limit yourself to one question and one follow-up. The first question today will come from Stephen Volkmann with Jefferies. Please go ahead.
Operator: Thank you. We will now begin the question-and-answer session. To ask a question, you may press star, then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. Please limit yourself to one question and one follow-up. The first question today will come from Stephen Volkmann with Jefferies. Please go ahead.
Speaker #2: If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then two. Please let me yourself to one question and one follow-up.
Speaker #2: And the first question today will come from Steven Volkmann with Jefferies. Please go ahead.
yes, while navigating the current industry backdrop,
Speaker #3: Great. Good morning, guys. Curious to think about what your planning relative to inventories in the US. I guess you're still about a month ahead of where you'd like to be.
Stephen Volkmann: Great. Good morning, guys. Curious to think about what you're planning relative to inventories in the US. I guess you're still about a month ahead of where you'd like to be. How long does that process take from here?
Stephen Volkmann: Great. Good morning, guys. Curious to think about what you're planning relative to inventories in the US. I guess you're still about a month ahead of where you'd like to be. How long does that process take from here?
With that, I'll turn the call over to the operator to begin the Q&A.
Operator: Thank you. We will now begin the question-and-answer session. To ask a question, you may press star, then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then two. Please limit yourself to one question and one follow-up. The first question today will come from Stephen Volkmann with Jefferies. Please go ahead.
Operator: Thank you. We will now begin the question-and-answer session. To ask a question, you may press star, then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then two. Please limit yourself to one question and one follow-up. The first question today will come from Stephen Volkmann with Jefferies. Please go ahead.
Thank you. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone.
Speaker #3: How long does that process take from here?
Speaker #4: Yeah. Excuse me. Good morning, Steve. So I think as you hit on, we did finish the year a little bit above our six-month target.
Damon Audia: Yeah. Excuse me. Good morning, Steve. So I think, as we, as you hit on, we did finish the year a little bit above our six-month target, so we will have some underproduction here, likely in the first half of the year in North America, trying to rightsize the dealer inventories. We'll see how the outlook for the balance of the year goes, but at least right now, I would expect sort of a underproduction, probably in around the 10% range, give or take, as we continue to rightsize here.
Damon Audia: Yeah. Excuse me. Good morning, Steve. So I think, as we, as you hit on, we did finish the year a little bit above our six-month target, so we will have some underproduction here, likely in the first half of the year in North America, trying to rightsize the dealer inventories. We'll see how the outlook for the balance of the year goes, but at least right now, I would expect sort of a underproduction, probably in around the 10% range, give or take, as we continue to rightsize here.
if you are using a speaker-phone please pick up your handset before pressing the keys to withdraw your question. Please press star then 2. Please let me yourself to 1 question and 1 follow-up.
Speaker #4: So we will have some underproduction here likely in the first half of the year in North America trying to right-size the dealer inventories. We'll see how the outlook for the balance of the year goes, but at least right now I would expect sort of underproduction probably in the around 10% range give or take as we continue to right-size here.
Stephen Volkmann: Great. Good morning, guys. Curious to think about what you're planning relative to inventories in the US. I guess you're still about a month ahead of where you'd like to be. How long does that process take from here?
Stephen Volkmann: Great. Good morning, guys. Curious to think about what you're planning relative to inventories in the US. I guess you're still about a month ahead of where you'd like to be. How long does that process take from here?
And the first question today will come from Steven Volkman with Jeffrey's. Please go ahead.
Great. Good morning, guys. I'm curious to hear what you're planning relative to your inventories in the US. I guess you're still about a month ahead of where you'd like to be. How long does that process take from here?
Damon Audia: Yeah. Excuse me. Good morning, Steve. So I think, as we-- as you hit on, we, we did finish the year a little bit above our six-month target, so we will have some underproduction here, likely in the first half of the year in North America, trying to rightsize the dealer inventories. We'll see how the outlook for the balance of the year goes, but at least right now, I would expect sort of a underproduction, probably in the around 10% range, give or take, as we continue to rightsize here.
Damon Audia: Yeah. Excuse me. Good morning, Steve. So I think, as we-- as you hit on, we, we did finish the year a little bit above our six-month target, so we will have some underproduction here, likely in the first half of the year in North America, trying to rightsize the dealer inventories. We'll see how the outlook for the balance of the year goes, but at least right now, I would expect sort of a underproduction, probably in the around 10% range, give or take, as we continue to rightsize here.
Speaker #3: Understood. Okay.
Eric Hansotia: Understood. Okay.
Stephen Volkmann: Understood. Okay.
Speaker #4: I think overall, as I said in my comments, we did a really good job. We took units down by 9% or so but just given that 12-month forward outlook we give you, the months didn't really move materially.
Damon Audia: I think overall, as I said in my comments, we did a really good job. We took units down by 9% or so, but just given that twelve-month forward outlook we give you, the months didn't really move materially. They only dropped down one month despite the 9% reduction in units.
Damon Audia: I think overall, as I said in my comments, we did a really good job. We took units down by 9% or so, but just given that twelve-month forward outlook we give you, the months didn't really move materially. They only dropped down one month despite the 9% reduction in units.
Speaker #4: They only dropped down one month despite the 9% reduction in
Speaker #4: units. Understood.
Eric Hansotia: Understood. Okay. And then, Damon, you mentioned in your prepared comments some discounting, and yet you guys are looking for, I think, 2 or 3% price for 2026. Just square those two for me. What are you seeing in terms of the discounting, and how do you still get that price?
Stephen Volkmann: Understood. Okay. And then, Damon, you mentioned in your prepared comments some discounting, and yet you guys are looking for, I think, 2 or 3% price for 2026. Just square those two for me. What are you seeing in terms of the discounting, and how do you still get that price?
Speaker #3: Okay. And then Damon, you mentioned in your prepared comments some discounting and yet you guys are looking for, I think, two or three percent price for '26.
Speaker #3: Just square those two for me. What are you seeing in terms of the discounting and how do you still get that price?
Yeah, excuse me. Good morning, Steve. So I think, uh, as as you hit on we, we did finish the year a little bit above our 6-month Target, so we will have some underproduction here, likely in the first half of, um, of the year in North America, trying to right-size the the dealer inventories. Um, we'll see how the outlook for the balance of the year goes. But at least right now I would expect sort of a underproduction. Probably in the round, 10% range. Give or take um as we continue to write size here.
Stephen Volkmann: Understood. Okay.
Stephen Volkmann: Understood. Okay.
Damon Audia: I think overall, as I said in my comments, we did a really good job. We took units down by 9% or so, but just given that 12-month forward outlook we give you, the months didn't really move materially. They only dropped down 1 month despite the 9% reduction in units.
Damon Audia: I think overall, as I said in my comments, we did a really good job. We took units down by 9% or so, but just given that 12-month forward outlook we give you, the months didn't really move materially. They only dropped down 1 month despite the 9% reduction in units.
Speaker #4: Yeah. So Steve, I think overall we've seen some competitive pressure especially in certain markets like South America. It was definitely a more aggressive market there.
Damon Audia: Yeah. So Steve, I think overall we've seen some competitive pressures, especially in certain markets like South America. It was definitely a more aggressive market there. When I look at the team, though, despite that, our Q4 came in exceptionally strong. If you may recall, I said at the end of the Q3 call, we guided, I think, pricing in the range of 0 to 1%. We finished the year just north of 1%. So the team gained share, took dealer inventories down, and had pricing better than our plan, coupled with the volume. So the team's done an exceptional job in managing and selling the value of our products relative to the competition.
Damon Audia: Yeah. So Steve, I think overall we've seen some competitive pressures, especially in certain markets like South America. It was definitely a more aggressive market there. When I look at the team, though, despite that, our Q4 came in exceptionally strong. If you may recall, I said at the end of the Q3 call, we guided, I think, pricing in the range of 0 to 1%. We finished the year just north of 1%. So the team gained share, took dealer inventories down, and had pricing better than our plan, coupled with the volume. So the team's done an exceptional job in managing and selling the value of our products relative to the competition.
Speaker #4: When I look at the team though, despite that, our fourth quarter came in exceptionally strong. If you may recall, I start at the end of the third quarter call, we guided I think price in the range of zero to 1%.
Stephen Volkmann: Understood. Okay. And then, Damon, you mentioned in your prepared comments, some discounting, and yet you guys are looking for, I think, 2 or 3% price for 2026. Just square those two for me. What, what are you seeing in terms of the discounting, and, and how do you still get that price?
Stephen Volkmann: Understood. Okay. And then, Damon, you mentioned in your prepared comments, some discounting, and yet you guys are looking for, I think, 2 or 3% price for 2026. Just square those two for me. What, what are you seeing in terms of the discounting, and, and how do you still get that price?
Understood. Okay, I think overall that as I said in my comments we did a really good job. We took units down by 9% or so, but just given that 12 month, forward Outlook, we give you um the months didn't really move materially. They only dropped down 1 month, despite the 9% reduction in units.
Speaker #4: We finished the year just north of 1%. So the team gained share took the dealer inventories down and had pricing better than our plan coupled with the volume.
Damon Audia: Yeah. So Steve, I think overall we've seen some competitive pressure, especially in certain markets like South America. It was definitely a more aggressive market there. When I look at the team, though, despite that, our Q4 came in exceptionally strong. If you may recall, I start at the end of the Q3 call, we guided, I think, price in the range of 0 to 1%. We finished the year just north of 1%. So the team gained share, took dealer inventories down, and had pricing better than our plan, coupled with the volume. So the team's done an exceptional job in managing and selling the value of our products relative to the competition.
Damon Audia: Yeah. So Steve, I think overall we've seen some competitive pressure, especially in certain markets like South America. It was definitely a more aggressive market there. When I look at the team, though, despite that, our Q4 came in exceptionally strong. If you may recall, I start at the end of the Q3 call, we guided, I think, price in the range of 0 to 1%. We finished the year just north of 1%. So the team gained share, took dealer inventories down, and had pricing better than our plan, coupled with the volume. So the team's done an exceptional job in managing and selling the value of our products relative to the competition.
Understood. Okay and then Damon you mentioned uh in your prepared comments. And discounting uh and yet you guys are looking for I think 2 or 3% price for 26 just Square. Those 2 for me. What what are you seeing in terms of the discounting and and how do you still get that price?
Speaker #4: So the team's done an exceptional job in managing and selling the value of our products relative to the competition. And so when I look at the pricing that we have carry over this year going into 2026, we have north of 1% of that 2 to 3% sort of already embedded into our base here.
Damon Audia: So when I look at the pricing that we have carry over this year going into 2026, we have north of 1% of that 2% to 3% sort of already embedded into our, into our base here. So, you know, overall, as we think about the new product introductions coming, what we see in Europe, we, we feel comfortable in that 2% to 3% range to at least start the year.
Damon Audia: So when I look at the pricing that we have carry over this year going into 2026, we have north of 1% of that 2% to 3% sort of already embedded into our, into our base here. So, you know, overall, as we think about the new product introductions coming, what we see in Europe, we, we feel comfortable in that 2% to 3% range to at least start the year.
Speaker #4: So overall, as we think about the new product introductions coming, what we see in Europe, we feel comfortable in that 2 to 3% range to at least start the year.
Speaker #2: The next question will come from Kristen Owen with Oppenheimer. Please go ahead.
Operator: The next question will come from Kristen Owen with Oppenheimer. Please go ahead.
Operator: The next question will come from Kristen Owen with Oppenheimer. Please go ahead.
Damon Audia: And so when I look at the pricing that we have carry over this year going into 2026, we have north of 1% of that 2% to 3% sort of already embedded into our base here. So overall, as we think about the new product introductions coming, what we see in Europe, we feel comfortable in that 2% to 3% range to at least start the year.
Damon Audia: And so when I look at the pricing that we have carry over this year going into 2026, we have north of 1% of that 2% to 3% sort of already embedded into our base here. So overall, as we think about the new product introductions coming, what we see in Europe, we feel comfortable in that 2% to 3% range to at least start the year.
Speaker #5: Good morning. Thank you for the question. I wanted to start here with your outlook for Europe I mean, that has continued to outperform for you guys.
Kristen Owen: Good morning. Thank you for the question. I wanted to start here with your, your outlook for Europe. I mean, that, that has continued to outperform for you guys. Can you just give us a sense of what, what's happening on the ground there? I mean, we've seen a little bit of compression in, in some of the dairy margins recently. So maybe just give us a sense of, like, farmer sentiment there, what you're seeing in terms of demand, and maybe ask you to double-click on, on the, the pricing acceptance that you're seeing there.
Kristen Owen: Good morning. Thank you for the question. I wanted to start here with your, your outlook for Europe. I mean, that, that has continued to outperform for you guys. Can you just give us a sense of what, what's happening on the ground there? I mean, we've seen a little bit of compression in, in some of the dairy margins recently. So maybe just give us a sense of, like, farmer sentiment there, what you're seeing in terms of demand, and maybe ask you to double-click on, on the, the pricing acceptance that you're seeing there.
Speaker #5: Can you just give us a sense of what's happening on the ground there? I mean, we've seen a little bit of compression in some of the dairy margins recently.
Yeah, so Steve I think overall we've seen some competitive pressure specially in certain markets, like South America. It was definitely a more aggressive Market there. When I look at the, the team though, despite that our fourth quarter came in exceptionally strong. If you may recall, I start at the end of the third quarter, call we guided. I think price in the range of 0 to 1%. We finished the year, just north of 1%. So the team gained share took the took dealer inventories down and had pricing better than our plan coupled with the volume. So the team's done an exceptional job, uh, in managing and selling the value of our products relative to the competition. And so, when I look at the pricing that we have carry over this year going into 2026, we have north of 1% of that 2 to 3%.
Speaker #5: So maybe just give us a sense of farmer sentiment there, what you're seeing in terms of demand, and maybe ask you to double-click on the pricing acceptance that you're seeing there.
Sort of already embedded into our into our base here so you know overall as we think about the new product, introductions coming, what we see in Europe, we we feel comfortable in that 2 to 3% range to at least start the year.
Operator: The next question will come from Kristen Owen with Oppenheimer. Please go ahead.
Operator: The next question will come from Kristen Owen with Oppenheimer. Please go ahead.
Kristen Owen: Good morning. Thank you for the question. I wanted to start here with your outlook for Europe. I mean, that has continued to outperform for you guys. Can you just give us a sense of what's happening on the ground there? I mean, we've seen a little bit of compression in some of the dairy margins recently. So maybe just give us a sense of, like, farmer sentiment there, what you're seeing in terms of demand, and maybe ask you to double-click on the pricing acceptance that you're seeing there.
Kristen Owen: Good morning. Thank you for the question. I wanted to start here with your outlook for Europe. I mean, that has continued to outperform for you guys. Can you just give us a sense of what's happening on the ground there? I mean, we've seen a little bit of compression in some of the dairy margins recently. So maybe just give us a sense of, like, farmer sentiment there, what you're seeing in terms of demand, and maybe ask you to double-click on the pricing acceptance that you're seeing there.
The next question will come from. Kristen Owen with Oppenheimer. Please go ahead.
Speaker #4: Sure. Yeah, I'll take that one, Kristen. If we take a look at the industry to start off with, and one of the things that we watch is average age of the fleet.
Eric Hansotia: Sure. Yeah, I'll take that one, Kristen. You know, if we step back, look at the industry to start off with, and one of the things that we watch is average age of the fleet, and it's been climbing steeply in EMEA, as it's been in North America, but let's stay on EMEA for now. It's almost back to its record peak age, and that's creating just a lot of pent-up demand for new products. So that's number one. That's kind of where the fleet is. Farmer sentiment is actually relatively positive. We had field tech days this fall, spent time at Agritechnica, and spent time with thousands of farmers at Agritechnica. The feedback that we were getting was more positive than we expected.
Eric Hansotia: Sure. Yeah, I'll take that one, Kristen. You know, if we step back, look at the industry to start off with, and one of the things that we watch is average age of the fleet, and it's been climbing steeply in EMEA, as it's been in North America, but let's stay on EMEA for now. It's almost back to its record peak age, and that's creating just a lot of pent-up demand for new products. So that's number one. That's kind of where the fleet is. Farmer sentiment is actually relatively positive. We had field tech days this fall, spent time at Agritechnica, and spent time with thousands of farmers at Agritechnica. The feedback that we were getting was more positive than we expected.
Good morning. Thank you for the question.
Here with your, your outlook for Europe. I mean that that has continued to outperform for you guys. Can you
Speaker #4: And it's been climbing steeply in EME as has it been in North America. But let's stay on EME for now. It's almost back to its record peak age.
Speaker #4: And that's creating just a lot of pent-up demand for new products. And so that's number one. That's kind of where the fleet is. Farmer sentiment is actually relatively positive.
Give us a sense of what what's happening on the ground there. I mean, we've seen a little bit of compression in in some of the dairy margins recently. Um so maybe just give us a sense of like farmer sentiment there, what you're seeing in terms of demand and maybe ask you to double click on on the the pricing acceptance that you're seeing there.
Eric Hansotia: Sure. Yeah, I'll take that one, Kristen. You know, if we take a start, look at the industry to start off with, and one of the things that we watch is average age of the fleet, and it's been climbing steeply in EME, as it's been in North America, but let's stay on EME for now. It's almost back to its record peak age, and that's creating just a lot of pent-up demand for new products. So that's number one. That's kind of where the fleet is. Farmer sentiment is actually relatively positive. We had a field tech days this fall, spent time at Agritechnica, and spent time with thousands of farmers at Agritechnica. The feedback that we were getting was more positive than we expected.
Eric Hansotia: Sure. Yeah, I'll take that one, Kristen. You know, if we take a start, look at the industry to start off with, and one of the things that we watch is average age of the fleet, and it's been climbing steeply in EME, as it's been in North America, but let's stay on EME for now. It's almost back to its record peak age, and that's creating just a lot of pent-up demand for new products. So that's number one. That's kind of where the fleet is. Farmer sentiment is actually relatively positive. We had a field tech days this fall, spent time at Agritechnica, and spent time with thousands of farmers at Agritechnica. The feedback that we were getting was more positive than we expected.
Speaker #4: We had a field tech days this fall. Spent time at Agritechnica. And spent time with thousands of farmers at Agritechnica. The feedback that we were getting was more positive than we expected.
Speaker #4: So although the seam of barometer is kind of just hovering in the same spot, which is one of the prediction models, we're bullish that we think the market's going to be up in EME this year.
Eric Hansotia: Although the CEMA barometer is kind of just hovering in the same spot, which is one of the prediction models, we're bullish that we think the market's going to be up in EME in this year.
Eric Hansotia: Although the CEMA barometer is kind of just hovering in the same spot, which is one of the prediction models, we're bullish that we think the market's going to be up in EME in this year.
Speaker #4: And I think Kristen, if I go to your other questions here, overall the demand profiles remain relatively strong. Their dealer inventories, as I made in the comments, or Eric made, were right around four months.
Damon Audia: I think, Kristen, if I go to your other questions here, you know, overall, the demand profiles remain relatively strong. Their dealer inventories, as I made in the comments, or Eric made, were right around four months, so we're right where we want to be from a dealer inventory standpoint. Pricing in Europe finished the year quite strong. We had over 3% pricing in Europe in the fourth quarter on top of that strong volume growth, which exceeded expectations as well. So we have relatively good carryover going into 2026 in Europe, pricing as well. Then you layer on the new product introductions that we showed at Agritechnica. We've got some great new products out there. The Fendt 800 is gonna be a hugely successful product, coupled with some of the other ones. So again, the European team has continued...
Damon Audia: I think, Kristen, if I go to your other questions here, you know, overall, the demand profiles remain relatively strong. Their dealer inventories, as I made in the comments, or Eric made, were right around four months, so we're right where we want to be from a dealer inventory standpoint. Pricing in Europe finished the year quite strong. We had over 3% pricing in Europe in the fourth quarter on top of that strong volume growth, which exceeded expectations as well. So we have relatively good carryover going into 2026 in Europe, pricing as well. Then you layer on the new product introductions that we showed at Agritechnica. We've got some great new products out there. The Fendt 800 is gonna be a hugely successful product, coupled with some of the other ones. So again, the European team has continued...
Sure. Yeah I'll take that 1 person. You know if we take a start look at the industry to start off with and 1 of the things that we watch is um average age of the fleet and it's been climbing steeply in EM as has it, as it's been in North America, but let's stay on the team for now. Um, it's almost back to its record Peak age and that's creating just a lot of pent-up demand for uh, new products and, and as so, that's number 1, that's kind of where the fleet is farmer. Sentiment is actually relatively positive. We had a far a field tech days this fall. Um, spent time at Agra Technica and uh,
Speaker #4: So we're right where we want to be from a dealer inventory standpoint. Pricing in Europe finished the year quite strong. We had over 3% pricing in Europe in the fourth quarter on top of that strong volume growth which exceeded expectations as well.
Eric Hansotia: Although the SEMA barometer is kind of just hovering in the same spot, which is one of the prediction models, we're bullish that we think the market's going to be up in EMEA in this year.
Eric Hansotia: Although the SEMA barometer is kind of just hovering in the same spot, which is one of the prediction models, we're bullish that we think the market's going to be up in EMEA in this year.
Speaker #4: And so we have relatively good carry over going into 2026 in Europe. Pricing as well. And then you layer on the new product introductions that we showed at Agritechnica.
Damon Audia: I think, Kristen, if I go to your other questions here, overall, the demand profiles remain relatively strong. Their dealer inventories, as I made in the comments or Eric made, were right around 4 months. So we're, we're right where we want to be from a dealer inventory standpoint. Pricing in Europe finished the year quite strong. We had over 3% pricing in Europe in the Q4 on top of that strong volume growth, which exceeded expectations as well. And so we have relatively good carryover going into 2026 in Europe, pricing as well. And then you layer on the new product introductions that we showed at Agritechnica. We've got some great new products out there. The Fendt 800 is gonna be a hugely successful product, coupled with some of the other ones.
Damon Audia: I think, Kristen, if I go to your other questions here, overall, the demand profiles remain relatively strong. Their dealer inventories, as I made in the comments or Eric made, were right around 4 months. So we're, we're right where we want to be from a dealer inventory standpoint. Pricing in Europe finished the year quite strong. We had over 3% pricing in Europe in the Q4 on top of that strong volume growth, which exceeded expectations as well. And so we have relatively good carryover going into 2026 in Europe, pricing as well. And then you layer on the new product introductions that we showed at Agritechnica. We've got some great new products out there. The Fendt 800 is gonna be a hugely successful product, coupled with some of the other ones.
The spent time with thousands of farmers at Agra Technica the the feedback that we were getting was more positive than we expected. So although the SEMA barometer is kind of just hovering in the same spot which is 1 of the prediction models. Um we're bullish that we think the Market's going to be up in in this year.
Speaker #4: We've got some great new products out there. The Fendt 800 is going to be a hugely successful product coupled with some of the other ones.
Speaker #4: So again, the European team is continued despite the backdrop here. The European team is continuing to hit on all cylinders and doing very well in gaining share, holding their margins at exceptionally high levels for us, and gives us a lot of confidence as we go into '26 in that market.
Damon Audia: Despite the backdrop here, the European team is continuing to hit on all cylinders and doing very well in gaining share, holding their margins at exceptionally high levels for us, and gives us a lot of confidence as we, as we go into 2026 in that market.
Damon Audia: Despite the backdrop here, the European team is continuing to hit on all cylinders and doing very well in gaining share, holding their margins at exceptionally high levels for us, and gives us a lot of confidence as we, as we go into 2026 in that market.
Speaker #5: That's great. Thank you for that color. And then my follow-up question just is here on the cost savings actions. I think you called out 65 million bottom line benefit in savings in 2025.
Kristen Owen: That's great. Thank you for that color. And then my follow-up question just is here on the cost savings actions. I think you called out $65 million bottom line benefit in savings in 2025, another 40 to 60 in 2026. Can you just remind us where the big buckets of those cost savings are coming from, and maybe tie that back to what you outlined for the 2029 targets, you know, where you're seeing those cost savings come through? Thank you.
Kristen Owen: That's great. Thank you for that color. And then my follow-up question just is here on the cost savings actions. I think you called out $65 million bottom line benefit in savings in 2025, another 40 to 60 in 2026. Can you just remind us where the big buckets of those cost savings are coming from, and maybe tie that back to what you outlined for the 2029 targets, you know, where you're seeing those cost savings come through? Thank you.
Damon Audia: So again, the European team has continued, despite the backdrop here. The European team is continuing to hit on all cylinders and doing very well in gaining share, holding their margins at exceptionally high levels for us, and gives us a lot of confidence as we go into 2026 in that market.
Damon Audia: So again, the European team has continued, despite the backdrop here. The European team is continuing to hit on all cylinders and doing very well in gaining share, holding their margins at exceptionally high levels for us, and gives us a lot of confidence as we go into 2026 in that market.
Speaker #5: Another 40 to 60 in '26. Can you just remind us where the big buckets of those cost savings are coming from and maybe tie that back to what you outlined for the 2029 targets?
We're right around 4 months. So we're we're right. Where we want to be from a dealer inventory, standpoint pricing in Europe, finished the year quite strong, we had over 3%, pricing in Europe, in the fourth quarter, on top of that, strong volume growth with 6 expect as well. And so we have relatively good carryover going into um 2026 in Europe, pricing as well. Then you layer on the new product, introductions that we showed at agrate Technica. We've got some great new products out there. The fendt 800 is going to be a huge hugely successful product coupled with some of the other ones. So again, the European team is continued, despite the backdrop here, the European team is continuing to hit on all cylinders and doing very well in gaining share.
Speaker #5: Where you're seeing those cost savings come through? Thank you.
Speaker #4: Yeah, sure. Good question, Kristen. Kristen and geographically, I would say they're very similar to our revenue split. So we're seeing them across all of our four regions.
Damon Audia: Yeah, sure. Good question, Kristen. And geographically, I would say they're very similar to our revenue split, so we're seeing them across all of our core regions. The vast majority of this is coming through or in the SG&A bucket. So a lot of, as AGCO's a company that has been built through acquisitions, we spent a lot of time the last couple of years really trying to standardize and simplify our processes. Once we've done that, how do we move them into lower cost opportunities, either offshoring them to other AGCO locations or potentially outsourcing them to third-party providers who can do that well for us? And so we've seen a lot of savings-...
Damon Audia: Yeah, sure. Good question, Kristen. And geographically, I would say they're very similar to our revenue split, so we're seeing them across all of our core regions. The vast majority of this is coming through or in the SG&A bucket. So a lot of, as AGCO's a company that has been built through acquisitions, we spent a lot of time the last couple of years really trying to standardize and simplify our processes. Once we've done that, how do we move them into lower cost opportunities, either offshoring them to other AGCO locations or potentially outsourcing them to third-party providers who can do that well for us? And so we've seen a lot of savings-...
Holding their margins at exceptionally, high levels for us and gives us a lot of confidence as we, uh, as we go into 26 in that market.
Mig Dobre: ... That's great. Thank you for that color. And then my, my follow-up question just is here on the cost savings actions. I think you called out $65 million, bottom line benefit in savings in 2025, another $40 to 60 million in 2026. Can you just remind us where the big buckets of those cost savings are coming from, and maybe tie that back to, to what you outlined for the 2029 targets, you know, where you're seeing those cost savings come through? Thank you.
Kristen Owen: ... That's great. Thank you for that color. And then my, my follow-up question just is here on the cost savings actions. I think you called out $65 million, bottom line benefit in savings in 2025, another $40 to 60 million in 2026. Can you just remind us where the big buckets of those cost savings are coming from, and maybe tie that back to, to what you outlined for the 2029 targets, you know, where you're seeing those cost savings come through? Thank you.
Speaker #4: The vast majority of this is coming through or in the SG&A bucket. So a lot of, as AGCO is a company that had been built through acquisitions, we spent a lot of time the last couple of years really trying to standardize and simplify our processes.
Speaker #4: Once we've done that, how do we move them into lower-cost opportunities either offshoring them to other AGCO locations or potentially outsourcing them to third-party providers who can do that well for us?
Damon Audia: Yeah, sure. Good question, Kristen. Geographically, I would say they're very similar to our revenue split. So we're seeing them across all of our core regions. The vast majority of this is coming through or in the SG&A bucket. So a lot of, as AGCO's a company that had been built through acquisitions, we spent a lot of time the last couple of years really trying to standardize and simplify our processes. Once we've done that, how do we move them into lower cost opportunities, either offshoring them to other AGCO locations or potentially outsourcing them to third-party providers who can do that well for us?
Damon Audia: Yeah, sure. Good question, Kristen. Geographically, I would say they're very similar to our revenue split. So we're seeing them across all of our core regions. The vast majority of this is coming through or in the SG&A bucket. So a lot of, as AGCO's a company that had been built through acquisitions, we spent a lot of time the last couple of years really trying to standardize and simplify our processes. Once we've done that, how do we move them into lower cost opportunities, either offshoring them to other AGCO locations or potentially outsourcing them to third-party providers who can do that well for us?
That color. Um, and then my, my follow-up question just is here on the cost savings actions. I think you called out 65 million, uh, bottom line benefit and Savings in 2025 another 40 to 60 and 26. Can you just remind us where the big buckets of those cost savings are coming from and maybe tie that back to to what you outlined for the 2029 targets. You know where you're seeing those cost savings. Come through. Thank you.
Speaker #4: And so we've seen a lot of savings coming from that shift. And at the same time, we've really continued to leverage artificial intelligence more and more within the company where we can automate those processes, streamline that, making it easier for our dealers, easier for our customers, and easier for momentum on the AI side of the house as well by just streamlining the work and moving it into a more technology-advanced product.
Damon Audia: coming from that shift, and at the same time, we've really been trying to leverage artificial intelligence more and more within the company, where we can automate those processes, streamline that, making it easier for our dealers, easier for our customers, and easier for our associates. So we're seeing some good momentum on the AI side of the house as well by just streamlining the work and moving it into a more technology-advanced product. You're right, we've did about $65 million in savings this year. We have another $40 to 60 million in savings coming in 2026. As I'd mentioned on some prior calls, given the industry downturn, we've been looking to accelerate some of those cost actions that we saw in 2026 into 2025. Excuse me. And that was part of the benefit that we saw in the fourth quarter.
Damon Audia: coming from that shift, and at the same time, we've really been trying to leverage artificial intelligence more and more within the company, where we can automate those processes, streamline that, making it easier for our dealers, easier for our customers, and easier for our associates. So we're seeing some good momentum on the AI side of the house as well by just streamlining the work and moving it into a more technology-advanced product.
Damon Audia: You're right, we've did about $65 million in savings this year. We have another $40 to 60 million in savings coming in 2026. As I'd mentioned on some prior calls, given the industry downturn, we've been looking to accelerate some of those cost actions that we saw in 2026 into 2025. Excuse me. And that was part of the benefit that we saw in the fourth quarter.
Speaker #4: You're right. We did about 65 million in savings this year. We have another 40 to 60 million in savings coming in 2026. As I've mentioned on some prior calls, given the industry downturn, we've been looking to accelerate some of those cost actions that we saw in '26 into 2025.
Damon Audia: So we've seen a lot of savings coming from that shift, and at the same time, we've really continued to leverage artificial intelligence more and more within the company, where we can automate those processes, streamline that, making it easier for our dealers, easier for our customers, and easier for our associates. So we're seeing some good momentum on the AI side of the house as well, by just streamlining the work and moving it into a more technology-advanced product. You're right, we've got about $65 million in savings this year. We have another $40 to 60 million in savings coming in 2026. As I'd mentioned on some prior calls, given the industry downturn, we've been looking to accelerate some of those cost actions that we saw in 2026 into 2025. Excuse me.
Damon Audia: So we've seen a lot of savings coming from that shift, and at the same time, we've really continued to leverage artificial intelligence more and more within the company, where we can automate those processes, streamline that, making it easier for our dealers, easier for our customers, and easier for our associates. So we're seeing some good momentum on the AI side of the house as well, by just streamlining the work and moving it into a more technology-advanced product. You're right, we've got about $65 million in savings this year. We have another $40 to 60 million in savings coming in 2026. As I'd mentioned on some prior calls, given the industry downturn, we've been looking to accelerate some of those cost actions that we saw in 2026 into 2025. Excuse me.
Speaker #4: Excuse me. And that was part of the benefit that we saw in the fourth quarter. So as I think about where we are at the end of 2025, the run rate savings is about 190 million.
Damon Audia: So as I think about where we are at the end of 2025, the run rate savings is about $190 million. So we're already in line with what we told the investors in December 2024 as to how we would run rate out of 2026. So we pulled some things in. Now, we got a lot of that in the fourth quarter, so you're still gonna see the absolute dollars come to the bottom line here in 2026. But from a run rate savings, we're already at about 190, so we'll probably get a little bit north of that 200 by the end of 2026. So very well positioned for that particular bucket on delivering to the 14% to 15% adjusted operating margin at mid-cycle that we talked about at, at our last Investor Day.
Damon Audia: So as I think about where we are at the end of 2025, the run rate savings is about $190 million. So we're already in line with what we told the investors in December 2024 as to how we would run rate out of 2026. So we pulled some things in. Now, we got a lot of that in the fourth quarter, so you're still gonna see the absolute dollars come to the bottom line here in 2026. But from a run rate savings, we're already at about 190, so we'll probably get a little bit north of that 200 by the end of 2026. So very well positioned for that particular bucket on delivering to the 14% to 15% adjusted operating margin at mid-cycle that we talked about at, at our last Investor Day.
Yeah, sure, good question. Christian, Christian, and, um, geographically, I would say they're very similar to our revenue split, so we're seeing them, um, across all of our four regions. The vast majority of this is coming through or in the SG&A bucket. So a lot of, as AGCO, a company that had been built through acquisitions, we spent a lot of time the last couple of years really trying to standardize and simplify our processes. Once we've done that, how do we move them into lower cost opportunities, either offshoring them to other AGCO locations or potentially outsourcing them to third-party providers who can do that well for us? And so we've seen a lot of savings coming from that shift. At the same time, we've really been trying to leverage artificial intelligence more and more within the company, where we can automate those processes, streamline that, making it easier for our dealers, easier for our customers, and easier for our associates. So we're seeing some good momentum on the AI side of the house as well.
Speaker #4: So we're already in line with what we've told the investors in December of 2024 as to how we would run rate out of 2026.
Speaker #4: So we've pulled some things in. Now we've got a lot of that in the fourth quarter. So you're still going to see the absolute dollars come to the bottom line here in 2026.
Speaker #4: But from a run rate savings, we're already at about 190. So we'll probably get a little bit north of that 200 by the end of '26.
Damon Audia: And that was part of the benefit that we saw in Q4. So as I think about where we are at the end of 2025, the run rate savings is about $190 million. So we're already in line with what we told the investors in December of 2024 as to how we would run rate out of 2026. So we pulled some things in. Now, we got a lot of that in Q4, so you're still gonna see the absolute dollars come to the bottom line here in 2026. But from a run rate savings, we're already at about 190, so we'll probably get a little bit north of that 200 by the end of 2026.
Damon Audia: And that was part of the benefit that we saw in Q4. So as I think about where we are at the end of 2025, the run rate savings is about $190 million. So we're already in line with what we told the investors in December of 2024 as to how we would run rate out of 2026. So we pulled some things in. Now, we got a lot of that in Q4, so you're still gonna see the absolute dollars come to the bottom line here in 2026. But from a run rate savings, we're already at about 190, so we'll probably get a little bit north of that 200 by the end of 2026.
Um, you're right, we did about 65 million. In savings. This year, we have another 40 to 60 million in savings. Coming in 2026. As I've mentioned on some prior calls, given the industry downturn we've been looking to accelerate some of those cost actions that we saw in 26 into 2025, excuse me. And that was part of the benefit that we saw in the
Speaker #4: So very well positioned for that particular bucket on delivering to the 14 to 15 percent adjusted operating margin at mid-cycle that we talked about at our last investor day.
Speaker #3: Yeah, maybe I'll just add a little bit on that one. This is Project Reimagine that Damon was describing. And 700 projects that are all managed very tightly going through the stage gates, that's taking out the 200 million in overhead.
Eric Hansotia: Yeah, maybe I'll just add a little bit on that one. This is Project Reimagine that Damon was describing, and, you know, 700 projects that are all managed very tightly, going through the stage gates, that's taking out the $200 million in overhead. What's still in front of us is more work left to do on AI, as Damon's talked about. We've got about 160 agentic AI projects in flight right now, 50 of them completely done, but a lot of them in flight. And then shift to low-cost country. That's still in front of us as well. We're aggressively going after that in 2026 and 2027. Much of our supply base is in high-cost countries. We're aggressively moving that. So the overhead kind of towards the tail end and very mature.
Eric Hansotia: Yeah, maybe I'll just add a little bit on that one. This is Project Reimagine that Damon was describing, and, you know, 700 projects that are all managed very tightly, going through the stage gates, that's taking out the $200 million in overhead. What's still in front of us is more work left to do on AI, as Damon's talked about. We've got about 160 agentic AI projects in flight right now, 50 of them completely done, but a lot of them in flight. And then shift to low-cost country. That's still in front of us as well. We're aggressively going after that in 2026 and 2027. Much of our supply base is in high-cost countries. We're aggressively moving that. So the overhead kind of towards the tail end and very mature.Now we're going after product cost really aggressively.
Speaker #3: What's still in front of us is more work left to do on AI, as Damon's talked about. We've got about 160 agentic AI projects in flight right now, 50 of them completely done.
Damon Audia: So very well positioned for that particular bucket on delivering to the 14 to 15% adjusted operating margin at mid-cycle that we talked about at our last Investor Day.
Damon Audia: So very well positioned for that particular bucket on delivering to the 14 to 15% adjusted operating margin at mid-cycle that we talked about at our last Investor Day.
Speaker #3: then shift to low-cost countries. That's still in front of us as well. We're aggressively But a lot of them in flight. And going after that in '26 and '27.
Fourth quarter. So as I think about where we are at the end of 2025, the Run rate savings is about 190 million. So we're already in line with what we told the investors in December of 2024 as to how we would run rate out of 2026. So we pulled some things in now we got a lot of that in the fourth quarter so you're still going to see the absolute dollars, come to the bottom line here in 2026, but from a run rate savings, we're already at about 190, so we'll probably get a little bit north of that 200 by the end of 26, so, very well positioned for that particular bucket on delivering to the 14 to 15%, adjusted operating margin at mid cycle that we talked about at at our last investor day.
Eric Hansotia: Yeah, maybe I'll just add a little bit on that one. This is Project Reimagine that Damon was describing, and, you know, 700 projects that are all managed very tightly, going through the stage gates, that's taking out the $200 million in overhead. What's still in front of us is more work left to do on AI, as Damon's talked about. We've got about 160 agentic AI projects in flight right now, 50 of them completely done, but a lot of them in flight. And then shift to low-cost country. That's still in front of us as well. We're, we're aggressively going after that in 2026 and 2027. Much of our supply base is in high-cost countries. We're, we're aggressively moving that. So the overhead, kind of, towards the tail end and very mature.
Eric Hansotia: Yeah, maybe I'll just add a little bit on that one. This is Project Reimagine that Damon was describing, and, you know, 700 projects that are all managed very tightly, going through the stage gates, that's taking out the $200 million in overhead. What's still in front of us is more work left to do on AI, as Damon's talked about. We've got about 160 agentic AI projects in flight right now, 50 of them completely done, but a lot of them in flight. And then shift to low-cost country. That's still in front of us as well. We're, we're aggressively going after that in 2026 and 2027. Much of our supply base is in high-cost countries. We're, we're aggressively moving that. So the overhead, kind of, towards the tail end and very mature.
Speaker #3: Much of our supply base is in high-cost countries. We're aggressively moving that. So overhead kind of towards the tail end and very mature. Now we're going after product costs really
Speaker #3: Much of our supply base is in high-cost countries. We're aggressively moving that. So overhead kind of towards the tail end and very mature. Now we're going after product costs really aggressively.
Eric Hansotia: Now we're going after product cost really aggressively.
Speaker #1: Again, if you have a question, please press star, and then one. The next question will come from Mig Dobre with Barrett. Please go
Operator: Again, if you have a question, please press star and then one. The next question will come from Mig Dobre with Baird. Please go ahead.
Operator: Again, if you have a question, please press star and then one. The next question will come from Mig Dobre with Baird. Please go ahead.
Speaker #1: ahead. Hey, good
Mig Dobre: Hey, good morning, everyone. I found your comments on 2025 being the biggest year of share gain to be really interesting, and I'm wondering if you can maybe give us a little more context there. As I understood it, it's North America. What's sort of specific to some of the things that you've been doing relative to maybe competitors pulling back from the market, if that at all was a factor? And PTX, you know, can we talk a little bit about how you see that progressing as well? It seems like the markets, to some extent, are starting to stabilize here. Do you think PTX can be a source of outgrowth, especially on the retrofitting part of the business, as we think about 2026 and even 2027?
Mig Dobre: Hey, good morning, everyone. I found your comments on 2025 being the biggest year of share gain to be really interesting, and I'm wondering if you can maybe give us a little more context there. As I understood it, it's North America. What's sort of specific to some of the things that you've been doing relative to maybe competitors pulling back from the market, if that at all was a factor? And PTX, you know, can we talk a little bit about how you see that progressing as well? It seems like the markets, to some extent, are starting to stabilize here. Do you think PTX can be a source of outgrowth, especially on the retrofitting part of the business, as we think about 2026 and even 2027?
Speaker #6: morning, everyone. I found your comments on 2025 being the biggest year of shared gains to be really interesting. And I'm wondering if you can maybe give us a little more context there as I understood it.
Yeah. Maybe I'll just add a little bit on that 1. This is project reimagine. That demon was describing and uh, you know, 700 projects that are all managed, very tightly going through the stage Gates, that's taking out the 200 million overhead, what's still in front of us, is more work left to do on AI as Damon's talked about. We've got about 160 agentic, um, AI projects, um, in Flight right now, 50 of them completely done, but a lot of them in flight and then shift to low-cost country that's still in front of us as well. We're, we're aggressively going after that in 26 and 27. Um much of our supply bases and high cost countries. We're we're aggressively moving that. So the overhead
Eric Hansotia: Now we're going after product cost really aggressively.
Eric Hansotia: Now we're going after product cost really aggressively.
Speaker #6: It's North America. What's sort of specific to some of the things that you've been doing relative to maybe competitors pulling back from the market if that at all was a factor?
Kind of towards the tail end and very mature. Now, we're going after product costs really aggressively.
Operator: Again, if you have a question, please press star and then one. The next question will come from Mig Dobre with Baird. Please go ahead.
Operator: Again, if you have a question, please press star and then one. The next question will come from Mig Dobre with Baird. Please go ahead.
Speaker #6: And PTX, can we talk a little bit about how you see that progressing as well? It seems like the markets, to some extent, are starting to stabilize here.
Mig Dobre: Hey, good morning, everyone. I found your comments on 2025 being the biggest year of share gain to be really interesting. And I'm wondering if you can maybe give us a little more context there. As I understood it, it's North America. What's sort of specific to some of the things that you've been doing relative to maybe competitors pulling back from the market, if that at all was a factor? And PTx, you know, can we talk a little bit about how you see that progressing as well? It seems like the markets, to some extent, are starting to stabilize here. Do you think PTx can be a source of outgrowth, especially on the retrofitting part of the business, as we think about 2026 and even 2027?
Mig Dobre: Hey, good morning, everyone. I found your comments on 2025 being the biggest year of share gain to be really interesting. And I'm wondering if you can maybe give us a little more context there. As I understood it, it's North America. What's sort of specific to some of the things that you've been doing relative to maybe competitors pulling back from the market, if that at all was a factor? And PTx, you know, can we talk a little bit about how you see that progressing as well? It seems like the markets, to some extent, are starting to stabilize here. Do you think PTx can be a source of outgrowth, especially on the retrofitting part of the business, as we think about 2026 and even 2027?
Again, if you have a question, please press star and then 1. The next question will come from MG Dobre with Barrett. Please go ahead.
Hey, good morning everyone. Um
Speaker #6: Do you think PTX can be a source of outgrowth, especially on a retrofitting part of the business as we think about '26 and even '27?
Speaker #6: Do you think PTX can be a source of outgrowth, especially on a retrofitting part of the business as we think about '26 and even '27?
Speaker #3: Yeah. Thanks, Meg. Few comments. One, overall, AGCO turned in the highest market share in our history in 2025. And that's global. So all over, when you take a look at where farmers are seeing value, they voted with their order book to come to AGCO.
Eric Hansotia: Yeah. Thanks, Mig. A few comments. One, overall, AGCO turned in the highest market share in our history in 2025, and that's global. So all over, when you take a look at where farmers are seeing value, they voted with their order book to come to AGCO. What's underneath that? Net Promoter Score, which is our customer feedback to AGCO, hit its all-time high in 2025. So the just the perception of the overall value of the product, the dealer performance, the services, the data management, data platform, all of that is coming together, and we feel like it's fueled for growth. We had a record patent filing in 2025, so we think we've got a great set of innovations continuing to come through. So that's the macro.
Eric Hansotia: Yeah. Thanks, Mig. A few comments. One, overall, AGCO turned in the highest market share in our history in 2025, and that's global. So all over, when you take a look at where farmers are seeing value, they voted with their order book to come to AGCO. What's underneath that? Net Promoter Score, which is our customer feedback to AGCO, hit its all-time high in 2025. So the just the perception of the overall value of the product, the dealer performance, the services, the data management, data platform, all of that is coming together, and we feel like it's fueled for growth. We had a record patent filing in 2025, so we think we've got a great set of innovations continuing to come through. So that's the macro.
Speaker #3: What's underneath that? Net promoter score, which is our customer feedback to AGCO, hit its all-time high in '25. So the perception of the overall value of the product, the dealer performance, the services, the data management, data platform, all of that is coming together.
Editors, uh, pulling back from the market. If, if that at all, was a factor and uh, PTX, you know, can we talk a little bit about how you see, um, that progressing as well? It seems like the market is to some extent are starting to stabilize here. Do you think PTX can be a source of outgrowth, especially on a retrofitting part of the business as we think about 26 and even 27?
Eric Hansotia: Yeah. Thanks, Mig. A few comments. One, overall, AGCO turned in the highest market share in our history in 2025, and that's global. So all over, when you take a look at where farmers are seeing value, they voted with their order book to come to AGCO. What's underneath that? Net Promoter Score, which is our customer feedback to AGCO, hit its all-time high in 2025. So the perception of the overall value of the product, the dealer performance, the services, the data management, data platform, all of that is coming together, and we feel like it's fueled for growth. We had a record patent filing in 2025, so we think we've got a great set of innovations continuing to come through. So that's the macro.
Eric Hansotia: Yeah. Thanks, Mig. A few comments. One, overall, AGCO turned in the highest market share in our history in 2025, and that's global. So all over, when you take a look at where farmers are seeing value, they voted with their order book to come to AGCO. What's underneath that? Net Promoter Score, which is our customer feedback to AGCO, hit its all-time high in 2025. So the perception of the overall value of the product, the dealer performance, the services, the data management, data platform, all of that is coming together, and we feel like it's fueled for growth. We had a record patent filing in 2025, so we think we've got a great set of innovations continuing to come through. So that's the macro.
Speaker #3: And we feel like it's fueled for growth. We had a record patent filing in 2025. So we think we've got a great set of innovations continuing to come through.
Yeah, thanks Meg. Few comments, 1 overall Echo turned in the highest market share in our history in 2025.
Speaker #3: So that's the macro. Then you drill into North America, it was the largest one-year gain in market share for large AG in North America.
Eric Hansotia: Then you drill into North America, it was the largest one-year gain in market share for large ag in North America. Largely, our portfolio has been what it is. It's now working with the dealers to get the most out of our partnership with our dealers to serve customers. We've got several focus areas. It's not so much about conquering white space, it's largely about penetrating the space the dealers are already in. And so we've been looking at performance by county and getting a very granular work plan together with our major dealers and saying: How do we go change how we're supporting the farmers? About 85% of our big dealers now have adopted FarmerCore, at least the early phases of it.
Eric Hansotia: Then you drill into North America, it was the largest one-year gain in market share for large ag in North America. Largely, our portfolio has been what it is. It's now working with the dealers to get the most out of our partnership with our dealers to serve customers. We've got several focus areas. It's not so much about conquering white space, it's largely about penetrating the space the dealers are already in. And so we've been looking at performance by county and getting a very granular work plan together with our major dealers and saying: How do we go change how we're supporting the farmers? About 85% of our big dealers now have adopted FarmerCore, at least the early phases of it.
Speaker #3: Largely, our portfolio has been what it is. It's now working with the dealers to get the most out of our partnership with our dealers to serve customers.
Speaker #3: We've got several focus areas. It's not so much about conquering white space. It's largely about penetrating the space the dealers are already in. And so we've been looking at performance by county and getting a very granular work plan together with our major dealers and saying, "How do we go change how we're supporting the farmers?" About 85% of our big dealers now have adopted farmer core at least the early phases of it.
Eric Hansotia: Then you drill into North America; it was the largest one-year gain in market share for large ag in North America. Largely, our portfolio has been what it is. It's, it's now working with the dealers to get the most out of our, our partnership with our dealers to serve customers. We've got several focus areas. It's not so much about conquering white space; it's largely about penetrating the space the dealers are already in. And so we've been looking at performance by county and getting a very granular work plan together with our, our major dealers and saying: How do we go change how we're, how we're supporting the farmers? About 85% of our big dealers now have adopted Farmer Core, at least the early phases of it.
Eric Hansotia: Then you drill into North America; it was the largest one-year gain in market share for large ag in North America. Largely, our portfolio has been what it is. It's, it's now working with the dealers to get the most out of our, our partnership with our dealers to serve customers. We've got several focus areas. It's not so much about conquering white space; it's largely about penetrating the space the dealers are already in. And so we've been looking at performance by county and getting a very granular work plan together with our, our major dealers and saying: How do we go change how we're, how we're supporting the farmers? About 85% of our big dealers now have adopted Farmer Core, at least the early phases of it.
Uh, and that's Global. So, all over, when you take a look at where farmers are seeing value, they voted with their, their order book, uh, to come to Echo, what's underneath that net promoter score, which is a, a customer feedback to Echo. Hit, its all-time high in 25. So, the, the, the, this, the perception of the overall value of the product, the dealer performance, the service is the data management data platform. All of that is coming together and and we feel like it's it's uh fueled for growth. We had a record patent filing in 2025. So we think we've got a great set of Innovations continuing to come through. So that's the macro then you drill in the North America. It was the largest 1 year gain in market, share, um, for large egg in in North America largely our portfolio has been what it is. It's it's now working with the dealers to get the most out of our, our partnership with our dealers to
Speaker #3: They're showing where their service trucks are. And doing much more of the work on farm. So that farmer core combined with detailed work with our dealers, matched up with an industry-leading product portfolio, we think is starting to show the early days.
Eric Hansotia: They're showing where their service trucks are and doing much more of the work on farm. So, you know, that FarmerCore, combined with detailed work with our dealers, matched up with an industry-leading product portfolio, we think is starting to show the early days. We also made a bit of an org change to even sharpen our focus on North America. So that's kind of the machinery side of the business. Now, if we switch over to PTx, had 14 product launches. There's essentially an innovation and an education side to that business as well. On innovation, we had 14 product launches, way ahead of what we would have expected a year or two ago. The feedback at Winter Conference, as I talked about, I go to that every single year, super strong. Some of the best farmers in the world.
Eric Hansotia: They're showing where their service trucks are and doing much more of the work on farm. So, you know, that FarmerCore, combined with detailed work with our dealers, matched up with an industry-leading product portfolio, we think is starting to show the early days. We also made a bit of an org change to even sharpen our focus on North America. So that's kind of the machinery side of the business. Now, if we switch over to PTx, had 14 product launches. There's essentially an innovation and an education side to that business as well.
Serve customers. We've got several.
Speaker #3: We also made a bit of an org change to even sharpen our focus on North America. So that's kind of the machinery side of the business.
Speaker #3: Now, if we switch over to PTX, had 14 product launches. There's essentially an innovation and an education side to that business as well. On innovation, we had 14 product launches.
Eric Hansotia: They're showing where their service trucks are and doing much more of the work on farm. You know, that Farmer Core, combined with detailed work with our dealers, matched up with an industry-leading product portfolio, we think is starting to show the early days. We also made a bit of an org change to even sharpen our focus on North America. So that's kind of the machinery side of the business. Now, if we switch over to PTx, had 14 product launches. There's essentially an innovation and an education side to that business as well. On innovation, we had 14 product launches, way ahead of what we would have expected a year or two ago. The feedback at winter conference, as I talked about, I go to that every single year, super strong. Some of the best farmers in the world.
Eric Hansotia: They're showing where their service trucks are and doing much more of the work on farm. You know, that Farmer Core, combined with detailed work with our dealers, matched up with an industry-leading product portfolio, we think is starting to show the early days. We also made a bit of an org change to even sharpen our focus on North America. So that's kind of the machinery side of the business. Now, if we switch over to PTx, had 14 product launches. There's essentially an innovation and an education side to that business as well. On innovation, we had 14 product launches, way ahead of what we would have expected a year or two ago. The feedback at winter conference, as I talked about, I go to that every single year, super strong. Some of the best farmers in the world.
Eric Hansotia: On innovation, we had 14 product launches, way ahead of what we would have expected a year or two ago. The feedback at Winter Conference, as I talked about, I go to that every single year, super strong. Some of the best farmers in the world. I think it was one of our best winter conferences. So the innovation engine is going strongly. But the bulk of the work now is on channel development and establishing our elite dealers, which is those dealers that carry the full product line.
Speaker #3: Way ahead of what we would have expected a year or two ago. The feedback at winter conferences I talked about, I go to that every single year.
Speaker #3: Super strong. Some of the best farmers in the world. I think it was one of our best winter conferences. So the innovation engine is going strongly.
Eric Hansotia: I think it was one of our best winter conferences. So the innovation engine is going strongly. But the bulk of the work now is on channel development and establishing our elite dealers, which is those dealers that carry the full product line. They're the tech dealers. They don't sell tractors and combines; they just sell tech. Establishing them, we've grown that to a little over 70 dealers now. We only had about 40... and we had added about 40 in 2025. So it's a channel story there as well. If you look at retrofit, it only is down about 1/3 as much as the overall market.
Speaker #3: But the bulk of the work now is on channel development. And establishing our elite dealers which is those dealers that carry the full product line.
Focus areas. Um, it's not so much about conquering, white space, it's largely about penetrating the space. The dealers are already in. And so we've been looking at performance by county and getting a very granular, um, work plan together with our, our major dealers and saying, how do we go change? How we're, how we're um supporting the farmers. Um, about 85% of our big dealers now, have their have adopted farmer core at least the early phases of it, they're showing where their service trucks are and doing much more of the work on farm. So you know, that farmer core combined with detailed work with our dealers, matched up with the industry-leading product portfolio. We think is starting to show the early days. We, we also made a bit of an org change to even sharpen our focus on North America. So that's kind of the machine res side of the business. Now, if we switch over to the PTX,
Speaker #3: They're the tech sell tech. Establishing them. dealers. They don't sell tractors and combines. They just We've grown that to a little over 70 dealers now.
Eric Hansotia: They're the tech dealers. They don't sell tractors and combines; they just sell tech. Establishing them, we've grown that to a little over 70 dealers now. We only had about 40... and we had added about 40 in 2025. So it's a channel story there as well. If you look at retrofit, it only is down about 1/3 as much as the overall market.So our thesis all along about serving farmers, serving the mixed fleet, serving every farmer regardless of brand, is playing out as long as you keep innovating, that farmers are thirsty to be, whether they're in a peak or a trough market, they're thirsty to be more productive and profitable.
Uh, had 14 product launches. There's essentially an innovation and an education side to that business as well.
Speaker #3: We only had about 40. And we have added about 40 in 2025. So it's a channel story there as well. If you look at retrofit, it only is down about a third as much as the overall market.
On innovation, we had 14 product launches way ahead of what we would have expected a year or two ago. The feedback at Winter Conference—as I talked about, I go to that every single year.
Eric Hansotia: I think it was one of our best winter conferences. So the innovation engine is going strongly. But the bulk of the work now is on channel development and establishing our elite dealers, which is those dealers that carry the full product line. They're the tech dealers. They don't sell tractors and combines; they just sell tech. Establishing them. We've grown that to a little over 70 dealers now. We only had about 40, and we added about 40 in 2025. So it's a channel story there as well. If you look at retrofit, it only is down about a third as much as the overall market. So our thesis all along about serving farmers, serving the mixed fleet, serving every farmer, regardless of brand, is playing out.
Eric Hansotia: I think it was one of our best winter conferences. So the innovation engine is going strongly. But the bulk of the work now is on channel development and establishing our elite dealers, which is those dealers that carry the full product line. They're the tech dealers. They don't sell tractors and combines; they just sell tech. Establishing them. We've grown that to a little over 70 dealers now. We only had about 40, and we added about 40 in 2025. So it's a channel story there as well. If you look at retrofit, it only is down about a third as much as the overall market. So our thesis all along about serving farmers, serving the mixed fleet, serving every farmer, regardless of brand, is playing out.
Speaker #3: So our thesis, all along, about serving farmers, serving the mixed fleet, serving every farmer regardless of brand, is playing out. As long as you keep innovating.
Eric Hansotia: So our thesis all along about serving farmers, serving the mixed fleet, serving every farmer regardless of brand, is playing out as long as you keep innovating, that farmers are thirsty to be, whether they're in a peak or a trough market, they're thirsty to be more productive and profitable.
Speaker #3: That farmers are thirsty to be whether they're in a peak or a trough market, they're thirsty to be more productive and
Speaker #3: profitable. Appreciate the callout.
Super strong. Um, some of the best farmers in the world. Um, I think it was 1 of our best winter conferences, so the Innovation engine is going strongly. Um, but the the bulk of the work now is is on channel development and uh, establishing our our Elite dealers, which is those dealers that carry the full product line, they're the tech dealers. They don't sell tractors in combines, they just sell Tech, um, establishing them. We've grown that to a little over 70 dealers, now,
Mig Dobre: Appreciate the color. That was really helpful. And then, I guess my follow-up, going back to EMEA, can you talk a little bit about how we should think about margins? I mean, margin here in 2025 surprised, at least relative to our model, pretty consistently. Should we be thinking additional margin expansion in 2026, especially as maybe volumes here get a little bit better? Thank you.
Mig Dobre: Appreciate the color. That was really helpful. And then, I guess my follow-up, going back to EMEA, can you talk a little bit about how we should think about margins? I mean, margin here in 2025 surprised, at least relative to our model, pretty consistently. Should we be thinking additional margin expansion in 2026, especially as maybe volumes here get a little bit better? Thank you.
Speaker #6: That was really helpful. And then I guess my follow-up, going back to Amia, can you talk a little bit about how we should think about margins?
Um, we only had about 40, and we have added about 40 in 2025, so—
It's a Channel story there as well. If you look at retrofit,
Speaker #6: I mean, margin here in '25 surprised at least relative to our model pretty consistently. Should we be thinking additional margin expansion in '26, especially as maybe volumes here get a little bit better?
It only is down about a third as much as the overall market. So our thesis all along about serving Farmers serving the mixed Fleet serving every farmer regardless of brand.
Eric Hansotia: As long as you keep innovating, farmers are thirsty to be, whether they're in a peak or a trough market, they're thirsty to be more productive and profitable.
Eric Hansotia: As long as you keep innovating, farmers are thirsty to be, whether they're in a peak or a trough market, they're thirsty to be more productive and profitable.
Speaker #6: Thank you.
Speaker #3: Yeah, Meg, overall, I think you're going to see the European margins stay relatively consistent here in '26 versus 2025 for on an annual basis.
Damon Audia: Yeah, Nick, Nick, overall, I think you're gonna see the European margins stay relatively consistent here in 2026 versus 2025 on an annual basis. It may mix a little bit in quarter, depending on production schedules, timing of pricing actions, but generally speaking, I would expect to see Europe right around that 15% operating margin where they finished last year.
Damon Audia: Yeah, Nick, Nick, overall, I think you're gonna see the European margins stay relatively consistent here in 2026 versus 2025 on an annual basis. It may mix a little bit in quarter, depending on production schedules, timing of pricing actions, but generally speaking, I would expect to see Europe right around that 15% operating margin where they finished last year.
Is playing out as long as you keep innovating. Um, that that farmers are thirsty to be, whether they're in a peak or a trough Market, they're thirsty to be more productive and profitable.
Mig Dobre: Appreciate that, Colin. That was really helpful. And then, I guess my follow-up, going back to EMEA, can you talk a little bit about how we should think about margins? I mean, margin here in 2025 surprised, at least relative to our model, pretty consistently. Should we be thinking additional margin expansion in 2026, especially as maybe volumes here get a little bit better? Thanks.
Mig Dobre: Appreciate that, Colin. That was really helpful. And then, I guess my follow-up, going back to EMEA, can you talk a little bit about how we should think about margins? I mean, margin here in 2025 surprised, at least relative to our model, pretty consistently. Should we be thinking additional margin expansion in 2026, especially as maybe volumes here get a little bit better? Thanks.
Speaker #3: It may mix a little bit in quarter depending on production schedules, timing of pricing actions. But generally speaking, I would expect to see Europe right around that 15% operating margin where they finished last year.
Speaker #1: The next question will come from Jamie Cook with Truist. Please go
Operator: The next question will come from Jamie Cook with Truist. Please go ahead.
Operator: The next question will come from Jamie Cook with Truist. Please go ahead.
Damon Audia: Yeah, Nick, Nick, overall, I think you're gonna see the European margins stay relatively consistent, here in 2026 versus 2025 for on an annual basis. It may mix a little bit in quarter, depending on production schedules, timing of pricing actions, but, but generally speaking, I would expect to see Europe right around that 15% operating margin where they finished, last year.
Damon Audia: Yeah, Nick, Nick, overall, I think you're gonna see the European margins stay relatively consistent, here in 2026 versus 2025 for on an annual basis. It may mix a little bit in quarter, depending on production schedules, timing of pricing actions, but, but generally speaking, I would expect to see Europe right around that 15% operating margin where they finished, last year.
Speaker #1: ahead. Hi, good
Jamie Cook: Hi, good morning. A nice quarter. I guess, David, just two questions. You just answered the question on EME margins. Just wondering how we're thinking about margins, or sorry, losses in North America, you know, in 2026 relative to 2025, given the top-line outlook and how—where we end up, you know, in South America with concerns about some of the discounting. I guess then on the positive, I—the operating cash flow number was very strong in Q4 for the year. So was there anything unusual in that? Is there any reason to believe, you know, free cash flow conversion has opportunities to improve from here? Thank you.
Jamie Cook: Hi, good morning. A nice quarter. I guess, David, just two questions. You just answered the question on EME margins. Just wondering how we're thinking about margins, or sorry, losses in North America, you know, in 2026 relative to 2025, given the top-line outlook and how—where we end up, you know, in South America with concerns about some of the discounting. I guess then on the positive, I—the operating cash flow number was very strong in Q4 for the year. So was there anything unusual in that? Is there any reason to believe, you know, free cash flow conversion has opportunities to improve from here? Thank you.
Speaker #7: morning. A nice quarter. I guess, David, just two questions. You just answered the question on e-margins. Just wondering how we're thinking about margins or, sorry, losses in North America in 2026 relative to 2025 given the top-line outlook.
Speaker #7: And where we end up in South America with concerns about some of the discounting? I guess then on the flow number was very strong in the positive, the operating cash fourth quarter for the year.
Yeah, make some big overall. I think you're going to see the European margins. Stay relatively consistent, um, here in 26 versus 2025 for on an annual basis. It may mix a little bit in quarter depending on production schedules, timing of pricing actions, but but generally speaking, I would expect to see Europe right around that 15% operating margin where they finished uh, last year.
Operator: The next question will come from Jamie Cook with Truist. Please go ahead.
Operator: The next question will come from Jamie Cook with Truist. Please go ahead.
Speaker #7: So was there anything unusual in that? Is there any reason to believe free cash flow conversion has opportunities to improve from here? Thank
Jamie Cook: Hi, good morning. A nice quarter. I guess, David, just two questions. You just answered the question on E margins. Just wondering how we're thinking about margins, or sorry, losses in North America, you know, in 2026 relative to 2025, given the top-line outlook and how where we end up, you know, in South America with concerns about some of the discounting. I guess then on the positive, I, the operating cash flow number was very strong in Q4 for the year. So was there anything unusual in that? Is there any reason to believe, you know, free cash flow conversion has opportunities to improve from here? Thank you.
Jamie Cook: Hi, good morning. A nice quarter. I guess, David, just two questions. You just answered the question on E margins. Just wondering how we're thinking about margins, or sorry, losses in North America, you know, in 2026 relative to 2025, given the top-line outlook and how where we end up, you know, in South America with concerns about some of the discounting. I guess then on the positive, I, the operating cash flow number was very strong in Q4 for the year. So was there anything unusual in that? Is there any reason to believe, you know, free cash flow conversion has opportunities to improve from here? Thank you.
The next question will come from Jamie Cook with Jefferies. Please go ahead.
Speaker #7: you. Yeah, good morning, Jamie.
Damon Audia: Yeah, good morning, Jamie. And, I think on, on North America, we're, as I am—in one of the earlier questions, we will be underproducing relative to retail in, in the first half of the year. So you're gonna see the, the North American margins are, are gonna be negative, likely for the first two to three quarters. A little bit too early to, to see how they play out in Q4 right now, given the, the industry outlook. But I think for us, we'll see Q1 and Q2 will likely be worse, than Q1 and Q2 last year, given the underproduction and the decline in the large ag market. And then hopefully we'll start to, see the margins improve year-over-year, but still be down in Q3, which is likely a negative for the full year.
Damon Audia: Yeah, good morning, Jamie. And, I think on, on North America, we're, as I am—in one of the earlier questions, we will be underproducing relative to retail in, in the first half of the year. So you're gonna see the, the North American margins are, are gonna be negative, likely for the first two to three quarters. A little bit too early to, to see how they play out in Q4 right now, given the, the industry outlook. But I think for us, we'll see Q1 and Q2 will likely be worse, than Q1 and Q2 last year, given the underproduction and the decline in the large ag market. And then hopefully we'll start to, see the margins improve year-over-year, but still be down in Q3, which is likely a negative for the full year.
Speaker #3: And I think on North America, as I am one of the earlier questions, we will be underproducing relative to retail in the first half of the year.
Speaker #3: So you're going to see the North American margins are going to be negative likely for the first two to three quarters a little bit too early to see how they play out in the fourth quarter right now given the industry outlook.
Speaker #3: But I think for us, we'll see Q1 and Q2 will likely be worse than Q1 and Q2 last year given the underproduction and the decline in the large AG market.
2026 relative to 2025 given the Top Line Outlook and how where we end up um you know, in South America with concerns about some of the discounting, um, I guess. Then on the positive I the operating cash flow number um was very strong in the fourth quarter for the year. So was there anything unusual in that? Is there any reason to believe? You know free. Cash flow conversion has opportunities uh to improve from here. Thank you.
Damon Audia: Yeah, good morning, Jamie. And, I think on North America, we're, as I am in one of the earlier questions, we will be underproducing relative to retail in the first half of the year. So you're gonna see the North American margins are gonna be negative, likely for the first two to three quarters. A little bit too early to see how they play out in Q4 right now, given the industry outlook. But I think for us, we'll see Q1 and Q2 will likely be worse than Q1 and Q2 last year, given the underproduction and the decline in the large ag market. And then hopefully we'll start to see the margins improve year-over-year, but still be down in Q3, which is likely a negative for the full year.
Damon Audia: Yeah, good morning, Jamie. And, I think on North America, we're, as I am in one of the earlier questions, we will be underproducing relative to retail in the first half of the year. So you're gonna see the North American margins are gonna be negative, likely for the first two to three quarters. A little bit too early to see how they play out in Q4 right now, given the industry outlook. But I think for us, we'll see Q1 and Q2 will likely be worse than Q1 and Q2 last year, given the underproduction and the decline in the large ag market. And then hopefully we'll start to see the margins improve year-over-year, but still be down in Q3, which is likely a negative for the full year.
Speaker #3: And then hopefully, we'll start to see the margins improve year over year, but still be down in Q3, which is likely a negative for the full year.
Damon Audia: But we'll see how that Q4 starts to pan out. Q4 free cash flow, again, as I said in my comments, just great performance, record free cash flow for the year. A lot of that was to do with the incremental volume that we saw flow through in North America and the significant volume increase we saw in South, sorry, in Europe. As you know, Jamie, we sell those receivables to AGCO Finance, so that receivable translates into cash for us very quickly. So great results for us there. As I think about 2026, we still feel comfortable in that conversion ratio of 75 to 100% of adjusted net income, so we'll stick with that for 2026.
Speaker #3: But we'll see how that fourth quarter starts to pan out. Fourth quarter free cash flow, again, as I said, my comments just great performance, record free cash flow for the year.
Damon Audia: But we'll see how that Q4 starts to pan out. Q4 free cash flow, again, as I said in my comments, just great performance, record free cash flow for the year. A lot of that was to do with the incremental volume that we saw flow through in North America and the significant volume increase we saw in South, sorry, in Europe. As you know, Jamie, we sell those receivables to AGCO Finance, so that receivable translates into cash for us very quickly. So great results for us there. As I think about 2026, we still feel comfortable in that conversion ratio of 75 to 100% of adjusted net income, so we'll stick with that for 2026.
Speaker #3: A lot of that was to do with the incremental volume that we saw flow through in North America and the significant volume increase we saw in Europe as you know, Jamie, we sell those receivables to AGCO Finance.
Speaker #3: So that receivable translates into cash for us very quickly. So great results for us there. As I think about '26, we still feel comfortable in that conversion ratio of 75 to 100% of adjusted net income.
Damon Audia: So we'll see how that fourth quarter starts to pan out. Fourth quarter free cash flow, again, as I said in my comments, just great performance, record free cash flow for the year. A lot of that was to do with the incremental volume that we saw flow through in North America and the significant volume increase we saw in South, sorry, in Europe. As you know, Jamie, we sell those receivables to AGCO Finance, so that receivable translates into cash for us very quickly. So great results for us there. As I think about 2026, we still feel comfortable in that conversion ratio of 75 to 100% of adjusted net income, so we'll stick with that for 2026.
Damon Audia: So we'll see how that fourth quarter starts to pan out. Fourth quarter free cash flow, again, as I said in my comments, just great performance, record free cash flow for the year. A lot of that was to do with the incremental volume that we saw flow through in North America and the significant volume increase we saw in South, sorry, in Europe. As you know, Jamie, we sell those receivables to AGCO Finance, so that receivable translates into cash for us very quickly. So great results for us there. As I think about 2026, we still feel comfortable in that conversion ratio of 75 to 100% of adjusted net income, so we'll stick with that for 2026.
Yeah, good morning Jamie and uh I think on on North America we're as I am in 1 of the earlier questions, we will be under producing relative to retail in the first half of the year. So you're going to see the, the North American margins are are going to be negative. Um, likely for the first 2 to 3 quarters. Um, a little bit too early to, uh, to see how they play out in the fourth quarter right now, given the the industry Outlook, but I think for us, uh, we'll see q1 and Q2 will likely be worse, um, than q1 and Q2 last year, given the underproduction and the decline in the large egg market. And then hopefully we'll start to, uh, see the margins improve year-over-year, but still be down in Q3, which is likely a negative for the full year. Um, so but we'll see how that fourth quarter starts to pan out.
Speaker #3: So we'll stick with that for 2026. If I think about working capital, here for '26, again, I expect us to continue to refine our inventory but we'll see how the build comes up with the team has done a really nice job with forecasting and getting the scheduling in our factories better, helping take out some of that working capital in the system.
Damon Audia: If I think about working capital, here for 2026, again, I expect us to continue to refine our inventory, but we'll see how the build comes up with the team has done a really nice job with forecasting and getting the scheduling in our factories better, helping take out some of that working capital in the system. So I'm hopeful that there's a little bit of a modest improvement in working capital, in 2026 as well.
Damon Audia: If I think about working capital, here for 2026, again, I expect us to continue to refine our inventory, but we'll see how the build comes up with the team has done a really nice job with forecasting and getting the scheduling in our factories better, helping take out some of that working capital in the system. So I'm hopeful that there's a little bit of a modest improvement in working capital, in 2026 as well.
Speaker #3: So I'm hopeful that there's a little bit of a modest improvement in working capital in 2026 as
Speaker #3: well. Thank
Speaker #7: you. The next question
Jamie Cook: Thank you.
Jamie Cook: Thank you.
Damon Audia: If I think about working capital, here for 2026, again, I expect us to continue to refine our inventory, but we'll see how the build comes up with. The team has done a really nice job with forecasting and getting the scheduling in our factories better, helping take out some of that working capital in the system. So I'm hopeful that there's a little bit of a modest improvement in working capital, in 2026 as well.
Damon Audia: If I think about working capital, here for 2026, again, I expect us to continue to refine our inventory, but we'll see how the build comes up with. The team has done a really nice job with forecasting and getting the scheduling in our factories better, helping take out some of that working capital in the system. So I'm hopeful that there's a little bit of a modest improvement in working capital, in 2026 as well.
Operator: The next question will come from Jerry Revich with Wells Fargo. Please go ahead.
Operator: The next question will come from Jerry Revich with Wells Fargo. Please go ahead.
Speaker #1: will come from Jerry Revich with Wells Fargo. Please go ahead.
Speaker #8: Yes, hi. Good morning, everybody. I'm wondering if we could just talk about your precision planning product lines specifically. What kind of demand are you anticipating for this planting season?
Jerry Revich: Yes. Hi. Good morning, everybody. I'm wondering if we just talk about your Precision Planting product line, specifically, what kind of demand are you anticipating for this planting season? How does 2026 versus 2025 look for that product on a retrofit and first fit basis, if you wouldn't mind?
Jerry Revich: Yes. Hi. Good morning, everybody. I'm wondering if we just talk about your Precision Planting product line, specifically, what kind of demand are you anticipating for this planting season? How does 2026 versus 2025 look for that product on a retrofit and first fit basis, if you wouldn't mind?
Speaker #8: How does '26 versus '25 look for that product on a retrofit and first fit basis if you wouldn't mind?
Fourth quarter, free cash flow. Again, I so I said my comments is great performance record free cash flow for the year. A lot of that was to do with the incremental volume that we saw flow through in North America and the significant volume increase. We saw in South sorry in Europe as you know, Jamie, we sell those receivables to add Co Finance so that receivable translates into cash for us very quickly. So great result for us there. As I think about 26, uh, we still feel comfortable in that option ratio of 75 to 100% of, uh, of adjusted net income. So, we'll stick with that, for, uh, for 2026. If I think about working capital, uh, here for 26. Uh, again, I expect us to continue to refine our inventory, um, but we'll see how the build comes up with the team. That's on a really nice job with forecasting and getting the scheduling in our factories better. Helping take out some of that working capital in the system. So I'm hopeful that there's a little bit of a m
Jamie Cook: Thank you.
Jamie Cook: Thank you.
Modest improvement in working capital in '26 as well.
Thank you.
Speaker #3: Yeah, we're expecting the market in general to be down in North America as the overall market kind of moves in the same direction. But we think that there's going to be enough attention on the retrofit business that it won't move down as much.
Eric Hansotia: Yeah, we're expecting, you know, the market in general to be down in North America, as we, you know, the overall market kind of moves in the same direction. But we think that there's gonna be enough attention on the retrofit business that it won't move down as much. And there's a lot of interest in AeroTube. That's the new seed placement launch that we had, where it places the seed tip down and at the right orientation, so when it comes out of the ground, perfect emergence, and the leaves have more capture of sunlight. That's unique to Precision Planting. There's nothing else like it in the world, and we think that that's gonna generate a lot of attention, but so is the dual boom spray system. So we're pretty bullish.
Eric Hansotia: Yeah, we're expecting, you know, the market in general to be down in North America, as we, you know, the overall market kind of moves in the same direction. But we think that there's gonna be enough attention on the retrofit business that it won't move down as much. And there's a lot of interest in AeroTube. That's the new seed placement launch that we had, where it places the seed tip down and at the right orientation, so when it comes out of the ground, perfect emergence, and the leaves have more capture of sunlight. That's unique to Precision Planting. There's nothing else like it in the world, and we think that that's gonna generate a lot of attention, but so is the dual boom spray system. So we're pretty bullish.
Operator: The next question will come from Jerry Revich with Wells Fargo. Please go ahead.
Operator: The next question will come from Jerry Revich with Wells Fargo. Please go ahead.
The next question will come from Jerry Revich with Wells Fargo. Please go ahead.
Eric Hansotia: Yes. Hi. Good morning, everybody. I'm wondering if we just talk about your Precision Planting product line, specifically, what kind of demand are you anticipating for this planting season? How does 2026 versus 2025 look for that product on a retrofit and first fit basis, if you wouldn't mind?
Jerry Revich: Yes. Hi. Good morning, everybody. I'm wondering if we just talk about your Precision Planting product line, specifically, what kind of demand are you anticipating for this planting season? How does 2026 versus 2025 look for that product on a retrofit and first fit basis, if you wouldn't mind?
Yes. Hi. Good morning everybody.
Speaker #3: And there's a lot of interest in AeroTube. That's the new seed placement launch that we had where they placed the seed tip down and at the right orientation.
Speaker #3: So when it comes out of the ground, it perfect emergence and the leaves have more capture of sunlight. That's unique to precision planting. There's nothing else like it in the world.
I'm wondering, if we just talked about your Precision Planting product lines specifically, what kind of demand are you anticipating for this planting season? How does ’26 versus ’25 look for that product on a retrofit and first-fit basis, if you wouldn't mind?
Damon Audia: Yeah, we're expecting, you know, the market in general to be down in North America, as you know, the overall market kind of moves in the same direction. But we think that there's going to be enough attention on the retrofit business that it won't move down as much. And there's a lot of interest in ArrowTube. That's the new seed placement launch that we had, where it places the seed tip down and at the right orientation, so when it comes out of the ground, it perfect emergence, and the leaves have more capture of sunlight. That's unique to Precision Planting. There's nothing else like it in the world, and we think that that's gonna generate a lot of attention, but so is the dual boom spray system. So we're pretty bullish.
Damon Audia: Yeah, we're expecting, you know, the market in general to be down in North America, as you know, the overall market kind of moves in the same direction. But we think that there's going to be enough attention on the retrofit business that it won't move down as much. And there's a lot of interest in ArrowTube. That's the new seed placement launch that we had, where it places the seed tip down and at the right orientation, so when it comes out of the ground, it perfect emergence, and the leaves have more capture of sunlight. That's unique to Precision Planting. There's nothing else like it in the world, and we think that that's gonna generate a lot of attention, but so is the dual boom spray system. So we're pretty bullish.
Speaker #3: And we think that that's going to generate a lot of attention. But so is the dual boom spray system. So we're pretty bullish. Those two hardware products combined with our farm engage platform, we think that there's a lot of interest in the precision planning market, especially those two are predominantly biggest hits for North America.
Eric Hansotia: Those two, hardware products, combined with our FarmEngage platform, we think that there's a lot of interest in the precision planting market, especially, those two are predominantly, biggest hits for North America.
Eric Hansotia: Those two, hardware products, combined with our FarmEngage platform, we think that there's a lot of interest in the precision planting market, especially, those two are predominantly, biggest hits for North America.
Speaker #3: Yeah. And Jerry, just to put some numbers, I know we've had a couple of questions on PTX. So 2025, the PTX team did an exceptional job.
Damon Audia: And Jerry, just to put some numbers, I know we've had a couple of questions on PTX. So 2025, the PTX team did an exceptional job. They, they hit their numbers. They finished the year right around $860 million. So credit to the team, they were on forecast or above every quarter, so a little bit better than where we finished 2024. And for 2026, again, as Eric alluded to, we do see the retrofit market doing better than the equipment market. And I, I would say right now, we see the 2026 PTX revenue flat to modestly up versus the 860 that they finished this year here.
Damon Audia: And Jerry, just to put some numbers, I know we've had a couple of questions on PTX. So 2025, the PTX team did an exceptional job. They, they hit their numbers. They finished the year right around $860 million. So credit to the team, they were on forecast or above every quarter, so a little bit better than where we finished 2024. And for 2026, again, as Eric alluded to, we do see the retrofit market doing better than the equipment market. And I, I would say right now, we see the 2026 PTX revenue flat to modestly up versus the 860 that they finished this year here.
Speaker #3: They hit their numbers. They finished the year right around 860 million dollars. So credit to the team. They were on forecasts or above every quarter.
Damon Audia: Those two hardware products, combined with our FarmEngage platform, we think that there's a lot of interest in the precision planting market, especially those two are predominantly biggest hits for North America. And Jerry, just to put some numbers, I know we've had a couple of questions on PTX. So 2025, the PTX team did an exceptional job. They, they hit their numbers. They finished the year right around $860 million. So credit to the team, they were on forecast or above every quarter, so a little bit better than where we finished 2024. And for 2026, again, as Eric alluded to, we do see the retrofit market doing better than the equipment market.
Damon Audia: Those two hardware products, combined with our FarmEngage platform, we think that there's a lot of interest in the precision planting market, especially those two are predominantly biggest hits for North America. And Jerry, just to put some numbers, I know we've had a couple of questions on PTX. So 2025, the PTX team did an exceptional job. They, they hit their numbers. They finished the year right around $860 million. So credit to the team, they were on forecast or above every quarter, so a little bit better than where we finished 2024. And for 2026, again, as Eric alluded to, we do see the retrofit market doing better than the equipment market.
Speaker #3: So a little bit better than where we finished 2024. And for 2026, again, as Eric alluded to, we do see the retrofit market doing better than the equipment market.
Speaker #3: And I would say right now we see the 26 PTX revenue flat to modestly up versus the 860 that they finished this year here.
Yeah, we're we're expecting you know, the market in general to be down in North America. As you know, the overall Market kind of Moves In The Same Direction but we think that there's going to be enough attention on the retrofit business that it won't move down as much and, um, there's a lot of interest in Aero tube. That's the new seed placement launch that we had where you it places the seed tipped down and at the right orientation. So when it comes out of the ground, it it perfect emergence and the leaves have more capture of sunlight. That's a that's unique to Precision planting. There's nothing else like it in the in the world and and we think that that's going to generate a lot of attention. But so is the Dual boom spray system. Um, so we we're we're pretty bullish. Those 2, uh, Hardware products combined, with our farm engage platform. Uh, we think that there's a lot of interest in the Precision planning Market. Especially, uh, those 2 are predominantly uh, biggest hits for North America. Yeah. And Jerry just to put some numbers. Um, I know we've had a couple questions on PTX so
Speaker #3: So good performance by the team and a lot of new products as Eric touched on giving us some good momentum, especially on that retrofit channel.
Damon Audia: So, good performance by the team and a lot of new products that Eric touched on, giving us some good momentum, especially on that retrofit channel.
Damon Audia: So, good performance by the team and a lot of new products that Eric touched on, giving us some good momentum, especially on that retrofit channel.
Speaker #8: Well, that's a good year given the backdrop. And in terms of the overall cost structure, obviously, you folks have done a lot of work.
Jerry Revich: Well, that's a good year given the backdrop. And in terms of the overall cost structure, obviously, you folks have done a lot of work. Can you talk about any incremental opportunities that you're considering? You know, obviously, the tariff headwinds are pretty painful. Do we see more potential opportunities if we think about the cost structure exiting 2026 versus starting 2026?
Jerry Revich: Well, that's a good year given the backdrop. And in terms of the overall cost structure, obviously, you folks have done a lot of work. Can you talk about any incremental opportunities that you're considering? You know, obviously, the tariff headwinds are pretty painful. Do we see more potential opportunities if we think about the cost structure exiting 2026 versus starting 2026?
Speaker #8: Can you talk about any incremental opportunities that you're considering? Obviously, the tariff headwinds are pretty painful. Do we see more potential opportunities if we think about the cost structure exiting '26 versus starting
Damon Audia: I, I would say right now, we see the 2026 PTx revenue flat to modestly up versus the $860 that they finished this year here. Good performance by the team and a lot of new products, as Eric touched on, giving us some good momentum, especially on that retrofit channel.
Damon Audia: I, I would say right now, we see the 2026 PTx revenue flat to modestly up versus the $860 that they finished this year here. Good performance by the team and a lot of new products, as Eric touched on, giving us some good momentum, especially on that retrofit channel.
Speaker #8: '26? Yeah, I think, Jerry, for
Damon Audia: Yeah, I think, Jerry, for us, from the SG&A standpoint, what we've sort of communicated for the $40 to 60 million of incremental costs, I think we've got really good visibility on that. Eric alluded to more on the cost of goods sold side, and I wouldn't say that's necessarily connected to the tariff environment. But as we think about how do we make ourselves more efficient without compromising quality to the farmers, we do think there are some opportunities to evaluate our sourcing.
Damon Audia: Yeah, I think, Jerry, for us, from the SG&A standpoint, what we've sort of communicated for the $40 to 60 million of incremental costs, I think we've got really good visibility on that. Eric alluded to more on the cost of goods sold side, and I wouldn't say that's necessarily connected to the tariff environment. But as we think about how do we make ourselves more efficient without compromising quality to the farmers, we do think there are some opportunities to evaluate our sourcing.
Speaker #3: us, from the SG&A standpoint, what we've sort of communicated to the here for the 60 for the 40 to 60 million of incremental costs, I think we got really good visibility on that.
Jerry Revich: Well, that's a good year, given the backdrop. In terms of the overall cost structure, obviously, you folks have done a lot of work. Can you talk about any incremental opportunities that you're considering? You know, obviously, the tariff headwinds are pretty painful. Do we see more potential opportunities, if we think about the cost structure exiting 2026, for starting 2026?
Jerry Revich: Well, that's a good year, given the backdrop. In terms of the overall cost structure, obviously, you folks have done a lot of work. Can you talk about any incremental opportunities that you're considering? You know, obviously, the tariff headwinds are pretty painful. Do we see more potential opportunities, if we think about the cost structure exiting 2026, for starting 2026?
2025 the PTX team uh did an exceptional job they, they hit their numbers. They finished the year right around 860 million. So credit to the team, they were on forecast for above every quarter, so a little bit better than where we finished 2024 and for 2026, uh, again, as Eric alluded to, we do see the retrofit market, doing better than the equipment market. And I, I would say right now, we see the, uh, the 26 PTX, Revenue flat to, to modestly up versus the 860 that they finished, uh, this year here. So, uh, good performance by the team and a lot of new products as Eric touched on giving us some good momentum, especially on, that retrofit Channel
Speaker #3: Eric alluded to more on the cost of goods sold side. And I wouldn't say that's necessarily connected to the tariff environment. But as we think about how do we make ourselves more efficient without compromising quality to the farmers, we do think there are some opportunities to evaluate our sourcing.
Do we see more potential opportunities if we think about the cost structure exiting '26 for starting '26?
Damon Audia: I think, Jerry, for us, from the SG&A standpoint, what we've sort of communicated to the... here for the $40 to 60 million of incremental costs, I think we've got really good visibility on that. Eric alluded to more on the cost of goods sold side. I wouldn't say that's necessarily connected to the tariff environment, but as we think about how do we make ourselves more efficient without compromising quality to the farmers, we do think there are some opportunities to evaluate our sourcing.
Damon Audia: I think, Jerry, for us, from the SG&A standpoint, what we've sort of communicated to the... here for the $40 to 60 million of incremental costs, I think we've got really good visibility on that. Eric alluded to more on the cost of goods sold side. I wouldn't say that's necessarily connected to the tariff environment, but as we think about how do we make ourselves more efficient without compromising quality to the farmers, we do think there are some opportunities to evaluate our sourcing.
Speaker #3: Now, that may come to certain that may help us from a tariff standpoint. But as we think about that, it's identifying suppliers who can deliver the quality that our farmers demand.
Damon Audia: Now that may help us from a tariff standpoint, but as we think about that, it's identifying suppliers who can deliver the quality that our farmers demand, but doing it in a way that's lower cost for us and really leveraging the economies of scale that we have with our Massey Ferguson and our Valtra brands globally, globally. And so we see some opportunities for that, helping improve the cost of goods sold and helping position the margins for Massey and Valtra more, especially as these volumes start to pick up, hopefully in 2027 and beyond.
Damon Audia: Now that may help us from a tariff standpoint, but as we think about that, it's identifying suppliers who can deliver the quality that our farmers demand, but doing it in a way that's lower cost for us and really leveraging the economies of scale that we have with our Massey Ferguson and our Valtra brands globally, globally. And so we see some opportunities for that, helping improve the cost of goods sold and helping position the margins for Massey and Valtra more, especially as these volumes start to pick up, hopefully in 2027 and beyond.
Speaker #3: But doing it in a way that's lower cost for us and really leveraging the economies of scale that we have with our Massey Ferguson and our Vulture brands globally.
Speaker #3: And so we see some opportunities for that, helping improve the cost of goods sold and helping position the margins for Massey and Vulture more, especially as these volumes start to pick up, hopefully in 2027 and
Damon Audia: Now, that may help us from a tariff standpoint, but as we think about that, it's identifying suppliers who can deliver the quality that our farmers demand, but doing it in a way that's lower cost for us and really leveraging the economies of scale that we have with our Massey Ferguson and our Valtra brands globally, globally. And so we see some opportunities for that, helping improve the cost of goods sold and helping position the margins for Massey and Valtra more, especially as these volumes start to pick up, hopefully in 2027 and beyond.
Damon Audia: Now, that may help us from a tariff standpoint, but as we think about that, it's identifying suppliers who can deliver the quality that our farmers demand, but doing it in a way that's lower cost for us and really leveraging the economies of scale that we have with our Massey Ferguson and our Valtra brands globally, globally. And so we see some opportunities for that, helping improve the cost of goods sold and helping position the margins for Massey and Valtra more, especially as these volumes start to pick up, hopefully in 2027 and beyond.
Speaker #3: beyond. The next
Operator: The next question will come from Tamy Zakaria with J.P. Morgan. Please go ahead.
Operator: The next question will come from Tamy Zakaria with J.P. Morgan. Please go ahead.
Speaker #1: question will come from Tammy Zakaria with JP Morgan. Please go ahead.
Speaker #9: Hey, hey, good morning. Thank you so much. I wanted to get some color on how you're thinking about operating margins by the different regions.
Tami Zakaria: Hey, hey, good morning. Thank you so much. I wanted to get some color on how you're thinking about operating margins by the different regions. If you could provide some color there, North America-
Tami Zakaria: Hey, hey, good morning. Thank you so much. I wanted to get some color on how you're thinking about operating margins by the different regions. If you could provide some color there, North America-
Speaker #9: If you could provide some color there, North America, Brazil, Europe, and how to think about, as the year progresses, first half versus back half.
Damon Audia: Yes.
Damon Audia: Yes.
I think Jerry for us uh, from the sgna standpoint. What we've sort of communicated to the here for the 60 for the 40 to 60 million of incremental costs. I think we got Fair really good visibility on that. Eric, alluded to more on the cost of goods, sold side. And I wouldn't say that's necessarily connected to the Tariff environment, but as we think about, how do we make ourselves more efficient without compromising quality to the farmers? Uh, we do think there are some opportunities to evaluate our sourcing. Um, now that may come to certain, that may help us from a tariff standpoint, but as we think about that, it's identifying suppliers, who can deliver the quality that our Farmers demand. Uh, but doing it in a way that's lower cost for us and really leveraging, the economies of scale that we have with our Massie Ferguson and our vulture Brands globally globally. And so, we see some opportunities for that helping improve the cost to get sold and helping position the
Tami Zakaria: Brazil, Europe, and how to think about, you know, as the year progresses, like first half versus back half. So any color you can give on regional margins as it relates to first half and back half would be helpful.
Tami Zakaria: Brazil, Europe, and how to think about, you know, as the year progresses, like first half versus back half. So any color you can give on regional margins as it relates to first half and back half would be helpful.
Speaker #9: So any color you can give on regional margins as it relates to first half and back half would be helpful.
Margins for massing and Vulture more, especially as these volumes start to pick up hopefully in '27 and beyond.
Operator: The next question will come from Tami Zakaria with JP Morgan. Please go ahead.
Operator: The next question will come from Tami Zakaria with JP Morgan. Please go ahead.
Speaker #3: Yeah, sure. No worries, Tammy. I think for as Meg asked in the question, I think Europe should stay right around that 15% margin for the full year and similar to what we've seen in the individual quarters.
The next question will come from Tami, Zakaria with JP Morgan. Please go ahead.
Tami Zakaria: Hey. Hey, good morning. Thank you so much. I wanted to get some color on how you're thinking about operating margins by the different regions. If you could provide some color there, North America-
Tami Zakaria: Hey. Hey, good morning. Thank you so much. I wanted to get some color on how you're thinking about operating margins by the different regions. If you could provide some color there, North America-
Damon Audia: Yeah, sure. No worries, Tammy. I think for, as Mig asked in the question, I think Europe should stay right around that 15% margin for the full year and, you know, similar to what we've seen in the individual quarters. As the other question came up on North America, I think you're gonna see North America, let's say, directionally down, in a loss position, probably in that sort of high single, low double-digit range for 2026, based on the industry forecast. That's gonna be worse year over year in the first half, given the industry and the underproduction, and then probably a little bit better than what we did last year in the back half of the year. And then South America, that's kind of, as you know, a little bit uncertain right now.
Damon Audia: Yeah, sure. No worries, Tammy. I think for, as Mig asked in the question, I think Europe should stay right around that 15% margin for the full year and, you know, similar to what we've seen in the individual quarters. As the other question came up on North America, I think you're gonna see North America, let's say, directionally down, in a loss position, probably in that sort of high single, low double-digit range for 2026, based on the industry forecast. That's gonna be worse year over year in the first half, given the industry and the underproduction, and then probably a little bit better than what we did last year in the back half of the year. And then South America, that's kind of, as you know, a little bit uncertain right now.
Hey, hey. Good morning, thank you so much.
Damon Audia: Yes.
Damon Audia: Yes.
Tami Zakaria: Brazil, Europe, and how to think about, you know, as the year progresses, like first half versus back half. So any color you can give on regional margins as it relates to first half and back half would be helpful.
Tami Zakaria: Brazil, Europe, and how to think about, you know, as the year progresses, like first half versus back half. So any color you can give on regional margins as it relates to first half and back half would be helpful.
Speaker #3: As the other question came up on North America, I think you're going to see North America directionally down in a loss position probably in that sort of high single low double digit range for '26 based on the industry forecast.
Damon Audia: Yeah, sure. No worries, Tami. I think for, as Mig asked in the question, I think Europe should stay right around that 15% margin for the full year and, you know, similar to what we've seen in the, the individual quarters. As the other question came up on North America, I think you're gonna see North America, let's say, directionally down, in a loss position, probably in that sort of high single, low double-digit range for 2026, based on the industry forecast. That's gonna be worse year over year in the first half, given the industry and the underproduction, and then probably a little bit better than what we did last year in the back half of the year. And then South America, that's kind of, as you know, a little bit uncertain right now.
Damon Audia: Yeah, sure. No worries, Tami. I think for, as Mig asked in the question, I think Europe should stay right around that 15% margin for the full year and, you know, similar to what we've seen in the, the individual quarters. As the other question came up on North America, I think you're gonna see North America, let's say, directionally down, in a loss position, probably in that sort of high single, low double-digit range for 2026, based on the industry forecast. That's gonna be worse year over year in the first half, given the industry and the underproduction, and then probably a little bit better than what we did last year in the back half of the year. And then South America, that's kind of, as you know, a little bit uncertain right now.
You know, as the year progresses, like first half first is back half so any color you can give on Regional margin as it relates to first half and back half, uh, would be helpful.
Speaker #3: It's going to be worse year over year in the first half given the industry and the underproduction and then probably a little bit better than what we did last year in the back half of the year.
Speaker #3: And then South America, that's kind of, as you know, a little bit uncertain right now overall for the full year. I think it'll be our forecast shows it being modestly better versus 2025 on a full year basis.
Damon Audia: Overall, for the full year, I think it'll be, our forecast shows it being modestly better versus 2025 on a full year basis. Gonna start worse off because we got to do some underproduction here. We've got to get the dealer inventories, and we've got some weaker mix right now and then sort of picking up to be a little bit stronger in the back half of the year, given what we saw here in the back half of 2025. So I'd say margins for the full year, relatively flat, maybe a little bit above, but more of a shift between first and second half, and then Asia being relatively flat, relative to last year from an overall margin perspective.
Damon Audia: Overall, for the full year, I think it'll be, our forecast shows it being modestly better versus 2025 on a full year basis. Gonna start worse off because we got to do some underproduction here. We've got to get the dealer inventories, and we've got some weaker mix right now and then sort of picking up to be a little bit stronger in the back half of the year, given what we saw here in the back half of 2025. So I'd say margins for the full year, relatively flat, maybe a little bit above, but more of a shift between first and second half, and then Asia being relatively flat, relative to last year from an overall margin perspective.
Speaker #3: It's going to start worse off because we got to do some underproduction here. We've got to get the dealer inventories and we've got some weaker mix right now.
Speaker #3: And then sort of picking up to be a little bit stronger in the back half of the year given what we saw here in the back half of 2025.
Speaker #3: So I'd say margins for the full year relatively flat, maybe a little bit above but more of a shift between first and second half.
Damon Audia: Overall, for the full year, I think it'll be... our forecast shows it being modestly better versus, versus 2025 on a full year basis. Gonna start worse off because we got to do some underproduction here. We've got to get the dealer inventories, and we've got some weaker mix right now, and then sort of picking up to be a little bit stronger in the back half of the year, given what we saw here in the back half of 2025. So I'd say margins for the full year, relatively flat, maybe a little bit above, but more of a shift between first and second half, and then Asia being relatively flat, relative to last year from an overall margin perspective.
Damon Audia: Overall, for the full year, I think it'll be... our forecast shows it being modestly better versus, versus 2025 on a full year basis. Gonna start worse off because we got to do some underproduction here. We've got to get the dealer inventories, and we've got some weaker mix right now, and then sort of picking up to be a little bit stronger in the back half of the year, given what we saw here in the back half of 2025. So I'd say margins for the full year, relatively flat, maybe a little bit above, but more of a shift between first and second half, and then Asia being relatively flat, relative to last year from an overall margin perspective.
Speaker #3: And then Asia being relatively flat relative to last year from an overall margin perspective.
Yeah, sure, no worries. Tammy, I think for um as big as some of the question, I think Europe should stay right around that 15% margin for the full year and you know, similar to what we've seen in the uh the individual quarters. Uh, as the other question came up on North America, I think you're going to see North America. Let's say directionally down, uh, in a loss position, probably in that sort of high single low, double digit range for 26. Based on the industry forecasts, it's going to be worse year-over-year in the first half, given the industry and the under production and then probably a little bit better than what we did last year in the back, half of the year. Um, and then South America, that's kind of as, you know, a little bit uncertain right now. Overall, for the full year, I think it'll be our forecast shows it being modestly better.
versus um,
Speaker #9: Understood. That's very helpful. And quickly, I think there's been some announcements on Indian tariffs going down. Any thoughts on whether that could be a tailwind for you?
Tami Zakaria: Understood. That's very helpful. And quickly, I think there's been some announcements on Indian tariffs going down. Any thoughts on whether that could be a tailwind for you? And overall, like, could you remind how much of tariffs impact is currently baked in so we can kind of keep track if other tariff rates come down, we can sort of calculate the shuffle of that?
Tami Zakaria: Understood. That's very helpful. And quickly, I think there's been some announcements on Indian tariffs going down. Any thoughts on whether that could be a tailwind for you? And overall, like, could you remind how much of tariffs impact is currently baked in so we can kind of keep track if other tariff rates come down, we can sort of calculate the shuffle of that?
Speaker #9: And overall, could you remind how much of tariff impact is currently baked in so we can kind of keep track if other tariff rates come down?
Speaker #9: We can sort of calculate based off of
Speaker #3: Yeah, absolutely. So if we think about the incremental tariff costs that we're going to see in our P&L in 2026 versus '25, and it's just the tariff costs themselves, that's about a 65 million dollar headwind year over year.
Damon Audia: Yeah, absolutely. So if we think about the incremental tariff costs that we're gonna see in our P&L in 2026 versus 2025, and it's just the tariff costs themselves, that's about a $65 million headwind year over year. And if I think about what we incurred in our P&L last year, it was around $40 million. So the absolute total tariff cost in 2026 will be just around $105, $110 million. So we've set around 1% of our sales, so that's sort of directionally where we're at. But about 65 of that will be incremental to 2025, and that's what's compressing our year-over-year margins.
Damon Audia: Yeah, absolutely. So if we think about the incremental tariff costs that we're gonna see in our P&L in 2026 versus 2025, and it's just the tariff costs themselves, that's about a $65 million headwind year over year. And if I think about what we incurred in our P&L last year, it was around $40 million. So the absolute total tariff cost in 2026 will be just around $105, $110 million. So we've set around 1% of our sales, so that's sort of directionally where we're at. But about 65 of that will be incremental to 2025, and that's what's compressing our year-over-year margins.
Versus 2025 on a full-year basis, going to start worse off because we’ve got to do some underproduction here. We’ve got to get the dealer inventories, um, and we’ve got some weaker mix right now, and then sort of picking up to be a little bit stronger in the back half of the year, given what we saw here in the back half of 2025. So I’d say margins for the full year, relatively flat, maybe a little bit above, but more of a shift between first and second half. And then Asia being relatively flat, uh, relative to last year from an overall margin perspective.
Tami Zakaria: Understood. That's very helpful. Quickly, I think there's been some announcements on Indian tariffs going down. Any thoughts on whether that could be a tailwind for you? And overall, like, could you remind how much of tariffs impact is currently baked in so we can kind of keep track if other tariff rates come down, we can sort of calculate the effect of that?
Tami Zakaria: Understood. That's very helpful. Quickly, I think there's been some announcements on Indian tariffs going down. Any thoughts on whether that could be a tailwind for you? And overall, like, could you remind how much of tariffs impact is currently baked in so we can kind of keep track if other tariff rates come down, we can sort of calculate the effect of that?
Speaker #3: And if I think about what we incurred in our P&L last year, it was around 40 million. So the absolute total tariff cost in '26 will be just around 105, 110 million.
Speaker #3: So we've set around 1% of our sales so that's sort of directionally where we're at. But about 65 of that will be incremental to 2020 to 2025.
Damon Audia: Yeah, absolutely. So if we think about the incremental tariff costs that we're gonna see in our P&L in 2026 versus 2025, and it's just the tariff costs themselves, that's about a $65 million headwind year over year. And if I think about what we incurred in our P&L last year, it was around $40 million. So the absolute total tariff cost in 2026 will be just around $105, $110 million. So we've set around 1% of our sales, so that's sort of directionally where we're at, but about 65 of that will be incremental to 2025. And that's what's-...
Damon Audia: Yeah, absolutely. So if we think about the incremental tariff costs that we're gonna see in our P&L in 2026 versus 2025, and it's just the tariff costs themselves, that's about a $65 million headwind year over year. And if I think about what we incurred in our P&L last year, it was around $40 million. So the absolute total tariff cost in 2026 will be just around $105, $110 million. So we've set around 1% of our sales, so that's sort of directionally where we're at, but about 65 of that will be incremental to 2025. And that's what's-...
Understood, that's very helpful and quick. Um, I think there's been some announcements on, um, Indian tariffs going down. Any thoughts on whether that could be a tailwind for you? And overall, could you remind us how much of, um, Tyson Pack is currently baked in so we can kind of keep track? If other tariff rates come down, we can sort of calculate this off of that.
Yeah, absolutely. So, if we think about the
Speaker #3: And that's what's compressing our year over year margins because when you look at our pricing guide of 2 to 3 percent, as I said on the call, at 3%, when you look at inflation plus tariffs, we're only going to cover that on a dollar basis at the 3.
Damon Audia: Because when you look at our pricing guide of 2 to 3%, as I said on the call, at 3%, when you look at inflation plus tariffs, we're only going to cover that on a dollar basis at the 3. So that's actually margin dilutive. If you look at the midpoint of our pricing guide, we would actually be negative from an earnings standpoint, and it would be margin dilutive. So that's sort of what's in the numbers right now based on what we know. If what was communicated related to India does come to fruition, probably not gonna have a big effect on us, Tammy. It would be a couple million dollars of a positive, but not a big mover to that $65 million that I just quoted.
Damon Audia: Because when you look at our pricing guide of 2 to 3%, as I said on the call, at 3%, when you look at inflation plus tariffs, we're only going to cover that on a dollar basis at the 3. So that's actually margin dilutive. If you look at the midpoint of our pricing guide, we would actually be negative from an earnings standpoint, and it would be margin dilutive. So that's sort of what's in the numbers right now based on what we know. If what was communicated related to India does come to fruition, probably not gonna have a big effect on us, Tammy. It would be a couple million dollars of a positive, but not a big mover to that $65 million that I just quoted.
Incremental tariff costs that we're going to see in our P&L in 2026 versus ’25—and it's just the tariff costs themselves—that's about a $65 million headwind year-over-year. And if I think about what we incurred in our P&L last year, it was around $40 million. So, the absolute total tariff cost.
Speaker #3: So that's actually margin dilutive. And if you look at the midpoint of our pricing guide, we would actually be negative from an earnings standpoint and it would be margin dilutive.
Speaker #3: So that's sort of what's in the numbers right now based on what we know. If what was communicated related to India does come to fruition, probably not going to have a big effect on us, Tammy.
Damon Audia: compressing our year-over-year margins, 'cause when you look at our pricing guide of 2 to 3%, as I said on the call, at 3%, when you look at inflation plus tariffs, we're only going to cover that on a dollar basis at the 3. So that's actually margin dilutive. And if you look at the midpoint of our pricing guide, we would actually be negative from an earnings standpoint, and it would be margin dilutive. So that's sort of what's in the numbers right now, based on what we know. If what was communicated related to India does come to fruition, probably not gonna have a big effect on us, Tammy. It's a couple million dollars of a positive, but not a big mover to that $65 million that I just quoted.
Damon Audia: compressing our year-over-year margins, 'cause when you look at our pricing guide of 2 to 3%, as I said on the call, at 3%, when you look at inflation plus tariffs, we're only going to cover that on a dollar basis at the 3. So that's actually margin dilutive. And if you look at the midpoint of our pricing guide, we would actually be negative from an earnings standpoint, and it would be margin dilutive. So that's sort of what's in the numbers right now, based on what we know. If what was communicated related to India does come to fruition, probably not gonna have a big effect on us, Tammy. It's a couple million dollars of a positive, but not a big mover to that $65 million that I just quoted.
Speaker #3: It's a couple it would be a couple million dollars of a positive, but not a big mover to that 65 million that I just
Speaker #3: quoted. And the last
Operator: The last question today will come from Angel Castillo with Morgan Stanley. Please go ahead.
Operator: The last question today will come from Angel Castillo with Morgan Stanley. Please go ahead.
Speaker #1: question today will come from Angel Castillo with Morgan Stanley. Please go
Speaker #1: ahead. Hi, this is
Esther Oshina: Hi, this is Esther Oshina on for Angel. Congrats on a good quarter. My question is, maybe going back to tariffs, could you maybe give us, like, kind of the cadence each quarter going to 2026? Do you see more happening in the first half or second half, or is it kind of equally divvied up?
Esther Osinaiya: Hi, this is Esther Oshina on for Angel. Congrats on a good quarter. My question is, maybe going back to tariffs, could you maybe give us, like, kind of the cadence each quarter going to 2026? Do you see more happening in the first half or second half, or is it kind of equally divvied up?
Speaker #10: Esther Oceania, on for Angel. Congrats on a good quarter. My question is, maybe going back to tariffs, could you maybe give us kind of the cadence, each quarter going to 2026?
Speaker #10: Do you see more happening in the first half or second half, or is it kind of equally divvied up?
Speaker #3: Yeah, good morning, Esther. So overall, given the timing of the tariffs last year, again, as I think about that 65 million incremental, it's going to be heavily weighted here in the first half of the year because if you remember the timing of when tariffs rolled in last year, coupled with the level of inventories that we had and our dealers had, we really saw that start to pick up in the third quarter and more into the fourth quarter.
Eric Hansotia: Yeah. Good morning, Esther. So overall, given the timing of the tariffs last year, again, as I think about that $65 million incremental, it's gonna be heavily weighted here in the first half of the year, because if you remember, the timing of when tariffs rolled in last year, coupled with the level of inventories that we had and our dealers had, we really saw that start to pick up in Q3 and more into Q4. So you're sort of looking at probably the majority of that $65 sitting in the first half, and then the balance of it sort of rolling in in Q3, and then being somewhat neutral in Q4.
Eric Hansotia: Yeah. Good morning, Esther. So overall, given the timing of the tariffs last year, again, as I think about that $65 million incremental, it's gonna be heavily weighted here in the first half of the year, because if you remember, the timing of when tariffs rolled in last year, coupled with the level of inventories that we had and our dealers had, we really saw that start to pick up in Q3 and more into Q4. So you're sort of looking at probably the majority of that $65 sitting in the first half, and then the balance of it sort of rolling in in Q3, and then being somewhat neutral in Q4.
And earning standpoint and it would be margin diluted. So that's sort of what's in the numbers right now. Based on what we know if uh what was communicated related to, India does come to fruition. Probably not going to have a big effect on us. Uh Tammy it's a couple it would be a couple million dollars of a positive but not a not a big mover to that 65 million that I just quoted.
Operator: The last question today will come from Angel Castillo with Morgan Stanley. Please go ahead.
Operator: The last question today will come from Angel Castillo with Morgan Stanley. Please go ahead.
Esther Osinaiya: Hi, this is Esther Osinaiya, on for Angel. Congrats on a good quarter. My question is, maybe going back to tariffs, could you maybe give us, like, kind of the cadence, each quarter going to 2026? Do you see more happening in the first half or second half, or is it kind of equally divvied up?
Esther Osinaiya: Hi, this is Esther Osinaiya, on for Angel. Congrats on a good quarter. My question is, maybe going back to tariffs, could you maybe give us, like, kind of the cadence, each quarter going to 2026? Do you see more happening in the first half or second half, or is it kind of equally divvied up?
And the last question today will come from Angel Castillo with Morgan Stanley. Please go ahead.
Speaker #3: So you're sort of looking at probably the majority of that 65 sitting in the first half and then the balance of it sort of rolling in in the third quarter and then being somewhat neutral in the fourth
Damon Audia: Yeah. Good morning, Esther. So overall, given the timing of the tariffs last year, again, as I think about that $65 million incremental, it's gonna be heavily weighted here in the first half of the year. Because if you remember, the timing of when tariffs rolled in last year, coupled with the level of inventories that we had and our dealers had, we really saw that start to pick up in Q3 and more into Q4. So you're sort of looking at probably the majority of that $65 million sitting in the first half, and then the balance of it sort of rolling in, in Q3, and then being somewhat neutral in Q4.
Damon Audia: Yeah. Good morning, Esther. So overall, given the timing of the tariffs last year, again, as I think about that $65 million incremental, it's gonna be heavily weighted here in the first half of the year. Because if you remember, the timing of when tariffs rolled in last year, coupled with the level of inventories that we had and our dealers had, we really saw that start to pick up in Q3 and more into Q4. So you're sort of looking at probably the majority of that $65 million sitting in the first half, and then the balance of it sort of rolling in, in Q3, and then being somewhat neutral in Q4.
Hi, this is Esther Oceania on for Angel. Um, congrats on a good quarter. My question is, maybe going back to tariffs. Could you maybe give us, like, kind of the cadence each quarter going to 2026? Do you see more happening in the first half or second half, or is it kind of equally divvied up?
Speaker #3: quarter. Okay.
Esther Oshina: Okay. Just to follow up, are there any limiting factors in your ability to underproduce at a greater degree just to kind of fix some of the excess inventory you mentioned in the call today?
Esther Osinaiya: Okay. Just to follow up, are there any limiting factors in your ability to underproduce at a greater degree just to kind of fix some of the excess inventory you mentioned in the call today?
Speaker #10: And just to follow up, are there any limiting factors in your ability to underproduce at a greater degree just to kind of fix some of the excess inventory you mentioned in the call today?
Speaker #3: So there's no inhibitors for us in reducing our production but I think you have to understand the complexity of a full portfolio and as we talk about the industry, the planter industry is different than the combine industry, which is different than a low horsepower, medium horsepower, high horsepower.
Eric Hansotia: So there's no inhibitors for us in reducing our production, but I think you have to understand the complexity of a full portfolio. And as we talk about the industry, the planter industry is different than the combine industry, which is different than a low horsepower, medium horsepower, high horsepower. So depending on which industry is fluctuating and what that dealer has on his or her yard, will influence our production. So we don't have any take or pay contracts with suppliers. We don't have any issues that prohibit us from slowing our production, but it's more as the different types of products have different dynamics that influence them. That's what may adjust the inventory or the months on hand that we then have to try to adjust.
Eric Hansotia: So there's no inhibitors for us in reducing our production, but I think you have to understand the complexity of a full portfolio. And as we talk about the industry, the planter industry is different than the combine industry, which is different than a low horsepower, medium horsepower, high horsepower. So depending on which industry is fluctuating and what that dealer has on his or her yard, will influence our production. So we don't have any take or pay contracts with suppliers. We don't have any issues that prohibit us from slowing our production, but it's more as the different types of products have different dynamics that influence them. That's what may adjust the inventory or the months on hand that we then have to try to adjust.
Yeah, good morning Esther. So overall given the timing of the tariffs last year again. As I think about that 65 million incremental, it's going to be heavily weighted here in the first half of the year because if you remember the timing of when tariffs rolled in last year, coupled with the level of inventories that we had in our dealers had we really saw that start to pick up in the third quarter and more into the fourth quarter. So you're sort of looking at probably the majority of that 65 sitting in the first half and then the balance of its sort of rolling in in the third quarter um and then being somewhat neutral in the fourth quarter.
Esther Osinaiya: Okay. And just a follow-up, are there any limiting factors in your ability to underproduce at a greater degree, just to kind of fix some of the excess inventory you mentioned in the call today?
Esther Osinaiya: Okay. And just a follow-up, are there any limiting factors in your ability to underproduce at a greater degree, just to kind of fix some of the excess inventory you mentioned in the call today?
Speaker #3: So depending on which industry is fluctuating and what that dealer has on his or her yard, will influence our production. So we don't have any take or pay contracts with suppliers.
Speaker #3: We don't have any issues that prohibit us from slowing our production. But it's more as the different types of products have different dynamics that influence them; that's what may adjust the inventory or the months on hand that we then have to try to
Okay. And just to follow up, um are there any limiting factors? Um in your ability to underproduce at a greater degree just to kind of fix? Um some of the excess inventory, you mentioned um, in the call today
Damon Audia: So there's no inhibitors for us in reducing our production, but I think you have to understand the complexity of a full portfolio. And as we've talked about the industry, the planter industry is different than the combine industry, which is different than a low horsepower, medium horsepower, high horsepower. So depending on which industry is fluctuating and what that dealer has on his or her yard, will influence our production. So we don't have any take or pay contracts with suppliers. We don't have any issues that prohibit us from slowing our production, but it's more as the different types of products have different dynamics that influence them, that's what may adjust the inventory or the months on hand that we then have to try to adjust.
Damon Audia: So there's no inhibitors for us in reducing our production, but I think you have to understand the complexity of a full portfolio. And as we've talked about the industry, the planter industry is different than the combine industry, which is different than a low horsepower, medium horsepower, high horsepower. So depending on which industry is fluctuating and what that dealer has on his or her yard, will influence our production. So we don't have any take or pay contracts with suppliers. We don't have any issues that prohibit us from slowing our production, but it's more as the different types of products have different dynamics that influence them, that's what may adjust the inventory or the months on hand that we then have to try to adjust.
Speaker #3: adjust. This concludes our question and answer
Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Eric Hansotia for any closing remarks.
Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Eric Hansotia for any closing remarks.
Speaker #1: session. I would like to turn the conference back over to Eric Hansonia for any closing
Speaker #1: remarks. Great.
Eric Hansotia: Great. So I just want to thank everybody for joining us today and, some of the really good questions. 2025 reflects a meaningful progress year that we've made in transferring AGCO into a more resilient, better positioned company. We're executing with discipline and focus on what we can control in a pretty volatile market. We're always staying focused on our farmer-first strategy, that creates purpose for our employees. Our global team delivered a 7.7% Adjusted Operating Margin in 2025. That's a high watermark and notable achievement at this stage of the ag cycle, best we've ever performed at the trough. I'm really appreciative of the commitment and results of our team and our dealer organization. We remain focused on delivering for all stakeholders.
Eric Hansotia: Great. So I just want to thank everybody for joining us today and, some of the really good questions. 2025 reflects a meaningful progress year that we've made in transferring AGCO into a more resilient, better positioned company. We're executing with discipline and focus on what we can control in a pretty volatile market. We're always staying focused on our farmer-first strategy, that creates purpose for our employees. Our global team delivered a 7.7% Adjusted Operating Margin in 2025. That's a high watermark and notable achievement at this stage of the ag cycle, best we've ever performed at the trough. I'm really appreciative of the commitment and results of our team and our dealer organization. We remain focused on delivering for all stakeholders.
Speaker #3: So I just want to thank everybody for joining us today and some of the really good questions. 2025 reflects a meaningful progress year that we've made in transferring AGCO into a more resilient, better-positioned company.
Speaker #3: We're executing with discipline and focus on what we can control. In a pretty volatile market, and we're always staying focused on our farmer-first strategy.
So there's no, there's no inhibitors for us in reducing our production, but I think you have to understand the complexity of a full portfolio and as we talked about the industry, the planter industry is different than the combined industry, which is different than a low horsepower, medium horsepower, High horsepower. So depending on which industry is fluctuating in what that dealer has on his, or her yard will influence our production. So we don't have any take or pay contracts with suppliers. We don't have any issues that prohibit us from slowing our production, but it's more as the different types of products have different dynamics, that influence them. That's what may adjust the inventory or the the, um, the months on hand that we then have to try to adjust.
Operator: This concludes our question and answer session. I would like to turn the conference back over to Eric Hansotia for any closing remarks.
Operator: This concludes our question and answer session. I would like to turn the conference back over to Eric Hansotia for any closing remarks.
Speaker #3: That creates purpose for our employees. Our global team delivered a 7.7% adjusted operating margin in 2025. That's a high-water mark and notable achievement at this stage of the AG cycle.
This concludes our question-and-answer session. I would like to turn the conference back over to Eric and Saudia for any closing remarks.
Damon Audia: Great. So I just want to thank everybody for joining us today and some of the really good questions. 2025 reflects a meaningful progress year that we've made in transferring AGCO into a more resilient, better positioned company. We're executing with discipline and focus on what we can control in a pretty volatile market. And we're always staying focused on our farmer-first strategy, that creates purpose for our employees. Our global team delivered a 7.7% adjusted operating margin in 2025. That's a high-water mark and notable achievement at this stage of the ag cycle. Best we've ever performed at the trough. I'm really appreciative of the commitment and results of our team and our dealer organization. We remain focused on delivering for all stakeholders.
Eric Hansotia: Great. So I just want to thank everybody for joining us today and some of the really good questions. 2025 reflects a meaningful progress year that we've made in transferring AGCO into a more resilient, better positioned company. We're executing with discipline and focus on what we can control in a pretty volatile market. And we're always staying focused on our farmer-first strategy, that creates purpose for our employees. Our global team delivered a 7.7% adjusted operating margin in 2025. That's a high-water mark and notable achievement at this stage of the ag cycle. Best we've ever performed at the trough. I'm really appreciative of the commitment and results of our team and our dealer organization. We remain focused on delivering for all stakeholders.
Speaker #3: Best we've ever performed at the trough. I'm really appreciative of the commitment and results of our team and our dealer organization. We remain focused on delivering for all stakeholders.
Great. Um, so I just want to thank everybody for joining us today. And, um, some of the really good questions, 2025 reflects a meaningful progress year that we've made in ago into a more resilient better position company.
Speaker #3: For our farmers, our innovation flywheel continues to spin fast. With solutions designed to solve real on-farm problems, we recorded a record net promoter score and have a record set of patent filings.
Eric Hansotia: For our farmers, our innovation flywheel continues to spin fast, with solutions designed to solve real on-farm problems. We recorded a record net promoter score and have a record set of patent filings, so farmers like what we've got, and we've got more coming. For shareholders, we executed a $250 million accelerated share repurchase in Q4. That's part of our $1 billion program, and we're in a new chapter in that regard, with our ability to do share buybacks. Share buybacks are probably coming more in the future because we had a record free cash flow of $740 million in 2025, all-time high watermark for AGCO.
Eric Hansotia: For our farmers, our innovation flywheel continues to spin fast, with solutions designed to solve real on-farm problems. We recorded a record net promoter score and have a record set of patent filings, so farmers like what we've got, and we've got more coming. For shareholders, we executed a $250 million accelerated share repurchase in Q4. That's part of our $1 billion program, and we're in a new chapter in that regard, with our ability to do share buybacks. Share buybacks are probably coming more in the future because we had a record free cash flow of $740 million in 2025, all-time high watermark for AGCO.
We're executing with discipline and focus on what we can control.
In a pretty volatile Market. Um, and we're always staying focused on our farmer first strategy. Um, that creates purpose for our employees.
Speaker #3: So farmers like what we've got, and we've got more coming. For shareholders, we exceeded executed a $250 million accelerated share repurchase in quarter four.
Our global team delivered a 7.7% adjusted operating margin in 2025. That's a high-water mark.
Speaker #3: As part of our $1 billion program, and we're in a new chapter in that regard, with our ability to do share buybacks. And share buybacks are probably coming more in the future because we had a record free cash flow of $740 million in 2025, all-time high watermark for AGCO.
And notable achievement at this stage of the egg cycle. Best we've ever performed at the trough,
Damon Audia: For our farmers, our innovation flywheel continues to spin fast, with solutions designed to solve real on-farm problems. We recorded a record net promoter score and have a record set of patent filings. So farmers like what we've got, and we've got more coming. For shareholders, we executed a $250 million accelerated share repurchase in Q4. That's part of our $1 billion program, and we're in a new chapter in that regard, with our ability to, to do share buybacks. And share buybacks are probably coming more in the future because we had a record free cash flow of $740 million in 2025, all-time high watermark for, for AGCO.
Eric Hansotia: For our farmers, our innovation flywheel continues to spin fast, with solutions designed to solve real on-farm problems. We recorded a record net promoter score and have a record set of patent filings. So farmers like what we've got, and we've got more coming. For shareholders, we executed a $250 million accelerated share repurchase in Q4. That's part of our $1 billion program, and we're in a new chapter in that regard, with our ability to, to do share buybacks. And share buybacks are probably coming more in the future because we had a record free cash flow of $740 million in 2025, all-time high watermark for, for AGCO.
Speaker #3: Our 2026 outlook reflects our ability to keep earnings earning the trust of farmers and OEMs. Transforming our dealer network, gaining market share, driving our high margin growth levers, and executing structural changes and cost initiatives that will position us well for when demand recovers.
Eric Hansotia: Our 2026 outlook reflects our ability to keep earnings, earning the trust of farmers and OEMs, transforming our dealer network, gaining market share, driving our high-margin growth levers, and executing structural changes and cost initiatives that will position us well for when demand recovers. 2025 was the bottom of the trough, and the fleets in our major markets are at the peak of their age, so we expect that the future looks brighter. Thanks for everybody's participation today.
Eric Hansotia: Our 2026 outlook reflects our ability to keep earnings, earning the trust of farmers and OEMs, transforming our dealer network, gaining market share, driving our high-margin growth levers, and executing structural changes and cost initiatives that will position us well for when demand recovers. 2025 was the bottom of the trough, and the fleets in our major markets are at the peak of their age, so we expect that the future looks brighter. Thanks for everybody's participation today.
Uh, I'm really appreciative of the, the commitment and results of our team and our dealer organization. We remain focused on, delivering for all stakeholders for our Farmers, our Innovation, flywheel continues to spin fast with Solutions designed to solve real on-farm problems. We recorded our record. Net promoter score.
And have a record set of patent filings so farmers, like what we've got and we've got more coming.
Speaker #3: 2025 was the bottom of the trough and the fleets in our major markets are at the peak of their age. So we expect that the future looks brighter.
Speaker #3: Thanks for everybody's participation
Speaker #3: Thanks for everybody's participation today. Thank you for joining the
Damon Audia: Our 2026 outlook reflects our ability to keep earnings, earning the trust of farmers and OEMs, transforming our dealer network, gaining market share, driving our high-margin growth levers, and executing structural changes and cost initiatives that will position us well for when demand recovers. 2025 was the bottom of the trough, and the fleets in our major markets are at the peak of their age, so we expect that the future looks brighter. Thanks for everybody's participation today.
Eric Hansotia: Our 2026 outlook reflects our ability to keep earnings, earning the trust of farmers and OEMs, transforming our dealer network, gaining market share, driving our high-margin growth levers, and executing structural changes and cost initiatives that will position us well for when demand recovers. 2025 was the bottom of the trough, and the fleets in our major markets are at the peak of their age, so we expect that the future looks brighter. Thanks for everybody's participation today.
For shareholders, we exceeded uh executed at 250 million accelerated share repurchase in quarter 4 as part of our 1 billion dollar program and we're in a new chapter in that regard, um, with our ability to, to do share BuyBacks and share BuyBacks are probably coming more in the future because we had a record free cash flow of 740 million in 2025, all-time high modern market for for Iko.
Operator: Thank you for joining the AGCO earnings call. The call has concluded. Have a nice day.
Operator: Thank you for joining the AGCO earnings call. The call has concluded. Have a nice day.
Our 2026 outlook reflects our ability to keep earnings.
Earning the trust of farmers and OEMs, transforming our dealer network, gaining market share, driving our high-margin growth levers, and executing structural changes and cost initiatives that will position us well for when demand recovers.
2025 was the bottom of the trough, and the fleets in our major markets are at the peak of their age. So we expect that the future looks brighter. Thanks for everybody's participation today.
Operator: Thank you for joining the AGCO earnings call. The call has concluded. Have a nice day.
Operator: Thank you for joining the AGCO earnings call. The call has concluded. Have a nice day.
Thank you for joining the ACO earnings call. The call has concluded. Have a nice day.