Q4 2025 AGCO Corp Earnings Call

February 5, 2026

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.

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.

Q4 2025 AGCO Corp Earnings Call

Request a DemoDemo

AGCO

Earnings

Q4 2025 AGCO Corp Earnings Call

AGCO

Thursday, February 5th, 2026 at 3:00 PM

Transcript

No Transcript Available

No transcript data is available for this event yet. Transcripts typically become available shortly after an earnings call ends.

Want AI-powered analysis? Try AllMind AI →

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.

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: 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: 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: 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.

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: 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: 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: 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: 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: 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: 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: 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: 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: 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: 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: 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: 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: 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: 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: 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.

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%.

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.

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.

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: 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: 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 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: 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: 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.

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.

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

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,

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

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

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

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.

AllMind AI

AllMind AI

Q4 2025 AGCO Corp Earnings Call

Event Details

AGCO

Q4 2025 AGCO Corp Earnings Call

Open Event Documents

Search Transcript

AGCO

Q4 2025 AGCO Corp Earnings Call

Transcript

No Transcript Available