What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-11-07 compared with 2024-08-08 · 131 added, 142 removed, 305 unchanged (47% of the section changed)

18 unchanged sentences

The Company recognizes assets and liabilities held for sale at the lower of carrying value or fair market value less costs to sell.

The fair market value less costs to sell of the disposal group is evaluated at each reporting period to determine if it has changed, and any subsequent changes are recognized as a gain or loss with a corresponding adjustment to the carrying amount of the disposal group.

The loss on business held for sale will be finalized in the fourth quarter upon the closing of the transaction based on the carrying value of the disposal group at the date of sale.

The Company determined the intended sale of the G&P business does not represent a strategic shift that will have a major effect on the consolidated results of operations, and therefore results of this business were not classified as discontinued operations.

The closing of the transaction is subject to customary conditions, including compliance with antitrust and similar laws.

The transaction is expected to be completed in the second half of 2024.

On November 1, 2024, the Company completed the previously announced sale of the Company’s G&P business to A-AG Holdco Limited, an affiliate of American Industrial Partners.

Refer to Note 3 of our Condensed Consolidated Financial Statements for further information.

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The following tables sets forth the percentage relationship to net sales of certain items included in our Condensed Consolidated Statements of Operations:

Three Months Ended June 30,

Three Months Ended September 30,

$ % of Net Sales (1)

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Impairment charges 0.2 — — —

Restructuring expenses 30.2 0.9 6.1 0.2

Loss on business held for sale

Restructuring and business optimization expenses

10.5 0.4 0.8 —

Income (loss) from operations

Loss on business held for sale

Income from operations

114.8 4.4 423.6 12.3

1 unchanged sentence

Other expense, net 52.3 2.0 84.2 2.4

Income (loss) before income taxes and equity in net earnings of affiliates

Income before income taxes and equity in net earnings of affiliates

28.6 1.1 333.9 9.7

Income tax provision 11.9 0.5 75.3 2.2

Income (loss) before equity in net earnings of affiliates

Income before equity in net earnings of affiliates

16.7 0.6 258.6 7.5

Equity in net earnings of affiliates 12.2 0.5 21.9 0.6

Net income (loss)

28.9 1.1 280.5 8.1

Net loss attributable to noncontrolling interests

Net income (loss) attributable to AGCO Corporation and subsidiaries

Net income attributable to AGCO Corporation and subsidiaries

$ 30.0 1.2 % $ 280.6 8.1 %

2 unchanged sentences

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Six Months Ended June 30,

Nine Months Ended September 30,

$ % of Net Sales (1)

7 unchanged sentences

Impairment charges 5.3 0.1 — —

Restructuring expenses 31.2 0.5 7.5 0.1

Restructuring and business optimization expenses

41.7 0.5 8.3 0.1

Loss on business held for sale

16 unchanged sentences

(1) Rounding may impact summation of amounts.

Net income (loss) attributable to AGCO Corporation and subsidiaries for the three months ended June 30, 2024, was $(367.1) million, or $(4.92) per diluted share, compared to $319.2 million or $4.26 per diluted share, for the three months ended June 30, 2023.

Net income (loss) attributable to AGCO Corporation and subsidiaries for the six months ended June 30, 2024, was $(199.1) million, or $(2.67) per diluted share, compared to $551.8 million or $7.36 per diluted share, for the six months ended June 30, 2023.

Net sales during the three months ended June 30, 2024 were approximately $3,246.6 million, or 15.1% lower than the three months ended June 30, 2023, primarily due to lower sales volumes resulting from softer industry sales reflecting lower end market demand and unfavorable currency impacts.

Income (loss) from operations was $(241.7) million for the three months ended June 30, 2024 compared to $496.4 million in the three months ended June 30, 2023.

The decrease in income from operations during 2024 was primarily the result of lower sales and production volumes, the recognition of the estimated loss on the G&P business held for sale as well as restructuring expenses associated with the Company's Program and higher selling, general and administrative expenses ("SG&A expenses"), primarily related to transaction costs related to the close of the PTx Trimble joint venture transaction and the announced G&P divestiture transaction.

Net sales during the six months ended June 30, 2024 were approximately $6,175.3 million, or 13.7% lower than the six months ended June 30, 2023, primarily due to lower sales volumes resulting from softer industry sales reflecting lower end market demand.

Income from operations was $31.9 million for the six months ended June 30, 2024 compared to $883.7 million in the six months ended June 30, 2023.

The decrease in income from operations during 2024 was primarily the result of lower sales and production volumes, the recognition of the estimated loss on the G&P business held for sale as well as restructuring expenses associated with the Company's Program and higher SG&A expenses, primarily related to transaction costs related to

Net income attributable to AGCO Corporation and subsidiaries for the three months ended September 30, 2024, was $30.0 million, or $0.40 per diluted share, compared to $280.6 million or $3.74 per diluted share, for the three months ended September 30, 2023.

Net income (loss) attributable to AGCO Corporation and subsidiaries for the nine months ended September 30, 2024, was $(169.1) million, or $(2.27) per diluted share, compared to $832.4 million or $11.10 per diluted share, for the nine months ended September 30, 2023.

Net sales during the three months ended September 30, 2024 were approximately $2,599.3 million, or 24.8% lower than the three months ended September 30, 2023, primarily due to lower sales volumes resulting from softer industry sales reflecting lower end market demand and unfavorable currency impacts.

Income from operations was $114.8 million for the three months ended September 30, 2024 compared to $423.6 million in the three months ended September 30, 2023.

The decrease in income from operations during 2024 was primarily the result of lower sales and production volumes reflecting weak industry conditions.

Net sales during the nine months ended September 30, 2024 were approximately $8,774.6 million, or 17.3% lower than the nine months ended September 30, 2023, primarily due to lower sales volumes resulting from softer industry sales reflecting lower end market demand and unfavorable currency impacts.

Income from operations was $146.7 million for the nine months ended September 30, 2024 compared to $1,307.3 million in the nine months ended September 30, 2023.

The decrease in income from operations during 2024 was primarily the result of lower sales and production volumes, the recognition of the estimated loss on the G&P business held for sale as well as restructuring and business optimization expenses and higher selling, general and administrative expenses ("SG&A expenses"), primarily related to transaction costs related to the close of the PTx Trimble joint venture transaction and the G&P divestiture transaction and higher compensation costs.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

the close of the PTx Trimble joint venture transaction and the announced G&P divestiture transaction and higher compensation costs.

We estimate that worldwide average price increases (decreases) were approximately (1.9)% and 14.1% for the three months ended June 30, 2024 and 2023, respectively, and (0.6)% and 13.0% for the six months ended June 30, 2024 and 2023, respectively.

Consolidated net sales of tractors and combines, which comprised approximately 61.6% and 62.7% of our net sales for the three and six months ended June 30, 2024, decreased approximately 17.6% and 13.8% compared to the same periods in 2023.

Unit sales of tractors and combines decreased approximately 22.3% and 21.1% during the three and six months ended June 30, 2024 compared to the same periods in 2023.

We estimate that worldwide average price increases (decreases) were approximately (1.2)% and 9.9% for the three months ended September 30, 2024 and 2023, respectively, and (0.8)% and 11.9% for the nine months ended September 30, 2024 and 2023, respectively.

Consolidated net sales of tractors and combines, which comprised approximately 57.6% and 61.2% of our net sales for the three and nine months ended September 30, 2024, decreased approximately 31.5% and 19.6% compared to the same periods in 2023.

Unit sales of tractors and combines decreased approximately 29.4% and 23.5% during the three and nine months ended September 30, 2024 compared to the same periods in 2023.

The primary driver of the decrease in unit sales was lower sales of compact and mid-range tractors and combines.

The difference between the unit sales change and the change in net sales was primarily the result of sales mix changes and foreign currency translation.

Overall, global production hours decreased approximately 23.3% and 19.8% during the three and six months ended June 30, 2024 compared to the same period in 2023, reflecting our response to lower end market demand.

Overall, global production hours decreased approximately 34.8% and 24.4% during the three and nine months ended September 30, 2024 compared to the same periods in 2023, reflecting our response to lower end market demand.

Results of Operations

Gross profit as a percentage of net sales decreased during the three months ended June 30, 2024 compared to the same period in 2023, primarily due to lower production volumes and unfavorable net pricing impacts.

Gross profit as a percentage of net sales were consistent during the six months ended June 30, 2024 compared to the same period in 2023.

SG&A expenses as a percentage of net sales were higher during the three and six months ended June 30, 2024 compared to the same periods in 2023.

The absolute level of SG&A expenses increased during the three and six months ended June 30, 2024 primarily due to PTx Trimble joint venture transaction-related costs, higher compensation costs and transaction costs related to the announced divestiture of the Company's G&P business.

Gross profit as a percentage of net sales decreased during the three and nine months ended September 30, 2024 compared to the same periods in 2023, primarily due to lower production volumes and unfavorable net pricing impacts.

SG&A expenses as a percentage of net sales were higher during the three and nine months ended September 30, 2024 compared to the same periods in 2023.

The absolute level of SG&A expenses were largely consistent during the three months ended September 30, 2024.

The absolute level of SG&A expenses increased during the nine months ended September 30, 2024 primarily due to PTx Trimble joint venture transaction-related costs and transaction costs related to the divestiture of the Company's G&P business.

These increases were partially offset by decreases in stock compensation expense.

We recorded $7.4 million and $15.4 million of stock compensation expense within SG&A expenses during the three and six months ended June 30, 2024, respectively, compared to $12.8 million and $26.3 million during the same periods in 2023.

Engineering expenses as a percentage of net sales were higher during the three and six months ended June 30, 2024 compared to the same periods in 2023, primarily driven by increased engineering expenses related to the PTx Trimble joint venture.

We recorded impairment charges of $5.1 million during the three and six months ended June 30, 2024 related

to the impairment of certain amortizing intangible assets and an investment in affiliate.

There were no impairment charges recorded during the three and six months ended June 30, 2023.

We recorded restructuring expenses of $30.2 million and $31.2 million during the three and six months ended June 30, 2024, respectively, compared to $6.1 million and $7.5 million, respectively, during the same periods in 2023.

We recorded $5.0 million and $20.4 million of stock compensation expense within SG&A expenses during the three and nine months ended September 30, 2024, respectively, compared to $9.8 million and $36.1 million during the same periods in 2023.

Engineering expenses as a percentage of net sales were higher during the three and nine months ended September 30, 2024 compared to the same periods in 2023, primarily driven by increased engineering expenses related to the PTx Trimble joint venture.

We recorded impairment charges of $0.2 million and $5.3 million during the three and nine months ended September 30, 2024, respectively, related to the impairment of certain amortizing intangible assets and an investment in affiliate.

There were no impairment charges recorded during the three and nine months ended September 30, 2023.

We recorded restructuring and business optimization expenses of $10.5 million and $41.7 million during the three and nine months ended September 30, 2024, respectively, compared to $0.8 million and $8.3 million, respectively, during the same periods in 2023.

On June 24, 2024, the Company announced a restructuring program (the “Program”) in response to increased weakening demand in the agriculture industry.

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Once fully implemented, the Company expects this phase of the Program to yield annual run-rate benefits and cost savings of approximately $100.0 million to $125.0 million.

The restructuring expenses recorded during the three and six months ended June 30, 2024 primarily related to severance and other related costs associated with the Company's Program and rationalization of certain manufacturing facilities and administrative offices.

The restructuring expenses recorded during the three and nine months ended September 30, 2024 primarily related to severance, business optimization and other related costs associated with the Company's Program and rationalization of certain manufacturing facilities and administrative offices.

Refer to Note 10 to our Condensed Consolidated Financial Statements for further information.

We recorded a loss on business held for sale of $494.6 million during the three and six months ended June 30, 2024.

There was no loss recorded during the three and six months ended June 30, 2023.

We recorded a loss on business held for sale of $3.2 million and $497.8 million during the three and nine months ended September 30, 2024, respectively.

There was no loss recorded during the three and nine months ended September 30, 2023.

On July 25, 2024, the Company announced it had entered into a definitive agreement to sell its G&P business, and as of June 30, 2024, the Company determined that the G&P business met the criteria to be classified as held for sale.

Upon the Company's classification as held for sale, the Company

Management’s Discussion and Analysis of Financial Condition and Results of Operations

recognized a loss on business held for sale of $494.6 million, which represents the estimated loss on the business held for sale.

As of September 30, 2024, the Company recognized a loss on business held for sale of $497.8 million, which represents the estimated loss on the business held for sale.

Refer to Note 3 to our Condensed Consolidated Financial Statements for further information.

Interest expense, net was $29.9 million and $31.8 million for the three and six months ended June 30, 2024, respectively, compared to $5.8 million and $6.3 million for the comparable periods in 2023.

The increase related primarily to an increase in interest expense resulting from the amortization of bridge facility commitment fees and increased debt levels related to financing the PTx Trimble joint venture transaction partially offset by higher interest income for the three and six months ended June 30, 2024 as compared to the same periods in 2023.

Interest expense, net was $33.9 million and $65.7 million for the three and nine months ended September 30, 2024, respectively, compared to $5.5 million and $11.8 million for the comparable periods in 2023.

The increase related primarily to

Management’s Discussion and Analysis of Financial Condition and Results of Operations

an increase in interest expense resulting from the amortization of bridge facility commitment fees and increased debt levels related to financing the PTx Trimble joint venture transaction partially offset by higher interest income for the three and nine months ended September 30, 2024 as compared to the same periods in 2023.

See “Liquidity and Capital Resources” for further information on our available funding.

Other expense, net was $65.3 million and $116.1 million for the three and six months ended June 30, 2024, respectively, compared to $78.0 million and $128.4 million for the comparable periods in 2023.

The decrease was primarily driven by decreases in foreign currency exchanges losses which were approximately $26.7 million and $49.6 million, respectively, for the three and six months ended June 30, 2024, compared to $41.9 million and $60.2 million, respectively, for the comparable periods in 2023.

During the six months ended June 30, 2024, the Company recorded the final insurance recovery of $5.0 million related to the 2022 cyber incident.

Losses on sales of receivables, primarily related to our accounts receivable sales agreements with our finance joint ventures in North America, Europe and Brazil and included in “ Other expense, net, ” were approximately $35.9 million and $63.8 million, respectively, for the three and six months ended June 30, 2024, compared to $30.3 million and $58.8 million, respectively, for the comparable periods in 2023.

We recorded an income tax provision of $41.6 million and $110.7 million for the three and six months ended June 30, 2024 compared to $111.0 million and $231.2 million for the three and six months ended June 30, 2023.

Other expense, net was $52.3 million and $168.4 million for the three and nine months ended September 30, 2024, respectively, compared to $84.2 million and $212.6 million for the comparable periods in 2023.

The decreases were primarily driven by decreases in foreign currency exchanges losses which were approximately $24.7 million and $74.3 million, respectively, for the three and nine months ended September 30, 2024, compared to $43.8 million and $104.1 million, respectively, for the comparable periods in 2023.

During the nine months ended September 30, 2024, the Company recorded the final insurance recovery of $5.0 million related to the 2022 cyber incident.

Losses on sales of receivables, primarily related to our accounts receivable sales agreements with our finance joint ventures in North America, Europe and Brazil and included in “ Other expense, net, ” were approximately $28.4 million and $92.2 million, respectively, for the three and nine months ended September 30, 2024, compared to $40.5 million and $99.3 million, respectively, for the comparable periods in 2023.

We recorded an income tax provision of $11.9 million and $122.6 million for the three and nine months ended September 30, 2024 compared to $75.3 million and $306.5 million for the three and nine months ended September 30, 2023.

Our effective tax rate varies from period to period due to the mix of taxable income and losses in the various tax jurisdictions in which we operate.

Based on a favorable tax ruling in Brazil regarding the taxability of certain state value added tax incentive benefits, the Company recorded a $31.7 million reduction in the provision for income taxes during the three months ended June 30, 2024.

During the six months ended June 30, 2023, we recorded approximately $26.4 million associated with our enrollment in a Brazilian tax amnesty program that is more fully described in Note 14 of our Condensed Consolidated Financial Statements.

Equity in net earnings of affiliates, which is primarily comprised of income from our AGCO Finance joint ventures, was $9.6 million and $25.8 million for the three and six months ended June 30, 2024 compared to $17.6 million and $34.0 million for the three and six months ended June 30, 2023.

The Company recorded a net loss attributable to noncontrolling interests of $1.8 million during the three and six months ended June 30, 2024.

During the nine months ended September 30, 2023, we recorded approximately $26.4 million associated with our enrollment in a Brazilian tax amnesty program that is more fully described in Note 14 of our Condensed Consolidated Financial Statements.

Equity in net earnings of affiliates, which is primarily comprised of income from our AGCO Finance joint ventures, was $12.2 million and $38.0 million for the three and nine months ended September 30, 2024 compared to $21.9 million and $55.9 million for the three and nine months ended September 30, 2023.

The Company recorded a net loss attributable to noncontrolling interests of $1.1 million and $2.9 million during the three and nine months ended September 30, 2024, respectively.

The net loss primarily relates to the noncontrolling interests of the PTx Trimble joint venture held by Trimble, which owns a 15% interest in the joint venture.

The Company had no net loss attributable to noncontrolling interests recorded for the three and six months ended June 30, 2023.

The Company recorded a net loss attributable to noncontrolling interests of $0.1 million and $0.1 million during the three and nine months ended September 30, 2023, respectively.

Results of Operations - Segment Information

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Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following table sets forth, for the three and six months ended June 30, 2024, the impact to net sales of currency translation by geographical segment (in millions, except percentages):

Three Months Ended June 30, Change Change Due to Currency Translation

The following table sets forth, for the three and nine months ended September 30, 2024, the impact to net sales of currency translation by geographical segment (in millions, except percentages):

Three Months Ended September 30, Change Change Due to Currency Translation

2024 2023 $ % $ %

4 unchanged sentences

$ 2,599.3 $ 3,455.5 $ (856.2) (24.8) % $ (21.2) (0.6) %

Six Months Ended

Change Change Due to Currency Translation

Nine Months Ended September 30, Change Change Due to Currency Translation

2024 2023 $ % $ %

4 unchanged sentences

$ 8,774.6 $ 10,611.7 $ (1,837.1) (17.3) % $ (21.3) (0.2) %

Three Months Ended

June 30, Change Six Months Ended

June 30, Change

Three Months Ended September 30, Change Nine Months Ended September 30, Change

2024 2023 $ 2024 2023 $

1 unchanged sentence

Income from Operations 83.0 199.3 (116.3) 654.4 733.9 (79.5)

Net sales in EME decreased in the three months ended June 30, 2024 compared to the three months ended June 30, 2023, primarily due to sales volumes declines, most significantly in compact and mid-range tractors, and hay tools, and unfavorable foreign currency translation, partially offset by increased sales of Fendt high-horsepower tractors and a favorable impact from the PTx Trimble joint venture transaction.

Income from operations decreased by $6.7 million in the three months ended June 30, 2024 compared to the three months ended June 30, 2023.

Income from operations remained relatively consistent due to the favorable product mix related to high-horsepower tractors.

Net sales in EME decreased in the six months ended June 30, 2024 compared to the six months ended June 30, 2023, primarily due to sales volumes declines, most significantly in compact and mid-range tractors, and combines, and lower sales of grain and protein products, partially offset by increased sales of Fendt high-horsepower tractors.

Income from operations increased by $36.8 million in the six months ended June 30, 2024 compared to the six months ended June 30, 2023, driven primarily by favorable product mix related to high-horsepower tractors.

Net sales in EME decreased in the three months ended September 30, 2024 compared to the three months ended September 30, 2023, primarily due to sales volume declines, most significantly in mid-range tractors, high-horsepower tractors and hay tools, partially offset by favorable foreign currency translation and a favorable impact from the PTx Trimble joint venture transaction.

Income from operations decreased by $116.3 million in the three months ended September 30, 2024 compared to the three months ended September 30, 2023 as a result of lower sales and production volumes, increased discounting and higher warranty costs.

Net sales in EME decreased in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily due to sales volume declines, most significantly in mid-range tractors and hay tools, and lower sales of grain and protein products, partially offset by favorable foreign currency translation.

Income from operations decreased by $79.5 million in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, as a result of lower sales and production volumes.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

North America

Three Months Ended

Six Months Ended

Three Months Ended September 30, Change Nine Months Ended September 30, Change

2024 2023 $ 2024 2023 $

Net Sales $ 736.1 $ 941.1 $ (205.0) $ 2,303.5 $ 2,861.0 $ (557.5)

Income from Operations 52.7 139.8 (87.1) 171.8 378.8 (207.0)

Net sales in North America decreased in the three months ended June 30, 2024 compared to the three months ended June 30, 2023, primarily due to sales volume declines, most significantly in mid-range and high-horsepower tractors, partially offset by a favorable impact from the PTx Trimble joint venture transaction.

Net sales in North America were also negatively impacted by the announced exit of two dealers in the three months ended June 30, 2024.

Income from operations decreased by $60.2 million in the three months ended June 30, 2024 compared to the three months ended June 30, 2023 as a result of lower sales and production volumes and higher warranty costs.

Net sales in North America decreased in the three months ended September 30, 2024 compared to the three months ended September 30, 2023, primarily due to sales volume declines, most significantly in mid-range and high-horsepower tractors and hay tools.

Income from operations decreased by $87.1 million in the three months ended September 30, 2024 compared to the three months ended September 30, 2023 as a result of lower sales and production volumes and higher warranty costs.

These decreases were partially offset by margin improvements related to grain and protein products.

Net sales in North America decreased in the six months ended June 30, 2024 compared to the six months ended June 30, 2023, primarily due to sales volume declines, most significantly in mid-range and high-horsepower tractors and hay tools.

Income from operations decreased by $119.9 million in the six months ended June 30, 2024 compared to the six months ended June 30, 2023 as a result of lower sales and production volumes and higher warranty costs.

Net sales in North America decreased in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily due to sales volume declines, most significantly in mid-range and high-horsepower tractors and hay tools.

Income from operations decreased by $207.0 million in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 as a result of lower sales and production volumes and higher warranty costs.

These decreases were partially offset by margin improvements related to grain and protein products.

South America

Three Months Ended

Change Six Months Ended

Three Months Ended September 30, Change Nine Months Ended September 30, Change

2024 2023 $ 2024 2023 $

1 unchanged sentence

Income from Operations 45.1 149.8 (104.7) 73.9 370.7 (296.8)

Net sales decreased in South America in the three months ended June 30, 2024 compared to the three months ended June 30, 2023, as a result of sales volume declines, most significantly in tractors and combines, and unfavorable foreign currency translation.

Income from operations decreased $108.8 million in the three months ended June 30, 2024 compared to the three months ended June 30, 2023, as a result of lower sales and production volumes and negative pricing impacts.

Net sales decreased in South America in the six months ended June 30, 2024 compared to the six months ended June 30, 2023, as a result of sales volume declines, most significantly in tractors and combines.

Income from operations decreased $192.1 million in the six months ended June 30, 2024 compared to the six months ended June 30, 2023, as a result of lower sales and production volumes and negative pricing impacts, partially offset by lower SG&A expenses resulting from a benefit recorded from the sale of a dealership in the first quarter of 2024 which was previously terminated in the fourth quarter of 2023.

Three Months Ended

Change Six Months Ended

Net sales decreased in South America in the three months ended September 30, 2024 compared to the three months ended September 30, 2023, as a result of sales volume declines, most significantly in tractors, combines and implements, and unfavorable foreign currency translation.

Income from operations decreased $104.7 million in the three months ended September 30, 2024 compared to the three months ended September 30, 2023, as a result of lower sales and production volumes and negative pricing impacts, partially offset by a one-time benefit from the tax reduction of tax on payments from imported goods and services in Argentina.

Net sales decreased in South America in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, as a result of sales volume declines, most significantly in tractors and combines and unfavorable foreign currency translation.

Income from operations decreased $296.8 million in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, as a result of lower sales and production volumes and negative pricing impacts, partially offset by lower SG&A expenses resulting from a benefit recorded from the sale of a dealership in the first quarter of 2024 which was previously terminated in the fourth quarter of 2023.

Three Months Ended September 30, Change Nine Months Ended September 30, Change

2024 2023 $ 2024 2023 $

1 unchanged sentence

Income from Operations 7.0 19.2 (12.2) 27.4 58.2 (30.8)

Net sales decreased in APA in the three months ended June 30, 2024 compared to the three months ended June 30, 2023, primarily due to lower sales volumes of high horse power tractors and lower sales of grain and protein products.

Income from operations decreased $8.5 million in the three months ended June 30, 2024 compared to the three months ended June 30, 2023, primarily due to lower sales and production volumes.

Net sales decreased in APA in the three months ended September 30, 2024 compared to the three months ended September 30, 2023, primarily due to lower sales volumes of high horse power tractors and lower sales of grain and protein products.

Income from operations decreased $12.2 million in the three months ended September 30, 2024 compared to the three months ended September 30, 2023, primarily due to lower sales and production volumes.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Net sales decreased in APA in the six months ended June 30, 2024 compared to the six months ended June 30, 2023, primarily due to lower sales volumes of high horse power tractors and hay tools, lower sales of grain and protein products and unfavorable foreign currency translation.

Income from operations decreased $18.6 million in the six months ended June 30, 2024 compared to the six months ended June 30, 2023, primarily due to lower sales and production volumes.

Net sales decreased in APA in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily due to lower sales volumes of high horse power tractors and hay tools and lower sales of grain and protein products.

Income from operations decreased $30.8 million in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily due to lower sales and production volumes.

LIQUIDITY AND CAPITAL RESOURCES

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Additional information regarding our indebtedness is contained in Note 9 to the Condensed Consolidated Financial Statements.

We believe that the following facilities listed below, together with available cash and internally generated funds, and assuming customary renewals and replacements, will be sufficient to support our working capital, capital expenditures and debt service requirements for the foreseeable future (in millions):

June 30, 2024 (1)

We believe that the following borrowings and facilities listed below, together with available cash and internally generated funds, and assuming customary renewals and replacements, will be sufficient to support our working capital, capital expenditures and debt service requirements for the foreseeable future (in millions):

September 30, 2024 (1)

Credit facility, expires 2027 $ 790.0

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The Company has a credit facility providing for a $1.25 billion multi-currency unsecured revolving credit facility (“Credit Facility”) that matures on December 19, 2027.

As of June 30, 2024, the Company had $760.0 million in outstanding borrowings under the revolving credit facility and had the ability to borrow $489.9 million.

In addition, the Company has an uncommitted revolving credit facility that allows the Company to borrow up to €100.0 million (or approximately $107.0 million as of June 30, 2024).

As of September 30, 2024, the Company had $790.0 million in outstanding borrowings under the revolving credit facility and had the ability to borrow $459.9 million.

Subsequent to the end of the quarter, on November 1, 2024, the Company repaid $150.0 million outstanding under the Credit Facility utilizing proceeds from the sale of the Company’s G&P business discussed further below.

In addition, the Company has an uncommitted revolving credit facility that allows the Company to borrow up to €100.0 million (or approximately $111.7 million as of September 30, 2024).

The credit facility expires on December 31, 2026.

As of June 30, 2024, the Company had no outstanding borrowings under the revolving credit facility.

As of September 30, 2024, the Company had no outstanding borrowings under the revolving credit facility.

On September 29, 2023, the Company entered into a multi-currency Finance Contract with the EIB permitting the Company to borrow up to €250.0 million, to fund up to 50% of certain investments in research, development and innovation primarily in Germany, France and Finland during the period from 2023 through 2026.

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The loan matures on October 26, 2029.

As of June 30, 2024, there was €250.0 million (approximately $267.5 million) outstanding under the EIB Senior Term Loan due 2029.

As of September 30, 2024, there was €250.0 million (approximately $279.3 million) outstanding under the EIB Senior Term Loan due 2029.

On January 25, 2024, the Company entered into an additional multi-currency Finance Contract with the EIB permitting the Company to borrow up to €170.0 million, for which the proceeds will be used in a similar manner as described for the EIB Senior Term Loan due 2029 above.

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The loan matures on February 15, 2030.

As of June 30, 2024, there was €170.0 million (approximately $181.9 million) outstanding under the EIB Senior Term Loan due 2030.

As of September 30, 2024, there was €170.0 million (approximately $189.9 million) outstanding under the EIB Senior Term Loan due 2030.

On March 21, 2024, the Company issued (i) $400.0 million aggregate principal amount of the 2027 Notes and (ii) $700.0 million aggregate principal amount of the 2034 Notes.

The Notes are unsecured and unsubordinated indebtedness of the Company and are guaranteed on a senior unsecured basis, jointly and severally, by certain direct and indirect subsidiaries of the Company.

As of June 30, 2024, the Company had $400.0 million and $700.0 million outstanding under the 2027 Notes and 2034 Notes, respectively.

The Notes are unsecured and unsubordinated indebtedness of the Company and are guaranteed on a senior unsecured basis, jointly and severally, by certain direct and indirect subsidiaries of the

Management’s Discussion and Analysis of Financial Condition and Results of Operations

As of September 30, 2024, the Company had $400.0 million and $700.0 million outstanding under the 2027 Notes and 2034 Notes, respectively.

In December 2023 and March 2024, the Company amended the Credit Facility to allow for incremental borrowings in the form of the Term Loan Facility in an aggregate principal amount of $500.0 million.

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The Term Loan Facility matures on December 19, 2027.

As of June 30, 2024, the Company had $500.0 million outstanding under the Term Loan Facility.

As of September 30, 2024, the Company had $500.0 million outstanding under the Term Loan Facility.

Subsequent to the end of the quarter, on November 1, 2024, the Company repaid the $500.0 million outstanding under the Term Loan Facility utilizing proceeds from the sale of the Company’s G&P business discussed further below.

On September 28, 2023, the Company entered into a bridge facility commitment letter with Morgan Stanley pursuant to which Morgan Stanley committed to provide, subject to the terms and conditions set forth therein, a $2.0 billion senior unsecured 364-day bridge facility.

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The Company financed the joint venture transaction through a combination of the Senior Notes due 2027 and 2034, the Term Loan Facility and the remainder through other borrowings and cash on hand.

The Company had redeemable noncontrolling interests of $504.7 million as of June 30, 2024 resulting from the PTx Trimble joint venture transaction, which may require the use of cash in certain instances, beginning in 2027.

The Company had redeemable noncontrolling interests of $337.5 million as of September 30, 2024 resulting from the PTx Trimble joint venture transaction, which may require the use of cash in certain instances, beginning in 2027.

Refer to Note 2 of our Condensed Consolidated Financial Statements for further information.

On July 25, 2024, the Company announced it had entered into a definitive agreement to sell the majority of its Grain & Protein business.

The Company expects to receive proceeds of approximately $700.0 million from the sale, subject to customary working capital and other adjustments.

The transaction is expected to be completed in the second half of 2024.

The Company intends to use the net proceeds from the transaction consistent with its stated capital allocation priorities, including debt repayment, disciplined investment in technology and organic growth initiatives, and return of capital to shareholders.

On November 1, 2024, the Company completed the previously announced sale of the Company’s G&P business to A-AG Holdco Limited, an affiliate of American Industrial Partners.

The Company received proceeds of approximately $700.0 million from the sale, subject to customary working capital and other adjustments.

The Company repaid the $500.0 million outstanding under the Term Loan Facility and $150.0 million outstanding under the Credit Facility utilizing proceeds from the sale.

The Company is in compliance with the financial covenants contained in these facilities and expects to continue to maintain such compliance.

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Refer to Note 9 to the Condensed Consolidated Financial Statements for additional information regarding our current facilities, including the financial covenants contained in each debt instrument.

Our debt to capitalization ratio, which is total indebtedness divided by the sum of total indebtedness, excluding short-term borrowings due within one year, and stockholders’ equity, was 48.8% and 23.0% at June 30, 2024 and December 31, 2023, respectively.

The increase largely reflects the indebtedness incurred to pay the purchase price attendant to the PTx Trimble joint venture transaction.

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Balance Sheet Information

(in millions) As of June 30,

2024 As of December 31, 2023

(in millions) As of September 30, 2024 As of December 31, 2023

Current assets (a)

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____________________________________

(a) Includes amounts due from non-guarantor subsidiaries of $2,529.1 million and $3,391.1 million as of June 30, 2024 and December 31, 2023, respectively.

(b) Includes amounts due from non-guarantor subsidiaries of $785.3 million and $404.1 million as of June 30, 2024 and December 31, 2023, respectively.

(c) Includes amounts due to non-guarantor subsidiaries of $2,438.5 million and $3,813.4 million as of June 30, 2024 and December 31, 2023, respectively.

(d) Includes amounts due to non-guarantor subsidiaries of $1,796.4 million and $1,193.3 million as of June 30, 2024 and December 31, 2023, respectively.

(a) Includes amounts due from non-guarantor subsidiaries of $2,309.9 million and $3,391.1 million as of September 30, 2024 and December 31, 2023, respectively.

(b) Includes amounts due from non-guarantor subsidiaries of $819.5 million and $404.1 million as of September 30, 2024 and December 31, 2023, respectively.

(c) Includes amounts due to non-guarantor subsidiaries of $1,836.7 million and $3,813.4 million as of September 30, 2024 and December 31, 2023, respectively.

(d) Includes amounts due to non-guarantor subsidiaries of $1,871.3 million and $1,193.3 million as of September 30, 2024 and December 31, 2023, respectively.

Statement of Operations Information

(in millions) Six months ended June 30, 2024

(in millions) Nine Months Ended September 30,

Income from Operations 490.1

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Balance Sheet Information

(in millions) As of June 30,

2024 As of December 31, 2023

(in millions) As of September 30, 2024 As of December 31, 2023

Current assets (a)

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____________________________________

(a) Includes amounts due from non-guarantor subsidiaries of $1,906.6 million and $2,760.2 million as of June 30, 2024 and December 31, 2023, respectively.

(b) Includes amounts due from non-guarantor subsidiaries of $751.7 million and $379.0 million as of June 30, 2024 and December 31, 2023, respectively.

(c) Includes amounts due to non-guarantor subsidiaries of $2,120.0 million and $3,540.1 million as of June 30, 2024 and December 31, 2023, respectively.

(d) Includes amounts due to non-guarantor subsidiaries of $1,796.4 million and $1,193.3 million as of June 30, 2024 and December 31, 2023, respectively.

(a) Includes amounts due from non-guarantor subsidiaries of $2,013.1 million and $2,760.2 million as of September 30, 2024 and December 31, 2023, respectively.

(b) Includes amounts due from non-guarantor subsidiaries of $784.7 million and $379.0 million as of September 30, 2024 and December 31, 2023, respectively.

(c) Includes amounts due to non-guarantor subsidiaries of $1,769.8 million and $3,540.1 million as of September 30, 2024 and December 31, 2023, respectively.

(d) Includes amounts due to non-guarantor subsidiaries of $1,834.2 million and $1,193.3 million as of September 30, 2024 and December 31, 2023, respectively.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Statement of Operations Information

(in millions) Six months ended June 30, 2024

(in millions) Nine Months Ended September 30, 2024

Income from Operations 616.0

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(a) Includes intercompany revenues generated from non-guarantor subsidiaries of $3,851.3 million.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Our accounts receivable sales agreements in North America, Europe and Brazil permit the sale, on an ongoing basis, of a majority of our receivables to our U.S., Canadian, European and Brazilian finance joint ventures.

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These agreements are accounted for as off-balance sheet transactions.

The cash received from receivables sold under the U.S., Canadian, European and Brazilian accounts receivable sales agreements that remain outstanding as of June 30, 2024 and December 31, 2023 was approximately $2.4 billion and $2.5 billion, respectively.

The cash received from receivables sold under the U.S., Canadian, European and Brazilian accounts receivable sales agreements that remain outstanding as of September 30, 2024 and December 31, 2023 was approximately $2.2 billion and $2.5 billion, respectively.

In addition, we sell certain trade receivables under factoring arrangements to other financial institutions around the world.

The cash received from trade receivables sold under factoring arrangements that remain outstanding as of June 30, 2024 and December 31, 2023 was approximately $221.4 million and $254.1 million, respectively.

The cash received from trade receivables sold under factoring arrangements that remain outstanding as of September 30, 2024 and December 31, 2023 was approximately $205.4 million and $254.1 million, respectively.

Our finance joint ventures in Europe, Brazil and Australia also provide wholesale financing directly to our dealers.

As of June 30, 2024 and December 31, 2023, these finance joint ventures had approximately $187.7 million and $211.3 million, respectively, of outstanding accounts receivable associated with these arrangements.

The total finance portfolio in our finance joint ventures was approximately $14.2 billion and $14.1 billion as of June 30, 2024 and December 31, 2023, respectively.

The total finance portfolio as of June 30, 2024 and December 31, 2023 included approximately $11.2 billion and $10.8 billion, respectively, of retail receivables and $3.0 billion and $3.3 billion, respectively, of wholesale receivables from AGCO dealers.

As of September 30, 2024 and December 31, 2023, these finance joint ventures had approximately $203.2 million and $211.3 million, respectively, of outstanding accounts receivable associated with these arrangements.

The total finance portfolio in our finance joint ventures was approximately $14.6 billion and $14.1 billion as of September 30, 2024 and December 31, 2023, respectively.

The total finance portfolio as of September 30, 2024 and December 31, 2023 included approximately $11.8 billion and $10.8 billion, respectively, of retail receivables and $2.8 billion and $3.3 billion, respectively, of wholesale receivables from AGCO dealers.

In order to efficiently manage our liquidity, we generally pay vendors in accordance with negotiated terms.

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Should we not be able to negotiate extended payment terms with our vendors, or should financial institutions no longer be willing to participate in early payment programs with us, we would expect to have sufficient liquidity to timely pay our vendors without any material impact on us or our financial position.

As of June 30, 2024 and December 31, 2023, the amount outstanding that remains unpaid to the banks or other intermediaries associated with these programs totaled $92.9 million and $82.7 million, respectively.

As of September 30, 2024 and December 31, 2023, the amount outstanding that remains unpaid to the banks or other intermediaries associated with these programs totaled $77.7 million and $82.7 million, respectively.

Refer to Note 8 of our Condensed Consolidated Financial Statements for further discussion.

Cash flows used in operating activities were approximately $134.5 million for the first six months of 2024 compared to cash used in operating activities of approximately $365.0 million for the same period in 2023.

The decrease of cash used in operating activities during the six months ended June 30, 2024 was primarily driven by changes in working capital, partially offset by a decrease in net income in the first six months of 2024 compared to the same period in 2023.

Cash flows used in operating activities were approximately $108.0 million for the first nine months of 2024 compared to cash provided by operating activities of approximately $202.7 million for the same period in 2023.

The increase of cash used in operating activities during the nine months ended September 30, 2024 was primarily driven by a decrease in net income in the first nine months of 2024 compared to the same period in 2023.

Our working capital requirements are seasonal, with investments in working capital typically building in the first half of the year and then reducing in the second half of the year.

We had approximately $2,275.2 million in working capital at June 30, 2024 as compared to $1,997.2 million at December 31, 2023.

Inventories as of June 30, 2024 were approximately $3,499.4 million as compared to $3,440.7 million at December 31, 2023.

Accounts and notes receivable, net, as of June 30, 2024 were approximately $139.4 million lower than at December 31, 2023 primarily due to timing of sales of accounts receivable under our factoring arrangements.

Capital expenditures for the first six months of 2024 were approximately $193.0 million compared to $237.0 million for the same period in 2023.

We had approximately $2,258.8 million in working capital at September 30, 2024 as compared to $1,997.2 million at December 31, 2023.

Inventories as of September 30, 2024 were approximately $3,443.2 million as compared to $3,440.7 million at December 31, 2023.

Accounts and notes receivable, net, as of September 30, 2024 were approximately $156.9 million lower than at December 31, 2023 primarily due to timing of sales of accounts receivable under our factoring arrangements.

Accounts payable and Accrued expenses as of September 30, 2024 were approximately $246.2 million and $395.0 million lower than at December 31, 2023, respectively.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Capital expenditures for the first nine months of 2024 were approximately $279.3 million compared to $357.7 million for the same period in 2023.

Share Repurchase and Dividends

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All shares received under the ASR agreement were retired upon receipt, and the excess of the purchase price over par value per share was recorded to a combination of “Additional paid-in capital” and “Retained earnings” within the Company’s Condensed Consolidated Balance Sheets.

We did not purchase any shares directly or enter into any accelerated share repurchase agreements during the three and six months ended June 30, 2024.

As of June 30, 2024, the remaining amount authorized to be repurchased under board-approved share repurchase authorizations was approximately $57.0 million, which has no expiration date.

We did not purchase any shares directly or enter into any accelerated share repurchase agreements during the three and nine months ended September 30, 2024.

As of September 30, 2024, the remaining amount authorized to be repurchased under board-approved share repurchase authorizations was approximately $57.0 million, which has no expiration date.

On April 25, 2024, the Company's Board of Directors declared a special variable dividend of $2.50 per common share that was paid during the second quarter of 2024.

During the three months ended June 30, 2024 and 2023, the Company declared and paid cash dividends of $2.79 and $5.28 per common share, respectively.

During the six months ended June 30, 2024 and 2023, the Company declared and paid cash dividends of $3.08 and $5.52 per common share, respectively.

On July 11, 2024, the Company's Board of Directors declared a regular quarterly dividend of $0.29 per common share to be paid on September 16, 2024, to all stockholders of record as of the close of business on August 15, 2024.

During the three months ended September 30, 2024 and 2023, the Company declared and paid cash dividends of $0.29 and $0.29 per common share, respectively.

During the nine months ended September 30, 2024 and 2023, the Company declared and paid cash dividends of $3.37 and $5.81 per common share, respectively.

On October 24, 2024, the Company's Board of Directors declared a regular quarterly dividend of $0.29 per common share to be paid on December 16, 2024, to all stockholders of record as of the close of business on November 15, 2024.

COMMITMENTS, OFF-BALANCE SHEET ARRANGEMENTS AND CONTINGENCIES

We are party to a number of commitments and other financial arrangements, which may include off-balance sheet arrangements.

At June 30, 2024, we had outstanding guarantees issued to our Argentine finance joint venture, AGCO Capital, of approximately $54.1 million.

At September 30, 2024, we had outstanding guarantees issued to our Argentine finance joint venture, AGCO Capital, of approximately $60.5 million.

In addition, we had accrued approximately $13.0 million of outstanding guarantees of residual values that may be owed to our finance joint ventures in the United States and Canada due upon expiration of certain eligible operating leases between the finance joint ventures and end users.

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We also sell a majority of our wholesale receivables in North America, Europe and Brazil to our U.S., Canadian, European and Brazilian finance joint ventures.

At June 30, 2024, we had outstanding designated and non-designated foreign currency contracts with a gross notional amount of approximately $3,032.1 million.

Refer to “Liquidity and Capital Resources” and “Item 3.

Quantitative and Qualitative Disclosures about Market Risk-Foreign Currency Risk Management,” as well as to Notes 4, 11 and 17 of our Condensed Consolidated Financial Statements for further discussion of these matters.

Refer to “Liquidity and Capital Resources” as well as to Notes 4 and 17 of our Condensed Consolidated Financial Statements for further discussion of these matters.

Contingencies

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See Note 17 of our Condensed Consolidated Financial Statements for further information.

On April 1, 2024, AGCO acquired an 85% ownership interest in PTx Trimble, and Trimble holds a 15% interest.

On April 1, 2024, AGCO acquired an 85% stake in PTx Trimble, and Trimble holds a 15% stake.

AGCO began consolidating the PTx Trimble joint venture into its consolidated financial statements on April 1, 2024.

In addition, on July 25, 2024, AGCO announced the entry into a definitive agreement to sell its Grain & Protein business which is expected to be completed in the second half of 2024.

On November 1, 2024, AGCO closed the previously announced divestiture of the Grain & Protein business.

Global industry demand for farm equipment, driven by farm income, has declined during 2024 in most major markets compared to 2023.

AGCO's net sales, including PTx Trimble, are expected to decrease in 2024 compared to 2023, resulting from lower sales volumes and adverse foreign currency translation.

Operating margins, including PTx Trimble, are expected to decrease from 2023 levels, reflecting the impact of lower net sales and lower production volumes, partially offset by increased cost controls and modestly lower investments in engineering.

AGCO's net sales are expected to decrease in 2024 compared to 2023, resulting from lower sales volumes.

Operating margins are expected to decrease from 2023 levels, reflecting the impact of lower net sales, lower production volumes, partially offset by increased cost controls and modestly lower investments in engineering.

Our outlook is based on current assumptions regarding a number of factors including demand, currency stability, pricing and market share gains.

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• grain stock levels and the levels of new and used field inventories;

Management’s Discussion and Analysis of Financial Condition and Results of Operations

• cost of steel and other raw materials;

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• government policies and subsidies;

Management’s Discussion and Analysis of Financial Condition and Results of Operations

• uncertainty regarding changes in the international tariff regimes and product embargoes and their impact on the cost of the products that we sell;

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• integration of recent and future acquisitions, including the completed acquisition on April 1, 2024 of the Trimble ag assets and formation of the joint venture, PTx Trimble, and the ability to obtain the expected results;

• our ability to complete the sale of the majority of the G&P business;

• our expansion plans in emerging markets;

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis