AGCO Corp at JPMorgan Global Technology, Media and Communications Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Tami Zakaria - JPMorgan Chase & Co, Research Division - Analyst : Absolutely. Thank you so much. So Brad, to you, can you help us conceptualize what kind of savings your existing Precision Ag solutions are generating for farmers? And can you give some examples what's the ROI from a farmer's perspective? If they want to buy a solution from you, what's the payback period?

Question: Tami Zakaria - JPMorgan Chase & Co, Research Division - Analyst : That's very helpful. And I think, last year, Precision Planting revenues were impacted by chip shortages and -- but recovered in the back half of the year. So how are you thinking about growth of this business this year and in the medium term? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 23, 2023 / 3:30PM, AGCO.N - AGCO Corp at JPMorgan Global Technology, Media and Communications Conference

Question: Tami Zakaria - JPMorgan Chase & Co, Research Division - Analyst : Got it. That's very helpful. And we've heard you talk about your retrofit strategy a lot. I think that's one of your differentiators. So can you just shed some light on why retrofit is the right way to go for Precision Ag within AGCO?

Question: Tami Zakaria - JPMorgan Chase & Co, Research Division - Analyst : Great color. I want to come back to the OEM piece of it. But before that, I think you gave out some growth targets for Precision Ag revenues. I think you talked about $1 billion -- reaching over $1 billion by 2025. So what kind of dealer network expansion do you need to do to achieve that in each of the 3 major regions?

Question: Tami Zakaria - JPMorgan Chase & Co, Research Division - Analyst : Got it. Very helpful. And for Precision Planting, I think you have relationships with OEMs. So update us on the breadth of OEM relationships you currently have. What's the growth outlook there?

Question: Tami Zakaria - JPMorgan Chase & Co, Research Division - Analyst : Before I move on to the next question, I do want to highlight that we will have the last 10 minutes of this session opened to the audience for questions, both for here in the room, and you can also submit questions via the webcast. So we will get to your questions, if you have any. So the next question, again, to you, Brad, what is the parts and services opportunity associated with Precision Ag sales?

Question: Tami Zakaria - JPMorgan Chase & Co, Research Division - Analyst : And is it fair to say that your dealer network will be essential in sort of creating that sticky relationship, where, if there's any new features, updates, they would be able to provide it to the farmers? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 23, 2023 / 3:30PM, AGCO.N - AGCO Corp at JPMorgan Global Technology, Media and Communications Conference

Question: Tami Zakaria - JPMorgan Chase & Co, Research Division - Analyst : Got it. I will come back to the upcoming launches. But before that, let's talk about pricing, price realization. What has price realization been in the Precision Ag business in the last few years? And what's the usual run rate for pricing for the segment? The reason I ask, I think for traditional machines, it's low single-digit inflation type of pricing -- price realization over time. But it seems like there's a lot of value to be had from Precision Ag solutions. So what about pricing for that segment?

Question: Tami Zakaria - JPMorgan Chase & Co, Research Division - Analyst : Got it. And going back to product launches, I think you mentioned 6 new launches this year. So can you update us on what those products would be? And then not just this year but beyond this year, what kind of new products are in the pipeline?

Question: Tami Zakaria - JPMorgan Chase & Co, Research Division - Analyst : Interesting. I think you've talked about the commercialization of fully autonomous crop care solutions by 2030 with retrofit solutions coming in by 2025. So from our perspective, the outsiders, what are some of the KPIs to monitor the progress of all these initiatives?

Question: Tami Zakaria - JPMorgan Chase & Co, Research Division - Analyst : Got it. Just to dig a little deeper, the autonomous grain carts and tillage equipment, I think you mentioned it's coming in 2024, right?

Question: Tami Zakaria - JPMorgan Chase & Co, Research Division - Analyst : Okay. That's the retrofit. And first fit is probably a year after, in 2026?

Question: Tami Zakaria - JPMorgan Chase & Co, Research Division - Analyst : Yes.

Question: Tami Zakaria - JPMorgan Chase & Co, Research Division - Analyst : Got it. So are there any competing products right now that farmers are used to or getting acquainted to? Or is it a novel technology that's going to be coming out? The reason I asked that question, what is the competitive landscape in terms of these autonomous solutions that you're bringing out? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 23, 2023 / 3:30PM, AGCO.N - AGCO Corp at JPMorgan Global Technology, Media and Communications Conference

Question: Tami Zakaria - JPMorgan Chase & Co, Research Division - Analyst : Got it. And so many would argue or even ask the question that maybe some of your bigger competitors, their tech stack could be better, and they are more poised to win the precision ag race. Tell us why that will not be the case, why AGCO could be the frontrunner.

Question: Tami Zakaria - JPMorgan Chase & Co, Research Division - Analyst : Got it. That's very helpful. So tell us more about the Precision Ag monetization strategy. Some of your peers have talked about taking a SaaS subscription-type revenue model similar to software. What are your views on what the right monetization strategy is for precision products and services?

Question: Tami Zakaria - JPMorgan Chase & Co, Research Division - Analyst : Got it. And from a farmer's perspective, are they currently used to paying any subscription-type fees to OEMs or across their crop care needs? And if not, then do you think there's some education that needs to be done for them to feel comfortable with the SaaS model rather than buying something upfront? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 23, 2023 / 3:30PM, AGCO.N - AGCO Corp at JPMorgan Global Technology, Media and Communications Conference

Question: Tami Zakaria - JPMorgan Chase & Co, Research Division - Analyst : Got it. So I do want to open it up to the audience, if anyone has any questions. We have a mic at the back of the room. So if you could raise your hand, the mic would reach front. Unidentified Participant You talked about addressing some opportunities in the cost structure in Massey Ferguson in the grain business. Why were these selected as opposed to across the entire operation? And what's going on there that could offer some above-average opportunities, I guess?

Question: Tami Zakaria - JPMorgan Chase & Co, Research Division - Analyst : Any other questions in the room? Also, as a reminder, those who are listening to the webcast, you can also submit your questions via the webcast. Unidentified Participant Just a question on the choice of going after a retrofit or just what that implies. Does it mean you're going after a slightly different customer than -- well, we may think of the larger firms who may buy and churn new equipment each year? And does that make a difference in terms of the adoption rate of new technology and the funding for new technology? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 23, 2023 / 3:30PM, AGCO.N - AGCO Corp at JPMorgan Global Technology, Media and Communications Conference

Question: Tami Zakaria - JPMorgan Chase & Co, Research Division - Analyst : I think we have 2 questions in the front. Unidentified Participant Can you maybe talk about the decremental margins and how they might improve over time with increased penetration in Precision Ag?

Question: Tami Zakaria - JPMorgan Chase & Co, Research Division - Analyst : Could you repeat the question?

Question: Tami Zakaria - JPMorgan Chase & Co, Research Division - Analyst : I think we're up on time with that. So thank you, Brad and Greg, for joining.