AGCO Corp Q1 2025 Earnings Call Transcript

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

Question: Jamie Cook - Truist Securities, Inc. - Analyst : Hi, good morning. I guess my first question, the first quarter came in better than you guys had expected. I think you were guiding to break even in an adjusted basis. You came in at $0.41, so Damon just any color and where you perform better versus what you would have thought. And then I guess my second question, just a little more color on tariffs and the actions you're taking to mitigate tariffs, I guess one. Can you talk to your order book? Is there any risk in your order book associated with tariffs, sort of the price increases that you're talking about and, actions you're taking? I don't know if you can put a dollar amount on that because it's impressive you are still, maintaining your guide. Thank you.

Question: Jamie Cook - Truist Securities, Inc. - Analyst : Thank you.

Question: Kyle Menges - Citigroup Inc. - Analyst : Thank you. So I know Damon, you called out just the EME margins, particularly strong in the quarter, at least partly driven by mix. So I guess the question is really just around the sustainability of the EME margins and just how do we think about the risks of a potential mix shift from Fendt to maybe the other brands and just how to think about mixed impacts on EME margins how to think about that for the rest of the year and then maybe in the kind of medium term?

Question: Kyle Menges - Citigroup Inc. - Analyst : That's helpful. Thank you. And then I think it'd also be helpful just to get some sense of what Trimble top line and margins look like in the quarter, like were margins or positive, and then just how should we be thinking about as you start lapping that CNH dealer stock up that we saw just what are you seeing now in terms of the dealer inventories and order trends from those dealers.

Question: Kyle Menges - Citigroup Inc. - Analyst : Really helpful. Thank you guys.

Question: Kristen Owen - Oppenheimer & Co., Inc. - Analyst : Good morning. Thank you for taking the question. I wanted to follow up on some of what Jamie touched on in her question, and just make sure I understand the mechanics on the full-year guide. So you've got the Q1 top line inline full year maintained, bottom line be by $0.40 full year maintained, but you've also lifted, some of the outlook for price for FX. So is it fair to think that your assumptions around tariffs are something on the order of the four points that you added to the top line. That could be a 4 percentage point headwind and similarly a 40% headwind on the bottom line. Sorry for the long winded question there, but I just want to make sure I understand the mechanics, and then I do have an unrelated follow up?

Question: Kristen Owen - Oppenheimer & Co., Inc. - Analyst : That's incredibly helpful. Thank you for that, Damon. And then I did want to ask, since you mentioned it in the prepared remarks as you typically do about your capital allocation strategy, just given the progress with your large shareholder and their decision not to stand for re-election, I'm 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 01, 2025 / 2:00PM, AGCO.N - Q1 2025 AGCO Corp Earnings Call wondering if you can maybe update us on what potential outcomes could look like there, and how that might influence your capital allocation going forward? Thank you.

Question: Kristen Owen - Oppenheimer & Co., Inc. - Analyst : Thank you.

Question: Jerry Revich - Goldman Sachs & Co. LLC - Analyst : Yes, hi, good morning, everyone, and nice quarter. Eric, I wanted to ask, if you folks looked at the scenario that I'm sure you've evaluated if you were to bring Fendt production into the US for the US market. What would that look like for AGCO? What would the impact be on unit costs if you were to move in that direction? How long would that transition take? Can you just fill us in on that contingency plan, and how you folks have evaluated it, if it were to come down to it?

Question: Jerry Revich - Goldman Sachs & Co. LLC - Analyst : Super. And then just to shift gears, and nice to hear progress about the Precision Ag reorganization and what that has meant for cross-selling. Can you just update us on your views on the legacy Trimble retrofit kit. You've got a competitor that's spoken publicly about making good headway in terms of launching that product at a lower upfront cost with subscription over time? What's the AGCO counterpoint to that offering? Are you folks in the market, the numbers that quoted earlier include potential lower ASP, but higher subscription value? Can you just talk about how you're thinking about the competitive landscape for --

Question: Jerry Revich - Goldman Sachs & Co. LLC - Analyst : Thank you.

Question: Stephen Volkmann - Jefferies LLC - Analyst : Hey, good morning guys, Damon, I'm wondering if you can sort of mark us to market relative to your various cost cut programs? What have you achieved so far? What do you expect to achieve by year-end? Any changes in that outlook?

Question: Stephen Volkmann - Jefferies LLC - Analyst : Super. Thank you for that. And I guess, as I think forward, I think, Damon, you said you're still looking at 25% as kind of the trough of the cycle. I guess just based on all this cost stuff, there shouldn't be any real reason that we wouldn't factor in potentially meaningfully higher incremental margins once we start turning back up again? Or is there some offset you'd like us to keep in mind?

Question: Stephen Volkmann - Jefferies LLC - Analyst : Got it. Thank you.

Question: Tami Zakaria - JPMorgan Securities LLC - Analyst : Hey, good morning. Thank you so much. So my first question is on Fendt. So if there is tariff -- import on tariffs from the Eu, starting in July. What's your plan regarding the Fendt brand? My understanding is it's a premium price product already, so would you consider raising prices? Or would you absorb the cost initially to not drive any price escalation in an already weak market?

Question: Tami Zakaria - JPMorgan Securities LLC - Analyst : Understood. That's very helpful. That's all I had for today. Thank you.

Question: Steven Fisher - UBS Equities - Analyst : Well thanks. Good morning. I just wanted to follow up on the $0.30 of the tariff impact. Just to clarify from a flow perspective, what are the tariffs that is really driving that? Is that Europe to US? Is it China? Where does that all come from?

Question: Steven Fisher - UBS Equities - Analyst : Very helpful. And then it seems like Brazil is obviously on the verge of perhaps really turning more positively here. So what can you do? And what are you doing to make sure you're keeping competitive pace there and really trying to -- is the objective to kind of win in Brazil? Can you just give a little bit of color there?

Question: Timothy Thein - Raymond James - Analyst : Just a quick one, I guess, Eric. Just continuing along the line here, getting flashbacks dragged to my old baseball base betting here at the bottom of the lineup. But the -- just on the back of that comment on Brazil, I guess just curious, in light of the increase in interest rates that's putting a bit more pressure on the federal government in terms of the kind of the wiggle room they have in terms of announcing the subsidized interest rate program. I'm just curious, if there's been any news or anything that's come out there in terms of what next year's program may look like? So maybe that's part one. And then part two, just -- and I probably missed this, but the change in the pricing expectations, and it wasn't a brand change, but the change from last quarter, was there a region? Or is that a mix dynamic going on with Brazil improving? Is that biasing that the overall pricing higher from last quarter? Maybe just a comment on that. Thank you. 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 01, 2025 / 2:00PM, AGCO.N - Q1 2025 AGCO Corp Earnings Call