Good day, and thank you for standing by. Welcome to the AGCO 2021 Fourth Quarter Earnings Release Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. To ask a question during the session, you'll need to press star one on your telephone. We ask that you please limit yourself to one question and one follow-up. Please be advised that today's call is being recorded. I would now like to hand the conference over to Greg Peterson, Head of Investor Relations, AGCO. Please go ahead. Thanks, Regina, and good morning. Welcome to those of you joining us for AGCO's Fourth Quarter 2021 Earnings Conference Call. You'll find our slides posted on our website at www.agcocorp.com. The non-GAAP measures that we're using in these slides are reconciled to GAAP metrics in the appendix of that presentation. We will make forward-looking statements this morning, including demand, product development and capital expenditure plans, production levels, engineering expense, exchange rate impacts, pricing, share repurchases, dividends, future commodity prices, crop production, supply chain inflation, component deliveries, retail revenue margins, earnings, cash flow, tax rates, and other financial metrics. We wish to caution you that these statements are predictions and that actual events may differ materially. We refer you to the periodic reports that we file from time to time with the Securities and Exchange Commission, including the company's Form 10-K for the year ended December 31st, 2020. These documents discuss important factors that could cause the actual results to differ materially from those contained in our forward-looking statements. These factors include, but are not limited to, adverse developments in the ag industry, including those resulting from COVID-19, including plant closings, workforce availability, and product demand, supply chain disruption, weather, exchange rate volatility, commodity prices, and changes in product demand. We disclaim any obligation to update any forward-looking statements except as required by law. We will have a replay of this call on our website later today. On the call with me this morning are Eric Hansotia, our Chairman, President, and Chief Executive Officer, and Andy Beck, our Senior Vice President and Chief Financial Officer. With that, Eric, please go ahead. We appreciate your interest in AGCO and your participation on the call today. We'll start on slide three that provides the financial summary. We finished 2021 with a very solid fourth quarter while mitigating supply chain delays and ongoing COVID challenges. I'd like to thank AGCO's 23,000 employees for their hard work that resulted in world-class support for our farmer customers throughout this challenging year. They were focused on the farmer and found hundreds of above-and-beyond solutions to tough problems. These efforts helped deliver fourth quarter sales growth of 16% with operating margins expanding by 160 basis points on an adjusted basis. For the full year, our net sales reached $11.1 billion. Adjusted operating margins improved 210 basis points to 9.1%, and adjusted earnings per share hit $10.38. These are all records for AGCO in the history of our company. During 2021, we also executed an ambitious investment plan to expand our smart farming solutions and enhance our digital capabilities. We continue to experience significant component shortages that are impacting our production volumes. In addition, material and freight cost inflation remains high, requiring additional pricing to offset its impact. The encouraging news is that despite the global supply bottlenecks and inflationary pressures, farmer economics remain very healthy and global end market demand remains strong. We expect supportive market conditions to continue into 2022. Our new financial outlook reflects this optimism as we plan to continue to make technology-related investments as well as to return cash to our shareholders. Slide four details industry unit retail sales by region for a full year of 2021. Elevated soft commodity prices supported improved farm income in 2021 despite significantly higher farm input costs, and therefore the financial health of our farmer customers remains strong. These favorable farm fundamentals are resulting in robust demand for agricultural equipment as farmers look to upgrade their fleets. In North America, industry retail sales increased about 14% in the full year of 2021 compared to 2020. Industry retail sales of large agricultural equipment grew by approximately 25%. Row crop farmers are taking advantage of improved commodity prices and projected healthy income levels to upgrade their equipment. Industry retail sales in Western Europe also increased in the full year of 2021 versus supply-constrained levels in the prior year. With growth across all major markets, higher wheat, dairy, and livestock prices, combined with healthy levels of crop production, are generating positive farmer economics and farmer sentiment in the region. In South America, industry sales increased during the full year of 2021, driven by improved demand in Brazil and Argentina, as well as recovery in the smaller export markets. Healthy crop production as well as favorable exchange rates are supporting positive economic conditions for farmers who continue to replace an aged fleet. AGCO's 2021 factory production hours are shown on slide five. As I mentioned, we continue to face supply chain and logistics challenges, as well as material and freight cost inflation. The supply chain issues have impacted our ability to produce and ship units, as well as contributed to labor inefficiencies. In addition, the volatile supply chain environment is still requiring us to keep higher than normal levels of raw material and work in process inventory on hand. Total company production was up approximately 24% for the fourth quarter versus the high level of production in the fourth quarter of 2020. The largest increase were seen in South American factories. For the full year of 2021, our production was up 25% compared to last year. Turning to 2022, we currently project production hours to increase approximately 5%-10% compared to 2021 levels. At year-end, AGCO's order board remained extended. Orders for tractors and combines were significantly higher in North America and Europe, and approximately flat in South America compared to a year ago. Now just as a reminder, we are continuing to truncate our order board in Brazil at three months to give ourselves more pricing flexibility. I wanna spend the last few minutes of my time this morning reviewing our strategic priorities and then highlight some of the recent successes in our precision ag business. You can see on slide six that our strategy is built on delivering value to our farmer customers. By being farmer-focused, we develop solutions that truly create value for farmers while building strong, loyal relationships. We are differentiating ourselves by three things. First, consistently delivering exceptional customer experiences at every touch point. Second, maximizing farmers' outcome through high quality smart solutions. Third, serving customers where and how they choose through customer-connected distribution throughout the life cycle. We made real progress in 2021 to help us deliver these exceptional customer experiences in a multi-brand structure we've organized into global brand teams deployed in each region. To monitor our progress and receive constant feedback on how we are doing, we've launched a Net Promoter Score measurement globally. We're also making progress in our customer-connected distribution. Our CRM solution is being rolled out rapidly on a global basis. We're already covering 83% of our target dealers in our EME region. North America is gonna grow from 7%-30% in 2022, and APA will reach 100% in 2022. Our e-commerce tool set went operational in 2021, both for accessories and parts. In addition, we purchased a company called Creative Sites Media, which specializes in software and app development to further develop our connectivity with our dealers and customers. This is a high-powered team of software and data developers with a great cultural fit to AGCO and Precision Planting. The development of high-quality smart solutions requires AGCO to accelerate its development of technology, which I'll address on the next couple of slides. Slide seven outlines the significant progress we made with our precision ag business in 2021. We expanded our capabilities internally by increasing our engineering spend by the largest amount in company history while also making investments and acquisitions. You can see on this slide that we had a very active year internally with 23 precision ag-enabled product launches, which included some examples like our FendtONE solution that connects farmers' office work with their activities on the field. It's getting rave reviews throughout the industry. Our new Fendt Rogator, the new sprayer, a revolutionary sprayer that enables both pre- and post-emergent application with the same machine. That new Rogator is winning lots of awards and getting tons of attention from our farmers with lots of interest. Externally, we made equity investments in two innovative companies that are helping us with autonomous applications and precision spraying capabilities. During 2021, we also announced four acquisitions that will enhance our capabilities in a number of important areas, including communication, monitoring, sensing, tracking, and controlling devices. We also upgraded our capabilities for smart solutions for livestock farming, aimed at increasing productivity of the growers, as well as improving animal welfare. Our precision ag investments are translating into sales growth and margin expansion. In 2021, our margin-rich precision ag sales surpassed a $500 million, which was 34% higher compared to 2020. Now this puts us well ahead of our announced pace to double precision ag sales in three to five years that we committed to you last year. I think most of you are familiar with our Precision Planting business, which provides retrofit technology to upgrade a customer's existing planter, resulting in significant yield improvement for the farmer. Since its acquisition in 2017, Precision Planting has been the growth engine for the retrofit side of our precision ag business. In 2021, Precision Planting sales grew 44% to over $300 million, significantly outpacing the market. One of Precision Planting's primary marketing event is their Winter Conference, which I attend each year. At this mid-January event, thousands of farmers gather, both in person and virtually, to hear directly from engineers and agronomists focused on improving farm operations through product development and research in the field. They have the opportunity to see the latest Precision Planting technologies. Now, historically, these new products have been focused on planters. Last month, at the 2022 Winter Conference, Precision Planting broke from that tradition and made a big announcement. They are now expanding to address the sprayer market. We are very excited that Precision Planting will be bringing their vast agronomy talents to help farmers improve their chemical fertilizer application efforts. In the coming years, Precision Planting will be providing retrofit sprayer products ranging from boom priming and recirculation solutions to smart nozzle control systems. In addition, the team is working on vision-based technologies, including a retrofit targeted sprayer system. Just like they've done for smart planters, Precision Planting will be bringing their disruptively fast retrofit solutions to the sprayer market as an economical alternative to OEM solutions. We are very, very excited about bringing these precision ag technologies to our farmer customers, which will also contribute to our growth and margin expansion goals for AGCO. I'll now hand the call over to Andy Beck, who will provide you more information about our fourth quarter results. Thank you, Eric, and good morning to everyone. I'll start on slide nine, which looks at AGCO's regional net sales performance for the fourth quarter and full year of 2021. AGCO's net sales were up about 19% compared to a strong fourth quarter of 2020, excluding the negative impact of currency. Robust end market demand as well as favorable pricing drove the increase. The Europe/Middle East segment reported an increase in net sales of approximately 9%, excluding the negative impact of currency translation, compared to the high level of sales in the fourth quarter of the prior year, which benefited from the catch-up of deliveries of equipment following factory shutdowns in the first half of 2020. Net sales in North America increased approximately 39%, excluding favorable impact of currency translation, compared to the levels experienced in the fourth quarter of 2020. Increased sales of tractors, Grain & Protein equipment, and sprayers produced most of the increase. AGCO's fourth quarter net sales in South America grew approximately 56% compared to the fourth quarter of 2020, excluding currency impacts. Sales were strongly up across all of the South American markets. High horsepower and mid-size tractors, planters, and Grain & Protein equipment showed the most increase. Net sales in our Asia Pacific Africa segment increased about 15% compared to the high-level sales in the fourth quarter of 2020 on a constant currency basis. Higher sales in Africa and Australia supported the increase. Consolidated replacement part sales were approximately $366 million for the fourth quarter of 2021 compared to $345 million for the fourth quarter of 2020. Part sales for the fourth quarter were 6% higher than the prior year. On slide 10, we examine AGCO's sales and margin performance. AGCO's 2021 adjusted operating margins improved by approximately 160 basis points in the fourth quarter and 210 basis points for the full year versus the comparable periods in 2020. Margins were supported primarily by higher levels of net sales and production. Fourth quarter price increases of approximately 6.5% were able to offset the impact of significant material and freight cost inflation experienced during the quarter. The Europe/ Middle East segment reported an increase of approximately $13 million in operating income compared to the fourth quarter of 2020, resulting primarily from higher net sales and production, partially offset by higher engineering expense. North American operating income grew approximately $14 million due to the higher sales, but were impacted by margin pressure from material cost inflation in the steel-intensive grain storage business. Operating margins in our South America region reached 12% in the fourth quarter, and operating income improved nearly $33 million from the same period in 2020. Significant increases in end market demand and a healthy sales mix supported the growth. In our Asia Pacific Africa segment, operating margins expanded to 13.6% in the fourth quarter, reflecting an improved sales mix. Slide 11 details Grain & Protein sales by region and by product. Sales increased about 19% in the full year of 2021 compared to 2020. Globally, grain equipment sales increased approximately 30%, with our South American and European regions showing the largest increases. Protein production sales grew approximately 8% in 2020, with the strongest growth in the South America region. Grain equipment demand has been stronger, supported by improved grain prices and profitability of farms. However, North America demand has been muted by significant price increases by manufacturers to cover surging steel costs. The protein production equipment market remains challenged due to labor issues and higher input costs such as grain. Protein prices are improved, so profitability is starting to recover. Slide 12 details AGCO's free cash flow for the full year of 2021 and 2020, which represents cash used or provided in operating activities less capital expenditures. Additional working capital requirements caused by higher inventory levels resulted in lower free cash flow for the full year of 2021 versus 2020. As we look ahead to 2022, while we expect our raw material and work in process inventory to remain elevated to help us manage through the difficult supply chain environment, our free cash flow forecast reflects a significant increase from 2021. AGCO's capital allocation priorities include investment in our precision ag offerings and digital capabilities, as well as opportunistically adding bolt-on acquisitions. In addition, we returned cash to shareholders of approximately $500 million in 2021 in the form of quarterly dividends, a special variable dividend, and share repurchases. We plan to continue returning cash to shareholders in 2022. In addition to quarterly dividend payments, our Board of Directors are planning to consider another annual variable special dividend, which would be paid in the second quarter. Other details for the quarter include losses on sales receivables associated with our receivable financing facilities, which are included in other expense, net, were approximately $7.4 million during the fourth quarter of 2021 compared to $5.6 million in the same period of 2020. Turning to the full year forecast for 2022, our outlook for the three major regional markets is captured on slide 13. We currently expect higher retail industry demand across all three major regions. In North America, higher commodity prices and healthy farmer sentiment is expected to result in increased 2022 sales. Higher demand to replace an aged fleet of larger equipment is expected to be partially offset by modestly softer demand for smaller equipment after several years of strong growth. We project North American industry unit tractor sales to be up 5%-10% in 2022 compared to 2021. E.U. farm economics are expected to remain supportive in 2022. Elevated commodity prices are expected to offset higher fertilizer costs. Economics are positive for dairy producers as milk prices remain above the 10-year average and are offsetting higher feed costs. Western Europe industry demand is expected to be flat to modestly up compared to 2021 levels. Supportive commodity prices and favorable exchange rates are expected to produce additional growth in South America during 2022 as farmers continue to replace aged equipment and planted acres are expected to expand. In total, industry demand in South America is expected to improve 5%-10% from 2021 levels. Slide 14 highlights the assumptions underlying our 2022 outlook. Our priorities continue to be maintaining safe working environment for our employees and providing proactive support to our customers and our dealers. In addition to focusing on meeting the robust end market demand, we'll also be making significant investments in the development of new solutions to support our farmer first strategy. AGCO's results are expected to be heavily dependent on its supply chain's performance in 2022. Our outlook is based on current estimates of component delivery levels we expect in 2022. AGCO's results will be impacted if the actual supply chain delivery performance differs from these estimates. Our sales plan includes price increases of 7%-8% aimed at offsetting higher material cost inflation during 2022. At current exchange rates, we expect currency translation to negatively impact sales by about 3%. Engineering expenses are expected to increase by approximately 15%-20% compared to 2021. The increase is targeted at investments in smart farming and precision ag products, as well as the continued rollout of our platform designs. Operating margins are expected to improve, driven by higher sales and production, favorable pricing net of material costs, and improved factory productivity, partially offset by increased investments in our engineering and digital initiatives, as well as inflationary cost pressures. We are targeting an effective tax rate ranging from 27%-28% for 2022. Slide 15 lists our view of selected 2022 financial goals. The ability of the company's supply chain to deliver parts and components on schedule is currently difficult to predict. The following outlook is based on AGCO's current estimates of our supply chain capacity. AGCO's results will be impacted if the actual supply chain delivery performance differs from these estimates. We're projecting sales to be in the $12.3 billion range, with 2022 earnings per share targeting at approximately $11.50. We also expect capital expenditures to be approximately $325 million and free cash flow to be in the $600 million range. For the first quarter of 2022, we project a modest improvement in operating income compared to the first quarter of 2021. Our first quarter operating income is expected to benefit from higher net sales in all regions, offset by supply chain constraints impacting our Precision Planting sales as well as material cost inflation and higher engineering expenses. First quarter net income is expected to be negatively impacted by a higher tax rate in the first quarter 2022 compared to 2021. As a result, our current estimate for the first quarter of 2022 is for our earnings per share to be approximately 5%-10% below last year. As you can imagine, forecasting with accuracy is difficult in the current supply chain environment. This estimate and our actual results are highly dependent on component availability from suppliers and the resulting timing of production, which is difficult to predict. With that, I'll turn it back over to Greg. Thanks, Andy. As we move to the question-and-answer phase of this call, we'll ask that you limit yourselves to one question and one follow-up question. Regina, please get us started. As a reminder, if you wish to ask a question, simply press star one on your telephone keypad. Your first question will come from the line of Tami Zakaria with JPMorgan. Please go ahead. Hi. Good morning. Thank you for taking my questions. My first question is, I think in your slides you mentioned market share gains expected this year. Can you provide some color on what segments or regions where you expect the greatest penetration to occur this year? Well, we've made a number of investments in a few areas that we've talked about in the past. We're globalizing our Fendt business. We're growing our Precision Planting business. We're growing our service parts business. Each of those areas. Those are just some examples. Each of those areas, we expect some success based on the products we've launched recently. The markets that all three of those participate in really is Europe, North America, and South America. You know, I think there's a lot of detail behind that, but big picture, that's where our focus is. Got it. Basically, market share gains across regions is the plan for this year. Understood. My follow-up question is, you mentioned about a sprayer retrofit option that you wanna introduce. Would that be available for other sprayer brands like your competitor brands, or would it be exclusive to you only? No, that's the difference in our strategy. Our retrofit solutions fit on fundamentally all brands. There may be a small niche brand or something like that that does. Our intention is that we serve the entire market, and we can upgrade the capabilities of the existing fleet that's out there, which is the large proportion of the machines in the field doing work to new technology using a retrofit channel instead of having everyone have to buy a full end-to-end new solution. Your next question will come from the line of Jamie Cook with Credit Suisse. Hi. Good morning, and nice quarter. I guess two questions. One, Andy, I appreciate your color on the first quarter with EPS and margins, but can you help us understand how you expect sales and margins, just the cadence throughout the year? You know, a lot of companies are talking about much weaker first half versus second half, so just any color there. My second question, I'm just trying to understand your top line guide. I think it implies, you know, 11% revenue growth, but you have 7%-8% pricing. Understanding FX is negative, but, like, assuming market share gains, I don't know, it just doesn't seem like you're implying much in volume unless I'm missing something. If you could help me out from that perspective. Thank you. Sure, Jamie. In terms of margins, as we said, we expect our overall margin in the first quarter to be below last year, probably could be up to 100 basis points down. That's driven by higher engineering expenses and also kind of a weaker mix. Also, our pricing, while covering our material cost inflation, is not doing at the margin. We'll see some margin reduction as a result of that. As we move throughout the year, it's kinda consistent with what you said, Jamie. Flattish margins in the second quarter, and then we start to see improved margins in the second half. That's the profile of what we're expecting throughout this year. In terms of our sales forecast, as you pointed out, you have to keep in mind that there is a negative currency impact, so that is limiting the sales growth a little bit this year. You know, we're expecting to see, as Eric mentioned, in certain segments, market share improvement. You know, that's being focused on in terms of our regional results in terms of North America, where we'll see, I think, improved sales and, as well as in our South America region as well. Hey, Jamie. Also, part of the reason that our first quarter's starting out a little lower from a margin perspective, Andy mentioned that we're having some supply chain issues, more significant supply chain issues in our Precision Planting business, which is very first-quarter centric, first- and second-quarter centric. We actually did fairly well with Precision Planting in terms of our supply chain in 2021. We started to feel it more at the end of the year. A lot of their products are chip intensive, so we'll have some delays, likely because of that. That's why our first margins in the first quarter anyway are gonna be a little bit light. Okay. Thanks. Thank you. That's helpful. Your next question comes from the line of Nicole DeBlase with Deutsche Bank. Yeah, thanks. Good morning, guys. Hi, Nicole. Good morning. Good Good morning, Nicole. Can we just talk a little bit about the outlook for production in 2022? The commentary on margin progression is really helpful, but can you maybe do something similar with how production looks by quarter next year? You want me to take this? Yeah. The production should follow our sales revenue for the most part during 2022. We're looking at production increases probably in the 15% in first half of the year, and then it'll be more like 5% in the second half, and that'll end up at about a 10% improvement. Got it. Thanks, Andy. Just could you comment a little bit on dealer inventory levels? I suspect obviously it's still very low and probably not much scope for restocking given the strength in backlog. Is that the right way to characterize what you're thinking for 2022? Yeah. Our dealer inventory levels are really in good shape. Obviously, we're you know having the supply chain disruptions and challenges and a strong retail sales environment. You know, we've lowered our dealer inventory really across the board during 2021 versus 2020, most significantly in South America, but really in our other regions as well. Dealer inventories are pretty tight right now. With the similar situations in terms of our supply chain and our projected high retail demand that we see in the marketplace, we don't expect to see much change in our dealer inventory levels. If possible, we'd like to see some improvement in dealer inventory or increase in dealer inventories in South America and maybe within our low horsepower segment in North America. For the most part, we're planning for dealer inventories to be relatively consistent with what we have at the end of 2021. Your next question will come from the line of Larry De Maria with William Blair. Hey, thanks. Good morning, everybody. As far as GSI goes, can you just help us understand some of the sales and margin expectations there? It seems to be entering maybe a better point in the cycle for that business that was under pressure and started to rebound. Margins have been kind of on the weak side, obviously. Can you just give us a little bit more color around expectations there? Sure. The Grain & Protein business has been a challenging market the last couple of years. We saw a nice rebound in our revenues here of about 20% in 2021. For 2022, we expect a similar increase, probably 15%-20% in revenue. With the strong grain prices, there's demand for grain handling equipment and storage. As we mentioned on our prepared notes, the protein sector is still recovering, but starting to get a little better. Protein prices are up, and there's some demand coming there. We would expect to see another bump in revenue this year. Where we had challenges in 2021 were with our margins. Really had performance issues because of the timing and lag between when we had our order intake versus ability to fulfill the orders in our projects, which were oftentimes delayed, which created cost increases as the steel prices went up. Our pricing and our costs were out of balance, and that severely impacted our margins this year. It impacted us in the fourth quarter in North America as well. We think we're getting beyond that mismatch or mistiming of our pricing versus costs, and we expect to see a much better margin improvement in 2022. That should contribute to improved margins, particularly in our North America region. Thanks, Andy. Then a quick follow-up with that. With the engineering expense is up substantially, or expected to be up, and it's obviously been up over the last few years. You know, what's your ability to pull that back when the market pulls back? Or is the stuff that's going in there now because of the ag tech position, ag offerings, so mission-critical that that's gonna stay high for the foreseeable future? Thanks. Yeah, I'll take that one, Larry. I would say there's a bit of both in my answer. On the one hand, a lot of our work is moving to more and more software and data focus. The new skills that we're bringing on now, we think are the skills for the future. We're doing the overall investment in a way that the total group has a flex lever to it. Something like 20% of our staff is contract or some sort of flexible mechanism, where if we were to go back down, we have choices on dialing it back from a cost standpoint. I think that the new skills are probably the skills we would keep, and we would probably dial back some of the other portions of the engineering team. Your next question will come from the line of Ross Gilardi with Bank of America. Hey, Good morning, guys. Morning, Ross. Yeah, I was hoping, you know, you're guiding to, you know, just about a 10% margin for 2022. Where does that leave you in relation to your mid-cycle framework that you had presented at your Investor Day, which was basically, you know, 10%? I mean, should we expect you to update that target, you know, anytime soon? Just if you could address some of the regions, and to your immense credit, I mean, you guys have come an awfully long way in the Americas. Just talk about the sustainability or margin improvement there. And is it possible that margins outside of EMEA? It sounds crazy to even be asking this given where we were a couple of years ago. Could actually eclipse EMEA on a full year basis at some point in the future. I can take a start off, Ross. You know, you can think back just a few years ago, we are a very unbalanced company. We had most of our margin was coming from EME, and then the other markets weren't as high as we'd like them to be. This year, you take a look at where things are, and it's a much more balanced. Everything 10%-13% margins, round numbers, 9%-13%. It's a much more balanced company. Then your question was, to what degree is that sustainable? We feel really good about it because a lot of this has been based on both a distribution focus and a product focus shift over time. We're focusing on precision ag, digital, large ag, and the professional producer. In South America, we've moved from the south low tech small machines to also focus on more in the north, in the Cerrado region, higher tech, larger machines with big dealers in that region. We feel good about that. One other comment I would say about Grain & Protein, Andy's comments were spot on. We made a number of transformation efforts there also in 2020 and 2021. Consolidated facilities, took out SG&A, and taken a lot of cost. In 2021, a fair bit of that was overshadowed by the crazy steel price increases that with our order bank, we were playing catch up on. Those changes are behind us now. As prices catch up to costs, which we expect in 2022, we should see the benefit of that coming through to the bottom line as well. The expectation is the same for that business as in our other businesses. You know, you can see a much more balanced outlook for the overall company. Should we expect you to raise that 10% margin target, which I interpreted as kind of a through the cycle target when you originally presented it? Are you basically implying that the grain and storage business is actually lower margin than the overall traditional ag business is now? Because I don't think that was the case, you know, back in the day. Yeah. Right now, the Grain & Protein margins are below. As I outlined, there's been some significant challenges for that business. There's, you know, we believe we can get those back up at least to our corporate averages, what you see, and has an opportunity or potential to be even that from what we've experienced in the past. Market conditions need to improve and get a little more stable cost profile for us to get there. You know, the 10% goal is still in place. We haven't achieved that yet. That was also a mid-cycle goal. We've still got some room to improve, and we're hoping to show that we're executing on those margin improvement targets that we've talked about in our strategy meeting. You know, we feel like we did a good job this year with margin improvement, and you know, our goals for this year reflect further improvement. We've still got a ways to go, and there's more opportunity to come. Your next question will come from the line of Stephen Volkmann with Jefferies. Hey, good morning, guys. Thanks for taking the question. I just wanted to go back to some of these supply chain issues that obviously everybody's seeing, but I wasn't quite clear. Are you basically assuming that they kind of continue as they are, as your base case for 2022, or do they improve as we go through 2022? You know, just any color on how you're looking at that. Yeah. You know, what we have clear visibility on is, you know, kind of what we've talked about in the first quarter. As Greg mentioned, we see some challenges in our Precision Planting business. We've got some other challenges going on today. You know, we actually believe that's gonna continue throughout the year. You know, with the exception of the semiconductor chips, I would say that we're seeing improvement. But the chips still are a challenge for us, but we're also taking a lot of actions to mitigate that. We're redesigning some of our products to take different chips to give us more flexibility there. And we're obviously also working on resourcing some of the chips to other suppliers that may have more capacity. A lot of work going on, and some of that will help us in the second half of the year. Okay, great. Then just obviously, steel prices seem like maybe they're coming back in a more positive direction. You know, I don't know what you've forecasted in your 2022 guidance, but how long would it be until we might see some benefit of lower steel costs? I assume you think you would get to keep the price increases that you've put through, but please correct me if you disagree. Yes. Good question, Steve. As you're aware, we don't use a lot of raw steel with the exception of our Grain & Protein business. There's a bit of a delay, but from the time you see steel move, you know, raw steel prices move one way or the other till the time we feel it in our supply chain. For sure the first half is gonna continue to be challenged by those higher steel prices. If you look at our net pricing assumptions, if you look at our pricing less what our inflation, material inflation is, we're expecting still to be challenged in the first half. First quarter actually kind of breakeven-ish on a net pricing basis, and then that improves to the point where we think the full year is gonna be 50-100 basis points positive on that net pricing. That means, you know, we improve modestly probably as we get to the second half and then through the second half. Your next question will come from the line of Courtney Yakavonis with Morgan Stanley. Hi, good morning, guys. I just wanted to go back, Andy, you know, you had mentioned that the 10% margin target was a mid-cycle goal, and you still have room to improve. Can you just comment a little bit on where you see the ag cycle right now? I think you made some comments earlier also about, you know, ag equipment demand remaining fairly strong in light of, you know, high grain input costs. If you can just talk about some of the pressures on the farmer and where you see the cycle relative to replacement demand and some of the other fundamental impacts. Yeah, that's a good question. One of the things that we look at is our calculated or estimated calculation of the average age of the fleet that's out in the marketplace. During the lean times, farmers hold off on buying, and so the average age of the fleet gets older and older. Now we're into a period where farmers have the profitability to be able to refresh their fleet, and the age of the fleet gets younger. We watch that as it compares to the, say, 10-year average. The fleet is still, especially in some of the markets that are more volatile. Europe is the least volatile. North and South America are more volatile. Europe stays closer to that average age, and hovers kind of up and down in a smaller range. North and South America are still in a recovery mode in terms of replacing that fleet age. Even our projections forward out to 2023, 2022, we have so many orders in hand that it's pretty solid. It's really all about guessing what 2023 will be. We still see a need to replace the fleet, combined with all of the new technology that we're coming out with creates an ROI for farmers, and that creates an incentive for them to upgrade to be able to access the new performance levels. Great. That's helpful. If you could also just make the comment, I think you talked about the Precision Planting business being one of the most impacted by supply chain in the first quarter. Can you just remind us how the order book works there, and if there are supply chain issues, should we consider those relatively lost sales if they you know aren't out before the planting season or you know can you ship those later? That is a great point that, you know, the planting season is you know, right here and now. The delays do cause issues for that part of the business. They are having to limit order intake on certain products because we won't be able to supply them in time for the season. The team also believes that we can catch up to some extent during the course of the rest of the year. You know, we've limited our projections on Precision Planting sales because of this issue, and yeah, I think it definitely is having a full-year impact. You know, and just to build on that so you can get in the mindset of the farmer, we don't expect farmers to cancel orders. It'd be unfortunate. We're working really hard if we miss the planting window. If we do, we still expect the farmer to take delivery of those and be able to use it in their next cycle. Your next question will come from the line of Jerry Revich with Goldman Sachs. Yes. Hi, good morning, everyone. Good morning. Morning, Jerry. I'm wondering if you could talk about the growth outlook for precision ag that's embedded in your outlook, just to flesh out that last question a bit more and, you know, talk about Fuse as well. If you can you tell us where a Massey Ferguson take rates for the proprietary guidance systems are shaping up for 2022? Thanks. Sure, Jerry. In terms of our overall precision ag sales, we're looking at an increase of about 15%-20% this year. As we just discussed, the Precision Planting portion of that, we're looking at somewhere at about 10% growth. As I said, this supply chain issue is impacting the sales forecast that we have for that business at this time. Overall, including our other precision ag products, it'd be a 15%-20% improvement. Just to put that in context, you know, precision ag sales for 2021 for the full year were up 34% compared to the 16% for AGCO in total. Precision Planting we've talked about was up 44%. Fuse is up 23%. Our smart planter growth, the model number we call is Momentum with smart technology on it, 40% growth over 2020. Our smart rows in total when you combine AGCO and Precision Planting is up 32%. On sprayers, we're seeing 24% growth in the sales of smart nozzles in our European sprayers. IDEAL combine grew from 2020 to 2021, 70% and 80% from 2021 to 2022. It's you know, in all areas where we're putting these technologies into the market, we're seeing high farmer interest and good margins. That's terrific. Then, you know, can we shift gears and talk about North America? You've been ramping up the Fendt brand. I wonder if you just update us on what's the mix of Fendt versus Massey versus Challenger revenues in that market today. If you can, give us an update on the dealer count. Yes. Maybe Eric can talk about the dealers while I try to get that. Sure. This is gonna be off the top of my head here, so we'll get close. We have 72-75 Fendt dealers that we've turned on, about 200 locations. 72 owner groups, 200 locations, and that covers something on the order of 70% of the market. Our mission over the next couple of years is to get that up over 90% of market potential covered with dealer locations. As a reminder with Fendt, even if a dealer organization gets approved, not every location within their facility will get approved, so maybe half of them will. They all have to meet the very high bar of the Fendt standards. Massey Ferguson, we've been doing some consolidations on the one end, but then we've also been adding a few new stores, say 15 to 20 in the more urban areas, small ag-focused rural lifestyle dealer outlets. The Massey Ferguson is somewhat balanced in terms of how many we consolidate versus how many we add. Challenger is really a, you know, runs alongside. If you look at wherever Challenger is sold, it's typically sold through a Fendt dealer. That's the dealer situation. Sure. On the Fendt sales in North America, our sales were up, you know, about 50% this year, and that includes some substitution of other products. If you take that out, it'd be about 40%. Now Fendt's about 15% of our North America sales. We're seeing strong growth in that segment of the business. Your next question will come from the line of Kristen Owen with Oppenheimer. Great. Thank you. Sort of a follow-up to that last question. Eric, I'm wondering if you can just help us understand the CRM rollout that you mentioned in the prepared remarks and anticipating that going from 7%-30% of targeted dealers this year in North America. Just help us understand what that means for the business, for your dealer network, how much of that is targeted at this Fendt rollout and just how we should think about that in terms of your impact on market share expectation. Yeah. What we're seeing is we're helping our dealers move from a very local notebook in the hands of an individual salesperson, a highly variable process for sales to occur to one that's more data-based, more structured, more proactive. Once the data is in the system and you can manage the sales leads, have a percent likelihood, the dealer organization can do things like load balance different sales people. They can make sure that their inventory planning is matching up with their sales leads that are coming in. They can be managing their used inventory proactively. If we're on a number of deals, we know we're gonna get trade-ins, we can start managing those used and start pre-selling those. It fundamentally changes the entire selling activity from one of local, manual, fragmented to much more proactive and disciplined. That's what we've seen in the areas where we've rolled it out early. Europe has been our early rollout locations and that's what the dealers tell us. Some of the dealers don't need this as much. That's why you don't see us going to 100% in some of the markets. Some of the very large dealers already had very sophisticated CRM tools. Where dealers don't have that's where we step in and help them. Thank you for that. Then my follow-up question, you didn't talk a whole lot about the investments that you made in the fourth quarter. I wanted to ask specifically about the Appareo acquisition, that was obviously a partner of yours in your network. Just help us understand the motivation for bringing that in-house and how that will contribute to your product roadmap. Thank you very much. Yeah. Appareo, like several of the other acquisitions that were made, really are an intersection of a few things. Number one, it's a skill set. Software-based artificial intelligence, machine learning, data work, those are the skill sets that we're very interested in bringing in to AGCO. They also have to have the right culture fit in terms of the company. We looked at many more companies than were on the list of the ones that we closed, and for one reason or another, we ended up choosing not to close the deals on the other ones. We feel really good about Appareo as well as the other companies that we've listed there. We want them to work now in a coordinated way with our Precision Planting team and our smart machine development groups so that we can accelerate our delivery of solutions to farmers. Our final question will come from the line of Chad Dillard with Bernstein. Hi, good morning, guys. Hey, Chad. Hi, Chad. I just wanted to go back to the margins for the year. For 2022, your guidance implies incremental operating margins about 16%. Can you help us bridge to your more normal kind of 25% incremental margin? I just wanna get a sense for, you know, how much of a headwind you're seeing on the materials, freight, you know, production efficiencies, and just how to think about how each of those layer in through the balance of the year. Sure, Chad. You know, first of all, if you factor out the fairly significant increase in engineering expense that we have in 2022, as we said, we're expecting a 15%-20% increase. Those incremental margins projections would be more in the low 20%. You know, that's about. We're also seeing some SG&A increases this year as we have wage inflation, we're spending more in digital, some of the things that Eric talked about, a little more travel, advertising, sales promotion expenses are going up. So that's probably part of your reconciliation there. Lastly, with this high inflationary environment, you know, where we're having to price 7% or 8% just to basically cover our cost and get a little bit of margin on our net pricing is the other big factor. You know, it's, I think if we can achieve that level, it's pretty solid performance given the amount of inflation in the market right now. Got it. That's helpful. Just going back to your prepared remarks, Eric, about the retrofit sprayer opportunity that you introduced a little while ago. Can you just talk about the productivity benefits, the technology behind it? You know, is it green on brown or is it actually green on green? Do you have a sense for just when this product's gonna be commercially available and the timing there? Yeah. I'll try and do that one short. You can get me pretty excited about this discussion, but the foundation is a vision system mounted onto the boom of the sprayer, works with some artificial intelligence that then identifies as the sprayer is moving through the field, what's a plant and what's a weed, and then is able to automatically adjust the system such that we can targeted spray those weeds with the right chemical. It'll have the system capability will be both green on brown and green on green solutions, retrofittable, all makes, and then there'll be other capabilities in addition to just targeted spraying. With those vision systems, we'll also be able to do on-the-fly crop scouting, be able to do mapping of what are the field populations, what was the planting accuracy. We can measure, you know, plant-to-plant variation in terms of spacing and all sorts of things are capable once you have that foundation technology. We have not committed to a release date yet, but you'll be hearing more about these technologies soon. There's a lot of excitement. I was sitting right in among all the farmers, just recently, a few weeks back, and there was an incredible buzz of excitement about the system that's being shown here. It was displayed at the Precision Planting Winter Conference. You'll be hearing more shortly. I'll now hand the conference back over to management for any further closing remarks. Okay. I'll just close today with saying thank you very much for your participation and your support of AGCO over these past years. We're very excited about 2021. It was a record year in many ways. If you peel the onion back a little bit, you see that the key success areas are right at the same places of the core of our strategy that we shared with you last spring. Our focus is on growing our strong businesses like Fendt, North America Large Ag, Service Parts, and then our precision ag and Smart Machine business overall. We've committed to you to improve some of our other businesses like Massey Ferguson and South America and our Grain & Protein, and you're seeing the results come through on all of those, whether they're our improvement businesses or our growth businesses. We're investing heavily, growing the largest increase in investment in R&D last year, and now we're making an even bigger one this year to continue to fund the development of these farmer-focused solutions that are really solving critical farmer problems that have a short payback. You're seeing that the take rates on those are very high, and the margins are high. Wrapping all of this, we're really engaging strongly on sustainability, putting more and more of our technology efforts on that and capturing a lot more data, helping our farmers make the transition to not only a more productive farm, but a more sustainable farm. We're excited about 2021, but we're even more excited about 2022 and beyond. We're convinced that the best days of AGCO are still in front of us. Thank you. Ladies and gentlemen, that does conclude today's call. Thank you all for joining, and you may now disconnect.