All right, why don't we just get started? Good afternoon, everyone. Thank you for joining us, and, you know, welcome to AGCO. We have Damon Audia, CFO, and Greg Peterson, VP of IR. Again, gentlemen, thank you for joining us for this conference. So let's just dive right in. I think we've seen in a lot of meetings a lot of questions around the cycle and the durability of it, right? So maybe high level, would love to just get your thoughts from an industry perspective. You know, how are you kind of seeing as we think about heading into 2024? And then after that, we'll dive into, you know, some specifics around AGCO and your order book, how that kind of informs your view as well. Yeah. So, you know, I think, Angel, at the highest level, the, the fundamentals are very strong. Again, we think at a macro level, the population is growing from 8 billion to 10 billion. The middle class is growing around the world, and generally speaking, when the middle class grows, their diets consume more protein, so 3 pounds of grain for every pound of chicken, 7 pounds of grain for every pound of beef. So an increasing level of demand for middle-class consumption of protein. And then you layer on the biofuels, so increasing level of demand for biodiesel, right? Gonna put more pressure on grain to supply that, that part of the market. So we think about those fundamentals long-term, it's a great industry long-term. Yep. If we look at more of the midterm right now, right, we know stock-to-use ratios are at a relatively low level. We look at what happened with the war in the Ukraine. 13% of the world's calories used to come out of Ukraine. Mm-hmm. With the war, that's been significantly reduced, putting more pressure on access to that grain. So you're seeing price challenges on the actual availability of grain. Mm-hmm. What that's doing is it's leading to relatively strong grain prices around the world. We look at corn today, I think corn futures are about $4.85 or so, $4.90. Generally speaking, that's fairly profitable. If you look at a U.S. farmer here today, I think the USDA said that their profitability was gonna be down around 20%- Mm-hmm year-over-year, but still 20% more profitable than the 20-year average. Right. So when you see that level of profitability, it's lending itself towards farmers wanting to invest in upgrading to the latest equipment, trying to replenish their fleet. If we think about what that means here in the U.S., the average age of the farmer's fleet for high horsepower or large ag equipment, it's around 7.5 years. The historical norm is around 6.5 years. So there's still opportunities for them to get to a more normalized fleet age. And then you layer on all the incremental technology that we're bringing and the industry is bringing, you know, fostering a desire for farmers to upgrade, potentially even faster than historically. Mm-hmm. When you think about the long-term fundamentals, the more medium-term opportunities, we see good demand going into 2024. Mm-hmm. If you layer on what's happening with the dealers- Mm-hmm overall, dealer inventory is probably normal, generally speaking. But if I bifurcate that between Small Ag and Large Ag, I would tell you that the Small Ag part of the business is probably normal, right? As interest rates have come up, GDP has sort of challenged many parts of the world. Small Ag inventory at the dealer level is probably at the right level. Large Ag, they're still below where they need to be, and that's probably both in South America, North America, and even in Europe. So as we think about the ability to deliver to the farmers, the dealers still want more inventory. Mm-hmm. We're producing to more to the retail. Right now, we haven't replenished the dealer inventory level. We don't see that happening in the balance of 2023. Mm-hmm. That's probably an opportunity, depending on demand from the retail side in 2024, but it's still an opportunity to potentially produce more than retail demand into 2024. Mm-hmm. No, that's very helpful, and I think, you know, you kind of touched on it a little bit, but just as you think about, again, going into maybe your early order book and what that tells you about the business and, and maybe gives you confidence in a lot of the fundamentals that we're talking about, right? One other area that I'd hope that, you know, we'd love your thoughts on is, we're coming off of these record levels for commodity prices and farm income, right? And, and we're still above historical norms, so it's still very healthy. But nevertheless, if you're a farmer, there is kind of this step change in a, in a kind of, you know, second derivative heading in the opposite direction and, and uncertainty in the broader macro. So help us understand. Sounds like you're not necessarily seeing that at the dealer level, at the farmer level. What are people telling you at Farm Progress when you're meeting with farmers? You know, are you seeing them be more cautious about it, and then how is that maybe being reflected in early orders? Yeah. So I think a couple things. Again, farmer profitability this year is kinda it's gonna be very strong. Mm-hmm. Again, it's gonna be coming off the record peak last year. If I look at what that's translating to our order books, you know, what we've said for North America, our order books are going out into the first quarter, so we have 8-9 months of orders- Mm-hmm I n North America. Again, relative to the peak in the coming out of COVID, that's down. But if I compare that 8-9 months to historical standards, it's still about twice as long as what a normal order book would. If I look at North America, we opened up our early order program for our seasonal products a couple weeks ago. So that's our sprayers, our planters, our track tractors for model year 2024, which sort of goes from now through a year from now. We've sold out on that. So again, a good, strong data point that at least from a large ag professional grower standpoint, fundamentals are strong enough that dealers and farmers are willing to put their orders in for model year 2024. If I look at Europe, which is half of our business is European-based, we go into early 2024, and our orders there, the order book 6-8 months. Again, relative to historical standards, double what it historically was. So again, good fundamentals of what we're seeing on the order book there. South America, we're a little bit more shorter term there. We only open the order book one quarter in advance because we wanna make sure from an inflationary standpoint, we're getting the right pricing in there. We opened up the Massey Ferguson brand for Brazil earlier this or last month. We opened it up for 2 days, and we got over 90% of the build slots for the fourth quarter filled. Now, that's more of a sentiment for how we think the market's shaping out there. Massey Ferguson really sells both low, medium, and high horsepower, so a very good reflection of the overall market conditions. The fact that we got more than 90% in two days is more of a sentiment that the Brazilian markets continue to be relatively robust. Yeah, I know that, and, and that's, that's very helpful, color there. And as you think about, I guess, 2024, in terms of production, you know, when do we get to a point where, one, both from a cost perspective, but also from a production standpoint, that you can kind of produce every, you know, to a more kind of normal level of lead times? Yeah. Things are continuing to improve. Again, if we go back a year ago, we were, you know, significant amount of supply chain disruptions, and the pieces that we were missing, you know, it was probably 7 or 8 pieces per piece of equipment. Today, we're probably closer to 1-2, so we've seen a lot of improvement, in our capacity to provide the dealers, the farmers, more visibility on when they're getting their products. I think we'll continue to see that improve as we move through 2024, and that'll unlock more capacity in the existing footprint, in the existing number of hours that we're running the factories. And I think that's probably why you're seeing some of these order boards come down, 'cause the farmers have more visibility. That if they place their order today, and we tell them 6 months, they know they're gonna get it. They don't need, in theory, jump in the queue the way they did 1 year ago, in just hopes that they may get it in 1 year or 15 months. So as we get more clarity on our supply chain, we see manufacturing improving. That'll help translate to better efficiency, better cost for us per unit, 'cause, again, we have less rework, less putting those incremental pieces on the tractors, you know, when that part shows up, and getting more efficiency through the factory, which shall hopefully deliver higher volume, better delivery time to the farmers and the dealers, and ultimately, a lower cost per unit for us next year. And maybe let's expand that into residual value and kind of what you're seeing in the used market. So, you know, also an area where prices have kind of come off a little bit off of the peaks, but still well above historical norms. So at what point does that become a little bit more of a concern, and what, you know, what are you watching in specific to inform then how you're producing, how you're pricing the kind of new equipment? Yeah. I think you sort of hit the nail on the head here. We're watching the used inventory prices, and we watched the number of units or days or months of supply on hand at the dealer level. Again, we're coming off a historically low point where there wasn't any used equipment in there. The pricing was extraordinarily high from a used standpoint. If you look at it versus those historical peaks, it's still inventory levels are still below where they should be at an optimal level, and the historical or the pricing is still above the historical norm. So still good sentiment, that it lends itself, that this should lead into a strong, a decent 2024, but those are the two data points we really focus on, are supply days or months of supply and what the residual prices are. That's perfect. That's very helpful. And I do wanna remind the audience, if anybody has any questions, feel free to raise your hand. We can get a mic to you, and, you know, happy to answer any questions there. But if there aren't any right now, you know, I do wanna continue because there's a lot of changes that have been taking place in your Fendt product line entering the North American and South American market, as well as, you know, transformation of the Massey brand, right? So I wanna understand those a little bit better, maybe starting with Fendt. You know, you're targeting $1.5 billion by 2025. There's a lot of, again, a lot of changes there and whether it's on the dealer network and expanding and really trying to grow that market share. Can you give us more color as to, you know, how that's progressing, you know, to the extent that you can? Like, who are you taking market share from? How is that impacting the competitive, you know, environment overall? Yeah, just overall, how's that strategy going? Yeah. So the Fendt market share rollout has been a huge success for us. I mean, it's one of our three primary growth engines. As we talk about, you know, outpacing the industry 4-5% per year, one of those big three growth drivers is the Fendt market share growth, coupled with precision and with parts. If you think about what we're doing with Fendt, you know, Fendt is the best of the best. Premium technology. It prices the highest price, product in the industry because it offers the best fuel efficiency, it's the most technologically advanced, and ultimately catering to those growers who are either looking for maximum technology or the best overall performance. As we've introduced that to the market, we've done two things. One, we've brought a full line, so our dealers are able to not only offer a tractor, but they have a sprayer, they have a combine, and they have a planter to couple with the overall Fendt tractor. That's giving our European operations, where we already had a very strong market share in Europe, the ability to attack and gain share in those other parts of the business. Mm-hmm. The second one is, as we brought those products here to the U.S. and to South America, where we had a very low share, in these large row crop areas, bringing that Fendt tractor here has really started us to gain share. So what we've did first is growing the dealer network. So we've started to introduce Fendt dealers. Not every dealer who sells Massey is able to offer Fendt. You have to deliver on what we call this Fendt experience. Mm. That means basically being able to offer the parts and service, the technicians. Part of the overall Fendt experience is what we call the Gold Star Warranty, so three years, in theory, bumper to bumper, and that if your tractor or machine goes down for an extended period of time, we bring a loader tractor onto the field for you. Industry-leading warranty there. So that dealer, he or she, has to have the capital to have those type of loaner machines to deliver on that Fendt experience. So when you look at a dealer or you look at a farmer who's thinking about going into Fendt, what they're being offered is the industry-leading technology, best fuel efficiency, industry-leading warranty, and a dealer network that offers them effectively white glove treatment. You know, all of that to build the momentum, allowing them to understand the switching cost from a competitor product is very low risk to them. Mm. We'll tell you, when we put a tractor on the field as a demo, the conquest rate's around 70%, so significantly higher than the industry average. As those farmers get to experience it, 70% of the time, they keep that tractor. Fendt is the only product that we're aware of, where the Net Promoter Score actually goes up after the first year of usage rather than down. So again, as farmers get to experience those tractors firsthand and appreciate the value of what it's bringing, either in cabin comfort, technology, or fuel efficiency, the CVT transmission is industry leading. Those things are driving incremental word of mouth to other farmers and helping us grow share here in North America. And today we're at about 70%-75% of the white space covered with our dealers. We see another chance to go about 20%-25% more on White Space. And then with our existing dealers, because we've been capacity constrained with supply chain, our existing dealers haven't had enough Fendt tractors to meet their market or aspirations, so we see good growth there. Mm-hmm. I would tell you a similar example in South America, in the Mato Grosso region, the Midwest, where you have these large professional growers who are doing 2-3 plantings per year, really maximizing the performance of their machines. You know, they're looking for the lowest cost per unit. Fendt and the Momentum planter, you know, that's the industry leader down there. We have between 25 to maybe 30 dealers by the end of this year, covering just over 75% of the white space in that Mato Grosso region, seeing good share growth there as well, and significant opportunity to continue on that white space as we really penetrate that part of the, of the Brazilian market now. What are you seeing from a competitive response to this entrance into a market? Well, we see a lot of competitive dynamics. Again, we're going into, you know, the U.S. market, where we're a small player going into against two larger players. Again, they're reacting. Again, we've heard stories about bounties, of trying to convert back a Fendt tractor or a Fendt combine, from a dealer, from a farmer, once he or she's taken possession of it. But again, we go back, and we're pricing at a premium to the competition. Mm-hmm W ith a relatively new or less than known brand. The fact that you're able to go into a market like this and price above the competition, in an unknown brand, means there's got to be other attributes that the farmer's willing to pay for. And whether that's the performance, whether that's the risk or the lack of risk you're taking on in the parts and service and the warranty, all of that sort of dovetailing in that Fendt experience that we talked about. But we're seeing good traction. And again, I would tell you, Fendt is not priced on price. It doesn't sell itself based on price. Mm-hmm. It sells itself based on performance. So there's gonna be competitive dynamics, but we have to make sure that we understand what the competitors are doing. Mm-hmm. But we're not gonna chase by price when we know the performance is superior to the competition. Yeah. No, and then that's maybe in a good segue, I guess, as we think about the Massey brand, right? It's a little bit more of, for the value-oriented, farmer, and but there's a lot of changes that you're making to transform that brand as well, right? Whether it's dealer network, continuing to kind of try to, expand that or, actually, consolidate that. So help us understand, I guess, what's happening with the Massey brand and how much that may be kind of, you know, is the other leg of this stool in terms of you have your growth platforms, and then you have your productivity and other kind of transformations. Yeah. So think of- Mm-hmm. So the Massey farmer is the rational decision maker. So you think at the premium product, the large professional growers who are looking for maximum performance, maximum technology, that's where Fendt's attacking. You move down a layer, it's not an opening price point, but that rational decision maker who's looking for good performance for the money, that's where that Massey Ferguson brand plays. Reliable, dependable, accessible, a different price point, a different farmer, so there's no cannibalization between the two. You see us growing, adding some of the high horsepower equipment there. At Farm Progress, we just introduced a new sprayer in the Massey Ferguson. Again, very strong reviews from what we heard from some of the farmers there. Again, very high-quality product. Not the same as the Rogator that you're seeing in the Fendt brand, but again, a very good product at a significantly lower cost and less weight than the competition, offering a good value for the money. So we're seeing good growth in what we're offering from a Massey brand. I think the second part that you touched on is the dealer network. You know, the Massey Ferguson brand has had a tremendous number of dealers here in the U.S. over the years, many of them very small, mom and pop, one store type dealerships. We've really worked to consolidate those dealers. We used to have around 1,500. We're down to about 500 today. We see opportunities to shrink that. Why is that important? It's not that we're changing the number of retail outlets or touch points with the farmer, but more consolidating the dealer who's managing those number of touch points to create more professional dealers who have a better understanding of how to grow share, understand the importance of absorption, really trying to maximize their back office across the multiple store points, creating more of a professional dealer network that allows them to gain the share, help them better in pricing, you know, parts and absorption, really trying to create a more professional network. At the same time, we're simplifying the portfolio, giving them, you know, a more common offering of different of different products under the Massey brand, you know, driving an increased level of profitability. And the Massey Improvement Plan is part of our overall optimization structure. When we talked to our investors in December about raising our mid-cycle margins 300 basis points from 9% to 12%, half of that was coming from growth, Fendt, precision, and parts. Half of that was coming from optimization, and Massey, along with grain and protein and our factory utilization, was the other 150 basis points. So big aspirations for profit improvement with Massey going forward here. Yeah. No, that's helpful. Any questions from the audience? No. I wanna dive into a little bit more on the precision side, right? So you said that's, that's along with Fendt, kind of part of that growth dynamic. Mm-hmm. And I think, so that you have target there for $1 billion by 2025, but you're already at $800 million-$850 million for this year- Mm-hmm I n terms of the target. So clearly delivering there, and just, can you help us understand, one, kind of the take rates and what you're seeing in, in terms of, again, maybe the go-to-market side of, side of things? I think you have a different approach than peers in terms of the retrofit first and then OE a couple of years after the fact. So help us understand that strategy and what you're seeing in terms of take rates from customers. Yeah. Yeah. So precision is one of the big three growth engines. We've seen great success in precision. No surprise, the consumers or farmers are requesting more of that. Precision's been growing 20% or so plus per year over the last couple of years. It's up 23% year to date. If you look at our targets, your point of $1 billion, it's about a 15% growth rate over the next couple of years. You know, a couple things about why we're so excited about our precision ag portfolio is two things. One is, you touched on, we're retrofit first. So when we think about introducing the latest technology, we are going into the aftermarket first. We are the only OEM that offers the retrofit through a different channel than new equipment. So if you think about our new equipment sales, selling that Fendt product, you know, there are salespeople who are selling that Momentum planter for $several hundred thousand. You know, asking that same salesperson to sell a retrofit piece of equipment for $25,000 or $50,000, again, are they really going to invest the time and effort to do that? You know, we have two very different discrete go-to-market channels. New equipment, those Precision Planting dealers are more on the field or on the farm with the farmers. They're agronomists, they're seed salesmen. They're looking at trying to solve the problems with the farmer and trying to improve his or her yield or to improve his or her input costs, and that's where that precision application really comes into play. So we have a different go-to-market channel. Yep. And when we talk about the retrofit channel, again, different than the competition, we are OEM-agnostic. So again, we're the only one out there. When we talk about retrofitting, you can retrofit ours on any of the competitors' products. When they talk about retrofit, it's retrofitting only their product. So when we talk about the TAM related to our retrofit market, it's everyone out there that we're looking to retrofit, where others are a little bit more selective on only offering it for their products. So we see a really good opportunity to grow there. Our biggest market today is in the U.S. We're seeing good acceptance rate by the farmers on things like planting. We're broadening that around the crop cycle into spraying, with targeted spraying, with our JC Acq. JCA acquisition and Headside acquisitions, bringing it into autonomy and into the, into the combines. So we're seeing good growth rate there. You would say in the U.S., it's probably incremental products being offered, Radicle Agronomics for soil sampling. First time in over a hundred years, we've redefined how you do soil sampling for the farmers to get better visibility of their soil, to optimize their planting, and other things like targeted spraying. South America, we're starting to open up more opportunities to enter that market. Again, think of the Mato Grosso region, where farmers are looking for maximum performance, and just starting in Europe. And again, as we think about things like sustainability really becoming a bigger challenge about farmers being asked to produce more or equal yield with less input or less fertilizer, less herbicides and pesticides, precision applications thereof targeted spraying or with our fertilizer being done in a precision mode, really helps those farmers hopefully deliver the yields they need to get, while minimizes the input costs or minimizing the this fertilizer or herbicides to meet some of those government mandates that are likely coming down, you know, to reduce those. Got it. No, that's helpful. And then maybe, you know, as you think about continuing to bolster that offering, right, is there any white space or bolt-on M&A that you're still kind of pursuing or, or kind of thinking about in terms of, again, continuing to develop that integrated stack of offering? Yeah, I mean, we're constantly... We're a very inquisitive company. We've done. done. We're a company that was built through acquisitions over the last 33 years, but over the last 3+ years, we've done 6 acquisitions. All of them have been in the tech space. So we are constantly looking out there for what sort of companies are doing technology, where they are able to accelerate our go-to-market, and either bringing them together as a partnership or a supplier or potentially acquiring them if it helps accelerate our offering. Again, the key thing about this retrofit, different than the competition, is when we bring in a technology, we go to the aftermarket first, almost in a beta testing mode. You know, these are farmers who are looking for the technology. They're willing to invest in the time and effort to retrofit their equipment, and we're getting it out there early to learn from it. As we perfect that information in the beta test mode or the retrofit mode, we then bring it into the OEM channel a couple of years later, and by then we know it's working seamlessly. So if you think about this targeted spraying, that'll go into the retrofit market next year, and then it'll be an OEM offering two years later after we work through some of the bugs. Mm-hmm. And I guess, you know, one area that we haven't talked too much about is just, China. It's a smaller part of your portfolio, but I think there was a comment around weakness in that market and what you're seeing. So just would love to get kind of the latest as to what you're seeing in that market. In China? In China, yeah. Yeah, I think, you know, from an equipment standpoint, it's a relatively small part of the market. They are not known to be the users of the high horsepower type equipment, small, medium to smaller. So it's not a big part of our overall business. I would tell you, where we're more exposed, where China is on the grain and protein side of the house. So we do have a protein business there that's big in China. That market has definitely been challenged. Again, last year, this time, we were optimistic that as they were coming out of their COVID, we were hoping to see a ramp-up in that. Given some of the challenges in the protein sector, we really haven't seen that. Their economy continues to struggle. So I would say our Asia equipment side is doing fairly well, but again, it's not the high horsepower type stuff, but the protein side of the house, where grain and protein has still been more of a challenged business. But again, grand scheme of things, Asia Pacific, which includes Australia, New Zealand, Far East, it's, you know, around 10% of our overall revenue, so not a big part of our business at all. Mm-hmm. And then maybe, you know, kind of one last one for me is just as you think about 2024 and kind of the key challenges, there's obviously a lot of fundamental tailwinds, right, that are driving optimism for continued growth, particularly outperformance versus the peers or kind of the industry. What are the risks or concerns that you would have as you think about, you know, again, potential impact, whether is it production? Is it any bottlenecks, again, to continue to maybe roll out Fendt faster than as you'd hope? What are kind of the risk concerns? I don't see. When I think about AGCO in the industry, I guess two different things. I don't see a lot of risks within AGCO. Supply chain's continuing to improve, it's getting better. You know, we have a clear plan with our dealer network on how we're rolling out Fendt in North America and in South America. We have the plan on the Massey Ferguson dealers on where we're headed there. So I think for the most part, I see more opportunity to get better and get faster when it comes to the things that AGCO can control and influence. You know, I think the question mark for me is more the macro. Again, we don't see a lot of indicators that give us a lot of reason for concern right now, but again, we're just starting the... We're getting ready to start the harvest season here in the U.S. You know, we hear that there's going to be some very strong yield in South America and Brazil and Argentina year-over-year. How do those things influence the overall global commodity prices? What does that do to the farmer's sentiment as he or she thinks about next year? Where do their input costs come? Fertilizer's been coming down, you know, diesel fuel is, you know, coming down. How does that affect their profitability next year, and what does it mean for them in wanting to invest? I think to me, it's more the question mark. Again, we don't see anything that gives us rise for a big level of concern next year, but still some TBDs as to how whether it'll be a good year, or, you know, maybe a little bit less than a good year versus this year. So that's, to me, my bigger question is the overall macro environment versus things that are under our control. Yeah. What about maybe specific to your costs? What are your kind of expectations around that, you know, and how are you thinking about that in relation to your price cost kind of formula for the year? Yeah, I mean, we think we see material costs coming down. If we look at our trajectory this year, if you think about our comment about pricing, we've said around 8%, which will be positive net of economics. If you look at the first half, we were at 14% and 11% in the first half. We're going to be lapping some big pricing that we put in last year, so you're going to see that second half be lower, you know, mid- to low-single digits to get to that 8%. That'll be positive net of economics this year. We haven't given an outlook for 2024 yet. What we do foresee is things getting more to what I'll call that normalized level. Historically, our industry was 3%-4%, you know, and that sort of positive net of economics, which historically would have been in that 1%-3% range. At least right now, we're sort of seeing that based on material cost of what we're seeing, which will flow into 2024 costs if it's sold back more into that. I'll call normalized rate. And that's net, net of incentives, right? Net of... Exactly. So we think about dealer discounts or other sort of incentives when we talk about that 8 this year or more normalized, that would be net of any sort of incentives that the dealers or the retail or the farmers would be given. Got it. And any changes or trends within that incentives aspect that, you know, kind of step change that you would highlight or how is that kind of evolving? Yeah, nothing significantly. The only point I'd put out there, and we've talked about this for the last couple of quarters, is the South American market has been extremely robust over the last year. We've seen margins in South America in this 19%-20% range. You know, we've said the last couple of quarterly earnings calls, it's exceeded our expectations, given the strength of the retail demand there, and we haven't been giving what I would say the more traditional dealer incentives. We do expect that to flow in at some point in time this year, and that'll probably drop the margins in South America a couple%. We still think the structural changes we made in South America, going from a money-losing business, we expect it to be in more of a mid-teens market longer term. All of that is structural improvements we've made with the Fendt conversation we had earlier. But where we are today is we're a mid-teen, so this, call it 19%-20%. Some of that is the very strong market demand and some of this pricing in excess of what we would consider normal, just given the strength of the market today. Got it. No, that's very helpful, and I think that brings us to the end of time. So, Damon I appreciate your time. Thank you.