Good morning. My name is Toni, and I will be your conference operator today. At this time, I would like to welcome everyone to the AGCO Corporation's 2013 Third Quarter Earnings Release and Conference Call. [Operator Instructions] Thank you. Mr. Peterson, you may begin your conference.

Thanks, Toni, and good morning. Welcome to those of you joining us on the call for our third quarter 2013 earnings announcement. We refer you to the slide presentation, which is posted on our website at www.agcocorp.com. The non-GAAP measures used in the slide presentation are reconciled to GAAP measures in the last section of the slides. We will make forward-looking statements this morning, including demand for our products and economic and other factors that drive that demand. Product development plans and timing of those plans, acquisition expansion and modernization plans and our expectations with respect to cost and benefits of those plans and timing of those benefits and our future earnings, revenue 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 31, 2012. These documents discuss important factors that could cause the actual results to differ materially from those contained in our forward-looking statements. A replay of this call will be available on our corporate website. On the call with me this morning are Martin Richenhagen, our Chairman, President and Chief Executive Officer; and Andy Beck, our Senior Vice President and Chief Financial Officer. With that, Martin, please go ahead.

Thank you, Greg. Good morning to everyone joining us on the call. We appreciate your interest in AGCO. We would start on Slide 3, which summarizes our results for the record third quarter and record first 9 months of 2013. We saw solid progress on both the top and the bottom line during the quarter. Our third quarter sales were about 8% higher than the third quarter of 2012. Global demand for farm equipment remains very healthy, but conditions vary widely across the developed ag markets. We are seeing robust demand in Brazil, solid conditions in North America and continued sluggishness in Europe. We continued to make strides toward our margin improvement programs, evidenced by nearly 200 basis points of improvement in our third quarter operating margins compared to the third quarter of 2012. AGCO's purchasing actions, factory efficiency projects and new product developments are all contributing to our improved profitability. Sales growth and higher margins produced record earnings in the quarter of $1.27 per share. I also want to emphasize that we are continuing to invest for the long term. Our product development expenses will be up nearly 15% this year and our capital expenditure program is expected to exceed $400 million for 2013. AGCO's tractor and combine production volumes are illustrated on Slide 4. Third quarter 2013 production was up about 7% compared to the third quarter of 2012. The production growth was strongest in South America, with more modest growth in our North American factories. Production was down slightly in Europe, where strong growth at our new Fendt assembly facility in Germany was offset by lower production levels at our Massey Ferguson and Valtra factories. As we discussed last quarter, our full year Fendt production is forecasted to be higher than in 2012. We expect total AGCO…

Thank you, Martin, and good morning to everyone. I will start with a look at AGCO's regional net sales performance for the third quarter and first 9 months of 2013, which are outlined on Slide 6. Currency translation had a negative impact of approximately 1.8% on AGCO's consolidated net sales in the third quarter of 2013 compared to the same period in 2012. The Europe/Africa/Middle East segment reported a decline in net sales of approximately 2%, excluding the positive impact of currency translation during the third quarter of 2013 compared to the third quarter of 2012. Sales declines in Central and Eastern Europe and the United Kingdom were offset by growth in Germany and France, largely enabled by Fendt's improved production capabilities. North America sales grew 9% during the third quarter of 2013 compared to the same period in 2012. Sales increases experienced in the professional producer segment generated growth in grain storage equipment, sprayers and midrange and high horsepower tractors. AGCO's third quarter 2013 net sales in South America grew about 35% from comparable 2012 levels, excluding negative currency translation impacts. Higher sales in Brazil and Argentina accounted for most of the increase. Attractive commodity prices, favorable financing rates and a weaker real all contributed to the strong demand in Brazil. Net sales in our Asia Pacific segment increased approximately 11% in the third quarter of 2013 compared to 2012, excluding the impact of currency translation. Growth in China, Australia and New Zealand produced most of the increase. Parts sales were $370 million for the third quarter of 2013, an increase of approximately 11% compared to the same period in 2012, excluding the impact of currency. For the first 9 months of 2013, parts sales were up or just over $1 billion, up approximately 4% compared to the same…

[Operator Instructions] Your first question comes from the line of Ross Gilardi.

Yes. Could you just talk a little bit more about how demand trends unfolded as the quarter progressed for you particularly as we've seen further downdraft in corn prices and any color you could provide by region would be really helpful, too.

Well, I don't think anything has really changed too much over the course of a quarter. Obviously, the commodity prices are down, but also you have to keep in mind that farm income levels are projected to be very strong in North America and South America. And in many cases, in Europe, we're seeing good harvest and farm income should be very good there as well. So we're expecting the activity levels in our dealerships and retail demand to be strong for the balance of the year, and that's what we're for focused on right now.

You took your production down just a little bit for 2013, I think from plus 6% to 8% to plus 5% to 7%, why was that?

Well, the -- one main reason was that we invested in some of our factories and productivity and efficiency increased pretty much. So therefore, we are just basically trying out how the new Fendt factory works. And the same is true also for the Massey Ferguson -- main Massey Ferguson factory in France. And you will maybe see more of those productivity gains in the future.

And how do you feel about your own inventories and your dealer inventories right now?

Everything is pretty much in shape, I would say.

Okay. And then just lastly, trends for GSI, I mean, you mentioned that improvement in North America accounted for all the increase in the third quarter. Have you seen slowing outside of the U.S.? Any color you provide there would be helpful.

No, we're not. We're up substantially in Asia Pacific sales, as well as in South America. Our sales for GSI are down for the first 9 months in Europe. In Europe, our business is much more project-driven. It's not as much of a flow business, but very large projects, particularly in Eastern, Central Europe, and just the timing of some of these projects. We had some very large ones last year, just getting started on some now. And so, that market is still going to be very good for us, but a little more kind of up-and-down rather than a more consistent market like North America.

You will see some nice surprises in Eastern Europe for GSI in the last quarter of the year.

Your next question comes from the line of Nicole DeBlase.

Yes. So on the pricing guidance, I think you're now expecting 2% pricing and it was 2% to 2.5% previously. I'm just curious where it's coming in a bit weaker than expected?

It's -- we're just seeing a little modest price, less pricing in most of the markets. I wouldn't pick out one as any particular issue. Pricing is still fairly strong. I think the fact that the inflation pressures on material costs are allowing the market not to have to discount -- not to have to price as much as maybe what we've seen. And so, we're expecting some normal discounting going on at the end of the year that we see every year. But really no major change in what's happening out in the markets.

Okay. Got it. That's helpful. And then just trying to get a sense on how sustainable the EAME margins are at this level. So I mean did you guys benefit from anything onetime in nature? I know you've got the fully operational Fendt facility, positive mix probably because of France and Germany, so just trying to get a sense of how margins will look year-on-year as we move into the fourth quarter?

Okay. So Nicole, we're looking -- we expect these margins for the full year to be about 10%, and we did see kind of the normal seasonality in the third quarter. We shut our factories down in August for maintenance 2 or 3 weeks typically for most of the factories, so that influences demand or influences production, which is typically down 10% to 15% sequentially from the second quarter. So we did see an improvement year-over-year in our margins in the third quarter, and we expect to see a similarly strong performance when you compare the fourth quarter of 2013 to the fourth quarter of 2012. So we're on track for the 10% that we talked about and think that's a sustainable level at these demand levels.

Your next question comes from the line of Seth Weber.

Going back -- sticking in Europe, can we talk about the, I guess, is there any more granularity on the order book? Is it -- can you frame, you said it was down 10%, 20% year-over-year. Is there any numbers -- are there any numbers we could put around that?

Not really because the main event in Europe, we basically, in Europe, are expecting or, let's say, in November, we will have the biggest farm show in the world with -- it's in Hanover, Germany, called Agritechnica. It's a very global, very international show. All dealers go, all importers go, a lot of customers go. And so it, therefore, typically, before Agritechnica, orders slow down a little bit. And the real picture we will have when we come towards this in December. So it's actually too early to talk about what's really going on and to talk about 2014. What I would like to say so is that I think nobody in our industry is expecting major downturns in EAME, but we are, actually, everybody is looking into the question when will EAME recover. And I'm talking about most of the European countries. So it's not a question, will they go down furthermore? It's a question, when will England come back? When will Sweden, Finland and Spain come back and Italy and so on? So I think this is the most important question. And in our case, for the future, I think we would like to see more coming out of Eastern Europe and mainly Russia, because our business in Russia or the business in general in Russia is rather small. We basically opened, as Andy mentioned, a factory, a joint venture factory in Russia, and we expect basically getting more out of this. We meet the guys in November again, so I think we will come towards this and you will like what we tell you in December.

Okay. Are you still targeting production at the Fendt factory of about 18,000 units for this year?

Yes.

Okay. And I guess just lastly, on the GSI business, I think your prior target was 5% to 10% revenue growth for this year. That came in a little bit. Is that just on the Europe kind of the timing on some Europe contracts? Is that what I think I heard you say?

Yes, yes, that's the main thing. No real change in market dynamics or anything else, just a little timing on some of the major projects.

Your next question comes from the line of Jamie Cook.

This is Andrew Buscaglia, in behalf of Jamie. So given the risk of less favorable financing in Brazil, can you give your thoughts on that region into 2014?

Well, in terms of the financing programs, the situation where we are right now is that the FINAME program is in place through the end of the year. The interest rates on the FINAME program are about 3.5% right now. There is no formal announcement of what the rates will be next year. Market anticipation is that there won't be a major change, but it could be a slight or a modest increase in the rates into next year. But we don't believe that'll have a material impact on demand.

Okay, that's helpful. And then just switching over to Asia. You guys lost money again this quarter in that segment. Do you anticipate or have a target for some sort of breakeven level? Or can you just help us frame that for your guidance going forward?

Yes. So for the current year, we do expect to be kind of breakeven-ish for the full year, plus or minus maybe 1% on the margins. Going forward then, as we complete the plant in China, we'll start production next year. We would expect to see sales volumes increase, although most of the production for that factory is going to be in the other regions, so you won't see it all showing up in Asia Pacific region. But over the next few years, we would expect to see those margins climb back kind of to corporate averages, as sales ramp up there and as the development costs associated with that factory line down and are covered by more sales volumes.

Your next question comes from the line of Stephen Volkman.

Tom Gilloran, on for Steve Volkman. A question on North American used pricing, have you guys seen any change since last quarter?

No.

And question on inventories. Have you -- I guess you previously said you're comfortable with those levels, can you share any more detail on that?

As we've said, our dealer month supply is about 5 to 6 months on most of our -- in our U.S. dealer inventory levels. And so, those are in normal ranges for us at this point in the year. They'll come down as we have -- we expect a very active year-end retail activity as we always do. So the inventories build up at this point in time and then will come down throughout the rest of the year.

Your next question comes from the line of Andrew Kaplowitz.

It's Alan Fleming, on for Andy this morning. I wanted to ask you if we could get a little more color on the order boards in North America. I think last quarter, you said they were relatively flat and if I heard Martin right, you said they were down a little bit this quarter. So is this more timing? Is this have anything to do with the late harvest and perhaps some of the order activity that you typically saw kind of in the last couple of weeks or month or so get pushed out towards later in the end of the year? Or are you seeing or hearing from your dealers that they are experiencing some slowdown in order activity?

No. I think it's -- our order board, I would call, is pretty solid right now in North America. We do -- it is down a little, but it's not substantially down. But the situation is that we have a good order board in almost all our product lines. There is some differences compared to prior years because of the timing of new product introductions and Tier 4 product programs and things like that. So it's not always easily comparable from year-to-year. But generally, we'd characterize it as a solid order board.

Okay. That's helpful. And then if I could switch gears. Over to Europe, and if I could just ask, did the European -- did European sales come in generally in line with your expectation? I think when you look at ex-currency sales were down a little bit and the comparisons were relatively easy because of the Fendt production issues in a year ago. So are the markets generally stable? Are they getting worse or just not getting better right now? And then if you could just provide...

We are in a record quarter and in a record year in EAME. So we actually to be careful here not to be too conservative. But we, let's say, in general, think that the market has some upside potential. And as I mentioned before, everybody is actually expecting Europe to sort of come back to the high levels we have seen maybe 2007 or so. So that means, this is the main question. It's not so that we are disappointed by the performance in Europe or by the markets, but we think those markets could be stronger in general.

Okay. And did you have any inefficiencies in the Fendt facility this quarter or have you guys generally worked all those kinks out?

No inefficiencies whatsoever, so we are doing fine. We are actually -- you will see that we are getting better and better. It's a major change of the layout. This is now the most modern tractor assembly factory in the world. We need to do a lot of benchmarking upfront with the automotive industry because we thought this is where we can learn from. And so, those productivity improvements, of course, come in every quarter, so to say. And we have -- so far, we are very pleased with what we are seeing.

Your next question comes from the line of Adam Fleck.

I wanted to stick on North America. Can you just update us maybe on, first, Challenger's revenue growth year-to-date and how the market share is trending for that product?

Sure. Challenger year-to-date sales are up about 7% from where we were a year ago, and the business continues to develop quite well. That is the main source of improvement that we're seeing in North America is through the Challenger branded products and the Challenger dealers. As you know, a lot of those Challenger dealers are Caterpillar dealers and we're seeing significant investments by those dealers to further position themselves in the ag sector and things are going quite well in that regard.

There you can see very strong companies, like Butler [ph] Ziegler, investing more in our business, and that helps us basically took hold of Challenger business in the U.S.

Okay, great. And then turning to the industry side in your forecast there. You obviously maintained your full year outlook for North America even though tractor volumes are up 12% year-to-date. By my math, it's just a pretty difficult fourth quarter. I don't know what you're seeing there in particular, if it was just conservatism, any details will be helpful there.

I would call it not just conservative, but we are conservative.

Your next question comes from the line of Ann Duignan. Michael Shlisky - JP Morgan Chase & Co, Research Division: It's Michael Shlisky, filling in for Ann. With grain prices lower, just wondering if you can give me -- give us a little commentary about, if you're seeing any change in demand for GSI products or for tractors coming out of the livestock industry?

Yes. For GSI, I think it's more positive because if you are a farmer, you basically think about whether you would like to sell your harvest later, so that means you might invest in grain storage. And the second part of the question, I didn't get. In protein, I think...

[indiscernible] where we at.

So we have seen a pickup in the midsize tractors for some of those dairy and livestock guys and also with that, we would expect to see heavier orders or continued heavy orders for the hay products. So that's balers, windrowers, those kinds of things. So there is some offset then as you see maybe a slowdown if you do on the row crop guys, the dairy and livestock and the protein producers typically see their margins go up and that's when we would expect to see stronger sales of those products that we just talked about.

Your next question comes from the line of Ashish Gupta. Ashish Gupta - Credit Agricole Securities (USA) Inc., Research Division: Martin, I'm just wondering with the balance sheet sort of now almost fully delevered after GSI and the strong free cash generation, it's been a while since you've announced the deal, I'm wondering how the M&A pipeline looks?

Well, we -- as you know, we launched a strategy which is pretty much based on organic growth with some exceptions. What my proposal is, when we come to Wall Street in December, you will hear about our plans for year 2014 and what we intend to do with our cash. Ashish Gupta - Credit Agricole Securities (USA) Inc., Research Division: Okay, so stay tuned.

Yes. You will like it. I'm sure you will like it. Ashish Gupta - Credit Agricole Securities (USA) Inc., Research Division: I'm sure I will. Greg, you touched on incentives a little bit that you're seeing normal year-on-year, end of year push. The trades have been talking about just a little bit more aggressive incentive activity. I'm wondering if you can comment any further, if you just think it's normal?

I think normal. There's a lot going on, especially in the U.S. with some expiring tax benefits and the farmers have had a very good year, a good harvest in most cases and commodity prices have been okay, so farm income is going to be good. So we're continuing to see pretty rational markets and we are seeing some discounts, as you would normally see at the end of the year, as you work on your inventories. But there's nothing really I would characterize as crazy going on. Ashish Gupta - Credit Agricole Securities (USA) Inc., Research Division: Okay. And then I guess if we look at Agritechnica 2 years ago, and if I remember correctly, it was a big boost for the order board. I'm just wondering kind of how you'd characterize the environment now with 2 years ago? I mean, it's sort of been maybe can you just provide some more context to us?

Yes. I think overall, I would describe it as similar. So I mean, it's too early to know because we still have almost a month to go. But when you talk to the, let's say, the best people who maybe know a little more because they're closer to the customer, they're closer to a certain market, when you talk to the European midsize family-owned companies, they are in pretty good mood. So which is a first indicator that we should see some support from -- coming from Agritechnica. The attendance is excellent, but it's still too early to know, to be honest.

[Operator Instructions] Your next question comes from the line of Steven Fisher.

Wondering if you could just talk about how your order intake on the final Tier 4 products has been since they were introduced. And then if you could give a little more color on the mix in the North American orders that you saw in the quarter?

Well, I would not like to do that regarding the mix in between the end and selection because this is kind of proprietary information and everybody of course has their strategies and I don't want to disclose that, but with the rest, I hand over to Andy.

Okay. Well, there's really not a major change there from what we've seen throughout the year. We're just starting getting orders for next year into the system. So early order programs and the like are going on right now, so it's little too early to draw any conclusions from those.

Okay. And then just because we've seen some headlines in the industry recently, I'll ask about it. Was just wondering if you've made any demand-driven headcount reductions in the last few months anywhere? And if not, do you anticipate any in the next few?

Well, you saw that our sales and production are -- absolutely, there's no reason for headcount reduction. Of course, we are lean, we are comparable -- much leaner than some of our big competitors. And it's an ongoing challenge to stay lean. So but we don't plan headcount reduction.

Okay. Then just on the Tier 4 inventory buildup. I think earlier you're expecting about $125 million. Is that still the number?

Yes, that's pretty close. It will be in that range by the end of the year. So we've been building it up throughout the year. The fourth quarter is the biggest amount of the buildup. But we'll get to that number by the end of the year.

Ladies and gentlemen, we are reaching our allotted time for questions. Your final question comes from Jerry Revich.

I'm wondering if you can talk about how we should expect the, I guess, efficiency profile for the Fendt facility to track heading into next year. On prior upgrades, you've been able to continually prove your throughput though we call it a year or so after the transition. I'm wondering where do we stand in the Fendt facility and you outlined your margin expectations for the full year, but just help us understand the opportunities going beyond the fourth quarter?

We will talk about it when we talk about 2014, which will be in December. So you will get a detailed plan and budget for 2014 in December.

All right. But can you talk about where you are in the transition, obviously you handled all of the European issues you're working through. Can you give us an operational update on where the facility stands?

Yes. So as you know, following AGCO in the third to fourth quarter last year, we had some normal ramp-up issues and costs associated with that. As we move into the first quarter and second quarter of 2013, we still had some, particularly in the first quarter, costs above normal. As we got into the second quarter and now in the third quarter, we're back to where we were and performing quite well in that plant. And we expect to have -- be very -- have high productivity in the fourth quarter this year with substantially higher production than a year ago in the Fendt facility. So as we move into next year, it should be still smooth sailing and we're looking for more opportunities for productivity as we move forward, just like we do in all of our plants.

Okay. And Andy, last question. On interim Tier 4, you folks transition pretty seamlessly at the factory level or should we think about the Tier 4 Final transition as similarly straightforward for you folks over the next 12 to 18 months?

Yes. What we do is we spread those new introductions out throughout the year so that it doesn't all come in 1 quarter or 1 month or anything like that to give the plants the time to make those transitions as seamlessly as possible.

And there are no further question. Presenters, do you have any closing remarks?

Yes. Thanks, Toni. I just wanted to thank our participants for their interest in AGCO today and encourage them to follow-up with me later if they have additional questions. Thanks, and have a great day.

Thank you for your participation. This does conclude today's conference call. You may now disconnect.