Good morning. My name is Scott and I will be your conference operator today. At this time, I would like to welcome everyone to the AGCO 2016 Fourth Quarter Earnings Release Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Thank you. Greg Peterson, AGCO Head of Investor Relations, you may begin your conference.

Thanks, Scott, and good morning. Welcome to those of you joining us for AGCO's fourth quarter 2016 earnings conference call. We will refer to a slide presentation this morning, which we posted on our website at www.agcocorp.com. The non-GAAP measures that we do use in the slide presentation are reconciled to GAAP measures in the appendix of the presentation. We will also be making forward-looking statements this morning, including demand, product development and capital expenditure plans, acquisition, expansion and modernization plans, and our expectations with respect to the cost and benefits of those plans and timing of those benefits, production levels, share repurchases and our future revenue, price levels, 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 31, 2015 and subsequent Form 10-Qs. 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 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. And with that, Martin, please go ahead.

Thank you, Greg, and good morning everybody. We appreciate everyone joining us on this call. My comments start on slide 3, where you can see that in the fourth quarter of 2016, AGCO's sales were up about 7% and for the full year, our sales were about flat. Our 2016 diluted adjusted earnings per share reached $2.47. In the year of challenging some fundamentals and weak industry demand, I'm pleased to tell you we met our financial goals, launched important new products, completed a strategic acquisition and made important investments to improve our product offering. Our cost reduction efforts are being balanced with our commitment to customer support and maintaining an aggressive sales and marketing presence. In 2016, we also generated $169 million in free cash flow, which helped support the funding of share repurchases of approximately $213 million and acquisitions that further strengthened our GSI platform. Despite the current market difficulties, our long-term view remains positive. In addition to dividend cost management, we will be concentrating on initiatives that will drive long-term benefits and raise the efficiency of our factories, improve our service levels and strengthen our product offering. Slide 4 details industry unit retail sales results by region for the full year of 2016. The past year was a challenging year for our industry and AGCO due to weakened market demand. The record grain harvest in the U.S., combined with the healthy crop production across Europe and Brazil, resulted in increased grain inventories and lower soft commodity prices. Deteriorating farm economics negatively impacted farmer sentiment, and we experienced lower industry equipment demand in all major markets. The farm equipment fleet remains relatively young in North America and industry retail sales in the row crop sector have declined through 2016. Sales of high-horsepower tractors, combines, sprayers and grain storage…

Thank you, Martin, and good morning to everyone. I will start on slide 6, which looks at AGCO's regional net sales performance for the fourth quarter and full year of 2016. AGCO's sales increased approximately 9% in the fourth quarter, excluding the negative impact of currency translation of approximately 1.8% compared to the fourth quarter of 2015. AGCO benefited from the impact of acquisitions, which increased sales by approximately 3% and the strong growth in Brazil in the fourth quarter of 2016 compared to the fourth quarter of 2015. The Europe/Africa/Middle East segment reported an increase in net sales of approximately 2%, excluding the impact of negative currency translation compared to the fourth quarter of 2015. Excluding acquisitions, EAME sales were down about 1%. Sales declines in France were mostly offset by growth in the UK and Scandinavia. North American sales increased approximately 4%, excluding the unfavorable impact of currency translation during the fourth quarter of 2016 compared to the levels experienced in the fourth quarter of 2015. Excluding acquisitions, North America sales were about flat. AGCO's fourth quarter 2016 sales in South America increased approximately 54% compared to the fourth quarter of 2015, excluding positive currency translation impacts. Market demand in Brazil improved from very low levels in the fourth quarter of 2015 and growth in Argentina was also very strong. Net sales in our Asia/Pacific segment increased about 23% in the fourth quarter of 2016 compared to 2015, excluding the negative impact of currency. Significant growth in GSI sales in China accounted for most of the increase. Parts sales were $282 million for the fourth quarter of 2016 and were up about 6% compared to the same period in 2015, excluding the negative impact of currency. Moving to slide 7, it details AGCO's sales and margin performance. Our…

Your first question comes from the line of Nicole Deblase with Deutsche Bank. Your line is open.

Yeah. Thanks, guys. So I guess looking at 1Q, totally understand the tax issue. But I guess thinking about production, what's the expected year-on-year movement in production and how does that look from a regional perspective?

Hi, Nicole. Our production looks to be down in the first quarter. We're having the impact overall of kind of getting off to a slower start in production in both North America and Europe. We're working again on our dealer inventories in North America. And in Europe, if you recall, the first quarter is quite strong last year and we expect it to be a little weaker here in the first quarter of 2017. Also in South America, production will be down because, again, we built forward some stock to transition our way through the 2017 change to Tier 3 and so that's giving us a lower production as well in Q1. So those are impacting our first quarter results. And so, as we mentioned, our tax rates should be much higher in the first quarter. As we said, our tax rate is going to be about 40% for the full year, but that's not a uniform 40%. It will fluctuate from quarter-to-quarter based on how we have to do the accounting for the U.S. tax rate. And as a result, that'll have us have a much higher tax expense in the first quarter and not be a benefit that we would – not be in line with the actual earnings in the first quarter.

Okay. Got it.

There is, of course, the potential that the tax laws might change with a positive impact on AGCO.

Okay. Understood. Thanks, Andy and Martin. And then just as my follow-up, I guess in the North America business, I was a bit surprised to see it lose money this quarter despite the year-on-year revenue growth. So, can you just elaborate a bit on this and then maybe give us a sense of how North America margins might look in 2017?

Sure. In addition, all year, we've been having lower margins in North America as it relates to lower production levels, product mix as we're – the high-horsepower sales are down, and those are the higher margin products. So those have been impacts throughout the year. In the fourth quarter, we also had higher costs in Q4, including a higher warranty for fourth quarter that addressed an issue that's now been rectified in our current production. So it was kind of a discrete item that was – should be onetime in nature. If you take out that cost, then we would have been much closer to our earnings in the prior year.

Okay. Got it. Thanks. I'll pass it on.

Okay.

Your next question comes from the line of Andy Casey with Wells Fargo Securities. Your line is open. Andy Casey, your line is open.

Good morning. Thanks. Could you give a little bit more color on what Cimbria may have added to operating profit during the fourth quarter?

Yeah. Cimbria in the fourth quarter is not one of their stronger periods. So, we had – I'm trying to get the numbers here. We had acquisition impacts of – in the fourth quarter of 2016 was about 3% overall, which was mainly the Cimbria business. In terms of earnings, those probably are just slightly positive. We had the higher amortization expense impacting as well. So, a little better than breakeven for the quarter.

Thank you, Andy. And correct if I'm wrong, some of that amortization expense should go away for 2017, is that right?

Yeah. It does start to come back down. So we had amortization expense in the fourth quarter of $13.5 million. It should be – it'll probably be a little bit higher in the first quarter 2017 and then come back down to about $13.5 million for the rest of – excuse me – yes, $13.5 million for the rest of the year.

Okay.

Excuse me, $15 million – it was – let me correct myself. I was looking at the wrong slide. It was $15.9 million for the fourth quarter 2016. It comes down a little in the first quarter, but stays a little higher, and then it should be the rest of the year about $13.5 million for second, third and fourth quarter.

So we're looking at, Andy, about $55 million next year for amortization...

Yeah.

Or for 2017.

Yes.

Okay. Thank you. And then for your comment in response to Nicole's question about North America, you referenced that absent that warranty charge, you would have been closer to the prior-year's operating profit. Does that pretty much imply that warranty accounted for about $11 million to $12 million headwind year-over-year?

Yeah. That's about right.

And that goes away. That's contained in the quarter; should not continue into first quarter.

That's right.

Okay. Thank you very much.

Your next question comes from the line of Jamie Cook with Credit Suisse. Your line is open. Jamie L. Cook - Credit Suisse Securities (USA) LLC: Hi. Good morning. I guess my first question just on South America. Obviously, the sales will be pretty strong in 2017. But, Andy, just trying to get a feel for how you're thinking about profitability with production being down in the first quarter. We have Tier 4 costs I think that, at some point, you're going to have to be able to pass through. And just I think Martin said at the Analyst Day, the competitive environment had been pretty bad. So putting all those things together, how do you think about overall profitability? I guess that's my first question.

Yeah. In terms of South America profitability, we expect the margins to improve in 2017 overall versus 2016. Some of the factors that you discussed are going to mute that to some extent. Particularly in the first quarter, we expect that the margins will just be slightly up because we do have lower production and we also have some advanced Tier 3 transition costs and marketing costs for the new products that we're introducing. So, our expenses are up higher in that first quarter. So, we'll just be slightly up in the first quarter and then you see better results kind of mid-single-digit margins for the rest of the year. Jamie L. Cook - Credit Suisse Securities (USA) LLC: Okay. And then I guess just my second question, I know you've talked about getting the excess – you saw a little bit of excess inventory out of the channel. You're going to have – production is going to be down a little bit year-over-year. Martin, any chance you can talk about your confidence level that this is the last year that we get – we fixed the used inventory issue in 2017? I'm just trying to get a sense for how you're feeling about that as we transition to 2018.

Well, I think in South America, it looks like it's – we would have bottomed out and therefore, let's say, because our inventories are in pretty good shape, we shouldn't have to face a similar problem next year. In North America, we can't, let's say – we hope that markets will be up, but it's not for sure yet. And Europe is very similar. So in Europe, I think the biggest potential we have in the markets, which went down so much last year, France and Germany. Jamie L. Cook - Credit Suisse Securities (USA) LLC: Okay. Thanks. I'll get back in queue.

Your next question comes from the line of Larry De Maria with William Blair. Your line is open. Larry T. De Maria - William Blair & Co. LLC: Hi. Thank you. Good morning. Just curious about – I know it's obviously the small segment, rest of world, but the cadence of the margins through the year and where we should think about that kind of run rate in sales and margins at some point when it's kind of mature because I know you're ramping up production on low-horsepower. So, any color on the rest of world, where that should be in terms of sales and margin run rate, and if that varies through the year very much?

Yes, Larry.

The opportunities in the rest of the world are certainly in Africa. We also, I think, have opportunities in China because this is a market we just start to enter, so there are opportunities to grow market share. And then, let's say you could be optimistic after what we heard so far from the administration about relationship between Russia and the U.S. that the Russian situation starts to normalize and that Russia could come back. Larry T. De Maria - William Blair & Co. LLC: Okay. But with the ramp on the low-horsepower tractors, that ramp will be embedded in the individual segments as opposed to the rest of world then. Is that right?

Yes.

Yeah. And also, Larry, we will benefit some in the APAC region in the sense that some of those overhead costs from that region are going to be carried by the units that then get sold in the other regions. So we are looking for margin improvement partially because of that increased production as we introduce the Global Series tractor. So we're looking for APAC margins to be in the low 4%s probably in 2017. Some of that is, as I said, because of the Global Series production and then the rest of it is just development of that market, including some benefit probably from GSI. So... Larry T. De Maria - William Blair & Co. LLC: Okay. But in other words, there's no major ramp in sales from the Global Series. That will be embedded elsewhere then. Got it.

That's right. Larry T. De Maria - William Blair & Co. LLC: Thank you.

Your next question comes from the line of Joel Tiss with BMO. Your line is open.

Hey, guys. How's it going?

Hey, Joel.

Good.

All right. So you guys always seem to give us conservative guidance and find a way to beat that guidance. So I just wondered if we could get a little bit of a sense of some of the areas that, in 2017, that could give us a little surprise to the upside. So, I guess you already mentioned to Larry Russia and China. Is there anything else in there where you feel like you don't really have as clear of a picture yet for 2017 that could end up being a little bit better?

I think it's maybe the combine business in South America and then, of course, also I think some of our core markets in Europe could come back. So, therefore, overall I think – as you know us, so our plan wants to be realistic, less conservative. And so, we hope that we can continue with this addition also in 2017. We also have an important initiative in the area of cost reduction. We call it radical, innovative new thinking. So we are expecting further efficiency gains and productivity gains all over the company.

Okay. And that was my other question. Can you give us a sense because you've been doing a lot of restructuring and changing the footprint for the last five years at least? And I just wonder, are there any sort of big steps left to do or is it more just tweaking at the margins?

It's both. So we look into some radical bigger steps, but we also – let's say, a lot of the initiatives are smaller things and, let's say, our organization handles this very successfully.

All right. Thank you.

You're welcome.

Your next question comes from the line of Jerry Revich with Goldman Sachs. Your line is open. Jerry Revich - Goldman Sachs & Co.: Hi. Good morning, everyone.

Morning.

Hey, Jerry. Jerry Revich - Goldman Sachs & Co.: I'm wondering if you could talk about the GSI performance in China. It sounded like that drove most of the growth in Asia in the quarter, if I heard your remarks correctly. Andy, can you talk about it? Is that a discrete project win? What's the carryover into 2017 and how should we be thinking about it within the context of the segment guidance you laid out?

Well, in terms of GSI for this year, our sales in the fourth quarter, GSI doubled from the year before. So, we had a really good result. We're seeing good momentum in the protein area in China. When we started that business, we were really getting in with U.S. companies that have moved to China to establish their operations. A lot of that now has – they pulled back out. And now, most of our business is with local producers of protein. And so, we had some slower years as we transition away from our – to the new customer base, but now we're being pretty successful. And so we're positive about the trends that we see in Asia overall with our GSI business as a result. For 2017, I think we're talking about improvement overall in our Asia business and part of that is also an increase in GSI. Certainly not doubling it again, but looking for further increases. Jerry Revich - Goldman Sachs & Co.: Okay. And in terms of in South America, can you talk about where dealer inventories stand today? Obviously Tier 3 is going to drive some variation, but if we think about where dealer inventories stand before the Tier 3 pre-buy and compare that to historical levels, can you just flesh it out for us? How much room is there for dealers to normalize their inventories, excluding the Tier 3 transitional lumpiness considering how much that market has been down?

Yeah, Jerry. So as, I guess, a preface to my comments, the inventory levels that our dealers typically carry in Brazil are much lower than what they would carry in Europe or in North America. So, any time we have inventory issues globally, it's typically not in Brazil. But as you talked about, the Tier 3 transition did lead to some increase in dealer inventories. We're up higher than normal just a little on the new, although it's kind of a mixed bag in that. On the use side, there's been a lot of interest and a lot of buying of the used equipment ahead of the Tier 3 transition. So, I would tell you that our used equipment is actually down some, a little lower than normal in Brazil and the new equipment is up a little from where it is normally. Jerry Revich - Goldman Sachs & Co.: Okay. And lastly in South America, can you talk about your production plan over the course of the year? So, you mentioned production is down in the first quarter. When do you expect the increased production works better than your guidance?

The production will ramp up throughout the year. So as we transition to the new production and we get rid of the transition stock, it'll come back. So, second half of the year, the production will be up from what we have in the first half on quarter-over-quarter. But relative to the prior year, you'll see it down because obviously a year ago, we were overproducing to build that stock particularly in the fourth quarter. So relative to last year, the second half will be below as well. Jerry Revich - Goldman Sachs & Co.: Thank you.

Your next question comes from the line of Steven Fisher with UBS. Your line is open.

Thanks. Good morning.

Good morning, Steven.

The Q4 revenues looked a little better than expected and I think you expected 2017 FX impact is slightly less than expected. What are the offsets that keep your total revenue forecast for 2017 just flat at $7.4 billion?

Yeah. For the full year 2017, what we have is, as you said, currency is going to be a negative, about 3%. Acquisition should add about 2%. And then you have pricing of about 1.5% to 2%. So, what that implies is the industry declines that we're forecasting and we laid out are going to be offset for the most part by market share, new products, things like that, that gives us opportunity to improve our sales over and above what those industry declines that we indicated were.

Relative to what you provided in December, it sounds like some of the headwinds might be a little bit less or some of the business performing a little better. That's just sort of rounding or a little conservatism or...

Yeah. I'd say mainly rounding. And as you say, we did a little bit better at the end of this year than what we had expected. But for the most part, everything is pretty consistent. Assumptions are all very consistent with what we had. So no major changes.

Okay. And then just one clarification. In terms of the North American profitability in 2017, do you expect the segment level to be profitable in every quarter?

Except for the first quarter.

Okay. So either of that will be down. It'd be negative in the first quarter. Okay.

Right.

Got it.

And then for the full year, it'd be pretty similar from a margin perspective to what it was in 2016.

Okay. Great. Thank you.

Your next question comes from the line of Tim Thein with Citigroup. Your line is open.

Thank you. Good morning. First, Andy, for you, I guess. Martin had alluded earlier to some potential benefit to AGCO should some form of corporate tax reform be put forth in the U.S. and I get it at this point that's pure speculation. But just thinking about it from a high level, my thought was that you're not at least currently in a taxable or a positive taxable income generated in the U.S. Also my – I guess part two of that is just can you give us, even if it's just kind of broad parameters, your position from a net import versus export standpoint.

Sure. You're basically right. We're currently in a loss position in the U.S., so any changes in the corporate tax rate wouldn't impact our results at this point in time. But obviously, as the market recovers, we expect to be back in a taxpaying position and then that would benefit our results. The other thing we're hoping to see is ability to bring cash back on a more readily or easier basis than before, and so that would certainly help us because we do generate a lot of cash overseas. So, we're watching those things very closely. On the import/export, we've looked at that and we're really very balanced. So, we do import product into the U.S., but we also are an exporter out of our factories into Canada and to our other markets around the world, and our net impact is basically neutral.

Okay.

So overall, let's say something around $400 million to $450 million on both sides, so imports and exports, with a slight – I think we export a little bit more than we import.

Okay. That's helpful. And then just on the material cost side, I think you outlined at the Analyst Day about expectations for about $40 million of year-over-year benefit on the sourcing side. Obviously, there's been a couple of steel price increases not just in the U.S., but some of the other markets and I think there are some questions in terms of the sustainability of that, but just update us in terms of your expectations. Do you still feel confident in your ability to get that roughly $40 million?

Yeah. I think you have to look at it in a way that it's not coming so much from price development and inflation and so on, but from our major efforts in the area of platform solutions, which give us a certain tailwind.

Okay. So net of any steel and other material cost increases, you're more than able to offset that, I guess, is the...

Yeah.

Yes. So the way we – that $40 million that you're referring to was a savings that we target every year and that's compared to what normal inflationary cost would be. So what we want to do is beat the material economics by $40 million. And so that our assumption is that we can price for the normal economics that we see, steel prices and other increases, and then have that better performance on what actually comes that we capture in our material costs and that should help us get our margins improved.

Okay. Understood. Appreciate it.

Your next question comes from the line of Ann Duignan with JPMorgan. Your line is open.

Hi. Good morning, guys.

Good morning, Ann.

Hey, Ann.

Good morning, Ann.

Just I wanted to circle back on Joel's comments about setting the bar low and beating Martin. It doesn't go unnoticed that part of your variable compensation is based on a target EPS and anything below that, competition goes down. Have there been any changes to any of the variable comp metrics as we go into 2017?

No. Go ahead, Martin.

No, no. Go. Go, Andy.

Okay. No, all the metrics are the same. Our bonus objectives are based on net income, free cash flow, operating margin and a quality metric that we – it's called as a non-financial metric on quality that we measure.

Yeah. Okay. Good to know there's no change. And then from an end market perspective, we see what's going on in the dairy industry in Europe; we see what intervention has done to drive milk powder and European Union's inability to put it back on the market. Can you talk about perhaps France and Germany individually and what your expectations are for both of those countries in 2017 in terms of equipment sales?

Well, as I said, I think countries like France, Germany and some of the Scandinavian markets might have a little upside potential, but it's too early to talk about it. So the dairy industry in Europe in general is a difficult one as you know. Maybe it – and it depends a little bit on what the various countries are doing. So, on one end, you have the EU regulations and subsidies. On the other hand, you have countries trying to do something on top of that. So I think the initiatives, which are in place in Germany by the new Secretary or Minister of Agriculture, so far work.

Okay. And what's your current outlook for both of those countries then if you think there may be some upside to your outlook?

Baked in...

Yeah. Go on.

Yeah. Baked into our forecast for sales for 2017, kind of low- to mid-single-digit declines in Germany and France.

Okay. Thank you. I'll get back in line.

Your next question comes from the line of Joe O'Dea with Vertical Research. Your line is open.

Hi. Good morning. It looks like what you're talking about with the different components of revenue drivers that about a point of contribution from market share gains. Could you just talk about kind of what you achieved in 2016 and then where you think you'll get the biggest contribution of those gains? I think you've previously commented on some pretty competitive pricing in South America, so maybe not there, but where the share gains are going to be kind of most beneficial.

Yeah. The share gains that we're getting where we're outperforming the market, we did quite well in North America in 2016. A lot of new products we introduced, particularly the Global Series helped us. But we did well in all sectors. In Europe, we also outperformed a number of markets. And then, as you can see from the sales results in our Asia region, we're also seeing higher sales. And so all those are contributing. As you point out South America, more competitive. We're not seeing that market share growth there at this point in time.

Okay. And then on Europe in the quarter, we saw some pretty steep declines in the registration data year-over-year, your performance far better than that. So, can you talk about just a little bit of the disconnect and just where, I guess, inventory levels are in Germany and France, whether you can put that in context with months of inventory and how that compares to the past few years?

Sure. There were some anomalies relating to registration reporting between the third and fourth quarter, so you have to kind of look through that. I would recommend that you look more what's happened for the full year. And as we pointed out, the market was down modestly for the full year. And so, I'm not sure. Certainly, fourth quarter was strong for France in 2015 and was much weaker because of the fact that they had just put in some tax incentives for farmers. And so, that should kind of clear out as we look at 2017. In terms of our performance, that's looking at registrations, our shipments to dealers are a little more uniform. And as we look at our dealer inventory, we think it's in pretty good shape in Europe. Dealer inventory looks to be down in both France and Germany and that's a good sign for us.

Okay. Thank you.

Your next question comes from the line of Mike Shlisky with Seaport Global. Your line is open.

Good morning, guys. I want to touch briefly on the interest cost in the fourth quarter here. They were up a bit. There's some new debt obviously on the books, but is the roughly $15 million we saw here the appropriate run rate for 2017?

Let's see.

Sorry, it's $18 million. Sorry.

Yeah. It was about $18 million. What's become down a little in the first quarter, I would say that our run rate is going to be more like $14 million, $15 million on average.

Okay. Got it. And then, secondly, it looks like your income from your financing JV kind of hung in there in 2016. Given what's going on right now in the markets, can that be sustained thinking through 2017 for the full year?

Yeah. We have that being pretty flat year-over-year.

Okay. That'll do for me, guys. Thank you so much.

Thank you.

That was our final question for today. Mr. Peterson, I will turn the call back over to you.

Thanks, Scott. We appreciate everyone's participation today. And if you do have follow-up questions, I encourage you to get back in touch, and have a great day.

Thank you, guys.

That concludes today's conference call. You may now disconnect.