AGCO

It has been about a month since the last earnings report for CNH Industrial (CNH). Shares have added about 11.4% in that time frame, outperforming the S&P 500. Will the recent positive trend continue leading up to its next earnings release, or is CNH due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers. CNH Industrial reported second-quarter 2026 adjusted earnings of 13 cents per share, down 23.5% year over year but above the Zacks Consensus Estimate of 11 cents by 18.2%. Positive pricing and cost-saving actions partly offset lower industry demand and tariff pressure.Consolidated revenues rose 2% year over year to $4.80 billion and beat the consensus estimate by 0.8%. Net sales of Industrial Activities increased 3% to $4.14 billion, with Construction growth helping offset a still-weak agricultural equipment cycle. Agriculture net sales increased 0.9% year over year to $3.28 billion. Favorable price realization supported the top line, while lower volumes remained a drag. North America sales rose 9.9%, EMEA gained 0.8% and Asia Pacific advanced 11.3%, while South America declined 27.0%.Adjusted EBIT fell to $170 million from $263 million, with the margin contracting to 5.2% from 8.1%. Lower South America volumes, unfavorable mix in North America and EMEA, tariffs, higher SG&A and R&D expenses, and weaker joint venture results weighed on profitability. Favorable pricing provided a partial offset. Adjusted gross margin declined to 19.7% from 21.8%. Construction net sales climbed 12.0% year over year to $866 million, led by higher shipment volumes in North America. The quarter also included machines whose shipments were delayed in the first quarter because of a supplier quality issue. North America sales increased 23.5%.Profitability did not keep pace with sales. Adjusted EBIT declined to $15 million from $35 million, while the margin fell to 1.7% from 4.5%. Tariffs and higher R&D expenses were the main pressures, partially offset by higher volumes and lower SG&A expenses. Adjusted gross margin declined to 11.9% from 15.7%. Financial Services revenues decreased 4.2% year over year to $656 million. Lower volumes in South America and North America, fewer used-equipment sales tied to operating lease maturities and lower yields in most regions pressured revenues, partly offset by favorable currency translation.Segment net income fell 18.4% to $71 million. Retail loan originations were $2.53 billion, down $209 million, while the managed portfolio ended at $28.0 billion, down $0.7 billion. Receivables more than 30 days past due rose to 4.4% from 3.9%, mainly reflecting economic pressure on farmers in South America. Net cash provided by operating activities was $145 million in the quarter, down from $772 million a year earlier. Industrial Activities generated $150 million of free cash flow versus $451 million, with management attributing the decline to lower EBIT and higher working capital investment.Cash and cash equivalents totaled $1.87 billion at June 30, down from $2.58 billion at year-end 2025, while total debt declined to $25.97 billion from $26.76 billion. During the quarter, CNH paid $126 million in annual dividends and repurchased $36 million of shares at an average price of about $10.31. CNH now expects 2026 Industrial Activities net sales to be flat to up 2% year over year and adjusted EBIT margin of 3.2% to 3.8%. Agriculture net sales are projected to be about flat with a 5.0% to 5.5% adjusted EBIT margin. Construction net sales are expected to rise 5% to 10%, with margin of 1.8% to 2.3%.The outlook reflects lower Section 232 tariff rates. CNH now estimates the 2026 tariff cost impact at about 170 basis points for Agriculture and 470 basis points for Construction, though higher transportation costs and South American market challenges remain offsets.Industrial free cash flow is forecast at $200 million to $400 million, while adjusted diluted earnings are projected at 41 cents to 46 cents per share. For the third quarter, management expects Agriculture sales and EBIT margin to be about flat year over year, while Construction sales should rise in the low-to-mid teens with a low-to-mid-single-digit EBIT margin. Since the earnings release, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -14.29% due to these changes. Currently, CNH has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for value investors. Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in. Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, CNH has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months. CNH is part of the Zacks Manufacturing - Farm Equipment industry. Over the past month, Agco (AGCO), a stock from the same industry, has gained 14.1%. The company reported its results for the quarter ended June 2026 more than a month ago. Agco reported revenues of $2.61 billion in the last reported quarter, representing a year-over-year change of -1%. EPS of $1.43 for the same period compares with $1.35 a year ago. For the current quarter, Agco is expected to post earnings of $0.88 per share, indicating a change of -34.8% from the year-ago quarter. The Zacks Consensus Estimate has changed -30.4% over the last 30 days. Agco has a Zacks Rank #5 (Strong Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report CNH Industrial N.V. (CNH) : Free Stock Analysis Report AGCO Corporation (AGCO) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

AGCO stock has delivered a slightly positive 1 year return but a decline over 3 years, yet current valuation checks suggest the shares may be pricing in more pessimism than the fundamentals imply. Both an intrinsic value estimate and market multiples currently point to AGCO trading at a discount to what its cash flows and earnings might justify. AGCO's share price has declined 9.6% over the past 3 years, which raises questions about whether recent weakness has gone too far relative to the business outlook. Planned product launches across Fendt, Massey Ferguson and PTx brands around the 2026 Farm Progress Show can support future cash flow expectations, while any prolonged softness in regional demand for agricultural equipment may weigh on how much of that value the market is willing to recognize. On Simply Wall St's broader checks, AGCO scores a high value rating of 5, which means several independent measures lean toward the stock looking cheap rather than expensive. The issue now is whether that apparent discount, including an intrinsic value estimate that sits about 28.3% above the recent share price, offers enough compensation for the risks around AGCO's demand cycle and investment needs. Spot undervalued opportunities like AGCO by reviewing the hand picked 44 high quality undervalued stocks, which currently screen as priced below what their cash flows and balance sheets might justify. The Discounted Cash Flow (DCF) model values AGCO based on the cash the business is expected to generate for shareholders. AGCO currently produces trailing twelve month free cash flow of about $277.4 million, and the model assumes that cash flows grow from this base before settling into a more mature pattern. On these assumptions, the DCF model points to an intrinsic value of about $158 per share, which implies AGCO trades at roughly a 28.3% discount to this estimate. The planned Fendt, Massey Ferguson and PTx launches at the 2026 Farm Progress Show are cited as a factor in the expectation that cash flows improve from current levels, although actual demand for agricultural equipment will remain a key swing factor. Despite this product pipeline, the market price for AGCO is below the value suggested by these cash flow projections. On this DCF view, AGCO stock appears undervalued relative to the cash flows implied by the current model. Our Discounted Cash Flow (DCF) analysis suggests AGCO is undervalued by 28.3%. Track this in your watchlist or portfolio, or discover 44 more high quality undervalued stocks. Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for AGCO. The P/E ratio is a useful cross check for AGCO because earnings are a core focus for many investors in established industrial businesses. AGCO trades on a P/E of about 14.9x. This is well below the Machinery industry average of 26.3x and also below the peer group average of 28.8x. On Simply Wall St’s fair multiple, which blends factors such as AGCO’s profitability profile, industry context and risk, a P/E of around 27.1x would be more in line with those characteristics. Compared with that fair ratio, the current 14.9x P/E leaves a sizeable gap. This indicates that the market is assigning a relatively cautious earnings multiple to AGCO stock despite its established position in agricultural equipment. If AGCO’s earnings profile continues to resemble that implied by the fair multiple, today’s valuation appears conservative rather than stretched. On the P/E lens, AGCO stock currently screens as undervalued relative to both its industry and the fair multiple estimate. See what the numbers say about this price — find out in our valuation breakdown. Simply Wall St Narratives pick up where the AGCO valuation puzzle leaves off and explain what patterns in growth, margins and earnings would need to hold for the stock to be worth materially more or materially less than today’s price. Each narrative presents AGCO's fair value as a thesis about the business that you can track over time, rather than a one off snapshot. These narratives are available on Simply Wall St's Community page. Community views on AGCO pull in very different directions, with one side focused on recovery potential and the other on structural headwinds. Bull case: 9% undervalued Read the full Bull Case to see why AGCO could be undervalued Bear case: 8% overvalued Read the full Bear Case to see why AGCO could be overvalued Do you think there's more to the story for AGCO? Head over to our Community to see what others are saying! AGCO screens as undervalued on both the Discounted Cash Flow (DCF) view and the P/E comparison, which is a rare alignment for value focused investors. The crux is whether future cash generation from planned product launches and aftermarket initiatives materialises strongly enough for the market to reconsider the cautious multiple. If agricultural equipment demand stays subdued for longer or capital needs rise, the current discount could prove justified rather than appealing. The key question from here is whether AGCO converts its product pipeline into resilient earnings without eroding returns through heavier investment. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include AGCO. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Deere & Company DE has reported third-quarter fiscal 2026 earnings of $5.10 per share, rising 7.4% year over year and beating the Zacks Consensus Estimate of $4.79 by 6.47%. Strength in Construction & Forestry and Small Agriculture & Turf offset weakness in Production & Precision Agriculture.Net sales from Deere’s equipment operations were $11 billion in third-quarter fiscal 2026, up 6.2% from the year-ago quarter’s $10.36 billion, reflecting strength in Small Agriculture & Turf and Construction & Forestry despite weakness in Production & Precision Agriculture. The top line beat the Zacks Consensus Estimate of $10.81 billion.Total net sales (including Financial Services and other income) rose 5% year over year to $12.61 billion. Top-line growth was supported by higher shipment volumes and favorable price realization in Small Agriculture & Turf and Construction & Forestry, partly offset by lower shipment volumes in Production & Precision Agriculture. Deere & Company price-consensus-eps-surprise-chart | Deere & Company Quote The cost of sales in the reported quarter increased 4.9% from the prior-year quarter to $7.94 billion. Total gross profit rose 9.8% year over year to $3.06 billion. Selling, administrative and general expenses (SA&G) were flat at $1.22 billion.Total operating profit (including Financial Services) increased 18% year over year to $1.86 billion in the fiscal third quarter. The Production & Precision Agriculture segment’s net sales declined 6% year over year to around $4 billion due to lower shipment volumes, partially offset by favorable price realization and foreign currency translation. Segment operating profit fell 9% from the year-ago quarter to $527 million, reflecting lower shipment volumes and sales mix, and higher production costs, partially offset by favorable price realization and foreign currency exchange.Small Agriculture & Turf net sales increased 12% year over year to $3.38 billion on higher shipment volumes and favorable price realization. Operating profit rose 28% year over year to $622 million, driven mainly by higher shipment volumes and sales mix, and favorable price realization, partially offset by higher production costs.Construction & Forestry net sales were $3.62 billion, up 18% year over year, primarily on higher shipment volumes and favorable price realization. Operating profit surged 84% year over year to $436 million, aided mainly by favorable price realization, partially offset by higher selling, administrative, general and R&D costs.Sales in Deere’s Financial Services division were $1.37 billion in the quarter, down 3% year over year. The segment’s operating profit increased 2% year over year to $271 million. Net income for Financial Services climbed 7% year over year to $219 million in the fiscal third quarter due to favorable financing spreads, partially offset by a lower average portfolio. Cash and cash equivalents totaled $8.93 billion as of Aug. 2, 2026, up from $8.28 billion at the end of fiscal 2025. Net cash provided by operating activities was $3.25 billion for the first nine months compared with $3.46 billion a year earlier. Deere also repurchased $697 million of common stock and paid out $1.32 billion in dividends. Deere raised its fiscal 2026 net income forecast to $4.75-$5 billion from the $4.5-$5 billion mentioned earlier. Equipment Operations net operating cash flow is expected to be $5-$5.50 billion, while capital expenditure is projected to be $1.30 billion and the effective tax rate is expected to be 24-26%.The company continues to view 2026 as the bottom of the current agriculture equipment cycle. Early order program trends, improving used-equipment inventories and increased customer adoption of advanced technologies underpin its confidence in the company's longer-term positioning. Shares of the company have gained 19.3% in the past year compared with the industry’s 15.2% growth. Image Source: Zacks Investment Research The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Lindsay Corporation LNN reported third-quarter fiscal 2026 earnings of $1.53 per share, beating the Zacks Consensus Estimate of $1.41 by 8.5%. The bottom line declined 14% year over year.Lindsay’s sales totaled $160.8 million, down 5% year over year. The top line missed the Zacks Consensus Estimate of $169 million by 5.15%. Irrigation softness outweighed infrastructure growth. The quarter reflected persistent demand challenges in North America and Brazil.CNH Industrial N.V. CNH reported second-quarter 2026 adjusted EPS of 13 cents, which declined from 17 cents in the prior-year quarter. The figure, however, surpassed the Zacks Consensus Estimate of 11 cents.In the second quarter, CNH Industrial’s net sales grew 2% from the year-ago level to $4.80 billion and topped the Zacks Consensus Estimate of $4.76 billion.AGCO Corp. AGCO delivered adjusted earnings per share of $1.43 in second-quarter 2026, missing the Zacks Consensus Estimate of $1.54 by 7.14%. AGCO Corp posted adjusted EPS of $1.35 in the year-ago quarter. Net sales declined 1% year over year to $2.61 billion and missed the consensus estimate of $2.73 billion. Excluding the favorable currency-translation impacts of 2.7%, net sales fell 3.7% year over year. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Deere & Company (DE) : Free Stock Analysis Report Lindsay Corporation (LNN) : Free Stock Analysis Report AGCO Corporation (AGCO) : Free Stock Analysis Report CNH Industrial N.V. (CNH) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Deere & Company DE is scheduled to report third-quarter fiscal 2026 results on Aug. 20 before the opening bell.The Zacks Consensus Estimate for Deere’s earnings has moved north over the past 60 days to $4.79 per share. The consensus mark implies a 0.8% rise from the year-ago actual. The consensus estimate for revenues is pegged at $10.78 billion, indicating a 4.1% year-over-year increase. Image Source: Zacks Investment Research Deere’s earnings beat the Zacks Consensus Estimates in three of the trailing four quarters and missed in one, the average surprise being 10.2%. Image Source: Zacks Investment Research Our model does not predict an earnings beat for DE this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here.Earnings ESP: The Earnings ESP for Deere is -1.14%. You can uncover the best stocks before they are reported with our Earnings ESP Filter. Zacks Rank: Deere currently has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here. Deere has been facing challenges due to weak farmer spending amid low commodity prices. In the wake of challenging conditions in the global agricultural and construction sectors, DE has been aligning its production with demand levels.This is likely to have weighed on the company’s fiscal third-quarter performance. High production expenses are also expected to have impacted the company’s margin in the quarter.Nevertheless, favorable price realization is expected to have negated some of these headwinds, as seen in the fiscal second quarter. The Zacks Consensus Estimate for the Production & Precision Agriculture segment’s revenues is pegged at $3.94 billion for the fiscal third quarter, suggesting a year-over-year decrease of 7.9%. Gains from price realization are likely to have been offset by escalated production expenses and lower shipment volumes. The Zacks Consensus Estimate for the segment’s operating profit is pegged at $491 million, indicating a 15.3% decrease from the prior-year quarter’s reported figure.The consensus estimate for the Small Agriculture & Turf segment’s revenues is pegged at $3.39 billion for the fiscal third quarter, implying a 12% increase from the prior-year quarter’s actual. The segment’s operating profit is estimated at $495 million, suggesting 2% year-over-year growth.The Construction & Forestry segment’s sales are pegged at $3.57 billion for the fiscal third quarter, implying a 16.9% rise from the prior-year quarter’s reported number. The segment’s operating profit is pegged at $424 million, whereas it reported $237 million in the prior year.The estimate for the Financial Services segment’s revenues is pegged at $1.61 billion for the fiscal third quarter, indicating a 4.1% rise from the year-ago quarter’s actual. The projection for the segment’s operating profit is $271 million. The segment reported operating profit of $266 million in the prior-year quarter. Shares of the company have gained 23.7% in the past year compared with the industry’s 19.5% growth. Image Source: Zacks Investment Research Lindsay Corporation LNN reported third-quarter fiscal 2026 earnings of $1.53 per share, beating the Zacks Consensus Estimate of $1.41 by 8.5%. The bottom line declined 14% year over year.Lindsay’s sales totaled $160.8 million, down 5% year over year. The top line missed the Zacks Consensus Estimate of $169 million by 5.15%. Irrigation softness outweighed infrastructure growth. The quarter reflected persistent demand challenges in North America and Brazil.CNH Industrial N.V. CNH reported second-quarter 2026 adjusted EPS of 13 cents, which declined from 17 cents in the prior-year quarter. The figure, however, surpassed the Zacks Consensus Estimate of 11 cents.In the second quarter, CNH Industrial’s net sales grew 2% from the year-ago level to $4.80 billion and topped the Zacks Consensus Estimate of $4.76 billion.AGCO Corp. AGCO delivered adjusted earnings per share of $1.43 in second-quarter 2026, missing the Zacks Consensus Estimate of $1.54 by 7.14%. AGCO Corp posted adjusted EPS of $1.35 in the year-ago quarter. Net sales declined 1% year over year to $2.61 billion and missed the consensus estimate of $2.73 billion. Excluding the favorable currency-translation impacts of 2.7%, net sales fell 3.7% year over year. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Deere & Company (DE) : Free Stock Analysis Report Lindsay Corporation (LNN) : Free Stock Analysis Report AGCO Corporation (AGCO) : Free Stock Analysis Report CNH Industrial N.V. (CNH) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Shareholders of AGCO would probably like to forget the past six months even happened. The stock dropped 26.2% and now trades at $102.26. This was partly due to its softer quarterly results and might have investors contemplating their next move. Is now the time to buy AGCO, or should you be careful about including it in your portfolio? Check out our in-depth research report to see what our analysts have to say, it’s free. Despite the more favorable entry price, we’re sitting this one out for now. Here are three reasons you should be careful with AGCO, plus one stock we’d rather own. A company’s long-term performance is an indicator of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Unfortunately, AGCO struggled to consistently increase demand as its $10.35 billion of sales for the trailing 12 months was close to its revenue five years ago. This wasn’t a great result and is a sign of poor business quality. We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable. Sadly for AGCO, its EPS declined by 5.5% annually over the last five years while its revenue was flat. This tells us the company struggled because its fixed cost base made it difficult to adjust to choppy demand. We like to invest in businesses with high returns, but the trend in a company’s ROIC can also be an early indicator of future business quality. Unfortunately, AGCO’s ROIC has decreased significantly over the last few years. We like what management has done in the past, but its declining returns are perhaps a symptom of fewer profitable growth opportunities. We see the value of companies helping their customers, but in the case of AGCO, we’re out. After the recent drawdown, the stock trades at 15.3× forward P/E (or $102.26 per share). While this valuation is fair, the upside isn’t great compared to the potential downside. There are superior stocks to buy right now. We’d suggest looking at one of our all-time favorite software stocks. WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses. But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.

Shares of AGCO Corp. AGCO have dipped 11% since missing its top- and bottom-line estimates on July 30. The company delivered adjusted earnings per share (EPS) of $1.43 in second-quarter 2026, missing the Zacks Consensus Estimate of $1.54 by 7.14%. The company posted adjusted EPS of $1.35 in the year-ago quarter. Including one-time items, AGCO posted an EPS of $1.08 compared with the year-ago quarter’s $4.22.Net sales declined 1% year over year to $2.61 billion and missed the consensus estimate of $2.73 billion. Excluding the favorable currency-translation impacts of 2.7%, net sales fell 3.7% year over year. AGCO Corporation price-consensus-eps-surprise-chart | AGCO Corporation Quote Gross profit decreased 1.9% year over year to $646 million. The gross margin contracted 30 basis points to 24.7%, as lower production volumes and higher input costs offset pricing and cost-management benefits.Selling, general and administrative expenses were $336 million compared with the year-ago quarter’s $326 million. Adjusted operating income fell 21.1% to $172 million. The adjusted operating margin declined 170 basis points to 6.6% due to weaker sales and factory absorption in Latin America, along with tariff-related costs. Sales in the North America segment increased 19.7% year over year to $471.5 million in the second quarter. Higher unit sales, particularly for high-horsepower tractors and hay tools, supported the top line. The reported figure missed our estimate of $439 million. The segment reported an operating loss of $24.5 million compared with the prior-year quarter’s operating loss of $25.2 million. Our projection for the segment’s operating loss was $34.6 million.Sales in the Latin America segment decreased 17.9% year over year to $271 million. We expected the segment’s net sales to be $218.5 million. The segment reported an operating loss of $21.8 million against the prior-year quarter’s operating income of $26.9 million. Our estimate for the segment's operating loss was $6.2 million. The downside was led by softer industry demand, lower sales and production volumes, and higher engineering expenses.The EME (Europe/Middle East) segment’s sales decreased 2.4% year over year to $1.73 billion. The reported figure missed our estimate of $1.91 billion. The segment’s operating income was $260.2 million compared with $261.3 million in the year-ago quarter. Our estimate for the segment's operating income was $7.5 million. Sales declines across most European markets were partly offset by growth in Germany and the U.K. Cost-optimization efforts and positive pricing supported the operating performance. We predicted EME’s operating income to be $301 million.Sales in the Asia/Pacific/Africa segment edged down 1% year over year to $134.5 million. We expected the segment’s sales to be $144 million. The segment reported an operating income of $10.3 million compared with the prior-year quarter’s $9.4 million. Lower sales across several Asian and African markets were partly offset by higher sales in Australia. Our projection for the segment’s operating profit was $6.1 million. AGCO Corp ended June with cash and cash equivalents of $573 million, down from $862 million at the end of 2025. Inventories increased to $3.01 billion from $2.71 billion, reflecting the seasonal working-capital build and higher first-half production.Net cash used in operating activities totaled $245 million in the first six months of 2026 against a cash inflow of $153.5 million in the year-ago period. The company completed $345 million in share repurchases during the quarter and maintained its quarterly dividend of 30 cents per share. Due to the weaker-than-expected industry conditions, the company lowered its 2026 outlook. It expects adjusted earnings of $5.50-$5.75 per share compared with the prior stated $6. AGCO expects 2026 net sales between $10.1 billion and $10.2 billion, while the adjusted operating margin is expected to be 7.5%.Capital expenditure is forecast between $300 million and $325 million. The company targets a free cash flow conversion of 75-100% of adjusted net income. For the third quarter, AGCO projects sales of $2.3-$2.4 billion and adjusted earnings of 85-90 cents per share. AGCO Corp currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. The company’s shares have lost 8.4% in the past year against the industry’s growth of 16.5%. Image Source: Zacks Investment Research Lindsay Corporation LNN reported third-quarter fiscal 2026 earnings of $1.53 per share, beating the Zacks Consensus Estimate of $1.41 by 8.5%. The bottom line declined 14% year over year.Lindsay’s sales totaled $160.8 million, down 5% year over year. The top line missed the Zacks Consensus Estimate of $169 million by 5.15%. Irrigation softness outweighed infrastructure growth. The quarter reflected persistent demand challenges in North America and Brazil.CNH Industrial N.V. CNH reported second-quarter 2026 adjusted EPS of 13 cents, which declined from 17 cents in the prior-year quarter. The figure, however, surpassed the Zacks Consensus Estimate of 11 cents.In the second quarter, CNH Industrial’s net sales grew 2% from the year-ago level to $4.80 billion and topped the Zacks Consensus Estimate of $4.76 billion. Deere & Company DE is expected to release third-quarter fiscal 2026 results on Aug. 20.The Zacks Consensus Estimate for Deere’s earnings per share is pegged at $4.85 for the fiscal third quarter, implying growth of 2.1% from the year-ago reported figure. The consensus estimate for Deere’s total sales is pinned at $10.8 billion, indicating a year-over-year increase of 4.6% Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report AGCO Corporation (AGCO) : Free Stock Analysis Report Lindsay Corporation (LNN) : Free Stock Analysis Report Deere & Company (DE) : Free Stock Analysis Report CNH Industrial N.V. (CNH) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Image source: The Motley Fool. Thursday, July 30, 2026 at 10:00 a.m. ET Head of Investor Relations - Greg Peterson Chairman, President, and Chief Executive Officer - Eric Hansotia Senior Vice President and Chief Financial Officer - Damon J. Audia Operator: Good day, and welcome to the AGCO Second Quarter 2026 Earnings Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star. After today's presentation, there will be an opportunity to ask questions. In consideration of time, please limit yourself to one question and one follow-up. To ask a question, you may press star then 1 on your touch-tone phone. To withdraw your question, please press star then 2. Please note this event is being recorded. I would now like to turn the conference over to Greg Peterson, AGCO Head of Investor Relations. Please go ahead. Greg Peterson: Thanks, and good morning. Welcome to those of you joining us for AGCO's second quarter 2026 earnings call. We will refer to a slide presentation this morning that is posted on our website www.agcocorp.com. The non-GAAP measures used in the slide presentation are reconciled to GAAP measures in the appendix of that presentation. We will make forward-looking statements this morning, including statements about our strategic plans and initiatives. As well as their financial impacts. We will also discuss demand, product development, and capital expenditure plans, and timing of those plans and our expectations concerning the cost and benefits of those plans and timing of those benefits. We will also cover future revenue, crop production, farm income, production levels, price levels, margins, earnings, operating income, cash flow, engineering expense, tax rates, and other financial metrics. All of these forward-looking statements are subject to risks that could cause actual results to differ materially from those suggested by the statements. These risks are further described in the safe harbor included on Slide 2 in the accompanying presentation. Actual results could differ materially from those suggested in these statements. Further information concerning these and other risks is included in AGCO's filings with the SEC including its Form 10-K for the year ended December 31, 2025 and subsequent Form 10-Q filings. AGCO disclaims any obligations to update any forward-looking statements except as required by law. We will make a replay of this call available on our corporate website later today. On the call with me this morning is Eric Hansotia, our chairman, president, and chief executive officer and Damon J. Audia, Senior Vice President and Chief Financial Officer. With that, Eric, please go ahead. Eric Hansotia: Thank you, Greg. Good morning, everyone, and thank you for joining us. AGCO's second quarter results reflect our continued focus on delivering products, and technologies that make farmers more productive, and profitable, while driving efficiencies across our business. and also improve AGCO's profitability through the cycle. While sales in Europe and Latin America progressed below our expectations, and farmers were increasingly cautious amid current market dynamics, We acted decisively to align production with retail demand, manage dealer inventory, and maintain strong discipline on operating expenses and working capital. Net sales for the quarter were approximately $2.6 billion 1% lower year-over-year. Our teams executed well, and maintained consistent performance throughout the quarter. Gaining market share in key regions. This is reflected in our adjusted earnings per share of $1.43. An increase of $0.08 over the prior year. Operating income was $140.7 million for the quarter, a decrease of 14% year-over-year. With reported operating margins decreasing by 80 basis points to 5.4%. On an adjusted basis, operating margin decreased 170 basis points to 6.6%. Driven primarily by lower sales and production volumes and higher input costs, including tariffs. Those were partially offset by solid pricing, the benefit of certain IEEPA tariff refunds, recognized during the period, and ongoing benefits from our business optimization initiatives. Our results demonstrate the resilience of our operating model in a dynamic environment, as we managed moderating demand higher input costs, and regional variability while continuing to deliver consistent results and maintain a strong financial position. Conditions in the broader industry remain complex. Weather continues to play a significant role as elevated temperatures and drought conditions persist across parts of Europe, along with ongoing weather variability in North and South America. These factors are influencing crop development, yield expectations, and ultimately farmers' decision-making. At the same time, financing costs remain elevated. And trade policy developments are adding another layer of complexity. While commodity prices have improved recently, farmers around the world have a heightened focus on maximizing net farm income. This environment is increasing demand for solutions that help manage costs, improve efficiency, and protect yields. That focus aligns well with AGCO's portfolio particularly our precision agriculture solutions which help farmers boost productivity and often deliver payback in one to two years for our retrofit customers. In this environment, our priorities are clear. To stay centered on being the most farmer-focused company in the industry, delivering high-quality innovations to solve farmers' toughest problems. Also to maintain discipline across the business to preserve operational flexibility and adjust production and cost levers as conditions evolve. Over the past several quarters, we have taken meaningful steps to simplify operations, improve efficiency, and strengthen execution. Those actions are helping us manage through the current environment and sustain a solid level of performance even as volumes fluctuate at the trough of the cycle. We are also continuing to invest in areas that matter most to our customers. Particularly smart farming and digital solutions that help improve productivity, and reduce input costs that I will talk more about in a moment. Slide 4 provides an overview of industry unit retail sales by region on a year-to-date basis through June. Across many markets, demand remained measured. Reflecting affordability considerations, elevated input costs, and a focus on near-term returns. Farmers have experienced double-digit increases on inputs like fuel and fertilizer These elevated input costs continue to pressure farmer economics and are contributing to a cautious approach toward fertilizer and equipment-purchasing decisions. It is unlikely that farmers will see meaningful relief on these input costs in the near-term. Which will likely result in many farmers staying conservative on their spending and applying less fertilizer, and that increases my optimism for 2027. In North America, industry demand remains soft year-over-year. With continued weakness in higher-horsepower equipment as farmers defer larger capital purchases. We are also seeing softer demand in lower-horsepower segments, reflecting new rural lifestyle customers focus on affordability in the current environment. In Western Europe, industry conditions were mixed. As input costs, demand, and capital allocation considerations influenced equipment purchases. Tractor demand showed relative stability year to date compared to prior year levels, but weakened during the second quarter. Combine demand remained more cautious as farmers consider financing conditions and capital allocation priorities. In Brazil, industry demand remained under pressure. Higher production costs and interest rates, lower credit availability, and currency dynamics continued to impact demand. With the greatest effects seen in larger equipment categories. Demand for smaller and midrange equipment has been more resilient compared to larger equipment categories. Across all regions, we continue to see farmers taking a disciplined and selective approach to equipment investment. Prioritizing solutions that deliver clear productivity and efficiency benefits. This environment reinforces the importance of aligning production with retail demand, and maintaining flexibility in how we operate the business. While we face several near-term challenges, a number of factors could create a more supportive backdrop for commodity prices, and farm economics over time. Elevated input costs, reduced fertilizer application, and drought conditions in parts of the world are pressuring crop production and this is before the potential effects of the Super El Niño. At the same time, there continue to be increased discussions on accelerating demand drivers such as expanded ethanol with year-round E15 in the US, and renewable diesel and sustainable aviation fuel usage in the US, Brazil, and Europe. All of these could support demand for key crops. Combined with aging equipment fleets, and the ongoing need for productivity gains, these dynamics reinforce our confidence in the fundamentals of agriculture. As the geopolitical environment stabilizes and input costs eventually moderate, we would expect farm economics to improve and farmers will be better positioned to invest in fleet replacement and productivity enhancing technologies. AGCO's factory production hours are shown on Slide 5. On a year-to-date basis through June, production hours were up approximately 6% compared to the prior year. Reflecting a significant increase in the first quarter off a low production base in early 2025 effectively in Europe, In the second quarter, production hours were slightly lower year-over-year, as we deliberately moderated output to align with our operating plan and current retail demand. Full-year 2026 production hours are now expected to be slightly lower versus 2025. As the year has progressed, we have taken a more measured approach to production. Including modest reductions in the second half to better align output with end-market demand, particularly in Latin America and Western Europe. This reflects our continued focus on matching production to demand and maintaining disciplined cost control in our cost structure. Turning to regional inventories. Dealer inventory management remained a positive contributor to execution during the quarter. As we saw lower dealer inventory levels in all three major regions. In Europe, dealer inventory months of supply were around 3.5 months compared to just under 4 months in the first quarter. Remaining well aligned with our four-month target range. Inventory levels across our brands continue to reflect disciplined channel management, and healthy market positioning. Providing flexibility to support customer demand while maintaining a focus on margin quality, and mix optimization our largest and most profitable region. In Latin America, dealer inventories moved to approximately 3.5 months of supply. Down from 4 months at the end of the first quarter. Units were down approximately 5% as dealers continue to work through aged inventory. Especially nontractor products. The reduction reflects continued progress toward our three-month target level, despite our current industry outlook in the region. In North America, dealer inventories improved modestly to just below 7 months of supply, moving closer to our six-month target. Units were down around 7% in the quarter as we continue to rightsize dealer inventory levels. Reductions were led by the large agriculture segment. Reflecting continued execution of our production and shipment plans designed to support channel health and align field inventories with retail demand. Overall, we are pleased with the progress we are making with our dealers around the world which increases our confidence of producing in line with retail demand next year. Slide 6 reinforces how we are executing against our strategy to drive higher quality growth and expand margins over time toward our 14% to 15% mid-cycle target. That strategy does not change with fluctuating market conditions. It continues to guide where we invest how we innovate, how we create value for farmers and shareholders through the cycle. In the current environment, what is most important is how our 3 high-margin growth levers are performing. High margin products continue to support mix. Our technology portfolio is driving differentiated values for customers. And our aftermarket business is providing a more stable and recurring revenue stream. Together, these three levers are helping to offset softer industry demand and reinforcing a business model that is less dependent on volume, and more anchored in value and customer outcomes. You can see this playing out in our performance. Where disciplined execution and a more balanced revenue mix are supporting margins and cash generation relative to the last cycle. Despite a more tempered demand backdrop. This gives us confidence that structural improvements that we have made position us well to navigate the cycle while continuing to invest in the business and deliver consistent long-term returns. Turning to Slide 7. Beyond the quarter's financials, we continue to convert our Farmer First strategy into tangible wins. From premium brand experiences to precision ag expansion and scaling AI. In our machinery brands, Fendt continued its strong momentum. The Fendt 800 series equipped with an AGCO Power CORE engine set an absolute new record in its class for fuel efficiency in the independent DLG power mix efficiency test. With rising operating costs, especially diesel fuel, every liter of fuel saved counts. And Fendt continues to set the bar high across the industry on fuel efficiency. We also celebrated the 50,000th Fendt 900 Vario, A Flagship High Horsepower Tractor That Matters Not Only In Europe but across the world. Fendt's value proposition is resonating especially with North American farmers. And we are seeing that translate into meaningful market share gains. Our precision ag and autonomy portfolio also moved into new ground. We launched OutRun, our mixed fleet retrofit autonomy solution in Brazil to very strong early customer feedback. Extending automation into sugarcane, Latin America and Argentina in particular continues to be a proving ground for our AI-enabled planting and sprayer technology. Across both our own dealer network and our OEM customers. We view this as a tremendous growth opportunity. As these large technology seeking farmers see the power and the productivity of our technologies. And we continue to advance AI as a core enabler. But with a sharper focus rather than spending efforts across many experiments, we are concentrating on the areas where AI delivers the most value and can scale across the business. Including product development, customer acquisition, and supply chain. On the factory floor, AI-based vision and inspection in our transmission and tractor plants in Germany are lifting quality and throughput. In the field, AI-enabled tools and customer and dealer support are reducing downtime. We are deploying these responsibly, with human oversight, applying AI where it drives both efficiency and growth. This is what Farmer-First looks like in practice. Better machines, smarter, higher margin technology, and focused innovation. That help farmers perform better while making AGCO stronger. With that, I will turn it over to Damon to walk through the financial results. Damon J. Audia: Thank you, Eric, and good morning, everyone. Slide 8 provides an overview of regional net sales performance in the second quarter and first half of 2026. On a constant currency basis, the second quarter net sales were 4% lower year-over-year. For the first six months of the year, net sales increased approximately 6% on a reported basis and were essentially flat excluding the benefit of foreign currency translation. By region, net sales in the Europe/Middle East region were approximately 5% lower during the second quarter of 2026 compared to the same period in 2025 on a constant currency basis. Most European markets remained restrained during the quarter while good performance in Germany and the United Kingdom helped offset a portion of the decline in countries like France. North America net sales increased approximately 20% over the second quarter of 2025, excluding currency impacts. The increase was driven primarily by stronger unit volumes led by high-horsepower tractors and hay tools and market share gains on many products. Net sales in Latin America were 25% lower compared to the second quarter of 2025 on a constant currency basis. Industry demand remained challenged across the region. Resulting in lower sales across all major product categories, However, pricing was effectively flat year-over-year in a quarter which was encouraging. Asia/Pacific/Africa net sales were more than 6% lower excluding favorable currency impacts. Higher sales in Australia helped offset lower sales across several Asian and African markets. Consolidated replacement parts sales were $516 million in the quarter, up about 3% on a reported basis and essentially flat excluding favorable currency translation. Parts demand remained stable during the quarter as farmers continue to prioritize maintenance of existing equipment fleets amid a disciplined spending environment. Activity levels varied by region, while overall demand remained consistent with our expectations and reflected the ongoing importance of aftermarket support across our installed base. Turning to Slide 9. Adjusted operating margin was 6.6% in the second quarter, 170 basis points lower than the prior year. This primarily reflects the current demand environment in Latin America, which continued to impact volumes, and absorption. By region, Europe/Middle East operating income was essentially unchanged from the prior year despite lower sales and increased engineering investment. Cost optimization and positive pricing contributed to the stable operating margins year-over-year. North America operating results were generally in line with the prior including a benefit of approximately $22 million from certain IEEPA tariff refunds. Results continue to reflect tariff-related costs as well as factory absorption associated with our demand-aligned production approach. Latin America operating income was approximately $49 million lower year-over-year with the region continuing to progress towards breakeven. Lower sales volumes and higher engineering expense were the primary drivers of the change. Asia/Pacific/Africa operating income was approximately flat compared to the second quarter of 2025. Turning to Slide 10. Year-to-date free cash flow use was approximately $347 million compared to positive free cash flow of $63 million in the first half of 2025. As discussed earlier, production levels were higher in the first half of 2026 than the prior period. As a result, inventory investment and working capital requirements were also higher. Contributing to the year-over-year change in free cash flow. While cash usage was higher through the first six months, the results remain consistent with our expectations and support our full-year target of generating free cash flow equal to approximately 75% to 100% of adjusted net income. Our capital allocation priorities remain unchanged. We will continue to invest in the business maintain an investment grade balance sheet, pursue targeted technology acquisitions, and return excess capital to shareholders. Consistent with that approach, we repurchased approximately $345 million of AGCO shares during the quarter, which included $293 million associated with the April $350 million share repurchase announcement and $52 million in shares from TAFE associated with repurchase announcement from 2025. In addition, we recently declared our regular quarterly dividend of $0.30 per share. Slide 11 summarizes our updated 2026 industry outlook across our major markets. Overall agricultural equipment demand remains below historical mid-cycle levels as farmers continue to evaluate equipment purchases against uneven crop economics elevated ownership costs, and broader macroeconomic dynamics. We continue to see healthy long-term fundamentals supported by aging equipment fleets and the need for productivity enhancing technology as well as increased discussions related to renewable fuels. In North America, we continue to expect large agricultural equipment to be down approximately 15% below 2025 levels. We now expect the small ag segment to be down 0% to 5% compared to 2025. Reflecting a more measured outlook from the rural lifestyle customers as higher financing costs and broader economic uncertainty weigh on discretionary equipment purchases. We continue to work with our dealers as well to ensure that they remain focused on managing their inventory levels. In Western Europe, we are updating our outlook for modest growth to approximately flat year-over-year. While certain markets continue to perform well, overall demand has moderated relative to our expectations entering the year. Higher input costs, hot and dry weather and ongoing policy and regulatory developments have resulted in a more measured demand environment. In Brazil, we are updating our forecast from 5% below 2025 levels to 5% to 10% lower. Industry demand has remained more cautious than expected, reflecting continued influence from financing costs, tighter credit availability and ongoing farmer profitability considerations. Brazil's government just recently activated its subsidized loan program last week, but the late start has further pressured the industry outlook. Despite near-term conditions, we continue to view Brazil as 1 of the world's most attractive long-term agricultural markets supported by expanding crop production, rising global food demand, and favorable long-term fundamentals. While these market revisions are relatively modest, we have updated our full year financial expectations, which are summarized on the slide. While global industry demand remains at a low level, operating at around 85% of mid-cycle demand, we continue to expect AGCO to outperform underlying markets. Through market share gains and the strength of our portfolio. Our outlook now assumes pricing realization of 2% to 2.5%. Updated from 2% to 3%. Favorable currency translation of 2% revised from positive 3% and continued market share gains in key regions. Our pricing outlook has moderated modestly since the beginning of the year reflecting the current industry environment, especially in Latin America, in Europe/Middle East. Inventory management remains a top priority, particularly in North America and Latin America. As we continue aligning production with retail demand and dealer inventory requirements. Requirements. Our outlook reflects the current tariff environment and the mitigation actions we have implemented through pricing, sourcing, and cost initiatives. Based on current policies and recent developments related to IEPA, Section 301 section 32, and section 22 tariffs we now expect gross tariff-related costs of approximately $115 million in 2026. We recorded $22 million of certain IEEPA tariff refunds in the second quarter, reducing our net tariff impact to $95 million for the year. This represents an increase of $50 million compared to last year, year, and does not assume any potential benefits related to future IEP refunds. These estimates are aligned with current policy and trade conditions which we may update as conditions evolve during the year. Engineering investment remains a strategic priority. With spending expected to be approximately 5% of sales. Production hours are now expected to be slightly lower than 2025 levels as we continue to align our output with retail demand and support dealer inventory objectives through the balance of the year. Operational efficiency initiatives are expected to deliver $60 million to $70 million of benefits in 2026 reinforcing ongoing transformation progress. Together, these assumptions support an adjusted operating margin of approximately 7.5% for 2026. Reflecting our updated volumes and pricing inputs partially offset by operational efficiencies and continued cost discipline. Finally, we continue to expect our full year effective tax rate to be between 31% and 33%. Moving to Slide 13. Based on our updated market outlook, we now expect full year net sales to be between $10.1 billion and $10.2 billion This reflects current lower demand expectations in Western Europe, Brazil and North American small ag, along with more modest contributions from pricing and foreign currency translation than previously planned. Primarily within the Europe and Middle East segment. Adjusted earnings per share are now expected to be in the range of $5.50 to $5.75 per share The revised outlook reflects our updated volume assumptions partially offset by focused cost management current tariff policies, operational efficiency initiatives and share repurchase activity completed during the year. Given the current industry environment, capital expenditures are now expected to be in the range of $300 million to $325 million driven by project timing and execution efficiencies while maintaining our current commitments to strategic growth initiatives and manufacturing capabilities. We continue to target free cash flow conversion of 75% to 100% of adjusted net income supported by disciplined working capital management and inventory control. Third quarter net sales are targeted between $2.3 billion and $2.4 billion The third quarter earnings per share are targeted between $0.85 and $0.90, reflecting the alignment of production and demand especially in Latin America and Europe/Middle East. Cost execution, and timing efficiencies as well. The third quarter EPS target excludes any impact from potential additional IEEPA tariff refunds. The sale of our equity interest in the AGCO Finance US and Canadian joint ventures generated $20 million benefit in other income expense during the second quarter. As mentioned last quarter, this benefit represents the up upfront recognition of earnings that otherwise would have been recognized through equity in earnings of unconsolidated affiliates which we expect to be lower in the back half of the year. Before opening the call for questions, I would like to remind everyone of 2 events. First, our meeting at Farm Progress Show in Boone, Iowa at 10:00 a.m. on September 1. And second is our 2026 tech day event near Chicago this October. This event will include a strategic business update, as well as live demonstrations of our precision agriculture technologies and FarmerCore capabilities. We look forward to hosting many of you at these events. With that, I will turn the call over to the operator to begin our Q&A. Operator: We will now begin the question-and-answer session. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. Please limit yourself to one question and one follow-up. Our first question comes from Jerry Revich with D. A. Davidson. Please go ahead. Judah Frommer: Good morning, and thanks for taking my questions. I guess I want to start off asking about the market share that you noted, the gains in share looks like you certainly gained some share in North America. Can you share a little bit about the market share increase that you saw overall? its size market share, on just the pricing in North America and also the mix Was there any additional attachment of, PTX or other or higher horsepower, etcetera? Is there anything we should we should isolate there besides the share gains that may have driven the upside in North America. Damon J. Audia: Yeah. I think, Mike, as you touched on the share gains, continue to have good momentum here in North America, especially in the high-horse segment. Again, we are seeing very good traction both with the Fendt brand as you know, which is our premier brand, but also with Massey Ferguson and the high-horsepower there. Coupled with their affiliation with Hay, all of that did quite well in the quarter. Pricing in North America, was exceptionally strong for us, around 3.5% in the quarter. So not only have we gained share, but also a strong pricing discipline there which helped us deliver pricing of over 2% for the company. In the quarter. And again, I think it goes back to some of the prior conversations we have had with the market share last year and the momentum this year that you are seeing great product quality, great product performance, but dovetailing that with our FarmerCore initiative, where our dealers are really servicing the farmers in a different way and being on the farm, helping them do it in a much more convenient way. And when you put that alongside the product performance, we feel we have got great momentum in the team in America had a great quarter here. Eric Hansotia: I might just build on that. This is Eric. When you look at the data on FarmerCore, the dealers that are performing the best on FarmerCore have 4.5 points higher net promoter score and 1.5 points higher market share. And we continue to get more and more on farm service capacity. We are up 65% now, in North America. And the Brazil fleet grew 25% in the last year. So this is a very fast moving adoption by our dealers and well received by the farmers. Judah Frommer: Greg. Thank you so much for that color. My follow-up question is also on market share. Maybe it is a 2-part question. 1, any progress you have made in combine market share? I would love to hear about that. Then secondly, just taking us around the world any other regions where you think you may have gained a bit of share so far in 2026? Damon J. Audia: Yeah. I think combines overall, Mike, as you know, we are a very small player. Really no significant traction. This time of the year, still early in the season, especially in the Northern Hemisphere. So no real meaningful movements there. When I think about share in other parts of the world, Europe, we were kind of a mixed bag here. So, the industry in Germany shrunk quite a bit, relative to our expectations. But we gained share in Germany, lost a little share in France. So Europe overall is kind of a mixed bag, and South America had a modest gain. for us. And Mike, in South America, I think we as we talked on the previous call, we have introduced Fendt into Argentina. We have seen as we are picking up sales there, we are obviously picking up market share in Argentina with the FEND brand. Eric Hansotia: Yeah, I think our combine share is going to grow here in the near-term, over the next year or 2 for a couple of reasons. 1, Net Promoter Score for combines in South America jumped by more than any other product in our portfolios. Same thing in Europe. So farmers are really liking the latest features that we have launched and the quality that is coming out with those products. And then secondly, we have had some dealers in North America convert from a competitor brand to our brand. And so whether it is product performance or channel support and alignment, I think both of those bode well for our combine business going forward. Operator: Our next question comes from Tami Zakaria with JPMorgan. Please go ahead. Tami Zakaria: Hi. Good morning. I hope you can hear me well. I am on the road. So, a question on farmer income or the health of the farm economics. If input costs do not see a relief in the near-term, like you said, how are you preparing for demand in the next 6 to 12 months across your key regions. In your outlook, is there a scenario that equipment demand could remain weak at least through the first half of next year And if so, what would be the strategy in case of in terms of production versus retail demand? Damon J. Audia: Yeah. I think Tami, as you would expect we are doing a lot of different scenario-planning right now as to how the back half of this year and early 27 and 2027 overall could play out. I think the way to think about this is over the last 18 months or so, we have been cutting production significantly in different parts of the world to different degrees, but especially here in North America, along with South America. Trying to right size those dealer inventories. And as we sit here today, you know, going around the world, Europe, we are actually a little bit below where we wanna be. We are sitting at just around 3.5 months. We wanna get those dealers more along the lines of 4 months. Latin America, you know, we are at 3.5. We wanna get them down to 3. So we are underproducing quite a bit in the quarter. We underproduced in South America by around 30%; we are down around 30% year-over-year, so we are continuing to cut production quite heavily there. Our dealers are doing a great job with our team. Really moving through a lot of that aged inventory that is on their yards. And, again, coming off that peak, there was combine sprayers planters, a lot of that is what they are moving through. Tractor inventories are quite healthy at the dealer level, but you are moving through a lot of this other equipment that is aged, and I think we will be in a good position to get through that this year. And so as we look at what that means next year, even if the industry is flat in South America, we are going to be producing at a much higher level and we are not going to be giving those levels of discounts that we are currently partnering with our dealers to move that aged inventory. So South America, we feel very good. When we look at North America, we brought the dealer inventory now is just below 7 months. So a little bit of work to do there, but again, the team's making good progress. So as we grow the share that you heard on the prior question, we will continue to watch the production of what we are making. But, again, similar to South America, we should be in a better position as the dealer inventory gets healthier to be more aligned. But we are gonna watch the outlooks. We are gonna look at our analytical models, and we are gonna make sure that we do not put too much into the dealer inventory until we get more visibility on the on the retail demand coming here. Eric Hansotia: I agree. Summary on the wholesale business. Maybe I will talk a little bit about retail as well. You are asking about farmer profitability. The biggest pressure has been fertilizer and fuel over the last little while, and that is largely tied to the Strait of Hormuz. So that one's an unknown. And who knows how long that will last. But there is other elements of the farmer equation. So the top line in terms of demand generation, we see a lot of things either implemented or brewing that could help the farmer. Brazil has already implemented their fuel of the future. And that is driving ethanol growth from 27% to 35%. We are seeing a lot more ethanol demand in Brazil, which is consuming the corn crop in addition to sugar. Europe's ReFuelEU Aviation has already implemented, and that is to grow sustainable aviation fuel from 2% of the market to 6% by 2030. That 1's implemented. But the big 1 that is a new 1 that we think is more likely to happen than not is E15 all year-round in the US. That will consume-- you know, today, ethanol represents about 36% of the corn crop. That could drive it all the way up to 50% of the corn crop. Significant demand generator and then renewable diesel. And sustainable aviation fuel in North America could grow to as much as 40% of the U.S. corn crop. So I am sorry, soybean crop. And then there is 1 more about renewable fuel going into ocean going vessels act that is working its way through congress, which would be another big generator of soybean demand. So those are all demand generators for top line. We are already seeing grain prices move up Those would all make those move up a lot more to offset some of the cost impacts. And we have got a you know, the fleet is about as aged as it is been. And we expect that because of the high fertilizer prices, farmers have put down less fertilizer. And so we could see an impact to grain production coming into the back of this year. if that has materialized. So, a lot of moving parts there, but there are several reasons to be positive about what could be coming for farmer economics even if their cost situation does not relieve itself in the short term. Which is tied to the street. Tami Zakaria: Understood. that is all very helpful. And just to clarify, I may have missed it, but under the updated guidance, what would be your underproduction percentage versus retail demand in North and South America? As you as you exit this year? Damon J. Audia: So the underproduction relative to retail demand in South America, Tami, is going to be probably 15% Yeah. 15% or so. Relative to retail. Underproduction relative to North America, will be a little bit less. And, again, I think, Tami, remember what we make in North America are the track tractors, the sprayers, the planters, the Gleaner combine. So that production is quite low. What we are seeing is great momentum in market share on the tractor part of the portfolio, which is coming from Europe. So I that is probably a little bit of a disconnect there because we looked at our revenue and our sales, again, coming from a little bit more of our imported products, but we will continue to underproduce those products relative to that we make in North America relative to retail demand. Operator: Our next question comes from Jamie Cook with Truist. Please go ahead. Jamie Cook: Hi, good morning. I guess two questions. First, Damon, just on your I am not surprised you are lowering guidance for the back half of the year. I guess I was a little surprised by the second quarter? So was there anything other than France or company specific that you know, resulted in the softer results in EME relative to your expectations And then just because Europe is so important to your company as a percent of earnings, how are we thinking about margins in the back half for the EME region? And then my second question I think you said the third quarter is going to be like $0.85 to $0.95. You know? So I am just trying to understand the bridge third quarter to fourth quarter. That would make the fourth quarter up so much. Anything other than I mean, you talked about production being down, but I am wondering if there is anything else positively coming in the fourth quarter to hit the full year. Thank you. Damon J. Audia: Yeah. So I think, Jamie, the if I think about the second quarter and as we said in our scripted remarks, it was a surprise to us Europe has been doing quite well in delivering on their forecast so the miss is a big surprise. When we unpack sort of where the surprises were, I would tell you it was really two pieces. one of those was sitting in Germany. As you know, when you look at our dominant market share in that country and the size of that market being 1 of the largest markets. The European sorry, the German market was significantly softer than what we had gave our Q2 outlook. The market was down probably about 15% more than what we had anticipated. And, again, given our market share, even though we grew share in Germany in the quarter, that market contraction relative to what we had expected was a big driver to the earnings of Europe. The second one was the dealer inventories. Again, given the uncertainty in the marketplace right now, as Eric was talking about with fuel costs, fertilizer costs, a lot of uncertainty sitting in at the farmer level. That obviously, as you would expect, has rippled over to our dealers. Not wanting to take on inventory. And so when you look at our dealer inventory, inventories last quarter, excuse me, we were just at around 4 months in Europe. We are down to around 3.5 months. that is a couple hundred million dollars of a change of sell-in versus sell-out. And, I do not think we were at that level of dealer decline, but just given the macro backdrop, the CEMA indicators really falling down in the quarter. All of those things drove the decline in Europe versus what we had expected. So that was sort of I will call it the surprises that we have experienced here in the quarter related to Europe If I think about the second half, the margins we are going to see the European margins drop again. They are at 15% this quarter. They are going to drop in the third quarter, that is not uncommon given the normal summer shutdown. But again, given the industry outlook that we have now being relatively flat we are going to take out some incremental days out of production in Europe. So I would expect to see the European margins kind of be in that low double-digits, so call it, that 11% to 12% range. And then as we come out of that summer shutdown, we really start to pick up production. We have our strongest selling season our strongest selling quarter in the fourth quarter is in Europe. So we should see that revenue growth year-over-year coupled with the increased production will get those margins back up into the high teens that should bring us more to a better balance for the full year. Got it. Jamie Cook: And then just anything other than production on the bridge fourth quarter to third quarter? Damon J. Audia: it is gonna be revenue. We are gonna see a significant growth. I would put revenues in Europe, Jamie. Probably around $1.3 billion or so, $1.4 billion in the third quarter, and we will see that because, again, that is taking production out, so we are not gonna be selling a lot And then going north of $2 billion in Q4. And then and then, Jamie, also our pricing our new model year pricing, we will see more of that in the fourth quarter than the third. So pricing is also part of the equation. Operator: Our next question comes from Kristen Owen with Oppenheimer. Please go ahead. Kristen Owen: Hi. Good morning. Thank you for the question. I appreciate all the color on the Q2, sort of Europe, what happened. I am wondering if you can talk to us a little bit about what you are seeing in terms of order velocity now in Europe. Commodities have actually come up quite a good bit since the close of the quarter, especially wheat. Fertilizer prices have kind of corrected. So I guess I am just trying to tease out how much of your comments are hey, we just had a cautious surprise in Q2, and so we want to roll that forward versus what is actually reflected in your orders. Damon J. Audia: Yeah. So, Kristen, I think right now again, remember Europe sort of has this August holiday, so I do not think the velocity of orders are there yet as a lot of our dealers and many companies are sort of shutting down here for the month of August. But if I look at our order board, right now, we are still sitting at around three months of orders in Europe. So not bad. Now we are down a little bit. If you remember last quarter, I said we were around three to four months we are seeing a little bit of softening. I think we have got to sort of get through this August and let's see how as the farmers, the dealers start to come back in start to think about the balance of the year where commodity prices are, I think we are more optimistic that we see that tick up really in the September time frame and then into the fourth quarter. Okay. Kristen Owen: that is super helpful. And then I want to follow-up also on the North America comments. Really strong large ag in the quarter. Can you just help us understand how much of that is sell-in versus sell-through? And then when we think about the impact of that high-horsepower mix on margins, I mean, Damon, you mentioned in one of the prior questions, you know, that is more imported form factors. How do we think about that mix effect factoring into the margins and the second half of the year? Thank you. Damon J. Audia: Yes. So I would tell you Kristen, mainly, effectively, the sell-in was sell-through. When you look at the dealer inventories, again, they came down a little bit, but we actually reduced the number of units, on dealers’ lots in North America by around 6% sequentially. So we are we are gaining share and it is a sell-through to the dealers here, or sorry, to the farmers. So good momentum on growing the high-horsepower share at the retail level not just putting it at the dealer level. When we think about the mix here, again, as you would expect, those tractors, high-horsepower, good mix. And as we think about the balance of the year here for North America, it can be a little bit of a seasonality effect here with the third quarter. We should see some improvement in the margins sequentially as well as year-over-year as we have a little bit of a stronger quarter on the sales and then likely a dip back down a little bit as we move into the fourth quarter, pending something happening here in the U.S. market related to subsidies or anything like that may trigger, farmers to sort of ramp up any of their purchases here at the end of the year? Operator: Our next question comes from Steven Michael Fisher with UBS. Please go ahead. Judah Frommer: Hi. Thanks for taking the question. I am on for Steven Michael Fisher. The first question is about Brazil. The updated market outlook seems to imply kind of improvement in the second half relative to the first half. Found that a bit surprising, you know, just given where the market is now. Guess what is driving the improvement in the second half? And I guess how reliant is this outlook on, you know, government stimulus or other factors later in the year? Damon J. Audia: Yes, Judah. So we do expect the second half to be a lot stronger in the industry and part of it is, as you alluded to, the subsidized financing programs. The Brazilian government had announced two different programs. 1 was the normal FINAME funding. So that information came out a little while ago. It was about 1% lower interest rates this year versus last year and then they had a special program that the government had announced earlier this year that was around BRL 10 billion that has an interest rate of just over 9%. So that information was public, but there was no details, for farmers and dealers to begin to access that. And that is what you heard in my scripted comment is that just came out late last week. That was announced, so a little bit delayed versus the historical release of that information. And so that normally is a good stimulus for farmers because now they can get the subsidized rates relative to the normal borrowing rates in Brazil. So we see that as a catalyst, for the back half of the year. The other thing is, as you know, there is an election in Brazil, coming up here later on this year and historically during those years, you see a lot of incentives or things to help spur the ag economy, as we go through that election cycle. So now that the FINAME information is out and accessible by farmers, coupled with some of the with the election, feel that there should be a pickup in demand here as we go into the back half of the year. Okay. Thanks. that is helpful. And then just a question on price-cost. You lowered the price range and know, the tariff impact is a bit lower. Do you expect you could be price-cost neutral on a dollar basis this year? Then could you help us think about the margin bridge from 2026 to 2027? There are a lot of moving pieces in 2026. So I guess what are the key items to keep in mind for next year? You know, price-cost, regional or product mix, diesel cost? Thanks. Yeah. So if I look at price-cost, if I look at just price versus traditional inflationary headwinds that we would normally talk, so excluding tariffs, even in the 2% to 2.5% range, we would be price-cost positive. Now when I factor in the tariffs and including the IEEPA refund, as I said, that is around a $50 million headwind year-over-year. With that with tariffs inclusive, I will not cover all of that at the 2% to 2.5% range, we will be negative when you include tariffs. But operationally we will cover this year, it is just that tariff headwind assuming no incremental rebates will likely be negative. As I think about 2027, it is obviously with the uncertainty we are dealing with, it is a little too early to tell. I think about what some of the big blocks are that we should expect to see in 2027. We will see some carryover of our of our savings. So the organizational restructuring that we have been talking about that $60 million to $70 million that we are gonna monetize this year, Things that are being put in place this year, there will be a little bit of a carryover next year, so we think that will be an opportunity. As I said on the on some of the prior questions, production relative to retail, we should be producing closer to retail. So that would be a positive for us in several markets. And then we have gotta figure out where price versus inflationary cost are gonna be and what the industry is gonna look like. So we should have a couple positive building blocks going into 2027, but it is still gonna be heavily influenced by what that industry is going to look like next year. Operator: Our next question comes from Jerry Revich with Wells Fargo. Please go ahead. Jerry Revich: Yes. Hi. Good morning, everybody. Eric, Damon, I am wondering if you could just talk about what the demand cadence has been for the short cycle precision ag business, the GPS kits? How has that fared as we have gone through the year? And can you just talk about the broader Precision Ag performance this year? Any revisions with the broader line revisions that you folks laid out? Damon J. Audia: Yeah, Jerry. I will start then Eric can maybe give his view. he is close to the organization. I think overall PTX as a group did fairly well in the quarter, I think very close in line with our expectations. Remember, there are three components to that. there is the PTX products that we are selling to the AGCO factories that continues to have a very high penetration rate, fluctuating as you would expect based on the industry. We have the other OEMs, so there is 100-plus OEMs that we are selling to. Again, have not lost any of those customers, continue to do well with them. But as the industry is weakening around the world, you know, we are seeing that sort of slowdown not due to share loss, but more due to industry. And then the retrofit channel has continued to stay relatively strong compared to the overall OEM industry. So, again, good quarter relative to our expectations relative I would say relatively flat year-over-year despite the industry being down and for the full year, we still think that we will be flat to maybe modestly up versus $860 million that we did last year. So overall, the team's team's doing quite well in delivering. Eric, anything you want to add? Eric Hansotia: We are we are staying on track. If you take a step back and say, strategically, what are we trying to achieve with the business? And we are trying to drive innovation on the one hand and channel development on the other. And so innovation, we launched 14 products last year. We are on track to launch another 12 this year. So we feel really good about the innovation pipeline. Solving a lot of farmers' toughest problems. And then on the channel, as Damon talked about, there are various types of channels. there is the retrofit channel and then the AGCO dealer channel. The AGCO channel, we are up to 320 dealers now that we have got armed to sell PTX as part of their business. And then the broader tech channel that they sell the entire range of solutions, it is this combination of former Trimble dealers and former Precision Planting dealers. We call those elite dealers, and we are up to 85 dealers now. About 50% of the market is covered by those. Over 90% of the market is covered by a PTX dealer. What we are just trying to do is melt those together into elite dealers and so that continues to be on track. So the structural investments and changes are all moving forward like we expect them to. Just need some farmer profitability to be able to embrace the new technologies that we are delivering. Jerry Revich: Yeah. Hopefully, El Niño gives us some help there. And then in terms of the outlook for precision planting heading into next year, Eric, can you comment on whether you have any initial indication of interest on how the demand cadence for your planters, first fit or retrofit, wherever you have visibility for next planting season might look like, and then heading into your tech day, you mentioned 12 new products. Any one or two that you think will really move the needle for AGCO next year that you would like us to focus on as we head into the event? Eric Hansotia: Yeah, a couple of things. I would say it is-- so you had a few parts of the question. Real quickly, it is it is too early for ordering for next year yet on things like planters. So but, strategically, if you had to say what is most likely to happen, planters, and combines have been down more than the rest of the market. And so as we start seeing recovery in 2027, I would expect those to, you know, feel more of that recovery. So we are we are bullish on that for overall industry demand. Relative to technologies, you know, hitting the bottom line, the biggest thing is our Precision Planting SymphonyVision system. We are up 35% in sales this year compared to last year, really getting a lot of we are just sold out. A lot of positive reaction to that. In terms of an interesting topic that probably will not hit the bottom line in the short term is our autonomy system called Outrun. We just showed that to customers in Brazil, first ones to launch into Brazil and both in crops and now in sugarcane and overwhelmingly positive reaction to the OutRun system to make the machine autonomous, both our brands and competitive brands. So those are of interest. But, you know, we are at the very bottom of the S-curve on that one, further up the S-curve on the targeted spraying. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Eric Hansotia for any closing remarks. Eric Hansotia: Well, I would just like to say thank you for joining us today and your continued interest in AGCO, The second quarter reflected a more challenging demand environment. But also demonstrated the discipline and resilience we are building into the company. We are aligning production with retail demand, managing inventory, controlling costs, and protecting cash generation while continuing to advance our Farmer-First strategy. That strategy is showing up in tangible ways. Fendt is gaining ground in North America, Precision agriculture and autonomy is expanding into new applications. And AI is being deployed where it can improve quality, uptime, efficiency, and growth. For farmers, that means practical innovation that helps improve productivity, efficiency, and profitability. For shareholders, it means disciplined capital deployment. Continued investment in strategic growth areas, and meaningful share repurchases while maintaining our commitment to long-term value creation. While the near-term environment remains challenging, the long-term fundamentals of agriculture remain strong. Structural demand for key crops, aging equipment fleets, the need for productivity enhancing technologies, and growth in precision agriculture all give us confidence in the industry and AGCO's ability to create value through the cycle. As we move through the balance of the year, we will stay focused on what we can control. Production alignment, cost discipline, working capital management, market share growth, and continued investment in the technologies, and brands that position AGCO to outperform through the cycle. Thank you for your continued support in AGCO, We appreciate your partnership, and look forward to updating you on our progress. Operator: Thank you for joining the AGCO earnings call. The call has now concluded. Have a nice day. 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Interested in AGCO Corporation? Here are five stocks we like better. AGCO’s second-quarter sales fell 1% to about $2.6 billion, while adjusted EPS rose to $1.43; weaker Europe and Latin America performance offset a 20% constant-currency sales increase in North America. The company lowered its 2026 outlook to $10.1 billion–$10.2 billion in sales and adjusted EPS of $5.50–$5.75, citing softer equipment demand, production adjustments and approximately $115 million in gross tariff costs. AGCO is reducing dealer inventories and moderating production, particularly in South America and Western Europe, while continuing investments in precision agriculture, autonomy and artificial intelligence; it also repurchased about $345 million of shares during the quarter. These 2025 Outperformers Just Unlocked Buyback Fuel AGCO (NYSE:AGCO) reported second-quarter 2026 net sales of approximately $2.6 billion, down 1% from a year earlier, as softer demand in Europe and Latin America offset stronger North American performance. Adjusted earnings per share rose $0.08 year over year to $1.43, while adjusted operating margin declined 170 basis points to 6.6%. Chairman, President and CEO Eric Hansotia said the company responded to a more cautious farm-equipment market by aligning production with retail demand, reducing dealer inventories and maintaining controls on operating expenses and working capital. He said farmers remain focused on equipment and technology that can improve productivity, reduce costs and protect yields amid elevated financing and input costs. → Why SK hynix Could Be the Best AI Chip Stock to Buy Now 12 Best Agriculture Stocks to Buy Now Reported operating income was $140.7 million, down 14% from the prior-year period, and reported operating margin fell 80 basis points to 5.4%. Hansotia said lower sales and production volumes, along with higher input costs including tariffs, pressured results. Those factors were partly offset by pricing, certain IEEPA tariff refunds and benefits from the company’s business-optimization initiatives. On a constant-currency basis, second-quarter sales declined 4% overall. Europe-Middle East sales fell about 5%, with relatively solid results in Germany and the United Kingdom partly offsetting weakness in markets including France. North American sales increased about 20%, driven by higher unit volumes in high-horsepower tractors and hay tools, as well as market-share gains. → Microsoft Just Flipped the AI Spending Narrative Overnight 3 Defensive Mid Caps to March Into This March Latin America was the company’s weakest major region, with sales declining 25% on a constant-currency basis. AGCO said higher production costs and interest rates, tighter credit availability and currency dynamics continued to restrain demand, particularly for larger equipment. Asia-Pacific-Africa sales declined more than 6% excluding currency effects, as stronger Australian sales were offset by lower activity in several Asian and African markets. Senior Vice President and Chief Financial Officer Damon Audia said North American pricing was “exceptionally strong,” at nearly 3.5% in the quarter. He also attributed market-share gains in the region to momentum in the Fendt and Massey Ferguson brands, high-horsepower tractors, hay equipment and the company’s FarmerCore service initiative. → Carrier Earnings Could Send the Stock to a New All-Time High AGCO said its dealer inventories declined in all three major regions. European inventory fell to about 3.5 months of supply from just under four months in the first quarter, while Latin American inventory also declined to roughly 3.5 months from four months. North American inventories improved to just below seven months of supply, moving toward the company’s six-month target. AGCO now expects full-year 2026 production hours to be slightly below 2025 levels after moderating output in response to conditions in Latin America and Western Europe. Production hours were up about 6% year to date through June because of a large first-quarter increase off a low base in early 2025, but were slightly lower year over year in the second quarter. The company updated its equipment-demand outlook in several markets: North American large agricultural equipment is still expected to decline about 15% from 2025 levels. North American small agricultural equipment is now expected to decline 0% to 5%, reflecting weaker rural-lifestyle customer demand. Western European equipment demand is now expected to be approximately flat year over year, revised from a prior expectation for modest growth. Brazilian industry demand is now expected to decline 5% to 10%, compared with AGCO’s previous forecast for a 5% decline. Audia said AGCO expects to underproduce retail demand by about 15% in South America as it continues helping dealers work through aged inventory. In North America, the company also expects to underproduce certain locally manufactured products relative to retail demand while continuing to monitor dealer inventory levels. AGCO lowered its full-year sales outlook to a range of $10.1 billion to $10.2 billion and projected adjusted earnings per share of $5.50 to $5.75. The company expects an adjusted operating margin of about 7.5%, pricing realization of 2% to 2.5%, and operational-efficiency benefits of $60 million to $70 million in 2026. The company expects gross tariff-related costs of approximately $115 million for the year. It recorded $22 million in certain IEEPA tariff refunds in the second quarter, reducing the expected net tariff impact to $95 million. Audia said the figure represents a $50 million increase from the prior year and does not include potential future IEEPA refunds. For the third quarter, AGCO targets net sales of $2.3 billion to $2.4 billion and adjusted earnings per share of $0.85 to $0.90, excluding any potential additional IEEPA tariff refunds. Year-to-date free cash flow was negative $347 million, compared with positive free cash flow of $63 million in the first half of 2025, primarily because higher production increased inventory and working-capital requirements. AGCO maintained its goal of generating free cash flow equal to roughly 75% to 100% of adjusted net income for the full year. During the quarter, AGCO repurchased approximately $345 million of shares and declared a regular quarterly dividend of $0.30 per share. Hansotia said AGCO continues to invest in precision agriculture, autonomy and artificial intelligence despite weaker industry demand. The company launched its OutRun mixed-fleet retrofit autonomy solution in Brazil, including for sugarcane applications, and said early customer feedback has been strong. AGCO’s PTx precision-agriculture business performed approximately in line with management’s expectations during the quarter. Audia said the company expects PTx revenue to be flat to modestly higher than the $860 million generated in 2025. Hansotia said AGCO launched 14 products last year and is on track to introduce another 12 in 2026. “While the near-term environment remains challenging, the long-term fundamentals of agriculture remain strong,” Hansotia said, citing aging equipment fleets, crop demand and the need for productivity-enhancing technology. AGCO Corporation is a global leader in the design, manufacture and distribution of agricultural machinery and precision farming solutions. Headquartered in Duluth, Georgia, the company markets a diverse portfolio of well-known brands, including Massey Ferguson, Fendt, Challenger, Valtra and GSI, serving farmers and producers in North America, South America, Europe, the Middle East, Africa and Asia Pacific. Through an extensive dealer network, AGCO provides equipment tailored to a broad range of crop and livestock operations. The company's product offerings span tractors, combine harvesters, hay and forage tools, application equipment, seeding and tillage implements, as well as grain storage and protein solutions. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "AGCO Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for July 2026.

Image source: The Motley Fool. Thursday, July 30, 2026 at 10:00 a.m. ET Head of Investor Relations - Greg Peterson Chairman, President, and Chief Executive Officer - Eric Hansotia Senior Vice President and Chief Financial Officer - Damon J. Audia Operator: Good day, and welcome to the AGCO Second Quarter 2026 Earnings Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star. After today's presentation, there will be an opportunity to ask questions. In consideration of time, please limit yourself to one question and one follow-up. To ask a question, you may press star then 1 on your touch-tone phone. To withdraw your question, please press star then 2. Please note this event is being recorded. I would now like to turn the conference over to Greg Peterson, AGCO Head of Investor Relations. Please go ahead. Greg Peterson: Thanks, and good morning. Welcome to those of you joining us for AGCO's second quarter 2026 earnings call. We will refer to a slide presentation this morning that is posted on our website www.agcocorp.com. The non-GAAP measures used in the slide presentation are reconciled to GAAP measures in the appendix of that presentation. We will make forward-looking statements this morning, including statements about our strategic plans and initiatives. As well as their financial impacts. We will also discuss demand, product development, and capital expenditure plans, and timing of those plans and our expectations concerning the cost and benefits of those plans and timing of those benefits. We will also cover future revenue, crop production, farm income, production levels, price levels, margins, earnings, operating income, cash flow, engineering expense, tax rates, and other financial metrics. All of these forward-looking statements are subject to risks that could cause actual results to differ materially from those suggested by the statements. These risks are further described in the safe harbor included on Slide 2 in the accompanying presentation. Actual results could differ materially from those suggested in these statements. Further information concerning these and other risks is included in AGCO's filings with the SEC including its Form 10-K for the year ended December 31, 2025 and subsequent Form 10-Q filings. AGCO disclaims any obligations to update any forward-looking statements except as required by law. We will make a replay of this call available on our corporate website later today. On the call with me this morning is Eric Hansotia, our chairman, president, and chief executive officer and Damon J. Audia, Senior Vice President and Chief Financial Officer. With that, Eric, please go ahead. Eric Hansotia: Thank you, Greg. Good morning, everyone, and thank you for joining us. AGCO's second quarter results reflect our continued focus on delivering products, and technologies that make farmers more productive, and profitable, while driving efficiencies across our business. and also improve AGCO's profitability through the cycle. While sales in Europe and Latin America progressed below our expectations, and farmers were increasingly cautious amid current market dynamics, We acted decisively to align production with retail demand, manage dealer inventory, and maintain strong discipline on operating expenses and working capital. Net sales for the quarter were approximately $2.6 billion 1% lower year-over-year. Our teams executed well, and maintained consistent performance throughout the quarter. Gaining market share in key regions. This is reflected in our adjusted earnings per share of $1.43. An increase of $0.08 over the prior year. Operating income was $140.7 million for the quarter, a decrease of 14% year-over-year. With reported operating margins decreasing by 80 basis points to 5.4%. On an adjusted basis, operating margin decreased 170 basis points to 6.6%. Driven primarily by lower sales and production volumes and higher input costs, including tariffs. Those were partially offset by solid pricing, the benefit of certain IEEPA tariff refunds, recognized during the period, and ongoing benefits from our business optimization initiatives. Our results demonstrate the resilience of our operating model in a dynamic environment, as we managed moderating demand higher input costs, and regional variability while continuing to deliver consistent results and maintain a strong financial position. Conditions in the broader industry remain complex. Weather continues to play a significant role as elevated temperatures and drought conditions persist across parts of Europe, along with ongoing weather variability in North and South America. These factors are influencing crop development, yield expectations, and ultimately farmers' decision-making. At the same time, financing costs remain elevated. And trade policy developments are adding another layer of complexity. While commodity prices have improved recently, farmers around the world have a heightened focus on maximizing net farm income. This environment is increasing demand for solutions that help manage costs, improve efficiency, and protect yields. That focus aligns well with AGCO's portfolio particularly our precision agriculture solutions which help farmers boost productivity and often deliver payback in one to two years for our retrofit customers. In this environment, our priorities are clear. To stay centered on being the most farmer-focused company in the industry, delivering high-quality innovations to solve farmers' toughest problems. Also to maintain discipline across the business to preserve operational flexibility and adjust production and cost levers as conditions evolve. Over the past several quarters, we have taken meaningful steps to simplify operations, improve efficiency, and strengthen execution. Those actions are helping us manage through the current environment and sustain a solid level of performance even as volumes fluctuate at the trough of the cycle. We are also continuing to invest in areas that matter most to our customers. Particularly smart farming and digital solutions that help improve productivity, and reduce input costs that I will talk more about in a moment. Slide 4 provides an overview of industry unit retail sales by region on a year-to-date basis through June. Across many markets, demand remained measured. Reflecting affordability considerations, elevated input costs, and a focus on near-term returns. Farmers have experienced double-digit increases on inputs like fuel and fertilizer These elevated input costs continue to pressure farmer economics and are contributing to a cautious approach toward fertilizer and equipment-purchasing decisions. It is unlikely that farmers will see meaningful relief on these input costs in the near-term. Which will likely result in many farmers staying conservative on their spending and applying less fertilizer, and that increases my optimism for 2027. In North America, industry demand remains soft year-over-year. With continued weakness in higher-horsepower equipment as farmers defer larger capital purchases. We are also seeing softer demand in lower-horsepower segments, reflecting new rural lifestyle customers focus on affordability in the current environment. In Western Europe, industry conditions were mixed. As input costs, demand, and capital allocation considerations influenced equipment purchases. Tractor demand showed relative stability year to date compared to prior year levels, but weakened during the second quarter. Combine demand remained more cautious as farmers consider financing conditions and capital allocation priorities. In Brazil, industry demand remained under pressure. Higher production costs and interest rates, lower credit availability, and currency dynamics continued to impact demand. With the greatest effects seen in larger equipment categories. Demand for smaller and midrange equipment has been more resilient compared to larger equipment categories. Across all regions, we continue to see farmers taking a disciplined and selective approach to equipment investment. Prioritizing solutions that deliver clear productivity and efficiency benefits. This environment reinforces the importance of aligning production with retail demand, and maintaining flexibility in how we operate the business. While we face several near-term challenges, a number of factors could create a more supportive backdrop for commodity prices, and farm economics over time. Elevated input costs, reduced fertilizer application, and drought conditions in parts of the world are pressuring crop production and this is before the potential effects of the Super El Niño. At the same time, there continue to be increased discussions on accelerating demand drivers such as expanded ethanol with year-round E15 in the US, and renewable diesel and sustainable aviation fuel usage in the US, Brazil, and Europe. All of these could support demand for key crops. Combined with aging equipment fleets, and the ongoing need for productivity gains, these dynamics reinforce our confidence in the fundamentals of agriculture. As the geopolitical environment stabilizes and input costs eventually moderate, we would expect farm economics to improve and farmers will be better positioned to invest in fleet replacement and productivity enhancing technologies. AGCO's factory production hours are shown on Slide 5. On a year-to-date basis through June, production hours were up approximately 6% compared to the prior year. Reflecting a significant increase in the first quarter off a low production base in early 2025 effectively in Europe, In the second quarter, production hours were slightly lower year-over-year, as we deliberately moderated output to align with our operating plan and current retail demand. Full-year 2026 production hours are now expected to be slightly lower versus 2025. As the year has progressed, we have taken a more measured approach to production. Including modest reductions in the second half to better align output with end-market demand, particularly in Latin America and Western Europe. This reflects our continued focus on matching production to demand and maintaining disciplined cost control in our cost structure. Turning to regional inventories. Dealer inventory management remained a positive contributor to execution during the quarter. As we saw lower dealer inventory levels in all three major regions. In Europe, dealer inventory months of supply were around 3.5 months compared to just under 4 months in the first quarter. Remaining well aligned with our four-month target range. Inventory levels across our brands continue to reflect disciplined channel management, and healthy market positioning. Providing flexibility to support customer demand while maintaining a focus on margin quality, and mix optimization our largest and most profitable region. In Latin America, dealer inventories moved to approximately 3.5 months of supply. Down from 4 months at the end of the first quarter. Units were down approximately 5% as dealers continue to work through aged inventory. Especially nontractor products. The reduction reflects continued progress toward our three-month target level, despite our current industry outlook in the region. In North America, dealer inventories improved modestly to just below 7 months of supply, moving closer to our six-month target. Units were down around 7% in the quarter as we continue to rightsize dealer inventory levels. Reductions were led by the large agriculture segment. Reflecting continued execution of our production and shipment plans designed to support channel health and align field inventories with retail demand. Overall, we are pleased with the progress we are making with our dealers around the world which increases our confidence of producing in line with retail demand next year. Slide 6 reinforces how we are executing against our strategy to drive higher quality growth and expand margins over time toward our 14% to 15% mid-cycle target. That strategy does not change with fluctuating market conditions. It continues to guide where we invest how we innovate, how we create value for farmers and shareholders through the cycle. In the current environment, what is most important is how our 3 high-margin growth levers are performing. High margin products continue to support mix. Our technology portfolio is driving differentiated values for customers. And our aftermarket business is providing a more stable and recurring revenue stream. Together, these three levers are helping to offset softer industry demand and reinforcing a business model that is less dependent on volume, and more anchored in value and customer outcomes. You can see this playing out in our performance. Where disciplined execution and a more balanced revenue mix are supporting margins and cash generation relative to the last cycle. Despite a more tempered demand backdrop. This gives us confidence that structural improvements that we have made position us well to navigate the cycle while continuing to invest in the business and deliver consistent long-term returns. Turning to Slide 7. Beyond the quarter's financials, we continue to convert our Farmer First strategy into tangible wins. From premium brand experiences to precision ag expansion and scaling AI. In our machinery brands, Fendt continued its strong momentum. The Fendt 800 series equipped with an AGCO Power CORE engine set an absolute new record in its class for fuel efficiency in the independent DLG power mix efficiency test. With rising operating costs, especially diesel fuel, every liter of fuel saved counts. And Fendt continues to set the bar high across the industry on fuel efficiency. We also celebrated the 50,000th Fendt 900 Vario, A Flagship High Horsepower Tractor That Matters Not Only In Europe but across the world. Fendt's value proposition is resonating especially with North American farmers. And we are seeing that translate into meaningful market share gains. Our precision ag and autonomy portfolio also moved into new ground. We launched OutRun, our mixed fleet retrofit autonomy solution in Brazil to very strong early customer feedback. Extending automation into sugarcane, Latin America and Argentina in particular continues to be a proving ground for our AI-enabled planting and sprayer technology. Across both our own dealer network and our OEM customers. We view this as a tremendous growth opportunity. As these large technology seeking farmers see the power and the productivity of our technologies. And we continue to advance AI as a core enabler. But with a sharper focus rather than spending efforts across many experiments, we are concentrating on the areas where AI delivers the most value and can scale across the business. Including product development, customer acquisition, and supply chain. On the factory floor, AI-based vision and inspection in our transmission and tractor plants in Germany are lifting quality and throughput. In the field, AI-enabled tools and customer and dealer support are reducing downtime. We are deploying these responsibly, with human oversight, applying AI where it drives both efficiency and growth. This is what Farmer-First looks like in practice. Better machines, smarter, higher margin technology, and focused innovation. That help farmers perform better while making AGCO stronger. With that, I will turn it over to Damon to walk through the financial results. Damon J. Audia: Thank you, Eric, and good morning, everyone. Slide 8 provides an overview of regional net sales performance in the second quarter and first half of 2026. On a constant currency basis, the second quarter net sales were 4% lower year-over-year. For the first six months of the year, net sales increased approximately 6% on a reported basis and were essentially flat excluding the benefit of foreign currency translation. By region, net sales in the Europe/Middle East region were approximately 5% lower during the second quarter of 2026 compared to the same period in 2025 on a constant currency basis. Most European markets remained restrained during the quarter while good performance in Germany and the United Kingdom helped offset a portion of the decline in countries like France. North America net sales increased approximately 20% over the second quarter of 2025, excluding currency impacts. The increase was driven primarily by stronger unit volumes led by high-horsepower tractors and hay tools and market share gains on many products. Net sales in Latin America were 25% lower compared to the second quarter of 2025 on a constant currency basis. Industry demand remained challenged across the region. Resulting in lower sales across all major product categories, However, pricing was effectively flat year-over-year in a quarter which was encouraging. Asia/Pacific/Africa net sales were more than 6% lower excluding favorable currency impacts. Higher sales in Australia helped offset lower sales across several Asian and African markets. Consolidated replacement parts sales were $516 million in the quarter, up about 3% on a reported basis and essentially flat excluding favorable currency translation. Parts demand remained stable during the quarter as farmers continue to prioritize maintenance of existing equipment fleets amid a disciplined spending environment. Activity levels varied by region, while overall demand remained consistent with our expectations and reflected the ongoing importance of aftermarket support across our installed base. Turning to Slide 9. Adjusted operating margin was 6.6% in the second quarter, 170 basis points lower than the prior year. This primarily reflects the current demand environment in Latin America, which continued to impact volumes, and absorption. By region, Europe/Middle East operating income was essentially unchanged from the prior year despite lower sales and increased engineering investment. Cost optimization and positive pricing contributed to the stable operating margins year-over-year. North America operating results were generally in line with the prior including a benefit of approximately $22 million from certain IEEPA tariff refunds. Results continue to reflect tariff-related costs as well as factory absorption associated with our demand-aligned production approach. Latin America operating income was approximately $49 million lower year-over-year with the region continuing to progress towards breakeven. Lower sales volumes and higher engineering expense were the primary drivers of the change. Asia/Pacific/Africa operating income was approximately flat compared to the second quarter of 2025. Turning to Slide 10. Year-to-date free cash flow use was approximately $347 million compared to positive free cash flow of $63 million in the first half of 2025. As discussed earlier, production levels were higher in the first half of 2026 than the prior period. As a result, inventory investment and working capital requirements were also higher. Contributing to the year-over-year change in free cash flow. While cash usage was higher through the first six months, the results remain consistent with our expectations and support our full-year target of generating free cash flow equal to approximately 75% to 100% of adjusted net income. Our capital allocation priorities remain unchanged. We will continue to invest in the business maintain an investment grade balance sheet, pursue targeted technology acquisitions, and return excess capital to shareholders. Consistent with that approach, we repurchased approximately $345 million of AGCO shares during the quarter, which included $293 million associated with the April $350 million share repurchase announcement and $52 million in shares from TAFE associated with repurchase announcement from 2025. In addition, we recently declared our regular quarterly dividend of $0.30 per share. Slide 11 summarizes our updated 2026 industry outlook across our major markets. Overall agricultural equipment demand remains below historical mid-cycle levels as farmers continue to evaluate equipment purchases against uneven crop economics elevated ownership costs, and broader macroeconomic dynamics. We continue to see healthy long-term fundamentals supported by aging equipment fleets and the need for productivity enhancing technology as well as increased discussions related to renewable fuels. In North America, we continue to expect large agricultural equipment to be down approximately 15% below 2025 levels. We now expect the small ag segment to be down 0% to 5% compared to 2025. Reflecting a more measured outlook from the rural lifestyle customers as higher financing costs and broader economic uncertainty weigh on discretionary equipment purchases. We continue to work with our dealers as well to ensure that they remain focused on managing their inventory levels. In Western Europe, we are updating our outlook for modest growth to approximately flat year-over-year. While certain markets continue to perform well, overall demand has moderated relative to our expectations entering the year. Higher input costs, hot and dry weather and ongoing policy and regulatory developments have resulted in a more measured demand environment. In Brazil, we are updating our forecast from 5% below 2025 levels to 5% to 10% lower. Industry demand has remained more cautious than expected, reflecting continued influence from financing costs, tighter credit availability and ongoing farmer profitability considerations. Brazil's government just recently activated its subsidized loan program last week, but the late start has further pressured the industry outlook. Despite near-term conditions, we continue to view Brazil as 1 of the world's most attractive long-term agricultural markets supported by expanding crop production, rising global food demand, and favorable long-term fundamentals. While these market revisions are relatively modest, we have updated our full year financial expectations, which are summarized on the slide. While global industry demand remains at a low level, operating at around 85% of mid-cycle demand, we continue to expect AGCO to outperform underlying markets. Through market share gains and the strength of our portfolio. Our outlook now assumes pricing realization of 2% to 2.5%. Updated from 2% to 3%. Favorable currency translation of 2% revised from positive 3% and continued market share gains in key regions. Our pricing outlook has moderated modestly since the beginning of the year reflecting the current industry environment, especially in Latin America, in Europe/Middle East. Inventory management remains a top priority, particularly in North America and Latin America. As we continue aligning production with retail demand and dealer inventory requirements. Requirements. Our outlook reflects the current tariff environment and the mitigation actions we have implemented through pricing, sourcing, and cost initiatives. Based on current policies and recent developments related to IEPA, Section 301 section 32, and section 22 tariffs we now expect gross tariff-related costs of approximately $115 million in 2026. We recorded $22 million of certain IEEPA tariff refunds in the second quarter, reducing our net tariff impact to $95 million for the year. This represents an increase of $50 million compared to last year, year, and does not assume any potential benefits related to future IEP refunds. These estimates are aligned with current policy and trade conditions which we may update as conditions evolve during the year. Engineering investment remains a strategic priority. With spending expected to be approximately 5% of sales. Production hours are now expected to be slightly lower than 2025 levels as we continue to align our output with retail demand and support dealer inventory objectives through the balance of the year. Operational efficiency initiatives are expected to deliver $60 million to $70 million of benefits in 2026 reinforcing ongoing transformation progress. Together, these assumptions support an adjusted operating margin of approximately 7.5% for 2026. Reflecting our updated volumes and pricing inputs partially offset by operational efficiencies and continued cost discipline. Finally, we continue to expect our full year effective tax rate to be between 31% and 33%. Moving to Slide 13. Based on our updated market outlook, we now expect full year net sales to be between $10.1 billion and $10.2 billion This reflects current lower demand expectations in Western Europe, Brazil and North American small ag, along with more modest contributions from pricing and foreign currency translation than previously planned. Primarily within the Europe and Middle East segment. Adjusted earnings per share are now expected to be in the range of $5.50 to $5.75 per share The revised outlook reflects our updated volume assumptions partially offset by focused cost management current tariff policies, operational efficiency initiatives and share repurchase activity completed during the year. Given the current industry environment, capital expenditures are now expected to be in the range of $300 million to $325 million driven by project timing and execution efficiencies while maintaining our current commitments to strategic growth initiatives and manufacturing capabilities. We continue to target free cash flow conversion of 75% to 100% of adjusted net income supported by disciplined working capital management and inventory control. Third quarter net sales are targeted between $2.3 billion and $2.4 billion The third quarter earnings per share are targeted between $0.85 and $0.90, reflecting the alignment of production and demand especially in Latin America and Europe/Middle East. Cost execution, and timing efficiencies as well. The third quarter EPS target excludes any impact from potential additional IEEPA tariff refunds. The sale of our equity interest in the AGCO Finance US and Canadian joint ventures generated $20 million benefit in other income expense during the second quarter. As mentioned last quarter, this benefit represents the up upfront recognition of earnings that otherwise would have been recognized through equity in earnings of unconsolidated affiliates which we expect to be lower in the back half of the year. Before opening the call for questions, I would like to remind everyone of 2 events. First, our meeting at Farm Progress Show in Boone, Iowa at 10:00 a.m. on September 1. And second is our 2026 tech day event near Chicago this October. This event will include a strategic business update, as well as live demonstrations of our precision agriculture technologies and FarmerCore capabilities. We look forward to hosting many of you at these events. With that, I will turn the call over to the operator to begin our Q&A. Operator: We will now begin the question-and-answer session. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. Please limit yourself to one question and one follow-up. Our first question comes from Jerry Revich with D. A. Davidson. Please go ahead. Judah Frommer: Good morning, and thanks for taking my questions. I guess I want to start off asking about the market share that you noted, the gains in share looks like you certainly gained some share in North America. Can you share a little bit about the market share increase that you saw overall? its size market share, on just the pricing in North America and also the mix Was there any additional attachment of, PTX or other or higher horsepower, etcetera? Is there anything we should we should isolate there besides the share gains that may have driven the upside in North America. Damon J. Audia: Yeah. I think, Mike, as you touched on the share gains, continue to have good momentum here in North America, especially in the high-horse segment. Again, we are seeing very good traction both with the Fendt brand as you know, which is our premier brand, but also with Massey Ferguson and the high-horsepower there. Coupled with their affiliation with Hay, all of that did quite well in the quarter. Pricing in North America, was exceptionally strong for us, around 3.5% in the quarter. So not only have we gained share, but also a strong pricing discipline there which helped us deliver pricing of over 2% for the company. In the quarter. And again, I think it goes back to some of the prior conversations we have had with the market share last year and the momentum this year that you are seeing great product quality, great product performance, but dovetailing that with our FarmerCore initiative, where our dealers are really servicing the farmers in a different way and being on the farm, helping them do it in a much more convenient way. And when you put that alongside the product performance, we feel we have got great momentum in the team in America had a great quarter here. Eric Hansotia: I might just build on that. This is Eric. When you look at the data on FarmerCore, the dealers that are performing the best on FarmerCore have 4.5 points higher net promoter score and 1.5 points higher market share. And we continue to get more and more on farm service capacity. We are up 65% now, in North America. And the Brazil fleet grew 25% in the last year. So this is a very fast moving adoption by our dealers and well received by the farmers. Judah Frommer: Greg. Thank you so much for that color. My follow-up question is also on market share. Maybe it is a 2-part question. 1, any progress you have made in combine market share? I would love to hear about that. Then secondly, just taking us around the world any other regions where you think you may have gained a bit of share so far in 2026? Damon J. Audia: Yeah. I think combines overall, Mike, as you know, we are a very small player. Really no significant traction. This time of the year, still early in the season, especially in the Northern Hemisphere. So no real meaningful movements there. When I think about share in other parts of the world, Europe, we were kind of a mixed bag here. So, the industry in Germany shrunk quite a bit, relative to our expectations. But we gained share in Germany, lost a little share in France. So Europe overall is kind of a mixed bag, and South America had a modest gain. for us. And Mike, in South America, I think we as we talked on the previous call, we have introduced Fendt into Argentina. We have seen as we are picking up sales there, we are obviously picking up market share in Argentina with the FEND brand. Eric Hansotia: Yeah, I think our combine share is going to grow here in the near-term, over the next year or 2 for a couple of reasons. 1, Net Promoter Score for combines in South America jumped by more than any other product in our portfolios. Same thing in Europe. So farmers are really liking the latest features that we have launched and the quality that is coming out with those products. And then secondly, we have had some dealers in North America convert from a competitor brand to our brand. And so whether it is product performance or channel support and alignment, I think both of those bode well for our combine business going forward. Operator: Our next question comes from Tami Zakaria with JPMorgan. Please go ahead. Tami Zakaria: Hi. Good morning. I hope you can hear me well. I am on the road. So, a question on farmer income or the health of the farm economics. If input costs do not see a relief in the near-term, like you said, how are you preparing for demand in the next 6 to 12 months across your key regions. In your outlook, is there a scenario that equipment demand could remain weak at least through the first half of next year And if so, what would be the strategy in case of in terms of production versus retail demand? Damon J. Audia: Yeah. I think Tami, as you would expect we are doing a lot of different scenario-planning right now as to how the back half of this year and early 27 and 2027 overall could play out. I think the way to think about this is over the last 18 months or so, we have been cutting production significantly in different parts of the world to different degrees, but especially here in North America, along with South America. Trying to right size those dealer inventories. And as we sit here today, you know, going around the world, Europe, we are actually a little bit below where we wanna be. We are sitting at just around 3.5 months. We wanna get those dealers more along the lines of 4 months. Latin America, you know, we are at 3.5. We wanna get them down to 3. So we are underproducing quite a bit in the quarter. We underproduced in South America by around 30%; we are down around 30% year-over-year, so we are continuing to cut production quite heavily there. Our dealers are doing a great job with our team. Really moving through a lot of that aged inventory that is on their yards. And, again, coming off that peak, there was combine sprayers planters, a lot of that is what they are moving through. Tractor inventories are quite healthy at the dealer level, but you are moving through a lot of this other equipment that is aged, and I think we will be in a good position to get through that this year. And so as we look at what that means next year, even if the industry is flat in South America, we are going to be producing at a much higher level and we are not going to be giving those levels of discounts that we are currently partnering with our dealers to move that aged inventory. So South America, we feel very good. When we look at North America, we brought the dealer inventory now is just below 7 months. So a little bit of work to do there, but again, the team's making good progress. So as we grow the share that you heard on the prior question, we will continue to watch the production of what we are making. But, again, similar to South America, we should be in a better position as the dealer inventory gets healthier to be more aligned. But we are gonna watch the outlooks. We are gonna look at our analytical models, and we are gonna make sure that we do not put too much into the dealer inventory until we get more visibility on the on the retail demand coming here. Eric Hansotia: I agree. Summary on the wholesale business. Maybe I will talk a little bit about retail as well. You are asking about farmer profitability. The biggest pressure has been fertilizer and fuel over the last little while, and that is largely tied to the Strait of Hormuz. So that one's an unknown. And who knows how long that will last. But there is other elements of the farmer equation. So the top line in terms of demand generation, we see a lot of things either implemented or brewing that could help the farmer. Brazil has already implemented their fuel of the future. And that is driving ethanol growth from 27% to 35%. We are seeing a lot more ethanol demand in Brazil, which is consuming the corn crop in addition to sugar. Europe's ReFuelEU Aviation has already implemented, and that is to grow sustainable aviation fuel from 2% of the market to 6% by 2030. That 1's implemented. But the big 1 that is a new 1 that we think is more likely to happen than not is E15 all year-round in the US. That will consume-- you know, today, ethanol represents about 36% of the corn crop. That could drive it all the way up to 50% of the corn crop. Significant demand generator and then renewable diesel. And sustainable aviation fuel in North America could grow to as much as 40% of the U.S. corn crop. So I am sorry, soybean crop. And then there is 1 more about renewable fuel going into ocean going vessels act that is working its way through congress, which would be another big generator of soybean demand. So those are all demand generators for top line. We are already seeing grain prices move up Those would all make those move up a lot more to offset some of the cost impacts. And we have got a you know, the fleet is about as aged as it is been. And we expect that because of the high fertilizer prices, farmers have put down less fertilizer. And so we could see an impact to grain production coming into the back of this year. if that has materialized. So, a lot of moving parts there, but there are several reasons to be positive about what could be coming for farmer economics even if their cost situation does not relieve itself in the short term. Which is tied to the street. Tami Zakaria: Understood. that is all very helpful. And just to clarify, I may have missed it, but under the updated guidance, what would be your underproduction percentage versus retail demand in North and South America? As you as you exit this year? Damon J. Audia: So the underproduction relative to retail demand in South America, Tami, is going to be probably 15% Yeah. 15% or so. Relative to retail. Underproduction relative to North America, will be a little bit less. And, again, I think, Tami, remember what we make in North America are the track tractors, the sprayers, the planters, the Gleaner combine. So that production is quite low. What we are seeing is great momentum in market share on the tractor part of the portfolio, which is coming from Europe. So I that is probably a little bit of a disconnect there because we looked at our revenue and our sales, again, coming from a little bit more of our imported products, but we will continue to underproduce those products relative to that we make in North America relative to retail demand. Operator: Our next question comes from Jamie Cook with Truist. Please go ahead. Jamie Cook: Hi, good morning. I guess two questions. First, Damon, just on your I am not surprised you are lowering guidance for the back half of the year. I guess I was a little surprised by the second quarter? So was there anything other than France or company specific that you know, resulted in the softer results in EME relative to your expectations And then just because Europe is so important to your company as a percent of earnings, how are we thinking about margins in the back half for the EME region? And then my second question I think you said the third quarter is going to be like $0.85 to $0.95. You know? So I am just trying to understand the bridge third quarter to fourth quarter. That would make the fourth quarter up so much. Anything other than I mean, you talked about production being down, but I am wondering if there is anything else positively coming in the fourth quarter to hit the full year. Thank you. Damon J. Audia: Yeah. So I think, Jamie, the if I think about the second quarter and as we said in our scripted remarks, it was a surprise to us Europe has been doing quite well in delivering on their forecast so the miss is a big surprise. When we unpack sort of where the surprises were, I would tell you it was really two pieces. one of those was sitting in Germany. As you know, when you look at our dominant market share in that country and the size of that market being 1 of the largest markets. The European sorry, the German market was significantly softer than what we had gave our Q2 outlook. The market was down probably about 15% more than what we had anticipated. And, again, given our market share, even though we grew share in Germany in the quarter, that market contraction relative to what we had expected was a big driver to the earnings of Europe. The second one was the dealer inventories. Again, given the uncertainty in the marketplace right now, as Eric was talking about with fuel costs, fertilizer costs, a lot of uncertainty sitting in at the farmer level. That obviously, as you would expect, has rippled over to our dealers. Not wanting to take on inventory. And so when you look at our dealer inventory, inventories last quarter, excuse me, we were just at around 4 months in Europe. We are down to around 3.5 months. that is a couple hundred million dollars of a change of sell-in versus sell-out. And, I do not think we were at that level of dealer decline, but just given the macro backdrop, the CEMA indicators really falling down in the quarter. All of those things drove the decline in Europe versus what we had expected. So that was sort of I will call it the surprises that we have experienced here in the quarter related to Europe If I think about the second half, the margins we are going to see the European margins drop again. They are at 15% this quarter. They are going to drop in the third quarter, that is not uncommon given the normal summer shutdown. But again, given the industry outlook that we have now being relatively flat we are going to take out some incremental days out of production in Europe. So I would expect to see the European margins kind of be in that low double-digits, so call it, that 11% to 12% range. And then as we come out of that summer shutdown, we really start to pick up production. We have our strongest selling season our strongest selling quarter in the fourth quarter is in Europe. So we should see that revenue growth year-over-year coupled with the increased production will get those margins back up into the high teens that should bring us more to a better balance for the full year. Got it. Jamie Cook: And then just anything other than production on the bridge fourth quarter to third quarter? Damon J. Audia: it is gonna be revenue. We are gonna see a significant growth. I would put revenues in Europe, Jamie. Probably around $1.3 billion or so, $1.4 billion in the third quarter, and we will see that because, again, that is taking production out, so we are not gonna be selling a lot And then going north of $2 billion in Q4. And then and then, Jamie, also our pricing our new model year pricing, we will see more of that in the fourth quarter than the third. So pricing is also part of the equation. Operator: Our next question comes from Kristen Owen with Oppenheimer. Please go ahead. Kristen Owen: Hi. Good morning. Thank you for the question. I appreciate all the color on the Q2, sort of Europe, what happened. I am wondering if you can talk to us a little bit about what you are seeing in terms of order velocity now in Europe. Commodities have actually come up quite a good bit since the close of the quarter, especially wheat. Fertilizer prices have kind of corrected. So I guess I am just trying to tease out how much of your comments are hey, we just had a cautious surprise in Q2, and so we want to roll that forward versus what is actually reflected in your orders. Damon J. Audia: Yeah. So, Kristen, I think right now again, remember Europe sort of has this August holiday, so I do not think the velocity of orders are there yet as a lot of our dealers and many companies are sort of shutting down here for the month of August. But if I look at our order board, right now, we are still sitting at around three months of orders in Europe. So not bad. Now we are down a little bit. If you remember last quarter, I said we were around three to four months we are seeing a little bit of softening. I think we have got to sort of get through this August and let's see how as the farmers, the dealers start to come back in start to think about the balance of the year where commodity prices are, I think we are more optimistic that we see that tick up really in the September time frame and then into the fourth quarter. Okay. Kristen Owen: that is super helpful. And then I want to follow-up also on the North America comments. Really strong large ag in the quarter. Can you just help us understand how much of that is sell-in versus sell-through? And then when we think about the impact of that high-horsepower mix on margins, I mean, Damon, you mentioned in one of the prior questions, you know, that is more imported form factors. How do we think about that mix effect factoring into the margins and the second half of the year? Thank you. Damon J. Audia: Yes. So I would tell you Kristen, mainly, effectively, the sell-in was sell-through. When you look at the dealer inventories, again, they came down a little bit, but we actually reduced the number of units, on dealers’ lots in North America by around 6% sequentially. So we are we are gaining share and it is a sell-through to the dealers here, or sorry, to the farmers. So good momentum on growing the high-horsepower share at the retail level not just putting it at the dealer level. When we think about the mix here, again, as you would expect, those tractors, high-horsepower, good mix. And as we think about the balance of the year here for North America, it can be a little bit of a seasonality effect here with the third quarter. We should see some improvement in the margins sequentially as well as year-over-year as we have a little bit of a stronger quarter on the sales and then likely a dip back down a little bit as we move into the fourth quarter, pending something happening here in the U.S. market related to subsidies or anything like that may trigger, farmers to sort of ramp up any of their purchases here at the end of the year? Operator: Our next question comes from Steven Michael Fisher with UBS. Please go ahead. Judah Frommer: Hi. Thanks for taking the question. I am on for Steven Michael Fisher. The first question is about Brazil. The updated market outlook seems to imply kind of improvement in the second half relative to the first half. Found that a bit surprising, you know, just given where the market is now. Guess what is driving the improvement in the second half? And I guess how reliant is this outlook on, you know, government stimulus or other factors later in the year? Damon J. Audia: Yes, Judah. So we do expect the second half to be a lot stronger in the industry and part of it is, as you alluded to, the subsidized financing programs. The Brazilian government had announced two different programs. 1 was the normal FINAME funding. So that information came out a little while ago. It was about 1% lower interest rates this year versus last year and then they had a special program that the government had announced earlier this year that was around BRL 10 billion that has an interest rate of just over 9%. So that information was public, but there was no details, for farmers and dealers to begin to access that. And that is what you heard in my scripted comment is that just came out late last week. That was announced, so a little bit delayed versus the historical release of that information. And so that normally is a good stimulus for farmers because now they can get the subsidized rates relative to the normal borrowing rates in Brazil. So we see that as a catalyst, for the back half of the year. The other thing is, as you know, there is an election in Brazil, coming up here later on this year and historically during those years, you see a lot of incentives or things to help spur the ag economy, as we go through that election cycle. So now that the FINAME information is out and accessible by farmers, coupled with some of the with the election, feel that there should be a pickup in demand here as we go into the back half of the year. Okay. Thanks. that is helpful. And then just a question on price-cost. You lowered the price range and know, the tariff impact is a bit lower. Do you expect you could be price-cost neutral on a dollar basis this year? Then could you help us think about the margin bridge from 2026 to 2027? There are a lot of moving pieces in 2026. So I guess what are the key items to keep in mind for next year? You know, price-cost, regional or product mix, diesel cost? Thanks. Yeah. So if I look at price-cost, if I look at just price versus traditional inflationary headwinds that we would normally talk, so excluding tariffs, even in the 2% to 2.5% range, we would be price-cost positive. Now when I factor in the tariffs and including the IEEPA refund, as I said, that is around a $50 million headwind year-over-year. With that with tariffs inclusive, I will not cover all of that at the 2% to 2.5% range, we will be negative when you include tariffs. But operationally we will cover this year, it is just that tariff headwind assuming no incremental rebates will likely be negative. As I think about 2027, it is obviously with the uncertainty we are dealing with, it is a little too early to tell. I think about what some of the big blocks are that we should expect to see in 2027. We will see some carryover of our of our savings. So the organizational restructuring that we have been talking about that $60 million to $70 million that we are gonna monetize this year, Things that are being put in place this year, there will be a little bit of a carryover next year, so we think that will be an opportunity. As I said on the on some of the prior questions, production relative to retail, we should be producing closer to retail. So that would be a positive for us in several markets. And then we have gotta figure out where price versus inflationary cost are gonna be and what the industry is gonna look like. So we should have a couple positive building blocks going into 2027, but it is still gonna be heavily influenced by what that industry is going to look like next year. Operator: Our next question comes from Jerry Revich with Wells Fargo. Please go ahead. Jerry Revich: Yes. Hi. Good morning, everybody. Eric, Damon, I am wondering if you could just talk about what the demand cadence has been for the short cycle precision ag business, the GPS kits? How has that fared as we have gone through the year? And can you just talk about the broader Precision Ag performance this year? Any revisions with the broader line revisions that you folks laid out? Damon J. Audia: Yeah, Jerry. I will start then Eric can maybe give his view. he is close to the organization. I think overall PTX as a group did fairly well in the quarter, I think very close in line with our expectations. Remember, there are three components to that. there is the PTX products that we are selling to the AGCO factories that continues to have a very high penetration rate, fluctuating as you would expect based on the industry. We have the other OEMs, so there is 100-plus OEMs that we are selling to. Again, have not lost any of those customers, continue to do well with them. But as the industry is weakening around the world, you know, we are seeing that sort of slowdown not due to share loss, but more due to industry. And then the retrofit channel has continued to stay relatively strong compared to the overall OEM industry. So, again, good quarter relative to our expectations relative I would say relatively flat year-over-year despite the industry being down and for the full year, we still think that we will be flat to maybe modestly up versus $860 million that we did last year. So overall, the team's team's doing quite well in delivering. Eric, anything you want to add? Eric Hansotia: We are we are staying on track. If you take a step back and say, strategically, what are we trying to achieve with the business? And we are trying to drive innovation on the one hand and channel development on the other. And so innovation, we launched 14 products last year. We are on track to launch another 12 this year. So we feel really good about the innovation pipeline. Solving a lot of farmers' toughest problems. And then on the channel, as Damon talked about, there are various types of channels. there is the retrofit channel and then the AGCO dealer channel. The AGCO channel, we are up to 320 dealers now that we have got armed to sell PTX as part of their business. And then the broader tech channel that they sell the entire range of solutions, it is this combination of former Trimble dealers and former Precision Planting dealers. We call those elite dealers, and we are up to 85 dealers now. About 50% of the market is covered by those. Over 90% of the market is covered by a PTX dealer. What we are just trying to do is melt those together into elite dealers and so that continues to be on track. So the structural investments and changes are all moving forward like we expect them to. Just need some farmer profitability to be able to embrace the new technologies that we are delivering. Jerry Revich: Yeah. Hopefully, El Niño gives us some help there. And then in terms of the outlook for precision planting heading into next year, Eric, can you comment on whether you have any initial indication of interest on how the demand cadence for your planters, first fit or retrofit, wherever you have visibility for next planting season might look like, and then heading into your tech day, you mentioned 12 new products. Any one or two that you think will really move the needle for AGCO next year that you would like us to focus on as we head into the event? Eric Hansotia: Yeah, a couple of things. I would say it is-- so you had a few parts of the question. Real quickly, it is it is too early for ordering for next year yet on things like planters. So but, strategically, if you had to say what is most likely to happen, planters, and combines have been down more than the rest of the market. And so as we start seeing recovery in 2027, I would expect those to, you know, feel more of that recovery. So we are we are bullish on that for overall industry demand. Relative to technologies, you know, hitting the bottom line, the biggest thing is our Precision Planting SymphonyVision system. We are up 35% in sales this year compared to last year, really getting a lot of we are just sold out. A lot of positive reaction to that. In terms of an interesting topic that probably will not hit the bottom line in the short term is our autonomy system called Outrun. We just showed that to customers in Brazil, first ones to launch into Brazil and both in crops and now in sugarcane and overwhelmingly positive reaction to the OutRun system to make the machine autonomous, both our brands and competitive brands. So those are of interest. But, you know, we are at the very bottom of the S-curve on that one, further up the S-curve on the targeted spraying. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Eric Hansotia for any closing remarks. Eric Hansotia: Well, I would just like to say thank you for joining us today and your continued interest in AGCO, The second quarter reflected a more challenging demand environment. But also demonstrated the discipline and resilience we are building into the company. We are aligning production with retail demand, managing inventory, controlling costs, and protecting cash generation while continuing to advance our Farmer-First strategy. That strategy is showing up in tangible ways. Fendt is gaining ground in North America, Precision agriculture and autonomy is expanding into new applications. And AI is being deployed where it can improve quality, uptime, efficiency, and growth. For farmers, that means practical innovation that helps improve productivity, efficiency, and profitability. For shareholders, it means disciplined capital deployment. Continued investment in strategic growth areas, and meaningful share repurchases while maintaining our commitment to long-term value creation. While the near-term environment remains challenging, the long-term fundamentals of agriculture remain strong. Structural demand for key crops, aging equipment fleets, the need for productivity enhancing technologies, and growth in precision agriculture all give us confidence in the industry and AGCO's ability to create value through the cycle. As we move through the balance of the year, we will stay focused on what we can control. Production alignment, cost discipline, working capital management, market share growth, and continued investment in the technologies, and brands that position AGCO to outperform through the cycle. Thank you for your continued support in AGCO, We appreciate your partnership, and look forward to updating you on our progress. Operator: Thank you for joining the AGCO earnings call. The call has now concluded. Have a nice day. 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