Good morning. My name is Regina and I will be your conference operator today. At this time, I would like to welcome everyone to the AGCO 2018 Second Quarter earnings release conference call. After the speaker's remarks there will be a question-and-answer session. I would now like to turn the conference over to Greg Peterson, Head of Investor Relations. Sir, you may begin.

Thanks, Regina, and good morning. Welcome to those of you joining us for AGCO's second quarter 2018 earnings call. This morning, we will refer to a slide presentation that we've posted on our website at www.ag www.agCORP.com. The non-GAAP measures that we've used in this slide presentation are reconciled to GAAP metrics in the appendix of those slides. We will make forward-looking statements this morning including demand, product development, and capital expenditure plans, and the timing of those plans, acquisition expansion and modernization plans, and our expectations with respect to the costs and benefits of those plans and timing of those benefits. We'll also discuss production level, share repurchases, dividend rates and our future revenue price levels, earnings, cash flow predictions, and actual events. I would like to caution you that actual events may differ materially from those statements. We refer you to the periodic reports that we file from time to time with the Securities and Exchange Commission, including in the company's Form 10-K for the year ended December 31, 2017. This document discusses important factors that could cause the actual results to differ materially from those contained in our forward-looking statements. We disclaim any obligation to update any forward-looking statements except as required by law. A replay of this call will be available on our corporate website later today. On the call with me this morning is Martin Richenhagen, our Chairman, President, and Chief Executive Officer and Andy Beck, our Senior Vice President and Chief Financial Officer. With that, Martin, please go ahead.

Thank you, Greg, and good morning. We appreciate everyone joining us on the call today. I'll begin my remarks on slide 3 where you'll find a summary of our second quarter and year-to-date results. Our second quarter sales and adjusted earnings per share grew double digits compared to the second quarter of 2017 with higher sales across our regions, except Asia/Pacific and Africa. AGCO capitalized on healthy industry conditions in Western Europe and improved industry demand in North America, delivering sales and margin improvement in those markets and better-than-expected sales and earnings growth for the company. Our weak results in South America reflects the challenging industry environment including the impacts of the national trucking strike, low levels of production as well as the transition cost associated with localizing newer product technology into our Brazilian factories. We expect our results in South America to improve substantially throughout the remainder of the year. I'm pleased to tell you, we are continuing to invest in initiatives that will drive long-term benefits and raise the efficiencies of our factories, improve our service levels, and strengthen our product offering. Slide 4 details industry unit retail sales results by region for the first half of 2018. Global crop conditions are mixed throughout the first half of 2018. Crop production estimates in the U.S. have recovered following a cold wet spring and forecasts are now calling for another solid harvest. The lack of spring rain across much of Eastern Europe and parts of Western Europe is negatively impacting crop development. A dry weather pattern across Argentina and Southern Brazil has also resulted in decreased 2018 crop production expectations. Global industry sales of farm equipment in the first half of 2018 were also mixed across key markets with future demand dependent on factors such as crop conditions, commodity…

Thank you, Martin and good morning to everyone. I will start on slide 6, which looks at AGCO's regional net sales performance for the second quarter and first six months of 2018. AGCO's sales increased approximately 14% compared to the second quarter of 2017, excluding positive impact of currency translation which benefited sales by approximately 3%. Acquisitions positively impacted sales by approximately 4% in the second quarter of 2018 compared to the second quarter of 2017. The Europe/Middle East segment reported an increase in net sales of approximately 14%, excluding the positive impact of currency translation compared to the second quarter of 2017. Excluding acquisition-related sales, Europe/Middle East sales were up about 10.5%. Sales growth was the strongest in Germany, France and Scandinavia. Sales in North America increased approximately 25%, excluding favorable impact of currency translation compared to the levels experienced in the second quarter of 2017. Precision Planting, which was acquired in the third quarter of 2017, contributed about 5% of the sales growth in its seasonally strong second quarter. Increased sales of sprayers, high horsepower tractors and grain storage and handling equipment provided most of the organic growth. AGCO's second quarter 2018 net sales in South America increased approximately 1% compared to the second quarter of 2017, excluding negative currency translation impact. Excluding acquisitions, sales in South America were slightly down compared to last year. Net sales in our Asia/Pacific/Africa segment decreased about 2% (sic) [decreased 1%] in the second quarter of 2018 compared to 2017, excluding positive impact of currency translation and the benefit of acquisitions. Lower sales across most of the Asian markets was mostly offset by growth in Australia. Part sales were approximately $388 million for the second quarter of 2018 and were up about 6% compared to the same period in 2017, excluding the…

Regina, and before we open the call for questions, I'd just like to remind our participants that we'd like to limit them to one question and one follow up. Thank you.

Our first question will comes from the line of Jerry Revich with Goldman Sachs. Please go ahead. Corinne Jenkins - Goldman Sachs & Co. LLC: Hi. This is Corinne Jenkins on for Jerry Revich. I was hoping you could talk a little bit about the production plan you have for the rest of the year. It looks like you've increased that outlook and I was wondering where you're seeing the opportunity to increase production.

Yes. We have increased our production for the second half of the year and it is up mainly in our North American and our European factories. We've also increased some production requirements in South America. As we talked before, we're transitioning to Tier 3 models for all our products in South America and we're building some transition inventory to carry us through 2019 with some of those models. And for that reason, there's been some production increases there as well. Corinne Jenkins - Goldman Sachs & Co. LLC: Thank you. And then can you just talk a little bit about where we stand with used equipment inventories and your order board, especially in North America?

So as we've discussed before, Corinne, it was in North America, where we saw the industry slow considerably over the last four, five years and our dealers saw build up in both new and used equipment. And if you look at where our inventories now have progressed to at the end of the second quarter, they're down about half compared to where they were at the peak. We came into the year with stabilizing used equipment prices, which is very positive in terms of both new and used equipment sales. So, we're heading towards our goal of being right-sized. We still plan, as Andy mentioned, to be under producing somewhere around 8% or 10% this year. We've seen our used equipment, as I said, come down and we're probably still three or four weeks of excess, both on the new and used side. Corinne Jenkins - Goldman Sachs & Co. LLC: Okay, great. Thank you

Your next question will come from the line of Jamie Cook with Credit Suisse. Please go ahead. Themis Davris - Credit Suisse Securities (USA) LLC: Hi. This is actually Themis on for Jamie. Just going back to your order book, I think last time you noted orders being up in the double-digit range in Europe and this time I think you noted it as flat. So curious as to what drove that. And any other numbers you could put around your order book by region, that'd be helpful.

Yeah. Our order book is, as we said, are up double-digit. The largest increases are in North America, in South America. And, as we mentioned before, our European order board's relatively flat. I think we had some very high order board at the end of this period last year because of some new product introductions, which impacted it, as well as when you look at our months of orders, I think it's pretty stable year-over-year for our European business. So we still have a very strong order board, I would say in all our markets at this point in time. Themis Davris - Credit Suisse Securities (USA) LLC: Okay. That's helpful. And then, maybe just a question on your South America margins, are you still confident of being able to get to sort of mid-single-digit margins in the second half of the year?

Yeah. We look for improvement in our margins in the second half of the year. I think in the third quarter, I would say, our margins should be fairly similar to – our target is for them to be fairly similar to what we saw in 2017 in South America and then see further improvement in the fourth quarter from there. So there is a big increase in production that we have planned in the third quarter and fourth quarter and that should help us. We also have some price increases that will be blending in to our results in the second half that should also impact our margins as well. And then we should eliminate some of these one-time or transition costs that we incurred in the first half and that should help our results as well. Themis Davris - Credit Suisse Securities (USA) LLC: Great, thank you. I'll get back in queue.

Your next question will come from the line of Larry De Maria with William Blair. Please go ahead. Larry T. De Maria - William Blair & Co. LLC: Hi, thanks. Good morning. First, question. Just to clarify, I believe you are now down 8% to 10% or under produced by 8% to 10% in North America I think before it was 10%. But just to clarify, are we going to have that cleared up so you can produce to retail demand next year?

Yeah, I think that would be our plan. I think assuming we hit our retails and looking at where the demand is for next year, we should be in pretty good shape and feel comfortable with our inventory levels at the end of the year. Larry T. De Maria - William Blair & Co. LLC: Okay. Great, thank you. And then secondly, I don't know, for Martin, obviously you were given a bonus to stay on for this new transition for the next CEO. Can you maybe let us know where that stands and the plan going forward? And are there incentives like hitting the 10% margin target for you? And is that what your goal would be before you leave?

I didn't get the first part of the question. What was it? Larry T. De Maria - William Blair & Co. LLC: Well, just, so we know you're staying on for a few years. You were given incentives to stay. So, curious -

Yes. The reason for that is that I recently did get some very attractive offer from a big blue chip company, and so the board wanted me to finish my job here, which I promised to do and that is the basis for the incentive. And yes, we talk about the margin situation when we basically (24:13) in December, but my, let's say, if you could call it, masterpiece would be to get there by the end of 2020. Larry T. De Maria - William Blair & Co. LLC: Okay. Okay. Thank you.

Our next question will come from the line of Seth Weber with RBC Capital Markets. Please go ahead.

Hi, guys. This is Emily McLaughlin on for Seth.

Good morning.

Just wondering if you could talk about price/cost during the quarter growth versus net realization, perhaps?

Sure. On our pricing in the second quarter was between 1% and 1.5% and our net pricing when you take out what our material cost increases are, were below 0.5%. So we had some increases in material cost in the second quarter which impacted our margins. As we look forward for the balance of the year, we've had more pricing that again will blend into our results in all markets to try to offset some material cost inflation that we see coming. Our target for the full year, we've said before was net pricing of about 50 to 70 basis points. We're still looking in that range, but they'll likely be more on the bottom end of that range. And that will be offset by the higher production that we've already talked about in terms of our margins. So our margin should be consistent with what we guided previously.

Got it. And then just any sentiment change related to the tariff situation? Are you seeing any customer or dealer angst?

I would say that from a dealer standpoint, there has been concern because of where the crop prices went and all the talk and consideration regarding tariffs. The farm aid program, I think provides some offset to that as well as some recovery in the prices that we've seen in the last few weeks. But I would say that our customers certainly would rather see free trade than farm aid. And so it's not a solution, but it does I think alleviate some of the near term concerns they had.

Got it. Thanks very much. I'll pass it on.

Our next question will come from the line of Andy Casey with Wells Fargo. Please go ahead.

Hey. This is Jorge Pica on for Andy Casey. I just want to confirm really quickly, so all other regions required inventory reductions in Europe, everything right-sized. Can you provide some comments on that?

We have inventory issues in the factories and in incoming goods which have to be addressed and we have projects in place accordingly.

So no planned inventory reduction for...?

Dealer level, as we talked about we want our North America inventories to continue to go down and we have targets to do that this year. Our European inventories are still in good shape and in South America our dealer inventories are down year-over-year and they're in reasonable sales shape as well. So, no plans in other markets to reduce dealer inventories.

Okay. And then I guess, can you just confirm then are all the restructuring supply chain related activities going to be completed in 2018 for Brazil?

Yes I would say so. So all the activities we have with additional resources we brought in to help improve our results and work through this heavy workload of the new products that we are bringing it should be completed for the most part by the end of this year. The improved results obviously will take – we're looking for quarter-over-quarter continued improvement in our results in that market.

That sounds great. Thank you.

Your next question comes from the line of Michael Feniger with Bank of America. Please go ahead.

Hey, guys. Thanks for taking my questions. The first question just on the grain storages in GSI business, what's the outlook for that business in light of the tariffs on poultry and livestock?

We, in GSI, as you point out, have two separate businesses. One is relating to grain storage and material handling of grain as well and the second part is the protein production equipment that a producer of poultry or swine would utilize. And so those two businesses typically are countercyclical to each other and we've been observing that. And this year, as we pointed out, the grain side of the business is starting to come back a little where our sales are up in the grain and material handling sector of the business. And that's similar to what we are seeing as we talked about with high horsepower tractors. So it's kind of, it goes with that side of the business. The protein production equipment has been very good over the last few years and starting to see that kind of pull back. There is some concern among some of our customers about some of these tariffs and where some of their exports can go. Right now, we haven't seen too much impact of that, but it's something that we're keeping our eye on.

Okay. That's helpful. And just my follow-up question, European margins continue to be strong and outperforming. I was just hoping you could give us an update on what you're kind of expecting there in the second half on the back half of the year? Thanks, guys.

Sure.

I think we will go on into the same direction also for the second half of the year.

Yeah. With a little more specificity, third quarter is going to be pretty similar to last year and then we think we'll have some year-over-year improvement in the fourth quarter. So for the full year, we're looking probably up 50 basis points or so, even with, as we've talked about, some increased investment in engineering expense, so all-in-all, a pretty steady outlook for Europe.

Thank you.

Our next question will come from the line of Mike Shlisky with Seaport Global. Please go ahead.

Good morning. And, Martin, AGCO is always blue chip to me.

Yeah, for me as well.

Exactly. So I wanted to start off by asking about your slides, which compares the tractor and combine sales for the first six months of the year for the three major regions. I'm curious as to why you think combines are outperforming tractors so much so far this year. And perhaps related, is anyone trying to get in front of a next model year price increase at all?

Yeah, Mike, maybe the easy high level answer is that the tractor numbers are somewhat skewed by smaller tractors that aren't tied to the row-crop segment. So some of the smaller mid-sized tractors are general economy and kind of dairy, livestock, which has – the diary, livestock piece hasn't been nearly as resilient so far this year anyway or in terms of year-over-year growth as the row-crop segment has. And the combines, obviously, are sold into the row-crop segment. So I think that's probably the biggest reason as you look, especially in North America.

Okay, great. And then, secondly, at this point, we are well into the heavy tractor delivery season by end of July here. So kind of curious, what's your kind of sense on the performance of the Challenger 1000 so far this year in North America. Do you think that has gained any additional share after last year's fairly successful launch?

What we hear from our dealers and customers is really excellent and better than expected. If we would have more capacity, maybe we could even sell more, but I think this is a product which supports our growth strategy in the U.S. We will add to this the new IDEAL range of combine harvesters, which come in as well under the Fendt brand and then we also will add certain smaller tractors, not really small, but below the Fendt 1000 in the area of Fendt 900, Fendt 800, Fendt 700, and so on. That means we want to gain this market from the top and this seems to work very well.

Got you. Great stuff. Thank you.

Our next question will come from the line of Joel Tiss with BMO Capital Markets. Please go ahead.

Hey, guys. This is Elliott Simon on for Joel Tiss. It looks like Asia/Pacific/Africa organic growth turned negative in the quarter from almost 10% last quarter. Can you just give us a little more detail on that and what's shaking out in the region and what we can kind of expect for the backup of the year?

Yes, that was more relating to the timing of shipments. You know there is lot of markets involved there. I think the sales were up in Australia, so that market's going well. Our sales were down more in Asia and I think a little down in Africa as well. Some of these supplier constraints we talked about are impacting the flow of product into some of those markets and so we do expect that the sales will be up in the second half of the year in Asia/Pacific/Africa.

Got you. Thanks. And then also just on the interest expense with the debt extinguishment, what should we sort of expect as your run rate for quarterly interest expense for the reminder of the year?

Yeah, net interest expense should be around $9 million or $10 million a quarter.

Great. Thanks, guys.

That was our final question for today. I'll now turn the conference back over to Mr. Peterson for any closing remarks.

Thanks, Regina. I would just like to thank the participants today and remind them that we are available to handle call for the remainder of the day. Thanks and enjoy the day.

Ladies and gentlemen this concludes today's call. Thank you all for joining. And you may now disconnect.