Greg Peterson - Director-Investor Relations Martin H. Richenhagen - Chairman, President & Chief Executive Officer Andrew H. Beck - Chief Financial Officer & Senior Vice President.

Ann P. Duignan - JPMorgan Securities LLC Jerry David Revich - Goldman Sachs & Co. Jamie L. Cook - Credit Suisse Securities (USA) LLC (Broker) Joe J. O'Dea - Vertical Research Partners LLC Andrew M. Casey - Wells Fargo Securities LLC Seth R. Weber - RBC Capital Markets LLC Lawrence De Maria - William Blair & Co.

LLC Robert Wertheimer - Barclays Capital, Inc. Tim W. Thein - Citigroup Global Markets, Inc. (Broker) Nicole DeBlase - Morgan Stanley & Co. LLC Steven Michael Fisher - UBS Securities LLC Joel G. Tiss - BMO Capital Markets (United States) Vishal B. Shah - Deutsche Bank Securities, Inc. Richard Leigh Haydon - Tipp Hill Capital Management LLC.

Good morning. My name is Kelly, and I will be your conference operator today. At this time, I would like to welcome everyone to the AGCO 2015 Third Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Thank you.

Greg Peterson, Head of Investor Relations, you may begin your conference..

Thanks, Kelly, and good morning. Welcome to those of you joining us on the call for our third quarter 2015 results summary. We will refer you to a slide presentation this morning, which is posted on our website at www.agcocorp.com. The non-GAAP measures used in the slide presentation are reconciled to GAAP measures in the appendix of this presentation.

We'll make forward-looking statements this morning, including demand, product development plans and timing of those plans, acquisition, expansion and modernization plans and our expectations with respect to the cost and benefits of those plans and timing of those benefits, and our future revenue earnings and other financial metrics.

We wish to caution you that these statements are predictions and that actual events may differ materially. We refer you to the periodic reports that we file from time to time with the Securities and Exchange Commission, including the company's Form 10-K for the year ended December 31, 2014 and subsequent Form 10-Qs.

These documents discuss important factors that could cause the actual results to differ materially from those contained in our forward-looking statements. A replay of this call will be available on our corporate website.

Pushing ahead, on the call this morning with me are Martin Richenhagen, our Chairman, President and Chief Executive Officer; and Andy Beck, our Senior Vice President and Chief Financial Officer. Martin, please go ahead..

Thank you, Greg, and good morning to those of you joining us on the call. My comments start on slide three. You will find a summary of our third quarter results. AGCO's performance demonstrates our ability to deliver solid results, despite difficult market conditions.

During the third quarter, our focus remained on operational execution and customer service. In response to softer market conditions across the globe, we continued our efforts to control costs and manage our production schedules to address our company and dealer inventory levels.

As a result of weaker market demand, lower production levels and currency headwinds, AGCO's sales were down approximately 19% compared to the third quarter of 2014. Despite the lower sales level, our gross and operating margins held up well compared to the prior year.

Our cost reduction efforts are being balanced with our commitment to customer support and maintaining an aggressive sales and marketing presence. The quarter was also highlighted by strong execution on our inventory reduction plans. Inventories were lower by over $305 million on a constant currency basis from September 30, 2014 levels.

Our balance sheet remains in very good shape and is enabling us to continue to return cash to our shareholders. Now, slide four details industry unit retail sales results by region for the first nine months of 2015.

Another year of robust global harvest is putting pressure on commodity prices, and more challenging farm economics has reduced demand for agricultural machinery, especially for larger models.

Industry retail sales in North America declined with the largest drop in high horsepower tractors, sprayers and combines, partially offset by more stable demand for small tractors due to more normal conditions in the region's livestock sector.

Industry unit retail sales of tractors in Western Europe were down about 8% in the first nine months of 2015 compared to industry sales in the same period last year. Difficult conditions for dairy producers and low grain prices impacted market demand across Western Europe.

Industry retail sales in South America were extremely weak, resulting from the political uncertainty and depressed general economy in Brazil as well as the related changes to the weak Brazil government financing programs. AGCO's 2015 production schedule for factory production hours are shown on slide five.

We closely managed the seasonal build in our company and dealer inventories during the first nine months of 2015. On a year-over-year basis, production hours were down 14% in the third quarter of 2015 and contributed to the significant decline in our company inventory compared to the third quarter of 2014.

The lower production also contributed to weaker earnings compared to last year. We expect fourth quarter production to be down about 10%, resulting in full-year production that is expected to be lower by 16% to 18% – about – compared to 2014 levels.

The 2015 production mix will also be weaker than last year, with more significant reductions in higher horsepower equipment. Globally, our order board for tractors was down about 10% as well at the end of September compared to September 30, 2014. Orders were up in Europe, down in North America and down more significantly in South America.

I will now turn the call over to Andy Beck, who will provide you more information on our third quarter results..

Thank you, Martin, and good morning. I will start with a look at AGCO's regional net sales performance for the third quarter and first nine months of 2015, which are outlined on slide six.

The weaker euro and Brazilian real resulted in adverse currency translation, which negatively impacted third quarter net sales by 15% and year-to-date net sales by 13.5% compared to the same periods last year. Weaker industry demand also pressured sales across all our regions for the first nine months of 2015.

For the third quarter of 2015, Europe/Africa/Middle East segment reported an increase in net sales of approximately 4%, excluding the negative impact of currency translation, compared to the third quarter of 2014. The timing of new product introductions compared to last year contributed to sales growth despite the industry decline.

Sales growth in France, Germany and Spain was mostly offset by declines in other markets. North American sales were down approximately 4%, excluding the unfavorable impact of currency translation, during the third quarter of 2015 compared to levels experienced in the third quarter of 2014.

Lower sales of combines and sprayers were partially offset by growth in protein production equipment. AGCO's third quarter net sales in South America were down approximately 24% compared to the third quarter of 2014, excluding negative currency translation impacts.

Significant sales declines in Brazil were partially offset by growth in other South American markets. Net sales in our Asia/Pacific segment were down about 4% in the third quarter of 2015 compared to 2014, excluding the negative impact of currency translation.

Lower sales in the Australia, New Zealand market and Japan were partially offset by growth in China. Parts sales were $329 million for the third quarter of 2015, which were up about 5% compared to the same period of 2014, excluding the negative impact of currency translation.

Parts sales were up modestly for the first nine months of 2015 compared to the same period last year on a constant currency basis. Slide seven details AGCO's sales and margin performance.

Our ongoing cost reduction efforts targeted at labor productivity and material costs helped to minimize the negative impacts of lower levels of demand and production on our third quarter operating margins. On a consolidated basis, third quarter adjusted operating margins declined only 60 basis points compared to the third quarter of 2014.

In addition, excluding the benefit of the 2014 reversal of previously-recorded stock compensation expense, the 2015 third quarter operating margins were higher compared to the third quarter of 2014. The Europe/Africa/Middle East segment reported an increase in operating margins of over 200 basis points from low levels in the third quarter of 2014.

Slightly higher sales on a constant currency basis, operational efficiencies, lower SG&A expenses and higher margins on new product sales all contributed to the margin improvement. North America's operating margins were 8.3% in the third quarter of 2015, up over 100 basis points compared to the third quarter of 2014.

The benefits of improved mix, cost control actions and favorable transactional currency impacts more than offset the impact associated with lower sales and production. In the South American region, weaker margins resulted from lower sales and production levels, as well as material cost inflation.

Margins in the Asia/Pacific region were negatively impacted by startup costs associated with our new factory in China. AGCO's third quarter results also benefited from lower interest expense, net, and higher other income compared to the third quarter of 2014.

Interest expense, net, was improved over the prior year as a result of lower interest rates on debt and higher interest income. Other income was improved due to lower discounts on sales and receivables, as well as the generation of foreign exchange transaction and hedging gains compared to losses in the prior year.

Slide eight details GSI sales by region and by product. GSI sales were down about 5%, excluding currency impacts, for the first nine months of 2015 compared to the same period in 2014. Sales declines in Eastern Europe and China were partially offset by growth in South America and in the North American protein production segment.

Demand for grain storage equipment in North America slowed considerably in the first nine months of 2015. We continue to expect GSI sales to be down modestly in 2015 compared to 2014, on a constant currency basis. Slide nine looks at our depreciation and capital expenditure trends.

After completing a number of major productivity projects and making heavy investments in new products over the last few years, we reduced our CapEx program for 2014 and 2015. For the full year of 2015, we expect our CapEx to be below 2014, primarily due to the impact of currency translation.

We continue to make strategic investments to refresh and expand our product line, upgrade our system capabilities and improve our factory productivity. Slide 10 addresses AGCO's free cash flow, which represents cash used in operating activities, less capital expenditures.

Our seasonal requirements for working capital are greater in the first half of the year and, thereby, resulted in negative free cash flow for the first nine months of 2014 and 2015. The benefit of our inventory reduction efforts that Martin mentioned earlier is evident on this slide.

Our lower production schedules reduced the seasonal build of working capital and our use of cash during the first nine months was lower by nearly $370 million compared to 2014. In 2015, we planned to continue to invest for long-term growth and profitability improvement, as well as make additional investments in new products.

After covering spending on those strategic investments, we're targeting significantly improved free cash flow for 2015. At the end of September 2015, our North America dealer months' supply on a trailing 12-month basis was higher for combines, in line for tractors and hay equipment compared to last year.

At the end of the third quarter, we were at 6.5 months for tractors, 5.5 months for hay equipment and nine months for combines.

Losses on sales receivables associated with our receivable financing facilities, which is included in other expense, net, were approximately $4 million during the third quarter of 2015, compared to $4.8 million in the same period of 2014. We continue to make cash returns an important component of our long-term capital allocation plan.

In the third quarter, we continued to repurchase shares under a $500 million authorization, which is expected to be utilized through 2016. Over the first three quarters, we repurchased shares at a rate of a little over $60 million per quarter. We intend to increase the rate for the fourth quarter.

The share repurchases and our dividend are expected to be funded with operating cash flows. Our outlook for 2015 for the three major regional markets is captured on slide 12. Our forecast anticipates softer market conditions in all three regions.

In the United States, the USDA estimates that farm income will be down again in 2015, and the equipment market continues to weaken through the first nine months of 2015. As a result, we have lowered our North American forecast to be down about 10% from 2014 levels.

We expect softer equipment demand with row crop equipment expected to be down more significantly and lower horsepower equipment expected to be relatively flat. We also lowered our forecast for the South American region, and now expect industry demand to be down about 25% from 2014 levels.

Political uncertainly and economic weakness is negatively impacting demand in Brazil. Uncertainty on the funding levels of the government-subsidized financing programs and unfavorable economics for sugar producers in Brazil are also expected to contribute to weaker South American industry demand in 2015 compared to 2014.

Lastly, we expect a decline in Western European market impacted by lower dairy and cereal prices that are reducing farm income in 2015. Slide 13 highlights the assumptions underlying our 2015 outlook. Our 2015 forecast assumes softer industry demand across all regions and a sales decline ranging from 22% to 23%.

Our plan includes price increases of about 1.5% on a consolidated basis, and currency exchange rates – we expect currency translations to negatively impact sales by about 13%. In 2015, engineering expenses are expected to run about 3.8% of our sales.

We also expect lower sales and production levels as well as a weaker sales mix to negatively impact gross margins. These negative impacts are expected to be partially offset by the benefit of new products, our productivity and purchasing initiatives, and our restructuring actions.

We are forecasting adjusted operating margins ranging from 5.3% to 5.5% in 2015, and are targeting an effective tax rate of approximately 30% to 32% for 2015. Slide 14 lists our selected 2015 financial goals.

We are projecting 2015 sales to range from $7.5 billion to $7.6 billion with softer market conditions and the negative impact of currency translation reducing both sales and earnings. These factors should be partially offset by pricing and modest market share gains.

We expect gross and operating margins to be down from 2014 levels, reflecting the negative impact of lower sales volumes and a weaker sales mix. The benefit of our cost reduction efforts and a lower tax rate are expected to be partially offset by the volume-related impacts.

Based on these assumptions, we are targeting 2015 adjusted earnings per share of approximately $3.20. We expect capital expenditures to range from $250 million to $275 million and free cash flow to be approximately $300 million. And with that, operator, we're ready to take your questions..

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

Hi, good morning..

Morning, Ann..

Good morning. First, can we talk a little bit about GSI? If I look at grain storage year-over-year, it looks like that business is down about 15% from a revenue perspective.

Can you give us a little bit more color on the North America grain storage business? I mean – and I know you said it was down significantly, but can you quantify how much it was down in the quarter and why wouldn't we expect that to get worse before it gets better?.

Well, Ann, what's happening on the grain storage side in North America is we're seeing that significant weakness on the on-farm storage part of the business. That's kind of being in line with what we're seeing on the row crop tractor/combine, where farmers are just delaying purchases or new investments.

What has held up better is what we call the commercial side of the grain storage business; that's selling to the Cargills of the world or in ports or grain elevators and those types of operations. So, our overall grain storage business in North America, and I'm going to talk about year-to-date, is down about 7% or 8%.

And our protein business, which in North America is up mid-teens – so overall, our sales in North America are relatively flat year-over-year through the first nine months of the year.

Looking forward, I think what's going to happen, still, is that we'll see weakness on the grain storage side, particularly on the on-farm side, as it looks like the demand patterns are going to mirror what's happening on the tractor/combine part of the business as well..

Your next question comes from the line of Jerry Revich of Goldman Sachs. Your line is open..

Hi, good morning..

Good morning, Jerry..

Hi, Jerry..

I'm wondering if you could talk about what you're seeing out of the other major markets for you in South America outside of Brazil; it looks like your organic volume performance was better than shipments in Brazil. Can you just flush out for us what you're seeing in Chile and Argentina and the go forward there? Thanks..

Well, the strategy for those South American markets outside Brazil is, of course, to take advantage of the very favorable low real, so the favorable exchange rates, which makes us more competitive in exports. And this is what we see this year, and we also try to leverage this for the remainder of the year.

Greg, do you want to comment?.

Yeah, absolutely. So, Jerry, the biggest export market outside of Brazil, or the market that we ship the equipment from Brazil to, is Argentina. And as you're aware, the last few years they've had import restrictions that has really reduced sales in that market. This year, though, there has been some increase to those import and import allowances.

And so, this year the market for us – or the – our sales in Argentina are up almost 20% and up actually more than that in some of the other South American markets; so, significant increases for sure..

Your next question comes from the line of Jamie Cook of Credit Suisse. Your line is open..

Hi, good morning. A couple of questions. One, on the order book, I think you noted again that Europe was up.

If you could just – I mean, does that give you increased confidence? Has your backlog improved at all, and what did you see on a sequential basis? And then, I guess, Martin or Andy, just broadly, you know, can you talk about sort of where dealer inventory is relative to where you want it to be and does the excess inventory in the channel sort of, you know, shift into 2016, which I think is the market's view at this point.

But if you could give us a little color on how much of a headwind that is to 2016 and whether or not, given what you're seeing in the markets, do you – should we expect – are you contemplating another restructuring of size? Thanks..

Okay, Jamie, looking at the orders in Europe, if you look at the Europe/Africa/Middle East order backlog, it's up over 20% versus where we were a year ago. But if you look at just Western European market, it's just modestly up. So, most of that order growth is in markets like Africa, Middle East.

So, the Western European market, I think, has been very steady; it's been down all year, relatively constant rates. And that's what we expect to continue for the balance of the year. In terms of dealer inventory levels, we're making some progress. Our North America dealer inventories are down about 10% compared to where we were a year ago.

Obviously, in the market, on the large equipment is down at a higher percentage than that, so that would indicate that we still have more work to do. Our target for the end of the year is to continue to have that dealer inventory get lower.

And the end of the year is a big retail period for our business in North America, and we'll have to look and see where we are at the end of the year to see how that impacts 2016. So, I would expect that we will have some more work to do in 2016, but the extent of it is still yet to be determined..

Jamie, when it comes to restructuring, I do not hope that we have to do something major 2016. We'll do a little bit here in North America. We offered another early retirement program, which could affect about 150 people. So the question is how many will take it. I guess maybe half of those.

So, we try to run the company with, let's say – very carefully in order to make sure that we stay very cost focused..

And your next question comes from the line of Joe O'Dea, Vertical Research Partners. Your line is open..

Hi, good morning.

With the outlook for a little bit more work to do on North America inventories, and I think the slides show that production should be flattish 4Q versus 3Q and I think some seasonal element of that, but could you talk about, in general, your comfort level with sort of current production rates and the extent to which you think those still need to come down a little bit, or have you made most of the move there and now it's a matter of just letting the inventory work itself down?.

No, we will cut production levels, also, in the fourth quarter..

Yeah. I think – right. As we indicated, our production levels will be down year-over-year about 10%, and I think we've pretty much set our production for the balance of the year.

There could be some, I would say, minor changes from that, depending on what happens in the market in the fourth quarter, but for the most part we're now in a position where our production's set and it's a matter of what our sales activities are, what our retail sales are for the balance of the year; and that's where the real focus is at this point..

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

Andy?.

Martin, can you hear me now?.

Yeah, yes..

Yes, yes..

Sorry about that..

That's technology..

Yeah. I still have to learn how to use it, I guess. Anyways, couple of questions, can you update us on what you're hearing about the potential changes to FINAME? And then, second, on cash flow, there is an implied acceleration in CapEx during Q4, and to get to the $300 million in free cash guidance, I understand Q4 is always seasonally strong.

What sort of inventory reduction or working capital benefit do you expect?.

Well, on the CapEx, you're right. We do typically spend more in the fourth quarter. And so, that should be consistent with what we've done in the prior years.

On the inventory side, because we did not increase seasonally our inventory as much as we did in the prior year, you won't see as dramatic a reduction in the fourth quarter; but we will reduce – our working capital comes down in the fourth quarter and our inventory levels come down as we wind down the year, and that should be consistent.

What we're looking for is our total inventories year-over-year on a constant currency basis to be somewhere $100 million and $125 million lower than a year ago. And I'll let Greg discuss what's going on in the Brazilian financing program..

Right, Andy. So the announcements that were made last week – the numbers that were thrown out were for all the commercial programs that they have; so that's trucks and construction equipment and farm equipment. And the numbers that you saw, $50 billion, was the original authorized amount. It got cut to $19.5 billion.

Some of that isn't – maybe the headline is a little worse than reality in that only about $7 billion has been funded year-to-date. So they're just cutting those budgets to kind of to back into what the run rates are today. Right now, our going-in assumption for the rest of 2015 is that interest rates and down payment requirements stay the same.

Throughout the year, the government has slowed the processing of loans to kind of regulate the amount of funding that's being met. So our expectation is that'll continue through the end of the year. We're going to monitor it very closely.

Right now, our assumption for 2015, though, is that we'll be able to fund – or that the financing program will fund our estimated industry sales. So that's kind of where we are..

When it comes to the slowdown in the – basically, in the process as such, together with our peers we really lobby hard in order to get that changed, because this is not acceptable. We talked to the Secretary of Agriculture, who has no understanding for the problem so far.

We talked to the government, who does not understand how important farming is for Brazil, and this is unheard of. And it's not okay that the process, let's say, after the money has been allocated, is going as slow as it is right now. I think they have political intentions. They want to keep as much money in their pocket as possible.

It's a lousy government. It doesn't function. It's dysfunctional, and we need to speak up and we need to basically get our voice heard; and that's what we are doing. We went to Brasilia. We talked to all relevant people, but this is a very, very difficult time in Brazil..

Your next question comes from the line of Seth Weber of RBC Capital Markets. Your line is open..

Hey. Good morning, guys.

I guess, first question, can you just update us on what you're seeing on used equipment inventories for AGCO and, I guess, maybe relative to the industry, and what you're seeing on used equipment pricing? And then, I had a follow-up question on the GSI business if you could?.

Yeah, sure. Our used inventory is coming down. It's down in relation to what I discussed or – actually, a little better than what I discussed on our new inventory. So, we're making progress there, but obviously the market is weak and – especially, on the large equipment. And so, it's just a matter of time to watch that inventory move its way down.

That certainly continues to impact the market as dealers do not want to increase their used inventories at this time. So, it's something that we continue to monitor. I think we're probably in maybe better shape than the overall industry just because of our position in North America, and we do still see it as an issue for the overall industry..

Is pricing holding, or is it, I don't know, down low single-digits, mid-single digits, something like that? Is that about right?.

Yes, it's been down modestly. We haven't seen any recent major changes in the used pricing..

The reason is a used Massey Ferguson tractor is so better as a new John Deere, so, therefore, we don't suffer as much..

Understood. If I could just follow-up with a GSI question, the North American margins were actually better than what we were looking for just across the board.

Is there any granularity you could share with respect to GSI margin? Grain storage versus the protein business, are they roughly comparable? Is one better than the other? Is there any way that we can help – you could help frame that for us?.

Yeah. So in South and North America, the products that we sell through our GSI business are typically a little more sophisticated. And so, the margins in North America are typically a little higher than what you would find outside the U.S.

And when you're looking between the grain storage and the protein production, I'd say that they're pretty comparable. Grain, in some cases – the bigger grain installations might be a little higher, but they're both very attractive margins..

Your next question comes from the line of Larry De Maria from William Blair. Your line is open..

Hi, thanks. Good morning. Two questions....

Hi..

Hey.

You mentioned that (32:55) not to do any major restructuring next year, but if volumes are down again, you know, 10% or 15%, and thinking maybe North America and Brazil, how would we think about decremental margins and your ability to take out more costs next year? And secondly, could you just help out – European registrations were down in most markets in the quarter, even sharply in some markets, but you posted a nice organic growth in the quarter.

So, can you give us a little color as to where that growth is coming from?.

Yeah, first I want to make some comments on the restructuring. I think, so far, we reacted early and in a very radical manner. So, you should assume that we will do something similar, if needed, in 2016. But I still believe we don't have to do major things directly, but will be adjusted anyhow, automatically.

So I would just suggest that you trust that we master this kind of situation..

On the decremental margins, Larry, our assumptions – and again, we think about it typically more on a constant currency basis, but our decremental margin assumptions are – range from probably low 20% more so – low-20%s to mid-20%s in South America to, in Europe, probably upper 20%s or low 30%s.

So depending on the mix of the products that are in decline, you'll see varying rates of decremental margins; but those are the assumptions that we typically think about, and – again, keeping currency constant. And that's one of the things this year as you look at our margins.

From a decremental basis, the currency movements have definitely influenced those. So, when you look at the underlying margins, so they're typically in that low 20%s to low 30%s range..

And you had one last question Larry?.

No. Two..

Yeah. Okay. Operator, we'll go ahead..

Your next question comes from the line of Robert Wertheimer of Barclays. Your line is open..

Hi, good morning, everybody. My first question is on Brazil margins, and you just alluded to it.

It would seem with the rapid – well, continued rapid depreciation of the real that importing some of the componentry that you might – I know you produce locally, but I assume there is a decent portion that's imported – would raise the local cost, and yet your margins were pretty good.

So, are you able to get local pricing? If there is such an impact as I've described, is that a quarter or two ahead? Are we through the worst of it? Maybe you can comment on that situation..

I just want to make a comment before I hand over to Andy on our factory. So we have several factories in Brazil, a very strong footprint and all products are localized, so we don't depend on imports so much..

I didn't mean, Martin, the finished product, but I didn't know how much componentry and whatnot..

No, no. Components as well; you can only localize if you buy the components locally, okay..

Yes. To qualify for the FINAME program in Brazil, you have to have at least 60% local content; and they're actually making those rules more stringent going forward. So you must be a local manufacturer. You are right that there are some components and some volume that we're importing.

Actually, the amount of imports had gone up over the years because we were able to get some content out of developing markets, like India or China, that were cheaper than Brazil. What our purchasing teams are doing right now is resourcing some of those components back locally. So, we think, for the most part, we can cope with the change in the real.

It does have some impact on the imported content, but also we are exporting tractors and production out of Brazil into other markets. We export them into the other South American markets. We export them into markets like Africa, Middle East and some other markets that like – that use small equipment.

And so, for that reason, actually, we're a net exporter out of Brazil, and so the weakening in the currency has some favorable impact for us..

That explains it; perfect. If I can ask a quick follow-up on the earlier question on financing, one of the summaries mentioned the PSI funding cut-off was changed from December 30 to October 31. I don't know if that has an actual meaning on the ground or what that meant, if you're able to clarify that if you saw it..

Yeah, Martin mentioned that we're working with various government agencies to get that clarified and to improve that. But also, Rob, there is another program in Brazil that you're aware of, (37:46), that is available when and if the PSI program is cut off.

So right now our expectation is there won't be a gap in funding, but obviously we'll watch that closely..

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

Great. Thank you. And, Martin, there's some good billboard material for some of the folks in Moline earlier. Two questions on EMEA (sic) [EAME], first just the margin expectations in light of the total company guidance coming down a bit.

Do you still feel, Andy, that you see the normal kind of 4Q margin acceleration to get you into the same ballpark as where you finished 2014? And then, the second part was just overall sentiment in Western Europe looks like it's picked up in – here in recent months, and even in Eastern Europe, but they've called out German dealers as talking about higher levels of both new and used machines.

So I'm just curious if there's something – especially, in light of the show coming up in a couple weeks, if there is anything kind of particular there? I know it's obviously a pretty important market for Fendt, so maybe you can just comment on Germany, specifically. Thanks..

Yeah, Germany actually is down this year, and I'm not sure how Germany will develop. We will know more, as you say, after we saw dealers and customers on the show. So the mood in Germany is not really great compared to other European countries..

And then on your question on the margins, we have not changed anything relating to our assumptions on Europe/Africa/Middle East segment and we do continue to see that the margin should be relatively close to what we performed last year in terms of overall operating margins in our Europe/Africa/Middle East business..

Your next question comes from the line of Nicole DeBlase of Morgan Stanley. Your line is open..

Yeah, thanks. Good morning..

Good morning..

So, my first question is around North America margins. So they were really strong this quarter. You guys saw 130 bps of expansion even though the revenues were down. I know you highlighted FX and mix, but I thought maybe you could dig into that a little bit and talk about the sustainability of that result into the fourth quarter.

And then, my second question is just if you guys have any more color around the volume of buybacks that you're expecting in 4Q since you said that you'll be accelerating the program..

Sure. On the margins, we did have a pretty good result here in the third quarter. There was a benefit from foreign exchange of about 1% on our margin. So, that helped offset some of the impacts of the – within our factory costs associated with the lower production, and so that was the main reason why we're up. And then, the mix is much better.

It's the best quarter – or one of the best quarters for our GSI business, which, as Greg highlighted before, is very good margin. As you move into the fourth quarter in North America, that is the weakest quarter for GSI. And so, we lose a lot from a mix standpoint.

And so our margins will come down substantially here in the fourth quarter compared to what we saw in the third and compared to what we had a year ago, because we have lowered production further to compensate for some of the industry weakness and that is going to affect our margins in the fourth quarter..

When it comes to the share buyback, we had discussions with some of our major shareholders and we basically agreed to the idea to accelerate the program. We couldn't do that – or we can't do that at any time because we have windows we have to reward. And, therefore, we will do that in the fourth – in the next quarter..

Okay. Thank you..

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

Thanks. Good morning. I know it's a little bit too early for 2016 guidance, but I just want to get a sense of the impact of your restructuring actions. What kind of market....

We don't talk about 2016 during that call. We will be in New York in December and talk about next year..

Right. But I was just kind of curious about what kind of market conditions you think....

Yeah. We don't talk about 2016. And understand, I'm curious as well, but let's wait till we put the plan together..

Okay. Fair enough. So I guess the other question would be coming back to Europe. Wondering if you can just talk a little bit more about what really did drive the European growth in the quarter and how sustainable it is. It sounds like it wasn't Germany. I know you mentioned some new products.

Do you have an extensive pipeline there that can keep that going? Just curious, what were the real drivers of Europe and how sustainable is that growth?.

Sure. You have to kind of first go back to what third quarter looked like a year ago. It was the quarter where we started to make rapid adjustments to production and sales levels to respond to the declining industry. And so, we had some extended production shut downs a year ago in Europe.

And actually, even though we've talked a little about Germany being weaker, our – for instance, our German Fendt facility, the production was actually up this year versus last year, just modestly. And so, for that reason, we saw some sales growth in some of our brands because of what we did a year ago.

Secondly, we had, last year, some really slower sales because we were transitioning to some new Tier 4 products that were going to be released later in the year. So it was a relatively weak sales quarter for us.

And this year, we have the full benefit of those new products in our results, so we can definitely see margin improvement and sales growth associated with those products that were not in our results a year ago..

So, I mean, is that enough to kind of sustain it for multiple quarters going forward, or do you need to see the kind of market conditions improve?.

Yeah. No, that was somewhat of an unusual situation. We kind of get back to normalized sales conditions in the fourth quarter with the comparable products being sold in both quarters. And so, I would expect that you're going to see our sales be down and be down in relation to what we're giving from an industry perspective of the decline..

Okay. Thanks a lot, guys..

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

Hey, guys, how's it going?.

Hey, good morning, Joel..

So far, so good; hanging in..

Well, that's good. Because that's all you can ask for. So, a lot of my questions have been answered. But before, Larry asked about the capacity utilization rate and I was curious about the answer to that.

And I guess we've gotten a lot of the pieces about really what's accounting for your much better resiliency in earnings and margins and all that during this cycle versus past cycles, but if there is anything else that we've missed on that front....

No, what I – I think the summary is pretty much that, one, we could deliver above guidance and above consensus. And then, second, we slightly raised the guidance for the reminder of the year, which is also good news.

Compared to our peers, I think we are, as I said, hanging in as – you might believe that we really try very, very hard to perform as well as possible. And I think it shows, also, how much we have changed the footprint of the company in previous years; and now imagine markets come back. So, we need shareholders who have a little bit of patience.

And if you're in for a little longer run, I think we will please our shareholders as soon as the markets come back..

And capacity utilization?.

Well, this is a question for whom? Greg, to you..

Yeah, so obviously, Dave, the utilization varies pretty significantly across our factories. One of the things that's consistent is that we've gone to single assembly shifts in all of our plants.

The good news is that over of the last 5 years to 10 years, we've made some significant improvements – significant investments in our plants such that we're able to operate more efficiently. A big example of that is in Germany; have taken a lot of cost out of the Fendt plant as a result of automation and some improved management and software.

So, we're probably closer to the two-thirds, 60% to 70% of capacity utilization, assuming these single assembly shifts. And, of course, some of that is dependent upon our supply chain and how timely we can get components, but probably in that range, Joel..

All right. Thank you..

Your next question comes from the line of Vishal Shah of Deutsche Bank. Your line is open..

Yeah, hi, thanks for taking my questions. So, I wanted to just understand the tax rate. You guys have done a good job in cutting tax rate over the last year.

Can you help us understand the contribution from regional mix versus some of the structural improvement and how much more runway you have to improve tax rate going forward?.

The tax rate is basically dependent on, as you say, the regional mix of profitability, and as our profitability's come down, particularly in our North America region – the U.S. tax rates are one of the – some of highest in the world, as you probably know. And so, that's allowing our rates to come down. So, that's the main driver of the rate decline.

So, the rate going forward will be very dependent on the mix of profitability in the future..

And the GSI business, you mentioned the commercial GSI segment is doing quite okay.

What kind of visibility do you have on that segment? Are you seeing strong orders from that part of the segment and do you think that this kind of activity continues into 2016?.

We don't really get a lot of visibility of GSI from an order backlog standpoint. Their order backlog's maybe one months to two months. And as we've said, that side of the market's held up better than the on-farm piece, but it's down as well and we're seeing weaker demand than a year ago in that segment as well..

Your next question comes from the line of Richard Haydon from THC. Your line is open..

Good morning. Most of the questions have been answered, so couple of small questions.

What created the $12.1 million swing in other income in the quarter?.

Sure. As we've said in our comments, there was a number of things, some are lower discounts on sales of receivables as our sales go down. We were selling fewer receivables, and so those costs come down as well. That was a portion of it. And then, we always have some level of foreign exchange transactional gains or losses in any quarter.

A year ago, they were losses and this year they were gains. And so, those are a little unpredictable and not something that you can count on, but they were gains this quarter versus losses and that creates that sizable swing in that line item on our income statement..

Thank you..

And there are no further questions at this time. I turn the call back over to Mr. Peterson..

Thank you for your participation this morning. We appreciate your interest in AGCO. And for those of you that have follow-up questions, I encourage you to follow-up with me later today. Thank you..

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