AGCO Corporation (AGCO) Earnings Call Transcript & Summary

All right. Good morning. This is Tami Zakaria, U.S. Machinery, Engineering and Construction Analyst here at JPMorgan. It is my pleasure to introduce to you the team of AGCO. We have CFO, Damon Audia, and we have Andrew Sunderman, who is the Head of PTX Trimble. I will get started with some questions, but we will also take questions from the audience towards the end. So if you have a question, raise your hand, we'll get a mic to you. And if anyone wants to submit a question online, you can also do that. you can submit it via the questions tab and then I can pose the question to the team for you. So with that, Damon and Andrew, welcome.

Considering the tech and media focus of the investors here, could you provide a brief introduction to the company and specifically your goals around Precision Ag, so we can get the conversation started?

Sure. Yes, I'd be happy to. First of all, thanks for having us here. So maybe a little bit about AGCO. So AGCO is a global leader in manufacturing, engineering and distribution of agriculture equipment and Precision Ag technologies. So we are a business that focuses on serving farmers around the world with the latest in machinery technology as well as Precision Ag technologies that are distributed through a couple of our core brands being sent Massey Ferguson and Valtra on the equipment side, and our leading brands on the technology side of PTX Trimble and Precision Planting. So we're a multi-brand company that really looks to serve farmers with industry-leading smart farming solutions for all types of farmers in all phases of what we would call the crop cycle. AGCO plays in the major markets around the world with our predominant markets in Europe, North America and South America and really look to utilize a strong dealer channel in those markets to distribute our products, both from the sales and the support side for farmers that we enjoy a nice business with working, to really transform the food production and the crop cycle from an automation standpoint and be more efficient, more effective in the agriculture practices that farmers partake in around the world.

Awesome. Since tariffs are still top of mind, believe it or not, how does tariffs impact the PTX Trimble side of the business? Do you outsource manufacturing of some of the hardware and retrofit kits to some other countries like maybe China or somewhere else? Basically, where do these hardware components come from?

Sure. Maybe if I could, maybe I can speak a little bit to the technology business first, and I can then talk about how we get those products -- how we source those products. So our technologies business really focuses around the precision agriculture technologies that automate the functions that the machinery does and/or the decisions that the people operating those machines need to make. Automating is a key part of the task for production agriculture today is there's thousands and thousands of decisions that our farmers must make as they're operating in the field and planning to operate in the field. So our technology solutions consist of both hardware solutions that go on the machine to automate either manual adjustments or automate on-the-go adjustments that happen in real time as those infield operations are completed. It also includes a series of software capabilities, either on the machine or back off -- what we call back office solutions that allow our farmers to plan, monitor and analyze all aspects of the operations. And so our precision ag portfolio is quite broad in its offering for both hardware and software, as well as for those familiar with the Ag space, our precision ag technologies are arguably the broadest portfolio around the crop cycle. So from planning, planting, the fertilizer application, spraying and ultimately when the harvest processes that our farmers partake in. As we speak to tariffs, certainly, tariffs have had an impact on our business as we operate around the world. We do a good bit of our own manufacturing. That's part of one of the things that we think is important to us is not only do we develop and design the products but we also take on different levels of manufacturing in some cases, making everything down to the -- building the ECUs that we use in our products, the sensors and certainly some of the harnessing that go into our products. Even though we do a portion of the manufacturing ourselves, there's still a large portion that we outsource. And from what we outsource, we do bring those in -- we have a number of U.S.-based suppliers, but we also bring those in from some major supply countries of Canada, Mexico, Thailand, Taiwan and some of our products coming from China as well. As we look at the impact that we have, we certainly do have some exposure because of these tariffs, although it's something that we continue to monitor every day. Our team has done a really nice job of working on ways to mitigate these tariffs as we navigate these changing times. I mean one of the things that we have in advantages is with our Precision Ag portfolio, we have a broad distribution footprint both for ourselves and for our dealers. And so we've been able to mitigate some of these impacts of tariff by working with our suppliers to distribute these to our different operation centers around the world, and getting those products to the end point of sale rather than routing through the U.S. specifically. We also have done some in-sourcing or resourcing bringing some of the products, especially around harnessing and some ECUs in-house for our own development as well as looking at some of our resourcing or dual sourcing with our suppliers here in North America. And lastly, we have taken certain pricing actions where necessary and we'll continue to do so as needed. But one of our key goals is that we do look to minimize the risk to both the business and to our farmer customers as we know that farmers are also experiencing the impact of tariffs. And so farmers certainly more on the distribution of their products and sale of their products as they look to get those into a very global market themselves. So in summary, we certainly see an impact, but I think our team has done a really nice job to mitigate those through a number of different avenues that we have at our disposal.

Understood. So let's talk about PTX Trimble, the recent JV you formed. Just to level set, who are the main competitors? And more importantly, how do you define that TAM for PTX Trimble? Because I know one of your bigger competitors came out with a TAM number a couple of years ago, a few years ago. So how do you approach the TAM of PTX Trimble?

Yes. So maybe just to speak to our competitors. There's maybe kind of 2 different types of competitors that we could look at. The first would be your large traditional equipment companies, similar to what AGCO's traditional business has been with the core brands of Fendt, Massey and Valtra. And these are competitors that their primary business is in the sale of equipment. But certainly, as farmers look to have a more technology-enhanced business, these equipment manufacturers have added more technology into the design of their original equipment. There's also been this whole range of technology-specific companies. The Ag tech market has been really a hotbed over the past couple of years with early-stage startups, new entrants into the market, working to solve different individual challenges that farmers face. And so we kind of have these 2 competitors, 2 competitive markets that we work with. As we speak specifically to some of the technology side, competitors would range from the likes of folks such as Topcon, there's Raven is a business that has been acquired by CNH, that's certainly one that we compete with. And there are some of these other smaller marketplaces and on the equipment side, certainly, the likes of Case, New Holland and John Deere are key competitors in our business. As we look at our overall technology business, and from a TAM perspective, we have a different go-to-market approach than what I think you'll find from most companies in the market. And we call this a retrofit first approach. And what we mean by this is, we look to get our technologies into the hands of farmers in a rapid way to use with the existing machines that they already have in their farm. Retrofitting for us means that we make an existing machine as good or better than what could be purchased new with new technology and new value-adding capabilities. And so this retrofit market really increases our addressable market and the fact that not only do we look at the number of machines that are sold in any given year, but we also look at generally how many machines have been sold over the past 10, maybe 20 years. And those machines that are already in the market today plus the new machines that are being produced each year really touches the addressable market that we can go out and capture with our farmer customers. The second part to our addressable market is as we look at what a farmer spends their money on, there's really only one section of that spend that we cannot touch. And that's the amount of money that they spend on their land itself. Everything else from their fertilizer, their seed, their machinery, even down to the fuel that they use, our Precision Ag technologies have the ability to impact -- have an impact, a positive impact for farmers in their areas. And so this combination of serving all customers regardless of their use of a new machine or an existing machine as well as touching all phases of the crop cycle, really provides an interesting business for us. And I think one that you'll find to be differentiated than what most other competitors are offering in this space.

So I wanted to go back to the PTX Trimble JV. I think you had to record a write-down 1 year into the deal. What did you not foresee? And related to that, can you walk us the bridge from the $850 million of sales for that JV this year all the way to $2 billion by 2029?

Sure. Let me take that one, Tami. So if I look at the impairment that we took at the end of the year, it's really of 2 variables that affected that. One is -- the biggest one was the speed of the industry change. So when we formulated the joint venture with Trimble, again, this was a bilateral negotiation. So it wasn't up for auction. They were planning to their own distribution channel, we decided to partner with them as we thought we'd be better together as the 2 companies. So happen to be doing that at the peak of the cycle. We know our industry is cyclical. Unfortunately, the industry declined sooner and probably more severely than what we had anticipated. So that was the biggest variable that affected that is that 2024 decline relative to what we had thought. And now we sit here in '25 with the North American market being down again and had a big effect on the discounted cash flow. The second variable that compounded that was really the last time buy that one of the large OEMs did who was selling that product to their CNH dealers. We have signed up over 200 of those dealers to be PTX Trimble dealers. But given the size of that purchase and coupled with the industry decline, what we thought would be a shorter period of that finding its way into the market, got elongated to the downturn. And so when you layer on really no sales going into that CNH channel in 2024, coupled with the industry decline in '24 and again in '25, it really impacted the discounted cash flow model resulted in us having to do an impairment of around $350 million for the goodwill. No change to the technology. No change to what we bought, why we bought it, the excitement that you've heard from Andrew and what you'll hear from us in building the portfolio around it. It just so happened that the timing of the cycle really affected the discounting flows. If I think about the growth, our target is to grow the PTX revenue, not just PTX Trimble, but PTX as a whole from around $850 this year to around $2 billion by 2029. And really comes into a couple of different facets. Again, if we look at what Andrew talked about with the Precision Planting group, focus historically on planting, very strong in North America and growing in Europe and Asia, and we look at Trimble, which was predominantly focused on guidance, but having an array of portfolio expanding into water management, farm management systems, targeted spring, they were very strong in Europe. So when we brought these 2 together under now what we call the PTX Trimble brand, and we create these full line tech dealers, that was part of the synergies that we talked about at the timing of the acquisition. We said that by the first -- by the third full year of the acquisition, we expected about $100 million of synergies between the 2 companies, around 2/3 of that coming from revenue synergies. So that's taking that precision planting dealer and giving him or her the ability to sell the Trimble related products, and taking those Trimble dealers where they're strong and giving them the precision planting products. So that's part of the -- that's the initial lever of growth that we see is that cross-selling opportunity. Now to go from this $850 million up to the $2 billion, it's really going to be driven by geographic expansion. So again, if I look at where Trimble was strong in Europe, undersized in North America, South America and Asia, so good growth potential internationally there. And if we look at precision planting strong in North America, but growing in South America, Europe and Asia. So you have the growth geographically, and then it's the new product introduction. So bringing these 2 retrofit powerhouses together has really accelerated the innovation. Andrew will talk about the autonomous grain cart, the outrun product that we have first in the market with autonomy, the Symphony Vision system, so targeted spring identifying a crop versus a we radical agronomics. So really driving the innovation engine even faster as these 2 companies come together, and that's a significant growth lever for us as we think between now and 2029 is the new products.

Just from a numbers perspective, that $2 billion, what is it in terms of market share? The reason I ask, let's say, in North America, your large equipment share is probably, call it, 10%. In Europe, maybe 20%, 25%, South America, probably similar or higher. What does that $2 billion mean from the Precision Ag market share perspective?

Yes, it's going to be hard to break it down by market share because there are so many different products into -- in that retrofit channel. If you think about the targeted spring, again, it's hard to describe a market share to the Symphony Vision system versus the water management system. If I think about the $2 billion, if I look at the $850 million today, I would tell you around half of that. So there's a piece that we sell to AGCO. That will continue to grow as AGCO continues to gain market share. If I strip that out, about 50% of that remaining revenue is to the other 100-plus OEMs that we sell and the other 50% is more of that retrofit channel. If I think about the $2 billion, I would say that retrofit channel will be the higher growth portion of that revenue versus the other OEM or the AGCO channel.

So let's talk about retrofit. Recently, one of your peers spoke with investors and came up with some targets autonomous solutions. Your other peer has some fully autonomous crop care solution target by 2030, and they recently launched a very affordable priced retrofit kit. And so things are heating up. And so how do you differentiate versus your competitors? Is it price point? Is it how far back the models can go? Is it distribution? What is it that differentiates you?

So I think there's a couple of things that provide differentiation for us. First of all, I would say it's important to understand what retrofit means. And for us, retrofit refers to the ability to use our products on any brand in any age of products. Some others in the industry use the retrofit term very differently. And oftentimes, they're looking at maybe making their own products better back to an older generation. And so that's a key differentiator as we focus our technology products to be able to work on any brand regardless of that age, while others focus on their own specific brands. As we look at some of the other pieces to it, one of the things that has been very valuable for us is our speed of innovation. We've oftentimes been known for really bringing farmer-focused solutions to the market. One of our key measures of success in our own product developments and our own decision-making for what we spend our engineering dollars on is the payback to the farmer. We generally target a 1 or maximum 2-year payback to the farmer in the technology products that we offer in the market. There's a lot of variability in the farming practice. And so when farmers can manage those costs when they can drive for better profitability themselves, we found that they're oftentimes very excited to engage with those products. A couple of other things that are key differentiators for us in addition to the speed of our innovations is the breadth of our product portfolio. By bringing these 2 businesses together, both PTX Trimble and Precision Planting, we really provide solutions as we would call it, solutions for every season, every seasons of that growing phase and of that harvesting cycle for the farmers. And so as we build on this, we now have a product portfolio that farmers know, trust and can utilize beyond where our business has started. Precision Planting starting strong in planting space, PTX Trimble is starting strong in the guidance and steering space, now being able to offer the same trusted products in broader phases of the crop cycle that our farmers work in. And the last part that I'd really focus on from a differentiation standpoint is how we go to market. We have, as Damon mentioned, we've developed kind of a -- well, we distribute our products in a couple of different ways. One, we serve OEM customers, and I'll come back to that in a moment. But within our retrofit channel, we've developed 2 different kind of channel partners, the first of that being what we call a full-line technology dealer. This is really the, I would say, the core and the key differentiator in our distribution approach. But these full-line technology dealers are dedicated Precision Ag dealers that really have come to know and are trusted by our customers in their local markets for value-adding solutions in their farms. These full-line tech dealers oftentimes do not sell agriculture equipment. They're oftentimes highly specialized in those Precision Ag sales. They may sell some periphery products such as maybe some seeds, some chemical, fertilizer, other inputs that are critical in the farming operation. But they themselves are oftentimes highly ingrained in the farming process, either as agronomists, farmers themselves, or other industries that are very close to the farming practice. And so their knowledge, their skill set and their capabilities to sell and support these products is really second to none. As Damon talked about the kind of growing geographies, as we look at the market today, we have a couple of very strong full-line technology dealers. But as we look out over the next year to 2 years, we really see that coverage of our full-line technology dealers growing drastically specifically in North America and South America so that we can get more products into the hands of more customers. We complement this channel with what we call our base dealers. And these base dealers are oftentimes the equipment dealers that we provide a portion of our product portfolio generally around this idea of connecting the mixed fleet. We know that farmers oftentimes use equipment from multiple brands in their farming operations. And so our base dealers have access to a small portion of the PTX portfolio that allows them to provide that consistent technology experience across the mixed fleet of equipment that our farmer customers are oftentimes using. So these 2 channels that make up our retrofit market are really the key differentiators. And the last thing I'll say from a distribution standpoint is, at the time a customer does look to go buy a new piece of equipment and they want our technology, we supply to over 100 OEM customers as what we look to be as the trusted provider for Precision Ag technologies. This means that regardless of a customer's purchasing behavior, whether it's a new machine or making their existing machine better, we have the ability to serve them through PTX with a pretty broad and very value-adding set of products from our business alone.

Yes. I think, Tami, and you know this, but for the broader audience, AGCO is the only OEM that has that unique retrofit channel, which is brand agnostic. Again, these are not, generally speaking, new equipment salespeople. These are seed salespeople, agronomist, technologists who are working to maximize or optimize things on the farm, regardless of the color of tractor or combine or sprayer that, that farmer is using. And so we're the only ones that bring our technology in that channel. So when people start to use the term retrofit, generally, that retrofit is being sold through a new equipment channel in other companies. And so that salesperson, she is deciding, do I sell a brand-new planter or do I sell at 400,000? Or do I sell a retrofit kit at $50,000 or $100,000? And so given their experiences, they tend to lean one way, this retrofit channel, they're not usually selling the new equipment. So they're on the farm looking to optimize. And again, it's one of those unique differentiators that the other 2 don't really have and likely won't invest in.

So I wanted to focus on data. I think it won't be too much to say that data these days is knowledge and knowledge is power. So when we speak to farmers, a lot of them have moved everything to JV OpCenter and they collect all the data from various sources, and it helps them to make better decisions about their farming practices. So where does AGCO stand in that regard?

Yes. So I mean you referenced there's a couple of strong tools out there that farmers utilize today. And one of those tools luckily does come from us with our Trimble Ag software portfolio, which is a very capable tool that connects, that allows our farmers with a mixed fleet to plan, monitor and analyze the different aspects of that farming operation from deciding what to go do in the fields to how that's actually being completed. And then ultimately, after that task is completed, how did the -- how was the performance of what I actually went and did. This is also an area you talked about data as a growing area for farmers to really make better decisions. And so this is something that we are focused on. We've talked about in other forums, kind of a 3-year phase, that 3-year plan that we are in the earlier stages of we're in the kind of coming to the end of Phase 1 here, where we're looking to bring together a couple of our technology solutions in this data management space. We have strong telematics products that allow us to really make sure that our uptime remains strong in the field. We have some very strong agronomic tools to make sure that what we applied or what we put into the ground is really being developed for maximum yield. And then we have some, I'll call it, operations management tools that are very strong. But what we haven't done is we've never put these tools together. And so right now, we have a great team of folks that are working to bring these 4 different solutions together into one strong portfolio that really provides probably the most capable tool set for managing, planning and analyzing the operation. We're in the first stage of that right now, where we look to bring these solutions together through common accesses for the customer. We're expanding that to bring the -- to bring the feature set together. And ultimately, then we'll be working to really make sure that the usability, that the interfaces and that the way that a customer can distribute that data to their other trusted partners is industry-leading and top-notch for their needs.

So I want to see -- I think we have a question in the back.

So every new operation kind of build itself on some hypotheses about how they're going to approach the marketplace and what they tend to believe is true. What are kind of like the 2 things that maybe now that you're -- as you said, you're ending this Phase 1 that you've kind of said this is the big insight that we had to refine this hypothesis built the business upon and now we're going to carry forward and make some adjustments around?

Yes. So I think -- I mean, the first hypothesis would be that farmers want access. They want choices. And so that's a thing that, as we've looked at the choices that farmers are interested in making, whether that's how they buy the technology on new equipment versus old equipment, how they buy in terms of do they have to get everything all at once? Or can they take small steps into what they need of just solving one problem after the next -- that's kind of a key hypothesis that I would say has really shaped our need for this full line technology channel. It's different, as Damon said, in the way that most people have gone, but it solidified our -- basically, our decision that this full-line tech channel is a differentiator and something that farmers benefit from not just us as a business. Maybe the second hypothesis that I would look at is that farmers look to -- today, they look to many different providers to provide their precision ag needs. And I think we've developed -- we've kind of tested this hypothesis of, well, can PTX actually be that singular point of contact and we've been reassured that we can. And so that's really pushed us to use our engineering resources in areas where our strength has not been in the past. I've mentioned we've been traditionally very strong in the planting space and the guidance and steering space. And a vast majority around something around 70% to 75% of our engineers are working on products outside of that core planting and guidance and steering space today. So that's been a maybe another key hypothesis that has really focused our engineering efforts from differently from where they were in the past couple of years.

It usually seems that every -- there's usually tranches of a marketplace as start to build it. And what's true for the first tranche of the marketplace tends not to always be true as you get deeper into the marketplace. What are you anticipating as you get further down into this marketplace so that you kind of unlock it more efficiently?

Yes. So maybe what I'll -- I'll think about maybe the tranches maybe even from a regional standpoint. Our customers and the way that we serve the market regionally can slightly differ as well. Certainly, in the type of customer that we have here in North America is very different than what we see in Europe. And so a lot of our heritage as a company is heavily rooted in North America. As we've gone into Europe in places of South America, it's allowed us and required us to strengthen some of our OEM relationships as different customer purchasing behaviors have changed. And it's also required us to find some adaptations to our products in different ways. That really serves the local market needs better. The goals of a farmer in Europe right now because of some of the requirements to farm in those markets, are different. Things such as chemical application, nutrient application are really, really top of mind for farmers in Europe at the moment. And so that's requiring us to focus on that part of the market a little bit more than, say, some other areas. In South America, the planting process is very, very different here than in North America. And so it presents some opportunities for us to solve a different set of problems that we don't experience here in the U.S. and in Canada. And so maybe from a tranche standpoint, I'd look at it is just as we've gotten so much phases of the business, but different opportunities to serve a global market in different ways with the base skill set and based technology offering.

One more here.

I guess a 2-part question. The first part is as data is becoming more important, are the days of multi-brand tractors on a larger farm coming to an end? Like might not make sense to have one competitor and another competitor different data sets because they probably don't match together. And then on the other side, it seems like it's getting a lot stickier, switching brands. So can you just talk about what that looks like, trying to get someone to switch off a different platform, to move over to yours, while they might still have another tractor from someone else?

I'll maybe take the first step and you can add anything to it. So I think to address your first question, I'll maybe bring it back to -- that's a choice that we want to provide an option to the customer, but ultimately, we believe they get to decide what's the right piece of equipment for their operation. From a technology standpoint, our main goal is that we would be able to provide a technology ecosystem and a set of technology products that regardless of whichever brand they choose to use, they can get a consistent technology experience, both from user experience, from user knowledge as well as from a feature set and capability standpoint. So that's been a big focus of ours that we really make sure that our industry-leading capabilities can be used regardless of the brands that they choose. Certainly, I think from a -- if I put on my equipment hat, there are certainly some things where the stickiness does come into play. Things such as support is arguably one of the stickiest parts. And I think as I look at the Fendt brand offering, especially here in North America, the industry's best warranty and support program with our Fendt Gold Star program, that's a sticking point that really attracts customers and keeps them here because they know they have a more fixed cost of ownership in the products that they utilize. I also think about a stickiness from a standpoint of customers become very accustomed to how to use the products that they have in their market. And so one of the things that we focus on is really bringing that point of knowledge to the customers, whether in that's the demonstrations that we offer, whether that's in the farms that we operate or whether that's the way in which we train and take a very education-based approach in our sales methodology. This is part of, I think, a way that we've been able to remove some of the stickiness to bring customers to our products, but also then reinforce that stickiness year after year as farming is very seasonal. And so what you did last year, it might be 1 year before you ever have to do it again. And so that continuous engagement with the customer, bringing new products to them at their point of need, and also serving them more locally in their markets is a key part of, I think, what helps us to alleviate some of the stickiness, and ultimately then keep people in our camp for the years to come.

Yes. I think the only thing I would add, Andrew, is as farms have evolved over the last 100 years. I mean, most farms, our businesses now and they're driven by their P&Ls and their profitability. So as we've started to launch the Fendt brand here in North America and in South America, it is one of the best, if not the best performing product out there. So for a firm who's managing his or her P&L, Fendt is the most fuel-efficient tractor on the marketplace. Andrew touched on the Gold Star warranty. So that farmer, he or she has 3 years bumper to bumper versus an industry condition normal of 2, and then that dealer network, that overall Fendt experience. So as we're looking to grow our markets you here and fences done quite well, both in North and South America over the last several years. It's that overall Fendt experience helping that business owner who's also a farmer manage his P&L more effectively, getting better performance at the same time, better service, and thus making their farms more productive.

Any more questions in the room? So probably, I have time for one question. So one math question for you, Damon. Your mid-cycle target is 14% to 15% EBIT margin by 2019. This year, you're doing 7% to 7.5%. And your volume this year is going to be 85% of mid-cycle. So let's say I tack on -- I add on high teens percent volume increase from here on and some pricing, maybe single digit over the next 5 years. If I put that in your model, you need almost over 40% incremental margin to get to that 14% to 15% mid-cycle. But your typical incremental margin, what we've known historically is much lower. So help us understand why this is not a tall order, and you can actually get to 14% to 15%?

Yes. So 2 answers. I mean, first, the current year, there's 2 variables that we have to factor in. One is, this year, we're significantly underproducing relative to retail. And as I've said, when you look at our mid-cycle margin target last year, we were at 9%. If I look at the 85% of mid-cycle, that would be about 8.5%. So I lose between 1% to 1.5% because of the under-absorption relative to retail. So that in a mid-cycle wouldn't be the case. When I think about the growth, part of it is also the incremental cost savings that we're generating on top of the normal environment is the delta. But if I look at the simplest way to look at that would be last year's numbers were 9%, and that was around 90% of mid-cycle. If I move that to mid-cycle, that's around 10%. So that's sort of my starting point is where I sit. And I'm going to go from 14% -- 14% to 15%. So about $150 million of that will come through the portfolio rationalization that we went through already. So we sold off Grain & Protein, which was a single-digit margin business. That's out of the portfolio. So as the industry comes back, and we layer in the PTX Trimble acquisition, that was a high 20s, around 30% EBITDA business. So it's just that general volume comes back to the industry, that's around 150 basis points of margin lift versus the 10% mid-cycle. The cost actions, so we announced the restructuring action last year of $100 million to $125 million of run rate savings by the end of this year. At the December Investor Day, I said we've identified about another $75 million of cost savings by the end of 2026. So as we move it by the end of '26, that's around $200 million of cost savings. That's around 150 basis points of margin lift as well. And then our 3 growth drivers, so the Fendt market share rollout in North and South America, parts growth enhanced by farmer core, and then the PTX Trimble, the PTX revenue on top of just the portfolio changes, so the new products that get us the $2 billion, those 3 growth engines are in the range of 150 to 200 basis points of margin lift.

Awesome. I think that's all the time we had. Thank you so much, and have a wonderful rest of the conference.