Operator: The next question is from the line of Chad Dillard from Bernstein.
Charles Albert Dillard: So my question is on the change in pricing guidance for ’24. I just wanted to get a sense for what you’re seeing from the regional standpoint. Was all the change driven by South America? Or are there other regions where you saw a pull back? And then specifically for South America, how should we think about the cadence of pricing from 1Q through the balance of the year?
Damon Audia: Yes. I think, Chad, the pricing is going to be pretty much across the board. I wouldn’t say — a little bit heavily weighted here in the first half as we start to lap some of the comps especially in the South America in the second half. I would say, again, it’s a little bit more concentrated in the volume-orientated brands if I had to weight it between Fendt and Massey and Valtra. But generally speaking, it’s across all of the regions here.
Charles Albert Dillard: Got you. That’s helpful. And then just second question on your legacy AGCO Precision Planting business. What was the year-on-year change in revenues in the first quarter? And what are you embedding in your guidance for the full year for that business?
Damon Audia: Yes. So if I look at precision ag revenue, it was flat year-over-year. If you remember the first quarter last year, we were still coming off the very strong momentum, supply chain challenges. So the revenues were flat year-over-year at just around $200 million. And that’s inclusive of the Fuse business.
So again, I think similar to the prior — one of your earlier questions, at both the retrofit sales as well as what we would term the internal Fuse sales, that was around $200 million. We still expect sort of, I would say, mid-single-digit growth in that business. And again, we’ve talked about helping dampen the earnings of our business through the cycles.
Precision — our precision ag business is doing really well. The aftermarket or that retrofit, we see that continuing to grow despite the OE part of the business. So good momentum, great margin business, and I would say sort of that mid-single digits — continue to expect mid-single-digit growth here for 2024 for that particular business.
Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Eric Hansotia for any closing remarks.
Eric Hansotia: Yes, I’ll close today by saying that there’s never been a more exciting time to be in the agriculture business. Technology is transforming how farmers operate and providing them with the potential to produce more food in more resource-efficient ways, a critical need given the world’s expanding population.
AGCO’s farmer-first focus centers on helping them realize this potential, enables them to operate more profitably and sustainably. The key to our success is the continued execution on our farmer-first strategy.
Our focus is on growing our margin-rich businesses like Fendt. In fact, I was just up at the launch of the Fendt Lodge, our brand home in North America. And we had unbelievable excitement by farmers and dealers about that brand and how it can grow — continue to grow into the future.
Secondly, our Parts and Services business; and third, our Precision Ag business, which we’ve been investing in heavily in the last few years. In April, we reached a major milestone in our company’s history by closing the PTx Trimble joint venture, which creates an industry-leading global mixed fleet precision ag platform to better serve farmers and original equipment manufacturers.
For the last few quarters, we’ve touched on many factors supporting our markets, including growing populations, changing diets, low stocks to use levels, increased demand for biofuels and relatively healthy commodity prices. All these trends give us confidence in the long-term health of our industry.
I’ll finish where I started. Our financial outlook reflects my confidence in the team and our strategy. Despite weaker industry conditions, we continue to execute on investing in the future, delivering market share gains and staying nimble on our costs.
All these will help position us to deliver the second highest level of adjusted operating margin in the history of our company despite meaningfully weaker market conditions year-over-year. We look forward to seeing you at the upcoming technology event in June. Thank you, and have a great day.
Operator: Thank you. Thank you for joining the AGCO First Quarter 2024 Earnings Call. This call has concluded. Have a nice day.
