Thanks, Nicole, and good morning to everyone, and thanks for joining us on the call today. This morning, we'll refer to a slide presentation that's 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 that presentation. 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 price levels, earnings, cash flow, tax rates, and other financial metrics. And we do wish to caution that these statements are predictions and that actual results 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, 2019, and the Form 10-Q for the quarter ended June 30, 2020. These documents discuss important factors that could cause the actual results to differ materially from those contained in our forward-looking statements. These factors include, but are not limited to, adverse developments in the agricultural industry, including those resulting from COVID-19, including plant closings, workforce availability, supply chain disruption, product demand, weather, commodity prices, and changes in product demand. We disclaim any obligation to update any forward-looking statements, except as required by law. We'll have a replay later today on our corporate website. On the call with me this morning are Martin Richenhagen, our Chairman, President, and Chief Executive Officer; Eric Hansotia, our Chief Operating Officer; and Andy Beck, our Chief Financial Officer. And with that, Eric, please go ahead.

Very good. Thank you, Greg, and good morning. We appreciate your interest in AGCO and your participation on the call today. We'll start on Slide 3 that provides the financial summary. Our third-quarter results demonstrated solid execution as we managed a difficult supply chain, ramped up production in Europe and Brazil, and delivered robust sales and income growth across all four regions. Because of the COVID-related factory shutdowns in the second quarter, we started the third quarter with a significant backlog. Our third-quarter production output was higher than anticipated, which enabled us to increase sales by approximately 20% in the quarter. Our strong sales also contributed to our inventory reduction goals, resulting in inventories being down $220 million lower than compared to September 2019, both on a constant currency basis. In addition, despite the increased third-quarter delivery performance, our order board remains solid heading into the fourth quarter. This exceptional operating performance translated into 390 basis points of adjusted margin improvement and third-quarter adjusted earnings per share of $2.09. The focus on working capital resulted in strong free cash flow in the third quarter and puts us in a very good position from a liquidity perspective. Strong customer response to our improved product lineup is also showing up in our retail sales performance in 2020, and we plan to keep investing in new technology. Our solid financial position is enabling us to maintain our planned investments in premium technology, smart farming solutions, and enhanced digital capabilities. Products like our smart planters, smart nozzle sprayers, and connected premium tractor products are providing productivity enhancement options for our customers and new margin-rich sales opportunities for AGCO. On Slide 4, we detail the industry unit retail sales level by region for the first nine months of 2020. As the COVID-19 pandemic unfolded earlier this year, the consumption of grain for food, fuel, and livestock was negatively impacted by the global economic constraints. During the third quarter, grain consumption began recovering, consistent with the improved economic activities and increased grain exports to China. Following reduced forecast for ending grain inventories, soft commodity prices have risen in the third quarter, which is positive for farmer economics. Consequently, our forecast of global industry demand for farm equipment has improved and is now expected to be flat in 2020, with the offsetting differences across the regions. North America industry retail sales of tractors increased in the first nine months of 2020 compared to the same period in 2019. Growth in the sales of low horsepower tractors was partially offset by softer demand for high horsepower tractors and combines. The fleet age for large equipment remains extended as replacement demand continues to be deferred in the North America market. Industry retail sales in Western Europe decreased in the first nine months of 2020, due largely to COVID-19 related production constraints. Market demand in the third quarter increased over the prior year but only partially offset significant declines in demand experienced in the first half. For the first nine months, industry sales were the weakest in the UK, France, and Spain, and were partially offset by growth in Germany, which has benefited from tax incentives implemented for the year 2020. Dry weather across much of Western Europe negatively impacted wheat production. However, strong grain export demand and supportive wheat prices provided some offsets. European dairy and livestock fundamentals have stabilized after weakening earlier in the year. Industry retail sales in South America increased during the first nine months of 2020, with growth in Brazil and Argentina, partially offset by weaker demand in the smaller South American markets. Strong crop production in Brazil and Argentina, as well as favorable exchange rates, are supporting positive economics. Farmers are replacing their aged fleet following years of depressed demand due to economic weakness and challenging political environments. As we communicated last quarter, our focus for 2020 has been to address the needs of all of our key stakeholders during the COVID-19 crisis. This perspective has guided our actions since the outbreak. First and foremost, we established protocols for all of our facilities, focusing on employee health and safety. These activities have served us well and have been a critical factor in keeping our facilities operating. However, our challenges in this area are not behind us. As an example, last week, we closed our production facility in Heston, Kansas, where we were making harvesting equipment, primarily for the North American market. We currently expect our operations will be limited during the month of November. However, our ability to restart production and our subsequent ramp-up plan in Heston is uncertain and will depend on the availability of our workforce. Currently, we expect a modest impact on fourth-quarter results. However, the actual impact will be dependent on the length and severity of the shutdown and the resulting loss of production. Similar risks remain for both our operations and our suppliers' operations. So we will stay diligent to attempt to mitigate these issues to the extent possible. We are very proud of the way our employees are going above and beyond to keep farmers and dealers operating through these difficult circumstances. Innovative approaches to connecting with dealers and customers through digital tools have been a positive byproduct that we can leverage when we return to normal. And in addition, our focus on working capital and cost management has put us in a strong liquidity position heading into the fourth quarter. AGCO's 2020 schedule for factory production hours is shown on Slide 6. As we discussed last quarter, our manufacturing operations have been significantly impacted by the crisis, particularly in Europe and South America. Our supply chain and production teams have done a great job securing parts to allow us to restart production in our factories, and we'll make great efforts to keep them running. Our recovery from COVID-19 shutdown has been much faster than expected, resulting in our third-quarter results being better than expected as we made progress catching up on our strong order board. Total company production hours were up approximately 10% for the third quarter versus the same period in 2019. Much of the growth was in Europe and Brazil as these factories recovered from shutdowns during the second quarter. Our full-year production plans for 2020 also factor in targeted reductions in both company and dealer inventories. We've made good progress on both fronts through the first nine months of the year. Company inventories are lower than September 2019, and dealer inventories are below their prior year levels in most categories in all of our regions. Turning to our order board. Our September 2020 order board for tractors remains significantly higher in North America, Europe, and South America compared to a year ago. Before we hand over the presentation to Andy, I'd like to take a few minutes to recognize Martin Richenhagen and his contributions to AGCO. Since we last spoke on our second-quarter earnings call, Martin has announced his retirement from AGCO, effective December 31, 2020. Under his 16 years of leadership, Martin has made a lasting impact on AGCO, the broader farm industry, and communities where we operate. During Martin's tenure, AGCO evolved into an integrated global manufacturer of high-tech, sustainable agricultural solutions that serves our farmer customers all around the world. AGCO expanded its product portfolio, entering into new markets, consolidated product platforms, and significantly modernized facilities. Driven by strong financial performance under his direction, AGCO improved to an investment-grade credit rating while initiating a dividend and a substantial share repurchase program. Martin, you've been a model of corporate leadership and courageous moves in the industry. We are grateful for your unwavering dedication, vision, and leadership. Personally, I've also benefited greatly from your mentorship and guidance. We wish you well as you embark on your next adventure, Martin. Best wishes.

Thank you, Eric, for those very kind words, and good morning to those of you on the call with us this morning. This is my 64th earnings call and my last as AGCO's Chairman and CEO. Without getting too sentimental, let me just say that it's been my great pleasure and privilege to serve alongside my AGCO colleagues for the past 16 years. Their dedication, integrity, spirit, and commitment to our customers are what make AGCO such an extraordinary company. And I'm proud to have been part of its history and proud of our culture. I also want to thank you and thank our investors and analysts for your support. It has been an honor to represent and guide AGCO to what it is today. I have tremendous confidence in AGCO — yes, in Eric and Andy and our great team, and believe that AGCO's best days are yet to come. Now let's focus on the great third quarter we had, and Andy, please go ahead. Stay healthy, guys.

Thank you, Martin, and good morning to everyone. I'd also like to thank you, Martin, for your great leadership over the past 16 years. It's truly been an honor to work with you and to be part of your team during such an important period in AGCO's history. Now let's go back to the quarter. I'm going to start on Slide 7, which looks at AGCO's regional net sales performance for the third quarter and first nine months of 2020. AGCO's net sales were up about 20% compared to the third quarter of 2019, excluding the negative impact of currency translation. The Europe/Middle East segment reported an increase in net sales of approximately 19%, excluding the positive impact of currency compared to the third quarter of 2019. Sales growth was driven primarily by higher rates of production in our European facilities as they recovered from the COVID shutdown, especially at our Valtra plant, which has shifted its maintenance work into the second quarter to avoid its normal July shutdown. Growth occurred across most of the European markets with the most significant increases in Germany. Net sales in North America increased approximately 9%, excluding unfavorable currency translation compared to the levels experienced in the third quarter of 2019. Increased sales of high horsepower tractors, replacement parts, and precision planting equipment accounted for most of the growth. AGCO's third-quarter net sales in South America increased approximately 48% compared to the third quarter of 2019, excluding negative currency translation impacts. Mid-range and high horsepower tractors, as well as our new Momentum planters, produced most of the increase. Sales growth was significant in Brazil and Argentina. Net sales in our Asia, Pacific, Africa segment increased about 21% in the third quarter of 2020 compared to 2019. Excluding the negative impacts of currency translation, strong growth in China and Australia was partially offset by continued weakness in Africa. Consolidated replacement part sales were approximately $391 million for the third quarter of 2020 and were up about 7% compared to the same period in 2019, excluding the positive impact of currency translation. Moving to Slide 8, we examine AGCO's sales and margin performance. AGCO's adjusted operating margins improved by approximately 390 basis points in the third quarter of 2020 compared to the same period last year. Margins were positively impacted primarily by higher levels of net sales and production. Cost control initiatives, as well as favorable material costs, also contributed to the higher margins experienced in the third quarter. The Europe Middle East segment reported an increase of $65.5 million in operating income compared to the third quarter of 2019, resulting primarily from significantly higher sales and production volumes, as well as a richer mix, partially offset by higher engineering expenses. North American operating income increased approximately $25.8 million in the third quarter compared to the third quarter of 2019, as operating margins reached 10%. Increased sales of high horsepower tractors and replacement parts produced a positive sales mix. In addition, despite lower sales, improved margins in the grain and protein business contributed to the margin expansion. Our South American segment reported operating margins of 6.1% in the third quarter as operating income improved $22.3 million from the same period in 2019. Higher sales and improved sales mix, including strong seasonal planter sales and reduced expenses, all contributed to the improvement. In our Asia, Pacific, Africa segment, operating margins expanded by 400 basis points to 10.1%. Higher sales and improved sales mix and expense control efforts contributed to the improvement. Slide 9 details GSI or grain and protein results by region and by product. Our grain and protein sales decreased by about 12%, excluding negative currency translation impacts in the first nine months of 2020 compared to 2019. Globally, grain and seed equipment declined approximately 17% with our Europe, Middle East, and Asia, Pacific, Africa region showing the largest decline. In Europe, we have had a number of projects deferred until 2021 due to economic conditions caused by the pandemic. Protein production sales decreased approximately 3% in the first nine months of 2020 due to declines in the North America and European region, partially offset by growth in the South America and Asia Pacific, Africa region. The protein production segment has been significantly impacted by the pandemic, particularly in North America, where protein processing capacity has been challenged. In China, protein producers are beginning to recover from Asian swine fever and have started to rebuild the production capabilities. Our order flow for production for our protein production equipment in the Asia, Pacific, Africa region has improved throughout the last nine months. Slide 10 addresses AGCO's liquidity and free cash flow for the third quarter and first nine months of 2020. Starting with free cash flow, which represents cash provided by or used in operating activities less capital expenditures. Our strong sales and earnings performance, in addition to our working capital discipline, contributed to strong free cash flow in the third quarter. As a result of our improved working capital position, our net debt at the end of September 2020 was approximately $323 million below September 2019. As it relates to returning cash to shareholders, we plan to maintain payment of our quarterly dividend. With regard to share repurchases, we completed $55 million of repurchases in the first quarter and suspended future repurchases during the second quarter and third quarter given the uncertainty. We will continue to evaluate operating conditions to determine the proper time to reinstate our share repurchase program. Other details for the quarter include losses on sales receivables associated with our receivable finance facilities, which are included in other expense net, or approximately $6.1 million for the quarter compared to $10.6 million in the same period of 2019. Our updated 2020 outlook for the three major regional markets is captured on Slide 11. We currently expect higher retail industry demand across North and South America, mostly offset by lower demand in Western Europe. In North America, the USDA is projecting higher 2020 farm income in the US, primarily due to additional subsidy payment. We project North American industry unit tractor sales to be up about 9% in 2020 compared to 2019. This increase is due solely to higher sales of low horsepower tractors. Despite increases in the third quarter, industry sales of high horsepower tractors are expected to be lower for the full year compared to 2019. EU farm economics are expected to remain supportive in 2020. Lower yields are expected to be offset by higher commodity prices. Milk prices are down from 2019 levels but economics for dairy producers are healthy. Although industry demand is expected to be more stable in the fourth quarter, it will not provide an offset to the significant declines experienced in the first half of the year. Accordingly, industry demand for the full year of 2020 is expected to be lower in 2019. Following two years of improving farm income and low levels of industry demand, we expect industry sales in Brazil and Argentina to increase as farmers replace their aged fleet. The smaller markets of South America are expected to be weaker due to pandemic impacts on their economy. In total, industry demand in South America is expected to improve from 2019 levels. On Slide 12, we highlight the assumptions underlying our 2020 outlook. Our priorities for 2020 continue to be maintaining a safe working environment for our employees and providing proactive support to our customers and our dealers. We also continue to manage our costs while preserving our investments in digital technology and smart farming product development. Our 2020 forecast assumes relatively flat global industry demand with no additional impact from the pandemic in the fourth quarter. Our sales plan includes market share improvement, price increases of 1% to 1.5%, and targeted dealer inventory reduction. At current exchange rates, we expect currency translation to negatively impact sales by about 2%. Engineering expenses are expected to be relatively flat compared to 2019 on a constant currency basis at about 3.9% of sales, implying year-over-year increases to the engineering expense in the fourth quarter. Operating margins are expected to be up 50 to 60 basis points from 2019 levels with improved product mix and favorable pricing, net of material cost, partially offset by the negative impact of lower production volumes in the first half of the year. We're targeting an effective tax rate ranging from 34% to 36% for 2020. Interest and other expenses are expected to be modestly lower compared to 2019 levels. Slide 13 lists our view of selected 2020 financial goals. We continue to operate in uncertain conditions, and this outlook does not consider any further business disruptions caused by the COVID-19 pandemic. We are projecting sales to be in the $8.9 billion range with 2020 earnings per share targeted at approximately $5 per share. We expect capital expenditures to be approximately $250 million and free cash flow to be in the $300 million to $350 million range. I'll now turn the call back over to Greg.

And before we take your questions, we wanted to give you a scheduling update for our annual analyst meeting that we traditionally host in December. We're currently targeting early March for that meeting, and we'll be sending out a save the date in the next few weeks. So now as we turn to the Q&A section and to broaden the participation during this session, we'll ask that you limit yourselves to one question each. And so, Nicole, we're ready to take questions.

The first question will come from Ross Gilardi with Bank of America.

I'd love to just get your perspective on the Americas, and I think you've had three straight quarters now at double-digit margins in North America, and you got back to six and South America was the best in a very long time. Have we turned the corner? And do you think a low double-digit margin for North America in sort of mid-single digit for South America is kind of indicative of what's normalized through the cycle as we model forward over the next few years, assuming no completely crazy things happen in the world?

Ross, we have gone through some really seasonally strong orders in North America and seen a lot of improvement in South America, as you pointed out. In North America, the fourth quarter is not as seasonally strong for us from a mix standpoint. And so those margins will come down in the fourth quarter. So we're not going to be at that double-digit level at the end of the year. However, obviously, that's our target. That's where we want to get to, and with some improvement in volumes from the market and what we're doing with our growth in high horsepower equipment and trying to grow our business in North America through precision planting and our grain protein business recovering, we think that's a very attainable target. In terms of South America, again, the fourth quarter is not as seasonally strong of a quarter for us. The revenue is down, and the mix isn't as strong. So we'll see those margins come down for the full year, but we'll be solidly in the profits for the full year. And that was our goal getting into this year was to turn that business around and be profitable again. And we've got a lot of work to do there. But again, our goal is to get back up to corporate averages in terms of our margins. It's going to take us some time, but with our work in terms of our cost reduction and the growth we're seeing in the market, that will certainly help us.

And then just as a follow-up, can you just comment a little bit more on the retail sell-through of your new products and Fendt and IDEAL really in North America, in South America? And were your margins in the Americas heavily influenced at all from just pipeline fill of a lot of those new products into the region?

I think to answer your last question first, I wouldn't say there was any unusual activity. Now in North America, one of the reasons we did better than we thought we were going to do this quarter was we were a little cautious on how quickly we could ramp up production, particularly in our European plants and get the products all the way over to North America and to get those into our dealers and our customers' hands. And so we were actually ahead of schedule there. So we did get to invoice out to customers more of our high horsepower products in the third quarter than we expected. So the mix was strong in the third quarter because of that. And so we'll see a little bit of an offset with the fourth quarter because we're ahead of schedule there. In terms of our retail performance of our new products, it's going quite well. Our high horsepower tractor sales are up over 20% in North America, and our IDEAL combined sales are going to be up. I think they're up about 50% globally from where we were a year ago. So making progress in both areas and that is contributing to our stronger results, particularly the high horsepower growth in North America.

The next question will come from the line of Ann Duignan with JPMorgan.

Martin, I know Eric said that you'd left a lasting impact on AGCO, but I think you've left a lasting impact on all of us. So we're going to miss your sense of humor, for sure. Eric, my question of you is more on the North America market, both on the tractor side, combine side, or high horsepower side, as well as on the grain storage side. Can you talk about the fact that farmers have gotten upwards of $70 billion over the last two years on government payments? We would have expected demand to have been much stronger going into the end of the year on the back of the windfalls that they have received and maybe into early next year? And then on grain storage, are you seeing any pickup in demand or orders for replacement storage given the huge storms we had, particularly in Iowa earlier in the year? Thank you.

I think there's probably two dynamics that are laying on top of one another. One is the numbers that you see in terms of government subsidies, and those are strong for sure. But if you just think back over the last six months, there's been about as high of uncertainty environment as you could imagine, even with the government payments about when they were going to trigger and how they're going to trigger and so on. And commodity prices were low. So I think the farmers have still had a dose of caution working through the course of the year. The combination now of both strong government payments and renewed strength in the commodity prices is bringing confidence back into the market. And we're seeing that in our order boards, that's why we spoke to even though we've built a lot, we're continuing to see strong order boards, and we're working our inventory down. So North America market is doing quite well, same thing. You also asked grain solutions. There is a lot of disruption to grain storage sites, especially in the Midwest with the straight-line winds that happened there. And so there's been a fair bit of ordering to replace those bins, both commercially and on-farm. But overall, that was one of the items that was on hold during the period of uncertainty. But we're seeing a more recent recovery in that market.

The next question will come from the line of Jamie Cook with Credit Suisse.

And same, Martin, congratulations on a great job. And like Ann said, I as well always appreciated your sense of humor as well as leadership. So I guess, just going back to the margin question again, Andy, Eric or Martin, to see North American margins approaching sort of the double-digit range for three quarters, historically, AIM would have been the only region that had double-digit margins. So I'm just trying to understand, just given where your market share in North America is relative to AIM, like, why those margins are there already, is it just sort of precision planting? And structurally can those margins become closer over time and what needs to happen to get them there over the long term? Thank you.

I think the North American market, we're showing good progress there in terms of profitability and our presence in some of these markets like high horsepower equipment. And I think that's what's the big driver for us is if we can grow in the high horsepower sector, that will give us — that's where the higher margin products are. And you've already pointed out the contributions that we're getting from our precision planting business, and also our grain and protein business have all contributed to this. So all those are high margin product ranges that certainly help our mix in North America. And as we can grow and gain scale, I think that's a big part of the equation to get the margins up further in our North America region.

The next question will come from the line of Seth Weber with RBC Capital Markets.

Maybe just a clarification then the question. Can you just clarify, in North America, whether you'll be producing, expect to be producing to retail demand next year? And then just weaving that in can you just, with all the product introductions and precision planning and whatnot. Can you just talk to your incremental margin framework by region that you're expecting into a recovery scenario? Thanks.

So we have talked a good bit this year about being really focused on our working capital, and we've made progress as you can see from our cash flow statement so far this year. We do plan to reduce dealer inventories further in the fourth quarter, particularly in North America and Western Europe. So that will impact both of those regions in terms of year-over-year sales growth. In terms of incremental margins then now that particularly after we get beyond the fourth quarter. But I'd say kind of as we look into next year, we've said that historically we would expect incremental margins ranging probably from the low 20s to the upper 20s or low 30s, depending on the region. So typically, we'd expect our European margins to be at the upper end of that range. So high 20s, potentially low 30s. North America, we would expect to be more kind of in the mid-20s with our South America incremental margins more in the lower 20s. So thanks, Seth. And Nicole, let's go ahead and take the next question.

The next question will come from the line of Jerry Revich with Goldman Sachs.

And Martin and Eric, congratulations. Can you talk about South America? Andy, you mentioned that there's still work to be done from a localization process. Can you just quantify that for us in terms of what proportion of your content is localized today and the opportunity set from here? As you heard from others based on the margin performance in the quarter, it feels like you got a lot down over the past couple of quarters, but maybe you can quantify and expand on where you stand?

Jerry, our margin improvement in South America is really driven by a lot of factors. The growth that we're seeing gives us a little more leverage and scale over our cost structure, and we're seeing, again, a strong growth in some of the higher margin products that we have down there, some of the complementary products like planters, sprayers, those have really helped us as well. Also, our grain and protein business sales are up in South America. So there's a lot of reasons why we're seeing improvement. As it relates to the localization efforts and the margins on our core products, it's been a lot of work to still do there. The exchange rate weakening in Brazil has caused some further challenges on those margins. We've been adding some pricing to try to offset some of that. But it just shows that we still need to get some more localization of the parts on some of those new products. So we're making some progress. But I would say that work still has at least another year, even maybe two years to get to where we completely want to be. But we're making some progress.

And sorry, can you specify the number, just rough ballpark on where we stand in terms of localization versus target? Are we at 50%, 60%? Just a bit of context to quantify it…

So Jerry, to sell the products in South America, we have to be 60% local. So we're probably closer to 60% than we have been historically. Historically, we've probably been at 80% or 90% local. So we obviously have a ways to go to get back to where we want to be to kind of minimize that exchange impact that Andy was talking about.

The next question will come from the line of Larry De Maria with William Blair.

And of course, best wishes to Martin and good luck to the team. I guess we won't get to hear from Martin in December, which we always looked forward to. Curious on Europe, the fundamentals, as you described, are obviously reasonable. Wondering how much demand has maybe been pulled forward in Germany given the tax team there that that's going to be the hurdle to growth in the medium term? In other words, if we need other markets to come back to in Europe to balance the European outlook? And second part of that question is, if you could just discuss maybe fleet age and the need for replacement in the European market, kind of broadly? Thank you.

Larry, it's interesting, the German market is one of the few markets in Europe that's up this year, and it was up year-to-date about 8% or one of the other markets are down. And so I do think there's evidence that those tax incentives, there was some VAT relief and also some accelerated depreciation incentives that were put in place, those incentives are helping the German market. So there's likely to be some pull forward because of that. But we're still obviously working and developing what we think the market is going to be like in 2021. But likely we like to see some recovery from some of the other markets to offset some of that pull forward in Germany, just as you described.

And then the other piece of your question was, where is the replacement demand cycle looking. We see the last — first of all, in general, that market is flatter, it's less volatile than some of the other markets. And so you don't have the big spikes up and you don't have the big spikes down. The last localized high point was in the 2017, '18 time period. And then there's been a bit of a softening since then. But what that tells you is the fleet is fairly fresh. We don't have the same kind of replacement gap or demand gap there that we've seen in South America and North America. It's not as acute in Europe.

The next question will come from the line of Chad Dillard with Bernstein.

I wanted to revisit the localization discussion in Brazil and ask if you could outline a plan for how to progress from your current 60% level to the target of 90%. What specific steps need to be taken from a practical perspective? Also, could you provide a timeline for this progress? Additionally, regarding the GSI component, can you quantify how current orders compare to last year, and what should we expect in terms of lead time? Should we anticipate seeing more significant developments in 2021?

Maybe I'll take a stab at this and then Andy can jump in as well if there's something to add. But I want to make sure that you heard Andy's comments, I think, in the way he had intended them to be, or Greg's comments, that is that FINAME law requires roughly around 60% local content, and that's essentially where we are. Historically with some of our heritage products, we were up in the 70% to 80% range, and that was because they had been designed locally. They weren't being — there wasn't a design that was being brought in from another location and localized; it had been designed for the local market. So it was naturally utilizing local suppliers with the exception of just a few components that needed to be sourced from global suppliers. As we move to global platforms, we're taking global designs and then designing them once, building them in multiple locations. And so you'll see, on average, more of a localization effort versus designing unique products for each region. And that's what you're seeing in South America. We don't expect to take those products up to 90% as a strategy. We'll take them higher than they are today, maybe it will be 70%, maybe it’ll be 80%. But it won't be so intensely high because we want to maintain — one of the benefits of global designs and global platforms is global volumes going through global suppliers. And so we want to maintain the advantage of both cost and quality that comes along with that. And as was mentioned earlier, it's probably a couple of years yet for us to extract all of the value out of the full localization of some of those tractor programs.

And then just a question on GSI. Just where is your order board today versus the year ago to quantify that? And how should we think about just the lead time for those orders to convert into revenue? Is it more like a 2021 event?

Our order board for grain and protein is up about 40% compared to where we were a year ago. It was a pretty low level a year ago. And I would say over half of that is really for 2021. So we're seeing a number of projects that are being deferred for whatever reason because of economic issues or availability of workforce to complete the project, a number of issues. So our revenues are going to be down here in grain and protein this year because of the weak market conditions. And we do have, obviously, a better order board coming into 2021 because of these deferrals. And so we'll have to obviously take that into account when we figure out what our planning is for 2021, but at least we'll have a better order board entering into the year.

The next question will come from the line of Courtney Yakavonis with Morgan Stanley.

Maybe just first on a clarification. I think you mentioned that order boards are significantly higher than one year ago, but if you can just give us any more color by region? And then secondly, obviously, you talked about some of the seasonal mix impact on margins in the fourth quarter, but they are implying around flat year over year. Can you just give us any other color aside from mix, if there's any other items that we should be thinking about, especially as it relates to it, Eric, I think you said the Kansas production is coming out, but you're not really taking in much other COVID disruption. So if you can just tell us especially what could be impacting the fourth quarter? Thanks.

To answer your second question first. The one thing that we would point out other than mix is that we are catching up a little bit on our engineering expenses in the fourth quarter. So we got a little behind in terms of what we expected in the second quarter, and we still have some projects and some work that we're trying to get done by the end of the year. So our engineering expense is going to be up, I think, about somewhere between $12 million to $14 million in the fourth quarter year-over-year. So that has a really sizable impact on our margins in the fourth quarter. In terms of the order board, the order boards are up, as we said, in almost all of our major markets. What happens with order boards is it's obviously a determination of our dealers' outlook in terms of where the markets are, but also they're...

Ladies and gentlemen, we are experiencing technical difficulty. Please remain on the line.

Sorry for that interruption. We were just — maybe, Andy, you could probably reiterate what you were saying about the order board in terms of regionally?

Yes. Hopefully, we're not sure where we cut off, so we'll cover that again. In terms of our order board, they're up all over our major markets significantly higher. Order boards are a factor of, obviously, our dealers' anticipation of future retail sales, but they're also, the dealers also factor in availability of production slots. And so we think both of those are factors of why our order boards are higher than where we were a year ago. In North America, orders are up over 20%. In Europe, our orders are up over 50%. And in South America, we actually have a new basis of how we accumulate orders. We give dealers more incentives to give us much more forward-looking visibility of their orders, and so our orders are over double where they were a year ago. So we have a good order board, gives us very good visibility for the balance of the fourth quarter.

The next question will come from the line of Nicole DeBlase with Deutsche Bank.

So I just wanted to ask a follow-up on your commentary around the dealer inventory progress you've made. Could you possibly characterize current levels of inventory globally? And I guess, maybe quantify the level under production that you expect in the fourth quarter in North America and Europe relative to what you did in the third quarter. And then last quick part of the conversation, do you guys still expect to produce in line with retail demand in 2021?

In terms of how our dealer inventory somewhat flows throughout the year, what happens is our low point on dealer inventories at the end of the year. And what we do is it builds seasonally in the first quarter and then kind of maintains that through the third quarter, and then we bring it back down in the fourth quarter. So we're always reducing dealer inventories in the fourth quarter. This year, we're going to reduce them more than we did last year. And so that will give us the effect of having lower dealer inventories at the end of the year. That's been our target all year. And as Greg discussed, that will impact our fourth-quarter sales a little bit. Right now our dealer inventories in North America and Europe are probably about 5% below where they were a year ago at the end of September, and our target for the full year is somewhere between 5% and 10% for those markets. South America dealer inventories are substantially below where they were a year ago. And I think that's an industry-wide phenomenon. All the participants in South America have brought their dealer inventories down during 2020. And so what we're looking at is really relative to last year's reduction, reducing them a little bit more in order to create that impact. So what we've said is that impact to our sales this year from this work we've been doing is somewhere between 1% and 2% of our sales. And to answer your last question, for 2021, assuming we hit our dealer inventory targets this year, then we think we're in a very good position and wouldn't likely plan for further reduction in 2021.

The next question will come from the line of Joel Tiss with BMO.

We've had a lot of good commentary. I wonder if there's any way you can give us a little bit of — just some of the factors for 2021, obviously, not guidance. But you're coming in with lower inventories, it sounds like the mix is getting better from higher horsepower. Any impact from, like, GSI, I guess, would be positive for mix? And maybe incentive plans are kicking in? Anything you can help us with to just sort of frame the year very generally?

I mean, I can make some high-level comments. I would start off with saying, as we talked about with our farmers in the beginning of the call, there was a lot of uncertainty over the past months. We still see a tremendous amount of uncertainty over the coming months. We shared with you today on our call about the Heston facility. There's still potential with rates going up in Europe and North America for there to be challenges ahead that you can't exactly plan for right now. So that's kind of the background music playing, and we expect that could be here for another couple of quarters or so. Given that commodity prices are strengthening, confidence is strengthening, we have a situation where there's an older fleet in North America and South America; those are both positive. And we've worked inventory down to target levels in most situations. So we think it's — and like Andy said, our GSI, our grain and protein business, has been working really hard this year. It's just that some of those projects got deferred into next year. So we've captured — we've got the orders but not the sales yet. So next year should be — it should be a pretty solid year. But we don't want to give too much more guidance than that. Those are just the high-level figures that we've talked about, or factors.

And then not to waste my second question. Can you give us a little sense in South America with kind of a new run rate of operating margins, again, with all the background noise, I understand. But structurally, do you feel like you're kind of climbing back to give this division a chance for double-digit operating margins again over the next two years or so?

Joel, I would say that that's probably too aggressive. We're making progress, and we want to continue to make progress. That's our goal with steady progress year-over-year. It's all dependent on a number of factors in terms of what the industry demand is and those kinds of things. But our goal would be just to see continued steady progress on the margins and the profitability in South America.

The next question will come from the line of Adam Uhlman with Cleveland Research.

I guess my question overall is on capital allocation here. It sounds like the buyback is on pause through the rest of the year. Maybe, Eric, could you share in your appetite for acquisitions, maybe what does the acquisition pipeline look like today? And when could we expect to see share repurchase start to tick back up? Thanks.

So we are an active company in looking at acquisitions, and we continue to do that. We've got our watch list of companies that we think would be a good fit for AGCO, and we continue to cultivate that. But like is typical, it's an opportunistic scenario where you just never know when the timing will be right for the seller to be ready to sell. We think the business could be a good fit. So we keep that actively going, and that would be our top priority. If one of those target acquisition opportunities came available that's our first choice to be able to move quickly and be able to marry them up. We're very happy with the acquisitions we've made over the last few years, and they've been good contributors like we had intended them to be. Relative to share buybacks, that's been a part of our history. We've put that on pause because of the uncertainty, and I tie that back to the discussion when we talked about relative to uncertainty. We see this is going to be with us for some time yet and with a fair bit of volatility in terms of what could happen. So we're continuing our cautious stance for some period yet with the intention at some point, we'd return to share repurchases once the market stabilizes and is a little more predictable.

And we have time for one final question. Our final question will come from the line of Joe O'Dea with Vertical Research.

Martin, I'll add my congrats and best wishes moving forward. Eric, I just wanted to ask high level on Precision Ag. Any notable areas that you'd really call out as leadership positions for you or laggard areas for you that you're trying to narrow some of that and then also just how the 2021 launch pipeline in Precision Ag specifically compares to 2020?

So our intention is to be a full crop cycle provider of — as a partner to our farmers. And so that means we want to have very strong planting, spring, and harvesting solutions that, in each case, are able to intelligently observe their environment, make onboard calculations to optimize their performance. And then when the farmer wants to, we can put those machines in autopilot mode and the machine optimizes its own performance. So those are what we think of when we talk about Smart Solutions. Our smart planter sales are up significantly to the tune of about 300% from 2018 to 2020. Our smart sprayer nozzle sales are up about 185% since 2018. The total rows of planters that we sell has gone up 57% in the last two years, up 28% this year. So our focus on Precision Ag is strong and is continuing, and Andy mentioned harvesting before. So we're intending to continue to invest in this area heavily and continue to grow it because we think that's where we can add the most value to our farmers.

I will now hand the conference back for closing remarks.

Thank you, Nicole, and we want to thank everyone for participating this morning. We appreciate your interest in AGCO. And if you do have follow-up questions, feel free to email me at [email protected]. Thank you very much, and have an awesome day.

This does conclude today's conference call. We thank you for your participation and ask that you please disconnect your lines.