CNH Industrial

Good day and welcome to the CNH conference call. At this time, I'd like to hand the call over to Jason Omursa. Please go ahead, sir. Good day and welcome to today's CNH conference call and webcast. At this time, I hand the call over to Jason Omertzer. Please go ahead.

Thank you, Sergey. Good morning and good afternoon to everyone. We would like to welcome you to the webcast and conference call for CNH Industrial's fourth quarter and full year results for the period ending December 31st, 2022. This call is being broadcast live on our website and is copyrighted by CNH Industrial. Any other use, recording, or transmission of any portion of this broadcast without their express written consent of C&H Industrial is strictly prohibited. Hosting today's call are C&H Industrial's CEO, Scott Wine, and CFO, Adone Nchiza. They will use the material available for download from the C&H Industrial website. Please note that any forward-looking statements that we might be making during today's call are subject to the risks and uncertainties mentioned in the Safe Harbor Statement included in the presentation material. Additional information pertaining to factors that could cause actual results to differ materially is contained in the company's most recent report, 20F, and EU Annual Report, as well as other periodic reports and filings with the U.S. Securities and Exchange Commission and the equivalent authorities in the Netherlands and Italy. The company presentation includes certain non-GAAP financial measures, Additional information, including reconciliations to the most directly comparable U.S. GAAP financial measures, is included in the presentation material. I will now turn the call over to Scott.

Thank you, Jason, and thanks, everyone, for joining our call. We finished 2022 with solid results, as fourth-quarter revenues were up over 27 percent, driving full-year consolidated revenues up 21 percent. Deliveries and product mix improved in both agriculture and construction. Our strength was broad-based, with double-digit year-over-year price realization coming from all regions. We expanded profit margins in both agriculture and construction despite significant input cost increases. The industry faced many other headwinds during the year, including a choppy supply chain, elevated freight costs, and ongoing inflation. Late in the year, these issues began to modestly improve, and we anticipate that will continue into 2023. The CNH team's creativity, hard work, and strong execution resulted in company records for both adjusted net income of $2 billion for the year and adjusted earnings per share at $1.46, up 14% over 2021. We also generated $2 billion in free cash flow from industrial activities in the fourth quarter and $1.6 billion for the full year as we over-delivered on our plans to complete and ship our accumulation of partially built units. This benefited our dealers and put us in a net cash position well ahead of our plan. Last year, we launched two potent margin improvement initiatives, the Strategic Sourcing Program and the CNHI Business System, which we refer to as CBS. Continuous improvement is hard, especially in pursuit of breakthrough results, but our team has embraced this lean mindset and is poised to deliver value across the business. Looking ahead, we remain focused on executing our strategy, including significant investments in our tech stack and product development. Derek Nielsen and his team continue to drive exceptional performance, delivering a strong fourth quarter with full-year net sales for the ag business up 22%. This growth was largely propelled by robust industry demand and significant year-over-year price realization, especially in North and South America. We saw improved product mix, including precision ag revenues up 32%, which benefited from both an increased take rate for factory fit precision options and incremental Raven sales. Ag profitability remained healthy, with Q4 gross margins up 280 basis points and adjusted EBIT margin up 310 points, admittedly against an easy comp. Margins were down sequentially versus our record third quarter performance impacted by regional mix and the non-stated work required to finish units. Overall, I'm extremely pleased with the Ag team's performance and results. For 2022, Ag adjusted EBIT was nearly $2.5 billion, marking our highest profit in more than a decade. We are executing on our customer-centric strategy, and customers have responded with continued demand for our high-end products at prices offsetting increased escalated production costs. They have also recognized us with improved net promoter scores, 5% higher than in 2021. Derek and his team are ensuring that customers are at the center of all we do, driving the right behaviors and results. Stefano Pompilone and his construction team executed quite well in the fourth quarter, with strong momentum from the Sampiriana, integration, manufacturing improvements, and enhanced customer focus, we expect even better progress in 2023 and beyond. 2022 net sales were up 16% for both the full year and the fourth quarter, with noteworthy growth in Europe and South America. Organic growth accounted for about two-thirds of the increase in the remainder, with the remainder attributed to Sampirana. Their excavator portfolio and technology innovations have enhanced our ability to meet customer needs, and their EuroCOMAC platforms provide an outstanding foundation for electrification. Construction adjusted EBIT for the quarter was $34 million at a 3.5 percent margin. Full-year adjusted EBIT was up 38 percent to $124 million, and we are encouraged by the ongoing progress in construction. The team is well-positioned to deliver on their strategic initiatives, support their dealers and customers, and gain market share. This past December, we held an engaging tech day to showcase our extensive suite of precision ag technology. Attendees met our deep team of experts in automation, autonomy, and connected platforms to better understand the cutting-edge products we are developing. Through a series of live demo stations, the team exhibited the real-world applications of our groundbreaking smart iron. The products and technology that we demonstrated Tech Day that you see here on this page and those we will be releasing over the next few years prove our commitment to being a leader in precision agriculture. We reiterate our expectation to deliver over $1 billion of precision ag sales in 2023. I also want to highlight two recent investments made through our C&H Industrial Ventures arm. Stout Industrial Technology is a U.S.-based startup focused on AI-powered smart agriculture implements. Earth Optics has proprietary sensor technology that precisely measures soil health and structure. By taking minority stakes in these and similar companies through our ventures portfolio, CNH is staying on the cutting edge of emerging technology to develop solutions that provide real advantages for customers. T&H remains committed to adding value and creating profitable growth for its customers and shareholders through sustainability. We have a strong history of sustainability performance as evidenced by our recognitions and our innovative products, including the New Holland methane tractor and electric mini excavator pictured here. In 2022, we pledge to set science-based targets that will enhance our operations, scope one and two emissions goals, and establish first-time decarbonization goals related to our products, which we'll announce later this year. With that, I will turn it over to Adonay to take you through our financial results. Adonay?