CNH Industrial

Hello and welcome to the CNH Industrial third quarter conference call. Please note this conference is being recorded and for the duration of the call your lines will be on listen only. However, you'll have the opportunity to ask questions. This can be done by pressing star 1 on your telephone keypad to register your question. If you require assistance at any point, please press star 0 and you'll be connected to an operator. I will now hand you over to your host Jason Omeza, Vice President of Investors Relations, to begin today's conference.

Thank you, Francois. Good morning and good afternoon to everyone. We would like to welcome you to the webcast and conference call for C&H Industrial's third quarter results for the period ending September 30th, 2023. This call is being broadcast live on our website and is copyrighted by C&H Industrial. Any other use, recording, or transmission of any portion of this broadcast is without the express written consent of CNH Industrial is strictly prohibited. Hosting today's call are CNH's CEO, Scott Wine, and CFO, Adoni Nchiza. They will use the material available for download from the CNH website. Please note that any forward-looking statements that we might make 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 annual report on Form 10-K, as well as other periodic reports and filings with the U.S. Securities and Exchange Commission and the equivalent reports and filings with authorities in the Netherlands and Italy. The company presentation includes certain non-GAAP financial measures. Additional information including reconciliations to the most direct, early 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. Our third quarter results were disappointing, but they also reflect the earnings power of C&H as we dealt with the challenging market environment in South America. The sustained strength of our North American row crop and construction equipment demand continues to be a helpful offset to slowing demand in Brazil and continental Europe. Better efficiency with operational improvements, supply chain normalization, and productivity gains from our many CNH business system initiatives help drive record third-quarter EBIT margins in both agriculture and construction. Our tech evolution is accelerating the development of innovative, customer-driven solutions. With key acquisitions, strategic investments, and a deep and talented team, we are largely in possession of the in-house capabilities to build out our tech stack and fulfill customers' precision needs. I am pleased to welcome the employees of Hemisphere who joined the CNH family in early October. We are redoubling our efforts on cost savings and working capital efficiency. Concurrent with the spinoff of Iveco in 2022, we streamlined our corporate structure and eliminated about 20% of the managerial positions. After almost two years of operating as an ag and construction pure play, We understand how to further optimize in support of our customers and dealers. Today, we are initiating an immediate restructuring program to achieve a 5% reduction in salaried workforce cost to be substantially completed by year end. This will be coupled with a comprehensive right sizing of the company's cost structure to be implemented early next year. We expect these two initiatives to deliver a run rate reduction of 10 to 15% of total labor and non-labor SG&A expenses. Additionally, we've announced today that we have formally applied to delist from the lawn exchange, which Adone will discuss in more detail. Company revenues for the third quarter were up 2% to $6 billion, driven by higher volumes in construction and higher interest revenues in financial services, offsetting lower agriculture sales. Positive price realization contributed 2% to 3% to the top line in both industrial segments. Industrial net sales were down 1%, as lower ag shipments offset 6% sales growth in construction. Adjusted EBIT margin, including corporate cost, was 12.3%, essentially flat compared to last year. Net income came in at $570 million, and EPS was up 1 cent to 42 cents. South American markets, primarily Brazil, were weaker than expected in the quarter. with industry-wide retail deliveries down 16% year-over-year in tractors, 46% in combines, and 27% in construction equipment. I was with our team in Brazil last month speaking with dealers and farmers who are reluctant to engage with the steep year-over-year declines in soft commodity prices. We are working closely with our dealers to maximize their retail sales while also responding prudently with production and wholesale shipment cuts. Very purposefully, we did not sequentially increase dealer inventories in Brazil. It's worth noting that we are also comping record harvest and results in the region last year. We remain bullish on the long-term growth prospects for South American market, which is an increasingly important part of the global ag economy and our strongest market position. We are pleased with the EBIT margin expansion for both of our industrial segments and will show later in our presentation how this is indicative of improved through the cycle margin performance. Derek Nielsen and his team are executing well and remain focused on driving benefits for our dealers and customers. Through an expanding product lineup, innovative technology solutions, improving product quality and productivity gains, they are expanding margins and maintaining our market share. I look forward to being in Hanover next week with our team as we showcase our Case IH, New Holland, and Steyr brands at Agritechnica. Collectively, we have won five innovation awards for the show, including the show's only gold medal for New Holland's twin rotor combine harvester concept. Our construction segment had a record-breaking quarter, driven by new product launches and solid retail sales growth in North America. Revenue was up 6% year-over-year with notable expansion of growth profit margins. North American demand for our equipment has been strong on the back of public infrastructure spending, and Stefano Pompiloni and his team are doing an impressive job moving the business forward and delivering significant value to customers. Dealer inventories have been normalizing for most products in most markets as supply availability recovers. We are judiciously balancing wholesale shipments with retail improvement to improve inventory levels by year end. Our company strategy remains centered with five key pillars, customer-inspired innovation, technology leadership, brand and dealer strength, operational excellence, and sustained stewardship. Today, we will focus on advances in technology leadership. Over the past quarter, we bolstered our precision technology offerings with three key product innovations. All these solutions automate guidance and steering enhance operator efficiency, and are first available as aftermarket solutions. We commercially launched our Raven Auto Cart solution with hands-on demo at Farm Progress in August. Early orders indicate strong demand for this solution that automatically sinks a grain cart to a combine, thereby eliminating operator strain, decreasing spillage, and enabling operational by less skilled workers. By optimizing the harvest process, Raven cart automation maximizes yield and farmer profits. Raven direct steer provides precision automated electric steering, which is backwards compatible across a wide range of brands, including other OEMs equipment. Direct steer outperforms other similar steering mechanisms, and for Case IH and New Holland tractors, replaces third-party technology with a superior in-house solution. We additionally previewed guidance and positioning kits that enable customers to replicate the factory-fit displays and features from newer CNH machines on their existing fleet. These internally developed automated driving advancements boost customers' productivity and profitability. We are reducing our reliance on third-party solutions and optimizing our products to meet customer needs. The innovative technology we are developing and launching reinforces my confidence in our strategy to transition to in-house solutions. We started this effort nearly four years ago, accelerated it with the Raven acquisition, and have been aggressively pursuing this strategy ever since. Recent developments in our industry will not change the course we set out years ago. In fact, we think they validate our direction. You can see from the graph that our tech stack hit an inflection point in 2023 with the integration of Raven and the contribution of some of our recent acquisitions. This activity allowed us to bypass years of organic development in key areas such as autonomy, vision, and guidance, which we further expedited by rapidly scaling our own tech talent. This steep increase in this ownership curve is no accident and is the manifestation of our strategy to take control of our tech offerings. Earlier this year, we announced the acquisition of Hemisphere and are excited to have finally closed the purchase in October. This is another highly strategic acquisition for us. Not only does Hemisphere have the most accurate position and heading technology in the business, but they also design and manufacture their complete positioning engine all the way down to the chipset. This acquisition allows C&H to create a seamless system to deliver optimal customer performance and experience. With Hemisphere, we own the foundation for positioning and guidance that powers all aspects of automation and autonomy. This vertical integration facilitates faster development times and gives us full control over feature performance and cost. Hemisphere adds to our comprehensive portfolio of high-tech companies that are expediting the advancement of full autonomy throughout our product offerings. In conjunction with Raven's expertise in autonomous technology and Augmento's unique sense and act solutions, Hemisphere's capabilities significantly advance our ability to improve customer productivity. We'll now turn the call over to Adonis to take us through the financial results.