CNH Industrial

there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. To withdraw your question, press star one again. I will now turn the call over to Jason Omerza, Vice President of Investor Relations.

Thank you, Regina, and good morning, everyone. We would like to welcome you to the webcast and conference call for C&A Industrial's fourth quarter and full year results for the period ending December 31st, 2024. This call is being broadcast live on our website and is copyrighted by C&H. Any other use, recording, or transmission of any portion of this broadcast without the express written consent of C&H is strictly prohibited. Hosting today's call are C&H CEO, Garrett Marks, and CFO, Adona Anchiza. They will reference the material available for download from the C&H 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. 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 Gerrit.

Thank you, Jason, and good morning to everyone joining our call. I'd like to start by recognizing the CNH team, our suppliers, and particularly our network partners for navigating a challenging year with determination and hard work. While industry demand remained very weak through the end of the year, as expected, our global team maintained focus on what we can control. reducing channel inventories, capturing operational efficiencies and quality upgrades throughout the company, innovating on cutting-edge technologies and executing on an even deeper level of our cost-saving initiatives. As we deliver the launches of our renewed tractor and combine lineup, one after the other, with in-house precision digital technologies, our confidence grows in our competitive positioning to capture share and margin and we know the measures we have taken set us up well for long-term success. As planned, we cut ag production hours by 34% year over year to help bring down the inventory levels in the channel. The lower production focused sales campaigns and some improvements in market share helped dealers reduce their inventory by over $700 million in the quarter. There is still work to do on that front, As we said before, we remain price disciplined and will continue to underproduce to the retail demand at least through the first half of 2025 to get our channel inventory down to lean levels. We are obviously monitoring multiple leading indicators in each region and when we see an upturn, we'll reassess inventory levels and our production speeds. When I rejoined CNH about seven months ago, I was very excited and encouraged by the already ongoing efforts towards business optimization and strategic realignment throughout our organization. We exited 2024 with about $600 million of run rate savings, and that is on top of the $185 million in 2023. These are structural cost reductions that are important contributions to our good decremental margins in this challenging market environment. And those savings put us on sure footing as we move into 2025 and continue our push for better future returns on our investments in products, structures and teams. And finally, as we continue our relentless focus on quality with an all company mindset shift, we looked at issues where we have an opportunity to improve our customers' product and service experience. This is an investment that we are making with an eye towards claiming industry leadership in product and service quality jointly with our network partners. And we will explain in greater depth at our upcoming investor day on May 8th, how we will undergo this total quality enabling transformation jointly with our larger and stronger multi-brand retail and service networks. We knew from the outset that the fourth quarter was going to be tough because of the market conditions, but also because of the choices we had to make for adjusting our inventories and manufacturing cadence. We were not solely focused on delivering the highest possible financial performance in one quarter, but rather on making the best choice across several key business parameters that sets us up for 2025 and for the industry upcycle whenever it happens. Looking at the full year, there is no avoiding that 2024 was challenging. You all know the story told so many times by all the market participants last year. Depressed commodity prices weighed on farm income, which in turn led to softness in equipment demand. In the beginning of 2024, we saw it already in South America and Europe, and then later also in North America. Thus, full year 2024 consolidated revenues, were down 20% and industrial net sales were down 23%. Industrial adjusted EBIT margin for the full year was 8.2%, down 370 basis points compared to 2023, primarily from the lower volumes and partly offset by our cost reduction actions. Industrial decremental EBIT margin was 25%, reflecting a more agile reaction to the sales downturn. Our Q4 results were low as expected, as we focus on the goals of reducing channel inventory and maintaining pricing discipline through some very targeted retail sales programs on pockets of aged or specialty inventory and through the lower production we accomplished both goals in the in a big first step in 2025 we continue to work proactively with our ag dealers to reduce the inventory levels which now becomes more granular as different product types in different regions are exposed to different demand cycles and require different stock availabilities. However, overall levels are still too high, assuming our 2025 market forecast isn't too conservative. While Ag is our core business, and that is where we put most of our focus, I also want to highlight the great achievements in our other two segments. In construction, we saw resilient gross margins supported by our tireless efforts on cost actions. Despite a 33% drop in net sales in the quarter, gross margins were flat year over year and gross margins actually improved on a full year basis, reflecting the outstanding work that the team has done to turn around that business. Well done, team construction, once again. In financial services, sound fundamentals and careful risk management has led to solid results. In fact, net income for the full year was slightly higher than in 2023, despite cautious and careful risk provisioning. Delinquencies are at reasonable levels and our return on assets is where we want it to be. Putting it all together, the team executed on our fourth quarter plans and positioned us well as we move into 2025, which will start with a very similar mix of levers between production and sales for the next few quarters. With that, I will now turn the call over to O'Donohue to take us through the details of our financial results.