CNH Industrial

Good morning and welcome to the CNH 2025 First Quarter Results Conference Call. All lines of the place unmute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I will now turn the call over to Jason Amerseth, Vice President of Investor Relations. Please go ahead.

Thank you, John, and good morning, everyone. We would like to welcome you to the webcast and conference call for C&H Industrial's first quarter results for the period ending March 31st, 2025. This call is being broadcast live and is copyrighted by C&H. Any recording, transmission, or other use 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 Adone Anchiza. They will reference the material available for download from our website. Please note that any forward-looking statements that we 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. Our presentation includes certain non-GAAP financial measures.

additional information including reconciliations the most directly comparable u.s gap financial measures is included in the presentation material i will now turn the call over to garrett thank you jason and good morning to everyone joining our call originating here from oak brook illinois before we begin i want to address the recent announcement that odona will be stepping down from his role as chief financial officer effective may 6 after more than five years as our CFO, safely navigating our path during COVID and the subsequent global recovery of our exciting industry, all the way to this very phase of our cyclical markets. On behalf of the board and the entire company, I want to extend my sincere thanks to O'Donohue for his outstanding leadership and unwavering dedication over his impressive 28-year career with CNH and related companies. He has been a key force in leading and growing our financial services business first, and then in shaping our financial strategy. And I wish him all the best for his future endeavors. We're also grateful that Odon is working closely with us to ensure a seamless transition with his successor, Jim Nicholas, who joins us from Martin Marietta, a company that is a global leader in its space and shares some of our analyst coverage connected today. We are thrilled to welcome Jim to the team as CNH's incoming chief financial officer. Jim brings a strong background of over 30 years of experience in corporate finance, M&A, tax, investment banking, and business strategy. You will all get a chance to meet Jim in person and on stage when he presents at our investor day in New York next week, alongside me and the other members of our global leadership team. With that, let's look at the first quarter results. where we kept production very low to reduce inventories while defending our growing market shares. So in line with expectations, our financial results came in at a low point. We are focused on what we can control while the industry demand remains soft, and we do our homework on multiple commercial and operational fronts. Our ag dealers continue to make meaningful progress in reducing their inventory. with another $100 million reduction in the quarter or about a billion dollars lower since Q1 2024. Typically, we and our dealers in the Northern Hemisphere built up inventories in the first quarter in preparation for the spring selling season. So while this decrease may seem modest when compared to the larger reduction we saw in Q4, this is actually great progress and right in line with where we expect retail deliveries to be in the coming months. defending our strong market shares in key segments. While some of the dealer inventory reductions, particularly the more aged and special purpose units, were supported by additional incentives in the quarter, we remained disciplined in balancing price and costs, particularly for our latest machines. Price cost was favorable, even with ag pricing slightly lower year over year in the quarter as targeted, and we expect to have better pricing comparisons in the second half, which depends on how the various factors governing our end markets will play out. Construction price cost was nearly even. We launched a great new automated spraying solution for farmers, Case IH Sand Supply and New Holland IntelliSands. using vision technology from Augmenta, the startup we acquired in 2023. This SENS and ACT technology offers great flexibility with a range of spraying application options. And it is a very cost-effective solution for farmers, as it requires no annual subscriptions or per acre fees, which drives efficiency and profitability using our world-class iron and precision technology. Besides the addition of Jim as our new CFO, we also announced some other leadership changes. Luis Abreu as our Chief Information Officer, Francesco Tutino as our Chief Human Resources Officer, and Cameron Batten as our Chief Communications Officer. Welcome to the CNH team. Luis was promoted from our internal bench while Francesco has returned to CNH just as I did almost a year ago. Cameron joined us after growing roles in high-tech and automotive players and is supporting our internal and external messaging as you will experience next week during our Investor Day. We remain relentlessly focused on driving operational excellence across the company, advancing cutting edge technologies and deepening the execution of our cost saving initiatives. We are looking forward to going into more detail during our Investor Day next week. We will review our mid-cycle 2030 profitability targets with you well past the certainly relevant short-term impacts from global uncertainties around tariffs and, of course, the cyclicality of our business. CNH is long-term oriented and focused on doing the right thing, regardless of what we might face in the near term. We will always find the best choice that balances all stakeholder interests. The Q1 results reflect the expected and guided market headwinds and our decision to keep production low. I'm confident we are taking the right steps to navigate this period and position the business for the next cycle upturn and our long-term success. Consolidated revenues for the first quarter were down 21% at $3.8 billion. Industrial adjusted EBIT was $101 million, down 73% compared to last year, and EPS for the quarter was 10 cents. While some commodity prices have improved year over year, farm incomes remain depressed and relevant boundary conditions are quite uncertain, which leads to softness in equipment demand. The adjustments to our manufacturing cadence, while painful, are necessary to position us to weather the equipment demand downturn in a healthy way that balances our various priorities and they also provide an opportunity to improve and change our processes to come out stronger on the other side while our operations run at a slow pace. As expected, retail demand was slow in the quarter. Our production hours were down 26% when compared to Q1 2024, with agriculture down 27% versus 2024 and construction down 19%. For context, Q1 2025 production hours were down 41% versus Q1 2023, with ag down 43% and construction down 33%. Large Ag was down 36% versus 2024 and 50% versus 2023. Small Ag was down 12% versus 2024 and 29% versus 2023. We are working very closely with our dealer network and supporting them with marketing actions and to reciprocal exchange of information to achieve lower healthy inventory levels while preparing for a great fresh model year 2026 lineup to come very soon. By staying close to the dealer network and focusing on market shares, we are well positioned to reach our year-end inventory targets. We are proud of the performance of our financial services segment that yielded sound results while facing the market slowdown and higher risk provisioning needs. This is an important strategic part of our business that provides our farmers and builders with access to competitive financing even when the macro environment becomes more uncertain and less stable. We are seeing once again the value of operating a captive financial services business in volatile times. Later on, we will speak in greater detail about the current tariff discussions and actions. But let me say that we are obviously monitoring the situation very closely given the speed with which things are changing. and we have the team and resources in place to respond and act swiftly. As prior moments of profound change and challenge in our industry have shown, there are some thoughtful actions that can be taken immediately, while other more structural changes will require more certainty and visibility. We act on both sides, effective today and in alignment with our dealers, we implemented a modest price adjustment in North America for new orders, while sharing the tariff cost impact with our supply base. We have been and always will be committed to the North American home of our global brands, and we see multiple ways to address the possible change of global trade, not only of commodities, but also of agriculture and construction equipment. Historically, the ag equipment and market has been more resilient than other industries in terms of GDP contraction, but the uncertainty is not helping an already depressed market. Facing those challenges head on, I'm very proud of our team for continuing to execute in an effective, thoughtful, and calm way, keeping the long-term picture and profound underlying drivers that define our business ecosystem in mind. With that, I will now turn the call over to Adonis to take us through the details of our financial results.