CNH Industrial

Good morning and welcome to the CNH 2025 second quarter results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, we will conduct a question and answer session. To ask a question, you'll need to press star followed by the number one on your telephone keypad. To withdraw your question, please press the one again. As a reminder, this conference is being recorded. I will now turn the call over to Jason Omerza, Vice President of Investor Relations.

Thank you, Julianne, and good morning, everyone. We would like to welcome you to the webcast and conference call for CNH's second quarter results for the period ending June 30th, 2025. This live webcast is copyrighted by CNH, and any recording, transmission, or other use of any portion of it without the express written consent of CNH is strictly prohibited. Hosting today's call are CNH CEO, Garrett Marks, and CFO, Jim Nicholas, who joined CNH in April. 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 to the most directly comparable U.S. GAAP 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 the call. In line with expectations, market conditions in the quarter remain soft. Consistent with our decision, to underproduce to the retail demand, we went to a financially muted quarter by design, while reducing our channel inventories. Given the ongoing complexity and uncertainty in the microeconomic environment, forecasting remains a careful scenario play. That's true for farmers, and so that's true for CNH. Underlying the current market are soft commodity prices, relatively high key commodity stock levels, and uncertain end markets, particularly for U.S. farm production, which all make it difficult for farmers to buy equipment above their immediate replacement demand. Changing trade dynamics adds an additional layer of uncertainties and scenarios, which we carefully observe and reflect in our decisions. As such, we continue to work closely with our prepared and informed dealer network keeping production very low to help reduce C&H dealer inventories and clear aged inventories while defending market share. Overall, industrial production hours were down 12% year over year in the quarter, with 12% down in ag and 15% down in construction. We are making good use of the down days and slow production pace to review our processes and take decisive action to improve our manufacturing quality and consistency. Our ag dealers continue to make progress in reducing their inventory with another $200 million-plus reduction in the quarter. While the pace of reductions was in line with our expectations in several territories, it slowed down in EMEA in part because of increased dealer and customer orders, especially in Eastern Europe, that we were able to fulfill through our own company inventory. We remain aligned with our global dealer base and are on track to achieve our target levels of newly built machine inventory by year end. And we expect to produce in line with retail demand sometime in the second half and into 2026. During the last two quarters, We continue to deploy targeted commercial actions on aged ag inventory, as well as on used machines. We are encouraged by the reductions we have seen in used inventories, not only at our own ag dealers, but across the industry. We have focused on clearing the yards to create space for the model year 2026 machines to come. Additionally, We remain relentlessly focused on driving operational excellence across the company, advancing cutting edge technologies, and deepening the execution of our cost saving initiatives with a great deal of discipline. Both price and costs were favorable in the agriculture and construction segment in the quarter. We do not, however, expect that this will necessarily continue in Q3 and Q4. as it depends on how and when the U.S. tariffs and potential retaliations will impact our industry. We took certain moderate pricing actions, but we don't know if we have covered the full tariff impact until we know the final trade agreements by country. In May, we announced a new collaboration agreement with Starlink, providing superfast and cost-efficient connectivity in all remote areas for our farmers, and I'll touch on that a bit more in a moment. Finally, on May 8th, we held our Investor Day 2025, where we detailed our new strategic business plan. The feedback on our down-to-earth strategy that we outlined has been pretty positive. We presented a no-nonsense approach to delivering leading products to our farmers and builders while growing our margins. Everything we presented is within our control and will be delivered as we focus on our homework, as I like to say. We appreciate your thoughtful engagement and continued confidence around the long-term priorities that we laid out. And of course, we will come back to you regularly with quarterly highlights and probably annually reporting back on our progress. With that, let's turn to the numbers. Q2 results reflect the expected and guided market headwinds and our conscious and painful decision to keep production low. I would like to send out a huge thanks to all our teams across our sites for turning the slow pace into an opportunity to rework our operations for the next phase. We are taking deliberate and disciplined actions to navigate the current market conditions while simultaneously positioning the business for the next cycle up-term and long-term success. As Jim and I have stressed many times, we manage daily, we report quarterly, and position C&H for the next decade, even if it requires interventions in our operations and investments in our technologies that impact our reported financial returns in the near term. We are in this for the long term. Consolidated revenues for the quarter were down 14% at $4.7 billion. Our ag segment sales were down 17%, and ag North America was down 36%. North America has the highest industry profit pool in the world for agricultural equipment, and historically, that is where C&H has derived the highest share of its ag sales. The low on North American industry retail demand, down 37% for high-horsepower tractors and down 23% for combines, and our dealer stocking efforts in the region have had very negative geographic mixed effects on our results and decremented margins. Industrial adjusted EBIT was $224 million, down 55% compared to last year, and EPS for the quarter was 17%. At our recent investor day, we outlined our path to 2030 and how we are breaking new ground in iron and tech while expanding our mid-cycle margins. As part of that, we highlighted five key strategic pillars, expanding product leadership, advancing our iron and tech integration, driving commercial excellence, operational excellence, and quality as a mindset. Today, I would like to draw your attention to an iron and tech advancement that was announced after the investor day was held. On May 15, we announced that CNH had reached an agreement to offer Starlink's satellite-based connectivity on Case IH and New Holland machines wherever Starlink service is available around the world. This connectivity option, which will be available both as factory fit as well as retrofit, is a great alternative for farmers where cellular connections may be weak or unreliable. With its seamless integration into field ops, Starlink will help farmers stay connected and enhance their productivity. We remain deeply committed to innovating with a farmer first and soil health mindset, and this is just the latest in a long line of innovations that deliver meaningful value to those we serve. But Starlink is just one example of how we are advancing the integration of iron and tech at CNH. Our efforts to bring more of our tech in-house gives us greater control over these very sophisticated solutions that we are delivering to farmers, which they can get both on a factory fit and a retrofit basis. At Agritechnica November, you will experience our renewed pace and determination in this field. including our attention to soil health as the farmer's key asset. From here, we will deliver several updates and upgrades to our onboard and off-board digital technology every year, advancing our offering at a pace we could not have done before launching FieldOps. A huge shout out to our precision and tech teams who work tirelessly on getting the next stack of code ready for our farmers. With that, I will now turn the call over to Jim to take us through the details of our financial results.