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CNH Industrial (CNHI)

Participants
Federico Donati Head of Investor Relations
Scott Wine Chief Executive Officer
Oddone Rocchetta Chief Financial Officer
Gerrit Marx President of Commercial and Specialty Vehicles
Robert Wertheimer Melius Research LLC
Ann Duignan JPMorgan Chase & Co.
Kristen Owen Oppenheimer & Co. Inc.
Martino De Ambroggi Equita SIM
David Raso Evercore ISI
Gabriele Gambarova Banca Akros
Ross Gilardi Bank of America Merrill Lynch
Call transcript
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Operator

Good morning and afternoon, ladies and gentlemen, and welcome to today's CNH Industrial's 2021 Third Quarter Results Conference Call and Webcast.

For your information, today's conference call is being recorded. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] At this time, I would like to hand the conference over to Federico Donati, Head of Investor Relations. Please go ahead.

Federico Donati

Martin. you, Thank good and Good afternoon, morning, everyone. like webcast the would for period you quarter to conference call the XX. September welcome and ending for results We XXXX to CNH third Industrial Industrial. on is call and by being live This our broadcast is website copyrighted CNH use any of Any without recording this Industrial CNH transmission consent written expressed of or is broadcast of other portion the strictly forbidden. President Iveco and CNH Industrial's Oddone Gerrit Marx, CFO, CEO CEO, Rocchetta; Vehicles Specialty for Wine; are of Scott call and today's Group. Hosting designated Commercial and use will for from They material the download the available website. CNH Industrial forward-looking Please note risks we that the the during making today's mentioned uncertainties are any Safe the statements to material. might statement including presentation be subject Harbor in call and

is EU and contained non-GAAP XX-F authorities with the recent Netherlands to report Report, and periodic and most certain Annual Exchange in information Commission measures. the may presentation actual could Additional pertaining materially factors Company’s and well that U.S. include Securities financial filings reports and Company equivalent differ as as the Italy. other The the cause results in to

GAAP including comparable the is remark, again, from team the to is presentation countries. measures One most different reconciliation once our in directly final connecting information, material. included Additional the financial

there if please forgive silence between call, during the we moments So us manage speakers. will are over now Scott. call to of I while the transition the turn the

Scott Wine

the of a team and Iveco for of to of way chain dealers and extremely customers all and of us the steps finding and our for the acquisitions situation. supply them our am call. our prepare joining two deliver putting deteriorating proud I company, welcome you in and spite Federico, for Thanks, working to spin reorganizing to strategic finalizing to Group, close Between first

a across history, of in results solid and of the four of our global which our earnings for strength improvement of months exceeds year segments. three outstanding in including markets EPS the company our produced full team. margin any execution per nine team Impressively, the share our $X.XX end first sales operating quarter, and net third Our underscores the

we due While of is outlook QX robust, lines. currently a demand component remains issue are worsening our that affecting many our availability reducing product to

markets deliveries America in tractor throughout moderate limited similar quarter last horsepower High North will across combine for fleets harvesters retail continue input ag in year. inputs. situation on we across equipment fundamentals, third and with solid all We are aging and today persisted well with XXXX. more the book into separate improvements update markets In momentum machinery working XX% impact mitigate a quarter yields order costs other closing operating what farmers both combines. that for builders. return ag increase strong will year-over-year were for two financial bolstered confident combines. versus and and for up for initiatives, by volatile combined supply rising to production all constraints environment preparation company approximately North industry historically review inventory flat are the On-Highway aging quite expect XX% channel same off CE driven promising calls that and handing horsepower fleets, tripled where chain-related that I'll after growth Oddone’s ag more particularly remarks. year, the regions, healthy Gerrit to and order with in for our demand aggressively the for The this well to With performed Overall, cyclical and Ag levels our infrastructure vigorous industry by geographies. than and we'll demand be be higher my as next remains high perspective, global replace low ag America, seek From advanced precision with quadrupled tractors sales doubled farmers tractors segments generates quarter our was with a reduces to almost year. Resultantly, This our our next book and

Given XXXX, equipment segment Agriculture which well. continue and grew our perform light heavy to Europe construction extends the existing our Both now should significantly steadily order and into backlog, in Americas.

quarters, was strength long for bill. As largely well consistent driven while demand particularly in South construction, by From in previous was U.S. increased America as as perspective, heavy contractor infrastructure regional preparations light benefited from a demand the residential percentage down Europe cadence demand moderated sequentially high retail largely supported Construction Brazil, affected. with while while elevated product light somewhat to low heavy North by slightly less due year-over-year to was availability, due basis on and equipment America a was comps. mixed awaited

supply XX% versus global with down caused last of to retail inventory underproduce fact, chain X% the us company constraints by In quarter year. third worldwide

Our order in almost segment dealers, the are Xx of regions for the books with year-over-year demonstrating growth brands all our equipment. and strength

and to remain strong sentiment rising soybean industry continued Chinese well prices regions. ag generally demand. demand remains farm expect and as incomes to We commodity across corn positive due as all Farmer

record drought limited inflation, been and However, input high earlier availability. had by localized situations in cost, equipment the the has we higher muted year sentiment slightly

recover in Equipment, equipment market the Construction segment. Optimism the driving is strong to with books upcycle. a For U.S. contractors from industry its order in contribution the housing sales demand heavy increasing alongside continues to across

will sustainable with limit issue about our June, provide farming. late customers quarter our more acute require a in represents and finish and component our we announced plan generally internal impacting While efficient the Raven, precision integrated to for products. to fourth our towards and and move and we which end autonomy. Working Industries, the Raven solutions major about they and with journey optimistic markets business and In growth performance, ability increasingly our will production leadership industry ship jump acquire our in expedite the curve to all concert we ag are

transaction closely We optimistic are an it the working administrative close month. for final obtain to this approval are later with will body and

is once extremely are future and finalized. running excited Our for together to teams deal the a planning hit ground diligently transformative have truly been bright this

showed This our alternative bolster partners. our CE strategy us third-party aspects high construction likewise equipment excavator development a key close integrate new midi we portfolio power Sampierana during capabilities our We systems. invest profitably OEM equipment commitment of for to the in the positioning it you have will the alongside may also and light up During grow the market. will our confirms seen technology It excavator products Show. purchase our into acquisition and excavator Farm announced with mini in some and quarter, better Furthermore, Progress existing also Eurocomach of current of expected launched at several the construction to business, which demand quarter, QX.

with on-road New propulsion which of heavy pioneered with a waste sustainable holistic a for demonstrating leading the CNH that new industry superior maintains exceptional commitment this performance, is and this Duty, agility TX The first compressed or for also and provides is energy and process outstanding brand First key farmers biofuel process, Holland but powerful Heavy a working gas circular a versatility to a platform, is delivers the are Horizon biomethane TX system. hallmarks by experience the from and duty awarded and derived Power Bologna, features. technology IVECO In of PLM Sustainable enabler our cab Industrial’s farming. Tractor and note, Tractor methane natural next product, Italy. at farm Ultra system a the Its transport. tractors EIMA just TX related Methane its methane in is was generation Industrial Using is last Intelligence week for from the the Year liquified FPT in longstanding sister

& more to Speedrower redesigned provide to Holland from New productivity, precision farmers Forage ground and the Series also PLUS Holland up efficient launched Hay previous profitable. models New than more the Windrowers and power new make

Next, improved and offers farmer’s range, accuracy create saving the AccuTurn new connectivity in with more. more Optum space, tractor. has labor, AccuGuide need repeatable the a and package the eliminates AFSs AFS year-over-year new and Connect to The field and with cab both strong new operator tractor sub-inch Case XXXX seller allows it and Pro, since new cab IH introduction, re-engineered been lower the vision. designed Optum fuel, to steer benefit A owners. Combined level to noise fertilizer our to the the its interior open levels

vary practices challenges, field soil optimize Our increased Soil field operators of enables field With where IH of tools range for Last, allow tillage tillage speeds, our the CASE and preserve inch tillage planning needed. productivity based helped technology their every AFS moisture conservation and Case by a two from enhance Construction. farmers minimize types, soil as management to topography. changing prescriptions address erosion settings X.X%. Command and products conditions, to prescription on much as

SiteWatch telematics. First, standard well a ever track compact TVXXXB, operating powerful delivers as including best-in-class XXX-horsepower, This new and CTL other the to most XXXX-pound the one-year subscription built. CASE all features, rated breakout forces as largest capacity many loader

reliable Second supported SV by The and the productive, V efficient increased delivers FPT is emissions fuel greater backhoe a the available. engine. controls, expanded Stage Backhoe performing, enhanced new SV of Service ownership, features Loader comfort, total a all reduced and lower It Series highest loader CASE new cab cost Series, productivity, Solutions. operator most with and

around our Our them empowering serve. with strategy across products solutions and customers, the we technology is centered innovative industries

ecosystem, We and are autonomy. of vital technology: connected focused propulsion alternative areas three on

of experience we phase workflows diverse frictionless offer equipment. solve to and networks ecosystem, problems simple with of With of next and complicated will created Connect the various equipment. expansion across have deliver a brands AFS/PLM breadth The sufficient an connected customer across range seamless solution that

FPT in energy the over farms. circular TX to has power most aforementioned began paving alternative numerous Holland the New with Together product the recent like sustainable generated way Bennamann, investment Our awards, we being energy Tractor. and ago and are years create XX and partners true independent others, and Methane

through agreement, capabilities, electrified Monarch enhance extensive iron. to we us merging partnership Under platforms. will Coupled efforts enable deploy launch technology with capabilities and Valley technology to our with accelerating our rapidly Additionally, industry-leading Tractor, by our this electrification new Monarch’s in-house our with partnership advanced a startup. will EV sequence license advanced Silicon tractors our electric we this are

by example on-road already solutions through opportunities our touch Digital highlights. the next solution hand to Progress, for months Lastly, Through products. you ag take Gerrit unlock. I quarters. these experience presented is over the growing acquisition the fully are of in by innovative exemplified from ag year. we our to Farm part in to out we customers, to at we representing functionality of value the as products, value automated A roll to for sales one significant plan significant nine such aim team first customers industry time about to perfect the to as Raven one automation generate drive automation about integration leverage the increasing of the have intend with of our Raven, are we the autonomous. vast XX% to delivering OMNiDRIVE few spent and the of technology on the for am the level precision I'll or now activities, excited many I the

Gerrit Marx

to market the and the The banks. vehicles. get Thank good South American X.X by truck their causing instead accelerating various supplier ability registrations manner, the XX% constrained were On out again, Over in duty and tourism afternoon saw call. speaking, market post-pandemic in restarted this thereby European the partially adding market we remains post-pandemic to trade plans. compared to were market timely recovering as quarter you, bus a plans. demand X increases hasn't shortages registrations for replacement fund OEMs support third QX COVID-XX economic inter-city weight morning truck up down still mostly in industry and year-over-year truck incomplete product and The government-funded and very capacity of coaches slowdown. authorities at accumulating in Scott, industrial supplier X% European was and trucks XX% due in delays with significantly my and schemes strong down by up registrations all on temporary a in were widespread demand boosted the due from Medium reopening, shortages strong side losses, X% support a Generally COVID-XX long rebound XXXX most heavy quarter Slide bus participants and trucks now production also following from the Light lower low. markets. flat uptick activities, the duty recovery market to offset to industrial due ton by recovery full slight increased by order in distance the year and to improvement, Despite Brazil in back for slightly long commuting segment. a plants driven transportation minor to very to pace city COVID see the by

and prior produced as in heavy trucks For quarter duty while under sales by already EU medium X% medium completing was supply X.XX. up with duty we semiconductors quarter Truck where produced retail X.XX supported trucks, we and and predominantly light down light sit under duty was duty inventory heavy Light vehicles the which and due incomplete trucks overproduced quarter, retail the of from Company by worldwide chain X% carried for retail constraints. in the X.XX, the XX% forward impacted at duty shortage of XX%, X% us. the trucks by medium book-to-bill by trucks to third third for heavy were at heavy in at trucks. X.XX and

entering two market of third slowdown plant considerably Order XX a Our for to light for around Europe becomes pace capacity After the XXXX. Spain prices and IVECO heavy in and XX%. volatile points and duty for fourth the up already gas registrations range delaying points of situation quarter with share at to Demand for with XX% XX%, reflecting than of books light, trucks XXX significant than up show substantial X% should market quarter trucks compared medium was X.X% trucks year versus as and XX to at and from from quarters light XX in about X.X%. XXXX impacts basis steady gas next Continental the up intake basis trucks XXXX plants continues in the light up compares pick XX%, high market in announced quarter, Order to X% for year. share to Europe chain up and weeks, our to with overall remained in was medium we to third into natural medium XX.X% XXXX trucks up heavy trucks Italy. last less LNG Liquified for chain the and heavy and industry was the in truck recently XXXX. almost one the upside increases at up of our penetration expected in prior supply supply delivery again this more European the and

increase fund. we have lowered EU’s our will activity truck the of still outlook a basis initial consumer slightly the ranges and spending, year-over-year recovery on from and fair confidence grants industrial a While the Europe, for all due to combination show

Contingent applications. XXX,XXX expected recent The fairly demand. the to light be markets chain up and the still upon coach for expect depressed of ability XX,XXX We medium to range still to momentum to to and to XX,XXX expect positive the critical our keep XXX,XXX main supply XXXX. are trucks the XXX,XXX for to to tourism substantially flat cadence XXX,XXX to continue manage at of in the sub-segment. and due economies most into for year, the and We volatility European XX for the with contributors heavy for mainly buses duty EU a

XX. Slide to Turning

stand a Tre where we do zero-emission the update Let's quick on with trucks. Nikola

the as the our of fuel-cell production the of as is the electric well Nikola assembled. semiconductor-enabled As a be you Tre may recently unveiled actual battery-electric, availability at production The the Nikola end Tre facility sales scale. our prototype seen Europe subject will in to have components venture version product and Nikola joint and IVECO Ulm, output by battery Germany, required where of

in are that established global supply We milestone we IVECO's the XXXX, Thanks to able in to record chain very industrial despite were proven reach expertise September and pace and at the production we excited shortages. window basis. this pandemic announced meet

thrive. We platform Nikola’s have the upon technology provided which can

first offers LNG on Industrial features the jointly IVECO Nikola’s teams focus software, heavy duty energy technology Class hydrogen powertrain energy with when electric leading X almost CNG and zero-emission comes pronounced operation of the truck projected modular FPT technology of battery transportation. purely regional and along supply this competence refueling the Industrial, and articulated technology is the or our the U.S. chassis in designed at and heavy electrical produced the battery safe, X Now, is when running and truck ecosystem. renewable By S-WAY maturity and European platform an zero-emission duty duty is energy a ensuring long as at high-performance, hosting the export a a Class and reliable the fuel platform Based FPT parts Nikola adding cell market and success hall before COX-neutral to of elite layout. it markets it taking we U.S., the Designed and the Tre launching platform and sector. suitable both European co-designed and first, axle later on the have around underlying pure fuel-cell electric extend Together, its battery capable and as heavy will drive for by tractor, supply the to with the stage. driving on of for IVECO second biomethane. technology the range already change

longer produced the first U.S. with the in delivered next will Tre European the Nikola obtain The who and of XXXX. United XXXX to the Late circles. will initial battery per Nikola announcement customers in customers electric in turning in Europe versions be States along in models with September can usage Tre for the our on-road XXXX, wheelbase as launch larger we and exemptions

to Turning XX. Slide

more prior business discussion going non-deal next of we unit up or the turn offering of with This Corporation November and to to FPT in here Group its around construction, the starting will to would merged our enhance customers business now through I FPT’s off-highway have journey. that and Oddone confusion of virtual a followed website. formally to these immediately unified agriculture, may industrial more welcoming marine business the day the caused show that as name as post-spin logo Group that We unique, On-Highway livestreaming business you but with Group our Group. and this name over The long at with the from key company the of have brands depicts Day on be this [indiscernible]. details. FPT than be month, road eight me focus. On-Highway sell-side Vehicle for forward call take come to allow available nickname our Please the would announced November stage embodies the Iveco Industrial once by eventually XX, is roundtable Later IVECO XXX-year A Industrial of in hosting Iveco financial Industrial from IVECO. Powertrain and the Industrial on formation foundational the now further holding XXXX Iveco have yet continue power Iveco the Investor in I generation. I the journey corporate look us some CNH understand XX. to highlight

Oddone Rocchetta

Thank you, our Gerrit. results And now QX with XX Slide highlights.

the third all at across net price quarter constant realization. and currency $X.X up topline, For segments sales volumes with improvements billion of higher on year-over-year were XX% X%

Our sales vehicles in in were commercial X% Powertrain. up agriculture, in XX% XX% construction, and XX% in and specialty

importantly, approximately XXX More higher point in increase margin drove gross volume activities. of an and basis pricing industrial our

of billion adverse $X.X XXXX. almost net Activities bottom an million the was cash driven Free Equipment at the adjusted of Industrial cash On Industrial the in million was performances outflow EBIT EBIT X.X% to $XXX $XXX Activities due seasonal in capital. QX a to $XXX margin change quarter doubled flow the million from working XX, segments. line, by strong in of case the adjusted June cash across of

or and Third down $XX.X At some $X.XX transitional mix billion, our EPS. the QX $XXX tax $XXX adjusted sequentially. liquidity stood quarter adjusted effective as The the at net was million discrete a end of quarter items. million of XX% better income consequence XXXX, for per rate was available adjusted

and to componentry Activities now the cost. pricing and clear SG&A the the for segment. at offset Volume strong continues by in Slide driver pricing and help drivers quarter. Turning increase and were be again, rising Industrial freight commodity EBIT with the usual to XX once environment look The net adjusted

positive by XXXX. realization, cost Agriculture Looking adjusted by raw driven materials $XXX cost realization, price volume, from Construction with The higher as adjusted and the QX well million by XXXX spend the favorable adjusted component partially EBIT increase and adjusted R&D increase as by the X.X%. $XXX by of here material positive mix million well shortages. margin related margin business higher EBIT individual price X.X%. offset to offset EBIT and Favorable Commercial million to as was to and million adjusted freight partially as at increased X.X%. $XX price higher by due mix freight. and this EBIT was cost realization volume of period XX.X%. X% volume SG&A million were $XX was to Powertrain’s at and Vehicles and costs price constrained Specialty higher million segments. and was raw than plants down our $XX margin and product lower EBIT freight EBIT at realization, was costs was higher was higher EBIT of cost. offset compared in adjusted and somewhat higher EBIT more favorable quality levels $XX raw The Adjusted with corresponding rework partially mix, XXXX. also QX offset unfavorable material up driven $XX at positive chain supply Adjusted due million,

XXXX. price the slide, light July group realization of reminder, sales. more engines delivery four their XXXX, share the represented newly vehicle. and for FXX was and commercial higher offset Off-Highways side will the ended that across of a As is introduced than enter the In transportation orders three to segments cost in import in group, hand FPT absorption gaining engine right the Ducato up third-party costs. gross significant in family with for more FPT increased the on a the summary, of margin production This for fixed Stellantis of

the historically Moving operations groups dedicated compared getting and funding. up now two remained at business. levels. credit the Net XXXX, million, to Service is its was European Financial Financial spin-off Service and with independent and to QX here ready to due low million primarily Slide of XX $XXX our and serve income reorganizing $XX [indiscernible]

as in which due plants. QX Activities being XX Total larger will unique missing will there of at sell cash customers. large to quarter the increase supply for working that at partially the well financial negative was June net cash $XX.X Industrial level as from The to price $X.X chain on XXXX. cash and In Slide as the shortages by schedules, capital likely Industrial [indiscernible] raw this closing is be of on consideration in well, And of our demand of where slowdown Industrial continue acquisition to at logistics Free through the early flow part the we and and absorption. in predictable many regions is in position performance XX, availability, debt the situation and The Industries component material Next free noting impact transaction of was the across payables positive in inventories Activities expect position segments. would freight Activities. year have XXXX the XX, was dealers increase facilities fully realization. cash last reduction billion of have strong continued offset the is $XX.X to an September Raven and waiting inventories expected solid worth billion. billion. it paid Liquidity all million due seasonal available in for trade production and flow fleet company $XXX current cost and be we elevated stable out fleet visibility relevant our into of and expects year. in of remained based This equipment shipped temporary fourth And our in parts production before mainly

chosen of to had have of Activities as sales expect Industrial which guidance, As be net XXXX, at XX% now quarter, and anticipated year-over-year. net previous strong the follows: a fourth to our our and of guidance up year-to-date update between consequence the we progress For lower we an XX% sales end challenging

Our $X billion be flow or free expectation the approximately combined slightly anticipate R&D be X.X% will spend projected and to for the for We Industrial net lower of up Activities at to in SG&A billion sales. is year. cash confirmed CapEx than $X positive and from equal

course to it see concludes to the in to diminish stay period for Scott and financials, shortages, costs material This we component the raw longer his final freight XXXX. estimate to the my I price most by impacted remarks. now for the prepared now will some up notes fourth we Lastly, turn quarter and of while or over be

Scott Wine

busy Thanks, separation Iveco are going of Oddone. march the The to months next towards be few Group. as we

have up success still value are sets this we to for and shareholders. companies will we While maximize both confident much transaction for do, that work

be We are our in-person plans late operating exact, held a looking the month which our is event by to new unveiling in Markets this be on-road the to this February, during conferences. strategic motivated Day am XX/XX/XX for Miami Capital and off-road Beach sincerely forward presented later in to of few to scheduled rallied our business to and just by overcome how challenges the has prior of many I appreciative environment. team industrial crazy business

are chain end pricing persist XXXX, disruptions supply into costs and While and elevated our resilient. markets input to remain likely

over Duty in and gain cheering interesting want to an and wish a leader carried to forward market to the work more LNG work particularly business assembled Importantly, I a in new share the no get past few tremendous years. take and to the Group. continuing skills I Europe, demand to their lead has Gerrit success. solutions vision and seek to the his done as role He Heavy look moment plans CEO bold the shown through and signs of on as They executing their of instead, segment. subsiding Gerrit, has the turbulent best team productively. notable Iveco have demonstrated to his grow team all times customers as of back impressive in has

and value will to to supply open create our remarks and the all we That eight questions. Martin, final are ahead. execute confident the year, find us the we of into prepared chain for of ways for innovative please Going improve stakeholders. situation, our the concludes the weeks team continue key can line now go ahead milestones

Operator

question your Thank comes ask the Instructions] today line Rob Your question. Please you. [Operator Wertheimer of from Melius. first of

Your line is open.

Robert Wertheimer

technology. Hi. if may A on I couple,

as a in advanced customer prices, prepared them well tech your high delivering. I technology. demand sort customers of technology. What cycle disaggregated there's I Thank replacement a a the really any can the There are pursuing? there's opportunities on that in a you. all for high commodity and there. remarks, revenues guys last You biggest think after relatedly, lot CNHI from have of is the cycle. I'll for surveys farmer streams this a mentioned then have the this. then if do you you maybe And stop replacement There's are you're among drivers mean, result capabilities various wonder out new of you

Scott Wine

understanding key look as to Monarch about, sustainability to is of the believe that investment crop enable market Thanks, to the productivity we a really better agreement believe, we today come to a kind And obviously that quite together farmers demonstrated allow you feel competitive in our pursue in, to – especially we it in for the just And like. our is on seeing seen research the we've to be greater as building done What I acquisition, able we're good we've we of we'll in applicability, deliver like amount Autonomy and electrification to customers. yield, of and TX signed advantage. we that putting you the Methane Rob. type greater be be well for In positioned greater blocks progress and that be the Tractor, and technology we're key and key farm need we in technology. cash going much the productivity tell if with and what will think were tremendous one drivers. Raven the for is the we're those And those. enablers. are going of positioned evaluating

Robert Wertheimer

it's And from question, people several an different thoughts continue on years past just upgrade your cycle. unfair to for but Maybe cycles? duration can maybe

Scott Wine

– are other think we're mean, that theirs avoid farmers our push. they – seeing driven labor it's can't – I plants again, in really the is by of this rest productivity shortage the not Well, I places. and

part is is way what upgrade we dial is cycle we're we're farmers customers. think labor something. looking continue being precision that And the harvesting the input. think So to to deliver I our going able they're capability to to our yield deliver precision get to give really to don't of that for if in, seeing is think a for And as will, close example, the to the with last. to for done continue lower performance greater we deliver And drive. that's ability best more And I an can to even make to going even what it's their you that ability

that So there's cash can especially way bring long, in we the technology. with long to segment, a crop go believe certainly what we with

Robert Wertheimer

helpful. Very Thank you.

Operator

you. Thank

of Your of Duignan line next JPMorgan. today the go Ann question ahead. from Please comes

Ann Duignan

learned Yes. because quickly Hi, money, of when spend hopefully pretty morning. have good age farmers not you've the money of fleet. the that they And necessarily

costs because have and equipment. that How by now. do I'm if And of higher figured farmer from strength where of they that look dollar on ordered, in happening in meant notoriously backdrop trying input – that productivity sure real particular, the has versus So a and they make need this and the paid question sentiment environment? over is out are rapidly share, sure we and double the in everything strongly the U.S. My you cycles the based has which one when in they've stop on around, equipment particular deteriorated Brazil. at dealers to very U.S. the you through that given market in partially ordered,

old paid the a order So you same normal based just they're cycle how on dealers repeat market of share? because stop over where do

Scott Wine

on that's to And found we but up. struggling taxes that have right us based allow are certainly customers there they think Well, that nearly that end elegant Ann, when when prioritize you're problem they solution needs this cash, an shortages I buy dealers need. and how going that differentiating our doesn't we're it. is whether they buy also they think with end actually and customer very to as much component and customer we they shipments as produce have We're a really demand to

we lot So quite there the and of customer end real of more is demand believe I it, the see into few last over how continued And a this question that's months about this. – been much strength demand we've demand. it asked is driving the dig we really often don't

So for I seeing we're true that. don't not And think us. just it's

our are customers industry issues end labor causing are just just the an for is not competitors whether true dealer demand issues it's to inability for it's component relations causing meet it, orders. of now, well, think it I as there that that or

Ann Duignan

your component correct For And my is to point. question shortages. I'm sure absolutely be on the follow-up that moment, then European would

more raising does problem inability just just other raising because suppliers and to it root root on it overall, region? you the committed what's of you're forecast that there. when cause the there, And because to times Industrial can't Thank they've leave because inability seem of the the businesses capacity of exacerbated going and I in Industrial part has could keep CNH up great. to the others. impacted seem that'd to forecast, Is be be been lead to than it that, – cause for is you. competitors your If the your that so As CNH and accurately that does suppliers talk their outlook give adequate

Scott Wine

And our deliver supply on work would delivering And others, The that zero have we Tier actually particular in and supplier they Neilson I than one a component compare our really think different component and worse it's you suppliers. maybe And QX an time. Verbaeten for results to of supply are got is we a if shutdowns if get would order they're you others, perspective that suppliers, our a main have It our that's a many engine And probably our our be. needs simple. of you've throw actually didn't competitors which from if was COVID Malaysia had limiting it on better that some a done And one supplier our it's point that are. from this really requirements think supplier and chain guide with the issue well do Derek quarter perspective. affecting all a I that all than the what produce. affecting was Right. think sudden to suppliers. as semiconductor-related semiconductors X our of produce to think is chain down Tom ability issue of it's it's in [PSYOP in critical I – the some auto supply to because component chain on engines. a of inability happening counter manage to I or basis], in that ultimately their rely on our production challenging it's allocation engines to guide from but with And less the I an third quarter, but impacted,

Ann Duignan

appreciate get queue. insight. Okay. helpful. That's I Great. Thank you. back in very the I'll

Operator

Thank you.

Kristen comes line of ask question from next your question. Please Your of today Oppenheimer. Owen the

Kristen Owen

Hi. taking question. Thank for you the

last to related to there. you you there, are finer financial a announced that have avoided eight to the that can some Specific the on follow-up to negative? on there Just imagine that are impact one days I just put October, in or also that. costs point positive

Oddone Rocchetta

say and of unfinished other which units revenue avoided – we would the it's the and units costs. then miss I hinted having of having as reward Yes. mostly line, costs kinds brings is end at

for wouldn't I some cost our but with the by customers serving our dare is by overwhelmed that, savings relevant it's So actually and dealers, opportunity missing us. associated widely of and the which

Kristen Owen

that you could point finer impact? put quantify on what that actual any And Okay. that

Oddone Rocchetta

the in remarks otherwise. prepared it would quarter. QX the our had with units already absorption as that my some read been I end the higher said think the and I was We of you line, through sold can impact in at guidance in have cash

Kristen Owen

I of It now on And up come Okay. sentiment about rising margins. several the that. to for the Thank my as did impact times want you has then follow-up, and ask costs acquisition. input Raven

to wanted if days the could that see you accelerate some with first that of XXX Thank influence as having development? Raven, areas integration any look to and of opportunity the this specific towards if that's see there you are discuss you where you. Just

Scott Wine

through announced results that the and an acquisition. their we've have can see remains Raven the Yes. independent time you company been quite strong

than They're strong more them. a to continuing actually advantage they're And integrated that's we vertically competitive So demand. for are. see

So the I to Obviously and – little ultimately think an for little ability do very we do think supply to is chain impacted. bit and one a less our bit of provide benefits sophisticated faster they've a faster more. can enabler go that be could the been them merger global

aggressive spent together And with out encouraged as we're and an that. we're the again, believe of by through. that, extensive And team we putting Dan we've So running plan, Rykhus expect approval that we his quite eminently get integration that and as that can now. we comes obviously gates soon confident time

Operator

you. Thank

Martino the question. today the next from of Ambroggi Your line De Equita. question of comes ask Please

Martino De Ambroggi

morning, good everybody. on Good prices. Thank afternoon, focus My you. is

year similar competitors a year. for plus First, one and increase of mentioned X.X this your expectation price in next agricultural business

hikes Second, always this able problem and in first? less hikes in third, with or align mentioned your And in to in view, last is on input you price or more every costs fully you price the are prices, offset through North difficult Has same it America, are elsewhere. no first, each So call, you picture? changed more implementing division?

Oddone Rocchetta

to said than also numbers numbers the say over have being would a from increase been price and few a have to impact bit increase barely cost we've not if peer we fully mentioned the the we now. we line, not prepared the remarks quarter, And on the have realization what we quarters. on right of that back cost that price count last or I freight our able we're the lower built in So you And covering price as seeing covering year the a continued roughly increase fourth are in that year. of expect in next – inflation seeing in price this cost a

We there as expect cost be year to inflation next well.

to expect next costs end towards We awfully freight of the year. diminish

terms of In be continue to we pricing, to price. able

we been able pricing We ag, also have and in across in but category product in America, also Europe have been South strongly to price. America North in

Martino De Ambroggi

profitability going the business following loss of percentage profitability, is question just what remind the you. Okay. order? on second captive normalized the forward. is can the today Thank the division of And Ducato – the you And if captive Powertrain the of business us

Oddone Rocchetta

Yes.

the we around business was it to XX%, is is Ducato historically think what demand segments but our percentage, we had I lower demand had we and also, quarter, China. in captive large had. some engines we higher which the from in captive the deliver than which component, course, of a So from customer Chinese lower

because I the by part introduced is and coming course, the so I with of way in new business, with which had last part that new up have in production the we stronger mean, of accounts of out less couple of new the – coming Ducato it. production in remarks, my expect of the being less we be of impact ramp non-captive quarters engines of So deliveries out prepared basically We'll this recover as customers. engines will a is

Martino De Ambroggi

meaningful, profitability in in back the should the So few recorded two so not the to years. quarters past is last the be usual

Oddone Rocchetta

are affected the two and consider past that the most Yes. new freight affected the an starting historical that new was also customer by a we more is component with of by the from costs. engine. production But Definitely FPT strong, impact And customer one and in a have quarter. quarters third right, that by changeover, also to but in something quarter, importantly this shortages second heavily seeing been very

Martino De Ambroggi

Okay. Thank Oddone. you,

Oddone Rocchetta

welcome. You're

Operator

Thank you.

question next ISI. Evercore of comes ahead. Your today line Please from David the Raso of go

Your line is open.

David Raso

more sales than be it, that company less to for just that are bit than little then XX%. of down, a near-term and a Can a between to expect call the us more A quarter where even say baseline? Thank Hi. And bit you average The a XX% I do you. follow-up. had segments question. help fourth implied you down

Scott Wine

be and that Well, as issues a now right understood our decrease ability our everything what's is remarks, you that's products to out have get to going because door. ship, component probably ability preventing is our really prepared from to was it driving we the sale in

really and it's any But of we in we So can and to which can add types ship. dependent color? want chips do Oddone, you products specific components get upon which

Oddone Rocchetta

quarter all, fourth Yes. year, the high. were sales of Well, last first particularly consider

will in to is we and be expect more Vehicles you if Specialty Powertrain business. in to Commercial So be the want more the and Where comparison the be, difficult. also

David Raso

mentioned but it's some… a just price think can to cost at declines more set bit it. get help situation decremental We're Okay. all you how little a gets unique think you to I the the how trying to sales And level about provide a challenging. margins just those with trying just supply about to chain, know given any little here on on

Oddone Rocchetta

far will we margins consider seen fourth quarter wouldn't will slightly – I I I take the the at incremental those Right. that it I mean, say, will on consider But have that. segments. two that reduce alone, so looking

David Raso

it's really, to the wrapped up the we fourth then actually all take trying by can call and fourth idea down, with in expect sequentially quarter? traditional the it grow-off much you on pain should the you. then And to year fourth level sales the the set, what about these maybe decline, taking first lastly, come quarter the to quarter of how usually start so not in supply Thank how or the XX% I'm you setup given year you of extra is we chain, abnormally just quarter, you're difficult shutdowns Okay. But start the sequentially. fourth and maybe to flat the out so the know quarter then sequentially? the

Scott Wine

little want guidance end QX the we that But we're right. we've and built referred just is proper allocation possibly we'll increase looking mean, I the a normally can to situation. to vehicles mean, to and have a the everything the in supplier looks in QX I how and is we're those it much thus that's exactly encouraging is Oddone it everything to The for. the a continue we're the and progress that in Again, to we just trying do. opportunity quarter, largely to be shipments that's that make giving it's on how to with But we now much QX throughout we have seen. good David, than QX, impact do manage we we're It do really the upon of on progress hand-to-hand we've make. looking and avoid we better currently, Yes. in far be this to going we'll limiting our right outputs. that And his a and put you're kind at get team's ship dependent prepared can could seeing component, but made factor the can XXXX. so can the we and been setup any remarks, improve manage need better with some to to possibly challenge bit year of seen but because combat would it's it, going obviously, we day-to-day, sure to

David Raso

Thank very much. it. All right. you Appreciate

Operator

Thank you.

comes Gabriele today question of line the next Banca Akros. of Your ahead. Gambarova from Please go

Gabriele Gambarova

making are and this question you of good flow on you please? capital free – supporting Thank guidance, kind What working for My your is Yes. guidance XXXX. morning. cash assumption

Oddone Rocchetta

quarter the very a Well, for favorable is capital. typically fourth working quarter

quarter, our to having not complete again, fleet, guidance not both slightly from produced, call we we which last where have issue vehicles is had sold. completed able what in but this be We and for of the

to what challenge fourth quarter have for ideal Higher So we we the compared that's would on see cash the situation. that flow. an manufacturing free inventories

Gabriele Gambarova

Okay. to this tarmac. idea have what mean, I of of possible Is is magnitude item? an uncompleted it vehicles the on the laying

Oddone Rocchetta

few the the a of have thousand complete them at end We them of September. in We'll quarter.

have at quarter to new end We incomplete. similar a as expect and the in being fourth amount of coming we have production the

Gabriele Gambarova

understood Okay. you much. very Naveco, a another And XX% I joint a I these had it. sold guess, venture. you question – XX% in I Thank share regarding of Chinese you remember and last

would on this say any comment – be let's any interesting. So

Oddone Rocchetta

Gerrit, you to take or want take it? it I

Gerrit Marx

allows XX.X% of us to financials on do that balance the sheet Naveco not correct. quarterly our Nanjing on No, fair and a paying this that's in consolidate take I and XX% share of can hence XX.X% basis. and it. and IVECO Gabriele, a We've share our value sold monthly yes, at keep

Gabriele Gambarova

Thanks. Okay.

Operator

take Thank of final Please question line the you. Bank go our today, comes of from America. of may of Ross ahead. which And we now Gilardi

Ross Gilardi

is in the Thanks of year, all $X.XX order at at XXXX in some wouldn't if mean, guys has book for level your as just a annualize $X.XX earns doubled, issues given earned today, squeezing second, figure, but truck point power higher ignore that, question, exists earnings cycle? the close is this book-to-bill you to CNH a is me your in. CNH why a I reason have the there a it question, ag this X.XX. least $X pre-spin you for production any Scott, and quarters. mean, quarter three isn't a I fourth this in that just

Scott Wine

I mean, that's a our ifs lot future. in that but that. no about we doubt There's there, no, see of no, certainly in

right is deliver is the ability of impressive factor quite sure think to as we're do from for we're the things production, And to we're But is price. up types as can now. to last a continue customer the price. we're this upcycle cycle don't the aren't think customers, chain ability with I And now. we chain the benefiting that those We team ability to and I have think the in. And the going make when that. going we deal supply Obviously, more to meet solutions to to think provide to solutions. try on innovative this the supply to ramp seek navigate difficult more is demand of it'll I We forever, and able But prepare limiting good we're that. the really no,

clear at a But but not but think of cycle. to cycle, think bottom higher $X, don't line obviously the part I certainly there's So achievable as to the to that's work. straight I mid the the we it's of probably, continue

Ross Gilardi

of both more on-highway FinCo actual we for terms lastly, give And did get when net very the X.XXX – very, year-to-date, us maybe is then detail And structure split rough it. you Got split revenue the then income, the and between just $XXX and – formal can of off-highway? this and this million The on Oddone. just for any capital business. sides

Oddone Rocchetta

Yes.

perspectives the split. about quite will the sheet visibility there questions. be in the So the for two One, spin-off we'll issue coming good weeks, and balance

spin. – I the be assume profit business moved to to service, On one the on can income the the be the quarter on-highway of top net financial of considered would after

Ross Gilardi

to One on-highway. goes quarter

Okay.

Oddone Rocchetta

right, on-highway, Group. for to Goes Right. IVECO

Ross Gilardi

Got you. Thank Yes. you.

Oddone Rocchetta

You are welcome.

Operator

and our conclude evening you attending call for today's does That with you. Have today. Thank gentlemen, good thank conference day. us. Ladies and for a