CNH Industrial (CNH) 7 Nov 232023 Q3 Earnings call transcript

Hello, and welcome to the CNH Industrial Third Quarter Conference Call. Please note, this conference is being recorded. [Operator Instructions] I will now hand you over to your host, Jason Omerza, Vice President of Investor Relations, to begin today's conference.

Thank you, Francois. Good morning and good afternoon to everyone. welcome Industrial's the the third September XXXX. to call and period like XX, CNH for quarter would you webcast to conference ending We results for is broadcast our This live is CNH Industrial. being website call and copyrighted by on transmission use, CNH Rocchetta. of of this any other Scott Oddone strictly is prohibited. Hosting the Any are of written Wine; CNH's CFO, without CEO, express portion or recording consent Industrial broadcast today's call and the They will available material website. use for download CNH from the statements that are forward-looking the might make risks Please uncertainties call, any note the in we during today's statement subject and that presentation material. included the to safe mentioned in harbor

XX-K, could is reports periodic well filings information with to company's equivalent as with annual the and Additional the and Securities filings company the and the measures. results authorities non-GAAP Form presentation to and recent and cause in contained factors Exchange Netherlands financial as in includes reports The certain differ Commission materially that other most pertaining U.S. on actual Italy. report

the reconciliations to presentation financial the GAAP is information, now measures including U.S. comparable in most I the directly call included Scott. will turn over material. Additional to

call. Thank everyone, thanks, Jason. joining for you, our And

the margins drive Agriculture CNH Continental third Brazil Construction. Our environment initiatives efficiency in EBIT and with productivity construction disappointing, they third system North earnings supply crop row The in be operational demand, demand our we American South from but normalization quarter sustained as equipment and power and Europe. Better to America. the also results CNH, gains business helpful in to both reflect record many of market were dealt challenging strength offset continues slowing of helped quarter and chain, with our improvements,

welcome talented With precision build and the development in-house we who Hemisphere, of to to is team, the capabilities the joined am a evolution October. are out and in key deep needs. I accelerating solutions. CNH stack fulfill our tech Our customers' in employees largely of investments of strategic family and possession acquisitions, pleased customer-driven early innovative, the tech

cost the in further working and on an structure and we early achieve and our positions. we understand efforts our of with corporate optimize initiating to with savings construction redoubling in years of operating efficiency. Iveco next are X of immediate program XX% about is almost a of This Concurrent implemented to salaried year. managerial be capital coupled ag and support in the eliminated rightsizing how We workforce X% year-end. of After XXXX, to reduction our pure be be we structure play, streamlined to dealers. Today, customers a are costs completed comprehensive company's cost restructuring by will the substantially an spinoff

XX% expect of non-labor initiatives a to labor deliver We X to expenses. run these reduction XX% of and SG&A total rate

applied Industrial segments. came costs, up last Industrial in sales was offsetting which flat have essentially the XX.X%, billion, were third X% as in realization million was today ag $X EBIT $X.XX offset both lower net interest to shipments contributed Adjusted lower that in Net line higher corporate in Additionally, growth EPS at including from to top down the will Construction. revenues and by Company higher of year. margin, price in compared were and more X% income $XXX X% to detail. Milan Oddone formally X% quarter driven sales in $X.XX. sales. Positive we volumes up to construction exchange, financial we've announced discuss delist to Agriculture revenues services, for X%

last farmers deliveries soft with to team With dealers year-over-year South in Construction year-over-year industry-wide tractors, expected steep engage in reluctant speaking XX% equipment. I primarily who combines down in retail the with our was Brazil, quarter. weaker month, declines American in and were in than a and Brazil XX% in markets, commodity XX% are prices. with

to Brazil. dealers we their worth inventories our production in working also maximize not dealer noting, Very also of and did cuts. We sales, are an purposely, on increase global prudently closely while It's wholesale sequentially retail bullish in with position. for with that shipment comping responding economy market, We long-term are increasingly growth American which prospects harvest is region the remain important South our market we the the record last and year. and strongest results part ag

quality through-the-cycle our margin pleased We later how are dealers our of EBIT remain of presentation in and and our lineup, innovative expanding Derek industrial next is both an and and margins Holland IH, executing share. brands Hanover will well to product in Neilson his market week with showcase and being with our Agritechnica. gains, customers. they as team, focused driving technology team benefits improving forward the improved expansion show productivity for indicative margin Case for performance. this are I our New segments solutions, product on and we our Through at Steyr and maintaining are expanding look

for innovation for including the medal combine awards X shows Holland's Rotor only gold we Twin concept. New harvester won show, Collectively, the have

Our a forward his driven sales for business doing profit been strong record-breaking new moving was customers. Dealer gross margins. American to demand of has North job team in delivering America. back most public spending, the solid year-over-year supply normalizing recoveries. launches our markets and value Stefano North the expansion in an growth Construction on infrastructure are products and and up significant retail as have availability equipment by for and of segment most Revenue inventories X% been Pampalone impressive had quarter, product with notable

retail balancing judiciously inventory to by We are shipments wholesale improvement year-end. improve with levels

leadership. excellence dealer technology leadership, on Our company and remains advances strength, in with centered strategy will customer-inspired X stewardship. Today, pillars: technology focus key operational we and sustained innovation, brand

profits. internally farmer by steering, IH electric automate available other combine, in across and mechanisms, past backwards Raven for optimizing workers. By including a Holland key solution precision commercially process, X New and strain, product and equipment. similar brands, Case yield maximizes AutoCart All the quarter, provides wide with and precision compatible DirecSteer DirecSteer solutions replaces steering third-party we automated hands-on on which profitability. our technology OEMs offerings thereby outperforms range is of orders advancement and with are machines Automation a additionally kits demo operational other and guidance our and tractors, automated these a positioning boost guidance with a Early existing customers to Progress the previewed less innovations. enhance that decreasing replicate newer syncs customers' August. launched efficiency operator bolstered as Raven Farm fleet. features superior productivity skilled Over from displays eliminating for cart in-house driving harvest We to strong solution. We and CNH operator solutions. this steering, spillage enable technology the These indicate automatically and developed at their aftermarket solution factory-fit Cart demand enabling Raven -- that first grain

this third-party to started effort optimizing developments have our X ago. needs. The technology solutions in-house meet will nearly on we our out not We We are our reducing with innovative the products strategy are change developing the solutions. and to our the industry and in set accelerated customer ever we confidence it years and since. to my transition launching, course Raven reliance ago, Recent reinforces acquisition pursuing in been strategy aggressively years

think we In direction. they fact, our validate

experience. With tech the in such to years of does as our of way Which are the that full ownership to key most companies our In technology and closed expedited conjunction guidance. have also allows offerings. our to own us the vertical our Hemisphere, now engine strategic manifestation results. excited create Hemisphere sensing our steep and their our and solutions, an the advanced acquisitions. of the technology the position portfolio take business, expediting no offerings. Earlier This faster call cost. activity chipset. to this XXXX, acquisition development adds acquisition foundation positioning vision accident, control product seamless graph, customer areas to another improve gives development contribution and performance the that the Oddone turn This to autonomy, finally recent positioning autonomous we and own productivity. and This but we and times only announced the unique can performance integration financial to rapidly ability tech Hemisphere tech through have acquisition of of We'll Raven's accurate organic and curve in in comprehensive take deliver they over high-tech of system facilitates are the the point powers purchase from bypass that expertise advancement in over strategy of automation talent. of to and this of Raven with autonomy, to You aspects in with inflection October. some hit our is Not CNH customer manufacture autonomy. of allowed scaling in and the Hemisphere's significantly a heading is for integration us further guidance, see control stack down it throughout our as to us This augment by capabilities and in all the optimal future the year, we us. design all complete This full is highly for Hemisphere increase

good Scott, on you, morning, and good call. Thank everyone to afternoon the

net activities realizations partially compensated lower year-over-year. were Agricultural billion, due industrial in price of about both industry down America, segment, in quarter the sales to South by demand currency especially mainly was Third $X.X This X% segments. of in constant at carryover

ago. compared we to XXXX XX% produce around globally, fewer low tractors demand slowed, horsepower As in year QX a

assemblies slowing margin in X%. With production margin South was on EBIT segments schedules where only America, except and for up globally, quarter. America for double we both plants CNH up While XX% up the on was digits in of demand. Low year-over-year. our were tractors, South view Construction high slightly X was EBIT XX% were down the Industrial combines, up horsepower machine production the categories. for in reduced down

inflationary September the higher with months America. of an impacts currency was capital XXXX. South first items the last up year-to-date sales demands due pullbacks outflow support outflow in Our share from from was for the per quarter. The flow of XXXX. this $XX quarter, of consistent diluted year. constant Adjusted Agricultural and XXXX, in in Free were down million X% costs earnings of favorable million $XXX net $XXX part seasonality in in X is figure better million net in unallocated Industrial by the outflow versus in $XXX income million, nonrecurring of large with working to million, the third cash driven than adjusted Activities quarter expenses $X.XX $XXX were $X.XX, on

Turkey, reacted improvement have production quarter sequentially margin to margin in bottom of year the included realization cost the EBIT price In in last lower here R&D the with than compared and year's with EBIT income end, year, higher our increased million in level, to a tail the lower million $X was was XX the in to higher and by more last with QX to Agriculture's All second margin of material We as line basis offsetting carried an higher QX, higher for Gross sales categories, EBIT than investments. points continues to in of all, adjusted last in cost. SG&A basis XX.X%, our inflation $XXX lower slightly this compensate the and dealers. year. record also lower XX despite than FX lower [indiscernible] deliveries margin. long gross point other than

currency, to South Gross constant basis bit heavy by economic in XX%, Construction. points came their about U.S. at Turning inventories. shipping to margin increased some pricing and XXX weaker SG&A. mainly In year-over-year with over year-over-year. we lower America, a improvement driven at Net quarter, Europe for with Construction the America, in in Demand uncertainties. favorable X% demand equipment. North the sales improved up therefore, largely was models new help from by for were we a market, higher margin mounting have started EBIT driven and X.X%,

business, XXXX. because steep income the originations $X risk higher For in all grew margin Services was interest few were increase compression Credit about up to generating and interest net year-over-year revenues, offset our million. cost rates by in $XX compared Financial regions, billion, the partially last portfolios million at Retail flat in quarters. higher of $XXX

billion financial nimble portfolio finance X.X%, equipment are $XX equipment of their book, level which strategic captive compared was prior Delinquencies million, seasonal to $X.X the this highlights operation. The still nearly Agriculture to customers spike for more saw which low to strong running a higher delinquencies the using a of healthy last company importance services the investments, quarter year-over-year, and reflects quarter, managed down third of sequentially financing. the year. As while nature on up were the

our from application to filed shares As announced Euronext earlier we today, have Borsa delist Italiana with Milan. Industrial CNH

the shares accepted, New XXXX, We York only our the has that just notified will have can been X, January confirm we that application as of and listed been Stock be on now so Exchange.

our single the consistently did We we look for shareholder CNH June participation corporate a XXXX and and liquidity a And without to Russell in long of single process. The organization. to increase frame, new our a smooth, Market it Index represents have in needing was stock Total obtained for September, and S&P streamline time albeit the listing a as business reporting. it added we have will within forward a financial milestone by to further we class in the communicated, significant listing investors.

part, to purchased that be program our announced my share back think be I'll continue New attractive of in of around the up that remaining the Directors to also Board and the $X shareholders million turn also Milan, buyback We This nature In listing will a that billion, York. new conjunction to deployed today the Scott. to has global approximately The concludes listing. will globe. of will EUR before be it amount approved announcement, in XXX with we which

Thank you, Oddone.

For for decline market-leading all presence. and outlook, our America product combines our given is The businesses unhelpful in we there. XXXX have especially weakened South lowered industry pronounced demand given estimates our the in categories,

slightly lower demand Pacific. also expect Asia We in

cash for further have while as tractors in for for them increasing strong. We expectations America, large small equipment tractors remains North demand lowered crop

project in -- in and North for in full contingent equipment are we sales said accordingly. better also upon heavy wholesales net would equipment as slightly for year moderating production be construction America light heavy equipment EMEA. demand, I construction quarter, retail Last our We demand

We than Despite we year-over-year are see We of foresaw, growth X% weaker net now to our market and of we $X.X XXXX $X billion X% updating American billion. sales South retail billion. excess of statement versus of programs reaffirm this be QX no guidance. flow the our will financial With to Day. adjusted cash projected the free EPS and XXXX around Capital EBIT and be to SG&A range, be incentive than on from R&D to to will in address fall I Markets some this and our that previously some also $X.X we CapEx demand. $X.XX. expect sales X% will pricing down the get where true, that our about EPS compared targets XXXX QX achieve year of at in to about year-over-year and pockets will able spending we holds more lower net our of increase up need as flat dealer XXXX to noted and margin depends still inventory. Volumes combined likely constant outlook, be we to currency target again,

confident margin We through profitability the cycle. efforts will allow sustain are our industry better that expansion us to

margin. composite XX% margins when EBIT on it about achieved XX-year axes, shown you industry mix the chart, was average, industry industry, a our of this and based XX-year agriculture horizontal created the here, construction, and XXX% estimated and about volumes is composite As see average we on from XXXX, of In with on respectively. vertical our

talk operating by achieve Capital XX% Day, blue business When of the to the represented XX% That's expansion, XXXX XXX% we to the curve XXXX, shifting the along the are margin at gray Our stayed Markets XX-year EBIT graph out average. the about on set to talking an we curve. our margin ambition the by was curve. gray if about blue we from curve. At we

blue level that curve curve. Capital in great higher curve than point with at be we the though we own the growth operational industry the up through and XXXX, In up XXXX. point than profitability XXXX, red than we margin, is the better the margin XXXX, expect XXXX the to are even to industry Markets vary curve composite demand, lower shifting XX.X% every cycle. In shifted margins improvements. to of achieved margins any but industry our Our Day black with Higher and

and from are result our shift where an cost but operational to to say land that standpoint, precisely as we of prepared we blue We will a improvements. are not XXXX confident industry the up will curve,

improvement our forward, and profitability results any in protecting market margin delivering continue programs measurable Looking environment. will

that targets realized Sourcing, with by that be move on and will remainder improvements supported slide. blue XXXX, We XX% Couple Strategic curve cost $XXX to that and in XXXX. will introduced the plan, with previous we of the our in operational track on our are around SG&A and well up through that million efficiency be positioned restructuring margin CBS the I

As mentioned, important an economy part global South America is ag and long-term there increasingly the of fundamentals the support growth. still

this for Brazil, remain important foundation vital us in Disciplined XXXX Our give regional strong for in and presence, inventory year. market. success dealer we brands crucial, solid management us and will next especially as is close a

acquisition, synergies Raven's the organic our leveraging and proficiencies. between actively capabilities recent are We our

will We solutions we factory taking stack, accelerate fit more development and our Precision tech control the continue of of to offer. aftermarket

look and farm rates XXXX, mix we abound. normalizing. And to remain are As likely dealer commodity depressed one are soft prices incomes, hand, while high. signals interest On backlogs order inventories

other there technologies. On still Precision the elevated, with fleet is hand, high ages demand equipment latest for the newer and are

are strong some slots. It books major for filling to We expect but we be XXXX demand, opened it a into XXXX already first industry in now do the prepared order and concludes completing are questions. visibility remarks. QX too to markets the cases, We is our year single than That through half early listed XXXX. with in look journey our gaining many open become company. to forward early order to and the we lines lower We'll finishing call

line Fisher Our from Instructions] [Operator from Steven the of first question UBS. comes

move going some to to QX. be incentives that mentioned some there's help You inventory in

opened of order first the half have you books mentioned in also XXXX. You the

is those into card? XXXX, Just of curious going about a of kind first different be know those this half whether do sort of what we point at pricing extending Or orders? extent that set to are to incentives

Steven. No. That's a great question,

to flat related the to was discussion around two. drive QX retail getting confuse definitely Let's pricing performance. actions The not

So not to prices, about retail. incentivize driving orders to That's we're what do. we've for we're very take trying us. to list do. about from retail -- incentives just been That's not it's performance, lowering to -- we're clear talking not planning we're people which It's actually really that

bonus there's that's Okay. terribly also, surprising not curious still farm prices, versus but helpful. down given in That's is growth. I'm fadeout shows what's in taking a just we've very of volumes the in mean And see bigger I guess 'XX going and I different now a you to it's this guess commodity what 'XX for 'XX how some be I question. year, down? seen income picture 'XX but depreciation actually

just it has that's play is is So threshold, Or decline a to demand of where it a for used out is time difference? to that though tale magnitude or kind there's just the decline values? the it interest rates of a of Or this like out? play it cross makes

interest want When I I it, a Yes. just certainly for the ideal. Agriculture Well, especially still certainly to sound take industry Brazil, -- mean good it's they we XXXX more considering, talk the are now. do strongly be But setup believe better. Higher of rates product fundamentals the seeing are on. farmers, not expensive and I for term. weakness now, I is they on. the couldn't If to in long financing weighing where mean, we're that are bit the new in fundamentals

So for a that them. is consideration

soft I Brazil see markets, we Specifically for whatever it boost, in for anticipating rebound those about soft reason most commodity really in think XXXX. gives just they're And that just and prices, commodity I back. waiting think Brazil, to prices, come a we're really to if not they're in but especially a the worried for

but So else to be by dealer turns be year. everybody what and by market going out is, triangulated our we'll to inventories, seeing slightly this most I than advantage, prudent it's if the to think and initial it's being prognosticating we're outlook, be with less certainly able better, we're take

Deutsche next comes Bank. The from Nicole from the question line DeBlase of

is that Maybe taking, and restructuring, sorry, or savings that guided guys related for, what this about the 'XX you've is annual is $XXX the Or 'XX? what -- separate expectable just are already and completely the incremental? for 'XX program? starting you for million, 'XX with to And from that talking

restructuring, reduction COGS this started And that to incremental. In also delivering year. that's terms general million the that's and on of that incremental of we $XXX working we cost are

the of In immediate spending, terms will in speak. we remainder the next year. Because count be taking this actions part year. will now, be of a on right first as chunk are it of head we And

dealer if demand, dealer Okay. 'XX. And retail And as the how to That's a still line inventories we around bit produce helpful. current Can think inventories. into shifting you little then talk that in about move kind guys you of with can you you just see world?

of. low went We've up certainly now, catch as down We and about call over tractors, to quickly. Yes. I to years are too quarters rid up we'd got high catch just call racing And what swings. of We've couple slowed seen struggling that to that the mid-single-digit pockets like horsepower from dealer net-net, that of I for it then it's last like that inventories. and high are we've in pockets -- talked wild a inventory get with the rather too say I'd would low. percent

not So it's dramatic. really

So working shipments we'll I line. focus, again, wholesale retail if with that believe in can to able is up drive retail, our dealers get keep to our be and we

of Michael America. line the of from comes question Feniger Bank from next The

we get ops you as Free about year? the base of kind cash to financial quarter? flow case net cash love free is conviction but down was just cut to fourth next the to looks you that. of that about for for year-over-year net of pieces sales, $X moving cut? the on understand just kept in flow. negative was Is billion cuts flow still services Just trying the with year, that next kind Just look it the think use sense know in we talk from hitting it I any and quarter. the the on guys is, flow of cash the Can where in there you free eliminations. from like EPS It a cash cash free your

the of probably have cash it. the of in lower linked to Which level and some you not are terms cash by is company year, it's we we but in we part the inventory, working in basically, flow mainly our about early sales of overall reduction of talk in production some I that business, free Reduction of right. think rate our over -- higher -- compensated XX% have. conversion is still capital. Yes, inventory, would year, our And mean dealer consistent cash next to time. slowdowns The got our next with of structure

would year. target we So that range of cash the generation for

just potentially numbers And we're I likely understand could There's I year. if cost add, these next are saying down looking the you're volumes restructuring. plus -- that savings at,

we Just be a in if to that And XX%? XX% can down we X%, XX%? volumes looking bigger headwind. kind ag of margins range that obviously, case, hold Is of Are are the at kind becomes bracketing? absorption flat should down

in, curious about in Just year? numbers but of year, next coming these we these with kind cost talk if big moving volumes down next saving pieces likely

to that really to and shout very give team out and topic. on are No, work this like his Neilson I he the a Derek doing

down think on to the no, and been the we're to of really benefits a bet against I just wouldn't team respond there. lift, margin question, seeing your got XX%, heavier a hold yes, If margins it's it's can to XX%, if, -- that's want I we if to it's focused but way down we flat. has the a that -- performance, now. get to team find driving But

from question ISI. from of David Evercore the next comes The line Raso

a term. over then term of and longer more more shorter little a A

magnitude you to SG&A. of next the thinking cuts year I of decision those to some of those we out of know were revenue assuming X-year you just to hard in take the see to kind reduction a ag? that some kind you Sort on traditional to considering made, the cost of of had what this year seen sense little and trying you a of decisions. is how program, next to revenue XX% even -- that in and right, downturn longer of decision, relationship really weakness we've of of the you this the enter quarter, is doing a you're incremental question, to importantly, the downturn just sort of I a it's the year to fourth about to and But couple you how but some sequentially in maybe your cuts? And same Were be some just in was shorter-term revenue this incremental -- point market. appreciate then ones, could the cost tough SG&A, to this a one of the the relationship this XX% offset XX% growth get all thought in -- there your And trying were decline be just that vein of when to XX%. shorter. I'm saw magnitude the normal more

if the a XX% implied. incremental XQ, to fact, revenue trying In it's a to XQ strong Why we're such prepare bit for weaker 'XX?

let All right. Oddone one. second one I'll the and the first take take

reaction difficult at organized or it our and to -- head customer it's surveys, still a lot a and we employees to lightly. and the focus action we getting as take. But to be It team, First market. our really relates a did something it's when we not not we take invest the We because really is as all, to do action any difficult and we we count lot just do activity, don't Iveco, lot we learned in it's employee -- want of more a where of get a company a a a that or we focused, just sometimes. took agile it's understanding a spin-off from lot despite, that's how of being do be. efficient. We how on shot we to feedback We've can about, are and ever

but So over is the and for not think to to it's next volume can our that year, we proper we've about, customers. really working recognizing years, in environment effectively this as to like the of with to need market and efficiently a grow, decrease going better we for as create past deal is the is what's several employees structure our better about that level not and a just seen

opportunity good to striving So to see that, is think that's timing right. what do the do, we and we're we a and

And Dave...

Generation of cycle. the

Sorry, Oddone, ahead. go

the If comment again. bait to you you're into me cycle, going a on think try

to trying below Well, was is to make, So SG&A flat easy just the not let some no, was I action, quarter pen going and revenues But to be needed mean, trying are implying decisions. despite I'm staying the nowadays, X% and people. to to those you always we decisions people fourth knew find it's hire it are good around people you're hard about were be getting to take thoughtful those XX%, we never go. just SG&A, to when hard, think paper. right? easy putting appreciate not to I up Obviously, right? easy I was

think typical seen Just get X you're eras. years downturns the going and approach and tougher to just from cycle. yes, a of we've trying this X a But approaching really to to I to tougher this a trying -- just was how yes, structural real view we're about, -- sense as of

I'm at... So trying you just to are bait -- decisions tough those made

middle we're was of And still the you reflects talking helpful for through-the-cycle was no, of the especially XXX% the market, in us. it margin together and look the at middle No, playing actually which above no. that if ground chart line. putting about it chart,

downturn. it we're the now. don't a market, not right dealer see lot past major of -- So to normalize a seen if slower be but downturns in we a we've -- little don't to too It's you bit are in inventories coming going good just that and fundamentals next We've compare for ag just just we year, -- like it's it's demand. fully think we the seen

That's helpful. discussion. I No, appreciate the

question in noticed is Which sequentially the the our I quarter we also have operate. dealers second our sales fourth quarter, your pretty mean retail rate typical on growth you that for the our about is farmers in on fourth and predicated and sales [indiscernible] yes, third In higher growth quarter business to our the Dave, typical. And quarter. fourth -- are way and the for

quarter, to get which the we're Which But wouldn't was But fine. going you're we the that I decision, I the normal some least That's or we what which was to typical growth, revenue, revenue. willing pricing? the fourth Do get the at guess clears correct. into -- it that get is It appreciate. is 'XX, with that bit out inventory the decision. third exactly just but right? a Without was out decision sequential clear revenue probably incentive, sequential that

from comes Citi. from line Thein Timothy the question Next of

side? And Apologies that of just terms taking the I with seen Is have on guess, ag question, on 'XX. kind just orders ask them the 'XX -- that i.e., into give a of you 'XX, give obviously, you're outlook bit every have a the that But about in just ag and as what don't that's order trend terms you in just in through see but your here. little presales on voice you seeing what Can you volume expectations sense in once, you're of negotiations some sense in issue uptake. purview again, for in us just second of and us of, can of context advance is informing and and kind terms you the -- the the and the you've terms just product, maybe cost how -- I'll talked that again contract what into the terms presales sense for do of seen at much you into terms where more Scott, you kind just of then longer what in of can the like cost on pricing in and lines and into about. side in relationship a to

Yes.

year, throughout but by our you as and going pricing, we're a inflation, that good I we've logistics really seeing not cost margins, seeing seeing still if significant also that, and we're cost. other EBIT pricing team, is seen look mean, moderating down carryover inflation on forward, been we're we're As but the at we've getting said moderating work level. to our And curve costs. lanes a specifically

is in I see show going not fruition. savings, and cost on but But Our that is We're actually, some still about giving it. the And a driving I that. price talked the still that improvement, market the in And 'XX, to to going review a in markets on continue last But we coming was now. There that like we we to And have delivering year, our I legs to we that categories, cost activities really North prepared of focus America first it seems benefit that very get take strategic I on the next have year, cost. And that is have guidance to cash us orders not longer-term push to CBS, some said for into benefit. those to on team that to the really think reasonable did we're double-digit it started able you're to for lean the earlier the mean and we'll up the for sourcing, XXXX. come. see say in be -- through logistics we we're year tomorrow, the see several that's quarters seems in it nice through products back bifurcation. still remarks crop that.

it's to weak, South think, books. mean until in as what I we we're for and harvested, overall, nothing prepared But out they sell. that. positive it's there's read we're sell, that farmers sell seeing weak, the that be negative, decide significantly order When America -- I and or is the going significantly to crops

comes Our next of Zakaria JPMorgan. Tami question line from the from

to fit seems bring ag solutions XX%, and quite in-house, over So given your which goal to XXXX, precision seems factory impressive. it aftermarket by

at next we XXXX to the even remain an of downturn -- should R&D for level, there expect from from a couple spend So is if R&D perspective, years?

elevated fruition of an level several is you're been seeing at for investments. now. We those And the think R&D have years I what

level And going stay single at we can. that looking -- obviously at where not project we're we're every are forever. to about We looking

going seen last be from higher probably But not higher over we'll got several down that will I that it we've some lower also slow gaps to flattish to important got those area. go you've make, it's leaning but go and don't and here, think the we're going to it's to from -- go and because fill, from our that I It But in product here, we've here. so future. to think looking years, we're go moderately. in some I think we're it won't upgrades

coming in That's very Anything a in corporate like quarter particular expenses helpful. seems up it. quick revenues ticked sequentially question. modeling third Got that? It one driving in a lower. And lot bit the despite

are last to the and mean, quarter, second X you then number to I year. think nonrecurrent this some last here. positive -- I things down One, gap there year, What than We quarter, big had be expect on in in a we quarter we the sequentially fourth as probably noticed But we the third year. there's slightly the that that sorry. have. repeat of is lower didn't sequentially items didn't

year. that's big that have in last comparison may noticed the So you gap, with

in to terms we In quarter. and cost subject million the those costs, immediately... million are $XX running at will also between be $XX that looking we're will of range that course, review per And the partially the be of

[Operator Instructions] from Goldman from line of Our next the question Costa comes Daniela Sachs.

X I things have left.

to sort tell of if quarter, of or Trimble. and sort financial a sort is wondering relationship internal you over First, be with reporting. could of I Raven I in our past between second release you obviously, you're it great. the you had to really the give is sorts impact of seen if one competitors, and that of now? if -- part was you It And us then and all terms some announcement clarity the controls see -- issue mentioned sourced, which some in of product ask what of it's throughout of any we've and would you, what with Trimble like all the the independent it that now sounds completely should just but at material thing, if us have in you used we wanted disclosures Can

one, let the Daniela. first So take me

have auditor of rotations European under beginning may rotation framework. And this we had an noticed mandatory year. at auditor the You are

And at with different different conjunction things, different instances mainly SAP the I some in what We ] we started looking number the considering and the we the corporation. of so with a way -- them. in of that in is large some of give are [ and with record, multinational axis way of particular, out even employees, we nowadays we these system this of system, is would the new a access to fact the, the the have. to our so service say, the scope that of ICT had to working looking auditor We typical a realized that that of at

of we are looking in working making have also say. a sure first on ways all, we let's very and swiftly situation, of -- manner. timely the is this of controls, we or we're what acting So at but all normalizing of have should a and well, that doing And bringing that solution we're

business don't anything? You or impact expect any on

when Absolutely, this the on no, no, There's on no. is on we the that has report, reps issue no and financial impact impact statements. quarterly the that stated you our see, documents will no

it that requires not that something the we a or But some access and that that seen. identified. is immediately perpetrated fraud again, see be has something course, risk not this it's extended skills, been has be to -- that system, is and happened lot Of could having could of the a

-- today, short quarter got the aftermarket long We've and really second to stuff still supplier to the in and in the relates a They've term. Trimble. at long as we for AGCO. And term going affect time. us of It Yes. Trimble the announced question direct partner the it lot about doesn't acquisition all during were the that a buy been go from They a great earlier. they or

will of continue. our that with customers continue as showed on known have to is would that. So going the serve this continues to we from and products still be supplier and to we AGCO Raven we'll continue. But, to that to Precision likely Planting Raven, that a ability lot well acquired a do And we in-house. do we've we lot since stuff the chart, of we believe a

we're That's of really, we're and we in what internal sell doing. there's necessarily just is long-term each to in our give changing. that with the capabilities in-house customers have to strategy that's why products, compete technology. our also and So the other, changing the we best-in-class solutions to don't our we see is but execution market, What

question from Kristen comes from the next Oppenheimer. The of Owen line

you America come in the in wanted for Brazil, the price Latin If were Latin to the happening X% of pricing. how And are those to abstract mentioned American that about think we quarter, around I in how back remarks, I pricing Scott, to the conversation large, is XQ. what's book prepared really incentives writ is from in trending? region? And that, much flat

are of region, No, those And incentives large mean, -- those frankly. board, are a I incentives. on American Latin good -- the across part not financial the would I say focus the

plan So deliver our the we retail financing support dealers. when cost and inventory, to floor holding also of

our I getting the board sales So And quarter. fourth support that's to dealers the retail that's across say there. would is -- in sustain effort global for -- mainly but

buyback, then delisting the So or my you've of $X follow-up to which be executed Milan the the be of announcement question majority by relates said will the March billion and all morning will executed which X. for this

to free a cash margin headwind once next the you've transaction Just just year, discussed the wondering generating This for closes. XX% about further the appetite me, conversion cash. mean lot that? I if think opportunity you of to tailwinds excuse can still this to buyback or rate And talk beyond and -- buybacks the how given flow.

them think and with want very of flowback time, the we're and I is we hedge you billion like fund no, Board next capital. we supportive we a now I a delisting lot and announced expected There have think to are right to of when that. one. and -- -- of in. But almost for And we the there's a buyback, $X is, just lean have large trading reality you're value, one deploy the times sounds already below laugh intrinsic asking right that places to Yes. was the it's a the question. It

providing part acquisitions We'll us the R&D faster, do to funding We're committed As can experience it of that. that them. to just of we'll over have capital keeping we can. intact. our profitably We're it or out is allocation We're strategy. grow the goes committed all think ratings customer if that help we our I improve buy time, improving

of $X done. the part single in Exchange, be And sometimes you important think billion history, billion But And I at a buybacks. probably more we'll with I in now, buy after historically strategy. capital mean over with going share we're just expect And the have one. be right coming there's to look think than Stock allocation would if listing that. I look more you rather lean our we'll right don't another York we going it's should it's $X -- a and to New

further no are There the concludes questions, and for call. today. Thanks joining this conference

disconnect lines. now may your You