CNH Industrial N.V. (NYSE:CNHI) Q2 2023 Earnings Call Transcript

Gabriele Gambarova: Yes. Thank you. Good morning — for taking my questions. The first one is on your say relative performance in terms of revenues. Over the last couple of quarters you trade your competitors. And I was wondering if this has to deal with your choices in terms of production basically. And if this trend is going to possibly revert in the second half of the year? And the second one deals with your 2023 free cash flow guidance. Is it possible to understand what is your implied assumption in terms of working capital delta change? Thank you.

Scott Wine: Well for the first question on our revenue cadence vis-à-vis our competitors I think the best place to look is just the second half guidance. Our guidance — because we’ve kept inventories lean we still have the opportunity to ship to demand or in some cases replenish dealer inventory and those competitors that are taking down — if they’re having a sequential decrease it means probably they’ve got too high dealer inventory and can’t ship in as much. So I think that explains how we got where we are. Oddone, do you want to take this?

Oddone Incisa: Yes. On the working capital, I mean, we were very lead on working capital on finished good inventories at the end of last year. So we’re being a little bit more prudent at the end of what we expect to have at the end of this year. Of course, we’re taking working capital out of the plants as we are becoming more efficient there, but we have some prudence on the overall balance of where we’re going to be with — end up with inventories at the end of the year also depending on where we want to update our inventories today.

Gabriele Gambarova: Okay. Thank you. Thank you very much.

Operator: Our next question is from Jamie Cook of Credit Suisse.

Jamie Cook: Hi. Good morning. Nice quarter. I guess just two questions. One — can you just talk to your approach to the order book for 2024 whether you’ll just open the by region whether you’ll just open the order book or open and close it and manage it throughout the year specifically within the Farm Equipment segment? And then my second question back on the $550 million in 2024, can you just remind me I think that assumes sort of a flattish type market. And if we have volumes I’m just trying to think about could we have above-average incrementals in 2024 if the volumes do there and we’re assuming you get the majority of the $550 million? Thank you.

Scott Wine: So just to answer your second question first, because it’s easy. Yes we can absolutely — if we get volume upside have upside to that number. And I think the incrementals that we had in the second quarter kind of demonstrate what we can do. And what will happen is we’re going to have a little bit less price, but also a lot less cost. So the mix of how we get there could be different. But certainly the opportunity to overdeliver on the $550 million volume were to be higher is certainly there. So the order books for 2024 we’re going to be — we’ve gotten to the point where we’d like maintaining some level of discipline and having strong visibility. So we won’t open up the entire year at one point. We’ll probably do the first half of the year and then go into the second half because we’ll have obviously the model year 2025 pricing we’ll have to think about at that point.

But I think it’s more of a — not necessarily quarter-by-quarter but it certainly won’t be wide open as we go into it. But as we said with cash crop and the innovative products that we’re bringing we feel good about what the order of demand can be.

Jamie Cook: Thank you.

Operator: Our next question comes from Daniela Costa of Goldman Sachs.