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

Michael Feniger: Great. And Scott, just it seems like you’re taking a proactive approach on inventories. The slide you show, with the different equipment categories and your company and dealer inventories, when we get to the fourth quarter, how do we — how does that chart look in terms of dealer inventories on a year-over-year level, when we think of those equipment categories?

Scott Wine: We are anticipating that they’re kind of at peak levels. Remember, on some of the cash crop we’re still behind. So what will happen is, we’ll decrease low horsepower inventory and will increase still some high-horsepower inventory. But on balance, we’re trying to keep — we’ve seen the benefits of it, right? When we keep our inventories lean, we get better customer attachment rates on the other side, we get the whole price better. It’s just — it’s a lot of goodness lower dealer flooring cost. So we will — I mean part of what we have included in our guidance, is continued healthy management or in some cases improved healthy management of dealer inventory.

Michael Feniger: And just a follow-up with that Scott. Next year is production in line with retail sales you think next year? Obviously, we’ll have to see how retail plays out. But just in terms of, how you’re thinking of your production for — versus your retail in 2024?

Scott Wine: That’s where we would like to be. It’s hard to tell, but that is an efficient way to run the business and how we would like to run it. I mean obviously, if I could I would just run on a direct pull system. We can’t necessarily just — it’s complicated with our long logistics, lead times and whatnot. But that would be the aspiration.

Michael Feniger: Thank you.

Operator: The next question comes from Larry De Maria of William Blair.

Larry De Maria: Thanks. Good morning, everybody. First, question. Are you taking any plan to spray orders for next year just yet, and just curious if there’s any programs out and how they’re looking — if they are out there? And related to that, with this one Smart Spray collaboration. When is the commercial launch for green on green targeted spraying, I think some competitors are out next year with that?

Scott Wine: Yes. So we are taking into the first quarter, partly maybe the first — a little second quarter for sprayers. So, that’s good. We are — we have not disclosed, and it’s partly because I don’t think we know how quickly we’re going to have that one spray solution integrated. Just a reminder though, Raven is in — are experts at Sprayer technology. So — and they had a relationship with Bosch even before us. I feel confident that we will not be delayed in any — but we don’t have a scheduled launch for that yet, but we recognize there’s a competitive need to get that in market as quickly as we can.

Larry De Maria: Okay. Thank you. And then I know you’ve refreshed your tractor lineup, and then obviously. you had to deal with the strike and now you — like you said. you’re running kind of full tilt into the year-end on tractors. But can you talk a little bit about share? And if you think you can regain some of that share, given the interruption or if that’s a multiyear event, or can you just talk about some of the trends there?

Scott Wine: No. We’re already seeing our ability to get some of that share back. I mean, we feel really good about the stickiness of our customers there. But that is not really acceptable to me, or anyone that we just get back to where we were because we felt like we were under-punching our weight there. So — but we’ve seen with the deliveries, the quality improvements that we’re getting back to a — I mean I wouldn’t even call it an acceptable share, but we were at an egregiously low level. We’ve gained in the month of June about 500 basis points. So we saw that start to creep up. And we believe that we’ve got the opportunity to continue to advance again from low levels but back to level. And then, we’re going to continue to invest in that product.