CNH Industrial N.V. (CNH) Earnings Call Transcript & Summary

Ladies and gentlemen, please welcome Head of Investor Relations, Noah Weiss.

Good afternoon, ladies and gentlemen, and good afternoon and evening to those who are joining us in live webcast. Welcome to the 2022 CNH Industrial Capital Markets Day. Here at the historic Fillmore Theater in Miami Beach, Florida. My name is Noah Weiss, Head of Investor Relations, and we are very excited to have you with us today. This event is being broadcast live on our website and is copyrighted by CNH Industrial. Any other use, recording or transmission of any portion of this broadcast without the expressed written consent of CNH Industrial is strictly prohibited. All of today's presentation material will be uploaded to the CNH Industrial Investor Relations section of our website. By clicking on the banner on the homepage, you will automatically be redirected to the appropriate section. For attendees here in the room, we have provided a tablet that you'll see on your table. During the day, as each speaker takes the stage, their respective presentations will be accessible for you to read as well as being projected on the screen behind me. For those following the webcast, you will see the slides in real time with the option of revisiting prior slides. Now let's take a closer look at today's agenda. We will have 2 sessions with a 20-minute break after Derek's ag segment deep dive. We will wrap up the presentations later today with a 45-minute Q&A session, alternating between the online and in-room guests. And with that, let's get started.

Ladies and gentlemen, please welcome Chief Executive Officer, Scott Wine.

Good afternoon, and welcome to all online, but specific thanks to all of you that are here. I mean, welcome to Miami Beach. I think it's a scene out in front that you probably haven't seen if you've been in this town before, but we're certainly proud to show you what we've got both here on stage and out front. I'd like to start by thanking our Chairwoman, lady, Suzanne Heywood, is here with us today. Really, it was her vision and the support of the Board of Directors and Exor, our largest shareholder that made today possible, because what we're going to talk a lot about today is being a more customer-focused centric organization. By executing the spin at the beginning of the year, we created 2 very separate customer-focused organizations and that's what enabled this. And I think what you're going to see us talk about today is what the new smaller, more agile, more customer-focused business can be. So we're excited that you're here and we certainly appreciate it. I'm going to start by playing a quick video that will hopefully give you an idea about why I'm so excited to be part of this team. [Presentation]

I'm really proud of Laura Overall and the communications team for coming up with this because I think this new purpose -- corporate purpose really serves us well. If you think about the idea of breaking new ground, it's what our equipment does both on the contract and the ag side, but also innovation, sustainability and productivity are the things that will drive us going forward. You will see those themes play out. And what I talk about today and what each of our presenters talk about because this represents our north star of what we will be and who -- what we will follow on the way forward. So we're excited about this. It's quite simple, but it really does speak very directly to who we are as a company. I'm proud to be up here today with 6 other presenters. The 7 of us represent the 33,000 employees of CNH Industrial. And one of the things I regularly hear from our team is how proud they are of our global diversity and that's represented on this side. Derek is from Scotland. Selin is from Turkey. We've got a couple of Italians, a couple of Americans. So we do bring a bit of diversity to the crowd, but more than that, we bring a lot of experience. Now the order of the presenters really should give you an idea of where we're putting our priorities as a company. Parag Garg, our new Chief Digital Office, will come up and really tell you about the Raven acquisition, but how we're integrating that. Parag brings tremendous experience from consumer electronics, where he brought many new products to market, and now he's excited to be with us to do that in the ag and construction space. Derek will then follow to talk about the ag business. We're really proud of the fact that that's now the largest part of our business. Derek's got 20-some years with the company, one of the best operators I've ever worked with and thankful that we've had him through the pandemic and the resulting supply chain situations. And I think you'll be really impressed with the story he puts out today. He'll be followed by Stefano Pampalone, who's been spent most of his time with us in our international businesses and how tough sometimes those can be. And Stefano has led an incredibly strong turnaround in our construction business. And I think when we're done today, you'll see why we feel like that's an important part of our future. And Selin Tur will come up and follow that with electrification and alternative powertrain technologies and how we expect to be a leader in that space. And Selin's background with electrical powertrains more in the high energy automotive sector, but really understanding now how to do that in a little bit slower vehicles, and we're excited to have Selin here today. Kelly Manley will talk about sustainability, and she really leads transformation, and I'll talk about culture today. She's leading that effort for us. But really, we'll talk about our commitment to continuing the strong sustainability focus we've had as a company over the last decade. And Oddone Incisa, who will come up and I would like to say that Oddone's been CFO for just about exactly 2 years now. And I think if you compare what he's done in those 2 years, it would stack up to what most CFOs do in a decade because it really has been almost everything thrown out at him, executing the spend, executing the largest acquisition in the company's history, and I'm really thankful to have Oddone as a partner with us. So let's jump in. One of the things that I've done is tried to spend as much time out talking to our dealers and customers, and what I regularly heard was this idea that we deliver great iron. And if you've got a chance to look at any of the machines upfront, I think you can see why we also believe that's true. But the term great iron has really been something that resonates with me. And it gets repeated over and over and it talks about our brands, it talks about our automation. But they also said usually in the next sentence, but we wish that you could be great with technology. And with the acquisition of Raven, we don't become great right away, but it puts us on a path to greatness. So what we're going to talk about is this idea of marrying great iron with great technology. And it's not just Raven, it's Augmenta, it's our investment in Monarch. It's our partnership with Trimble. It's just so many different things that we can do with technology now with Raven at the core. And what we believe is that by marrying that with a much greater customer focus, we actually can have a very bright future. But everything we do depends on our team, that 33,000 members of our global team that I talked about. And I spent -- I talked about spending time talking to dealers and customers, but I also spent time talking to a lot of our employees at various levels of the company all over the world, and I typically started the conversation with the same 5 questions, what 3 things do you want me to change? What 3 things do you want to protect? What are you worried I might do? What do you want me to do and what else you want to talk about? And through those conversations, I got the guidepost really for this entire plan. But one of the things that came out most significantly was the request to get rid of our bureaucracy. They were very clear about it. Scott, we're too bureaucratic. We're too slow. And in the same sentence, they talked about wanting to be more focused on and do better for our customers. And what we, as a leadership team, we spent a lot of time with our organization, driving as we did the spin, reorganizing our company so we would have less managers to be bureaucratic but also how can we design the organization to be more customer focused, put more people at the front end of the business, which I'll talk about. But really, this idea of culture for us was how do we do that to get rid of our bureaucracy once and for all. And really, what we're doing, Kelly Manley is driving it. It's all part of our CNHI business system that we'll talk. But we're driving a culture change to get better results. And the better results that we're focused on it -- we called it as focus 5 that red circle, you see, putting the customer at the middle of everything we do, striving to deliver better products, better service to our customers. And at the same time, we do that by creating an incredibly safe working environment for our employees, delivering world-class quality, improving delivery of both the products and services that we deliver at best-in-class levels and ultimately doing that while driving improving profitability. We believe internally, if we deliver on those 5 things, we will have achieved success. And if you look at the beliefs on the right, almost all of those are about how do we become better for our customers. So our commitment to proving evolving our culture in a more positive way we're very, very excited about. But let me tell you why I'm excited about both of our businesses. And we do have 2 strong businesses. Construction [indiscernible]. You'll see that on the next slide. But over 3 billion this year, approaching 4 billion next year. I mean it is a very strong and growing property growth business. But let's first talk about ag. What the business that Derek plays in is over $100 billion total addressable market worldwide. And we are a very global company. We have renowned brands. I hear a lot of conversations about how are you going to manage Case IH and New Holland together. Derek's got a great slide that talks about the parity of those on a worldwide basis. And what we believe is we've got the governance now to drive those to a much better place and allow us to become #1 in more places in the future. Machine automation is something that our customers value. It's in our combines with world-class productivity. Remember, this game in ag is really about productivity and yield. And what you see us talk about is how are we delivering that better for our customers going forward. Raven is a nice shot in the arm from a technology perspective. John Preheim is here today. I'm thrilled to have him leading that technology effort and what they've done so much with autonomy at Raven. And we're also, as you'll see with Selin expect to be leaders in alternative powertrain. So we really, really like our ag business. Now let's talk about construction. The case brand and construction, I've been really surprised how strong it is. New Holland Construction is also really strong. But when we go -- where we're located, the markets that we serve predominantly North America and South America, we have great opportunities for profitable growth in construction. Eurocomach business will certainly help, and we're investing in our partnerships that we can do more driving profitable growth across the portfolio in our business. And really, there's a great opportunity. What we're finding is that as we invest more in ag, construction gets a lot of the benefit. So we get a lot of innovation focus in construction off tailwinds of ag. So we really like where Stefano has got that business, and I'm excited for you to hear what he's got to say today. Looking at how those break down from a revenue perspective, you can see just over 3/4 of the business is ag today. Construction is not quite up to 20%, but I suspect that will continue to grow over time. And then financial services is a small part of the overall revenue scheme but a very much an enabler to what we drive the rest of our businesses. Our dealers and our customers rely on our financial services business, and since the Oddone ran it for so long, you can trust that, that is a very disciplined business and profitable success for our company. Looking at our global footprint, as I mentioned earlier, we're exactly even between North America and Europe. And that mostly represents the strength of the Case IH brand in North America and the New Holland brand in Europe. It's not exactly that way, but essentially, that's how it falls out. South America, it's only 16% of our business, but I would argue what Vilmar Fistarol has done, has created our most successful, our highest Net Promoter Scores. They know how to manage the high swings in inflation in that region. But really -- and then what [indiscernible] has over in APAC is a great opportunity to continue growth in the Asia Pacific region without a significant reliance on China. We have great opportunities for growth in Indonesia, in India and across the Asia region without having to rely too much on the very difficult China market. So the global reach of our business and our footprint is one of the huge competitive advantages that we have. But we also recognize because we're so global, it is a very, very dynamic world. And if you read the newspapers this morning or listened to the news last night, with Russia perhaps moving into parts of Ukraine, you never know what's going to happen over in Asia Pacific, if Xi Jinping thinks that the Taiwan is an attractive. I mean this is a very, very difficult world we're in. And we understand that. It's not like we're taking all of these factors into our business. COVID-19, we believe, is waning, but we know how to deal with it. The geopolitics, it's probably going to get worse before it gets better. So we understand that we're going to deal with it. I'm worried about inflation. Global debt is a big problem, and that usually ties directly to inflation. The Fed is going to try to handle that here in the U.S. what happens is that drive down market demand. We're factoring that into our thinking. Certainly, the tech acceleration we all feel it every day. As I was putting this slide together, I realized that 30 years ago, when I graduated from the Naval Academy, I was the last class to graduate without a computer. And if you think about the technology that we see every day and that advancement over the last 30 years is probably going to happen in the next 5. That's how fast things are moving, we're going to be prepared for it. And we think more specifically about how those impact our business. We expect to benefit from population growth. We expect to benefit as we provide better precision autonomy to let farmers get more productivity, as skilled labor is so difficult to find. The North American infrastructure bill is likely to be helpful. I'm surprised it got passed, but it did. On the negative side, I talked about interest rates, is not going to be helpful. The semiconductor problem is not going away. We'll battle through this year, probably get better in '23, but it's a challenge. And certainly, the regulatory environment, sometimes it's our friend and often it's not. We'll be ready no matter what happens. And then the things that we think are just on balance. The one that I'd like to highlight here is the ag cycle. What we are assuming in this plan is the ag cycle is not hurtful nor helpful through the plan period. We're essentially going to see ups and downs through the next 3 years that are essentially going to keep us what we think relatively flat from a market perspective. So the performance you see is what we believe we can generate without tailwinds of the market. So where does that leave us with 5 strategic priorities that I believe if we execute well and we will, that can make this company better for our customers, better for our dealers, better for our investors and better for our employees and all other stakeholders. The first is customer inspired innovation. You will see in all of our presentations that theme coming through loud and clear. Technology leadership, I mean I think if you saw the $2.2 billion check we wrote to bring in Raven, our commitment to being a leader in technology. Parag will talk about it. Selin will talk about it. We really believe that is a very important part of our future. Brand and dealer management. We are pleased with our historical brands. We need to better leverage them, and we need to enhance the relationships with the dealers. We're working towards that. Operational excellence, I think we all know the value of just being better fundamentally being fundamentally sound. You'll see our commitment to that. And ultimately, the sustainability stewardship is key. And what we expect to get when we deliver on those 5 strategic imperatives. First of all, customer success. We'll measure that with Net Promoter Scores. We have it in our major regions and major products like that's where we'll measure it. And we have opportunities for improvement, but that puts money behind our commitment to being better for our customers. We expect to gain market share, not massive amounts, but 200 basis points over the 3-year plan period is not easy, but you'll see our investments, we need to get that result over time and not buying market share. We're going to drive margin expansion. We believe we can get the entire company to a 24-plus percent gross margin over the period, certainly with room to go from there, but certainly, that's a nice near-term target. We also believe we've got to deliver an opportunity. We generate our business model enables us to generate a lot of cash. We expect to be able to convert most of that and have opportunities, and we'll talk about capital allocation later. But really, our returns on invested capital right at 19%, we're pleased with that. We're going to be careful with our investments and expect to invest in those projects that give us the best return. And ultimately, with sustainability, we'll talk about our deep commitment to getting that right going forward. But let's start quickly with what we've done. This is not a plan that starts out with these grand goals, but we've got to start from ground zero. We've got a running start into this plan, and I'm pretty proud of what the team has done in a very, very difficult environment. Executing the spin allows us and Iveco Group to be more customer-focused companies. We took the opportunity to rationalize our organization, and we've got 2x more customer-focused people in our organization and 5x more people in our tech community as we go forward. Our strong partners in our ecosystem. We've become -- and when our CNHI Ventures that was announced this morning, we've become a more welcoming partner for those innovative tech companies to come and be part of what we do. Monarch and Augmenta are a perfect example of that. The Raven acquisition, we've talked about it a lot. Parag will explain how we're going to leverage that. Let me just tell you why I'm so happy to have that team as part of our business. We've known them for a long time. They were a supplier, they make great technology that our dealers and customers love. What we didn't realize is how strong that team and culture is, and that's what's driving us to what we call a reverse integration. That's not easy when you're this big global conglomerate to let this little company to have their culture and their influence come back on. That's what we're striving to do. They can make us significantly better. Their technology is -- they're stacked. And Parag will talk about the stack. How are they going to -- how are we going to bring Raven in, not quite plug-and-play, but darn close to make our stack significantly better for our farmers and growers. We believe the new products -- I mean, the proof is in the pudding of what products that we bring out with this technology. There's a couple of examples here, and there'll be many, many more over time, but we're really excited to have that team as part of CNH Industrial where we believe it's good. There were 2 businesses, as you know, that we bought that we -- that aren't core CNH Industrial. We've got the process underway to find the right owners for those businesses, and we believe that, that will be good for both them and certainly to reduce a little of the cost we had there. But overall, we are very pleased with the Raven acquisition and what that will mean for the company going forward. On brand and dealer strength and on operational excellence, there's a lot of work to do, but we're starting, I guess, again, with a running start. We've got an organization that is global in nature, but set up in regions, that's -- in the regions on the brands and the ability to serve customers. We think that will be helpful. We've really put a lot of focus on our dealer engagement. And I think you'll see that we're making a lot of progress there. We've got a leaner, flatter, more agile organization. Our delegations of authority have gone down significantly, so we can do things faster. All of that designed as our employees ask for, can we reduce the bureaucracy in the company. And then sustainability stewardship. We have a long history of having the best scores on ESG, getting the best awards consistently from the various companies. We got Sustainable Tractor of the Year for our -- for methane tractor this year. So again, all of these things give us a running start into the plan. So very quickly, customer-inspired innovation. This idea of understanding our customers better, seeing them in the field, on the construction site, understanding how they're using that -- the equipment to just feed that back to our teams so they can deliver exactly what they need, not what we think they need. We've got over 200 -- over the plan period, the next 3 years, I think it's about 150 products in ag and over 50 in construction that we'll bring to the market, understanding what's better for our customers. This rigorous infield testing is the ability to work with our customers as we're validating the equipment to make it better real time. Certainly driving connected vehicles is better for our customers and better for us and our dealers, so that's a key part of it. Each of these slides will show on the right, what metrics we expect to drive as we execute these priorities. Technology leadership. I'll go very quickly through that one because this is exactly what Selin and Parag are going to talk about. But what I want you to see is how far along we are with autonomy, how quickly we can bring that to market when customers demand it? How much better we're making the stack from a precision standpoint? And how much -- what we can do with this new CNHI ventures to be able to bring not just our internal capability, but external capability into our stack for the benefits of our customers. And you look at the right side, there's a lot of benefits we get when we drive technology. It's customer success, it's sustainability improvements, it's margin expansion. This just makes us better, and you'll see a significant focus on the people that are involved and the investments we make going forward. Brand and dealer strength, we got -- I mean, the truly historic brands, hundreds of years of benefiting customers and they can feed their families and build things. I mean that is the strength of the Case IH, the Case and the New Holland brands. And really, what we need to do is give our dealers better tools because if you remember, most of our customers think the OEM behind is the dealer. The OEM relationship they have is with the dealer. David Meyer is our largest dealer, he's here today. And David, I hope you're saying that we're making a commitment to be better for you and better for your customers. That's our goal. We've got a journey here to go on, whether it's CRM capability, whether it's parts support, whether it's technology insertion, lots of work to do, but ultimately enhancing our brand and distribution. I like to say we can win in this game. If we're great at product brand distribution, this is a pretty easy game to win. It's hard to do, but our commitment is there. One of the things that Derek is going to talk about is brand governance. A lot of people over the years have said, Scott, the brands compete with each other too much, way too much they compete with each other. With our -- and actually Brad Crews is here. He runs the America business. Both brands report to him. The same is true in Europe. APAC and South America. The governance we now have to leverage both brands to gain market share against the competition, not gain market share at the expense and lower margin internally is something that those regional leaders are enduring happens, and we've got good strong governance and rightly the right culture to make sure that, that happens. Operational excellence is dear to my heart. I grew up on a factory environment, worked for a couple of companies. We're quite good at it. This is our pictures from our St. Valentin factory in Austria. It's probably as good as lean as any factory that I've been in. What we need to do is take that and spread it across the company. The WCM that we used for a long time gave us the fundamentals of lean manufacturing. What we're going to do now by evolving that into the CNHI business system is how do we involve our employees more, drive customer-focused ties in and drive significant benefits for our customers and margin expansion at the same time. We've got to get improvements in quality. We've got to get improvements in productivity, and that's what CNHI business system. Again, culture is one of the things. Strategic sourcing is another aspect. We can be much better at extracting value from our supply base, not beating them down for better price but how do we partner with the best suppliers in the world to get better pricing but also better innovation, better working capital turns, and you'll see us give significant focus to that. I mean, $550 million of operational improvements is how we drive margin expansion without relying on the market. And again, sustainability. We've got a whole section on it and Kelly will talk about it. We recently, very, very recently, actually, with the support of our Board, signed this science-based targets initiative. What that does is give our commitment to reducing greenhouse gases over time. We've got a couple of years to figure out exactly what our targets are going to be and how we're going to commit to it, but it is a -- as it says, science-based approach to reducing greenhouse gases. We believe it's right for our business. It will drive innovation. It will be -- help us be more prepared for regulation when it comes, and we also believe it's just the right thing to do. We've got -- we have a good scope 1, 2, we've had a good progress of reducing CO2 emissions, and now we'll use science-based initiatives to drive into scope 3. I'm really excited about what we're doing with methane tractor. There was a great article in the Wall Street Journal talking about the investments going in there. We are poised with the product in the market right now to be able to take advantage of that. And certainly, our commitment to driving more women in the workplace, and I'm proud that we've got Selin and Kelly Manley here with us today, but really, over time, continuing to advance that to make us a better company. I talked about capital allocation. And Oddone will talk about this in more detail, but I figured if I was a CEO that came in, in my first 4 months asked the Board to spend $2.2 billion on a tech company, I probably ought to talk about capital allocation. We are not going to spend money on acquisitions ever to buy to get bigger. When we do things like Raven, we can buy to build capability or we can buy to grow more profitably faster, that's more in line. But our first dollar is going to be driving organic growth and we think we get really good and improving returns on that. We are committed to a strong balance sheet. Again, the business model allows us to generate a lot of cash. And I think our ability to manage that and return cash to shareholders over the plan period will be significant. And ultimately, we're not, again, not going to buy to get bigger, but disciplined M&A will be a key part of our future going forward. This is what the financials look like when, not if we execute this plan. We think revenue growth is a -- I don't want to call it -- when you get deliver 6% growth, I mean I know a lot of companies over time, 6% organic growth is quite impressive, especially in these industrial markets and not relying on tailwinds for the market. But really, it's the 15% improvement over time in EBIT that we're most proud of, but also what really people want to see is where is ag going. Derek believes that he can get north of -- he likes to call it north of 15%. I think it's 14.5% to 15.5%, but either one works. But we're -- we've got a long -- a lot of work to do, a lot of plans in place, the right people, the right team to drive that margin expansion and continue -- this is not the stopping point, but this is where we can go in the medium term. Construction getting up to 5.5% to 6.5%. That's a tremendous improvement from where they've been. I think when Stefano comes up, you'll see how -- why we're so confident in that ability to deliver that plan and position it for further growth in the years to come. So to wrap up, what should you expect? Now this slide is meant to really to focus on what you should expect from the rest of the day. But I also think it fits on what you should expect from the future of CNH Industrial. First, I think you're going to see enhanced capabilities, enhanced capabilities from the Raven acquisition, from Sampierana acquisition and construction giving us much more capability, but also in the people we have here, the discipline we have across the company, much stronger enhanced capabilities. There's deep experience. Not all of the experiences with CNH Industrial, but deep experience in many industries brought to bear by one team working together to make this company better and deliver for our customers. There's also a solid -- focus on a solid foundation. I mean there's a rock solid that we were not fixing things at the bottom. We've got a strong foundation to build on, and I'm quite proud of that. But what I'm perhaps most excited and again, bringing a bunch of tractors and combines right here to Miami Beach is a great example of it, you'll see bold action. Most of the bold action will be for our customers. That's what we're striving to do. But there will be many other times where we could not make the investment, we could not do the hard work, but we're pretty excited and expect you to see that we are playing to win. Trust that we will move with purpose and pace our shoulders to the wheel. And I think you're going to see why I'm so confident in our future when the next 6 presenters come up. I'll be back for Q&A. Thank you.

Ladies and gentlemen, please welcome Chief Digital Officer Parag Garg.

Hi, everybody. Thanks for being here today, and thanks for taking the time to spend with us. Before I jump in, I'd like to spend a little bit of time talking about myself to you guys. So I've spent the last 20 years in my career developing tech products in the consumer areas. You've probably use many of these products like Microsoft Windows, Amazon Fire TV and 5G products from T-Mobile. And I am here for a reason. After I became apparent, it became my personal mission to have a positive and tangible impact on the world. So when Scott gave me the opportunity to join CNH Industrial 10 months ago, I didn't think about it twice. What really motivates me is to use my tech experience to transform and advance our precision technology offering for our agriculture and construction customers. And today, I'm going to walk you through those challenges our customers are facing and how we've been working hard to deliver smart iron solutions to solve these challenges. As many of you know, in today's environment and the years to come, our customers will need to produce more while utilizing fewer resources. They have to meet the continuously rising demand for crops with less arable land, fewer workers, decreased irrigation and a reduced usage of chemicals. Helping our customers address these challenges is our purpose. What I get asked all the time is how? While precision technology tackles all these challenges by uniting data analysis and machine automation and is the backbone of CNH Industrial's long-term strategy. CNH Industrial has a long history of building great iron and tools to help farmers throughout that entire farming life cycle, an awesome legacy in which our team is building strong precision technology for every season. Our machine automation is best-in-class to prepare the soil for planting and to efficiently protect and harvest the crop. I've had a chance to drive a combine myself. And these machines are impressive. And our customers love them. The level of automation in our combines has largely taken the need for a skilled operator out of the equation, which is a higher level of automation than our competition. And the benefits show up to our farmers as optimized grain quality, minimize grain loss, reduce operator fatigue and improve fuel consumption. In our digital services, we have the opportunity to advance the customer experience, and we're delivering solutions that are inspired by customer needs and built for customer use. Our vision for the future is to make precision technology so smart and so easy that the customers can focus on what really matters to them. These are the areas that we are investing in to drive that vision. And following the acquisition of Raven, we are better positioned now more than ever to leapfrog the competition by accelerating at each one of these areas. Our digital service tools help our customers manage their businesses better, whether it's in the office or in the field. And we will continuously deliver new advancements in automation, the technology that makes our machines automatically adjust themselves. And autonomy, we are combining automation and digital services to pave the way to full autonomy to take the operator out of the cab. So farmers can now run their equipment longer, day or night and with less labor. We have made tremendous strides since Raven was brought into the CNH Industrial family 3 months ago. So let me give you guys a quick video in which our employees and customers tell you how enthusiastic they are about what we're doing and show you how these 2 companies come together to advance the future of autonomy. [Presentation]

Man that video gives me going -- that video gives me super excited about CNH Industrial's future and the amazing technologies we're working on together to serve our customers better. Even as we tackle our current challenges and give our customers the support they require in the present, we are simultaneously building the future, combating these dual challenges requires an organized strategy that we've structured around these 4 pillars. Continuing our customer obsession, constructing a culture that's tech first, building on our tech stack and utilizing our partners ecosystem with a plug-and-play approach. So let's talk about customer obsession. Solving our customers' challenges require a strong collaboration with customers around the globe. And we've really taken that to heart. During the recent harvest season, I had some time -- I had the opportunity to spend some time with Jordan, a fifth-generation 50,000-acre farmer. Learning about his pain points really made me appreciate the importance of precision technology and how critical it is to his business and the entire farming community. And this starts with proactive engagement, understanding what their needs are and seeing how we can meet them. Putting our engineers in the cab, in the field to test live code on equipment and understand the experiences we create for our farmers. We've deployed on-farm development now like bringing our mobile command centers to the farms to be really be side by side with our customers across all different types of soil and climate conditions. And we're not doing that just here in the U.S. We're starting to do this globally. Performance monitoring, really being diligent about ensuring the products perform the way our customers expect them to perform. And when they don't, we make sure that we're looking at those numbers and getting them to where they need to be. Simple by Design. We've put simplicity at the heart of our designs. So they're so intuitive, which in turn builds trust and loyalty in our technology. And lastly, a stronger-than-ever enterprise commitment to make this customer obsession possible, from our Board, to Scott, our senior leadership team and throughout the entire organization. So let's talk about the team. We work towards aligning our culture to be a customer-first mindset. When I joined CNH Industrial, we were in the midst of a transformation to lead with technology. Precision technology now is a dedicated team at CNH Industrial that's responsible for product development of precision applications. Starting with the tech-minded leadership, we've been infusing new tech talent by hiring experts in the field of technology and engineering. And we've empowered our engineers to enable them to make bold decisions to improve technology for our customers. In 2020, we in-sourced 5x more tech talent compared to the previous year. And we've been working internally to eliminate friction to streamline our development processes. Raven was a natural fit into the precision technology reorganization, and we're seeing amazing synergy between these 2 companies already. And lastly, we've changed the way we face every new project. We have a clear vision for what we want our tech to be in the future, and this allows us to think of every new development as a building block of a broader system and not a stand-alone item. So the moment you've been waiting for. Let's talk about the tech stack. We've been building a robust tech stack that offers both flexibility and a plug-and-play architecture, allowing for more partners into the ecosystem. We define our tech stack across 5 dimensions: architecture, connectivity and data platform, guidance, automation and intelligence and autonomy. It was an important milestone to bring Raven into the CNH Industrial family, as they bridge our autonomous gap and add a tremendous amount of capabilities as a leader in sprayer applications and their expanded suite of guidance technology. This is going to lead to a powerful tech stack that accelerates development and will deliver fully autonomous solutions, expand automation and develop products to optimize each job on the farm. Since I joined CNH Industrial, we started working on this improved stack. And with the close of Raven, we're already starting to see some of that progress come together. Together, the stack is stronger and it will allow us to develop more comprehensive solutions for our customers to scale easily. Let's talk about the ecosystem. We take pride in the partnerships that we've developed over the years. We have worked towards giving accessibility to other providers with the goal of enhancing our customers' experience by plugging their solutions into our tech stack to further scale our offerings. It also makes it really easy for us when we go look at acquisitions as well as participating in industry partnership opportunities. So this balanced approach of internal development, partnerships and third-party enablement really makes it easy for us to continue to offer our customers the best in industry solutions. So let's talk about how all these pillars come together. We'll use spraying as an example. Customer problem. Spraying without precision is wasteful. Solution, precision spraying is a way to reduce chemical usage. But let me tell you, precision spring is like a complicated orchestration. We need to know where to spray, control the nozzle flow rate and adjust the boom height in order to deliver the right amount of product at the right location at the right time while traveling at high speeds through bumpy rows of crop without damaging them. And we do this so seamlessly on our new Case IH 50 Series sprayer. And let me tell you how. Case IH leads with its ultimate operator experience, fastest field application speeds, [ IronClad ] booms, all in a cab forward perfectly balanced air ride suspension that delivers the smoothest drive in the roughest train. How does Raven fit in? They deliver the automated boom height leveling system, rate control monitoring, the Hawkeye 2 individual nozzle control and the, VSN vision steering in guidance. Together, they delivered the best sprayer in the market. And good luck getting one. Farmer response has been so incredible, we're sold out for the year. So if any of you want one, get in line now. And let me tell you how Augmenta fits in. Augmenta is one of our strategic investments and partners, and they make a vision system that performs a real-time canopy scan of crop health for see and act capabilities. Augmenta's technology can reduce the application of fertilizers by up to 40% while increasing yield. This all comes together on our tech stack, which enables the seamless partner integrations and workflow management for our customers. Augmenta and CNH Industrial are currently testing this combined system in Texas. And in Q2 of this year, we'll start testing see and act capabilities with customer validation. We're also leveraging our relationship with Augmenta and our open ecosystem to test ways to use their technology to drive sustainability improvements and customer value. This is a perfect example on how our versatile tech stack makes it easy for others to participate in our platforms and expedite the delivery of new products. This is one of many new product options you'll see in the future. In conjunction with our products, CNH Industrial has a goal of providing a seamless digital solution that helps our customers make informed decisions with their data to maximize yield, productivity and vehicle uptime. This includes researching their equipment needs, buying equipment or parts, planning out their farming operation based on agronomic data, real-time monitoring of their fleet and finally, reporting and analytics. When I spent time with Jordan, he told me how incredible our New Holland automation was, but admitted that he had some concerns on how we are progressing in our digital journey. As an example, a sore point for Jordan and the local dealer was our digital reporting capabilities. In order to service them better, we went back to Jordan's office and spent time discussing and understanding what the gaps were. And not just for him, but for farmers across the world. This led to some very rapid product development where we were able to deliver Jordan A customizable reporting solution in less than 30 days, a process that would have taken months prior. And that solution is now being offered to farmers in their core experience at CNH Industrial. As CNH Industrial transforms, Jordan will continue to be one of the many customer partners we work with to help develop and iterate on the future needs of the business. We are incredibly passionate about our future plans for automation. As previously stated, automation is a key strength for CNH Industrial's tech strategy. Already bringing benefits to farmers across the world, across the whole cycle and helping build a backbone to deliver an autonomous future. CNH Industrial has been a consistent leader in the field for decades, providing more and more efficiency and productivity for our customers. And we're going to continue to build on that further and to increase our lead across the portfolio. We are leaders in smart tillage with soil command farmers increase productivity, reduce soil erosion, all while saving on fuel consumption, which then creates the ideal seedbed for plants to thrive. In addition, we're testing future forward solutions to be ready for the market, such as enhancing our vehicle-to-vehicle communications, some machines don't overlap work areas, improving efficiency and paving the way to autonomy. Finally, I want to talk to you about our autonomy journey. Our rich history in this field started back in 1995, driving significant advancements along the way. In 2016, we were the first to put out a bold vision for what we thought the future of autonomy would look like, and that journey is now being accelerated exponentially. With Raven on board, we've been commercializing autonomous solutions since 2020 with the OMNiPOWER platform. Then we had our first sales of auto cart, which we've been -- and then we started doing testing -- customer testing with auto tillage. Together, we're testing auto spread and auto spray on our sprayer platforms and then pushing on to autonomous solutions across our entire vehicle platform. As you can see, this has really jump-started us in both in terms of solutions and market and deep technical acumen for the journey ahead across the entire tech stack. I'm confident that we have all the right ingredients and tools necessary to be a leaders in autonomy and help our customers throughout the entire farming cycle. So I opened my presentation by discussing how I wanted to make a tangible and positive impact on the world. We know and understand what our farmers need and I'm really excited about how our team, our technology and our tech stack come together and make our iron a great way to win in the marketplace. This is going to be a fantastic ride and thank you.

Ladies and gentlemen, please welcome President of Agriculture, Derek Neilson.

Good afternoon, ladies and gentlemen. My name is Derek Neilson, and I have the privilege of leading CNH Industrial's Agricultural business. I've been with CNH Industrial for over 20 years, and the constant challenge of supporting our customers and our dealers in a dynamic industry that never stands still, keeps me as motivated today is when I first joined this great company. Today, I'm going to talk to you about the rich history of our segment and our plans to shape the future of agriculture and a rapidly changing world. Why am I so proud to lead this business in such a talented team. I think this slide helps explain why. To start with, we have 2 tremendously strong global brands Case IH and New Holland, which have an incredible heritage spanning 180 years and 7 generations of loyal customers. This is enhanced by a well-balanced and geographical distribution, which includes 200 countries and more than 6,500 sales and service points. Our strong dealer network enables us to foster a trusted partnership with our customers, elevate our brands and collect and analyze the local data, which we can then use to improve both our businesses. Our global customer base can count on the support of 29 manufacturing facilities and 18 research and development centers across the world. With our regional presence, we are where our customers are, which means we can best serve them. Our relentless focus is paying off with revenue growth outpacing our peers by nearly 50% and hitting new profit levels, thanks to price realization, mix improvement and market share gains. Our record results in 2021 also underscore our commitment to operational excellence, as we successfully navigate through significant supply chain challenges. To maintain this momentum, we are continually expanding our product range, both organically by strengthening our positioning in key profit pools and inorganically through partnerships such as Monarch and Bennamann plus the acquisition of Raven, [indiscernible], which I'll talk a little later in the presentation. As you've heard today, and what all this changing rapidly and this presents a unique challenge for our farmers simply to produce more with less. Demand is growing whilst input costs are rising. At the same time, labor and resources are becoming more and more scarce. As a result, our farmers have a clear mandate to increase productivity that will be driven by technology advancements through the entire value chain. And this goes beyond the farmers. It's about us CNH industrial, committing to sustainability where precision technology enables farmers to reduce fertilizer, pesticides, water usage, supporting a cleaner world and alternative propulsion increases the sustainability of the entire farming system. We believe these developments are foundational of a healthier and ultimately, more profitable family ecosystem. And all of this is happening in a historic moment where supply chain complexities are adding new pressures on the entire industry. The initial impact fell by ourselves, but ultimately impacting end users. As our customers' needs change, we are investing in the iron and the technology, roughly twice the amount we used to, to help them navigate the transition and enhance our partnership with our customers. In short, we are investing to gain market share to drive up margins and to make our business less exposed to the agricultural cycle. We are over-indexing investments in new technology, both in terms of precision and ultimate propulsion and alternative propulsion, but we are not forgetting of the iron, ensuring our customers are safe and our machines meet their demanding quality and reliability requirements, which will always be fundamental to our mission. This will bring us to an improved return on invested capital during the plan period through a balanced 1:1 investment ratio between tech and iron. And to make sure everything I just said becomes reality, we'll continue upgrading and enhancing our manufacturing facilities, so we can safely and efficiently build the future of agriculture. Our investments in the Ag segment are well aligned with the strategic priorities Scott discussed and presented to you earlier. We are now a more focused company, allowing us to sharpen our strategy and further leverage our synergies between our agriculture and construction segments. Our strategy is anchored on a singular focus on customer centricity, which you'll hear throughout all the presentations today. We have a structured strategic plan built around our customer, where brand, product and distribution remain key to our success. And I will take the opportunity to walk you through these pillars on the next few slides. As I said, everything we do stems from our customer-centric approach from iron to our innovation. So let me spend a couple of moments discussing how we are partnering with our customers across the globe, ultimately to feed the world. Our customer base is extremely diverse in terms of farm type, farm size and technology requirements, understanding and meeting the definite needs is what drives customer-inspired innovation. Our geographical diversity facilities is enabling our 2 primary global brands to deliver a fully competitive portfolio to a truly broad range of farmers. All of this allows us to gain a deep understanding of how firms work and how their needs are evolving. Today, we are building differentiated customer-inspired agricultural equipment and services to maximize their business and at the same time, further reinforce and expand our brand's legacy. Seven generations, yes, 7 generations of farmers have been loyal to our brands. And we are building on this tremendous heritage by further optimizing our multi-brand strategy. Our brand portfolio levered 2 distinct global brands, similar in size. But focusing on different customer segments, which are then complemented by regional specific brands with focused product offerings, all of this to provide the customer exactly what they need in their respective markets. And across all of this, we provide access to our technology brands, both as factory fit and also as aftermarket kits. Geographic diversification is one of our greatest strengths. And whilst the revenue contribution from our 2 global brands is relatively equal, they are strongly characterized by differences in the respective segments and geographies. Case IH, for example, is focused on cash crop, especially on large farms, hence is greater presence here in North America and also in markets such as Australia, where cash crop and large farms are more prevalent. New Holland, however, targets small [indiscernible] forage and livestock customers and is more tailored to small to midsized farms. This differentiation makes it the prepared partner in Europe and Asia Pacific, where the average farm size is smaller. In the remaining areas of the world, it really boils down to the country-specific needs where farmers look for powerful and highly productive applications they gravitate to Case IH, where farmers feel a more tailored approach is needed, they tend to refer to New Holland. And finally, it is important to note our historical leadership in specialty crops and which brand differentiation is even more evident. Case IH is the preferred partner for sugarcane customers and New Holland for vineyards and orchards across all regions. As I mentioned, great iron and great technology are critical to maintaining our strong partnership with the diligent customers. Last year, we launched some 40 products, further improving our portfolio. And we have an impressive 150 more launches planned over the next 3 years. [indiscernible] a selection of the most important next-generation and upgrades in our product road map. And as you can see, we are intensifying our development on automation and autonomous features and at the same time, bringing in all the innovation, which Parag has shown to you earlier. And we also have relevant releases for alternative propulsion, which Selin will give you more details later on. Each of these 150 product launches will bring additional value to farmers, dealers and ultimately to ourselves. This means top line and bottom line incremental growth. I'd love to go through all of the new product launches, but in the interest of time and not boring you too much, I'll focus on 3 examples. Tractors remain the backbone of our portfolio. We have been building them for over 100 years, racking up many, many industry firsts along the way. Our existing lineup is robust, meaning every type and size of farm can find the right CNH Industrial tractor from narrow vineyards, all the way to expansive Prairie operations. Our latest advancements are making farming experience even more better and progressive. The new generation tractor that you see on the screen behind me launched last year, not only brings outstanding performance, but also offers the quietest cabinet segment, combined with powerful climate control and exceptional visibility. Now if these seem like trivial improvements, remember that a farmer can spend more than 12 straight hours in these machines. And if we can operate them more comfortably for longer, this benefits their well-being and benefits the farm's overall productivity. None of this matters if the tractor won't run, if it needs refueling or needs repair. This latest tractor can stay in the field longer than any other before refueling. And time between maintenance is 50% longer than our peers. And all of this happens with the tractor being fully connected to other machines, to the farm office, and to third-party applications. If tractors are the backbone of CNH Industrial, sprayers represent a key opportunity for growth. Where earn know how our is further enhanced by Raven. Parag already gave you some of the technical aspects of the new product, but let me try to give you an idea how vital this is for our customers. New performance levels allow our sprayer to cover 20% more acres per day and avoid respraying the same area. The precision technology is a crucial benefit for the environment by reducing nitrogen usage by 9%, use of plant growth regulators by 20% and harvested by fully 15%. The result for farmers will be to reduce their input costs, minimize damage to their crop and allow them to be more efficient in a key area of the agricultural cycle. And again, all of this is done without conceding anything in terms of economics or smoothness [Indiscernible]. Combines represent a core strength in our portfolio today. We are incredibly proud of being global #1 in terms of sales. We intend to continue to build 20 years of industry first and numerous awards that have shaped how today's combines function. An automated combine increases productivity by fully 30% to 40%. It also preserves grain quality and reduces impurities which help obtain higher grain prices. Additionally, automated combines protect the soil to maximize this season production whilst better preparing the ground for higher yields in the seasons to come. It also allows a semiskilled operator to fully optimize the output of a critical piece of farming equipment. And we will launch these automated features across all of our combines product range, and we are already well advanced in the development of the next iteration of automation. To successfully complement our brands and our products is essential we continue to invest and develop our dealer network, enhancing the network, in particular through digital capabilities, is one of the key pillars of our strategic plan and significantly contributes to improving customer satisfaction. This includes an improvement in front end, connectivity and back-end tools, supporting a fully digital customer experience from sales all the way through to service. This will enable our dealers and our teams to improve the overall service level by avoiding or reducing machine banking. The need for increased productivity opened up new opportunities also for additional service revenues, both through retrofitting to older machines and creating a more captive parts and service business. Until now, we have been more focused on our customer, but strong internal operations enable us to work better and smarter for our customers, and we have been actively implementing a number of initiatives to improve our operations, which as we move beyond the supply chain headwinds will drive increased efficiency across all of our businesses. Our execution as we navigated these recent supply chain challenges underscores our ability to find smart solutions to refine our operations, also taking the opportunity to simplify our product lineup. We have launched an ambitious strategic sourcing plan where our company operates as one team through purchasing, engineering and manufacturing to engage with the best suppliers for a long-term win-win solutions. On top of that, the newly implemented CNH Industrial business system will expand upon our history of lean world-class manufacturing, leading to simpler processes, improve quality, reduce bureaucracy and better communication through our entire business. We are supremely confident that all of these projects will contribute to solid margin expansion during the plan period in excess of $500 million. As I mentioned earlier, our commitment to sustainability will remain, and this will be focused on 2 pillars, namely biofuels and electrification, both of which Kelly and Selin will show you in more detail a little later. Our commitment to sustainability is indeed not limited to targeting strong reductions in Scope 1 and 2 greenhouse gas emissions, but we believe we can really propel our ecosystem to drive a significant reduction in Scope 3 and finally target a net zero carbon environment. But why does sustainability really matter? It is fundamentally important to our farmers in a world where their end customers are demanding even more and more food products. We're also ensuring that we stay ahead of ever demanding emission regulations. This also benefits our shareholders by further solidifying CNH Industrial's long-standing excellence and sustainability. On the biofuel side, we already launched last year the most sustainable tractor in our market. Now we will expand the same technology and approach progressively to more and more products in our portfolio. We are also well advanced with the Bennamann Biofuels secular economy solution, which you will see in the market very, very soon. Our electrification journey. Within our strategy is 3 simple steps, light electrification such as E-implements, medium electrification where hybrid solutions will pave the way. And for the final step, we will bring to market fully electric tractors, utilizing [Indiscernible] technology, which will be launched within the plan horizon. And as I said, Selin will take you through these in much, much more detail in the later presentation. Now let's look at the financials. When we bring it all together, we plan to increase revenues by 16% over the next 3 years coming from a combination of content, product launches and pricing. We will be profitable growth as the additional value we deliver to customers translates into higher margins versus traditional products. Combined with our operational efficiency, this will allow us to improve gross margin, fully fund a 50% increase in R&D and deliver adjusted EBIT expansion in excess of 300 basis points by 2024. So in summary, our balanced and extensive footprint puts us close to farmers even in the most remote locations. We will use this proximity to continue to understand our customers' needs, and this in turn will drive our significant investment to bring them great iron and the great technology they deserve. Over the next 3 years, we will enhance our already formidable portfolio with a vast array of new products that will fulfill the mandate for increased farm productivity, which we will then sell through an increasingly digitalized and well-trained dealer network. Industry-leading advances and alternative propulsion will bolster our firm commitment to maintain our lead in sustainability. And finally, as a historical pioneer in agriculture, dedicated to serving our customers, we will continue to reach new heights and at the same time, breaking new ground. I thank you for your attention during the presentation. And with that, I will invite you all to take a 20-minute break, at which time we will resume proceedings by my colleague for construction firm, Stefano Pampalone. Thank you very much for your time. [Break]

Ladies and gentlemen, please welcome President of Construction, Stefano Pampalone.

Ladies and gentlemen, good afternoon. I've been with CNH Industrial for most of my career in different assignments across the world. This is an exciting time for the Construction segment. And I'm delighted to share with you today what we've been working on in the last 2 years, from product development to enhancing our operations or to position the business for profitable growth. CNH Industrial's Construction Equipment segment has a long storied history. We are a global business with an established presence in all geographies. Our widespread network of dealers and importers, manufacturing plants and research and development centers mean we are close to our customers wherever they are. Our robust product portfolio ranging from many excavators to large reloaders is sold under 3 brands: Case, New Holland Construction and the newcomer, Eurocomach from the Sampierana acquisition. Each has a strong heritage and positioning within its respective geography serving customers with a tailored-product offering. Over the past 2 years, we have taken a number of actions to position the Construction segment for profitable growth. These efforts have resulted in doubling the EBIT during this time. This was constrained by headwinds spurred by the COVID-19 pandemic and the resulting supply chain disruptions. We've made structural changes throughout the organization. First, we implemented the regional structure to be closer to our dealers and customers. We enhanced research and development capabilities with the addition of new talent and competence. We improved the quality of our products and prepare our manufacturing system to match the expected demand. We optimized our manufacturing footprint, creating efficiencies. And this constitutes a very strong vision to drive profitable growth in the coming years. With that strong foundation in place, we are now focused on accelerating the renewal of our product offering. This started with the launch of new wheel loaders and the industry's biggest compact track loader, both with advanced digital features and leading-edge connectivity systems. Additionally, we have expanded our portfolio of mini and medium excavators through the Sampierana acquisition. We are now in the process of launching the Minotaur, a groundbreaking new product that blends the versatility of a large compact tractor loader with the power of a dozer. We have the biggest growth opportunities in North and South America. In Asia Pacific, we are strengthening our presence in selected markets, such as India, where our manufacturing footprint and supply base is very well-established. We are stronger in Europe, thanks to the Sampierana acquisition and we have created specific value proposition for our residential, nonresidential and dealer enter segments where we already have a strong position and there is growing demand. Digitalization is radically evolving in our industry. This provides with the opportunity to offer advanced connected services driven by data collection. All of this enables our customers to increase productivity, safety and efficiency. We are well-positioned in this changing environment. As I mentioned, the construction industry is undergoing massive transformation driven by a number of global trends. First and foremost, significant infrastructure investments are underway, driven in large part by the recent infrastructure bill in the U.S., the European Union's long-term budget coupled with next-generation EU and similar programs in other parts of the world. New technologies are being launched at stunning pace, addressing the need for safety, efficiency and productivity as well as the lack of skilled personnel. Digitalization is impacting the competitive environment through connectivity, big data, Internet of Things, mobile interfaces and machine automation. Air quality regulator and noise control are driving the development of alternative forms of propulsion and actuation of the machines. Every player in our industry along the supply chain is moving toward better, more sustainable operations and products. Selin and Kelly will talk more about that . Barriers will fall, new players will emerge. These trends will shape a new construction equipment industry across the world. We welcome the challenge. With almost half of our sales and a significant portion of our margins driven from North America, the infrastructure spending in the U.S. positions us well for growth over the next 3 to 4 years. In addition, we are also expecting robust demand to continue in South America. Specifically, in Brazil, we are among the top 5 players with a long history and a well-established network of dealers. In Europe, the market has yet to reach its historical peak and we are working to be in a position to meet the expected demand resulting from the stimulus package. Sampierana fitting product offering will further assist us in achieving this. Our limited exposure in China protects us from the adverse impact of the decline in demand. In the rest of the world, we see opportunities in a number of markets, among which India, Turkey, South Africa. We are geographically well positioned to capture continued profitable growth in the coming years, and we execute on CNH Industrial strategic priorities. Let's see how we will drive growth by delivering value to our customers through reliable, integrated and sustainable solutions. It starts with our customers. As you've heard from Scott, Parag, Derek, partnering with our customers around the world is our top priority. We are with them at every step of the way from advice during the purchasing process through the life of every machine with aftermarket sales and service and beyond. We are designing our machines to elevate the operator's experience and improve overall safety. Digital and automation solutions aim to increase safety, productivity, uptime and profitability. Specifically, machine control solutions reduce operator fatigue by eliminating the need for joystick movements. The person detection system allows operators to people or vehicles approaching machines. Uptime is promoted through planned maintenance contracts, proactive dealer support with telematics alerts and other services such as oil sampling to detect and predict abnormal functioning. Fleet management, site watch enables better machine utilization by identifying and reducing idle time on machines. Each of our customers has different requirements, which are continuously evolving. So we are enhancing a wider service and product offering with different price points, levels of investments and full access to a wide variety of financial services through our CNH Industrial Capital. Scott said it at the beginning of this presentation, we have a great hire and we are committed to maintaining that. Our product portfolio is central to our growth. And by 2024, we will have completed the renewal, all the most important ranges focusing on the uptime, the productivity and ergonomics critical for our customers. This includes the totality of our heavy line, which will be upgraded with advanced digitalization features such as cycle automation and a human-machine interface. By the end of '23, we will launch the next generation of small and medium wheel loaders in Europe and North America, as well as the next generation of crawler excavator, plan to be launched in Europe in March and in Q3 2022 in North America. Road building customers will benefit from new electrohydraulic controls on graders and dozers, enabling machine control automation capabilities. For our compact line, we firmly believe there is an electric future and for each of the major product lines, we are developing electric versions of selected models. In addition, we are focusing on developing enhanced services and features that can be applicable throughout the range. With the acquisition of Sampierana, we have bought in a competitive range of mini and medium excavators built through a cost-effective supply chain rooted in a competitive cost country, and a sound Eurocomach business significantly strengthening our presence in Europe. Sampierana has excellent and agile R&D capabilities, which will support the design of an innovative range of electric mini excavators. One of them is here today on display outside this building in the Case livery. This acquisition is specifically important for the European market as many excavators represent the main product. We are now fully committed to increasing the production capacity in order to integrate Sampierana into our existing mini and medium escalator offering. And we will quadruple Sampierana volumes by 2023. Marine technology leadership with our great iron will drive profitable growth. For us, this means digitalization and automation, which are key to delivering increased productivity and uptime on today's evolving job sites. Thanks to the scale and quality of CNH industrial competencies, investments and assets, we are able to achieve significant progress in several areas of digital and automation. The data received from connected machines are used in many ways, including in the design for future product features and digital services, promoting uptime and productivity for our customers through our dealers. Examples include proactive alerts, predictive maintenance, and remote support that are available today on some of our heavy line products just launched. We are also in the process of scaling up these services, and we'll be launching them on additional product lines later this year. The enablers are common across the 2 segments. Machine automation helps improve safety and productivity for our customers. We are working to expand our existing 2D and 3D machine control and guidance solution and launch new functionality for added safety and productivity. And this will be progressively rolled out across our product lines over the next few years. To enhance the customer experience, our goal is to digitize the entire work flow on the job site from initial site survey all the way through to the final as this map. If we look at electrification, the worldwide market for electric vehicles in construction is expected to grow steadily, progressively overcoming challenges. We are introducing electric solution for select models in our compact line starting this year with the launch of the new electric mini excavator followed by backhoe loaders, compact wheel loaders and compact track loaders in the years to come. The experience of an electric machine requires a different approach on the vehicles overall utilization. It is not just about propulsion. This is the area where we are focusing our efforts and is strictly linked to a better knowledge and understanding of evolving customer needs. Our dealers are key assets and our brand ambassadors. They play a crucial role in serving our customers and earning their loyalty. They know the customers' evolving needs and maintain the daily relationship with them and it is through their knowledge and professional support that we are able to truly satisfy our customer needs. Our strength lies in our capillary network that is constantly evolving with the market. We are working hard to elevate the digital service offerings with our distributor partners and create new value, providing an enhanced customer experience integrating, for example, dealer management system and our parts platforms. We plan further integration of systems to offer new digital tools. We are one of the leaders in compact construction equipment for agriculture and landscape application. The ag channel, North America and Europe is a unique asset for us, offering opportunities for further growth. In an industry like ours, one of the biggest challenges has always been and will always be production efficiency. Our smart factory models, initiatives to reduce complexity and modular approach in product development together will build a highly competitive industrial system. Smart factories are the foundation elements of a digital supply chain, capable of synchronizing product demand with customer satisfaction within the expected time line. We are in the process in in-depth review of our current supply chain, moving production and sourcing to where we can obtain the levels of efficiency and productivity we're looking for. We intend to make the most of the unique assets of our commonalities and synergy with the agricultural segment in terms of plants, processes, systems and suppliers. We are doing all this while always keeping quality for our customers at the forefront, which has been core to our transformation journey and structurally embedded in everything we do. The modular approach and product development combines the need to simplify our processes with the preservation of the offering required by our customers. Our efforts over the last 2 years have positioned us well to pursue profitable growth. Through the execution of our strategic initiatives, together with an attractive demand outlook and strong plan to significantly increase the technology content of our offering, we have built the opportunity to double our current profitability. Our strategy will sustain the achievement of sales, ranging from $3.7 billion to $4.5 billion by '24, and a 5.5% to 6.5% adjusted EBIT margin, driven primarily by new technologies, the addition of Sampierana and synergies with the Agriculture segment. We are confident we have put in place the building blocks necessary to reach these goals. I want to leave here today understanding you, understanding we have a clear road map to profitable growth. We have built on our strong foundation by focusing on geographies and end markets where we see the biggest opportunities, benefiting from the addition of Sampierana's products and technology, further enhancing our commercial and operational excellence through synergies with the Agricultural segment and advancing our strong partnerships. Given our strong running start, we have rebuilt a solid foundation for the construction segment to deliver long-term success. Thank you very much.

Ladies and gentlemen, please welcome Vice President of Advanced Technologies and Innovations, Selin Tur.

Thank you very much for being with us today. I joined CNH Industrial about 4 years ago as the Director of Electrified Powertrain Engineering at SPT Industrial. Prior to joining the company, I spent over 20 years developing cutting-edge electric and electrified powertrain technologies and their components, including battery packs and propulsion systems. I also worked on the integration into passenger and racing cars, such as in FIA Formula 1 and Formula-E, although now I am focused on much larger and lower vehicles. It is my privilege to talk to you about our electrification and alternative fuel strategy today. Our customers are the driving force behind our journey towards electrification and alternative fuels. Sustainability is something our customers, their customers and the planet are demanding. Businesses and their stakeholders would like to reduce their carbon footprint and ultimately reach net zero emissions on a global scale. This is true for our customers and for CNH Industrial as a company. But this is not only about sustainability. Next-generation products deliver a better user experience with reduced noise, better traction, driving and working features. Controls and automation are more responsive and intuitive. Data is available all the time everywhere. These benefits open up new use cases in specific environments, enabling additional market opportunities beyond current applications. For example, the use of compact construction equipment indoors and tractors in greenhouses. Although this improves our customers' financial returns, productivities enhanced with higher efficiency and more responsive controls. Lower operating costs are a result of reduced fuel assumption, fuel maintenance and services requirements. Lastly, users are prepared to comply with the merger regulations, which are either being introduced or planned in line with Kyoto Protocol, Paris Agreement, COP26 to name a few. Regulations are tightening, and we are getting ready for when they are implemented. The world is changing, and we have products and a product plan for the realities of this new world. Let me show you some world-class products that demonstrate the best of electrification and alternative fuels that CNH Industrial already offers to our customers around the world. Our 100% biomethane tractor was awarded sustainable tractor for year 2022. It not only brings net zero impact, but significantly reduces pollutants while having a considerable impact on operating costs and cuts noose by half. We unveiled industry's first fully-electric backhoe loader bucket CONEXPO in 2020. Again, it is not only about zero emissions. It is about delivering optimal performance, minimizing job site losses, low noise, lowering daily operating costs and maintenance. Electrification is also enabling new ways of working as electric motors have a start and stop feature liking cars, meaning that when the machine is not operating , is shuts down completely and make zero noise. This gives tremendous value to our construction workers as they use the manual shut down the machine and stop working to be able to communicate with their coworkers. Now they can continue working and communicate at the same time. In Agriculture and Construction, electrification involves far more than propulsion. Our challenge is improving hotel vehicle efficiency. In many applications, other functions use more energy than vehicle propulsion. For example, tractors deliver power to implement through power take-offs. And construction equipment delivers powerful machine working functions through hydraulic actuators. Electrification simplifies all this. In Agriculture, we successfully introduced eSource, electrifying sprayer attached to its traditional tractor. By just applying electricity to the sprayer through eSource, we can significantly reduce full consumption, emissions and noise. In construction, we were able to get the benefits of zero emissions and dramatically reduce noise by containing the size of the excavators so that it now fits throug domestic, opening up new opportunities for construction workers in indoor applications. And it is not only about a few missions. Replacing rigid mechanical linkage between the machine and the equipment with a simple cable provides higher maneuvaribility and better safety. Also implements and attachments become more reactive compared to hydraulic versions with enhanced automation and sensory integration. And data becomes fully available for applications such as predictive maintenance. At CNH Industrial, we are tucked in these emerging trends by capitalizing on our technology and innovation roadmap to become the leader in electrification and alternative fuels. Our mission will be accomplished through a laser focused 3-pillar strategy. Alternative fields, electrification in agriculture and construction. Being at the forefront of alternative propulsion is something that has been critical for our company since the clean NRG leader strategy started back in 2006. Since then, we have continuously demonstrated clean and added solutions and proof of concepts, exploring the limits of the technology and learning about the viability of market introduction. These include a concept fuel cell hydrogen electric tractor in 2009. And our working prototype methane tractor in 2013 and the hybrid tractor concept in 2019. Over time, we have optimized these technologies and continually raise the bar with concepts that were very ahead of their time. In 2019 and 2020, we presented 2 industry-first concepts, a methane-powered construction vehicle and then electrified-backhoe loader respectively. Then in 2021, we became the first company to go to market with a 100% bio-methane tractor and have showcased our concept power pack, eSource to connect electric implement. We have a strong foundation and a clear path to sustain our leadership position in clean and IT technologies. And to do this, we continue to advance our tech road map. In particular, we are pursuing our strategy for electrification and alternative fuels through both organic and inorganic means. With regards to alternative fuels, CNH Industrial is working with a U.K.-based alternative fuels tech company, Panama. Our biomethane production through circular fuel economy and natural gas tanks. This confirms a strong technology know-how built over the years between CNH Industrial and FPT, a partnership that will continue to grow into the future. On electrification front, we have some of the key capabilities in-house. With some pieralis strengthening our ability to electrify the in compact range of construction equipment. And such strengths are further boosted by FPT's capabilities in batteries and e-powertrain. And our investment in Monarch, which brings skills across all areas. We will also continue to collaborate with FPT Industrial on various alternative fields and electrification innovation programs, which we believe will be applied to our future products. So what should you expect from our plan? In the AEO alternative fields, we are an industry leader delivering top solutions. We launched the world's first production 100% biomethane tractor in 2021, and we will complete the global rollout by 2024 . Methane tractors significant radius well-to-wheel carbon emissions, while enabling circular economy, achieving net zero or negative carbon emissions empowered with biomethane produced from waste such as manure, which in turn could enable energy-independent farms. We intend to further expand our product portfolio with liquid natural gas solutions aiming at expanding autonomy and power capacity. This liquid natural gas, we will more than double the autonomy of our current methane products within the same packaging. While we believe methane is a perfect technology for AG. We also remain committed to our other alternative fuel innovation programs. As a source of propulsion for our biomethane tractor and other alternative fuel vehicles, we are partnering with Bennamann on biogas recovery. When integrated with the circular economy cycle, Bennamann Solutions, coupled with our biofuel offering, enable a circular economy model for our farmers, capturing physical emissions and delivering a local clean energy revolution. Indeed, agricultural waste can be used to generate electricity, heat and fuel for vehicles and machinery, all while reducing emissions and opening up new revenue streams. This is already a reality on our newfound smart farm in Italy. Biogas is produced, stocked and used on the farm. This is taking out the complexities of a broader infrastructure, allowing farms to be carbon neutral and energy independent. Moving to electrification. We are accelerating the implementation of our strategy from 3 different angles, as highlighted by Derek. Implement electrification enables us to integrate capabilities to deliver even better precision, while potentially decoupling the machine and the implements. Drive and hybridization increases the power to waste ratio of our tractors, helping our customers achieve even higher productivity and full electric solutions in agriculture eliminate emissions and increase efficiency. e-Source will be the power pack for our electric instruments. It has been proven and production ready since 2021. And right now, we have various e-Implements such as the sprayer in the works. We are also developing our new generation hybrid tractor within the planned horizon. It will improve the power density, enhance dynamic performance, providing power boost and achieve better traction control. This results in increased productivity, controlling the ground speed independently are responding to incentive new stock demands during field activities. With regards to full electrification, we will launch the first small battery electric tractor leveraging our strategic partnership with Monarch. Following that, we will continue to expand our batt range. We believe we are well positioned to deliver a range of electric farming products that satisfy our customers' sustainability targets and improve their productivity. We are moving forward in this direction, taking into account the technical constraints, the industry has on battery energy density and battery costs in electrifying larger vehicles in the future. We are excited about electrification and construction, and we plan to leverage our Sampierana acquisition to accelerate our electric in excavator range as well as expand our electric construction offering. Benefits of electrification of construction equipment are clear. It reduces operational costs, deliver significant reduction in noise and emissions, which is critical to urban construction and opens up new business opportunities in indoor applications. As Stefano construction equipment strategy, we will build on our recent success to introduce the new mini excavator platform in 2022 and enlarge our product portfolio with new compact EV products. CNH Industrial has built a strong foundation for the electrification of construction segment to deliver long-term success for our customers. To summarize, CNH Industrial is at the beginning of its electrification and alternative fuels journey, but we are already well positioned for a net zero carbon future. We have aligned our mission with [ batt ] of our customers to produce more with less in response to growing and focus on sustainability. We are building on a long and compelling history of innovation in clean energy technologies. We will leverage our in-house capabilities, boosted by recent acquisitions and our partners ecosystem. CNH Industrial has the opportunity and obligation to lead the industry in these areas. Thank you very much.

Ladies and gentlemen, please welcome Chief Diversity and Inclusion Sustainability and Transformation Officer, Kelly Manley.

Good afternoon. I am so happy to be here. I joined CNH Industrial last year in this capacity, and I have nearly 20 years of experience driving change in large industrial companies. As I stepped into this role, it was immediately clear that sustainability has been an integral part of CNH Industrial strategy. For the new CNH Industrial, sustainability will continue to drive the decisions we make and the priorities we set for our future. This is absolutely necessary. Since by now, we have all realized that sustainability is vital to the future of our planet and therefore, ensuring our facilities and products are sustainable, creates value for the world, our customers, both internal and external stakeholders and our business. Our work to help address climate change has earned us recognition as one of the world's leaders in sustainability. And we are determined to advance this cause as a focused agriculture and construction business. Our industry has a significant impact on the environment and greenhouse gas emissions. And we see value potential in circular economy and creating an ecological transition on what is delivered as solutions to our customers and society. This is why we believe it is a natural move to commit to the science-based targets initiatives. And internally, we see discipline and governance across our facilities and sites worldwide as key enablers to ensure we deliver to all of our stakeholders in these endeavors. CNH Industrial has a strong record of sustainability recognitions. In 2021, we ranked in the top 1% on the Annual EcoVadis Sustainability Assessment, receiving a Platinum metal certification for one of the foremost providers of business sustainability ratings. And for the 11th consecutive year, we were a top score in the Dow Jones Sustainability World Index in machinery and electrical equipment. The Gold metal certification we received was the only one awarded in our industry. We were one of 56 firms that receive CDP's AA score out a global pool of over 13,000 disclosing companies. Indeed, we made it into both the CDP climate change A List and the CDP water security A List. And for the eighth straight year, we received a AAA rating in the MSCI ESG Ratings assessment. These awards testify to our commitment to address the world's biggest sustainability challenges, setting us apart from our peers. And for the new CNH Industrial, we created a strategy centered around these 4 areas, a natural next step that aligns with our existing priorities. As our company's history is built on such a strong foundation of creating sustainable solutions as the way we do business. It made sense for us to continue on this path. This, coupled with an in-depth materiality analysis, it was reinforced that CO2 emissions and safety are the most material aspects internally and for our stakeholders. And through our commitment to diversity, equity and inclusion and to our local communities, these all made sense, recognizing that they are very much intertwined. That being said, this framework is designed to focus investment, drive performance and create long-term value for our company well into the future. And delivering against these areas remains in line with our stakeholders' expectations, positioning our company and our employees they have a positive impact on our planet, enabling us to win the war for talent and delivering on our key results. Now as Scott and I have already mentioned, we are committed to taking deliberate actions to reduce our carbon footprint. We must all collectively deliver outcomes that limit the planet's temperature increase to 1.5 degrees Celsius above preindustrial levels and achieve carbon neutrality by 2050 as stated by the Paris Agreement. And to ensure we deliver against what we've set out to achieve, we see committing to science-based targets initiatives as a way to develop reduction targets that are certified with a sound reduction strategy. This commitment recognized as the gold standard for environmental impact furthers our sustained efforts in this field. And as you can see, we are enhancing targets on Scope 1 and 2 emissions of our manufacturing plans and on renewable electricity in line with our previously stated sustainability plans. CNH Industrial is not new at pursuing every effort to reduce its carbon footprint. As an example, between 2020 and 2021, 5 of our plants around the world were equipped with the PV solar panels and all of them are now active. The ambition is to get to a total of 9 active plants with PV installation by 2024 and to 100% of our plants worldwide by 2040. By working in partnership with our employees, we will continue to identify measures which will further our energy transition. To build upon the pillar of increased circularity and eco efficiency, we will accelerate our efforts on product, water and waste optimization. Our biomethane tractor is a perfect example of our commitment to innovative and will lead with sustainable product design. As it enables a circular economy that removes carbon from the atmosphere. And by 2024, we will design all new products according to these criteria. And by 2030, new CNH Industrial equipment will be 90% recyclable. This enables our customers the ability to have a direct and personal influence on sustainability and doing it profitably. Our employees have a direct impact on the sustainability as well through the products that they produce and their usage by our end customers. Our people do meaningful work. Imagine what that means to them and what it is as a motivating factor in retaining a highly skilled workforce. As Parag's presentation clearly demonstrated our precision technology solutions strongly contribute to circularity and eco efficiency, boosting farm productivity and hence, profitability. Gives farmers added incentive to adopt precision technologies with commensurate benefit to the environment. The impact of these enabling technologies will be quantifiable on direct outcomes for our customers such as productivity, fertilizer use, herbicides, fossil fuels and water. In addition, we also see indirect outcomes such as improved water quality and soil health. There was an independent study conducted by the Association of Equipment Manufacturers and conjoining groups, and they shared that productivity has increased by an estimated 4% as a result of precision ag adoption and has the potential to further increase 6% with broader adoption. As a result, cultivating an estimated 10 million acres of cropland was avoided due to more efficient use of existing land. This is an area equivalent to 4.5 Yellowstone National Park's. There is potential to create more efficient use of existing land. We are confident these benefits are tangible and measurable. So we are actively translating data from our connected machines into objective performance taking the lead to prove the measurable outcomes. Emphasizing inclusion, equity and engagement is another strategic area. In this regard, CNH Industrial is building an attractive workplace within our industry by acting on multiple fronts. We aspire to continually reflect the societies and communities where employees live, work and where we do business all around the world. Our company purpose positions us to attract the best talent now and, in the future, offering ways to solve some of the world's most complex yet rewarding challenges. We're creating platforms that give our employees the opportunity to celebrate and be their true selves, ensuring women, ethnic minorities, differently abled and LGBTQ+ employees all feel supported and valued in our organization. Our company aspires to represent and reflect society. Internally, we are invested in training our employees and providing holistic solutions designed to ensure we are an injury-free workplace promoting a culture of inclusion and building communities through our employee resource groups, creating a sense of belonging and allowing us to grow together. Overall, we are a company who innovates, and innovation drives market growth and diverse teams are best positioned to deliver this. The last of our 4 key areas drives accountability to deliver everything we set out to achieve. The governance and commitment pillar ensures that our company relies on a formal discipline to guide all matters related to sustainability and deliver results, including the definition and implementation of specific activities and the monitoring of the underlying targets. We will soon be holding a new quarterly Executive Sustainability Committee chaired by our CEO, Scott. While continuing our regular ESG Board committee meetings. CNH is designed to deliver for our customer from the CEO and Board level through our CNH business system, which is linked to compensation and performance. As part of this focus to deliver on accountability, CNH Industrial is putting in place a new business system we expect will ultimately produce a positive impact on sustainability driving product innovation and customer focus. Sustainability is a crucial aspect of our corporate strategy, an aspect, we will continue to leverage and creating shared value for all of our stakeholders. Our ultimate objective is to become globally recognized as a sustainability leader in the agriculture and construction segments, set science-based measurable targets and report them according to formal procedure, become the employer of choice in our industries and keep being accountable to our sustainability performance. All of the above are means through which we contribute to the United Nations 2030 agenda, focusing specifically on the Sustainable Development Goals or SDGs deemed most relevant to our business. As stated in our previous plan, we decided to keep focusing on 0 hunger, good health and wellbeing, decent work and economic growth, reduce inequalities, responsible consumption and production and climate action. It's CNH Industrial's way of contributing to a better future for our business, our shareholders and the global community. Thank you.

Ladies and gentlemen, please welcome Chief Financial Officer, Oddone Incisa.

Good afternoon -- good afternoon to you, and good evening to the many that are connected via the webcast. And thank you for -- to our colleagues and friends connected from Asia, Europe for staying up so long with us tonight. Well, before I start, I need to call your attention on the disclaimer and basis for presentation page here on the screen. And then I'd like to kick off with a quick recap of what we have covered so far this afternoon with our colleagues in the segments and then a quick outlook of what I will cover with financial services later in the presentation. Derek, presented earlier agriculture, projecting sales of $16.5 billion to $17.5 billion in 2024 and an adjusted EBIT at around 15% at this on the back of stable industry and globally balanced presence in the world, renewed focus on gross margin through commercial discipline, and operating efficiencies coming from strategic sourcing and supply chain improvement. Additionally, there's a notable step-up in R&D and CapEx for new products and critical technology in precision agriculture, as we heard. And this is to respond better to the needs of our customers and ultimately to make us stronger and more resilient. Our profitability in agriculture has improved over the last few years. And we are building on robust foundations that would have squarely in the mid-teens for adjusted EBIT margins for 2024 and beyond, even if the markets were to soften. Construction is a sound transformation story, as we have heard from Stefano. And from a market perspective, we view the current U.S. market has strong and we view some incremental volume coming from the infrastructure bill. We have a solid market presence in South America. And with the acquisition of Sampierana December last year, we are profitably extending the offering for construction in Europe. Lastly, we have seen several investment synergies with the agricultural segment for electrification and technology, and this positions agriculture for profitable growth. This is a business that has a respectable top line and it's a business that would double the profit margin in the next 3 years. Both segments will generate the cash necessary to fund their -- the growth, and I'll talk more about that later. Now on financial services. Financial services gives a competitive advantage to our industrial segments around the world with customer knowledge and tailored financing tools. It will grow the portfolio with a combination of increased penetration and higher sales from our equipment operations and we expect to have a net income potential of $360 million to $380 million by 2024. This continuing with a target pretax return on equity of around 20%. Two weeks ago, we presented the full year 2021 results, and we discuss the pro forma figures for the new CNH Industrial after the spin-off. As a pure player in agriculture and construction, with a strong financial service company, we are a company with almost $20 billion in consolidated revenues with double-digit margins, pretax on consolidated numbers and with a solid cash generation. You may remember 2019 started strong but ended with our industries and markets quite under pressure. But in 2020 and 2021 with the pandemic and all the implications that we have on supply and demand during the pandemic, we work and we're working relentlessly for increasing the gross margin of our industrial activities. Of course, the industry growth help us in improving the bottom line margin, but we also posted 2 years of cash conversion rates well above 100% and earnings per share in this timeframe doubled from $0.64 to $1.28. Additionally, we made major investments in technology with the acquisition of Raven. We completed an important M&A for the construction business with the acquisition of Sampierana, and we simplified our portfolio significantly with the spin-off. All along, we have maintained a healthy balance sheet and we think we are in a stronger position now to move -- moving forward. And we started 2022 as a leaner, more agile company and with -- as we heard from our colleagues before with a sharp focus on customer simplicity. Now the plan that we have presented today [indiscernible] some minimal to low market growth from 2021, but it's really grounded on our conviction that with best-in-class products and technology, together with the strengths of our brands, we will be able to expand market share and more importantly, to maintain and improve the pricing power that we have gained in the last few years, and that is reflected in the expansion of the gross margin that you see here. For sure, precision agriculture will contribute to the growth with higher content, especially on our combines in the high horsepower machines, driving market share and margins. And this will grow further after 2024 when we have the full implementation of all this or part of this innovations and the full implementation of the integration of Raven. We have regional organizations, as you heard from Scott and from Derek that are responsible for the management of our brands. And through their specific and their professional dealer network, we will be seeking for a higher market share, combined market share without fighting on pricing with more disciplined pricing. In addition, on the construction segment, the acquisition of Sampierana is important to us because it opens up new profit pools through the direct entry in the mini excavator segments. And on top of this, increased penetration on parts and services, also linked to the digitalization effort that we are taking will contribute to higher margins. It is a plan based on a combination of growth and operational improvements through more effective strategic purchasing, improved logistics, lean manufacturing. And these will be the drivers for the growth in EBIT between '21 and 2024. On lean manufacturing under the CNH Industrial business system, we will have the entire organization looking at lean with expanding what we have done so far with world-class manufacturing, and we expect to have operational improvements of around 35 million per year from our plans, and this would be on top of the savings from the strategic sourcing program. SG&A will grow and will grow proportionally to revenues, but we will remain at today's industry-leading levels of around or below 7.5% of sales. And we'll talk about R&D a little bit later. Maybe still on this slide, the return on invested capital is expected to increase to 19% by 2024, which is a 350 basis point increase. And this will -- while we will maintain a strong liquidity in the balance sheet and a quite large that this quarter. Over the 3 years of the plan, operating cash flow coming from the business will be around $6.2 billion and these would provide the funds that are needed for the capital expenditure on products and technologies on top of around $2.6 billion that we will expend during the plan on R&D in our P&L. All in all, cumulative CapEx will be $1.8 billion for the 3 years, and this is a 35% increase from the run rate that we have so far. Roughly half of these investments of this CapEx will be directed to new products, to precision technology and to alternative propulsion. The balance will be dedicated to improving our facilities and our production sites to be at the forefront of lean manufacturing, ensuring people's safety and wellbeing and a lower impact on the environment. All this guarantee that we will have the capacity not to slowdown market share growth that we have in the plan. After CapEx, we will have $4.4 billion on free cash flow over the 3 years and of course, will be available for shareholders return for balance sheet deleveraging and for targeted M&A. We'll talk more about capital allocation after, but now I'd like to take a few minutes to talk about financial services. Financial services, a global business that provides floor plan financing to our dealers and retail financing and operating leases to our end customers globally. It is a distinctive and competitive element of the way our brands go-to-market. And over the last few years, CNH Industrial capital has modernized its platforms, IT systems to enhance the customer experience, to get faster approvals on credit, to get flexible terms and bundling the financing and insurance services. In 2022, we will start providing directly credit -- revolving credit accounts, which we call productivity plus for parts and services to the customers of our dealer in North America. These are activities that we have been doing, but we were outsourcing it to an external financial provider. In 2021, we established a new branch in Chile, and this to support the South American customers outside of the traditional markets of Brazil and Argentina. We will continue expanding to other countries into other markets, whatever captive financing may be needed by our brands and by our dealers. We have in capital a strong credit performance and we are one of the larger or probably the largest issuer of EBS in equipment financing in North America. But also we have been differentiating -- well diversifying our funding as our rating has improved over the last 10 years, and we are now also a frequent issuer of bonds. Today, financial services finance around 37% of every -- of the retail sales from our industrial segments. We expect to increase this to more than 40% over the next 3 years. And so the receivable portfolio will grow from $20 billion to $26 billion with a combination of higher sales from our brands and higher penetration from our captive financing arm. Also, our European customers will be serviced by the portion of the financial service organization that with the spin-off move to Iveco Group. But we will retain also on that portfolio risk responsibility for funding and for risk. So basically, we are keeping the operations in common with the vehicle. So we're preserving some of the synergies that we have, but we have separate portfolios, separate risk and separate funding. Now if we move to the consolidated figures. If we combine the revenues of industrial activities and financial services, we will have revenues for $22 billion to $24 billion in 2024. And the other number here is that adjusted net income is expected to be at around $2.3 billion in 2024 with adjusted EPS at around $1.70, basically on the same share base -- share count that we have today. So capital allocation priorities. I talked before about the organic growth that will be funded by the cash generated by our operations. We remain firmly committed to a rating and we want to improve it. We can run these operations, the industrial operations with low debt or with no debt. But our financial service business, as I said before, is important for the way we do our business. And we think that a solid credit rating and the robust liquidity are essential supporting the balance sheet needed by the captive financing company. So we are committed to the credit rating. And as I say, we see space for improvement from the current ratings. Over time, we will also reduce gross debt as the bonds we have will come to maturity, and this will moderately reduce the interest expenses from today's levels. Of course, we continue to -- continue supporting our annual dividend, and we were working in the plan with a range between the 25% and 35% of net income, which is consistent with our policy. And we will have flexibility around share buybacks, even though we have very little in the plan. We will then maintain the flexibility as Scott said before, for inorganic investments, including using the CNH Industrial Ventures platform that we announced this morning. We want to further position ourselves as innovation leaders in AG and in CE technologies. And we want to bring to our customers the most advanced features for improving the productivity and their sustainability. And we will continue with CNH Industrial Ventures to nurture the investments that we have already done and possibly do more investments in disruptive companies that can support our profitable growth and introduce advanced technology with our products. Now with numbers the capital allocation. We started 2022 with around $10.5 billion on available liquidity, and that's a combination of cash and committed trade lines. We will -- the industrial operation will provide more than $6 billion in cash over the plan. And we talk about the $1.8 billion that we are dedicating on CapEx for organic growth. We will deleverage our balance sheet by around $1.5 billion to $2 billion, and we will return to our shareholders $1.5 billion. So the plan shows here $12 billion in available liquidity at the end of 2024, there's some contribution from the financial services there as well. And this assumes that we have no funds earmarked here for M&A. But of course, it leaves headroom for strategic investments over the next 3 years. So here, I'd like to summarize the figures in the plan that we have presented today. We are assuming limited or no growth from our industries from '21 to '24, but we see a 6% top line CAGR. We have more than 300 basis points in gross margin growth. We'll see 2 to 3 percentage points in adjusted EBIT margin growth, and we see our agriculture business to achieve and maintain a margin at around 15%. We see construction equipment set to continue building on profitability above 6% after 2024. We have discussed about cash flow and investments. I'd like to confirm here that we expect to be net debt free for industrial operations again in 2023, and that our earnings per share are expected to be above $1.70 by 2024. So concluding here, I would say that we have set forth a very clear path for the creation of shareholders' value with a leaner and more focused industrial and financial service businesses, all working toward a defined goal of improving shareholders' return. We will step up the investments in new products and new services, not only with the view of solid financial results, but also in contributing to our sustainability targets we talked about before. This means running the business with a clear sense where we want our balance sheet to be while we are investing for future. And I would say, in summary, we are showcasing a company that aims to provide superior and sustainable products and services to our customers and a management team who intends to provide robust returns to the shareholders and a positive contribution to society. Thank you.

Ladies and gentlemen, please welcome back to the stage, Scott Wine.

Well, I promise you that's the last slide you will see from us today. It's been a long afternoon or evening in Europe, and we appreciate all of you sitting through this. Hopefully, it's our goal that you actually learn something and more importantly, understand where we're going with the company. I'm extremely excited about our future. It's not -- it's very much a self-help plan. We're not asking or counting on support from the market or anyone else. These are things that we have a lot of control off and I'm really confident in the team's ability to deliver on that. It's -- the example was I walked into cafeteria 2 weeks ago, someone came up to me and he said, "Scott, I just want to tell you I look forward to getting up in the morning and I have a lot more energy coming to work." And that's not really to me. That's the entire leadership team that is leading a transformation that is going to make this a better place to work, not just for us but for our customers. And I think you saw it through all of the presentations that I did, and we're going to put our customers first. We're going to be good stewards of capital. We're going to be really good stewards of the environment, and I think you saw that in Kelly's presentation. But first and foremost, we're going to be good stewards for our customers. And when we do that, we can be good stewards for our shareholders. We think there's a lot of value here. There's a lot of work to do. We're not afraid of work. We're -- as you saw, I'm really proud of the way the team got through 2021 and supply chain challenges. It doesn't look like it's going to get easier from a geopolitical standpoint. But we have the people, we have the team to deliver this. And hopefully, as you saw it, we have the plan that we can do. I talk a lot internally about accountability. And for us, we talk about a say-do ratio. And that means that how often do people actually do what they say they're going to do. And really, it's what I'm asking you of us, you have to count on the fact that we're going to do what we say we're going to do to deliver this plan and be better for all of our stakeholders. That will wrap up the overall conversation. We're going to ask some chairs to be brought out. The whole team will be here. We've got about 45 minutes of Q&A. And then obviously, we'll be around afterwards for a little bit of questions as well. But 45 minutes, and we'll alternate between questions taken here in the room and also those coming in online.

[Operator Instructions] Please take our first question from the house audience. David?

I was curious the decision to not put any real capital allocation into the 2024 targets. And then also, you're saying it'll be EBITDA around $3 billion, $3.2 billion in '24 and by then presumably, almost net cash. Can you give us a sense of your comfort level when we try to think of how much firepower that, say, your net cash $1 billion, EBITDA is $3 billion. Are you willing to go to 1x EBITDA or more? Just so we have some sense of the firepower.

So I think I had the slide with the liquidity at the end of the period where I would say, we expect to be at the level of liquidity -- we can't be at the level of liquidity we were at the beginning of -- at the end of 2021, beginning of 2022. So the firepower is the difference that we have in there for cash allocation to either M&A or shareholders' distribution.

And the decision not to put any capital allocation into the guidance?

That's where we -- how we put it. And we want to keep some level of flexibility, of course.

Just a follow-up. Can you clarify then where you're looking to allocate that capital as we sit today, a balance between repo or M&A? And if it is more M&A, what are the things on your agenda? If nothing, I think you mentioned maybe not quite as big as Raven?

Well, I mean one of the things is that -- you're asking the question because we generate a lot of cash. We're going to have a good bit. With Iveco Group off, we have better places to put it right now. I think I said it in my prepared remarks, Oddone said it in his, we kind of rank in order. First is organic growth. We -- and you see a lot of it and a big increase in how we're funding Derek's business and Stefano's business and a lot of it going to technology. So that's our first dollar. Second dollar, we've got to maintain a good credit rating. We have a big balance sheet for our Financial Services business. And I think with this plan, our credit rating will be improving perhaps. But then the next 2 blocks are distributing to shareholders and driving inorganic growth. And we didn't put in there where that allocation would go because we don't know. It's up to the Board of Directors ultimately, but really, it's also what the opportunity is like. We're not -- we really see opportunities to advance our capabilities, mostly with technology, both with what Parag and Selin talked about. But really to how we can drive profitable growth, and I think what we do with Eurocomach is an example of spending money where we can drive profitable growth in our Construction business. But how much of that goes there versus towards share buybacks and dividends, I think that's just the conversation we have to have with the Board. And we didn't feel like, at this point, putting out an allocation between the 2 because we don't know what the other opportunities are going to be on the M&A side.

Great. First, I was hoping, could you flesh out the 200 basis points plus of market share gains? How does that vary by segment, by region, even by brand, if you have an idea there that you could talk about?

I mean really, market share gains are based -- the plan builds it together. I mean driving the improvement we're doing with our dealers and better leveraging our brand helps, but it's mostly the product. We talked about 200 product launches between the 2 businesses, that certainly helps. And obviously, the improvements that Parag is driving on the Precision also is a key enabler of it as well. But you put them all together, and we think in our major markets being South America, North America and Europe, we feel confident that, that should be -- I mean I'll be disappointed if it's not a little bit more than that actually.

And if we look at our growth over the last 3 years in the AG segment, it has been fairly balanced between the 4 regions and the 2 brands. So again, we're expecting a similar path for the next 3 years as well, not necessarily favoring 1 versus the other.

Got it. And then on the Construction side, there also, Stefano, so how should we be thinking about market share on that?

On our side, I think with the Sampierana acquisition, we have the technology and the product that we've been missing or not also considering the OEM shortage of supply as well that we can really fill our network with a great demand of product. So I think that comes easy. If you compare similar compact line products, we have market share in the range of high single-digit, if not double digit in some, and this is 1 product line where we are really, really low in share. So it's something which is highly demanded by our dealers. That's an easy one, I would say. Plus, there are some geographies where we have opportunities, certainly, North America and the South America where we have to strengthen and we are strengthening our network. So I see lots of opportunities coming out of there. And Europe, of course, where this product is probably the majority of the TIV -- of the total industry volume.

And then just one real quick one. Just following up on David's question. Do you guys have to be -- do you guys have to achieve your net debt free by 2023 before you explore share repurchases?

No.

Let's go ahead and take 1 question from the online audience. Daniela Costa? Please.

I hope you can hear me. I was actually, if I can, going to ask 3 things; one on Construction Equipment, one on AG and one generic. And I'll actually start by these orders. So first on the margins, I understand 14.5% to 15.5%, you don't have market growing that, but, obviously, your end markets are highly cyclical. If you could help us understand sort of the peak to trough volatility that you expect going forward to put this in context, if the market effectively doesn't grow 0 and fluctuates as it has in the past. Then my question on AG was related to service penetration. I think you said aftermarket share in one of the slides was 20%, if I saw it correctly. What's the penetration in the installed base today? And where do you want it to be in 2024 and sort of how -- what is the potential further beyond that? And my question on CE is regarding the synergies you get from having CE on -- in the business. So how much of the 5.5% to 6.5% is because you are in the group? I know portfolios are not totally comparable, but there are peers out there that have double-digit margins. Is that something you could aspire to further down the line?

So maybe I'll start with the first one on the industry. So in 2022, we're expecting demand to exceed supply. We're expecting another troublesome year from a supply chain perspective. So whilst we expect the overall industry and market to be up, we expect not to spill into 2023. Although we do then expect to have the inflection point where the supply base starts to meet our demands in our industrial facilities to meet the customers' needs. So '22 will be higher, '23 will be slightly lower and then we'd expect in 2024 to normalize to a similar level of 2021. Again, we're not uncomfortable with that situation because if we look at the industry of 2021, it's up, again, different region by region, but 10%, 20%, 30% across major product lines and major regions as well. So it's still a very, very good market for us. And I think we've demonstrated today that we are not building a plan that needs the industry growth to realize. We're building a plan to drive market share growth, to drive gross margin improvement on an industrial side and with our products such that if the market is higher in 2024, we'll capitalize and take full advantage of that as well. But it's not heavily dependent on the industry coming back towards us. And I think these last couple of years have told us that the predictability of the industry is very complicated as well. Again, pandemics can change the industry plus or minus 15%, 20%. So we are well balanced and well placed to accommodate whatever that industry looks like going forward.

And for Construction, I mean, in reality, the synergies we see with AG are mainly in the investment area where we see the opportunity to really benefit from what AG anyway has to do, and we get it for free. For what is related to the plan, we do not count significantly on those synergies to realize EBITDA, for instance. So I think it's solid on our own with the foundation that we have rebuilt. In terms of expectation for future growth, I mean this is the first leg of a long journey. So I think we are coming out of a period where Construction has not been performing, as you know, particularly well. But I think the trajectory that we have taken and the performance progressively during the quarter is showing that our foundation is pretty solid. So the first leg, I think, it's doubling the EBIT compared to today and plus, I think it's a significant time. And then another leg.

Maybe just first question around the AG outlook and when you put together the revenue outlook, is there any contribution from pricing? And the reason I ask is, obviously, pricing has been really strong in the industry. And so maybe the second question is, are you guys seeing any sort of evidence of elasticity of demand developing in the AG space?

We envisage incremental pricing in 2022. In '23, '24, we're expecting costs to normalize. Obviously, we are pricing for the significant hike that we've seen in utility prices, raw material costs. Again, difficult to predict if, where and when, but our expectation at this point, that will start to normalize in '23, which then will limit our opportunity for pricing in '23, '24. Obviously, I think we've demonstrated in the last 12, 18 months, where there are headwinds in costs, we are more than capable of pricing above those headwinds as well. But at some point, there has to be an inflection point, whether it's elasticity price, and we will discuss them with [indiscernible] there comes a point where the customer will wait for the next cycle rather than continue to demand a price. So we're ahead of the game. We intend to stay ahead of the game in 2022 with price exceeding cost is difficult, and we see the circumstances today with Ukraine and Russia, which is another potential cost hike coming towards us. So we're managing that in a meticulous as we go forward and that to normalize with more significant growth in '23, '24. But if it happens, we'll be there to take further advantage of it.

I think if you could just comment, Parag, obviously, you showed us the pathway to some more autonomous solutions. Just curious how you're thinking about the business model for monetizing a lot of these solutions, will be more of a recurring model or more a point of sale? And then just as a follow-up to some of the comments about the AG market. If you can also comment -- I think you've talked about channel inventories being very low, but how you think about restocking the base when -- or the channel inventories when you talk about your outlook over the next couple of years?

Do you want to take the monetization?

Yes. I mean, the -- let me give you an example rather than giving you a hypothetical answer. If you looked in Midwest corn today with the input costs and the commodity prices, with a fully deployed precision solution, which gives you higher yields, gives you lower input costs in terms of less needs for pesticides, et cetera, and also an improvement in labor costs as well. It will give you around 40% improvement on a vehicle at equipment, it's nonprecision acquired. Obviously, we've seen prices and input costs move dramatically over the last period. So we're staying between 30% and 50%. So again, we're expecting the requirement and the need and the uptake of those solutions to be really significant. And obviously, as we develop our portfolio, we'll be more and more taken there as well. Again, with regard to recurring revenues, everyone has a reduction. It is 10% in 2030, it's 20% in 2027. All we can say is with the plan that we have and the solutions that we have in the road map, we're confident we'll be there to take full advantage of that recurring revenue as without predicting something that's going to be 7 years from now.

Yes. I would add right now from the technology side, we're focused on solving customer problems, and so we're creating value for them. And as Derek's saying, if there's a 30% to 50% opportunity for them in terms of efficiency, we have the tools in place to be able to participate in that. So whether it turns into a SaaS model, a onetime purchase, a participation in the value that's created, that's Derek, Oddone and Scott's call to make on how that works. But right now, the technology teams are focused on getting great products out to customers that are actually solving the problems that they have and making sure that they're happy with them.

Great. Let's go with an online question next. Martino?

Hello? Can you hear me?

Yes.

Okay. Scott, in your initial remarks, you mentioned Raven makes you stronger, but not enough. What's missing and what we are looking for, I suppose, through acquisitions? And still on Raven, you provided guidance for revenues and EBITDA synergies when you announced the acquisition was on 2025. Could you provide us an update on what's your -- embedded in your guidance? And one question for Oddone on the bridge -- on the operating profit bridge. If you could elaborate a bit on the docks that you call growth because they are the most important ones in the bridge, and they are composed by several different drivers. If you could indicate what are the most important ones?

First of all, I mean I don't want to suggest that we're not absolutely thrilled with the Raven acquisition, but it doesn't completely close the gap. We never thought it would. What we got was a great team and great technology. And hopefully, you saw that coming through. And what we want to do is have an industry-leading solutions across precision and autonomy. And if I -- you can't -- just because we own them doesn't mean that we can rapidly accelerate what is deployed in our equipment. It's mostly plug and play. We got -- we can go rather quickly, but it needs more software engineers. We need to advance the stack a little bit faster. So there's work to do. It's work we know how to do. It's a clear path to get there, but it just doesn't -- because we closed the acquisition doesn't immediately close the gap in terms of where we want to be with our precision and autonomy offers. Parag, do you want to add to that?

Yes. I would just say from the time we've closed Raven, you just have to remember, we've had a decade-long partnership with them. We've been working with them for years. And so what we are seeing immediately now is this natural kind of glove and fit of the Raven team and the CNH precision teams, and they're together working through like what that future looks like. So where Scott's going is like it's not a magic Band-Aid. You just buy Raven and everything switches, right? You have to get the -- the teams are together, the stacks are coming together, the solutions are coming together. Derek's team and the brand leaders are coming in. And we are getting a really clear path of how we're solving these customer problems, and we're just cranking on that. So I think Scott's point is we need some time on it, and we're creating customer value and demonstrating customer solutions, and then we'll monetize.

And our original finance targets that we talked about, I think we're certainly maintaining those. And I believe we see opportunities to go a little bit faster and do more. But remember, it's -- we work, we work, we work and then we start to get the benefit. Really, it's '24, '25 and beyond where the margins and really the real integration benefits start to come in. But we're absolutely -- there's nothing negative surprising about what we got. It's a really, really solid business with a solid outlook.

And you had a question about -- sorry, Martino, had a question about the growth components of the margin. Well, there, we have some of the pricing that Derek was referring to before. We have mix of richer products and we think that there is space for growth within Agriculture in the high-horsepower tractors in North America and in the combines in North America, which, of course, has an impact on the overall mix. And we have higher content coming from technology and from better products. So those are I would say, the 4 largest components. Of course, pricing and -- is also a consequence of a better, more focused regional management of our brands and our network and how we compete in the regional markets. And maybe going back to the question we had before about the inventory situation and the stock in the market, I mean our pricing also depends, since we are a distribution -- distributed business, with dealership. It also depends on the levels of inventories that we -- and pressure that we have on the channel. And we have very healthy levels now. We have space for some growth there into our channel, but we will maintain the discipline to make sure that we will not give up on pricing over time.

I wanted to ask about the electrification and alternative powertrain investment. First of all, can you just summarize for us what the total cost of that investment is over the planned horizon? How that splits or how that's being allocated in your operating margin bridge between AG and Construction? And then just how much of that demand is being driven by the end user versus your outlook for the regulatory environment?

Let me start, and then I'll let these guys fill in with the details. But one of the things we really like about the plan that Selin pitched, it's somewhat asset-light. And the fact that we've got a great relationship with our sister -- former sister division at FPT, which is a long-term ESA that will help us drive a lot of the -- especially the biofuel stuff there, but also some of the electric powertrain capability that they have. Our investment in Monarch is going to be a heavy yield to especially the low-horsepower tractors for electrification, and that is a great, again, asset-light in the terms that we get access to it without owning it. You want to add anything to that?

No. I mean we are investing -- I mean we're not overinvesting, expecting the industry is going there. We invest in the lines where we expect the industry to go. Again, I was responsible for many other things back in 2016, '17, as was commercial vehicle product development. So I was there when we put electrification and natural gas in our trucks or buses, which again, were all profitable development products that we developed in the commercial vehicle at the time. So you can't underestimate the benefit that we have of 4, 5 years of technology advancement in development that we can bring into our off-highway portfolio. So again, we don't have to repeat a lot of that investment because the core base investment has already been placed in the last 5 years and we can take full advantage of it.

The way we're thinking about electrification is that there is an inflection point coming. We're not there yet, it's going to happen. I mean even automobiles, we're hearing all the talk about it, it's still a small percentage of what's being built. But we know it's going to happen. We know there's going to be customers in both AG and Construction that want electrification. We want to be positioned to be able to provide the best solutions to those customers when it comes. Anything you want to add on the actual capital allocation?

No. I think you said it. I mean it's not the predominant part of our investment -- of our step-up in investments. Though the thing that Scott said, it is something we're investing in, but it's not predominant by any mean into our investment.

And we -- and again, from our intelligence and where industry is going, we do expect to be a significant increase in regular requirements for the next period as well. So we're staying ahead of that curve.

As we go to our next question, if there's anybody online that has a question, please remember to raise your hand. Thank you.

The operational content here was excellent. My question is more on the governance side and some opportunities there. Any thought as it relates to dual listing of the stock now that you're more of a North American company? Thoughts on S&P 500 inclusion? There's some real opportunities here to get more passive investors into your stock. I just want to pick your brain as to how the Board is looking at that as well.

Yes. We're having those active discussions with the Board. Obviously, there's benefits and then there's offsets. And we're trying to balance those 2, really quantify how good the benefit is and if it's worth the thing. It's absolutely a discussion that we're deep in, but it's going to be an objective decision that we get the data for. And then the Board makes a subjective decision about whether it's the right thing to do. But we're in the midst of having the analysis and we're having that discussion now, but we don't have the answer for you.

Great. Scott, how optimized would you say your dealer network is at this point on both Construction and AG? And to what extent do you have initiatives to incentivize consolidation or strengthening of that distribution network?

I would say on -- overall, I'm very pleased with our distribution network. So in fact, I was been invited to go down to Texas for a new Case dealership going in down there. There are points that we can add to that will be constructive, pardon the pun, on Construction specifically. I think part -- the 1 area to possibly clean up, if that's a term I can use, is because of the history of brand competition, there are places where we have New Holland and Case dealers perhaps closer to each other than is necessarily helpful. And so we've already seen consolidation happen in those markets. I think we're seeing some of our larger, better dealers and really the dealer principles make all the difference in the world. I mean so it's not as much about where they are, it's do we have the right people. And I think what we're seeing across our network is the kind of the cream rises to the top. And we will continue to support and facilitate that, but not mandate it.

Okay. Just a couple of follow-ups. You mentioned you started the process of finding new owners for the noncore Raven businesses. To what extent do you have any of that assumed, any proceeds baked in your capital allocation plan? And then just my other follow-up on this M&A process is, to what extent should we necessarily assume that businesses you might buy will be either non-revenue generating or nonprofit generating given that you're looking for more emerging technologies? Or are there some companies you could buy an add-on that are already going to be accretive initially?

So let me start. There's no capital coming from the disposition of the 2 business in the capital allocation that we showed.

Yes, we're going to get it. We're just conservative and not accounting for it. But yes, no, there's -- it's not a rounding here. It's helpful and will certainly improve our cash position in 2022. So that's that. The other question was about businesses we might buy. I mean -- obviously -- I mean I -- when we first started looking at Raven -- I mean I'm an industrial guy. I come from an industrial background and we're paying revenue multiples, and I was uncomfortable with that. So I can't see that we're going to go out and spend a ton of money on non-revenue things because that would make me even more comfortable (sic) [ uncomfortable ]. Now I do know that some of our competitors have done that and had wild success with it. So I won't rule it out. We do need to build capability, and I think there are times where we will do that. And it may be the new CNHI ventures that we announced this morning; Michele Lombardi, who leads that. I mean they're -- they've got a very -- it's a defined -- a very good process to identify those technologies early on in the likelihood that some of those will be non-revenue producing [ in the way we want to ] buy them. But I wouldn't say that's our goal to do that, but certainly wouldn't rule it out either.

I think we're going to go with an online question at this point with François. We can't hear you, François.

I think you're on mute.

I'm in mute.

There you go. Now we can hear you.

Okay. Just a couple of questions from my side. More about the current events and how they are reflected in your guidance. First point is current Ukraine crisis. You mentioned geopolitics as a potential source of threat in your thought points. Can you just come back on this point? And given the impact it seems to have currently on crop prices, can you just give us some more details on the moving parts from that side? And the other question is on the rising interest rate environment in the U.S., and how do you reflect it in your AG demand forecasts?

So all of those were -- we didn't know about them, but all of them, as I showed on the chart of what was impacting our business, were anticipated. We're going to have geopolitics, new interest rates are going up. So we're relatively balanced in that. We do get benefits. You're seeing, wheat price is going up right now. Corn is actually better than we thought it was going to be, but the input cost on the other side of oil, for example, is going up. So we anticipated a dynamic environment. I doubt we got every one right or wrong.

I think you mentioned Ukraine and -- yes. I mean, listen, the first thing related to the issue we have between Ukraine and Russia is the safety and well being of our employees. So again, we've taken all the precautionary measures to make sure our employees and employees of our dealers are obviously safe and their families are well protected in this next period as well. We haven't seen any material change to the market quite transparently in the last 24, 48 hours. We are fully aware that things will change and we are fully prepared to adapt to those changes as well. It's obviously a very unpredictable situation. It's changing by the hour, if not by the minute. Again, we are watching that space and we have every opportunity or avenue covered from what we consider and then we'll play those cards as we need to as this thing unfolds.

As you currently look at it, most of our dealers and most of the farming areas is outside of the regions that are currently in play, if you will, but certainly watching it very closely.

Question from David?

Oddone, I apologize if I missed in the presentation something with the structure of the FinCo changing. But if not, you're showing the portfolio grows 30% in the next 3 years, but the net income is only up 6%. Is that something [indiscernible]

There's a growth in penetration there. And also the portfolio being retail loans and leases, there's [ sort of stratification ] there. So we have been growing the last 2 years on sales, and that will add up in the growth of the portfolio. But there's an impact on penetration rate, moving from 37% to 41%. Now one of the things that happens when interest rate go up is that there's less liquidity in the market, there's less competition from independent banks going into retail financing of farmers. And normally, the captive is used more and so there will be growth in there as well.

But that's why I'm so surprised. The gap, though, between 30% portfolio growth and only 6% on net income, is there something there about you're getting big lease gains now with respect to not getting them...

Yes, it's going to be -- remember that portfolio also has floor plan financing for the dealers. There's going to be some more exposure.

So there is some funding of the growth with the margin?

Correct. Correct.

Tami?

This is Tami Zakaria from JPMorgan. My first question is, how do you feel about your pricing power? Should there be a downturn? And then I have a follow-up.

Yes. I mean I think if you look over the last 12, 18 months, our pricing power has been particularly good. If you compare ourselves versus our peers, I think we are outpacing them in terms of price positioning. I -- looking forward, I mean we have priced in place where we already see negative headwinds on utility costs, raw material costs, semiconductors. So again, we are well prepared and well balanced for what we know coming towards us. We're also conscious that it's a very, very volatile market we're dealing with from a commodity perspective. Again, another raid of COVID, heaven forbid, could have another impact on Tier 2, Tier 3 suppliers. We then have a knock-on effect as well. So we're monitoring religiously. We are staying ahead of the game. And again, I think, rather than tell you what we're going to do in the next 12, 18 months, I think you know we've done over the past 12, 18 months and know that we are -- we're ahead of the game. And we intend to stay so.

And maybe I will go back and look at the channel as well, right? I mean that's compared to other situations where we had much more inventory in the channel, and it was more difficult to pass pricing. We expect that this time, starting from a much cleaner situation, even if the market were to slow down, there will be still a buffer for -- first for sales, but also for being more disciplined on pricing.

And again, there will be an inflection point. We said earlier, but [indiscernible] there will be a point where customers will wait another cycle. We're not there yet, but again, that could come in the near term if we can continue to see these cost hikes.

To add to Oddone, I think, more than cleaner, it's depleted in the sense that we have lower inventory than normally we should and we don't see immediately, I mean, supply chain improvement as such that we'll make sure that we can replenish in the short term. So we see still difficulties continuing.

That's helpful. And one quick follow-up. I think you quantified some operational efficiencies in both the segments. How do you -- how do those phase in over the next 3 years, ratably or back-end loaded?

Well, the supply chain savings are more back-end loaded because it's an investment in time and effort to get that. But the other is more as ratable over time. But it's the supply chain that will be certainly year 2, year 3 elevating.

And with regard to the balance, I mean we showed you the normalized supply chain conditions, the strategic sourcing and the lean operations. The expected savings are fairly well balanced between the 3 of them as well. So we're not again heavily dependent on 1 criteria. And just to support what Scott said, I mean when the supply chain normalizes, we'll take immediate advantage of it. But again, certainly not going to happen in the first half of this year, and there's still a lot of questions as to what [indiscernible] we'll get in the second half of the year as well. But again, once that normalizes, we'll take full advantage.

We're going to take our next online question from Ross Gilardi.

Scott, I just wanted to get your general sense, your biggest competitor in the world is highlighting $150 billion addressable -- incremental addressable market in AG by the end of the decade. I mean you're reflecting none of that in your outlook. You're reflecting no cyclical tailwinds in your outlook. But certainly, the content in your deck today seems to support and convey a lot of enthusiasm just on the structural growth opportunity in the market. That's really just a statement, but feel free to respond to that. And then just generally, I mean if 1 naturally wants to take the view that your revenue assumptions for 2023 or 2024 are simply too low, what sort of incremental margin assumptions would you suggest is appropriate? I mean in the past, you've done about 25%. Is there any reason to think you cannot do that if the market turns out to be more of a friendly or assuming in your projections?

Well, in terms of the total addressable market, I think we talked about $100-plus billion for Derek. And obviously, Stefano and the overall market is probably about the same. As far as putting another $150 billion of incremental on top of it, I mean we are clearly positioning ourselves to be an incredibly worthy competitor with our technology stack, our alternative and electrical powertrains and the capability of our iron overall, not to mention what we do with our brands. And we don't feel like we're going to give up much as we continue the self-help project that we're on over time. As far as the cycle goes, I mean, if we're wrong, obviously, we get better revenue growth and better margin expansion over time. Just the assumptions that we chose to take is that the geopolitical and inflation, all of these things together are probably going to not lead to growth in the out years once we get past this inflection point. And so we think it's a prudent way to plan. But if it comes across better than that, incremental margins, what do you think?

No. I mean the number you mentioned, Ross, is in line with what we have seen historically, and is in line with what we would have in our plan with the growth in revenues. Of course, in our plan, we also have these operating efficiencies that are very independent from the volumes, right?

You did say 24%-plus gross margins?

For the company. Not...

We're going to do much better than that.

This question is specifically for Parag. And just wanted to get your concept or your idea about how you think about developing the technology stack. Just given your background, it's a little bit different from a traditional capital goods market. So how do you think about driving value for CNH beyond just that original point of sale and maybe disaggregating that value for the customer as cycle times pace in ahead of sort of the capital goods cycle?

Yes. I mean Derek and I've spent a lot of time talking about our vehicles or platforms, right, our applications or platforms. And when you start thinking about the long cycle of an iron good and you talk about the shorter cycle of a technical good, we're working together on making sure that we continue to create more and more value on our platforms. So as we find new technologies and new ways to connect into them, we're going to add them to the platforms and make them available to our customers. And that also goes for augmented technologies, right? So when you start thinking about our perception stack and our visual stack and all these different technology improvements, we'll continue to be able to add those opportunities to our customers. And again, we want to win hearts and minds, right? We want our customers to know we have the best technology. And as that becomes available, when possible and economically right, we'll make it available to customers. So I think there was a little question earlier about how are we going to monetize? And software is evolving all the time. And so we know that, we recognize that and that's part of the plan. And that we'll continue to keep adding value to our customers and as we do and they can participate, they will. Anything else to add?

And again, I think we've emphasized it multiple times over the presentation. This starts with the customer. If the customer has tangible value in the precision technology, then they're prepared to use it -- prepared to use it, prepared to pay for it. So again, it all starts from the customers, not -- it's not that we want to put the most profitable thing in the hands of the customer that doesn't add value because what the customer needs is what we provide [indiscernible] which makes us confident that our road maps and our plan is going to be more successful than maybe others.

Yes. And I mean we talked about and -- I talked about in my presentation, but like both on the iron side and the technology side, like we have farmers in our company that do this stuff, right? And so they really know what our customers want and need. And we're empowering them to go build solutions. So not only do we have our regular road map development sprints of the work that needs to be done, but we also have like innovation cycles in sprints that allows us to go find new opportunities to innovate and -- Scott will probably shoot me if I talk about it here. But like we have all this cool fun stuff we're working on that -- as we're showing it to the brand leaders and to Derek and others, they're like getting really excited about how all this stuff comes together and how we make our customers more successful. That's all I'll say.

So we have a few minutes left here. [Operator Instructions] Okay. There are no other questions. Scott...

Must be a thirsty crowd. All right. Well, that will conclude -- final, no final questions? Well, that will conclude the event. We certainly appreciate your participation. There will be -- for those of you in the room, there will be cocktails and hors d'oeuvres outside. And for those of you online, get some sleep. Thank you very much.