Good afternoon ladies and gentlemen, and welcome to today’s CNH Industrial Second Quarter 2015 Results Webcast Conference Call. For your information, today’s conference call is being recorded. At this time, I would like to turn the call over to Mr. Federico Donati, Head of Investor Relations. Please go ahead, sir.

Thank you, Pascal. Good afternoon, everyone. We would like to welcome you to the CNH Industrial second quarter and first half 2015 results webcast conference call. CNH Industrial Group CEO, Rich Tobin and Max Chiara, Group CFO, will host today’s call. They will use the material you should have downloaded from our website, www.cnhindustrial.com. After introductory remarks we will be available to answer the questions you may have. Before moving ahead, let me just remind you that any forward-looking statements we might be making during today’s call, are subject to the risks and uncertainties mentioned in the Safe Harbor statement included in the presentation material. I will now turn the call over to Mr. Rich Tobin.

Thanks. Good morning, good afternoon everyone. Most favorites in opening comments before hand it over Max, and going through the slide deck. Q2 operation performance was broadly aligned with our expectations as we continue to navigate through the continued challenging conditions in the agricultural equipment segment and broader macro issues such as the declined in emerging markets demand. Particularly Brazil and LATAM effect of U.S dollar strength versus the majority of the Group's trading currencies Despite these headwinds we continue to execute on our efficiency program objectives which we will see in the comparable profit performance, particularly in construction equipment in commercial vehicle segments. In the agricultural segment, we continue to execute in the market with some positive share development in the various regions and the continuation of decisive inventory system clearing process to realign our channel stock levels to new market demand conditions which will be covered in the main presentation. Looking forward, managing focus we maintain on operational execution and cost control actions, channel inventory level at June end was $700 million lower and seasonally comparable from the period last year. Our expectation is to clear significant amount of dealer inventory in Q3, as a result of seasonal manufacturing facility shutdowns and reduce line rates. In construction equipment segment, we continue to make progress in the longer term objectives and despite particularly difficult trading conditions in the LATAM market particularly Brazil. We’re able to improve margins for the quarter. We’ve made particularly good progress and our excavator strategy in LATAM and EMEA and will be in production by the end of the year and we are 75% complete with the realignment project from a brand point of view in Europe. In commercial vehicles in this environment in the truck and bus segment has been generally positive with tough…

Thank you, Rich. I’m delightful the second quarter financial highlights. The company consolidated view including financial services second quarter revenues total $7 billion down 10% compared to Q2 2014 on a constant currency basis or 22% as reported. Net income was $122 million or $0.09 per share. Net income before restructuring and other exceptional items was $141 million or $0.11 per share. Available liquidity increased during the quarter totaling $7.8 billion again the June versus a $7.2 billion figure of March 31, 2015. Balance in undrawn committed facilities of $2.8 billion at the end of June. When we turn to the industrial activities, net sales of industrial activities at $6.6 billion, down 10% in constant currency or down 22.5% as reported. Company achieved industrial profit – operating profit of industrial activities for the second quarter of $401 million, $678 million was Q2 2014 to the comparable number. Operating margin at 6%, net industrial debt at June 30 was $3 billion, was $3.1 billion at the end of March. With net industrial cash flow positive $520 million in Q2 2015 on the back of working capital improvements and capital expenditures containment. On Slide 5 now, here we have the reconciliation from consolidated operating profits and net income for the quarter, consolidated profit, operating profit at $467 million or 6.7% for the quarter. Restructuring expenses totaled $22 million in the quarter, $8 million lower than last year and mainly relate to actions in commercial vehicle and agricultural equipment as part of the company efficiency program launched in 2014. Interest expense net totaled $170 million for the quarter, a decrease of $41 million or 26% compared to last year primarily due to a more favorable cost of funding and the lower average indebtedness, primarily from reduced working capital needs, as a result of…

Okay, Thanks Max. On Slide 12, and I think the Max covered this early in the presentation you can see that more than 50% of the change in revenue, quarter-to-quarter due to FX translation you can see the table on the bottom left hand side versus the dollar and its corresponding impact in terms of operating profit. The only thing change would see you will be left sales by currency with the dollar representing less than in previous periods as a result on the downturn in the agricultural market. Slide 13, I think I’ll get to in the individual presentations of the sector. So let’s move to Slide 14. Net sales of the quarter down 24% on a constant currency basis as a result of lower industry volumes the row crop sector and dealer inventory destocking actions primarily in NAFTA. Operating profit was $253 million for the quarter at a margin of 8.7%, driven by lower sales volume in less favorable product mix in the row crop sector primarily in NAFTA – negative foreign exchange translation impacts primary as a result, strengthening of the U.S dollar can sold currencies primarily the euro and the Brazilian real. And we’re also negatively impacted by some prior year hedge position grow on the euro. So this is a one-time impact which we don’t expect to see in the second half of the year, going forward we expect unfavorable translation impact that have hedge to hold the currency movement within a tight volatility band. These effects were slightly offset by positive net pricing and cost control actions, including purchasing efficiencies and structural cost reductions, decremental margin achieving in Ag of 26% which is slightly higher than in Q1, largely as a result of change in SG&A, but less than 30 years that we have…

Thank you, Mr. Tobin. Now we are ready to start a Q&A session. Pascal please take the first question.

[Operator Instructions] We will now take our first question from Mike Shlisky from Company Global Hunter. Please go ahead. Your line is open.

Hi guys good morning. Maybe answer if I asking about commercial vehicle first we look at the previous market share gains. In Europe are the gain do it all to maybe a change in the mix of what countries are doing better than others right now that some of selling year coming up pretty low base? And then in LATAM I saw your trucks orders were up 17% there as well even say about your plans for share gains there?

To the first part of the question the answer is yes so if you look at demand condition in the Southern tier those moved up and traditionally that is been areas of strength for the commercial vehicle segment. So yeah there is a knock on effect from where the market is growing in 2015 versus what our backlog is. The second part of the question is I think that our increased in production of following what the TIV [ph] changes so whether that manifest itself. I think our intention will be the hold the share gains that we have through the first half of the year and then at move with the market I think it's a little but too early to tell whether we've implied share gains for the second half of the year its more matter of what we expect to be the TIV change.

Great. And then secondly, I don't know we have tax rate question, but its pretty important here given this year's size, can you maybe update us to how long you're thinking might take to you guys to get from let's say 50% or so today to the 34 to 36 range? How many years might that take or how many quarters?

I would expect for us to get there in 2016. I mean, I think a lot of what we had there is for a couple of reasons. I mean, I think that we've got two phenomenon. We've got the reduction in the Ag space was putting some pressure on Italy and Brazil. We're rightsizing the business so we think we can squeeze down some of the issue there and addition to a variety of other tax planning strategies. And then we've announced before in the commercial vehicle segment about some repatriation of volumes back into Italy that were well underway and we would expect to see the benefit of that in 2016.

And just to be clear, once you get there, that just sort of for a long-term, right, we did now sort of major one-time item to get to the tax rate to that level, correct?

No. I think it's a more of a – I mean, we want to go OECD rates is the long-term target. There is not any mean. You see volatility because these non-put benefit of losses once we put the structural changes and that hopefully smooth that out and you'd see volatility of the tax line go down quite a bit under normal business conditions.

Great. Thanks. I'll pass along.

Thank you. We will now take our next question from Ann Duignan, JPMorgan. Please go ahead.

Hi. Good morning guys. This is Ann.

Hi, Ann.

Hi. Can you talk a little bit about not might high horsepower tractors in particular segment, we're hearing very extended leasing programs 42 months of zero percent financing. At first can you confirm that there are some deals like that occurring? And then is that's what plugging market share in North America and why would we talking about increase market share in an environment we are seeing right now?

I don't think we are trumpeting the market share. As you know this is pretty concentrated market at the high horsepower segment. So lot of inter year market share movement is based on when production is taking place rather than share gains going back and forth. So if you looked at quarter-to-quarter share movement in large and high horsepower tractors and combines for example you see a lot of volatility the number, but the end of the year positions don't move much. And I think that's really what you see here. But we are obligated to say here is what we are in terms of share gain. In terms of question at least the bigger issue that we have been trying to address is short term leases and we've basically exited the short lease market for all intensive purposes. There isn't amount of longer term leases in the horsepower especially contractor space, but the financial risk on the longer term leases is significantly less than the short term less model. So I think that we have done the heavy lifting and we already take the amount of short term leases that are out there but there is always going to be amount of lease activity. As long as the term is as a significant duration we think that financial risk is manageable.

And why would you think that financial risk start lower and longer term basis, is that an expectation that the market will ever cover in 42 months?

There is more embedded depreciation in the lease.

Okay. I'll get back in queue. That was my biggest question.

Okay.

Thank you. We will now take our next question from Martino De Ambroggi, Company Equita. Please go ahead.

Yes, good morning, good afternoon everybody. The first question is on prices which hold well in each and every segment. I was wondering if you believe this trend can help for the rest of the year in each and every segment?

I think it depends. I think that we are in control in terms of pricing as a market leader in the Ag space, so, pricing in Ag in least and certain category is up for us to manage because of the market structure of the competitive base. On truck and construction equipment I mean, considering our market position were more of a followers. If pricing is to become very competitive and I think would be a bigger challenge. Despite the fact that we are follower on the commercial vehicle and the construction equipment we have been able to post price through the first half of the year, our expectation is to hold that for the second half of the year but I mean, from a longer-term question I think they were it's in our hands to a certain extent on the Ag side and less so in the other two businesses.

Okay. And a specific question on Brazil, the question is on Iveco in particular but can be considered validate also for the remaining businesses. Are you planning additional action considering the very weaker market environment and I know you are not to providing any specific date on a geographical environment. But what the visibility right now in Brazil and are you able to return on profitable for Iveco?

We have then reducing production across all with the businesses in Brazil since the second half of 2014. And that's why in terms of comparable performance here is in a large negative in commercial vehicles versus last year because lot of the heavy lifting that we have to do we did in 2014. So while the market is challenged in Brazil in 2015 we took a lot of the pain of rightsizing the cost base. We are taking action today is more on the Ag in the commercial vehicle space the Ag is purely a question of what's going to happen in terms of financing conditions. The construction equipment business is driven by two phenomenons one is the lack of federal programs for buying equipment for municipalities which is a significant amount of the volume that we gone to Brazil that has which just not happening in 2015 and the balance is the overall negativity that's overhanging the general construction in Brazil. That's why I have said in my opening comments that we are going to intervene on production and construction equipment in the second half of 2015 because you don't expect to that situation to improve until 2016.

Okay. And if I may one for wrap on that on the ratio Iveco is unable to return profitable in without any market recovery I suppose?

We don't give out regional profit by segment, but Iveco like any other market participant when the market is down 50% or 60% it needs amount of base volume to make money. I think we've done a very good job as I mentioned of taking our structural cost where we're not losing more money in 2016, but we need return in terms of volume. I mean, these are pretty dramatic decreases.

Okay. Thank you.

Thank you. We will now take our next question from Joe O'Dea, company Vertical Research Partners. Please go ahead.

Hi. Good morning. First question, just with the outlook for the remainder of the year and second half its implied stronger then 2Q run rate both on top line end margin. If you could talk to whether how things will trend across the segments and kind of what you're seeing for the support I guess particularly on the margin side to hold those up with 2Q typically the strongest margin quarter of the year?

Sure. In Ag, we're down significantly and we showed you that they were down 40% quarter-to-quarter and woke up. It will be down in terms of production in Q3 which is – were already down in terms of line rate point of view, but we're also going to some shutdown so the inventory clearing expectation in Ag for Q3 is relatively significant. In Q4 of last year when the market start to turn down we intervened quite a bit in terms of production performance and that's so we would expect in Q4 this year to be running at a production level than we were in the comparable quarter. So that's on the Ag side. Commercial vehicle I think historically Q4 as always been the strongest quarter for the business, you see the backlog, lots of the bus business is delivered in Q4, so that is just probably more of a seasonal pattern on the commercial vehicle side in terms of profitability.

Okay, thank you. And then on the commercial vehicle pricing, it sounds like already talked to being a little bit of price follow than those markets, but just wondering given some of the engine technology that you have and if you are seeing any more opportunity maybe given kind of the value proposition that you can offer and maybe outperforming even a little bit on price.

Yes. I think if we go back turn and there is a slide in there in terms of the positioning of the segment. I think that goes along way in terms of our ability to gain pricing. I think there is a lot of work has been done. In the light commercial segment to position the Daily at the heavier and LCV segment where we can retain its pricing because of its payload that we have been successful. I think on the heavy side in terms of our relative price position and the total cost of ownership I think we have done a reasonably good job there. I mean we are not a premium player in the heavy side we are more of a value player, but I think that would in terms of engine technology what you get is lot for your money and that's helped on the heavy commercial vehicle side.

Get it. Thanks very much.

Thank you. Our next question is from Larry T. De Maria, company William Blair.

Hi. Good morning Rich, clearly if crop pricing are lower 2016 starts to look like looking lower as we moving in to later this year, can you adjust the fourth quarter rapidly now to right size inventory or in other words would be more likely to add on and produce again next year if get another write-down?

I don't know, I mean, Larry if you look at the numbers is in terms of the decline in the high horsepower segment you are talking about being down 50% from the peak. I think that if we execute correctly and I think that we are in terms of taking production down significantly, we are working with the dealers to take total channel inventory down significantly. I you know look – they can always go down again in terms of demand, we don't expect crop prices to come down significantly from where they are, I think our expectation is pretty flat environment year-over-year. You know you're not a long way to come – you know to having a pretty much of flat market in terms of expectation of 2016. So you know can we adjust, sure. You don't get the full benefit if we had the cut production again in Q4 because of the amount of industrial inventory, that stuck there but you know or we going to manage it correctly. I mean, I think as we mentioned before there were certain products where we are leader and a co-leader we are trying to take pressure off of the system in terms of pricing and the clearing of used, so we are doing our best to restrict the amount of new wholesales that are going in there. And our expectation at least as for a flattish environment going into 2016 and based on what we have done and what we will do for the balance of the year I think we are position appropriately in terms of the mix of total channel inventory.

In other words thanks that's possible. In other words you would not have to presumably under produce in a flattish environment is that the idea?

That's correct. I mean I think you make an argument that we are under producing the market decline this year right so you've got our total production cut is larger than the change in TIV by segment for the full year, because it's not only cutting because the markets down its cutting for the liquidation of inventory. So even if it's flat inventories are stabilized and production remains arguably with more upside potential than downside potential and in certain categories.

Okay, all right. Thanks Rich.

Thank you. Our next question is from [indiscernible] Company Piper Jaffray. Please go ahead.

Thanks for taking my question. I was just wondering if you guys have any visibility on an improvement in LATAM it seems to be getting progressively worse if this is something that could be a turnaround in a year or if we are looking at something much more longer term?

I think you mean we have to split it between LATAM, commercial vehicles and construction equipment and then LATAM Ag. The -- in commercial vehicles and construction equipment is got is more of a micro play so its micro Brazil and both of those businesses are the ones that bore the blunt of a significant change in terms of the financing condition year-over-year. What's going to improve that is an increase has the return to post austerity from better word. On the macro side, and then maybe if there is a return in terms of financing conditions that we've seen in the past that's really got to give there. On the Ag side, the – is more of a shorter-term issue we believe financing conditions are still okay relative to the other two businesses. I think it just hung up a little bit just because of the overall sentiment issue. There is not a lot of used market in Brazil. The machines are use to their end of the life, so there is going to be a replacement cycle there. So I think overall we're less concerned about the duration of the Ag turndown I think that the macro situation on the commercial vehicles and construction equipment is more important than that is going to – that's going to needed to be a change in terms of overall sentiment and how much money that the Federal government puts into the economy.

Okay. Thanks. That's a great answer. In terms of heavy construction equipment in North America and Europe, are those markets fairly stabilized or could we see just in the back half of the year specifically more in North America?

We're not huge market share participants. So for it to be we must to call the market. I think that we had some hopes for North America at a certain point to be up 10% and it was tracking there at the end of last year at the beginning of this year to sentiment is kind of flattening now. So the expectation for it to be up 10%, I think that we – is not going to happen at this point. Europe is still operating on extremely low levels relative to historical demand or even normalized demand, so I would – I can't expect it to go down from here. I think that we had a conversation around here that arguably the first portion of the business that comes back with improvement of the economic environment is the on road truck. And so if we look at on road truck as a leading indicator for EMEA and that's good news for construction equipment, it's relative good news for construction equipment in EMEA going forward.

All right, excellent. Thank you very much.

Thank you. We will take our final question from Massimo Vecchio, company Mediobanca.

Good afternoon, everybody. Few questions from my side, the first one is on the incremental margin in Ag, what will it be without the negative that from minus 26 to probably something close to minus 23 that you reported in Q1. And the second question is a little bit more longer term, probably more complex. Do you think that with the current commodity prices U.S. farmers are making a profit or loss position? And put it in other words do you see that is the current prices with old can we expect rebound in tractors in 2016?

I'll take the second question first and then Max will come back on the question in terms of the margin performance. Our estimates right now that producers are still making money. The margins have been squeezed and that's what's the head win is in the market place. In terms of acreage despite the margin skews acreages moving not moving at all in terms – in North America in terms of plant of acreage I think there is a small swing between soya and corn but from our point of view that's somewhat irrelevant right its raw crop at the end of the day. So we think that they continue to make money. I mean, you can see a lot of estimates where our margins going negative but that I think takes in a pretty caustic view of high priced rented lands, majority of the land is owned by the producers themselves so we think that there is margin available there. Under flat commodity prices as I mentioned before are expect there I want to call 2016 now but we would expect the market demand to reasonably flat next year. But I think we need to see the balance of this year to see it whether it would be a return of demand next year. But I mean if you look at the declines at least in the raw crop segment it were down 50% or 50% plus in certain categories. So even at flat commodity prices you could expect that there is some hope for an upside in terms of deliveries for 2016.

Thank you Rich. This Massimiliano, if were to exclude the exchange impact which is a combination of the translation and the there is one time prior to your hedge negative impact, than definitely the decrement would be more inline with Q1 potentially better.

Okay. Thank you very much.

Thank you. That will conclude the question-and-answer session. I would now like to turn the call back to Federico Donati for any additional or closing remarks.

Thank you, Pascal. We would like to thank everyone for attending today's call with us. Have a good evening.

That will conclude today's conference call. Thank you for your participation ladies and gentlemen. You may now disconnect.