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

Thank you, Maria. Good afternoon, good morning. We would like to welcome you to the CNH Industrial fourth quarter and full year 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 statement 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.

Thank you, Federico. Good morning or good afternoon, everybody. Overall, it was a good quarter for our CNH Industrial. I’ll start by providing some highlights of our operational performance. Industrial operations improved operating margin by 3.5 percentage points versus Q4 2014. All four of our operating segments posted profit margin improvements but the agricultural equipment segment posting at 11.7% margin for the quarter. Our efforts in world-class manufacturing and footprint optimization programs reduced manufacturing and quality costs. In Europe, Iveco gained market share in commercial vehicles in both the light and heavy segments in Q4 and posted market share gains in all three vehicle classes for the year. We generated $1.6 billion in working capital cash flow in the quarter and exit 2015 with a net industrial debt of $1.6 billion, a reduction of $1 billion for the year. The demand conditions remain challenging in some of our business and operating geographies during the quarter. But we did a good job of navigating them. We increased profits while reducing inventory, adopted our cost structure to prevailing demand conditions, demonstrated the strength of our product portfolio by gaining share and positioned ourselves to compete in 2016. In light of this performance, we have announced a dividend recommendation of €0.13 a share and announced to initiate a share repurchase program of up to $300 million. I’ll hand over the presentation to Max, who will take you through the financial results. And I will go through the operating segments further in the presentation. Max?

Thank your, Rich. And good morning, good afternoon. On Page 5, and let me walk you through the financial highlights for the quarter on the full-year. Net industrial activities level, net sales were $6.9 billion for the quarter down 3.6% compared to the comparable period of prior year on a constant currency basis. For full-year net sales stood at $24.7 billion down 9.6% in constant currency. The Company achieved an operating profit of industrial activities for the fourth quarter of $563 million, up 63% versus Q4 of 2014, with operating margin at 8.2% for the quarter. operating profits for full-year was $1.4 billion with the margin of 5.8%. Net income before restructuring and other exceptional items was $262 million or $0.19 per share up 57% year-on-year for the quarter and was $474 million or $0.35 per share for the year. Net industrial debt at December 31 was $1.6 billion versus $3.8 billion at the end of December and $2.7 billion at the end of September, sorry – and $2.7 billion at the end of December 2014. Available liquidity was $9.3 billion at the end of December inclusive of $3 billion in undrawn committed facilities verus a comparable figure of $8.9 billion at the end of last year. Moving on to Slide 6, industrial activities net sales composition and by segment, excluding negative impact from currency translation, net sales decreased 3.6% in the quarter. As you can see on the net sales by currency pie chart Q4 continue to negative affected by the strengthening of the U.S. dollar versus our major trading currencies that make up approximately 70% of our revenue. We expect this to continue into 2016, but at a lower rate. On Slide 7, in the quarter operating profit was up $236 million or 63% versus last year at…

Thanks Max. Starting with agriculture on Slide 15. Agricultural equipment net sales were $3 billion for the quarter, down 3.8% compared to 2014 on a constant currency basis. The decrease was driven mainly by industry volumes in the row crop sector, primarily in NAFTA and LATAM, offset by favorable net price realization. Operating profit was $348 million for the quarter, up 54% on a constant currency basis, with margin at 11.7% up 4.6 percentage points. Positive price realization, manufacturing and purchasing efficiencies and a reduction in structural costs were able to offset the reduced shipment volume and negative effects of fixed cost absorption in the quarter. And our main ag products during the quarter, global combines under production versus retail at 30% with production levels down 35% versus Q4 2014. Global tractor production was 9% below retail with the production levels flat versus Q4 2014. Worldwide total channel inventory was reduced in both categories with current inventory showing a significant change in mix to lower horsepower tractors as a result of the reduced demand in the row crop category. Worldwide market share performance was good considering the positive net price realization to margins for the period. Market share performance for the year was satisfactory in tractors where we held share on a worldwide basis. The LATAM share is measured in wholesale shipments, and our performance is a reflection of our channel inventory reduction efforts. In combines, our performance was good; and despite the large cuts in production, we were able to increase share in NAFTA during the quarter. As you can see from the chart on the bottom right, we did not get a lot of help from commodity prices during the year and it’s not going to affect our net farm income in the United States. We’re dealing with…

Thank you, Mr. Tobin. Now we’re ready to start the Q&A Session. Maria, please take the first question.

Thank you, Mr Tobin. [Operator Instructions] We will now take our first question from Joe ODea from Vertical Research Partners. Please go ahead.

Hi, good morning. Could you just talk about the way channel inventory and large NAFTA ag round up for the end of the year, but what that sets up in terms of underproduction plans in 2016? And Rich I think you commented on kind of the first half, second half splits. So then how those plans might kind of consider what’s your first half underproduction is versus your second half?

Yes, sure. Our estimate right now is that NAFTA row crop production will be somewhere in the range of 15% to 20% below retail in 2016. So in line with the decline in the market, so just a steady runoff of the ending position of 2015. Based on order books right now and based on amount of uncertainty in the marketplace, we would expect to come out of Q1 at very low levels of production because we think that the market will build into 2016 rather than to be steady over the year. So, we expect a significant portion of the production cuts to be made in Q1 of this year, so detrimental to earnings and the like. But we think that we get this right, we can still deliver the margins as we did at this past cycle by timing, the demand cycle with what we did at the industrial side to still protect margins as much as we can.

Okay. And then just a pricing question, last quarter you had commented that on the ag side, pricing was holding up, but maybe you are seeing some indications of a little bit more competitive pressure there. Again, it looks like in 4Q pricing was positive. So maybe just how things unfolded over the course of the year and as you look at more underproduction, do you think pricing is still positive in 2016?

Yes, I think that we’ve got a little bit scared of Q4 of 2014, where the market really turned down in that quarter and then it becomes a little bit difficult because everybody was trying to liquidate inventory simultaneously. I think that from an industry point of view, production has been cut pretty heavily. And so, pricing wasn’t prohibitive during the second half of the year and especially in Q4. And then going into 2016, on the row crop side, I think from what we can see, what we can see our own numbers; I think that we’re in pretty good shape on combines. So the amount of cuts that we need to make on combine mines relative to 2015 should be marginal. I think that what – most of what we’re taking out of row crop going into next year will be in mid horsepower segment because that’s what’s been built up – because that’s where the demand was in 2015. So we’ll see, I mean, I think that if we look at – what we think the demand is going to be versus the industry’s position in terms of standing inventory, if there’s going to be any price pressure, it’s going to be into the mid-low horsepower segment as everybody has been chasing the Dairy Livestock. On the upper end of the segment, if there’s been a significant clearance, if we’d like it to be more, we’re going to run again lower and our expectation is to bring down dealer inventory by another 30% in NAFTA, in 2016. And hopefully, if we get it right again that that pricing should hold up.

That’s really helpful. Thank you.

We will now take our next question from Henry Kirn from Societe Generale. Please go ahead.

Hi, everyone.

Hi, Henry.

Could you talk about the capital and R&D spending projects and needs for 2016, and maybe specifically an update on the digital initiatives that you have gone on right now?

Both CapEx – as you’re referring to ag, I guess, but both CapEx and R&D will both go up relative to 2015 in ag, largely driven by, let’s just call it the whole precision farming ecosystem. There’s not a lot to be done on Q4 anymore. I mean, we’ve got a variety of different launches across the portfolio. We’re launching at new high speed planter. But what’s driving the year-over-year increase in R&D that’s baked into our outlook is largely driven by precision farming.

That’s helpful. And then with the new product introductions and Powertrain, can you talk a little bit about your view on the uptake of CNG and LNG engines over the next few years and what that could mean the company as a whole?

I think you’re bullish over the longer term. I mean with the downward pressure on diesel, right now, the economics of LNG, C&G are getting a little tighter. But I think from a medium term, not even a long-term perspective, we think that once the infrastructure is built out and they’re well on their way in Europe, I mean, NAFTA hasn’t started at all. But in Europe, once the refueling infrastructure is built out and with the pressure on emissions forget just the input costs on diesel that we’re pretty bullish in terms of the uptake on the conversion for long haulage applications.

That’s very helpful. Thank you very much.

You’re welcome.

We’ll now take our next question from Ann Duignan from JP Morgan. Please go ahead.

Hey, guys. It’s Ann.

Hi, Ann.

Well done in Q4 that was a good margin.

Thank you.

Can you just talk a little bit about if I look at your managed portfolio on the finance, wholesale finance went from about $8.3 billion in Q3 to about $8.66 billion in Q4. Should we be concerned that all that there were some channel stuffing and endurancy was very uncharacteristically very adamant that Case IH has been stuffing the channel on the – at least high horsepower tractor side.

So they’re worried about what we have in dealer inventory. But I don’t know, the only thing I can say about that is we’ve given more stats than anybody in the industry in terms of channel inventory and the movement. We give out all the stats in terms of production to retail. And then reposted some very good gains from pricing. So if we’re stuffing, it’s hard to say where that’s being reflected in the marketplace.

Okay, how do you explain that retail notes were down and wholesale notes were up quarter-over-quarter?

I think you got to be very careful, I mean, there’s mix in there. There’s currency and variety of different things, I mean, I can get you a more detailed answer on that. I don’t operationally particularly look at it that way that’s more on the Finco side. But I’m not – our – we were below – wholesale was below retail, right, we’ve given you the stats. So whether there’s a mix effect in terms and there’s a portion of the pricing that’s baked into what’s been sold into the part of that $120 million is in the gross receipts.

Okay. Maybe we can take it offline and go through it in more detail. Can you just talk then a little about through 2016 outlook, if I do the mathematics, decrementals come in at about 14%. Can you just talk about the difference between the different groups and where would you expect decrementals to be worse and where would you expect them to be better?

Okay, we look at it from a group perspective, the margin loss in ag about 50% of that is recovered by additional profits in the other three segments year-over-year. Without getting into decremental, incremental margins by particular sector, I mean that’s the way you can look at it. I mean, we’re calling the market down by 15%, 20% that would equate to roughly $400 million, but that’s not how it is baked in there so that’s got to be made up for the balance of the portfolio.

Okay, that’s helpful. I appreciate that .Thank you.

You’re welcome. Thanks Ann.

We will now take our next question from Monica Bosio from Banca IMI. Please go ahead, your line is open.

Good afternoon and good morning everyone, I would add a few questions. That first one is on the total CapEx 2016. I understood that in [indiscernible] the CapEx and the R&D will be higher, but I was wondering what about the total of the group especially in the commercial vehicles? And my second question is still on the commercial vehicles. Do you feel that, still sound trained in commercial vehicles in EMEA might continue to effect the weakness condition in the LATAM market. And the third question is on the agricultural segment. Can you give us a flavor quarter-by-quarter, I’m just trying to figure out what could be there, the trend in the first quarter in terms of profitability given that, most of the production cut [ph] will be made in the first quarter of 2016. Thank you very much.

Okay, I’ll do questions two and three first and I got to have to circle and come back to question one. Our expectation that EMEA volume will offset further declines in the LATAM. I think that, that’s our expectation of full year in terms of profits. Are we – on the ag side our weakest quarter in terms of margin will be Q1 of 2016 because of the fact that we’re going to be delaying the restart of the industrial machine. So there would be Q1 and likely Q3 as a result of more maintenance related shutdown periods. And what was your first question again, sorry.

It was on the reported CapEx expected for 2016.

It’s going to be up somewhere around 10%.

Okay. Thank you very much.

We’ll now take our next question from Alberto Villa from Intermonte Sim. Please go ahead.

Hi, good afternoon. Just a couple of questions, one is on the – what I’ve read on the Financial Times today that Brazil is planning to introduce some sort of incentives this year to revive investments. I was wondering if you think this kind of initiatives can allow you to, I mean, to see a little bit less negative outlook for Brazil, or you think that the demand there is going to be very weak this year. The second one is on the guidance on net debt, I was wondering if you think whether the buyback realization of $300 million or not? Thank you.

On the first one, we don’t know yet. I mean, I read the same article this morning. But nothing has been publicly announced, so we don’t have anything baked into our forecasts for credit availability in Brazil or an improvement of where we are today or what our forecasts are today. In terms of net debt the answer to your question is yes. It’s baked in.

Thank you.

We’ll now take our next question from Richard Smith from Citigroup. Please go ahead.

Hi there, thank for taking my call. Just bearing in mind the significant recovery in margins in Q4, in particularly in the agro business and then also I guess in commercial vehicles. Why are we still seeing 2016 guidance kind of down, is any of that margin improvement momentum expected to carry through into 2016 or is it more of a kind of a one-off? And secondly with the 300 million share buyback program announced, are you still targeting an investment grade rating for your credit and how do you see share buyback being consistent with it?

The answer for your first question, its volume related. I mean, we’re calling the market in ag down and ag is up most profitable segment within the group, so by its nature it’s going to come down some. In terms of our target to – remain investment grade we still have that target, the aggregate amount of the return on capital is the change, the overall performance of net industrial debt. So we end up right where we expect it to be and then return and make a return to shareholders.

Okay. Thank you.

And the fact that the value of – what we would consider our shares undervalued on top of that.

We will now take our next question from Christophe Boulanger from Barclays. Please go ahead

Yes, hi. Good morning. I would have a question on balance sheet. I’m looking at your intercompany loans standing at $1 billion at the end of 2015. Could you share with us what will be the target for 2016? And the second question is on your pension, if you could share with us the size of your pension deficit at the end of 2015. Thanks

So we expect the balance of our intersegment to be below 2014, 2015, in 2016. And the pension balance is about $2 billion.

$2 billion.

$2 billion.

And…

In op-ed [ph] all together…

Passion on op-ed, is – okay. And just…

That operates 200 million.

Thank you. Just to come back on intercompany loan, do you plan to fully cancel intercompany loan at some point?

You’re saying do we cancel the intercompany or between industrial and…

To basically surprise the intercompany loan between industrial arm and the Fin Corp?

There is a level of funding that is physiological between the two pieces of the business, but again we expect to be below 2015 and 2016.

Okay, all right, thank you.

We will now take our next question from Ross Gilardi from BoAML. Please go ahead. Your line is open.

Good morning. Thank you. Rich could you just talk about European truck order trends. I mean did they accelerate or decelerate you think as the year – as we came into the year end. I mean obviously the market performance was very good, but just curious more on directional movement in order trends in European truck?

Well, I think that on a percentage base, Ross, it’s come down because it’s starting from a lower base, but our backlog is flat year-over-year. So it’s steady, so once the percentage decline was just a function of the market moving up, but what we have in backlog is flat to where we exited Q3.

And then, you said you got pricing in EMEA truck, but can you still took market share. So could you talk a little bit more about that? What parts of the truck market did you actually [indiscernible]. Was that more of a light and medium duty comment versus a heavy duty comment and any color geographically?

We actually gained share in all three segments for the year. Look, at the end of the day, I think, the price is more reflection of the fact that that product line has been rejuvenated. I mean, the Daily is brand new, we’ve made significant improvements to the quality to both the medium and the heavy segments and we’re pricing for it. We just think we have a more competitive product.

Got it. Thanks, guys.

Thanks.

Our final question will now come from Massimo Vecchio from Mediobanca. Please go ahead.

Good afternoon. My first question is on the operating profit work for Ag. If I understand correctly from previous question, the positive pricing is an easy comparison with Q4. Is it correct with Q4 last year?

It’s correct.

And can you also detail what was benefit of low raw material in this breach? Is it probably included in the production costs?

That it’s a piece of it in production and a piece of it ends up in pricing because of inventory turn. It is approximately 10%.

Okay, so very small. Second question is on the tax rate, you said the long-term sustainable is 34%, 36%. When do you think you would get there and what can we expect for 2016?

I think that we can expect a steady walk down from where we are today. I think the 2017 depending on market conditions or demand conditions of the market would be where we get into the range – long-term range.

All right, thank you very much.

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

Thank you. We would like to thank everyone for attending today’s call with us. Have a good afternoon and evening. Bye.

That will conclude today’s conference call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.