Good morning, and welcome to the CNH Third Quarter Results conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. We do ask that you limit yourself to one question and one follow-up. Thank you. I will now turn the call over to Jason Omerza, Vice President, Investor Relations.

Thank you, Jeannie, and good morning, everyone. I would like to welcome you to the webcast and conference call for CNH Industrial's third quarter results for the period ending September 30, 2024. This call is being broadcast live on our website and is copyrighted by CNH. Any other recording or transmission of any portion of this broadcast without the expressed written consent of CNH is strictly prohibited. Hosting today's call are CNH CEO, Gerrit Marx, and CFO, Oddone Incisa. They will reference the material available for download from the CNH website. Please note that any forward-looking statements that we might make during today's call are subject to the risks and uncertainties mentioned in the Safe Harbor statement included in the presentation material. Additional information pertaining to factors that could cause actual results to differ materially is contained in the company's most recent 10-K annual report as well as other periodic reports and filings with the U.S. Securities and Exchange Commission. The company presentation includes certain non-GAAP financial measures. Additional information, including reconciliations to the most directly comparable U.S. GAAP financial measures, is included in the presentation material. In addition, the presentation has been updated for an immaterial revision to our reported joint venture results for 2023 and the first half of 2024 related to our unconsolidated Turkish joint venture whose functional currency is the Turkish lira. The Turkish economy was highly inflationary in 2022, and CNH has determined that CNH's translation of the joint venture results into U.S. Dollars under highly inflationary accounting resulted in an immaterial overstatement. In today's presentation, prior period results and variances to those results have been updated to reflect this revision. The impact by quarter can be found in the appendix of today's presentation materials. With that, I will now turn the call over to Gerrit.

Thank you, Jason, for clarifying this point upfront, and thanks to everyone for joining our call. The third quarter marked my first three months as CNH Chief Executive Officer. I wanted to take a few moments to share some of my observations with you. In every cycle downturn before, this is a financially challenging environment for most of our farmers. The depressed commodity prices continue to weigh on farm income, and sentiment remains muted and uncertain across regions. We have had low visibility on the industry cycle so far, especially as the retail pace has been slowing month over month. As in prior cycle swings, but in a more proactive way, we continue to work with our dealers as they reduce their inventory levels, which are above our set targets entering 2025. We know what needs to be done here, and our efforts to underproduce retail demand will continue into 2025. I have visited many of our manufacturing R&D sites and am encouraged by the desire and attitude to drive quality more consistently in everything that we do. We are on a very good trajectory here. With this spirit, we have also taken significant strides to address quality issues stemming from a protracted labor strike, and we have the fixes in place to support our end customers. Overall, within 2024, we will have spent around $100 million to address various field quality priorities. We have also been diligent in pursuing cost efficiencies in our plants, and we are taking action to rebalance capacities where necessary. Beyond that, we are also evaluating options to simplify our footprint. I am really excited about the strategic sourcing work we are doing and how it will transform our supply base and how we work with our supplier partners. We are taking many strategic actions…

Thank you, Gerrit, and good morning, good afternoon to everyone on the call. Third quarter net sales of industrial activities of nearly $4 billion were down 25% year over year. This was mainly driven by the decrease of equipment deliveries and lower industry demand compounded by the impact of dealers increasing their inventories in 2023 but needing to reduce them in 2024. Adjusted net income in the quarter was $304 million with an adjusted diluted earnings per share of $0.24, down $0.16 from Q3 2023. Free cash flow from industrial activities was an outflow of $180 million. This is consistent with the seasonality and working capital in the third quarter and is affected by the lower year-over-year activity levels. Moving to the segments, agriculture net sales decreased 24% for the period with lower volumes across all regions, and an overproportionate reduction on sales of combined harvesters. Production hours in our agricultural equipment plants were down 42% year over year in the quarter for our raw crop products, so for large tractors and combines, and 26% year to date for the entire product range. Cost margin was down 290 basis points, up 22.7%. The margin results were driven mainly by lower volume in all regions and negative price realization in EMEA and South America, as we launch the targeted campaigns to support deliveries to end customers in the coming months. You should expect deck pricing to remain positive for the full year. SG&A expenses were $46 million lower year over year, as labor costs were reduced due to headcount reduction and variable compensation. Lower advertising and travel and structural improvements in our source of services continue to provide a partial shield to the quarterly earnings. R&D expense was $40 million less than last year and benefited from similar back-office efficiencies while…

Thank you, Oddone. Now let us review our revised outlook for 2024. In agriculture, we have lowered the industry demand forecast for combines across the major market by 5 to 10 percentage points. As CNH and New Holland have a high product mix in combines, this market demand reduction is driving an unfavorable mix impact for CNH in this phase of the cycle. We also slightly lowered our outlook for high horsepower tractors in North America. We now expect load production hours to be down 36% year over year in Q4 on top of the 21% reduction we had in 2023. We do forecast ag pricing to be positive year over year in the fourth quarter and reaffirm our expectation for about plus 1% net pricing for the full year. With those factors in mind, we expect full-year ag net sales to be down between 22% to 23% year over year. We now expect Agriculture's full-year EBIT margin to be between 10.5% to 11.5%, down from prior guidance of 13% to 14%. About 70 basis points of the change from the previous guidance is because of the change in joint venture accounting. The remaining change is due to the lower sales levels and lower production. In construction, we have slightly improved the industry projections for South America. In an effort to keep our channel inventory levels in check, we are planning global production hours to be down 13% year over year in Q4. Net pricing in Q4 will be modestly negative, as it was in Q3. Therefore, we have slightly lowered our full-year net sales forecast to be down between 21% to 22% year over year. We still forecast construction EBIT margin to be between 5% to 6%. Combining the two industry businesses, we expect a full decrease in net…

Thank you. We will now begin the question and answer session of the call. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you are called upon to ask your question and are listening via loudspeaker on a device, please pick up your handset and ensure that your phone is not on mute when asking your question. Again, please limit yourself to one question and one follow-up to allow time for as many participants as possible. We will take our first question from the line of Kyle Menguez with Citigroup. Please go ahead.

Thank you, guys. I was hoping if you could just elaborate a bit on the plans to underproduce retail more so in the first half of 2025. And is that really just an ag comment, or should we expect that in construction as well? And just if you could unpack just how you are thinking about underproducing retail by geography in the first half of 2025, that would also be helpful.

Yeah. Thank you for the question. Look, when we take a look at agriculture, let's say tractors, for example, we expect to underproduce retail in the fourth quarter by probably about 30% to 40%. In the fourth quarter alone. And then given the season coming, we will hold and make sure that we have, you know, fresh machines in the dealers for the season to come, and that is looking for when you look at combines, by the way, in the fourth quarter, we are also slightly underproducing retail. However, there, the season usually starts a little earlier. So we have in practice and combines a probably more aligned view in the first quarter, and then we continue to underproduce retail in Q2 and look at basically having that matched again in the second half. So we are following the season here, making sure that our network partners have the products they need. On construction, we continue to destock also here our retail channels, and that means we will, on average, underproduce retail here as well.

And so in construction, you'd expect also underproducing retail demand in the first half of 2025?

Yes.

Okay. Got it. Thank you.

Our next question comes from the line of Daniela Costa with Goldman Sachs. Please go ahead.

Hi. Good afternoon. Thank you. Two questions. One is actually this is a follow-up on what we the question just before, just to make sure. So you expect to match production and retail in the by the second half. But dealer inventories, you said, are only one and a half months too elevated. Is that because you do think that the weakness in 2025 is gonna be sort of to the magnitude demand that we had this year? So what's the implied assumption there?

Look, Daniela, the implied assumption is retail, when you break it down to the very product, the demand has to be met with a certain product. And the demand we have obviously now products in our retail network. And that speaks to my commentary before that we have put some extra sell-out commercial campaigning around those products where we need to have an extra push to get them off the yard and what we produce fresh is obviously completely in line with the demand that we see in the market to come. So when we talk about one and a half months too high, that is a financial number. But when you double click on what is the retail underneath, which tractor combinations, which configurations, etcetera, that is a more complex that's a complex more complex riddle and hence that's why we operate our industry machine by, you know, matching retail demand as we, you know, entering next year and then we underproduce again. In order to have a good balance of selling out the fresh inventory that we add as well as keep selling off the inventory that we have carried over to next year. So it's a mix of the tools. So inventory in the end breaks down into very specific products that need a very specific customer demand. So it's a matching task that takes a couple of quarters.

And how shall we think about pricing going forward in the base of in the back of this demand backdrop and pricing now having turned slightly negative?

Yeah. And I do know as well, feedback into our you know, feedback on the question, but we have, you know, taken certain specific focus pricing actions on certain subset of our inventory that has proven to sit a little heavier there. So that is what is, what happened. In the quarter while, you know, as we move forward, we do expect and we absolutely plan to keep pricing as we go into next year as we manage production instead of pricing, as I mentioned, love things.

Yeah. And, Daniela, as we have, I think, in the prepared remarks, Latin America and Europe is where we and where we saw some softening in pricing in the third quarter. But we confirmed that we see positive pricing for the year. And so and clearly the action, because it's taking a production and or what Gerrit was explaining, are directed at preserving our pricing power.

Our next question comes from the line of Steven Fisher with UBS. Please go ahead.

Thanks. Good morning. Just from a detrimental and general margin perspective, I mean, in Ag, seems like we're doing in the neighborhood of about 30%. To what extent should we expect better than that in the first half of 2025 given some additional cost savings? I guess part of what I'm asking is that, you know, looks like we're now gonna be down to single-digit implied EBIT margins in Q4 in Ag. Is that kind of what we should assume for the first part of 2025 as well?

It's early to talk about 2025 as you know. But clearly, our costs have been reducing through the year. So when we compare quarter over quarter, in the first second of in the first couple of quarters, we may be more favorable. But let's see when we talk about the year. That will be probably in January.

Okay. And then you mentioned considering simplifying your footprint, and you gave one example in the construction business. I guess as you think more about those opportunities, would that represent new and incremental cost savings efforts would be on top of what you've articulated and quantified so far?

Yes. That's what it means. And over and beyond the immediate savings from those activities, it is a way to simplify the overall structured processes and flows of components and goods. And it is a great way to ease when launching and when, you know, relaunching a product for the world in fewer plants than in too many. So, therefore, yes, it's definitely an adding. It hasn't been in the plan before, and these are things we're gonna work through and we'll let you know at the right point in time.

Okay. Thank you very much.

Our next question comes from the line of Jamie Cook with Trues Securities. Please go ahead.

Hi. Good morning. Just back to the manufacturing footprint discussion and the ability to hold decremental margins at a better level than history. Are some of these manufacturing footprint considerations could that help 2025 or do you sort of get is is, you know, later on? And then I guess besides the COGS and the you know, SG&A savings, is there anything else that you could point to that would allow CH or decrementals in 2025 to you know, what looks to be a down year? And then Oddone on the free cash flow that you put out there. You talked about, like, the different buckets, you know, under you know, the weaker demand, the dealer pool or incentives and stuff like that. Can you just put in buckets you know what I mean? The how much is related to each one of those you know, sorry, free cash flow cut. Like, put it in buckets so we can bridge it? Thank you.

Thank you. Let me take the first two questions. When I'm on the manufacturing footprint, the announcement we just made, I would refer to and also other work we are considering none of that will impact 2025. These are things that in itself need quite some time to analyze and get properly set up. On the other side, we obviously are very carefully monitoring and watching the implications from the US elections and what it means in terms of tariffs. And with those tariffs, depending on from where goods are shipped and what tariffs apply, what kinds of levels of, let's say, reshoring or other activities will be needed in order to better manage in with the new framework condition. So there is analysis required, and it will take a while to get these things into place. Also factoring in the new framework conditions that will be in and around the United States. And, obviously, also, when it being executed, it takes a while until these effects take place. In 2025, other ways or items we are diligently working on to further improve the underlying run rate cost base that we carry over from 2024, you heard me say that we had about $100 million costs related to quality. Spend in it's actually more than $100 million. In 2024 in order to address certain challenges for some products that were in the field and we absolutely went relentlessly after those and remediate those issues over the next couple of months. And I do not expect that to repeat next year. We will work further on upgrading our processes to be more robust and more consistent in quality delivery yet these one-offs that we had this year I do not expect to repeat next year.

Yeah. So I mentioned, the change in the free cash flow compared to the numbers we were discussing back in July. Yes. Directly linked with the reduction in sales and the reduction in production that we decided to take. Right after the summer break, I would say. When we realized that the orders were lower and that the pace of retail wasn't getting at the level we wanted to have. Clearly, that brings reduction in your operating performance. But also brings impacts on our working capital rebalancing. And also something on the payout of reserves, the dealer, which the later being a positive to the cash flow. So that's a combination of this factor. I would say half of it comes from the basic operating performance. And the rest from the working capital.

Thank you.

Your next question comes from the line of Mig Dobre with Baird. Please go ahead.

Hi, thank you for taking the question. If we can go back to the pricing discussion and it sounds like the pressure is really in Europe and Latin America. Maybe you can expand on that a little bit. You also seem to expect this to get better in the fourth quarter. So I'm trying to make sense of that a little bit. Is this a function of North America, maybe providing some kind of a buffer there something else going on here? And how do you expect pricing to evolve into 2025, given the fact that the environment is still pretty weak, and you're still dealing with the stock.

Look. Let's start with Latin America and Europe. Latin America, we knew from the beginning of the year that the situation became very competitive because of just of the amount of inventory that every player left on the field when when I mean, on the channel, let's say, when the market started turning down. And the turn down of demand was, you know, quite rapid. And I would say, now prolonged. Compared to what everyone could have expected. You remember that we acted on our own inventory? Very early. But that doesn't mean that on competitive market, if there's overall more inventory and you'll have you sort of have to compete. And that's our response to that. Europe is, I would say, much more linked to individual actions that we have been taking for supporting retail sales of units that were already in dealer inventory. Of course, as you know, as the pricing works, what we do is we accrue high reserves on the new hotels and this is what has affected the Q3 results. All in all, it wasn't a large reduction in pricing in Q3. And we expect Q4 to be slightly positive. And the year to remain positive. As for next year, I would stop commenting next year. But we don't expect a decrease in pricing.

Understood. My follow-up is, on EMEA, I'm curious as to what you're hearing from your dealers in that region. Obviously, the business is down quite a bit this year. You get this sense that we could be seeing sort of a similar cycle in EMEA that we're seeing in North America and in LatAm or is there hope that that market can stabilize before the other two? Thank you.

Look. EMEA, I mean, it really depends when you talk to which dealers subset in which market. For example, if you talk to certain dealers in the Germany front or so they will tell you that it's not too bad. It's not great. But it's not too bad. And other markets obviously have a heavier impact. So therefore, the European territory itself is quite diverse. The big unknown for Europe itself is when and how the war in Ukraine or the conflict around Ukraine is coming to a standstill in a form of a frozen conflict or stops in whatever shape and form, that would determine when and how Ukraine would turn back to its prior crisis production levels of agricultural products. And how would Europe then deal with those crops that those commodities coming across the border? And how and if those commodities will be in competition with the products from Western European farmers. There is this one event that you know, we don't know when it will happen, but I think what is the has and this is going to have a pretty impact on the European environment for our farmers is what is going to happen in Ukraine when it happens and how it will impact the commodity prices. Because it will say, 15% or so relevant player in the global commodity markets. And so I think that is determining a bit when and how the cycle will turn on that end. And we have been traditionally also very strong in the region of Ukraine. And I think when the conflict is coming to a standstill there or when things turn to a better side, we feel very well positioned to benefit from that country in itself as well.

Our next question comes from the line of Chris.

Hi. Good morning. Thank you for taking the question. Forgive me here. Maybe I'm a little rusty after a long week, but I'm trying to piece together the pricing outlook and appreciate some of the competitive dynamics that you called out, Oddone, but is there some kind of mixed effect or something that makes the that enables you to reaccelerate your price in Q4? Is it just that the comps are easier? Just help me bridge Q3 to Q4. Why should we expect that to turn back positive?

I will say yeah. There's not really a mix effect in there, but there's also an effect that some of these actions were targeted and specific. And we don't plan to repeat all of them.

Chris, maybe I'll give you a bit more color on this. The inventory that take Europe, the inventory that we have in Europe, that is let's say, nine months old or older, these are machines that were produced at a time. In configurations that are not exactly matching not all the inventory, please. Yeah. But there are subsets and pockets in there that are not exactly matching the demand that we see right now in the market. So these are subsets and pockets in the inventory where we allocate more commercial action and more commercial focus on in order to clear that stock. So that is what we're not going to repeat in Q4. That was an effort we had in Q3.

Okay. That's incredibly helpful. Thank you for that additional color. So then I do want to ask about FinCo, the impact of used pricing, how that's influencing how you're thinking about underwriting loans, providing maybe some financial incentives. We didn't talk much about FinCo on call, so just a brief update there would be very helpful. Thank you.

Well, two things. One, FinCo plays a role in the financing of equipment to new customers I mean, to customers. And definitely, FinCo plays a role in financing used equipment sold by our dealers to end customers. And with pooled funds that accrued when we sell new equipment, the dealers are able to access subsidized financing from the capital organization to provide subsidized financing to their customers to buy used units. So definitely, FinCo is a part of the play of supporting the sales from our dealers, the retail sales. And obviously, this is subsidized by the industrial operations. Part of the pricing, and it's either directly or through the pooled funds I was mentioning before. We don't see if the question was about the used equipment, in relation with sorry. The used price in relation with the used equipment, we don't see anything that is comparable to what happened in 2015 and 2016. Where, as you know, all of the captive company found themselves with a lot of lease equipment coming back. Pretty young and at prices that weren't competitive anymore. Not happening. And so and that's not happening just because the way we all built we built our leasing portfolios in the last few years were not the way we build them back at the last peak of the cycle. So we are not doing short-term we have not been doing short-term business. And we have been very prudent, I would say, in the underwriting and in the determination of the residual lines.

Thank you for the time. That response to

Your next question comes from the line of Tami Zakaria with JPMorgan. Please go ahead.

Hey. Good afternoon. Thank you so much. So one question for clarification. I think you said inventory now is one to one and a half months more than your desired level. So after the underproduction in the fourth quarter, where do you see that going at the end of this year from that one one and a half months? And whatever excess inventory is remaining, do you plan to underproduce on a prorated basis in Q1 and Q2, to bring it down, or could it be heavier in Q1 and then whatever is remaining, you do that in Q2?

Yeah. Hi, Tami. Well, look, where are we gonna land this year? We have obviously a target here and that would get us below one and a half months or one and a half billion. It depends on the market that we see ahead. Right? And that depends on how effective we will be in the fourth quarter to set it out. So it will not be certainly not less than a billion that we will carry over into next year. And how we're gonna steer and manage the quarters ahead and is really we are running here with the visibility of give or take, six months. And with that visibility, we will proactively adjust production capacity since steer accordingly. What we have started to do, obviously, and I did that a couple of weeks ago as well myself with the basically, all the German dealers. Going through for Europe in this case, going through what they see to come and how they see the market and what orders they have. Inside. And I think we are syncing ourselves, I wanted to say, with them more closely in order to steer it what we produce and what they're gonna retail. So we basically manage here with a six months visibility ahead, and that will allow us to underproduce retail, as I said, on average in the first half. While always keeping an eye on the season and having sufficient fresh and, you know, matched and, wanted machines available for our farmers and builders.

Got it. Got it. That is very helpful. My second question is on R&D. I think it stepped up as a percentage of sales in the third quarter. So as you think about the next couple of years, I think you mentioned your in-house product innovation is progressing well. The pipeline seems strong. And you want to continue doing it in source all of most of it. So should we expect R&D dollars spent to stay at these levels over the next couple of years? Yeah. Even if, you know, weaker demand environment?

Yeah. You can expect that quantum of spend to stay on that level. We will get more work out of the quantum that we plan to spend as per my comments that we are going to work on our footprint as well. That is one commentary, and if you might wonder why haven't you done that before? Why do you come now with this? I think the new organizational structure that we have built enables this now. Before, let's say, the different pieces call it the India tech center or, let's say, our digital team and then our product development team, they were sitting in different places. Yeah. And now this is all under one aligned lead under Jay Schroeder, our chief technology officer, who is going to obviously synchronize and synergize among those very, very capable colleagues, and that means we will get out of the same spend, probably more work. Not probably, but very likely more work over the years.

Got it. Thank you.

Your next question comes from the line of Mike Shlisky with D.A. Davidson. Please go ahead.

Hi, everybody. Thanks for taking my question. I want to follow-up on the R&D comments in the last question there. I was a bit surprised to see that it was a tailwind in both segments in the quarter. Know you mentioned there were some efficiencies there. I'm curious if you could just mention the product launch cadence for 2025 has that changed at all in an environment where pricing is tougher to come by, you know, the right timing to be putting out newer and higher-priced products? Just any thoughts as to the cadence that may be changing here.

Well, look, that's a very good question. And look, the product launch, when I look at the most relevant product launches, the one that started first was the long wheelbase. Our new heavy tractor, medium tractor, long wheelbase, that was launched and it's in the rollouts, and it's coming to a full swing. We are in the late innings of getting the new generation combined to our customers. We obviously started production, but we have now small a lot of production here that we validate like hell around the world and every farm we work equipment really, really hard and whether it's in Australia, New Zealand, whether it's in and obviously in the United States, in South America. And we collect the learnings from those field actions. And I think our combined have left many market participants speechless in terms of performance and capability to deliver great yields for our farmers. And as we want to get that really, really right, we will look at the market, how it will develop over 2025, and we would pace production with that in order to maintain pricing and the target pricing for those very big and very relevant machines namely the combined. And we have other launches to come. I mean, we are planning to launch, and we are going not only planning. We are going to launch our new short wheelbase lineup in somewhere around the Agri Technica that's at the second half of November this year. That's another very, very relevant launch, and we invest quite a bit of the R&D dollars that you can see also the quality validation team dollars here in getting these machines right for the launch. So 2025 is a very, very relevant year for us. Launching. And if there's something good about the market that is slow, is when you launch a product. You don't want to launch a product into a high volume market when the market is high. Because if that happens, you need to go very quickly, very fast, to high volumes, and that might stress a little your supply base, and that might stress a little bit your industry machine too much. And again, I don't like cycle downturns, but if there's something good about it, it's the right time to launch products very thoughtfully and very carefully as a coordinated effort across the entire company.

Got it. Thanks for that. Also want to ask about some of your comments around product quality. You mentioned it many times here during the call here, and you've been out in the field to fix sounds like a lot of products that may have had some issues. Can you comment, whether you have lost share this year because of it or any plan or any thoughts about your market share next year, and any extra work that has to be done to kind of regain farmer trust? Are the issues of quality that serious that you've had to patch things over with, like, folks or make some changes?

Well, we actually have gained share in the segments where we focused on. And where we were very thoughtful about. Know, getting back in or even further strengthening our, anyway, quite strong position. I know we have gained market shares in those segments. And look, the quality that I was talking about was related to certain launch quality and certain field quality. That we want to get cleared and remediated prior to, you know, bringing the new generation into the field on the tractor side. We have very good, combine quality. So there was never an issue with those. It is really about the tractors. And here, the launch of the new long wheel and the short wheelbase will entirely renew our mid-range tractors in Europe. And for the world. And with that, we are pretty well positioned to compete on a very different level from next year on or let's say from 2026 on and those need to be launched on the ground of proper quality and proper processes. That's why I've been mentioning that. And on the market, we have actually gained this year.

Our final question comes from the line of David Raso with Evercore.

Hi. Thank you for the time. Excuse me. Quick question on the operating leases you have on the FinCo. Can you help us with where are the current carrying values the reasons on the operating leases versus market prices?

Dave, Oddone here. We are fine with that. I don't have a report in front of me, but we have been realizing the value of the units that have been coming back. Without any issue.

So the lease is coming off of late. They're not causing any losses on those trades?

No. I'm not saying that it will happen. Right? It happened in the past, and I'm not saying that it will happen in the future, but from what we see now, there's no significant alteration. Of course. I mean, the balance has been coming down, but, obviously, you just get nervous. Some lease resids we set a couple of years ago show up next year, and we're underwater. Why I'm just trying to think of a starting point for 2025. But at least from what you understand right now, they're not coming off the lease levels that the resale is a loss. Okay. And then real quick on the production cost for next year. You know, I know the pricing is down, but some of the production costs came in a little more favorable than I was modeling. Can you give us any insight on early contracts deal, you name the input? To how to think about production costs. For 2025.

We we're looking at it. I wouldn't say that we have any I mean, does the user prudence from the purchasing organization when we set up the budget? Which we are reviewing and from the last review we had, as I say, there's nothing significant.

Yeah. Look. There's also I mean, fair to add, we have made great improvements on production cost in the United States. North America, you remember we had this protracted strike in Racine. We had to get efficiency back into our sprayer plans and Benson particularly, and we had to get our operational efficiency back on track. We had a couple of plant leader changes also in North America and that has paid back really well. And we have with the leadership team centered in the US with our manufacturing head, Carlos, over quality tune, we have the ones who go after these areas of quality and manufacturing cost quite diligently. So that is going to continue, and that has been a great addition particularly from the US team across their plans, and we will grind through also the other regions to see them operating at a lower overall production cost level. Also next year, even at lower volumes. Because you do not need necessarily higher volumes in order to get productive efficiency. You can also do good things better with lower production volumes. Yeah. And that is something that we expect to see also in the next year.

And lastly, I know the call's been going long. Sorry. The decision on Burlington I mean, just given the back coast, sort of what the construction business was built on over the decades, I know it's not the same product category it was. To close that facility, maybe I missed a comment earlier. How does that relate to your overall and we've sort of discussed this already in the past about strategic decisions around that business. Now as the CEO. Is there a bigger message from factory than just cost savings of what I'm driving at?

Well, look, we are further improving the business. It's part of our structure. There is a need for action. That decision has been very thoroughly prepared by the construction team for quite a while, and Burlington today produces rough terrain forklift trucks as well as TUV. And as I said, we are going to relocate the just as an attendee plant, we're gonna relocate those to existing CNH plants in the US and Europe. And that these are this move is similar to other moves that concern team has done. And it is benefiting the business and it is the right thing to do, so we do it. Just because there are considerations around strengthening the business further down the line, possibly with a partner doesn't mean that we stop thinking. And stop acting.

That's helpful. Thank you so much.

Thank you.