Good morning, and welcome to the CNH 2025 Fourth Quarter Results Conference Call. I will now turn the call over to Jason Omerza, Vice President of Investor Relations. Please go ahead.

Thank you, Krista, and good morning, everyone. We would like to welcome you to CNH's fourth quarter earnings presentation for the period ending December 31, 2025. This live webcast is copyrighted by CNH and any recording, transmission or other use of any portion of it without the written consent of CNH is strictly prohibited. Hosting today's call are CNH CEO, Gerrit Marx; and CFO, Jim Nickolas. They will reference the material available for download from our website. Please note that any forward-looking statements that we 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 most recent annual report on Form 10-K as well as other periodic reports and filings with the U.S. Securities and Exchange Commission. Our 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. I will now turn the call over to Gerrit.

Thank you, Jason, and welcome to everyone joining the call. We are calling today from our plant in Wichita, Kansas, where we build loaders for our construction business. There were bright spots for us to celebrate as the year ended, even though there are continuing challenges in the markets that we serve. We had a successful Tech Day presentation at the Agritechnica Show in November. If you haven't seen it yet, we encourage you to watch the replay and learn about the advancements we have made and will continue to make in the pursuit of serving farmers on their soil. At Agritechnica, we showed how CNH tech powers digital solutions for our world-class equipment from factory fit to retrofit aftermarket solutions; we have the technology to help farmers be more productive with their equipment. We also introduced a new lineup of mid-range tractors for the global market, which specifically addresses a particular need in Europe for large mid-range high-horsepower tractors. This new tailored offering of tractors helps us compete better and facilitate pull-through sales of combined sprayers and planters. We also showcased our leadership in combine harvesters with our award-winning CR and AF Series machines. We have ramped up our efforts to strengthen and consolidate our dealer network with several flagship transactions already completed. This is a critical piece of our long-term strategy, and we are very pleased with the initial reaction from our dealer partners. We are proud of the progress we have made with our quality and operational excellence initiatives that we outlined at our Investor Day last year. We took out $230 million of cost from the Agriculture segment in 2025, which puts us on pace to achieve the $550 million cumulative savings target by 2030. Those savings plus incremental actions that we will take will help us eventually offset the entire tariff cost impact incurred. We also continue to make progress on our near-term goals. Agriculture dealer inventories were down another $200 million in the quarter for a full year reduction of about $800 million. That is a little shy of the target that we had initially set at the beginning of 2025, but it is because we shipped out a bit more company inventory to the dealers than we had originally expected in Q4 on the back of the European market showing some green shoots. But commodity prices remain low. As the single largest contributor to farm income, it is hard for farmers to operate their farms, let alone purchase equipment. The trade environment remains in flux, which makes it difficult for CNH farmers and builders to have a sense of certainty when making capital investments. So we do our best and focus on the things that we have in our own control. So while market conditions were very dynamic and are forecasted to remain so in 2026, the CNH team is focused on solutions today and in the future that delight our farmers and builders and that will deliver returns for our shareholders. With that, let's turn to the results. On a year-over-year basis, our Q4 results are very encouraging. We are, however, comparing to a very low Q4 of 2024 when we had severely cut our production levels. We will talk about our 2026 guidance in a moment, but I want to caution against using this Q4 improvement as a run rate into Q1. Fourth quarter consolidated revenues were $5.2 billion or up 6% from Q4 of 2024. Our Ag segment sales were up 5%, with EMEA up 33% and North America down 10%. Construction sales were up 19% on an easy comparison with 2024. Industrial adjusted EBIT was $234 million, up 21% year-over-year, mainly as a result of positive pricing, higher production, cost-saving actions, and lower corporate expenses, which together offset the tariffs and geographic mix headwind. Adjusted net income was $246 million with adjusted EPS for the quarter at $0.19. Looking at the full year, we faced another challenging period for the Ag industry. 2025 consolidated revenues were down 9% year-over-year, while industrial sales decreased double digits. 2025 Industrial adjusted EBIT margin was 4.3%, primarily driven by the higher tariff costs and unfavorable geographic mix, partly offset by pricing and cost-saving actions. We remain confident that our North and South American markets will deliver growth in revenue and profit pools in the coming years as trade flows stabilize and farmers migrate to larger machines with connectivity solutions. We grew market share in large tractors and combine harvesters in North America during 2025. As we move into 2026, EMEA is on a great path to further recover from its low margin levels through our transformation, cost efficiency programs, and market share gains in the mid-range tractor segment. Sustainability has always been one of our main priorities because it is vital to our farmers. As we discussed at the Tech Day, land is the most valuable asset for farmers, and soil health is of prime importance. That is why we have always stressed sustainability in our operations and in our machines. For us, sustainability is not only about protecting the environment; it is also about ensuring the long-term profitability of our farmers, which is central to our conviction of what true sustainability means. We are proud to have been ranked #1 in our industry on S&P's Global 2025 Corporate Sustainability Assessment and to have received an A for climate and an A- for water in CDP's 2025 scores. These results recognize our leadership in environmental actions and disclosure across our products, operations, and supply chain. With that, I will turn the call over to Jim to take us through the details of our financials.

Thank you, Gerrit. Fourth quarter industrial net sales were up 8% year-over-year to nearly $4.5 billion, mainly driven by favorable price realization and positive foreign exchange impacts. Adjusted net income increased to $246 million with adjusted diluted earnings per share at $0.19, up from $0.15 in Q4 2024. Even though we had lower production levels in Q4 2025, they were higher than the very low levels in the same period of 2024. So the year-over-year increase in sales and income is mostly related to a relatively easy comparison. Industrial free cash flow in the quarter was $817 million, essentially in line with Q4 of the previous year as the lower year-over-year change in net working capital was offset by better EBIT and cash taxes. Agriculture Q4 net sales were about $3.6 billion, up 5% year-over-year, driven by favorable pricing and positive currency translation. On a regional basis, the year-over-year sales decrease in North and South America was more than offset by the EMEA increase, which was mostly in Central and Eastern Europe, along with the Middle East. Positive pricing was the most pronounced in EMEA and North America. Adjusted gross margin was 20%, down slightly from 20.6% in Q4 2024, affected by the tariff costs and unfavorable geographic mix, partially offset by purchasing efficiencies, lower warranty expenses, and a 15% increase in production hours. Agriculture adjusted EBIT margin was 6.5%, down from 7.2% in Q4 2024, as positive pricing and lower R&D partially offset negative product and regional mix and higher SG&A related to variable compensation. On a full-year basis, gross tariff costs had a 110 basis point impact on EBIT margin and unfavorable geographic and product mix had a 90 basis point impact. Construction net sales in the quarter were up 19% year-over-year to $853 million, driven by better sales in North and South America. Q4 gross margin was 11.5%, down 340 basis points year-over-year as tariffs weighed on the quarter's profitability. Favorable purchasing and manufacturing efficiencies were more than offset by $35 million of tariff costs. Those are all netted together in the product cost category of the EBIT bridge. As was the case in agriculture, construction SG&A was unfavorable due to variable compensation and labor inflation. Q4 adjusted EBIT margin was 0.6%. In Financial Services segment, net income in the quarter was $109 million. The 18% year-over-year increase came from interest margin improvements across all regions, only partially offset by higher risk costs in Brazil and lower volumes in North America and EMEA. Retail originations in the third quarter were $2.8 billion, and the managed portfolio ended the quarter at $28.6 billion. Credit collection rates have been relatively steady in most regions despite the market downturn. Delinquency rates in Brazil have stabilized, albeit at elevated levels. Our capital allocation priorities remain the same: reinvesting in our business while maintaining a healthy balance sheet and then returning cash to shareholders. During Q4, we repurchased $45 million worth of CNH stock at an average price of $10.02 per share. For the full year, we returned $432 million through $333 million in dividends and $100 million in share repurchases. I'll come back in a moment to discuss our 2026 guidance. But first, let's take a look at the progress on our long-term targets. Gerrit?

Thank you, Jim. Our company strategy is centered around five key strategic pillars: expanding product leadership, advancing our iron and tech integration, driving commercial excellence, operational excellence, and quality as a mindset. These pillars keep our team focused and united in our shared purpose to feed and build the world we live in. Today, I would like to give you an update on our progress on each of these areas. Innovation is a constant at CNH, and we have a robust pipeline of new product launches. We are using rising technologies such as Gen AI to increase the velocity of our product introductions. At our Investor Day, we outlined plans for more than 15 new tractor launches, 10 in harvesting, 19 in crop production, and over 30 precision technology releases between now and the end of 2027. You can see on the slide the progress we have already made in 2025, and we had about as many minor product launches as the major ones during the year. And the pipeline is full for 2026 and 2027, underscoring our commitment to continuous improvement and purposeful innovation. Expanding on this a little bit, I want to highlight just a few of the innovations that we introduced at Agritechnica. Some things are in development and some are already commercially available. In addition to our green on brown and variable rate application technology, which are already available, we highlighted some of the progress that we have made on green on green spraying in conjunction with our partner, ONE SMART SPRAY. This solution is targeted to launch in 2027 and will improve farmers' profitability and sustainability. We also spent some time explaining how active and passive implement control can help correct the field conditions that would otherwise compromise tilling or planting. FieldOps has introduced new features such as AI-enabled field boundary management, and we are constantly adding new features to this tool. More to come in 2026, such as additional machinery support and further remote display abilities. We partnered up to introduce the FLEETPRO line of aftermarket kits for the EMEA region at a very competitive price point in a commoditizing market. These guidance and steering kits provide a value offering for legacy products of all makes while our state-of-the-art Raven technology will equip our recent and new machines with full connectivity to our FieldOps system. These and other innovations will help us achieve our goal to nearly double the amount of precision tech components within our ag sales to 10% by 2030. We are on track to achieve that with the eventual rebound of the North American market, which tends to favor a richer mix of precision tech components. One of the key pillars of our long-term strategy is driving commercial excellence by working with and strengthening our distribution network. This is a long journey, and benefits are more back-end loaded in our plan. As disclosed in our last annual report, in 2024, we had about 2,500 ag dealer owners operating about 6,000 points of sale. Our goal is to reduce the number of first-level owners by about one-third, while maintaining very competitive point of sale and service coverage. Feedback from our forward-leaning and ambitious dealer partners, both large and small, has been enthusiastic. Our progress on this front will create some noise in the channel as it should, but the expanded reach of the dealers can be leveraged for better investments in facilities and service technicians. We are also giving dealers access to new and better tools like the AI tech assist. That tool is getting rave reviews with over 1,500 users worldwide who have used it already over 0.5 million times. Our 2030 target is to have around 60% of our ag sales coming from dealers who sell both brands in their network, up from 30% in 2024. 2025 was already 35%. You can see examples of some notable transactions we have already done on this front. The message here is not that Case IH is taking over New Holland or the other way around, the message is giving dealers access to all the great products that we have, regardless of their branding. We will finally focus our collective and unrivaled attention on competing with companies with green-colored products. That was not always the case in the past. Our in-flight operational initiatives have runway to continue underlying margin expansion. Our strategic sourcing initiative uses data-driven insights and supply partnerships to improve cost efficiency while maintaining quality and reliability, and it delivered $34 million worth of savings in agriculture in 2025 alone. Our lean manufacturing projects boost productivity, reduce downtime, and streamline workflows. We realized $45 million in savings at our plants in 2025 as a result of these efforts. Quality is one of our most important focus areas. Enhancing product reliability and refining manufacturing processes helped us realize over $150 million in quality cost savings in 2025. Now admittedly, that excludes the warranty true-ups that we did in 2024. But beyond the cost improvements, we see our dealer and customer satisfaction survey results reflecting the improvements that we are making in this area. Our Net Promoter Score went up 8 percentage points in '25 versus '24, which has ongoing benefits to our reputational value. Quality pays back in three ways: lower costs, better ability to price, and growing market share in a self-reinforcing virtuous circle. All told, our cost savings initiatives already add up to $230 million in 2025, making us well on the way to our $550 million savings target. Again, the pace of the savings will moderate in 2026 because of the warranty one-timers, but you'll see the cumulative savings grow over the next few years. Let's now put this in the context of our margin goal. Our commitment is to raise agricultural EBIT margin to 16% to 17% by 2030 on an industry mid-cycle basis. That commitment was made prior to the expansion of Section 232 tariffs, but our intent is to offset those costs and still reach the EBIT margin target at mid-cycle volumes. Netting the savings that we just discussed against investments that we are making as planned in R&D and in the network development, we improved the margin profile of our ag business by 85 basis points. In 2026, we will further improve the margin profile between 50 to 75 basis points, which is admittedly hard to see in the consolidated figures as we are impacted by a temporary adverse regional and product mix in sales and margins, as Jim will explain in a moment. We are laser focused on improving the underlying profitability, and we did make sound progress in the first year on our path to 2030. With that, Jim will now discuss our 2026 guidance.

Thanks, Gerrit. Let's first look together at our agriculture industry outlook for 2026. Commodity prices remain low, below many farmers' breakeven points, and they want more confidence in their end markets before making equipment purchases over and above the replacement demand. North America lagged the other regions into the downturn, and so now it is the region expected to decrease the most in terms of large equipment industry retail demand. Conditions in South America remain weak, but we forecast a more flattish demand in EMEA with tractors slightly up year-over-year and combines slightly down. In aggregate, we forecast global industry retail demand to be at around 80% of mid-cycle or down around 5% from 2025 levels. 2026 should represent the trough of the cycle. As Gerrit mentioned, we do expect that the North American revenue and profit pool will grow significantly over the next 5 to 10 years as demand grows for even larger machines and fully connected production systems. CNH is well-positioned to capture a larger share of those tools on all the advancements that we've made in harvesters, tractors, and tech. We will still be underproducing to the retail demand in order to reach our dealer inventory targets, with overall production levels flattish year-over-year. In addition to industry demand stability in Europe, we are gaining strength in that market on the back of recent product launches, our focus on quality, and the network consolidation. Consequently, we are forecasting ag net sales to be flat to down 5% when compared to 2025, and that includes favorable currency translation of 2% and positive pricing of 1.5% to 2%. We continue to take advantage of the slow months of production to improve our industrial processes. Gerrit mentioned that our cost initiatives will improve ag margins by 50 to 75 basis points in 2026. However, the tariff headwind is expected to grow from 110 basis points in 2025 to about 210 to 220 in 2026, as we continue to work to fully offset tariff impacts through sourcing, production moves, and additional pricing. The mix shift between North America and EMEA has disrupted our usual decremental margins, and that has dragged on our 2025 EBIT margins by about 90 basis points. We estimate mix reaching mix to have an additional drag of up to 50 basis points in 2026. With the North American market inevitably recovering, we'll see our incremental margins revert back to the normal levels in the low 30s. With all that, we expect ag EBIT margin to be between 4.5% to 5.5%. In construction, we forecast flattish demand in both light and heavy equipment, with the exception of South America, where we expect further demand pressures on heavy equipment. We expect strength in certain non-residential construction markets to be offset by persistent weakness in residential construction. Construction production levels and net sales will be about flat year-over-year, including about 1% of favorable currency translation and 2% of pricing. EBIT margin is forecasted to be between 1% and 2%, mainly due to taking a full year of tariffs, which are now estimated to have a gross impact of around 500 basis points of margin. Putting together all those elements, we forecast 2026 industrial net sales to be flat to down 4% year-over-year and industrial adjusted EBIT margin between 2.5% and 3.5%. We plan R&D expenses to be about flat year-over-year, while CapEx will be between $600 million and $650 million. Industrial free cash flow is forecasted to be between $150 million and $350 million. Our effective tax rate is expected to be in the usual long-term range of between 24% to 26%. Adjusted EPS is forecasted to be between $0.35 and $0.45 assuming an average share count of about 1.29 billion shares. To help with your modeling and to prevent any surprises, I'll provide some additional considerations for our first quarter. In the quarter, we will continue to produce at low levels in order to achieve our internal dealer destocking target. As a reminder, Q1 is historically the weakest quarter of the year in terms of sales and margins. On average, the sequential percentage drop in sales from Q4 to Q1 is in the low to mid-20s. For construction, the 2026 drop should be similar to past years. But in ag, you should expect sales to be down sequentially in the low 30s, as some of our Q4 2025 sales were effectively a pull ahead of what we had originally expected to sell in Q1 2026. We are continuing to advance our cost reduction initiatives. While these actions will not fully offset Q1 headwinds, they are gaining traction and will deliver increasing benefits as the year progresses. The low production levels, the unfavorable geographic mix, and the full impact of the tariffs will likely result in a breakeven Q1, plus or minus, for both the Agriculture segment EBIT and company-wide earnings per share. Construction EBIT will likely be negative in Q1 due to tariff headwinds. The Agriculture segment's Q2 will be much better sequentially, albeit likely a bit lower versus Q2 2025. When we get into the second half, we forecast overall profits and margins to be higher on a year-over-year basis despite the tariffs, exiting 2026 with a clearly positive trajectory. Free cash flow in the quarter will be an outflow as is typical due to the company inventory buildup at the beginning of the year as we prepare for the spring selling season. We expect this quarterly outflow to be larger than in Q1 2025, mainly driven by the lower EBIT generation. With that, I'll turn it back to Gerrit for some closing remarks.

Thank you, Jim. While we may have hoped for greater stability in the trade environment by this point, the reality is that we must remain agile in our approach. While we carefully observe market conditions, we will be deliberate with our production and inventory planning. Production swaps are full for Q1 and for Q2, and ag is full; for Q2, ag is three-quarters full, while construction is half full. We're excited about the commercial launch of our new mid-range tractors, and our internal organizational changes are helping us to improve the speed of our product launches by a great deal. That applies to both our iron and our technology, and you will see an increased frequency of our technology releases. We're also making progress in our development of new product categories, such as our cotton harvester that is coming. We have made great strides already on our long-term targets for quality and operational excellence, and we will continue to do so in 2026 with an incremental 50 to 75 basis points margin improvement. That will be offset by the incremental tariffs and regional mix, but we will continue to work with our dealer partners on finding the right network configuration in each of the markets that we serve. The right answer will vary by region and brand, but we will remain focused on what makes the most sense for servicing our customers. Even in the face of the most significant downturn in our industry in decades, we are delivering better products with higher quality while improving our underlying margin profile. The markets are moving slowly, but CNH is moving fast to deliver our commitments. As there is today, there will always be a full suite of competitive construction equipment branded as Case or New Holland construction available through our construction dealer network and our agricultural dealer network as well. With no urgency or pressure for outcomes, we have restarted discussions with several players about the partnering options for our Construction business. To fully leverage our brand strength and reach, we will explore partnership options to regain a strong footing in the recovering global construction industry. When there is news to share, we will include those in our earnings calls in 2026 or 2027. This concludes our prepared remarks, and we can now start the Q&A session.

We will take our first question from Steven Fisher with UBS.

Just wanted to clarify the inventory situation. It sounds like you didn't hit the $1 billion, but it's really just because of Europe. Can you just comment a little bit on the progress in North America? And then just to frame that in terms of how you see the setup for 2027. It sounds like your second half of the year seems like it's going to be a little more positive in ag than the first half? Is that sort of a reflection yet of the setup for '27 or is it just easier comps?

Steven, let me take that one. We have made good progress. And by design, we slowed down a little at the dealer destocking, particularly in Europe, as I mentioned, because of the market coming back and us getting ready for the season. We had similar stock-ups in some lines by design in South America in order, again, to be ready for the season 2026 to come. So for us, it was about a $100 million to $150 million shortfall from the target we gave ourselves at the beginning of the year, which was around $1 billion; we landed at $800 million. This is a great accomplishment by the CNH team globally. But now as we are now scratching more and more towards the lower levels of inventory, we got to be pretty smart about how deep we want to dip in inventory because when the market returns—and it won't return in a sudden rush, it will return steadily—we want to be ready with high-quality machines and the full lineup in all the regions where we operate as we go through 2026. But the dealer destocking, by and large, is accomplished in the last two years; 2026 is now a bit fine-tuning by product lines and by market depending on how the different segments are moving. So as we will continue to talk about here and there some dealer stocking, as Jim said, we will also talk about underproducing relative to retail pace in Q1. This is now for us more like the last innings of that journey. And we will see when the market starts to show signs of life and a better trajectory as we finish '26 and enter into 2027. So now it is about not going too low, actually, and we'll see what that means by market and by region.

Your next question comes from the line of Kristen Owen with Oppenheimer.

Really appreciate all of the incremental color on the guidance and, in particular, Q1. As I'm furiously writing down these notes, I'm wondering, can you maybe help us put it all together in something that would look like an EBIT bridge for 2026? How much of that incremental savings that you're expecting versus the offset of mix versus the upside of geo? Can you kind of build a bridge for us just so we can put that together into the context of the 2026 margin guidance?

Good question, Kristen. I'm happy to answer that. For Ag, I assume you're focusing on Ag. Volumes are about 190 basis points of reduction in margin walking from 2025 to the full-year margin. Geo mix, we said between up to 50 basis points to, call it, 25% for purposes of modeling, 25 basis point negative. Price call it, 175 basis points midpoint of our price guide, 1.5% of 2%. Operational improvements—tariffs, tariffs about 110 basis point headwind. And then operational improvements combined with the higher SG&A netting about 25 basis points improvement. So that should get you at around 5% midpoint for 2026.

Your next question comes from the line of David Raso with Evercore ISI.

Just following up on that, I just want to clarify first before my question. The first-quarter Ag profitability, I just want to make sure I heard correctly about the plus or minus Ag segment EBIT. Is it basically around breakeven for the quarter, just to clarify?

Yes, that's right.

Okay. I'm just trying to think about the guide, what it implies for the rest of the year, right? The first quarter is down — talking Ag, right, down 5% on revs year-over-year breakeven — it means the rest of the year, sales are still down 2%, the subsequent nine months, but your margins are up a little bit year-over-year. And I'm just trying to figure out the cadence of that, assuming those numbers are right, the cadence of that when do we start to see the margin improvement despite sales still down and maybe the cadence on the...

Yes, you'll see margin improvement beginning in Q3, but I'll just call it second half, better margins, better profits in total. Q2, we expect to be better—much better than Q1 sequentially, but not quite as good as Q2 of 2025.

Your next question comes from the line of Tim Thein with Raymond James.

Jim, maybe just going back to your comment on when you kind of walked through the dynamics on margins in Ag. Can you — on the 150 to 200 basis points of price, can you maybe just give us some regional color as to the expectations for '26, what's in backlog and just how you're thinking about the contribution? Is there a notable geographical contribution or difference as you think about that?

Yes. I'd say North America is probably the leader in terms of price growth, followed by EMEA; that's where we're getting most of the pricing in 2026.

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

This is Peter Kalemkerian on for Mig this morning. Quick one here for me on South America Ag. Your industry forecast, call it, down 5% to 10% between tractors and combines. That's a bit more negative than your peers who've outlined more of a flattish retail environment. Is there any color you can provide on what you're seeing in that market? And is there any significant difference between Brazil and elsewhere on the continent?

Yes. Look, I think we're just cautious here in the market. We have elections coming up. We are very, very close to our dealer partners as well as our farmers directly. We have carefully listened, particularly as we closed last year, to what they expect to happen in 2026. I think there is a range of outcomes for South America in total. It depends on several factors, one of which is the global trade and whether China is going to really start buying those 25 million metric tons of soy from North America or more or less or—and how and who is running in Brazil for presidency. I think there are so many unknowns that we took a cautious view here on the market in South America. Argentina has shown signs of momentum politically, and there was quite some support, but I wouldn't necessarily call it out as a bright spot in South America. I mean, Brazil is clearly what pulls the region. And there's not an upside to be expected from Venezuela, in case you were wondering about that. The entire region is predominantly Brazil, followed by Argentina, and we see replacement demand now forcing a continuous level that we currently see in the machine sales, but I wouldn't go that far and say this is now going to be a rebound in 2026, as we actually did expect last year to see more life in South America this year. At this point, with all the factors that I mentioned, we still need to see and watch a few more quarters to see what happens. But that's why we are a bit more cautious on this end. But in the end, the market is the market, and we'll see, but we are less forward-leaning here.

Your next question comes from the line of Kyle Menges with Citigroup.

Hi, good morning. This is Randy on for Kyle. Just going back to some of your targets you laid out on the target to reduce the Ag dealer owners by one-third by 2030 and then also increase sales of dual-branded dealers over the same time frame. Should we be thinking about progress on these two initiatives as kind of linear over the next couple of years, a little more back-end weighted? I guess just how should we be thinking of your progress in the timing that we should be expecting to see some of those things flow through?

Randy, it was kind of hard to understand what the question was; was it about sales and inventory development?

Through dual-branded dealers, the progress.

Okay. So through dual-branded dealers. Look, it's a steady advancement on this number. I mean, you've seen a number of deals. We just had another one announced in Q1, which is a pretty sizable deal we did in Northeastern Germany, where we basically converted the largest network of one of our smaller competitors completely to CNH, effective immediately, more or less. These moves are all going to be multi-brand out of the gates. We have picked up a lot of positivity, and as expected, by the way, and forward-leaning attitude from our strongest dealer partners. Strongest means not only in terms of size, largest, but also our most ambitious dealer partners to be consolidators in their respective regions with a multi-brand attitude. From the multi-branding percentage point of view, we expect that to be a steady growth. We will have a few bigger hits in the earlier years, but then it will be a long grind to the tail of the network where we possibly here and there decide to not have all the brands in a particular region because again, our target is not to have all the brands everywhere. This we never said. We said where it makes sense, we will have dual-branded dealerships in North America, South America, as well as in Europe. And there might be regions where we just have New Holland or we just have Case because it is the farming in the region that requires only one brand. We'll be smart about it. So that is how to think about it. It's steady with a few big ones coming over the more near term and then a long grind through the tail of the network overall, setting ourselves up to once and for all finally focus on who competes with us, and that is not the other CNH brand.

Your next question comes from the line of Joel Jackson with BMO Capital Markets.

Just a two-parter. Looking at North America, we've seen really farmer sentiment come down across a whole bunch of different metrics and articles and things that associations talk about. So the first part of the question would be, can you comment about just what's going on with farmer sentiment in the States, how your view of it is, how it may play out for your sales? Second part of the question would be, we've also seen in the U.S. in the political arena, a lot of talk about equipment and crop inputs and what the government might want to do on some initiatives going forward. Any views on that? Any things you want to talk about that?

Joel, the farmer sentiment in North America is not great. You're reading the same articles, plus we have a lot of conversations directly with them. The farmer's income for 2026 is projected to be more or less flat—slightly up. You need to dig into the data to see some positive elements here, but it all comes back down to the commodity prices for the usual commodities, soy and corn. At this point, there is no relief really in sight for those, and hence, the farmer sentiment remains where it is at this very moment. We'll see what happens, what the administration in the United States has in store. There is a great level of attention to farmers and to the agricultural industry in total, and there is a great deal of help being prepared. I don't know exactly what is going to happen, but we have a list of things that are under discussion. We'll see what the administration is going to put in place over the next couple of months and, let's say, the near term, in 2026. As a matter of fact, I'm actually on my way to Washington tomorrow to meet my peers and have meetings to discuss these points.

Your next question comes from the line of Angel Castillo with Morgan Stanley.

I just wanted to revisit a little bit more on the comments around Europe earlier. You had mentioned some green shoots, if you could unpack that a little bit more. And Gerrit, you outlined a pretty robust product launch pipeline here. Just can you talk about which of these we should be watching closely in terms of particular product lines that you're perhaps most excited about in terms of maybe unlocking or having a more meaningful impact on your ability to compete and gain share, particularly in Europe, but if any other region stands out, that would be helpful. And then just more broadly, if you could talk about the competitive environment in Europe, that would be helpful.

Okay. I mean, asking me about product risks for the rest of the call. So let me take a few items here that are particularly exciting for me. We showed at Agritechnica our completely renewed short mid-based and long mid-based mid-range tractor lineup with horsepower ranges that we've never had before. Our horsepower range was all the way up to 300, 340 in the European mid-range tractors, and we are now offering a lineup all the way up to 450, where we never played. The feedback from farmers who now pay attention to our brand and our color over the other brands that they usually have is really, really encouraging. With our attitude and focus on quality first, we'll supply these machines with great care at low quantities in 2026 before we start scaling as the market comes back. That's super exciting. The feedback we've received on our next-gen combine over the last two years is overwhelming. When we look at the shipments that we have, whether it is to Australia, New Zealand, across North America and Europe, this points to a really, really good performance of the next-gen combine in the field across and around the world. Another thing that is super exciting for me, and maybe you think this is small, but it is not, is the cotton picker. We will be the only other manufacturer with a round baler integrated cotton picker that is going to be one of the center machines in the farming system for farmers in South America, Australia, and also in the southern states of the United States to build a multicolor fleet here, as opposed to just a single color. That is the cotton picker that we were missing for quite a while. We have our new compact tractors coming out of India as we speak right now, all new; they reach these shores very soon, and the new utility light tractor lineup, which we didn't have really at this level of technology before, is also entering production in 2026. We are all over the place on the products, and with quality as a mindset, these things will start to show at low quantities in '26 and then accelerate in quantum and financial impact in '27 and going forward. When you think about Europe, there are a couple of positives that are clearly around the resilience of that region and good momentum and state support in markets like Germany, Poland, and Eastern Europe; that has actually helped mainly the tractor sales in Europe, while combines are still low, and you know we are pretty strong in combines there. It was an adverse product mix in '25, and it's still a little drag in '26. So it's mainly tractor Europe, mainly Germany, German-speaking, and Eastern Europe that we have seen and observed in Europe. But I would not call this a recovery or a swing in the market, necessarily. This very much depends also on the global trade environment. Mercosur is out there, and farmers have already reentered the cities with tractors protesting against the Mercosur agreement. It is the region with the best growth potential in terms of total industry volume for our industry in '26 and maybe also '27, but we got to be cautious there because it's still a little fragile. The stability and the solidity of the European Union and their ability to make coordinated decision-making when it comes to such important interest groups as farmers, we need to see where this will land. But it is from all the signs that we see the region with a better momentum of all the big ones.

Your next question comes from the line of Daniela Costa with Goldman Sachs.

Maybe just a clarification on something I didn't—well, maybe you didn't hear correctly on sort of where did the prebuy come. Did you just say that it came from Europe, particularly? And then my main question was regarding whether everyone is talking a lot about AI and potential for cost savings and system simplifications and given you have so many self-help actions going on? Are you finding incrementally some simplifications and, given that you have so many self-help actions going on, are you finding any incremental pockets where maybe AI could help you push faster with savings?

Daniela, so yes, the positivity is mainly around Europe. So that's true. It's mainly Europe, and it's mainly tractors. That was my comment here. What we do see is basically, if you start on the other side of the world, like Australia, New Zealand, that is basically all replacement driven. That region is not really impacted by tariffs, and it's a fairly steady market. We have seen that this is going to bottom out, and it's already on a positive trajectory as we can see. We are holding our ground in China quite well, and actually, we are gaining here and there in the non-Chinese brand universe there. We are scouting for the next site for small and compact tractors and continue to grow market share there and make this a hub for utility and compact for CNH Global. Yes, and look, the AI application is everywhere in our company. We are distinguishing between not only the generic but also agentic AI. We have launched it in our FieldOps platform where we connect different agentic AIs to provide a fully connected experience. We have in our machines contextual AI running as we speak. When it comes to back office and structure costs, we are looking at AI applications to speed up and drive efficiency into our processes. Overall, I think in CNH, we have a pretty substantial upside in getting leaner when it comes to processes, and there is a good potential here for the application of solutions that are driven by either generic or agentic AI, and we're on top of these things. But I'm not committing any percentage number to AI at this point because what we experienced is that it drives the outcome much faster, more efficiently, and we are getting more for the same at this point, while obviously, cost savings are part of the mix.

Your next question comes from the line of Ted Jackson with Northland Securities.

First question is just pretty straightforward. You had a pull forward, you said in the fourth quarter that normally would have been in the first quarter. If I kind of pill around with your guidance and stuff, I mean, are we talking somewhere between $50 million and $100 million in terms of revenue in the fourth quarter that you would have normally expected to happen in the first quarter? That's my first question. And then I have one more behind it.

Yes, it's Jim. I'd say about $100 million, $150 million of those sales that happened in Q4 we would otherwise expect to occur in Q1.

Okay. Normalizing out for that and kind of thinking through your inventories, for conversational sake, at this point, your retail inventories are aligned with demand. You've generally been underproducing to demand for a period of time. Is it a fair scenario to think that as we get to the back part of '26 that you might be able to put up some revenue growth just simply because you'll be able to produce to retail demand and not below it and that we will be able to see that continue into the first half of '27, absent even a turnaround in the cycle?

Yes, I think that's very fair. That's the way we're thinking about it. That's right.

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

I wanted to ask about SG&A. I think you saw a sequential step down more so than what we saw last year. So anything to call out then how we should think about SG&A growth in 2026 versus 2025?

Yes, it's Jim. SG&A came down in Q4, largely due to lower variable compensation expense. That was versus full-year '25 versus full-year '24. For purposes of modeling and guidance, we're assuming a normalized level of variable comp, among other things. SG&A, I would expect to grow next year by about 40 basis points or so headwind from SG&A growth.

Our last question comes from the line of Kristen Owen from Oppenheimer.

Just because it wasn't discussed in any of the other questions, I was hoping you might be able to touch on the free cash flow guidance, and in particular, your CapEx outlook. It seems like a pretty sizable step up year-on-year. So I'm just wondering if you can provide some color on that, if that's related to what you're doing on the dealer side or anything else we should be considering?

Yes, happy to answer that. It's a great question. There are multiple reasons we are driving it's growing in '26 versus '25. The primary use of that extra CapEx is to enhance and improve our manufacturing facilities. The best time to get that done and deployed is when the factors are slow, and we want to get that done before the upturn, and things pick up in a bigger way in '27. So that's the majority of the extra CapEx. But to your point, it's also being used for, to some degree, dealer enhancements and also our strategic sourcing plan and program. We have to buy new tooling for that as well to help keep that pipeline of savings coming forward. So it's mostly manufacturing, some manufacturing footprint moves. As you know, we're calling you today from Wichita; some of the equipment is being moved from Burlington to Wichita among other places. So there's some money in there for those kinds of things as well. But primarily enhancing our manufacturing to get lower costs, more efficiencies, dealer enhancements, and also our strategic sourcing program.

And ladies and gentlemen, that does conclude our question-and-answer session, and it does conclude our call for today. Thank you for your participation, and you may now disconnect.