CNH Industrial NV (CNHI) 2010 Q3 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to today's CNH 2010 third-quarter results conference call.

For your information, today's conference is being recorded.

(Operator Instructions).

At this time, I would like to turn the call over to your host today, Mr.

Gerry Spahn.

Please go ahead, sir.

Thank you, Tom.

Good morning and good afternoon, everyone.

We'd like to welcome you to the CNH 2010 third-quarter earnings conference call.

Just a quick introduction.

I'd like to remind everybody they can refer to page 3 of our presentation, which was distributed today and posted on the Internet regarding certain forward-looking statements.

Also, all information that will be used in the conference call today is available on our website at www.cnh.com.

Today, we will have a presentation from Rich Tobin, the CFO of CNH Global, followed by a short Q&A.

We have with us today Rich Tobin; Harold Boyanovsky, CEO of CNH Global; and Marco Casalino, our Treasurer.

We would like to begin with a brief presentation.

With that, I'd like to turn it over to you, Rich.

Thank you, Gerry, and good morning, everyone.

If we turn to page 4 of the highlights for the quarter, I'll go through this briefly.

Net sales of equipment of $3.5 billion, up 20% for the quarter; $10.7 billion on a year-to-date basis, up 12%.

So you see the acceleration.

Agricultural equipment, up 12.8% in the third quarter, better than we had forecasted early in the year.

The drivers for that we can discuss in the Q&A and further through the presentation, but improvement in commodity prices, changes in tax legislation and some effect of Tier 4 transition has driven that number during the quarter.

Construction equipment is up, albeit off a low base, of 53% for the third quarter, 42% for the first nine months, which can be described as general structural improvement in the construction equipment segment, with North America improving quicker than our European operations.

Equipment operations, operating profit increase of $167 million compared to Q3 2009 and $441 million on a year-to-date basis.

Q3 operating margin increased to 6.8% for the quarter compared to 2.4% in the comparable quarter of 2009.

Year-to-date operating margin at 6.7% compared to 2.8% in 2009.

Equipment operations' net cash position increased by $1.2 billion to $1.8 billion for the first nine months of the year.

And net income before restructuring and exceptional items of $102 million in the third quarter and $280 million for the first nine months, giving an EPS before restructuring and exceptional items for the quarter of $0.43 a share and year to date $1.18 a share.

So those are the highlights.

I will go through some of the more granular data following the balance of the presentation.

So next slide, please?

This is slide five.

I won't spend a lot of time here, and this is more the numerical presentation of the highlight slide that we just went through.

So you can see the comparable quarters and the percent changes which I've just described to you on the previous slide.

Next slide, please.

We will spend a little bit more time here.

This is the net sales by geographic region.

And you can see net sales year over year, 20%.

Starting from the bottom moving up on the 2010 basis for the third quarter, North America up 29% on the back of the improvement in demand, largely driven by agriculture.

European operations, down 11% quarter over quarter; Latin America, up 54%; and rest-of-world markets, up 16%.

What we've added on the far right of the chart is the rate of change between the quarter versus what we reported at the half-year, to give you an idea of what markets are accelerating and decelerating.

So overall rate of change in the quarter of 20%, so in consolidation of 20%, that is an acceleration of the top line vis-a-vis where we were at the first half of the year.

The North American market improving largely, Western Europe improving, so we are seeing some improvement in Western Europe.

So the rate of deceleration in Western Europe has slowed down, and we can talk about some of the drivers and maybe some of the countries where we see some improvement, largely driven by the movement in commodity prices.

Latin America on a comparable basis is beginning to slow, largely driven by election periods and the fact that demand through the first half of the year or first three quarters of the year was up significantly across both sectors, and rest-of-the-world markets accelerating in Q3 as compared to the first half of the year.

In the bottom right-hand corner, you see percent of 2010 total net sales and the distribution of those sales.

And as we've mentioned on previous calls before, it is a healthy distribution of revenue in terms of 60 -- what?

-- 66% is garnered outside of North America and 44% in North America.

Next slide, please.

This is a slide we've been using for some time, so it is a graphical representation of the third quarter going back to 2006.

And we highlight through those slides in terms of relative performance of the business.

So you can see comparable to some of the good years back in 2007 and 2008, largely in the construction equipment market, where we stand in 2010, especially on the operating side in terms of margin potential and peak margin potential.

If you look at the slides and you look back, in 2007 peak margins at 10%; in 2010 Q3, we are at 0.5%.

So we've continued to improve and reaching the breakeven point for the year.

In 2008, ag margins were 9.4%.

2010, we're at 8.5%.

So largely, the recovery in the agricultural market to the 2008 business profile has largely been concentrating.

And in terms of the split in terms of the portfolio between revenues coming from the agricultural side and the construction equipment side, if you look to 2007, ag was at 65% of total Group revenues, and CE was at 35%.

We are beginning to see the distribution come back to historical norms.

In 2010, we were at 78% agriculture and 22% in construction equipment, largely driven by the improvement in both sides of the market.

Next slide, please.

This is the equipment operations' operating profit.

It's the waterfall chart that you see.

So at the far left side of the chart, you have operating profit of $72 million in Q3 2009 and what is contributing to the Q3 2010 $239 million in operating profit to get a volume and mix of $96 million, net pricing of $32 million, production cost of $63 million.

SG&A is up $23 million quarter to quarter, largely driven by incentive costs.

R&D is up by $20 million, which is largely driven by Tier 4 transition, and then other at $19 million.

The other at $19 million is smaller than you have seen at the half-year, and that is largely driven by the fact that if you look at the revenue and the impact of translation for the Group, that has constricted quite a bit as average rates have moved to very similar rates in 2003.

Next slide, please.

This gives you a graphical representation of the contribution of equipment operations' JVs for the period.

On the far left side, you see by the significant unconsolidated subsidiaries of the locations around the world.

And to the right of the slide, you see the performance of those subsidiaries as compared to the previous quarter.

So as you can see, as we've seen all year, what we have is a robust performance on the agricultural joint ventures, largely driven by Turkey and Pakistan, and an improvement, a relative improvement on the construction JVs, although those operations continue to operate at a loss.

Next slide, please.

Equipment operations' change in net debt -- I guess the most relevant item on here is you see the change in depreciation and amortization over the year, driven by the increase in CapEx and the $335 million that has been generated on a year-to-date basis from working capital movement.

We can talk about where we stand in terms of our inventory position just as it has been disclosed in North America right now.

With the exception of a few categories of class of goods, our inventory position is at or better than industry standard in both the agricultural and the construction equipment portfolio.

And that is -- and we will get into where we stand vis-a-vis retail production further on in the slide.

Next slide, please.

Inventory reductions by units of equipment, third quarter in the ag side is an underproduction versus retail of 1%.

That is largely driven by the increased demand in Q3.

We would expect, depending on how markets perform in Q4, to overproduce retail in Q4 as we prepare for product launches in the first half of next year on the ag side, depending on how markets perform.

We feel that we have adequate production capacity to meet market demand under a variety of scenarios during the quarter, and we have a 3% reduction in forward-month supply on the ag side.

In construction equipment, we have an overproduction versus retail of 4% during the quarter, a 44% reduction in forward-month supply, so what we have is it increased, as you saw in the net working capital change.

We continue to improve in liquidating prior-period whole goods in the sector.

We are overproducing retail as markets structurally recover and in preparation for product launches that we will cover further on in the presentation.

Next slide, please.

Just to give you an idea where we stand, and these are slides that we generally use every quarter, we have global commodity prices.

I don't think we have to talk a lot about this.

I think we can deal with it in the Q&A.

But clearly, on the ag side, commodity prices for corn, soybeans and wheat are proactive for us in the business.

We can talk about what the impact is via region, but clearly, the North American region is a first-mover reacting to this movement in commodity prices.

As we discussed earlier in the presentation, we did see a deceleration in Europe.

It's a slower reaction to these commodity prices.

And we can talk about individual markets.

But clearly, the North American market in terms of agricultural equipment demand is reacting quite quickly to this.

And you can see that from our topline growth on a quarter-to-quarter and a year-to-date basis.

Net farm income, which drives demand in conjunction with changes in tax legislation, with the bonus depreciation that has been -- that was put into effect in Q3, is a structural benefit for agricultural equipment.

And we expect it to continue through the end of the year.

Next slide, please.

It's a more macro slide in terms of global GDP and residential construction spending and US housing starts.

Clearly, the markets are coming off of very low bases.

The good news is that the machine park continues to age.

So rather than reacting largely to improvement in either GDP -- talking about North America and Western Europe, predominantly -- GDP or housing starts, the market, as we believe, the improvement in conditions in North America is largely just driven by the fact that the existing pool or park of equipment has aged.

So you have rental companies and distributors rebuilding their positions going forward.

Next slide, please.

Slide 15, the left side, industry unit volumes, third quarter, agriculture and construction equipment.

So you have change in industry in Q3 vis-a-vis CNH's performance on the bottom of the slide.

You see that reflected in both tractors and combines.

Looks largely like the revenue slide, if we look at the -- if we look on the ag side in terms of market share performance of CNH during the quarter, some movement from a year-to-date basis.

But clearly, where CNH has been -- the year-to-date performance is not deteriorating or improving.

We are largely just holding our position, with some movement between individual geographies.

And we can deal with that as part of the Q&A.

On the case of the construction equipment side, you see the same information in terms of change in industry, or TIV, and CNH performance, largely flat, more or less, across the board.

So we continue to keep up with the industry movement, outperforming and underperforming in certain regions.

As I said, we can deal with that in the Q&A side more than anything else.

So overall, we are able to flex our production systems to meet demands in a variety of different geographies around the world.

Next slide, please.

The next four slides -- or five slides, excuse me -- are just graphical representations of -- there's been a significant amount of news flow in the agricultural market as a whole and CNH particularly.

So those of you that follow the Company have gone to the large both agricultural and construction equipment shows know that we have been disclosing a significant amount of information in terms of our strategy as it relates to Tier 4 solutions.

I'm not going to read these slides for you.

I think it's more important just to give a placeholder in terms of where we stand and our progress on that.

Our plans in terms of launch dates and product classes remain on track, as they were disclosed in April as part of our [SBP] on slide 16.

On the ag side, slide 17 gives you a graphical representation of, on the Case IH side, of some of the material that has been released to the market in terms of on both the Magnum and Steiger four-wheel-drive series.

Giving that just as a reminder to everyone that this is not purely just a Tier 4 transition.

These are some of -- arguably, the strength of the CNH agricultural portfolio, that these are complete rebuilds of those products with added features in addition to Tier 4.

And then you see some of the related advertising material as it relates to not -- about production efficiency and what we expect to get out of the SE-R engines in Tier 4 at release.

That covers pages 17 and 18, both on the Case IH and New Holland side.

As we've disclosed earlier in the year, we have new products also coming in construction equipment.

I think it's helpful on these slides where we show a percent of the construction equipment portfolio.

So 30% in terms of units of the CNH business is the new tractor/loader/backhoe.

The first units are being delivered into our dealership as we speak during the month of October.

We are launching this product on a global scale, so it will be produced in three regions -- North America, Latin America and Europe.

The North American and Europe models are Tier 4 compliant and have been designed to accept that change.

And as I mentioned, delivery to the dealer network is underway, retail launch of the Case brand and series in Q4, and New Holland products to follow sequentially after that.

Slide 20 is upcoming launches, production that's started.

And that's why, if you refer back to the slide of production versus retail, production has started in the new skid steer loader, both for New Holland and Case, with redesigned -- basically a totally redesigned product, redesigned cab, 25% wider, increase in lift capacity and the like.

If you look at the CE portfolio in the -- let's call it a donut, for lack of a better word, you see between the tractor/loader/backhoe and the skid steer loader, 56% of the construction equipment portfolio in 2011 will be new redesigned units as the market structurally improves.

Slide 21, please, is industry unit volume full-year outlook.

As you saw from the press release this morning, we've upgraded our view on the ag side for a worldwide -- we believe it's somewhere between 0% and 5%.

We were forecasting earlier through -- at the first half of a decline in the market in terms of units.

But with the acceleration that we've seen in Q3 and what we expect business based on orderboard performance and demand, we expect that worldwide the industry will grow.

We have strong fundamentals, as I mentioned earlier, in both North America and Latin America, that are expected to drive the market demand in 2010.

Continued weak and, as mentioned, but stabilizing conditions in Western Europe for the balance of the year.

On the Construction-equipment side, worldwide agrigood demand for light and heavy construction equipment expected to be up 40% to 45%, with growth or relative growth in all regions.

We can discuss relative growth by region as part of the Q&A.

Next, please.

And the final slide is, as we mentioned at the half-year that we would be releasing new full-year targets for the Group, so we are upgrading those targets that were released in April.

Agricultural markets are expected to remain solid through the year end.

Construction market continues slow structural improvement.

New product launches, as I mentioned in the previous slides, on the backhoe, grader and skid steer on the agricultural side.

We will be bringing in a new utility tractor in the low-horsepower segment in Q4, and Tier 4 deployment in high-horsepower equipment will be released in the end of Q1 -- will be the start of 2011.

Our 2010 financial targets update -- CNH anticipates that it will achieve the following financial targets for the full year of 2010 -- net sales in excess of $14 billion,(Sic-see press release) operating profit of $900 million, and a net industrial cash position of $1.3 billion for the year.

So that concludes the presentation, Gerry.

So we can turn it over to Q&A.

Okay, Tom, if you could prompt, we can start with the Q&A now.

We have a few people in queue already.

(Operator Instructions).

Andrew Obin, Merrill Lynch.

Just a question on Europe.

I just want to get more granularity as to what you guys are seeing in terms of order flow, given what happened with commodity prices there and the overall more positive sentiment there.

And, you know, you have revised outlook for the rest of the year for other regions, but no revision in Europe.

And obviously, I understand that that's what you guys are seeing, but if you could give more color on the dynamic, what's happening in Western Europe right now, and Eastern Europe as well.

Thank you.

Andrew, good day; this is Harold.

I think the reason you haven't seen a change in our outlook for Europe is it's consistent with what we discussed in the second quarter.

We have seen, as Rich indicated, an improvement in the rate of decline.

Let me just give you a couple of numbers on some key countries.

France, which has been really soft in the second quarter, the TIV on tractors was down almost 40%.

Third quarter, it's in the 20% range.

Germany, second quarter to third quarter has moved from down 16% to up 7%, so there has been early improvement in Germany.

Spain was down 10% in the second quarter and is actually up 4% in the third quarter, from a very low base, because of the market condition there.

And in UK, which is another significant market, second-quarter TIV was off about 17% in the second quarter and off 7% in the third quarter.

So as we indicated last time we were together, there has been some improvement in attitudes, for sure.

The commodity price improvements are helping the economics of the farm there.

So as we were in the first half down on TIV 15% on tractors, 30%-plus on combines, we see that improving as we move through the balance of the year.

So we are in track -- or on track with the numbers that we gave you earlier.

And just to follow up on that -- and I apologize; if you commented on it, I missed it -- in North America, how much of a prebuy are we seeing ahead of interim Tier 4?

Because you guys, I think as late as a couple of months ago, you guys were not sure if you were seeing a prebuy.

Any more visibility on that?

Well, to be clear, as an example, on our large four-wheel-drive tractors, we haven't started our 2011 presale program.

We have on our large two-wheel-drive tractors.

And I think the best way is to give you a little bit of an orderboard view.

Globally, our orderboards are up about 13%.

In North America, just focusing on the 100-plus tractors, which is of interest to all of us, the orderboard is up 63%, so quite strong.

Combines globally, year over year, our orderboard is up in excess of 30%.

And in North America, that's 80%.

So we are seeing strong (multiple speakers)

So that's orderboards right now versus where we were a year ago?

Yes.

Okay.

Thanks, Andrew.

We will take the next question, Tom.

Henry Kirn, UBS.

Just wondering if you could chat a little bit about where the capacity utilization stands right now in light of the restructuring actions you've done, especially on the construction side.

I know it has got to be relatively low, but how does it compare to the revised manufacturing base?

It is, as you can see from production versus retail, it's moving up, predominantly in North America.

It is starting in Europe, and that is for basically the production of the new backhoe more than anything else.

But fundamentally, capacity utilization in Q3 has moved up slightly.

But clearly, in Europe, capacity utilization is still at low levels, which is reflected really in the profit margin.

(multiple speakers) Can you -- sorry.

Yes, go ahead.

Can you talk a little bit about the pace that you're seeing the rental companies come back to the market for equipment over the next year?

How quickly do you expect that to be a factor in the improvement?

This is Harold again.

We've seen continued requests for quotation from the major rental companies.

You know, I think as those of us that follow the market, clearly this, as Rich indicated, a replacement of fleet as the fleet has aged.

Rates are not moving up by as much as the rental companies would like to see it, but there is a little bit increase in utilization.

But I think predominantly, most of the rental companies have liquidated inventory, and the request for quotes are to replace the fleet versus a significant increase in demand from the consumer side.

Okay.

Thanks a lot, guys.

Lawrence De Maria, Sterne, Agee.

If I heard you guys right, I think you said North American orderboards are up 63% for tractors, combines up 80% in North America and 30% overall.

Did you talk about European orderboards?

And then secondly, given what you are seeing in the orderboards, is there any color you can give us as to how you are thinking about a framework for next year, with possibly a pullback in South America, but Europe up possibly strongly, North America obviously up strongly?

Can you just give us a framework about how initially you think about next year?

Yes, I think that -- you know, I think we've commented in terms of -- and that's why we added that far-right chart, I believe it was on slide 6, just to give you what we think is happening in terms of acceleration and deceleration.

I think Harold gave a good amount of information in terms of orderboards.

We did discuss the fact that the deceleration in Europe has declined in Q3.

We are seeing some pickups which are largely driven by the movement in commodity prices.

Yes, I think that talking about 2011, we prefer to get 2010 and then give you a clear understanding what 2011 looks like.

As expected, during the election period in Brazil, we would have expected some uncertainty be in the market, as we commented at the first half.

We expect some support to be given to the Brazilian market next year in terms of tractor financing programs.

What the level of that support will be and at what point it will be announced is open to some debate, but we believe that during the year there will be support given to the market.

But that's not surprising to us now that we see the Brazil market slowing in Q4 around the elections.

We would expect that level to remain through Q1 and then come back, depending on the macro markets in terms of commodity prices in 2011.

And just a little regional color on the orderboard, if it helps you.

On tractors, the Europe orderboard is up in the mid-double digit.

As Rich indicated, the Latin America is down about the same, as we see it now.

Okay, that's very, very helpful.

Thank you very much.

So do we see -- you mentioned that obviously the laggard is France, and we're starting to see some moderation declines there.

Would we probably have to wait until first half of next year before we start to see positive comps in France, or will that -- are you seeing signs that that could be actually up by the end of the year?

I think we are going to have to get into 2011 before we see any significant signs of change.

Okay.

Thank you very, very much.

Ann Duignan, JPMorgan.

It's Greg Williams sitting in for Ann Duignan at JPMorgan.

Thanks for taking our questions.

My first question is just around the customer feedback and reception of your 3% to 4% price hike this summer.

Well, I think the best response is the comment I gave you about the order boards.

Okay.

Can you talk about -- you mentioned the commodity prices helping out the agriculture in Europe, but can you talk about how you it would affect the protein sector and how that's affecting your business?

Could you repeat which sector was that question about?

Yes, just the protein sector.

I mean, it's already struggling in Europe, and I'm wondering how it would impact your business in Europe going forward.

Not much change from what we've seen in Q1, Q2 in that area.

Okay, thank you.

Matt Vittorioso, Barclays Capital.

Thanks for taking the call.

Just trying to get a little more color around working capital build into the fourth quarter.

Your net cash guidance for the fourth quarter seems to suggest roughly a $500 million cash burn, I guess, into the fourth quarter.

Can you give us a little more color on where we should expect inventory to go moving into this next quarter and maybe into 2011, and just confirm that we are looking at that cash burn correctly?

I think you are looking at it correctly.

I mean, it's reflected in the guidance itself.

We, depending on how markets perform, it is our expectation that we will have inventory build in Q4, predominantly in preparation for new product launches.

As I mentioned earlier in the presentation, on an FMS basis, we are either par or better than the industry in terms of where we stand on inventory.

So we would expect, with making sure that we have enough product for our dealers to sell into these markets and the fact that we are launching a variety of new products in both sectors, for inventory to move up.

We don't think that it is a structural move; it's just more of just a periodic move more than anything else.

The other issue, just in terms of cash flow itself, we are a little bit backend-loaded in terms of CapEx.

So you see the year-to-date figure, and we gave you in the press release a full-year estimate for CapEx.

And that would be negative to cash flow as compared to Q3.

Okay, that's helpful.

And then just as a quick follow-up, we saw S&P comment on your ratings recently, really just kind of leaving you unchanged from where you were before all the demerger talk.

Just as sort of a high-level discussion point, we've talked in the past about the advantage that you guys would gain going to investment grade, particularly on the financing side.

Cat and Deere have that advantage.

How should we think about -- I mean, you've got $3 billion sitting with your -- $3 billion of cash sitting with your parent at Fiat.

Would there ever be a consideration of using some of that cash to pay down debt to accelerate your trajectory towards investment-grade ratings?

I don't want to speak for the rating agencies, but I think that they recognize the improvement in the balance sheet of CNH.

I think that until the demerger is effected in January of next year, everybody is just a little bit in a wait-and-see mode.

But to reiterate, it's our intention to move to investment-grade status as quickly as possible.

That's helpful.

Thank you, guys.

Jerry Revich, Goldman Sachs.

Harold, can you please give us an update on how you feel about used equipment inventories on the ag side in North America and Europe?

Thanks.

Yes, Jerry, both in North America and Europe, no change from the relative position at the end of the second quarter.

So we are comfortable with the levels of used equipment inventory.

In absolute dollars, it is up a little bit, but in days sales, it is in line with our expectation and planning.

And on the margin bridge chart that Gerry put together, I believe it is slide 4 or 5, can you give us the breakout between input cost tailwinds versus lower operating costs in that manufacturing bucket that you've got there?

Thanks.

I don't think we will give you absolute granular detail on it, but we can comment a little bit on input costs.

At the first-half release, we were discussing what our expectations were primarily for steel and fuel, so fuel impacting logistics costs, and steel obviously at the industrial level.

Neither of those estimates have been realized, so they are positives to earnings for the year.

We do see steel pricing moving up, but not at the levels that we had estimated at the first half of the year.

And fuel has been largely flat.

So what we expected to be maybe some headwinds in terms of logistics costs have not been realized.

Thank you.

And I'm not sure if Steve Bierman is on the call.

I'm wondering if someone can talk about the CNH Capital capital structure post the spinout, as you are going to be paying down the Fiat debt.

Wondering, are you going to replace that with external debt, securitizations or intercompany debt?

Any color you could provide there would be helpful.

Thanks.

Yes, this is Marco Casalino; good morning.

I think I can provide some color on that.

If you look at what CNH Capital has been doing in the last quarter, they have been consistently reducing their dependency on Fiat.

There is some residual debt on Fiat, and we anticipate that, in January 2011, that that relationship will be terminated.

They won't be borrowing from Fiat S.p.A.

anymore.

And in terms of where you are going to replace that call it $1 billion or so of Fiat auto borrowing, just rough color around that point would be helpful.

Well, I mean, as you can see, financial markets are quite positive right now.

And we have showed recently that we can have access to them in various regions.

So we don't think that replacing the Fiat indebtedness is an issue.

Mark Koznarek, Cleveland Research.

Could you clarify the agricultural equipment orderboard comment?

Specifically, how much of this orderboard currently reaches into 2011?

You know, how much is addressing the new Tier 4 and Euro 3 stuff, and how much of it is really just the orderboard for remaining deliveries in the fourth quarter of current technology?

Well, as I indicated on large four-wheel-drive tractors, we have not released Tier 4 information, because that shipment is not planned until the end of the first quarter or second quarter of 2011.

And typically, we look at orders with our network and customers on a 90-day basis.

So when I referenced the orderboard strength, it was at the opening of the quarter.

So it is a good visibility through the end of the year.

Okay, so it is really too early to say anything about the acceptance of the new products that are rolling out?

Yes, absolutely.

When we get together and talk about fourth quarter and full year, we will give you an update.

Okay.

And a quick question here -- kind of a minor thing, but the price realization seems to have deteriorated in the third quarter relative to the first half.

It was coming in at like 1.4%.

It is a little under 1.0% right now.

And as a previous questioner indicated, you did announce a price increase recently.

So I am just a little bit surprised about that price realization element.

Yes, I mean, it is heavily impacted by both product and geographical mix.

So there's a significant amount of moving parts in there, clearly.

And I mentioned before that purchasing costs have gone up somewhat, that that flows through.

So it's not -- I don't think that it is anything to worry about at all.

I think that both ag and CE on a comparative basis are both doing better on pricing.

I think that the real clarity we'll have is at the end of Q4, because it will be very interesting to see, if demand stays at its current rate on the ag side, what the impact on pricing is going to be there.

As Harold mentioned before on the used equipment side in terms of levels of used equipment, we are not overly concerned in terms of historical averages.

We've taken a look at used equipment pricing, and used equipment pricing has remained firm, which is a good sign in terms of the total market.

So I think we can give a lot more color when we see everybody report in on both a -- by equipment line and by geography.

But right now, I think that we're -- we'd always like to get more, but we are relatively pleased in performance between the two sectors.

As we have no further questions at this point, I would like to hand the call back over for any additional or closing remarks.

Thank you.

Okay.

Thank you, Tom.

I know everybody has a busy morning, a busy day today with conference calls coming up.

We'd like to thank you for joining today's call.

As always, all the information is available on the CNH website, www.cnh.com.

We look forward to taking follow-up calls with you, and we look forward to talking to you next for our Q4 call in January.

Thanks for joining us.

Ladies and gentlemen, that will conclude today's conference call.

Thank you for your participation.

You may now disconnect.