Good morning and afternoon, ladies and gentlemen, and welcome to today's CNH Industrial 2020 Fourth Quarter and Full-Year Results Conference Call. For your information today's conference call is being recorded. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] At this time, I would like to turn the call over to Federico Donati, Head of Investor Relations. Please go ahead, sir.

Thank you, Jolly. Good morning and good afternoon, everyone. We would like to welcome you to the webcast and conference call for CNH Industrial fourth quarter and full-year 2020 results for the year ending December 31. This call is being broadcast live on our website and is copyrighted by CNH Industrial. Any other use, recording or transmission of any portion of this broadcast without the express written consent of CNH Industrial is strictly forbidden. We are pleased to have you here with us today our Chairperson, Suzanne Heywood; our CEO, Scott Wine; and our CFO, Oddone Incisa, who will be hosting today call. They will use the material available for download from the CNH Industrial website. After their presentation, we will be holding a Q&A session. Please note that any forward-looking statements we might be making during today's call are subject to the risks and uncertainties mentioned in the Safe Harbor statement included in the presentation material. Additional information pertaining to factors that could cause actual results to defer materially is contained in the company’s most recent Report 20-F and EU Annual Report, as well as other periodic reports and filings with the U.S. Securities and Exchange Commission and the equivalent authorities in the Netherlands and Italy. The company presentation may include certain non-GAAP financial measures. Additional information, including reconciliation to the most directly comparable GAAP financial measures, is included in the presentation material. One final remark, once again, our team is connecting from different countries. So please forgive us if there are moments of silence during the call while we manage the transition between the speakers. I will now turn the call over to Scott Wine.

Thank you, Federico. I'm excited and honored to be part of this CNH Industrial team, and I look forward to sharing you our progress and plans today and for many quarters to come. Our fourth quarter results and the positive momentum we developed across the portfolio throughout the second half of 2020 reflect the capability and dedication of our team. Suzanne and the senior leadership team ably positioned the business for solid improvements heading into 2021. And I am motivated by the challenge of accelerating our progress and realizing the potential of the CNH Industrial business and brands. It is now my pleasure to turn the call over to Suzanne who will review our fourth quarter and 2020 results.

Thank you, Scott. I would like to start by welcoming you as well to this call and underlining your comment about the great potential that there is in the CNH Industrial businesses and brands. I know I'm echoing the views of the Board, the senior leadership team, and colleagues across CNH Industrial when I say how much I'm looking forward to working with you to realize that potential in the coming years. We've defined this as a year of firsts for many different reasons. Facing the pandemic has been challenging for all of us. As you know from our previous calls, going into the crisis, we prioritized protecting the health and safety of our workforce, supporting our dealers and customers, and actively managing our supply chain. While we're now guardedly optimistic about the impact of the vaccine rollout, the current global spiking COVID-19 cases means that we must continue to safeguard our employees and our businesses from the pandemic. CNH Industrial delivered solid results in Q4, ending 2020 with year-over-year profitability improvements across all industrial segments. The net financial position for our industrial activities at year end was $800 million. This is the first time that this figure has been positive in our company's history and it demonstrates the effectiveness of our cost containment and cost cash preservation actions. Together with our significant reduction in working capital, this enabled us to deliver positive free cash flow of $1.9 billion for the full year. During 2020, we invested in new technologies, embrace new ways of working and position the company for strong profitable growth. We are continuing the preparation work needed to spin the company into two parts, as we outlined in our 2019 Capital Markets Day. We are now entering 2021 in a strong position ready to support our customers…

Thank you, Suzanne and good morning, and afternoon to everybody in the call. I’m now on Slide 7 which summarized Q4 end of year results. I think it is worth noting that this year has really been a tale of two halves with a strong back half partially offsetting the very difficult first half where pandemic containment measures halted production in our plants and the month stalled in most of our segments. For the top line, fourth quarter net sales were up 12% due to higher volume and price realization mainly in Agriculture and Commercial and Specialty Vehicles. However for the full year, net sales were down 7% due to high channel inventories at the start of the year and adverse COVID-19 impact in the first half. Moving down the P&L, Q4 address of EBIT increased by $219 million year-over-year driven by strong performance across segments. For the full year, adjusted EBIT was down 60% versus previous year impacted the industry demand disruptions, negative absorption caused by destocking actions and plant shutdowns in H1, partially offset by cost-containment measures. Q4 adjusted net income of $432 million or adjusted diluted earnings per share of $0.30, was an increase of $153 million - compared to 2019. The $0.10 per share improvement versus the first quarter 2019 is entirely due to operating performance of our Industrial segments. The adjusted effective tax rate for the quarter was 14% and the adjusted EPS for the year to 27% due to our improved profitability and a more favorable due to our mix of pretax income during Q4 as well as net sales tax benefits. I will talk later in the call about the strong free cash flow achieved this year, largely from a reduction in working capital. This in conjunction with numerous treasury activities added to…

Thank you, Oddone. Despite the many distractions in 2020, we continue to develop our digital and precision farming offerings, structuring our solutions across three dimensions of field, fleet and farm. Field is the classic precision farming area, focused on optimizing yield and input costs to maximize profitability for our growers. In the fourth quarter, we launched 23 new field features, including one with further defined infield data collection. When integrated alongside our automated, in the road turn and sequence automation, which is all controlled through our award-winning display and armrest. This innovation provides the ease of use and data accuracy that our customers demand. Fleet is focused on improving the productivity of customers’ machine and our connected fleet has more doubled year-over-year. We added 11 new features in our fleet solution last quarter and will add nearly 20 more in the coming months. Farm helps farmers enhance their profitability by combining a range of agronomic information including soil, weather and crop data to deliver seamless visualization and analysis of these data layers that facilitates better farm management decisions. Customization can be executed in the field utilizing cloud sharing directly to the machines. Lastly, we keep expanding our Ag extend portfolio which brings some of the newest and most innovative precision farming solutions to our customers. We've recently added six new offerings into this portfolio and there will certainly be more to come. Our next generation farming solution co-designed by our customer and product teams is improving the performance of precision farming features, auto guidance end of road turns, section control and more while greatly enhancing ease of use. Take rates for Precision Technology features on our large machines are close to 100%. This offers significant potential as we deploy across machine platforms including smaller tractors where current technology take rates…

[Operator Instructions] We will take our first question today from Ann Duignan from JPMorgan. Please go ahead.

Maybe you touched on only being there a short period of time and talking to customers and employees. But maybe if we take a step back, what do you consider your top priorities to be as you move forward? I mean, there is certainly a lot to bite off at CNH Industrials. I'd be interested to hear your perspective.

Yes. Well, I mean, first of all, it's great to be here and join a team with a lot of momentum. And certainly, what they accomplished in 2020 puts a foundation in place that's a great place for me to start. My first priority is really to learn the business, and at the exact same time, get to work for our dealers and customers and stakeholders. There is no time for me to learn and for us to not made progress that we've done. So, that's a big challenge and one that I'm really looking forward to. I'm a big believer in personal accountability. And for me, establishing as a say-do ratio, that means delivering on our commitments. So, I've got to work on setting the right goals and priorities. And I'll tell you just kind of how I prioritize and I went over this with the board of directors last week. Our first priority, as Suzanne and the team led last year, we are going to focus on keeping our employees safe through this pandemic until we get to the other side. Really pleased with the work we've done in doing that. But it's not done. And we'll continue to make that a priority until we're on the other side of it. Secondly, we're going to execute the spend, for sure, or an alternative transaction, but we're going to create two customer-focused businesses that allow us to reward shareholders and more importantly reward our customers. I'm going to try to drive a mindset shift within the company to really put the dealers and customers at the center of what we do. We’re at really, really good product and brand company but a lot of times, we don’t have that customer centricity that I think can really unlock much more…

Okay. And I appreciate that color. And just as a quick follow-up, you said on the truck side, the spin or alternative transactions. Does that mean that you're open to something like an outright sale and/or something like a spec type spin-off?

I think what we're committed to the spin. I think it's a great transaction for us. And I do think that we're primarily focused on creating two customer-centric organizations and maximizing shareholder value. So, I think if there's an alternative transaction out there that would be better for customers and shareholders, we would certainly pursue that. I don't believe there would be much consideration for a spec. The quality of our businesses is too good. We can handle the due diligence of a road show. And I don't believe we would need to go down that or ever consider going down that avenue.

Okay. That's good to know actually. I appreciate that. I'll get back in line in the interest of time. So thank you.

Our next question is from Steven Fisher from UBS. Please go ahead.

Great, thanks and welcome, Scott. And just a follow-up on Ann's question there about priorities and your goals, just anything that stands out initially as really kind of low-hanging fruit to address and then say the first six months in terms of either margin improvements or any of your priorities and a sense of what maybe is really underappreciated versus what expectations are what you've found so far?

Well, Steven, thanks for the question. I really don't think there is any low-hanging fruit. The work that Suzanne and then the senior leadership team did last year to basically take advantage of all of those opportunities to deliver the cash flow they did in the improving results throughout the year. That doesn't mean there is not significant opportunity here. But I don't think it's low-hanging fruit. There's a lot of work to be done. I think there is a general under-appreciation for the strength of the brands and the commitment of this team to win. I mean there is just - and I’m spending a lot of time talking to people at all levels of the organization all over the world and consistently, the pride they have and the willingness they have to do more. I do think, if there are opportunities, there really is this idea of recognizing our dealers as partners and our customers as the ones that drive our innovation does offer us an opportunity. It's not low hanging fruit, but it's a mindset shift that we will make. And I think ultimately, we can be better for all of our stakeholders as we drive towards that. I'm used to a lean organization and I think there is a little bit more. There is an opportunity for us to be a little bit more efficient from an organization standpoint as we really work to serve customers. But the gross margin stuff really the most largest opportunity because of the spend is in material productivity. And I'm very confident we can get after that. It's just going to take a little while to do. It's not quick wins. It's got to be a sustainable, smooth, but we'll drive that and quality improvements and ultimately drive a commitment to a long-term, consistent gross profit improvement.

And just for a follow up, Suzanne you mentioned having good confidence in the first half of the year. How uncertain would you say the second half of the year is? How far out does your order book extend? And what do you see as the biggest uncertainties for the second half?

Thank you very much. So as I mentioned, I think the kind of first half is looking strong. We've got a very good order book across the different segments. And of course, we're coming into this year in a much stronger position in terms of inventory levels. Second half of the year is harder to predict. I mean, as many of you will know, we tend to have stronger sales in a normal year. We have stronger sales in the first half of the year than we do in the second half of the year. That's kind of normal pattern that we would see. Obviously, that was reversed last year because of the pandemic. I think we’re expecting to see this year go back to a more kind of normal curve through the year. But it is quite hard to predict because, of course, as we all know, we still have the pandemic sadly going on. So, a lot of other factors will play into this. But suddenly, the first half the year is looking strong just based on the order books that were already seeing.

We will take our next question from David Raso from Evercore. Please go ahead.

Following up on that question about the second half, first half, so just to be clear, the second half, are you more just concerned or just hedging, let's see what happens in the second half of the year on fundamentals or is there also a supply chain issue to be thoughtful about on our part on your ability to meet demand? I mean, just given the order book shrank, the age of the fleet, the pricing power and just how much you want to produced retail last year to set up the comp on production for 2021. And then, I have a quick price cost question as a follow up?

Yes. I'll address the seasonality question, first. Now, I think, as Suzanne mentioned, the order books are very strong, covering the first half of the year. The second half, we do get into more difficult compares. But really, as I think about us being prudent what is going on in the global economies and wanting to make sure that we've built - we worked hard in 2020 to get our dealer inventory levels to a very good point, and we want to make sure that we're consistent. And really, our goal is really to produce to retail throughout the year. So, if we see retail acceleration in the second half, I'm very confident that our supply chain and our plants will be able to deliver for that. But really, it's just not feeling overly confident in the demand in the second half at this point. But certainly, we're going to position ourselves to be able to fulfill that. The supply chain constraints are more, I would say, in the near term now, and the team is doing an excellent job of working through those. But we don’t expect things to deteriorate from a supply chain perspective throughout the year. We actually expect them to improve. Oddone, I'll turn it over to you for the cost and pricing question.

Oddone, just you know. I mean the idea is obviously the - right now the prices doing very well versus the production costs that you've outlined in the waterfall charts. But can you help us a little bit how do we think about the full-year price cost, and sort of related to that the R&D now going to 4.5% of revenue? Should we think of that as now more of a run rate for the company going forward versus the historical less than 4% of revenue?

Yes. Let's start from the R&D. And of course, we have - as you know, we have curtailed some of the R&D this year, so 2020, also because some of our facilities were closed to the pandemic. And we have restarted in Q4. And you've seen that Q4 is higher than what we had in the previous year. And we plan to have higher R&D into 2021. And as Scott was saying before, we have a number of initiatives of activities where we need to invest more. In terms of price cost, we're very happy with what we did in pricing this year, particularly in - sorry, in 2020 in Ag. We want to continue into that trajectory. On the cost side, we know that it's going to be some headwinds in 2021 due to raw materials and some bottlenecks we may have in the supply chain. We have seen that in Q4 and we will continue probably seeing in Q1. But we’re pricing, we want to face most of it.

So I mean, long story short that the price cost is probably a drag on margin. Right. Unit that’s equal price cost is a drag on margin or it might even be negative. But you have the volume ramp and it sounds like it’s in some of the higher margin businesses like North America, high horsepower Ag. Can you help us a little bit with the margin color? I know you gave SG&A and R&D, but I’ll leave it here at that last question about any sense on the gross margins for the year or if you want to speak to EBIT margin so we can level set how you’re thinking about the operating leverage? Thank you.

Yes. I think it's probably early to go there. Definitely, we will have incremental margin to 2020. And I would say, I would look at 2019 as a more normalized year and beat the margins at that level.

We will take our next question from Ross Gilardi from Bank of America. Please go ahead.

Yes. Good morning. Good afternoon, everybody and yes, let me add my welcome to you as well, Scott.

Thank you.

I just want to follow-up on the off-highway separation. There are obviously been a number of press articles about approaches for Iveco. And are you at least willing to say if you're leaning more heavily towards a sale over a spin versus your initial thought process at your 2019 Capital Markets Day? And if you were to sell the business are there any tax leakage considerations to take into account?

Well, thanks for the question. And I - as both Suzanne and I said in our prepared remarks, we are very committed to the spend and separating the businesses, which we think we're confident will unlike value for both segments. We're not going to comment on speculation in the press, but there has been and we communicated at least engagement with one interested party. But I would say it's far at this point from saying that we prefer a sale versus a spend in any way. I mean we are still committed to separating the businesses. And ultimately we'll find a way that has the best transaction. I mean, we clearly aren't going to speculate on tax implications or anything else for something that we're not going to comment on. But recognize that our commitment to and our efforts to execute this separation are rock solid. Suzanne, anything you want to add color to what I didn't say?

No, I think that’s summarized it very well. Thank you, Scott.

Okay. Thank you. And then, Scott, you mentioned a couple of times the opportunity on gross margin to expedite the progress for the company. Can you say what you're baking in for 2021 and can you comment on what the aspirational view would be on gross margin?

I think Oddone did a nice job of avoiding answering the gross margin question a second ago, and so I'll be consistent with that. I do think obviously mix is going to be a big benefit for us this year to a certain extent, offset by - we talked about commodity pressure. So that commodities drive higher demand, but they also drive higher cost, and we'll work through to try to make sure we take advantage of that where we can. Again, most of the gross margin opportunities are more long-term in nature. I mean driving quality isn't something you flip a switch on but you - its design, its supplier quality, and ultimately addressing things in the field faster. But we’ll get that and that'll ultimately be better for our customers. And the more we drive innovation and technology and quality, the more pricing opportunities we have. So, I mean, I really feel good about the long-term gross margin. I don’t yet have the work done to define the potential of that opportunity. But it's - I would say, it falls into the material category for sure.

Just as last follow-up, on the R&D expense of 4.5%, what would that figure look like for the highway business if you split out on-highway?

I don't have - done that math yet.

We will follow-up on this, if you don’t mind.

Our next question comes from Martino De Ambroggi from Equita. Please go ahead.

A follow-up on the spin-off, based on the improved performance and improved market visibility, could spin-off be a second-half event? And still on the perimeter, the construction keep and I know this question was already asked in the past but maybe it's too early for you, Scott just arrived, to ask you. But once the spin-off is executed, the Construction of would be a core asset in which you maybe look for acquisitions, mergers or you believe you've got users and you still believe to stay with or to find an exit strategy for Construction?

Well, let's start with Construction and then work our way back to the question. I’m not going to give much clarity to. But, Stefano Pampalone has really done a good job of I mean, incredibly heavy lifting to bring stability to the CE business as exampled by - exemplified by the improving fourth quarter results. I mean, there is still a lot of work to do there. I will tell you that, we’d like the synergies between the construction business and our Ag business. We think there is potential there. I don’t necessarily think, we put our best foot forward with construction. So we're going to continue the turnaround there, which I think has got a lot of legs. But there are certainly some strategic aspects to that we've got to figure out. But ultimately, we are in no way shape or form looking at actually in that business. We like it. We think there is potential there. And ultimately, what we'll continue to revisit it over time. But we like the trajectory that we're on and we're going to look to drive further profitable growth in that category. The timing of the spin has always been said, it would be you know early 2022 as I think did the best we could shoot for. And there is a lot of work to be done to make that happen. But that's kind of what we're driving towards.

And the second question is on the guidance. If I look at the incremental margin you recorded in the last quarter 29% in Ag more than 30% in CD. I understand that you do not provide any specific guidance on profitability for the current year, but should we take maybe these are a slightly lower incremental margin as a reference point for next year? And on the free cash flow, just to have an idea what's the underlying assumption on net working capital that probably there will be a reversal in the trend in the current year?

Oddone, I assume you got down.

Yes. So, I mean on the incremental margin, remember Q4 2019 was a relatively soft quarter for us. And Q4 2020 all things considered is a strong quarter. So I wouldn't go that far in projecting the same incremental margins for the remainder of the year. On the working capital for next year, of course, again, we will have a much better starting point this year. So we are giving a guidance on free cash flow for the year. The working capital component of it will be modest, I will say.

Our next question for today is from Rob Wertheimer from Melius Research. Please go ahead.

Yes. Hello, everyone. And, Scott, you've come aboard on time where there's just a tremendous amount of change and exciting things happening. So with apologies you're brand new. I'm going to ask a couple of kind of big-picture questions and see what your take is if that's all right.

Sure.

The first one is just on Ag investment. I mean close to 100% or very, very high take rates on large Ag, obviously indicative a customer that wants to buy that product and that's exciting. What's your impression then of the investment to-date? Has the company invested enough? Has it done it the right way, internal, and external, and the balance? And just sort of maybe if you can talk about what potential you see there. And the second one I'll just ask them both at once is, your philosophy on operating systems and on how you saw the company when you came in on culture engagement, [indiscernible] improvement, et cetera? I'm not 100% sure if I heard the words 80/20 in the prepared remarks and I don't know where you want to take operations. Thank you.

Well, first of all, I am really impressed, actually, with the progress we've made with precision ag and some of the tools. I mean, I think if you listen to the public conversation there, it's like we're way behind, and we certainly are behind. But there's been a lot of work done. So, it's not like we're starting from zero. To very directly answer your question, if we had done enough or spent enough and invested enough, we wouldn't be playing from behind right now. That's just clear. So, there's an opportunity for us to do more. And I think the whole digital and technology thing is hard. But ultimately, as I tried to say in my prepared remarks, we've actually got to just start with the customer, understand what the growers need, understand what the drivers and workers need, and build capability that enhances their profitability of what they're doing and ease of use. So, that's what we'll continue to do. And again, there's a lot of good progress ongoing. We just need to accelerate it. And I suspect that will be an area that we'll get additional investments going forward. As far as an operating system, obviously, everybody has a different philosophy on operating systems. I was really encouraged coming in to understand the approach with world-class manufacturing. I'm really - it's just a different word for Lean. And they've really done a lot of work specifically in the manufacturing plants to drive that. I mean, what I'd like about, whether you call it world-class enterprise or call it Lean, it’s the concept says you start with a customer and then eliminate waste all through the system to add value there. And I think there is an opportunity from an operating rhythm standpoint, just the rigor that I'm - I've been just beat into me over the years is really a rigorous accountability starting with safety and quality and then driving that on a regular monthly rhythm throughout the organization. And we're doing that now. And I think we're going to get a lot of opportunity for us to deliver better results. But certainly, the team is in a strong place. The fundamentals are in a strong place. And I feel like I'm entering at a time where we have a lot of opportunity but much of it is within our own grasp to deliver.

That's super clear. Thank you. And, Suzanne, if it's fair to ask, I mean, I take that the board is supportive of a higher level of commitment to ag tech, industrial ag tech or whatever you want to call it, then maybe was the case several years ago. I mean, everybody’s fully on board I’d assume.

I think everyone is very much on board with the fact that if we look forward into the feature, digital farming is only going to become more and more important. And one thing that we did last year as we went through the pandemic is, although we were very thoughtful about where we could reduce cash outflow, we preserved a lot of our spending in this area. We consider it to be absolutely kind of fundamental to the future of the company. And I know the Board feels that very strongly as well.

Our next question is from Massimo Vecchio from UBI Banca. Please go ahead.

Good afternoon to everybody and welcome, Scott. My first question is on the commodity prices. I'm looking at the super cycle, the 2013 levels. Current commodity prices are not that far away but still combines, registrations in the U.S. are half the level they reached in 2013. So and my question, am I looking in the right direction? Can we expect a NIM full rebound in U.S. combines in this year or next?

Oddone, you want to take that?

Yes, I would say that it’s probably too early to call. And you've seen our forecast for the year and we’ll stick with that.

Okay. And the follow-up, I saw your underproduction before. I was wondering how much that was deliberate and deliberate choice and if this drove some market share loss in some geographies or in some products?

No. I think the underproduction was predominantly driven by higher retail demand than we expected. And market share losses, probably - I mean, our inventory is lower than it has been. But certainly, there's plenty of inventory in the field. So we don't think that was a driver of market share.

Okay. And last question very quick, do you plan a Capital Market Day anytime soon?

No.

Our next question is from Larry De Maria from William Blair. Please go ahead.

Question hi guys, first obviously, ramping production in the first half and it's kind of tales two halves as of now. But what I'm curious about is your ability to satisfy all the seasonal first-half demand or do we kind of full now and our orders are getting pushed out? And maybe you can tell us also when you're taking some - when you're taking orders for some of the higher-horsepower Ag lines how far out of those now?

Well we feel - we're running the factories with demand and then backlog is high as you know, we're doing well to fulfill demand. We do think, we're trying to get to the point where we just - its production and delivery to retail. But there's a little bit of work to be done in the first half. But I think we're generally feeling like we can do that really, the team's working very, very strong. There is a couple of pockets of specific parts that we're having to expedite. And certainly, expedited logistics is just one of the challenges that we're having to deal with. But overall, I think the team's done a nice job of putting us in a position to deliver in the first half what we need to deliver. The question is what is going to be the demand, the take rate in the second half of the year. And that - we've been prudent, but I do think there's potential for that to be - continue to be strong given what you said about the commodity cycle.

So I guess what I'm - one thing I'm trying to understand, are we sold out in the first half at this point or we can continue to ramp? And then just my second question was when is CNH - you talked about precision Ag digitization, obviously you had a slide. When are we going to see some of the first AI-enabled technology? Obviously, your competitors come out with see and spray. So, when is the CNH version? Thanks.

I don't think there's tremendous upside for production in the first half. And again, the order books are strong and we're going to fulfill that demand and get our inventories in a reasonable level, but probably not tremendous upside in the first half. I'm not - I don't have timing of AI implementation schedules. I do know it's a core part of what our team is working on. But I don't have a specific timing to that.

Our next question is from Andrea Balloni from Mediobanca. Please go ahead.

Welcome Scott, and congratulations for the strong results. A couple of questions as to my first one is about the heavy-duty trucks. I remember in - during the Q3 release you guys mentioned about some gain in market share in the heavy-duty trucks? Can you give us an update about what you have seen in Q4? And my second question is about Q1 production. Are you guys are still seeing any shortage in semiconductor which could slowdown your production activity in Q1?

So, we were encouraged by - as Oddone talked about in the prepared remarks, encouraged by the work that Gerrit Marx and the team are doing with the IVECO business and ultimately gaining share. In the year was - a couple points of market share was quite good. Lots of opportunity there going forward, the second question was - I'm sorry, was related to?

Is related to the potential shortages in semiconductors, some competitors have mentioned even this morning about potential slowdown in the production activity?

We're not immune from that. Certainly, that has been a challenge we're working through. But again, that's implied in our Analyst Day and we feel like the team's done a nice job of managing that right now.

Okay.

But certainly, there is - those are just the things that we worked through. But again, there's a strong team in place to do that.

Our final question for today comes from Courtney Yakavonis from Morgan Stanley. Please go ahead.

Hi great, thanks for squeezing me in and welcome, Scott. I guess, you've kind of characterized some of your key goals. And obviously you mentioned that you're not planning in the Analyst Day anytime soon. But when we look back at the 2019 Analyst Day, there was some 2022 targets that were laid out kind of by segment. And I guess I'd just be curious when you look at those obviously we've had some major disruptions? But which of those do you kind of view at this point as being the most achievable and versus least achievable and which - just as we're thinking through the operational improvement of the different segments? And then I guess specifically on construction equipment that's when - where is - are you expecting to have positive margins next year in that segment given that you're starting to see this recovery or is it that one that we could still see negative operating margins next year? Thanks.

Well, I mean, the 2019 Analyst Day was - they did a lot of really nice work. And I think obviously the big news out of that was the commitment to the spent which I think is going to unlock tremendous value. I mean the rest of the targets, I think, are very reasonable, but they were reasonable before the 2020 and then the whole COVID thing. So I can't comment now. I mean, actually, I'll admit I have not done the work to see. If the math still works to get from the 2020 - the targeted Analyst Day numbers to 2022 given what happened in 2020. That's where - I mean quite frankly, I want to make sure we're doing everything fundamentally right before we go back and hit numbers that quite honestly I am not - I mean again, the numbers, as when they were committed, were very, very good, and I am fully bought in to what they said they would do. I just don't know if we can still get there with what happened in 2020. I do know that the work Stefano - had done, there's a lot of potential that was realized in 2020, continued progress in 2021, and the ongoing profitability improvements in construction I think is real. But there's a lot of really heavy lifting to be done still.

Okay great, that's [indiscernible] I know you've been a lot of questions about the margin outlook for 2021. But I think, originally, you guys were talking about only about a third of the cost cuts this year flowing through the next year. Is that still the assumption, I know you've talked a little bit about the R&D step-up and giving us some guidance on SG&A. But just wanted to make sure when we think about some of those temporary costs flowing back in next year versus price costs - that's the right way to be thinking about it.

Oddone, you got that?

Yes, I think we gave this guidance on the level of SG&A that we expect to have on revenues and I feel also the level of R&D and CapEx. I think we demonstrated in 2020 that we were able to adjust for that. And of course, some of the costs that were taken out in 2020 will stay out. But other costs will come in. And we want to let our job business based on how the actual performance of the underwriting performance of sales and revenues is.

Thank you very much. Ladies and gentlemen, that will conclude the question-and-answer session. I would now like to turn the call back to Federico Donati for any closing or additional remarks.

Thank you, everybody, and have a nice day. Thank you, bye.

Thank you, sir. That does conclude the call for today. Thank you all for joining. You may now disconnect.