U.S. Machinery & Construction: Machinery FinCo’s: Stability Through Volatility

Research evidence excerpt

U.S. Machinery & Construction: Machinery FinCo’s: Stability Through Volatility

, Barclays Research

(Figure 6). Net operating lease book values have held steady, while residual values as a

percentage of gross equipment on lease have trended modestly higher. This may reflect tighter AGCO UNDERWEIGHT

used equipment inventories (Figures 30-34). U.S. Machinery & POSITIVE Construction

2) Deere's net write-offs and provisions for credit losses both moved higher this cycle but Price Target USD 105.00

have started to decline in early 2026. CNH's remain elevated but steadying. While the Price (13-Jul-26) USD 114.08

recent improvement could suggest the company is moving through the cycle, both metrics Potential Upside/Downside -8.0%

Source: Bloomberg, Barclays Researchremain elevated relative to prior cycle peaks. At CNH, provisions and write-offs remain near

prior-cycle highs and, unlike Deere, have yet to show an inflection lower (Figures 24-25) but do

seem stable. Like past-dues, provisions for credit losses are still small on an absolute basis <1%. CAT EQUAL WEIGHT

U.S. Machinery & POSITIVE Construction

3) CAT's finco is in a materially healthier position than 5-10 years ago. Lower past-dues, Price Target USD 800.00

write-offs, and equipment on operating lease amongst key metrics. Trailing-12-month North Price (13-Jul-26) USD 931.47

American provision for credit losses has increased materially since 2023, likely reflecting Potential Upside/Downside -14.1%

inflationary pressures and a more cautious credit environment. However, absolute levels are Source: Bloomberg, Barclays Research

small ($100mn) and other regions remain relatively stable. Total provisions as a percentage of

receivables continue to track below long-term averages. Prior areas of caution include power

U.S.