Cnh Industrial N.v. · NYSE:CNH
Cnh Industrial — Q4 2022 Earnings Presentation
38 slides from Cnh Industrial's earnings presentation, Feb 2, 2023
Slide 1: Q4 & FY 2022 Results Review
Q4 & FY 2022 RESULTS REVIEW February 2, 2023 Q4 & FY 2022 Results Review | February 2, 2023
Slide 2: Safe Harbor Statement and Disclosures
SAFE HARBOR STATEMENT AND DISCLOSURES All statements other than statements of historical fact contained in this presentation, including competitive strengths; business strategy; future financial position or operating results; budgets; projections with respect to revenue, income, earnings (or loss) p
Slide 3: 2022 Highlights
2022 HIGHLIGHTS Revenue and cash flow enabled by continued strong demand and pricing Backlog reduction aided by modest supply chain improvements in Q4 Industrial Activities moved from Net Debt to Net Cash position ahead of plan Enhanced margin improvement initiatives launched Product and tech invest
Slide 4: Agriculture
AGRICULTURE Q4 22 $5.4B +29% $701M 13.1% Net Sales Δ YoY adj. EBIT adj. EBIT margin Net sales up with double-digit increases in volume and pricing Q4 Gross margin +280 bps YoY to 23.1% Q4 Adj. EBIT margin +310 bps YoY Net promoter score (NPS) improved +5% vs 2021 FY 22 $18.0B +22% $2.5B 13.7% adj. E
Slide 5: Construction
CONSTRUCTION Q4 22 $983M +16% $34M 3.5% net sales Δ YoY adj. EBIT adj. EBIT margin Net sales up especially in Europe and South America Q4 Gross margin +100 bps YoY to 13.3% Q4 Adj. EBIT margin +110 bps YoY Sampierana acquisition providing growth and technology FY 22 $3.6B +16% $124M 3.5% adj. EBIT n
Slide 6: Technology Highlights
TECHNOLOGY HIGHLIGHTS Most recent investments Our first Tech Day showcased New Holland introduces CNH Industrial’s technology driverless T8 Tractor and sustainability strengths with Raven Autonomy™ Case IH Quadtrac AFS Connect™ awarded ‘Farm Machine 2023’ prize at SIMA Q4 & FY 2022 Results Review |
Slide 7: Adding Value Through Sustainability
ADDING VALUE THROUGH SUSTAINABILITY New Holland T6.180 Methane Tractor Our Commitment Key Recognitions Innovative Products Be the sustainability leader in Agriculture and Construction Be accountable for our sustainability performance Be the employer of choice New Holland E15X Electric Power Mini Exc
Slide 8: Q4 / FY 2022 Financial Highlights
Q4 / FY 2022 | FINANCIAL HIGHLIGHTS Industrial Activities Consolidated Net Sales Adjusted Gross Margin(1) Adjusted Diluted EPS(1) ($bn) 21.5 22.2% $1.46 17.8 21.7% $1.28 20.7% 19.0% 6.4 5.0 $0.31 $0.36 +27% +21% +2.7pp +1.5pp +14% +16% Q4 FY Q4 FY Q4 FY 2021 Adjusted EBIT(1) Free Cash Flow(1) Availa
Slide 9: Q4 2022 Industrial Activities Adj. EBIT Walk
Q4 2022 | INDUSTRIAL ACTIVITIES ADJ. EBIT (1) WALK ($mn) 10.7% 7.6% ADJ. EBIT(1) Unallocated, ADJ. EBIT(1) Vol. & Mix Pricing, Net Prod. Cost SG&A R&D FX | Other Q4’21 Elim. & Other Q4’22 0100 200 300 400 500 600 0100 200 300 400 500 600 -500 -400 -300 -200 -1000 -600 -500 -400 -300 -200 -1000 -400
Slide 10: Q4 / FY 2022 Financial Services
Q4 / FY 2022 | FINANCIAL SERVICES Net Income Profitability Ratios ($mn) 4.0% 3.5% 90 3.2% 3.0% Q4 3.0% -17% 75 2.3% 1.9% 1.7% 2.0% 349 FY 1.0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 -3% 338 2020 2021 2022 2021 2022 Δ YoY Gross Margin / Average Assets on Book RoA(2) Managed Portfolio(*) & Retail Origina
Slide 11: Q4 2022 Industrial Activities Change in Net (Debt)/Cash
Q4 2022 | INDUSTRIAL ACTIVITIES CHANGE IN NET (DEBT) / CASH (1) ($mn) Share BB (37) Dividends (7) Free Cash Flow(1) of Industrial Activities 2,049 Change in Change in Dividends & I.A. Net Debt(1) Cash Interest PP&E Other I.A. Net Cash(1) Adj. EBIT(1) D&A Working Provisions & Equity FX & Other Sept.
Slide 12: Capital Allocation Priorities
CAPITAL ALLOCATION PRIORITIES ORGANIC GROWTH $1.3bn in combined R&D and capex investments in the year CREDIT RATING Current long-term ratings affirmed: Moody’s Baa2; S&P BBB and Fitch BBB+, improved after Iveco Group spin-off Support growth and GROSS DEBT ensure shareholder Gross Debt stable at cons
Slide 13: FY 2023 Estimates: Industry Unit Performance vs. FY 2022
FY 2023 ESTIMATES | INDUSTRY UNIT PERFORMANCE VS. FY 2022 NORTH SOUTH EMEA(1) APAC(1) AMERICA(1) AMERICA(1) 0-140 HP Tractors (5%) – flat flat flat (5%) – flat 140+ Large Tractors 5% – 10% Combines flat – 5% flat flat (5%) – flat Light (5%) – flat (10%) – (5%) (10%) – (5%) flat – 5% Heavy (5%) – fla
Slide 14: FY 2023 Guidance
FY 2023 GUIDANCE INDUSTRIAL ACTIVITIES Net Sales(1) +6% to +10% vs. 2022 SG&A up <5% vs. 2022 Free Cash Flow(2) $1.3bn to $1.5bn R&D ~ $1.6bn CapEx (1) Net Sales outlook reflecting full-year €/$ exchange rate average of 1.05 (2) Non-GAAP measures (definition in appendix) 14 Q4 & FY 2022 Results Revi
Slide 15: Update on Move to Single Listing
UPDATE ON MOVE TO SINGLE LISTING Key Benefits Process Further profile simplification Dual listing adopted in 2013, when NYSE-listed CNH Global merged with Milan-listed Fiat Industrial to form CNH Industrial Enhanced trading liquidity Improved peer comparability CNH Industrial is now a focused agricu
Slide 16: 2023 Priorities & Outlook
2023 PRIORITIES & OUTLOOK Strong orders & momentum; macro uncertainty remains Continued ramp-up of R&D & tech investments Raven impact accelerates Inflation & supply chain moderately improving Margin improvement programs yielding results Q4 & FY 2022 Results Review | February 2, 2023 16
Slide 17: Appendix
APPENDIX Q4 & FY 2022 Results Review | February 2, 2023
Slide 18: 2023 CNH Industrial Financial Calendar
2023 CNH INDUSTRIAL FINANCIAL CALENDAR A.G.M. Q2 results Shareholders’ Annual General Meeting April 14 July 28 Results release conference call March April May June July August September October November December Q1 results Q3 results May 5 November 7 Q4 & FY 2022 Results Review | February 2, 2023 18
Slide 19: FY 2022 Unit Performance vs. FY 2021
FY 2022 | UNIT PERFORMANCE VS. FY 2021 NORTH AMERICA(1) EMEA(1) SOUTH AMERICA(1) APAC(1) 0-140 HP Tractors (14%) (7%) 3% 5% 140+ Large Tractors 4% Industry Combines 15% (16%) (1%) 50%(2) Light (4%) 1% 23% (22%) Heavy 8% 3% 16% (23%) Order Book(3) Order Book(3) Order Book(3) Order Book(3) TRACTORS do
Slide 20: Q4 / FY 2022 Financial Summary
Q4 / FY 2022 | FINANCIAL SUMMARY ($mn) Q4 2022 Q4 2021 Δ YoY FY 2022 FY 2021 Δ YoY U.S. GAAP Revenues 6.943 5,480 +27% 23,551 19,496 +21% Net Sales | Industrial Activities 6,352 4,994 +27% 21,541 17,802 +21% Net Income 592 464 +128 2,039 1,801 +238 Diluted EPS ($) 0.43 0.34 +0.9 1.49 1.32 +0.17 Non
Slide 21: Q4 2022 Industrial Activities Net Sales
Q4 2022 | INDUSTRIAL ACTIVITIES NET SALES AG AG CE Industrial Activities(1)(1) IndustrialActivities $5,369mn $983mn $6,352mn +29% YoY +34% @CC(2) +16% YoY +19% @CC(2) +27% YoY +31% @CC(2) By Region By Region By Region as reported as reported as reported Q4 2022 NA EMEA SA APAC NA EMEA SA APAC NA EME
Slide 22: Q4 / FY 2022 Financials by Segment
Q4 / FY 2022 | FINANCIALS BY SEGMENT ($mn) Revenues Gross Profit Gross Margin Adj. EBIT(1) Adj. EBIT Margin(1) Q4 22 Q4 21 Q4 22 Q4 21 Q4 22 Q4 21 Q4 22 Q4 21 Q4 22 Q4 21 Agriculture 5,369 4,150 1,238 844 23.1% 20.3% 701 414 13.1% 10.0% Construction Equip. 983 844 131 104 13.3% 12.3% 34 20 3.5% 2.4%
Slide 23: Q4 / FY 2022 Net Sales and Adj. EBIT Breakdown
Q4 / FY 2022 | NET SALES AND ADJ. EBIT BREAKDOWN ($mn) Net Sales Split AG CE AG CE Q4 22 Q4 21 Q4 22 Q4 21 FY 22 FY 21 FY 22 FY 21 NA 39% 38% NA 49% 48% NA 38% 35% NA 48% 47% EMEA 33% 32% EMEA 25% 25% EMEA 32% 39% EMEA 25% 25% LA 20% 21% LA 19% 19% LA 21% 16% LA 19% 16% APAC 7% 9% APAC 8% 8% APAC 9%
Slide 24: FY 2022 Industrial Activities Change in Net (Debt)/Cash
FY 2022 | INDUSTRIAL ACTIVITIES CHANGE IN NET (DEBT) / CASH (1) ($mn) Share BB (153) Free Cash Flow(1) of Industrial Activities Dividends (426) 1,596 M&A 276 Change in Change in Dividends & I.A. Net Debt Cash Interest PP&E Other I.A. Net Cash Adj. EBIT D&A Working Provisions & Equity FX & Other Dec.
Slide 25: Q4 / FY 2022 CapEx and R&D
Q4 / FY 2022 | CAPEX AND R&D ($mn) Q4 2022 Q4 2021 FY 2022 FY 2021 Investments in property, plant and equipment, and intangible assets 106 90 456 360 Breakdown by Category New Product & Technology 34% 31% 36% 37% Maintenance & Other 56% 51% 48% 49% Industrial Capacity Expansion & LT Investments 10%
Slide 26: Debt Maturity Schedule
DEBT MATURITY SCHEDULE | BREAKDOWN ($bn) Outstanding 2023 2024 2025 2026 2027 Beyond Dec. 31, 2022 3.1 Bank Debt 1.4 0.5 0.3 0.2 0.3 0.4 10.0 Capital Market 2.4 2.1 1.9 1.7 1.2 0.7 0.1 Other Debt 0.1 0.0 0.0 0.0 0.0 0.0 13.2 Cash Portion of (Debt) Maturities 3.9 2.6 2.2 1.9 1.5 1.1 of which Industri
Slide 27: Reconciliations
RECONCILIATIONS Q4 & FY 2022 Results Review | February 2, 2023
Slide 28: Reconciliation of Net Income to Adj. EBIT by Segment (Q4)
RECONCILIATION OF NET INCOME (LOSS) TO ADJ. EBIT BY SEGMENT (US GAAP) Q4 2022 Q4 2021 ($mn) Unall. Items, Industrial Unall. Items, Industrial AG CE AG CE Elim. & Other Activities Elim. & Other Activities Consolidated Net income 592 307 Less: Consolidated Net Income (loss) of Discontinued Operations
Slide 29: Reconciliation of Net Income to Adj. EBIT by Segment (FY)
RECONCILIATION OF NET INCOME (LOSS) TO ADJ. EBIT BY SEGMENT (US GAAP) FY 2022 FY 2021 ($mn) Unall. Items, Industrial Unall. Items, Industrial AG CE AG CE Elim. & Other Activities Elim. & Other Activities Consolidated Net income 2,039 1,760 Less: Consolidated Net Income (loss) of Discontinued Operati
Slide 30: Reconciliation of Total Debt to Net Debt
RECONCILIATION OF TOTAL DEBT TO NET DEBT (US GAAP) ($mn) Consolidated Industrial Activities Financial Services Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, 2022 2021 2022 2021 2022 2021 Third party debt (22,962) (20,897) (4,909) (5,335) (18,053) (15,562) Intersegment notes payable - - (63)
Slide 31: Reconciliation of Cash to Available Liquidity
RECONCILIATION OF CASH & CASH EQUIVALENTS TO AVAILABLE LIQUIDITY UNDER U.S.-GAAP ($mn) December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 December 31, 2021 Cash and cash equivalents 4,376 3,154 2,855 3,219 5,044 Restricted cash 753 660 729 842 801 Undrawn committed facilities 5,061 4,
Slide 32: Change in Net Cash (Debt) of Industrial Activities
CHANGE IN NET CASH (DEBT) OF INDUSTRIAL ACTIVITIES UNDER US -GAAP ($mn) Q4 2022 Q4 2021 FY 2022 FY 2021 Net Cash (Debt) of Industrial Activities at beginning of period (1,272) (125) (1,126) (893) Adjusted EBIT of Industrial Activities 680 378 2,433 1,763 Depreciation and Amortization 75 76 325 293 D
Slide 33: Reconciliation of Operating Cash Flow to Free Cash Flow
RECONCILIATION OF NET CASH PROVIDED BY (USED IN) OPERATING ACTIV ITIES TO FREE CASH FLOW OF INDUSTRIAL ACTIVITIES UNDER U.S. GAAP ($mn) Q4 2022 Q4 2021 FY 2022 FY 2021 Net cash provided by (used in) Operating Activities (Continuing Operations) 1,443 1,724 557 3,198 Cash flows from Operating Activiti
Slide 34: Reconciliation of Adj. Net Income and Adj. Income Tax (1/2)
RECONCILIATION OF ADJ. NET INCOME AND ADJ. INCOME TAX (EXPENSE) BENEFIT TO NET INCOME (LOSS) AND INCOME TAX (EXPENSE) BENEFIT AN D CALCULATION OF ADJ. DILUTED EPS AND ADJ. ETR UNDER U.S. -GAAP (1/2) ($mn) Q4 2022 Q4 2021 FY 2022 FY 2021 Net income (loss) – Continuing Operations 592 464 2,039 1,801 A
Slide 35: Reconciliation of Adj. Net Income and Adj. Income Tax (2/2)
RECONCILIATION OF ADJ. NET INCOME AND ADJ. INCOME TAX (EXPENSE) BENEFIT TO NET INCOME (LOSS) AND INCOME TAX (EXPENSE) BENEFIT AN D CALCULATION OF ADJ. DILUTED EPS AND ADJ. ETR UNDER U.S. -GAAP (2/2) ($mn) Q4 2022 Q4 2021 FY 2022 FY 2021 (a) Adjustments impacting Income (loss) before income tax (expe
Slide 36: Geographic Information
GEOGRAPHIC INFORMATION The composition of our regions part of the geographic information is as follow: ▪ North America: United States, Canada, and Mexico; ▪ Europe, Middle East, and Africa (EMEA): member countries of the European Union, European Free Trade Association, the United Kingdom, Ukraine, B
Slide 37: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES CNH Industrial monitors its operations through the use of several non-GAAP financial measures. CNH Industrial’s management believes that these non-GAAP financial measures provide useful and relevant information regarding its operating results and enhance the readers’ abil
Slide 38: Investor Relations Contacts
INVESTOR RELATIONS CONTACTS investor.relations@cnhind.com Jason Omerza +1 (630) 740 8079 | jason.omerza@cnhind.com Federico Pavesi +39 (345) 605 6218 | federico.pavesi@cnhind.com