Cnh Industrial N.v. · NYSE:CNH
Cnh Industrial — Q3 2023 Earnings Presentation
34 slides from Cnh Industrial's earnings presentation, Nov 7, 2023
Slide 1: Q3 2023 Results Review
Q3 2023 RESULTS REVIEW November 7, 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: Q3 2023 Main Achievements
Q3 2023 | MAIN ACHIEVEMENTS Record Q3 EBIT margins in both Agriculture and Construction Tech evolution accelerating Cost reductions to proactively address softening markets 3 Q3 2023 results review | 7-Nov-2023
Slide 4: Q3 2023 Results
Q3 2023 | RESULTS Consolidated Adj. EBIT1 Net Income Diluted EPS Revenues Industrial Activities $6.0B $657M $570M $0.42 +2% -2% +2% +$0.01 Net Sales Adj. EBIT%1 Adjusted Adjusted Industrial Activities Industrial Activities Net Income1 Diluted EPS1 $5.3B 12.3% $570M $0.42 -1% -10 bps +2% +$0.01 YoY v
Slide 5: Q3 2023 Business Highlights
Q3 2023 | BUSINESS HIGHLIGHTS South American markets softer than expected Cost reductions through CBS1 and supply chain improvements Margin and market share holding up in declining Ag environment Construction momentum continues with new product launches Aggressive actions to optimize dealer inventor
Slide 6: Strategic Priorities
STRATEGIC PRIORITIES CUSTOMER TECHNOLOGY BRAND OPERATIONAL SUSTAINABILITY INSPIRED LEADERSHIP AND DEALER EXCELLENCE STEWARDSHIP INNOVATION STRENGTH 6 Q3 2023 results review | 7-Nov-2023
Slide 7: Technology Leadership: Product Innovations
TECHNOLOGY LEADERSHIP: PRODUCT INNOVATIONS Orders opened to strong customer demand for three key technology products Raven Cart Automation™ Raven DirecSteer™ Case IH & New Holland guidance kits Increased productivity with Simple, silent, and powerful Case IH Pro 1200 Guidance Kit reliable synchroniz
Slide 8: Technology Leadership: Ag Precision Tech Independence
TECHNOLOGY LEADERSHIP: AG PRECISION TECH INDEPENDENCE Percentage of in-house precision tech solutions 100% Development of CNH in-house tech stack began in 2019 75% Factory fit 2021 Raven acquisition accelerated 50% speed of tech stack evolution Aftermarket 25% Changes in competitive environment rein
Slide 9: Technology Leadership Through Strategic Investments
TECHNOLOGY LEADERSHIP THROUGH STRATEGIC INVESTMENTS Hemisphere gives CNH full control of precision and navigation technologies Solidifies CNH’s in-house precision, automation, and autonomy technology Provider of guidance systems, GNSS1-based correction services, and application software Acquisition
Slide 10: Q3 2023 Financial Highlights
Q3 2023 | FINANCIAL HIGHLIGHTS ($M) -1% +2% +$0.01 (329) 5,396 5,332 557 570 $0.42 202 $0.41 -3% @CC2 (127) Q3 2022 Q3 2023 Q3 2022 Q3 2023 Q3 2022 Q3 2023 Q3 2022 Q3 2023 Net Sales Adjusted Adjusted Free Cash Flow1 Industrial Activities Net Income1 Diluted EPS1 Industrial Activities Δ YoY 10 Q3 202
Slide 11: Q3 2023 Agriculture
Q3 2023 | AGRICULTURE ($M) Net Sales Gross Margin1 -3% +60 bps 4,501 25.0% 25.6% 4,384 -4% @CC2 Q3 2022 Q3 2023 Δ YoY Q3 2022 Q3 2023 Adjusted EBIT3 14.8% 15.3% Vol. Pricing, Prod. FX & Q3 2022 SG&A R&D Q3 2023 & Mix Net Cost Other (1) Gross Margin calculated as Gross Profit divided by Net Sales, as
Slide 12: Q3 2023 Construction
Q3 2023 | CONSTRUCTION ($M) Net Sales Gross Margin1 +6% +330 bps 895 948 15.9% 12.6% +4% @CC2 Q3 2022 Q3 2023 Δ YoY Q3 2022 Q3 2023 Adjusted EBIT3 6.3% 2.7% Vol. Pricing, Prod. FX & Q3 2022 SG&A R&D Q3 2023 & Mix Net Cost Other (1) Gross Margin calculated as Gross Profit divided by Net Sales, as sho
Slide 13: Q3 2023 Financial Services
Q3 2023 | FINANCIAL SERVICES Net Income Profitability Ratios ($M) 4.0% 3.6% 3.5% Q3 2022 86 3.0% 3.0% 2.5% 2.2% 1.8% 2.0% Q3 2023 86 1.0% Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Gross Margin / Average Assets on Book RoA1 Managed Portfolio2 & Retail Originations2 Delinquencies on Book (
Slide 14: Update on Single Listing
UPDATE ON SINGLE LISTING Application to delist from Milan filed on November 7, 2023 Single listing on NYSE beginning of January 20241 Improved market liquidity, reporting simplification Increase in US index inclusion $1B share buyback program announced today, of which up to €400M to be executed in M
Slide 15: FY 2023 Estimates: Industry Unit Performance vs. FY 2022
FY 2023 ESTIMATES | INDUSTRY UNIT PERFORMANCE VS. FY 2022 NORTH SOUTH EMEA1 APAC1 AMERICA1 AMERICA1 0-140 HP – Small Tractors (10%) – (5%) flat (10%) – (5%) (5%) 140+ HP – Large Tractors 20% – 25% Combines 5% – 10% flat – 5% (20%) – (15%) (20%) Light flat – 5% (5%) – flat (10%) – (5%) (10%) Heavy fl
Slide 16: FY 2023 Guidance
FY 2023 GUIDANCE INDUSTRIAL ACTIVITIES Previous Guidance Current Guidance +8% to +11% +3% to +6% Net Sales1 vs. 2022 vs. 2022 SG&A up <5% vs. 2022 Reaffirmed Free Cash Flow2 $1.3B to $1.5B $1.0B to $1.2B R&D ~$1.6B Reaffirmed CapEx EPS3 target of ~$1.70 (1) Reflects full-year €/$ exchange rate avera
Slide 17: Improving Profitability at All Points in the Cycle
IMPROVING PROFITABILITY AT ALL POINTS IN THE CYCLE 14% Original 2024 13% CMD Target1 Curves represent margin Industrial Activities Adj. EBIT % outcomes at different industry 12% 2023E volumes 11% 2022 We are consistently moving to a 10% higher curve each year 2021 through margin expansion 9% 8% On t
Slide 18: 2023-2024 Priorities & Outlook
2023-2024 PRIORITIES & OUTLOOK Aggressive cost management to secure margin expansion Despite current weakness, South America increasingly important role in global Ag economy Focus on retail execution and dealer inventory Tech stack enhancements accelerating Order collection extends into H1 2024, pro
Slide 19: Appendix
APPENDIX
Slide 20: Q3 2023 Unit Performance vs. Q3 2022
Q3 2023 | UNIT PERFORMANCE VS. Q3 2022 NORTH SOUTH EMEA1 APAC1 AMERICA1 AMERICA1 0-140 HP – Small Tractors (7%) 4% (16%) (10%) 140+ HP – Large Tractors 19% Total Industry Combines (4%) (18%) (47%) 33% Light flat (2%) (13%) (5%) Heavy 7% (5%) (35%) (19%) TRACTORS COMBINES LIGHT HEAVY Company Q3'22 Q4
Slide 21: Q3 / 9M 2023 Financial Summary
Q3 / 9M 2023 | FINANCIAL SUMMARY ($M) Q3 2022 Q3 2023 Δ YoY 9M 2022 9M 2023 Δ YoY U.S. GAAP Revenues 5,881 5,986 +2% 16,608 17,895 +8% Net Sales | Industrial Activities 5,396 5,332 (1%) 15,189 16,062 +6% Net Income 559 570 +2% 1,447 1,766 +22% Diluted EPS - $ 0.41 0.42 +0.01 1.06 1.30 +0.24 Non – GA
Slide 22: Q3 2023 Industrial Activities Net Sales
Q3 2023 | INDUSTRIAL ACTIVITIES NET SALES Agriculture Construction Industrial Activities1 $4,384M $948M $5,332M Q3 2022 -3% YoY -4% @CC2 +6% YoY +4% @CC2 -1% YoY -3% @CC2 Q3 2023 By Region By Region By Region as reported as reported as reported NA EMEA SA APAC NA EMEA SA APAC NA EMEA SA APAC Q3 2023
Slide 23: 9M 2023 Industrial Activities Net Sales
9M 2023 | INDUSTRIAL ACTIVITIES NET SALES Agriculture Construction Industrial Activities1 $13,201M $2,861M $16,062M 9M 2022 +5% YoY +5% @CC2 +11% YoY +11% @CC2 +6% YoY +6% @CC2 9M 2023 By Region By Region By Region as reported as reported as reported NA EMEA SA APAC NA EMEA SA APAC NA EMEA SA APAC 9
Slide 24: Q3 2023 Financials by Segment
Q3 2023 | FINANCIALS BY SEGMENT ($M) Revenues & Adj. EBIT Gross Profit Gross Margin Adj. EBIT1 Net Sales Margin1 Q3 22 Q3 23 Q3 22 Q3 23 Q3 22 Q3 23 Q3 22 Q3 23 Q3 22 Q3 23 Agriculture 4,501 4,384 1,127 1,122 25.0% 25.6% 666 672 14.8% 15.3% Construction 895 948 113 151 12.6% 15.9% 24 60 2.7% 6.3% El
Slide 25: Q3 / 9M 2023 CapEx and R&D
Q3 / 9M 2023 | CAPEX AND R&D ($M) Q3 2022 Q3 2023 9M 2022 9M 2023 Investments in property, plant and equipment, and intangible assets 106 176 243 397 Breakdown by Category New Product & Technology 50% 31% 38% 35% Maintenance & Other 33% 63% 42% 57% Industrial Capacity Expansion & LT Investments 17%
Slide 26: Debt Maturity Schedule Breakdown
DEBT MATURITY SCHEDULE | BREAKDOWN ($B) Outstanding Sep. 30, 2023 2023 2024 2025 2026 2027 Beyond 3.6 Bank Debt 1.0 1.1 0.4 0.2 0.2 0.7 10.6 Capital Market 0.3 2.7 2.5 2.1 1.2 1.8 0.2 Other Debt 0.2 - - - - - 14.4 Cash Portion of (Debt) Maturities 1.5 3.8 2.9 2.3 1.4 2.5 of which Industrial Activiti
Slide 27: Reconciliations
RECONCILIATIONS
Slide 28: Reconciliation of Net Income to Adj. EBIT of Industrial Activities
RECONCILIATION OF NET INCOME TO ADJ. EBIT OF INDUSTRIAL ACTIVITI ES ($M) Q3 2022 Q3 2023 9M 2022 9M 2023 Net Income 559 570 1,447 1,766 Less: Consolidated income tax expense (192) (171) (579) (536) Consolidated income before taxes 751 741 2,026 2,302 Less: Financial Services Financial Services Net I
Slide 29: Reconciliation of Operating Cash Flow to Free Cash Flow
RECONCILIATION OF NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES TO FREE CASH FLOW OF IND. ACTIVITIES UNDER U.S. GAAP ($M) Q3 2022 Q3 2023 9M 2022 9M 2023 Net cash provided by (used in) Operating Activities 272 232 (886) (608) Cash flows from Operating Activities of Financial Services net of el
Slide 30: 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) ($M) Q3 2022 Q3 2023 9M 2022 9M 2023 Net income (loss) 559 570 1,447 1,766 Adjustments impacting Inco
Slide 31: Reconciliation of Adj. Net Income and Adj. Income Tax (2/2)
RECONCILIATION OF ADJ. NET INCOME AND ADJ. INCOME TAX (EXPENSE) BENEFIT TO NET INCOME (LOSS) AND INCOME TAX (EXPENSE) BENEFIT AN D CALCULATION OF ADJ. DILUTED EPS AND ADJ. ETR UNDER U.S. GAAP (2/ 2) ($M) Q3 2022 Q3 2023 9M 2022 9M 2023 (a) Adjustments impacting Income (loss) before income tax (expen
Slide 32: Geographic Information
GEOGRAPHIC INFORMATION The composition of our regions part of the geographic information is as follows: ▪ 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 33: 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 34: 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 CNH Industrial | Investors