Cnh Industrial N.v. · NYSE:CNH
Cnh Industrial — Q4 2023 Earnings Presentation
36 slides from Cnh Industrial's earnings presentation, Feb 14, 2024
Slide 1: Q4 2023 Results Review
Q4 2023 RESULTS REVIEW February 14, 2024
Slide 2: Safe Harbor Statement and Disclosures
SAFE HARBOR STATEMENT AND DISCLOSURES All statements other than statements of historical fact contained in this press release including competitive strengths; business strategy; future financial position or operating results; budgets; projections with respect to revenue, income, earnings (or loss) p
Slide 3: 2023 Main Achievements
2023 | MAIN ACHIEVEMENTS Record EBIT margin performance Record FY revenue and net income Record investments in iron & tech 3 Q4 2023 results review | Feb 14, 2024
Slide 4: Q4 2023 Results
Q4 2023 | RESULTS Consolidated Adj. EBIT1 Net Income Diluted EPS Revenues Industrial Activities $6.8B $696M $617M $0.46 -2% +2% +4% +$0.03 Net Sales Adj. EBIT%1 Adjusted Adjusted Industrial Activities Industrial Activities Net Income1 Diluted EPS1 $6.0B 11.6% $557M $0.42 -5% +90 bps +15% +$0.06 YoY
Slide 5: FY 2023 Results
FY 2023 | RESULTS Consolidated Adj. EBIT1 Net Income Diluted EPS Revenues Industrial Activities $24.7B $2.7B $2.4B $1.76 +5% +12% +17% +$0.27 Net Sales Adj. EBIT%1 Adjusted Adjusted Industrial Activities Industrial Activities Net Income1 Diluted EPS1 $22.1B 12.4% $2.3B $1.70 +3% +110 bps +15% +$0.24
Slide 6: Q4 2023 Business Highlights
Q4 2023 | BUSINESS HIGHLIGHTS Expanded margins through accelerating cost reductions Continued softness in South American markets Addressing dealer inventories with commercial execution Retail sales ahead of industry in both segments Lower SG&A YoY & restructuring program launch Strategic Sourcing be
Slide 7: Strategic Priorities
STRATEGIC PRIORITIES CUSTOMER TECHNOLOGY BRAND OPERATIONAL SUSTAINABILITY INSPIRED LEADERSHIP AND DEALER EXCELLENCE STEWARDSHIP INNOVATION STRENGTH 7 Q4 2023 results review | Feb 14, 2024
Slide 8: Industry Leading Product Innovation
INDUSTRY LEADING PRODUCT INNOVATION Award-winning agriculture products position us to increase market share New Holland CR11: next-generation flagship combine remote diagnostics near-infrared grain quality monitors real-time learning powers automatic adjustments computer vision & AI- driven chopping
Slide 9: Adding Value Through Sustainability
ADDING VALUE THROUGH SUSTAINABILITY Our Commitment Key Recognitions Innovative Products Be the sustainability leader in Case IH Farmall 75C Electric Agriculture and Construction New Holland T4 Electric Power Be accountable for our sustainability performance New Holland E25X Electric Power Be the emp
Slide 10: Operational Excellence
OPERATIONAL EXCELLENCE Ongoing cost reduction focus on both COGS and SG&A 2023 Actions 2024 Actions Cost Impact1 ($M) ~$550M ✓ Logistics optimization Further lean manufacturing ~550 COGS improvements Reduction ✓ Plant efficiencies Kaizen events nearly doubling 185 ✓ 800+ kaizen events Strategic Sour
Slide 11: Q4 / FY 2023 Financial Highlights
Q4 / FY 2023 | FINANCIAL HIGHLIGHTS ($B, except EPS) 2.3 $1.70 21.5 22.1 2.0 2.0 $1.46 1.6 1.6 1.2 6.4 6.0 0.6 $0.42 0.5 $0.36 -5% +3% +15% +15% +$0.06 +$0.24 -20% -24% Q4 FY Q4 FY Q4 FY Q4 FY Net Sales Adjusted Adjusted Free Cash Flow1 Industrial Activities Net Income1 Diluted EPS1 Industrial Activ
Slide 12: Q4 / FY 2023 Agriculture
Q4 / FY 2023 | AGRICULTURE Net Sales ($B) Gross Margin1 18.0 18.1 25.5% 23.8% 23.1% 23.3% 5.4 4.9 2022 2023 -8% +1% Δ YoY +0.2pp +1.7pp Q4 FY Q4 FY Adjusted EBIT ($M) 13.1% 13.5% Q4 Vol. Pricing, Prod. FX & 2022 SG&A R&D 2023 & Mix Net Cost Other 2,456 (293) 888 (200) (65) (152) 99 2,732 FY 13.7% 15
Slide 13: Q4 / FY 2023 Construction
Q4 / FY 2023 | CONSTRUCTION Net Sales ($B) Gross Margin1 3.9 15.6% 3.6 14.8% 13.3% 13.3% 1.1 2022 1.0 2023 +9% +10% Δ YoY +1.5pp +2.3pp Q4 FY Q4 FY Adjusted EBIT ($M) 5.8% 3.5% Q4 Vol. Pricing, Prod. FX & 2022 SG&A R&D 2023 & Mix Net Cost Other 124 34 181 (85) (10) (15) 7 238 FY 3.5% 6.1% (1) Gross
Slide 14: Q4 / FY 2023 Financial Services
Q4 / FY 2023 | FINANCIAL SERVICES Net Income Profitability Ratios ($M) 4.0% 3.5% 3.4% 75 3.2% Q4 113 3.0% 2.3% 2.4% 2022 1.7% 2.0% 2023 338 1.0% FY Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 371 Gross Margin / Avg. Assets on Book Return on Assets1 Managed Portfolio2 & Retail Originations2
Slide 15: Capital Allocation Priorities
CAPITAL ALLOCATION PRIORITIES ORGANIC GROWTH $3.0B combined R&D / Capex investments over 2022-23 (~$4.4B targeted1 for 2022-24) BALANCE SHEET & CREDIT RATING Low Industrial debt; S&P Global Ratings raised to ‘BBB+’ with stable outlook SHAREHOLDER RETURNS ~$1.2B in dividends and share buybacks in 202
Slide 16: 2024 Outlook – Assumptions
2024 OUTLOOK – ASSUMPTIONS Industrial Activities R&D expenses Capex ~$1.0B $0.4-0.5B Unallocated & other ~flat $ YoY Company Adj. Effective Tax rate1 Share count2 25% - 27% ~1,250M (1) Non-GAAP measure (definition in appendix) 16 Q4 2023 results review | Feb 14, 2024 (2) Weighted average shares outs
Slide 17: 2024 Outlook – Agriculture
2024 OUTLOOK – AGRICULTURE Total Industry Unit Performance1 North South EMEA APAC America America LHP Tractors (10%) – (5%) (10%) – (5%) ~(10%) (5%) – flat HHP Tractors (15%) – (10%) Combines (15%) – (10%) (10%) – (5%) (15%) – (10%) ~flat Total Industry Volume % change FY 2024 vs. FY 2023 reflecting
Slide 18: 2024 Outlook – Construction
2024 OUTLOOK – CONSTRUCTION Total Industry Unit Performance1 North South EMEA APAC America America Light (5%) – flat (15%) – (10%) ~flat (5%) – flat Heavy (10%) – (5%) (10%) – (5%) flat – 5% (5%) – flat Total Industry Volume % change FY 2024 vs. FY 2023 reflecting the aggregate for key markets where
Slide 19: 2024 Outlook – Targets
2024 OUTLOOK – TARGETS 14% Net Sales of Industrial Activities CNH: Industrial Activities Adj. EBIT %1 (12%)-(8%) YoY 13% 2023 A 12% Ongoing commitment to improve through- cycle segment margins 11% 2022 A Aggressive cost reduction actions will help 10% 2021 A offset industry volume impacts 9% Free Ca
Slide 20: 2024 Priorities & Outlook
2024 PRIORITIES & OUTLOOK Drive retail performance in declining demand environment Order book providing visibility up to Q3 2024 Execution of cost efficiency programs Further tech stack enhancements Investor Day 2024 to be held May 21 at the NYSE 20 Q4 2023 results review | Feb 14, 2024
Slide 21: Appendix
APPENDIX
Slide 22: FY 2023 Unit Performance vs. FY 2022
FY 2023 | UNIT PERFORMANCE VS. FY 2022 NORTH SOUTH EMEA1 APAC1 AMERICA1 AMERICA1 0-140 HP – Small Tractors (9%) flat (8%) (5%) 140+ HP – Large Tractors 20% Total Industry Combines 2% 8% (18%) (37%) Light 3% 3% (10%) (9%) Heavy 4% flat (32%) (22%) TRACTORS COMBINES LIGHT HEAVY Company Q4'22 Q1'23 Q2'
Slide 23: Q4 / FY 2023 Financial Summary
Q4 / FY 2023 | FINANCIAL SUMMARY ($M) Q4 2022 Q4 2023 Δ YoY FY 2022 FY 2023 Δ YoY U.S. GAAP Revenues 6,943 6,792 (2%) 23,551 24,687 +5% Net Sales | Industrial Activities 6,352 6,018 (5%) 21,541 22,080 +3% Net Income 592 617 +4% 2,039 2,383 +17% Diluted EPS - $ 0.43 0.46 +0.03 1.49 1.76 +0.27 Non – G
Slide 24: Q4 2023 Industrial Activities Net Sales
Q4 2023 | INDUSTRIAL ACTIVITIES NET SALES Agriculture Construction Industrial Activities1 $4,947M $1,071M $6,018M Q4 2022 -8% YoY -9% @CC2 +9% YoY +8% @CC2 -5% YoY -7% @CC2 Q4 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 Q4 20
Slide 25: FY 2023 Industrial Activities Net Sales
FY 2023 | INDUSTRIAL ACTIVITIES NET SALES Agriculture Construction Industrial Activities1 $18,148M $3,932M $22,080M FY 2022 +1% YoY +1% @CC2 +10% YoY +10% @CC2 +3% YoY +2% @CC2 FY 2023 By Region By Region By Region as reported as reported as reported NA EMEA SA APAC NA EMEA SA APAC NA EMEA SA APAC F
Slide 26: Q4 / FY 2023 Financials by Segment
Q4 / FY 2023 | FINANCIALS BY SEGMENT ($M) Revenues & Adj. EBIT Gross Profit Gross Margin Adj. EBIT1 Net Sales Margin1 Q4 22 Q4 23 Q4 22 Q4 23 Q4 22 Q4 23 Q4 22 Q4 23 Q4 22 Q4 23 Agriculture 5,369 4,947 1,238 1,154 23.1% 23.3% 701 669 13.1% 13.5% Construction 983 1,071 131 159 13.3% 14.8% 34 62 3.5%
Slide 27: Q4 / FY 2023 Capex and R&D
Q4 / FY 2023 | CAPEX AND R&D ($M) Q4 2022 Q4 2023 FY 2022 FY 2023 Investments in property, plant and equipment, and intangible assets 212 240 456 637 Breakdown by Category New Product & Technology 34% 25% 36% 31% Maintenance & Other 56% 68% 48% 61% Industrial Capacity Expansion & LT Investments 10%
Slide 28: Debt Maturity Schedule | Breakdown
DEBT MATURITY SCHEDULE | BREAKDOWN ($B) Outstanding Dec. 31, 2023 2024 2025 2026 2027 2028 Beyond 4.3 Bank Debt 2.3 0.4 0.3 0.3 0.3 0.6 11.1 Capital Market 3.2 2.6 2.2 1.3 0.8 1.1 0.2 Other Debt 0.2 - - - - - 15.6 Cash Portion of (Debt) Maturities 5.7 3.0 2.5 1.6 1.1 1.7 of which Industrial Activiti
Slide 29: Reconciliations
RECONCILIATIONS
Slide 30: Reconciliation of Net Income to Adj. EBIT of Industrial Activities
RECONCILIATION OF NET INCOME TO ADJ. EBIT OF INDUSTRIAL ACTIVITI ES ($M) Q4 2022 Q4 2023 FY 2022 FY 2023 Net Income 592 617 2,039 2,383 Less: Consolidated income tax expense (168) (58) (747) (594) Consolidated income before taxes 760 675 2,786 2,977 Less: Financial Services Financial Services Net In
Slide 31: Reconciliation of Operating Cash Flow to Free Cash Flow
RECONCILIATION OF NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES TO FREE CASH FLOW OF IND. ACTIVITIES UNDER U.S. GAAP ($M) Q4 2022 Q4 2023 FY 2022 FY 2023 Net cash provided by (used in) Operating Activities 1,443 1,515 557 907 Cash flows from Operating Activities of Financial Services net of el
Slide 32: 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) ($M) Q4 2022 Q4 2023 FY 2022 FY 2023 Net income (loss) 592 617 2,039 2,383 Adjustments impacting Inco
Slide 33: Reconciliation of Adj. Net Income and Adj. Income Tax (2/2)
RECONCILIATION OF ADJ. NET INCOME AND ADJ. INCOME TAX (EXPENSE) BENEFIT TO NET INCOME (LOSS) AND INCOME TAX (EXPENSE) BENEFIT AN D CALCULATION OF ADJ. DILUTED EPS AND ADJ. ETR UNDER U.S. GAAP (2/ 2) ($M) Q4 2022 Q4 2023 FY 2022 FY 2023 (a) Adjustments impacting Income (loss) before income tax (expen
Slide 34: 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 35: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES CNH monitors its operations through the use of several non-GAAP financial measures. CNH’s management believes that these non-GAAP financial measures provide useful and relevant information regarding its operating results and enhance the readers’ ability to assess CNH’s fi
Slide 36: Investor Relations Contacts
INVESTOR RELATIONS CONTACTS investor.relations@cnh.com Jason Omerza +1 (630) 740 8079 | jason.omerza@cnh.com Federico Pavesi +39 (345) 605 6218 | federico.pavesi@cnh.com www.cnh.com