Cnh Industrial N.v. · NYSE:CNH
Cnh Industrial — Q2 2024 Earnings Presentation
31 slides from Cnh Industrial's earnings presentation, Jul 31, 2024
Slide 1: Q2 2024 Results Review
Q2 2024 RESULTS REVIEW July 31, 2024
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) pe
Slide 3: Gerrit Marx Rejoins CNH as CEO: First 30 Days
GERRIT MARX REJOINS CNH AS CEO: FIRST 30 DAYS Meeting employees, touring manufacturing & R&D facilities, visiting dealers & end customers Case IH, Racine, US STEYR, St. Valentin, Austria New Holland, Noida, India Case IH, Grand Island, US Dealer, Bavaria, Germany Case IH & CASE, Fargo, US New Hollan
Slide 4: Q2 2024 Main Achievements
Q2 2024 | MAIN ACHIEVEMENTS Actively addressing market dynamics with disciplined cost reduction efforts Diligent execution of upgraded iron and precision tech Global Leadership Team with streamlined governance1 4 Q2 2024 results review | July 31, 2024 (1) Details included in a press release availabl
Slide 5: Q2 2024 Results
Q2 2024 | RESULTS Consolidated Adj. EBIT1 Net Income Diluted EPS Revenues Industrial Activities $5.5B $536M $438M $0.34 (16)% (35)% (38)% ($0.18) Net Sales Adj. EBIT%1 Adjusted Adjusted Industrial Activities Industrial Activities Net Income1 Diluted EPS1 $4.8B 11.2% $485M $0.38 (19)% (260) bps (32)%
Slide 6: Q2 2024 Business Highlights
Q2 2024 | BUSINESS HIGHLIGHTS Further weakness in market demand and sentiment Ag production hours 30% lower year-over-year Production cost improvements partially offset lower volume impact Focus on product quality improvements SG&A restructuring program proceeding to plan 6 Q2 2024 results review |
Slide 7: Q2 2024 Financial Highlights
Q2 2024 | FINANCIAL HIGHLIGHTS ($M) (19)% (32)% ($0.14) (246) 5,954 711 $0.52 4,803 386 485 $0.38 140 Q2 2023 Q2 2024 Q2 2023 Q2 2024 Q2 2023 Q2 2024 Q2 2023 Q2 2024 Net Sales Adjusted Adjusted Free Cash Flow1 Industrial Activities Net Income1 Diluted EPS1 Industrial Activities Δ YoY 7 Q2 2024 resul
Slide 8: Q2 2024 Agriculture
Q2 2024 | AGRICULTURE ($M) Net Sales Gross Margin1 (20)% (260) bps 4,890 27.0% 3,913 24.4% Q2 2023 Q2 2024 Δ YoY Q2 2023 Q2 2024 Adjusted EBIT 16.8% 13.7% Vol. Pricing, Prod. FX & Q2 2023 SG&A R&D Q2 2024 & Mix Net Cost Other (1) Gross Margin calculated as Gross Profit divided by Net Sales, as shown
Slide 9: Q2 2024 Construction
Q2 2024 | CONSTRUCTION ($M) Net Sales Gross Margin1 (16)% +50 bps 1,064 890 16.0% 16.5% Q2 2023 Q2 2024 Δ YoY Q2 2023 Q2 2024 Adjusted EBIT 6.8% 6.7% Vol. Pricing, Prod. FX & Q2 2023 SG&A R&D Q2 2024 & Mix Net Cost Other (1) Gross Margin calculated as Gross Profit divided by Net Sales, as shown in t
Slide 10: Q2 2024 Financial Services
Q2 2024 | FINANCIAL SERVICES Net Income Profitability Ratios ($M) 3.8% 4.0% 3.1% 3.1% Q2 2023 94 3.0% 2.6% 1.9% 2.0% 1.6% Q2 2024 91 1.0% Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Gross Margin / Average Assets on Book RoA1 Managed Portfolio2 & Retail Originations2 Delinquencies on Book (
Slide 11: Cost Reduction Actions
COST REDUCTION ACTIONS Ongoing focus on both COGS and SG&A of Industrial Activities H1 Actions H2 Actions Impact by Quarter1 ($M) ~300-335 COGS ✓ Logistics costs • Lean manufacturing ✓ Manufacturing efficiencies • Kaizen events 128 ✓ Material cost control • Strategic Sourcing Program 25 range reflec
Slide 12: Capital Allocation Priorities
CAPITAL ALLOCATION PRIORITIES ORGANIC GROWTH Support future growth through operating cash flow reinvestments BALANCE SHEET & CREDIT RATING Sustain healthy liquidity levels and investment grade credit rating SHAREHOLDER RETURNS Maintain a dedicated and consistent dividend and share repurchase policy
Slide 13: 2024 Outlook – Agriculture
2024 OUTLOOK – AGRICULTURE Total Industry Unit Performance1 North South EMEA APAC America America LHP Tractors (15)% – (10)% (15)% – (10)% (15)% – (10)% (5)% – flat HHP Tractors (15)% – (10)% Combines (20)% – (15)% (25)% – (20)% (30)% – (25)% ~flat Total Industry Volume % change FY 2024 vs. FY 2023
Slide 14: 2024 Outlook – Construction
2024 OUTLOOK – CONSTRUCTION Total Industry Unit Performance1 North South EMEA APAC America America Light (10)% – (5)% (20)% – (15)% (5)% – flat (10)% – (5)% Heavy (10)% – (5)% (10)% – (5)% flat – 5% (5)% – flat Total Industry Volume % change FY 2024 vs. FY 2023 reflecting the aggregate for key marke
Slide 15: 2024 Outlook – Financial Targets
2024 OUTLOOK – FINANCIAL TARGETS Industrial previous current Activities Net Sales (14)-(10)% YoY (20)-(15)% YoY Adj. EBIT margin1 10.5% - 11.5% 10.0% - 11.0% Free Cash Flow1 $1.1B - $1.3B $0.7B - $0.9B Company previous current Adj. Diluted EPS1 $1.45 - $1.55 $1.30 - $1.40 15 Q2 2024 results review |
Slide 16: Priorities for Next 90 Days
PRIORITIES FOR NEXT 90 DAYS Focus on delivering results in a challenging environment with an empowered team Establish Agriculture as our core business with improved commercial and brand effectiveness Manage Construction as distinct business with its own governance for greater agility and optionality
Slide 17: Appendix
APPENDIX a a
Slide 18: Q2 2024 Unit Performance vs. Q2 2023
Q2 2024 | UNIT PERFORMANCE VS. Q2 2023 NORTH SOUTH EMEA1 APAC1 AMERICA1 AMERICA1 0-140 HP – Small Tractors (11)% (10)% (10)% 1% 140+ HP – Large Tractors 2% Total Industry Combines (5)% (36)% (26)% 4% Light flat (19)% 32% flat Heavy flat (8)% 28% (11)% Tractors Combines Light Heavy Company Q2'23 Q3'2
Slide 19: Q2 / H1 2024 Financial Summary
Q2 / H1 2024 | FINANCIAL SUMMARY ($M) Q2 2023 Q2 2024 Δ YoY H1 2023 H1 2024 Δ YoY U.S. GAAP Revenues 6,567 5,488 (16)% 11,909 10,306 (13)% Net Sales | Industrial Activities 5,954 4,803 (19)% 10,730 8,934 (17)% Net Income 710 438 (38)% 1,196 840 (30)% Diluted EPS - $ $0.52 $0.34 ($0.18) $0.88 $0.66 (
Slide 20: Q2 2024 Industrial Activities Net Sales
Q2 2024 | INDUSTRIAL ACTIVITIES NET SALES Agriculture Construction Industrial Activities1 $3,913M $890M $4,803M Q2 2023 (20)% YoY (19)% @CC2 (16)% YoY (16)% @CC2 (19)% YoY (19)% @CC2 Q2 2024 By Region By Region By Region as reported as reported as reported NA EMEA SA APAC NA EMEA SA APAC NA EMEA SA
Slide 21: H1 2024 Industrial Activities Net Sales
H1 2024 | INDUSTRIAL ACTIVITIES NET SALES Agriculture Construction Industrial Activities1 $7,286M $1,648M $8,934M H1 2023 (17)% YoY (17)% @CC2 (14)% YoY (14)% @CC2 (17)% YoY (17)% @CC2 H1 2024 By Region By Region By Region as reported as reported as reported NA EMEA SA APAC NA EMEA SA APAC NA EMEA S
Slide 22: Q2 / H1 2024 Financials by Segment
Q2 / H1 2024 | FINANCIALS BY SEGMENT ($M) Revenues & Adj. EBIT Gross Profit Gross Margin Adj. EBIT1 Net Sales Margin1 Q2 23 Q2 24 Q2 23 Q2 24 Q2 23 Q2 24 Q2 23 Q2 24 Q2 23 Q2 24 Agriculture 4,890 3,913 1,321 954 27.0% 24.4% 821 536 16.8% 13.7% Construction 1,064 890 170 147 16.0% 16.5% 72 60 6.8% 6.
Slide 23: Q2 / H1 2024 CapEx and R&D
Q2 / H1 2024 | CAPEX AND R&D ($M) Q2 2023 Q2 2024 H1 2023 H1 2024 Investments in property, plant and equipment, and intangible assets 131 110 221 206 Breakdown by Category New Product & Technology 34% 48% 39% 47% Maintenance & Other 58% 45% 52% 47% Industrial Capacity Expansion & LT Investments 8% 7
Slide 24: Debt Maturity Schedule | Breakdown
DEBT MATURITY SCHEDULE | BREAKDOWN ($B) Outstanding Jun. 30, 2024 2024 2025 2026 2027 2028 Beyond 3.0 Bank Debt 1.0 0.3 0.5 0.3 0.2 0.6 11.4 Capital Market 1.2 2.7 2.3 1.7 0.8 2.6 0.1 Other Debt 0.1 - - - - - 14.5 Cash Portion of Debt Maturities 2.3 3.0 2.8 2.1 1.0 3.2 of which Industrial Activities
Slide 25: Reconciliations
RECONCILIATIONS a a
Slide 26: Reconciliation of Net Income to Adj. EBIT of Industrial Activities
RECONCILIATION OF NET INCOME TO ADJ. EBIT OF INDUSTRIAL ACTIVITI ES ($M) Q2 2023 Q2 2024 H1 2023 H1 2024 Net Income 710 438 1,196 840 Less: Consolidated income tax expense (192) (95) (365) (172) Consolidated income before taxes 902 533 1,561 1,012 Less: Financial Services Financial Services Net Inco
Slide 27: Reconciliation of Operating Cash Flow to Free Cash Flow
RECONCILIATION OF NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES TO FREE CASH FLOW OF IND. ACTIVITIES UNDER U.S. GAAP ($M) Q2 2023 Q2 2024 H1 2023 H1 2024 Net cash provided by (used in) Operating Activities (139) 379 (840) (515) Cash flows from Operating Activities of Financial Services net of
Slide 28: Reconciliation of Adj. Net Income and Adj. Diluted EPS
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 ($M) Q2 2023 Q2 2024 H1 2023 H1 2024 Net income (loss) 710 438 1,196 840 Adjustments impacting Income (loss)
Slide 29: 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 30: 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 31: 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