Cnh Industrial N.v. · NYSE:CNH
Cnh Industrial — Q2 2022 Earnings Presentation
33 slides from Cnh Industrial's earnings presentation, Jul 29, 2022
Slide 1: Q2 2022 Results Review
Q2 2022 RESULTS REVIEW July 29th, 2022 Q2 2022 Results Review | July 29, 2022
Slide 2: Safe Harbor Statement and Disclosures
SAFE HARBOR STATEMENT AND DISCLOSURES All statements other than statements of historical fact contained in this earning release, including competitive strengths; business strategy; future financial position or operating results; budgets; projections with respect to revenue, income, earnings (or loss
Slide 3: Second Quarter 2022 Highlights
SECOND QUARTER 2022 HIGHLIGHTS Record Q2 revenues up 17.5%, pricing and volume, negative FX (3%) Double-digit margin for Industrial Activities, continued pressure on production Orders remain solid as soft commodities decline Positive Free Cash Flow in the quarter Sale of non-core Raven businesses co
Slide 4: Agriculture
AGRICULTURE $4.7B +22% $663M 14.0% net sales Q2 22 change net sales adj. EBIT(1) adj. EBIT margin(1) (@CC*) Pricing of +13% offset increased cost Gross margin at 23.4% Manufacturing inventories remain elevated Strong demand for row crop equipment Softening for low HP tractors Order books remain stro
Slide 5: Construction
CONSTRUCTION $891M +12% $34M 3.8% net sales Q2 22 change net sales adj. EBIT(1) adj. EBIT margin(1) (@CC*) Pricing offsetting higher production cost Sampierana already strong contributor in EU, ahead of plan Market share increased in light equipment Order book up over 20% YoY across regions and sub-
Slide 6: Strategic Priorities | In Focus
STRATEGIC PRIORITIES | IN FOCUS CUSTOMER TECHNOLOGY BRAND OPERATIONAL SUSTAINABILITY INSPIRED LEADERSHIP AND DEALER EXCELLENCE STEWARDSHIP INNOVATION STRENGTH 6 Q2 2022 Results Review | July 29, 2022
Slide 7: Second Quarter 2022 | Financial Highlights
SECOND QUARTER 2022 | FINANCIAL HIGHLIGHTS Industrial Activities Consolidated Net Sales(*) Adjusted Gross Margin(*) Adjusted Diluted EPS(*) ($mn) 22.2% -20 bps 22.0% $0.43 5,613 +$0.06 +18% $0.37 4,778 Q2 2021 Q2 2022 Q2 2021 Q2 2022 Q2 2021 Q2 2022 Adjusted EBIT(*) Free Cash Flow(*) Available Liqui
Slide 8: Second Quarter 2022 | Industrial Activities Adj. EBIT Walk
SECOND QUARTER 2022 | INDUSTRIAL ACTIVITIES ADJ. EBIT (1) WALK ($mn) 11.7% 12.0% ADJ. EBIT(1) Unallocated, ADJ. EBIT(1) Vol. & Mix Pricing, Net Prod. Cost SG&A R&D FX | Other Q2’21 Elim. & Other Q2’22 0100 200 300 400 500 600 0100 200 300 400 500 600 -600 -500 -400 -300 -200 -1000 -600 -500 -400 -30
Slide 9: Second Quarter 2022 | Financial Services
SECOND QUARTER 2022 | FINANCIAL SERVICES Net Income Profitability Ratios ($mn) 5.0% 3.8% 4.0% 3.2% 3.2% Q2 2022 95 3.0% 2.6% 2.2% 2.0% 1.7% Q2 2021 85 1.0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2020 2021 2022 Gross Margin / Average Assets on Book ROA(**) Managed Portfolio(*) & Retail Originations(*) Delinqu
Slide 10: Second Quarter 2022 | Industrial Activities Change in Net Debt
SECOND QUARTER 2022 | INDUSTRIAL ACTIVITIES CHANGE IN NET DEBT(*) ($mn) Free Cash Flow* of Industrial Activities Shares BB (20) 404 Dividends (414) Change in I.A. Net Debt I.A. | adj. Cash Interest Change in PP&E Other Dividends & I.A. Net Debt Provisions & FX & Other Mar 31, 2022 EBITDA & Taxes Wor
Slide 11: Capital Allocation Priorities
CAPITAL ALLOCATION PRIORITIES ORGANIC GROWTH Capex up 22% from Q2 2021, R&D up 29%, largest increase in digital CREDIT RATING Current long-term ratings: Moody’s Baa2; S&P BBB and Fitch BBB+ Support growth and GROSS DEBT ensure shareholder Gross Debt stable in Q2, operating cash flow and sale of unit
Slide 12: FY 2022 Estimates | Industry Unit Performance vs. FY 2021
FY 2022 ESTIMATES | INDUSTRY UNIT PERFORMANCE VS. FY 2021 NORTH SOUTH EUROPE REST OF EMEA APAC AMERICA AMERICA 0-140 HP Tractors (10%) – (5%) Flat (10%) – (5%) Flat – 5% Flat 140+ Large Tractors 15% Combines 10% Flat (40%) Flat 20% Light (5%) (5%) – Flat (15%) – (10%) 10% – 15% (20%) – (15%) Heavy 5
Slide 13: FY 2022 E | Guidance
FY 2022 E | GUIDANCE INDUSTRIAL ACTIVITIES Net Sales(1) 12%-14% Narrowed / Confirmed SG&A ≤ 7.5% Confirmed Free Cash Flow(2) > $1.0B Confirmed R&D ~ $1.4B Confirmed CapEx Supply Chain challenges to persist in H2 Significant uncertainties remain in all regions, linked to rising inflation, geopolitica
Slide 14: 2022 | Focus and Priorities
2022 | FOCUS AND PRIORITIES Early signs of moderating supply chain headwinds Deliveries improving to meet customer demand Order books remain strong and dealer inventories low Strike ongoing, seeking resolution while accelerating mitigations Improving Raven contribution to product pipeline Strategic
Slide 15: Appendix
APPENDIX Q2 2022 Results Review | July 29, 2022
Slide 16: Q2 2022 | Unit Performance vs. Q2 2021
Q2 2022 | UNIT PERFORMANCE VS. Q2 2021 NORTH EUROPE REST OF EMEA SOUTH AMERICA APAC AMERICA 0-140 HP Tractors (16%) (6%) 6% 4% 11% 140+ Large Tractors Flat Industry Combines 3% 2% (47%) (14%) 21% Light (6%) (2%) (14%) 25% (27%) Heavy 7% (8%) 4% 20% (31%) Order Book* Order Book* Order Book* Order Boo
Slide 17: Q2 2022 | Financial Summary
Q2 2022 | FINANCIAL SUMMARY Q2 2022 Q2 2021 Δ U.S. GAAP Revenues ($mn) 6,082 5,174 18% Net Sales | Industrial Activities ($mn) 5,613 4,778 18% Net Income ($mn) 552 514 38 Diluted EPS ($) 0.40 0.38 0.02 Non – GAAP (1) Net Sales | Industrial Activities @CC ($mn) 5,752 4,778 20% Adjusted EBIT | Industr
Slide 18: Q2 2022 | Industrial Activities Net Sales
Q2 2022 | INDUSTRIAL ACTIVITIES NET SALES AG AG CE IndustrialActivities Industrial Activities(1)(1) $4,722mn $891mn $5,613mn +19% +22% @CC +10% +12% @CC +18% +20% @CC By Region By Region By Region as reported as reported as reported Q2 2022 NA EMEA SA APAC NA EMEA SA APAC NA EMEA SA APAC Q2 2021 By
Slide 19: Q2 2022 | Financials by Segment
Q2 2022 | FINANCIALS BY SEGMENT ($mn) Revenues Gross Profit Adj. EBIT Adj. EBIT Margin % Q2 22 Q2 21 Q2 22 Q2 21 Q2 22 Q2 21 Q2 22 Q2 21 Agriculture 4,722 3,970 1,105 955 663 582 14.0% 14.7% Construction Equip. 891 808 123 100 34 24 3.8% 3.0% Elimination & Other - - 8 7 (43) (34) Industrial Activiti
Slide 20: Q2 2022 | Net Sales and Adj. EBIT Breakdown
Q2 2022 | NET SALES AND ADJ. EBIT BREAKDOWN ($mn) Net Sales Split AG CE Q2 22 Q2 21 Q2 22 Q2 21 NA 1,757 1,287 NA 412 373 EMEA 1,560 1,705 EMEA 234 226 LA 939 565 LA 174 116 APAC 466 413 APAC 71 93 Tractors 51% 57% Heavy 38% 45% Combines 25% 23% Light 60% 52% Others* 24% 20% Others 2% 3% Industrial
Slide 21: Q2 / 1H 2022 | CapEx and R&D
Q2 / 1H 2022 | CAPEX AND R&D ($mn) Q2 2022 Q2 2021 1H 2022 1H 2021 Investments in property, plant and equipment, and intangible assets 84 69 137 105 Breakdown by Category New Product & Technology 28% 46% 28% 47% Maintenance & Other 48% 46% 48% 47% Industrial Capacity Expansion & LT Investments 24% 8
Slide 22: Debt Maturity Schedule | Breakdown
DEBT MATURITY SCHEDULE | BREAKDOWN ($bn) Outstanding 6M 2022 2023 2024 2025 2026 Beyond Jun 30, 2022 2.0 Bank Debt 0.6 0.7 0.3 0.2 0.1 0.1 9.7 Capital Market 0.7 2.1 2.0 1.4 1.7 1.8 0.1 Other Debt 0.1 0.0 0.0 0.0 0.0 0.0 11.8 Cash Portion of (Debt) Maturities 1.3 2.9 2.3 1.6 1.8 1.9 of which Industr
Slide 23: Reconciliations
RECONCILIATIONS Q2 2022 Results Review | July 29, 2022
Slide 24: Reconciliation of Net Income (Loss) to Adj. EBIT by Segment (US GAAP)
RECONCILIATION OF NET INCOME (LOSS) TO ADJ. EBIT BY SEGMENT (US GAAP) ($mn) Q2 2022 1H 2022 Unall. Items, Industrial Unall. Items, Industrial AG CE AG CE Elim. & Other Activities Elim. & Other Activities Consolidated Net income 552 888 Less: Consolidated Income tax (expense) benefit (228) (387) Cons
Slide 25: Reconciliation of Net Income (Loss) to Adj. EBIT by Segment (US GAAP)
RECONCILIATION OF NET INCOME (LOSS) TO ADJ. EBIT BY SEGMENT (US GAAP) Q2 2021 1H 2021 ($mn) Unall. Items, Industrial Unall. Items, Industrial AG CE AG CE Elim. & Other Activities Elim. & Other Activities Consolidated Net income 699 1,124 Less: Consolidated Net Income (loss) of Discontinued Operation
Slide 26: Reconciliation of Total Debt to Net Debt (US GAAP)
RECONCILIATION OF TOTAL DEBT TO NET DEBT (US GAAP) ($mn) Consolidated Industrial Activities Financial Services June 30, December 31, June 30, December 31, June 30, December 31, 2022 2021 2022 2021 2022 2021 Third party debt (20,817) (20,897) (4,828) (5,335) (15,989) (15,562) Intersegment notes payab
Slide 27: Reconciliation of Cash & Cash Equivalents to Available Liquidity
RECONCILIATION OF CASH & CASH EQUIVALENTS TO AVAILABLE LIQUIDITY UNDER U.S.-GAAP ($mn) June 30, March 31, December 31, 2022 2022 2021 Cash and cash equivalents 2,855 3,219 5,044 Restricted cash 729 842 801 Undrawn committed facilities 5,002 5,087 5,177 Receivables from Iveco Group N.V. 281 297 3,484
Slide 28: Reconciliation of Operating Cash Flow to Free Cash Flow
RECONCILIATION OF NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES TO FREE CASH FLOW OF INDUSTRIAL ACTIVITIES UNDER U.S. GAAP ($mn) Q2 2022 Q2 2021 1H 2022 1H 2021 Net cash provided by (used in) Operating Activities (Continuing Operations) (271) 560 (1,158) 801 Less: Cash flows from Operating Act
Slide 29: Reconciliation of Adjusted Net Income and Adjusted Income Tax (1/2)
RECONCILIATION OF ADJUSTED NET INCOME AND ADJUSTED INCOME TAX (EXPENSE) BENEFIT TO NET INCOME (LOSS) AND INCOME TAX (EXPENSE) BENEFIT AND CALCULATION OF ADJUSTED DILUTED EPS AND ADJUSTED ETR UNDER U.S.-GAAP (1/2) ($mn) Q2 2022 Q2 2021 1H 2022 1H 2021 Net income (loss) – Continuing Operations 552 514
Slide 30: Reconciliation of Adjusted Net Income and Adjusted Income Tax (2/2)
RECONCILIATION OF ADJUSTED NET INCOME AND ADJUSTED INCOME TAX (EXPENSE) BENEFIT TO NET INCOME (LOSS) AND INCOME TAX (EXPENSE) BENEFIT AND CALCULATION OF ADJUSTED DILUTED EPS AND ADJUSTED ETR UNDER U.S.-GAAP (2/2) ($mn) Q2 2022 Q2 2021 1H 2022 1H 2021 (a) Adjustments impacting Income (loss) before in
Slide 31: Geographic Information
GEOGRAPHIC INFORMATION The composition of our regions part of the geographic information is as follow: North America: United States, Canada, Mexico and Puerto Rico, previously included in South America Europe, Middle East, and Africa (previously Europe): member countries of the European Union, E
Slide 32: 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 33: Investor Relations Contact
INVESTOR RELATIONS CONTACT Noah Weiss | Head of Investor Relations +1 (773) 896 5242 | noah.weiss@cnhind.com Federico Pavesi | Manager Investor Relations +39 (345) 605 6218 | federico.pavesi@cnhind.com 33