Cnh Industrial N.v. · NYSE:CNH
Cnh Industrial — Q3 2024 Earnings Presentation
37 slides from Cnh Industrial's earnings presentation, Nov 8, 2024
Slide 1: Q3 2024 Results Review
Q3 2024 RESULTS REVIEW November 8, 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: Basis of Presentation
BASIS OF PRESENTATION Prior periods have been revised to reflect an immaterial correction to the financial statements CNH accounts for its 37.5% ownership of Türkiye-based TürkTraktör ve Ziraat Makineleri A.S. (TTRAK.IS) under the equity method TürkTraktör’s functional currency is the Turkish li
Slide 4: CEO Observations – My First Quarter at CNH
CEO OBSERVATIONS – MY FIRST QUARTER AT CNH MARKET DYNAMICS INDUSTRIAL CAPABILITIES Farmer sentiment remains muted Need more consistency in quality Low visibility on industry cycle Cost efficient capacity utilization at low production rates Very slow retail pace; inventory levels decreasing
Slide 5: Q3 2024 | Main Achievements
Q3 2024 | MAIN ACHIEVEMENTS Continued cost reduction momentum New leadership team working closer to business priorities Strategic Sourcing supplier convention FieldOps™ commercial launch 5 Q3 2024 results review | Nov 8, 2024
Slide 6: Q3 2024 | Results
Q3 2024 | RESULTS Consolidated Adj. EBIT1 Net Income Diluted EPS Revenues Industrial Activities $4.7B $336M $310M $0.24 (22)% (46)% (43)% $(0.16) Net Sales Adj. EBIT%1 Adjusted Adjusted Industrial Activities Industrial Activities Net Income1 Diluted EPS1 $4.0B 8.4% $304M $0.24 (25)% (340) bps (44)%
Slide 7: Q3 2024 | Business Highlights
Q3 2024 | BUSINESS HIGHLIGHTS Declining industry retail demand and sentiment Lower production levels to address demand weakness Limited progress on dealer inventory reductions Additional focus on product quality programs 7 Q3 2024 results review | Nov 8, 2024
Slide 8: Q3 2024 | Financial Highlights
Q3 2024 | FINANCIAL HIGHLIGHTS ($M) (25)% (44)% $(0.16) (53) 5,332 $0.40 540 3,997 $0.24 304 (127) (180) Q3 2023 Q3 2024 Q3 2023 Q3 2024 Q3 2023 Q3 2024 Q3 2023 Q3 2024 Net Sales Adjusted Adjusted Free Cash Flow1 Industrial Activities Net Income1 Diluted EPS1 Industrial Activities Δ YoY (1) Non-GAAP
Slide 9: Q3 2024 | Agriculture
Q3 2024 | AGRICULTURE ($M) Net Sales Gross Margin1 (24)% (290) bps 4,384 25.6% 3,310 22.7% Q3 2023 Q3 2024 Δ YoY Q3 2023 Q3 2024 Adjusted EBIT 14.6% 10.2% Vol. Pricing, Prod. FX & Q3 2023 SG&A R&D Q3 2024 & Mix Net Cost Other (1) Gross Margin calculated as Gross Profit divided by Net Sales, as shown
Slide 10: Q3 2024 | Construction
Q3 2024 | CONSTRUCTION ($M) Net Sales Gross Margin1 (28)% +70 bps 948 16.6% 15.9% 687 Q3 2023 Q3 2024 Δ YoY Q3 2023 Q3 2024 Adjusted EBIT 6.3% 5.8% Vol. Pricing, Prod. FX & Q3 2023 SG&A R&D Q3 2024 & Mix Net Cost Other (1) Gross Margin calculated as Gross Profit divided by Net Sales, as shown in the
Slide 11: Q3 2024 | Financial Services
Q3 2024 | FINANCIAL SERVICES Net Income Profitability Ratios ($M) 4.0% 3.5% 3.0% 3.1% Q3 2023 86 3.0% 2.2% 1.8% 2.0% 1.3% Q3 2024 78 1.0% Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 Gross Margin / Average Assets on Book RoA1 Managed Portfolio2 & Retail Originations2 Delinquencies on Book (
Slide 12: Cost Reduction Actions
COST REDUCTION ACTIONS Ongoing focus on both COGS and SG&A of Industrial Activities 2024 Actions & YtD Impact by Quarter1 ($M) Looking Ahead COGS Logistics costs ~300 $70-90M carryover benefit in 213 2025 from 2024 actions Manufacturing efficiencies 128 Continued productivity Material cost
Slide 13: 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 14: 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 (20)% – (15)% Combines (25)% – (20)% (35)% – (30)% (35)% – (30)% flat – 5% Total Industry Volume % change FY 2024 vs. FY 2
Slide 15: 2024 Outlook – Construction
2024 OUTLOOK – CONSTRUCTION Total Industry Unit Performance1 North South EMEA APAC America America Light (10)% – (5)% (20)% – (15)% flat – 5% ~flat Heavy (10)% – (5)% (10)% – (5)% flat – 5% flat – 5% Total Industry Volume % change FY 2024 vs. FY 2023 reflecting the aggregate for key markets where th
Slide 16: 2024 Outlook – Financial Targets
2024 OUTLOOK – FINANCIAL TARGETS Industrial previous current Activities Net Sales1 (20)-(15)% YoY (23)-(22)% YoY Adj. EBIT margin2 10.0-11.0% 8.0-9.0% Free Cash Flow2 $700M-$900M ($300M)-($100M) Company previous current Adj. Diluted EPS2 $1.30-$1.40 $1.05-$1.15 (1) Reflects full-year €/$ exchange ra
Slide 17: Priorities & Outlook
PRIORITIES & OUTLOOK Near Term Price-conscious reduction of channel inventory Taking orders for model year 2025 equipment Cost containment & further process streamlining Looking Ahead Monitor market indicators in a challenging industry environment Matching production to retail demand by H2
Slide 18: Appendix
APPENDIX a a
Slide 19: Q3 2024 | Unit Performance vs. Q3 2023
Q3 2024 | UNIT PERFORMANCE VS. Q3 2023 NORTH SOUTH EMEA1 APAC1 AMERICA1 AMERICA1 0-140 HP – Small Tractors (18)% (20)% (12)% 1% 140+ HP – Large Tractors (17)% Total Industry Combines (29)% (50)% (32)% (33)% Light (7)% (20)% 9% (3)% Heavy (9)% (9)% 12% 9% Tractors Combines Light Heavy Company Q3'23 Q
Slide 20: Q3 / 9M 2024 | Financial Summary
Q3 / 9M 2024 | FINANCIAL SUMMARY ($M) Q3 2023 Q3 2024 Δ YoY 9M 2023 9M 2024 Δ YoY U.S. GAAP Revenues 5,986 4,654 (22)% 17,895 14,960 (16)% Net Sales | Industrial Activities 5,332 3,997 (25)% 16,062 12,931 (19)% Net Income 540 310 (43)% 1,704 1,083 (36)% Diluted EPS $0.40 $0.24 $(0.16) $1.25 $0.85 $(
Slide 21: Q3 2024 | Industrial Activities Net Sales
Q3 2024 | INDUSTRIAL ACTIVITIES NET SALES Agriculture Construction Industrial Activities1 $3,310M $687M $3,997M Q3 2023 (24)% YoY (24)% @CC2 (28)% YoY (26)% @CC2 (25)% YoY (24)% @CC2 Q3 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 22: 9M 2024 | Industrial Activities Net Sales
9M 2024 | INDUSTRIAL ACTIVITIES NET SALES Agriculture Construction Industrial Activities1 $10,596M $2,335M $12,931M 9M 2023 (20)% YoY (19)% @CC2 (18)% YoY (18)% @CC2 (19)% YoY (19)% @CC2 9M 2024 By Region By Region By Region as reported as reported as reported NA EMEA SA APAC NA EMEA SA APAC NA EMEA
Slide 23: Q3 / 9M 2024 | Financials by Segment
Q3 / 9M 2024 | FINANCIALS BY SEGMENT ($M) Revenues & Adj. EBIT Gross Profit Gross Margin Adj. EBIT1 Net Sales Margin1 Q3 23 Q3 24 Q3 23 Q3 24 Q3 23 Q3 24 Q3 23 Q3 24 Q3 23 Q3 24 Agriculture 4,384 3,310 1,122 752 25.6% 22.7% 642 336 14.6% 10.2% Construction 948 687 151 114 15.9% 16.6% 60 40 6.3% 5.8%
Slide 24: Q3 / 9M 2024 | Capex and R&D
Q3 / 9M 2024 | CAPEX AND R&D ($M) Q3 2023 Q3 2024 9M 2023 9M 2024 Investments in property, plant and equipment, and intangible assets 176 123 397 329 Breakdown by Category New Product & Technology 31% 47% 35% 47% Maintenance & Other 63% 50% 57% 48% Industrial Capacity Expansion & LT Investments 6% 3
Slide 25: Debt Maturity Schedule | Breakdown
DEBT MATURITY SCHEDULE | BREAKDOWN ($B) Outstanding Sept. 30, 2024 2024 2025 2026 2027 2028 Beyond 3.6 Bank Debt 1.1 0.6 0.6 0.3 0.2 0.8 11.6 Capital Market 1.0 2.8 2.5 1.9 0.8 2.7 0.1 Other Debt 0.1 - - - - - 15.3 Cash Portion of Debt Maturities 2.2 3.4 3.1 2.2 1.0 3.4 of which Industrial Activitie
Slide 26: Accounting Revision
ACCOUNTING REVISION a a
Slide 27: Accounting Revision by Quarter (1/2)
ACCOUNTING REVISION BY QUARTER (1/2) ($M) Q1’23 Q2’23 Q3’23 Q4’23 FY 2023 Q1’24 Q2’24 H1 2024 Equity in income of unconsolidated subsidiaries and affiliates As reported 33 64 79 98 274 77 79 156 Revision (15) (17) (30) (34) (96) (33) (34) (67) As revised 18 47 49 64 178 44 45 89 Net income (loss) As
Slide 28: Accounting Revision by Quarter (1/2)
ACCOUNTING REVISION BY QUARTER (1/2) ($M) Q1’23 Q2’23 Q3’23 Q4’23 FY 2023 Q1’24 Q2’24 H1 2024 (1) Adjusted net income As reported 475 711 570 557 2,313 421 485 906 Revision (15) (17) (30) (34) (96) (33) (34) (67) As revised 460 694 540 523 2,217 388 451 839 Adjusted diluted EPS(1) As reported $0.35
Slide 29: Reconciliation of Adj. EBIT for Industrial Activities to Net Income
RECONCILIATION OF ADJ. EBIT FOR INDUSTRIAL ACTIVITIES TO NET INCOME ($M) Q1’23 Q2’23 Q3’23 Q4’23 FY 2023 Q1’24 Q2’24 H1 2024 Net Income (loss) - as reported 486 710 570 617 2,383 402 438 840 Revision impacts (15) (17) (30) (34) (96) (33) (34) (67) Net income (loss) - as revised 471 693 540 583 2,287
Slide 30: Reconciliation of Adjusted Net Income to Net Income and Recasted Adjusted Diluted EPS
RECONCILIATION OF ADJUSTED NET INCOME TO NET INCOME AND CALCULATION OF THE RECASTED ADJUSTED DILUTIVE EPS ($M) Q1’23 Q2’23 Q3’23 Q4’23 FY 2023 Q1’24 Q2’24 H1 2024 Net Income (loss) - as reported 486 710 570 617 2,383 402 438 840 Revision impacts (15) (17) (30) (34) (96) (33) (34) (67) Net income (lo
Slide 31: Reconciliations
RECONCILIATIONS a a
Slide 32: Reconciliation of Net Income to Adj. EBIT of Industrial Activities
RECONCILIATION OF NET INCOME TO ADJ. EBIT OF INDUSTRIAL ACTIVITIES ($M) Q3 2023 Q3 2024 9M 2023 9M 2024 Net Income 540 310 1,704 1,083 Less: Consolidated income tax expense (171) (75) (536) (247) Consolidated income before taxes 711 385 2,240 1,330 Less: Financial Services Financial Services Net Inc
Slide 33: 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 ($M) Q3 2023 Q3 2024 9M 2023 9M 2024 Net cash provided by (used in) Operating Activities 232 791 (608) 276 Cash flows from Operating Activities of Financial Services net of elim
Slide 34: Reconciliation of Adj. Net Income and Adj. Income Tax to Net Income
RECONCILIATION OF ADJ. NET INCOME AND ADJ. INCOME TAX (EXPENSE) BENEFIT TO NET INCOME (LOSS) AND INCOME TAX (EXPENSE) BENEFIT AND CALCULATION OF ADJ. DILUTED EPS AND ADJ. ETR UNDER U.S. GAAP ($M) Q3 2023 Q3 2024 9M 2023 9M 2024 Net income (loss) 540 310 1,704 1,083 Adjustments impacting Income (loss
Slide 35: 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 36: 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 37: 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