Cnh Industrial N.v. · NYSE:CNH
Cnh Industrial — Q2 2023 Earnings Presentation
32 slides from Cnh Industrial's earnings presentation, Jul 28, 2023
Slide 1: Q2 2023 Results Review
Q2 2023 RESULTS REVIEW July 28, 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: Q2 2023 Main Achievements
Q2 2023 | MAIN ACHIEVEMENTS Record Q2 margins in both Agriculture and Construction Highest North America HHP tractor production levels since 2015 CNH Business System driving operational efficiencies 3 Q2 2023 results review | 28-Jul-2023
Slide 4: Q2 2023 Results
Q2 2023 | RESULTS Consolidated Adj. EBIT1 Net Income Diluted EPS Revenues Industrial Activities $6.6B $822M $710M $0.52 +8% +26% +29% +$0.12 Net Sales Adj. EBIT%1 Adjusted Adjusted Industrial Activities Industrial Activities Net Income1 Diluted EPS1 $6.0B 13.8% $711M $0.52 +6% +210 bps +22% +$0.09 Y
Slide 5: Q2 2023 Business Highlights
Q2 2023 | BUSINESS HIGHLIGHTS Agriculture set new Gross and EBIT margin records Construction hit $1B+ quarterly net sales for the first time Order books opened for MY24; sustained tractor demand Continued growth in precision solutions adoption New Straddle Tractor range introduced Published 2022 Sus
Slide 6: Construction Momentum
CONSTRUCTION MOMENTUM Sales & Adj. EBIT Margin Trend Net Sales Adj. EBIT Margin Capitalizing on Sampierana product and 6.8% technology integration $3.6B 5.2% 5.5-6.5%1 $3.1B $2.8B 2.9% 3.5% North American market strength 1.8% $1.1B $0.8B // Leveraging distribution synergies with Ag FY'19 … FY'21 FY'
Slide 7: Strategic Priorities
STRATEGIC PRIORITIES CUSTOMER TECHNOLOGY BRAND OPERATIONAL SUSTAINABILITY INSPIRED LEADERSHIP AND DEALER EXCELLENCE STEWARDSHIP INNOVATION STRENGTH 7 Q2 2023 results review | 28-Jul-2023
Slide 8: Operational Excellence: CNH Business System (CBS)
OPERATIONAL EXCELLENCE: CNH BUSINESS SYSTEM (CBS) CBS employs Kaizen / Lean Toolsets and Root Cause Problem Solving Daily Management System Daily Management System prioritizes & Compass Room solves site systemic problems Strategy Deployment drives innovative breakthrough change Margin expansion thro
Slide 9: Q2 2023 Financial Highlights
Q2 2023 | FINANCIAL HIGHLIGHTS ($M) +6% +22% +$0.09 -4% 711 $0.52 5,954 404 386 5,613 583 $0.43 +7% @CC2 Q2 2022 Q2 2023 Q2 2022 Q2 2023 Q2 2022 Q2 2023 Q2 2022 Q2 2023 Net Sales Adjusted Adjusted Free Cash Flow1 Industrial Activities Net Income1 Diluted EPS1 Industrial Activities Δ YoY 9 Q2 2023 re
Slide 10: Q2 2023 Agriculture
Q2 2023 | AGRICULTURE ($M) Net Sales Gross Margin1 +4% +360 bps 4,722 4,890 27.0% 23.4% +5% @CC2 Q2 2022 Q2 2023 Δ YoY Q2 2022 Q2 2023 Adjusted EBIT3 16.8% 14.0% Vol. Pricing, Prod. FX & Q2 2022 SG&A R&D Q2 2023 & Mix Net Cost Other (1) Gross Margin calculated as Gross Profit divided by Net Sales, a
Slide 11: Q2 2023 Construction
Q2 2023 | CONSTRUCTION ($M) Net Sales Gross Margin1 +19% +220 bps 1,064 16.0% 891 13.8% +20% @CC2 Q2 2022 Q2 2023 Δ YoY Q2 2022 Q2 2023 Adjusted EBIT3 6.8% 3.8% Vol. Pricing, Prod. FX & Q2 2022 SG&A R&D Q2 2023 & Mix Net Cost Other (1) Gross Margin calculated as Gross Profit divided by Net Sales, as
Slide 12: Q2 2023 Financial Services
Q2 2023 | FINANCIAL SERVICES Net Income Profitability Ratios ($M) 3.8% 4.0% 3.2% 3.1% Q2 2022 95 3.0% 2.6% 2.2% 1.9% 2.0% Q2 2023 94 1.0% Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Gross Margin / Average Assets on Book RoA1 Managed Portfolio2 & Retail Originations2 Delinquencies on Book (
Slide 13: Capital Allocation Priorities
CAPITAL ALLOCATION PRIORITIES ORGANIC GROWTH Support future growth through operating cash flow reinvestments CREDIT RATING Maintain strong credit rating, supporting strategic captive finance business GROSS DEBT Reduce industrial debt through strong free cash flow SHAREHOLDER RETURNS Maintain a dedic
Slide 14: 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 (5%) – flat flat flat (5%) – flat 140+ HP – Large Tractors 10% – 15% Combines 5% – 10% flat (5%) – flat (5%) – flat Light flat – 5% (10%) – (5%) (5%) – flat (5%) – flat Heavy
Slide 15: FY 2023 Guidance
FY 2023 GUIDANCE INDUSTRIAL ACTIVITIES Previous Guidance Current Guidance +8% to +11% Net Sales1 vs. 2022 Reaffirmed SG&A up <5% vs. 2022 Reaffirmed Free Cash Flow2 $1.3B to $1.5B Reaffirmed R&D ~$1.6B Reaffirmed CapEx (1) Reflects full-year €/$ exchange rate average of 1.10 15 Q2 2023 results revie
Slide 16: 2023 Priorities & Outlook
2023 PRIORITIES & OUTLOOK Margin improvement programs yielding results North America row crop strength; global ag fundamentals solid Focus on retail execution Continued ramp-up of R&D investments Tech stack enhancements accelerate 16 Q2 2023 results review | 28-Jul-2023
Slide 17: Appendix
APPENDIX
Slide 18: Q2 2023 Unit Performance vs. Q2 2022
Q2 2023 | UNIT PERFORMANCE VS. Q2 2022 NORTH SOUTH EMEA1 APAC1 AMERICA1 AMERICA1 0-140 HP – Small Tractors (8%) (6%) (4%) (4%) 140+ HP – Large Tractors 21% Total Industry Combines 27% 32% (27%) (29%) Light 9% (1%) flat (11%) Heavy 4% 2% (25%) (15%) TRACTORS COMBINES LIGHT HEAVY Company Q2'22 Q3'22 Q
Slide 19: Q2 / H1 2023 Financial Summary
Q2 / H1 2023 | FINANCIAL SUMMARY ($M) Q2 2022 Q2 2023 Δ YoY H1 2022 H1 2023 Δ YoY U.S. GAAP Revenues 6,082 6,567 +8% 10,727 11,909 +11% Net Sales | Industrial Activities 5,613 5,954 +6% 9,793 10,730 +10% Net Income 552 710 +29% 888 1,196 +35% Diluted EPS - $ 0.40 0.52 +0.12 0.65 0.88 +0.23 Non – GAA
Slide 20: Q2 2023 Industrial Activities Net Sales
Q2 2023 | INDUSTRIAL ACTIVITIES NET SALES Agriculture Construction Industrial Activities1 $4,890M $1,064M $5,954M Q2 2022 +4% YoY +5% @CC2 +19% YoY +20% @CC2 +6% YoY +7% @CC2 Q2 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 Q2
Slide 21: H1 2023 Industrial Activities Net Sales
H1 2023 | INDUSTRIAL ACTIVITIES NET SALES Agriculture Construction Industrial Activities1 $8,817M $1,913M $10,730M H1 2022 +9% YoY +11% @CC2 +13% YoY +14% @CC2 +10% YoY +11% @CC2 H1 2023 By Region By Region By Region as reported as reported as reported NA EMEA SA APAC NA EMEA SA APAC NA EMEA SA APAC
Slide 22: Q2 2023 Financials by Segment
Q2 2023 | FINANCIALS BY SEGMENT ($M) Revenues & Adj. EBIT Gross Profit Gross Margin Adj. EBIT1 Net Sales Margin1 Q2 22 Q2 23 Q2 22 Q2 23 Q2 22 Q2 23 Q2 22 Q2 23 Q2 22 Q2 23 Agriculture 4,722 4,890 1,105 1,321 23.4% 27.0% 663 821 14.0% 16.8% Construction 891 1,064 123 170 13.8% 16.0% 34 72 3.8% 6.8%
Slide 23: Q2 / H1 2023 CapEx and R&D
Q2 / H1 2023 | CAPEX AND R&D ($M) Q2 2022 Q2 2023 H1 2022 H1 2023 Investments in property, plant and equipment, and intangible assets 84 131 137 221 Breakdown by Category New Product & Technology 28% 34% 28% 39% Maintenance & Other 48% 58% 48% 52% Industrial Capacity Expansion & LT Investments 24% 8
Slide 24: Debt Maturity Schedule | Breakdown
DEBT MATURITY SCHEDULE | BREAKDOWN ($B) Outstanding June 30, 2023 2023 2024 2025 2026 2027 Beyond 3.4 Bank Debt 1.1 0.9 0.4 0.2 0.2 0.5 10.9 Capital Market 1.6 2.6 2.5 1.7 1.2 1.3 0.1 Other Debt 0.1 0.0 0.0 0.0 0.0 0.0 14.4 Cash Portion of (Debt) Maturities 2.8 3.5 2.9 1.9 1.4 1.9 of which Industria
Slide 25: Reconciliations
RECONCILIATIONS
Slide 26: Reconciliation of Net Income to Adj. EBIT of Industrial Activities
RECONCILIATION OF NET INCOME TO ADJ. EBIT OF INDUSTRIAL ACTIVITI ES ($M) Q2 2022 Q2 2023 H1 2022 H1 2023 Net Income 552 710 888 1,196 Less: Consolidated income tax expense (228) (192) (387) (365) Consolidated income before taxes 780 902 1,275 1,561 Less: Financial Services Financial Services Net Inc
Slide 27: Reconciliation of Operating Cash Flow to Free Cash Flow
RECONCILIATION OF NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES TO FREE CASH FLOW OF IND. ACTIVITIES UNDER U.S. GAAP ($M) Q2 2022 Q2 2023 H1 2022 H1 2023 Net cash provided by (used in) Operating Activities (271) (139) (1,158) (840) Cash flows from Operating Activities of Financial Services net
Slide 28: 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) ($M) Q2 2022 Q2 2023 H1 2022 H1 2023 Net income (loss) 552 710 888 1,196 Adjustments impacting Income
Slide 29: Reconciliation of Adj. Net Income and Adj. Income Tax (2/2)
RECONCILIATION OF ADJ. NET INCOME AND ADJ. INCOME TAX (EXPENSE) BENEFIT TO NET INCOME (LOSS) AND INCOME TAX (EXPENSE) BENEFIT AN D CALCULATION OF ADJ. DILUTED EPS AND ADJ. ETR UNDER U.S. GAAP (2/ 2) ($M) Q2 2022 Q2 2023 H1 2022 H1 2023 (a) Adjustments impacting Income (loss) before income tax (expen
Slide 30: Geographic Information
GEOGRAPHIC INFORMATION The composition of our regions part of the geographic information is as follow: ▪ 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 31: 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 32: 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