Cnh Industrial N.v. · NYSE:CNH
Cnh Industrial — Q1 2023 Earnings Presentation
36 slides from Cnh Industrial's earnings presentation, May 5, 2023
Slide 1: Q1 2023 Results Review
Q1 2023 RESULTS REVIEW May 5, 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: Q1 2023 Main Achievements
Q1 2023 | MAIN ACHIEVEMENTS Record Q1 margins in both Agriculture and Construction Cost saving initiatives underway Organic and inorganic investments driving tech stack development 3 Q1 2023 results review | 5-May-2023
Slide 4: Q1 2023 Results
Q1 2023 | RESULTS Consolidated Adj. EBIT1 Net Income Diluted EPS Revenues Industrial Activities $5.3B $555M $486M $0.35 +15% +29% +45% +$0.11 Net Sales Adj. EBIT%1 Adjusted Adjusted Industrial Activities Industrial Activities Net Income1 Diluted EPS1 $4.8B 11.6% $475M $0.35 +14% +130 bps +26% +$0.07
Slide 5: Q1 2023 Business Highlights
Q1 2023 | BUSINESS HIGHLIGHTS Ag NA row crop market strength; rebounding retail activity in Brazil Construction demand strong; production increased Financial Services portfolio growth; interest rates pressure margins Showcased new products at ConExpo in Las Vegas Reaffirmed top 1%1 in S&P’s Sustaina
Slide 6: Strategic Priorities
STRATEGIC PRIORITIES CUSTOMER TECHNOLOGY BRAND OPERATIONAL SUSTAINABILITY INSPIRED LEADERSHIP AND DEALER EXCELLENCE STEWARDSHIP INNOVATION STRENGTH Superior user experience Full autonomous farming cycle Global brands + local partners World-class quality and delivery SBTi commitment Rigorous “in fiel
Slide 7: Strategic Priorities
STRATEGIC PRIORITIES CUSTOMER TECHNOLOGY BRAND OPERATIONAL SUSTAINABILITY INSPIRED LEADERSHIP AND DEALER EXCELLENCE STEWARDSHIP INNOVATION STRENGTH Superior user experience Full autonomous farming cycle Global brands + local partners World-class quality and delivery SBTi commitment Rigorous “in fiel
Slide 8: Customer Inspired Innovation
CUSTOMER INSPIRED INNOVATION Best-in-Class Medium Heavy Duty Tractors Achieving Superior Results Customer benefits: Quietest tractor cab in the market Optum New benchmark in spacious comfort, with 11% more glass and 30% more airflow Powerful and compact, with lower soil compaction Productivity incre
Slide 9: Technology Leadership
TECHNOLOGY LEADERSHIP Organic and Inorganic Technology Investments R&D investments continue With bolt-on enhancements 4.1%1 Machine vision & automation 3.8% 3.6% Satellite positioning Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Methane 2021 2022 2023 capture R&D expense TTM R&D / Sales1 9 Q1 2023 results review | 5-
Slide 10: Q1 2023 Financial Highlights
Q1 2023 | FINANCIAL HIGHLIGHTS ($mn) +14% +26% +$0.07 +386 4,776 475 $0.35 4,180 378 $0.28 (673) +17% @CC2 (1,059) Q1 2022 Q1 2023 Q1 2022 Q1 2023 Q1 2022 Q1 2023 Q1 2022 Q1 2023 Net Sales Adjusted Adjusted Free Cash Flow1 Industrial Activities Net Income1 Diluted EPS1 Industrial Activities Δ YoY 10
Slide 11: Q1 2023 Agriculture
Q1 2023 | AGRICULTURE ($mn) Net Sales Gross Margin1 +16% +210 bps 3,927 26.2% 3,377 24.1% +19% @CC2 Q1'22 Q1'23 Δ YoY Q1'22 Q1'23 Adjusted EBIT3 14.5% 12.6% Vol. Pricing, Prod. FX & Q1’22 SG&A R&D Q1’23 & Mix Net Cost Other (1) Gross Margin calculated as Gross Profit divided by Net Sales, as shown o
Slide 12: Q1 2023 Construction
Q1 2023 | CONSTRUCTION ($mn) Net Sales Gross Margin1 +6% +260 bps 849 15.9% 803 13.3% +8% @CC2 Q1'22 Q1'23 Δ YoY Q1'22 Q1'23 Adjusted EBIT3 5.2% 4.0% Vol. Pricing, Prod. FX & Q1’22 SG&A R&D Q1’23 & Mix Net Cost Other (1) Gross Margin calculated as Gross Profit divided by Net Sales, as shown on slide
Slide 13: Q1 2023 Financial Services
Q1 2023 | FINANCIAL SERVICES Net Income Profitability Ratios ($mn) 4.0% 3.7% 3.2% 3.0% Q1 2022 82 2.6% 3.0% 2.1% 1.8% 2.0% Q1 2023 78 1.0% Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Gross Margin / Average Assets on Book RoA1 Managed Portfolio2 & Retail Originations2 Delinquencies on Book
Slide 14: Capital Allocation Priorities
CAPITAL ALLOCATION PRIORITIES ORGANIC GROWTH Increase in R&D and capex investments funded through operating cash flow CREDIT RATING Current long-term ratings: Moody’s Baa2; S&P BBB and Fitch BBB+ GROSS DEBT Financial Services issued new bonds in Q2; Industrial debt stable SHAREHOLDER RETURNS ~$70M s
Slide 15: Update on Single Listing
UPDATE ON SINGLE LISTING On-going constructive dialog with exchange management Delisting from Milan to be completed by year end Prepared to increase share buybacks as needed Positive feedback from shareholder base 15 Q1 2023 results review | 5-May-2023
Slide 16: 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 Tractors (5%) – flat flat flat (5%) – flat 140+ Large 5% – 10% Tractors Combines 5% – 10% flat flat (5%) – flat Light (5%) – flat (10%) – (5%) (10%) – (5%) (5%) – flat Heavy (5%) – flat (10%)
Slide 17: FY 2023 Guidance
FY 2023 GUIDANCE INDUSTRIAL ACTIVITIES Previous Guidance Updated Guidance +6% to +10% +8% to +11% Net Sales1 vs. 2022 vs. 2022 SG&A up <5% vs. 2022 Reaffirmed Free Cash Flow2 $1.3bn to $1.5bn Reaffirmed R&D ~$1.6bn Reaffirmed CapEx (1) Reflects full-year €/$ exchange rate average of 1.10 17 Q1 2023
Slide 18: 2023 Priorities & Outlook
2023 PRIORITIES & OUTLOOK Strong orders & momentum in cash crop Continued ramp-up of R&D / tech investments Raven impact accelerates Integration of new acquisitions Margin improvement programs yielding results 18 Q1 2023 results review | 5-May-2023
Slide 19: Appendix
APPENDIX
Slide 20: Unit Performance vs. Q1 2022
Q1 2023 | UNIT PERFORMANCE VS. Q1 2022 NORTH SOUTH EMEA1 APAC1 AMERICA1 AMERICA1 0-140 HP Tractors (16%) 140+ Large (5%) (6%) 6% 19% Industry Tractors Combines 116% 7% 16% (3%) Light 2% 3% (19%) (13%) Heavy 3% (6%) (28%) (23%) TRACTORS COMBINES LIGHT HEAVY Company Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q1'22
Slide 21: Financial Summary
Q4 / FY 2022 | FINANCIAL SUMMARY ($mn) Q1 2022 Q1 2023 Δ YoY U.S. GAAP Revenues 4,645 5,342 +15% Net Sales | Industrial Activities 4,180 4,776 +14% Net Income 336 486 +45% Diluted EPS ($) 0.24 0.35 +0.11 Non – GAAP1 Net Sales | Industrial Activities @CC2 4,180 4,878 +17% Adjusted EBIT | Industrial A
Slide 22: Industrial Activities Net Sales
Q1 2023 | INDUSTRIAL ACTIVITIES NET SALES AG CE Industrial Activities1 $3,927mn $849mn $4,776mn Q1 2022 +16% YoY +19% @CC2 +6% YoY +8% @CC2 +14% YoY +17% @CC2 Q1 2023 By Region By Region By Region as reported as reported as reported NA EMEA SA APAC NA EMEA SA APAC NA EMEA SA APAC Q1 2023 mix 38% 34%
Slide 23: Financials by Segment
Q1 2023 | FINANCIALS BY SEGMENT ($mn) Revenues & Adj. EBIT Gross Profit Gross Margin Adj. EBIT1 Net Sales Margin1 Q1 22 Q1 23 Q1 22 Q1 23 Q1 22 Q1 23 Q1 22 Q1 23 Q1 22 Q1 23 Agriculture 3,377 3,927 814 1,030 24.1% 26.2% 426 570 12.6% 14.5% Construction Equip. 803 849 107 135 13.3% 15.9% 32 44 4.0% 5
Slide 24: Ind. Activities Change in Net (Debt) / Cash
Q1 2023 | IND. ACTIVITIES – CHANGE IN NET (DEBT) / CASH 1 ($mn) Share BB (71) Dividends (1) M&A (107) Free Cash Flow1 (673) Change in Change in Dividends & Net Cash1 Cash Interest PP&E Other Net Debt1 Adj. EBIT(1) D&A Working Funds & Equity FX & Other 31-Dec-22 & Taxes CapEx Changes 31-Mar-23 Capita
Slide 25: CapEx and R&D
Q1 2023 | CAPEX AND R&D ($mn) Q1 2022 Q1 2023 Investments in property, plant and equipment, and intangible assets 53 90 Breakdown by Category New Product & Technology 29% 45% Maintenance & Other 47% 44% Industrial Capacity Expansion & LT Investments 24% 11% Breakdown by Segment Agriculture 89% 90% C
Slide 26: Debt Maturity Schedule | Breakdown
DEBT MATURITY SCHEDULE | BREAKDOWN ($bn) Outstanding Dec. 31, 2022 2023 2024 2025 2026 2027 Beyond 3.3 Bank Debt 1.4 0.6 0.4 0.2 0.3 0.5 10.3 Capital Market 2.1 2.4 2.1 1.7 1.2 0.8 0.1 Other Debt 0.1 0.0 0.0 0.0 0.0 0.0 13.8 Cash Portion of (Debt) Maturities 3.6 3.0 2.5 1.9 1.5 1.3 of which Industri
Slide 27: Reconciliations
RECONCILIATIONS
Slide 28: Reconciliation of Net Income to Adj. EBIT of Industrial Activities
RECONCILIATION OF NET INCOME TO ADJ. EBIT OF INDUSTRIAL ACTIVITI ES ($mn) Q1 2022 Q1 2023 Net Income 336 486 Less: Consolidated income tax expense (159) (173) Consolidated income before taxes 495 659 Less: Financial Services Financial Services Net Income 82 78 Financial Services Income Taxes 36 29 A
Slide 29: Reconciliation of Total Debt to Net Debt (US GAAP)
RECONCILIATION OF TOTAL DEBT TO NET DEBT (US GAAP) ($mn) Consolidated Industrial Activities Financial Services 31-Dec-22 31-Mar-23 31-Dec-22 31-Mar-23 31-Dec-22 31-Mar-23 Third party debt (22,962) (23,552) (4,909) (5,025) (18,053) (18,527) Intersegment notes payable - - (63) (16) (888) (982) Payable
Slide 30: Reconciliation of Operating Cash Flow to Free Cash Flow
RECONCILIATION OF NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES TO FREE CASH FLOW OF INDUSTRIAL ACTIVITIES UNDER U.S. GAAP ($mn) Q1 2022 Q1 2023 Net cash provided by (used in) Operating Activities (887) (701) Cash flows from Operating Activities of Financial Services net of eliminations (96) 1
Slide 31: Change in Net Cash (Debt) of Industrial Activities
CHANGE IN NET CASH (DEBT) OF INDUSTRIAL ACTIVITIES UNDER US -GAAP ($mn) Q1 2022 Q1 2023 Net Cash (Debt) of Industrial Activities at beginning of period (1,126) 362 Adjusted EBIT of Industrial Activities 429 555 Depreciation and Amortization 82 85 Depreciation of assets under operating leases 1 1 Cas
Slide 32: Reconciliation of Adj. Net Income and Adj. Income Tax (1/2)
RECONCILIATION OF ADJ. NET INCOME AND ADJ. INCOME TAX (EXPENSE) BENEFIT TO NET INCOME (LOSS) AND INCOME TAX (EXPENSE) BENEFIT AN D CALCULATION OF ADJ. DILUTED EPS AND ADJ. ETR UNDER U.S.-GAAP (1/2) ($mn) Q1 2022 Q1 2023 Net income (loss) 336 486 Adjustments impacting Income (loss) before income tax
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) ($mn) Q1 2022 Q1 2023 (a) Adjustments impacting Income (loss) before income tax (expense) benefit and
Slide 34: 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 35: 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 36: 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