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CNH Industrial (CNHI) Q2 Earnings Beat Estimates, Revenues Miss
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CNH Industrial delivered second-quarter 2023 adjusted earnings per share of 52 cents, which increased from 43 cents in the prior-year quarter and surpassed the Zacks Consensus Estimate of 48 cents.
In the second quarter, consolidated revenues rose 8% from the year-ago level to $6,567 million. The company’s net sales from industrial activities came in at $5,954 million, up 6%, led by favorable pricing. However, the metric lagged the Zacks Consensus Estimate of $6,781 million.
CNH Industrial N.V. Price, Consensus and EPS Surprise
In the June quarter, net sales in the Agricultural segment grew 4% year over year to $4,890 million thanks to favorable price realization. But the metric missed our estimate of $5,129 million due to low demand for tractors. The segment’s adjusted EBIT came in at $821 million, jumping 23.8% year over year and outpacing our estimate of $734 million. The adjusted EBIT margin increased to 16.8% from 14% due to favorable pricing and improved mix.
The Construction segment’s sales grew 19% year over year to $1,064 million in the quarter, led by favorable price realization and improved volume and mix in North America. The metric also surpassed our estimate of $1,008 million. Adjusted EBIT came in at $72 million, gaining 111.8% on favorable volume and a positive price realization. The figure also surpassed the our estimate of $27.3 million. The adjusted EBIT margin increased to 6.8% from 3.8%.
The Financial Services segment’s revenues went up 28% to $603 million, topping our estimate of $578.4 million on improved volumes and better base rates across all regions. Net income from the segment declined 1.1% to $94 million due to high-risk costs and margin compression in North America in the quarter under review.
Financial Details
CNH Industrial had cash and cash equivalents of $3,194 million as of Jun 30, 2023, down from $4,376 million as of Dec 31, 2022. The company’s debt totaled $24,870 million at the end of the second quarter of 2023, up from $22,962 million as of Dec 31, 2022.
The company’s net cash, used by operating activities, was $139 million, down from $271 million in the year-ago period. Free cash flow from industrial activities was $386 million in the quarter versus free cash flow of $404 million in the second quarter of 2022.
Reaffirmed Guidance 2023
For Industrial activities, sales are expected to increase year over year in the band of 8-11%. The projections for free cash flow from industrial activities are in the range of $1.3-$1.5 billion. R&D expenses and capex projections are pegged at $1.6 billion. SG&A expenses are expected to grow by no more than 5% vs 2022.
A few other players in the same industry are Deere & Company (DE - Free Report) and AGCO Corporation (AGCO - Free Report) , each carrying a Zacks Rank #3 (Hold).
The Zacks Consensus Estimate for DE’s 2023 sales and earnings implies year-over-year growth of 9.3% and 31.8%, respectively. The 2023 EPS estimate has been revised upward by a cent in the past seven days. The EPS estimate for 2024 has moved south by 3 cents in the past seven days.
The Zacks Consensus Estimate for AGCO’s 2023 sales and earnings implies year-over-year growth of 7.5% and 0.9%, respectively. The 2023 EPS estimate has been revised upward by 33 cents in the past seven days. The EPS estimate for 2024 has moved north by 11 cents in the past seven days.
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CNH Industrial (CNHI) Q2 Earnings Beat Estimates, Revenues Miss
CNH Industrial delivered second-quarter 2023 adjusted earnings per share of 52 cents, which increased from 43 cents in the prior-year quarter and surpassed the Zacks Consensus Estimate of 48 cents.
In the second quarter, consolidated revenues rose 8% from the year-ago level to $6,567 million. The company’s net sales from industrial activities came in at $5,954 million, up 6%, led by favorable pricing. However, the metric lagged the Zacks Consensus Estimate of $6,781 million.
CNH Industrial N.V. Price, Consensus and EPS Surprise
CNH Industrial N.V. price-consensus-eps-surprise-chart | CNH Industrial N.V. Quote
Segmental Performance
In the June quarter, net sales in the Agricultural segment grew 4% year over year to $4,890 million thanks to favorable price realization. But the metric missed our estimate of $5,129 million due to low demand for tractors. The segment’s adjusted EBIT came in at $821 million, jumping 23.8% year over year and outpacing our estimate of $734 million. The adjusted EBIT margin increased to 16.8% from 14% due to favorable pricing and improved mix.
The Construction segment’s sales grew 19% year over year to $1,064 million in the quarter, led by favorable price realization and improved volume and mix in North America. The metric also surpassed our estimate of $1,008 million. Adjusted EBIT came in at $72 million, gaining 111.8% on favorable volume and a positive price realization. The figure also surpassed the our estimate of $27.3 million. The adjusted EBIT margin increased to 6.8% from 3.8%.
The Financial Services segment’s revenues went up 28% to $603 million, topping our estimate of $578.4 million on improved volumes and better base rates across all regions. Net income from the segment declined 1.1% to $94 million due to high-risk costs and margin compression in North America in the quarter under review.
Financial Details
CNH Industrial had cash and cash equivalents of $3,194 million as of Jun 30, 2023, down from $4,376 million as of Dec 31, 2022. The company’s debt totaled $24,870 million at the end of the second quarter of 2023, up from $22,962 million as of Dec 31, 2022.
The company’s net cash, used by operating activities, was $139 million, down from $271 million in the year-ago period. Free cash flow from industrial activities was $386 million in the quarter versus free cash flow of $404 million in the second quarter of 2022.
Reaffirmed Guidance 2023
For Industrial activities, sales are expected to increase year over year in the band of 8-11%. The projections for free cash flow from industrial activities are in the range of $1.3-$1.5 billion. R&D expenses and capex projections are pegged at $1.6 billion. SG&A expenses are expected to grow by no more than 5% vs 2022.
Zacks Rank and Key Picks
CNH Industrial currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
A few other players in the same industry are Deere & Company (DE - Free Report) and AGCO Corporation (AGCO - Free Report) , each carrying a Zacks Rank #3 (Hold).
The Zacks Consensus Estimate for DE’s 2023 sales and earnings implies year-over-year growth of 9.3% and 31.8%, respectively. The 2023 EPS estimate has been revised upward by a cent in the past seven days. The EPS estimate for 2024 has moved south by 3 cents in the past seven days.
The Zacks Consensus Estimate for AGCO’s 2023 sales and earnings implies year-over-year growth of 7.5% and 0.9%, respectively. The 2023 EPS estimate has been revised upward by 33 cents in the past seven days. The EPS estimate for 2024 has moved north by 11 cents in the past seven days.