CNH Industrial (CNHI) Q4 Earnings Beat Estimates, Rise Y/Y

CNH Industrial CNHI delivered fourth-quarter 2023 adjusted earnings per share (EPS) of 42 cents, up from 36 cents reported in the prior-year quarter. The figure also beat the Zacks Consensus Estimate of 41 cents.

In the fourth quarter, consolidated revenues declined 2% from the year-ago level to $6.79 billion. The company’s net sales from industrial activities came in at $6.02 billion, down 5% due to lower industry demand in Agriculture. The figure lagged the Zacks Consensus Estimate of $6.35 billion.

Segmental Performance

In the fourth quarter, net sales in the Agriculture segment fell 8% year over year to $4.95 billion, due to lower industry volume and unfavorable mix. The metric missed our estimate of $5.29 billion. The segment’s adjusted EBIT came in at $669 million, down 4.6% year over year. The figure also lagged our estimate of $725.5 million. The adjusted EBIT margin increased to 13.5% from 13.1%, led by a better mix, higher gross margin and a slight reduction in SG&A expenses.

The Construction segment’s sales grew 9% year over year to $1.07 billion in the quarter, led by a favorable price realization and improved volume and mix in North America. However, the metric lagged our estimate of $1.1 billion. Adjusted EBIT came in at $62 million, up 82.5% on favorable price realization. The figure missed our estimate of $65.7 million. The adjusted EBIT margin increased to 5.8% from 3.5%.

The Financial Services segment’s revenues went up 33% to $768 million, surpassing our estimate of $681.9 million on improved volumes and better base rates across all regions. Net income from the segment rose to $113 million from $75 million reported in the year-ago quarter.

Financial Details

CNH Industrial had cash and cash equivalents of $4.32 billion as of Dec 31, 2023, down from $4.38 billion as of Dec 31, 2022.

The company’s debt totaled $27.3 billion as of Dec 31, 2023, up from $22.96 billion as of Dec 31, 2022.

The company’s net cash provided by operating activities was $1.52 billion, up from $1.44 billion in the year-ago period.

Free cash flow from industrial activities was $1.63 billion in the quarter compared with free cash flow of $2.05 billion in the fourth quarter of 2022.

CNHI approved an additional $500 million share buyback program, which will begin after the completion of the existing $1 billion share buyback program.

Guidance 2024

For full-year 2024, Agriculture sales are expected to decline 8-12% year over year. Adjusted EBIT margin for the Agriculture segment is expected in the band of 14-15%. For the Construction segment, sales are expected to decline 7-11% year over year. Adjusted EBIT margin for the Construction segment is expected in the range of 5-6%. The projections for free cash flow from industrial activities are in the range of $1.2-$1.4 billion. Adjusted diluted EPS is expected between $1.50 and $1.60.

Zacks Rank & Key Picks

CNHI currently carries a Zacks Rank #3 (Hold).

Some better-ranked players in the auto space are Modine Manufacturing Company MOD, NIO Inc. NIO and Oshkosh Corporation OSK. MOD sports a Zacks Rank #1 (Strong Buy), while NIO & OSK carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for MOD’s 2024 sales and earnings implies year-over-year growth of 4% and 67.2%, respectively. The EPS estimates for 2024 and 2025 have improved 22 cents each in the past 30 days.

The Zacks Consensus Estimate for NIO’s 2023 sales implies year-over-year growth of 10.4%. The EPS estimates for 2024 have improved 7 cents in the past 30 days.

The Zacks Consensus Estimate for OSK’s 2024 sales and earnings indicates year-over-year growth of 6.7% and 4%, respectively. The EPS estimates for 2024 and 2025 have improved 16 cents and 29 cents, respectively, in the past 30 days.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report