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CNH Industrial (CNHI) Rallies 3.4% Since Q2 Earnings Beat, Ups View

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CNH Industrial (CNHI - Free Report) announced second-quarter 2021 results on Jul 30, before the opening bell. The company’s comprehensive beat, improved year-over-year performance and upbeat 2021 guidance pushed the stock higher, resulting in a rally of 3.4% since the announcement of quarterly results.

CNH Industrial posted second-quarter 2021 adjusted earnings per share of 42 cents, reversing the loss of 7 cents per share reported in the prior-year period and comfortably surpassing the Zacks Consensus Estimate of 27 cents. Higher-than-anticipated revenues from industrial activities (comprising Agricultural Equipment, Construction Equipment, Commercial and Specialty vehicles, and Powertrain segments) resulted in this outperformance.

For the second quarter, consolidated revenues climbed 60% from the year-ago level to $8,911 million and topped the consensus mark of $7,657 million as well. The company’s net sales for industrial activities came in at $8,490 million, up 65% year on year.

CNH Industrial N.V. Price, Consensus and EPS Surprise 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

For the June-end quarter, net sales in the Agricultural Equipment segment jumped 56% year over year to $3,970 million. The metric also surpassed the Zacks Consensus Estimate of $3,101 million. Moreover, the segment’s adjusted EBIT came in at $582 million, surging 186.7% from the year-ago quarter on higher volumes, positive price realization and favorable mix, partially offset by rising raw material and freight costs, as well as higher SG&A and R&D spend.

The Construction Equipment segment’s sales escalated 92.4% year over year to $808 million for second-quarter 2021. Revenues from the unit also outpaced the Zacks Consensus Estimate of $601 million. Adjusted EBIT came in at $24 million, reversing the loss of $87 million posted in the prior-year period, on the back of favorable volume, as well as better price realization.

Revenues in Commercial and Specialty vehicles increased 85.2% year on year to $3,220 million, beating the consensus mark of $2,862 million. Adjusted EBIT came in at $100 million, against the loss of $156 million reported in the prior-year period. This upside primarily stemmed from higher volumes, positive price realization and favorable mix, partially offset by rising raw material costs, as well as higher SG&A and R&D spend.

The Powertrain segment’s quarterly revenues soared 68.7% year over year to $1,287 million for the second quarter. The reported figure also outpaced the consensus mark of $877 million. Adjusted EBIT from the segment skyrocketed 132.3% from the prior-year quarter to $74 million amid favorable volume and mix and positive price realization.

The Financial Services segment revenues came in at $439 million, essentially flat year over year amid lower average portfolio in North America and lower loan yields. The reported figure lagged the consensus mark of $459 million. Net income from the segment jumped 86.8% from the prior-year quarter to $99 million, primarily on lower risk costs and improved pricing on used equipment sales.

Financial Details

CNH Industrial had cash and cash equivalents of $7,820 million as of Jun 30, 2021, compared with $5,145 million in the corresponding period of 2020. The company’s debt increased to $24,512 million as of Jun 30, 2021 from $24,449 million in the comparable period of 2020. The firm had available liquidity of $14,423 million as of Jun 30, 2021 compared with $11,515 million in the same period last year.

CNH Industrial’s cash provided by operating activities was $999 million during the reported quarter compared with the prior-year period’s $1,067 million. Free cash flow (FCF) from industrial activities came in at $1,008 million for the second quarter, up from the $97 million recorded in the prior-year period.

2021 View Up

CNH Industrial expects net sales from industrial activities (including currency-translation effects) for 2021 to increase 24-28% year on year, up from the prior outlook of 14-18% year on year.  The company envisions FCF from industrial activities for the ongoing year to be more than $1 billion, higher than the previous guidance of within $0.6-$1 billion.

CNH industrial, peers of which include PACCAR (PCAR - Free Report) , Volkswagen AG (VWAGY - Free Report) and Daimler AG (DDAIF - Free Report) , currently carries a Zacks Rank of 3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


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