CNH Industrial posted fourth-quarter 2021 adjusted earnings per share of 25 cents. The bottom line decreased from 30 cents in the prior-year quarter but surpassed the Zacks Consensus Estimate of 21 cents. Higher-than-anticipated revenues and EBIT across the Agricultural Equipment and the Construction Equipment segments resulted in this outperformance.

In the fourth quarter, consolidated revenues climbed around 7% from the year-ago level to $9,072 million and topped the consensus mark of $7,983.3 million. The company’s net sales for industrial activities came in at $8,552 million, up 6.4% year on year.

Segmental Performance

In the December quarter, net sales in the Agricultural Equipment segment jumped 21.2% year over year to $4,150 million due to a demand boost and favorable price realization. The metric also surpassed the Zacks Consensus Estimate of $3,083 million. The segment’s adjusted EBIT came in at $414 million, up $35 million year over year and topped the consensus mark of $308 million. The adjusted EBIT margin decreased to 10% from 11.1% amid an unfavorable mix and higher raw material and freight as well as increased selling, general & administrative (SG&A) and research & development (R&D) spend.

The Construction Equipment segment’s sales grew 12.2% year over year to $844 million in fourth-quarter 2021, led by favorable price realization, higher demand and lower destocking by dealers and distributors. Revenues from the unit also outpaced the Zacks Consensus Estimate of $564 million. Adjusted EBIT came in at $20 million, doubling from the prior-year figure and topping the consensus mark of $8 million, on the back of favorable volume and better price realization. The adjusted EBIT margin increased to 2.4% from 1.3% in the year-ago quarter. The performance was aided by positive price realization and favorable volume and mix.

Revenues in Commercial and Specialty vehicles slid down 1% year over year to $3,256 million in the fourth quarter, affected by unfavorable currency translation. The reported figure, however, topped the consensus mark of $3,043 million. Adjusted EBIT came down to $55 million from $110 million reported in the prior-year period and missed the consensus figure of $99 million. The adjusted EBIT margin decreased to 1.7% from 3.3% in the year-ago quarter. This performance primarily stemmed from higher raw material costs and higher freight, rework costs due to component shortages and R&D spending.

The Powertrain segment’s quarterly revenues came down to $945 million, contracting 21.5% year over year due to lower deliveries to external customers. The reported figure also lagged the consensus mark of $1,096 million. Adjusted EBIT from the segment declined to $23 million from $87 million amid high freight, commodity and raw material costs. The figure missed the consensus estimate of $82 million. The adjusted EBIT margin decreased to 2.4% from 9.1% in the year-ago quarter.

The Financial Services segment revenues went up to $533 million, increasing around 10% year over year. The reported figure also topped the consensus mark of $497 million. Net income from the segment jumped 86.6% to $112 million, primarily on lower risk costs and improved pricing on used-equipment sales.

Financial Details

CNH Industrial had cash and cash equivalents of $6,006 million as of Dec 31, 2021. The company’s debt totaled $23,745 million at the end of the fourth quarter of 2021, decreasing around 9% from the year-ago quarter. The firm had available liquidity of $12,149 million as of Dec 31, 2021, compared with $15,871 million at 2020-end.

CNH Industrial’s cash provided by operating activities was $2,190 million during the reported quarter, down from $2,766 in the previous-year quarter. Free cash flow from industrial activities came in at $1,842 million in the fourth quarter.

2022 Guidance

CNH Industrial expects net sales from industrial activities (including currency-translation effects) for 2022 to increase in the band of 10-14% year over year. It expects to generate more than $1 billion in free cash flow from industrial activities in 2022. R&D expenses and capex are projected at around $1.4 billion, rising from $1 billion in 2021.

Zacks Rank & Key Picks

Currently, CNH Industrial has a Zacks Rank #3 (Hold).

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