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CNH Industrial (CNHI - Free Report) delivered first-quarter 2023 adjusted earnings per share of 35 cents, which increased from 28 cents in the prior-year quarter and surpassed the Zacks Consensus Estimate of 32 cents. Higher-than-anticipated revenues across the Agricultural and Financial Services segments resulted in this outperformance.
In the first quarter, consolidated revenues rose 15% from the year-ago level to $5,342 million, topping the Zacks Consensus Estimate of $5,146 million. The company’s net sales from industrial activities came in at $4,776 million, up 14.3%, led by higher volumes and favorable pricing.
CNH Industrial N.V. Price, Consensus and EPS Surprise
In the December quarter, net sales in the Agricultural segment grew 16% year over year to $3,927 million due to higher volumes, favorable price realization and an improved mix. The metric also topped the Zacks Consensus Estimate of $3,826 million. The segment’s adjusted EBIT came in at $570 million, jumping 33.8% year over year and rising from the consensus mark of $533 million. The adjusted EBIT margin increased to 14.5% from 12.6%.
The Construction segment’s sales grew 6% year over year to $849 million in the quarter, led by favorable price realization and improved volume and mix in Europe and North America. However, revenues lagged the Zacks Consensus Estimate of $862 million. Adjusted EBIT came in at $44 million, gaining 37.5% on favorable volume and a positive price realization. The figure also surpassed the consensus mark of $34.17 million. The adjusted EBIT margin increased to 5.2% from 4%.
The Financial Services segment’s revenues went up 18% to $549 million, topping the consensus mark of $504 million on improved volumes and better base rates. Net income from the segment declined 4.9% to $78 million due to high labor costs and margin compression in North America in the quarter under review.
Financial Details
CNH Industrial had cash and cash equivalents of $3,213 million as of Mar 31, 2023, down from $4,376 million as of Dec 31, 2022. The company’s debt totaled $23,552 million at the end of the first quarter of 2023, up from $22,962 million as of Dec 31, 2022.
CNH Industrial’s net cash, provided by operating activities was $701 million, down from $887 million in the year-ago period. Free cash flow from industrial activities was $673 million in the quarter versus FCF of $1,059 million in the first quarter of 2022.
Revised Guidance 2023
For 2023, sales are expected to increase year over year in the band of 8-11%, up from the previous guidance of 6-10%. The projections for free cash flow from industrial activities are in the range of $1.3 billion to $1.5 billion. R&D expenses and capex projections stand at around $1.6 billion. SG&A expenses are expected to grow by no more than 5% vs 2022.
A few top-ranked players in the same industry are Deere & Company (DE - Free Report) and AGCO (AGCO - Free Report) , both carrying a Zacks Rank #2 (Buy).
Deere is the world’s largest producer of agricultural equipment, manufacturing agricultural machinery since 1837 under the iconic John Deere brand. The Zacks Consensus Estimate for DE’s 2023 sales and earnings imply year-over-year growth of 14.7% and 30.9%, respectively.
AGCO is a leading manufacturer and distributor of agricultural equipment and related replacement parts. The Zacks Consensus Estimate for AGCO’s 2023 sales and earnings imply year-over-year growth of 14% and 14.9%, respectively.
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CNH Industrial (CNHI) Q1 Earnings & Revenues Surpass Estimates
CNH Industrial (CNHI - Free Report) delivered first-quarter 2023 adjusted earnings per share of 35 cents, which increased from 28 cents in the prior-year quarter and surpassed the Zacks Consensus Estimate of 32 cents. Higher-than-anticipated revenues across the Agricultural and Financial Services segments resulted in this outperformance.
In the first quarter, consolidated revenues rose 15% from the year-ago level to $5,342 million, topping the Zacks Consensus Estimate of $5,146 million. The company’s net sales from industrial activities came in at $4,776 million, up 14.3%, led by higher volumes and favorable pricing.
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 December quarter, net sales in the Agricultural segment grew 16% year over year to $3,927 million due to higher volumes, favorable price realization and an improved mix. The metric also topped the Zacks Consensus Estimate of $3,826 million. The segment’s adjusted EBIT came in at $570 million, jumping 33.8% year over year and rising from the consensus mark of $533 million. The adjusted EBIT margin increased to 14.5% from 12.6%.
The Construction segment’s sales grew 6% year over year to $849 million in the quarter, led by favorable price realization and improved volume and mix in Europe and North America. However, revenues lagged the Zacks Consensus Estimate of $862 million. Adjusted EBIT came in at $44 million, gaining 37.5% on favorable volume and a positive price realization. The figure also surpassed the consensus mark of $34.17 million. The adjusted EBIT margin increased to 5.2% from 4%.
The Financial Services segment’s revenues went up 18% to $549 million, topping the consensus mark of $504 million on improved volumes and better base rates. Net income from the segment declined 4.9% to $78 million due to high labor costs and margin compression in North America in the quarter under review.
Financial Details
CNH Industrial had cash and cash equivalents of $3,213 million as of Mar 31, 2023, down from $4,376 million as of Dec 31, 2022. The company’s debt totaled $23,552 million at the end of the first quarter of 2023, up from $22,962 million as of Dec 31, 2022.
CNH Industrial’s net cash, provided by operating activities was $701 million, down from $887 million in the year-ago period. Free cash flow from industrial activities was $673 million in the quarter versus FCF of $1,059 million in the first quarter of 2022.
Revised Guidance 2023
For 2023, sales are expected to increase year over year in the band of 8-11%, up from the previous guidance of 6-10%. The projections for free cash flow from industrial activities are in the range of $1.3 billion to $1.5 billion. R&D expenses and capex projections stand at around $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 #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
A few top-ranked players in the same industry are Deere & Company (DE - Free Report) and AGCO (AGCO - Free Report) , both carrying a Zacks Rank #2 (Buy).
Deere is the world’s largest producer of agricultural equipment, manufacturing agricultural machinery since 1837 under the iconic John Deere brand. The Zacks Consensus Estimate for DE’s 2023 sales and earnings imply year-over-year growth of 14.7% and 30.9%, respectively.
AGCO is a leading manufacturer and distributor of agricultural equipment and related replacement parts. The Zacks Consensus Estimate for AGCO’s 2023 sales and earnings imply year-over-year growth of 14% and 14.9%, respectively.