CNH Industrial (CNHI) Q1 Earnings Top Estimates, Down Y/Y
CNH Industrial CNHI posted first-quarter 2022 adjusted earnings per share of 28 cents that decreased 12.5% from 32 cents in the prior-year quarter but topped the Zacks Consensus Estimate of 25 cents. Higher-than-anticipated revenues across the Construction Equipment and the Financial Services segments resulted in this outperformance.
In the first quarter, consolidated revenues fell around 37.8% from the year-ago level to $4,645 million but topped the consensus mark of $4,606.5 million. The company’s net sales for industrial activities came in at $4,180 million, up 13%, led by 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 March quarter, net sales in the Agricultural Equipment segment jumped 11% year over year to $3,377 million due to a favorable price realization and mix mainly driven by the North America and South America regions. The metric, however, lagged the Zacks Consensus Estimate of $3,488 million. The segment’s adjusted EBIT came in at $426 million, rising 6.7% year over year and matching the consensus mark. The adjusted EBIT margin, however, decreased to 12.6% from 13.1% amid higher labor cost as well as increased selling, general & administrative (SG&A) and research & development (R&D) spend.
The Construction Equipment segment’s sales grew 22% year over year to $803 million in the quarter, led by higher volumes due to higher industry demand in our main markets, market share growth and favorable price realization, primarily in North America and South America. Revenues from the unit also outpaced the Zacks Consensus Estimate of $712 million. Adjusted EBIT came in at $32 million, gaining 25% and topping the consensus mark of $21.49 million on the back of favorable volume and better price realization. The adjusted EBIT margin slightly increased to 4% from 3.8% in the year-ago quarter.
The Financial Services segment revenues went up 17% to $466 million and topped the consensus mark of $440 million on higher used equipment sales, increased base rates in South America and average portfolios in South America and EMEA. Net income from the segment jumped 5.1% to $82 million.
Financial Details
CNH Industrial had cash and cash equivalents of $3,219 million as of Mar 31, 2022, down from $5,044 million as of Dec 31, 2021. The company’s debt totaled $21,335 million at the end of the first quarter of 2022, down from $20,897 million as of Dec 31, 2021. The firm had available liquidity of $9,399 million as of Mar 31, 2022, compared with $10,521 million at 2021-end.
CNH Industrial’s net cash used in operating activities was $887 million against net cash of $241 million provided by operating activities in the previous-year quarter. Free cash flow from industrial activities was $1,059 million in the quarter.
2022 Guidance
CNH Industrial keeps its previous estimates for 2022 unchanged. Its net sales from industrial activities (including currency-translation effects) for 2022 are expected 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
CNHI currently carries a Zacks Rank #3 (Hold).
Better-ranked players in the auto space include BRP Group, Inc. DOOO, sporting a Zacks Rank #1 (Strong Buy) and Dorman Products DORM and Tesla Inc. TSLA, each carrying a Zacks Rank #2 (Buy), currently. You can see the complete list of today’s Zacks #1 Rank stocks here.
BRP Group has an expected earnings growth rate of 9.1% for fiscal 2023. The Zacks Consensus Estimate for current-year earnings has been revised around 7.9% upward in the past 60 days.
BRP Group’s earnings beat the Zacks Consensus Estimate in all of the trailing four quarters. DOOO pulled off a trailing four-quarter earnings surprise of 68%, on average. The stock has declined 6.3% over the past year.
Dorman Products has an expected earnings growth rate of 18.8% for the current year. The Zacks Consensus Estimate for current-year earnings has been marginally revised 0.7% upwards in the past 60 days.
Dorman Products’ earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed in one. DORM pulled off a trailing four-quarter earnings surprise of 3.1%, on average. The stock has lost 2% over the past year.
Tesla has an expected earnings growth rate of 66.1% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised around 18.7% upward in the past 60 days.
Tesla’s earnings beat the Zacks Consensus Estimate in all of the trailing four quarters. TSLA pulled off a trailing four-quarter earnings surprise of 41.27%, on average. The stock has gained 43.6% over the past year.
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