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CNH Industrial (CNHI) Q2 Earnings Beat, Declares $300M Buyback

·5 min read

CNH Industrial CNHI posted second-quarter 2022 adjusted earnings per share of 43 cents, which increased 16.2% from 37 cents in the prior-year quarter and topped the Zacks Consensus Estimate of 37 cents. Higher-than-anticipated revenues across the Agricultural Equipment and the Financial Services segments resulted in this outperformance.

In the second quarter, consolidated revenues rose 18% from the year-ago level to $6,082 million and topped the consensus mark of $5,859 million. The company’s net sales for industrial activities came in at $5,613 million, up 18%, led by favorable pricing.

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

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

In the June quarter, net sales in the Agricultural Equipment segment jumped 19% year over year to $4,722 million due to a favorable price realization and mix mainly driven by the North America and South America regions. The metric also topped the Zacks Consensus Estimate of $4,454 million. The segment’s adjusted EBIT came in at $663 million, rising 13.9% year over year and driven by higher gross profit and topping the consensus mark of $631 million. The adjusted EBIT margin however, decreased to 14% from 14.7% amid increased selling, general & administrative (SG&A) and research & development (R&D).

The Construction Equipment segment’s sales grew 10% year over year to $891 million in the quarter, led by price realization and contribution from the Sampierana business. But, revenues missed the Zacks Consensus Estimate of $892 million. Adjusted EBIT came in at $34 million, gaining 41.2% on the back of favorable volume and a positive price realization. Nonetheless, the figure nominally lagged the consensus mark of $34.16 million. The adjusted EBIT margin fell to 3.8% from 3% in the year-ago quarter amid unfavorable fixed costs absorption and higher freight and raw material costs.

The Financial Services segment revenues went up 20% to $471 million and topped the consensus mark of $427 million on higher used equipment sales, base rates in South America and average portfolios across all regions. Net income from the segment jumped 11.8% to $95 million.

Financial Details

CNH Industrial had cash and cash equivalents of $2,855 million as of Jun 30, 2022, down from $5,044 million as of Dec 31, 2021. The company’s debt totaled $20,817 million at the end of the second quarter of 2022, down from $20,897 million as of Dec 31, 2021. The firm had available liquidity of $8,795 million as of Jun 30, 2022.

CNH Industrial’s net cash used in operating activities was $271 million against net cash of $999 million provided by operating activities in the previous-year quarter. Free cash flow from industrial activities was $404 million in the quarter.

During the quarter, the company received proceeds of $350 million for the sale of the Raven Engineered Films Division. Also, it approved a $300 million share buyback program to be launched at the completion of the existing $100 million program.

2022 Guidance

CNH Industrial has revised its estimates for net sales from industrial activities (including currency-translation effects) for 2022. Sales are now expected to increase year over year in the band of 12-14% instead of 10-14% guided earlier. Its projections for free cash flow remains unchanged and it continues to expect to generate more than $1 billion in free cash flow from industrial activities in 2022. R&D expenses and capex projections also remain the same at around $1.4 billion. SG&A expenses remain projected at lower or equal to 7.5% of net sales.

Zacks Rank & Key Picks

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

Better-ranked players in the auto space include Genuine Parts Company GPC, LCI Industries LCII and Standard Motor Products SMP, each carrying a Zacks Rank #2 (Buy), currently. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Genuine Parts has an expected earnings growth rate of 15.8% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised 1.9% upward in the past 30 days.

Genuine Parts’ earnings beat the Zacks Consensus Estimate in all of the trailing four quarters. GPC pulled off a trailing four-quarter earnings surprise of 11.03%, on average. The stock has risen 20.8% over the past year.

LCI Industries has an expected earnings growth rate of 65.9% for the current year. The Zacks Consensus Estimate for current-year earnings has remained constant in the past 30 days.

LCI Industries’ earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed in one. LCII pulled off a trailing four-quarter earnings surprise of 21.81%, on average. The stock has declined 7.3% in the past year.

Standard Motor has an expected earnings growth rate of 5.2% for the current year. The Zacks Consensus Estimate for current-year earnings has remained constant in the past 30 days.

Standard Motor’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters. SMP pulled off a trailing four-quarter earnings surprise of 40.34%, on average. The stock has risen 8.8% over the past year.


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