CNH Industrial N.V. Reports Second Quarter 2024 Results

Second quarter consolidated revenue declined 16% on lower industry demand

Second quarter diluted EPS at $0.34; adjusted diluted EPS at $0.38 ($0.52 in the second quarter of 2023)

Results reflect continued execution of cost savings initiatives mitigating the impact of market headwinds

Returned $1.2 billion to shareholders through dividends and share repurchases in the first half of 2024

Full-year guidance updated to reflect weaker market conditions

Basildon, UK - July 31, 2024 - CNH Industrial N.V. (NYSE: CNH) today reported results for the three months ended June 30, 2024, with net income of $438 million and diluted earnings per share of $0.34 compared with net income of $710 million and diluted earnings per share of $0.52 for the three months ended June 30, 2023. Consolidated revenues were $5.49 billion (down approximately 16% compared to Q2 2023) and Net sales of Industrial Activities were $4.80 billion (down approximately 19% compared to Q2 2023). Net cash provided by operating activities was $379 million and Industrial Free Cash Flow generation was $140 million in Q2.

I am thrilled to have rejoined the hardworking CNH team. I have long admired this leading company for its iconic brands and truly global presence. After spending my first weeks visiting our plants, dealers, and customers, I am impressed by the focus on advancing our brands distinctive positions, developing the product pipeline, accelerating our technology offerings, and turning around the construction business. Im returning at a challenging point in our industries, and I appreciate the ongoing efforts that our employees have made this past quarter. We will continue to manage the business prudently through 2024 while positioning ourselves for 2025. I am confident in our success and look forward to presenting our strategy with you at an investor day in early 2025.

Gerrit Marx, Chief Executive Officer

2024 Second Quarter Results

(all amounts $ million, comparison vs Q2 2023 - unless otherwise stated)

US-GAAP
		Q2 2024		Q2 2023		Change		Change at c.c.(1)
Consolidated revenue		5,488		6,567		(16)%		(16)%
of which Net sales of Industrial Activities		4,803		5,954		(19)%		(19)%
Net income		438		710		(38)%
Diluted EPS $		0.34		0.52		(0.18)
Cash flow provided (used) in operating activities		379		(139)		+518
Cash and cash equivalents(2)		2,002		4,322		(2,320)
Gross profit margin of Industrial Activities		22.9%		25.0%		(210) bps

NON-GAAP(3)
		Q2 2024		Q2 2023		Change
Adjusted EBIT of Industrial Activities		536		822		(286)
Adjusted EBIT margin of Industrial Activities		11.2%		13.8%		(260) bps
Adjusted net income		485		711		(226)
Adjusted diluted EPS $		0.38		0.52		(0.14)
Free cash flow of Industrial Activities		140		386		(246)

The decline in Net sales of Industrial Activities is mainly due to lower shipments on decreased industry demand and reduced dealer inventory requirements. Price realization continued to be modestly favorable for Agriculture and essentially flat for Construction.

Adjusted net income was $485 million with adjusted diluted earnings per share of $0.38. In comparison, in Q2 2023, adjusted net income was $711 million with adjusted diluted earnings per share of $0.52.

Income tax expense was $95 million ($192 million in Q2 2023), and the effective tax rate (ETR) was 20.9% (22.9% in Q2 2023) with an adjusted ETR⁽³⁾ of 21.0% for the second quarter (24.0% in Q2 2023). The Company forecasts full year 2024 adjusted ETR to be in the range of 24-26%⁽⁶⁾.

Cash flow provided by operating activities in the quarter was $379 million ($139 million used in Q2 2023). Free cash flow of Industrial Activities was $140 million.

The Companys restructuring program continued during the quarter according to plan, and CNH expects to achieve a run rate reduction of 10-15% on total labor and non-labor SG&A expenses. The Company has incurred a total of $114 million of restructuring charges through Q2 2024, including $53 million in 2023, and now expects to incur up to $180 million in total.

Agriculture
		Q2 2024		Q2 2023		Change		Change at c.c.(1)
Net sales ($ million)		3,913		4,890		(20)%		(19)%
Adjusted EBIT ($ million)		536		821		(285)
Adjusted EBIT margin		13.7%		16.8%		(310) bps

In North America, industry volume was down 11% year-over-year in the second quarter for tractors under 140 HP and was up 2% for tractors over 140 HP; combines were down 5%. In Europe, Middle East and Africa (EMEA), tractor and combine demand was down 10% and down 36%, respectively. South America tractor demand was down 10% and combine demand was down 26%, continuing the recent negative trend. Asia Pacific tractor demand was up 1% and combine demand was up 4%.

Agriculture net sales decreased for the quarter by 20% to $3.91 billion, primarily due to lower shipment volumes on decreased industry demand and dealer inventory requirements across all regions, partially offset by favorable price realization.

Gross profit margin was 24.4% (27.0% in Q2 2023), down 260 bps as a result of lower production volume and unfavorable mix. These were partially offset by price realization, primarily in North America, and improved purchasing and manufacturing costs.

Adjusted EBIT decreased to $536 million ($821 million in Q2 2023) driven by the lower industry volumes, partially offset by improved purchasing and manufacturing costs, and a continued reduction in SG&A expenses. R&D investments accounted for 5.5% of sales (4.9% in Q2 2023). Income from unconsolidated subsidiaries increased $15 million year-over-year. Adjusted EBIT margin was 13.7% (16.8% in Q2 2023).

Construction
		Q2 2024		Q2 2023		Change		Change at c.c.(1)
Net sales ($ million)		890		1,064		(16)%		(16)%
Adjusted EBIT ($ million)		60		72		(12)
Adjusted EBIT margin		6.7%		6.8%		(10) bps

Global industry volume for construction equipment decreased 5% year-over-year in the second quarter for Heavy construction equipment; Light construction equipment was down 4%. Aggregated demand decreased 15% in EMEA, was flat in North America, increased 30% in South America and decreased 6% in Asia Pacific.

Construction net sales decreased for the quarter by 16% to $890 million, due to lower volumes across all regions driven mainly by lower market demand.

Gross profit margin was 16.5%, up 50 bps compared to Q2 2023, mainly due to better purchasing and manufacturing costs, partially offset by unfavorable mix.

Adjusted EBIT was $60 million, a decrease of $12 million from $72 million in Q2 2023, as a result of lower volumes, mostly offset by improved product costs and lower SG&A expenses. Adjusted EBIT margin at 6.7% decreased by 10 bps year-over-year.

Financial Services
		Q2 2024		Q2 2023		Change		Change at c.c.(1)
Revenue ($ million)		687		603		+14%		+16%
Net income ($ million)		91		94		(3)
Equity at quarter-end ($ million)		2,843		2,534		+309
Retail loan originations ($ million)		2,864		2,770		+3%

Revenues of Financial Services increased 14% due to favorable volumes in all regions except EMEA and higher yields, primarily in North America, partially offset by lower used equipment sales due to decreased operating lease maturities.

Net income was $91 million in the second quarter of 2024, a decrease of $3 million compared to the same quarter of 2023, primarily due to increased risk costs driven by higher delinquencies in South America offsetting higher volumes and interest margin improvements globally.

The managed portfolio (including unconsolidated joint ventures) was $28.5 billion as of June 30, 2024 (of which retail was 65% and wholesale was 35%), up $2.5 billion compared to June 30, 2023 (up $3.3 billion on a constant currency basis).

At June 30, 2024, the receivables balance greater than 30 days past due as a percentage of receivables was 2.5% (1.8% as of June 30, 2023), with most of the growth in South America from the seasonal concentration of yearly payments owed by agricultural customers compounded by regional economic and environmental factors.

2024 Outlook

The Company forecasts that global industry retail sales will continue to be weaker in both the agriculture and construction equipment markets in the second half of 2024. CNH is continuing its efforts to improve through-cycle margins with its previously announced cost reduction programs focused on product costs and SG&A expenses to partially offset the impact of the lower industry demand.

As a result of the lower industry sales projections, the Company is updating its 2024 outlook as follows:

• Agriculture segment net sales⁽⁵⁾ down between 15% and 20% year-over-year including currency translation effects (from down 11% to 15% previously)
• Agriculture segment adjusted EBIT margin between 13.0% and 14.0% (from between 13.5% and 14.5% previously)
• Construction segment net sales⁽⁵⁾ down between 15% and 20% year-over-year including currency translation effects (from down 7% to 11% previously)
• Construction segment adjusted EBIT margin between 5.0% and 6.0% (unchanged)
• Free Cash Flow of Industrial Activities⁽⁶⁾ between $0.7 and $0.9 billion (from between $1.1 to $1.3 billion previously)
• Adjusted diluted EPS⁽⁶⁾ between $1.30 to $1.40 (from between $1.45 to $1.55 previously)

Change from Foreign Private Issuer to U.S. Domestic Filer

As of June 30, 2024, CNH has determined that it will no longer qualify as a foreign private issuer, as defined under the Securities Exchange Act of 1934, as amended (the Exchange Act) as of January 1, 2025. As a result, effective as of January 1, 2025, the Company will no longer be eligible to use the rules designed for foreign private issuers and will be considered a U.S. domestic issuer. At that time, CNH will be required to comply with, among other things, U.S. proxy requirements and Regulation FD, and its officers, directors and shareholders owning more than 10% will become subject to the beneficial ownership reporting and short-swing profit recovery requirements in Section 16 of the Exchange Act. Starting with its third quarter 2022 results, CNH began voluntarily reporting its financial results under the periodic reporting forms for U.S. domestic filers. The Company will continue to file annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K.

Results for the Six Months Ended June 30, 2024

(all amounts $ million, comparison vs YTD Q2 2023 - unless otherwise stated)

US-GAAP
		YTD Q2 2024		YTD Q2 2023		Change		Change at c.c.(1)
Consolidated revenue		10,306		11,909		(13)%		(13)%
of which Net sales of Industrial Activities		8,934		10,730		(17)%		(17)%
Net income		840		1,196		(30)%
Diluted EPS $		0.66		0.88		(0.22)
Cash flow used in operating activities		(515)		(840)		+325
Cash and cash equivalents(2)		2,002		4,322		(2,320)
Gross profit margin of Industrial Activities		22.8%		24.8%		(200) bps

NON-GAAP(3)
		YTD Q2 2024		YTD Q2 2023		Change
Adjusted EBIT of Industrial Activities		941		1,377		(436)
Adjusted EBIT margin of Industrial Activities		10.5%		12.8%		(230) bps
Adjusted net income		906		1,186		(280)
Adjusted diluted EPS $		0.71		0.87		(0.16)
Free cash flow of Industrial Activities		(1,069)		(287)		(782)

Agriculture
		YTD Q2 2024		YTD Q2 2023		Change		Change at c.c.(1)
Net sales ($ million)		7,286		8,817		(17)%		(17)%
Adjusted EBIT ($ million)		957		1,391		(434)
Adjusted EBIT margin		13.1%		15.8%		(270) bps

Construction
		YTD Q2 2024		YTD Q2 2023		Change		Change at c.c.(1)
Net sales ($ million)		1,648		1,913		(14)%		(14)%
Adjusted EBIT ($ million)		111		116		(5)
Adjusted EBIT margin		6.7%		6.1%		+60 bps

Financial Services
		YTD Q2 2024		YTD Q2 2023		Change		Change at c.c.(1)
Revenue ($ million)		1,372		1,152		+19%		+19%
Net income ($ million)		209		172		+37

Notes

CNH reports quarterly and annual consolidated financial results under U.S. GAAP and annual consolidated financial results under EU-IFRS. The tables and discussion related to the financial results of the Company and its segments shown in this press release are prepared in accordance with U.S. GAAP.

1. c.c. means at constant currency.
2. Comparison vs. December 31, 2023
3. This item is a non-GAAP financial measure. Refer to the Non-GAAP Financial Information section of this press release for information regarding non-GAAP financial measures. Refer to the specific table in the Other Supplemental Financial Information section of this press release for the reconciliation between the non-GAAP financial measure and the most comparable GAAP financial measure.
4. Certain financial information in this report has been presented by geographic area. Our geographical regions are: (a) North America; (b) Europe, Middle East and Africa (EMEA); (c) South America and (d) Asia Pacific. The geographic designations have the following meanings:
   1. North America: United States, Canada, and Mexico;
   2. Europe, Middle East, and Africa: member countries of the European Union, European Free Trade Association, the United Kingdom, Ukraine and Balkans, Russia, Turkey, Uzbekistan, Pakistan, the African continent, and the Middle East;
   3. South America: Central and South America, and the Caribbean Islands; and
   4. Asia Pacific: Continental Asia (including the India subcontinent), Indonesia and Oceania.
5. Net sales reflecting the exchange rate of 1.09 EUR/USD.
6. The Company is unable to provide this reconciliation without unreasonable effort due to the uncertainty and inherent difficulty of predicting the occurrence, the financial impact, and the periods in which the adjustments may be recognized. For the same reasons, the Company is unable to address the probable significance of the unavailable information, which could be material to future results.

Non-GAAP Financial Information

CNH monitors its operations through the use of several non-GAAP financial meas