CNH Industrial N.V.(CNH) - 2025 Q1 - Quarterly Results

First Quarter 2025 Financial and Operational Highlights CNH Industrial reported a significant decline in Q1 2025 results, with consolidated revenues falling 21% to $3.8 billion and diluted EPS dropping to $0.10, driven by lower demand and dealer destocking Q1 2025 Performance Summary CNH Industrial reported a significant decline in Q1 2025 results, with consolidated revenues falling 21% to $3.8 billion and diluted EPS dropping to $0.10, driven by lower demand and dealer destocking | Metric | Q1 2025 | Q1 2024 | Change | Change at constant currency | | :--- | :--- | :--- | :--- | :--- | | Consolidated revenues | $3,828 Million | $4,818 Million | (21)% | (17)% | | Net sales of Industrial Activities | $3,172 Million | $4,131 Million | (23)% | (21)% | | Net income | $132 Million | $369 Million | (64)% | - | | Diluted EPS | $0.10 | $0.29 | ($0.19) | - | | Adjusted net income | $132 Million | $388 Million | (66)% | - | | Adjusted diluted EPS | $0.10 | $0.30 | ($0.20) | - | | Cash flow from operating activities | $162 Million | ($894) Million | +$1,056 Million | - | | Free cash flow of Industrial Activities | ($567) Million | ($1,209) Million | +$642 Million | - | - The decline in Net sales of Industrial Activities was mainly attributed to lower shipments resulting from decreased industry demand and dealer destocking[4] - Management emphasized a focus on reducing dealer inventories and managing costs to navigate current macroeconomic uncertainties, expressing confidence in strategic initiatives ahead of the upcoming Investor Day[1] Segment Performance This section details the performance of Agriculture, Construction, and Financial Services segments, all experiencing revenue declines and margin contractions Agriculture The Agriculture segment saw a 23% decline in net sales to $2.58 billion and a 64% drop in Adjusted EBIT to $139 million due to lower demand and shipments | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Net sales | $2,581 Million | $3,373 Million | (23)% | | Gross profit margin | 20.0% | 23.8% | (380) bps | | Adjusted EBIT | $139 Million | $388 Million | (64)% | | Adjusted EBIT margin | 5.4% | 11.5% | (610) bps | - Industry demand for tractors and combines fell sharply in North America (down 12-51%) and EMEA (down 23-34%), while South America saw a rebound with tractor and combine demand up 10% and 1% respectively[7] - The decrease in Adjusted EBIT was primarily caused by lower shipment volumes, partially offset by improved purchasing and manufacturing costs and reduced SG&A expenses[9] Construction The Construction segment's net sales decreased by 22% to $591 million, with Adjusted EBIT falling 73% to $14 million due to lower volumes and unfavorable pricing | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Net sales | $591 Million | $758 Million | (22)% | | Gross profit margin | 14.9% | 17.4% | (250) bps | | Adjusted EBIT | $14 Million | $51 Million | (73)% | | Adjusted EBIT margin | 2.4% | 6.7% | (430) bps | - Global industry volume for Heavy construction equipment increased by 2%, while Light construction equipment decreased by 6%, with aggregated demand falling in North America (-11%), EMEA (-9%), and South America (-1%), but growing in Asia Pacific (+7%)[10] Financial Services Financial Services revenues declined 5% to $651 million, with net income decreasing 24% to $90 million due to currency impacts and increased risk costs | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Revenues | $651 Million | $685 Million | (5)% | | Net income | $90 Million | $118 Million | (24)% | - The managed portfolio stood at $28.0 billion as of March 31, 2025, a slight decrease from the prior year[14] - The balance of receivables more than 30 days past due as a percentage of the receivable portfolio increased to 2.3% from 1.7% as of March 31, 2024[14] 2025 Outlook CNH updated its 2025 full-year guidance, lowering and widening ranges for net sales, EBIT margins, and EPS due to macroeconomic uncertainty and inventory reduction strategy Updated 2025 Full-Year Guidance CNH updated its 2025 outlook, lowering and widening guidance ranges for net sales, EBIT margins, and EPS due to macroeconomic uncertainty and inventory reduction strategy - The company anticipates lower global industry retail sales in 2025 for both agriculture and construction equipment markets compared to 2024[15] - CNH is focused on reducing excess channel inventory by producing fewer units than the retail demand level, which will negatively impact 2025 net sales[15] | Metric | Updated 2025 Outlook | Previous 2025 Outlook | | :--- | :--- | :--- | | Agriculture Net Sales (YoY) | Down 12% to 20% | Down 13% to 18% | | Agriculture Adj. EBIT Margin | 7% to 9% | 8.5% to 9.5% | | Construction Net Sales (YoY) | Down 4% to 15% | Down 5% to 10% | | Construction Adj. EBIT Margin | 2% to 4% | 4% to 5% | | Free Cash Flow of Industrial Activities | $100 Million to $500 Million | $200 Million to $500 Million | | Adjusted Diluted EPS | $0.50 to $0.70 | $0.65 to $0.75 | Financial Statements This section presents the Consolidated Statements of Operations, Balance Sheets, and Cash Flows, detailing the company's financial performance and position Consolidated Statements of Operations This statement details the company's revenues, costs, and profits, showing a decline in total revenues from $4.8 billion to $3.8 billion and net income from $369 million to $132 million | ($ million, except per share data) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Total Revenues | $3,828 | $4,818 | | Cost of goods sold | $2,569 | $3,195 | | Total Costs and Expenses | $3,666 | $4,416 | | Income before Income Taxes | $162 | $402 | | Net Income | $132 | $369 | | Net Income attributable to CNH | $131 | $368 | | Diluted EPS | $0.10 | $0.29 | Consolidated Balance Sheets This statement shows the company's financial position, highlighting a decrease in cash from $3.2 billion to $1.7 billion and total debt from $26.9 billion to $26.0 billion | ($ million) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $1,695 | $3,191 | | Inventories, net | $5,156 | $4,776 | | Total Assets | $42,057 | $42,933 | | Liabilities and Equity | | | | Debt | $26,010 | $26,882 | | Total Liabilities | $34,098 | $35,165 | | Total Equity | $7,902 | $7,713 | Consolidated Statements of Cash Flows This statement details cash flows from operating, investing, and financing activities, showing a significant improvement in net cash from operating activities to $162 million from a ($894 million) use | ($ million) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided (used) by operating activities | $162 | ($894) | | Net cash provided (used) by investing activities | ($280) | ($419) | | Net cash provided (used) by financing activities | ($1,422) | $319 | | Net increase (decrease) in cash, cash equivalents and restricted cash | ($1,468) | ($1,086) | Supplemental Financial Information and Non-GAAP Reconciliations This section provides reconciliations for key non-GAAP financial metrics and details an immaterial correction to prior period financial statements Non-GAAP Reconciliations This section provides reconciliations for key non-GAAP metrics, including Adjusted EBIT by segment, Net Cash (Debt), Free Cash Flow of Industrial Activities, and Adjusted Diluted EPS Adjusted EBIT of Industrial Activities by Segment | ($ million) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Agriculture | $139 | $388 | | Construction | $14 | $51 | | Unallocated items, eliminations and other | ($52) | ($67) | | Total Adjusted EBIT of Industrial Activities | $101 | $372 | Reconciliation to Free Cash Flow of Industrial Activities | ($ million) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided (used) by Operating Activities | $162 | ($894) | | Less: Cash flows from Operating Activities of Financial Services | (638) | (198) | | Less: Investments in PP&E and intangibles of Industrial Activities | (103) | (96) | | Other adjustments | 12 | (21) | | Free cash flow of Industrial Activities | ($567) | ($1,209) | Revision of Prior Period Financial Statements The company disclosed an immaterial correction to prior period financial statements due to accounting treatment for an unconsolidated affiliate in Türkiye under highly inflationary conditions - An immaterial correction was made to prior periods' results for the accounting treatment related to the highly inflationary economy in Türkiye and its impact on an unconsolidated affiliate[58] - The correction fixed an overstatement of CNH's 'Equity in income of unconsolidated subsidiaries and affiliates' by $96 million in 2023 and $67 million in the first half of 2024[58] Impact of Revision on Q1 2024 Results | ($ million, except EPS) | Previously Reported | Revision Impacts | As Revised | | :--- | :--- | :--- | :--- | | Equity in income of unconsolidated subsidiaries | $77 | ($33) | $44 | | Net income | $402 | ($33) | $369 | | Diluted EPS | $0.31 | ($0.02) | $0.29 |