Why CNH Industrial Shares Are Gaining today

Zinger Key Points
  • CNH Industrial's revenue dropped by 10% Y/Y to $4.82 billion, beating the consensus estimate.
  • Adjusted EPS came in at $0.33, surpassing the consensus of $0.27, though down from $0.35 in the previous year.

CNH Industrial N.V. CNHI shares are trading higher after it reported first-quarter FY24 results.

Revenue declined 10% Y/Y (both reported and CC) to $4.82 billion, beating the consensus of $4.37 billion.

Net sales of Industrial Activities were $4.13 billion, down 14% Y/Y, due to lower industry demand and dealer inventory management. 

Agriculture net sales declined 14% Y/Y to $3.37 billion on lower industry volume across all regions and dealer inventory management.

Construction net sales fell 11% Y/Y to $758 million owing to lower volume across all regions due to weak market demand.

The gross profit margin for Industrial Activities was 22.7%, down from 24.4% a year ago, mainly due to the weak margin in the Agriculture segment.

Agriculture segment adjusted EBIT margin contracted 200 bps Y/Y to 12.5%, and the Construction segment adjusted EBIT margin up 150 bps Y/Y to 6.7%.

Adjusted EPS of $0.33, down from $0.35, beat the consensus of $0.27.

Operating cash flow was negative $894 million, and Industrial Free Cash Flow was negative $1.209 billion in the quarter. 

CNH Industrial had cash and cash equivalents of $3.95 billion at the end of the quarter.

Restructuring Program: CNH said its restructuring program continues progressing according to plan and expects a run rate reduction of 10%-15% on total labor and non-labor SG&A expenses. The company has incurred $78 million of restructuring charges through the first quarter and expects to incur up to $200 million in total.

2024 Outlook: CNH Industrial lowered adjusted EPS outlook to $1.45-$1.55 (from $1.50-$1.60) versus the $1.55 consensus.

The company now expects Free Cash Flow of Industrial Activities of $1.1 billion and $1.3 billion (vs $1.2 billion to $1.4 billion previously).

The company now expects the agriculture segment net sales to be down 11% and 15% (vs. 8%-12% YoY earlier), including currency translation effects, with the adjusted EBIT margin of 13.5% and 14.5% (vs. 14% and 15% prior).

The company reiterated the Construction segment net sales growth guidance at down 7%-11% YoY, including currency translation effects, and adjusted EBIT margin at 5%-6%.

CNH forecasts that 2024 global industry retail sales will be lower in the agriculture and construction equipment markets than 2023.

It now estimates that agriculture industry retail sales will be down approximately 15% (vs. 10%-15% prior), and construction equipment industry retail sales are still expected to be down around 10% Y/Y.

In a separate release, the company disclosed changing its NYSE ticker symbol to “CNH” on May 20.

Investors can gain exposure to the stock via Global X AgTech & Food Innovation ETF KROP and Advisors Series Trust VegTech Plant-Based Innovation & Climate ETF EATV.

Price Action: CNHI shares are up 3.09% at $11.68 at the last check Thursday.

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