Executive Summary

Q2 2025 revenue of $4.71B declined 14% YoY but beat Wall Street consensus ($4.50B), and diluted EPS of $0.17 exceeded consensus ($0.141), while adjusted EBIT margin compressed to 5.6% on continued under‑production to reduce dealer inventories . Consensus values from S&P Global data: $4.50B*, $0.141*.
Free cash flow for Industrial Activities improved materially to $451M, driven by working capital reductions; management reaffirmed full‑year guidance (Industrial net sales down 11–19%, adjusted EBIT margin 4.5–6.5%, adjusted EPS $0.50–$0.70) .
Agriculture adjusted EBIT margin rose sequentially to 8.1% (from 5.4% in Q1), though YoY margins fell on sharp North America demand weakness (HHP tractors -37%, combines -23%) and unfavorable mix; Construction margins also fell YoY on NA decline .
Management highlighted tariff/FX dynamics and under‑production strategy; Q3 production slots are full and Q4 slots are half full, with guidance reaffirmed despite updated tariff assumptions (e.g., steel/aluminum tariffs to 50%) and FX translation impact improving to -1% on net sales .

What Went Well and What Went Wrong

What Went Well

Strong cash generation: Q2 operating cash flow was $772M and Industrial FCF reached $451M, aided by lower working capital; FCF improved $311M YoY .
Sequential margin lift in Agriculture: Adjusted EBIT margin rose to 8.1% from 5.4% in Q1, helped by favorable purchasing, lower warranty, and SG&A; management: “Pricing was a bit better than neutral… Production costs were favorable” .
Strategic tech progress: CNH announced Starlink collaboration to enhance precision tech connectivity and FieldOps integration, reinforcing “Iron + Tech” execution and mid‑cycle margin plan .

Quote: “We are focused on the strategic priorities… to advance our operational improvements and the investments that deliver exceptional products and technology for our farmers and builders” — CEO Gerrit Marx .

What Went Wrong

Demand/mix headwinds: Consolidated revenues -14% YoY and Industrial net sales -16% YoY; Agriculture net sales -17% with NA down 36% driving unfavorable geographic mix and decremental margins .
Margin compression: Industrial Activities adjusted EBIT margin fell to 5.6% (from 10.5% YoY) and Construction EBIT margin to 4.5% (from 6.7%), reflecting volume declines and NA weakness .
Credit/delinquencies: Financial Services delinquencies >30 days rose to 3.9%, mainly Brazil; FS net income dipped to $87M on higher risk costs .

Financial Results

Consolidated Performance (oldest → newest)

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($USD Billions)	$4.88	$3.83	$4.71
Diluted EPS ($)	$0.14	$0.10	$0.17
Adjusted Diluted EPS ($)	$0.15	$0.10	$0.17
Adjusted EBIT – Industrial Activities ($USD Millions)	$194	$101	$224
Adjusted EBIT Margin – Industrial Activities (%)	4.7%	3.2%	5.6%
Gross Profit Margin – Industrial Activities (%)	19.5%	19.0%	20.6%
Cash from Operations ($USD Millions)	$1,692	$162	$772
Industrial Free Cash Flow ($USD Millions)	$848	$(567)	$451

Q2 2025 vs Wall Street Consensus

Metric	Consensus	Actual Q2 2025
Revenue ($USD Billions)	$4.50*	$4.71
Primary EPS ($)	$0.141*	$0.17
EBITDA ($USD Millions)	$260*	$400*

Values marked with * retrieved from S&P Global.

Segment Breakdown (oldest → newest)

Segment Metric	Q4 2024	Q1 2025	Q2 2025
Agriculture Net Sales ($USD Millions)	$3,411	$2,581	$3,248
Agriculture Gross Margin (%)	20.6%	20.0%	21.8%
Agriculture Adjusted EBIT ($USD Millions)	$244	$139	$263
Agriculture Adjusted EBIT Margin (%)	7.2%	5.4%	8.1%
Construction Net Sales ($USD Millions)	$718	$591	$773
Construction Gross Margin (%)	14.8%	14.9%	15.7%
Construction Adjusted EBIT ($USD Millions)	$18	$14	$35
Construction Adjusted EBIT Margin (%)	2.5%	2.4%	4.5%

KPIs (oldest → newest)

KPI	Q4 2024	Q1 2025	Q2 2025
Cash & Cash Equivalents ($USD Millions)	$3,191	$1,695	$2,512
Effective Tax Rate (%)	36.9%	29.0%	27.6% (Adj. 27.7%)
Financial Services Net Income ($USD Millions)	$92	$90	$87
Delinquencies (>30 Days, %)	1.9% (year‑end)	2.3%	3.9%
Managed Portfolio ($USD Billions)	$27.8	$28.0	$28.7
Retail Loan Originations ($USD Billions)	$3.22	$2.39	$2.74
Dividends Cash Out ($USD Millions)	$607 FY 2024	$—	~$321 in Q2

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Agriculture Net Sales YoY	FY 2025	Down 13%–18% (Feb)	Down 12%–20% incl. FX (May update)	Lowered
Agriculture Adjusted EBIT Margin	FY 2025	8.5%–9.5% (Feb)	7%–9% (May update)	Lowered
Construction Net Sales YoY	FY 2025	Down 5%–10% (Feb)	Down 4%–15% incl. FX (May update)	Lowered/expanded
Construction Adjusted EBIT Margin	FY 2025	4%–5% (Feb)	2%–4% (May update)	Lowered
Industrial Free Cash Flow	FY 2025	$200M–$500M (Feb)	$100M–$500M (May update)	Lowered bottom
Company Adjusted Diluted EPS	FY 2025	$0.65–$0.75 (Feb)	$0.50–$0.70 (May update)	Lowered
Reaffirmation status	FY 2025	—	All ranges reaffirmed in Q2	Maintained
FX translation on Net Sales	FY 2025	-3% prior	-1% current	Improved
Tariff assumptions (U.S.)	2H 2025	Steel/Aluminum 25% prior	Steel/Aluminum 50% current; other country/tariff risks updated	Raised risk

Earnings Call Themes & Trends

Topic	Q4 2024 (Q-2)	Q1 2025 (Q-1)	Q2 2025 (Current)	Trend
AI/Tech initiatives	Strategy focus; set stage for Investor Day	Investor Day announced; Iron + Tech plan	Starlink deal; FieldOps integration emphasized	Strengthening
Supply chain & dealer inventory	Aggressive destocking; -34% production hours in Q4	Under‑produce vs retail; destocking continues	Q2 production hours -12% (Ag), dealer inventories -$0.2B; target levels by year‑end	Improving
Tariffs/macro	Highlighted trade uncertainties	Broadened scenarios; lowered guidance ranges	Updated assumptions; steel/aluminum tariffs 50%; $~120M EBIT headwind in 2H	Headwind intensifying
Product performance	NA Ag trough; margins compressed	Ag margins 5.4%; Construction soft	Ag margin 8.1% (seq up), Construction 4.5%; NA demand still weak	Sequential stabilization
Regional trends	NA weakness; EMEA mixed	EMEA down; SA up in tractors	Early EMEA “green shoots” (Germany/Poland); NA still down	Mixed
R&D execution	R&D as % sales rising	R&D 6.3% of Ag sales	R&D investments 6.0% of Ag sales; Precision Tech focus 26% of Q2 spend	Sustained
FS credit quality	Elevated delinquencies end‑2024	Delinquencies 2.3%	Delinquencies 3.9% (Brazil); reserves increased	Deterioration (Brazil)

Management Commentary

Strategic pillars: “Breaking new ground on Iron + Tech… Expanding product leadership… Driving commercial and operational excellence… Quality as a mindset” .
CEO tone: “Resilience… focused on strategic priorities… navigate uncertain trade waters… position CNH for long‑term success” — Gerrit Marx .
Pricing/cost: “Pricing was a bit better than neutral… production costs were favorable… warranty improvements expected” — CFO Jim Nicholas .
Tariffs impact: “Very little affected in Q2… close to $120M negative effect on EBIT in the second half” — CFO Jim Nicholas .

Q&A Highlights

Dealer inventory progress: Management reduced ~$200M of excess Ag inventory in Q2; remaining focus on NA small/medium tractors and used equipment programs to clear yards ahead of MY2026 .
Pricing strategy: CNH expects full‑year pricing to be positive; implemented MY2026 price actions to offset tariffs, alongside supplier sharing and cost reductions .
Tariff timing/magnitude: Minimal Q2 impact due to FIFO; ~$120M EBIT headwind concentrated in 2H 2025; potential carryover headwind into H1 2026 vs 2025 baseline .
Regional margin mix: NA remains highest margin region, EMEA second; management aims to narrow margin gap through governance, quality, tech, and sourcing initiatives .
FS delinquencies: Spike largely isolated to Brazil; reserves increased; expected improvement post‑Q2 .

Estimates Context

Q2 beat: Revenue $4.71B vs $4.50B consensus*, EPS $0.17 vs $0.141 consensus*, and EBITDA $400M* vs $260M*; strong cash generation despite margin compression . Values marked with * retrieved from S&P Global.
FY 2025 consensus EPS (Primary EPS) is $0.473*, below CNH’s adjusted EPS guidance of $0.50–$0.70; note Primary EPS may not be directly comparable to adjusted guidance . Values marked with * retrieved from S&P Global.
Estimate revisions likely: Tariff headwinds (~$120M EBIT in 2H), FX translation improvement (-1% vs -3%), and dealer destocking progress suggest near‑term models may shift mix assumptions and 2H margins .

Key Takeaways for Investors

Q2 was a “beat on muted volumes”: top‑line and EPS exceeded consensus with sequential margin improvement in Agriculture; cash generation provides flexibility amid cycle trough .
Guidance intact: Reaffirmation signals management visibility despite tariff uncertainty; FX translation less negative may modestly lift reported sales, though margins absorb tariff costs .
Watch NA Ag and tariffs: NA demand/mix remains the principal earnings headwind; tariff execution (pricing, sourcing) is critical for 2H margin trajectory .
Destocking nearing goal line: Under‑production strategy is working; full Q3 slots and half Q4 slots indicate planning discipline; wholesale should align with retail by late 2025 into 2026 .
Tech differentiation: Starlink and FieldOps integration deepen the “Iron + Tech” stack, supporting pricing power and mid‑cycle margin ambitions into the next upturn .
FS risk contained: Delinquencies centered in Brazil; reserves raised; monitor credit costs vs margin gains in NA/EMEA .
Near‑term trading setup: Beat plus reaffirmed guidance are supportive; clarity on tariff pass‑through and EMEA green shoots are potential catalysts; monitor H2 EBIT impact and Q4 rebound seasonality .

CNH Industrial N.V. (CNH)·Q2 2025 Earnings Summary