Sign in

You're signed outSign in or to get full access.

CI

CNH Industrial N.V. (CNHI)·Q4 2023 Earnings Summary

Executive Summary

  • Q4 2023 delivered resilient profitability amid softer demand: consolidated revenue of $6.79B (-2% YoY), net income of $617M (+4% YoY), diluted EPS $0.46; Industrial Activities gross margin up 20 bps to 21.8% and adjusted EBIT margin +90 bps to 11.6% .
  • Agriculture adjusted EBIT margin expanded to 13.5% (+40 bps YoY) despite net sales down 8%; Construction net sales rose 9% with adjusted EBIT margin up 230 bps to 5.8% .
  • 2024 outlook guides industry volumes down: Ag net sales -8% to -12% with 14.0–15.0% adj. EBIT margin; Construction net sales -7% to -11% with 5.0–6.0% margin; company adj. diluted EPS $1.50–$1.60 and Industrial FCF $1.2–$1.4B .
  • Capital returns remain a catalyst: board authorized an additional $500M share buyback to follow the existing $1B program, reinforcing commitment to through-cycle margin improvement and shareholder returns .

What Went Well and What Went Wrong

What Went Well

  • Margin expansion through cost reductions: Industrial Activities adjusted EBIT margin improved +90 bps YoY to 11.6%; CEO highlighted “robust contributions from our cost reduction focus and disciplined commercial execution” .
  • Segment performance: Construction net sales +9% with adjusted EBIT margin +230 bps (to 5.8%) on price realization and favorable mix; Agriculture margin +40 bps despite volume headwinds .
  • Financial Services strength: revenue +33% YoY and net income +$38M, with managed portfolio up $5.1B to $28.9B and >30-day delinquencies at 1.4% .

What Went Wrong

  • Demand softness and mix: Agriculture net sales down 8% on lower industry demand (South America across categories; combines in NA/EMEA), and dealer inventory management actions; adjusted EBIT down $32M YoY in Agriculture .
  • Free cash flow down YoY: Industrial FCF of $1.63B in Q4 was -$419M vs prior-year Q4; FY Industrial FCF down 24% to $1.216B, reflecting working capital dynamics and investment cadence .
  • Consolidated debt higher YoY: year-end total debt rose to $27.3B (from $23.0B), with inventory build and portfolio growth, partially offset by strong liquidity (cash $4.3B) .

Financial Results

Core P&L and Cash Metrics (Quarterly)

MetricQ3 2023Q4 2023
Consolidated Revenues ($B)$5.99 $6.79
Net Sales - Industrial Activities ($B)$5.33 $6.02
Net Income ($M)$570 $617
Diluted EPS ($)$0.42 $0.46
Adjusted Diluted EPS ($)$0.42 $0.42
Gross Profit Margin - Industrial Activities (%)23.9% 21.8%
Adjusted EBIT - Industrial Activities ($M)$657 $696
Adjusted EBIT Margin - Industrial Activities (%)12.3% 11.6%
Cash from Operating Activities ($M)$232 $1,515
Free Cash Flow - Industrial Activities ($M)-$127 $1,630

Segment Breakdown (Q4 YoY)

SegmentNet Sales ($M)Gross Margin (%)Adjusted EBIT ($M)Adjusted EBIT Margin (%)
Agriculture (Q4 2022 → Q4 2023)5,369 → 4,947 23.1% → 23.3% 701 → 669 13.1% → 13.5%
Construction (Q4 2022 → Q4 2023)983 → 1,071 13.3% → 14.8% 34 → 62 3.5% → 5.8%
Industrial Activities total (Q4 2022 → Q4 2023)6,352 → 6,018 21.6% → 21.8% 680 → 696 10.7% → 11.6%

KPIs and Balance Sheet Highlights

KPIQ4 2023
Adjusted Net Income ($M)$557
Adjusted Effective Tax Rate (%)27.1%
Weighted Avg. Diluted Shares (M)1,334
Cash & Cash Equivalents ($B)$4.32
Consolidated Debt ($B)$27.33
Financial Services Revenue ($M)$768
Financial Services Net Income ($M)$113
Managed Portfolio ($B)$28.9
>30-Day Delinquencies (%)1.4%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Agriculture Net SalesFY 2024—Down 8%–12% YoY (incl. FX) New
Agriculture Adjusted EBIT MarginFY 2024—14.0%–15.0% New
Construction Net SalesFY 2024—Down 7%–11% YoY (incl. FX) New
Construction Adjusted EBIT MarginFY 2024—5.0%–6.0% New
Adjusted Diluted EPSFY 2024—$1.50–$1.60 New
Free Cash Flow - Industrial ActivitiesFY 2024—$1.2–$1.4B New
Adj. Effective Tax RateFY 2024—25%–27% New
R&D ExpenseFY 2024—~$1.0B New
CapexFY 2024—$0.4–$0.5B New
Diluted Share Count AssumptionFY 2024—~1,250M New
Share Buyback—$1.0B authorized (11/7/23) Additional $500M authorized (2/14/24) Increased

Earnings Call Themes & Trends

Note: The Q4 2023 earnings call transcript could not be retrieved due to a document access error; themes below reflect management’s Q4 press release and slide commentary alongside prior-quarter disclosures .

TopicPrevious Mentions (Q2 and Q3)Current Period (Q4)Trend
Cost reduction programs / SG&A restructuringCBS-driven efficiencies; reaffirmed FY23 margin targets ; announced 5% salaried cost reduction and SG&A restructuring plan; charges up to $200M “Aggressive cost reduction actions” to offset lower volume; ongoing SG&A restructuring Accelerating execution
Dealer inventory managementProactive SA delivery moderation and dealer inventory optimization in Q2 ; “Aggressive actions to optimize dealer inventory” in Q3 “Addressing dealer inventories with commercial execution” Continued focus
Technology stack/precision tech independenceIn-house stack progress; Hemisphere acquisition completes navigation; Raven integration “Further tech stack enhancements”; Investor Day May 21 at NYSE Ongoing integration
Regional demand trends (South America)Softer SA demand; combines weakness in EMEA; Construction up in NA Continued softness in SA across Ag; Construction growth driven by NA Soft SA; NA resilience
Through-cycle margin ambitionRecord segment margins; FY23 Industrial adj. EBIT margin 12.4% ; CMD trajectory Commitment to improve margins through cycle despite lower volume Sustained margin focus
Capital allocationStrong buybacks/dividends; FCF generation Additional $500M buyback; FY24 FCF target $1.2–$1.4B Enhanced capital returns

Management Commentary

  • “With more challenging end markets in Q4, robust contributions from our cost reduction focus and disciplined commercial execution drove margin expansion, and we will remain aggressive on these fronts moving forward.” — Scott W. Wine, CEO .
  • 2024 priorities: “Drive retail performance in declining demand environment… Execution of cost efficiency programs… Further tech stack enhancements… Investor Day 2024 to be held May 21 at the NYSE.” .

Q&A Highlights

The Q4 2023 earnings call transcript was unavailable due to an access error, so Q&A specifics cannot be provided. Themes and guidance clarifications above are sourced from the Q4 press release and results presentation .

Estimates Context

  • S&P Global/Capital IQ consensus EPS/revenue estimates for Q4 2023 were unavailable due to missing CIQ mapping for CNHI. As a result, no beat/miss analysis versus Wall Street consensus is included here [SpgiEstimatesError: Missing CIQ mapping for ticker 'CNHI'].

Key Takeaways for Investors

  • Margin resilience in a down-cycle: Industrial Activities adjusted EBIT margin expanded to 11.6% (+90 bps YoY), with Agriculture and Construction both showing YoY margin improvement—evidence of pricing discipline and cost actions .
  • 2024 is about defense and execution: Management guides lower industry volumes (Ag -10% to -15%; Construction ~-10%) and is leaning on cost reductions to protect margins; watch cadence of SG&A restructuring savings in H1 .
  • U.S. exposure a relative positive: Construction growth was NA-driven; Ag pricing in NA supported margins—regional mix should help buffer global volatility .
  • Cash generation to remain solid despite working capital swings: FY24 Industrial FCF guided to $1.2–$1.4B; monitor inventory normalization and retail execution vs. order book visibility to Q3 .
  • Capital returns support equity narrative: New $500M buyback post $1B program completion provides downside support and signals confidence in through-cycle profitability .
  • Risk monitor: South America demand softness, combine weakness in NA/EMEA, and macro rate sensitivity in captive finance; debt up YoY but liquidity strong ($4.32B cash) .
  • Near-term trading setup: Without consensus prints, focus on margin trajectory, FCF delivery, and Investor Day detail on tech stack integration and cost programs; headline catalysts include buyback execution and updated market volume checkpoints .