CNH Industrial (CNH) Q4 2023 earnings summary

Executive summary

• FY 2023 revenue reached $24.69B, up 5%, and net income rose 17% to $2.38B; adjusted industrial EBIT margin expanded 110 bps to 12.4%.

• Q4 revenue declined 2% to $6.79B; net income rose 4% to $617M and adjusted net income increased 15%.

Financial highlights

• Q4 Industrial Activities net sales fell 5% to $6.02B; adjusted EBIT rose to $696M, with margin up 90 bps to 11.6%.

• FY Industrial Activities net sales increased 3% to $22.08B; adjusted EBIT rose to $2.73B and margin improved 110 bps to 12.4%.

• FY net income was $2.38B, up 17%; adjusted net income was $2.31B, up 15%. Diluted EPS was $1.76 and adjusted diluted EPS was $1.70.

• Q4 diluted EPS was $0.46 and adjusted diluted EPS was $0.42; both increased YoY.

• Industrial free cash flow was $1.216B for FY 2023 and $1.630B in Q4; operating cash flow was $907M for the year and $1.52B in Q4.

Outlook and guidance

• FY 2024 Industrial net sales are expected to decline 8%-12%; adjusted diluted EPS guidance is $1.50-$1.60 and Industrial free cash flow is $1.2B-$1.4B.

• Agriculture net sales are expected to decline 8%-12%, with a 14.0%-15.0% adjusted EBIT margin; Construction net sales are expected to decline 7%-11%, with a 5.0%-6.0% margin.

• 2024 agriculture industry retail sales are forecast down 10%-15% and construction equipment retail sales down ~10% in key markets.

• Assumptions include ~$1.0B in R&D, $0.4B-$0.5B in capex, a 25%-27% adjusted effective tax rate and ~1,250M diluted weighted-average shares. Cost programs are expected to partly offset weaker demand.