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CNH Industrial reports strong second quarter performance

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CNH Industrial N.V.
CNH Industrial N.V.

Record consolidated revenues of $6,082 million (up 17.5% compared to Q2 2021 for continuing operations, up 20% at constant currency)

Net income of $552 million, Adjusted Net Income of $583 million, with adjusted diluted EPS of $0.43

Adjusted EBIT of Industrial Activities of $654 million (up $82 million compared to Q2 2021)

Free cash flow generation of $404 million (Industrial Activities)

Board approved additional $300 million share buy-back program

Financial results presented under U.S. GAAP

Our robust second quarter results highlighted the CNH Industrial team’s focus on execution, as they excelled in both tactically ensuring we continued to meet customer commitments and making notable progress on our strategic initiatives. These considerations and strong price realization contributed to our impressive sales and adjusted diluted EPS growth, up 17.5% and 16.2% respectively. Pricing, volumes, and favorable mix offset significant cost escalation and gross profit increased $174 million year over year. Component shortages again impacted production, resulting in Free Cash Flow of $404 million which, though a tremendous sequential improvement, was still down almost 50% versus Q2 2021. Despite this, we continue to expect to deliver more than $1 billion of free cash flow for 2022.

Looking forward, we have exciting new products to unveil at the upcoming trade shows and our Tech Day late in the year. Raven and our Precision team are making great strides and helping to drive Agriculture’s growth, and Construction Equipment, bolstered by Sampierana, is significantly increasing its profitability. With this ever-stronger foundation, we expect to meet our Full Year guidance, but anticipate a decidedly less advantageous climate for the next several quarters. The strengthening US dollar is impacting soft commodity prices, risking further deterioration in farmer sentiment and income, while we see the likelihood of declining European industrial demand due to the war in Ukraine, energy risk and inflation. In the Americas, steady demand from cash crop customers indicates that the market may be more stable, but overall we are positioning for a recession. Our team has proven that, regardless of the environment, they will continue to execute our strategic priorities and deliver for our customers and shareholders.”

Scott W. Wine, Chief Executive Officer

2022 Second Quarter Results

(all amounts $ million, comparison vs Q2 2021 continuing operations - unless otherwise stated)

US-GAAP

 

 

Q2 2022

 

PY(1)

 

Change

Change at c.c.(3)

Consolidated revenue

 

6,082

 

5,174

 

+17.5%

+20%

of which Net sales of Industrial Activities

 

5,613

 

4,778

 

+17.5%

+20%

Net income

 

552

 

514

 

+38

 

Diluted EPS $

 

0.40

 

0.38

 

+0.02

 

Cash flow from operating activities

 

(271)

 

560

 

(831)

 

Cash and cash equivalents(6)

 

2,855

 

3,219

 

(364)

 

Gross profit margin of Industrial Activities

 

22.0%

 

22.2%

 

-20bps

 

 

 

 

 

 

 

 

 

NON-GAAP(2)

 

 

Q2 2022

 

PY(1)

 

Change

 

Adjusted EBIT of Industrial Activities

 

654

 

572

 

+82

 

Adjusted EBIT Margin of Industrial Activities

 

11.7%

 

12.0%

 

-30bps

 

Adjusted net income

 

583

 

507

 

+76

 

Adjusted diluted EPS $

 

0.43

 

0.37

 

+0.06

 

Free Cash flow of Industrial Activities

 

404

 

785

 

(381)

 

Available liquidity(6)

 

8,795

 

9,399

 

(604)

 

Adjusted gross margin of Industrial Activities

 

22.0%

 

22.2%

 

-20bps

 

Net sales of Industrial Activities of $5,613 million, up 17.5% mainly due to favorable price realization, offsetting almost 3% adverse currency conversion.

Adjusted EBIT of Industrial Activities of $654 million ($572 million in Q2 2021), with both segments up year over year. Agriculture adjusted EBIT margin at 14% and Construction at 3.8%.

Adjusted net income of $583 million, with adjusted diluted earnings per share of $0.43 (adjusted net income of $507 million in Q2 2021, with adjusted diluted earnings per share of $0.37).

Gross profit margin of Industrial Activities of 22.0%, (22.2% in Q2 2021) with improvement in Construction despite continued cost pressures.

Reported income tax expense of $228 million and adjusted income tax expense(1) of $185 million, with adjusted effective tax rate (adjusted ETR(1)) of 25.0%,

Free cash flow of Industrial Activities was $404 million. Manufacturing inventories remain high, amid supply chain constraints, while finished goods inventories are lean relative to sales. Total Debt of $20.8 billion at June 30, 2022 ($20.9 billion at December 31, 2021).

Industrial Activities Net Debt(1) position at $1.6 billion, an increase of $438 million from December 31, 2021.

Available liquidity at $8,795 million as of June 30, 2022. In April, CNH Industrial Capital LLC's 4.375% $500 million notes matured. In May, CNH Industrial Capital LLC issued a 3.950% $500 million notes due in 2025. In May, CNH Industrial paid €379 million (~$412 million) in dividends to shareholders. During the quarter, CNH Industrial received proceeds of $350 million for the sale of the Raven Engineered Films Division.

The Board of Directors approved a $300 million share buyback program to be launched at the completion of the existing $100 million program.

Agriculture

 

 

Q2 2022

 

Q2 2021(1)

 

Change

 

Change at c.c.(3)

Net sales ($ million)

 

4,722

 

3,970

 

+19%

 

+22%

Adjusted EBIT ($ million)

 

663

 

582

 

+81

 

 

Adjusted EBIT margin

 

14.0%

 

14.7%

 

-70 bps

 

 

In North America, industry volume was flat for tractors over 140 HP and was down 16% for tractors under 140 HP; combines were up 3%. In Europe, Middle East and Africa (EMEA), tractor and combine demand was down 1% and 24%, respectively, with combine demand up when excluding Turkey and Russia. South America tractor demand was up 4% and combine demand was down 14%. Asia Pacific tractor demand was up 11% and combine demand was up 21%.

Net sales were up 19%, due to favorable price realization and better mix, mostly driven by North America and South America.

Gross profit margin was 23.4%, with Gross Profit $150 million higher than in Q2 2021, mainly due to better mix and favorable price realization primarily in North America and South America, partially offset by higher production and raw material costs across all regions.

Adjusted EBIT was $663 million ($582 million for Q2 2021), with Adjusted EBIT margin at 14.0%. The $81 million increase was driven by higher gross profit, partially offset by higher SG&A costs, and increased R&D spend.

Order book in Agriculture was up almost 5% year over year for tractors. Order book for combines was down almost 6%, with declines in North America and South America offset partially by growth in EMEA. At more than 3 times the pre-pandemic levels, order books remain strong in all regions and key products, with the company accepting orders only through Q1 2023 in most regions as cost uncertainties remain.

Construction

 

 

Q2 2022

 

Q2 2021(1)

 

Change

 

Change at c.c.(3)

Net sales ($ million)

 

891

 

808

 

+10%

 

+12%

Adjusted EBIT ($ million)

 

34

 

24

 

+10

 

 

Adjusted EBIT margin

 

3.8%

 

3.0%

 

+80 bps

 

 

Global industry volume for construction equipment decreased in both Heavy and Light sub-segments, with Heavy down 18% and Light down 12%, mostly driven by a 29% decrease in Light and Heavy equipment demand for Asia Pacific, particularly in China. Demand decreased 3% in North America, 3% in EMEA and increased 22% in South America.

Net sales were up 10%, driven by price realization and contribution from the Sampierana business, partially offset by lower volume in all regions except South America.

Gross profit margin was 13.8%, up 1.4% compared to Q2 2021, mainly due to higher volumes and favorable price realization, partially offset by unfavorable fixed costs absorption and higher freight and raw material costs.

Adjusted EBIT increased $10 million due to favorable volume and mix and positive price realization, partially offset by higher freight and raw material costs and increased SG&A spend. Adjusted EBIT margin at 3.8%.

Construction order book up more than 20% year over year in both Heavy and Light sub-segments, with increases in the North America, EMEA and South America regions.

Financial Services

 

 

Q2 2022

 

Q2 2021(1)

 

Change

 

Change at c.c.(3)

Revenue ($ million)

 

471

 

392

 

+20%

 

+20%

Net income ($ million)

 

95

 

85

 

+10

 

 

Equity at quarter-end ($ million)

 

2,211

 

2,185

 

+26

 

 

Retail loan originations ($ million)

 

2,440

 

2,407

 

+1.4%

 

 

Revenues were up 20% due to higher used equipment sales, higher base rates in South America and higher average portfolios in all regions, partially offset by lower average retail yields in North America.

Net income increased $10 million to $95 million, primarily as a result of higher recoveries on used equipment sales, higher base rates in South America, and higher average portfolios in all regions, offset by increased income taxes and unfavorable risk costs.

The managed portfolio (including unconsolidated joint ventures) was $21.1 billion as of June 30, 2022 (of which retail was 70% and wholesale 30%), up $0.6 billion compared to June 30, 2021 (up $1.7 billion on a constant currency basis).

The receivable balance greater than 30 days past due as a percentage of receivables was 1.5% (1.5% as of June 30, 2021).

2022 Outlook

The Company is substantially confirming the following 2022 outlook for its Industrial Activities:

  • Net sales(5) up between 12% and 14% year on year including currency translation effects

  • SG&A expenses lower or equal to 7.5% of net sales

  • Free cash flow in excess of $1.0 billion

  • R&D expenses and capital expenditures at around $1.4 billion

Significant uncertainties remain in all regions, linked to rising inflation, geopolitical instability, the war in Ukraine and continuing COVID-19 infection waves, all these factors may affect our forecast for the year.

RESULTS FOR THE SIX MONTHS ENDED JUNE 30, 2022

Consolidated revenues of $10,727 million (up 15.7% year on year, up 18% at constant currency), net income of $888 million, with adjusted diluted EPS of $0.70, adjusted EBIT of Industrial Activities of $1,083 million, and free cash flow absorption of $655 million (Industrial Activities).

Results for the Six Months Ended June 30, 2022

(all amounts $ million, comparison vs Q2 2021 continuing operations - unless otherwise stated)

US-GAAP

 

 

Q2 2022

 

PY(1)

 

Change

Change at c.c.(3)

Consolidated revenue

 

10,727

 

9,270

 

+15.7%

+18%

of which Net sales of Industrial Activities

 

9,793

 

8,472

 

+15.6%

+18%

Net income

 

888

 

877

 

+11

 

Diluted EPS $

 

0.65

 

0.64

 

+0.01

 

Cash flow from operating activities

 

(1,158)

 

801

 

(1,959)

 

Cash and cash equivalents(7)

 

2,855

 

5,044

 

(2,189)

 

Gross profit margin of Industrial Activities

 

21.8%

 

22.0%

 

-20bps

 

NON-GAAP(2)

 

 

Q2 2022

 

PY(1)

 

Change

 

Adjusted EBIT of Industrial Activities

 

1,083

 

965

 

+118

 

Adjusted EBIT Margin of Industrial Activities

 

11.1%

 

11.4%

 

-30bps

 

Adjusted net income

 

961

 

859

 

+102

 

Adjusted diluted EPS $

 

0.70

 

0.63

 

+0.07

 

Free Cash flow of Industrial Activities

 

(655)

 

772

 

(1,427)

 

Available liquidity(7)

 

8,795

 

10,521

 

(1,726)

 

Adjusted gross margin of Industrial Activities

 

22.1%

 

22.0%

 

+10bps

 


Agriculture

 

 

YTD Q2 2022

 

YTD Q2 2021(1)

 

Change

 

Change at c.c.(3)

Net sales ($ million)

 

8,099

 

7,008

 

+16%

 

+18%

Adjusted EBIT ($ million)

 

1,089

 

981

 

+108

 

 

Adjusted EBIT margin

 

13.4%

 

14.0%

 

-60bps

 

 


Construction

 

 

YTD Q2 2022

 

YTD Q2 2021(1)

 

Change

 

Change at c.c.(3)

Net sales ($ million)

 

1,694

 

1,464

 

+16%

 

+17%

Adjusted EBIT ($ million)

 

66

 

49

 

+17

 

 

Adjusted EBIT margin

 

3.9%

 

3.3%

 

+60bps

 

 


Financial Services

 

 

YTD Q2 2022

 

YTD Q2 2021(1)

 

Change

 

Change at c.c.(3)

Revenues ($ million)

 

937

 

789

 

+19%

 

+19%

Net income ($ million)

 

177

 

163

 

+14

 

 

Notes

CNH Industrial reports quarterly and annual consolidated financial results under U.S. GAAP and EU-IFRS. The tables and discussion related to the financial results of the Company and its segments shown in this press release are prepared in accordance with U.S. GAAP. Financial results under EU-IFRS are shown in specific tables at the end of this press release.

  1. Effective January 1, 2022, the Iveco Group business was separated from CNH Industrial N.V. by way of a demerger under Dutch law to Iveco Group N.V. and Iveco Group became a public listed company independent from CNH Industrial. Accordingly, that business is presented as discontinued operations beginning in the first quarter of 2022. The Company has reclassified the financial results of Iveco Group to Net income (loss) from discontinued operations in the Condensed Consolidated Statements of Operations for all periods presented. The Company has reclassified the related assets and liabilities as Assets held for distribution and Liabilities held for distribution on the Condensed Consolidated Balance Sheets as of December 31, 2021. Cash flows from the Company’s discontinued operations are presented in the Condensed Consolidated Statements of Cash Flows for all periods. All comparative figures shown exclude the results of the discontinued operations.

  2. This item is a non-GAAP financial measure. Refer to the “Non-GAAP Financial Information” section of this press release for information regarding non-GAAP financial measures. Refer to the specific table in the “Other Supplemental Financial Information” section of this press release for the reconciliation between the non-GAAP financial measure and the most comparable GAAP financial measure.

  3. c.c. means at constant currency.

  4. Certain financial information in this report has been presented by geographic area. Our geographical regions are: (1) North America; (2) Europe, Middle East and Africa; (3) South America and (4) Asia Pacific. The geographic designations have the following meanings:

    1. North America: United States, Canada, and Mexico;

    2. Europe, Middle East, and Africa: member countries of the European Union, European Free Trade Association, the United Kingdom, Ukraine, Balkans, Russia, Turkey, the African continent, and the Middle East;

    3. South America: Central and South America, and the Caribbean Islands; and

    4. Asia Pacific: Continental Asia (including the Indian subcontinent) and Oceania.

  5. Net sales reflecting the exchange rate of 1.05 EUR/USD

  6. Comparison vs. March 31, 2022

  7. Comparison vs. December 31, 2021

Non-GAAP Financial Information

CNH Industrial monitors its operations through the use of several non-GAAP financial measures. CNH Industrial’s management believes that these non-GAAP financial measures provide useful and relevant information regarding its operating results and enhance the readers’ ability to assess CNH Industrial’s financial performance and financial position. Management uses these non-GAAP measures to identify operational trends, as well as make decisions regarding future spending, resource allocations and other operational decisions as they provide additional transparency with respect to our core operations. These non-GAAP financial measures have no standardized meaning under U.S. GAAP or EU-IFRS and are unlikely to be comparable to other similarly titled measures used by other companies and are not intended to be substitutes for measures of financial performance and financial position as prepared in accordance with U.S. GAAP and/or EU-IFRS.

CNH Industrial’s non-GAAP financial measures are defined as follows:

  • Adjusted EBIT of Industrial Activities under U.S. GAAP is defined as net income (loss) before income taxes, Financial Services’ results, Industrial Activities’ interest expenses, net, foreign exchange gains/losses, finance and non-service component of pension and other post-employment benefit costs, restructuring expenses, and certain non-recurring items. In particular, non-recurring items are specifically disclosed items that management considers rare or discrete events that are infrequent in nature and not reflective of on-going operational activities.

  • Adjusted EBIT of Industrial Activities under EU-IFRS: is defined as profit/(loss) before taxes, Financial Services’ results, Industrial Activities’ financial expenses, restructuring costs, and certain non-recurring items.

  • Adjusted Net Income (Loss): is defined as net income (loss), less restructuring charges and non-recurring items, after tax.

  • Adjusted Diluted EPS: is computed by dividing Adjusted Net Income (loss) attributable to CNH Industrial N.V. by a weighted-average number of common shares outstanding during the period that takes into consideration potential common shares outstanding deriving from the CNH Industrial share-based payment awards, when inclusion is not anti-dilutive. When we provide guidance for adjusted diluted EPS, we do not provide guidance on a earnings per share basis because the GAAP measure will include potentially significant items that have not yet occurred and are difficult to predict with reasonable certainty prior to year-end.

  • Adjusted Income Taxes: is defined as income taxes less the tax effect of restructuring expenses and non-recurring items, and non-recurring tax charges or benefits.

  • Adjusted Effective Tax Rate (Adjusted ETR): is computed by dividing a) adjusted income taxes by b) income (loss) before income taxes and equity in income of unconsolidated subsidiaries and affiliates, less restructuring expenses and non-recurring items.

  • Adjusted Gross Profit Margin of Industrial Activities: is computed by dividing Net sales less Cost of goods sold, as adjusted by non-recurring items, by Net sales.

  • Net Cash (Debt) and Net Cash (Debt) of Industrial Activities: Net Cash (Debt) is defined as total debt less intersegment notes receivable, cash and cash equivalents, restricted cash, other current financial assets (primarily current securities, short-term deposits and investments towards high-credit rating counterparties) and derivative hedging debt. CNH Industrial provides the reconciliation of Net Cash (Debt) to Total (Debt), which is the most directly comparable measure included in the consolidated balance sheets. Due to different sources of cash flows used for the repayment of the debt between Industrial Activities and Financial Services (by cash from operations for Industrial Activities and by collection of financing receivables for Financial Services), management separately evaluates the cash flow performance of Industrial Activities using Net Cash (Debt) of Industrial Activities.

  • Free Cash Flow of Industrial Activities (or Industrial Free Cash Flow): refers to Industrial Activities only, and is computed as consolidated cash flow from operating activities less: cash flow from operating activities of Financial Services; investments of Industrial Activities in assets sold under operating leases, property, plant and equipment and intangible assets; change in derivatives hedging debt of Industrial Activities; as well as other changes and intersegment eliminations.

  • Available Liquidity: is defined as cash and cash equivalents plus restricted cash, undrawn medium-term unsecured committed facilities, net receivables/payables with Iveco Group N.V. and other current financial assets (primarily current securities, short-term deposits and investments in instruments of high-credit rating counterparties).

  • Change excl. FX or Constant Currency: CNH Industrial discusses the fluctuations in revenues on a constant currency basis by applying the prior year average exchange rates to current year’s revenues expressed in local currency in order to eliminate the impact of foreign exchange rate fluctuations

The tables attached to this press release provide reconciliations of the non-GAAP measures used in this press release to the most directly comparable GAAP measures.

Forward-looking statements

All statements other than statements of historical fact contained in this earning release, including competitive strengths; business strategy; future financial position or operating results; budgets; projections with respect to revenue, income, earnings (or loss) per share, capital expenditures, dividends, liquidity, capital structure or other financial items; costs; and plans and objectives of management regarding operations and products, are forward-looking statements. Forward looking statements also include statements regarding the future performance of CNH Industrial and its subsidiaries on a standalone basis. These statements may include terminology such as “may”, “will”, “expect”, “could”, “should”, “intend”, “estimate”, “anticipate”, “believe”, “outlook”, “continue”, “remain”, “on track”, “design”, “target”, “objective”, “goal”, “forecast”, “projection”, “prospects”, “plan”, or similar terminology. Forward-looking statements, including those related to the COVID-19 pandemic, are not guarantees of future performance. Rather, they are based on current views and assumptions and involve known and unknown risks, uncertainties and other factors, many of which are outside our control and are difficult to predict. If any of these risks and uncertainties materialize (or they occur with a degree of severity that the Company is unable to predict) or other assumptions underlying any of the forward-looking statements prove to be incorrect, including any assumptions regarding strategic plans, the actual results or developments may differ materially from any future results or developments expressed or implied by the forward-looking statements. Factors, risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements include, among others: the continued uncertainties related to the unknown duration and economic, operational and financial impacts of the global COVID-19 pandemic and the actions taken or contemplated by governmental authorities or others in connection with the pandemic on our business, our employees, customers and suppliers; supply chain disruptions, including delays caused by mandated shutdowns, industry capacity constraints, material availability, and global logistics delays and constraints; disruption caused by business responses to COVID-19, including remote working arrangements, which may create increased vulnerability to cybersecurity or data privacy incidents; our ability to execute business continuity plans as a result of COVID-19; the many interrelated factors that affect consumer confidence and worldwide demand for capital goods and capital goods-related products, including demand uncertainty caused by COVID-19; general economic conditions in each of our markets, including the significant economic uncertainty and volatility caused by the war in the Ukraine and COVID-19; changes in government policies regarding banking, monetary and fiscal policy; legislation, particularly pertaining to capital goods-related issues such as agriculture, the environment, debt relief and subsidy program policies, trade and commerce and infrastructure development; government policies on international trade and investment, including sanctions, import quotas, capital controls and tariffs; volatility in international trade caused by the imposition of tariffs, sanctions, embargoes, and trade wars; actions of competitors in the various industries in which we compete; development and use of new technologies and technological difficulties; the interpretation of, or adoption of new, compliance requirements with respect to engine emissions, safety or other aspects of our products; production difficulties, including capacity and supply constraints and excess inventory levels; labor relations; interest rates and currency exchange rates; inflation and deflation; energy prices; prices for agricultural commodities; housing starts and other construction activity; our ability to obtain financing or to refinance existing debt; price pressure on new and used equipment; the resolution of pending litigation and investigations on a wide range of topics, including dealer and supplier litigation, intellectual property rights disputes, product warranty and defective product claims, and emissions and/or fuel economy regulatory and contractual issues; security breaches, cybersecurity attacks, technology failures, and other disruptions to the information technology infrastructure of CNH Industrial and its suppliers and dealers; security breaches with respect to our products; our pension plans and other post-employment obligations; political and civil unrest; volatility and deterioration of capital and financial markets, including other pandemics, terrorist attacks in Europe and elsewhere; our ability to realize the anticipated benefits from our business initiatives as part of our strategic plan; our failure to realize, or a delay in realizing, all of the anticipated benefits of our acquisitions, joint ventures, strategic alliances or divestitures and other similar risks and uncertainties, and our success in managing the risks involved in the foregoing.

Forward-looking statements are based upon assumptions relating to the factors described in this earnings release, which are sometimes based upon estimates and data received from third parties. Such estimates and data are often revised. Actual results may differ materially from the forward-looking statements as a result of a number of risks and uncertainties, many of which are outside CNH Industrial’s control. CNH Industrial expressly disclaims any intention or obligation to provide, update or revise any forward-looking statements in this announcement to reflect any change in expectations or any change in events, conditions or circumstances on which these forward-looking statements are based. Further information concerning CNH Industrial, including factors that potentially could materially affect CNH Industrial’s financial results, is included in CNH Industrial’s reports and filings with the U.S. Securities and Exchange Commission (“SEC”), the Autoriteit Financiële Markten (“AFM”) and Commissione Nazionale per le Società e la Borsa (“CONSOB”).

All future written and oral forward-looking statements by CNH Industrial or persons acting on the behalf of CNH Industrial are expressly qualified in their entirety by the cautionary statements contained herein or referred to above.

Conference Call and Webcast

Today, at 3:30 p.m. CEST / 2:30 p.m. BST/ 9:30 a.m. EDT, management will hold a conference call to present second quarter 2022 results to financial analysts and institutional investors. The call can be followed live online at https://bit.ly/CNH_Industrial_Q2_2022 and a recording will be available later on the Company’s website www.cnhindustrial.com. A presentation will be made available on the CNH Industrial website prior to the call.

London, July 29, 2022

CONTACTS

Media Inquiries – Laura Overall Tel +44 207 925 1964 or Rebecca Fabian Tel +1 312 515 2249 (Email mediarelations@cnhind.com)

Investor Relations – Noah Weiss Tel +1 773 896 5242 or Federico Pavesi Tel +39 345 605 6218

CNH INDUSTRIAL N.V.
Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2022 and 2021
(Unaudited, U.S.-GAAP)

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

($ million)

 

2022

 

2021

 

2022

 

2021

Revenues

 

 

 

 

 

 

 

 

Net sales

 

5,613

 

4,778

 

9,793

 

8,472

Finance, interest and other income

 

469

 

396

 

934

 

798

TOTAL REVENUES

 

6,082

 

5,174

 

10,727

 

9,270

Costs and Expenses

 

 

 

 

 

 

 

 

Cost of goods sold

 

4,377

 

3,716

 

7,663

 

6,612

Selling, general and administrative expenses

 

424

 

355

 

802

 

674

Research and development expenses

 

212

 

164

 

396

 

296

Restructuring expenses

 

6

 

5

 

8

 

6

Interest expense

 

162

 

137

 

300

 

290

Other, net

 

148

 

156

 

331

 

298

TOTAL COSTS AND EXPENSES

 

5,329

 

4,533

 

9,500

 

8,176

 

 

 

 

 

 

 

 

 

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND EQUITY IN INCOME OF UNCONSOLIDATED SUBSIDIARIES AND AFFILIATES

 

753

 

641

 

1,227

 

1,094

Income tax (expense) benefit

 

(228)

 

(152)

 

(387)

 

(268)

Equity in income (loss) of unconsolidated subsidiaries and affiliates

 

27

 

25

 

48

 

51

Net income (loss) from continuing operations

 

552

 

514

 

888

 

877

Net income (loss) from discontinued operations

 

 

185

 

 

247

NET INCOME (LOSS)

 

552

 

699

 

888

 

1,124

Net income attributable to noncontrolling interests

 

4

 

9

 

7

 

26

NET INCOME (LOSS) ATTRIBUTABLE TO CNH INDUSTRIAL N.V.

 

548

 

690

 

881

 

1,098

 

 

 

 

 

 

 

 

 

Basic earnings (loss) per share attributable to common shareholders (in $)

 

 

 

 

 

 

 

 

Continuing operations

 

0.40

 

0.38

 

0.65

 

0.64

Discontinued operations

 

 

0.13

 

 

0.17

Basic earnings per share attributable to CNH Industrial N.V.

 

0.40

 

0.51

 

0.65

 

0.81

Diluted earnings (loss) per share attributable to common shareholders (in $)

 

 

 

 

 

 

 

 

Continuing operations

 

0.40

 

0.38

 

0.65

 

0.64

Discontinued operations

 

 

0.13

 

 

0.17

Diluted earnings per share attributable to CNH Industrial N.V.

 

0.40

 

0.51

 

0.65

 

0.81

Average shares outstanding (in millions)

 

 

 

 

 

 

 

 

Basic

 

1,355

 

1,354

 

1,355

 

1,354

Diluted

 

1,360

 

1,361

 

1,360

 

1,360

Cash dividends declared per common share

 

0.302

 

0.132

 

0.302

 

0.132

These Condensed Consolidated Statements of Operations should be read in conjunction with the Company’s Audited Consolidated Financial Statements and Notes for the year ended December 31, 2021 included in the Annual Report on Form 20-F. These Condensed Consolidated Statements of Operations represent the consolidation of all CNH Industrial N.V. subsidiaries.

CNH INDUSTRIAL N.V.
Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021
(Unaudited, U.S.-GAAP)

($ million)

 

June 30, 2022

 

December 31, 2021

ASSETS

 

 

 

 

Cash and cash equivalents

 

2,855

 

5,044

Restricted cash

 

729

 

801

Financing receivables, net

 

16,537

 

15,376

Receivables from Iveco Group N.V.

 

281

 

Inventories, net

 

5,473

 

4,216

Property, plant and equipment, net and equipment under operating lease

 

3,043

 

3,213

Intangible assets, net

 

4,435

 

4,417

Other receivables and assets

 

2,295

 

2,803

Assets held for distribution

 

 

13,546

TOTAL ASSETS

 

35,648

 

49,416

LIABILITIES AND EQUITY

 

 

 

 

Debt

 

20,817

 

20,897

Payables to Iveco Group N.V.

 

73

 

502

Other payables and liabilities

 

8,915

 

9,272

Liabilities held for distribution

 

 

11,892

Total Liabilities

 

29,805

 

42,563

Redeemable noncontrolling interest

 

49

 

45

Equity

 

5,794

 

6,808

TOTAL LIABILITIES AND EQUITY

 

35,648

 

49,416

These Condensed Consolidated Balance Sheets should be read in conjunction with the Company’s Audited Consolidated Financial Statements and Notes for the year ended December 31, 2021, included in the Annual Report on Form 20-F. These Condensed Consolidated Balance Sheets represent the consolidation of all CNH Industrial N.V. subsidiaries.

CNH INDUSTRIAL N.V.
Condensed Consolidated Statement of Cash Flows for the six months ended June 30, 2022 and 2021
(Unaudited, U.S.-GAAP)

 

 

Six Months Ended June 30,

($ million)

 

2022

 

2021

Net income (loss)

 

888

 

1,124

Less: Net income (loss) of Discontinued Operations

 

 

247

Net income (loss) of Continuing Operations

 

888

 

877

Adjustments to reconcile net income (loss) from Continuing Operations to net cash provided by (used in) operating activities from Continuing Operations:

 

(2,046)

 

(76)

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES FROM CONTINUING OPERATIONS

 

(1,158)

 

801

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES FROM DISCONTINUED OPERATIONS

 

 

570

TOTAL NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

 

(1,158)

 

1,371

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES FROM CONTINUING OPERATIONS

 

(1,000)

 

(612)

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES FROM DISCONTINUED OPERATIONS

 

 

(153)

TOTAL NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES

 

(1,000)

 

(765)

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES FROM CONTINUING OPERATIONS

 

72

 

(1,111)

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES FROM DISCONTINUED OPERATIONS

 

 

(370)

TOTAL NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES

 

72

 

(1,481)

Effect of foreign exchange rate changes on cash and cash equivalents and restricted cash

 

(175)

 

(170)

DECREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH

 

(2,261)

 

(1,045)

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF YEAR

 

5,845

 

9,629

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD

 

3,584

 

8,584

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD (Discontinued Operations)

 

 

680

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD (Continuing Operations)

 

3,584

 

7,904

These Condensed Consolidated Statements of Cash Flows should be read in conjunction with the Company’s Audited Consolidated Financial Statements and Notes for the year ended December 31, 2021 included in the Annual Report on Form 20-F. These Condensed Consolidated Statements of Cash Flows represent the consolidation of all CNH Industrial N.V. subsidiaries.

CNH INDUSTRIAL N.V.
Supplemental Statements of Operations for the three months ended June 30, 2022 and 2021
(Unaudited, U.S.-GAAP)

 

 

Three Months Ended June 30, 2022

 

Three Months Ended June 30, 2021

($ million)

 

Industrial Activities(1)

 

Financial Services

 

Eliminations

 

Consolidated

 

Industrial Activities(1)

 

Financial Services

 

Eliminations

 

Consolidated

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

5,613

 

 

 

5,613

 

4,778

 

 

 

4,778

Finance, interest and other income

 

15

 

471

 

(17)(2)


469

 

14

 

392

 

(10)(2)


396

TOTAL REVENUES

 

5,628

 

471

 

(17)

 

6,082

 

4,792

 

392

 

(10)

 

5,174

Costs and Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

 

4,377

 

 

 

4,377

 

3,716

 

 

 

3,716

Selling, general and administrative expenses

 

381

 

43

 

 

424

 

333

 

22

 

 

355

Research and development expenses

 

212

 

 

 

212

 

164

 

 

 

164

Restructuring expenses

 

6

 

 

 

6

 

5

 

 

 

5

Interest expense

 

50

 

129

 

(17)

(3)

162

 

45

 

102

 

(10)

(3)

137

Other, net

 

(21)

 

169

 

 

148

 

(4)

 

160

 

 

156

TOTAL COSTS AND EXPENSES

 

5,005

 

341

 

(17)

 

5,329

 

4,259

 

284

 

(10)

 

4,533

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND EQUITY IN INCOME OF UNCONSOLIDATED SUBSIDIARIES AND AFFILIATES

 

623

 

130

 

 

753

 

533

 

108

 

 

641

Income tax (expense) benefit

 

(190)

 

(38)

 

 

(228)

 

(126)

 

(26)

 

 

(152)

Equity in income (loss) of unconsolidated subsidiaries and affiliates

 

24

 

3

 

 

27

 

22

 

3

 

 

25

NET INCOME (LOSS) Continuing Operations

 

457

 

95

 

 

552

 

429

 

85

 

 

514

NET INCOME (LOSS) Discontinued Operations

 

 

 

 

 

171

 

14

 

 

185

NET INCOME (LOSS)

 

457

 

95

 

 

552

 

600

 

99

 

 

699

(1)   Industrial Activities represents the enterprise without Financial Services. Industrial Activities includes the Company’s Agriculture and Construction segments, and other corporate assets, liabilities, revenues and expenses not reflected within Financial Services.
(2)   Elimination of Financial Services’ interest income earned from Industrial Activities.
(3)  Elimination of Industrial Activities’ interest expense to Financial Services.

CNH INDUSTRIAL N.V.
Supplemental Statements of Operations for the six months ended June 30, 2022 and 2021
(Unaudited, U.S.-GAAP)

 

 

Six Months Ended June 30, 2022

 

Six Months Ended June 30, 2021

($ million)

 

Industrial Activities(1)

 

Financial Services

 

Eliminations

 

Consolidated

 

Industrial Activities(1)

 

Financial Services

 

Eliminations

 

Consolidated

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

9,793

 

 

 

9,793

 

8,472

 

 

 

8,472

Finance, interest and other income

 

25

 

937

 

(28)(2)


934

 

27

 

789

 

(18)(2)


798

TOTAL REVENUES

 

9,818

 

937

 

(28)

 

10,727

 

8,499

 

789

 

(18)

 

9,270

Costs and Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

 

7,663

 

 

 

7,663

 

6,612

 

 

 

6,612

Selling, general and administrative expenses

 

710

 

92

 

 

802

 

619

 

55

 

 

674

Research and development expenses

 

396

 

 

 

396

 

296

 

 

 

296

Restructuring expenses

 

8

 

 

 

8

 

6

 

 

 

6

Interest expense

 

95

 

233

 

(28)

(3)

300

 

98

 

210

 

(18)

(3)

290

Other, net

 

(38)

 

369

 

 

331

 

(17)

 

315

 

 

298

TOTAL COSTS AND EXPENSES

 

8,834

 

694

 

(28)

 

9,500

 

7,614

 

580

 

(18)

 

8,176

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND EQUITY IN INCOME OF UNCONSOLIDATED SUBSIDIARIES AND AFFILIATES

 

984

 

243

 

 

1,227

 

885

 

209

 

 

1,094

Income tax (expense) benefit

 

(313)

 

(74)

 

 

(387)

 

(216)

 

(52)

 

 

(268)

Equity in income (loss) of unconsolidated subsidiaries and affiliates

 

40

 

8

 

 

48

 

45

 

6

 

 

51

NET INCOME (LOSS) Continuing Operations

 

711

 

177

 

 

888

 

714

 

163

 

 

877

NET INCOME (LOSS) Discontinued Operations

 

 

 

 

 

220

 

27

 

 

247

NET INCOME (LOSS)

 

711

 

177

 

 

888

 

934

 

190

 

 

1,124

(1)  Industrial Activities represents the enterprise without Financial Services. Industrial Activities includes the Company’s Agriculture and Construction segments, and other corporate assets, liabilities, revenues and expenses not reflected within Financial Services.
(2)   Elimination of Financial Services’ interest income earned from Industrial Activities.
(3)  Elimination of Industrial Activities’ interest expense to Financial Services.

CNH INDUSTRIAL N.V.
Supplemental Balance Sheets as of June 30, 2022 and December 31, 2021
(Unaudited, U.S.-GAAP)

 

 

June 30, 2022

 

December 31, 2021

($ million)

 

Industrial Activities(1)

 

Financial Services

 

Eliminations

 

Consolidated

 

Industrial Activities(1)

 

Financial Services

 

Eliminations

 

Consolidated

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

2,430

 

425

 

 

2,855

 

4,386

 

658

 

 

5,044

Restricted cash

 

144

 

585

 

 

729

 

128

 

673

 

 

801

Financing receivables, net

 

694

 

16,691

 

(848)(2)


16,537

 

199

 

15,508

 

(331)(2)


15,376

Receivables from Iveco Group N.V.

 

220

 

61

 

 

281

 

 

 

 

Inventories, net

 

5,455

 

18

 

 

5,473

 

4,187

 

29

 

 

4,216

Property, plant and equipment, net and equipment on operating lease

 

1,458

 

1,585

 

 

3,043

 

1,504

 

1,709

 

 

3,213

Intangible assets, net

 

4,273

 

162

 

 

4,435

 

4,255

 

162

 

 

4,417

Other receivables and assets

 

2,305

 

478

 

(488)(3)


2,295

 

2,656

 

345

 

(198)(3)


2,803

Assets held for distribution

 

 

 

 

 

9,814

 

4,543

 

(811)

 

13,546

TOTAL ASSETS

 

16,979

 

20,005

 

(1,336)

 

35,648

 

27,129

 

23,627

 

(1,340)

 

49,416

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt

 

4,997

 

16,668

 

(848)

(2)

20,817

 

5,485

 

15,743

 

(331)

(2)

20,897

Payables to Iveco Group N.V.

 

8

 

65

 

 

73

 

334

 

168

 

 

502

Other payables and liabilities

 

8,342

 

1,061

 

(488)

(3)

8,915

 

8,426

 

1,044

 

(198)

(3)

9,272

Liabilities held for distribution

 

 

 

 

 

8,985

 

3,718

 

(811)

 

11,892

Total Liabilities

 

13,347

 

17,794

 

(1,336)

 

29,805

 

23,230

 

20,673

 

(1,340)

 

42,563

Redeemable noncontrolling interest

 

49

 

 

 

49

 

45

 

 

 

45

Equity

 

3,583

 

2,211

 

 

5,794

 

3,854

 

2,954

 

 

6,808

TOTAL LIABILITIES AND EQUITY

 

16,979

 

20,005

 

(1,336)

 

35,648

 

27,129

 

23,627

 

(1,340)

 

49,416

(1)  Industrial Activities represents the enterprise without Financial Services. Industrial Activities includes the Company’s Agriculture and Construction segments, and other corporate assets, liabilities, revenues and expenses not reflected within Financial Services.
(2)  This item includes the elimination of receivables/payables between Industrial Activities and Financial Services.
(3)  This item primarily represents the reclassification of deferred tax assets/liabilities in the same taxing jurisdiction and elimination of intercompany activity between Industrial Activities and Financial Services.

CNH INDUSTRIAL N.V.
Supplemental Statements of Cash Flows for the six months ended June 30, 2022 and 2021
(Unaudited, U.S.-GAAP)

 

 

Six months ended June 30, 2022

 

Six months ended June 30, 2021

($ million)

 

Industrial Activities(1)

 

Financial Services

 

Eliminations(3)


 

Consolidated

 

Industrial Activities(1)

 

Financial Services

 

Eliminations(3)


 

Consolidated

Net income (loss)

 

711

 

177

 

 

888

 

934

 

190

 

 

1,124

Less: Net income (loss) of Discontinued Operations

 

 

 

 

 

220

 

27

 

 

247

Net income (loss) of Continuing Operations

 

711

 

177

 

 

888

 

714

 

163

 

 

877

Adjustments to reconcile net income (loss) from Continuing Operations to net cash provided by (used in) operating activities from Continuing Operations:

 

(1,192)

 

(764)

 

(90)(2)


(2,046)

 

167

 

(163)

 

(80)

 

(76)

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES FROM CONTINUING OPERATIONS

 

(481)

 

(587)

 

(90)

 

(1,158)

 

881

 

 

(80)

 

801

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES FROM DISCONTINUED OPERATIONS

 

 

 

 

 

342

 

230

 

(2)

 

570

TOTAL NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

 

(481)

 

(587)

 

(90)

 

(1,158)

 

1,223

 

230

 

(82)

 

1,371

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES FROM CONTINUING OPERATIONS

 

(764)

 

(236)

 

 

(1,000)

 

(363)

 

(255)

 

6

 

(612)

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES FROM DISCONTINUED OPERATIONS

 

 

 

 

 

(280)

 

125

 

2

 

(153)

TOTAL NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES

 

(764)

 

(236)

 

 

(1,000)

 

(643)

 

(130)

 

8

 

(765)

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES FROM CONTINUING OPERATIONS

 

(513)

 

495

 

90

 

72

 

(1,077)

 

(108)

 

74

 

(1,111)

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES FROM DISCONTINUED OPERATIONS

 

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