CNH Industrial (CNHI) Q3 Earnings Top Estimates, Revenues Lag

CNH Industrial N.V. (NYSE:CNHI) reported adjusted earnings per share of 16 cents in third-quarter 2018, increasing from 4 cents in the prior-year quarter. Moreover, the bottom line surpassed the Zacks Consensus Estimate of 13 cents.

Reportedly, adjusted net income rose to $222 million from $151 million recorded in third-quarter 2017.

Consolidated revenues were almost flat year over year to $6.69 billion. However, the figure missed the Zacks Consensus Estimate of $6.9 billion. The company’s net sales in Industrial Activities were $6.2 billion while adjusted EBITDA (earnings before interest, tax, depreciation and amortization) of Industrial Activities increased 13% to $591 million.

CNH Industrial N.V. Price, Consensus and EPS Surprise

Segmental Performances

Net revenues from the Agricultural Equipment segment rose 3.5% year over year to $2.6 billion. The rise was due to positive price across all regions and higher sales in NAFTA. Moreover, the segment’s adjusted EBIT was $196 million, marking a $23 million increase compared with the third quarter of 2017.

Construction Equipment segment’s revenues increased 17.5% to $726 million compared with the prior-year quarter. The gain was primarily due to favorable demand, majorly in NAFTA and APAC. Adjusted EBIT was $26 million, marking a $24 million gain compared with the prior-year quarter.

Revenues from the Commercial Vehicles slumped 6.6% to $2.4 billion compared with the prior-year quarter. Waning demand, primarily for heavy vehicle trucks in EMEA, led to this decline. The segment’s adjusted EBIT was $68 million, witnessing an increase of $25 million from third-quarter 2017.

Powertrain segment’s revenues declined 9.5% year over year to $972 million. The segment’s adjusted EBIT was $82 million, marking a $6 million decline compared with the second quarter of 2017.

Revenues from the Financial Services segment declined 1.9% year over year to $469 million. This decline was majorly due to a lower average portfolio balance in NAFTA. Adjusted EBIT was $123 million, a decline of $3 million from the prior-year quarter.

Financial Details

CNH Industrial had cash and cash equivalents of $4.1 billion as of Sep 30, 2018, compared with $5.4 billion as of Dec 31, 2017. The company’s debt was $24 billion as of Sep 30, 2018, recording a decline from $25.9 billion as of Dec 31, 2017.

In third-quarter 2018, CNH Industrial’s net cash outflow from operations was $620 million compared with an outflow of $152 million a year ago.

Outlook

For 2018, the company reaffirmed its net sales anticipation of Industrial Activities to be approximately $28 billion. Adjusted earnings per share are expected to be 67-71 cents. Also, net industrial debt is anticipated between $0.7 billion and 0.9 billion.

Zacks Rank & Key Picks

CNH Industrial currently carries a Zacks Rank #5 (Strong Sell). A few better-ranked stocks in the auto space are AutoZone, Inc. (NYSE:AZO) , General Motors Company (NYSE:GM) and Tesla, Inc. (NASDAQ:TSLA) . AutoZone and General Motors currently carry a Zacks Rank #2 (Buy) while Tesla sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

AutoZone has an expected long-term growth rate of 12.2%. Over the past month, shares of the company have gained 1%.

General Motors has an expected long-term growth rate of 8.5%. Shares of the company have increased 13% over the past month.

Tesla has an expected long-term growth rate of 10%. Shares of the company have rallied 32.5% over the past month.

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