CNH Financial Analysis

Analysis Date: 1/24/2025

Business Model

CNH generates revenue primarily through sales of agricultural and construction equipment

Revenue Sources

• Agriculture Equipment (82% of Q3 2024 revenue)
• Construction Equipment (18% of Q3 2024 revenue)

Revenue Distribution by Channel

• Agriculture segment sales breakdown: Tractors 56%, Combines 23%, Others 21%
• Construction segment sales breakdown: Heavy 36%, Light 62%, Others 2%

Income Statement Analysis

• Revenue decreased 22% year-over-year due to lower volumes across all regions
• Gross margin declined to 21.7% from 23.9% due to lower production volumes and pricing pressure
• Net income decreased 43% due to lower volumes and margins

Capital Allocation

Management priorities include: 1) Supporting future growth through operating cash flow reinvestments, 2) Maintaining healthy liquidity levels and investment grade credit rating, 3) Dedicated dividend and share repurchase policy, 4) Retaining option for disciplined M&A

Management Commentary

Farmer sentiment remains muted with low visibility on industry cycle

Continued cost reduction momentum with ongoing focus on both COGS and SG&A

Inventory levels decreasing but still above target

Overall Sentiment: Cautious but focused on cost control and inventory management while navigating challenging market conditions

Recommendation

Rating: Hold

Reason for Rating: Near-term headwinds balanced against ongoing cost reduction initiatives and strong market position

Disclaimer: This analysis is based on company filings and public information. It is for informational purposes only and not financial advice. Past performance does not guarantee future results.

Generated on: 1/24/2025, 1:45:33 PM