CNH Industrial Capital originations rise 11%

CNH Industrial Capital originations grew in the first quarter as appetite increased for the captive’s offerings, while delinquencies rose, parent company sales declined and interest rates remained elevated globally. 

STATE OF PLAY:  

CNH Industrial Capital’s originations grew in the first quarter, but the company experienced interest rate difficulties and rising delinquencies, Oddone Incisa, chief financial officer and president of financial services at parent CNH Industrial, said during the company’s Q1 earnings call on May 1. 

“The notable improvement was mostly driven by solid market gains, but the adjustment to higher interest rates is now largely completed on the receivable portfolio,” he said. “Delinquencies ticked up in the quarter, which is normal when the market contracts. The delinquency rates we are seeing now are at the same or lower levels than in previous downturns.” 

Still, the decline in Q1 agriculture sales led CNH to lower its full-year forecast for that segment to a decline of 11% to 15% from the previous 8% to 12% projection, while the construction forecast remained at a 10% decline the same on a percentage basis, Scott Wine, chief executive of the parent company, said during the earnings call.  

WHAT THEY’RE SAYING:  

Despite the decline in Q1 agricultural and construction sales, CNH Industrial exceeded expectations for the quarter, according to a Stifel research note produced before the earnings call. 

“CNH successfully navigated a challenging environment in 1Q24 with revenue and [earnings per share] ahead of expectations,” the note stated. “Restructuring combined with improved price/cost are helping margins remain relatively stable versus prior expectations.” 

CNH expects restructuring to continue through the year, as Gerrit Marx takes over as CEO on July 1. The restructuring has already saved $33 million, Wine said. 

BY THE NUMBERS:  

CNH Industrial Capital experienced growth in Q1 despite softer industrial sales at CNH Industrial on a year-over-year basis, resulting in lower guidance for agriculture sales and resulting in projected declines in construction sales persisting, according to CNH Industrial’s earnings presentation today.  

In the Q1 earnings presentation, CNH Industrial Capital reported: 

• Originations of $2.5 billion, up 11.3% YoY; 
• A managed portfolio of $28.7 billion, up 17.1% YoY; 
• Portfolio mix remained 60% retail transactions, 35% wholesale transactions and 5% operating leases.  
• Delinquencies more than 30 days past-due rose 30 basis points (bps) quarter over quarter and YoY to 1.7%. 

Sales figures included:  

• Global industrial sales of $4.1 billion, down 13.5% YoY. 
• Worldwide agriculture sales of $3.3 billion, down 14.1% YoY. 
• Worldwide construction sales of $758 million, down 10.7% YoY. 

THE BOTTOM LINE:  

CNH Industrial plans to continue navigating the “street fight” taking place in the equipment industry and to find ways to help dealers and itself win in the high interest rate environment, Wine said. 

“It’s a street fight out there, and I’d tell you that a lot of what we’ve done is just driving customer-centric customer focus, and I think you’re seeing that play out with our dealers as we’re able to win more of those battles throughout the year,” he said. “Don’t expect big [moves], it is a battle, and I’m not suggesting it’s easy, but I think what you saw in the first quarter is the team’s ability to execute that and what we’ve guided is the expectation that that will continue, but the product portfolio is quite strong right now.” 

CNH Industrial Capital is the 13th-largest equipment finance company in the United States and the fourth-largest captive equipment finance company in the country by total assets, according to the 2023 Monitor 100. The captive provides financing for the company’s CASE Construction Equipment and New Holland construction products as well as CNH’s CASE IH, New Holland and Steyr Traktoren agricultural products. 

Shares of CNH Industrial N.V. (NYSE: CNHI) rose 3.09% or 35 cents to $11.68 as of market close today. CNH Industrial has a market capitalization of $14.11 billion.  

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