CNH Industrial NV (CNH) Q3 2025 Earnings Call Highlights: Navigating Challenges with Strategic ...

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Consolidated Revenue: $4.4 billion, down 5% year-over-year. Global Ag Segment Sales: Down 11%; North America down 29%, EMEA up 16%. Industrial Adjusted EBIT: $104 million, down 69% year-over-year. Adjusted Net Income: $109 million. Adjusted EPS: $0.08. Industrial Net Sales: $3.7 billion, down 7% year-over-year. Q3 Free Cash Flow from Industrial Activities: Outflow of $188 million. Agriculture Q3 Net Sales: Just under $3 billion, down 10% year-over-year. Adjusted Gross Margin: 20.6%, down from 22.7% in Q3 2024. SG&A Expenses: $36 million higher than last year. Construction Q3 Net Sales: $739 million, up 8% year-over-year. Construction Gross Margin: 14.5%, down from 16.6% in Q3 2024. Financial Services Net Income: $47 million, down $31 million year-over-year. Retail Originations: $2.7 billion, down 6% year-over-year. Managed Portfolio: $28.5 billion. Stock Repurchase: $50 million worth at an average price of $11.25 per share. Net Tariff Impact for 2025: Estimated at $100 million for agriculture and $40 million for construction. Full Year Pricing: Expected to be positive about 1%. Free Cash Flow Guidance: $200 million to $500 million range. EPS Guidance: Forecasted to be between $0.44 and $0.50.

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Release Date: November 07, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

CNH Industrial NV (NYSE:CNH) has successfully reduced ag dealers' new inventory levels by over $200 million, putting them on track to achieve targeted levels in the next 3 to 4 months. The company is advancing investments in technology, including AI applications for digital farm management, which could enhance operational efficiency. CNH Industrial NV (NYSE:CNH) received two innovation awards for its corn header automation and ForageCam, showcasing its commitment to technological advancements. The company is making progress on its strategic sourcing program, selecting suppliers that meet stringent quality standards, which has led to a reduction in quality costs by over $60 million year-to-date. CNH Industrial NV (NYSE:CNH) has maintained a healthy balance sheet and continues to reinvest in its business, including a $50 million stock repurchase during the third quarter.

Negative Points

Consolidated revenues for the quarter were down 5% at $4.4 billion, with Global Ag segment sales down 11%, significantly impacting overall financial performance. Industrial adjusted EBIT was $104 million, down 69% compared to last year, primarily due to lower industry demand, tariffs, and unfavorable geographic mix. The company is facing persistent delinquencies in Brazil, leading to increased credit reserves and impacting financial services net income. Tariffs have introduced a significant cost burden, with an estimated net impact of $100 million for agriculture and $40 million for construction in 2025. CNH Industrial NV (NYSE:CNH) has experienced a 29% decrease in higher-margin North American market sales, contributing to a decline in agriculture net sales by 10% year-over-year.

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Q & A Highlights

Q: Can you elaborate on the decremental margin on the volume mix, particularly the decline in North America, and the SG&A drag? Also, could you unpack the product cost impacts, including tariffs and quality improvements? A: The decremental margin in agriculture was mainly due to a 29% sales decline in North America and a 16% increase in EMEA, affecting geographic mix. SG&A grew due to higher variable compensation. Tariffs and geographic mix were significant factors, along with lower profits from ag JVs. Product costs were favorable by $33 million, excluding $44 million of tariff costs, with quality improvements contributing significantly.

Q: Regarding fiscal year '26, how much of the tariff headwind do you expect to offset through pricing and other initiatives? Also, what gives you confidence in achieving desired dealer inventory levels in 3 to 4 months? A: The tariff headwind is estimated to be a 2% to 3% impact on North America sales. While list price growth alone won't cover this, we plan to offset it through cost-cutting and adjusting discounting. We expect to achieve dealer inventory targets by year-end, allowing for increased production hours in 2026, potentially leading to further inventory reduction if needed.

Q: How much of the total tariff costs are tied to different tariff types, and what could be the opportunity if there's relief from any Supreme Court ruling? A: About 20% of the tariff costs are tied to specific tariffs. Any relief granted would be beneficial, but we are not currently factoring that into our plans.

Q: How are you approaching pricing for model year '26 machines, and what feedback have you received from customers regarding pricing compared to competitors? A: In construction, we were more aggressive with price increases, while in agriculture, we aligned with the market at 3% to 4% list price increases. This approach has been well-received, as evidenced by our filled production slots.

Q: What are the drivers behind the smaller declines in revenue guidance for 2025, and what regional color can you provide for Q4? A: EMEA and construction equipment are driving sales growth, with EMEA performing strongly and construction markets improving. Additionally, we are underproducing retail less in Q4, contributing to sales growth.

Q: Can you clarify the moving pieces in the guidance, particularly the impact of tariffs and other factors on EBIT? A: The guidance reflects a mix effect, with construction sales growing but at lower margins, while agriculture sales are not growing as fast. Tariffs are a small part of the guidance reduction, with SG&A increases and mix effects being more significant factors.

Q: How is the used inventory situation progressing, and when can we expect wholesale sales to exceed retail sales again? A: We've seen three consecutive quarters of declines in used inventory, but it's still above historical norms. Progress is ongoing, but we don't expect to reach optimal levels by year-end.

Q: What has changed in your outlook for South America, and what factors are influencing this region's performance? A: The optimism for South America has waned due to continued uncertainty in global trade and delayed payouts from local farm bills. The region's performance is closely tied to China's actual purchase volumes, which remain uncertain.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

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