CNH

CNH Industrial N.V. Q2 2026 Filing Summary

Business Context and Reporting Period

This Form 10-Q covers the quarterly period ended June 30, 2026. CNH Industrial N.V. operates through three reportable segments: Agriculture, Construction, and Financial Services. The company reported a challenging global agriculture market environment characterized by subdued demand due to elevated input costs and financing rates, while the Construction segment showed growth driven by higher shipment volumes in North America and EMEA.

Key Financial Metrics

Material Changes vs. Prior Period

• Profitability Decline: Net income attributable to CNH decreased 35% year-over-year in Q2 ($138M vs. $213M) and 58% year-to-date ($145M vs. $344M). This was driven by lower volumes in Agriculture, unfavorable product mix in South America, and higher costs.
• Segment Performance:
  • Agriculture: Net sales were flat (+0.9% Q2, +0.8% YTD) due to favorable price realization offsetting lower volumes. Adjusted EBIT dropped significantly ($170M vs. $263M in Q2) due to tariffs, higher SG&A/R&D, and lower joint venture results.
  • Construction: Net sales grew 12.0% in Q2 and 5.6% YTD, driven by North America and EMEA volumes. However, Adjusted EBIT fell to $15M (Q2) and turned negative at -$13M (YTD) due to tariff impacts and higher R&D expenses.
  • Financial Services: Revenues declined 4.2% in Q2 due to lower volumes in South America and North America. Net income decreased due to higher risk costs in Brazil and margin compression.
• Cost Pressures: Cost of goods sold as a percentage of net sales increased to 82.0% in Q2 (from 79.4% in 2025) due to tariff costs and lower production volumes. Restructuring expenses rose to $27M in Q2 (from $5M) due to dealer network optimization.
• Cash Flow: Operating cash flow dropped sharply to $180M YTD 2026 from $934M YTD 2025, reflecting lower net income and unfavorable working capital changes (specifically a $436M increase in inventory).

Outlook, Risks, and Contingencies

• Market Outlook: Management views the current environment as a cyclical downturn. The company remains focused on disciplined production, inventory management, and operational efficiency. Commodity markets showed signs of improvement, but farmer sentiment remains cautious.
• Tariff Impacts: Changes in U.S. trade policies increased costs. The company recognized a $5M tariff recovery in H1 2026 and expects to recover approximately $150M in future periods upon meeting recognition criteria.
• Credit Risk: Receivables greater than 30 days past due increased to 4.4% (from 3.9% in 2025), primarily reflecting economic pressures on farmers in South America (Brazil). An additional $104M in retail reserves was added for Brazil due to crop prices and weather events.
• Legal Proceedings:
  • Poland Antitrust: A fine of approx. €57M was imposed on CNH Polska; the company has appealed and does not expect a final decision for at least two years. No reserve is currently required.
  • Environmental: Reserves of $21M are established for environmental remediation; management does not expect a material adverse effect.
• Credit Ratings: S&P lowered the long-term issuer credit rating to 'BBB' (from 'BBB+') with a Stable outlook. Fitch revised the outlook to Negative (from Stable) while affirming the 'BBB' rating.

Investor Verification Checklist

• Brazil Exposure: Verify the sustainability of the $104M increase in credit reserves and the impact of local crop prices and weather on future delinquency rates.
• Tariff Recovery: Monitor the timeline and realization of the expected $150M IEEPA tariff refund.
• Inventory Levels: Assess the $517M increase in inventory YTD and its impact on future working capital and potential write-downs.
• Construction Margins: Review the ability to recover Construction segment Adjusted EBIT margins given the negative YTD result despite sales growth.
• Debt Refinancing: Track upcoming debt maturities and the impact of the recent credit rating changes on borrowing costs.