London — CNH Industrial N.V. today announced consolidated revenues of $8,045 million for the second quarter of 2018, up 15% compared to the second quarter of 2017. Net sales of Industrial Activities were $7,579 million in the second quarter of 2018, up 16% compared to the second quarter of 2017. Net income of $408 million for the second quarter of 2018 included a pre-tax gain of $20 million ($15 million net of tax impact) as a result of the amortization over approximately 4.5 years of the $527 million positive impact from the modification of a healthcare plan following the favorable judgment issued by the United States Supreme Court, as previously announced by the company on April 16, 2018.

Adjusted net income was $397 million for the second quarter of 2018 compared to $255 million in the second quarter of 2017. Adjusted EBIT of Industrial Activities was $571 million in the second quarter of 2018, an increase of $175 million (or up 44%) compared to the second quarter of 2017. Adjusted EBIT margin increased 1.4 percentage points (“p.p.”) to 7.5%.

Adjusted EBITDA of Industrial Activities was up 30% to $843 million for the second quarter of 2018 compared to $650 million in the second quarter of 2017, with an adjusted EBITDA margin of 11.1%, up 1.1 p.p. compared to the second quarter of 2017.

Agricultural Equipment’s net sales increased 20% in the second quarter of 2018 compared to the second quarter of 2017 (up 18% on a constant currency basis). A favorable end-user demand environment, with NAFTA row-crop industry demand up 9% in high horsepower tractors and 26% in combines, combined with increased sales from company inventory, led to the segment’s strong retail performance (up 16% year-over-year). Price realization was favorable across all regions.

Adjusted EBIT was $396 million in the second quarter of 2018, a $135 million increase compared to the second quarter of 2017. Adjusted EBIT margin increased 2.6 p.p. to 12% compared to the second quarter of 2017. Half of the increase was due to favorable volume and mix, primarily in NAFTA and EMEA, while the remaining increase was due to sustained net price realization across all regions, including the expected reduction in interest compensation to Financial Services as a result of the achievement of an investment grade rating. The anticipated increase in raw material costs was offset by manufacturing efficiencies. Product development spending, related primarily to precision farming and compliance with Stage V emissions requirements, increased 10%.

Construction Equipment’s net sales increased 23% in the second quarter of 2018 compared to the second quarter of 2017 (up 22% on a constant currency basis), as a result of a favorable end-user industry demand environment, up 20% in light equipment and 34% in heavy equipment year-over-year.

Adjusted EBIT was $33 million in the second quarter of 2018, a $26 million increase compared to the second quarter of 2017, with an adjusted EBIT margin increase of 3.0 p.p. to 4.1%, as a result of higher volume, favorable product mix, and positive net price realization, more than offsetting raw material cost increase. In the quarter, production levels were 12% above retail demand, in line with the order book, which is up approximately 15% compared to the prior year period.

Commercial Vehicles’ net sales increased 11% in the second quarter of 2018 compared to the second quarter of 2017 (up 6% on a constant currency basis), as a result of a favorable product mix and positive pricing primarily in EMEA and LATAM. Total deliveries were flat year-over-year, as increased volumes in light commercial vehicles (as a result of favorable end-user demand in EMEA and Brazil) and in buses in EMEA and LATAM were offset by the impact of re-focusing the heavy vehicle sales to a more profitable product portfolio, including alternative propulsion vehicles.

Adjusted EBIT was $92 million for the second quarter of 2018, an increase of $20 million compared to the second quarter of 2017, with an adjusted EBIT margin of 3.2% (up 0.4 p.p. compared to the second quarter of 2017). The increase was the result of a favorable volume and mix performance primarily in buses, and positive net price realization in EMEA and LATAM in trucks, partially offset by a 24% increase in research and development spending primarily related to initiatives aimed at enhancing product competitiveness and fuel efficiency.

Powertrain’s net sales increased 7% in the second quarter of 2018 compared to the second quarter of 2017 (up 1% on a constant currency basis). Sales to external customers accounted for 49% of total net sales (47% in the second quarter of 2017).

Adjusted EBIT was $108 million for the second quarter of 2018, an $11 million increase compared to the second quarter of 2017, with an adjusted EBIT margin of 8.9% (up 0.4 p.p. compared to the second quarter of 2017). The increase was due to a favorable product mix and manufacturing efficiencies, partially offset by increased selling, general and administrative expenses and product development spending.

Financial Services’ revenues totaled $498 million in the second quarter of 2018, a decrease of 1% compared to the second quarter of 2017 (flat on a constant currency basis), primarily due to a lower average portfolio balance in NAFTA.

In the second quarter of 2018, retail loan originations (including unconsolidated joint ventures) were $2.6 billion, relatively flat compared to the second quarter of 2017. The managed portfolio (including unconsolidated joint ventures) was $25.9 billion as of June 30, 2018 (of which retail was 61% and wholesale 39%), up $0.3 billion compared to June 30, 2017. Excluding the impact of currency translation, the managed portfolio increased $0.8 billion compared to the same period in 2017.

Net income was $102 million in the second quarter of 2018, an increase of $15 million compared to the second quarter of 2017, primarily due to stronger performances in NAFTA, EMEA and LATAM.

2018 Outlook(1)

As a result of the sustained profitability improvement in the second quarter of 2018, CNH Industrial is updating its guidance for the full year 2018 as follows:

• Net sales of Industrial Activities unchanged at approximately $28 billion;
• Adjusted diluted EPS(2) increased to between $0.67 and $0.71 per share;
• Net industrial debt at the end of 2018 improved to between $0.7 billion and $0.9 billion.