UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended ~~June~~September 30, 2023
or
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission File Number: 000-55510

CNH INDUSTRIAL CAPITAL LLC

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)		39-1937630 (I.R.S. Employer Identification Number)
5729 Washington Avenue Racine, Wisconsin (Address of principal executive offices)	(262) 636-6011 (Registrant’s telephone number, including area code)	53406 (Zip code)

Securities registered pursuant to Section 12(b) of the Act: None

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes o No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). x Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o	Accelerated filer o
Non-accelerated filer x	Smaller reporting company ☐
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ☐ Yes x No

As of ~~June~~September 30, 2023, all of the limited liability company interests of the registrant were held by CNH Industrial America LLC, a wholly-owned subsidiary of CNH Industrial N.V.

The registrant meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this Form with certain reduced disclosures as permitted by those instructions.

Table of Contents

TABLE OF CONTENTS


		PAGE
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Consolidated Statements of Income for the Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2023 and 2022 (Unaudited)	1
	Consolidated Statements of Comprehensive Income for the Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2023 and 2022 (Unaudited)	2
	Consolidated Balance Sheets as of ~~June~~September 30, 2023 and December 31, 2022 (Unaudited)	3
	Consolidated Statements of Cash Flows for the ~~Six~~Nine Months Ended ~~June~~September 30, 2023 and 2022 (Unaudited)	5
	Consolidated Statements of Changes in Stockholder’s Equity for the ~~Six~~Nine Months Ended ~~June~~September 30, 2023 and 2022 (Unaudited)	6
	Condensed Notes to Consolidated Financial Statements (Unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	*
Item 4.	Controls and Procedures	3637
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	3639
Item 1A.	Risk Factors	3639
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	*
Item 3.	Defaults Upon Senior Securities	*
Item 4.	Mine Safety Disclosures	3639
Item 5.	Other Information	3640
Item 6.	Exhibits	3740

*	This item has been omitted pursuant to the reduced disclosure format as set forth in General Instruction (H)(2) of Form 10-Q

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

CNH INDUSTRIAL CAPITAL LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

FOR THE THREE AND ~~SIX~~NINE MONTHS ENDED ~~JUNE~~SEPTEMBER 30, 2023 AND 2022

(Dollars in thousands)

(Unaudited)


	Three Months Ended				Six Months Ended				Three Months Ended				Nine Months Ended
	June 30,				June 30,				September 30,				September 30,
	2023		2022		2023		2022		2023		2022		2023		2022
REVENUES
Interest income on retail notes and finance leases	$	69,626	$	49,048	$	137,850	$	95,749	$	73,092	$	54,888	$	210,942	$	150,637
Rental income on operating leases		57,451		62,765		114,500		126,586		61,414		61,657		175,914		188,243
Revolving charge account income		9,996		—		18,326		—		10,455		—		28,781		—
Interest income on wholesale notes		13,336		6,197		23,931		11,688		18,370		8,043		42,301		19,731
Interest and other income from affiliates		95,569		65,232		179,673		127,539		111,913		67,488		291,586		195,027
Other income		1,136		6,034		1,352		15,123		3,153		7,481		4,505		22,604
Total revenues		247,114		189,276		475,632		376,685		278,397		199,557		754,029		576,242
EXPENSES
Interest expense:
Interest expense to third parties		117,103		46,205		212,359		85,292		134,557		62,539		346,916		147,831
Interest expense to affiliates		4,985		1,366		13,433		1,699		10,180		2,933		23,613		4,632
Total interest expense		122,088		47,571		225,792		86,991		144,737		65,472		370,529		152,463
Administrative and operating expenses:
Fees charged by affiliates		13,112		12,157		26,987		23,573		13,359		12,946		40,346		36,519
Provision for credit losses		2,649		1,944		4,568		4,769
Provision (benefit) for credit losses										6,649		(1,825)		11,217		2,944
Depreciation of equipment on operating leases		44,675		49,801		89,727		103,358		44,598		50,086		134,325		153,444
Other expenses, net		4,706		(1,257)		8,239		(3,980)		3,261		3,416		11,500		(564)
Total administrative and operating expenses		65,142		62,645		129,521		127,720		67,867		64,623		197,388		192,343
Total expenses		187,230		110,216		355,313		214,711		212,604		130,095		567,917		344,806
INCOME BEFORE TAXES		59,884		79,060		120,319		161,974		65,793		69,462		186,112		231,436
Income tax provision		12,186		19,166		26,320		38,593		15,093		16,159		41,413		54,752
NET INCOME	$	47,698	$	59,894	$	93,999	$	123,381	$	50,700	$	53,303	$	144,699	$	176,684

See the accompanying Condensed Notes to Consolidated Financial Statements (Unaudited).

Table of Contents

CNH INDUSTRIAL CAPITAL LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE AND ~~SIX~~NINE MONTHS ENDED ~~JUNE~~SEPTEMBER 30, 2023 AND 2022

(Dollars in thousands)

(Unaudited)


	Three Months Ended				Six Months Ended				Three Months Ended				Nine Months Ended
	June 30,				June 30,				September 30,				September 30,
	2023		2022		2023		2022		2023		2022		2023		2022
NET INCOME	$	47,698	$	59,894	$	93,999	$	123,381	$	50,700	$	53,303	$	144,699	$	176,684
Other comprehensive income (loss):
Foreign currency translation adjustment		13,366		(19,746)		13,072		(10,592)		(7,790)		(37,238)		5,282		(47,830)
Pension liability adjustment		(186)		(168)		(367)		(354)		(180)		(158)		(547)		(512)
Change in derivative financial instruments		(387)		3,908		(2,780)		10,359		4		1,572		(2,776)		11,931
Total other comprehensive income (loss)		12,793		(16,006)		9,925		(587)		(7,966)		(35,824)		1,959		(36,411)
COMPREHENSIVE INCOME	$	60,491	$	43,888	$	103,924	$	122,794	$	42,734	$	17,479	$	146,658	$	140,273

See the accompanying Condensed Notes to Consolidated Financial Statements (Unaudited).

Table of Contents

CNH INDUSTRIAL CAPITAL LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF ~~JUNE~~SEPTEMBER 30, 2023 AND DECEMBER 31, 2022

(Dollars in thousands)

(Unaudited)


	June 30,		December 31,		September 30,		December 31,
	2023		2022		2023		2022
ASSETS
Cash	$	198,036	$	262,244	$	235,560	$	262,244
Restricted cash and cash equivalents		397,272		446,335		374,721		446,335
Receivables, less allowance for credit losses of $115,120 and $125,012, respectively		11,918,352		10,741,820
Receivables, less allowance for credit losses of $118,944 and $125,012, respectively						12,700,749		10,741,820
Affiliated accounts and notes receivable		59,091		53,509		283,787		53,509
Equipment on operating leases, net		1,429,645		1,472,973		1,415,452		1,472,973
Equipment held for sale		13,400		11,685		14,467		11,685
Goodwill		109,088		108,567		108,773		108,567
Other intangible assets, net		17,449		18,388		17,854		18,388
Other assets		74,329		63,958		83,019		63,958
TOTAL	$	14,216,662	$	13,179,479	$	15,234,382	$	13,179,479
LIABILITIES AND STOCKHOLDER’S EQUITY
Liabilities:
Short-term debt (including current maturities of long-term debt)	$	4,697,990	$	4,096,426	$	4,581,015	$	4,096,426
Accounts payable and other accrued liabilities		929,442		1,046,688		974,511		1,046,688
Affiliated debt		262,405		341,531		511,883		341,531
Long-term debt		6,914,753		6,387,135		7,686,899		6,387,135
Total liabilities		12,804,590		11,871,780		13,754,308		11,871,780
Commitments and contingent liabilities (Note 11)
Stockholder’s equity:
Member’s capital		—		—		—		—
Paid-in capital		844,471		844,022		869,739		844,022
Accumulated other comprehensive loss		(127,908)		(137,833)		(135,874)		(137,833)
Retained earnings		695,509		601,510		746,209		601,510
Total stockholder’s equity		1,412,072		1,307,699		1,480,074		1,307,699
TOTAL	$	14,216,662	$	13,179,479	$	15,234,382	$	13,179,479

See the accompanying Condensed Notes to Consolidated Financial Statements (Unaudited).

Table of Contents

CNH INDUSTRIAL CAPITAL LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Continued)

AS OF ~~JUNE~~SEPTEMBER 30, 2023 AND DECEMBER 31, 2022

(Dollars in thousands)

(Unaudited)

The following table presents certain assets and liabilities of consolidated variable interest entities (“VIEs”), which are included in the consolidated balance sheets. The assets in the table include those assets that can only be used to settle obligations of consolidated VIEs. The liabilities in the table include third-party liabilities of the consolidated VIEs, for which creditors do not have recourse to the general credit of CNH Industrial Capital LLC. See Note 4: Receivables for additional information on the Company’s VIEs.


	June 30,		December 31,		September 30,		December 31,
	2023		2022		2023		2022
Restricted cash and cash equivalents	$	397,272	$	446,335	$	374,721	$	446,335
Receivables, less allowance for credit losses of $52,080 and $55,645, respectively		7,013,037		6,927,032
Receivables, less allowance for credit losses of $52,818 and $55,645, respectively						7,266,652		6,927,032
TOTAL	$	7,410,309	$	7,373,367	$	7,641,373	$	7,373,367

Short-term debt (including current maturities of long-term debt)	$	3,236,036	$	3,120,860	$	3,288,164	$	3,120,860
Long-term debt		3,532,674		3,599,575		3,701,524		3,599,575
TOTAL	$	6,768,710	$	6,720,435	$	6,989,688	$	6,720,435

See the accompanying Condensed Notes to Consolidated Financial Statements (Unaudited).

Table of Contents

CNH INDUSTRIAL CAPITAL LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE ~~SIX~~NINE MONTHS ENDED ~~JUNE~~SEPTEMBER 30, 2023 AND 2022

(Dollars in thousands)

(Unaudited)

2023

2022

CASH FLOWS FROM OPERATING ACTIVITIES


Net income

$
93,999

$
123,381

Adjustments to reconcile net income to net cash from (used in) operating activities:

Depreciation on property and equipment and equipment on operating leases

89,731

103,362

Amortization of intangibles

1,400

1,093

Provision for credit losses

4,568

4,769

Deferred income tax benefit

(9,589)

(14,343)

Changes in components of working capital:

Change in affiliated accounts and notes receivables

(5,582)

165,366

Change in other assets and equipment held for sale

(14,881)

3,465

Change in accounts payable and other accrued liabilities

(109,013)

(320)

Net cash from (used in) operating activities


50,633

386,773

CASH FLOWS FROM INVESTING ACTIVITIES


Cost of receivables acquired

(8,440,653)

(6,610,535)

Collections of receivables

7,305,071

5,889,389

Purchase of equipment on operating leases

(227,809)

(246,514)

Proceeds from disposal of equipment on operating leases

190,007

267,151

Change in property, equipment and software, net

(462)

(1,707)

Net cash from (used in) investing activities


(1,173,846)

(702,216)

CASH FLOWS FROM FINANCING ACTIVITIES


Proceeds from issuance of affiliated debt

609,482

539,854

Payment of affiliated debt

(692,997)

(351,779)

Proceeds from issuance of long-term debt

2,368,436

1,777,487

Payment of long-term debt

(1,361,216)

(2,154,222)

Change in committed asset-backed facilities, net

115,685

133,379

Change in short-term borrowings, net

(29,448)

111,561

Dividends paid to CNH Industrial America LLC

—

(90,000)

Net cash from (used in) financing activities


1,009,942

(33,720)

DECREASE IN CASH AND RESTRICTED CASH AND CASH EQUIVALENTS


(113,271)

(349,163)

CASH AND RESTRICTED CASH AND CASH EQUIVALENTS


Beginning of period

708,579

1,028,659

End of period

$
595,308

$
679,496

CASH PAID DURING THE PERIOD FOR INTEREST

$
222,746

$
90,707

CASH PAID DURING THE PERIOD FOR TAXES

$
46,464

$
63,774


	2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	144,699	$	176,684
Adjustments to reconcile net income to net cash from (used in) operating activities:
Depreciation on property and equipment and equipment on operating leases		134,331		153,450
Amortization of intangibles		2,164		1,632
Provision for credit losses		11,217		2,944
Deferred income tax benefit		(27,881)		(31,375)
Changes in components of working capital:
Change in affiliated accounts and notes receivables		916		206,788
Change in other assets and equipment held for sale		(24,029)		(6,130)
Change in accounts payable and other accrued liabilities		(43,686)		11,612
Net cash from (used in) operating activities		197,731		515,605
CASH FLOWS FROM INVESTING ACTIVITIES
Cost of receivables acquired		(13,392,367)		(10,325,233)
Collections of receivables		11,440,578		9,238,310
Change in affiliated cash pooling receivables, net		(223,389)		—
Cost of affiliated notes receivables acquired		(14,000)		—
Collections of affiliated notes receivables		8,000		—
Purchase of equipment on operating leases		(357,375)		(354,324)
Proceeds from disposal of equipment on operating leases		282,817		374,439
Change in property, equipment and software, net		(1,630)		(2,029)
Net cash from (used in) investing activities		(2,257,366)		(1,068,837)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of affiliated debt		1,308,327		670,960
Payment of affiliated debt		(1,137,975)		(446,072)
Proceeds from issuance of long-term debt		4,252,037		2,594,387
Payment of long-term debt		(2,531,760)		(2,780,848)
Change in committed asset-backed facilities, net		(160,996)		(10,760)
Change in short-term borrowings, net		206,704		152,973
Dividends paid to CNH Industrial America LLC		—		(110,000)
Proceeds from capital contribution		25,000		—
Net cash from (used in) financing activities		1,961,337		70,640
DECREASE IN CASH AND RESTRICTED CASH AND CASH EQUIVALENTS		(98,298)		(482,592)
CASH AND RESTRICTED CASH AND CASH EQUIVALENTS
Beginning of period		708,579		1,028,659
End of period	$	610,281	$	546,067
COMPONENTS OF CASH AND RESTRICTED CASH AND CASH EQUIVALENTS
Cash	$	235,560	$	105,915
Restricted cash and cash equivalents		374,721		440,152
TOTAL CASH AND RESTRICTED CASH AND CASH EQUIVALENTS	$	610,281	$	546,067

See the accompanying Condensed Notes to Consolidated Financial Statements (Unaudited).

Table of Contents

CNH INDUSTRIAL CAPITAL LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER’S EQUITY

FOR THE ~~SIX~~NINE MONTHS ENDED ~~JUNE~~SEPTEMBER 30, 2023 AND 2022

(Dollars in thousands)

(Unaudited)

Accumulated




Other

Member’s

Paid-in

Comprehensive

Retained

Capital

Capital

Income (Loss)

Earnings

Total
BALANCE - January 1, 2023

$
—

$
844,022

$
(137,833)

$
601,510

$
1,307,699
Net income

—

—

—

46,301

46,301
Foreign currency translation adjustment

—

—

(294)

—

(294)
Stock compensation

—

196

—

—

196
Pension liability adjustment, net of tax

—

—

(181)

—

(181)
Change in derivative financial instruments, net of tax

—

—

(2,393)

—

(2,393)
BALANCE - March 31, 2023

$
—

$
844,218

$
(140,701)

$
647,811

$
1,351,328
Net income

—

—

—

47,698

47,698
Foreign currency translation adjustment

—

—

13,366

—

13,366
Stock compensation

—

253

—

—

253
Pension liability adjustment, net of tax

—

—

(186)

—

(186)
Change in derivative financial instruments, net of tax

—

—

(387)

—

(387)
BALANCE - June 30, 2023

$
—

$
844,471

$
(127,908)

$
695,509

$
1,412,072


					Accumulated
					Other
	Member’s		Paid-in		Comprehensive		Retained
	Capital		Capital		Income (Loss)		Earnings		Total
BALANCE - January 1, 2023	$	—	$	844,022	$	(137,833)	$	601,510	$	1,307,699
Net income		—		—		—		46,301		46,301
Foreign currency translation adjustment		—		—		(294)		—		(294)
Stock compensation		—		196		—		—		196
Pension liability adjustment, net of tax		—		—		(181)		—		(181)
Change in derivative financial instruments, net of tax		—		—		(2,393)		—		(2,393)
BALANCE - March 31, 2023	$	—	$	844,218	$	(140,701)	$	647,811	$	1,351,328
Net income		—		—		—		47,698		47,698
Foreign currency translation adjustment		—		—		13,366		—		13,366
Stock compensation		—		253		—		—		253
Pension liability adjustment, net of tax		—		—		(186)		—		(186)
Change in derivative financial instruments, net of tax		—		—		(387)		—		(387)
BALANCE - June 30, 2023	$	—	$	844,471	$	(127,908)	$	695,509	$	1,412,072
Net income		—		—		—		50,700		50,700
Foreign currency translation adjustment		—		—		(7,790)		—		(7,790)
Stock compensation		—		268		—		—		268
Pension liability adjustment, net of tax		—		—		(180)		—		(180)
Change in derivative financial instruments, net of tax		—		—		4		—		4
Capital contribution		—		25,000		—		—		25,000
BALANCE - September 30, 2023	$	—	$	869,739	$	(135,874)	$	746,209	$	1,480,074

See the accompanying Condensed Notes to Consolidated Financial Statements (Unaudited).

Table of Contents

CNH INDUSTRIAL CAPITAL LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER’S EQUITY (Continued)

FOR THE ~~SIX~~NINE MONTHS ENDED ~~JUNE~~SEPTEMBER 30, 2023 AND 2022 ~~(Continued)~~

(Dollars in thousands)

(Unaudited)

Accumulated




Other

Member’s

Paid-in

Comprehensive

Retained

Capital

Capital

Income (Loss)

Earnings

Total
BALANCE - January 1, 2022

$
—

$
843,469

$
(111,457)

$
517,388

$
1,249,400
Net income

—

—

—

63,487

63,487
Dividends paid to CNH Industrial America LLC

—

—

—

(25,000)

(25,000)
Foreign currency translation adjustment

—

—

9,154

—

9,154
Stock compensation

—

101

—

—

101
Pension liability adjustment, net of tax

—

—

(186)

—

(186)
Change in derivative financial instruments, net of tax

—

—

6,451

—

6,451
BALANCE - March 31, 2022

$
—

$
843,570

$
(96,038)

$
555,875

$
1,303,407
Net income

—

—

—

59,894

59,894
Dividends paid to CNH Industrial America LLC

—

—

—

(65,000)

(65,000)
Foreign currency translation adjustment

—

—

(19,746)

—

(19,746)
Stock compensation

—

134

—

—

134
Pension liability adjustment, net of tax

—

—

(168)

—

(168)
Change in derivative financial instruments, net of tax

—

—

3,908

—

3,908
BALANCE - June 30, 2022

$
—

$
843,704

$
(112,044)

$
550,769

$
1,282,429


					Accumulated
					Other
	Member’s		Paid-in		Comprehensive		Retained
	Capital		Capital		Income (Loss)		Earnings		Total
BALANCE - January 1, 2022	$	—	$	843,469	$	(111,457)	$	517,388	$	1,249,400
Net income		—		—		—		63,487		63,487
Dividends paid to CNH Industrial America LLC		—		—		—		(25,000)		(25,000)
Foreign currency translation adjustment		—		—		9,154		—		9,154
Stock compensation		—		101		—		—		101
Pension liability adjustment, net of tax		—		—		(186)		—		(186)
Change in derivative financial instruments, net of tax		—		—		6,451		—		6,451
BALANCE - March 31, 2022	$	—	$	843,570	$	(96,038)	$	555,875	$	1,303,407
Net income		—		—		—		59,894		59,894
Dividends paid to CNH Industrial America LLC		—		—		—		(65,000)		(65,000)
Foreign currency translation adjustment		—		—		(19,746)		—		(19,746)
Stock compensation		—		134		—		—		134
Pension liability adjustment, net of tax		—		—		(168)		—		(168)
Change in derivative financial instruments, net of tax		—		—		3,908		—		3,908
BALANCE - June 30, 2022	$	—	$	843,704	$	(112,044)	$	550,769	$	1,282,429
Net income		—		—		—		53,303		53,303
Dividends paid to CNH Industrial America LLC		—		—		—		(20,000)		(20,000)
Foreign currency translation adjustment		—		—		(37,238)		—		(37,238)
Stock compensation		—		164		—		—		164
Pension liability adjustment, net of tax		—		—		(158)		—		(158)
Change in derivative financial instruments, net of tax		—		—		1,572		—		1,572
BALANCE - September 30, 2022	$	—	$	843,868	$	(147,868)	$	584,072	$	1,280,072

See the accompanying Condensed Notes to Consolidated Financial Statements (Unaudited).

Table of Contents

CNH INDUSTRIAL CAPITAL LLC AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands)

(Unaudited)

NOTE 1: BASIS OF PRESENTATION

CNH Industrial Capital LLC and its primary operating subsidiaries, including New Holland Credit Company, LLC (“New Holland Credit”), CNH Industrial Capital America LLC (“CNH Industrial Capital America”) and CNH Industrial Capital Canada Ltd. (“CNH Industrial Capital Canada”) (collectively, “CNH Industrial Capital” or the “Company”), are each a subsidiary of CNH Industrial America LLC (“CNH Industrial America”), which is an indirect wholly-owned subsidiary of CNH Industrial N.V. (“CNHI” and, together with its consolidated subsidiaries, “CNH Industrial”). CNH Industrial America and CNH Industrial Canada Ltd. (collectively, “CNH Industrial North America”) design, manufacture, and sell agricultural and construction equipment. CNH Industrial Capital provides financial services for CNH Industrial North America dealers and end-use customers primarily located in the United States and Canada.

CNHI is incorporated in and under the laws of The Netherlands. CNHI has its corporate seat in Amsterdam, The Netherlands, and its principal office in Basildon, England. The common shares of CNHI are listed on the New York Stock Exchange under the symbol “CNHI,” as well as on the Mercato Telematico Azionario managed by Borsa Italiana S.p.A.

The Company has prepared the accompanying consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, which should be read in conjunction with the audited financial statements in its Annual Report on Form 10-K for the year ended December 31, 2022. Certain financial information that is normally included in annual financial statements prepared in conformity with U.S. GAAP, which is not required for interim reporting purposes, has been condensed or omitted. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of our interim unaudited financial statements have been reflected.

The consolidated financial statements include the Company and its consolidated subsidiaries. The consolidated financial statements are expressed in U.S. dollars. The consolidated financial statements include the accounts of the Company’s subsidiaries in which the Company has a controlling financial interest and reflect the noncontrolling interests of the minority owners of the subsidiaries that are not fully owned for the periods presented, as applicable. A controlling financial interest may exist based on ownership of a majority of the voting interest of a subsidiary, or based on the Company’s determination that it is the primary beneficiary of a variable interest entity (“VIE”). The primary beneficiary of a VIE is the party that has the power to direct the activities that most significantly impact the economic performance of the entity and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the entity. The Company assesses whether it is the primary beneficiary on an ongoing basis, as prescribed by the accounting guidance on the consolidation of VIEs. The consolidated status of the VIEs with which the Company is involved may change as a result of such reassessments.

The preparation of consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities and reported amounts of revenues and expenses. Significant estimates in these consolidated financial statements include the allowance for credit losses and residual values of equipment on operating leases. Actual results could differ from these estimates.

Certain reclassifications have been made to prior period amounts to conform to current period presentation. These reclassifications did not have an impact on the Company’s results of operations or financial position as of December 31, 2022 or ~~June~~September 30, 2022.

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CNH INDUSTRIAL CAPITAL LLC AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

NOTE 2: NEW ACCOUNTING PRONOUNCEMENTS

New Accounting Pronouncements Adopted

In March 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2022-02, Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures (“ASU 2022-02”). ASU 2022-02 eliminates the accounting guidance for troubled debt restructurings (“TDRs”) for creditors in ASC 310-40 and amends the guidance on vintage disclosures to require disclosure of current-period gross charge-offs by year of origination. ASU 2022-02 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted. Entities can elect to adopt the guidance on TDRs using either a prospective or modified retrospective transition. The amendments related to disclosures should be adopted prospectively. The Company adopted ASU 2022-02 and applied the guidance within ASU 2022-02 to its consolidated financial statements prospectively beginning January 1, 2023. The adoption did not have a material impact on the Company’s consolidated financial statements and note disclosures.

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). ASU 2020-04 provides temporary optional expedients and exceptions for applying U.S. GAAP to contract modifications, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. In December 2022, the FASB issued ASU No. 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848 (“ASU 2022-06”). ASU 2022-06 extended the sunset date of ASC Topic 848 from December 31, 2022 to December 31, 2024. The Company elected to adopt ASU 2020-04 and ASU 2022-06 in the second quarter of 2023. The Company renegotiated its contract terms on its interest rate derivatives by changing the floating interest rate swap from LIBOR to overnight SOFR. The Company elected to make the change using the optional expedients under ASC 848, which allows the change in critical terms without dedesignation and results in no change to the cumulative basis adjustment reflected in earnings. The elections did not have a material impact on the Company’s consolidated financial statements for the ~~three~~nine months ended ~~June~~September 30, ~~2023, and the impact of applying the elections to future eligible contract modifications that occur through December 31, 2023 is also not expected to be material.~~2023.

NOTE 3: ACCUMULATED OTHER COMPREHENSIVE INCOME

Accumulated other comprehensive income (“AOCI”) includes net income plus other comprehensive income, which includes foreign currency translation gains and losses, certain changes in pension plans and changes in fair value of certain derivatives designated as cash flow hedges.

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CNH INDUSTRIAL CAPITAL LLC AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

The following table summarizes the change in the components of the Company’s AOCI balance and related tax effects for the three months ended ~~June~~September 30, 2023:


	Currency				Unrealized				Currency				Unrealized
	Translation		Pension		(Losses) Gains				Translation		Pension		(Losses) Gains
	Adjustment		Liability		on Derivatives		Total		Adjustment		Liability		on Derivatives		Total
Beginning balance, gross	$	(151,548)	$	2,323	$	12,061	$	(137,164)	$	(138,182)	$	2,077	$	11,605	$	(124,500)
Tax liability		—		(561)		(2,976)		(3,537)		—		(501)		(2,907)		(3,408)
Beginning balance, net of tax		(151,548)		1,762		9,085		(140,701)		(138,182)		1,576		8,698		(127,908)
Other comprehensive income (loss) before reclassifications		13,366		(111)		(56)		13,199		(7,790)		(102)		812		(7,080)
Amounts reclassified from accumulated other comprehensive income (loss)		—		(135)		(400)		(535)		—		(135)		(781)		(916)
Tax effects		—		60		69		129		—		57		(27)		30
Net current-period other comprehensive income (loss)		13,366		(186)		(387)		12,793		(7,790)		(180)		4		(7,966)
Total	$	(138,182)	$	1,576	$	8,698	$	(127,908)	$	(145,972)	$	1,396	$	8,702	$	(135,874)

The following table summarizes the change in the components of the Company’s AOCI balance and related tax effects for the ~~six~~nine months ended ~~June~~September 30, 2023:


	Currency				Unrealized				Currency				Unrealized
	Translation		Pension		(Losses) Gains				Translation		Pension		(Losses) Gains
	Adjustment		Liability		on Derivatives		Total		Adjustment		Liability		on Derivatives		Total
Beginning balance, gross	$	(151,254)	$	2,563	$	15,288	$	(133,403)	$	(151,254)	$	2,563	$	15,288	$	(133,403)
Tax liability		—		(620)		(3,810)		(4,430)		—		(620)		(3,810)		(4,430)
Beginning balance, net of tax		(151,254)		1,943		11,478		(137,833)		(151,254)		1,943		11,478		(137,833)
Other comprehensive income (loss) before reclassifications		13,072		(216)		(2,621)		10,235		5,282		(318)		(1,809)		3,155
Amounts reclassified from accumulated other comprehensive income (loss)		—		(270)		(1,062)		(1,332)		—		(405)		(1,843)		(2,248)
Tax effects		—		119		903		1,022		—		176		876		1,052
Net current-period other comprehensive income (loss)		13,072		(367)		(2,780)		9,925		5,282		(547)		(2,776)		1,959
Total	$	(138,182)	$	1,576	$	8,698	$	(127,908)	$	(145,972)	$	1,396	$	8,702	$	(135,874)

The following table summarizes the change in the components of the Company’s AOCI balance and related tax effects for the three months ended ~~June~~September 30, 2022:


	Currency				Unrealized				Currency				Unrealized
	Translation		Pension		(Losses) Gains				Translation		Pension		(Losses) Gains
	Adjustment		Liability		Derivatives		Total		Adjustment		Liability		Derivatives		Total
Beginning balance, gross	$	(103,464)	$	2,205	$	7,667	$	(93,592)	$	(123,210)	$	1,983	$	12,911	$	(108,316)
Tax liability		—		(527)		(1,919)		(2,446)		—		(473)		(3,255)		(3,728)
Beginning balance, net of tax		(103,464)		1,678		5,748		(96,038)		(123,210)		1,510		9,656		(112,044)
Other comprehensive income (loss) before reclassifications		(19,746)		(73)		8,783		(11,036)		(37,238)		(59)		2,439		(34,858)
Amounts reclassified from accumulated other comprehensive income (loss)		—		(148)		(3,539)		(3,687)		—		(150)		(342)		(492)
Tax effects		—		53		(1,336)		(1,283)		—		51		(525)		(474)
Net current-period other comprehensive income (loss)		(19,746)		(168)		3,908		(16,006)		(37,238)		(158)		1,572		(35,824)
Total	$	(123,210)	$	1,510	$	9,656	$	(112,044)	$	(160,448)	$	1,352	$	11,228	$	(147,868)

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CNH INDUSTRIAL CAPITAL LLC AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

The following table summarizes the change in the components of the Company’s AOCI balance and related tax effects for the ~~six~~nine months ended ~~June~~September 30, 2022:


	Currency				Unrealized				Currency				Unrealized
	Translation		Pension		(Losses) Gains				Translation		Pension		(Losses) Gains
	Adjustment		Liability		Derivatives		Total		Adjustment		Liability		Derivatives		Total
Beginning balance, gross	$	(112,618)	$	2,451	$	(956)	$	(111,123)	$	(112,618)	$	2,451	$	(956)	$	(111,123)
Tax asset (liability)		—		(587)		253		(334)		—		(587)		253		(334)
Beginning balance, net of tax		(112,618)		1,864		(703)		(111,457)		(112,618)		1,864		(703)		(111,457)
Other comprehensive income (loss) before reclassifications		(10,592)		(170)		14,082		3,320		(47,830)		(229)		16,521		(31,538)
Amounts reclassified from accumulated other comprehensive income (loss)		—		(297)		(215)		(512)		—		(447)		(557)		(1,004)
Tax effects		—		113		(3,508)		(3,395)		—		164		(4,033)		(3,869)
Net current-period other comprehensive income (loss)		(10,592)		(354)		10,359		(587)		(47,830)		(512)		11,931		(36,411)
Total	$	(123,210)	$	1,510	$	9,656	$	(112,044)	$	(160,448)	$	1,352	$	11,228	$	(147,868)

The reclassifications out of AOCI were immaterial for the three and ~~six~~nine months ended ~~June~~September 30, 2023 and 2022.

NOTE 4: RECEIVABLES

A summary of receivables included in the consolidated balance sheets as of ~~June~~September 30, 2023 and December 31, 2022 is as follows:


	June 30,		December 31,		September 30,		December 31,
	2023		2022		2023		2022
Retail notes	$	1,356,544	$	1,241,775	$	1,422,379	$	1,241,775
Revolving charge accounts		233,695		207,744		265,775		207,744
Finance leases		194,973		198,064		191,850		198,064
Wholesale		1,144,211		875,628		1,321,229		875,628
Restricted receivables		9,104,049		8,343,621		9,618,460		8,343,621
Gross receivables		12,033,472		10,866,832		12,819,693		10,866,832
Less: Allowance for credit losses		(115,120)		(125,012)		(118,944)		(125,012)
Total receivables, net	$	11,918,352	$	10,741,820	$	12,700,749	$	10,741,820

Restricted Receivables and Securitization

As part of its overall funding strategy, the Company periodically transfers certain receivables into special purpose entities (“SPEs”) as part of its asset-backed securitization (“ABS”) programs.

SPEs utilized in the securitization programs differ from other entities included in the Company’s consolidated financial statements because the assets they hold are legally isolated from the Company’s assets. For bankruptcy analysis purposes, the Company has sold the receivables to the SPEs in a true sale and the SPEs are separate legal entities. Upon transfer of the receivables to the SPEs, the receivables and certain cash flows derived from them become restricted for use in meeting obligations to the SPEs’ creditors. The SPEs have ownership of cash balances that also have restrictions for the benefit of the SPEs’ investors. The Company’s interests in the SPEs’ receivables are subordinate to the interests of third-party investors. None of the receivables that are directly or indirectly sold or ~~transferred in any of these transactions are available to pay the Company’s creditors until all obligations of the SPE have been fulfilled or the receivables are removed from the SPE.~~

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CNH INDUSTRIAL CAPITAL LLC AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

transferred in any of these transactions are available to pay the Company’s creditors until all obligations of the SPE have been fulfilled or the receivables are removed from the SPE.

The secured borrowings related to the restricted receivables are obligations that are payable as the receivables are collected. The following table summarizes the restricted receivables as of ~~June~~September 30, 2023 and December 31, 2022:


	June 30,		December 31,		September 30,		December 31,
	2023		2022		2023		2022
Retail notes	$	5,817,567	$	5,835,445	$	6,108,827	$	5,835,445
Wholesale		3,286,482		2,508,176		3,509,633		2,508,176
Total restricted receivables	$	9,104,049	$	8,343,621	$	9,618,460	$	8,343,621

Within the U.S. retail notes securitization programs, qualifying retail notes are sold to bankruptcy-remote SPEs. In turn, these SPEs establish separate trusts, which are VIEs, to either transfer receivables in exchange for proceeds from asset-backed securities issued by the trusts, or pledge the receivables as collateral in exchange for proceeds from a committed asset-backed facility. In Canada, qualifying retail notes are transferred directly to trusts, which are also VIEs. The VIEs are consolidated since the Company has both the power to direct the activities that most significantly impact the VIEs’ economic performance and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIEs.

With regard to the wholesale receivable securitization programs, the Company sells eligible receivables on a revolving basis to structured master trust facilities, which are bankruptcy-remote SPEs. These trusts were determined to be VIEs. In its role as servicer, the Company has the power to direct the trusts’ activities. Through its retained interests, the Company provides security to investors in the event that cash collections from the receivables are not sufficient to make principal and interest payments on the securities. Consequently, the Company has consolidated these wholesale trusts.

Allowance for Credit Losses

The allowance for credit losses is the Company’s estimate of the lifetime expected credit losses inherent in the receivables owned by the Company. Retail customer receivables primarily include retail notes and finance leases to end-use customers. Revolving charge accounts represent financing for customers to purchase parts, service, rentals, implements and attachments from CNH Industrial North America dealers. Wholesale receivables include dealer floorplan financing, and to a lesser extent, the financing of dealer operations. Typically, the Company’s receivables within a geographic area have similar risk profiles and methods for assessing and monitoring risk.

Retail customer receivables that share the same risk characteristics, such as collateralization levels, geography, product type and other relevant factors, are reviewed on a collective basis using measurement models and management judgment. The allowance for credit losses on retail customer receivables is based on loss forecast models that consider a variety of factors that include, but are not limited to, historical loss experience, collateral value, portfolio balance and delinquency. The loss forecast models are updated on a quarterly basis. The calculation is adjusted for forward-looking macroeconomic factors, such as GDP and Net Farm Income. The forward-looking macroeconomic factors are updated quarterly. In addition, qualitative factors that are not fully captured in the loss forecast models are considered in the evaluation of the adequacy of the allowance for credit losses. These qualitative factors are subjective and require a degree of management judgment.

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CNH INDUSTRIAL CAPITAL LLC AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

Wholesale receivables that share the same risk characteristics, such as collateralization levels, term, geography and other relevant factors, are reviewed on a collective basis using measurement models and management judgment. The allowance for wholesale credit losses is based on loss forecast models that consider a variety of factors that include, but are not limited to, historical loss experience, collateral value, portfolio balance and delinquency. The loss forecast models are updated on a quarterly basis. The calculation is adjusted for forward-looking macroeconomic factors, such as industry sales volumes. The forward-looking macroeconomic factors are updated quarterly. In addition, qualitative factors that are not fully captured in the loss forecast models are considered in the evaluation of the adequacy of the allowance for credit losses. These qualitative factors are subjective and require a degree of management judgment.

Retail customer receivables and wholesale receivables that do not have similar risk characteristics are individually reviewed based on, among other items, amounts outstanding, days past due and prior collection history. Expected credit losses are measured by considering: the probability-weighted estimates of cash flows and collateral value; the time value of money; current conditions and forecasts of future economic conditions. Expected credit losses are measured as the probability-weighted present value of all cash shortfalls (including the value of the collateral, if appropriate) over the expected life of each financial asset.

Charge-offs of principal amounts of receivables outstanding are deducted from the allowance at the point when it is estimated that amounts due are deemed uncollectible. Revolving charge accounts are generally deemed to be uncollectible and charged-off to the allowance for credit losses when delinquency reaches 120 days.

Allowance for credit losses activity for the three months ended ~~June~~September 30, 2023 is as follows:


			Revolving								Revolving
	Retail		Charge						Retail		Charge
	Customer		Accounts		Wholesale		Total		Customer		Accounts		Wholesale		Total
Allowance for credit losses:
Beginning balance	$	103,442	$	7,345	$	6,685	$	117,472	$	99,965	$	8,662	$	6,493	$	115,120
Charge-offs		(5,358)		(447)		—		(5,805)		(1,771)		(1,231)		—		(3,002)
Recoveries		521		1		5		527		313		4		5		322
Provision (benefit)		1,119		1,749		(219)		2,649		4,378		2,305		(34)		6,649
Foreign currency translation and other		241		14		22		277		(123)		(8)		(14)		(145)
Ending balance	$	99,965	$	8,662	$	6,493	$	115,120	$	102,762	$	9,732	$	6,450	$	118,944

Allowance for credit losses activity for the ~~six~~nine months ended ~~June~~September 30, 2023 is as follows:

Revolving

Retail

Charge

Customer

Accounts

Wholesale

Total
Allowance for credit losses:

Beginning balance

$
110,341

$
8,519

$
6,152

$
125,012
Charge-offs

(10,970)

(4,685)

—

(15,655)
Recoveries

913

1

16

930
Provision (benefit)

(550)

4,814

304

4,568
Foreign currency translation and other

231

13

21

265
Ending balance

$
99,965

$
8,662

$
6,493

$
115,120
Receivables:

Ending balance

$
7,369,084

$
233,695

$
4,430,693

$
12,033,472

~~At June 30, 2023, the allowance for credit losses included a decrease in reserves primarily due lower specific reserve needs.~~


			Revolving
	Retail		Charge
	Customer		Accounts		Wholesale		Total
Allowance for credit losses:
Beginning balance	$	110,341	$	8,519	$	6,152	$	125,012
Charge-offs		(12,741)		(5,916)		—		(18,657)
Recoveries		1,226		5		21		1,252
Provision		3,828		7,119		270		11,217
Foreign currency translation and other		108		5		7		120
Ending balance	$	102,762	$	9,732	$	6,450	$	118,944
Receivables:
Ending balance	$	7,723,056	$	265,775	$	4,830,862	$	12,819,693

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CNH INDUSTRIAL CAPITAL LLC AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

The allowance for credit losses increased during the third quarter, driven by an increase in specific reserve needs on retail customers and growth in the revolving charge account portfolio. For the nine months ended September 30, 2023, the allowance for credit losses decreased due to lower specific reserve needs for retail customers and the continued strong outlook for the agricultural industry, offset by growth in the revolving charge account portfolio.

Allowance for credit losses activity for the three months ended ~~June~~September 30, 2022 is as follows:


	Retail						Retail
	Customer		Wholesale		Total		Customer		Wholesale		Total
Allowance for credit losses:
Beginning balance, as previously reported	$	108,650	$	9,724	$	118,374	$	105,937	$	5,467	$	111,404
Charge-offs		(4,578)		(4,631)		(9,209)		(1,689)		—		(1,689)
Recoveries		596		4		600		739		508		1,247
Provision		1,549		395		1,944
Provision (benefit)								(1,410)		(415)		(1,825)
Foreign currency translation and other		(280)		(25)		(305)		(743)		(36)		(779)
Ending balance	$	105,937	$	5,467	$	111,404	$	102,834	$	5,524	$	108,358

Allowance for credit losses activity for the ~~six~~nine months ended ~~June~~September 30, 2022 is as follows:

Retail

Customer

Wholesale

Total
Allowance for credit losses:

Beginning balance

$
109,742

$
6,211

$
115,953
Charge-offs

(5,475)

(4,631)

(10,106)
Recoveries

893

15

908
Provision

883

3,886

4,769
Foreign currency translation and other

(106)

(14)

(120)
Ending balance

$
105,937

$
5,467

$
111,404
Receivables:

Ending balance

$
7,040,072

$
2,704,394

$
9,744,466

At June 30, 2022, the allowance for credit losses included decreases in reserves primarily due to charge-offs and a reduction in the expected impact on credit conditions from the COVID-19 pandemic, partially offset by specific reserve needs.

~~Allowance for credit losses activity for the year ended December 31, 2022 is as follows:~~


			Revolving
	Retail		Charge						Retail
	Customer		Accounts		Wholesale		Total		Customer		Wholesale		Total
Allowance for credit losses:
Beginning balance	$	109,742	$	—	$	6,211	$	115,953	$	109,742	$	6,211	$	115,953
Charge-offs		(8,202)		(49)		(4,631)		(12,882)		(7,164)		(4,631)		(11,795)
Recoveries		2,262		—		526		2,788		1,632		523		2,155
Provision (benefit)		7,311		(169)		4,099		11,241		(527)		3,471		2,944
Foreign currency translation and other		(772)		8,737		(53)		7,912		(849)		(50)		(899)
Ending balance	$	110,341	$	8,519	$	6,152	$	125,012	$	102,834	$	5,524	$	108,358
Receivables:
Ending balance	$	7,275,284	$	207,744	$	3,383,804	$	10,866,832	$	7,166,320	$	2,823,528	$	9,989,848

~~At December 31, 2022,~~The Company assesses and monitors the ~~allowance~~credit quality of its receivables based on past due information. Receivables are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Delinquency is reported on receivables greater than 30 days past due. As the terms for ~~credit losses included increases in reserves primarily~~the retail customer receivables are greater than one year, the past due ~~to the addition~~information is presented by year of ~~revolving charge accounts.~~origination.

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

The Company assesses and monitors the credit quality of its receivables based on past due information. Receivables are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Delinquency is reported on receivables greater than 30 days past due. As the terms for the retail customer receivables are greater than one year, the past due information is presented by year of origination.

The aging of receivables and charge-offs as of ~~June~~September 30, 2023 are as follows:


					Greater														Greater								Net
	31 – 60 Days		61 – 90 Days		Than		Total				Total		Net		31 – 60 Days		61 – 90 Days		Than		Total				Total		Charge-offs
	Past Due		Past Due		90 Days		Past Due		Current		Receivables		Charge-offs		Past Due		Past Due		90 Days		Past Due		Current		Receivables		(Recoveries)
Retail customer
United States
2023	$	904	$	36	$	—	$	940	$	1,317,217	$	1,318,157	$	24	$	3,913	$	909	$	861	$	5,683	$	2,130,137	$	2,135,820	$	189
2022		7,807		3,524		1,913		13,244		2,208,165		2,221,409		1,464		10,443		2,343		5,458		18,244		2,011,048		2,029,292		2,254
2021		6,668		2,685		2,291		11,644		1,333,763		1,345,407		1,797		7,344		3,269		3,639		14,252		1,192,754		1,207,006		1,783
2020		3,390		1,110		31,970		36,470		618,860		655,330		2,113		5,046		1,503		31,281		37,830		542,831		580,661		2,609
2019		1,896		542		1,974		4,412		269,111		273,523		2,541		2,058		655		1,946		4,659		219,910		224,569		2,714
Prior to 2019		751		628		4,264		5,643		142,153		147,796		2,221		920		463		3,831		5,214		99,800		105,014		2,139
Total	$	21,416	$	8,525	$	42,412	$	72,353	$	5,889,269	$	5,961,622	$	10,160	$	29,724	$	9,142	$	47,016	$	85,882	$	6,196,480	$	6,282,362	$	11,688
Canada
2023	$	—	$	—	$	—	$	—	$	234,771	$	234,771	$	—	$	321	$	—	$	—	$	321	$	432,407	$	432,728	$	73
2022		1,502		852		272		2,626		538,752		541,378		290		685		66		1,030		1,781		462,070		463,851		149
2021		956		428		1,446		2,830		368,242		371,072		408		807		157		1,992		2,956		330,194		333,150		744
2020		654		139		722		1,515		159,422		160,937		(299)		694		231		879		1,804		132,596		134,400		(265)
2019		41		198		407		646		70,088		70,734		115		237		92		451		780		55,703		56,483		187
Prior to 2019		126		29		675		830		27,740		28,570		296		44		3		473		520		19,562		20,082		165
Total	$	3,279	$	1,646	$	3,522	$	8,447	$	1,399,015	$	1,407,462	$	810	$	2,788	$	549	$	4,825	$	8,162	$	1,432,532	$	1,440,694	$	1,053
Revolving charge accounts
United States	$	6,933	$	2,267	$	1,186	$	10,386	$	205,934	$	216,320	$	4,425	$	4,977	$	2,547	$	1,485	$	9,009	$	237,998	$	247,007	$	5,542
Canada	$	425	$	154	$	89	$	668	$	16,707	$	17,375	$	260	$	458	$	219	$	87	$	764	$	18,004	$	18,768	$	374
Wholesale
United States	$	—	$	—	$	3	$	3	$	3,579,050	$	3,579,053	$	—	$	4	$	—	$	4	$	8	$	3,997,726	$	3,997,734	$	—
Canada	$	—	$	—	$	—	$	—	$	851,640	$	851,640	$	—	$	—	$	—	$	—	$	—	$	833,128	$	833,128	$	—
Total
Retail customer	$	24,695	$	10,171	$	45,934	$	80,800	$	7,288,284	$	7,369,084	$	10,970	$	32,512	$	9,691	$	51,841	$	94,044	$	7,629,012	$	7,723,056	$	12,741
Revolving charge accounts	$	7,358	$	2,421	$	1,275	$	11,054	$	222,641	$	233,695	$	4,685	$	5,435	$	2,766	$	1,572	$	9,773	$	256,002	$	265,775	$	5,916
Wholesale	$	—	$	—	$	3	$	3	$	4,430,690	$	4,430,693	$	—	$	4	$	—	$	4	$	8	$	4,830,854	$	4,830,862	$	—

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

The aging of receivables as of December 31, 2022 is as follows:


					Greater
	31 – 60 Days		61 – 90 Days		Than		Total				Total
	Past Due		Past Due		90 Days		Past Due		Current		Receivables
Retail customer
United States
2022	$	6,258	$	976	$	350	$	7,584	$	2,728,247	$	2,735,831
2021		6,610		1,269		3,701		11,580		1,610,175		1,621,755
2020		4,490		1,503		32,505		38,498		807,990		846,488
2019		2,365		1,034		4,114		7,513		382,168		389,681
2018		1,579		465		1,493		3,537		186,897		190,434
Prior to 2018		765		131		4,955		5,851		54,566		60,417
Total	$	22,067	$	5,378	$	47,118	$	74,563	$	5,770,043	$	5,844,606
Canada
2022	$	1,544	$	22	$	387	$	1,953	$	652,576	$	654,529
2021		2,420		502		2,371		5,293		436,138		441,431
2020		810		128		960		1,898		190,905		192,803
2019		197		114		615		926		90,968		91,894
2018		388		178		262		828		38,477		39,305
Prior to 2018		123		25		257		405		10,311		10,716
Total	$	5,482	$	969	$	4,852	$	11,303	$	1,419,375	$	1,430,678
Revolving charge accounts
United States	$	12,979	$	9,965	$	—	$	22,944	$	169,851	$	192,795
Canada	$	1,237	$	759	$	—	$	1,996	$	12,953	$	14,949
Wholesale
United States	$	7	$	—	$	4	$	11	$	2,721,282	$	2,721,293
Canada	$	—	$	—	$	—	$	—	$	662,511	$	662,511
Total
Retail customer	$	27,549	$	6,347	$	51,970	$	85,866	$	7,189,418	$	7,275,284
Revolving charge accounts	$	14,216	$	10,724	$	—	$	24,940	$	182,804	$	207,744
Wholesale	$	7	$	—	$	4	$	11	$	3,383,793	$	3,383,804

Included in the receivables balance at ~~June~~September 30, 2023 and December 31, 2022 is accrued interest of ~~$71,560~~$82,418 and $57,831, respectively. The Company does not include accrued interest in its allowance for credit losses.

Recognition of income is generally suspended when management determines that collection of future finance income is not probable or when an account becomes 90 days past due, whichever occurs first. ~~Accrued~~The amount of interest ~~is charged-off to interest income. Interest~~ income ~~charged-off~~suspended was not material for the three and ~~six~~nine months ended ~~June~~September 30, 2023 and 2022. Interest accrual is resumed if the receivable becomes contractually current and collection becomes probable. Previously suspended income is recognized at that time.

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

The retail customer receivables on nonaccrual status as of ~~June~~September 30, 2023 and December 31, 2022 are as follows:


	June 30,		December 31,		September 30,		December 31,
	2023		2022		2023		2022
United States	$	43,536	$	48,690	$	48,179	$	48,690
Canada	$	4,219	$	4,852	$	6,087	$	4,852

As of ~~June~~September 30, 2023, total revolving charge account receivables on nonaccrual status were immaterial and there were no revolving charge account receivables on nonaccrual status as of December 31, 2022. As of ~~June~~September 30, 2023 and December 31, 2022, there were no wholesale receivables on nonaccrual status.

As of ~~June~~September 30, 2023 and December 31, 2022, the Company’s receivables on non-accrual status without an allowance were immaterial. Interest income recognized for receivables on non-accrual status for the three and ~~six~~nine months ended ~~June~~September 30, 2023 and 2022 was immaterial.

Troubled Debt Restructurings

A restructuring of a receivable constitutes a TDR when the lender grants a concession it would not otherwise consider to a borrower that is experiencing financial difficulties. As a collateral-based lender, the Company typically will repossess collateral in lieu of restructuring receivables. As such, for retail customer receivables, concessions are typically provided based on bankruptcy court proceedings. For wholesale receivables, concessions granted may include extended contract maturities, inclusion of interest-only periods, modification of a contractual interest rate to a below market interest rate and waiving of interest and principal.

TDRs are reviewed along with other receivables as part of management’s ongoing evaluation of the adequacy of the allowance for credit losses. As of ~~June~~September 30, 2023 and 2022, the Company’s TDRs were immaterial.

NOTE 5: EQUIPMENT ON OPERATING LEASES

Lease payments owed to the Company for equipment under non-cancelable operating leases (excluding deferred operating lease subsidy of ~~$73,676)~~$72,900) as of ~~June~~September 30, 2023 are as follows:


2023	$	108,068	$	58,230
2024		166,654		182,004
2025		103,942		119,837
2026		44,308		57,167
2027 and thereafter		18,228		25,432
Total lease payments	$	441,200	$	442,670

NOTE 6: CREDIT FACILITIES AND DEBT

On ~~April 10,~~July 3, 2023, the Company repaid $600,000 of its 1.950% unsecured notes due 2023.

On August 11, 2023, CNH Industrial Capital Canada Ltd. completed a private placement offering of C$400,000 ($297,640) in aggregate principal amount of its 5.500% unsecured notes due 2026, with an issue price of 99.883%.

On September 13, 2023, the Company completed an offering of ~~$600,000~~$500,000 in aggregate principal amount of its ~~4.550%~~5.500% unsecured notes due ~~2028,~~2029, with an issue price of ~~98.857%~~99.399%.

On ~~April 24,~~September 18, 2023, the Company ~~borrowed $412,233 through an amortizing loan secured by U.S. operating leases. The final~~extended the maturity date ~~is December 2028.~~

~~On April 25, 2023,~~of the ~~Company, through a bankruptcy-remote trust, issued $817,010 of amortizing asset-backed notes secured by~~ U.S. retail ~~receivables.~~

~~On May 24, 2023, the Company, through a trust, issued C$459,650 ($337,981) of amortizing~~committed asset-backed ~~notes secured by Canadian retail receivables.~~facility to September 2025.

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

On September 26, 2023, the Company entered into a Global Master Repurchase Agreement which expires in September 2024. Concurrently, the Company sold C$258,070 ($190,894) of Canadian receivables under the repurchase agreement, with an obligation to repurchase such receivables in 30 days.

On September 27, 2023, the Company, through a bankruptcy-remote trust, issued $1,050,960 of amortizing asset-backed notes secured by U.S. retail receivables.

Committed unsecured facilities with banks as of ~~June~~September 30, 2023, totaled ~~$685,635.~~$682,329. These credit facilities, which are eligible for renewal at various future dates, are used primarily for working capital and other general corporate purposes. As of ~~June~~September 30, 2023, the Company had ~~$285,635~~$282,329 outstanding under these credit facilities. The remaining available credit commitments are maintained primarily to provide backup liquidity for commercial paper borrowings. The Company’s outstanding commercial paper totaled ~~$269,107~~$348,090 as of ~~June~~September 30, 2023.

NOTE 7: INCOME TAXES

The effective tax rates for the three months ended ~~June~~September 30, 2023 and 2022 were ~~20.3%~~22.9% and ~~24.2%~~23.3%, respectively. The effective tax rate was ~~21.9%~~22.3% for the ~~six~~nine months ended ~~June~~September 30, 2023, compared to ~~23.8%~~23.7% for the same period in 2022.

NOTE 8: FINANCIAL INSTRUMENTS

The Company may elect to measure financial instruments and certain other items at fair value. This fair value option would be applied on an instrument-by-instrument basis with changes in fair value reported in earnings. The election can be made at the acquisition of an eligible financial asset, financial liability, or firm commitment or when certain specified reconsideration events occur. The fair value election may not be revoked once made. The Company has not elected the fair value measurement option for eligible items.

Fair-Value Hierarchy

The hierarchy of valuation techniques for financial instruments is based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. These two types of inputs have created the following fair-value hierarchy:

Level 1 —

Quoted prices for identical instruments in active markets.

Level 2 —

Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.

Level 3 —

Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

This hierarchy requires the use of observable market data when available.

Determination of Fair Value

When available, the Company uses quoted market prices to determine fair value and classifies such items in Level 1. In some cases where a market price is not available, the Company will use observable market-based inputs to calculate fair value, in which case the items are classified in Level 2.

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

If quoted or observable market prices are not available, fair value is based upon internally developed valuation techniques that use, where possible, current market-based or independently sourced market parameters such as interest rates, currency rates, or yield curves. Items valued using such internally generated valuation techniques are classified according to the lowest level input or value driver that is significant to the valuation. Thus, an item may be classified in Level 3 even though there may be some significant inputs that are readily observable.

~~Table of Contents~~

~~CNH INDUSTRIAL CAPITAL LLC AND SUBSIDIARIES~~

~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Dollars in thousands)~~

~~(Unaudited)~~

The following section describes the valuation methodologies used by the Company to measure various financial instruments at fair value, including an indication of the level in the fair value hierarchy in which each instrument is generally classified. Where appropriate, the description includes details of the valuation models and the key inputs to those models, as well as any significant assumptions.

Derivatives

The Company utilizes derivative instruments to mitigate its exposure to interest rate and foreign currency exposures. The Company designates derivatives that are effective at reducing the risk associated with the exposure being hedged as accounting hedges at the inception of the contract and does not hold or enter into derivative or other financial instruments for speculative purposes. The credit and market risk related to derivatives is reduced through diversification among various counterparties, utilizing mandatory termination clauses and/or collateral support agreements. Derivative instruments are generally classified as Level 2 in the fair value hierarchy. The cash flows underlying all derivative contracts were recorded in operating activities in the consolidated statements of cash flows.

Interest Rate Derivatives

The Company has entered into interest rate derivatives in order to manage interest rate exposures arising in the normal course of business. Interest rate derivatives that have been designated as cash flow hedges are being used by the Company to mitigate the risk of rising interest rates related to existing debt and anticipated issuance of fixed-rate debt in future periods. Gains and losses on these instruments are deferred in accumulated other comprehensive income (loss) and recognized in interest expense over the period in which the Company recognizes interest expense on the related debt. As of ~~June~~September 30, 2023, the maximum length of time over which the Company is hedging its interest rate exposure through the use of derivative instruments designated in cash flow hedge relationships is 6360 months. As of ~~June~~September 30, 2023, the after-tax gains deferred in accumulated other comprehensive income (loss) that will be recognized in interest expense over the next 12 months are approximately ($~~2,156)~~2,215).

The Company also enters into offsetting interest rate derivatives with substantially similar terms that are not designated as hedging instruments to mitigate interest rate risk related to the Company’s committed asset-backed facilities. Unrealized and realized gains and losses resulting from fair value changes in these instruments are recognized directly in income and were insignificant for the three and ~~six~~nine months ended ~~June~~September 30, 2023 and 2022.

All of the Company’s interest rate derivatives as of ~~June~~September 30, 2023 and December 31, 2022 are considered Level 2. The fair market value of these derivatives is calculated using market data input and can be compared to actively traded derivatives. The total notional amount of the Company’s interest rate derivatives was ~~$3,591,246~~$3,833,944 and $3,628,725 at ~~June~~September 30, 2023 and December 31, 2022, respectively. The ~~seven-month~~ten-month average notional amounts for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022 were ~~$3,687,713~~$3,696,877 and ~~$3,797,375,~~$3,746,080, respectively.

As a result of the reform and replacement of specific benchmark interest rates, the Company elected to make the replacement using the optional expedient under ASC 848, which allows the change in critical terms without dedesignation and the Company also elected the optional expedient to apply a spread adjustment to hedged items cash flows that resulted in no change to the cumulative basis adjustment reflected in earnings.

~~Foreign Exchange Contracts~~

The Company uses forward contracts to hedge certain assets and liabilities denominated in foreign currencies. Such derivatives are considered economic hedges and are not designated as hedging instruments. The changes in the fair value of these instruments are recognized directly as income in “Other expenses, net” and are expected to offset the foreign exchange gains or losses on the exposures being managed.

~~All of the Company’s foreign exchange derivatives are considered Level 2 as the fair value is calculated using market data input and can be compared to actively traded derivatives.~~

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(Dollars in thousands)

(Unaudited)

Foreign Exchange Contracts

All of the Company’s foreign exchange derivatives are considered Level 2 as the fair value is calculated using market data input and can be compared to actively traded derivatives.

Financial Statement Impact of the Company’s Derivatives

The fair values of the Company’s derivatives as of ~~June~~September 30, 2023 and December 31, 2022 in the consolidated balance sheets are recorded as follows:


	June 30,		December 31,		September 30,		December 31,
	2023		2022		2023		2022
Derivatives Designated as Hedging Instruments
Other assets:
Interest rate derivatives	$	2,411	$	3,597	$	2,548	$	3,597
Accounts payable and other accrued liabilities:
Interest rate derivatives	$	46,103	$	42,936	$	49,833	$	42,936
Derivatives Not Designated as Hedging Instruments
Other assets:
Interest rate derivatives	$	34,330	$	27,862	$	43,762	$	27,862
Foreign exchange contracts		2,967		4,116		3,404		4,116
Total	$	37,297	$	31,978	$	47,166	$	31,978
Accounts payable and other accrued liabilities:
Interest rate derivatives	$	34,330	$	27,862	$	43,762	$	27,862
Foreign exchange contracts		321		435		—		435
Total	$	34,651	$	28,297	$	43,762	$	28,297

Pre-tax gains (losses) on the consolidated statements of income and comprehensive income related to the Company’s derivatives for the three and ~~six~~nine months ended ~~June~~September 30, 2023 and 2022 are recorded in the following accounts:


	Three Months Ended				Six Months Ended				Three Months Ended				Nine Months Ended
	June 30,				June 30,				September 30,				September 30,
	2023		2022		2023		2022		2023		2022		2023		2022
Cash Flow Hedges
Recognized in accumulated other comprehensive income (loss):
Interest rate derivatives	$	(56)	$	8,783	$	(2,621)	$	14,082	$	812	$	2,439	$	(1,809)	$	16,521
Reclassified from accumulated other comprehensive income (loss):
Interest rate derivatives—Interest expense to third parties	$	400	$	3,539	$	1,062	$	215	$	781	$	342	$	1,843	$	557
Not Designated as Hedges
Foreign exchange contracts—Other expenses, net	$	2,220	$	(3,710)	$	2,251	$	(863)	$	(1,227)	$	(6,256)	$	1,024	$	(7,119)

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

Items Measured at Fair Value on a Recurring Basis

The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis as of ~~June~~September 30, 2023 and December 31, 2022, all of which are measured as Level 2:


	June 30,		December 31,		September 30,		December 31,
	2023		2022		2023		2022
Assets
Interest rate derivatives	$	36,741	$	31,459	$	46,310	$	31,459
Foreign exchange contracts		2,967		4,116		3,404		4,116
Total assets	$	39,708	$	35,575	$	49,714	$	35,575
Liabilities
Interest rate derivatives	$	80,433	$	70,798	$	93,595	$	70,798
Foreign exchange contracts		321		435		—		435
Total liabilities	$	80,754	$	71,233	$	93,595	$	71,233

There were no transfers between Level 1, Level 2 and Level 3 hierarchy levels during the periods presented.

Fair Value of Other Financial Instruments

The carrying amount of cash, restricted cash and cash equivalents, floating-rate affiliated accounts and notes receivable, floating-rate short-term debt, interest payable and short-term affiliated debt was assumed to approximate its fair value. Under the fair value hierarchy, cash and restricted cash and cash equivalents are classified as Level 1 and the remainder of the financial instruments listed is classified as Level 2.

Financial Instruments Not Carried at Fair Value

The carrying amount and estimated fair value of assets and liabilities considered financial instruments as of ~~June~~September 30, 2023 and December 31, 2022 are as follows:


	June 30, 2023				December 31, 2022				September 30, 2023				December 31, 2022
	Carrying		Estimated		Carrying		Estimated		Carrying		Estimated		Carrying		Estimated
	Amount		Fair Value *		Amount		Fair Value *		Amount		Fair Value *		Amount		Fair Value *
Receivables	$	11,918,352	$	11,715,166	$	10,741,820	$	10,433,949	$	12,700,749	$	12,477,786	$	10,741,820	$	10,433,949
Long-term debt	$	6,914,753	$	6,594,315	$	6,387,135	$	6,032,997	$	7,686,899	$	7,373,947	$	6,387,135	$	6,032,997

______________

Under the fair value hierarchy, receivables measurements are classified as Level 3 and long-term debt measurements are classified as Level 2.

Receivables

The fair value of receivables was determined by discounting the estimated future payments using a discount rate which includes an estimate for credit risk.

Long-term debt

The fair values of long-term debt were based on current market quotes for identical or similar borrowings and credit risk.

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

NOTE 9: GEOGRAPHICAL INFORMATION

A summary of the Company’s geographical information is as follows:


	Three Months Ended				Six Months Ended				Three Months Ended				Nine Months Ended
	June 30,				June 30,				September 30,				September 30,
	2023		2022		2023		2022		2023		2022		2023		2022
Revenues
United States	$	197,024	$	146,628	$	379,919	$	296,464	$	224,291	$	157,790	$	604,210	$	454,254
Canada		50,630		43,866		96,738		82,928		54,463		42,301		151,201		125,229
Eliminations		(540)		(1,218)		(1,025)		(2,707)		(357)		(534)		(1,382)		(3,241)
Total	$	247,114	$	189,276	$	475,632	$	376,685	$	278,397	$	199,557	$	754,029	$	576,242
Interest expense
United States	$	101,441	$	38,046	$	187,093	$	69,763	$	121,318	$	52,303	$	308,411	$	122,066
Canada		21,187		10,743		39,724		19,935		23,776		13,703		63,500		33,638
Eliminations		(540)		(1,218)		(1,025)		(2,707)		(357)		(534)		(1,382)		(3,241)
Total	$	122,088	$	47,571	$	225,792	$	86,991	$	144,737	$	65,472	$	370,529	$	152,463
Net income
United States	$	35,823	$	47,280	$	72,082	$	97,967	$	40,248	$	44,005	$	112,330	$	141,972
Canada		11,875		12,614		21,917		25,414		10,452		9,298		32,369		34,712
Total	$	47,698	$	59,894	$	93,999	$	123,381	$	50,700	$	53,303	$	144,699	$	176,684
Depreciation and amortization
United States	$	32,432	$	37,874	$	65,261	$	79,431	$	32,006	$	37,813	$	97,267	$	117,244
Canada		12,978		12,476		25,870		25,024		13,358		12,814		39,228		37,838
Total	$	45,410	$	50,350	$	91,131	$	104,455	$	45,364	$	50,627	$	136,495	$	155,082
Expenditures for equipment on operating leases
United States	$	90,878	$	88,855	$	166,119	$	178,562	$	86,985	$	73,055	$	253,104	$	251,617
Canada		33,652		35,441		61,690		67,952		42,581		34,755		104,271		102,707
Total	$	124,530	$	124,296	$	227,809	$	246,514	$	129,566	$	107,810	$	357,375	$	354,324
Provision (benefit) for credit losses
United States	$	3,279	$	804	$	6,438	$	5,199	$	5,139	$	(2,373)	$	11,577	$	2,826
Canada		(630)		1,140		(1,870)		(430)		1,510		548		(360)		118
Total	$	2,649	$	1,944	$	4,568	$	4,769	$	6,649	$	(1,825)	$	11,217	$	2,944

Table of Contents

CNH INDUSTRIAL CAPITAL LLC AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)


	As of		As of		As of		As of
	June 30,		December 31,		September 30,		December 31,
	2023		2022		2023		2022
Total assets
United States	$	11,551,683	$	10,712,413	$	12,272,421	$	10,712,413
Canada		2,844,999		2,683,722		3,104,479		2,683,722
Eliminations		(180,020)		(216,656)		(142,518)		(216,656)
Total	$	14,216,662	$	13,179,479	$	15,234,382	$	13,179,479
Managed receivables
Receivables
United States	$	9,756,995	$	8,758,694	$	10,527,103	$	8,758,694
Canada		2,276,477		2,108,138		2,292,590		2,108,138
Total	$	12,033,472	$	10,866,832	$	12,819,693	$	10,866,832

NOTE 10: RELATED-PARTY TRANSACTIONS

The Company receives compensation from CNH Industrial North America for retail notes and finance leases, wholesale and operating lease sales programs offered by CNH Industrial North America on which finance charges are waived or below market rate financing programs are offered. The Company receives compensation from CNH Industrial North America based on the Company’s estimated costs and a targeted return on equity. The Company is also compensated for lending funds to CNH Industrial North America.

The summary of sources included in “Interest and other income from affiliates” in the accompanying consolidated statements of income for the three and ~~six~~nine months ended ~~June~~September 30, 2023 and 2022 is as follows:


	Three Months Ended				Six Months Ended				Three Months Ended				Nine Months Ended
	June 30,				June 30,				September 30,				September 30,
	2023		2022		2023		2022		2023		2022		2023		2022
Subsidy from CNH Industrial North America
Retail notes and finance leases	$	29,389	$	31,045	$	57,864	$	63,488	$	35,917	$	30,885	$	93,781	$	94,373
Operating lease		9,835		12,272		20,158		24,851		10,265		11,328		30,423		36,179
Revolving charge accounts		1,106		—		1,965		—		1,086		—		3,051		—
Wholesale		53,953		21,704		97,366		38,747		63,169		24,563		160,535		63,310
Income from affiliated receivables
CNH Industrial North America		83		143		83		329		422		206		505		535
Banco CNH Industrial Capital Brazil		779		—		1,417		—		723		—		2,140		—
Other affiliates		424		68		820		124		331		506		1,151		630
Total interest and other income from affiliates	$	95,569	$	65,232	$	179,673	$	127,539	$	111,913	$	67,488	$	291,586	$	195,027

Interest expense to affiliates was ~~$4,985~~$10,180 and ~~$1,366,~~$2,933, respectively, for the three months ended ~~June~~September 30, 2023 and 2022 and ~~$13,433~~$23,613 and ~~$1,699,~~$4,632, respectively, for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022. Fees charged by affiliates were ~~$13,112~~$13,359 and ~~$12,157,~~$12,946, respectively, for the three months ended ~~June~~September 30, 2023 and 2022, and ~~$26,987~~$40,346 and ~~$23,573,~~$36,519, respectively, for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, which amounts consist of payroll and other human resource services CNH Industrial America performs on behalf of the Company.

Table of Contents

CNH INDUSTRIAL CAPITAL LLC AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

(Unaudited)

As of ~~June~~September 30, 2023 and December 31, 2022, the Company had various accounts and notes receivable and debt with the following affiliates:


	June 30,		December 31,		September 30,		December 31,
	2023		2022		2023		2022
Affiliated receivables
CNH Industrial America	$	—	$	10	$	—	$	10
CNH Industrial Canada Ltd.						224,096		—
Banco CNH Industrial Capital Brazil		46,551		40,983		47,274		40,983
Other affiliates		12,540		12,516		12,417		12,516
Total affiliated receivables	$	59,091	$	53,509	$	283,787	$	53,509
Affiliated debt
CNH Industrial America	$	44,092	$	100,195	$	511,883	$	100,195
CNH Industrial Canada Ltd.		218,313		241,036		—		241,036
Other affiliates		—		300		—		300
Total affiliated debt	$	262,405	$	341,531	$	511,883	$	341,531

Accounts payable and other accrued liabilities, including tax payables, of ~~$159,928~~$188,942 and $212,167 were payable to related parties as of ~~June~~September 30, 2023 and December 31, 2022, respectively.

NOTE 11: COMMITMENTS AND CONTINGENCIES

Legal Matters

The Company is party to various litigation matters and claims arising from its operations. Management believes that the outcome of these proceedings, individually and in the aggregate, will not have a material adverse effect on the Company’s financial position or results of operations.

Guarantees

The Company provides payment guarantees on the financial debt of various foreign financial services subsidiaries of CNHI for approximately $50,400. The guarantees are in effect for the term of the underlying funding facilities.

Commitments

As of ~~June~~September 30, 2023, the Company had various agreements, on an uncommitted basis, to extend credit for the following portfolios:


	Total						Total
	Credit Limit		Utilized		Not Utilized		Credit Limit		Utilized		Not Utilized
Wholesale and dealer financing	$	6,186,068	$	4,390,106	$	1,795,962	$	6,540,009	$	4,751,422	$	1,788,587
Revolving charge accounts	$	2,511,699	$	234,403	$	2,277,296	$	2,533,805	$	266,294	$	2,267,511

~~NOTE 12: SUBSEQUENT EVENTS~~

~~On July 3, 2023, the Company repaid $600,000 of its 1.950% unsecured notes due 2023.~~

Table of Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

Organization

CNH Industrial Capital LLC and its primary operating subsidiaries, including New Holland Credit Company, LLC (“New Holland Credit”), CNH Industrial Capital America LLC (“CNH Industrial Capital America”) and CNH Industrial Capital Canada Ltd. (“CNH Industrial Capital Canada”) (collectively, “CNH Industrial Capital” the “Company” or “we”) are each an indirect wholly owned subsidiary of CNH Industrial N.V. (“CNHI” and together with its consolidated subsidiaries, “CNH Industrial”) and is headquartered in Racine, Wisconsin. As a captive finance company, our primary business is to underwrite and manage financing products for end-use customers and dealers of CNH Industrial America LLC (“CNH Industrial America”) and CNH Industrial Canada Ltd. (collectively, “CNH Industrial North America”) and provide other related financial products and services to support the sale of agricultural and construction equipment sold by CNH Industrial North America.

We offer a range of financial products and services to the customers and dealers of CNH Industrial North America. Retail financing products primarily include retail notes, finance leases, operating leases and revolving charge account financing to end-use customers. Wholesale financing consists primarily of dealer floorplan financing as well as financing to dealers for used equipment taken in trade, equipment utilized in dealer-owned rental yards, parts inventory, working capital and other financing needs.

Trends and Economic Conditions

~~Significant uncertainties,~~In combination with the economic recovery from the pandemic and repercussions from geopolitical events, the global economy continues to experience volatile disruptions including ~~inflation, geopolitical instability,~~to the commodity, labor and ~~the war in Ukraine,~~transportation markets. These disruptions have contributed to an inflationary environment which has affected, and may continue to ~~create volatility in~~affect, the ~~global economy. These factors lead to inefficiencies in~~price and availability of certain products and services necessary for CNH Industrial North America’s ~~manufacturing operations~~operations. For example, CNH Industrial North America experienced supply chain disruptions and ~~impact costs.~~inflationary pressures in 2022 and, while these trends improved in 2023, CNH Industrial North America continues to ~~work~~experience some disruptions. The reduction in supply chain disruptions contributed to ~~mitigate~~improved efficiencies in its manufacturing operations, but purchasing costs remain elevated.

In addition, CNH Industrial North America continues to monitor global economic conditions and the impact of ~~these issues in order to meet end-market demand~~macroeconomic pressures, including repercussions from rising interest rates, fluctuating currency exchange rates, inflation and ~~will continue to monitor the situation as conditions remain fluid~~recession fears, on its business, customers and ~~evolve.~~suppliers.

Our business is closely tied to the agricultural and construction equipment industries because we offer financing products for such equipment. For the three months ended ~~June~~September 30, 2023, CNH Industrial’s net sales of agricultural equipment and net sales of construction equipment generated in North America were ~~$1,872~~$1,807 million and ~~$587~~$544 million, respectively, representing increases of ~~6.5%~~5.2% and ~~42.5%~~24.2% from the same period in 2022, respectively. For the ~~six~~nine months ended ~~June~~September 30, 2023, CNH Industrial’s net sales of agricultural equipment and net sales of construction equipment generated in North America were ~~$3,360~~$5,167 million and ~~$1,050~~$1,594 million, respectively, representing increases of ~~14.6%~~11.1% and ~~30.3%~~28.1% from the same period in 2022, respectively.

In general, our receivable mix between agricultural and construction equipment financing directionally reflects the mix of equipment sales by CNH Industrial North America. As such, changes in the agricultural industry or with respect to our agricultural equipment borrowers may affect the majority of our portfolio.

As a finance company, we are subject to interest rate risks. Rising interest rates can reduce demand for CNH Industrial North America equipment, adversely affect our interest margins and limit our access to capital markets while increasing our borrowing costs. Most of our retail customer receivables are fixed rate, while our revolving charge accounts and wholesale receivables are a combination of fixed and floating rate. We manage interest rate risks via a match funding program and the selective use of derivatives.

Table of Contents

Net income was ~~$47.7~~$50.7 million and ~~$94.0~~$144.7 million for the three and ~~six~~nine months ended ~~June~~September 30, 2023, respectively, compared to ~~$59.9~~$53.3 million and ~~$123.4~~$176.7 million for the same periods in 2022, respectively. The quarter-over-quarter and year-over-year decreases were primarily due to increased borrowing costs and lower gains on used equipment sales due to ~~diminished inventory levels.~~decreased operating lease maturities. The receivables balance greater than 30 days past due as a percentage of ~~managed~~ receivables was 0.8% at ~~June~~September 30, 2023, 1.0% at December 31, 2022 and ~~0.8%~~0.7% at ~~June~~September 30, 2022.

Macroeconomic issues for us include the uncertainty of governmental actions with respect to monetary, fiscal and legislative policies, global economic volatility, changes in demand and pricing for used equipment, capital market disruptions, trade agreements, and financial regulatory reform. Significant volatility in the price of certain commodities could also impact CNH Industrial North America’s and our results.

~~Table of Contents~~

Results of Operations

Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2023 Compared to Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2022

Revenues

Revenues for the three and ~~six~~nine months ended ~~June~~September 30, 2023 and 2022 were as follows (dollars in thousands):


	Three Months Ended								Three Months Ended
	June 30,								September 30,
	2023		2022		$ Change		% Change		2023		2022		$ Change		% Change
Interest income on retail notes and finance leases	$	69,626	$	49,048	$	20,578	42.0	%	$	73,092	$	54,888	$	18,204	33.2	%
Rental income on operating leases		57,451		62,765		(5,314)	(8.5)			61,414		61,657		(243)	(0.4)
Interest income on revolving charge accounts		9,996		—		9,996	—			10,455		—		10,455	—
Interest income on wholesale notes		13,336		6,197		7,139	115.2			18,370		8,043		10,327	128.4
Interest and other income from affiliates		95,569		65,232		30,337	46.5			111,913		67,488		44,425	65.8
Other income		1,136		6,034		(4,898)	(81.2)			3,153		7,481		(4,328)	(57.9)
Total revenues	$	247,114	$	189,276	$	57,838	30.6	%	$	278,397	$	199,557	$	78,840	39.5	%


	Six Months Ended								Nine Months Ended
	June 30,								September 30,
	2023		2022		$ Change		% Change		2023		2022		$ Change		% Change
Interest income on retail notes and finance leases	$	137,850	$	95,749	$	42,101	44.0	%	$	210,942	$	150,637	$	60,305	40.0	%
Rental income on operating leases		114,500		126,586		(12,086)	(9.5)			175,914		188,243		(12,329)	(6.5)
Interest income on revolving charge accounts		18,326		—		18,326	—			28,781		—		28,781	—
Interest income on wholesale notes		23,931		11,688		12,243	104.7			42,301		19,731		22,570	114.4
Interest and other income from affiliates		179,673		127,539		52,134	40.9			291,586		195,027		96,559	49.5
Other income		1,352		15,123		(13,771)	(91.1)			4,505		22,604		(18,099)	(80.1)
Total revenues	$	475,632	$	376,685	$	98,947	26.3	%	$	754,029	$	576,242	$	177,787	30.9	%

Revenues totaled ~~$247.1~~$278.4 million and ~~$475.6~~$754.0 million for the three and ~~six~~nine months ended ~~June~~September 30, 2023, respectively, compared to ~~$189.3~~$199.6 million and ~~$376.7~~$576.2 million for the same periods in 2022, respectively. The quarter-over-quarter and year-over-year increases were due to a higher average portfolio coupled with a higher average yield for the ~~managed~~total portfolio. The average yield for the ~~managed~~total portfolio was ~~7.6%~~8.0% and ~~6.6%~~6.7% for the three months ended ~~June~~September 30, 2023 and 2022, respectively, and ~~7.5%~~7.7% and ~~6.6%~~6.7% for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, respectively.

Interest income on retail notes and finance leases for the three and ~~six~~nine months ended ~~June~~September 30, 2023 was ~~$69.6~~$73.1 million and ~~$137.9~~$210.9 million, respectively, representing ~~an increase~~increases of ~~$20.6~~$18.2 million and ~~$42.1~~$60.3 million from the same periods in 2022, respectively. For the ~~second~~third quarter, the increase was due to the favorable impacts of ~~$18.6~~$15.0 million from higher interest rates and ~~$2.0~~$3.2 million from higher average earning assets. For the ~~six~~nine months ended ~~June~~September 30, 2023, compared to the same period in 2022, the increase was due to the favorable impacts of ~~$36.9~~$51.9 million from higher interest rates and ~~$5.2~~$8.4 million from higher average earning assets.

Table of Contents

Rental income on operating leases for the three and ~~six~~nine months ended ~~June~~September 30, 2023 was ~~$57.5~~$61.4 million and ~~$114.5~~$175.9 million, respectively, representing ~~a decrease~~decreases of ~~$5.3~~$0.2 million and ~~$12.1~~$12.3 million from the same periods in 2022, respectively. The ~~second~~third quarter decrease was primarily due to a ~~$7.2~~$5.2 million unfavorable impact from lower average earning assets, partially offset by a ~~$1.9~~$5.0 million favorable impact from higher interest rates. For the ~~six~~nine months ended ~~June~~September 30, 2023, compared to the same period in 2022, the decrease was primarily due to a ~~$15.6~~$20.8 million unfavorable impact from lower average earning assets, partially offset by a ~~$3.5~~$8.5 million favorable impact from higher interest rates.

Revolving charge accounts income was ~~$10.0~~$10.5 million and ~~$18.3~~$28.8 million for the three and ~~six~~nine months ended ~~June~~September 30, 2023, respectively.

~~Table of Contents~~

Interest income on wholesale notes for the three and ~~six~~nine months ended ~~June~~September 30, 2023 was ~~$13.3~~$18.4 million and ~~$23.9~~$42.3 million, respectively, representing ~~an increase~~increases of ~~$7.1~~$10.3 million and ~~$12.2~~$22.6 million from the same periods in 2022, respectively. For the ~~second~~third quarter, the increase was due to the favorable impacts of ~~$5.7~~$5.8 million from higher interest rates and ~~$1.4~~$4.5 million from higher average earning assets. For the ~~six~~nine months ended ~~June~~September 30, 2023, compared to the same period in 2022, the increase was due to the favorable impacts of ~~$10.6~~$16.4 million from higher interest rates and ~~$1.6~~$6.2 million from higher average earning assets.

Interest and other income from affiliates for the three and ~~six~~nine months ended ~~June~~September 30, 2023 was ~~$95.6~~$111.9 million and ~~$179.7~~$291.6 million, respectively, compared to ~~$65.2~~$67.5 million and ~~$127.5~~$195.0 million for the three and ~~six~~nine months ended ~~June~~September 30, 2022, respectively. For the three and ~~six~~nine months ended ~~June~~September 30, 2023, compensation from CNH Industrial North America for retail low-rate financing programs and interest waiver programs offered to customers was ~~$29.4~~$35.9 million and ~~$57.9~~$93.8 million, respectively, an increase of $5.0 million and a decrease of ~~$1.7 million and $5.6~~$0.6 million from the same periods in 2022, respectively. Both the quarter-over-quarter increase and the year-over year ~~decreases~~decrease were primarily due to the mix in pricing programs. For select operating leases, compensation from CNH Industrial North America for the difference between market rental rates and the amounts paid by customers was ~~$9.8~~$10.3 million and ~~$20.2~~$30.4 million for the three and ~~six~~nine months ended ~~June~~September 30, 2023, respectively, a decrease of ~~$2.4~~$1.1 million and ~~$4.7~~$5.8 million from the same periods in 2022, respectively. The decreases were primarily due to lower average earning assets. For revolving charge accounts, compensation from CNH Industrial North America for low-rate financing programs and interest waiver programs offered to customers was $1.1 million and ~~$2.0~~$3.1 million for the three and ~~six~~nine months ended ~~June~~September 30, 2023, respectively. For the three and ~~six~~nine months ended ~~June~~September 30, 2023, compensation from CNH Industrial North America for wholesale marketing programs was ~~$54.0~~$63.2 million and ~~$97.4~~$160.5 million, respectively, an increase of ~~$32.2~~$38.6 million and ~~$58.6~~$97.2 million from the same periods in 2022, respectively. The increases were primarily due to higher originations.

Other income for the three and ~~six~~nine months ended ~~June~~September 30, 2023 was ~~$1.1~~$3.2 million and ~~$1.4~~$4.5 million, respectively, representing a decrease of ~~$4.9~~$4.3 million and ~~$13.8~~$18.1 million from the same periods in 2022, respectively, as the Company no longer receives commission income related to a private-label revolving charge account product previously offered by Citibank, N.A. and Citi Cards Canada Inc.

Expenses

Expenses for the three and ~~six~~nine months ended ~~June~~September 30, 2023 and 2022 were as follows (dollars in thousands):

Three Months Ended




June 30,


2023

2022

$ Change

% Change

Total interest expense

$
122,088

$
47,571

$
74,517

156.6
%
Fees charged by affiliates

13,112

12,157

955

7.9

Provision for credit losses

2,649

1,944

705

36.3

Depreciation of equipment on operating leases

44,675

49,801

(5,126)

(10.3)

Other expenses, net

4,706

(1,257)

5,963

(474.4)

Total expenses

$
187,230

$
110,216

$
77,014

69.9
%


	Six Months Ended								Three Months Ended
	June 30,								September 30,
	2023		2022		$ Change		% Change		2023		2022		$ Change		% Change
Total interest expense	$	225,792	$	86,991	$	138,801	159.6	%	$	144,737	$	65,472	$	79,265	121.1	%
Fees charged by affiliates		26,987		23,573		3,414	14.5			13,359		12,946		413	3.2
Provision for credit losses		4,568		4,769		(201)	(4.2)
Provision (benefit) for credit losses										6,649		(1,825)		8,474	(464.3)
Depreciation of equipment on operating leases		89,727		103,358		(13,631)	(13.2)			44,598		50,086		(5,488)	(11.0)
Other expenses, net		8,239		(3,980)		12,219	(307.0)			3,261		3,416		(155)	(4.5)
Total expenses	$	355,313	$	214,711	$	140,602	65.5	%	$	212,604	$	130,095	$	82,509	63.4	%

Table of Contents


	Nine Months Ended
	September 30,
	2023		2022		$ Change		% Change
Total interest expense	$	370,529	$	152,463	$	218,066	143.0	%
Fees charged by affiliates		40,346		36,519		3,827	10.5
Provision for credit losses		11,217		2,944		8,273	281.0
Depreciation of equipment on operating leases		134,325		153,444		(19,119)	(12.5)
Other expenses, net		11,500		(564)		12,064	(2,139.0)
Total expenses	$	567,917	$	344,806	$	223,111	64.7	%

Interest expense totaled ~~$122.1~~$144.7 million and ~~$225.8~~$370.5 million for the three and ~~six~~nine months ended ~~June~~September 30, 2023, respectively, compared to ~~$47.6~~$65.5 million and ~~$87.0~~$152.5 million for the same periods in 2022, respectively. For the three months ended ~~June~~September 30, 2023, the increase was due to the unfavorable impacts of ~~$66.3~~$65.3 million from higher average interest rates and ~~$8.2~~$14.0 million from higher average total debt. For the ~~six~~nine months ended ~~June~~September 30, 2023, the increase was due to the unfavorable impacts of ~~$126.1~~$191.4 million from higher average interest rates and ~~$12.7~~$26.7 million from higher average total debt. The average debt cost was ~~4.1%~~4.3% for the ~~six~~nine months ended ~~June~~September 30, 2023 compared to ~~1.8%~~2.1% for the ~~six~~nine months ended ~~June~~September 30, 2022.

The provision (benefit) for credit losses were ~~$2.6~~$6.6 million and ~~$4.6~~$11.2 million for the three and ~~six~~nine months ended ~~June~~September 30, 2023, respectively, compared to ~~$1.9~~a $1.8 million benefit and ~~$4.8~~a $2.9 million provision for the same periods in 2022, respectively. For the three months ended ~~June~~September 30, 2023, the increase was due to a higher ~~average portfolio, partially offset by lower~~ specific reserve ~~needs.~~needs for retail customers and the addition of the revolving charge account portfolio. For the ~~six~~nine months ended ~~June~~September 30, 2023, the ~~decrease~~increase was due to ~~lower specific reserve needs.~~higher charge-offs and the addition of the revolving charge account portfolio.

Depreciation of equipment on operating leases was ~~$44.7~~$44.6 million and ~~$89.7~~$134.3 million for the three and ~~six~~nine months ended ~~June~~September 30, 2023, respectively, compared to ~~$49.8~~$50.1 million and ~~$103.4~~$153.4 million for the same periods in 2022, respectively. The decrease for the three and ~~six~~nine months ended ~~June~~September 30, 2023, compared to the same periods in 2022, was primarily due to a lower average operating lease portfolio.

Other expenses, net were ~~an expense of $4.7~~$3.3 million and ~~$8.2~~$11.5 million for the three and ~~six~~nine months ended ~~June~~September 30, 2023, respectively, compared to an expense of $3.4 million and income of ~~$1.3 million and $4.0~~$0.6 million for the same periods in 2022, respectively. For the ~~three and six~~nine months ended ~~June~~September 30, 2023, compared to the same ~~periods~~period in 2022, the ~~increases were~~increase was due to lower gains on used equipment sales ~~due to diminished inventory levels.~~as a result of decreased operating lease maturities.

Receivables and Equipment on Operating Leases Originated and Held

Receivables and equipment on operating lease originations for the three and ~~six~~nine months ended ~~June~~September 30, 2023 and 2022 were as follows (dollars in thousands):


	Three Months Ended								Three Months Ended
	June 30,								September 30,
	2023		2022		$ Change		% Change		2023		2022		$ Change		% Change
Retail notes and finance leases	$	1,031,802	$	1,024,700	$	7,102	0.7	%	$	1,167,404	$	925,927	$	241,477	26.1	%
Revolving charge accounts		280,626		—		280,626	—			289,546		—		289,546	—
Wholesale		3,593,199		2,796,698		796,501	28.5			3,494,764		2,788,771		705,993	25.3
Equipment on operating leases		124,530		124,296		234	0.2			129,566		107,810		21,756	20.2
Total originations	$	5,030,157	$	3,945,694	$	1,084,463	27.5	%	$	5,081,280	$	3,822,508	$	1,258,772	32.9	%

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Six Months Ended

June 30,

2023

2022

$ Change

% Change

Retail notes and finance leases

$
1,736,102

$
1,931,077

$
(194,975)

(10.1)
%
Revolving charge accounts

478,359

—

478,359

—

Wholesale

6,226,192

4,679,458

1,546,734

33.1

Equipment on operating leases

227,809

246,514

(18,705)

(7.6)

Total originations

$
8,668,462

$
6,857,049

$
1,811,413

26.4
%


	Nine Months Ended
	September 30,
	2023		2022		$ Change		% Change
Retail notes and finance leases	$	2,903,506	$	2,857,004	$	46,502	1.6	%
Revolving charge accounts		767,905		—		767,905	—
Wholesale		9,720,956		7,468,229		2,252,727	30.2
Equipment on operating leases		357,375		354,324		3,051	0.9
Total originations	$	13,749,742	$	10,679,557	$	3,070,185	28.7	%

The ~~year-over-year decrease~~increase in originations for retail notes and finance leases and equipment on operating leases were primarily due to ~~a reduction in used equipment financing.~~better penetration rates. Wholesale originations increased due to higher shipment volumes of CNH Industrial North America equipment. During the fourth quarter of 2022, we began offering revolving charge account financing.

~~Table of Contents~~

Total receivables and equipment on operating leases held as of ~~June~~September 30, 2023, December 31, 2022 and ~~June~~September 30, 2022 were as follows (dollars in thousands):


	June 30,		December 31,		June 30,		September 30,		December 31,		September 30,
	2023		2022		2022		2023		2022		2022
Retail notes and finance leases	$	7,369,084	$	7,275,284	$	7,040,072	$	7,723,056	$	7,275,284	$	7,166,320
Revolving charge accounts		233,695		207,744		—		265,775		207,744		—
Wholesale		4,430,693		3,383,804		2,704,394		4,830,862		3,383,804		2,823,528
Equipment on operating leases		1,429,645		1,472,973		1,584,977		1,415,452		1,472,973		1,510,285
Total receivables and equipment on operating leases	$	13,463,117	$	12,339,805	$	11,329,443	$	14,235,145	$	12,339,805	$	11,500,133

The total balance of retail notes and finance leases greater than 30 days past due as a percentage of retail note and finance lease receivables was ~~1.1%~~1.2% at ~~June~~September 30, 2023, 1.2% at December 31, 2022 and 1.0% at ~~June~~September 30, 2022. The total wholesale receivables balance greater than 30 days past due as a percentage of the wholesale receivables was not significant at ~~June~~September 30, 2023, December 31, 2022 or ~~June~~September 30, 2022. The total revolving charge account receivables balance greater than 30 days past due as a percentage of the revolving charge account receivables was ~~4.7%~~3.7% at ~~June~~September 30, 2023 and 12.0% at December 31, 2022.

Total retail customer receivables on nonaccrual status, which represent retail notes and finance leases for which we have ceased accruing finance income, were ~~$47.8~~$54.3 million, $53.5 million and ~~$54.1~~$50.4 million at ~~June~~September 30, 2023, December 31, 2022 and ~~June~~September 30, 2022, respectively. As of ~~June~~September 30, 2023, total revolving charge account receivables on nonaccrual status were immaterial and there were no revolving charge account receivables on nonaccrual status as of December 31, 2022. As of ~~June~~September 30, 2023 and December 31, 2022, there were no wholesale receivables on nonaccrual status.

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Total receivable charge-offs and recoveries, by product, for the three and ~~six~~nine months ended ~~June~~September 30, 2023 and 2022 were as follows (dollars in thousands):


	Three Months Ended				Six Months Ended				Three Months Ended				Nine Months Ended
	June 30,				June 30,				September 30,				September 30,
	2023		2022		2023		2022		2023		2022		2023		2022
Charge-offs:
Retail customer	$	5,358	$	4,578	$	10,970	$	5,475	$	1,771	$	1,689	$	12,741	$	7,164
Revolving charge accounts		447		—		4,685		—		1,231		—		5,916		—
Wholesale		—		4,631		—		4,631		—		—		—		4,631
Total charge-offs		5,805		9,209		15,655		10,106		3,002		1,689		18,657		11,795
Recoveries:
Retail customer		(521)		(596)		(913)		(893)		(313)		(739)		(1,226)		(1,632)
Revolving charge accounts		(1)		—		(1)		—		(4)		—		(5)		—
Wholesale		(5)		(4)		(16)		(15)		(5)		(508)		(21)		(523)
Total recoveries		(527)		(600)		(930)		(908)		(322)		(1,247)		(1,252)		(2,155)
Charge-offs, net of recoveries:
Retail customer		4,837		3,982		10,057		4,582		1,458		950		11,515		5,532
Revolving charge accounts		446		—		4,684		—		1,227		—		5,911		—
Wholesale		(5)		4,627		(16)		4,616		(5)		(508)		(21)		4,108
Total charge-offs, net of recoveries	$	5,278	$	8,609	$	14,725	$	9,198	$	2,680	$	442	$	17,405	$	9,640

Our allowance for credit losses on all receivables financed totaled ~~$115.1~~$118.9 million at ~~June~~September 30, 2023, $125.0 million at December 31, 2022 and ~~$111.4~~$108.4 million at ~~June~~September 30, 2022.

The allowance is subject to a quarterly evaluation based on many quantitative and qualitative factors, including historical loss experience by product category, portfolio duration, delinquency trends, forward-looking macroeconomic factors (in particular, those conditions directly affecting the profitability and financial strength of our customers), and collateral value. No single factor determines the adequacy of the allowance. Different assumptions or changes in forward-looking economic assumptions would result in changes to the allowance for credit losses and the provision for credit losses. These qualitative factors are subjective and require a degree of management judgment.

We believe our allowance is sufficient to provide for losses in our receivable portfolio as of ~~June~~September 30, 2023.

~~Table of Contents~~

Liquidity and Capital Resources

The following discussion of liquidity and capital resources principally focuses on our statements of cash flows, balance sheets and capitalization. CNH Industrial Capital’s current funding strategy is to maintain sufficient liquidity and flexible access to a wide variety of financial instruments.

In the past, securitization has been one of our most economical sources of funding and, therefore, the majority of our originated receivables are securitized, with the cash generated from such receivables utilized to repay the related debt or purchase new receivables.

In addition, we have secured and unsecured facilities, a repurchase agreement, commercial paper, unsecured notes, affiliate borrowings and cash to fund our liquidity needs.

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Cash Flows

For the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, our cash flows were as follows (dollars in thousands):


	2023		2022		2023		2022
Cash flows from (used in):
Operating activities	$	50,633	$	386,773	$	197,731	$	515,605
Investing activities		(1,173,846)		(702,216)		(2,257,366)		(1,068,837)
Financing activities		1,009,942		(33,720)		1,961,337		70,640
Net cash increase (decrease)	$	(113,271)	$	(349,163)
Net cash decrease					$	(98,298)	$	(482,592)

Operating activities in the six months ended June 30, 2023 generated cash of $51 million, resulting primarily from net income of $94 million, adjusted by depreciation and amortization of $91 million and a provision for credit losses of $5 million, partially offset by changes in working capital of $129 million and deferred income tax benefit of $10 million. The decrease in net cash ~~provided by~~from operating activities ~~for~~during the ~~six~~first nine months ~~ended June 30,~~of 2023 compared to the same period in 2022 was primarily due to ~~$298 million related to~~ changes in components of working ~~capital, a $29 million decrease in net income and a $13 million decrease in depreciation and amortization, partially offset by a $4 million increase in deferred income tax adjustment.~~

Investing activities in the six months ended June 30, 2023 used cash of $1,174 million, resulting primarily from net expenditures for receivables of $1,136 million and net expenditures for equipment on operating leases of $38 million. The increase incapital. Net cash used byfor investing activities ~~for~~during the ~~six~~first nine months ~~ended June 30,~~of 2023 ~~compared to the same period in 2022~~ was primarily due to ~~increases~~growth in ~~net expenditures of $414 million~~receivables. Net cash used for ~~receivables~~investing activities was funded primarily through external borrowings, a capital contribution from CNH Industrial America LLC and ~~$58 million for equipment on operating leases.~~

Financing activities in the six months ended June 30, 2023 generated cash of $1,010 million, resulting primarily from net cash received on long-term debt and committed asset-backed facilities of $1,007 million and $116 million, respectively, partially offset by net cash paid on affiliated debt and short-term borrowings of $84 million and $29 million, respectively. The increase in cash provided in financing activities for the six months ended June 30, 2023 compared to the same period in 2022 was primarily due to an increase in ~~net cash received of long-term debt of $1,384 million and lower dividends of $90 million paid to CNH Industrial America, partially offset by an increase in net cash paid on~~ affiliated ~~debt and short-term borrowings of $271 million and $141 million, respectively, and a decrease in net cash received in committed asset-backed facilities of $18 million.~~debt.

Securitization

CNH Industrial Capital and its predecessor entities have been securitizing receivables since 1992. CNH Industrial Capital had approximately ~~$5.2~~$5.7 billion of public and private asset-backed securities outstanding in the U.S. and Canada as of ~~June~~September 30, 2023. Our securitizations are treated as financing arrangements for accounting purposes.

~~Table of Contents~~

Committed Asset-backed Facilities

CNH Industrial Capital has committed asset-backed facilities with several banks or through their commercial paper conduit programs. Committed asset-backed facilities for the U.S. and Canada totaled $2.8 billion at ~~June~~September 30, 2023, with original borrowing maturities of up to two years. The unused availability under the facilities varies during the year, depending on origination volume and the refinancing of receivables with term securitization transactions and/or other financing. At ~~June~~September 30, 2023, there was approximately ~~$0.7~~$1.0 billion of funding available under these facilities.

Repurchase Agreement

Unsecured Facilities and Debt

Committed unsecured facilities with banks as of ~~June~~September 30, 2023, totaled ~~$686~~$682 million. These credit facilities, which are eligible for renewal at various future dates, are used primarily for working capital and other general corporate purposes. As of ~~June~~September 30, 2023, we had ~~$286~~$282 million outstanding under these credit facilities. The remaining available credit commitments are maintained primarily to provide backup liquidity for commercial paper borrowings. Our outstanding commercial paper totaled ~~$269~~$348 million as of ~~June~~September 30, 2023.

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As of ~~June~~September 30, 2023, our unsecured senior notes were as follows (dollars in thousands):


Issued by CNH Industrial Capital LLC (the "U.S. Senior Notes"):⁽¹⁾
1.950% notes, due 2023	$	600,000
4.200% notes, due 2024		500,000	$	500,000
3.950% notes, due 2025		500,000		500,000
5.450% notes, due 2025		400,000		400,000
1.875% notes, due 2026		500,000		500,000
1.450% notes, due 2026		600,000		600,000
4.550% notes, due 2028		600,000		600,000
5.500% notes, due 2029				500,000
Hedging, discounts and unamortized issuance costs		(72,198)		(81,288)
		3,627,802		3,518,712
Issued by CNH Industrial Capital Canada (the "Canadian Senior Notes"):⁽²⁾
1.500% notes, due 2024		226,139		223,392
5.500% notes, due 2026				297,856
Discounts and unamortized issuance costs		(680)		(2,614)
		225,459		518,634
Total	$	3,853,261	$	4,037,346

(1)

These notes, which are senior unsecured obligations of CNH Industrial Capital LLC, are guaranteed by CNH Industrial Capital America and New Holland Credit.

(2)

These notes, which are senior unsecured obligations of CNH Industrial Capital Canada, are guaranteed by CNH Industrial Capital LLC, CNH Industrial Capital America and New Holland Credit.

On ~~April 10,~~August 11, 2023, CNH Industrial Capital Canada completed a private placement offering of C$400 million ($298 million) in aggregate principal amount of its 5.500% unsecured notes due 2026, with an issue price of 99.883%.

On September 13, 2023, CNH Industrial Capital LLC completed an offering of ~~$600~~$500 million in aggregate principal amount of ~~4.550%~~5.500% unsecured notes due ~~2028,~~2029, with an issue price of ~~98.857% of their principal amount.~~99.399%.

Credit Ratings

Our ability to obtain funding is affected by credit ratings of our debt, which are closely related to the outlook for and the financial condition of CNHI, and the nature and availability of our support agreement with CNHI.

To access public debt capital markets, we rely on credit rating agencies to assign short-term and long-term credit ratings to our securities as an indicator of credit quality for fixed income investors. A credit rating agency may change or withdraw our ratings based on its assessment of our current and future ability to meet interest and principal repayment obligations. Each agency’s rating should be evaluated independently of any other rating. Lower credit ratings generally result in higher borrowing costs, including costs of derivative transactions, and reduced access to debt capital markets.

~~Table of Contents~~

Our current credit ratings are as follows:


	Senior Long-Term	Short-Term	Outlook
S&P Global Ratings	BBB	A-2	Stable
Fitch Ratings	BBB+	F2	Stable
Moody's Investors Service	Baa2	-	Stable

Affiliate Sources

CNH Industrial Capital borrows, as needed, from CNH Industrial. This source of funding is primarily used to finance various assets and provides additional flexibility when evaluating market conditions and potential third-party financing options. We had affiliated debt of ~~$262~~$512 million and $342 million as of ~~June~~September 30, 2023 and December 31, 2022, respectively.

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Equity Position

Our equity position also supports our ability to access various funding sources. Our stockholder’s equity at ~~June~~September 30, 2023 and December 31, 2022 was ~~$1.4~~$1.5 billion and $1.3 billion, respectively.

Liquidity

While we expect securitization to continue to represent a material portion of our capital structure and affiliated borrowings to remain a marginal source of funding, we will continue to diversify our funding sources and expand our investor base to support our investment grade credit ratings. These diversified funding sources include committed asset-backed facilities, a repurchase agreement, unsecured notes, bank facilities and a commercial paper program.

The liquidity available for use varies due to: (a) changes in origination volumes, reflecting the financing needs of our customers, and is influenced by the timing of any refinancing of underlying receivables; and (b) the execution of our funding strategy of maintaining a sufficient level of liquidity and flexible access to a wide variety of financial instruments.

Guarantor Statements

CNH Industrial Capital America and New Holland Credit, which are 100%-owned subsidiaries of CNH Industrial Capital LLC, guarantee the U.S. Senior Notes (the “U.S. Notes Guarantees”). CNH Industrial Capital LLC, CNH Industrial Capital America and New Holland Credit (the “Guarantor Entities”) guarantee the Canadian Senior Notes (the “Canadian Notes Guarantees” and, together with the U.S. Notes Guarantees, the “Guarantees”). The Guarantees are full, unconditional, and joint and several.

The Guarantees are general unsecured obligations of the applicable Guarantor Entities and rank senior in right of payment to all future obligations of such Guarantor Entities that are, by their terms, expressly subordinated in right of payment to such Guarantees and pari passu in right of payment with all existing and future unsecured indebtedness of such Guarantor Entities that are not so subordinated.

The Guarantor Entities’ obligations under their applicable Guarantees are limited as necessary to prevent the Guarantees from constituting a fraudulent conveyance under applicable law. If the Guarantees were rendered voidable, they could be subordinated by a court to all other indebtedness (including guarantees and other contingent liabilities) of the applicable Guarantor Entities and, depending on the amount of the indebtedness, such Guarantor Entities’ liability on the Guarantees to which they are parties could be reduced to zero.

~~Table of Contents~~

The Guarantees of the Guarantor Entities will be automatically released:

(1)

in connection with any sale or other disposition of all of the capital stock of the applicable Guarantor Entities to a person other than, for purposes of the U.S. Notes Guarantees, CNH Industrial Capital LLC or any subsidiary of CNH Industrial Capital LLC, or, for purposes of the Canadian Notes Guarantees, CNH Industrial N.V. or any subsidiary of CNH Industrial N.V.;

(2)

in connection with the sale or other disposition of all or substantially all of the assets or properties of the applicable Guarantor Entities, including by way of merger, consolidation or otherwise, to a person other than, for purposes of the U.S. Notes Guarantees, CNH Industrial Capital LLC or any subsidiary of CNH Industrial Capital LLC or, for purposes of the Canadian Notes Guarantees, CNH Industrial N.V. or any subsidiary of CNH Industrial N.V.; or

(3)

in certain other circumstances.

The following tables present summarized financial information for the obligor groups of the U.S. Senior Notes and the Canadian Senior Notes. The obligor group consists of the issuer and guarantors for the applicable senior notes. Intercompany balances and transactions between the issuer and guarantors have been eliminated. The investments in, and equity in income from, non-guarantor subsidiaries has been excluded.

Table of Contents

For the three and ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, the summarized statement of income information for the obligor group of the U.S. Senior Notes was as follows (dollars in thousands):


	Three Months Ended				Six Months Ended				Three Months Ended				Nine Months Ended
	June 30,				June 30,				September 30,				September 30,
	2023		2022		2023		2022		2023		2022		2023		2022
Revenues	$	148,275	$	108,680	$	287,726	$	217,563	$	165,816	$	118,898	$	453,542	$	336,461
Interest expense		94,699		32,698		169,091		51,012		114,199		53,491		283,290		104,503
Administrative and operating expenses		55,164		57,394		102,385		137,415		57,885		66,696		160,270		204,111
Income tax provision (benefit)		(410)		4,457		3,924		7,025		(1,550)		(431)		2,374		6,594
Net income (loss)	$	(1,178)	$	14,131	$	12,326	$	22,111
Net income									$	(4,718)	$	(858)	$	7,608	$	21,253

For the U.S. Senior Notes, affiliated interest amounts recorded from and to the non-guarantor subsidiaries of CNH Industrial Capital LLC for the three and nine months ended September 30, 2023 and 2022 were as follows (dollars in thousands):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Interest and other income from affiliates from non-guarantor subsidiaries	$	16,304	$	10,431	$	47,096	$	23,167
Interest expense to affiliates to non-guarantor subsidiaries		52,390		19,699		131,544		49,494

As of ~~June~~September 30, 2023 and December 31, 2022, the summarized balance sheet information for the obligor group of the U.S. Senior Notes was as follows (dollars in thousands):


	June 30,		December 31,		September 30,		December 31,
	2023		2022		2023		2022
Cash	$	173,155	$	235,428	$	195,260	$	235,428
Restricted cash and cash equivalents		—		—		—		—
Receivables, less allowance for credit losses of $33,493 and $36,093		2,619,372		2,198,816
Receivables, less allowance for credit losses of $36,059 and $36,093						2,919,122		2,198,816
Equipment on operating leases, net		1,005,760		1,055,313		986,449		1,055,313
Short-term debt, including current maturities of long-term debt		1,461,954		975,566		951,753		975,566
Accounts payable and other accrued liabilities		689,692		784,491		705,601		784,491
Long-term debt		2,870,112		2,456,038		3,332,635		2,456,038

For the U.S. Senior Notes, the obligors’ amounts due from and due to the non-guarantor subsidiaries of CNH Industrial Capital LLC as of ~~June~~September 30, 2023 and December 31, 2022 were as follows (dollars in thousands):


	June 30,		December 31,		September 30,		December 31,
	2023		2022		2023		2022
Affiliated accounts and notes receivable from non-guarantor subsidiaries	$	3,254,187	$	2,689,403	$	3,501,985	$	2,689,403
Accounts payable and other accrued liabilities to non-guarantor subsidiaries		3,429,706		3,254,572		3,501,791		3,254,572

3334

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For the three and ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, the summarized statement of income information for the obligor group of the Canadian Senior Notes was as follows (dollars in thousands):


	Three Months Ended				Six Months Ended				Three Months Ended				Nine Months Ended
	June 30,				June 30,				September 30,				September 30,
	2023		2022		2023		2022		2023		2022		2023		2022
Revenues	$	198,364	$	151,964	$	383,437	$	299,326	$	219,919	$	160,644	$	603,356	$	459,970
Interest expense		115,347		42,859		207,791		69,783		137,616		66,639		345,407		136,422
Administrative and operating expenses		72,250		74,270		134,308		167,666		75,751		83,371		210,059		251,037
Income tax provision		1,045		8,612		8,248		15,396		1,456		2,535		9,704		17,931
Net income	$	9,722	$	26,223	$	33,090	$	46,481	$	5,096	$	8,099	$	38,186	$	54,580

For the Canadian Senior Notes, affiliated interest amounts recorded from and to the non-guarantor subsidiaries of CNH Industrial Capital LLC for the three and nine months ended September 30, 2023 and 2022 were as follows (dollars in thousands):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Interest and other income from affiliates from non-guarantor subsidiaries	$	15,947	$	9,877	$	45,714	$	21,449
Interest expense to affiliates to non-guarantor subsidiaries		52,390		19,685		131,544		51,016

As of ~~June~~September 30, 2023 and December 31, 2022, the summarized balance sheet information for the obligor group of the Canadian Senior Notes was as follows (dollars in thousands):


	June 30,		December 31,		September 30,		December 31,
	2023		2022		2023		2022
Cash	$	196,726	$	260,907	$	232,236	$	260,907
Restricted cash and cash equivalents		67,823		88,589		64,975		88,589
Receivables, less allowance for credit losses of $46,048 and $51,237		4,883,294		4,291,809
Receivables, less allowance for credit losses of $49,645 and $51,237						5,198,126		4,291,809
Equipment on operating leases, net		1,429,645		1,472,973		1,415,452		1,472,973
Short-term debt, including current maturities of long-term debt		2,074,084		1,561,788		1,901,163		1,561,788
Accounts payable and other accrued liabilities		790,493		877,678		811,524		877,678
Long-term debt		4,034,811		3,477,671		4,663,514		3,477,671

For the Canadian Senior Notes, the obligors’ amounts due from and due to the non-guarantor subsidiaries of CNH Industrial Capital LLC as of ~~June~~September 30, 2023 and December 31, 2022 were as follows (dollars in thousands):


	June 30,		December 31,		September 30,		December 31,
	2023		2022		2023		2022
Affiliated accounts and notes receivable from non-guarantor subsidiaries	$	3,176,910	$	2,576,713	$	3,462,933	$	2,576,713
Accounts payable and other accrued liabilities to non-guarantor subsidiaries		3,453,378		3,276,544		3,524,479		3,276,544

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Other Data


	As of or for the						As of or for the
	Six Months Ended June 30,						Nine Months Ended September 30,
	2023			2022			2023			2022

	(Dollars in thousands)						(Dollars in thousands)
Total managed receivables	$	12,033,472		$	9,744,466
Operating lease equipment		1,429,645			1,584,977
Total managed portfolio	$	13,463,117		$	11,329,443
Gross receivables							$	12,819,693		$	9,989,848
Equipment on operating leases, net								1,415,452			1,510,285
Total portfolio							$	14,235,145		$	11,500,133
Delinquency ⁽¹⁾		0.76	%		0.75	%		0.81	%		0.68	%
Average managed receivables	$	10,660,656		$	9,156,226
Average gross receivables balance							$	11,262,049		$	9,360,888
Net credit loss ⁽²⁾		0.15	%		0.21	%		0.16	%		0.16	%
Profitability: ⁽³⁾
Return on average managed portfolio ⁽⁴⁾		1.49	%		2.26	%
Return on average portfolio ⁽⁴⁾								1.49	%		2.13	%
Asset Quality:
Allowance for credit losses/total receivables		0.96	%		1.14	%
Allowance for credit losses / gross receivables								0.93	%		1.08	%

(1)

Delinquency ~~means managed~~is reported on gross receivables ~~that are~~greater than 30 days past due, ~~over 30 days,~~ expressed as a percentage of the ~~managed~~gross receivables as of the end of the respective period.

(2)

Net credit losses on the ~~managed~~ receivables means charge-offs, net of recoveries, for the preceding 12 months expressed as a percentage of the respective average ~~managed~~balance of gross receivables.

(3)

~~Six~~Nine months ended ~~June~~September 30, 2023 and 2022 annualized.

(4)

Net income for the period expressed as a percentage of the average ~~managed~~ portfolio.

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Cautionary Note on Forward-Looking Statements

This Quarterly Report includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact contained in this filing; including competitive strengths; business strategy; future financial position or operating results; budgets; projections with respect to revenue, income, capital expenditures, dividends, liquidity, capital structure or other financial items; costs; and plans and objectives of management regarding operations, products and services, are forward-looking statements. Forward-looking statements also include statements regarding the future performance of CNH Industrial and its subsidiaries on a stand-alone basis. These statements may include terminology such as “may,” “will,” “expect,” “could,” “should,” “intend,” “estimate,” “anticipate,” “believe,” “outlook,” “continue,” “remain,” “on track,” “design,” “target,” “objective,” “goal,” “forecast,” “projection,” “prospects,” “plan,” or similar terminology. Forward-looking statements are not guarantees of future performance. Rather, they are based on current views and assumptions and involve known and unknown risks, uncertainties and other factors, many of which are outside our control and are difficult to predict. If any of these risks and uncertainties materialize (or they occur with a degree of severity that the Company is unable to predict) or other assumptions underlying any of the forward-looking statements prove to be incorrect, including any assumptions regarding strategic plans, the actual results or developments may differ materially from any future results or developments expressed or implied by the forward-looking statements.

Factors, risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements include, among others: economic conditions in each of CNH Industrial’s markets, including the significant uncertainty caused by ~~the war in the Ukraine; the duration and economic, operational and financial impacts of the global COVID-19 pandemic;~~geopolitical events; production and supply chain disruptions, including industry capacity constraints, material availability, and global logistics delays and constraints; the many interrelated factors that affect consumer confidence and worldwide demand for capital goods and capital goods-related products; changes in government policies regarding banking, monetary and fiscal policy; legislation, particularly pertaining to capital goods-related issues such as agriculture, the environment, debt relief and subsidy program policies, trade and commerce and infrastructure development; government policies on international trade and investment, including sanctions, import quotas, capital controls and tariffs; volatility in international trade caused by the imposition of tariffs, sanctions, embargoes, and trade wars; actions of competitors in the various industries in which CNH Industrial North America competes; development and use of new technologies and technological difficulties; the interpretation of, or adoption of new, compliance requirements with respect to engine emissions, safety or other aspects of CNH Industrial’s products; labor relations; interest rates and currency exchange rates;

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inflation and deflation; energy prices; prices for agricultural commodities and material price increases; housing starts and other construction activity; our ability to obtain financing or to refinance existing debt; restrictive covenants in our debt agreements; actions by rating agencies concerning the ratings on our debt and asset-backed securities and the credit rating of CNHI; price pressure on new and used equipment; security breaches, cybersecurity attacks, technology failures, and other disruptions to the information technology infrastructure of the Company and its CNH Industrial North America dealers; security breaches with respect to CNH Industrial’s products; political and civil unrest; volatility and deterioration of capital and financial markets, including pandemics (such as the COVID-19 pandemic) and terrorist attacks; the remediation of a material weakness; our ability to realize the anticipated benefits from our business initiatives as part of CNHI’s strategic ~~plan;~~plan including targeted restructuring actions to optimize CNHI’s cost structure and improve the efficiency of its operations; CNHI’s failure to realize, or a delay in realizing, all of the anticipated benefits of its acquisitions, joint ventures, strategic alliances or divestitures and other similar risks and uncertainties, and our and CNHI’s success in managing the risks involved in the foregoing.

Forward-looking statements are based upon assumptions relating to the factors described in this filing, which are sometimes based upon estimates and data received from third parties. Such estimates and data are often revised. Actual results may differ materially from the forward-looking statements as a result of a number of risks and uncertainties, many of which are outside of our control. CNH Industrial Capital expressly disclaims any intention or obligation to provide, update or revise any forward-looking statements to reflect any change in expectations or any change in events, conditions or circumstances on which these forward-looking statements are based.

Further information concerning CNH Industrial Capital, including factors that potentially could materially affect CNH Industrial Capital’s financial results, is included in CNH Industrial Capital’s reports and filings with the SEC.

All future written and oral forward-looking statements by CNH Industrial Capital or persons acting on the behalf of CNH Industrial Capital are expressly qualified in their entirety by the cautionary statements contained herein or referred to above.

Additional factors could cause actual results to differ from those expressed in or implied by the forward-looking statements included in the Company’s filings with the SEC (including, but not limited to, the factors discussed in our annual report on Form 10-K and quarterly reports submitted on Form 10-Q).

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Critical Accounting Policies and Estimates

See our critical accounting policies and estimates discussed in our annual report for the year ended December 31, 2022 under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 2 to our audited consolidated financial statements included in such annual report. There were no material changes to these policies or estimates during the three months ended ~~June~~September 30, 2023.

New Accounting Pronouncements Not Yet Adopted

See Note 2: New Accounting Pronouncements to this Form 10-Q.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, our management carried out an evaluation, under the supervision and with the participation of our President and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15(e) under the Securities Exchange Act of 1934. Based upon that evaluation as of September 30, 2023, our President and Chief Financial Officer concluded that, as a result of the material weakness in our internal control over financial reporting as described below, our disclosure controls and procedures were not effective as of ~~June~~September 30, 2023.

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Material Weakness in Internal Control over Financial Reporting

As of September 30, 2023, we determined that we have a material weakness in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis. The material weakness relates to the design and implementation of information technology (IT) general controls in the areas of user access limits and segregation of duties related to enterprise resource planning (ERP) applications.

These control deficiencies have not resulted in an error or misstatements to our financial statements or the need to revise any previously published financial results. However, these deficiencies if not timely remediated, could impact maintaining effective segregation of duties, as well as the effectiveness of IT-dependent controls (such as automated controls that address the risk of material misstatements to one or more assertions, and IT controls and underlying data that support the effectiveness of IT system-generated data and reports).

The control deficiencies could have resulted in a misstatement of one or more account balances or disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected, and accordingly, we determined that these control deficiencies constitute a material weakness.

Management’s Plan to Remediate the Material Weakness

We are currently in the process of implementing measures and taking steps to address the underlying causes of the material weakness. Our efforts will include enhancing our IT general controls framework that addresses risks associated with user access and security, application change management and IT operations. We also expect to engage in focused training for control owners to help sustain effective control operations and comprehensive remediation efforts relating to segregation of duties to strengthen user access controls and security.

While we believe these efforts will improve our internal controls and address the underlying cause of the material weakness, the material weakness will not be remediated until our remediation plan has been fully implemented and we have concluded that the improvements added to our current control environment are operating effectively for a sufficient period of time. We cannot be certain that the steps we are taking will be sufficient to remediate the control deficiencies that led to the material weakness in our internal control over financial reporting or prevent future material weaknesses or control deficiencies from occurring. In addition, we cannot be certain that we have identified all material weaknesses in our internal control over financial reporting, or that in the future we will not have additional material weaknesses in our internal control over financial reporting.

Changes in Internal Control over Financial Reporting

~~There has~~The Company is engaging in ongoing remediation efforts on the material weakness noted above; there have been no ~~change~~changes in our internal control over financial reporting during the three months ended ~~June~~September 30, 2023, that ~~has~~have materially affected, or isare reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Disclosure Controls and Procedures and Internal Control over Financial Reporting

Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to the costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

CNH Industrial Capital is party to various litigation matters and claims arising from its operations. Management believes that the outcome of these proceedings, individually and in the aggregate, will not have a material adverse effect on CNH Industrial Capital’s financial position or results of operations.

Item 1A. Risk Factors

~~See our most recent annual report on Form 10-K (Part~~This section supplements and updates certain of the information found under Part I, Item ~~1A). There was no material change~~1A. “Risk Factors” of our 2022 Annual Report based on information currently known to us and recent developments since the date of the 2022 Annual Report. The matters discussed below should be read in conjunction with the risk factors set forth in the 2022 Annual Report. However, the risks described in our ~~risk factors during~~2022 Annual Report and below are not the only risks faced by us. Additional risks and uncertainties not currently known, or that are currently judged to be immaterial, may also materially affect our business, financial condition or operating results.

We have identified a material weakness in our internal control over financial reporting. If our remediation of this material weakness is not effective, or if we identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, we may not be able to accurately or timely report our financial condition or results of operations and investors may lose confidence in the accuracy and completeness of our financial reports.

In connection with the preparation of our quarterly report for the three months ended ~~June~~September 30, ~~2023.~~2023, we identified a material weakness in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis. The material weakness relates to the design and implementation of information technology, or IT, general controls in the areas of user access limits and segregation of duties related to enterprise resource planning (ERP) applications. This material weakness has not resulted in an error or misstatement to our financial statements or the need to revise any of our previously published financial results.

We are in the process of taking steps intended to remediate the material weakness. Our efforts have included enhancing our IT general controls framework that addresses risks associated with user access and security, application change management and IT operations. We also expect to engage in focused training for control owners to help sustain effective control operations and comprehensive remediation efforts relating to segregation of duties to strengthen user access controls and security.

While we believe these efforts will improve our internal controls and address the underlying causes of the material weakness, the material weakness will not be fully remediated until our remediation plan has been fully implemented and we have concluded that our controls are operating effectively for a sufficient period of time. We cannot be certain that the steps we are taking will be sufficient to remediate the control deficiencies that led to the material weakness in our internal control over financial reporting or prevent future material weaknesses or control deficiencies from occurring. In addition, we cannot be certain that we have identified all material weaknesses in our internal control over financial reporting, or that in the future we will not have additional material weaknesses in our internal control over financial reporting.

If we fail to effectively remediate the material weakness in our internal control over financial reporting, or if we identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls in the future, we may be unable to accurately or timely report our financial condition or results of operations. We also could become subject to sanctions or investigations by the SEC or other regulatory authorities. In addition, if we are unable to assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, when required, investors may lose confidence in the accuracy and completeness of our financial reports and we may face restricted access to the capital markets.

Item 4. Mine Safety Disclosures

Not applicable.

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Item 5. Other Information

None.

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Item 6. Exhibits


Exhibit		Description
22		Issuer and Guarantors of Guaranteed Securities
31.1		Certifications of President Pursuant to Exchange Act Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certifications of Chief Financial Officer Pursuant to Exchange Act Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1†		Certification required by Exchange Act Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350).
101		Interactive Inline data files pursuant to Rule 405 of Regulation S-T: (i) Consolidated Statements of Income for the three and ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, (ii) Consolidated Statements of Comprehensive Income for the three and ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, (iii) Consolidated Balance Sheets as of ~~June~~September 30, 2023 and December 31, 2022, (iv) Consolidated Statements of Cash Flows for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, (v) Consolidated Statements of Changes in Stockholder’s Equity for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022 and (vi) Condensed Notes to Consolidated Financial Statements.
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

†	These certifications are deemed not filed for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section; nor shall they be deemed incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act.

Pursuant to Item 601(b)(4)(iii) of Regulation S-K, copies of instruments defining the rights of holders of certain long-term debt have not been filed. The registrant will furnish copies thereof to the SEC upon request.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	CNH INDUSTRIAL CAPITAL LLC
Date: ~~August 2,~~November 13, 2023	/s/ Douglas MacLeod
	Douglas MacLeod, Chairman and President
	(Principal Executive Officer)


Date: ~~August 2,~~November 13, 2023	/s/ Daniel Willems Van Dijk
	Daniel Willems Van Dijk, Chief Financial Officer and Assistant Treasurer
	(Principal Financial Officer)

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