Cnh Industrial N.v. · NYSE:CNH
Cnh Industrial — Q3 2019 Earnings Presentation
48 slides from Cnh Industrial's earnings presentation, Nov 6, 2019
Slide 1: Q3 & Sep YTD 2019 Results Review
Q3 & Sep YTD 2019 Results Review November 6, 2019 Exhibit 99.3
Slide 2: Safe Harbor Statement and Disclosures
Safe Harbor Statement and Disclosures All statements other than statements of historical fact contained in the slides presented today including statements regarding our competitive strengths; business strategy; future financial position or operating results; budgets; projections with respect to reve
Slide 3: Q3 & Sep YTD 2019 Highlights
Q3 & Sep YTD 2019 | Highlights Industry demand deceleration and dealer inventory actions affecting AG and CE segments, with C&SV and PT segments’ sales flat Note: All figures are provided herein on a US GAAP $ basis unless otherwise indicated. C&SV: includes a $50mn gain realized from granting to Ni
Slide 4: Q3 2019 Industry and Company Unit Performances
Q3 2019 | Industry and Company Unit Performances TRACTORS COMBINES NA EU SA RoW WW 0-140 HP 5% 2% (13)% (7)% (5)% 140+ HP (5)% (12)% (13)% Flat (10)% (9)% COMPACT AND SERVICE Eq. NA EU SA RoW WW 2% (1)% 25% (4)% Flat General Construction | Road building and site preparation General CE 7% 1% 9% (10)%
Slide 5: Q3 & Sep YTD 2019 Financial Summary
Q3 & Sep YTD 2019 | Financial Summary (1) Non-GAAP measures (definition and reconciliation in appendix) Note: Numbers may not add due to rounding (*) Note: @CC means at constant currency Q3 2019 Q3 2018 Δ Sep YTD 2019 Sep YTD 2018 Δ U.S. GAAP Revenues ($bn) 6.4 6.7 (4.9)% 20.4 21.5 (5.2)% Net Sales
Slide 6: Industrial Activities Net Sales
Q3 & Sep YTD 2019 | Industrial Activities Net Sales Net Sales split (1) BY SEGMENT AG CE C&SV PT (1) Note: Net Sales: Excluding Other Activities, Unallocated Items and Adjustment & Eliminations BY CURRENCY EUR 46% USD 28% BRL 8% CAD 2% GBP 2% AUD 3% OTHER 11% Note: Numbers may not add due to roundin
Slide 7: Adj. EBIT walk
Q3 & Sep YTD 2019 | Adj. EBIT walk Non-GAAP measures (definition and reconciliation in appendix) (*) PT Pricing net within Volume & Mix 444 (87) 107 (133) (17) 9 62 22 (6) 401 Adj. EBIT VOL & MIX PRICING NET (*) PROD COST SG&A R&D FX | OTHER UNALLOCATED, ELIM & OTHER FS Adj. EBIT Q3 2018 Q3 2019 6.6
Slide 8: AG Financial Results
AG | Financial Results ($mn) NA EU SA RoW TRACTORS COMBINES OTHERS Q3 ’19 Change vs. prior year Net Sales Q3 ’19 Change vs. prior year 2019 2018 Δ Δ At CC 2,446 2,636 (7.2)% (6.0)% Q3 Note: at CC means at constant currency Adj. EBITDA & Adj. EBIT walk 272 76 196 (75) 79 (74) 4 8 14 152 69 221 Adj. E
Slide 9: CE Financial Results
CE | Financial Results (*) C&S: Compact and Service Equipment; General CE: General Construction; R&S : Road building and site preparation NA EU SA RoW C&S (*) General CE (*) R&S (*) Q3 ’19 Change vs. prior year Q3 ’19 Change vs. prior year ($mn) Note: at CC means at constant currency Net Sales 2019
Slide 10: C&SV Financial Results
C&SV | Financial Results ($mn) NA EU SA RoW n.m. TRUCKS BUSES SPECIALTY VEHICLES Q3 ’19 Change vs. prior year Q3 ’19 Change vs. prior year Note: at CC means at constant currency Net Sales 2019 2018 Δ Δ At CC 2,331 2,404 (3.0)% 0.9% Q3 9.0% 2.8% 3.0% 216 148 68 (1) 7 (37) (19) 4 48 70 126 196 Adj. EB
Slide 11: PT Financial Results
PT | Financial Results NA EU SA RoW Q3 ’19 Change vs. prior year ($mn) Note: at CC means at constant currency (*) Net Sales 2019 2018 Δ Δ At CC 940 972 (3.3)% 0.5% Q3 (*) 3rd Party sales at 51% in 2019 vs. 52% in Q3 2018 Adj. EBITDA & Adj. EBIT walk 113 31 82 (7) 14 (4) (3) (1) 81 29 110 Adj. EBITDA
Slide 12: Financial Services
Financial Services (*) Including unconsolidated JVs Managed Portfolio (*) & Retail Originations (*) Q3 ’19 retail originations at $2.4bn, flat compared to September 30, 2018 Managed portfolio* at $25.5bn, flat compared to September 30, 2018 (up $0.8bn on a constant currency basis) $25.5bn $25.5bn Se
Slide 13: Net Industrial Cash Flow and Available Liquidity
Q3 2019 | Net Industrial Cash Flow and Available Liquidity Change in Working Capital Cash inflow Cash outflow TRADE RECEIVABLES INVENTORIES TRADE PAYABLES OTHER CHG IN WORKING CAPITAL (1.1) Q3 2019 Q3 2018 Non-GAAP measures (reconciliation in appendix) (1.1) (2.4) Net Debt IA Free Cash Flow IA ($bn)
Slide 14: FY 2019E US GAAP Financial Targets and Market Outlook
FY 2019E US GAAP Financial Targets and Market Outlook
Slide 15: FY 2019E Updated Industry Outlook
FY 2019E | Updated Industry Outlook (*) NOTE: Total Industry Volume FY 2019E vs. FY 2018 reflecting aggregate for key markets where Company competes (*) New Regional split definition in Appendix TRACTORS COMBINES NA EU SA RoW WW 0-140 HP Flat – 5% Flat – 5% (10)% (10)% (10)% - (5)% 140+ HP (5)% (5)%
Slide 16: FY 2019E US GAAP Financial Targets
FY 2019E | US GAAP Financial Targets (1) 2019 guidance does not include any impacts deriving from the gain resulting from the modification of the healthcare plan in the U.S. previously mentioned, as this gain has been considered non-recurring and therefore treated as an adjusting item for the purpos
Slide 17: Closing Remarks
Closing Remarks
Slide 18: Update on selected Strategic Initiatives
Transform 2 Win | Update on selected Strategic Initiatives Grow Nikola Investment Three Acquisitions in AG segment New products and technologies Perform & Simplify 80/20 simplification initiative World Class Manufacturing productivity Organization Optimization Optimize Right-size operational footpri
Slide 19: IVECO & Nikola: Fuel Cell Partnership
Transform 2 Win | Grow Update: IVECO & NIKOLA: Fuel Cell Partnership NAFTA EUROPE We partner with Nikola to disrupt the Industry FCEV FCEV / BEV $250Mn Total Investment $50mn @ Q319 $50mn @ Q319 2021 BEV FCEV $150mn In kind $100mn In Cash PARTNERSHIP ON FUEL CELLS (FCEV) & BATTERY EV (BEV) 2023 Base
Slide 20: Update - Agriculture Inorganic Growth
Transform 2 Win | Grow Update - Agriculture Inorganic Growth Q3 '19 Q4 ‘19 Pioneer in Australian implements with high-speed tillage equipment Leader in Farm Management Information Systems (FMIS) ü Industry-leading suspension and high-speed track technology ü Closed ü ü ü ü ü Signed
Slide 21: New Products and Awards
Transform 2 Win | Grow Update - New Products and Awards CASE IH Case IH combine: new 150 series Axial-Flow range, 250 series Axial-Flow updates and header upgrades with upgraded engines that meet Stage V emissions regulations New Engine New Engine STEYR The Expert CVT extends the STEYR tractor range
Slide 22: Selected Initiatives Updates
Transform 2 Win | Selected Initiatives Updates Perform & Simplify Optimize 80/20 Simplification CE NA: SKUs reduction targeted at ~60% with benefit ramping up in Q4 2019, coupled with focused pricing actions AG NA: SKUs reduction at ~60% identified for execution in 2020 European streams for AG and C
Slide 23: On track with Spin Off Roadmap
Transform 2 Win | On track with Spin Off Roadmap Q4 '19 Q1 '20 Q2 '20 Q3 '20 Q4' 20 2021 SPIN ANNOUNCEMENT EXTRAORDINARY GENERAL MEETING INVESTOR ROADSHOWS DAY 1 LEADERSHIP ANNOUNCEMENT DELIVER ON PORTFOLIO TRANSFORMATION ü Off-Highway On-Highway
Slide 24: Appendix
Appendix
Slide 25: Sustainability Leader for the 9th consecutive year
Sustainability Leader for the 9th consecutive year New Engine Sustainability – Dow Jones CNH Industrial named as Industry Leader in the Dow Jones Sustainability Indices, World and Europe for the ninth consecutive year CNH Industrial The Company was ranked first in the Automotive and Large Vehicles s
Slide 26: Industrial Activities Q3 2019 Net Sales Split
Industrial Activities | Q3 2019 Net Sales Split Agriculture Q3 2019 | Split Chg. vs. Q3 ’18 Construction Q3 2019 | Split Chg. vs. Q3 ‘18 By region: By region: NA 36% (7%) NA 51% (12%) EU 32% (4%) EU 16% (9%) SA 17% 1% SA 15% 16% RoW 15% (20%) RoW 18% (12%) By product: By product: TRACTORS 64% (5%) C
Slide 27: Q3 2019 IA Adj. EBITDA & Adj. EBIT walk by segment & driver
Q3 2019 | IA Adj. EBITDA & Adj. EBIT walk by segment & driver Non-GAAP measures (definition and reconciliation in appendix) (*) Including unallocated items 591 270 321 (44) (16) 2 (1) 22 284 239 523 Adj. EBITDA D&A Adj EBIT AG CE C&SV PT ELIM & OTHER (*) Adj EBIT D&A Adj EBITDA Gross Margin 17.3% 19
Slide 28: Industrial Activities Sep YTD 2019 Net Sales Split
Industrial Activities | Sep YTD 2019 Net Sales Split (*) C&S: Compact and Service Equipment; General CE: General Construction; R&S : Road building and site preparation Agriculture Sep YTD 2019 | Split Chg. vs. Sep YTD ’18 Construction Sep YTD 2019 | Split Chg. vs. Sep YTD ‘18 By region: By region: N
Slide 29: Sep YTD 2019 IA Adj. EBITDA & Adj. EBIT walk by segment & driver
Sep YTD 2019 | IA Adj. EBITDA & Adj. EBIT walk by segment & driver Non-GAAP measures (definition and reconciliation in appendix) (*) Including unallocated items 1,981 828 1,153 (117) (11) 12 (6) 58 1,089 727 1,816 Adj. EBITDA D&A Adj EBIT AG CE C&SV PT ELIM & OTHER (*) Adj EBIT D&A Adj EBITDA Gross
Slide 30: Reconciliation of Net Income to Adj. EBIT and EBITDA by Segment
Reconciliation of Net Income (Loss) to Adj. EBIT and EBITDA by Segment (US GAAP) For Industrial Activities, net income net of “Results from intersegment investments”. In the three months ended September 30, 2019, this item includes the pre-tax gain of $30 million as a result of the amortization over
Slide 31: Reconciliation of Net Income to Adj. EBIT and EBITDA by Segment
Reconciliation of Net Income (Loss) to Adj. EBIT and EBITDA by Segment (US GAAP) ($mn) Q3 2018 AG CE CV PT Unallocated Items, Elim. & Other Industrial Activities Financial Services Total Net Income (Loss) (1) 139 92 231 Add back: Interest expenses of Industrial Activities, net of interest income and
Slide 32: Reconciliation of Net Income to Adj. EBIT and EBITDA by Segment
Reconciliation of Net Income (Loss) to Adj. EBIT and EBITDA by Segment (US GAAP) For Industrial Activities, net income net of “Results from intersegment investments”. In the nine months ended September 30, 2019, this item includes the pre-tax gain of $90 million and $50 million, respectively, as a r
Slide 33: Reconciliation of Net Income to Adj. EBIT and EBITDA by Segment
Reconciliation of Net Income (Loss) to Adj. EBIT and EBITDA by Segment (US GAAP) ($mn) Sep YTD 2018 AG CE CV PT Unallocated Items, Elim. & Other Industrial Activities Financial Services Total Net Income (Loss) (1) 544 297 841 Add back: Interest expenses of Industrial Activities, net of interest inco
Slide 34: Calculation of ROIC of Industrial Activities
Calculation of ROIC of Industrial Activities (U.S. GAAP) ($mn) Twelve Months Rolling - September 30, 2019 2018 Adjusted EBIT of Industrial Activities 1,521 1,501 Tax impact (a) (416) (408) Adjusted EBIT of Industrial Activities after-tax (A) 1,105 1,093 Average Third-party debt of Industrial Activit
Slide 35: Reconciliation of Adj. net income and Adj. income tax
Q3 & Sep YTD 2019 Reconciliation of Adj. net income and Adj. income tax (expense) to Net Income (loss) and Income tax (expense) and calculation of Adj. diluted EPS and Adj. ETR under U.S.GAAP ($mn) Sep YTD 2019 Sep YTD 2018 Q3 2019 Q3 2018 1,334 841 Net income (loss) 643 231 125 (34) Adjustments imp
Slide 36: Reconciliation of Adj. net income and Adj. income tax
Q3 & Sep YTD 2019 ($mn) Reconciliation of Adj. net income and Adj. income tax (expense) to Net Income (loss) and Income tax (expense) and calculation of Adj. diluted EPS and Adj. ETR under U.S.GAAP Sep YTD 2019 Sep YTD 2018 Q3 2019 Q3 2018 (a) Adjustments impacting Income (loss) before income tax (e
Slide 37: Q3 2019 Investment in Future Growth
Q3 2019 | Investment in Future Growth (1) Excluding assets sold under buy-back commitments and assets under operating leases Capex at $143mn up 10% vs. Q3 2018 Capex at 2.4% of net sales in Q3 2019 and 1.7% at Sep YTD 2019 CAPEX (1) ($mn) R&D at $238mn down 6% vs. Q3 2018 R&D running at 4% of net sa
Slide 38: Capex
Capex (1) (1) Excluding assets sold under buy-back commitments and assets under operating leases Q3 2019 Q3 2018 Sep YTD 2019 Sep YTD 2018 Investments in property, plant and equipment, and intangible assets (1) 143 130 323 288 Breakdown by Category NEW PRODUCT & TECHNOLOGY 43% 52% 44% 38% MAINTENANC
Slide 39: Reconciliation of Operating Activities cash to Free cash flow
Reconciliation of Net cash provided by (used in) Operating Activities to Free cash flow of Industrial Activities (US GAAP) (1) This item primarily includes change in intersegment financial receivables and capital increases in intersegment investments. ($mn) Industrial Activities Q3 2019 Q3 2018 Sep
Slide 40: Reconciliation of Total Debt to Net Debt
Reconciliation of Total Debt to Net Debt (US GAAP) Sep 30, 2019 Dec 31, 2018 Sep 30, 2019 Dec 31, 2018 Sep 30, 2019 Dec 31, 2018 Third party debt (23,906) (24,445) (5,556) (5,211) (18,350) (19,234) Intersegment notes payable - - (1,173) (1,136) (1,275) (1,202) Total (Debt) (1) (23,906) (24,445) (6,7
Slide 41: From Total Debt to Net Industrial Debt
From Total Debt to Net Industrial Debt Sep 30, 2019 Dec 31, 2018 Total (Debt) (1) (23,906) (24,445) Financial Services Third Party Debt 18,350 19,234 Intersegment Note Payables (1,173) (1,136) Intersegment Note Receivables 1,275 1,202 Cash and cash equivalents 2,956 4,553 Restricted cash 108 - Deriv
Slide 42: Liquidity & Debt Maturity
Liquidity & Debt Maturity 1 Represents cash portion of debt maturities as of 09/30/2019 2 Of which $0.8bn Restricted Cash Undrawn M/T unsecured Committed Lines Bank Debt Capital Market Cash Other Available Liquidity ($bn) Available liquidity at September 30, 2019 was $9.4bn, compared to $9.9bn at Ju
Slide 43: Debt Maturity Schedule Breakdown
Debt Maturity Schedule | Breakdown Note: Numbers may not add due to rounding Outstanding Sep 30, 2019 3M 2019 2020 2021 2022 2023 2024 Beyond (4.2) Bank Debt (1.2) (1.6) (0.6) (0.3) (0.2) (0.1) (0.1) (8.9) Capital Market (0.6) (0.8) (1.5) (1.1) (1.2) (0.6) (3.2) (0.1) Other Debt (0.1) (0.0) (0.0) (0
Slide 44: Europe Trucks Company performance
Europe Trucks | Company performance (*) Europe: 27 countries reflecting key markets where the segment competes (excluding United Kingdom and Ireland for market share reporting purposes); (1) Company’s estimated market share in the European truck market (GVW ≥3.5 tons) Q3 2016 2017 2018 2019 MKT SHAR
Slide 45: Europe Trucks Company performance
Europe Trucks | Company performance (*) Europe: 27 countries reflecting key markets where the segment competes (excluding United Kingdom and Ireland for market share reporting purposes); (1) Company’s estimated market share in the European truck market (GVW ≥3.5 tons) Sep YTD 2016 2017 2018 2019 MKT
Slide 46: New Geographic Information
New Geographic Information Starting from Q1 2019 the composition of our regions part of the geographic information have been amended as follow: North America (formerly NAFTA): United States, Canada and Mexico; Europe (member countries of the European Union, European Free Trade Association, Ukraine,
Slide 47: Non-GAAP Financial Measures
Non-GAAP Financial Measures CNH Industrial monitors its operations through the use of several non-GAAP financial measures. CNH Industrial’s management believes that these non-GAAP financial measures provide useful and relevant information regarding its operating results and enhance the readers’ abil
Slide 48: Investor Relations Team
Investor Relations Team e-mail: investor.relations@cnhind.com website: www.cnhindustrial.com Federico Donati – Head of Global Investor Relations ( +44 (207) 76 - 60386 ( +39 (011) 00 - 71929 Noah Weiss – Investor Relations North America ( +1 (630) 887 - 3745 Giovanni Somajni – Investor Relations Eur