Cnh Industrial N.v. · NYSE:CNH
Cnh Industrial — Investor Day (May 2014)
22 slides from Cnh Industrial's investor day presentation, May 8, 2014
Slide 1: Five-year Financial Targets
Five-year Financial Targets Max Chiara Max Chiara Exhibit 99.5
Slide 2: Executive Summary
Executive Summary Financial Highlights (2014 – 2018) • Net Sales of Industrial Activities reaches $38b by 2018 • Operating Profit of Industrial Activities increases more than 1.6x to $3.4b in 2018 • Operating Margin of Industrial Activities reaches 9% by 2018 • Net Income grows more than 2.7x to $2.
Slide 3: Industrial Activities Net Sales by Segment
AG CE 16.7 3.3 Industrial Activities Net Sales by Segment Consolidated figures include corporate & eliminations CV PT Net Sales increases $5.6b by 2018 CAGR 3.2% Note :
Slide 4: Industrial Activities Segment Progression
AG CE Industrial Activities Segment Progression 2013 Actual Net Sales (CAGR = 3.2%) 2013 Actual Industrial Operating Profit (CAGR = 10.4%) CE in negative operating profit position in 2013 1.17x 1.64x CV PT 3% Note :
Slide 5: Industrial Activities Sales and Operating Margin
6.4% 6.9% 9.0% 6.5% 8.6% Industrial Activities Sales and Operating Margin Consolidated figures include corporate & eliminations Operating Margin increases 2.6pp Industrial Activities Operating Margin Margin improvement 6.4% to 9.0% Operating Margin (High) Operating Margin (Low) 8.3% 7.9% CAGR 3.2% N
Slide 6: Agricultural Equipment (AG) Net Sales & Operating Margin
12.0% 12.3% 13.2% 11.9% 12.8% Agricultural Equipment (AG) Net Sales & Operating Margin Operating Margin increases 1.2pp Net Sales % Operating Margin Margin improvement 12% to 13.2% Operating Margin (High) Operating Margin (Low) CAGR 1.8% Five-year Financial Targets
Slide 7: Construction Equipment (CE) Net Sales & Operating Margin
-3.0% 0.0% 5.1% -0.3% 4.7% Construction Equipment (CE) Net Sales & Operating Margin Operating Margin increases 8.1pp Net Sales % Operating Margin Operating Margin (High) Operating Margin (Low) CAGR 6.9% Margin improvement -3.0% to 5.1% Five-year Financial Targets
Slide 8: Commercial Vehicles (CV) Net Sales & Operating Margin
0.7% 1.8% 5.4% 1.4% 5.0% Commercial Vehicles (CV) Net Sales & Operating Margin Operating Margin increases 4.7pp Net Sales % Operating Margin Margin improvement 0.7% to 5.4% Operating Margin (High) Operating Margin (Low) CAGR 3.3%
Slide 9: Powertrain (PT) Net Sales & Operating Margin
4.2% 4.6% 6.3% 4.2% 5.9% Powertrain (PT) Net Sales & Operating Margin Operating Margin increases 2.1pp % Operating Margin Net Sales Margin improvement 4.2% to 6.3% Operating Margin (High) Operating Margin (Low) CAGR 3.8%
Slide 10: Consolidated Net Income
0.9 2.1 2.4% 3.0% 5.5% 2.7% 5.3% Consolidated Net Income 2014 - Margin increases 3.1pp % Net Revenue Consolidated Net Income 0.69 – 1.58 – EPS Net Income and EPS before restructuring for the plan period Margin Improvement 2.4% to 5.5% Net Income Low Delta to Net Income High Net Income margin (High)
Slide 11: Organic Investment: CAPEX and R&D Spending
1.2 1.2 1.2 1.8x 1.7x 0.9x Organic Investment CAPEX and R&D Spending 14% 3% Strategic / Greenfield Initiatives % of Total Yearly Organic Investment 7.4% 7.5% 7.0% 5.3% 3.7% 3.8% 3.2% CAPEX R&D CAPEX / D&A Total % Net Sales R&D % Net Sales Investment pattern focused on product renewals and powertrain
Slide 12: Capital Expenditures By Segment
0.5 0.5 0.1 0.1 0.1 AG CE 0.4 Capital Expenditures By Segment Consolidated figures include corporate & eliminations; Total numbers may not add due to rounding. Weighted towards high margin generating businesses CV PT Note :
Slide 13: Balance Sheet Management - Assumptions
2014-2018 Business Plan Balance Sheet Management - Assumptions • Driving towards investment grade while interest cost benefit not embedded in the plan • Continued focus on rebalancing funding by gradually shifting from Bank Debt to Capital Markets (Capital Market at 50% of total funding at the end o
Slide 14: Net Industrial (Debt)/Cash Plan Progression
(2.2) (2.1) 0.5 Net Industrial (Debt )/Cash Plan Progression Debt free by end of plan (1.5)
Slide 15: Plan Period Walk
Plan Period Walk Net Industrial ( Debt )/ Cash Debt free by 2018 *Net Income before restructuring for the plan period Note : Gross CF as Net Income + D&A + Change in Funds NID NID NID Gross CF in WC & Other CAPEX Dividends FX Gross CF in WC & Other CAPEX Dividends FX (1.5) (2.2) (3.4) (1.1) (1.1) (1
Slide 16: Capitalization: Net Industrial (Debt)/Cash and Equity
Net Industrial (Debt)/Cash $ (2.2) $ 0.5 Capitalization Net Industrial (Debt)/Cash and Equity USD billions Cash & Marketable Securities $ 4.0 $ 1.9 Intersegment Cash Bank Debt (5.1) (0.4) Capital Market (4.9) (2.7) Other Debt (0.1) (0.1) Total Debt $ (10.1) $ (3.2) Equity Total Available Liquidity A
Slide 17: Capital Allocation Guidelines
Capital Allocation Guidelines Capital to Value Generation cycle *Share repurchase program subject to achieving investment grade and ensuring earnings are accretive ORGANIC Investments Weighted towards the highest return on capital businesses Continued AG and CE expansion in APAC CV/CE product evolut
Slide 18: Financial Targets (US GAAP)
Operating Profit & Margin Net Sales CAPEX Net Industrial (Debt) / Cash Consolidated Net Income * Financial Targets (US GAAP) 2014-2018 Business Plan * Net Income and EPS before restructuring for the plan period 6.4% 2.1 – 6.5% - 6.9% 2.8 – 7.9% - 8.3% 3.3 – 8.6% - 9.0% ~ 1.2 ~ 1.2 ~ 0.8 (2.2) (2.2)
Slide 19: Industrial
INDUSTRIAL
Slide 20: US GAAP to IFRS reconciliation
US GAAP to IFRS reconciliation Operating Profit (US GAAP) to Trading Profit (IFRS) Industrial Activities US GAAP - Operating Profit 6.9% 8.3% 9.0% Development costs, net Reclassification of Interest compensation (0.4) (0.4) (0.4) Other Adjustments & Reclassifications, net (0.1) (0.1) (0.1) Total Adj
Slide 21: Financial Targets (IFRS)
Consolidated Revenues * Consolidated Trading Profit CAPEX Net Industrial (Debt) / Cash Consolidated Net Income Financial Targets (IFRS) 2014-2018 Business Plan CAGR of 3.4% Note : Net Income before restructuring for the plan period *Including Financial Services business (2.2) 2.6 – 3.2 – 3.5 – ~2.0
Slide 22: Disclaimer
Disclaimer Certain statements and information contained in this presentation that are not statements or information of historical fact constitute forward-looking statements, notwithstanding that such statements are not specifically identified. These statements may include terminology such as “may”,