Cnh Industrial N.v. · NYSE:CNH
Cnh Industrial — Q3 2018 Earnings Presentation
40 slides from Cnh Industrial's earnings presentation, Nov 7, 2018
Slide 1: Q3 & Sep YTD 2018 Results Review
Q3 & Sep YTD 2018 Results Review November 7, 2018 Exhibit 99.2
Slide 2: Safe Harbor Statement and Disclosures
Safe Harbor Statement and Disclosures All statements other than statements of historical fact contained in this presentation including statements regarding our competitive strengths; business strategy; future financial position or operating results; budgets; projections with respect to revenue, inco
Slide 3: Q3 2018 Highlights
Q3 2018 | Highlights Note: All figures are provided herein on a US GAAP $ basis unless otherwise indicated. Additionally: 2017 figures have been recast following the retrospective adoption, on January 1, 2018, of the updated accounting standards for revenue recognition (ASC 606) and retirement benef
Slide 4: Q3 2018 Industry and Company unit performances
Q3 2018 | Industry and Company unit performances Worldwide deliveries up 4% in Tractors and flat in Combines vs. last year Worldwide production up 3% vs. last year with NAFTA row crop overproduction vs. retail at 15% Worldwide inventory (units equivalent) was up 3% in Tractors and up 14% in Combines
Slide 5: Q3 & Sep YTD 2018 Financial Summary
Q3 & Sep YTD 2018 | Financial Summary (1) Non-GAAP measures (definition and reconciliation in appendix) Q3 2018 Q3 2017 Δ Sep YTD 2018 Sep YTD 2017 Δ U.S. GAAP Revenues ($bn) 6.7 6.7 0% 21.5 19.5 10% Net Sales | Industrial Activities ($bn) 6.2 6.2 0% 20.1 18.1 12% Net Income ($mn) 231 60 285% 841 34
Slide 6: Q3 2018 Industrial Activities Net Sales
Q3 2018 | Industrial Activities Net Sales Net Sales split (1) BY REGION BY SEGMENT NAFTA EMEA LATAM APAC AG CE CV PT (1) Note: Net Sales: Excluding Other Activities, Unallocated Items & Adjustment & Eliminations BY CURRENCY EUR 44% USD 28% BRL 7% CAD 3% GBP 2% AUD 4% OTHER 12% Note: Numbers may not
Slide 7: Q3 2018 Industrial Activities Adj. EBITDA & Adj. EBIT walk
Q3 2018 | Industrial Activities Adj. EBITDA & Adj. EBIT walk Non-GAAP measures (definition and reconciliation in appendix) 522 264 258 23 24 25 (6) (3) 321 270 591 Adj. EBITDA D&A Adj EBIT AG CE CV PT ELIM & OTHER (*) Adj EBIT D&A Adj EBITDA Q3 2017 Q3 2018 CHANGE IN ADJUSTED EBIT 63 24.4% 8.4% 4.1%
Slide 8: Q3 2018 Net Industrial Debt and Working Capital trend
Q3 2018 | Net Industrial Debt and Working Capital trend ($bn) Change in Working Capital Cash inflow Cash outflow TRADE RECEIVABLES INVENTORIES TRADE PAYABLES OTHER CHG IN WORKING CAPITAL (941) Capex (1) (1) Excluding assets sold under buy-back commitments and assets under operating leases Net Indust
Slide 9: Financial Services
Financial Services (*) Including unconsolidated JVs Managed Portfolio (*) & Retail Originations (*) $26.0bn Q3 ’18 retail originations at $2.4bn, flat compared to Sep 30, 2017 Managed portfolio at $25.5bn, down $0.5bn compared to September 30, 2017 (up $0.4bn on a constant currency basis) $25.5bn Se
Slide 10: AG Financial Results
AG | Financial Results Adj. EBITDA & Adj. EBIT walk ($mn) NAFTA EMEA LATAM APAC TRACTORS COMBINES OTHERS 2,547 2,636 Change vs. prior year Change vs. prior year 255 82 173 (14) 77 0 0 (12) (28) 196 76 272 Adj. EBITDA D&A Adj. EBIT VOLUME & MIX PRICING NET PROD COST SG&A R&D JV | FX | OTHER Adj. EBIT
Slide 11: CE Financial Results
CE | Financial Results Adj. EBITDA & Adj. EBIT walk Net Sales ($mn) NAFTA EMEA LATAM APAC LIGHT HEAVY OTHERS n.m. 618 726 Change vs. prior year Change vs. prior year 2.9% 0.3% 3.6% 5.6% Higher volume, favorable product mix, and net price realization Raw material cost increase Negative FX impacts 18
Slide 12: CV Financial Results
CV | Financial Results Adj. EBITDA & Adj. EBIT walk ($mn) NAFTA EMEA LATAM APAC n.m. TRUCKS BUSES OTHERS (1) 2,573 2,404 Change vs. prior year Change vs. prior year 6.9% 1.7% 2.8% 9.0% (1) Others are “Specialty vehicles” 177 134 43 9 12 1 3 0 0 68 148 216 Adj. EBITDA D&A Adj. EBIT VOLUME & MIX PRICI
Slide 13: PT Financial Results
PT | Financial Results Adj. EBITDA & Adj. EBIT walk ($mn) NAFTA EMEA LATAM APAC ENGINES TRANSM. AXLES 120 32 88 4 (6) 1 (3) (2) 82 31 113 Adj. EBITDA D&A Adj. EBIT VOLUME & MIX | PRICING NET PROD COST SG&A R&D FX | OTHER Adj. EBIT D&A Adj. EBITDA Q3 2017 Q3 2018 Change vs. prior year Change vs. prio
Slide 14: FY 2018E US GAAP Financial Targets and Market Outlook
FY 2018E US GAAP Financial Targets and Market Outlook
Slide 15: FY 2018E Industry outlook
FY 2018E | Industry outlook NOTE: Total Industry Volume FY 2018E vs. FY 2017 reflecting aggregate for key markets where Company competes Trucks >3.5t AG Tractors Combines 0-140 HP ~5% (5%) - (10%) Flat ~5% 140+ HP ~10% CE Light Heavy ~10% ~5% Flat - 5% Flat NAFTA EMEA LATAM APAC 20% - 25% ~10% 5% -
Slide 16: FY 2018E US GAAP Financial Targets
FY 2018E | US GAAP Financial Targets (1) 2018 guidance does not include any impacts deriving from the gain resulting from the modification of the healthcare plan in the U.S. previously mentioned and anticipated on April 16, 2018 as this gain has been considered non-recurring and therefore treated as
Slide 17: Closing Remarks
Closing Remarks
Slide 18: Q3 2018 Product Highlights
Q3 2018 | Product Highlights New Engine New Engine New Holland Agriculture New Holland Agriculture’s RB125 round baler won a Technology Innovation Award at China’s TOP50+ Agricultural Machinery Products of the Year Awards. This honour recognises the exceptional effectiveness of the RB125’s all-new a
Slide 19: Q3 2018 Sustainability growth drivers
Q3 2018 | Sustainability growth drivers EXPAND THE BIOFUEL OFFERING Reduce the consumption of resources by moving from fossil fuels to a circular economy SPREAD SUSTAINABLE FARMING SOLUTIONS Increase agricultural productivity to improve food availability ADVANCE ENVIRONMENTAL PROTECTION Reduce envir
Slide 20: CEO Closing Remarks
CEO | Closing Remarks CNH Industrial has the unique opportunity to drive change as a disruptor and leader in the coming years in our core business segments Profit Margin Improvement – Simplify the Business (80:20) | Close the gap with Peers Strategic Options – Portfolio Assessment | Deleverage and C
Slide 21: Appendix
Appendix
Slide 22: Industrial Activities Net Sales split
Industrial Activities | Net Sales split Agricultural Equipment Q3 2018 | Split Chg. vs. Q3 ‘17 Construction Equipment Q3 2018 | Split Chg. vs. Q3 ‘17 By region: By region: NAFTA 36% 15% NAFTA 54% 22% EMEA 34% 4% EMEA 18% 2% LATAM 15% (2%) LATAM 11% (3%) APAC 15% (12%) APAC 17% 45% By product: By pro
Slide 23: Reconciliation of Net Income to Adjusted EBITDA by Segment (Q3 2018)
Reconciliation of Net Income (Loss) to Adjusted EBITDA by Segment (US GAAP) (1) For Industrial Activities, net income / (loss) net of “ Results from intersegment investments” Q3 2018 AG CE CV PT Unallocated Items, Elim. & Other Industrial Activities Financial Services Total Net Income (Loss) (1) 139
Slide 24: Reconciliation of Net Income to Adjusted EBITDA by Segment (Q3 2017)
Reconciliation of Net Income (Loss) to Adjusted EBITDA by Segment (US GAAP) (1) For Industrial Activities, net income / (loss) net of “ Results from intersegment investments” ($mn) Q3 2017 AG CE CV PT Unallocated Items, Elim. & Other Industrial Activities Financial Services Total Net Income (Loss) (
Slide 25: Reconciliation of Net Income to Adjusted EBITDA by Segment (Sep YTD 2018)
Reconciliation of Net Income (Loss) to Adjusted EBITDA by Segment (US GAAP) (1) For Industrial Activities, net income / (loss) net of “ Results from intersegment investments” Sep YTD 2018 AG CE CV PT Unallocated Items, Elim. & Other Industrial Activities Financial Services Total Net Income (Loss) (1
Slide 26: Reconciliation of Net Income to Adjusted EBITDA by Segment (Sep YTD 2017)
Reconciliation of Net Income (Loss) to Adjusted EBITDA by Segment (US GAAP) (1) For Industrial Activities, net income / (loss) net of “ Results from intersegment investments” ($mn) Sep YTD 2017 AG CE CV PT Unallocated Items, Elim. & Other Industrial Activities Financial Services Total Net Income (Lo
Slide 27: Reconciliation of Net Income to Adjusted EBITDA by Segment (Q4 2017)
Reconciliation of Net Income (Loss) to Adjusted EBITDA by Segment (US GAAP) (1) For Industrial Activities, net income / (loss) net of “ Results from intersegment investments” ($mn) Q4 2017 AG CE CV PT Unallocated Items, Elim. & Other Industrial Activities Financial Services Total Net Income (Loss) (
Slide 28: Reconciliation of Adj. net income and Adj. diluted EPS
Q3 & Sep YTD 2018 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 2018 Sep YTD 2017 Q3 2018 Q3 2017 841 342 Net income (loss) 231 60 (34) 133 Adjustments impacting In
Slide 29: Adjustments impacting income and income tax
Q3 & Sep YTD 2018 Sep YTD 2018 Sep YTD 2017 Q3 2018 Q3 2017 (a) Adjustments impacting Income (loss) before income tax (expense) and equity in income of unconsolidated subsidiaries and affiliates 16 77 Restructuring expenses 8 53 - 56 Cost of repurchase/early redemption of Notes - 39 (50) - Pre-Tax g
Slide 30: Capex
Capex (1) (1) Excluding assets sold under buy-back commitments and assets under operating leases Q3 2018 Q3 2017 Investments in property, plant and equipment, and intangible assets (1) (130) (112) Breakdown by Category NEW PRODUCT & TECHNOLOGY 52% 25% MAINTENANCE & OTHER 43% 72% INDUSTRIAL CAPACITY
Slide 31: Reconciliation to Operating Cash Flow
Reconciliation to Operating Cash Flow (US GAAP) (*) Not included in Net Industrial Debt definition Q3 2018 Q3 2017 Sep YTD 2018 Sep YTD 2017 Net Cash provided by (used in) Operating Activities (445) 70 (52) 592 Change in Derivatives hedging debt (*) (4) (1) (7) (8) Expenditures on Buyback and Op Lea
Slide 32: Liquidity & Debt Maturity
Liquidity & Debt Maturity 1 Represents cash portion of debt maturities as of 09/30/2018 2 Of which $0.7bn Restricted Cash Undrawn M/T unsecured Committed Lines Bank Debt Capital Market Cash Other Available Liquidity ($bn) Debt Maturity Schedule (1) ($bn) (*) Gross Debt represents third party debt on
Slide 33: Reconciliation of Total Debt to Net Debt
Reconciliation of Total Debt to Net Debt (US GAAP) Sep 30, 2018 Dec 31, 2017 Sep 30, 2018 Dec 31, 2017 Sep 30, 2018 Dec 31, 2017 Third party debt (23,999) (25,895) (5,651) (6,461) (18,348) (19,434) Intersegment notes payable - - (976) (982) (1,101) (1,641) Total (Debt) (1) (23,999) (25,895) (6,627)
Slide 34: From Total Debt to Net Industrial Debt
From Total Debt to Net Industrial Debt Sep 30, 2018 Dec 31, 2017 Total (Debt) (1) (23,999) (25,895) Financial Services Third Party Debt 18,348 19,434 Intersegment Note Payables (976) (982) Intersegment Note Receivables 1,101 1,641 Cash and cash equivalents 3,549 4,901 Restricted cash - - Derivatives
Slide 35: Debt Maturity Schedule | Breakdown
Debt Maturity Schedule | Breakdown Outstanding Sep 30, 2018 3M 2018 2019 2020 2021 2022 Beyond (3.7) Bank Debt (0.8) (1.0) (1.2) (0.4) (0.2) (0.2) (9.0) Capital Market (0.3) (1.4) (0.7) (1.7) (1.2) (3.7) (0.2) Other Debt (0.1) (0.0) (0.0) (0.0) (0.0) (0.0) (12.9) Cash Portion of (Debt) Maturities (1
Slide 36: Total Equity – US GAAP to EU-IFRS Reconciliation
Total Equity – US GAAP to EU-IFRS | Reconciliation Note: 2017 figures have been recast following the retrospective adoption, on January 1, 2018, of the updated accounting standards for revenue recognition (ASC 606) and retirement benefits accounting (ASU 2017-07). Sep 30, 2018 Dec 31, 2017 Total Equ
Slide 37: CV Industry performance Europe Trucks
CV | Industry performance | Europe Trucks (*) 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 2015 2016 2017 2018 MK
Slide 38: Geographic Information
Geographic Information Certain financial and market information in this presentation has been presented by geographic area. CNH Industrial defines its geographic areas as NAFTA: United States, Canada and Mexico; EMEA: member countries of the European Union, European Free Trade Association, Ukraine,
Slide 39: 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 results and allow management and investors to a
Slide 40: 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