Cnh Industrial N.v. · NYSE:CNH
Cnh Industrial — Q1 2020 Earnings Presentation
40 slides from Cnh Industrial's earnings presentation, May 6, 2020
Slide 1: Q1 2020 Results Review
Q1 2020 Results Review May 6th, 2020 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 future responses to and effects of the COVID-19 pandemic; competitive strengths; business strategy; future financial position or operating r
Slide 3: Introductory Remarks | Short-Term Priorities and Long-Term Strategy
Introductory Remarks | Short-Term Priorities and Long-Term Strategy Note: All figures are provided herein on a US GAAP $ basis unless otherwise indicated. Confirming Transform2Win strategy and priorities Extending spin-off timeline due to market conditions ENSURING SUSTAINABLE OPERATIONAL AND FINANC
Slide 4: Highlights
Q1 2020 | Highlights Note: All figures are provided herein on a US GAAP $ basis unless otherwise indicated. Non-GAAP measures (definition and reconciliation in appendix) Note: @CC means at constant currency Net sales at $5bn, down 17% vs. Q1 2019, due to COVID-19 impact on market conditions across a
Slide 5: Industry Unit Performances
Q1 2020 | Industry Unit Performances TRACTORS COMBINES NA EU SA RoW WW Feb YTD Mar month 0-140 HP (9%) (10%) (6%) (17%) (15%) Flat (36%) 140+ HP (7%) (22%) (20%) (30%) (2%) (11%) (12%) (10%) COMPACT AND SERVICE Eq. NA EU SA RoW WW Feb YTD Mar month (14%) (16%) (1%) (31%) (22%) (6%) (44%) General Con
Slide 6: Company Unit Statistics
Q1 2020 | Company Unit Statistics Worldwide Tractors and Combines production down 40% and 26% respectively in March month vs. last year NA row crop production down 16% in Q1 ‘20 Worldwide channel inventory for Tractors up 3% and for Combines down 3% vs Q1 2019 NA row crop channel inventory down 11%
Slide 7: Financial Summary
Q1 2020 | Financial Summary (1) Non-GAAP measures (definition and reconciliation in appendix) Note: Numbers may not add due to rounding Note: @CC means at constant currency Q1 2020 Q1 2019 Δ U.S. GAAP Revenues ($bn) 5,461 6,457 (15.4%) Net Sales | Industrial Activities ($bn) 4,993 6,006 (16.9%) Net
Slide 8: Industrial Activities Net Sales
Q1 2020 | Industrial Activities Net Sales (1) Note: Net Sales: Excluding Other Activities, Unallocated Items and Adjustment & Eliminations (*) Note: @CC means at constant currency NA EU SA RoW TRACTORS COMBINES OTHERS NA EU SA RoW NA EU SA RoW N.M. NA EU SA RoW C&S (*) Gen. CE (*) R&S (*) TRUCKS BUS
Slide 9: Adj. EBIT walk and IA Adj. EBIT walk by Segment & driver
Q1 2020 | Adj. EBIT walk and IA Adj. EBIT walk by Segment & driver Non-GAAP measures (definition and reconciliation in appendix) (*) PT Pricing net within Volume & Mix 409 (273) (18) (82) 13 24 (76) (14) (21) (38) Adj. EBIT VOL & MIX PRICING NET (*) PROD COST SG&A R&D FX | OTHER UNALLOCATED, ELIM &
Slide 10: Financial Services
Financial Services (*) Including unconsolidated JVs Managed Portfolio (*) & Retail Originations (*) Q1 ’20 retail originations at $2.1bn, down $0.1bn compared to Q1 ‘19 Managed portfolio* at $24.7bn, down $1.4bn compared to March 31, 2019 (down $0.1bn on a constant currency basis) $26.1bn $24.7bn Ma
Slide 11: Net Industrial Debt and Free Cash Flow
Q1 2020 | Net Industrial Debt and Free Cash Flow Non-GAAP measures (reconciliation in appendix) ($bn) (*) Industrial Gross Debt represents third party debt only. Net Industrial Debt includes net intersegment debt, and is offset by cash and cash equivalents, restricted cash and derivative hedging deb
Slide 12: Available Liquidity and Debt Maturity Schedule
Q1 2020 | Available Liquidity and Debt Maturity Schedule 1 Represents cash portion of debt maturities as of March 31st, 2020 2 Of which $0.9bn Restricted Cash Undrawn M/T unsecured Committed Lines Cash Bank Debt Capital Market Other Debt Maturity Schedule (1) ($9.4bn) €4bn committed revolving credit
Slide 13: Debt Maturity Schedule
Q1 2020 | Debt Maturity Schedule Industrial Activities Financial Services Bank Debt Capital Market Other (0.2) (0.4) (0.5) (1.0) - (3.2) 9M 2020 2021 2022 2023 2024 Beyond (3.7) (1.8) (0.9) (0.2) (0.7) (0.1) 9M 2020 2021 2022 2023 2024 Beyond Short-term maturities concentrated in FS business matched
Slide 14: Final Remarks
Final Remarks
Slide 15: COVID-19 | Emergency Plan – Executive Summary
COVID-19 | Emergency Plan – Executive Summary Extended Health & Safety protocols Plan to start in-house production of PPE Leveraging smart and new ways of working Parts network operating notwithstanding Covid-19 emergency, plants reopening started across jurisdictions Various actions to preserve cas
Slide 16: Organic Investment in Future Growth
Q1 2020 | Organic Investment in Future Growth (1) Excluding assets sold under buy-back commitments and assets under operating leases Capex at $63mn down 18% vs. Q1 2019 Capex at 1.3% of net sales in Q1 2020 CAPEX (1) ($mn) R&D at $214mn down 12% vs. Q1 2019 R&D at 4.3% of net sales in Q1 2020 R&D (1
Slide 17: Organic Growth – New Product launches and Awards
Q1 2020 | Organic Growth – New Product launches and Awards CASE IH New line of articulated 4WD tractors. Proven power with a redesigned cab. Includes advanced technology for easier operation and ultimate connectivity. Available in EU in Autumn 2020 New Engine New Engine NEW HOLLAND The new WORKMASTE
Slide 18: Inorganic Growth
Q1 2020 | Inorganic Growth IVECO and FPT together with Nikola Motor Company announce future Nikola TRE production in Ulm, Germany The Nikola TRE will be manufactured, through the European Joint Venture, in Ulm, Germany, at the IVECO manufacturing facility In the first stage of the project, €40mn wil
Slide 19: Final Remarks – Key Takeaways
Final Remarks – Key Takeaways Committed to emerge from this crisis as a stronger and more efficient company $9.9bn available liquidity providing solid cash base and headroom, remaining dedicated to maintain it strong throughout the year Continued positive long term prospects of Agricultural end-mark
Slide 20: Appendix
Appendix
Slide 21: Financials by Segment
Q1 2020 | Financials by Segment (1) Non-GAAP measures (definition and reconciliation in appendix) Q1 2020 $ Chg. % Chg. Margin Bps Chg. Adj. EBIT Agriculture 24 (144) (85.7%) 1.1% (560) Construction (83) (96) (738.5%) (19.7%) (2,170) Commercial & Specialty Vehicles (56) (107) (209.8%) (2.8%) (490) P
Slide 22: Industrial Activities | Q1 2020 Net Sales Split
Industrial Activities | Q1 2020 Net Sales Split Note: Numbers may not add due to rounding (*) C&S: Compact and Service; General CE: General Construction; R&S : Road building and site preparation Agriculture Q1 2020 | Split Chg. vs. Q1 ’19 Construction Q1 2020 | Split Chg. vs. Q1 ’19 By region: By re
Slide 23: AG | Financial Results
AG | Financial Results Note: at CC means at constant currency Adj. EBITDA & Adj. EBIT walk ($mn) NA EU SA RoW Q1 ’20 Change vs. prior year 243 75 168 (91) 21 (49) 13 15 (53) 24 64 88 Adj. EBITDA D&A Adj. EBIT VOLUME & MIX PRICING NET PROD COST SG&A R&D JV | FX | OTHER Adj. EBIT D&A Adj. EBITDA Q1 20
Slide 24: CE | Financial Results
CE | Financial Results (*) C&S: Compact and Service Equipment; General CE: General Construction; R&S : Road building and site preparation Note: at CC means at constant currency Adj. EBITDA & Adj. EBIT walk ($mn) NA EU SA RoW Q1 ’20 Change vs. prior year 27 14 13 (28) (45) (22) (0) 1 (2) (83) 13 (70)
Slide 25: C&SV | Financial Results
C&SV | Financial Results Note: at CC means at constant currency ($mn) Adj. EBITDA & Adj. EBIT walk ($mn) NA EU SA RoW N.M. Q1 ’20 Change vs. prior year 177 126 51 (88) 6 (17) (1) 6 (13) (56) 114 58 Adj. EBITDA D&A Adj. EBIT VOLUME & MIX PRICING NET PROD COST SG&A R&D JV | FX | OTHER Adj. EBIT D&A Ad
Slide 26: PT | Financial Results
PT | Financial Results Note: at CC means at constant currency (*) (*) 3rd Party sales at 44% in 2020 vs. 47% in FY 2019 Adj. EBITDA & Adj. EBIT walk ($mn) NA EU SA RoW Q1 ’20 Change vs. prior year 128 32 96 (66) 6 1 2 (8) 31 29 60 Adj. EBITDA D&A Adj. EBIT VOLUME & MIX | PRICING NET PROD COST SG&A R
Slide 27: Reconciliation of Net Income (Loss) to Adj. EBIT and EBITDA by Segment (US GAAP)
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 March 31, 2020, this item includes the pre-tax gain of $30 million as a result of the amortization over app
Slide 28: Reconciliation of Net Income (Loss) to Adj. EBIT and EBITDA by Segment (US GAAP)
Reconciliation of Net Income (Loss) to Adj. EBIT and EBITDA by Segment (US GAAP) ($mn) Q1 2019 AG CE C&SV PT Unallocated Items, Elim. & Other Industrial Activities Financial Services Total Net Income (Loss) (1) Add back: 169 95 264 53 53 Interest expenses of Industrial Activities, net of interest in
Slide 29: Reconciliation of Adj. net income and Adj. income tax (expense) to Net Income (loss)
Q1 2020 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 ($mn) Q1 2020 Q1 2019 Net income (loss) (54) 264 Adjustments impacting Income (loss) before income tax (expense) and e
Slide 30: Reconciliation of Adj. net income and Adj. income tax (expense) to Net Income (loss)
Q1 2020 ($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 Q1 2020 Q1 2019 (a) Adjustments impacting Income (loss) before income tax (expense) and equity in income of unco
Slide 31: Capex
Capex (1) (1) Excluding assets sold under buy-back commitments and assets under operating leases Q1 2020 Q1 2019 Investments in property, plant and equipment, and intangible assets (1) 63 77 Breakdown by Category NEW PRODUCT & TECHNOLOGY 56% 42% MAINTENANCE & OTHER 43% 54% INDUSTRIAL CAPACITY EXPANS
Slide 32: Capex
Capex (1) (1) Excluding assets sold under buy-back commitments and assets under operating leases Q1 2020 Q1 2019 Investments in property, plant and equipment, and intangible assets (1) 63 77 Breakdown by Category NEW PRODUCT & TECHNOLOGY 56% 42% MAINTENANCE & OTHER 43% 54% INDUSTRIAL CAPACITY EXPANS
Slide 33: Reconciliation of Total Debt to Net Debt (US GAAP)
Reconciliation of Total Debt to Net Debt (US GAAP) Mar 31, 2020 Dec 31, 2019 Mar 31, 2020 Dec 31, 2019 Mar 31, 2020 Dec 31, 2019 Third party debt (23,518) (24,854) (5,326) (5,226) (18,192) (19,628) Intersegment notes payable - - 1,491 1,332 (901) (1,120) Total (Debt) (1) (23,518) (24,854) (6,817) (6
Slide 34: From Total Debt to Net Industrial Debt
From Total Debt to Net Industrial Debt Mar 31, 2020 Dec 31, 2019 Total (Debt) (1) (23,518) (24,854) Financial Services Third Party Debt 18,192 19,628 Intersegment Note Payables (1,491) (1,332) Intersegment Note Receivables 901 1,120 Cash and cash equivalents 3,429 4,407 Restricted cash 122 120 Other
Slide 35: Reconciliation of Net cash from Operating Activities to Free cash flow
Reconciliation of Net cash provided by (used in) Operating Activities to Free cash flow of Industrial Activities under U.S. GAAP ($mn) Q1 2020 Q1 2019 Net cash provided by (used in) Operating Activities (532) (751) Net cash (provided by) used in Operating Activities of Financial Services (881) (70)
Slide 36: Debt Maturity Schedule | Breakdown
Debt Maturity Schedule | Breakdown Note: Numbers may not add due to rounding Outstanding Mar 31, 2020 9M 2020 2021 2022 2023 2024 Beyond (4.2) Bank Debt (2.7) (0.8) (0.3) (0.2) (0.1) (0.1) (8.4) Capital Market (1.1) (1.5) (1.0) (1.0) (0.6) (3.2) (0.1) Other Debt (0.1) (0.0) (0.0) (0.0) (0.0) (0.0) (
Slide 37: 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) Q1 2017 2018 2019 2020 MKT SHAR
Slide 38: Geographic Information
Geographic Information The composition of our regions part of the geographic information is as follow: North America: United States, Canada and Mexico; Europe: member countries of the European Union, European Free Trade Association, Ukraine, and Balkans; South America: Central and South America, and
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 operating results and enhance the readers’ abil
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 Giovanni Somajni – Investor Relations Eur