Cnh Industrial N.v. · NYSE:CNH
Cnh Industrial — Q2 2020 Earnings Presentation
48 slides from Cnh Industrial's earnings presentation, Jul 31, 2020
Slide 1: Q2 & H1 2020 Results Review
Q2 & H1 2020 Results Review July 30th, 2020
Slide 2: Safe Harbor Statement and Disclosures
Safe Harbor Statement and Disclosures 2 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
Slide 3: Q2 2020 Highlights
Q2 2020 | Highlights 3 Industrial Activities Net Sales ▪ Net sales at $5.2bn, down 27% vs. Q2 2019, due to COVID-19 impact on supply chain and end-markets across all regions and segments (23.8%) at CC ▪ Resilient profit in AG and PT only partially offsets losses in C&SV and CE segments Industrial Ac
Slide 4: Q2 vs. Q2 Industry Unit Performances
Q2 20 vs. Q2 19 | Industry Unit Performances Worldwide Industry (Monthly Performances) 4 TRACTORS NA EU SA RoW WW April May June 0-140 HP 20% (25%) (10%) (3%) (1%) (30%) 9% 19% 140+ HP (22%) COMBINES 3% (23%) 29% 21% 12% 19% 20% (10%) COMPACT AND SERVICE EQ. NA EU SA RoW WW April May June (16%) (31%
Slide 5: Q2 2020 Worldwide Company Unit Statistics (Retail, Wholesale, Production)
Q2 2020 | Worldwide Company Unit Statistics (Retail | Wholesale | Production) 5 TRACTORS COMBINES 6% (3)% (42)% ▪ WW Tractors and Combines underproduction vs. retail at 44% and 40% respectively in Q2 2020 (1)% (15)% (49)% ▪ NA row crop underproduction vs. retail at 10% in Q2 2020 Q2 2019 Q2 2020 Q2
Slide 6: Q2 2020 Worldwide Company Unit Statistics (Inventory)
Q2 2020 | Worldwide Company Unit Statistics (Inventory) 6 TRACTORS Channel Inventory (27)% COMBINES Channel Inventory (29)% ▪ WW Tractors Company and dealer inventories down 41% and 16% respectively vs. last year ▪ WW Combines Company and dealer inventories down 48% and 16% respectively vs. last yea
Slide 7: Q2 2020 Financial Summary
Q2 2020 | Financial Summary 7 Q2 2020 Q2 2019 Δ U.S. GAAP Revenues ($mn) 5,578 7,567 (26.3%) Net Sales | Industrial Activities ($mn) 5,150 7,068 (27.1%) Net Income ($mn) 361 427 (15.5%) Diluted EPS ($) 0.26 0.31 (0.05) Non – GAAP (1) Net Sales | Industrial Activities @CC ($mn) 5,386 7,068 (23.8%) Ad
Slide 8: Q2 2020 Industrial Activities Net Sales
Q2 2020 | Industrial Activities Net Sales 8 19% 21% NA (North America) ($mn) EU (Europe) 10% BY REGION SA (South America) RoW (Rest of World) CHANGE IN NET SALES @ CC 50% (1,682) (23.8%) EUR 43% GBP 1% 7,068 (435) (309) (884) (347) 293 5,386 (236) 5,150 USD 28% AUD 3% BY CURRENCY BRL 7% OTHER 15% FX
Slide 9: Adj. EBIT walk and IA Adj. EBIT walk by Segment & driver
Q2 2020 | Adj. EBIT walk and IA Adj. EBIT walk by Segment & driver 9 INDUSTRIAL ACTIVITIES CHANGE IN ADJUSTED EBIT ($mn) (585) 8.6% 0.3% 651 (600) (28) (44) 91 64 (59) (9) (51) 15 Q2 UNALLOCATED, Adj. EBIT VOL & MIX PRICING NET (*) PROD COST SG&A R&D FX | OTHER ELIM & OTHER FS Adj. EBIT 2019 2020 IA
Slide 10: Financial Services
Financial Services 10 ($mn) Net Income Managed Portfolio (*) & Retail Originations (*) 91 53 7% 7% ▪ Q2 ’20 retail originations at $2.4bn, down $0.1bn compared to June 30, 2019 40% $26.9bn 53% 37% $24.6bn 56% 2019 2020 ▪ Managed portfolio* at $24.6bn, down $2.4bn compared to June 30, 2019 (down ▪ Ne
Slide 11: Net Industrial Debt and Free Cash Flow
Q2 2020 | Net Industrial Debt and Free Cash Flow 11 ($mn) FREE CASH FLOW OF INDUSTRIAL ACTIVITIES 97 (2,310) 160 (38) 369 (166) (69) (159) (2) (92) (2,307) CHANGE IN CASH INTEREST CHANGE IN WORKING DIVIDENDS & EQUITY Mar 31, 2020 IA | ADJ EBITDA AND TAXES CAPITAL PROVISIONS & PP&E CAPEX (2) OTHER CH
Slide 12: Available Liquidity and Debt Maturity Schedule
Q2 2020 | Available Liquidity and Debt Maturity Schedule 12 AVAILABLE LIQUIDITY ($bn) DEBT MATURITY SCHEDULE (1) ($10.0BN) 6.9 7.7 7.8 8.8 8.3 8.4 9.9 11.5 2.3 3.8 1.9 1.3 0.7 3.4 Jun-end ‘13 Jun-end ‘14 Jun-end ‘15 Jun-end ‘16 Jun-end ‘17 Jun-end ‘18 Jun-end ‘19 Jun-end ‘20 6M 2020 2021 2022 2023 2
Slide 13: Final Remarks
Final Remarks Corporate Presentation 2017
Slide 14: COVID-19 Emergency Plan - Quarterly update
COVID-19 | Emergency Plan – Quarterly update 14 Employee Health & Safety Business Continuity ▪ H&S Protocol fully implemented across all ▪ All plants and depos fully operational in Manufacturing and Non-Manufacturing sites line with demand patterns and recovering the post-COVID backlogs while return
Slide 15: Organic Growth - AG - Digitalization & Precision Farming
Q2 2020 | Organic Growth – AG - Digitalization & Precision Farming 15 FIELD FLEET ““Reimagined in-cab Customer Experience” “Harness Data for improved uptime and superior product design” Recent releases Coming releases Recent releases Coming releases ▪ Next Gen CCH + 4WD ▪ CCM, Sprayer and FS Combine
Slide 16: Inorganic Growth - Iveco & Nikola
Q2 2020 | Inorganic Growth – Iveco & Nikola 16 Investment and Accounting Treatment ▪ IVECO holds 25,661,448 shares of Nikola Corporation, corresponding to approximately 7.11% of Nikola outstanding share capital ▪ The investment will be valued at Fair Value Through Profit or Loss (“FVTPL”), with any
Slide 17: FY 2020E Preliminary Industry Outlook
Final Remarks – FY 2020E | Preliminary Industry Outlook (*) 17 TRACTORS NA EU SA RoW WW 0-140 HP 5% (10%) - (15%) (10%) Flat - (5%) Flat - (5%) 140+ HP (10%) COMBINES (10%) (15%) (10%) 5% Flat - (5%) COMPACT AND SERVICE EQ. NA EU SA RoW WW (15%) – (20%) (20%) – (25%) (15%) – (20%) (5%) – (10%) (15%)
Slide 18: Looking at FY 2020E
Final Remarks – Looking at FY 2020E 18 Net sales of Industrial Activities (1) expected to be down between 15% and 20% including currency-translation effects, due to COVID-19 impact on market conditions across all regions and segments Free cash flow of Industrial Activities to remain negative for the
Slide 19: Appendix
Appendix INDUSTRIAL
Slide 20: Industrial Activities Q2 2020 Net Sales Split
Industrial Activities | Q2 2020 Net Sales Split 20 Chg. Chg. Agriculture Q2 2020 | Split Construction Q2 2020 | Split vs. Q2 ’19 vs. Q2 ’19 By region: By region: NA 35% (19%) NA 38% (59%) EU 37% (22%) EU 21% (33%) SA 12% (17%) SA 17% (20%) RoW 16% (4%) RoW 24% (32%) By product: By product: TRACTORS
Slide 21: Q2 2020 Financials by Segment
Q2 2020 | Financials by Segment 21 Q2 2020 Q2 2019 % Chg % Chg. @cc Q2 2020 $ Chg. Margin Bps Chg. REVENUES Gross Profit Agriculture 474 (225) 18.7% (390) Agriculture 2,541 3,095 (17.9%) (14.1%) Construction (34) (134) (8.1)% (2,130) Construction 420 757 (44.5%) (40.8%) Commercial & Specialty Vehicl
Slide 22: AG Financial Results
AG | Financial Results 22 ($mn) Net Sales Q2 ’20 Change vs. prior year Q2 ’20 Change vs. prior year Δ 2020 2019 Δ At CC NA EU SA RoW TRACTORS COMBINES OTHERS Q2 2,541 3,095 (17.9)% (14.1)% Adj. EBITDA & Adj. EBIT walk Lower volume and mix and negative fixed cost absorption, only partially mitigate
Slide 23: CE Financial Results
CE | Financial Results 23 ($mn) Net Sales Q2 ’20 Change vs. prior year Q2 ’20 Change vs. prior year Δ 2020 2019 Δ At CC NA EU SA RoW C&S (*) General CE (*) R&S (*) Q2 420 757 (44.5)% (40.8)% Adj. EBITDA & Adj. EBIT walk Lower volumes and negative fixed cost absorption due to lower production level
Slide 24: C&SV Financial Results
C&SV | Financial Results 24 ($mn) Net Sales Q2 ’20 Change vs. prior year Q2 ’20 Change vs. prior year Δ 2020 2019 Δ At CC NA EU SA RoW TRUCKS BUSES SPECIALTY VEHICLES Q2 1,739 2,698 (35.5)% (32.8)% N.M. Adj. EBITDA & Adj. EBIT walk Lower volumes and the negative impact on product cost from plant s
Slide 25: PT Financial Results
PT | Financial Results 25 ($mn) Net Sales Q2 ’20 Change vs. prior year Q2 ’20 Change vs. prior year Δ 2020 2019 Δ At CC NA EU SA RoW ENGINES TRANSM. AXLES Q2 763 1,133 (32.7)% (30.6)% (*) (*) 3rd Party sales at 63% in Q220 vs. 48% in Q219 Adj. EBITDA & Adj. EBIT walk Lower volume, partially offset
Slide 26: H1 2020 Financial Summary
H1 2020 | Financial Summary 26 H1 2020 H1 2019 Δ U.S. GAAP Revenues ($mn) 11,039 14,024 (21.3%) Net Sales | Industrial Activities ($mn) 10,143 13,074 (22.4%) Net Income ($mn) 307 691 (55.6%) Diluted EPS ($) Non – GAAP (1) Net Sales | Industrial Activities @CC ($mn) 10,548 13,074 (19.3%) Adjusted EBI
Slide 27: Industrial Activities H1 2020 Net Sales Split
Industrial Activities | H1 2020 Net Sales Split 27 Chg. Chg. Agriculture H1 2020 | Split Construction H1 2020 | Split vs. H1 ’19 vs. H1 ’19 By region: By region: NA 36% (12%) NA 39% (52%) EU 36% (19%) EU 22% (32%) SA 13% (16%) SA 16% (14%) RoW 15% (4%) RoW 23% (30%) By product: By product: TRACTORS
Slide 28: H1 2020 Financials by Segment
H1 2020 | Financials by Segment 28 H1 2020 H1 2019 % Chg % Chg. @cc H1 2020 $ Chg. Margin Bps Chg. REVENUES Gross Profit Agriculture 4,785 5,585 (14.3%) (11.0%) Agriculture 817 (410) 17.1% (490) Construction 842 1,397 (39.7%) (36.7%) Construction (43) (233) (5.1)% (1,870) Commercial & Specialty Vehi
Slide 29: H1 2020 Industrial Activities Net Sales
H1 2020 | Industrial Activities Net Sales 29 ($mn) Net Sales walk Segment Net Sales by Region (Y-o-Y change as reported) CHANGE IN NET SALES AT CONSTANT CURRENCY AG CE CV PT (2,526) (19.3%) NA N.M. EU SA RoW 13,074 (614) (512) (1,199) (603) 402 10,548 (405) 10,143 > (15%) vs. H1 19 < (15%) vs. H1 19
Slide 30: H1 2020 Adj. EBIT walk by Segment & driver
H1 2020 | Adj. EBIT walk and IA Adj. EBIT walk by Segment & driver 30 INDUSTRIAL ACTIVITIES CHANGE IN ADJUSTED EBIT ($mn) (1,011) 7.6% (0.2)% 1,060 (873) (46) (126) 104 88 (135) (23) (72) (23) H1 UNALLOCATED, Adj. EBIT VOL & MIX PRICING NET (*) PROD COST SG&A R&D FX | OTHER ELIM & OTHER FS Adj. EBIT
Slide 31: Reconciliation of Net Income to Adj. EBIT and EBITDA by Segment (Q2 2020)
Reconciliation of Net Income (Loss) to Adj. EBIT and EBITDA by Segment (US GAAP) 31 Q2 2020 ($mn) Unallocated Industrial Financial AG CE CV PT Items, Elim. & Total Activities Services Other Net Income (Loss) (1) 308 53 361 Add back: Interest expenses of Industrial Activities, net of interest income
Slide 32: Reconciliation of Net Income to Adj. EBIT and EBITDA by Segment (Q2 2019)
Reconciliation of Net Income (Loss) to Adj. EBIT and EBITDA by Segment (US GAAP) 32 Q2 2019 ($mn) Unallocated Items, Industrial Financial AG CE CV PT Total Elim. & Other Activities Services Net Income (Loss) (1) 336 91 427 Add back: Interest expenses of Industrial Activities, net of interest income
Slide 33: Reconciliation of Net Income to Adj. EBIT and EBITDA by Segment (H1 2020)
Reconciliation of Net Income (Loss) to Adj. EBIT and EBITDA by Segment (US GAAP) 33 H1 2020 Unallocated ($mn) Industrial Financial AG CE CV PT Items, Elim. & Total Activities Services Other Net Income (Loss) (1) 174 133 307 Add back: Interest expenses of Industrial Activities, net of interest income
Slide 34: Reconciliation of Net Income to Adj. EBIT and EBITDA by Segment (H1 2019)
Reconciliation of Net Income (Loss) to Adj. EBIT and EBITDA by Segment (US GAAP) 34 H1 2019 ($mn) Unallocated Items, Industrial Financial AG CE CV PT Total Elim. & Other Activities Services Net Income (Loss) (1) 505 186 691 Add back: Interest expenses of Industrial Activities, net of interest income
Slide 35: Reconciliation of Adj. net income and Adj. income tax
Q2 & H1 2020 35 Reconciliation of Adj. net income and Adj. income tax (expense) to Net Income (loss) and Income tax (expense) and ($mn) calculation of Adj. diluted EPS and Adj. ETR under U.S.GAAP H1 2020 H1 2019 Q2 2020 Q2 2019 307 691 Net income (loss) 361 427 Adjustments impacting Income (loss) be
Slide 36: Reconciliation of Adj. net income and Adj. income tax (adjustments)
Q2 & H1 2020 36 Reconciliation of Adj. net income and Adj. income tax (expense) to Net Income (loss) and Income tax (expense) and ($mn) calculation of Adj. diluted EPS and Adj. ETR under U.S.GAAP H1 2020 H1 2019 Q2 2020 Q2 2019 (a) Adjustments impacting Income (loss) before income tax (expense) and
Slide 37: Capex
Capex (1) 37 Q2 Q2 H1 H1 ($mn) 2020 2019 2020 2019 Investments in property, plant and equipment, and intangible assets (1) Breakdown by Category NEW PRODUCT & TECHNOLOGY 52% 48% 54% 45% MAINTENANCE & OTHER 46% 48% 44% 51% INDUSTRIAL CAPACITY EXPANSION & LT INVESTMENTS 2% 4% 2% 4% Breakdown by Segmen
Slide 38: Organic Investment in Future Growth
Q2 & H1 2020 | Organic Investment in Future Growth 38 ($mn) Total spending (Capex + R&D) in new CAPEX (1) R&D (1) products was $140mn, down 15% vs. Q2 ‘19 20% 16% $140mn 103 69 273 203 Q2 Q2 64% 2019 2020 2019 2020 180 132 517 417 H1 H1 2019 2020 2019 2020 Digitalization; Electrification; Autonomous
Slide 39: Reconciliation of Total Debt to Net Debt
Reconciliation of Total Debt to Net Debt (US GAAP) 39 Consolidated Industrial Activities Financial Services ($mn) Jun 30, Dec 31, Jun 30, Dec 31, Jun 30, Dec 31, 2020 2019 2020 2019 2020 2019 Third party debt (24,449) (24,854) (6,990) (5,226) (17,459) (19,628) Intersegment notes payable - - (968) (1
Slide 40: From Total Debt to Net Industrial Debt
From Total Debt to Net Industrial Debt 40 Jun 30, Dec 31, ($mn) Q2 2020 Q2 2019 2020 2019 Net (debt)/cash of Industrial Activities at Total (Debt) (1) (24,449) (24,854) (2,310) (1,475) beginning of period Financial Services Third Party Debt 17,459 19,628 Adjusted EBITDA of Industrial Activities 160
Slide 41: Reconciliation of Operating Activities cash to Free cash flow
Reconciliation of Net cash provided by (used in) Operating Activities to Free 41 cash flow of Industrial Activities under U.S. GAAP ($mn) Q2 2020 Q2 2019 H1 2020 H1 2019 Net cash provided by (used in) Operating Activities 1,067 246 535 (503) Net cash (provided by) used in Operating Activities of Fin
Slide 42: Debt Maturity Schedule Breakdown
Debt Maturity Schedule | Breakdown 42 ($mn) Outstanding Jun 30, 2020 6M 2020 2021 2022 2023 2024 Beyond 3.8 Bank Debt 1.1 1.5 0.8 0.2 0.2 0.1 9.4 Capital Market 1.2 2.3 1.1 1.0 0.5 3.2 0.1 Other Debt 0.1 0.0 0.0 0.0 0.0 0.0 13.4 Cash Portion of (Debt) Maturities 2.3 3.8 1.9 1.3 0.7 3.4 5.9 Cash & Ca
Slide 43: Q2 2020 Debt Maturity Schedule
Q2 2020 | Debt Maturity Schedule 43 Industrial Activities Financial Services (0.2) (1.6) (0.9) (1.0) - (3.3) (2.1) (2.2) (1.0) (0.3) (0.7) (0.1) 6M 2020 2021 2022 2023 2024 Beyond 6M 2020 2021 2022 2023 2024 Beyond Capital Market Bank Debt Other Q2 & H1 2020 Results Review July 30th, 2020
Slide 44: Europe Trucks Company performance (Q2)
Europe Trucks | Company performance 44 Q2 2017 2018 2019 2020 MKT SHARE(1) Light (3.5-7.49t) 14.5% 14.2% 12.8% 10.0% M&H (≥7.5t) 9.4% 8.5% 6.3% 8.3% Europe (*) 12.6% 12.2% 10.3% 9.6% B-TO-B Light (3.5-7.49t) 0.92 0.79 0.89 1.14 M&H (≥7.5t) 0.94 0.80 0.94 1.17 Europe 0.93 0.79 0.90 1.15 Δ 17/18 Δ 18/
Slide 45: Europe Trucks Company performance (H1)
Europe Trucks | Company performance 45 H1 2017 2018 2019 2020 MKT SHARE(1) Light (3.5-7.49t) 14.4% 14.0% 12.9% 11.0% M&H (≥7.5t) 9.3% 8.3% 6.2% 8.4% Europe (*) 12.4% 11.9% 10.4% 10.2% B-TO-B Light (3.5-7.49t) 1.06 1.03 1.05 1.33 M&H (≥7.5t) 1.01 0.91 1.01 1.21 Europe 1.05 1.00 1.04 1.29 Δ 17/18 Δ 18
Slide 46: Geographic Information
Geographic Information 46 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 Ame
Slide 47: Non-GAAP Financial Measures
Non-GAAP Financial Measures 47 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’ a
Slide 48: Investor Relations Team
Investor Relations Team ▪ 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 Europe +44 (207) 76 - 60369 e-mail: investor.relations@cnhind.co