Cnh Industrial N.v. · NYSE:CNH
Cnh Industrial — FY2014 Earnings Presentation
41 slides from Cnh Industrial's earnings presentation, Jan 29, 2015
Slide 1: Q4 & FY 2014 Results Review
Exhibit 99.2 Q4 & FY 2014 Results Review January29 th, 2015
Slide 2: Safe Harbor Statement and Disclosures
Safe Harbor Statement and Disclosures Certain statements contained in this conference call and accompanying material that are not statements of historical fact constitute forward-looking statements, notwithstanding that such statements are not specifically identified. They may also include financial
Slide 3: FY 2014 Financial Highlights
FY 2014 Financial Highlights Key financial highlights: Industrial Activities net sales at $31.2bn down 2.8% in constant currency vs. last year Operating profit of Industrial Activities at $2.0bn down 3.6% 32.7 31.2 in constant currency vs. last year; operating margin at 6.4% in line with last year N
Slide 4: Financial Highlights
Financial Highlights 4
Slide 5: Q4 & FY 2014 Highlights
Q4 & FY 2014 Highlights Consolidated Revenuesat $8.4bnin Q4 2014 down 10%vs.last year (Revenuesat $32.6bndown 3.8%in FY2014) Net incomeat $87mnin Q4 2014($708mnin FY2014) Net incomebeforerestructuring andother exceptionalitemsat $167mnin Q42014 ($ 940mnin FY2014) EPSat $0.06 in Q4 2014; EPSbeforeres
Slide 6: From operating profit to net income
Q4 & FY 2014 From operating profit to net income ($mn) Q4 2014 Q4 2013 FY 2014 FY 2013 Industrial Activities Operating profit 376 389 (13) 1,988 2,095 (107) Financial Services Operating profit 147 115 32 554 514 40 Elimination & Other (88) (90) 2 (343) (332) (11) Operating Profit 435 414 21 2,199 2,
Slide 7: Q4 2014 Cash Flow – Change in Net Industrial Debt
Q4 2014 Cash Flow – Change in Net Industrial Debt ($MN) NETINDUSTRIAL CASH FLOW 1,179 (2,691) 1,456 (3,935) 2 63 (417) (69) 173 87 (51) SEP 30, CAPITAL FX DEC 31, NET D&A CHANGE IN CHANGE TANGIBLE & CHANGE IN 2014 INCREASE, TRANSLATION 2014 INCOME FUNDS IN WC INTANGIBLE INVESTMENT, DIVIDENDS & EFFEC
Slide 8: FY 2014 Cash Flow – Change in Net Industrial Debt
FY 2014 Cash Flow – Change in Net Industrial Debt Note: all figures in $mn, except Delta vs. Target and FY 2014 Target in $bn th January 29 , 2015 Q4 & FY 2014 Results Review 8
Slide 9: Industrial Activities - Capex breakdown
Q4 & FY 2014 Industrial Activities - Capex breakdown th January 29 , 2015 Q4 & FY 2014 Results Review 9
Slide 10: Financial Services performance
Q4 & FY 2014 Financial Services performance Q4 2014 KEY HIGHLIGHTS Net incomewas $98mn,down $24mncomparedto Q4 2013 asthe positiveimpact of the higher averageportfolio and lower provisions for credit losseswasmore than offset by higher incometaxes Retail originations at $3bn, down $0.5bn compared to
Slide 11: Liquidity & Debt Maturity (December 31, 2014)
Q4 2014 Liquidity & Debt Maturity (December 31 st , 2014) Available liquidity at December 31, 2014 was $8.9bn, compared to $7.9bn at September 30, 2014 Cash generation from operating Bank debt reduction and activities negative currency translation differences • $6.1bnof cash2 • $2.7bn undrawn under
Slide 12: Industrial Activities Overview
Industrial Activities Overview 12
Slide 13: Industrial Activities Net Sales (Growth Composition & Regional split)
Q4 & FY 2014 Industrial Activities Net Sales (Growth Composition & Regional split) Q4 2014 (USGAAP,$/mn) FY 2014 Note: Net Sales: Including Other Activities, Unallocated Items & Adjustment & Eliminations (*) Quarterly average; December 31, 2014 end of year th January 29 , 2015 Q4 & FY 2014 Results R
Slide 14: Q4 2014 Net Sales Performance by Industrial Activities
Q4 2014 Net Sales Performance by Industrial Activities Net Sales at $3.4bn down 17.8% Net Sales at $800mn down 3.8% (down Net Sales at $3.4bn, down 5.5% (up Net Sales at $1.0bn, down 25.8% (down 14.2% in constant currency) 0.5% in constant currency) 0.9% in constant currency) (down 19.1% in constant
Slide 15: Operating Profit Performance by Industrial Activities
Q4 & FY 2014 Operating Profit Performance by Industrial Activities 2014 Operating Margin 2013 Operating Margin th January 29 , 2015 Q4 & FY 2014 Results Review 15
Slide 16: Agricultural Equipment
Agricultural Equipment Q4 & FY 2014 Q4 Actual FY Actual Q4 Actual FY Actual 0-40 HP +9% +8% 40-140 HP +7% +9% NAFTA (42%) (25%) 140+ HP (37%) (25%) EMEA (9%) (10%) NAFTA (1%) +3% EMEA (14%) (8%) LATAM (27%) (24%) LATAM (14%) (15%) APAC (3%) (9%) APAC (18%) (8%) Worldwide (14%) (7%) Worldwide (25%) (
Slide 17: Agricultural Equipment - Industry drivers & Looking ahead
Agricultural Equipment Inventory management (units of equipment) - Main industry drivers & Looking ahead Structural fundamentals in AG remain strong beyond down-cycle. Farmers’productivity increases are pushing for product innovation and demand for higher horsepower Extension to mixed farming of mid
Slide 18: Construction Equipment
Construction Equipment Q4 & FY 2014 Q4 Actual FY Actual Q4 Actual FY Actual NAFTA +17% +12% NAFTA +8% +12% EMEA +5% +12% EMEA +5% +11% LATAM (22%) (24%) LATAM (22%) (13%) APAC Flat (1%) APAC (35%) (19%) Worldwide +6% +5% Worldwide (20%) (9%) Strategic initiatives outlined in our 2014-2018 Strategic
Slide 19: Construction Equipment - Industry drivers & Looking ahead
Construction Equipment Inventory management (units of equipment) - Main industry drivers & Looking ahead Global GDP growth, supported by recent QE in Europe and solid growth in the US Continued growth in developing economies’ urbanization Need for infrastructure improvements in developed economies a
Slide 20: Commercial Vehicles
Commercial Vehicles Q4 & FY 2014 Q4 Actual FY Actual EMEA* (9%) +1% LATAM * (7%) (16%) APAC * (2%) (3%) Total deliveries at 38.6k vehicles, Total orders at 33.1k units, down down 10% vs. Q4 ’13 2% vs. Q4 ’13 Operating Profit at $100mn, margin at 3.0% • Trucks volumes by segment: • EMEA at 25.8k unit
Slide 21: Commercial Vehicles - Industry drivers & Looking ahead
Commercial Vehicles Inventorymanagement(unitsof equipment)- Mainindustrydrivers& Lookingahead EUROPEAN HISTORICAL TRUCKS MARKET (>6T– MCV & HCV ONLY ) COMMERCIAL VEHICLES (ALL EQUIPMENT) Mean = 316k Source: National Registrations Official Source LOOKINGAHEAD Only 7%of fleet (>6t) are EUROVI,while ag
Slide 22: Powertrain
Q4 & FY 2014 P – owertrain Net Sales split by product & Units Sold (% change y-o-y) FY 2014 NET SALES BY PRODUCT ($) FY 2014 KEY HIGHLIGHTS Units sold by business line • Engines up 7% to 584k units (CV 24%, AG 24%, CE 5% and Units Sold Units Sold Q4 ‘14 vs. Q4 ‘13 FY ‘14 vs. FY ‘13 47% to external c
Slide 23: FY 2015E US GAAP Financial Targets
FY 2015E US GAAP Financial Targets 23
Slide 24: FY 2015E Industry Units – Prior vs. New Outlook
FY 2015E Industry Units – Prior * vs. New Outlook TRACTORS COMBINES Prior Outlook New Outlook Prior Outlook New Outlook 0-40 HP Flat Flat 40-140 HP Flat Flat NAFTA (10)% to (15)% (25%) to (30%) Agricultural 140+ HP (10)% to (15)% (15%) to (20%) Equipment EMEA (5)% to (10)% (5%) to (10%) NAFTA Flat F
Slide 25: FY 2015E US GAAP Financial Targets
FY 2015E US GAAP Financial Targets The Company expects improved profitability in Commercial Vehicles and Construction Equipment, coupled with structural cost improvement measures from the Company’s Efficiency Program now extended to Agricultural Equipment. These actions are expected to buffer, but n
Slide 26: Appendix
Appendix 26
Slide 27: Q4 2014 Results highlights (IFRS & US GAAP)
Q4 2014 Resultshighlights(IFRS$ & USGAAP$) – deltawith previousyear ($MN) REVENUES Trading Profit Operating Profit MARGIN (IFRS) (US GAAP) (IFRS) (US GAAP) (IFRS) (US GAAP) Agricultural Equipment 3,403 (739) 3,403 (739) 238 (93) 241 (71) 7.0% 7.1% Construction Equipment 800 (32) 800 (32) 2 55 9 62 0
Slide 28: FY 2014 Results highlights (IFRS & US GAAP)
FY 2014 Resultshighlights(IFRS$ & USGAAP$) – deltawith previousyear ($MN) REVENUES Trading Profit Operating Profit MARGIN (IFRS) (US GAAP) (IFRS) (US GAAP) (IFRS) (US GAAP) Agricultural Equipment 15,204 (1,55) 15,204 (1,559) 1,689 (260) 1,770 (238) 11.1% 11.6% Construction Equipment 3,346 88 3,346 8
Slide 29: Efficiency Program – update
Q4 & FY 2014 Efficiency Program – update Main efficiency actions and restructuring charges in Q4: Q4 2014 FY 2014 AG:$15mnmainlydueto cost reductionactivities asa Total charges $86mn $184mn result of negative demand conditions CE: $5mn mainly due to European network initiatives Agricultural Equipmen
Slide 30: Net Income to Net Income before Restructuring and Exceptional Items
Q4 & FY 2014 Net Income / (Loss) to Net Income and basic EPS before Restructuring and Exceptional Items (US GAAP) ($MN) Fourth Quarter December YTD 2014 2013 2014 2013 Net Income 87 54 708 828 Restructuring expenses, net of tax 80 37 168 68 Other exceptional items, net of tax - 26 64 51 Net Income b
Slide 31: Operating Profit US GAAP to Trading Profit IFRS
Q4 & FY 2014 Operating Profit US GAAP to Trading Profit IFRS - Reconciliation The following reconciles Industrial Operating Profit (US GAAP) to Industrial Trading Profit under IFRS: Fourth Quarter December YTD ($MN) % of % of % of % of 2014 Net Sales 2013 Net Sales 2014 Net Sales 2013 Net Sales US G
Slide 32: Net Income US GAAP to Profit under IFRS
Q4 & FY 2014 Net Income / (Loss) US GAAP to Profit / (Loss) under IFRS - Reconciliation The following reconciles Net Income / (Loss) in US GAAP to Profit / (Loss) under IFRS: ($MN) Fourth Quarter December YTD 2014 EPS 2013 EPS 2014 EPS 2013 EPS Net Income attributable to CNH Industrial N.V. 83 0.06
Slide 33: Total Equity – US GAAP to IFRS Reconciliation
FY 2014 Total Equity – US GAAP to IFRS Reconciliation Dec. 31, 2014 Dec. 31, 2013 ($MN) Total Equity in accordance with US GAAP 4,961 4,955 (a) Development costs, net 2,819 2,862 (b) Goodwill and other intangible assets (122) (130) (c) Defined benefit plans (6) (29) (d) Restructuring provision (12)
Slide 34: Cash Flow – Change in Net Industrial Debt (US GAAP)
Q4 & FY 2014 Cash Flow – Change in Net Industrial Debt (US GAAP) (US$/mn) Q4 2014 FY 2014 Net Debt of Industrial Activities at the beginning of period (3,935) (2,214) Net income 87 708 Amortization and depreciation (*) 173 725 Changes in provisions and similar, and items related to assets sold under
Slide 35: Gross Debt - Breakdown
Q4 2014 Gross Debt - Breakdown SEPTEMBER 30, 2014 DECEMBER 31, 2014 Industrial Financial Services Industrial Financial Services 11.3 5.7 Cash Portion of Debt Maturities 10.2 5.9 4.5 2.0 Bank Debt 3.5 2.1 6.7 3.6 Capital Market 6.5 3.5 0.2 0.1 Other Debt 0.2 0.2 0.0 13.8 Securitization and Sale of Re
Slide 36: Debt Maturity Schedule - Breakdown
Q4 2014 Debt Maturity Schedule -Breakdown Outstanding ($BN ) 2015 2016 2017 2018 2019 Beyond December 31, 2014 5.6 Bank Debt 2.3 1.2 0.7 0.5 0.8 0.2 10.1 Capital Market 2.4 0.9 2.0 2.1 1.8 0.8 0.4 Other Debt 0.2 0.0 0.0 0.0 0.0 0.1 16.0 Cash Portion of Debt Maturities 4.9 2.1 2.8 2.6 2.6 1.1 (6.1) C
Slide 37: Main Product Launches across Segments & Awards
Q4 2014 Main Product Launches across Segments & Awards Magnum 380 CVX wins Tractor of the Year Award at 2015 TOTY awards in Bologna, Italy • First 8-Speed Automatic gearbox on the market Launch of the new Axial-Flow 4000 Series combines at the China International Agricultural • Eco-Power mode for Ou
Slide 38: Geographic Information
Geographic Information Consistent with the organization structure, certain financial and market information in this presentation has been presented separately by geographic area. CNH Industrial defines its geographic areas as NAFTA: United States, Canada and Mexico LATAM: Central and South America,
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 believes that these non-GAAP financial measures provide useful and relevant information regarding its results and enhance the reader’s ability to assess CNH Indus
Slide 40: Accounting standards, reporting currency and segment realignment
Accounting standards, reporting currency and segment realignment Beginningwith the filing with the U.S.Securitiesand ExchangeCommission(“SEC”)of its annualreport on Form20-Ffor the fiscalyear ended December31, 2013,preparedin accordancewith U.S.GAAP,CNHIndustrialreportsquarterly and annualfinancialr
Slide 41: Investor Relations Team
Contacts Investor Relations Team Federico DonatiHead – of Investor Relations +39 (011) 00 62756 - Noah Weiss Investor – Relations North America +1 (630) 887 3745 - e-mail: investor.relations@cnhind.com website: www.cnhindustrial.com th January 29 , 2015 Q4 & FY 2014 Results Review 41