Cnh Industrial N.v. · NYSE:CNH
Cnh Industrial — Q3 2014 Earnings Presentation
51 slides from Cnh Industrial's earnings presentation, Oct 30, 2014
Slide 1: Q3 & Sep YTD 2014 Results Review
Exhibit 99.2 Q3 & Sep YTD 2014 Results Review October 30th, 2014
Slide 2: Safe Harbor Statement
Safe Harbor Statement Certain statements containedin this earnings releasethat are not statements of historical fact constitute forward-lookingstatements,notwithstanding that such statements are not specificallyidentified. Thesestatements may include terminology such as “may”, “will”, “expect”, “cou
Slide 3: The quarter in summary
Q3 2014 The quarter in summary Challenging tradingconditionsin the agricultural row crop sector, particularlyin NAFTAand LATAMregions. Improvedperformances in commercialvehicles,construction equipment,and powertrain segments asa resultof increaseddemandandcostcontrolactions Keyfinancialhighlights: I
Slide 4: Financial Highlights
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Slide 5: Q3 & Sep YTD 2014 Highlights
Q3 & Sep YTD 2014 Highlights Consolidated Revenuesat $7.7bnin Q3 2014 down 5.2%($24.2bnin SepYTD2014) Net incomeat $162mnin Q3 2014;net incomebefore restructuring and other exceptionalitems at $214mn(SepYTD2014 net incomeat $621mn;net incomebefore restructuring and other exceptionalitems at $773mn)
Slide 6: From operating profit to net income
Q3 2014 From operating profit to net income ($mn) Q3 2014 Q3 2013 Industrial Activities Operating profit 522 599 (77) Financial Services Operating profit 121 117 4 Elimination & Other (81) (85) 4 Operating Profit 562 631 (69) Restructuring expenses (56) (3) (53) Interest expenses of Industrial Activ
Slide 7: Efficiency Program – quarterly update
Q3 & Sep YTD 2014 Efficiency Program – quarterly update Main efficiency actions and restructuring charges in the quarter: Q3 2014 Sep YTD 2014 AG:$28mnprimarily for the closureof a JVin China Total charges $56mn $98mn CE:$6mnmainlydueto the re-positioningof Caseand NewHollandbrandofferingsandthe con
Slide 8: Net Sales Performance by Industrial Activities
Q3 2014 Net Sales Performance by Industrial Activities Net Salesat $3.7bndown11.6% Net Salesat $841mnup 14.7% Net Salesat $2.5bn,down6.2% Net Salesat $1.0bn,up1.8% Net Pricing Volumes up across all regions Volumes in EMEA Trucks (Light & Volumes Heavy) Volumes Product Mix Volumes in LATAM and EMEA f
Slide 9: Operating Profit Performance by Industrial Activities
Q3 2014 Operating Profit Performance by Industrial Activities 599 582 522 433 -12.9% -25.6% 50 59 (31) 39 15 20 (17) (29) n.m. 33.3% 18% Agricultural Construction Commercial Vehicles Powertrain Other & Eliminations Industrial Activities Equipment Equipment OperatingProfitat $433mn, OperatingProfitat
Slide 10: Cash Flow – Change in Net Industrial Debt
Q3 2014 Cash Flow – Change in Net Industrial Debt NET INDUSTRIAL CASH FLOW ($MN) (697) (3,692) (3,935) 194 162 (123) 447 53 7 (737) (246) TANGIBLE & CHANGE IN CAPITAL JUN 30, CHANGE IN CHANGE SEP 30, NET D&A INTANGIBLE INVESTMENT, INCREASE, FX TRANSLATION 2014 FUNDS & IN WC EFFECTS 2014 INCOME CAPEX
Slide 11: Industrial Activities - Capex breakdown
Q3 2014 Industrial Activities - Capex breakdown Delta % y-o-y October 30th, 2014 Q3 & Sep YTD 2014 Results Review 11
Slide 12: Financial Services performance
Q3 2014 Financial Services performance Retail originations at $2.8bn flat vs. Q3 ’13 ($MN) * 75 Managed portfolio at $28.1bn (of which retail 64% and 15.4% 65 wholesale 36%) down $1.0bn vs. June 30, 2014, flat excluding currency impact • Delinquencies on-book over 30 days were 3.9% down 1.2 p.p. vs.
Slide 13: Liquidity & Debt Maturity (September 30, 2014)
Q3 2014 Liquidity & Debt Maturity (September 30 th, 2014) Available 1 DebtMaturitySchedule($bn) Liquidity ($bn) COMPANY AVAILABLE LIQUIDITY $7.9 Available liquidity at September 30, 2014 was $7.9bn, compared to $7.7bn at June 30, 2014 Proceeds from the €700mn ($881mn) Cash utilized in operating acti
Slide 14: Industrial Activities Overview
Industrial Activities Overview 14
Slide 15: Agricultural Equipment
Q3 2014 –Agricultural Equipment Operating Profit Variance Operatingprofitof $433mn($582mnin Q3 2013) Operatingmarginat 11.8% Net Pricing, exceeding Volumes & Mix in LATAM and impact of new product NAFTA (primarily high cost enhancement horsepower tractors and (primarily Tier 4 B), combines) inflatio
Slide 16: Agricultural Equipment – Industry Volumes & Outlook
Q3 2014 –Agricultural Equipment Industry Volumes & Outlook (% Change y-o-y) Q3 ’14 Industry FY ’14E Industry Q3 ’14 Industry FY ’14E Industry change vs. prior year change vs. prior year change vs. prior year change vs. prior year Worldwide (1%) (5%) to Flat (22%) (15%) to (20%) NAFTA 10% Flat to 5%
Slide 17: Agricultural Equipment – Inventory management
Q3 2014 –Agricultural Equipment Inventory management (units of equipment) Thirdquarteroverproduction vs.retailat 10% Productiondecreased6%vs.Q3 ’13 and12%vs.Q2 ’14 LowestquarterlyproductionvolumesinceQ3 ’11 Company expects to significantly under-produce retail demand in Q4 ’14 * Excluding Joint Vent
Slide 18: Agricultural Equipment – Looking ahead, main strengths
Q3 2014 –Agricultural Equipment Looking ahead - our main strengths Quick actions for cost savings (K UNITS) Disciplined approach to balance supply with demand Single mission plants for selected HHP tractors and harvesting machinery Reduction of overtime and weekend premiums Reduction of outsourced c
Slide 19: Construction Equipment
Q3 2014 –Construction Equipment Operating Profit Variance ($MN) 4 39 9 Operatingprofitof $39mn(loss$31mnfor Q3 2013) 5 10 4.6% Operatingmarginat 4.6%(negative4.2%for Q3 2013) 27 Volume& Mix acrossall regions 15 (4.2)% Net pricing in NAFTA,LATAMand APAC (31) Continuedcontainmentactionsin SG&Aand R&De
Slide 20: Construction Equipment – Industry Volumes & Outlook
Q3 2014 –Construction Equipment Industry Volumes & Outlook (% Change y-o-y) Q3 ’14 Industry FY ’14E Industry Q3 ’14 Industry FY ’14E Industry change vs. prior year change vs. prior year change vs. prior year change vs. prior year Worldwide 3% Flat to 5% (13%) (5%) to (10%) NAFTA 10% 5% to 10% 15% 10
Slide 21: Construction Equipment – Inventory management
Q3 2014 –Construction Equipment Inventory management (units of equipment) Third quarter overproduction vs. retail at 9% * Excluding Joint Ventures Source: CNH Industrial Internal Data October 30th, 2014 Q3 & Sep YTD 2014 Results Review 21
Slide 22: Commercial Vehicles
Q3 2014 –Commercial Vehicles Operating Profit Variance KEY HIGHLIGHTS Operatingprofitof $20mn($15mnin Q3 2013) $(MN) Operatingmarginat 0.8%up 0.2 p.p. vs. Q3 ’14 1 20 10 Positive Pricing in EMEA & APAC LATAM Industry / Deliveries 15 mostly related to new products 22 0.8% 0.8% 0.6% LATAM negative fix
Slide 23: Commercial Vehicles – Industry Volumes & Outlook
Q3 2014 –Commercial Vehicles Industry Volumes & Outlook (% Change y-o-y) Q3 ’14 Industry FY ’14E Industry change vs. prior year change vs. prior year EMEA * 4.3% Flat LATAM * (22.5)% (15%) to (20%) APAC * (7.6)% (5%) to (10%) Market share in EMEA at 10.2% down 0.5 p.p. vs. last year LATAM at 9.8% do
Slide 24: Commercial Vehicles – Units Sold & Orders
Q3 2014 –Commercial Vehicles Units Sold & Orders KEY HIGHLIGHTS Totaldeliveriesat 29k vehicles,down8.2%vs.Q3 ’13 • Trucksvolumes by segment: • Lightup 2.6%to 15.4kunits. In Europelight up 14%in line with market Deliveries Orders • Medium down 29.6%to 3.7kandHeavydown 10.3%to 7kunits, driven change v
Slide 25: Commercial Vehicles – Inventory management
Q3 2014 –Commercial Vehicles Inventory management (units of equipment) 2% Company Inventory Dealer Inventory CVs Retail Sales* CVs Production* Third quarter overproduction vs. retail at 2% LATAM underproduction vs. retail at ~20% October 30th, 2014 Q3 & Sep YTD 2014 Results Review 25
Slide 26: Powertrain – Units Sold
Q3 2014 –Powertrain Units Sold (% change y-o-y) KEY HIGHLIGHTS Units Sold change vs. prior year Unitssoldby businessline • Enginesup 3%to 133k units (CV25%,AG25%,CE5%and ENGINES +3% 45%to external customers);thirdpartysalesat 59k units GEARBOXES +8% up20%vs. last year AXLES +9% • Gearboxesup 8%to 14
Slide 27: Main Product Launches across Segments & Awards
Q3 2014 Main Product Launches across Segments & Awards • Magnum Rowtrac tractor International launch held at beginning of June • Launched at Farm Progress Show 2014 • New 2015 lineup of Farmall tractors • 11k units sold since launch • Hay and forage tools unveiled • AFS connect 2.0 w/ advanced telem
Slide 28: Growing Responsibly and Sustainably
CNH Industrial N.V. Growing Responsibly and Sustainably CNH Industrial Industry Leader for 4th consecutive year DJSI World – Machinery and Electrical Equipment Eligible companies: 98 Admitted companies: 11 CNH Industrial has been selected for inclusion on The A List: The CDP Climate Performance Lead
Slide 29: FY 2014E US GAAP Guidance
weenie — FY 2014E US GAAP Guidance
Slide 30: FY 2014E US GAAP Guidance
FY 2014E US GAAP Guidance Despitechallenging tradingconditioninthe agricultural rowcropsectorparticularlyin NAFTAandthe general depressedmarketsin LATAMin AgriculturalEquipmentandCommercial Vehicles,CNHIndustrialisconfirmingits 2014U.S.GAAPguidance,asfollows: • Net salesof IndustrialActivitiesat app
Slide 31: FY 2015E US GAAP Outlook
MM FY 2015E us GAAP Outlook anDusTRE
Slide 32: FY 2015E Industry Outlook - units
FY 2015E Industry Outlook - units TRACTORS COMBINES FY 2015E FY 2015E 0-40 HP Flat 40-140 HP Flat NAFTA (10)% to (15)% Agricultural 140+ HP (10)% to (15)% Equipment EMEA (5)% to (10)% NAFTA Flat EMEA (5)% to Flat LATAM (10)% to (15)% LATAM (5)% to (10)% APAC (5)% to (10)% APAC Flat to 5% Worldwide F
Slide 33: FY 2015E US GAAP Outlook
FY 2015E US GAAP Outlook FullYear2014operatingprofitto be heldin 2015.Improvedprofitabilityin Commercial VehiclesandConstruction Equipment,coupledwithproductivityactionsandstructuralcostimprovementmeasuresfromthe Company’s Efficiency Programare expectedto offsetprojectedchallenging conditionsin the
Slide 34: Appendix
Appendix 34
Slide 35: US GAAP Industrial Activities Net Sales - Growth Composition
Q3 2014 US GAAP Industrial Activities Net Sales - Growth Composition NET SALES ($MN) Impact on Q1 Q2 Q3 P&L Q3 ‘14vs. Q3‘13 $/€ 1.370 1.371 1.325 BRL / $ 2.366 2.231 2.275 $ / GBP 1.655 1.683 1.669 $ / AUD 0.897 0.933 0.925 (*) Including Other Activities, UnallocatedItems & Adjustment& Eliminations
Slide 36: Industry drivers
Industry drivers MONTHLY COMMODITY PRICE (US$ PER METRIC TON) MONTHLY COMMODITY PRICE (US$ PER METRIC TON) % change Sep-13 Sep-14 vs. Sep 13 SOYBEANS $503 $369 -26.6% CORN $207 $163 -21.3% WHEAT $308 $244 -20.8% 2011 2012 2013 F Y-o-Y (12/13) 2014 F 2015 F 2016 F Net Farm IncomeUSD - billion IHS Glo
Slide 37: Q3 2014 Results highlights (IFRS & US GAAP)
Q3 2014 Results highlights (IFRS $ & US GAAP $) – delta with previous year ($MN) REVENUES Trading Profit Operating Profit MARGIN (IFRS) (US GAAP) (IFRS) (US GAAP) (IFRS) (US GAAP) Agricultural Equipment 3,659 (479) 3,659 (479) 398 (147) 433 (149) 10.9% 11.8% Construction Equipment 841 108 841 108 29
Slide 38: Sep YTD 2014 Results highlights (IFRS & US GAAP)
Sep YTD 2014 Results highlights (IFRS $ & US GAAP $) – delta with previous year ($MN) REVENUES Trading Profit Operating Profit MARGIN (IFRS) (US GAAP) (IFRS) (US GAAP) (IFRS) (US GAAP) Agricultural Equipment 11,801 (820) 11,801 (820) 1,451 (167) 1,529 (167) 12.3% 13.0% Construction Equipment 2,546 1
Slide 39: Sep YTD 2014 From operating profit to net income (US GAAP)
Sep YTD 2014 From operating profit to net income (US GAAP) ($mn) Sep YTD 2014 Sep YTD 2013 Industrial Activities Operating profit 1,612 1,706 (94) Financial Services Operating profit 407 399 8 Elimination & Other (255) (242) (13) Operating Profit 1,764 1,863 (99) Restructuring expenses (98) (32) (66
Slide 40: Net Income to Net Income and EPS before Restructuring and Exceptional Items
Q3 & Sep YTD 2014 Net Income / (Loss) to Net Income and basic EPS before Restructuring and Exceptional Items (US GAAP) ($MN) Third Quarter September YTD 2014 2013 2014 2013 Net Income 162 275 621 774 Restructuring expenses, net of tax 52 2 88 31 Other exceptional items, net of tax - - 64 25 Net Inco
Slide 41: Operating Profit US GAAP to Trading Profit IFRS - Reconciliation
Q3 & Sep YTD 2014 Operating Profit US GAAP to Trading Profit IFRS - Reconciliation The following reconciles Industrial Operating Profit (US GAAP) to Industrial Trading Profit under IFRS: Third Quarter September YTD ($MN) % of % of % of % of 2014 Net Sales 2013 Net Sales 2014 Net Sales 2013 Net Sales
Slide 42: Net Income US GAAP to Profit under IFRS - Reconciliation
Q3 & Sep YTD 2014 Net Income / (Loss) US GAAP to Profit / (Loss) under IFRS - Reconciliation The following reconciles Net Income / (Loss) in US GAAP to Profit / (Loss) under IFRS: Third Quarter September YTD ($MN) 2014 EPS 2013 EPS 2014 EPS 2013 EPS Net Income attributable to CNH Industrial N.V. 173
Slide 43: Total Equity – US GAAP to IFRS Reconciliation
Q3 2014 Total Equity – US GAAP to IFRS Reconciliation ($MN) Sep. 30, 2014 June 30, 2014 Total Equity in accordance with US GAAP 5,266 5,144 (a) Development costs, net 2,855 2,995 (b) Goodwill and other intangible assets (124) (125) (c) Defined benefit plans (63) (55) (d) Restructuring provision (21)
Slide 44: Cash Flow – Change in Net Industrial Debt (US GAAP)
Q3 & Sep YTD 2014 Cash Flow – Change in Net Industrial Debt (US GAAP) (US$/mn) Sep YTD Q3 2014 2014 Net Debt of Industrial Activities at the beginning of period (3,692) (2,214) Net income 162 621 Amortization and depreciation (*) 194 552 Change in provision and similar, and item related to assets so
Slide 45: Industrial Activities Cash Provided (used) by Working Capital
Sep YTD 2014 Industrial Activities Cash Provided (used) by Working Capital ($MN) Effect of Balance as of Currency Balance as of Cash Provided December 31, Translation and September 30, (Used) by 2013 non-cash 2014 Working Capital Transactions Trade receivables and financing receivables related to sa
Slide 46: Gross Debt - Breakdown
Q3 2014 Gross Debt - Breakdown JUNE30, 2014 SEPTEMBER 30, 2014 Industrial Financial Services Industrial Financial Services 11.3 5.8 Cash Portion of Debt Maturities 11.3 5.7 4.9 2.1 Bank Debt 4.5 2.0 6.2 3.7 Capital Market 6.7 3.6 0.2 0.1 Other Debt 0.2 0.1 0.0 14.3 Securitization and Sale of Receiva
Slide 47: Debt Maturity Schedule - Breakdown
Q3 2014 Debt Maturity Schedule - Breakdown Outstanding ($BN) Next 3 M 2015 2016 2017 2018 Beyond September 30, 2014 6.5 Bank Debt 0.8 1.8 2.1 1.0 0.4 0.4 10.3 Capital Market 0.1 2.4 0.9 2.0 2.2 2.7 0.3 Other Debt 0.1 0.0 0.0 0.0 0.0 0.1 17.1 Cash Portion of Debt Maturities 1.0 4.2 3.0 3.0 2.6 3.2 (5
Slide 48: 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 49: Non-GAAP Financial Measures
Non-GAAP Financial Measures CNHIndustrial monitors itsoperationsthroughthe useof severalnon-GAAP financialmeasures.CNHIndustrialbelievesthat thesenon-GAAP financialmeasuresprovide usefulandrelevant informationregardingits results and enhancethe reader’sabilityto assessCNHIndustrial’sfinancialperform
Slide 50: Accounting standards, reporting currency and segment realignment
Accounting standards, reporting currency and segment realignment Beginning with the filing with the U.S. Securities and Exchange Commission (“SEC”) of its annual report on Form 20-F for the fiscal year ended December 31, 2013, prepared in accordance with U.S. GAAP, CNH Industrial reports quarterly a
Slide 51: 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 October 30th, 2014 Q3 & Sep YTD 2014 Results Review 51