Cnh Industrial N.v. · NYSE:CNH
Cnh Industrial — Q1 2020 Earnings Presentation
39 slides from Cnh Industrial's earnings presentation, May 6, 2020
Slide 1: Q1 2020 Results Review
Q1 2020 Results Review May 6th, 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: Introductory Remarks: Short-Term Priorities and Long-Term Strategy
Introductory Remarks | Short-Term Priorities and Long-Term Strategy 3 Daily Global Executive Committee meetings chaired by Acting CEO SAFEGUARDING HEALTH AND WELLBEING OF OUR EMPLOYEES ENSURING SUSTAINABLE OPERATIONAL AND FINANCIAL BUSINESS CONTINUITY MONITORING OUR DEALER NETWORK AND SUPPLIER BASE
Slide 4: Q1 2020 Highlights
Q1 2020 | Highlights 4 Industrial Activities Net Sales ▪ Net sales at $5bn, down 17% vs. Q1 2019, due to COVID-19 impact on market conditions across all regions, coupled with previously announced actions to reduce dealer inventory levels (14%) at CC Industrial Activities ▪ All industrial segments st
Slide 5: Industry Unit Performances
Q1 2020 | Industry Unit Performances 5 Worldwide TRACTORS NA EU SA RoW WW Feb YTD Mar month ▪ Worldwide Tractors industry was down 36% in March 0-140 HP (9%) month (with EU and RoW down 24% and 43% respectively) (10%) (6%) (17%) (15%) Flat (36%) 140+ HP (7%) ▪ NA HHP Tractors down 13% in March month
Slide 6: Company Unit Statistics
Q1 2020 | Company Unit Statistics 6 TRACTORS COMBINES ▪ Worldwide Tractors and Combines production down 40% and 26% respectively in March month vs. last year 8% (20)% (19)% (18)% ▪ NA row crop production down 16% in Q1 ‘20 (16)% ▪ Worldwide channel inventory for Tractors up 3% and for (18)% Combines
Slide 7: Financial Summary
Q1 2020 | Financial Summary 7 Q1 2020 Q1 2019 Δ U.S. GAAP Revenues ($bn) 5,461 6,457 (15.4%) Net Sales | Industrial Activities ($bn) 4,993 6,006 (16.9%) Net Income ($mn) (54) 264 (318) Diluted EPS ($) (0.05) 0.19 (0.24) Non – GAAP (1) Net Sales | Industrial Activities @CC ($bn) 5,162 6,006 (14.1%) A
Slide 8: Industrial Activities Net Sales
Q1 2020 | Industrial Activities Net Sales 8 16% 20% NA (North America) ($mn) 10% EU (Europe) BY REGION SA (South America) RoW (Rest of World) CHANGE IN NET SALES @ CC 54% (844) EUR 47% GBP 2% 6,006 (179) (204) (316) (256) 110 5,162 (169) 4,993 USD 27% AUD 3% BY CURRENCY BRL 7% OTHER 12% ELIM & Q1 20
Slide 9: Adj. EBIT walk and IA Adj. EBIT walk by Segment & driver
Q1 2020 | Adj. EBIT walk and IA Adj. EBIT walk by Segment & driver 9 INDUSTRIAL ACTIVITIES CHANGE IN ADJUSTED EBIT ($mn) (426) 6.3% (0.7)% 409 (273) (18) (82) 13 24 (76) (14) (21) (38) Q1 UNALLOCATED, Adj. EBIT VOL & MIX PRICING NET (*) PROD COST SG&A R&D FX | OTHER ELIM & OTHER FS Adj. EBIT 2019 20
Slide 10: Financial Services
Financial Services 10 ($mn) Net Income Managed Portfolio (*) & Retail Originations (*) 95 80 7% 7% ▪ Q1 ’20 retail originations at $2.1bn, down $0.1bn compared to Q1 ‘19 39% $26.1bn 54% 38% $24.7bn 55% ▪ Managed portfolio* at $24.7bn, down 2019 2020 $1.4bn compared to March 31, 2019 (down $0.1bn on
Slide 11: Net Industrial Debt and Free Cash Flow
Q1 2020 | Net Industrial Debt and Free Cash Flow 11 FREE CASH FLOW OF INDUSTRIAL ACTIVITIES (1,523) (854) 72 (79) (1,293) (166) (63) 6 (1) 68 (2,310) CHANGE IN CASH INTEREST CHANGE IN WORKING DIVIDENDS & EQUITY Dec 31, 2019 IA | ADJ EBITDA AND TAXES CAPITAL PROVISIONS & PP&E CAPEX (2) OTHER CHANGES
Slide 12: Available Liquidity and Debt Maturity Schedule
Q1 2020 | Available Liquidity and Debt Maturity Schedule 12 AVAILABLE LIQUIDITY ($bn) DEBT MATURITY SCHEDULE (1) ($9.4BN) 6.5 8.1 7.2 8.2 7.6 7.6 10.0 9.9 (3.9) (2.2) (1.4) (1.2) (0.7) (3.3) Mar-end ‘13 Mar-end ‘14 Mar-end ‘15 Mar-end ‘16 Mar-end ‘17 Mar-end ‘18 Mar-end ‘19 Mar-end ‘20 9M 2020 2021
Slide 13: Debt Maturity Schedule
Q1 2020 | Debt Maturity Schedule 13 Industrial Activities Financial Services (0.2) (0.4) (0.5) (1.0) - (3.2) (3.7) (1.8) (0.9) (0.2) (0.7) (0.1) 9M 2020 2021 2022 2023 2024 Beyond 9M 2020 2021 2022 2023 2024 Beyond Capital Market Bank Debt Other Short-term maturities concentrated in FS business matc
Slide 14: Final Remarks
Final Remarks Corporate Presentation 2017
Slide 15: COVID-19 Emergency Plan – Executive Summary
COVID-19 | Emergency Plan – Executive Summary 15 ▪ Extended Health & Safety protocols ▪ Majority of dealers open / on-call ▪ Plan to start in-house production of PPE throughout ▪ Leveraging smart and new ways of ▪ Actively monitoring and supporting dealer and supply base working ▪ Synchronizing supp
Slide 16: Organic Investment in Future Growth
Q1 2020 | Organic Investment in Future Growth 16 ($mn) Total spending (Capex + R&D) in new CAPEX (1) R&D (1) products was $117mn, up 6% vs. Q1 ‘19 23% $117mn 53% 77 63 244 214 Q1 Q1 2019 2020 2019 2020 24% ▪ Capex at $63mn down 18% vs. Q1 2019 ▪ R&D at $214mn down 12% vs. Q1 2019 Digitalization; Ele
Slide 17: Organic Growth – New Product launches and Awards
Q1 2020 | Organic Growth – New Product launches and Awards 17 CASE IH IVECO S-WAY New New Engine New line of articulated 4WD tractors. Proven IVECO wins prestigious iF DESIGN AWARD Engine power with a redesigned cab. Includes advanced 2020 for the IVECO S-Way heavy duty technology for easier operati
Slide 18: Inorganic Growth
Q1 2020 | Inorganic Growth 18 ▪ On March 11th, FPT Industrial, announced that it has acquired IVECO and FPT together with Nikola Motor Company announce Potenza Technology, a company specialized in the design and future Nikola TRE production in Ulm, Germany development of electric and hybrid powertra
Slide 19: Final Remarks – Key Takeaways
Final Remarks – Key Takeaways 19 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 Perform & Simplify and Optimize initiatives even more releva
Slide 20: Appendix
Appendix INDUSTRIAL
Slide 21: Financials by Segment
Q1 2020 | Financials by Segment 21 Q! 2020 Q1 2019 % Chg % Chg. @cc Q1 2020 $ Chg. Margin % Chg. REVENUES Gross Profit Agriculture 2,244 2,490 (9.9%) (7.2%) Agriculture 343 (185) 15.3% (5.9%) Construction 422 640 (34.1%) (31.8%) Construction (9) (99) (2.1%) (16.2%) Commercial & Specialty Vehicles 2,
Slide 22: Industrial Activities Q1 2020 Net Sales Split
Industrial Activities | Q1 2020 Net Sales Split 22 Chg. Chg. Agriculture Q1 2020 | Split Construction Q1 2020 | Split vs. Q1 ’19 vs. Q1 ’19 By region: By region: NA 37% (3%) NA 40% (44%) EU 35% (16%) EU 22% (32%) SA 13% (16%) SA 16% (6%) RoW 15% (4%) RoW 22% (29%) By product: By product: TRACTORS 59
Slide 23: AG Financial Results
AG | Financial Results 23 ($mn) Net Sales Q1 ’20 Change vs. prior year Q1 ’20 Change vs. prior year Δ 2020 2019 Δ At CC NA EU SA RoW TRACTORS COMBINES OTHERS Q1 2,244 2,490 (9.9)% (7.2)% Adj. EBITDA & Adj. EBIT walk Lower wholesale volume and, unfavorable market and product mix, negative fixed cos
Slide 24: CE Financial Results
CE | Financial Results 24 ($mn) Net Sales Q1 ’20 Change vs. prior year Q1 ’20 Change vs. prior year Δ 2020 2019 Δ At CC NA EU SA RoW C&S (*) General CE (*) R&S (*) Q1 422 640 (34.1)% (31.8)% Adj. EBITDA & Adj. EBIT walk Negative volume and mix including negative fixed cost absorption Net pricing
Slide 25: C&SV Financial Results
C&SV | Financial Results 25 ($mn) Net Sales Q1 ’20 Change vs. prior year Q1 ’20 Change vs. prior year Δ 2020 2019 Δ At CC NA EU SA RoW TRUCKS BUSES SPECIALTY VEHICLES Q1 2,021 2,414 (16.3)% (13.1)% N.M. Adj. EBITDA & Adj. EBIT walk Critical market conditions, particularly in EU, generating lower v
Slide 26: PT Financial Results
PT | Financial Results 26 ($mn) Net Sales Q1 ’20 Change vs. prior year Q1 ’20 Change vs. prior year Δ 2020 2019 Δ At CC NA EU SA RoW ENGINES TRANSM. AXLES Q1 753 1,036 (27.3)% (24.7)% (*) (*) 3rd Party sales at 44% in 2020 vs. 47% in FY 2019 Adj. EBITDA & Adj. EBIT walk Unfavorable volume and mix,
Slide 27: Reconciliation of Net Income (Loss) to Adj. EBIT and EBITDA by Segment, Q1 2020
Reconciliation of Net Income (Loss) to Adj. EBIT and EBITDA by Segment (US GAAP) 27 Q1 2020 ($mn) Unallocated Items, Industrial Financial AG CE C&SV PT Total Elim. & Other Activities Services Net Income (Loss) (1) Add back: (134) 80 (54) Interest expenses of Industrial Activities, net of interest in
Slide 28: Reconciliation of Net Income (Loss) to Adj. EBIT and EBITDA by Segment, Q1 2019
Reconciliation of Net Income (Loss) to Adj. EBIT and EBITDA by Segment (US GAAP) 28 Q1 2019 Unallocated Items, Industrial Financial ($mn) AG CE C&SV PT Elim. & Other Activities Services Total Net Income (Loss) (1) Add back: 169 95 264 53 53 Interest expenses of Industrial Activities, net of interest
Slide 29: Reconciliation of Adj. net income and Adj. income tax to Net Income
Q1 2020 29 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 ($mn) Q1 2020 Q1 2019 Net income (loss) (54) 264 Adjustments impacting Income (loss) before income tax (expense) an
Slide 30: Reconciliation of Adj. net income and Adj. income tax (adjustments detail)
Q1 2020 30 Reconciliation of Adj. net income and Adj. income tax (expense) to Net Income (loss) and Income tax (expense) and ($mn) calculation of Adj. diluted EPS and Adj. ETR under U.S.GAAP Q1 2020 Q1 2019 (a) Adjustments impacting Income (loss) before income tax (expense) and equity in income of u
Slide 31: Capex
Capex (1) 31 Q1 Q1 ($mn) 2020 2019 Investments in property, plant and equipment, and intangible assets (1) 63 77 Breakdown by Category NEW PRODUCT & TECHNOLOGY 56% 42% MAINTENANCE & OTHER 43% 54% INDUSTRIAL CAPACITY EXPANSION & LT INVESTMENTS 1% 4% Breakdown by Segment AGRICULTURAL 50% 49% CONSTRUCT
Slide 32: Reconciliation of Total Debt to Net Debt (US GAAP)
Reconciliation of Total Debt to Net Debt (US GAAP) 32 Consolidated Industrial Activities Financial Services ($mn) Mar 31, Dec 31, Mar 31, Dec 31, Mar 31, Dec 31, 2020 2019 2020 2019 2020 2019 Third party debt (23,518) (24,854) (5,326) (5,226) (18,192) (19,628) Intersegment notes payable - - 1,491 1,
Slide 33: From Total Debt to Net Industrial Debt
From Total Debt to Net Industrial Debt 33 Mar 31, Dec 31, ($mn) Q1 2020 Q1 2019 2020 2019 Net (debt)/cash of Industrial Activities at Total (Debt) (1) (23,518) (24,854) (854) (599) beginning of period Financial Services Third Party Debt 18,192 19,628 Adjusted EBITDA of Industrial Activities 72 525 C
Slide 34: Reconciliation of Net Cash from Operating Activities to Free Cash Flow
Reconciliation of Net cash provided by (used in) Operating Activities to Free 34 cash flow of Industrial Activities under U.S. GAAP ($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) (7
Slide 35: Debt Maturity Schedule | Breakdown
Debt Maturity Schedule | Breakdown 35 ($mn) 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) (12.7) Cash Portion of (Debt) Matu
Slide 36: Europe Trucks | Company performance
Europe Trucks | Company performance 36 Q1 2017 2018 2019 2020 MKT SHARE(1) Light (3.5-7.49t) 14.2% 13.8% 13.1% 12.1% M&H (≥7.5t) 9.3% 8.2% 6.0% 8.5% Europe (*) 12.2% 11.6% 10.4% 10.8% B-TO-B Light (3.5-7.49t) 1.25 1.35 1.21 1.50 M&H (≥7.5t) 1.19 1.04 1.12 1.27 Europe 1.23 1.26 1.19 1.44 Δ 17/18 Δ 18
Slide 37: Geographic Information
Geographic Information 37 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 38: Non-GAAP Financial Measures
Non-GAAP Financial Measures 38 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 39: 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