Cnh Industrial N.v. · NYSE:CNH
Cnh Industrial — H1 2014 Earnings Presentation
46 slides from Cnh Industrial's earnings presentation, Jul 31, 2014
Slide 1: Q2 & H1 2014 Results Review
Exhibit 99.2 Q2 & H1 2014 Results Review st July 31 , 2014
Slide 2: Safe Harbor Statement
Safe Harbor Statement Certain statements contained in this earnings release that are not statements of historical fact constitute forward-looking statements, notwithstanding that such statements are not specifically identified. These statements may include terminology such as “may”, “will”, “expect”
Slide 3: The quarter in summary
Q2 2014 The quarter in summary INDUSTRIAL ACTIVITIES NET SALES($BN) Sales performance and operational conditions flat year over year, despite a significant market drop in 8.5 8.6 LATAM across all segments and in particular for Commercial Vehicles, offset by resilience in Agriculture Equipment, conti
Slide 4: Financial Highlights
Financial Highlights 4
Slide 5: Q2 & H1 2014 Highlights
Q2 & H1 2014 Highlights Consolidated Revenuesat $8.9bnin Q2 2014 up 0.9%(up 0.4%to $16.5bnin H1 2014) Net incomeat $358mnin Q2 2014;net incomebefore restructuring and other exceptionalitems at $382mn(H12014 net incomeat $459mn; net income before restructuring and other exceptional items at $559mn) E
Slide 6: From operating profit to net income
Q2 2014 From operating profit to net income ($mn) Q2 2014 Q2 2013 Industrial Activities Operating profit 678 686 (8) Financial Services Operating profit 152 141 11 Elimination & Other (94) (77) (17) Operating Profit 736 750 (14) Restructuring expenses (30) (20) (10) Interest expenses of Industrial A
Slide 7: Net Sales Performance by Industrial Activities
Q2 2014 Net Sales Performance by Industrial Activities Q2 2013 Q2 2014 8,536 8,564 0.3% 4,539 4,436 2,718 2,704 -2.3% -0.5% 1,100 1,250 939 931 -0.9% 13.6% (760) (757) Net Sales at $4.4bn down 2.3% Net Sales at $931mn down 0.9% Net Sales at $2.7bn, flat to prior year Net Sales at $1.3bn, up 13.6% Ne
Slide 8: US GAAP Industrial Activities Net Sales - Growth Composition
Q2 2014 US GAAP Industrial Activities Net Sales - Growth Composition NET SALES ($MN) 8,536 8,513 51 8,564 1,100 1,202 1,250 (23) 2,718 2,660 2,704 939 -0.3% 949 +0.6% 931 4,539 4,433 4,436 Q2 '13 Organic Growth Q2 '14 @ constant FX impact Q2 '14 as reported currency Agricultural Equipment Constructi
Slide 9: Operating Profit Performance by Industrial Activities
Q2 2014 Operating Profit Performance by Industrial Activities OPERATINGPROFIT($MN) Operating Profit at $632mn, Operating Profit at $28mn vs. Operating Loss of $21mnvs. a Operating Profit at $64mn up down 2.2% vs. Q2 2013 $13mn in Q2 2013 loss of $11mn in Q2 2013 $10mn vs. Q2 2013 Operating Profit Ma
Slide 10: Cash Flow – Change in Net Industrial Debt
Q2 2014 Cash Flow C – hange in Net Industrial Debt NET INDUSTRIAL CASH FLOW 636 (4,024) (3,692) 267 183 24 4 358 70 (200) (374) MAR 13, NET D&A CHANGE IN CHANGE IN TANGIBLE & CHANGE IN CAPITAL FX JUN 30, 2014 INCOME FUNDS & WC INTANGIBLE INVESTMENT, INCREASE, TRANSLATION 2014 OTHERS CAPEX SCOPE & OT
Slide 11: Industrial Activities - Capex breakdown
Q2 2014 Industrial Activities - Capex breakdown BY CATEGORY TOTAL CAPEX ($MN) 14% New Products & Technology 47% Maintenance & Other 216 200 39% Industrial Capacity Expansion & LT Investments -7.4% BY SEGMENT 10% Agricultural Equipment 33% Construction Equipment Commercial Vehicles 52% 5% Powertrain
Slide 12: Financial Services performance
Q2 2014 Financial Services performance KEY HIGHLIGHTS NET INCOME ($MN) Retail originations at $2.7bn flat vs. Q2 ’13 +9% 105 * Managed portfolio at $29.1bn (of which retail 65% and wholesale 35%) 96 up $1.4bn vs. March 31, 2014 (of which retail up $0.4bn and wholesale up $1.0bn) Delinquencies on-boo
Slide 13: Liquidity & Debt Maturity (June 30, 2014)
Q2 2014 Liquidity & Debt Maturity (June 30 th , 2014) COMPANY AVAILABLE LIQUIDITY 1 Available Debt Maturity Schedule ($bn) Liquidity ($bn) Available liquidity at June 30, 2014 was $7.7bn, compared to $8.1bn at March 31, 2014 $7.7 Proceeds from the $500mn bond Dividend payment issued by CNH Industria
Slide 14: Industrial Activities Overview
Industrial Activities Overview 14
Slide 15: Agricultural Equipment - Operating Profit Variance
Q2 2014 – Agricultural Equipment Operating Profit Variance KEY H IGHLIGHTS OPERATING PROFIT VARIANCE ($MN) Operating profit of $632mn ($646mn in Q2 2013) 646 103 - 632 (13) (5) (2) Operating margin at 14.2% (97) 14.2% 14.2% Pricing (recovery of Tier 4B Volume in LATAM and NAFTA content cost, inflati
Slide 16: Agricultural Equipment - Industry Volumes & Outlook
Q2 2014 – Agricultural Equipment Industry Volumes & Outlook (% Change y-o-y) Q2 ’14 Industry FY ’14E Industry Q2 ’14 Industry FY ’14E Industry change vs. prior year change vs. prior year change vs. prior year change vs. prior year Worldwide (12%) (5%) to Flat (13%) (10%) to (15%) NAFTA 1% Flat to 5%
Slide 17: Agricultural Equipment - Inventory management
Q2 2014 – Agricultural Equipment Inventory management (units of equipment) AGRICULTURAL EQUIPMENT (MAJOR EQUIPMENT) 6% Q1'10 Q2'10 Q3'10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Company Inventory Dealer Inventory AG Retail Sales* AG Production* Second
Slide 18: Construction Equipment - Operating Profit Variance
Q2 2014 – Construction Equipment Operating Profit Variance OPERATING PROFIT VARIANCE KEY HIGHLIGHTS ($MN) 3 Operating profit of $28mn ($13mn for Q2 2013) 9 28 Operating margin at 3.0% (1.4% for Q2 2013) 9 (10) 14 3.0% Pricing (NAFTA and LATAM) Volume (LATAM and APAC) 13 Production Cost Product Mix 1
Slide 19: Construction Equipment - Industry Volumes & Outlook
Q2 2014 – Construction Equipment Industry Volumes & Outlook (% Change y-o-y) Q2 ’14 Industry FY ’14E Industry Q2 ’14 Industry FY ’14E Industry change vs. prior year change vs. prior year change vs. prior year change vs. prior year Worldwide (2%) Flat to 5% (10%) (5%) to Flat NAFTA 7% 5% to 10% 11% 1
Slide 20: Construction Equipment - Inventory management
Q2 2014 – Construction Equipment Inventory management (units of equipment) CONSTRUCTION EQUIPMENT (LIGHT &HEAVY) Second quarter overproduction vs. retail at 12% * Excluding Joint Ventures Source: CNH Industrial Internal Data July 31st, 2014 Q2 & H1 ’14 Results Review Review 20
Slide 21: Commercial Vehicles - Operating Profit Variance
Q2 2014 – Commercial Vehicles Operating Profit Variance Operatinglossof $21mn(loss of $11mnin Q2 2013) EMEA Volume/Mix and Pricing LATAM Industry / Deliveries • Brazil down ~34%; • Argentina down ~57% (11) 4 12 • Venezuela down 100% (21) 2 22 APAC Product Mix LATAM under absorption (29) SG&A Contain
Slide 22: Commercial Vehicles - Industry Volumes & Outlook
Q2 2014 – Commercial Vehicles Industry Volumes & Outlook (% Change y-o-y) Q2 ’14 Industry FY ’14E Industry change vs. prior year change vs. prior year EMEA * +3% Flat to 5% LATAM * (23%) (15%) to (20%) APAC * (6%) (5%) to Flat Market share in EMEA at 11% in line with last year excluding adverse geog
Slide 23: Commercial Vehicles - Units Sold & Orders
Q2 2014 – Commercial Vehicles Units Sold & Orders Total deliveries at 33k vehicles, down 4% vs. Q2 ’13 • Trucks volumes by segment: • Light up 3% on favorable industry demand Deliveries Orders change vs. prior year change vs. prior year • Medium down 25% as a result of the Euro V pre-buy effect • He
Slide 24: Commercial Vehicles - Inventory management
Q2 2014 – Commercial Vehicles Inventory management (units of equipment) Second quarter overproduction vs. retail at 2% st July 31 , 2014 Q2 & H1 ’14 Results Review Review 24
Slide 25: Powertrain - Units Sold
Q2 2014 – Powertrain Units Sold (% change y-o-y) Units Sold change vs. prior year Units sold by business line • Engines up 18% to 160k units (CVs 24%, AG 25%, CE 5%, third ENGINES +18% parties 46%); third parties at 74k units sold up 35% vs. last year GEARBOXES +3% • Gearboxes up 3% to 18k units AXL
Slide 26: Main Product Launches across Segments
Q2 2014 Main Product Launches across Segments • Upgraded Farmall C Tractor Range New Daily: a worldwide product with two frame • Six new models from 58-107 HP layouts to optimize both cab and van • New 3.4 litre, four-cylinder, common-rail diesel • engine which are both turbocharged and intercooled
Slide 27: FY 2014 US GAAP Guidance & Efficiency Program Announcement
FY 2014 US GAAP Guidance & Efficiency Program Announcement 27
Slide 28: FY 2014 US GAAP Guidance
FY 2014 US GAAP Guidance CNH Industrial is confirming its 2014 U.S. GAAP guidance, consistent with the 5-year plan financial projections presentedat the May 8 th InvestorDay,asfollows: • Net sales of Industrial Activities at approximately $32bn • Operating profit of Industrial Activities between $2.
Slide 29: Efficiency Program
Efficiency Program Comprehensive Efficiency Program designed to enhance productivity and competitiveness of its Industrial Activities: • Total cumulative charge of approximately $280mn over the next three years (non-cash impact of approximately 20%); • Majority of Restructuring charges to impact the
Slide 30: Appendix
Appendix 30
Slide 31: Industry drivers
Industry drivers MONTHLYCOMMODITYPRICE(US$ PER METRIC TON) MONTHLYCOMMODITYPRICE(US$ PER METRIC TON) $800 $560 $528 % change $600 Jun-13 Jun-14 vs. Jun 13 $400 $314 $307 SOYBEANS $560 $528 -5.7% $200 $297 $203 CORN $297 $203 -31.6% $0 WHEAT $314 $307 -2.2% SOYBEANS CORN WHEAT 2011 2012 2013 F Y-o-Y
Slide 32: Q2 2014 Results highlights (IFRS & US GAAP)
Q2 2014 Results highlights (IFRS & US GAAP ) – delta with previous year ($MN ) REVENUES Trading Profit Operating Profit MARGIN (IFRS) (US GAAP) (IFRS) (US GAAP) (IFRS) (US GAAP) Agricultural Equipment 4,436 (103) 4,436 (103) 611 (16) 632 (14) 13.8% 14.2% Construction Equipment 931 (8) 931 (8) 34 22
Slide 33: H1 2014 Results highlights (IFRS & US GAAP)
H1 2014 Results highlights (IFRS & US GAAP ) – delta with previous year ($MN ) REVENUES Trading Profit Operating Profit MARGIN (IFRS) (US GAAP) (IFRS) (US GAAP) (IFRS) (US GAAP) Agricultural Equipment 8,142 (341) 8,142 (341) 1,053 (20) 1,096 (18) 12.9% 13.5% Construction Equipment 1,705 12 1,705 12
Slide 34: H1 2014 From operating profit to net income (US GAAP)
H1 2014 From operating profit to net income (US GAAP) ($mn) H1 2014 H1 2013 Industrial Activities Operating profit 1,090 1,107 (17) Financial Services Operating profit 286 282 4 Elimination & Other (174) (157) (17) Operating Profit 1,202 1,232 (30) Restructuring expenses (42) (29) (13) Interest expe
Slide 35: Net Income to Net Income and basic EPS before Restructuring
Q2 & H1 2014 Net Income / (Loss) to Net Income and basic EPS before Restructuring and Exceptional Items (US GAAP) Second Quarter First Half 2014 2013 2014 2013 Net Income 358 348 459 499 Restructuring expenses, net of tax 24 20 36 29 Other exceptional items, net of tax - - 64 25 Net Income before re
Slide 36: Operating Profit US GAAP to Trading Profit IFRS - Reconciliation
Q2 & H1 2014 Operating Profit US GAAP to Trading Profit IFRS - Reconciliation The following reconciles Industrial Operating Profit (US GAAP) to Industrial Trading Profit under IFRS: Second Quarter First Half % of % of % of % of 2014 Net Sales 2013 Net Sales 2014 Net Sales 2013 Net Sales USGAAP- Indu
Slide 37: Net Income US GAAP to Profit under IFRS - Reconciliation
Q2 & H1 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: Second Quarter First Half ($MN) 2014 EPS 2013 EPS 2014 EPS 2013 EPS Net Income attributable to CNH Industrial N.V. 354 0.26 2
Slide 38: Total Equity – US GAAP to IFRS Reconciliation
Q2 2014 Total Equity – US GAAP to IFRS Reconciliation June 30, 2014 March 31, 2014 ($MN) Total Equity in accordance with US GAAP 5,144 5,081 (a) Development costs, net 2,995 2,925 (b) Goodwill and other intangible assets (125) (126) (c) Defined benefit plans (55) (41) (d) Restructuring provision (28
Slide 39: Cash Flow – Change in Net Industrial Debt (US GAAP)
Q2 & H1 2014 Cash Flow – Change in Net Industrial Debt (US GAAP) (US$/mn) Q2 2014 H1 2014 Net Debt of Industrial Activities at the beginning of period (4,024) (2,214) Net income 358 459 Amortization and depreciation (*) 183 358 Change in provision and similar, and item related to assets sold under b
Slide 40: Industrial Activities Cash Provided (used) by Working Capital
H1 2014 Industrial Activities Cash Provided (used) by Working Capital ($MN) Effect of Balance as of Currency Balance as of Cash Provided December 31, Translation and June 30, (Used) by 2013 non-cash 2014 Working Capital Transactions Trade receivables and financing receivables related to sales, net 1
Slide 41: Gross Debt - Breakdown
Q2 2014 Gross Debt - Breakdown MARCH31, 2014 JUNE30, 2014 Industrial Financial Services Industrial Financial Services 11.5 5.2 Cash Portion of Debt Maturities 11.3 5.8 5.1 2.1 Bank Debt 4.9 2.1 6.2 3.1 Capital Market 6.2 3.7 0.2 0.1 Other Debt 0.2 0.1 Securitization and Sale of Receivables 0.0 14.6
Slide 42: Debt Maturity Schedule - Breakdown
Q2 2014 Debt Maturity Schedule - Breakdown Outstanding ($BN) Next 6 M 2015 2016 2017 2018 Beyond June 30, 2014 7.0 Bank Debt 1.3 1.6 2.2 1.0 0.4 0.4 9.8 Capital Market 0.1 2.5 0.9 2.0 2.3 1.9 0.2 Other Debt 0.1 0.0 0.0 0.0 0.0 0.1 17.0 Cash Portion of Debt Maturities 1.5 4.1 3.2 3.1 2.8 2.4 (5.4) Ca
Slide 43: 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 44: 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 45: 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 46: Investor Relations Team
Contacts Investor Relations Team Federico Donati – Head 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 July 31st , 2014 Q2 & H1 ’14 Results Review Review 46