Cnh Industrial N.v. · NYSE:CNH
Cnh Industrial — Q3 2020 Earnings Presentation
48 slides from Cnh Industrial's earnings presentation, Nov 6, 2020
Slide 1: Q3 & Sep YTD 2020 Results Review
Q3 & Sep YTD 2020 Results Review November 5th, 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: Q3 2020 Highlights
Q3 2020 | Highlights 3 Industrial Activities Net Sales Net sales at $6.1bn, up 4% vs. Q3 2019 as reported, solid performance in the AG segment (up 11%) slightly up C&SV sales (up 1.7%, flat at CC) and lower net sales in CE and PT Up 4% at CC Adj EBIT down $46mn vs. last year with profitability i
Slide 4: Q3 20 vs. Q3 19 Industry Unit Performances
Q3 20 vs. Q3 19 | Industry Unit Performances Worldwide Industry (Monthly Performances) 4 TRACTORS NA EU SA RoW WW July August September 0-140 HP 24% 5% 1% 37% 29% 34% 41% 19% 140+ HP 8% COMBINES 16% 14% (17%) 22% 12% 44% (1%) (4%) COMPACT AND SERVICE EQ. NA EU SA RoW WW July August September 14% (12
Slide 5: Q3 2020 Worldwide Company Unit Statistics
Q3 2020 | Worldwide Company Unit Statistics (Retail | Wholesale | Production) 5 TRACTORS COMBINES 25% 20% (11)% WW Tractors and Combines underproduction vs. retail at 7% and 25% respectively in Q3 2020 15% 6% Flat NA row crop overproduction vs. retail at 13% in Q3 2020 Q3 2019 Q3 2020 Q3 2019 Q3
Slide 6: Q3 2020 Worldwide Channel Inventory Statistics
Q3 2020 | Worldwide Channel Inventory Statistics (units) 6 Channel Inventory Channel Inventory WW Tractors Company and Dealer inventories down (33)% (42)% 44% and 25% respectively vs. last year TRACTORS COMBINES WW Combines Company and Dealer inventories down 64% and 23% respectively vs. last ye
Slide 7: Q3 2020 Financial Summary
Q3 2020 | Financial Summary 7 Q3 2020 Q3 2019 Δ U.S. GAAP Revenues ($mn) 6,492 6,360 2% Net Sales | Industrial Activities ($mn) 6,107 5,892 4% Net Income ($mn) (932) 643 (245%) Diluted EPS ($) (0.70) 0.47 (249%) Non – GAAP (1) Net Sales | Industrial Activities @CC ($mn) 6,150 5,892 4% Adjusted EBIT
Slide 8: Q3 2020 Industrial Activities Net Sales
Q3 2020 | Industrial Activities Net Sales 8 19% 20% NA (North America) ($mn) EU (Europe) 10% BY REGION SA (South America) RoW (Rest of World) CHANGE IN NET SALES @ CC 51% 258 4.4% EUR 45% GBP 1% 5,892 340 (67) 5 (58) 38 6,150 (43) 6,107 USD 26% AUD 3% BY CURRENCY BRL 8% OTHER 14% FX ELIM & Q3 2020 Q
Slide 9: IA Adj. EBIT walk by Segment & driver
Q3 2020 | IA Adj. EBIT walk by Segment & driver 9 INDUSTRIAL ACTIVITIES CHANGE IN ADJUSTED EBIT ($mn) (46) 4.8% 3.9% 284 (48) 45 3 55 16 (81) (36) 238 Q3 UNALLOCATED ITEMS Adj. EBIT VOL & MIX PRICING NET PROD COST SG&A R&D FX | OTHER ELIM & OTHERS Adj. EBIT 2019 2020 IA - Adj. EBIT walk by driver Ag
Slide 10: Financial Services
Financial Services 10 ($mn) Net Income Managed Portfolio (*) & Retail Originations (*) 82 56 7% 7% Q3 ’20 retail originations at $2.6bn, up $0.2bn compared to September 30, 2019 38% $25.5bn 55% 35% $24.7bn 58% Managed portfolio* at $24.7bn, down 2019 2020 $0.7bn compared to September 30, 2019
Slide 11: Net Industrial Debt and Free Cash Flow
Q3 2020 | Net Industrial Debt and Free Cash Flow 11 FREE CASH FLOW OF INDUSTRIAL ACTIVITIES 987 (2,307) 456 (81) 788 (53) (96) (27) (1) (223) (1,544) CHANGE IN CASH INTEREST CHANGE IN WORKING DIVIDENDS & EQUITY Jun 30, 2020 IA | ADJ EBITDA AND TAXES CAPITAL PROVISIONS & PP&E CAPEX (2) OTHER CHANGES
Slide 12: Available Liquidity and Debt Maturity Schedule
Q3 2020 | Available Liquidity and Debt Maturity Schedule 12 AVAILABLE LIQUIDITY ($bn) DEBT MATURITY SCHEDULE (1) ($10.5BN) 6.6 7.9 7.4 8.9 7.9 8.4 9.5 13.2 1.9 3.8 2.2 1.9 0.7 3.6 Sep-end ‘13 Sep-end ‘14 Sep-end ‘15 Sep-end ‘16 Sep-end ‘17 Sep-end ‘18 Sep-end ‘19 Sep-end ‘20 3M 2020 2021 2022 2023 2
Slide 13: Final Remarks
Final Remarks Corporate Presentation 2017
Slide 14: Q3 2020 Organic Growth
Q3 2020 | Organic Growth 14 NEW HOLLAND IVECO – STRALIS NP New New Engine New Holland Agriculture launched the CH Won a record order to deliver 100 Stralis Engine CROSSOVER HARVESTING combine range Natural Power trucks powered by that sets new standards of capacity and compressed natural gas (CNG) t
Slide 15: Organic Growth – AG Digitalization & Precision Farming
Q3 2020 | Organic Growth – AG - Digitalization & Precision Farming 15 FIELD In-Field Process Productivity AFS Harvest Command – automatically adjusting (Yield/Cost) machine settings on the go Recent Releases Next Releases 40 23 Operational Asset FLEET Productivity Recent Releases Next Releases 10 11
Slide 16: Organic & Inorganic Growth – Iveco
Q3 2020 | Organic & Inorganic Growth – Iveco 16 EU | Market Share S-Way 9.4% 8.3% Heavy duty Trucks market share up 300 bps in Q3 ’20 vs. last year (with M&H market share up y-o-y across all European countries); market share in Natural Gas at 65.7% Heavy Commercial Orders in EU were up 51% in Q3
Slide 17: FY 2020E Preliminary Industry Outlook
Final Remarks – FY 2020E | Preliminary Industry Outlook (*) 17 TRACTORS NA EU SA RoW WW 0-140 HP 10% - 15% (5%) Flat - (5%) 5% - 10% 5% 140+ HP (5%) - (10%) COMBINES Flat – 5% (5%) – (10%) Flat - (5%) 15% 5% - 10% COMPACT AND SERVICE EQ. NA EU SA RoW WW Flat (15%) (15%) – (20%) 5% Flat GENERAL CONST
Slide 18: Final Remarks – Looking at FY 2020E
Final Remarks – Looking at FY 2020E 18 Net Sales of Industrial Activities (including currency-translation effects) Previous Updated (*) Down between 15% and 20% Down between 10% and 15% Free Cash Flow of Industrial Activities Previous Updated To remain negative for the full year Positive between $0.
Slide 19: Appendix
Appendix INDUSTRIAL
Slide 20: Industrial Activities Q3 2020 Net Sales Split
Industrial Activities | Q3 2020 Net Sales Split 20 Chg. Chg. Agriculture Q3 2020 | Split Construction Q3 2020 | Split vs. Q3 ’19 vs. Q3 ’19 By region: By region: NA 34% 7% NA 46% (21%) EU 33% 13% EU 17% (8%) SA 14% (8%) SA 15% (11%) RoW 19% 36% RoW 22% 2% By product: By product: TRACTORS 59% 3% C&S
Slide 21: Q3 2020 Financials by Segment
Q3 2020 | Financials by Segment 21 Q3 2020 Q3 2019 % Chg % Chg. @cc Q3 2020 $ Chg. Margin p.p. Chg. Gross Profit REVENUES Agriculture 552 72 20.3% 0.7 p.p. Agriculture 2,713 2,446 10.9% 13.9% Construction 40 (37) 6.9% (4.8) p.p. Construction 576 664 (13.3%) (10.1%) Commercial & Specialty Vehicles 2,
Slide 22: AG Financial Results
AG | Financial Results 22 ($mn) Net Sales Q3 ’20 Change vs. prior year Q3 ’20 Change vs. prior year Δ 2020 2019 Δ At CC NA EU SA RoW TRACTORS COMBINES OTHERS Q3 2,713 2,446 10.9% 13.9% Adj. EBIT walk Higher volumes, positive price realization, reduced SG&A expenses, continued prioritization in R&D
Slide 23: CE Financial Results
CE | Financial Results 23 ($mn) Net Sales Q3 ’20 Change vs. prior year Q3 ’20 Change vs. prior year Δ 2020 2019 Δ At CC NA EU SA RoW C&S (*) General CE (*) R&S (*) Q3 576 664 (13.3)% (10.1)% Adj. EBIT walk Lower volumes, negative fixed cost absorption and unfavorable price realization Cost conta
Slide 24: C&SV Financial Results
C&SV | Financial Results 24 ($mn) Net Sales Q3 ’20 Change vs. prior year Q3 ’20 Change vs. prior year Δ 2020 2019 Δ At CC NA EU SA RoW TRUCKS BUSES SPECIALTY VEHICLES Q3 2,371 2,331 1.7% 0.2% N.M. Adj. EBIT walk Unfavorable mix (LCV in EU) and negative impact of fixed cost absorption due to lower
Slide 25: PT Financial Results
PT | Financial Results 25 ($mn) Net Sales Q3 ’20 Change vs. prior year Q3 ’20 Change vs. prior year Δ 2020 2019 Δ At CC NA EU SA RoW ENGINES TRANSM. AXLES Q3 909 940 (3.3)% (6.2)% (*) (*) 3rd Party sales at 53% in Q320 vs. 51% in Q319 Adj. EBIT walk Lower volume, partially offset by product cost e
Slide 26: Sep YTD 2020 Financial Summary
Sep YTD 2020 | Financial Summary 26 Sep YTD 2020 Sep YTD 2019 Δ U.S. GAAP Revenues ($mn) 17,531 20,384 (14%) Net Sales | Industrial Activities ($mn) 16,250 18,966 (14%) Net Income ($mn) (625) 1,334 (147%) Diluted EPS ($) (0.49) 0.97 (151%) Non – GAAP (1) Net Sales | Industrial Activities @CC ($mn) 1
Slide 27: Industrial Activities Sep YTD 2020 Net Sales Split
Industrial Activities | Sep YTD 2020 Net Sales Split 27 Sep YTD 2020 | Chg. Sep YTD 2020 | Chg. Agriculture Construction Split vs. Sep YTD '19 Split vs. Sep YTD '19 By region: By region: NA 35% (6%) NA 42% (42%) EU 35% (11%) EU 20% (25%) SA 13% (13%) SA 16% (13%) RoW 17% 9% RoW 22% (20%) By product:
Slide 28: Sep YTD 2020 Financials by Segment
Sep YTD 2020 | Financials by Segment 28 Sep YTD 2020 $ Chg. Margin p.p. Chg. Sep YTD 2020 Sep YTD 2019 % Chg % Chg. @cc Gross Profit REVENUES Agriculture 1,369 (338) 18.3% (3.0) p.p. Agriculture 7,498 8,031 (6.6%) (3.4%) Construction (3) (270) (0.2%) (13.2) p.p. Construction 1,418 2,061 (31.2%) (28.
Slide 29: Sep YTD 2020 Industrial Activities Net Sales
Sep YTD 2020 | Industrial Activities Net Sales 29 14% AG CHANGE IN NET SALES AT ($mn) CONSTANT CURRENCY 43% CE BY (2,269) SEGMENT C&SV (12.0%) 35% PT 8% EUR 45% GBP 1% USD 28% AUD 3% BY 18,966 (274) (579) (1,195) (661) 440 16,697 (447) 16,250 CURRENCY BRL 7% OTHER 13% Sep YTD FX Sep YTD ELIM & Sep Y
Slide 30: Sep YTD 2020 IA Adj. EBIT walk by Segment & driver
Sep YTD 2020 | IA Adj. EBIT walk by Segment & driver 30 INDUSTRIAL ACTIVITIES CHANGE IN ADJUSTED EBIT ($mn) (1,057) 5.7% 0.2% 1,089 (921) (1) (123) 159 104 (216) (59) 32 Sep YTD Adj. EBIT VOL & MIX PRICING NET (*) PROD COST SG&A R&D FX | OTHER UNALLOCATED ITEMS ELIM & OTHERS Adj. EBIT 2019 2020 IA -
Slide 31: Reconciliation of Net Income (Loss) to Adj. EBIT by Segment
Reconciliation of Net Income (Loss) to Adj. EBIT by Segment (US GAAP) 31 Q3 2020 Unallocated ($mn) Industrial AG CE CV PT Items, Elim. & Activities Other Consolidated Net income (loss) (932) Less: Consolidated Income tax benefit (expense) 15 Consolidated Income (loss) before taxes (947) Less: Financ
Slide 32: Reconciliation of Net Income (Loss) to Adj. EBIT by Segment
Reconciliation of Net Income (Loss) to Adj. EBIT by Segment (US GAAP) 32 ($mn) Q3 2019 Unallocated Industrial AG CE CV PT Items, Elim. & Activities Other Consolidated Net income (loss) 643 Less: Consolidated Income tax benefit (expense) 486 Consolidated Income (loss) before taxes 157 Less: Financial
Slide 33: Reconciliation of Net Income (Loss) to Adj. EBIT by Segment
Reconciliation of Net Income (Loss) to Adj. EBIT by Segment (US GAAP) 33 Sep YTD 2020 Unallocated Industrial ($mn) AG CE CV PT Items, Elim. & Activities Other Consolidated Net income (loss) (625) Less: Consolidated Income tax benefit (expense) 78 Consolidated Income (loss) before taxes (703) Less: F
Slide 34: Reconciliation of Net Income (Loss) to Adj. EBIT by Segment
Reconciliation of Net Income (Loss) to Adj. EBIT by Segment (US GAAP) 34 Sep YTD 2019 ($mn) Unallocated Industrial AG CE CV PT Items, Elim. & Activities Other Consolidated Net income (loss) 1,334 Less: Consolidated Income tax benefit (expense) 261 Consolidated Income (loss) before taxes 1,073 Less:
Slide 35: Reconciliation of Adj. net income and Adj. EPS
Q3 & Sep YTD 2020 35 Reconciliation of Adj. net income and Adj. income tax benefit (expense) to Net Income (loss) and Income tax benefit ($mn) (expense) and calculation of Adj. diluted EPS and Adj. ETR under U.S.GAAP 9M 2020 9M 2019 Q3 2020 Q3 2019 (625) 1,334 Net income (loss) (932) 643 790 125 Adj
Slide 36: Reconciliation of Adj. net income and Adj. EPS
Q3 & Sep YTD 2020 36 Reconciliation of Adj. net income and Adj. income tax benefit (expense) to Net Income (loss) and Income tax benefit ($mn) (expense) and calculation of Adj. diluted EPS and Adj. ETR under U.S.GAAP 9M 2020 9M 2019 Q3 2020 Q3 2019 (a) Adjustments impacting Income (loss) before inco
Slide 37: Capex
Capex (1) 37 ($mn) Q3 Q3 Sep YTD Sep YTD 2020 2019 2020 2019 Investments in property, plant and equipment, and intangible assets (1) 96 143 228 323 Breakdown by Category NEW PRODUCT & TECHNOLOGY 47% 43% 51% 44% MAINTENANCE & OTHER 51% 54% 47% 52% INDUSTRIAL CAPACITY EXPANSION & LT INVESTMENTS 2% 3%
Slide 38: Organic Investment in Future Growth
Q3 & Sep YTD 2020 | Organic Investment in Future Growth 38 ($mn) Total spending (Capex + R&D) in new CAPEX (1) R&D (1) products was $183mn, down 12% vs. Q3 ‘19 23% $183mn 54% 143 96 238 226 Q3 Q3 2019 2020 2019 2020 23% 323 228 755 643 Sep Sep YTD 2019 2020 YTD 2019 2020 Digitalization; Electrificat
Slide 39: Reconciliation of Total Debt to Net Debt
Reconciliation of Total Debt to Net Debt (US GAAP) 39 Consolidated Industrial Activities Financial Services ($mn) September 30, December 31, September 30, December 31, September 30, December 31, 2020 2019 2020 2019 2020 2019 Third party debt 24,670 24,854 7,484 5,226 17,186 19,628 Intersegment notes
Slide 40: From Total Debt to Net Industrial Debt
From Total Debt to Net Industrial Debt 40 Sep 30, Dec 31, ($mn) 2020 2019 Q3 2020 Q3 2019 Total (Debt) (1) (24,670) (24,854) Net (debt)/cash of Industrial Activities at beginning of period (2,307) (1,504) Financial Services Third Party Debt 17,186 19,628 Adjusted EBIT of Industrial Activities 238 28
Slide 41: Reconciliation of Operating Activities cash to Free cash flow
Reconciliation of Net cash provided by (used in) Operating Activities to Free 41 cash flow of Industrial Activities under U.S. GAAP ($mn) Q3 2020 Q3 2019 (*) Sep YTD 2020 Sep YTD 2019 (*) Net cash provided by (used in) Operating Activities 2,228 359 2,763 (144) Less: Cash flows from Operating Activi
Slide 42: Debt Maturity Schedule Breakdown
Debt Maturity Schedule | Breakdown 42 ($mn) Outstanding Sep 30, 2020 3M 2020 2021 2022 2023 2024 2025 Beyond 3.6 Bank Debt 0.8 1.4 0.8 0.2 0.2 0.1 0.1 10.1 Capital Market 1.0 2.4 1.2 1.7 0.5 0.9 2.5 0.3 Other Debt 0.1 0.0 0.2 0.0 0.0 0.0 0.0 14.1 Cash Portion of (Debt) Maturities 1.9 3.8 2.2 1.9 0.7
Slide 43: Q3 2020 Debt Maturity Schedule
Q3 2020 | Debt Maturity Schedule 43 Industrial Activities Financial Services (0.2) (1.7) (1.1) (1.1) (0.0) (0.9) (2.5) (1.7) (2.1) (1.0) (0.9) (0.7) (0.1) (0.1) 3M 2020 2021 2022 2023 2024 2025 Beyond 3M 2020 2021 2022 2023 2024 2025 Beyond Capital Market Bank Debt Other Q3 & Sep YTD 2020 Results Re
Slide 44: Europe Trucks Company performance
Europe Trucks | Company performance 44 Q3 2017 2018 2019 2020 MKT SHARE(1) Light (3.5-7.49t) 14.8% 14.1% 13.5% 11.0% M&H (≥7.5t) 9.5% 7.1% 6.8% 9.4% Europe (*) 12.8% 11.4% 11.4% 10.6% B-TO-B Light (3.5-7.49t) 0.94 0.95 0.89 1.42 M&H (≥7.5t) 1.12 0.89 0.97 1.25 Europe 0.99 0.94 0.91 1.37 Δ 17/18 Δ 18
Slide 45: Europe Trucks Company performance
Europe Trucks | Company performance 45 Sep YTD 2017 2018 2019 2020 MKT SHARE(1) Light (3.5-7.49t) 14.5% 14.1% 13.1% 11.0% M&H (≥7.5t) 9.4% 7.9% 6.3% 8.7% Europe (*) 12.5% 11.8% 10.7% 10.4% B-TO-B Light (3.5-7.49t) 1.03 1.02 1.00 1.36 M&H (≥7.5t) 1.07 0.91 1.02 1.23 Europe 1.04 0.99 1.00 1.33 Δ 17/18
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