Cnh Industrial N.v. · NYSE:CNH
Cnh Industrial — FY2018 Earnings Presentation
45 slides from Cnh Industrial's earnings presentation, Feb 7, 2019
Slide 1: Q4 & FY 2018 Results Review
Q4 & FY 2018 Results Review February 7, 2019 Exhibit 99.2
Slide 2: Safe Harbor Statement and Disclosures
Safe Harbor Statement and Disclosures All statements other than statements of historical fact contained in this presentation including statements regarding our competitive strengths; business strategy; future financial position or operating results; budgets; projections with respect to revenue, inco
Slide 3: Q4 & FY 2018 Highlights
Q4 & FY 2018 | Highlights Note: All figures are provided herein on a US GAAP $ basis unless otherwise indicated. Additionally: 2017 figures have been recast following the retrospective adoption, on January 1, 2018, of the updated accounting standards for revenue recognition (ASC 606) and retirement
Slide 4: FY 2018 Industry and Company Unit Performances
FY 2018 | Industry and Company Unit Performances Worldwide deliveries up 8% both in Tractors and Combines vs. last year Worldwide production up 10% vs. last year with NAFTA row crop overproduction vs. retail at 6% Worldwide inventory (units equivalent) was up 27% in Tractors and up 4% in Combines (w
Slide 5: Q4 & FY 2018 Financial Summary
Q4 & FY 2018 | Financial Summary (1) Non-GAAP measures (definition and reconciliation in appendix) Q4 2018 Q4 2017 Δ FY 2018 FY 2017 Δ U.S. GAAP Revenues ($bn) 8.2 8.2 (0)% 29.7 27.7 7% Net Sales | Industrial Activities ($bn) 7.7 7.7 (0)% 27.8 25.8 8% Net Income ($mn) 258 (52) n.m. 1,099 290 ~3.8x D
Slide 6: FY 2018 Industrial Activities Net Sales
FY 2018 | Industrial Activities Net Sales Net Sales split (1) BY SEGMENT AG CE CV PT (1) Note: Net Sales: Excluding Other Activities, Unallocated Items and Adjustment & Eliminations BY CURRENCY EUR 46% USD 26% BRL 7% CAD 4% GBP 2% AUD 3% OTHER 12% Note: Numbers may not add due to rounding (*) Note:
Slide 7: FY 2018 Industrial Activities Adj. EBITDA & Adj. EBIT walk
FY 2018 | Industrial Activities Adj. EBITDA & Adj. EBIT walk Non-GAAP measures (definition and reconciliation in appendix) 2,191 1,048 1,143 245 107 104 46 (60) 1,585 1,086 2,671 Adj. EBITDA D&A Adj EBIT AG CE CV PT ELIM & OTHER (*) Adj EBIT D&A Adj EBITDA FY 2017 FY 2018 CHANGE IN ADJUSTED EBIT 442
Slide 8: Net Industrial Cash Flow and Focus on Balance Sheet
FY 2018 | Net Industrial Cash Flow and Focus on Balance Sheet Available Liquidity Cash and Available Committed Lines 3.1 (5.2) 8.9 Change in Working Capital Cash inflow Cash outflow TRADE RECEIVABLES INVENTORIES TRADE PAYABLES OTHER CHG IN WORKING CAPITAL (496) FY 2018 FY 2017 Third Party Debt Indus
Slide 9: Operating Cash Flow and Use of Cash
FY 2018 | Operating Cash Inflow / (Outflow) and Use of Cash Industrial Activities – Capital Allocation CAPEX $550mn or 58% DIVIDENDS $243mn or 26% SHARE BUY BACK $156mn or 16% Industrial Activities – Operating Cash Flow 2,671 (613) (496) (406) 1,156 ADJ. INDUSTRIAL EBITDA CASH INTEREST AND TAXES CHA
Slide 10: Financial Services
Financial Services (*) Including unconsolidated JVs Managed Portfolio (*) & Retail Originations (*) FY ’18 retail originations at $10.0bn, up $0.9bn compared to December 31, 2017 Managed portfolio* at $26.3bn, down $0.5bn compared to December 31, 2017 (up $0.7bn on a constant currency basis) $26.8bn
Slide 11: AG Financial Results
AG | Financial Results Adj. EBITDA & Adj. EBIT walk ($mn) NAFTA EMEA LATAM APAC TRACTORS COMBINES OTHERS FY ’18 Change vs. prior year 1,106 315 791 132 270 (58) (20) (43) (36) 1,036 303 1,339 Adj. EBITDA D&A Adj. EBIT VOLUME & MIX PRICING NET PROD COST SG&A R&D JV | FX | OTHER Adj. EBIT D&A Adj. EBI
Slide 12: CE Financial Results
CE | Financial Results Adj. EBITDA & Adj. EBIT walk Net Sales ($mn) NAFTA EMEA LATAM APAC LIGHT HEAVY OTHERS n.m. 1.9% (0.6)% 3.0% 5.0% Higher sales volume, favorable mix and positive net price realization Raw material cost increase, mainly in North America Negative FX impacts 49 65 (16) 71 61 (19)
Slide 13: CV Financial Results
CV | Financial Results Adj. EBITDA & Adj. EBIT walk ($mn) NAFTA EMEA LATAM APAC n.m. TRUCKS BUSES SPECIALTY VEHICLES 7.0% 1.8% 2.7% 8.1% 735 540 195 28 84 19 0 (15) (12) 299 591 890 Adj. EBITDA D&A Adj. EBIT VOLUME & MIX PRICING NET PROD COST SG&A R&D JV | FX | OTHER Adj. EBIT D&A Adj. EBITDA FY 201
Slide 14: PT Financial Results
PT | Financial Results Adj. EBITDA & Adj. EBIT walk (*) NAFTA EMEA LATAM APAC ENGINES TRANSM. AXLES 488 128 360 44 19 (8) (19) 10 406 130 536 Adj. EBITDA D&A Adj. EBIT VOLUME & MIX | PRICING NET PROD COST SG&A R&D FX | OTHER Adj. EBIT D&A Adj. EBITDA FY 2017 FY 2018 11.2% 8.2% 8.9% 11.7% Favorable p
Slide 15: FY 2019E US GAAP Financial Targets and Market Outlook
FY 2019E US GAAP Financial Targets and Market Outlook
Slide 16: FY 2019E Industry Outlook
FY 2019E | Industry Outlook (*) NOTE: Total Industry Volume FY 2019E vs. FY 2018 reflecting aggregate for key markets where Company competes Trucks >3.5t (*) New Regional split definition in Appendix AG Tractors Combines 0-140 HP Flat Flat – 5% Flat – 5% Flat 140+ HP Flat – 5% CE Light Heavy Flat (5
Slide 17: FY 2019E US GAAP Financial Targets
FY 2019E | US GAAP Financial Targets (1) 2019 guidance does not include any impacts deriving from the gain resulting from the modification of the healthcare plan in the U.S. previously mentioned and anticipated on April 16, 2018 as this gain has been considered non-recurring and therefore treated as
Slide 18: Closing Remarks
Closing Remarks
Slide 19: Q4 2018 Product Highlights
Q4 2018 | Product Highlights New Engine New Engine FPT Industrial FPT Industrial has displayed at EIMA 2018 next-generation products, N45 and F36 engines, that stand out for their best-in-class features, such as efficiency, lightness and easy maintenance. Both engines use HI-eSCR2, the second genera
Slide 20: FY 2019 Main Themes, New Products and Upgrades
FY 2019 | Main Themes, New Products and Upgrades Alternative Drivelines & Emissions Reductions Key new Commercial and Specialty Vehicle electric, CNG and LNG offerings Best in class advanced diesel solutions in all segments featuring improved TCO and lower emissions while meeting Stage V and Euro VI
Slide 21: Global Executive Committee (GEC)
Global Executive Committee (GEC) New organizational structure to accelerate global growth and profitability Enhanced Company organizational structure focusing on its five global operating segments (Agriculture, Commercial & Specialty Vehicles, Construction, Powertrain, and Financial Services) suppor
Slide 22: FY 2019 Corporate Calendar
FY 2019 | Corporate Calendar March April May June July August September October November December A Capital Markets Day is expected in the course of 2019 Shareholders’ Annual General Meeting Quarterly Results & Analysts’ call conference April 12, 2019 August 1, 2019 May 7, 2019 November 6, 2019
Slide 23: CEO Priorities
CEO | Priorities IMPROVE PROFITABILITY WCM continuous improvement | 80/20 Implementation | Gas innovation premium | Reorganization and resizing | Continue turnaround in CV and CE CONCLUDE STRATEGIC BUSINESS PLAN Digitalization/Connectivity | Electrification | Automation and Autonomous Driving | Serv
Slide 24: Appendix
Appendix
Slide 25: FY 2019E Industry Outlook – Old Regional Split
FY 2019E | Industry Outlook – Old Regional Split NOTE: Total Industry Volume Q3 2018 vs. Q3 2017 reflecting aggregate for key markets where Company competes AG Tractors Combines 0-140 HP Flat Flat Flat – 5% Flat 140+ HP Flat – 5% CE Light Heavy Flat (5%) - Flat Flat (10%) – (5%) NAFTA EMEA LATAM APA
Slide 26: Industrial Activities Q4 2018 Net Sales Split
Industrial Activities | Q4 2018 Net Sales Split Agricultural Equipment Q4 2018 | Split Chg. vs. Q4 ‘17 Construction Equipment Q4 2018 | Split Chg. vs. Q4 ‘17 By region: By region: NAFTA 39% 10% NAFTA 51% 10% EMEA 33% (3%) EMEA 19% (1%) LATAM 16% (3%) LATAM 11% 2% APAC 12% (9%) APAC 19% 12% By produc
Slide 27: Industrial Activities FY 2018 Net Sales Split
Industrial Activities | FY 2018 Net Sales Split Agricultural Equipment FY 2018 | Split Chg. vs. FY ‘17 Construction Equipment FY 2018 | Split Chg. vs. FY ‘17 By region: By region: NAFTA 35% 13% NAFTA 51% 17% EMEA 37% 12% EMEA 20% 16% LATAM 14% (2%) LATAM 11% 15% APAC 14% 5% APAC 18% 35% By product:
Slide 28: Reconciliation of Net Income to Adjusted EBITDA by Segment Q4 2018
Reconciliation of Net Income (Loss) to Adjusted EBITDA by Segment (US GAAP) For Industrial Activities, net income / (loss) net of “ Results from intersegment investments” This item includes the pre-tax gain of $30 million as a result of the amortization over approximately 4.5 years of the $527 milli
Slide 29: Reconciliation of Net Income to Adjusted EBITDA by Segment Q4 2017
Reconciliation of Net Income (Loss) to Adjusted EBITDA by Segment (US GAAP) (1) For Industrial Activities, net income / (loss) net of “ Results from intersegment investments” ($mn) Q4 2017 AG CE CV PT Unallocated Items, Elim. & Other Industrial Activities Financial Services Total Net Income (Loss) (
Slide 30: Reconciliation of Net Income to Adjusted EBITDA by Segment FY 2018
Reconciliation of Net Income (Loss) to Adjusted EBITDA by Segment (US GAAP) For Industrial Activities, net income / (loss) net of “ Results from intersegment investments” This item includes the pre-tax gain of $80 million as a result of the amortization over approximately 4.5 years of the $527 milli
Slide 31: Reconciliation of Net Income to Adjusted EBITDA by Segment FY 2017
Reconciliation of Net Income (Loss) to Adjusted EBITDA by Segment (US GAAP) (1) For Industrial Activities, net income / (loss) net of “ Results from intersegment investments” FY 2017 AG CE CV PT Unallocated Items, Elim. & Other Industrial Activities Financial Services Total Net Income (Loss) (1) (16
Slide 32: Reconciliation of Adj. Net Income and Adj. Diluted EPS
Q4 & FY 2018 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 FY 2018 FY 2017 Q4 2018 Q4 2017 1,099 290 Net income (loss) 258 (52) 3 249 Adjustments impacting Income (loss) be
Slide 33: Adjustments Impacting Income and Income Tax
Q4 & FY 2018 FY 2018 FY 2017 Q4 2018 Q4 2017 (a) Adjustments impacting Income (loss) before income tax (expense) and equity in income of unconsolidated subsidiaries and affiliates 61 93 Restructuring expenses 45 16 22 64 Cost of repurchase/early redemption of Notes 22 8 (80) - Pre-Tax gain related t
Slide 34: Capex
Capex (1) (1) Excluding assets sold under buy-back commitments and assets under operating leases Q4 2018 Q4 2017 FY 2018 FY 2017 Investments in property, plant and equipment, and intangible assets (1) 262 211 550 488 Breakdown by Category NEW PRODUCT & TECHNOLOGY 34% 24% 36% 28% MAINTENANCE & OTHER
Slide 35: Reconciliation to Operating Cash Flow
Reconciliation to Operating Cash Flow (US GAAP) (*) Not included in Net Industrial Debt definition Q4 2018 Q4 2017 FY 2018 FY 2017 Net Cash provided by (used in) Operating Activities 1,835 2,199 1,783 2,791 Change in Derivatives hedging debt (*) 5 1 (2) (7) Expenditures on Buyback and Op Lease Asset
Slide 36: Liquidity & Debt Maturity
Liquidity & Debt Maturity 1 Represents cash portion of debt maturities as of 12/31/2018 2 Of which $0.8bn Restricted Cash Undrawn M/T unsecured Committed Lines Bank Debt Capital Market Cash Other Available Liquidity ($bn) Debt Maturity Schedule (1) ($bn) (*) Industrial Gross Debt represents third pa
Slide 37: Reconciliation of Total Debt to Net Debt
Reconciliation of Total Debt to Net Debt (US GAAP) Dec 31, 2018 Dec 31, 2017 Dec 31, 2018 Dec 31, 2017 Dec 31, 2018 Dec 31, 2017 Third party debt (24,445) (25,895) (5,211) (6,461) (19,234) (19,434) Intersegment notes payable - - (1,136) (982) (1,202) (1,641) Total (Debt) (1) (24,445) (25,895) (6,347
Slide 38: From Total Debt to Net Industrial Debt
From Total Debt to Net Industrial Debt Dec 31, 2018 Dec 31, 2017 Total (Debt) (1) (24,445) (25,895) Financial Services Third Party Debt 19,234 19,434 Intersegment Note Payables (1,136) (982) Intersegment Note Receivables 1,202 1,641 Cash and cash equivalents 4,553 4,901 Restricted cash - - Derivativ
Slide 39: Debt Maturity Schedule Breakdown
Debt Maturity Schedule | Breakdown Outstanding Dec 31, 2018 2019 2020 2021 2022 2023 Beyond (4.1) Bank Debt (1.4) (1.8) (0.4) (0.2) (0.2) (0.2) (8.8) Capital Market (1.9) (0.7) (1.4) (1.2) (1.2) (2.5) (0.2) Other Debt (0.1) (0.0) (0.0) (0.0) (0.0) (0.0) (13.2) Cash Portion of (Debt) Maturities (3.4)
Slide 40: Total Equity – US GAAP to EU-IFRS Reconciliation
Total Equity – US GAAP to EU-IFRS | Reconciliation Note: 2017 figures have been recast following the retrospective adoption, on January 1, 2018, of the updated accounting standards for revenue recognition (ASC 606) and retirement benefits accounting (ASU 2017-07). Dec 31, 2018 Dec 31, 2017 Total Equ
Slide 41: CV Industry Performance Europe Trucks
CV | Industry performance | Europe Trucks (*) Europe: 27 countries reflecting key markets where the segment competes (excluding United Kingdom and Ireland for market share reporting purposes); (1) Company’s estimated market share in the European truck market (GVW ≥3.5 tons) FY 2015 2016 2017 2018 MK
Slide 42: Geographic Information
Geographic Information Certain financial and market information in this presentation has been presented by geographic area. CNH Industrial defines its geographic areas as NAFTA: United States, Canada and Mexico; EMEA: member countries of the European Union, European Free Trade Association, Ukraine,
Slide 43: New Geographic Information
New Geographic Information Starting from Q1 2019 the composition of our regions part of the geographic information have been amended as follow: North America (formerly NAFTA): United States, Canada and Mexico; Europe (member countries of the European Union, European Free Trade Association, Ukraine,
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’s management believes that these non-GAAP financial measures provide useful and relevant information regarding its results and allow management and investors to a
Slide 45: Investor Relations Team
Investor Relations Team e-mail: investor.relations@cnhind.com website: www.cnhindustrial.com 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 Eur