Cnh Industrial N.v. · NYSE:CNH
Cnh Industrial — Q3 2017 Earnings Presentation
37 slides from Cnh Industrial's earnings presentation, Oct 31, 2017
Slide 1: Q3 & Sep YTD 2017 Results
Q3 & Sep YTD 2017 Results October 31, 2017 Exhibit 99.3
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: Q3 2017 Highlights
Q3 2017 | Highlights Updated FY 2017E Guidance Net sales of Industrial Activities of $25.0bn to $25.5bn Adjusted diluted EPS of $0.44 to $0.46 Net industrial debt at the end of 2017 at $1.5bn to $1.7bn Note: All figures are provided herein on a US GAAP $ basis unless otherwise indicated Net Income a
Slide 4: Q3 2017 Main Product Launches & Awards
Q3 2017 | Main Product Launches & Awards NEW HOLLAND – METHANE POWER CONCEPT TRACTOR DJSI WORLD: “INDUSTRY LEADER” – 7TH YEAR RUNNING DAILY BLUE POWER BENSON (US) – BRONZE MEDAL IN WCM
Slide 5: Q3 2017 Summary
Q3 2017 | Summary (1) Non-GAAP measures (definition and reconciliation in appendix) Industrial Activities Net Sales & Operating Margin Adj. Net Income & EPS (1) Net Industrial Debt (1) Available Liquidity (1) Net Sales at $6.3bn up 15.9% vs. last year Operating Margin at 5.5% vs. 4.5% last year $(2.
Slide 6: Net Sales | Industrial Activities
Net Sales | Industrial Activities ($mn) Net Sales split (1) BY REGION BY SEGMENT NAFTA EMEA LATAM APAC AG CE CV PT (1) Note: Net Sales: Excluding Other Activities, Unallocated Items & Adjustment & Eliminations 5,461 221 36 311 173 (86) 6,116 215 6,331 Q3 2016 AG CE CV PT ELIM & OTHER Q3 2017 @ CC (*
Slide 7: Industrial Activities Operating Profit and Adjusted Net Income Walk
Industrial Activities Operating Profit and Adjusted Net Income Walk ($mn) 68 103 6 1 9 (29) 8 (34) 16 148 Q3 2016 IA OP. PROFIT FS OP. PROFIT OP ELIM INTEREST EXP, NET (1) OTHER NET JV INCOME Taxes on change in PBT Change in Adj. ETR Q3 2017 TAXES (2) CHANGE IN ADJUSTED NET INCOME 80 +118% Adjusted
Slide 8: Cash Flow | Change in Net Industrial Debt
Cash Flow | Change in Net Industrial Debt (2,064) 57 184 39 116 (547) (112) (22) (12) (214) (*) (2,575) Jun 30, 2017 NET INCOME D&A CHARGE ON REPURCHASE / EARLY REDEMPTION OF NOTES CHG IN PROVISION AND SIMILAR CHANGE IN WC CAPEX OTHER CHANGES CAPITAL INCREASE & DIVIDENDS, NET FX TRANSLATION & OTHER
Slide 9: Capex | Change in Working Capital | Net Industrial Cash Flow
Capex | Change in Working Capital | Net Industrial Cash Flow Capex (1) Change in Working Capital Net Industrial Cash Flow BY SEGMENT AG CE BY CATEGORY CV PT NEW PRODUCT & TECHNOLOGY MAINTENANCE & OTHER INDUSTRIAL CAPACITY EXPANSION & LT INVESTMENTS Cash inflow Cash outflow Cash inflow Cash outflow T
Slide 10: Financial Services
Financial Services (**) RoA defined as: PBT / average managed assets annualized (*) Including unconsolidated JVs Net Income ($mn) Managed Portfolio (*) & Retail Originations (*) $24.8bn Q3 retail originations at $2.3bn, flat compared to September 30, 2016 Managed portfolio* at $26.0bn, up $1.2bn com
Slide 11: Liquidity & Debt Maturity
Liquidity & Debt Maturity 1 Represents cash portion of debt maturities as of 09/30/2017 2 Of which $0.7bn Restricted Cash Undrawn M/T Committed Lines Bank Debt Capital Market Cash Other 7.9 06 3.5 2.3 1.9 2.0 3.7 As of 09/30/17 3M 2017 2018 2019 2020 2021 Beyond Available Liquidity ($bn) Debt Maturi
Slide 12: Investment Grade Credit Rating
Investment Grade Credit Rating These two actions will make the Company’s securities eligible for the main investment grade indices in the U.S. market On June 15, 2017, Standard & Poor’s upgraded the long-term corporate rating of CNH Industrial N.V. and CNH Industrial Capital LLC to “BBB-” with stabl
Slide 13: Industrial Activities Overview
Industrial Activities Overview
Slide 14: AG | Financial Results
AG | Financial Results Operating Profit walk Net Sales 155 33 29 (2) (13) (13) 19 208 Q3 2016 VOLUME & MIX PRICING NET PROD COST SG&A R&D FX | OTHER Q3 2017 ($mn) CHANGE VS Q3 2016 NAFTA (1.7%) EMEA 24.2% LATAM 19.1% APAC 16.2% Net Sales at $2.7bn up 12.4% vs. last year (up 9.4% at constant currency
Slide 15: AG | Industry performance & Inventory management
AG | Industry performance & Inventory management | 0-140HP (2%) | 140+ HP (1) (1%) EMEA 1% LATAM 2% APAC 22% Industry Units (For Q3 2017) Tractors Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2015 2016 2017 (1) Included in row crop sector definition Q3 2017 overproduction vs. retail at 4% NAFTA (140+/4WD) (1) u
Slide 16: AG | NAFTA Row Crop Production Channel Inventory
AG | NAFTA Row Crop Production Channel Inventory Q1 Q2 Q3 Q4 Q1 Q2 Q3 2016 2017 (14%) vs. last year Q1 Q2 Q3 Q4 Q1 Q2 Q3 2016 2017 (22%) vs. last year (1) Source: New sales data from AEM, used sales data from UCC database 3.4x 2.2x 1.8x US Industry – HHP Tractors Used to New Sales Ratio (1) US Indus
Slide 17: CE | Financial Results
CE | Financial Results Operating Profit walk Net Sales 1 15 3 (2) (4) 2 (2) 13 Q3 2016 VOLUME & MIX PRICING NET PROD COST SG&A R&D FX | OTHER Q3 2017 ($mn) 0.2% 2.0% CHANGE VS Q3 2016 NAFTA 6.3% EMEA 1.6% LATAM 15.6% APAC 17.6% Net Sales at $642mn up 7.9% vs. last year (up 6.0% at constant currency)
Slide 18: CE | Industry performance & Inventory management
CE | Industry performance & Inventory management Light NAFTA 15% EMEA 10% LATAM 1% APAC 25% Industry Units (For Q3 2017) Heavy NAFTA 8% EMEA 6% LATAM 15% APAC 58% Q3 2017 overproduction vs. retail at 2% Production up 8% vs. Q3 2016 Inventory Management (Light & Heavy) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q
Slide 19: CV | Financial Results
CV | Financial Results Operating Profit walk Net Sales 64 3 (10) 19 12 (9) (20) 59 Q3 2016 VOLUME & MIX PRICING NET PROD COST SG&A R&D FX | OTHER Q3 2017 ($mn) CHANGE VS Q3 2016 NAFTA n.m. EMEA 16.8% LATAM 24.9% APAC 50.3% CHANGE VS Q3 2016 TRUCKS 16.5% BUSES 17.0% OTHERS (1) 78.4% Net Sales at $2.5
Slide 20: CV | Industry performance & Inventory management
CV | Industry performance & Inventory management TRUCKS >3.5T EMEA (*) 4% LATAM (*) 15% APAC (*) 10% Industry Units (For Q3 2017) Inventory Management (CV – All Equipment) Q3 2017 – Europe Trucks MKT SHARE(1) CHG VS ‘16 ORDERS Chg. Y-o-Y DELIVERIES Chg. Y-o-Y B-TO-B Light (3.5-7.49t) 14.8% (2.0) p.p
Slide 21: PT | Financial Results
PT | Financial Results Net Sales & Operating Profit CHANGE VS Q3 2016 NAFTA 37.5% EMEA 26.2% LATAM 22.6% APAC 26.8% BY REGION Chg. vs. Q3 ’16 ENGINES 147.8k 16.6% TRANSMISSIONS 15.8k (9.4%) AXLES 41.7k 3.7% Units Sold Engines sold to third party at 54% vs. 58% in Q3 2016 Net Sales at $1.1bn up 26.5%
Slide 22: FY 2017E US GAAP Financial Targets
FY 2017E US GAAP Financial Targets
Slide 23: FY 2017E | Industry Units
FY 2017E | Industry Units TRACTORS COMBINES LIGHT HEAVY TRUCKS >3.5T NAFTA Flat – 5% 10% - 15% 10% Flat – 5% - (5%) – (10%) EMEA Flat Flat 5% - 10% 5% - 10% Flat LATAM 15% - 20% 10% – 15% Flat – 5% 10% 10% - 15% APAC Flat – 5% Flat – 5% 20% - 25% 35% - 40% 5% - 10% AG CE 0-140 HP 140+ HP 1 Reflects
Slide 24: FY 2017E | US GAAP Financial Targets
FY 2017E | US GAAP Financial Targets (*) Outlook is not provided on diluted EPS, most comparable GAAP financial measure of this non-GAAP financial measure, as the income or expense excluded from the calculation of adjusted diluted EPS are, by definition, not predictable and uncertain FY 2017E Guidan
Slide 25: Appendix
Appendix
Slide 26: Reconciliation of Operating Profit (loss) to Net Income (Loss) under US GAAP
Reconciliation of Operating Profit (loss) to Net Income (Loss) under US GAAP Q3 2017 Q3 2016 Δ Industrial Activities Operating Profit 351 248 103 Financial Services Operating Profit 120 114 6 Elimination & Other (83) (84) 1 Operating Profit 388 278 110 Restructuring expenses (53) (6) (47) Interest e
Slide 27: Reconciliation of Adj. net income and Adj. income taxes
Q3 & Sep YTD 2017 Reconciliation of Adj. net income and Adj. income taxes to the most comparable GAAP financial measure and determination of Adj. diluted EPS and Adj. ETR under U.S.GAAP Q3 2017 Q3 2016 Net Income (Loss) 57 39 Adjustments impacting Income (loss) before income tax (expense) and equity
Slide 28: Reconciliation of Adj. net income and Adj. income taxes (adjustments)
Q3 & Sep YTD 2017 Reconciliation of Adj. net income and Adj. income taxes to the most comparable GAAP financial measure and determination of Adj. diluted EPS and Adj. ETR under U.S.GAAP Q3 2017 Q3 2016 (a) Adjustments impacting Income (loss) before income tax (expense) and equity in income of uncons
Slide 29: Net Income / (Loss) US GAAP to Profit / (Loss) under EU-IFRS
Net Income / (Loss) US GAAP to Profit / (Loss) under EU-IFRS | Reconciliation 2017 EPS 2016 EPS 2017 EPS 2016 EPS Net Income (Loss) attributable to CNH Industrial N.V. 53 0.04 39 0.03 341 0.25 (347) (0.25) Plus: Net Income / (Loss) attributable to non-controlling interest 4 - 12 2 Net Income / (Loss
Slide 30: Total Equity – US GAAP to EU-IFRS Reconciliation
Total Equity – US GAAP to EU-IFRS | Reconciliation Sep 30 2017 Dec 31 2016 Total Equity in accordance with US GAAP 4,456 4,451 Development costs 2,489 2,374 Other adjustments (141) (121) Tax impact on adjustments (701) (655) Deferred tax assets and tax contingencies recognition 650 585 Total adjustm
Slide 31: Reconciliation of Total Debt to Net Debt (US GAAP)
Reconciliation of Total Debt to Net Debt (US GAAP) (1) Total Debt of Industrial Activities includes Intersegment notes payable to Financial Services of $800 million and $997 million as of September 30, 2017 and December 31, 2016, respectively. Total Debt of Financial Services includes Intersegment n
Slide 32: From Total Debt to Net Industrial Debt
From Total Debt to Net Industrial Debt Sep 30, 2017 Dec 31, 2016 Total Debt (1) (25,518) (25,276) Financial Services Third Party Debt 18,914 18,582 Intersegment Note Payables (800) (997) Intersegment Note Receivables 1,267 1,479 Cash and cash equivalents 3,569 4,649 Restricted cash - - Derivatives h
Slide 33: Debt Maturity Schedule | Breakdown
Debt Maturity Schedule | Breakdown Outstanding Sep 30, 2017 3M 2017 2018 2019 2020 2021 Beyond 4.5 Bank Debt 0.5 1.2 1.0 1.2 0.2 0.3 9.3 Capital Market 0.0 2.4 1.2 0.6 1.8 3.3 0.2 Other Debt 0.1 0.0 0.0 0.0 0.0 0.1 14.0 Cash Portion of Debt Maturities 0.6 3.5 2.3 1.9 2.0 3.7 4.8 Cash & Cash Equivale
Slide 34: CV | Industry performance | Europe Trucks
CV | Industry performance | Europe Trucks (*) Europe: EU 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) Q3 2014 2015 2016 2017
Slide 35: 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 LATAM: Central and South America, and the Caribbean Islands APAC: Continental Asia (inclu
Slide 36: 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 37: 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