Cnh Industrial N.v. · NYSE:CNH
Cnh Industrial — FY2019 Earnings Presentation
48 slides from Cnh Industrial's earnings presentation, Feb 7, 2020
Slide 1: Q4 & FY 2019 Results Review
Q4 & FY 2019 Results Review February 7, 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 competitive strengths; business strategy; future financial position or operating results; budgets; projections with respect to revenue, in
Slide 3: FY 2019 Highlights
FY 2019 | Highlights 3 INDUSTRIAL ACTIVITIES CONSOLIDATED Net Sales Adj. EPS (1) $26.1bn (2.1%) (*) $0.84 5.0% (*) % change at constant currency Adj. EBIT Margin (1) Net Debt (1) Available Liquidity Dividend per Share (**) At 5.3% down 40 bps $(0.9)bn $11.2bn €0.18 (1) Non-GAAP measures (definition
Slide 4: Q4 2019 Industry and Company Unit Performances
Q4 2019 | Industry and Company Unit Performances 4 TRACTORS NA EU SA RoW WW CNH INDUSTRIAL UNITS STATISTICS 0-140 HP (5%) (6%) (19%) (7%) (7%) ▪ Worldwide deliveries down 3% in Tractors and down 15% in Combines vs. last year 140+ HP 1% ▪ Worldwide production down 16% vs. last year COMBINES ▪ NA row
Slide 5: Q4 & FY 2019 Financial Summary
Q4 & FY 2019 | Financial Summary 5 Q4 2019 Q4 2018 Δ FY 2019 FY 2018 Δ U.S. GAAP Revenues ($bn) 7.7 8.2 (6.2)% 28.1 29.7 (5.5)% Net Sales | Industrial Activities ($bn) 7.2 7.7 (6.8)% 26.1 27.8 (6.0)% Net Income ($mn) 120 258 (53.5)% 1,454 1,099 32.3% Diluted EPS ($) 0.08 0.19 (57.9)% 1.05 0.78 34.6%
Slide 6: Q4 & FY 2019 Industrial Activities Net Sales
Q4 & FY 2019 | Industrial Activities Net Sales 6 Net Sales split (1) ($mn) Net Sales walk CHANGE IN NET SALES 15% (1,682) 21% NA (North America) (6.0)% 10% BY EU (Europe) REGION CHANGE IN NET SALES AT CONSTANT CURRENCY SA (South America) (587) RoW (Rest of World) (2.1)% 54% AG 14% CE 39% BY SEGMENT
Slide 7: Q4 & FY 2019 Adj. EBIT walk
Q4 & FY 2019 | Adj. EBIT walk 7 ($mn) INDUSTRIAL ACTIVITIES CHANGE IN ADJUSTED EBIT (12.3)% 7.1% 6.7% 2,101 (255) 306 (279) 10 (14) (65) 102 (26) 1,880 FY UNALLOCATED, Adj. EBIT VOL & MIX PRICING NET (*) PROD COST SG&A R&D FX | OTHER ELIM & OTHER FS Adj. EBIT 2018 2019 541 (160) 50 (29) 19 35 (90) 4
Slide 8: AG Financial Results
AG | Financial Results 8 ($mn) Net Sales FY ’19 Change vs. prior year FY ’19 Change vs. prior year Δ 2019 2018 Δ At CC NA EU SA RoW TRACTORS COMBINES OTHERS FY 10,959 11,682 (6.2)% (3.4)% Q4 2,928 3,155 (7.2)% (5.3)% Adj. EBITDA & Adj. EBIT walk 11.5% Lower wholesale volume and market and product
Slide 9: CE Financial Results
CE | Financial Results 9 ($mn) Net Sales FY ’19 Change vs. prior year FY ’19 Change vs. prior year Δ 2019 2018 Δ At CC NA EU SA RoW C&S (*) General CE (*) R&S (*) FY 2,768 3,021 (8.4)% (6.4)% Q4 707 814 (13.1)% (11.9)% Adj. EBITDA & Adj. EBIT walk Unfavorable volume and mix in North America and Re
Slide 10: C&SV Financial Results
C&SV | Financial Results 10 ($mn) Net Sales FY ’19 Change vs. prior year FY ’19 Change vs. prior year Δ 2019 2018 Δ At CC NA EU SA RoW TRUCKS BUSES SPECIALTY VEHICLES FY 10,439 10,939 (4.6)% 0.9% Q4 2,996 3,151 (4.9)% (1.3)% Adj. EBITDA & Adj. EBIT walk Favorable volume and mix Higher product co
Slide 11: PT Financial Results
PT | Financial Results 11 ($mn) Net Sales FY ’19 Change vs. prior year FY ’19 Change vs. prior year Δ 2019 2018 Δ At CC NA EU SA RoW ENGINES TRANSM. AXLES FY 4,117 4,565 (9.8)% (5.0)% (*) Q4 1,008 1,189 (15.2)% (12.7)% (*) 3rd Party sales at 51% in 2019 vs. 50% in FY 2018 Adj. EBITDA & Adj. EBIT wal
Slide 12: Financial Services
Financial Services 12 ($mn) Net Income Managed Portfolio (*) & Retail Originations (*) 385 361 7% 7% ▪ FY ’19 retail originations at $9.7bn, down $0.4bn compared to December 31, 2018, (flat 38% $26.3bn 55% 39% $26.6bn 54% on a constant currency basis) 2018 2019 ▪ Managed portfolio* at $26.6bn, up $0
Slide 13: FY 2019 Net Industrial Cash Flow and Available Liquidity
FY 2019 | Net Industrial Cash Flow and Available Liquidity 13 ($bn) Net Debt and Free Cash Flow Available Liquidity Industrial Activities (1) Cash and Available Committed Lines 11.2 0.0 5.5 5.8 (0.9) 2013 2014 2015 2016 2017 2018 2019 Cash Undrawn Lines 2013 2014 2015 2016 2017 2018 2019 Note: Numbe
Slide 14: FY 2019 Operating Cash Inflow / (Outflow) and Use of Cash
FY 2019 | Operating Cash Inflow / (Outflow) and Use of Cash 14 Industrial Activities – Operating Cash Flow Industrial Activities – Capital Allocation ($mn) SHARE BUY BACK $57mn or 5% DIVIDENDS $275mn or 26% CAPEX $633mn or 60% M&A (net impact) 2,357 (388) (753) (436) 780 $83mn or 8% CHANGE IN CHANGE
Slide 15: Transform2Win Update
Transform2Win Update Corporate Presentation 2017
Slide 16: Transform 2 Win Update on Selected Strategic Initiatives
Transform 2 Win | Update on Selected Strategic Initiatives 16 TOP LINE PROFITABILITY PORTFOLIO GROWTH IMPROVEMENT TRANSFORMATION Grow Perform & Simplify Spin - Off ▪ Inorganic growth initiatives ▪ 80/20 simplification initiative ▪ Spin off roadmap on track well underway ▪ WCM productivity ▪ Supporte
Slide 17: Grow Update – Commercial Vehicle & Powertrain
Transform 2 Win | Grow Update – Commercial Vehicle & Powertrain 17 Inorganic Growth Organic Growth IVECO | New S-WAY The on-road IVECO S-WAY developed to deliver a complete package of features and services focused on the driver, on sustainability and on an advanced level of connectivity-enabling new
Slide 18: Grow Update – Agricultural & Construction Equipment
Transform 2 Win | Grow Update – Agricultural & Construction Equipment 18 Inorganic Growth Organic Growth NEW HOLLAND ▪ Leader in Farm Management Information Systems (FMIS) New Holland unveils the world’s first production T6 Methane Power Tractor at Agritechnica 2019 AGXTEND | our aftermarket Precisi
Slide 19: Selected Initiatives Updates: Perform & Simplify, Optimize
Transform 2 Win | Selected Initiatives Updates 19 Perform & Simplify Optimize 80/20 Simplification Footprint Rationalization ▪ CE: extension to EU in Q4 2019; SKUs reduction in NA at 60% ▪ Phase 1 of footprint rationalization affecting operations of CE achieved as planned, including focused pricing
Slide 20: On track with Spin Off Roadmap
Transform 2 Win | On track with Spin Off Roadmap 20 EXTRAORDINARY GENERAL MEETING QUARTERLY RESULTS & ✓ SPIN ANALYSTS’ CALL CONFERENCE ANNOUNCEMENT (May 6th) DAY 1 LEADERSHIP ANNOUNCEMENT 2019 Q1 '20 Q2 '20 Q3 '20 Q4' 20 2021 QUARTERLY RESULTS & ANALYSTS’ CALL CONFERENCE ANNUAL (November 5th) GENERA
Slide 21: FY 2020E US GAAP Financial Guidance and Market Outlook
FY 2020E US GAAP Financial Guidance and Market Outlook Corporate Presentation 2017
Slide 22: FY 2020E Industry Outlook
FY 2020E | Industry Outlook 22 TRACTORS NA EU SA RoW WW 0-140 HP Flat Company Production vs. Retail Flat Flat Flat Flat 140+ HP (5%) COMBINES AG | underproduction vs. retail of 10% including for (5%) Flat Flat Flat Flat North America Row Crop COMPACT AND SERVICE EQ. NA EU SA RoW WW (5%) (5%) – (10%)
Slide 23: FY 2020E US GAAP Financial Guidance
FY 2020E | US GAAP Financial Guidance 23 FY 2020E Guidance (1) (*): Flat to slightly down Net Sales of Industrial Activities at constant currency Adjusted diluted EPS (2) $0.78 - $0.86 Free cash flow of Industrial Activities $400mn - $600m Capex and R&D expected slightly up year over year Investment
Slide 24: FY 2020E Financial Guidance vs. SBP Initial Target
FY 2020E Financial Guidance vs. FY 2020E SBP Initial Target | Highlights 24 $0.95 - $1.00 $0.78 - $0.86 AG INDUSTRY CE TURNAROUND ACCELERATION OF FX GAP TO CMD (*) DELAY “T2W” PROFITABILITY VOLATILITY INITIATIVES Adj. EPS 2020 SBP Adj. EPS 2020 Guidance Initial Target Firmly committed to our long-te
Slide 25: Appendix
Appendix INDUSTRIAL
Slide 26: Industrial Activities Q4 2019 Net Sales Split
Industrial Activities | Q4 2019 Net Sales Split 26 Chg. Chg. Agriculture Q4 2019 | Split Construction Q4 2019 | Split vs. Q4 ’18 vs. Q4 ‘18 By region: By region: NA 38% (12%) NA 51% (12%) EU 33% 1% EU 17% (5%) SA 16% (6%) SA 13% (4%) RoW 13% (14%) RoW 19% (26%) By product: By product: TRACTORS 59% (
Slide 27: Q4 2019 IA Adj. EBITDA & Adj. EBIT walk by segment & driver
Q4 2019 | IA Adj. EBITDA & Adj. EBIT walk by segment & driver 27 ($mn) CHANGE IN ADJUSTED EBIT (131) 9.0% 7.5% 5.6% 4.2% 690 258 432 (22) (29) (87) (37) 44 301 240 541 Q4 Adj. EBITDA D&A Adj EBIT AG CE C&SV PT ELIM & OTHER (*) Adj EBIT D&A Adj EBITDA Gross Margin 17.6% 19.7% 11.7% 9.6% 16.5% 15.7% Y
Slide 28: Industrial Activities FY 2019 Net Sales Split
Industrial Activities | FY 2019 Net Sales Split 28 Chg. Chg. Agriculture FY 2019 | Split Construction FY 2019 | Split vs. FY ’18 vs. FY ‘18 By region: By region: NA 36% (2%) NA 51% (8%) EU 35% (5%) EU 18% (5%) SA 15% (1%) SA 12% (0%) RoW 14% (22%) RoW 19% (16%) By product: By product: TRACTORS 59% (
Slide 29: FY 2019 IA Adj. EBITDA & Adj. EBIT walk by segment & driver
FY 2019 | IA Adj. EBITDA & Adj. EBIT walk by segment & driver 29 ($mn) CHANGE IN ADJUSTED EBIT (195) 9.6% 9.0% 5.7% 5.3% 2,671 1,086 1,585 (139) (40) (75) (43) 102 1,390 967 2,357 FY Adj. EBITDA D&A Adj EBIT AG CE C&SV PT ELIM & OTHER (*) Adj EBIT D&A Adj EBITDA Gross Margin 17.5 % 20.8% 12.6% 11.7%
Slide 30: Reconciliation of Net Income to Adj. EBIT and EBITDA by Segment
Reconciliation of Net Income (Loss) to Adj. EBIT and EBITDA by Segment (US GAAP) 30 Q4 2019 ($mn) Unallocated Items, Industrial Financial AG CE CV PT Total Elim. & Other Activities Services Net Income (Loss) (1) 27 93 120 Add back: Interest expenses of Industrial Activities, net of interest income a
Slide 31: Reconciliation of Net Income to Adj. EBIT and EBITDA by Segment
Reconciliation of Net Income (Loss) to Adj. EBIT and EBITDA by Segment (US GAAP) 31 Q4 2018 ($mn) Unallocated Items, Industrial Financial AG CE CV PT Total Elim. & Other Activities Services Net Income (Loss) (1) 170 88 258 Add back: Interest expenses of Industrial Activities, net of interest income
Slide 32: Reconciliation of Net Income to Adj. EBIT and EBITDA by Segment
Reconciliation of Net Income (Loss) to Adj. EBIT and EBITDA by Segment (US GAAP) 32 FY 2019 Unallocated Items, Industrial Financial ($mn) AG CE CV PT Total Elim. & Other Activities Services Net Income (Loss) (1) 1,093 361 1,454 Add back: Interest expenses of Industrial Activities, net of interest in
Slide 33: Reconciliation of Net Income to Adj. EBIT and EBITDA by Segment
Reconciliation of Net Income (Loss) to Adj. EBIT and EBITDA by Segment (US GAAP) 33 FY 2018 ($mn) Unallocated Items, Industrial Financial AG CE CV PT Total Elim. & Other Activities Services Net Income (Loss) (1) 714 385 1,099 Add back: Interest expenses of Industrial Activities, net of interest inco
Slide 34: Calculation of ROIC of Industrial Activities
Calculation of ROIC of Industrial Activities (U.S. GAAP) 34 ($mn) Twelve Months Rolling - December 31, 2019 2018 Adjusted EBIT of Industrial Activities 1,390 1,585 Tax impact (a) (351) (438) Adjusted EBIT of Industrial Activities after-tax (A) 1,039 1,147 Average Third-party debt of Industrial Activ
Slide 35: Q4 & FY 2019 Reconciliation of Adj. net income and EPS
Q4 & FY 2019 35 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 ($mn) FY 2019 FY 2018 Q4 2019 Q4 2018 1,454 1,099 Net income (loss) 120 258 Adjustments impacting Income (loss
Slide 36: Q4 & FY 2019 Reconciliation of Adj. net income and EPS
Q4 & FY 2019 36 Reconciliation of Adj. net income and Adj. income tax (expense) to Net Income (loss) and Income tax (expense) and ($mn) calculation of Adj. diluted EPS and Adj. ETR under U.S.GAAP FY 2019 FY 2018 Q4 2019 Q4 2018 (a) Adjustments impacting Income (loss) before income tax (expense) and
Slide 37: Q4 & FY 2019 Investment in Future Growth
Q4 & FY 2019 | Investment in Future Growth 37 ($mn) Total spending in new products CAPEX (1) R&D was $812mn, up 12% vs. FY ‘18 23% $812mn 53% 550 633 1,061 1,030 FY FY 24% 262 310 318 275 Q4 Q4 2018 2019 2018 2019 Digitalization; Electrification; Autonomous & Telematics ▪ Capex at $633mn up 15% vs.
Slide 38: Capex
Capex (1) 38 Q4 Q4 FY FY ($mn) 2019 2018 2019 2018 Investments in property, plant and equipment, and 310 262 633 550 intangible assets (1) Breakdown by Category NEW PRODUCT & TECHNOLOGY 44% 34% 44% 36% MAINTENANCE & OTHER 53% 63% 53% 59% INDUSTRIAL CAPACITY EXPANSION & LT INVESTMENTS 3% 3% 3% 5% Bre
Slide 39: Reconciliation of Operating Activities Cash to Free cash flow
Reconciliation of Net cash provided by (used in) Operating Activities to Free 39 cash flow of Industrial Activities (US GAAP) ($mn) Industrial Activities Q4 2019 Q4 2018 FY 2019 FY 2018 Net cash provided by (used in) Operating Activities 1,970 1,358 1,826 2,554 Net cash (provided by) used in Operati
Slide 40: Reconciliation of Total Debt to Net Debt
Reconciliation of Total Debt to Net Debt (US GAAP) 40 Consolidated Industrial Activities Financial Services ($mn) Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, 2019 (*) 2018 (*) 2019 (*) 2018 (*) 2019 (*) 2018 (*) Third party debt (24,854) (24,445) (5,226) (5,211) (19,628) (19,234) Intersegment no
Slide 41: From Total Debt to Net Industrial Debt
From Total Debt to Net Industrial Debt 41 Dec 31, Dec 31, ($mn) FY 2019 (*) FY 2018 (*) 2019 (*) 2018 (*) Net (debt)/cash of Industrial Activities at Total (Debt) (1) (24,854) (24,445) beginning of period (599) (903) Financial Services Third Party Debt 19,628 19,234 Adjusted EBITDA of Industrial Act
Slide 42: Liquidity & Debt Maturity
Liquidity & Debt Maturity 42 Q4 2019 | Highlights ▪ Available liquidity at December 31, 2019 was $11.2bn, compared to $9.4bn at September 30, 2019 ▪ $5.8bn of cash & cash equivalents (2) ▪ $5.5bn undrawn under medium-term committed unsecured credit lines Available Liquidity ($bn) DEBT MATURITY SCHED
Slide 43: Debt Maturity Schedule Breakdown
Debt Maturity Schedule | Breakdown 43 ($mn) Outstanding Dec 31, 2019 2020 2021 2022 2023 2024 Beyond (4.1) Bank Debt (2.4) (0.9) (0.3) (0.2) (0.2) (0.1) (8.9) Capital Market (1.4) (1.5) (1.1) (1.0) (0.6) (3.3) (0.2) Other Debt (0.1) (0.0) (0.0) (0.0) (0.0) (0.0) (13.1) Cash Portion of (Debt) Maturit
Slide 44: Europe Trucks Company performance (Q4)
Europe Trucks | Company performance 44 Q4 2016 2017 2018 2019 MKT SHARE(1) Light (3.5-7.49t) 15.8% 16.4% 13.5% 13.4% M&H (≥7.5t) 11.0% 9.5% 6.6% 7.6% Europe (*) 13.8% 13.6% 11.0% 11.5% B-TO-B Light (3.5-7.49t) 0.95 1.02 0.94 0.92 M&H (≥7.5t) 0.75 0.91 0.97 1.03 Europe 0.79 0.99 0.94 0.95 Δ 16/17 Δ 1
Slide 45: Europe Trucks Company performance (FY)
Europe Trucks | Company performance 45 FY 2016 2017 2018 2019 MKT SHARE(1) Light (3.5-7.49t) 15.3% 15.0% 13.9% 13.2% M&H (≥7.5t) 9.8% 9.4% 7.6% 6.6% Europe (*) 13.1% 12.8% 11.6% 10.9% B-TO-B Light (3.5-7.49t) 0.98 1.03 0.99 0.98 M&H (≥7.5t) 0.99 1.03 0.92 1.02 Europe 0.98 1.03 0.98 0.99 Δ 16/17 Δ 17
Slide 46: New Geographic Information
New Geographic Information 46 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, Uk
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