EX-99.1 2 d53318dex991.htm EX-99.1 EX-99.1

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Exhibit 99.1

2015 THIRD QUARTER RESULTS

 

CNH Industrial third quarter revenues of $5.9 billion, operating profit of Industrial Activities of $245 million at a margin of 4.4%, net loss of $128 million including the exceptional charge of $150 million from the re-measurement of Venezuelan operations

Financial results under U.S. GAAP(*) (**)

 

    Third quarter revenues totaled $5.9 billion, down 13% compared to Q3 2014 on a constant currency basis (down 24% on a reported basis). Net sales of Industrial Activities were $5.5 billion, down 13% compared to Q3 2014 on a constant currency basis (down 25% on a reported basis).

 

    Operating profit of Industrial Activities for the quarter was $245 million ($522 million in Q3 2014), with operating margin at 4.4% (7.1% in Q3 2014).

 

    Costs for research and development and selling, general and administrative expenses were $772 million in Q3 2015, down $218 million reflecting primarily the results from the Efficiency Program.

 

    Net income before restructuring and other exceptional items for the period was $38 million or $0.03 per share. Reported net loss was $128 million, or -$0.09 per share, after a $150 million exceptional charge due to the re-measurement of the Venezuelan operations to prevailing SIMADI exchange rates to the U.S. dollar.

 

    Net industrial debt was $3.4 billion at September 30, 2015 ($3.0 billion at June 30, 2015) including the impact of the Venezuelan re-measurement of $133 million on cash and cash equivalents. Available liquidity totaled $7.4 billion ($7.8 billion at June 30, 2015).

 

    Full year guidance updated as follows: net sales of Industrial Activities in the range of $25-26 billion, with operating margin of Industrial Activities between 5.6% and 6.0% and net industrial debt at the end of 2015 between $2.1 billion and $2.3 billion.

 

  (*) CNH Industrial reports quarterly and annual consolidated financial results under U.S. GAAP and IFRS. The following tables and discussion related to the financial results of the Company and its segments are prepared in accordance with U.S. GAAP. Financial results under IFRS are shown in specific tables at the end of this press release.

 

  (**) Refer to the Non-GAAP Financial Information section of this press release for information regarding non-GAAP financial measures.

CNH INDUSTRIAL

Summary Income Statement ($ million)

 

YTD (01.01 to 09.30)          3rd Quarter  
2015      2014      Change          2015     2014      Change  
  18,768         24,190         -22.4   Revenues      5,850        7,739         -24.4
  17         621         -604      Net income (loss)      (128     162         -290   
  212         773         -561      Net income before restructuring and other exceptional items (1)      38        214         -176   
  22         627         -605      Net income (loss) attributable to CNH Industrial N.V.      (124     173         -297   
  0.02         0.46         -0.44      Basic EPS ($)      (0.09     0.13         -0.22   
  0.02         0.46         -0.44      Diluted EPS ($)      (0.09     0.13         -0.22   
  0.16         0.57         -0.41      Basic EPS before restructuring and other exceptional items (1) ($)      0.03        0.16         -0.13   

 

(1) This item is a non-GAAP measure. Refer to the Non-GAAP Financial Information section of this press release for information regarding non GAAP financial measures.

CNH Industrial N.V.

Corporate Office:

25 St James’s Street

London, SW1A 1HA

United Kingdom

 


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2015 THIRD QUARTER RESULTS

 

CNH INDUSTRIAL

Income Statement Data of Industrial Activities(1) ($ million)

 

YTD (01.01 to 09.30)          3rd Quarter  
2015      2014      Change          2015      2014      Change  
  17,808         23,180         -23.2   Net sales of Industrial Activities      5,549         7,403         -25.0
  869         1,612         -743      Operating profit of Industrial Activities (2)      245         522         -277   
  4.9         7.0         -2.1 p.p.      Operating margin of Industrial Activities (%)      4.4         7.1         -2.7 p.p.   

 

(1) Industrial Activities represent the activities carried out by the four industrial segments Agricultural Equipment, Construction Equipment, Commercial Vehicles, and Powertrain, as well as Corporate functions.
(2) Operating profit of Industrial Activities is a non-GAAP measure and is defined as net sales less cost of goods sold, selling, general and administrative expenses, and research and development expenses.

London (UK) – (October 29, 2015) CNH Industrial N.V. (NYSE:CNHI / MI:CNHI) today announced consolidated revenues of $5,850 million for the third quarter of 2015, down 12.9% compared to Q3 2014 on a constant currency basis (down 24.4% on a reported basis). Net sales of Industrial Activities were $5,549 million in Q3 2015, down 13.3% compared to Q3 2014 on a constant currency basis (down 25.0% on a reported basis). Excluding the negative impact of currency translation, net sales increased for Commercial Vehicles (up 4.6%) confirming a positive trend in EMEA for trucks and buses. This increase was more than offset by the forecasted decline in Agricultural Equipment, driven by lower industry volumes in the row crop sector, primarily in NAFTA and LATAM, slightly offset by favorable net pricing in all regions. Net sales also decreased in Construction Equipment, due to continued negative industry volumes primarily in LATAM, and in Powertrain, due to lower sales to captive customers.

CNH INDUSTRIAL

Revenues by Segment ($ million)

 

YTD (01.01 to 09.30)           3rd Quarter  
2015      2014     % change           2015     2014     % change  
  8,043         11,801        -31.8       Agricultural Equipment      2,431        3,659        -33.6   
  1,933         2,546        -24.1       Construction Equipment      591        841        -29.7   
  6,696         7,534        -11.1       Commercial Vehicles      2,189        2,522        -13.2   
  2,648         3,476        -23.8       Powertrain      800        1,025        -22.0   
  (1,512)         (2,177     —         Eliminations and other      (462     (644     —     

 

 

    

 

 

   

 

 

       

 

 

   

 

 

   

 

 

 
  17,808         23,180        -23.2       Total Industrial Activities      5,549        7,403        -25.0   
  1,226         1,363        -10.1       Financial Services      390        455        -14.3   
  (266)         (353     —         Eliminations and other      (89     (119     —     

 

 

    

 

 

   

 

 

       

 

 

   

 

 

   

 

 

 
  18,768         24,190        -22.4       Total      5,850        7,739        -24.4   

Operating profit of Industrial Activities was $245 million in Q3 2015, a $255 million decrease compared to Q3 2014 on a constant currency basis (down $277 million on a reported basis) with an operating margin for the third quarter of 4.4%, down 2.7 p.p. from Q3 2014. Operating profit declined in Agricultural Equipment, driven by negative volume and product mix, primarily in the NAFTA row crop sector. These negative factors were partially offset by net price realization, lower material costs and structural cost reductions. Commercial Vehicles’ operating result improved due to favorable volume in EMEA, industrial efficiencies and a reduction in selling, general and administrative (“SG&A”) expenses as a result of the Company’s Efficiency Program. Construction Equipment’s operating profit was substantially flat, as a result of cost containment actions and net price realization in NAFTA offset by the negative effect of lower volume in LATAM. Powertrain’s operating profit decreased mainly due to lower volumes, primarily due to the decline of agricultural equipment demand, partially offset by manufacturing efficiencies.

 

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CNH INDUSTRIAL

Operating profit/(loss) by Segment (1) ($ million)

 

YTD (01.01 to 09.30)           3rd Quarter  
2015      2014     Change           2015     2014     Change  
  604         1,529        -925       Agricultural Equipment      137        433        -296   
  72         70        2       Construction Equipment      37        39        -2   
  128         (71     199       Commercial Vehicles      60        20        40   
  124         157        -33       Powertrain      35        59        -24   
  (59)         (73     14       Eliminations and other      (24     (29     5   

 

 

    

 

 

   

 

 

       

 

 

   

 

 

   

 

 

 
  869         1,612        -743       Total Industrial Activities      245        522        -277   
  397         407        -10       Financial Services      128        121        7   
  (227)         (255     28       Eliminations and other      (85     (81     -4   

 

 

    

 

 

   

 

 

       

 

 

   

 

 

   

 

 

 
  1,039         1,764        -725       Total      288        562        -274   

 

(1) Operating profit of Industrial Activities (a non-GAAP measure) is defined as net sales less cost of goods sold, selling, general and administrative expenses, and research and development expenses. Operating profit of Financial Services (a non-GAAP measure) is defined as revenues less selling, general and administrative expenses, interest expense and certain other operating expenses.

CNH INDUSTRIAL

Reconciliation of Operating Profit to Net Income ($ million)

 

YTD (01.01 to 09.30)          3rd Quarter  
2015      2014          2015     2014  
  1,039         1,764      Total Operating Profit      288        562   
  52         98      Restructuring expenses      18        56   
  341         449      Interest expenses of Industrial Activities, net of interest income and eliminations      118        150   
  (403)         (254   Other, net      (235     (97
  243         963      Income before income taxes and equity in income of unconsolidated subsidiaries and affiliates      (83     259   
  259         408      Income taxes      56        107   
  33         66      Equity in income of unconsolidated subsidiaries and affiliates      11        10   
  17         621      Net income (loss)      (128     162   

Restructuring expenses totaled $18 million for the quarter, $38 million lower than Q3 2014, and mainly related to actions in Commercial Vehicles and Agricultural Equipment as part of the Company’s Efficiency Program launched in 2014.

Interest expense, net totaled $118 million for the quarter, a decrease of $32 million or 21% compared to Q3 2014, primarily due to a more favorable cost of funding and a lower average indebtedness in the quarter.

Other, net was a charge of $235 million for the quarter, an increase of $138 million compared to Q3 2014 mainly as a result of the exceptional pre-tax charge of $150 million primarily due to the re-measurement of the net monetary assets of the Venezuelan subsidiary denominated in bolivar fuerte (“Bs.F”) adopting the Marginal Foreign Exchange System (“SIMADI”) rate of Bs.F 199.42 to the U.S. dollar, as opposed to the exchange rate Supplementary Foreign Currency Administration System (“SICAD”) rate of Bs.F 12.8 to the U.S. dollar which the Company used at June 30, 2015. The SIMADI rate is considered more reflective of the current economic environment in Venezuela and future transactions at the SICAD rate appear highly unlikely.

 

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Income taxes totaled $56 million in the quarter ($107 million in Q3 2014). Excluding the impact of the exceptional pre-tax charge relating to the re-measurement of the Venezuelan operations, for which no corresponding tax benefit has been booked, and the impact deriving from the inability to record deferred tax assets on losses in certain jurisdictions, primarily Italy and Brazil, the effective tax rate for the third quarter 2015 was 30%. The Company’s effective tax rate for the full year is expected now to be in the range of 60% to 63%. The long-term effective tax rate target of between 34% to 36% range remains unchanged.

Equity in income of unconsolidated subsidiaries and affiliates totaled $11 million for the quarter ($10 million for Q3 2014).

Net income of Financial Services was $94 million for the quarter compared to $75 million for Q3 2014, primarily due to lower provisions for credit losses and reduced income taxes, partially offset by the negative impact of currency translation.

Net income before restructuring and other exceptional items was $38 million for the quarter ($214 million in Q3 2014) or $0.03 per share ($0.16 for Q3 2014). Consolidated net loss was $128 million for the quarter (compared to net income of $162 million for Q3 2014), or -$0.09 per share ($0.13 for Q3 2014), after the $150 million exceptional charge due to the re-measurement of the Venezuelan operations.

Net industrial debt was $3.4 billion at September 30, 2015 ($3.0 billion at June 30, 2015 and $2.7 billion at December 31, 2014). Excluding the impact from the Venezuelan re-measurement, net industrial cash flow was a net outflow of $0.5 billion in the third quarter, primarily attributable to an increase in working capital related to lower payables due to the production shutdown in the quarter. The impact on net industrial debt was partially offset by favorable foreign exchange translation impact on non U.S. dollar-denominated debt for $0.2 billion.

Available liquidity at September 30, 2015 was $7.4 billion, inclusive of $2.9 billion in undrawn committed facilities ($2.8 billion at June 30, 2015), compared to $7.8 billion at June 30, 2015. The decrease is mainly attributable to a reduction in bank debt and unfavorable foreign exchange impact partially offset by lower financing needs of Financial Services due to lower portfolio receivables.

 

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Agricultural Equipment

AGRICULTURAL EQUIPMENT

Net sales & Operating profit/(loss) ($ million)

 

YTD (01.01 to 09.30)          3rd Quarter  
2015      2014      Change          2015      2014      Change  
  8,043         11,801         -31.8   Net sales      2,431         3,659         -33.6
  604         1,529         -925      Operating profit      137         433         -296   
  7.5         13.0         -5.5 p.p.      Operating margin (%)      5.6         11.8         -6.2 p.p.   

Agricultural Equipment’s net sales were $2,431 million for the quarter, down 25.1% compared to Q3 2014 on a constant currency basis (down 33.6% on a reported basis). The decrease was driven by the anticipated decline in industry volumes in the row crop sector, primarily in NAFTA and LATAM, slightly offset by favorable net pricing in all regions. The geographic distribution of net sales for the period was 39% NAFTA, 33% EMEA, 11% LATAM and 17% APAC.

The NAFTA row crop sector (primarily tractors over 140 horsepower (“hp”) and combines) was down 37% year-over-year. The under 40 hp tractor segment in NAFTA was up 8%, and the 40-140 hp tractor segment was down 2%. EMEA markets were down 8% for tractors and up 8% for combines. In LATAM, tractor and combine markets decreased 34% and 37%, respectively. APAC markets decreased 15% for tractors but were up 20% for combines.

Agricultural Equipment’s worldwide market share performance was flat for tractors in the quarter. Combine market share decreased in NAFTA and LATAM, was flat in EMEA and increased in APAC.

The Company was able to under-produce retail in the NAFTA row crop sector by 29% in Q3 2015 in the continued effort to balance channel inventory to prevailing demand conditions. Total worldwide unit production was down 24% year-over-year. The Company expects to significantly under-produce retail demand in the last quarter of the year.

Agricultural Equipment’s operating profit was $137 million for the quarter ($433 million in Q3 2014), with an operating margin of 5.6% (11.8% in Q3 2014). The decrease was mainly due to lower sales volumes, less favorable product mix primarily in the NAFTA row crop sector, and the negative effect of the significant reduction in industrial capacity utilization. These effects were partially offset by net price realization, lower material costs and structural cost reductions.

 

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Construction Equipment

CONSTRUCTION EQUIPMENT

Net sales & Operating profit/(loss) ($ million)

 

YTD (01.01 to 09.30)          3rd Quarter  
2015      2014      Change          2015      2014      Change  
  1,933         2,546         -24.1   Net sales      591         841         -29.7
  72         70         2      Operating profit      37         39         -2   
  3.7         2.7         1.0 p.p.      Operating margin (%)      6.3         4.6         1.7 p.p.   

Construction Equipment’s net sales were $591 million for the quarter, down 23.1% compared to Q3 2014 on a constant currency basis (down 29.7% on a reported basis), due to continued negative industry volumes, primarily in LATAM. The geographic distribution of net sales for the period was 55% NAFTA, 22% EMEA, 14% LATAM and 9% APAC.

In Q3 2015, Construction Equipment’s worldwide heavy and light industry sales were down 17% and 7%, respectively. Industry light equipment sales were roughly flat in NAFTA and EMEA, and down in LATAM and APAC. Industry heavy equipment sales decreased in all regions, but primarily in LATAM and APAC.

Construction Equipment’s worldwide market share was flat compared to the prior year period for both heavy and light construction equipment. Light equipment was down in NAFTA while flat to up in all other regions. Heavy equipment was flat in all regions except for LATAM, where municipality-driven demand declined as infrastructure investments, in which the Company has a significant position, slowed.

Construction Equipment’s worldwide production levels were 4% above retail sales in the quarter, in-line with production seasonality. In LATAM, underproduction vs. retail was at 9% and production level was down 48% from Q3 2014. A similar production curtailment is expected for Q4 2015 in the region, as a result of poor demand conditions in the construction sector and an uncertain environment with BNDES PSI programs.

Construction Equipment reported operating profit of $37 million for the third quarter compared to $39 million for Q3 2014, as a result of cost containment actions and net price realization in NAFTA, offset by the negative effect of lower volume in LATAM. Operating margin increased 1.7 p.p. to 6.3%.

Commercial Vehicles

COMMERCIAL VEHICLES

Net sales & Operating profit/(loss) ($ million)

 

YTD (01.01 to 09.30)          3rd Quarter  
2015      2014     Change          2015      2014      Change  
  6,696         7,534        -11.1   Net sales      2,189         2,522         -13.2
  128         (71     199      Operating profit/(loss)      60         20         40   
  1.9         (0.9     2.8 p.p.      Operating margin (%)      2.7         0.8         1.9 p.p.   

 

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Commercial Vehicles’ net sales were $2,189 million for the quarter, up 4.6% compared to Q3 2014 on a constant currency basis (down 13.2% on a reported basis), primarily as a result of favorable volume and product mix in EMEA. Excluding the negative impact of currency translation, net sales increased in EMEA driven by higher volumes for trucks, primarily in the light and heavy segments, and buses. In LATAM, net sales decreased significantly, mainly due to the decline of the Brazilian market for trucks, partially offset by positive pricing. In APAC, net sales were slightly up. The geographic distribution of net sales for the period was 80% EMEA, 12% LATAM and 8% APAC.

The European truck market (GVW >3.5 tons) was up 16% compared to Q3 2014. The light vehicle market (GVW 3.5-6.0 tons) increased 15%, the medium vehicle market (GVW 6.1-15.9 tons) increased 7% and the heavy vehicle market (GVW >16 tons) increased 21%. In LATAM, new truck registrations (GVW >3.5 tons) declined 38% compared to Q3 2014, with a decrease of 47% in Brazil and 5% in Venezuela, while Argentina increased by 21%. In APAC, registrations declined 9%.

In Q3 2015, the Company’s market share in the European truck market (GVW >3.5 tons) was 11.4%, up 1.2 p.p. compared with Q3 2014. The Company’s market share in LATAM was 11.8%, up 2.0 p.p. compared to Q3 2014.

Commercial Vehicles delivered approximately 33,500 vehicles (including buses and specialty vehicles) in the quarter, representing a 16% increase compared to Q3 2014. Volumes were higher in the light segment and heavy segment, up 15% and 24%, respectively, while volumes were substantially flat in the medium segment. Commercial Vehicles’ deliveries increased 23% in EMEA, but decreased in APAC and LATAM by 6% and 5%, respectively.

Commercial Vehicles’ Q3 2015 ending book-to-bill ratio was 0.89, a decrease of 6% over Q3 2014. Third quarter 2015 truck order intake in Europe increased 18% compared to Q3 2014.

Commercial Vehicles closed the third quarter with an operating profit of $60 million, up $40 million compared to Q3 2014, with an operating margin of 2.7% (0.8% in Q3 2014). The increase was mainly due to higher volume in EMEA, industrial efficiencies and SG&A expense reductions as a result of the Company’s Efficiency Program. The increase in operating profit occurred primarily in EMEA, where European market strength and structural cost reductions were partially offset by the negative impact of currency translation. In LATAM, operating profit also improved, primarily as a result of improved demand in Argentina and structural cost reductions enacted in the Company’s Brazilian operations, while the profit contribution of operations in Venezuela was immaterial following the re-measurement.

Powertrain

POWERTRAIN

Net sales & Operating profit/(loss) ($ million)

 

YTD (01.01 to 09.30)          3rd Quarter  
2015      2014      Change          2015      2014      Change  
  2,648         3,476         -23.8   Net sales      800         1,025         -22.0
  124         157         -33      Operating profit      35         59         -24   
  4.7         4.5         0.2 p.p.      Operating margin (%)      4.4         5.8         -1.4 p.p.   

 

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Powertrain’s net sales were $800 million for the quarter, a decrease of 7.4% compared to Q3 2014 on a constant currency basis (down 22.0% on a reported basis), on lower volumes mainly in the captive portion of the business as a result of decreased agricultural equipment demand and the 2014 build-up of Tier 4 final transition engine inventory for the off-road segment. Sales to external customers accounted for 44% of total net sales (39% in Q3 2014).

During the quarter, Powertrain sold approximately 112,500 engines, a decrease of 16% compared to Q3 2014. By major customer, 31% of engine units were supplied to Commercial Vehicles, 11% to Agricultural Equipment, 4% to Construction Equipment and the remaining 54% to external customers (units sold to third parties were up 1.4% compared to Q3 2014). Additionally, Powertrain delivered approximately 14,600 transmissions and 43,600 axles, an increase of 3% and 16%, respectively, compared to Q3 2014.

Powertrain’s operating profit was $35 million for the quarter, down $24 million compared to Q3 2014, with an operating margin of 4.4% (down 1.4 p.p. compared to Q3 2014), mainly due to lower sales volume and negative foreign exchange impacts, partially offset by manufacturing efficiencies.

Financial Services

FINANCIAL SERVICES

Revenues & Net income ($ million)

 

YTD (01.01 to 09.30)          3rd Quarter  
2015      2014      Change          2015      2014      Change  
  1,226         1,363         -10.1   Revenues      390         455         -14.3
  277         266         11      Net income      94         75         19   

Financial Services’ revenues were $390 million for the quarter, a decrease of 4.1% compared to Q3 2014 on a constant currency basis (down 14.3% on a reported basis) due to a reduction in interest yields, primarily driven by lower funding costs.

Financial Services’ net income was $94 million, up $19 million compared to Q3 2014, mainly due to lower provisions for credit losses and reduced income taxes, partially offset by the negative impact of currency translation.

Retail loan originations in the quarter were $2.2 billion, down $0.6 billion compared to Q3 2014, due to the decline in Agricultural Equipment sales and the negative impact of currency translation. The managed portfolio (including unconsolidated joint ventures) of $24.5 billion as of September 30, 2015 (of which retail was 66% and wholesale 34%) was down $0.9 billion compared to June 30, 2015. Excluding the impact of currency translation, the portfolio decreased $0.2 billion, primarily in NAFTA (wholesale).

*****

In September, CNH Industrial was confirmed as Industry Leader in the Dow Jones Sustainability Indices (DJSI) World and Europe. The Company was also named as leader in the Capital Goods Industry Group. The 2015 assessment resulted in a score of 91/100 for CNH Industrial, compared to an average of 52/100 for the participating companies in the Machinery and Electrical Equipment industry. All companies chosen for consideration in the indices are evaluated on their economic, environmental and social performance by RobecoSAM, investment specialists focused exclusively on Sustainability Investing.

 

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2015 U.S. GAAP Guidance

The Company expects that continued demand weakness primarily in LATAM and ongoing strength of the U.S. dollar will have a negative impact on the revenue levels previously forecasted for the fourth quarter of 2015. Full year guidance is therefore updated as follows:

 

    Net sales of Industrial Activities in the range of $25-26 billion, the operating margin of Industrial Activities is unchanged at 5.6% and 6.0%;

 

    Net industrial debt at the end of 2015 between $2.1 billion and $2.3 billion.

 

LOGO     LOGO
Sergio Marchionne     Richard Tobin
Chairman     Chief Executive Officer

 

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About CNH Industrial

CNH Industrial N.V. (NYSE: CNHI /MI: CNHI) is a global leader in the capital goods sector with established industrial experience, a wide range of products and a worldwide presence. Each of the Company’s individual brands is a major international force in its specific industrial sector: Case IH, New Holland Agriculture and Steyr for tractors and agricultural machinery; Case and New Holland Construction for earth moving equipment; Iveco for commercial vehicles; Iveco Bus and Heuliez Bus for buses and coaches; Iveco Astra for quarry and construction vehicles; Magirus for firefighting vehicles; Iveco Defence Vehicles for defence and civil protection; and FPT Industrial for engines, transmissions and axles. More information can be found on the corporate website: www.cnhindustrial.com

Additional Information

Today, at 6:00 p.m. CET / 5:00 p.m. GMT / 1:00 p.m. EDT, management will hold a conference call to present 2015 third quarter and first nine months results to financial analysts and institutional investors. The call can be followed live online at: http://bit.ly/1Ozq3aP and a recording will be available later on the Company’s website (www.cnhindustrial.com). A presentation will be made available on the CNH Industrial website prior to the call.

Non-GAAP Financial Information

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 Industrial’s financial performance and financial position. They provide measures which facilitate management’s ability to identify operational trends, as well as make decisions regarding future spending, resource allocations and other operational decisions. These and similar measures are widely used in the industries in which the Company operates. These financial measures may not be comparable to other similarly titled measures used by other companies and are not intended to be substitutes for measures of financial performance and financial position prepared in accordance with U.S. GAAP and/or IFRS.

CNH Industrial non-GAAP financial measures are defined as follows:

 

    Operating Profit under U.S. GAAP: Operating Profit of Industrial Activities is defined as net sales less cost of goods sold, selling, general and administrative expenses and research and development expenses. Operating Profit of Financial Services is defined as revenues, less selling, general and administrative expenses, interest expenses and certain other operating expenses.

 

    Trading Profit under IFRS: Trading Profit is derived from financial information prepared in accordance with IFRS and is defined as income before restructuring, gains/(losses) on disposal of investments and other unusual items, interest expense of Industrial Activities, income taxes, equity in income (loss) of unconsolidated subsidiaries and affiliates, non-controlling interests.

 

    Operating Profit under IFRS: Operating Profit under IFRS is computed starting from Trading Profit under IFRS plus/minus restructuring costs, other income (expenses) that are unusual in the ordinary course of business (such as gains and losses on the disposal of investments and other unusual items arising from infrequent external events or market conditions).

 

    Net income (loss) before restructuring and other exceptional items: is defined as Net income (loss), less restructuring charges and exceptional items, after tax.

 

    Net Debt and Net Debt of Industrial Activities (or Net Industrial Debt): CNH Industrial provides the reconciliation of Net Debt to Total Debt, which is the most directly comparable measure included in the consolidated balance sheets. Due to different sources of cash flows used for the repayment of the debt between Industrial Activities and Financial Services (by cash from operations for Industrial Activities and by collection of financing receivables for Financial Services), management separately evaluates the cash flow performance of Industrial Activities using Net Debt of Industrial Activities.

 

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    Working capital: is defined as trade receivables and financing receivables related to sales, net, plus inventories, less trade payables, plus other assets (liabilities), net.

 

    Constant currency: CNH Industrial discusses the fluctuations in revenues and certain non-GAAP financial measures on a constant currency basis by applying the prior-year exchange rates to current year’s values expressed in local currency in order to eliminate the impact of foreign exchange rate fluctuations.

Forward-looking statements

All statements other than statements of historical fact contained in this earning release including statements regarding our: competitive strengths; business strategy; future financial position or operating results; budgets; projections with respect to revenue, income, earnings (or loss) per share, capital expenditures, dividends, capital structure or other financial items; costs; and plans and objectives of management regarding operations and products, are forward-looking statements. These statements may include terminology such as “may”, “will”, “expect”, “could”, “should”, “intend”, “estimate”, “anticipate”, “believe”, “outlook”, “continue”, “remain”, “on track”, “design”, “target”, “objective”, “goal”, “forecast”, “projection”, “prospects”, “plan”, or similar terminology. Forward-looking statements are not guarantees of future performance. Rather, they are based on current views and assumptions and involve known and unknown risks, uncertainties and other factors, many of which are outside the Company’s control and are difficult to predict. If any of these risks and uncertainties materialize or other assumptions underlying any of the forward-looking statements prove to be incorrect, the actual results or developments may differ materially from any future results or developments expressed or implied by the forward-looking statements. Factors, risks, and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements including, among others: the many interrelated factors that affect consumer confidence and worldwide demand for capital goods and capital goods-related products; general economic conditions in each of the Company’s markets; changes in government policies regarding banking, monetary and fiscal policies; legislation, particularly relating to capital goods-related issues such as agriculture, the environment, debt relief and subsidy program policies, trade and commerce and infrastructure development; government policies on international trade and investment, including sanctions, import quotas, capital controls and tariffs; actions of competitors in the various industries in which the Company competes; development and use of new technologies and technological difficulties; compliance requirements (including engine emissions legislation and/or regulations); production difficulties, including capacity and supply constraints and excess inventory levels; labor relations; interest rates and currency exchange rates; inflation and deflation; energy prices; prices for agricultural commodities; housing starts and other construction activity; the Company’s ability to obtain financing or to refinance existing debt; a decline in the price of used vehicles; the resolution of pending litigation and investigations on a wide range of topics, including dealer and supplier litigation, intellectual property rights disputes, product warranty and defective products claims, emissions and/or fuel economy regulatory and contractual issues; the evolution of the Company’s contractual relations with Kobelco Construction Machinery Co., Ltd. and Sumitomo (S.H.I.) Construction Machinery Co., Ltd.; the Company’s pension plans and other post-employment obligations; political and civil unrest; volatility and deterioration of capital and financial markets, including further deterioration of the Eurozone sovereign debt crisis and other similar risks and uncertainties; and the Company’s success in managing the risks involved in the foregoing. Further information concerning factors, risks, and uncertainties that could materially affect the Company’s financial results is included in our annual report on Form 20-F for the year ended December 31, 2014, prepared in accordance with U.S. GAAP and in our EU Annual Report at December 31, 2014, prepared in accordance with IFRS. Investors should refer to and consider the incorporated information on risks, factors, and uncertainties in addition to the information presented here.

Forward-looking statements speak only as of the date on which such statements are made. Furthermore, in light of ongoing difficult macroeconomic conditions, both globally and in the industries in which CNH Industrial operates, it is particularly difficult to forecast results, and any estimates or forecasts of particular periods that are provided in this earnings release are uncertain. Accordingly, investors should not place undue reliance on such forward-looking statements. The Company can give no assurance that the expectations reflected in any forward-looking statements will prove to be correct. Actual results could differ materially from those anticipated in such forward-looking statements. The Company’s outlook is based upon assumptions relating to the factors

 

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described in the earnings release, which are sometimes based upon estimates and data received from third parties. Such estimates and data are often revised. The Company undertakes no obligation to update or revise publicly its outlook or forward-looking statements, whether as a result of new developments or otherwise. Further information concerning the Company and its businesses, including factors that potentially could materially affect the Company’s financial results, is included in the Company’s reports and filings with the U.S. Securities and Exchange Commission (“SEC”), the Autoriteit Financiële Markten (“AFM”) and Commissione Nazionale per le Società e la Borsa (“CONSOB”).

All future written and oral forward-looking statements by the Company or persons acting on Company’s behalf are expressly qualified in their entirety by the cautionary statements contained herein or referred to above.

 

Contacts   
Media Inquiries    Investor Relations
Richard Gadeselli    Federico Donati
Tel: +44 207 7660 346    Tel: +39 011 00 62756

Laura Overall

   Noah Weiss

Tel: +44 207 7660 346

   Tel: +1 630 887 3745

e-mail: mediarelations@cnhind.com

www.cnhindustrial.com

 

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CNH INDUSTRIAL N.V.

Condensed Consolidated Statements of Operations

For The Three Months Ended September 30, 2015 and 2014 and For The Nine Months Ended September 30, 2015 and 2014

(Unaudited)

(U.S. GAAP)

 

($ million)

   Three Months Ended September 30,     Nine Months Ended September 30,  
   2015     2014     2015     2014  

Revenues

        

Net sales

     5,549        7,403        17,808        23,178   

Finance and interest income

     301        336        960        1,012   
  

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL REVENUES

     5,850        7,739        18,768        24,190   

Costs and Expenses

        

Cost of goods sold

     4,599        5,998        14,771        18,797   

Selling, general and administrative expenses

     565        736        1,758        2,240   

Research and development expenses

     207        254        622        809   

Restructuring expenses

     18        56        52        98   

Interest expense

     258        327        824        976   

Other, net

     286        109        498        307   
  

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL COSTS AND EXPENSES

     5,933        7,480        18,525        23,227   

INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN INCOME OF UNCONSOLIDATED SUBSIDIARIES AND AFFILIATES

     (83     259        243        963   

Income taxes

     56        107        259        408   

Equity in income of unconsolidated subsidiaries and affiliates

     11        10        33        66   

NET INCOME (LOSS)

     (128     162        17        621   

Net income (loss) attributable to noncontrolling interests

     (4     (11     (5     (6

NET INCOME (LOSS) ATTRIBUTABLE TO CNH INDUSTRIAL N.V.

     (124     173        22        627   
(in $)                         

Earnings (loss) per share attributable to common shareholders

        

Basic

     (0.09     0.13        0.02        0.46   

Diluted

     (0.09     0.13        0.02        0.46   

These Condensed Consolidated Statements of Operations should be read in conjunction with the Company’s Audited Consolidated Financial Statements and Notes for the Year Ended December 31, 2014 included in the Annual Report on Form 20-F. These Condensed Consolidated Statements of Operations represent the consolidation of all CNH Industrial N.V. subsidiaries.

 

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CNH INDUSTRIAL N.V.

Condensed Consolidated Balance Sheets

As of September 30, 2015 and December 31, 2014

(Unaudited)

(U.S. GAAP)

 

($ million)

   September 30, 2015      December 31, 2014  

ASSETS

     

Cash and cash equivalents

     3,717         5,163   

Restricted cash

     782         978   

Trade receivables, net

     818         1,054   

Financing receivables, net

     18,867         21,472   

Inventories, net

     6,866         7,008   

Property, plant and equipment, net

     6,447         6,865   

Investments in unconsolidated subsidiaries and affiliates

     543         605   

Equipment under operating leases

     1,744         1,518   

Goodwill

     2,452         2,484   

Other intangible assets, net

     797         850   

Deferred tax assets

     1,811         1,747   

Derivative assets

     334         205   

Other assets

     1,748         1,964   
  

 

 

    

 

 

 

TOTAL ASSETS

     46,926         51,913   

LIABILITY AND EQUITY

     

Debt

     26,123         29,594   

Trade payables

     5,407         5,982   

Deferred tax liabilities

     774         452   

Pension, postretirement and other post-employment benefits

     2,470         2,614   

Derivative liabilities

     87         235   

Other liabilities

     7,595         8,059   
  

 

 

    

 

 

 

Total liabilities

     42,456         46,936   

Redeemable noncontrolling interest

     19         16   

Equity

     4,451         4,961   
  

 

 

    

 

 

 

TOTAL EQUITY AND LIABILITIES

     46,926         51,913   

These Condensed Consolidated Balance Sheets should be read in conjunction with the Company’s Audited Consolidated Financial Statements and Notes for the Year Ended December 31, 2014 included in the Annual Report on Form 20-F. These Condensed Consolidated Balance Sheets represent the consolidation of all CNH Industrial N.V. subsidiaries.

 

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CNH INDUSTRIAL N.V.

Condensed Consolidated Statements of Cash Flows

For The Nine Months Ended September 30, 2015 and 2014

(Unaudited)

(U.S. GAAP)

 

($ million)

   Nine Months Ended
September 30,
 
   2015     2014  

Operating activities:

    

Net income

     17        621   

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

    

Depreciation and amortization expense, net of assets under operating leases and assets sold under buy-back commitments

     516        556   

Depreciation and amortization expense of assets under operating leases and assets sold under buy-back commitments

     325        303   

Loss from disposal of assets

     6        4   

Undistributed income (loss) of unconsolidated subsidiaries

     27        (5

Other non-cash items

     283        177   

Changes in operating assets and liabilities:

    

Provisions

     (82     210   

Deferred income taxes

     37        (116

Trade and financing receivables related to sales, net

     603        (1,041

Inventories, net

     (657     (1,571

Trade payables

     (154     (861

Other assets and liabilities

     110        255   
  

 

 

   

 

 

 

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

     1,031        (1,468
  

 

 

   

 

 

 

Investing activities:

    

Net (additions) collections of retail receivables

     390        (99

Proceeds from the sale of assets, net of assets under operating leases and assets sold under buy-back commitments

     3        16   

Proceeds from the sale of assets previously under operating leases and assets sold under buy-back commitments

     511        391   

Expenditures for property, plant and equipment and intangible assets, net of assets under operating leases and assets sold under buy-back commitments

     (375     (601

Expenditures for assets under operating leases and assets sold under buy-back commitments

     (1,315     (1,240

Other

     328        451   
  

 

 

   

 

 

 

NET CASH (USED IN) IN INVESTING ACTIVITIES

     (458     (1,082
  

 

 

   

 

 

 

Financing activities:

    

Net increase (decrease) in debt

     (1,114     2,267   

Dividends paid

     (294     (381

Other

     17        15   
  

 

 

   

 

 

 

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES

     (1,391     1,901   
  

 

 

   

 

 

 

Effect of foreign exchange rate changes on cash and cash equivalents

     (628     (303
  

 

 

   

 

 

 

DECREASE IN CASH AND CASH EQUIVALENTS

     (1,446     (952
  

 

 

   

 

 

 

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR

     5,163        5,567   
  

 

 

   

 

 

 

CASH AND CASH EQUIVALENTS, END OF PERIOD

     3,717        4,615   
  

 

 

   

 

 

 

These Condensed Consolidated Statements of Cash Flows should be read in conjunction with the Company’s Audited Consolidated Financial Statements and Notes for the Year Ended December 31, 2014 included in the Annual Report on Form 20-F. These Condensed Consolidated Statements of Cash Flows represent the consolidation of all CNH Industrial N.V. subsidiaries.

 

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CNH INDUSTRIAL N.V.

Supplemental Statements of Operations

For The Three Months Ended September 30, 2015 and 2014 and For The Nine Months Ended September 30, 2015 and 2014

(Unaudited)

(U.S. GAAP)

 

     Industrial Activities      Financial Services  

($ million)

   Three Months Ended
September 30,
     Nine Months Ended
September 30,
     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
   2015     2014      2015     2014      2015      2014     2015      2014  

Revenues

                    

Net sales

     5,549        7,403         17,808        23,180         —           —          —           —     

Finance and interest income

     32        65         162        191         390         455        1,226         1,363   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

TOTAL REVENUES

     5,581        7,468         17,970        23,371         390         455        1,226         1,363   

Costs and Expenses

                    

Cost of goods sold

     4,599        5,998         14,771        18,799         —           —          —           —     

Selling, general and administrative expenses

     498        629         1,546        1,960         67         107        212         280   

Research and development expenses

     207        254         622        809         —           —          —           —     

Restructuring expenses

     18        56         51        98         —           —          1         —     

Interest expense

     152        211         501        630         141         180        448         530   

Interest compensation to Financial Services

     83        85         229        265         —           —          —           —     

Other, net

     234        92         398        239         55         52        174         161   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

TOTAL COSTS AND EXPENSES

     5,791        7,325         18,118        22,800         263         339        835         971   

INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN INCOME OF UNCONSOLIDATED SUBSIDIARIES AND AFFILIATES

     (210     143         (148     571         127         116        391         392   

Income taxes

     18        61         130        267         38         46        129         141   

Equity in income of unconsolidated subsidiaries and affiliates

     6        4         18        52         5         6        15         14   

Result from intersegment investments

     94        76         277        265         —           (1     —           1   

NET INCOME (LOSS)

     (128     162         17        621         94         75        277         266   

These Supplemental Statements of Operations are presented for informational purposes. The supplemental Industrial Activities data in these statements (with Financial Services on the equity basis) include CNH Industrial N.V.’s Agricultural Equipment, Construction Equipment, Commercial Vehicles and Powertrain segments, as well as Corporate functions. The supplemental Financial Services data in these statements refer to CNH Industrial N.V.’s Financial Services segment. Transactions between Industrial Activities and Financial Services have been eliminated to arrive at the consolidated financial statements.

 

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CNH INDUSTRIAL N.V.

Supplemental Balance Sheets

As of September 30, 2015 and December 31, 2014

(Unaudited)

(U.S. GAAP)

 

     Industrial Activities      Financial Services  

($ million)

   September 30, 2015      December 31, 2014      September 30, 2015      December 31, 2014  

ASSETS

           

Cash and cash equivalents

     2,793         4,122         924         1,041   

Restricted cash

     16         1         766         977   

Trade receivables, net

     793         1,025         53         92   

Financing receivables, net

     2,216         4,767         19,495         22,717   

Inventories, net

     6,669         6,845         197         163   

Property, plant and equipment, net

     6,445         6,862         2         3   

Investments in unconsolidated subsidiaries and affiliates

     2,893         3,063         134         136   

Equipment under operating leases

     11         20         1,733         1,498   

Goodwill

     2,300         2,324         152         160   

Other intangible assets, net

     780         828         17         22   

Deferred tax assets

     1,648         1,508         163         239   

Derivative assets

     328         198         8         9   

Other assets

     1,499         1,502         452         781   
  

 

 

    

 

 

    

 

 

    

 

 

 

TOTAL ASSETS

     28,391         33,065         24,096         27,838   

LIABILITY AND EQUITY

           

Debt

     8,414         11,520         20,553         24,086   

Trade payables

     5,284         5,850         149         197   

Deferred tax liabilities

     534         202         240         250   

Pension, postretirement and other post-employment benefits

     2,440         2,594         30         20   

Derivative liabilities

     81         221         8         16   

Other liabilities

     7,168         7,701         631         675   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total liabilities

     23,921         28,088         21,611         25,244   

Redeemable noncontrolling interest

     19         16         —           —     

Equity

     4,451         4,961         2,485         2,594   
  

 

 

    

 

 

    

 

 

    

 

 

 

TOTAL EQUITY AND LIABILITIES

     28,391         33,065         24,096         27,838   

These Supplemental Balance Sheets are presented for informational purposes. The supplemental Industrial Activities data in these statements (with Financial Services on the equity basis) include CNH Industrial N.V.’s Agricultural Equipment, Construction Equipment, Commercial Vehicles and Powertrain segments, as well as Corporate functions. The supplemental Financial Services data in these statements refer to CNH Industrial N.V.’s Financial Services segment. Transactions between Industrial Activities and Financial Services have been eliminated to arrive at the consolidated financial statements.

 

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CNH INDUSTRIAL N.V.

Supplemental Statements of Cash Flows

For The Nine Months Ended September 30, 2015 and 2014

(Unaudited)

(U.S. GAAP)

 

     Industrial Activities     Financial Services  

($ million)

   Nine Months Ended
September 30,
    Nine Months Ended
September 30,
 
   2015     2014     2015     2014  

Operating activities:

        

Net income

     17        621        277        266   

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

        

Depreciation and amortization expense, net of assets under operating leases and assets sold under buy-back commitments

     512        552        4        4   

Depreciation and amortization expense of assets under operating leases and assets sold under buy-back commitments

     173        196        152        107   

Loss from disposal of assets

     6        —          —          4   

Undistributed (loss) of unconsolidated subsidiaries

     (103     (153     (12     (15

Other non-cash items

     196        56        87        121   

Changes in operating assets and liabilities:

        

Provisions

     (93     203        11        7   

Deferred income taxes

     13        (124     24        8   

Trade and financing receivables related to sales, net

     101        110        529        (1,138

Inventories, net

     (618     (1,599     (39     28   

Trade payables

     (139     (751     (45     (123

Other assets and liabilities

     (202     (76     315        331   
  

 

 

   

 

 

   

 

 

   

 

 

 

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

     (137     (965     1,303        (400
  

 

 

   

 

 

   

 

 

   

 

 

 

Investing activities:

        

Net (additions) collections of retail receivables

     —          —          390        (99

Proceeds from the sale of assets, net of assets under operating leases and assets sold under buy-back commitments

     3        16        —          —     

Proceeds from the sale of assets under operating leases and assets sold under buy-back commitments

     218        213        293        178   

Expenditures for property, plant and equipment and intangible assets, net of assets under operating leases and assets sold under buy-back commitments

     (375     (588     —          (13

Expenditures for assets under operating leases and assets sold under buy-back commitments

     (597     (589     (718     (651

Other

     1,774        325        (1,488     113   
  

 

 

   

 

 

   

 

 

   

 

 

 

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES

     1,023        (623     (1,523     (472
  

 

 

   

 

 

   

 

 

   

 

 

 

Financing activities:

        

Net increase (decrease) in debt

     (1,467     1,942        353        325   

Dividends paid

     (294     (381     (135     (103

Other

     17        15        42        13   
  

 

 

   

 

 

   

 

 

   

 

 

 

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES

     (1,744     1,576        260        235   
  

 

 

   

 

 

   

 

 

   

 

 

 

Effect of foreign exchange rate changes on cash and cash equivalents

     (471     (248     (157     (55
  

 

 

   

 

 

   

 

 

   

 

 

 

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

     (1,329     (260     (117     (692
  

 

 

   

 

 

   

 

 

   

 

 

 

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR

     4,122        4,010        1,041        1,557   
  

 

 

   

 

 

   

 

 

   

 

 

 

CASH AND CASH EQUIVALENTS, END OF PERIOD

     2,793        3,750        924        865   
  

 

 

   

 

 

   

 

 

   

 

 

 

These Supplemental Statements of Cash Flows are presented for informational purposes. The supplemental Industrial Activities data in these statements (with Financial Services on the equity basis) include CNH Industrial N.V.’s Agricultural Equipment, Construction Equipment, Commercial Vehicles and Powertrain segments, as well as Corporate functions. The supplemental Financial Services data in these statements refer to CNH Industrial N.V.’s Financial Services segment. Transactions between Industrial Activities and Financial Services have been eliminated to arrive at the consolidated financial statements.

 

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CNH INDUSTRIAL N.V.

Other Supplemental Financial Information

(Unaudited)

(U.S. GAAP)

CNH INDUSTRIAL

Net debt ($ million)

 

     September 30, 2015     June 30, 2015     December 31, 2014  

Total debt (1)

     (26,123     (27,340     (29,594

- Asset-backed financing

     (12,498     (12,710     (13,587

- Other debt

     (13,625     (14,630     (16,007

Derivative hedging debt

     37        35        35   

Cash and cash equivalents

     3,717        4,235        5,163   

Restricted cash

     782        749        978   

Net debt (2)

     (21,587     (22,321     (23,418

Of which : Industrial Activities

     (3,439     (3,016     (2,691

Financial Services

     (18,148     (19,305     (20,727

Cash, cash equivalents and restricted cash

     4,499        4,984        6,141   

Undrawn committed facilities

     2,910        2,845        2,716   

Available liquidity

     7,409        7,829        8,857   

 

(1) Inclusive of adjustments to fair value hedges.
(2) Net Debt is a non-GAAP measure. Refer to the Non-GAAP Financial Information section of this press release for information regarding non-GAAP financial measures.

(U.S. GAAP)

CNH INDUSTRIAL

Change in Net Industrial Debt ($ million)

 

YTD (01.01- 09.30)          3rd Quarter  
2015      2014          2015     2014  
  (2,691)         (2,214   Net industrial (debt)/cash at beginning of period      (3,016     (3,692
  17         621      Net income (loss)      (128     162   
  512         552      Amortization and depreciation (*)      166        194   
  41         (36   Changes in provisions and similar, and items related to assets sold under buy-back commitments, and assets under operating leases      157        (123
  (1,084)         (2,481   Change in working capital      (458     (737
  (374)         (588   Investments in property, plant and equipment, and intangible assets (*)      (150     (246
  (97)         77      Other changes      (99     53   
  (985)         (1,855   Net industrial cash flow (1)      (512     (697
  (277)         (366   Capital increases and dividends      —          7   
  514         500      Currency translation differences      89        447   
  (748)         (1,721   Change in Net industrial debt      (423     (243
  (3,439)         (3,935   Net industrial (debt)/cash at end of period      (3,439     (3,935

 

(*) Excluding assets sold under buy-back commitments and assets under operating leases.
(1) This item is a non-GAAP measure. Refer to the Non-GAAP Financial Information section of this press release for information regarding non GAAP financial measures.

 

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CNH INDUSTRIAL N.V.

Other Supplemental Financial Information

(Unaudited)

(U.S. GAAP)

CNH INDUSTRIAL

Net Income and basic EPS before Restructuring and Exceptional Items

($ million, except per share data)

 

Nine Months Ended September 30,           Three Months Ended September 30,  
2015     2014           2015     2014  
  17        621       Net income (loss)      (128     162   
  45        88       Restructuring expenses, net of tax      16        52   
  150 (1)      64       Other exceptional items, net of tax      150 (1)      —     
  212        773       Net income before restructuring and other exceptional items      38        214   
  214        768       Net income (loss) before restructuring and other exceptional items attributable to CNH Industrial N.V.      39        214   
  1,360        1,354       Weighted average shares outstanding (million)      1,362        1,354   
  0.16        0.57       Basic EPS before restructuring and exceptional items ($)      0.03        0.16   

 

(1)  Represents the exceptional charge due to the re-measurement of Venezuelan operations.

(U.S. GAAP)

CNH INDUSTRIAL

Industrial Activities Cash Provided (Used) by Working Capital ($ million)

 

     Balance as of
September 30,
2015
    Balance as of
June 30, 2015
    Differences     Of which:
effect of
Foreign
Currency
Translation
and Non-
Cash
Transactions
    Cash
Provided
(Used) by
Working
Capital
 

Trade and financing receivables related to sales, net

     850        872        22        85        (63

Inventories, net

     6,669        7,019        350        312        38   

Trade payables

     (5,284     (5,815     (531     (77     (454

Other assets and liabilities, net

     (194     (190     4        (17     21   

Working capital (1)

     2,041        1,886        (155     303        (458

 

(1) This item is a non-GAAP measure. Refer to the Non-GAAP Financial Information section of this press release for information regarding non GAAP financial measures.

(U.S. GAAP)

CNH INDUSTRIAL

Industrial Activities Cash Provided (Used) by Working Capital ($ million)

 

     Balance as of
September 30,
2015
    Balance as of
December 31,
2014
    Differences     Of which:
effect of
Foreign
Currency
Translation
and Non-
Cash
Transactions
    Cash
Provided
(Used) by
Working
Capital
 

Trade and financing receivables related to sales, net

     850        1,096        246        145        101   

Inventories, net

     6,669        6,845        176        784        (608

Trade payables

     (5,284     (5,850     (566     (427     (139

Other assets and liabilities, net

     (194     (674     (480     (42     (438

Working capital

     2,041        1,417        (624     460        (1,084

 

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CNH INDUSTRIAL N.V.

Condensed Consolidated Income Statement

For The Three Months Ended September 30, 2015 and 2014 and For The Nine Months Ended September 30, 2015 and 2014

(Unaudited)

(IFRS)

 

($ million)

   3rd Quarter
2015
    3rd Quarter
2014
    01/01-09/30
2015
    01/01-09/30
2014
 

Net revenues

     5,968        7,817        19,095        24,469   

Cost of sales

     4,923        6,322        15,740        19,760   

Selling, general and administrative costs

     537        672        1,666        2,110   

Research and development costs

     223        217        638        645   

Other income/(expenses)

     (18     (36     (60     (73

TRADING PROFIT/(LOSS)

     267        570        991        1,881   

Gains/(losses) on the disposal of investments

     —          —          —          —     

Restructuring costs

     16        51        48        116   

Other unusual income/(expenses)

     (30     (14     (41     (24

OPERATING PROFIT/(LOSS)

     221        505        902        1,741   

Financial income/(expenses)

     (296     (191     (608     (585

Result from investments:

     12        12        38        68   

Share of the profit/(loss) of investees accounted for using the equity method

     12        12        40        68   

Other income/(expenses) from investments

     —          —          (2     —     

PROFIT/(LOSS) BEFORE TAXES

     (63     326        332        1,224   

Income taxes

     49        92        237        441   

PROFIT/(LOSS) FROM CONTINUING OPERATIONS

     (112     234        95        783   

Profit/(loss) from discontinued operations

     —          —          —          —     

PROFIT/(LOSS) FOR THE PERIOD

     (112     234        95        783   

PROFIT/(LOSS) FOR THE PERIOD ATTRIBUTABLE TO:

        

Owners of the parent

     (108     245        98        789   

Non-controlling interests

     (4     (11     (3     (6
(in $)                         

BASIC EARNINGS/(LOSS) PER COMMON SHARE

     (0.08     0.18        0.07        0.58   

DILUTED EARNINGS/(LOSS) PER COMMON SHARE

     (0.08     0.18        0.07        0.58   

These Condensed Consolidated Income Statements should be read in conjunction with the Company’s Audited Consolidated Financial Statements and Notes for the Year Ended December 31, 2014 included in the EU Annual Report. This Condensed Consolidated Income Statements represents the consolidation of all CNH Industrial N.V. subsidiaries.

 

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CNH INDUSTRIAL N.V.

Condensed Consolidated Statement of Financial Position

As of September 30, 2015 and December 31, 2014

(Unaudited)

(IFRS)

 

($ million)

   September 30, 2015      December 31, 2014  

ASSETS

     

Intangible assets

     5,747         6,031   

Property, plant and equipment

     6,339         6,733   

Investments and other financial assets:

     621         690   

Investments accounted for using the equity method

     575         633   

Other investments and financial assets

     46         57   

Leased assets

     1,744         1,518   

Defined benefit plan assets

     14         20   

Deferred tax assets

     1,419         1,655   
  

 

 

    

 

 

 

Total Non-current assets

     15,884         16,647   

Inventories

     6,975         7,140   

Trade receivables

     818         1,054   

Receivables from financing activities

     18,867         21,472   

Current tax receivables

     414         324   

Other current assets

     1,144         1,434   

Current financial assets:

     334         205   

Current securities

     —           —     

Other financial assets

     334         205   

Cash and cash equivalents

     4,499         6,141   
  

 

 

    

 

 

 

Total Current assets

     33,051         37,770   

Assets held for sale

     17         24   
  

 

 

    

 

 

 

TOTAL ASSETS

     48,952         54,441   

EQUITY AND LIABILITIES

     

Issued capital and reserves attributable to owners of the parent

     6,895         7,534   

Non-controlling interests

     45         43   
  

 

 

    

 

 

 

Total Equity

     6,940         7,577   

Provisions:

     5,839         6,386   

Employee benefits

     2,708         2,831   

Other provisions

     3,131         3,555   

Debt:

     26,202         29,701   

Asset-backed financing

     12,498         13,587   

Other debt

     13,704         16,114   

Other financial liabilities

     87         235   

Trade payables

     5,407         5,982   

Current tax payables

     209         206   

Deferred tax liabilities

     372         399   

Other current liabilities

     3,896         3,955   

Liabilities held for sale

     —           —     

Total Liabilities

     42,012         46,864   
  

 

 

    

 

 

 

TOTAL EQUITY AND LIABILITIES

     48,952         54,441   

These Condensed Consolidated Statements of Financial Position should be read in conjunction with the Company’s Audited Consolidated Financial Statements and Notes for the Year Ended December 31, 2014 included in the EU Annual Report. This Condensed Consolidated Statements of Financial Position represents the consolidation of all CNH Industrial N.V. subsidiaries.

 

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CNH INDUSTRIAL N.V.

Condensed Consolidated Statement of Cash Flows

For The Nine Months Ended September 30, 2015 and 2014

(Unaudited)

(IFRS)

 

($ million)

   01/01-09/30/2015     01/01-09/30/2014  

A) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

     6,141        6,489   

B) CASH FLOWS FROM/(USED IN) OPERATING ACTIVITIES DURING THE PERIOD:

    

Profit/(loss) for the period

     95        783   

Amortization and depreciation (net of vehicles sold under buy-back commitments and operating leases)

     841        861   

(Gains)/losses from disposal of non-current assets (net of vehicles sold under buy-back commitments)

     6        —     

Other non-cash items

     233        86   

Dividends received

     61        61   

Change in provisions

     (146     190   

Change in deferred income taxes

     47        (127

Change in items due to buy-back commitments (a)

     75        85   

Change in operating lease items (b)

     (316     (334

Change in working capital

     (718     (2,310
  

 

 

   

 

 

 

TOTAL

     178        (705

C) CASH FLOWS FROM/(USED IN) INVESTMENT ACTIVITIES:

    

Investments in:

    

Property, plant and equipment and intangible assets (net of vehicles sold under buy-back commitments and operating leases)

     (704     (1,086

Consolidated subsidiaries and other equity investments

     (5     (5

Proceeds from the sale of non-current assets (net of vehicles sold under buy-back commitments)

     (3     16   

Net change in receivables from financing activities

     902        (1,148

Change in current securities

     —          —     

Other changes

     199        264   
  

 

 

   

 

 

 

TOTAL

     389        (1,959

D) CASH FLOWS FROM/(USED IN) FINANCING ACTIVITIES:

    

Bonds issued

     600        2,801   

Repayment of bonds

     (1,126     —     

Issuance of other medium-term borrowings (net of repayment)

     (476     453   

Net change in other financial payables and other financial assets/liabilities

     (266     (982

Capital increase

     17        15   

Dividends paid

     (294     (381
  

 

 

   

 

 

 

TOTAL

     (1,545     1,906   

Translation exchange differences

     (664     (314
  

 

 

   

 

 

 

E) TOTAL CHANGE IN CASH AND CASH EQUIVALENTS

     (1,642     (1,072

F) CASH AND CASH EQUIVALENTS AT END OF PERIOD

     4,499        5,417   

 

 

(a) The cash flows generated by the sale of vehicles under buy-back commitments, net of the amounts included in Profit/(loss) for the period, are included under operating activities in a single line item which includes changes in working capital, capital expenditures, depreciation and impairment losses. This item also includes gains and losses arising from the sales of vehicles transferred under buy-back commitments that occur before the end of the agreement term without repossession of the vehicle.
(b) Cash flows generated during the period by operating lease arrangements are included in operating activities in a single line item which includes capital expenditures, depreciation, impairment losses and changes in inventories.

These Condensed Consolidated Statement of Cash Flows should be read in conjunction with the Company’s Audited Consolidated Financial Statements and Notes for the Year Ended December 31, 2014 included in the EU Annual Report. This Condensed Consolidated Statement of Cash Flows represents the consolidation of all CNH Industrial N.V. subsidiaries.

 

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CNH INDUSTRIAL N.V.

Other Supplemental Financial Information

(Unaudited)

CNH INDUSTRIAL

Revenues by Segment under IFRS ($ million)

 

Nine Months Ended September 30,           3rd Quarter  
2015      2014     % change           2015     2014     % change  
  8,043         11,801        -31.8       Agricultural Equipment      2,431        3,659        -33.6   
  1,933         2,546        -24.1       Construction Equipment      591        841        -29.7   
  6,860         7,675        -10.6       Commercial Vehicles      2,238        2,565        -12.7   
  2,656         3,484        -23.8       Powertrain      803        1,027        -21.8   
  (1,512)         (2,177     —         Eliminations and other      (462     (644     —     

 

 

    

 

 

   

 

 

       

 

 

   

 

 

   

 

 

 
  17,980         23,329        -22.9       Total Industrial Activities      5,601        7,448        -24.8   
  1,450         1,541        -5.9       Financial Services      465        504        -7.7   
  (335)         (401     —         Eliminations and other      (98     (135     —     

 

 

    

 

 

   

 

 

       

 

 

   

 

 

   

 

 

 
  19,095         24,469        -22.0       Total      5,968        7,817        -23.7   

CNH INDUSTRIAL

Trading profit/(loss) by Segment under IFRS ($ million)

 

Nine Months Ended September 30,           3rd Quarter  
2015      2014     Change           2015     2014     Change  
  434         1,451        -1,017       Agricultural Equipment      66        398        -332   
  38         64        -26       Construction Equipment      23        29        -6   
  79         (111     190       Commercial Vehicles      45        2        43   
  105         147        -42       Powertrain      27        52        -25   
  (57)         (63     6       Eliminations and other      (21     (28     7   

 

 

    

 

 

   

 

 

       

 

 

   

 

 

   

 

 

 
  599         1,488        -889       Total Industrial Activities      140        453        -313   
  392         393        -1       Financial Services      127        117        10   
  —           —          —         Eliminations and other      —          —          —     

 

 

    

 

 

   

 

 

       

 

 

   

 

 

   

 

 

 
  991         1,881        -890       Total      267        570        -303   

CNH INDUSTRIAL

Key Balance Sheet data under IFRS ($ million)

 

     September 30, 2015     June 30, 2015     December 31, 2014  

Total assets

     48,952        51,321        54,441   

Total equity

     6,940        7,366        7,577   

Equity attributable to CNH Industrial N.V.

     6,895        7,314        7,534   

Net debt

     (21,456     (22,348     (23,590

Of which Net industrial debt

     (3,299     (3,053     (2,874

 

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CNH INDUSTRIAL N.V.

Other Supplemental Financial Information

(Unaudited)

CNH INDUSTRIAL

Net income reconciliation ($ million)

 

Nine Months Ended September 30,          3rd Quarter  
2015      2014          2015     2014  
  17         621      Net income (loss) under U.S. GAAP      (128     162   
    

Adjustments to conform with IFRS:

    
  2         181     

Development costs, net of amortization

     (7     39   
  6         6     

Goodwill and other intangible assets

     2        2   
  33         12     

Defined benefit plans

     11        4   
  4         (18  

Restructuring provisions

     2        5   
  11         14     

Other adjustments

     1        7   
  (12)         (97  

Tax impact on adjustments

     2        (51
  34         64     

Deferred tax assets and tax contingencies recognition

     5        66   

 

 

    

 

 

      

 

 

   

 

 

 
  78         162     

Total adjustments

     16        72   
  95         783      Profit under IFRS      (112     234   

CNH INDUSTRIAL

Total Equity reconciliation ($ million)

 

     September 30, 2015     December 31, 2014  

Total Equity under U.S. GAAP

     4,451        4,961   

Adjustments to conform with IFRS:

    

Development costs, net of amortization

     2,614        2,819   

Goodwill and other intangible assets

     (116     (122

Defined benefit plans

     (46     (6

Restructuring provisions

     (6     (12

Other adjustments

     3        (16

Tax impact on adjustments

     (769     (815

Deferred tax assets and tax contingencies recognition

     809        768   
  

 

 

   

 

 

 

Total adjustments

     2,489        2,616   
  

 

 

   

 

 

 

Total Equity under IFRS

     6,940        7,577   

Translation of financial statements denominated in a currency other than the U.S. dollar

The principal exchange rates used to translate into U.S. dollars the financial statements prepared in currencies other than the U.S. dollar were as follows:

 

     01/01-09/30/2015      At December 31, 2014      01/01-09/30/2014  
     Average      At September 30             Average      At September 30  

Euro

     0.898         0.893         0.824         0.738         0.795   

Pound sterling

     0.653         0.659         0.642         0.599         0.618   

Swiss franc

     0.953         0.974         0.990         0.899         0.959   

Polish zloty

     3.731         3.789         3.520         3.081         3.320   

Brazilian real

     3.164         4.000         2.653         2.290         2.449   

Canadian dollar

     1.260         1.342         1.158         1.094         1.117   

Argentine peso

     8.966         9.420         8.551         7.984         8.478   

Turkish lira

     2.666         3.026         2.333         2.165         2.287   

 

25