Market Overview

CNH Industrial 2017 first quarter revenues up 5.8% to $5.7 billion, net income increased to $49 million, net industrial debt of $2.1 billion

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LONDON, April 27, 2017 /PRNewswire/ --

Financial results presented under U.S. GAAP(1)

  • Industrial Activities revenues up 6.1% (up 6.5% on a constant currency basis) driven by demand for agricultural equipment in the LATAM region, and in the Commercial Vehicles and Powertrain segments
  • Operating profit(2)(3) of Industrial Activities at $219 million, an increase of 23%, at an operating margin of 4.1% driven by volume leverage in Agricultural Equipment and Powertrain
  • Adjusted net income(2)(3) was $58 million in the first quarter of 2017, with adjusted diluted EPS(2)(3) of $0.04
  • Net industrial debt(2)(3) was $2.1 billion at March 31, 2017, with industrial operations cash flow improved by $0.1 billion compared to the first quarter of 2016
  • In April, CNH Industrial Capital LLC issued $500 million in principal amount of 4.375% Notes due 2022, and today the Company announced the early redemption of all of the outstanding $636 million in principal amount of Case New Holland Industrial Inc. 7⅞% Senior Notes due 2017 
  • Full year guidance reaffirmed

 






Summary of Results     ($ million except EPS)





Three Months ended March 31,




2017

2016

Change



Revenues

5,681

5,372

5.8%



Net income (loss)

49

(513)

562



Adjusted net income

58

1

57









Basic EPS ($)

0.03

(0.38)

0.41



Diluted EPS ($)

0.03

(0.38)

0.41



Adjusted diluted EPS ($)

0.04

0.00

0.04
















(1)

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

(2)

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

(3)

Refer to the specific table in the "Other Supplemental Financial Information" section of this press release for the reconciliation between the non-GAAP financial measure and the most comparable GAAP financial measure.

CNH Industrial N.V. (NYSE:CNHI / MI:CNHI) today announced consolidated revenues of $5,681 million for the first quarter of 2017, up 5.8% compared to the first quarter of 2016. Net sales of Industrial Activities were $5,384 million in the first quarter of 2017, up 6.1% compared to the first quarter of 2016. Reported net income was $49 million for the first quarter of 2017. Adjusted net income was $58 million for the quarter.

Operating profit of Industrial Activities was $219 million for the first quarter of 2017, a $41 million increase compared to the first quarter of 2016, with an operating margin of 4.1%, up 0.6 p.p. compared to the first quarter of 2016.

Income taxes were $48 million in the first quarter of 2017 ($40 million in the first quarter of 2016). Adjusted income taxes(1)(2) for the first quarter of 2017 were $51 million ($43 million in the first quarter of 2016). The adjusted effective tax rate (adjusted ETR)(1)(2) was 56% (91% in the first quarter of 2016), and was impacted by unbenefited losses in certain jurisdictions.

Net industrial debt of $2.1 billion at March 31, 2017 increased by $0.6 billion from December 31, 2016. Industrial operations cash flow was an outflow of $0.5 billion in the first quarter of 2017 as a result of increased inventory to meet seasonal demand. Industrial operations cash flow improved $0.1 billion compared to the first quarter of 2016. Total debt of $24.5 billion at March 31, 2017, was down $0.8 billion compared to December 31, 2016. As of March 31, 2017, available liquidity(1)(2) was $7.6 billion, down $1.2 billion compared to December 31, 2016. In April 2017, CNH Industrial Capital LLC issued $500 million in principal amount of 4.375% Notes due 2022, and the Company announced today the early redemption of all of the outstanding $636 million in principal amount of Case New Holland Industrial Inc. 7⅞% Senior Notes due 2017.

(1)

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

(2)

Refer to the specific table in the "Other Supplemental Financial Information" section of this press release for the reconciliation between the non-GAAP financial measure and the most comparable GAAP financial measure.

Segment Results

CNH INDUSTRIAL

Revenues and Operating profit (loss) by Segment     ($ million)



Revenues


Operating profit (loss)(2)




Three Months ended March 31,


Three Months ended March 31,




2017

2016

% change

% change excl. FX(1)


2017
Profit

2016
Profit

$ change

2017 Margin

2016
Margin




2,346

2,124

10.5

8.5

Agricultural Equipment

159

90

69

6.8%

4.2%



523

536

-2.4

-2.8

Construction Equipment

(22)

14

-36

(4.2)%

2.6%



2,091

2,045

2.2

4.7

Commercial Vehicles

28

38

-10

1.3%

1.9%



1,002

882

13.6

16.9

Powertrain

74

53

21

7.4%

6.0%



(578)

(511)

-

-

Eliminations and other

(20)

(17)

-3

-

-



5,384

5,076

6.1

6.5

Total Industrial Activities

219

178

41

4.1%

3.5%



396

388

2.1

-1.0

Financial Services

120

130

-10

30.3%

33.5%



(99)

(92)

-

-

Eliminations and other

(82)

(76)

-6

-

-




5,681

5,372

5.8

6.2

Total

257

232

25

4.5%

4.3%




(1)   "Change excl. FX" or "constant currency" is a non-GAAP financial measure. Refer to the "Non-GAAP Financial Information" section of this press release for information regarding non-GAAP financial measures.

(2)   Operating profit of Industrial Activities (a non-GAAP financial 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 financial measure) is defined as revenues less selling, general and administrative expenses, interest expense and certain other operating expenses.






















Agricultural Equipment's net sales increased 10.5% in the first quarter of 2017 compared to the first quarter of 2016 (up 8.5% on a constant currency basis), as a result of a strong rebound in demand in LATAM and the continuation of positive market momentum in APAC. Revenue in NAFTA and EMEA were flat to slightly down due to a weak demand environment, partially mitigated by positive pricing.

Operating profit was $159 million in the first quarter ($90 million in the first quarter of 2016). Operating margin increased 2.6 p.p. to 6.8% compared to the first quarter of 2016, as a result of increased revenues in LATAM and APAC, as well as improved fixed cost absorption, disciplined net price realization and manufacturing efficiencies.

Construction Equipment's net sales decreased 2.4% in the first quarter of 2017 compared to the first quarter of 2016 (down 2.8% on a constant currency basis), as a result of a 5% decline in heavy industry demand in NAFTA and continued weak markets in EMEA and LATAM, partially mitigated by market share gains in NAFTA.

Operating loss was $22 million in the first quarter of 2017 (operating profit of $14 million in the first quarter of 2016). Results were affected by a planned slower production schedule in the quarter to maintain appropriate levels of channel inventory, in response to continuing weak market demand. The results were also impacted by a negative price environment driven primarily by sales channel mix in NAFTA, an unfavorable foreign exchange impact on product cost and promotional expenses related to the launch of the new mini-excavator family.

Commercial Vehicles' net sales increased 2.2% in the first quarter of 2017 compared to the first quarter of 2016 (up 4.7% on a constant currency basis), as a result of favorable truck and bus volume, partially offset by lower specialty vehicles volumes. In LATAM, recoveries in Argentinian truck demand more than offset Brazilian weakness.

Operating profit was $28 million for the first quarter of 2017 (operating margin of 1.3%) compared to $38 million in the first quarter of 2016. The decrease was mainly due to an unfavorable product and market mix in EMEA, lower specialty vehicles volumes and negative foreign currency impacts, partially offset by manufacturing efficiencies and material cost reductions.

Powertrain's net sales increased 13.6% in the first quarter of 2017 compared to the first quarter of 2016 (up 16.9% on a constant currency basis), as a result of higher volumes. Sales to external customers accounted for 45% of total net sales (44% in the first quarter of 2016).

Operating profit was $74 million for the first quarter of 2017, a $21 million increase compared to the first quarter of 2016, with an operating margin of 7.4%, up 1.4 p.p. compared to the first quarter of 2016 as a result of higher volumes and manufacturing efficiencies.

Financial Services' revenues totaled $396 million in the first quarter of 2017, an increase of 2.1% compared to the first quarter of 2016 (down 1.0% on a constant currency basis). In the first quarter of 2017, retail loan originations (including unconsolidated joint ventures) were $1.9 billion, flat compared to the first quarter of 2016. The managed portfolio (including unconsolidated joint ventures) was $24.7 billion as of March 31, 2017 (of which retail was 64% and wholesale 36%), down $0.2 billion compared to March 31, 2016.

Net income was $87 million in the first quarter of 2017, flat compared to the first quarter of 2016.

2017 Outlook

CNH Industrial is reaffirming its 2017 guidance(1) as follows:

  • Net sales of Industrial Activities between $23 billion and $24 billion;
  • Adjusted diluted EPS(2) between $0.39 and $0.41;
  • Net industrial debt at the end of 2017 between $1.4 billion and $1.6 billion.

 

(1)

At the exchange rate of 1.05 EUR/USD.

(2)

Outlook is not provided on diluted EPS, the most comparable GAAP financial measure of this non-GAAP financial measure, as the income or expense excluded from the calculation of adjusted diluted EPS and instead included in the calculation of diluted EPS are, by definition, not predictable and uncertain.

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 individual brands belonging to the Company 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 and transmissions. More information can be found on the corporate website: www.cnhindustrial.com

Additional Information

Today, at 3:30 p.m. CEST / 2:30 p.m. BST / 9:30 a.m. EDT, management will hold a conference call to present 2017 first quarter results to financial analysts and institutional investors. The call can be followed live online at: http://bit.ly/CNH_Industrial_Q1_2017 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's management believes that these non-GAAP financial measures provide useful and relevant information regarding its results and allow management and investors to assess CNH Industrial's operating trends, financial performance and financial position. Management uses these non-GAAP measures to identify operational trends, as well as make decisions regarding future spending, resource allocations and other operational decisions as they provide additional transparency with respect to our core operations. These non-GAAP financial measures have no standardized meaning presented in U.S. GAAP or EU-IFRS and are unlikely to be comparable to other similarly titled measures used by other companies due to potential differences between the companies in calculations. As a result, the use of these non-GAAP measures has limitations and they should not be considered as substitutes for measures of financial performance and financial position as prepared in accordance with U.S. GAAP and/or EU-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 expense and certain other operating expenses.
  • Trading Profit under EU-IFRS: Trading Profit is derived from financial information prepared in accordance with EU-IFRS and is defined as net revenues less cost of sales, selling, general and administrative costs, research and development costs, and other operating income and expenses.
  • Operating Profit under EU-IFRS: Operating Profit under EU-IFRS is computed starting from Trading Profit under EU-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).
  • Adjusted Net Income (Loss): is defined as net income (loss), less restructuring charges and non-recurring items, after tax. In particular, non-recurring items are specifically disclosed items that management considers rare or discrete events that are infrequent in nature and not reflective of on-going operational activities.
  • Adjusted Diluted EPS: is computed by dividing Adjusted Net Income (loss) attributable to CNH Industrial N.V. by a weighted-average number of common shares outstanding during the period that takes into consideration potential common shares outstanding deriving from the CNH Industrial share-based payment awards, when inclusion is not anti-dilutive.
  • Adjusted Income Taxes: is defined as income taxes less the tax effect of restructuring expenses and non-recurring items and non-recurring tax charges.
  • Adjusted Effective Tax Rate (Adjusted ETR): is computed by dividing a) adjusted income taxes by b) income (loss) before income taxes and equity in income of unconsolidated subsidiaries and affiliates, less restructuring expenses and non-recurring items.
  • 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.
  • Available Liquidity: is defined as cash and cash equivalents plus restricted cash and undrawn committed facilities.
  • Change excl. FX or 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.

The tables attached to this press release provide reconciliations of the non-GAAP measures used in this press release to the most directly comparable GAAP measures.

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 our 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 include, 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 our 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 we compete; development and use of new technologies and technological difficulties; the interpretation of, or adoption of new, compliance requirements with respect to engine emissions, safety or other aspects of our products; 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; our 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, follow-on private litigation in various jurisdictions after the recently settled EU antitrust investigation announced on July 19, 2016, intellectual property rights disputes, product warranty and defective product claims, and emissions and/or fuel economy regulatory and contractual issues; our 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, possible effects of Brexit, political evolutions in Turkey, terror attacks in Europe and elsewhere, and other similar risks and uncertainties and our 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, 2016, prepared in accordance with U.S. GAAP and in the Company's EU Annual Report at December 31, 2016, prepared in accordance with EU-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 we operate, it is particularly difficult to forecast our results and any estimates or forecasts of particular periods that we provide in this earnings release are uncertain. Accordingly, investors should not place undue reliance on such forward-looking statements. We can give no assurance that the expectations reflected in our forward-looking statements will prove to be correct. Our outlook is based upon assumptions relating to the factors described in the earnings release, which are sometimes based upon estimates and data received from third parties. Such estimates and data are often revised. Our actual results could differ materially from those anticipated in such forward-looking statements. We undertake no obligation to update or revise publicly our outlook or forward-looking statements. Further information concerning CNH Industrial and its businesses, including factors that potentially could materially affect CNH Industrial's financial results, is included in CNH Industrial'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 CNH Industrial or persons acting on the behalf of CNH Industrial are expressly qualified in their entirety by the cautionary statements contained herein or referred to above.

Contacts  


Media Inquiries   

Investor Relations



United Kingdom 

United Kingdom



Richard Gadeselli  

Federico Donati

Tel: +44 207 7660 346 

Tel: +44 207 7660 386



Laura Overall 

United States

Tel: +44 207 7660 338



Noah Weiss


Tel: +1 630 887 3745

E-mail: mediarelations@cnhind.com 


www.cnhindustrial.com 


 

CNH INDUSTRIAL N.V.

Condensed Consolidated Statements of Operations

For The Three Months Ended March 31, 2017 and 2016

(Unaudited)


(U.S. GAAP)


($ million)

Three Months Ended March 31,

2017


2016

Revenues




Net sales

5,384


5,076

Finance and interest income

297


296

TOTAL REVENUES

5,681


5,372

Costs and Expenses




Cost of goods sold

4,497


4,238

Selling, general and administrative expenses

542


546

Research and development expenses

191


183

Restructuring expenses

12


15

Interest expense

219


230

Other, net(1)

141


630

TOTAL COSTS AND EXPENSES

5,602


5,842

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

79


(470)

Income taxes

48


40

Equity in income of unconsolidated subsidiaries and affiliates

18


(3)

NET INCOME (LOSS)

49


(513)

Net income (loss) attributable to noncontrolling interests

3


(1)

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

46


(512)





(in $)




Earnings (loss) per share attributable to common shareholders




Basic

0.03


(0.38)

Diluted

0.03


(0.38)



Notes:

(1)

In the three months ended March 2016, Other, net included the non-recurring charge of $502 million related to the European Commission investigation.


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, 2016 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.

 

CNH INDUSTRIAL N.V.

Condensed Consolidated Balance Sheets

As of March 31, 2017 and December 31, 2016

(Unaudited)


(U.S. GAAP)


($ million)



March 31, 2017


December 31, 2016

ASSETS






Cash and cash equivalents



3,924


5,017

Restricted cash



743


837

Trade receivables, net



560


623

Financing receivables, net



18,474


18,662

Inventories, net



6,470


5,609

Property, plant and equipment, net



6,484


6,397

Investments in unconsolidated subsidiaries and affiliates



488


487

Equipment under operating leases



1,897


1,907

Goodwill



2,452


2,449

Other intangible assets, net



779


787

Deferred tax assets



989


937

Derivative assets



70


95

Other assets



1,705


1,740

TOTAL ASSETS



45,035


45,547

LIABILITIES AND EQUITY






Debt



24,500


25,276

Trade payables



5,469


5,185

Deferred tax liabilities



99


84

Pension, postretirement and other postemployment benefits



2,293


2,276

Derivative liabilities



207


249

Other liabilities



7,898


8,005

Total Liabilities



40,466


41,075

Redeemable noncontrolling interest



22


21

Common shares, €0.01, par value; outstanding 1,362,981,869 common shares and 396,263,417 special voting shares at 03/31/2017; and outstanding 1,361,630,903 common shares and 412,268,203 special voting shares at 12/31/2016



25


25

Treasury stock, at cost: 0 shares at 03/31/2017 and 1,278,708 shares at 12/31/2016



-


(9)

Additional paid in capital



4,406


4,408

Retained earnings



1,833


1,787

Accumulated other comprehensive loss



(1,723)


(1,767)

Noncontrolling interests



6


7

Equity



4,547


4,451

TOTAL LIABILITIES AND EQUITY



45,035


45,547

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, 2016 included in the Annual Report on Form 20-F. These Condensed Consolidated Balance Sheets represent the consolidation of all CNH Industrial N.V. subsidiaries.

 


CNH INDUSTRIAL N.V.

Condensed Consolidated Statements of Cash Flows

For The Three Months Ended March 31, 2017 and 2016

(Unaudited)


(U.S. GAAP)


($ million)

Three Months Ended March 31,

2017

2016

Operating activities:



Net income (loss)

49

(513)

Adjustments to reconcile net income (loss) 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

177

177

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

139

133

Loss from disposal of assets

4

1

Undistributed income of unconsolidated subsidiaries

8

42

Other non-cash items

42

55

Changes in operating assets and liabilities:



Provisions

(72)

357

Deferred income taxes

(26)

98

Trade and financing receivables related to sales, net

203

301

Inventories, net

(760)

(704)

Trade payables

198

126

Other assets and liabilities

(136)

(82)

NET CASH USED IN OPERATING ACTIVITIES

(174)

(9)

Investing activities:



Additions to retail receivables

(846)

(858)

Collections of retail receivables

1,050

1,172

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

2

2

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

188

154

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

(74)

(81)

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

(393)

(300)

Other

29

21

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES

(44)

110

Financing activities:



Proceeds from long-term debt

2,851

1,835

Payment of long-term debt

(3,869)

(2,990)

Net increase (decrease) in other financial liabilities

71

(109)

Dividends paid

(1)

(2)

Other

-

(49)

NET CASH USED IN FINANCING ACTIVITIES

(948)

(1,315)

Effect of foreign exchange rate changes on cash and cash equivalents

73

141

DECREASE IN CASH AND CASH EQUIVALENTS

(1,093)

(1,073)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR

5,017

5,384

CASH AND CASH EQUIVALENTS, END OF PERIOD

3,924

4,311

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, 2016 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.

 


CNH INDUSTRIAL N.V.

Supplemental Statements of Operations

For The Three Months Ended March 31, 2017 and 2016

(Unaudited)


(U.S. GAAP)



Industrial Activities

Financial Services

($ million)

Three Months Ended March 31,

Three Months Ended March 31,

2017

2016

2017

2016

Revenues





Net sales

5,384

5,076

-

-

Finance and interest income

36

31

396

388

TOTAL REVENUES

5,420

5,107

396

388

Costs and Expenses





Cost of goods sold

4,497

4,238

-

-

Selling, general and administrative expenses

477

477

65

69

Research and development expenses

191

183

-

-

Restructuring expenses

11

15

1

-

Interest expense

139

150

131

126

Interest compensation to Financial Services

82

76

-

-

Other, net

63

565

80

66

TOTAL COSTS AND EXPENSES

5,460

5,704

277

261

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

(40)

(597)

119

127

Income taxes

10

(6)

38

46

Equity in income of unconsolidated subsidiaries and affiliates

12

(9)

6

6

Results from intersegment investments

87

87

-

-

NET INCOME (LOSS)

49

(513)

87

87


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.

 

CNH INDUSTRIAL N.V.

Supplemental Balance Sheets

As of March 31, 2017 and December 31, 2016

(Unaudited)


(U.S. GAAP)



Industrial Activities

Financial Services

($ million)

March 31,

2017

December 31, 
2016

March 31,
2017

December 31,
2016

ASSETS





Cash and cash equivalents

3,557

4,649

367

368

Restricted cash

-

-

743

837

Trade receivables

530

596

55

58

Financing receivables

1,794

1,592

19,276

19,546

Inventories, net

6,266

5,396

204

213

Property, plant and equipment, net

6,481

6,395

3

2

Investments in unconsolidated subsidiaries and affiliates

2,895

2,886

162

153

Equipment under operating leases

20

17

1,877

1,890

Goodwill

2,298

2,296

154

153

Other intangible assets, net

766

772

13

15

Deferred tax assets

1,101

1,060

198

188

Derivative assets

68

98

8

8

Other assets

1,646

1,505

346

382

TOTAL ASSETS

27,422

27,262

23,406

23,813

LIABILITY AND EQUITY





Debt

7,393

7,691

19,711

20,061

Trade payables

5,374

5,042

120

180

Deferred tax liabilities

103

84

306

310

Pension, postretirement and other postemployment benefits

2,267

2,256

26

20

Derivative liabilities

197

239

16

21

Other liabilities

7,519

7,478

658

669

Total Liabilities

22,853

22,790

20,837

21,261

Redeemable noncontrolling interest

22

21

-

-

Equity

4,547

4,451

2,569

2,552

TOTAL LIABILITIES AND EQUITY

27,422

27,262

23,406

23,813

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.

 


CNH INDUSTRIAL N.V.

Supplemental Statements of Cash Flows

For The Three Months Ended March 31, 2017 and 2016

(Unaudited)


(U.S. GAAP)



Industrial Activities

Financial Services

($ million)

Three Months Ended March 31,

Three Months Ended March 31,

Operating activities:

2017

2016

2017

2016

Net income (loss)

49

(513)

87

87

Adjustments to reconcile net income (loss) 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

176

176

1

1

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

74

72

65

61

Loss from disposal of assets

4

1

-

-

Undistributed income (loss) of unconsolidated subsidiaries

31

37

(6)

(7)

Other non-cash items

18

26

24

29

Changes in operating assets and liabilities:





Provisions

(66)

359

(6)

(2)

Deferred income taxes

(16)

39

(10)

59

Trade and financing receivables related to sales, net

72

(33)

133

341

Inventories, net

(770)

(684)

10

(20)

Trade payables

254

174

(60)

(55)

Other assets and liabilities

(158)

(134)

24

52

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

(332)

(480)

262

546

Investing activities:





Additions to retail receivables

-

-

(846)

(858)

Collections of retail receivables

-

-

1,050

1,172

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

2

2

-

-

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

71

76

117

78

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

(74)

(80)

-

(1)

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

(229)

(143)

(164)

(157)

Other

(494)

(39)

523

60

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES

(724)

(184)

680

294

Financing activities:





Proceeds from long-term debt

120

146

2,731

1,689

Payment of long-term debt

(238)

(416)

(3,631)

(2,574)

Net increase (decrease) in other financial debt

14

(71)

57

(38)

Dividends paid

(1)

(2)

(104)

(75)

Other

-

(49)

-

-

NET CASH USED IN FINANCING ACTIVITIES

(105)

(392)

(947)

(998)

Effect of foreign exchange rate changes on cash and cash equivalents

69

111

4

30

DECREASE IN CASH AND CASH EQUIVALENTS

(1,092)

(945)

(1)

(128)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR

4,649

4,551

368

833

CASH AND CASH EQUIVALENTS, END OF PERIOD

3,557

3,606

367

705

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.

 

CNH INDUSTRIAL N.V

Other Supplemental Financial Information

(Unaudited)


CNH INDUSTRIAL
Reconciliation of Operating Profit (loss) to Net Income (loss) under U.S. GAAP   ($ million)




Three Months Ended March 31,






2017

2016



Total Operating Profit



257

232



Restructuring expenses



12

15



Interest expenses of Industrial Activities, net of interest income and eliminations



103

119



Other, net(1)



(63)

(568)



Income (loss) before income taxes and equity in income of unconsolidated subsidiaries and affiliates



79

(470)



Income taxes



48

40



Equity in income of unconsolidated subsidiaries and affiliates



18

(3)



Net income (loss)



49

(513)




(1)  
In the three months ended March 2016, Other, net included the non-recurring charge of $502 million related to the European Commission investigation


 

 

CNH INDUSTRIAL
Reconciliation of Total Debt to Net debt under U.S. GAAP   ($ million)



Consolidated


Industrial Activities


Financial Activities




March 31,

 2017

December 31, 2016


March 31,
2017

December 31, 2016


March 31,
2017

December 31, 2016



Third party debt

24,500

25,276


6,505

6,694


17,995

18,582



Intersegment notes payable

-

-


888

997


1,716

1,479



Total Debt(1)

24,500

25,276


7,393

7,691


19,711

20,061



Less:
       
Cash and cash equivalents

3,924

5,017


3,557

4,649


367

368



Restricted cash

743

837


-

-


743

837



Intersegment notes receivable

-

-


1,716

1,479


888

997



Derivatives hedging debt

(3)

2


(3)

2


-

-



Net debt (cash)(2)

19,836

19,420


2,123

1,561


17,713

17,859



(1)  
Total Debt of Industrial Activities includes Intersegment notes payable to Financial Services of $888 million and $997 million as of March 31, 2017 and December 31, 2016, respectively. Total Debt of Financial Services includes Intersegment notes payable to Industrial Activities of $1,716 million and $1,479 million as of March 31, 2017 and December 31, 2016, respectively.
(2)   The net intersegment receivable/payable balance owed by Financial Services to Industrial Activities was $828 million and $482 million as of March 31, 2017 and December 31, 2016, respectively.


 


CNH INDUSTRIAL

Reconciliation of Cash and cash equivalents to Available liquidity under U.S. GAAP   

($ million)




 

March 31, 2017

 

December 31, 2016



Cash and cash equivalents


3,924

5,017



Restricted cash


743

837



Undrawn committed facilities


2,887

2,890



Available liquidity


7,554

8,744











 

CNH INDUSTRIAL N.V.

Other Supplemental Financial Information

(Unaudited)


CNH INDUSTRIAL

Change in Net Industrial Debt under U.S. GAAP    ($ million)




Three Months ended March 31,





2017


2016



Net industrial (debt)/cash at beginning of period


(1,561)


(1,578)



Net income (loss)


49


(513)



Amortization and depreciation(1)


176


177



Changes in provisions and similar(2)


(93)


464



Change in working capital


(626)


(673)



Investments in property, plant and equipment, and intangible assets(1)


(74)


(80)



Other changes


35


3



Net industrial cash flow


(533)


(622)



Capital increases and dividends


(1)


(7)



Currency translation differences and other


(28)


(263)



Change in Net industrial debt


(562)


(892)



Net industrial (debt)/cash at end of period


(2,123)


(2,470)




(1)     Excluding assets sold under buy-back commitments and assets under operating leases.
(2)     This item also includes changes in items related to assets sold under buy-back commitments, and assets under operating leases. In the three months ended March 31, 2016, this item included the accrued provision of $502 million related to the European Commission investigation.

 

CNH INDUSTRIAL N.V.

Other Supplemental Financial Information

(Unaudited)


CNH INDUSTRIAL

Reconciliation of Adjusted net income and Adjusted income taxes to the most comparable GAAP financial measure and determination of Adjusted diluted EPS and Adjusted ETR under U.S.GAAP

($ million, except per share data)




Three Months ended March 31,





2017


2016



Net income (loss)


49


(513)



Adjustments impacting Income (loss) before income taxes and equity in income of unconsolidated subsidiaries and affiliates (a)


12


517



Adjustments impacting Income taxes (b)


(3)


(3)



Adjusted net income


58


1



Adjusted net income attributable to CNH Industrial N.V.


55


2



Weighted average shares outstanding – diluted (million)


1,366


1,364



Adjusted diluted EPS ($)


0.04


0.00






Income (loss) before income taxes and equity in income of unconsolidated subsidiaries and affiliates


79


(470)



Adjustments impacting Income (loss) before income taxes and equity in income of unconsolidated subsidiaries and affiliates (a)


12


517



Adjusted income (loss) before income taxes and equity in income of unconsolidated subsidiaries and affiliates (A)


91


47






Income taxes


48


40



Less: Adjustments impacting Income taxes (b)


3


3



Adjusted income taxes (B)


51


43






Adjusted Effective Tax Rate (Adjusted ETR) (C=B/A)


56%


91%






a)   Adjustments impacting Income (loss) before income taxes and equity in income of unconsolidated subsidiaries and affiliates



Restructuring expenses


12


15



European Commission investigation charge


-


502



Total


12


517






b)   Adjustments impacting Income taxes 



Tax effect of adjustments impacting Income (loss) before income taxes and equity in income of unconsolidated subsidiaries and affiliates


(3)


(3)



Total


(3)


(3)





 

CNH INDUSTRIAL N.V.

Other Supplemental Financial Information

(Unaudited)


CNH INDUSTRIAL
Revenues and Trading profit/(loss)(1) by Segment under EU-IFRS   ($ million)


Net revenues


Trading profit/(loss)



Three Months ended March 31,


Three Months ended March 31,



2017

2016

% change


2017

2016

Change



2,346

2,124

10.5

Agricultural Equipment

71

19

52



523

536

-2.4

Construction Equipment

(42)

(6)

-36



2,142

2,097

2.1

Commercial Vehicles

(3)

15

-18



1,002

884

13.3

Powertrain

67

46

21



(578)

(511)

-

Eliminations and other

(21)

(17)

-4



5,435

5,130

5.9

Total of Industrial Activities

72

57

15



514

455

13.0

Financial Services

120

127

-7



(120)

(110)

-

Eliminations and other

-

-

-



5,829

5,475

6.5

Total

192

184

8



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












 

CNH INDUSTRIAL

Key Balance Sheet data under EU-IFRS   ($ million)




March 31, 2017

December 31, 2016



Total Assets


47,270

47,834



Total Equity


6,728

6,634



Equity attributable to CNH Industrial N.V.


6,717

6,623



Net debt


(20,059)

(19,734)



Of which Net industrial debt(1)


(2,307)

(1,822)



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


 

CNH INDUSTRIAL

Net income reconciliation U.S. GAAP to EU-IFRS   ($ million)




Three Months ended March 31,





2017

2016



Net income (loss) in accordance with U.S. GAAP


49

(513)



Adjustments to conform with EU-IFRS:






Development costs


(42)

(40)



Other adjustments


10

20



Tax impact on adjustments


10

10



Deferred tax assets and tax contingencies recognition


(4)

(7)



Total adjustments


(26)

(17)



Profit (loss) in accordance with EU-IFRS


23

(530)






 

CNH INDUSTRIAL N.V.

Other Supplemental Financial Information

(Unaudited)


CNH INDUSTRIAL
Total Equity reconciliation U.S. GAAP to EU-IFRS  ($ million)



March 31, 2017

December 31, 2016



Total Equity under U.S. GAAP

4,547

4,451



Adjustments to conform with EU-IFRS:





Development costs

2,365

2,374



Other adjustments

(129)

(121)



Tax impact on adjustments

(648)

(655)



Deferred tax assets and tax contingencies recognition

593

585



Total adjustments

2,181

2,183



Total Equity under EU-IFRS

6,728

6,634










 

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:


Three Months Ended
March 31, 2017


At December 31, 2016


Three Months Ended
March 31, 2016


Average

At March 31




Average

At March 31

Euro

0.939

0.935


0.949


0.907

0.878

Pound sterling

0.808

0.800


0.812


0.699

0.695

Swiss franc

1.004

1.000


1.019


0.994

0.960

Polish zloty

4.058

3.953


4.184


3.959

3.740

Brazilian real

3.143

3.162


3.254


3.902

3.617

Canadian dollar

1.324

1.334


1.346


1.374

1.295

Argentine peso

15.670

15.410


15.850


14.440

14.680

Turkish lira

3.698

3.638


3.517


2.945

2.821

 

CNH INDUSTRIAL N.V.

Condensed Consolidated Income Statement

For The Three Months Ended March 31, 2017 and 2016

(Unaudited)


(EU-IFRS)



Three Months Ended March 31,

($ million)

2017

2016

Net revenues

5,829

5,475

Cost of sales

4,858

4,536

Selling, general and administrative costs

516

514

Research and development costs

240

225

Other income/(expenses)

(23)

(16)

TRADING PROFIT/(LOSS)

192

184

Gains/(losses) on the disposal of investments

-

-

Restructuring costs

13

15

Other unusual income/(expenses)(1)

8

(504)

OPERATING PROFIT/(LOSS)

187

(335)

Financial income/(expenses)

(141)

(156)

Result from investments:

19

(2)

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

19

(2)

Other income/(expenses) from investments

-

-

PROFIT/(LOSS) BEFORE TAXES

65

(493)

Income taxes

42

37

PROFIT/(LOSS) FROM CONTINUING OPERATIONS

23

(530)

PROFIT/(LOSS) FOR THE PERIOD

23

(530)




PROFIT/(LOSS) FOR THE PERIOD ATTRIBUTABLE TO:



Owners of the parent

20

(529)

Non-controlling interests

3

(1)










(in $)



BASIC EARNINGS/(LOSS) PER COMMON SHARE

0.01

(0.39)

DILUTED EARNINGS/(LOSS) PER COMMON SHARE

0.01

(0.39)


Notes:

(1)

In the three months ended March 31, 2016, Other unusual income/(expenses) included the non-recurring charge of $502 million related to the European Commission investigation.

This Condensed Consolidated Income Statement should be read in conjunction with the Company's Audited Consolidated Financial Statements and Notes for the Year Ended December 31, 2016 included in the EU Annual Report. This Condensed Consolidated Income Statement represents the consolidation of all CNH Industrial N.V. subsidiaries.

 

CNH INDUSTRIAL N.V.

Condensed Consolidated Statement of Financial Position

As of March 31, 2017 and December 31, 2016

(Unaudited)


(EU-IFRS)


($ million)


March 31, 2017

December 31, 2016

ASSETS




Intangible assets


5,493

5,504

Property, plant and equipment


6,330

6,278

Investments and other financial assets:


557

554

Investments accounted for using the equity method


507

505

Other investments and financial assets


50

49

Leased assets


1,897

1,907

Defined benefit plan assets


5

5

Deferred tax assets


950

959

Total Non-current assets


15,232

15,207

Inventories


6,628

5,732

Trade receivables


560

623

Receivables from financing activities


18,474

18,662

Current tax receivables


266

430

Other current assets


1,353

1,209

Current financial assets:


70

95

Current securities


-

-

Other financial assets


70

95

Cash and cash equivalents


4,667

5,854

Total Current assets


32,018

32,605

Assets held for sale


20

22

TOTAL ASSETS


47,270

47,834

EQUITY AND LIABILITIES




Issued capital and reserves attributable to owners of the parent


6,717

6,623

Non-controlling interests


11

11

Total Equity


6,728

6,634

Provisions:


5,614

5,687

Employee benefits


2,402

2,532

Other provisions


3,212

3,155

Debt:


24,589

25,434

Asset-backed financing


11,279

11,784

Other debt


13,310

13,650

Other financial liabilities


207

249

Trade payables


5,469

5,185

Current tax payables


59

229

Deferred tax liabilities


142

188

Other current liabilities


4,462

4,228

Liabilities held for sale


-

-

Total Liabilities


40,542

41,200

TOTAL EQUITY AND LIABILITIES


47,270

47,834

This Condensed Consolidated Statement of Financial Position should be read in conjunction with the Company's Audited Consolidated Financial Statements and Notes for the Year Ended December 31, 2016 included in the EU Annual Report. This Condensed Consolidated Statement of Financial Position represents the consolidation of all CNH Industrial N.V. subsidiaries.

 

CNH INDUSTRIAL N.V.

Condensed Consolidated Statement of Cash Flows

For The Three Months Ended March 31, 2017 and 2016

(Unaudited)


(EU-IFRS)



Three Months Ended March 31,

($ million)

2017

2016

A) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

5,854

6,311

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



Profit/(loss) for the period

23

(530)

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

291

295

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

-

-

Other non-cash items

5

43

Dividends received

25

39

Change in provisions

(167)

311

Change in deferred income taxes

(19)

100

Change in items due to buy-back commitments(1)

(17)

40

Change in operating lease items(2)

23

(36)

Change in working capital

(486)

(761)

TOTAL

(322)

(499)

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)

(148)

(161)

Consolidated subsidiaries and other equity investments

(5)

5

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

2

2

Net change in receivables from financing activities

374

666

Change in current securities

-

2

Other changes

(112)

(109)

TOTAL

111

405

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



Bonds issued

80

500

Repayment of bonds

(500)

(263)

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

8

(98)

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

(642)

(1,322)

Capital increase

-

-

Dividends paid

(1)

(2)

Purchase of treasury shares

-

(5)

Purchase of ownership interests in subsidiaries

-

(44)

TOTAL

(1,055)

(1,234)

Translation exchange differences

79

159

E) TOTAL CHANGE IN CASH AND CASH EQUIVALENTS

(1,187)

(1,169)

F) CASH AND CASH EQUIVALENTS AT END OF PERIOD

4,667

5,142



(1)

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.

(2)

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, 2016 included in the EU Annual Report. This Condensed Consolidated Statement of Cash Flows represents the consolidation of all CNH Industrial N.V. subsidiaries.

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/cnh-industrial-2017-first-quarter-revenues-up-58-to-57-billion-net-income-increased-to-49-million-net-industrial-debt-of-21-billion-300447068.html

SOURCE CNH Industrial N.V.

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