CNH Industrial reported 2017 consolidated revenues up 10% to $27.4 billion, net income at $313 million, with adjusted net income(2)(3) at $669 million or $0.48 per share. Net industrial debt(2)(3) reduced to $0.9 billion
LONDON, Jan. 30, 2018 /PRNewswire/ --
Financial results presented under U.S. GAAP((1))
-- Industrial Activities' revenues up 11% (up 9% on a constant currency
basis), with solid growth in all segments
-- Operating profit((2)(3)) of Industrial Activities increased 18% to
$1,519 million, with an operating margin of 5.8%, as a result of
positive performances in the Agricultural Equipment, Powertrain and
Construction Equipment segments
-- Adjusted net income increased to $669 million (up 39%) in full year
2017, with adjusted diluted EPS((2)(3)) of $0.48
-- Net industrial debt was $0.9 billion at December 31, 2017, a 45%
reduction compared to December 31, 2016
-- The Board of Directors is recommending a dividend of EUR0.14 per common
share, or approximately EUR191 million (~$237 million), an increase of
27%. The Board of Directors will also be recommending a reauthorization
and upsizing of the Company's share repurchase program to $700 million
-- For 2018, CNH Industrial expects net sales of Industrial Activities
between $27 billion and $28 billion and an increase of 30% of adjusted
diluted EPS to between $0.63 and $0.67. Net industrial debt expected
between $0.8 billion and $1.0 billion
Summary of Results ($ million except EPS)
Year Ended December 31, Three Months Ended December 31,
----------------------- -------------------------------
2017 2016 Change 2017 2016 Change
---- ---- ------ ---- ---- ------
27,361 24,872 10.0% Consolidated revenues 8,102 6,998 15.8%
------ ------ ---- --------------------- ----- ----- ----
313 (249) 562 Net income (loss) (40) 96 -136
--- ---- --- ---------------- --- --- ----
669 482 187 Adjusted net income 197 197 -
--- --- --- ------------------- --- --- ---
0.22 (0.18) 0.40 Basic EPS ($) (0.03) 0.07 -0.10
---- ----- ---- ------------ ----- ---- -----
0.22 (0.18) 0.40 Diluted EPS ($) (0.03) 0.07 -0.10
---- ----- ---- -------------- ----- ---- -----
0.48 0.35 0.13 Adjusted diluted EPS ($) 0.14 0.14 -
---- ---- ---- ----------------------- ---- ---- ---
CNH Industrial N.V. (NYSE:CNHI / MI:CNHI) today announced consolidated revenues of $27,361 million for the full year 2017, up 10% compared to 2016. Net sales of Industrial Activities were $26,168 million for the year, up 11% compared to 2016. In the fourth quarter of 2017, consolidated revenues were $8,102 million, up 16% compared to the fourth quarter of 2016. Net sales of Industrial Activities were $7,798 million for the fourth quarter of 2017, up 17% compared to the fourth quarter of 2016. Net income was $313 million for the full year 2017 and includes a non-cash pre- and after-tax charge of $92 million due to the deconsolidation of CNH Industrial's Venezuelan operations effective December 31, 2017; a non-cash tax charge of $123 million due to the U.S. Tax Cuts and Jobs Act (the "U.S. Act") and tax legislation changes in the UK and certain other countries enacted in the fourth quarter of 2017, as disclosed in our press release of January 25, 2018; as well as a total pre-tax charge of $64 million (total after-tax charge of $55 million) related to the repurchase/early redemption of certain notes in 2017.
(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.
Adjusted net income was $669 million for the full year 2017 compared to $482 million in 2016. Adjusted diluted EPS in 2017 was $0.48, up 37% compared to 2016. For the fourth quarter of 2017, net loss was $40 million and, as mentioned above, was affected by the $92 million charge for Venezuelan operations deconsolidation, the $123 million charge due to the U.S. Act and other tax legislation changes, as well as a $8 million charge on early redemption of notes. The adjusted net income was $197 million for the quarter, flat compared to the fourth quarter of 2016. Adjusted diluted EPS in the fourth quarter of 2017 was $0.14, flat compared to the fourth quarter of 2016.
Operating profit of Industrial Activities was $1,519 million for the full year 2017 compared to $1,291 million in 2016, with an operating margin of 5.8%, up 0.3 percentage points ("p.p.") compared to 2016. In the fourth quarter of 2017, operating profit of Industrial Activities was $468 million, compared to $412 million in the fourth quarter of 2016, with an operating margin of 6.0% (6.2% in 2016).
For the full year 2017, income taxes were $455 million ($298 million in 2016), including the $123 million non-cash tax charge. Adjusted income taxes((1)(2)) for the full year 2017 were $348 million ($265 million in 2016). The adjusted effective tax rate (adjusted ETR)((1)(2) ) improved by 2 p.p. to 37%, when compared to 2016. For 2018, we expect the adjusted ETR to be in the range of 30% to 32%, reflecting the positive impact of the recently enacted rate reductions in the U.S. and several other jurisdictions.
Net industrial debt was reduced to $0.9 billion at December 31, 2017, down $1.7 billion and $0.7 billion compared to September 30, 2017, and December 31, 2016, respectively, as a result of strong cash flow performance mainly arising from reduced working capital levels. Total debt was $25.9 billion at December 31, 2017, up $0.6 billion compared to December 31, 2016, with third party debt in Industrial Activities down $0.2 billion from December 31, 2016 to $6.5 billion (or down $0.8 billion at constant currency). At December 31, 2017, available liquidity((1)(2)) was $9.4 billion, up $0.6 billion compared to December 31, 2016.
During the quarter, CNH Industrial N.V. issued $500 million in aggregate principal amount of 3.850% Notes due 2027. This was the first bond issued after the Company's securities became eligible for the main investment grade indices in the U.S. market (following the assignment of the investment grade rating from Fitch and the upgrade to investment grade from S&P). This is the first 10-year term public bond ever issued by the Company.
(1) This item is a non-GAAP financial
measure. Refer to the "Non-GAAP
Financial Information" section of
this press release for information
regarding non-GAAP financial
measures.
(2) Refer to the specific table in the
"Other Supplemental Financial
Information" section of this press
release for the reconciliation
between the non-GAAP financial
measure and the most comparable
GAAP financial measure.
Segment Results
CNH INDUSTRIAL
Revenues by Segment ($ million)
Year Ended December 31, Three Months Ended December 31,
----------------------- -------------------------------
2017 2016 % change % change 2017 2016 % change % change
excl. FX(1) excl. FX(1)
--- -----------
11,130 10,120 10.0 8.0 Agricultural Equipment 3,240 2,829 14.5 10.9
------ ------ ---- --- ---------------------- ----- ----- ---- ----
2,626 2,304 14.0 12.8 Construction Equipment 785 578 35.8 33.4
----- ----- ---- ---- ---------------------- --- --- ---- ----
10,415 9,553 9.0 7.0 Commercial Vehicles 3,212 2,799 14.8 8.0
------ ----- --- --- ------------------- ----- ----- ---- ---
4,372 3,707 17.9 15.9 Powertrain 1,159 952 21.7 13.1
----- ----- ---- ---- ---------- ----- --- ---- ----
(2,375) (2,015) - - Eliminations and other (598) (476) - -
------ ------ --- --- ---------------------- ---- ---- --- ---
26,168 23,669 10.6 8.6 Total Industrial Activities 7,798 6,682 16.7 11.6
------ ------ ---- --- --------------------------- ----- ----- ---- ----
1,625 1,570 3.5 1.3 Financial Services 420 397 5.8 3.0
----- ----- --- --- ------------------ --- --- --- ---
(432) (367) - - Eliminations and other (116) (81) - -
---- ---- --- --- ---------------------- ---- --- --- ---
27,361 24,872 10.0 8.1 Total 8,102 6,998 15.8 10.8
------ ------ ---- --- ----- ----- ----- ---- ----
(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.
CNH INDUSTRIAL
Operating Profit (loss)(1) by Segment ($ million)
Year Ended December 31, Three Months Ended December 31,
----------------------- -------------------------------
2017 2016 $2017 2016 2017 2016 $2017 2016
Profit Profit Margin Margin Profit Profit change Margin Margin
change
------
949 818 131 8.5% 8.1% Agricultural Equipment 279 272 7 8.6% 9.6%
--- --- --- --- --- ---------------------- --- --- --- --- ---
21 2 19 0.8% 0.1% Construction Equipment 13 (30) 43 1.7% (5.2)%
--- --- --- --- --- ---------------------- --- --- --- --- -----
272 333 -61 2.6% 3.5% Commercial Vehicles 94 131 -37 2.9% 4.7%
--- --- --- --- --- ------------------- --- --- --- --- ---
362 232 130 8.3% 6.3% Powertrain 102 61 41 8.8% 6.4%
--- --- --- --- --- ---------- --- --- --- --- ---
(85) (94) 9 - - Eliminations and other (20) (22) 2 - -
--- --- --- --- --- ---------------------- --- --- --- --- ---
1,519 1,291 228 5.8% 5.5% Total 468 412 56 6.0% 6.2%
Industrial Activities
---------------------
479 478 1 29.5% 30.4% Financial Services 114 115 -1 27.1% 29.0%
--- --- --- ---- ---- ------------------ --- --- --- ---- ----
(336) (330) -6 - - Eliminations and other (88) (86) -2 - -
---- ---- --- --- --- ---------------------- --- --- --- --- ---
1,662 1,439 223 6.1% 5.8% Total 494 441 53 6.1% 6.3%
----- ----- --- --- --- ----- --- --- --- --- ---
(1) 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% for the full year 2017 compared to 2016 (up 8% on a constant currency basis). In LATAM, the increase was mainly due to higher industry volume, market share gains, a favorable mix of higher horsepower products and net price realization. Net sales increased in APAC mainly driven by favorable volume in Australia, Russia and South East Asia. In EMEA, net sales increased due to higher industry volume, a favorable product mix and net price realization. In NAFTA, net sales decreased as a result of de-stocking actions in our dealer network, primarily with the high horsepower tractors and the hay and forage product lines. NAFTA industry volumes were flat overall, with the row crop sector higher, offset by lower livestock sector volumes. In the fourth quarter of 2017, Agricultural Equipment's net sales increased 15% compared to the fourth quarter of 2016 (up 11% on a constant currency basis). Net sales increased in EMEA, primarily driven by higher combine sales in preparation of the 2018 season and positive price realization. Net sales also increased in APAC and in LATAM. In NAFTA, net sales were flat.
Full year 2017 operating profit was $949 million, a 16% increase compared to $818 million in 2016, mainly due to the favorable volume and product mix in all regions except NAFTA. One percent net price realization more than offset increases in raw material cost and unfavorable foreign exchange fluctuations. Agricultural Equipment also increased spending in research and development, primarily related to our new precision farming solutions, and in selling, general and administrative expenses, primarily associated with the increased sales activity. Operating margin increased 0.4 p.p. to 8.5%. In the fourth quarter of 2017, operating profit was $279 million ($272 million in the fourth quarter of 2016), with an operating margin of 8.6% (operating margin of 9.6% in the fourth quarter of 2016). Favorable volume, net price realization and lower warranty costs were partially offset by an unfavorable product mix, higher manufacturing costs in EMEA as a result of the transition to new regulatory requirements and an overall increase in research and development spending.
Construction Equipment's net sales increased 14% in the full year 2017 compared to 2016 (up 13% on a constant currency basis), due to higher industry volume in all regions except EMEA, and net price realization, primarily in NAFTA and LATAM. In the fourth quarter of 2017, net sales increased 36% compared to the fourth quarter of 2016 (up 33% on a constant currency basis), driven by market growth in all regions.
Full year 2017 operating profit was $21 million compared to $2 million in 2016, with an operating margin of 0.8% (up 0.7 p.p. compared to 2016). The increase was due to higher volume including a positive overhead absorption and net price realization, partially offset by increases in raw material cost, unfavorable foreign exchange impacts on product components, and increased production costs. In the fourth quarter of 2017, operating profit was $13 million compared to an operating loss of $30 million in the fourth quarter of 2016.Higher industry volume and positive price realization, partially offset by ramp-up costs to accommodate increased production (up more than 50% in the quarter compared to the fourth quarter of 2016), to meet retail sales in the quarter, led to these improved results. Operating margin increased 6.9 p.p. to 1.7%. The global order book in Construction Equipment remains solid with an increase year-over-year of over 30%.
Commercial Vehicles' net sales increased 9% in the full year 2017 compared to 2016 (up 7% on a constant currency basis) as result of higher truck and bus sales in EMEA, higher volume and mix in APAC, and recovering truck sales in LATAM, mainly in Argentina. In the fourth quarter of 2017, net sales increased 15% compared to the fourth quarter of 2016 (up 8% on a constant currency basis). In EMEA and APAC, net sales increased primarily as a result of higher volume and favorable mix. In LATAM, net sales were flat.
Full year 2017 operating profit was $272 million compared to $333 million in 2016, with an operating margin of 2.6% (down 0.9 p.p. compared to 2016). Operating profit increased in LATAM and APAC, mainly due to higher volume and favorable pricing. In EMEA, operating profit decreased as favorable volumes were more than offset by unfavorable mix, primarily associated with fleet-related channel sales, Euro 6 emission content costs, and the negative impact of the British pound devaluation. Increased spending in research and development on new product programs was more than offset by favorable manufacturing efficiencies. In the fourth quarter of 2017, operating profit was $94 million ($131 million in the fourth quarter of 2016), with an operating margin of 2.9% (down 1.8 p.p. compared to the fourth quarter of 2016). Favorable volume was more than offset by unfavorable mix, primarily associated with fleet-related channel sales, increases in product content costs and new product introductions, higher spending in research and development, and the unfavorable impact of the British pound devaluation.
Powertrain's net sales increased 18% in the full year 2017 compared to 2016 (up 16% on a constant currency basis), due to higher volumes. Sales to external customers accounted for 48% of total net sales (47% in 2016). In the fourth quarter of 2017, net sales increased 22% compared to the fourth quarter of 2016 (up 13% on a constant currency basis), due to higher sales volumes to both captive and external customers.
Full year 2017 operating profit was $362 million, a $130 million increase compared to 2016, with an operating margin of 8.3%, up 2.0 p.p. compared to 2016. The improvement was due to higher volumes and manufacturing efficiencies. In the fourth quarter of 2017, operating profit was $102 million, a $41 million increase compared to the fourth quarter of 2016, as result of higher volumes, favorable mix and manufacturing efficiencies. Operating margin increased 2.4 p.p. to 8.8%, the highest quarterly margin ever reported in Powertrain's history, reflecting the profitability of a well-balanced portfolio of engine applications.
Financial Services' revenues totaled $1,625 million in the full year 2017, an increase of 4% compared to 2016 (up 1% on a constant currency basis), due to higher activity in all regions except NAFTA. In the fourth quarter of 2017, revenues totaled $420 million, an increase of 6% compared to the fourth quarter of 2016 (up 3% on a constant currency basis).
In 2017, retail loan originations (including unconsolidated joint ventures) were $9.1 billion, flat compared to 2016. The managed portfolio (including unconsolidated joint ventures) of $26.8 billion as of December 31, 2017 (of which retail was 61% and wholesale 39%) increased $2.0 billion compared to December 31, 2016. Excluding the impact of currency translation, the managed portfolio increased $0.6 billion compared to 2016.
Full year 2017 net income was $452 million, a $118 million increase compared to 2016 primarily attributable to an improvement in income taxes as a result of the revaluation of deferred tax liabilities following the U.S. Act enactment. Excluding the favorable tax impact, net income was flat compared to 2016, as stronger performances in the EMEA, LATAM and APAC regions were offset by a weaker result in NAFTA. In the fourth quarter of 2017, net income was $192 million, an increase of $109 million compared to the fourth quarter of 2016, mainly attributable to the revaluation of the U.S. deferred tax liabilities.
Dividends and Share Buy-back
The Board of Directors of CNH Industrial N.V. intends to recommend to the Company's shareholders a dividend of EUR0.14 per common share, representing an increase of 27% over the prior year dividend, and totaling approximately EUR191 million ($237 million). Subject to the approval of the upcoming Annual General Meeting (expected on April 13, 2018), the exdividend date would be set at April 23, 2018.
The Board of Directors also intends to recommend to the Company's shareholders the renewal of the authorization to repurchase up to a maximum of 10% of the Company's issued common shares. After such authorization and subject to general and market conditions, the Company intends to launch a buy-back program up to $700 million, representing an increase of $400 million versus the current program.
Neither the renewal of the authorization, nor the launch of the program obliges the Company to repurchase any common shares and the program may be suspended, discontinued or modified at any time for any reason and without previous notice, in accordance with applicable laws and regulations.
2018 Outlook
Worldwide demand for agricultural equipment is expected to improve with all regions flat to up 5% on average. Farm incomes are expected to remain stable, leading to no significant changes in planted acreage. Construction equipment demand is forecasted to be up 5-10% in LATAM and APAC while remaining relatively flat to up slightly in EMEA and NAFTA. Commercial vehicle demand is expected to be up about 15% in LATAM and flat to slightly down in EMEA and APAC.
As a result of the forecasted improvement in product demand conditions, and the positive impact of changes in the Company's capital structure, the Company is setting its full year 2018 guidance as follows:
-- Net sales of Industrial Activities of $27 billion to $28 billion;
-- Adjusted diluted EPS((1)) of $0.63 to $0.67;
-- Net industrial debt at the end of 2018 at $0.8 billion to $1.0 billion.
(1) 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 4:00 p.m. CET / 3:00 p.m. GMT / 10:00 a.m. EST, management will hold a conference call to present 2017 fourth quarter and full year results. The call can be followed live online at: http://bit.ly/CNH_Industrial_FY_Q4_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 conference 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. When we provide guidance for adjusted diluted EPS, we do
not provide guidance on an earnings per share basis because the GAAP
measure will include potentially significant items that have not yet
occurred and are difficult to predict with reasonable certainty prior to
year-end.
-- 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):
Net Debt is defined as total debt less intersegment notes receivable,
cash and cash equivalents, restricted cash and derivative hedging 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 on a constant currency basis by applying the
prior year average exchange rates to current year's revenues 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 settlement of the 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", 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 are based upon assumptions relating to the factors described in this 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. Forward-looking statements speak only as of the date on which such statements are made, and we undertake no obligation to update or revise publicly our 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 and The Years Ended December 31, 2017 and 2016
(Unaudited)
(U.S. GAAP)
($ million) Three Months Ended December 31, Years Ended December 31,
---------- ------------------------------- ------------------------
2017 2016 2017 2016
---- ---- ---- ----
Revenues
--------
Net sales 7,798 6,682 26,168 23,669
--------- ----- ----- ------ ------
Finance and interest income 304 316 1,193 1,203
--------------------------- --- --- ----- -----
TOTAL REVENUES 8,102 6,998 27,361 24,872
-------------- ----- ----- ------ ------
Costs and Expenses
------------------
Cost of goods sold 6,455 5,525 21,621 19,539
------------------ ----- ----- ------ ------
Selling, general and
administrative expenses 654 575 2,330 2,262
------------------------ --- --- ----- -----
Research and development expenses 295 241 957 860
--------------------------------- --- --- --- ---
Restructuring expenses 16 13 93 44
---------------------- --- --- --- ---
Interest expense(1) 230 285 942 1,028
------------------ --- --- --- -----
Other, net(2) 284 197 738 1,148
------------ --- --- --- -----
TOTAL COSTS AND EXPENSES 7,934 6,836 26,681 24,881
------------------------ ----- ----- ------ ------
INCOME (LOSS) BEFORE INCOME TAXES
AND EQUITY IN INCOME OF
UNCONSOLIDATED SUBSIDIARIES AND
AFFILIATES 168 162 680 (9)
--------------------------------- --- --- --- ---
Income tax (expense)(3) (230) (119) (455) (298)
---------------------- ---- ---- ---- ----
Equity in income of unconsolidated
subsidiaries and affiliates(4) 22 53 88 58
---------------------------------- --- --- --- ---
NET INCOME (LOSS) (40) 96 313 (249)
---------------- --- --- --- ----
Net income (loss) attributable to
noncontrolling interests 6 1 18 3
--------------------------------- --- --- --- ---
NET INCOME (LOSS) ATTRIBUTABLE TO
CNH INDUSTRIAL N.V. (46) 95 295 (252)
--------------------------------- --- --- --- ----
(in $)
-----
Earnings (loss) per share attributable to common shareholders
-------------------------------------------------
Basic (0.03) 0.07 0.22 (0.18)
----- ----- ---- ---- -----
Diluted (0.03) 0.07 0.22 (0.18)
------- ----- ---- ---- -----
Cash dividends declared per common
share - - 0.118 0.148
---------------------------------- --- --- ----- -----
Notes:
(1) In the three months and year ended
December 31, 2017, Interest expense
includes the charge of $8 million and $64
million, respectively, related to the
repurchase/early redemption of notes. In
the three months and year ended December
31, 2016, this item included the charge
of $22 million and $60 million,
respectively, related to the repurchase
of notes.
(2) In the three months and year ended
December 31, 2017, Other, net includes a
non-cash charge of $92 million due to
the deconsolidation of the Venezuelan
operations effective December 31, 2017.
In the three months and year ended
December 31, 2016, this item included the
non-recurring charge of $34 million due
to the re-measurement and impairment of
certain assets in Venezuela. In the year
ended December 31, 2016, Other, net also
included the non-recurring charge of
$551 million related to the European
Commission settlement.
(3) In the three months and year ended
December 31, 2017, Income tax (expense)
includes a non-cash tax charge of $123
million due to the U.S. Act and tax
legislation changes in the UK and certain
other countries. In the three months and
year ended December 31, 2016, this item
included a non-cash tax charge of $59
million accounted for in connection with
the reorganization of Latin American
operations, intended to simplify
corporate structure and promote
operational efficiencies, and including
changes in valuation allowances recorded
against deferred tax assets in the
region.
(4) In the three months and year ended
December 31, 2016, Equity in income of
unconsolidated subsidiaries and
affiliates included a net positive impact
of $19 million and a net negative impact
of $9 million, respectively, due to
restructuring of our joint ventures in
China.
CNH INDUSTRIAL N.V.
Condensed Consolidated Balance Sheets
As of December 31, 2017 and 2016
(Unaudited)
(U.S. GAAP)
($ million) December 31, 2017 December 31, 2016
---------- ----------------- -----------------
ASSETS
------
Cash and cash equivalents 5,430 5,017
------------------------- ----- -----
Restricted cash 770 837
--------------- --- ---
Financing receivables, net 19,842 18,662
-------------------------- ------ ------
Inventories, net 6,280 5,609
---------------- ----- -----
Property, plant and equipment,
net and Equipment under
operating leases 8,848 8,304
------------------------------ ----- -----
Intangible assets, net 3,264 3,236
---------------------- ----- -----
Other receivables and assets 3,841 3,882
---------------------------- ----- -----
TOTAL ASSETS 48,275 45,547
------------ ------ ------
LIABILITIES AND EQUITY
----------------------
Debt 25,895 25,276
---- ------ ------
Other payables and liabilities 17,955 15,799
------------------------------ ------ ------
Total Liabilities 43,850 41,075
----------------- ------ ------
Redeemable noncontrolling
interest 25 21
------------------------- --- ---
Equity attributable to CNH
Industrial N.V. 4,390 4,444
-------------------------- ----- -----
Noncontrolling interests 10 7
------------------------ --- ---
Equity 4,400 4,451
------ ----- -----
TOTAL LIABILITIES AND EQUITY 48,275 45,547
---------------------------- ------ ------
CNH INDUSTRIAL N.V.
Condensed Consolidated Statements of Cash Flows
For The Years Ended December 31, 2017 and 2016
(Unaudited)
(U.S. GAAP)
($ million)
----------
2017 2016
---- ----
Net income (loss) 313 (249)
---------------- --- ----
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities 1,702 2,357
----------------------------------- ----- -----
NET CASH PROVIDED BY OPERATING
ACTIVITIES 2,015 2,108
------------------------------ ----- -----
NET CASH USED IN INVESTING ACTIVITIES (932) (921)
------------------------------------- ---- ----
NET CASH USED IN FINANCING ACTIVITIES (1,045) (1,538)
------------------------------------- ------ ------
Effect of foreign exchange rate changes
on cash and cash equivalents 375 (16)
--------------------------------------- --- ---
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 413 (367)
------------------------------------ --- ----
CASH AND CASH EQUIVALENTS, BEGINNING OF
YEAR 5,017 5,384
--------------------------------------- ----- -----
CASH AND CASH EQUIVALENTS, END OF YEAR 5,430 5,017
-------------------------------------- ----- -----
CNH INDUSTRIAL N.V.
Supplemental Statements of Operations
For The Three Months and the Years Ended December 31, 2017 and 2016
(Unaudited)
(U.S. GAAP)
Industrial Activities Financial Services
($ million) Three Months Ended Years Ended Three Months Ended Years Ended
December 31, December 31, December 31, December 31,
--- ------------ ------------ ------------ ------------
2017 2016 2017 2016 2017 2016 2017 2016
---- ---- ---- ---- ---- ---- ---- ----
Revenues
--------
Net sales 7,798 6,682 26,168 23,669 - - - -
--------- ----- ----- ------ ------ --- --- --- ---
Finance and interest income 29 50 122 153 420 397 1,625 1,570
--------------------------- --- --- --- --- --- --- ----- -----
TOTAL REVENUES 7,827 6,732 26,290 23,822 420 397 1,625 1,570
-------------- ----- ----- ------ ------ --- --- ----- -----
Costs and Expenses
------------------
Cost of goods sold 6,455 5,525 21,621 19,539 - - - -
------------------ ----- ----- ------ ------ --- --- --- ---
Selling, general and
administrative expenses 580 504 2,071 1,979 74 71 259 283
------------------------ --- --- ----- ----- --- --- --- ---
Research and development expenses 295 241 957 860 - - - -
--------------------------------- --- --- --- --- --- --- --- ---
Restructuring expenses 15 13 90 43 1 - 3 1
---------------------- --- --- --- --- --- --- --- ---
Interest expense 142 200 604 694 147 131 555 521
---------------- --- --- --- --- --- --- --- ---
Interest compensation to Financial
Services 88 87 338 332 - - - -
---------------------------------- --- --- --- --- --- --- --- ---
Other, net 192 114 396 855 90 81 341 294
---------- --- --- --- --- --- --- --- ---
TOTAL COSTS AND EXPENSES 7,767 6,684 26,077 24,302 312 283 1,158 1,099
------------------------ ----- ----- ------ ------ --- --- ----- -----
INCOME (LOSS) BEFORE INCOME TAXES
AND EQUITY IN INCOME OF
UNCONSOLIDATED SUBSIDIARIES AND
AFFILIATES 60 48 213 (480) 108 114 467 471
--------------------------------- --- --- --- ---- --- --- --- ---
Income tax (expense) (307) (83) (413) (137) 77 (36) (42) (161)
------------------- ---- --- ---- ---- --- --- --- ----
Equity in income of unconsolidated
subsidiaries and affiliates 15 48 61 34 7 5 27 24
---------------------------------- --- --- --- --- --- --- --- ---
Results from intersegment
investments 192 83 452 334 - - - -
------------------------- --- --- --- --- --- --- --- ---
NET INCOME (LOSS) (40) 96 313 (249) 192 83 452 334
---------------- --- --- --- ---- --- --- --- ---
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 December 31, 2017 and 2016
(Unaudited)
(U.S. GAAP)
Industrial Activities Financial Services
--------------------- ------------------
($ million) December 31, December 31, December 31, December 31,
2017 2016 2017 2016
--- ---- ---- ---- ----
ASSETS
------
Cash and cash
equivalents 4,901 4,649 529 368
------------- ----- ----- --- ---
Restricted cash - - 770 837
--------------- --- --- --- ---
Financing
receivables, net 1,718 1,592 20,699 19,546
----------------- ----- ----- ------ ------
Inventories, net 6,064 5,396 216 213
---------------- ----- ----- --- ---
Property, plant and
equipment, net and
Equipment under
operating leases 7,036 6,412 1,812 1,892
------------------- ----- ----- ----- -----
Intangible assets,
net 3,095 3,068 169 168
------------------ ----- ----- --- ---
Other receivables
and assets 6,277 6,145 828 789
----------------- ----- ----- --- ---
TOTAL ASSETS 29,091 27,262 25,023 23,813
------------ ------ ------ ------ ------
LIABILITIES AND EQUITY
----------------------
Debt 7,396 7,691 21,075 20,061
---- ----- ----- ------ ------
Other payables and
liabilities 17,270 15,099 1,134 1,200
------------------ ------ ------ ----- -----
Total Liabilities 24,666 22,790 22,209 21,261
----------------- ------ ------ ------ ------
Redeemable
noncontrolling
interest 25 21 - -
--------------- --- --- --- ---
Equity 4,400 4,451 2,814 2,552
------ ----- ----- ----- -----
TOTAL LIABILITIES
AND EQUITY 29,091 27,262 25,023 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 Years Ended December 31, 2017 and 2016
(Unaudited)
(U.S. GAAP)
Industrial
Activities Financial Services
----------- ------------------
($ million) 2017 2016 2017 2016
---------- ---- ---- ---- ----
Net income
(loss) 313 (249) 452 334
---------- --- ---- --- ---
Adjustments to
reconcile net
income (loss)
to net cash
provided by
(used in)
operating
activities 2,103 1,968 (496) 396
-------------- ----- ----- ---- ---
NET CASH
PROVIDED BY
(USED IN)
OPERATING
ACTIVITIES 2,416 1,719 (44) 730
------------ ----- ----- --- ---
NET CASH
PROVIDED BY
(USED IN)
INVESTING
ACTIVITIES (1,450) (759) 472 (267)
------------ ------ ---- --- ----
NET CASH USED IN
FINANCING
ACTIVITIES (1,075) (815) (281) (959)
---------------- ------ ---- ---- ----
Effect of
foreign
exchange rate
changes on cash
and cash
equivalents 361 (47) 14 31
---------------- --- --- --- ---
INCREASE
(DECREASE) IN
CASH AND CASH
EQUIVALENTS 252 98 161 (465)
-------------- --- --- --- ----
CASH AND CASH
EQUIVALENTS,
BEGINNING OF
YEAR 4,649 4,551 368 833
------------- ----- ----- --- ---
CASH AND CASH
EQUIVALENTS,
END OF YEAR 4,901 4,649 529 368
------------- ----- ----- --- ---
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 to Net Income (loss) under U.S. GAAP ($ million)
Year Ended Three Months
December 31, Ended December
31,
------------- ---------------
2017 2016 2017 2016
---- ---- ---- ----
1,662 1,439 Total Operating Profit 494 441
----- ----- ---------------------- --- ---
93 44 Restructuring expenses 16 13
--- --- ---------------------- --- ---
484 543 Interest expenses of Industrial
Activities, net of interest income and
eliminations(1) 114 151
--- --- --------------------------------------- --- ---
(405) (861) Other, net(2) (196) (115)
---- ---- ------------ ---- ----
680 (9) Income (loss) before income taxes and
equity in income of unconsolidated
subsidiaries and affiliates 168 162
--- --- -------------------------------------- --- ---
(455) (298) Income tax (expense)(3) (230) (119)
---- ---- ---------------------- ---- ----
88 58 Equity in income of unconsolidated
subsidiaries and affiliates(4) 22 53
--- --- ----------------------------------- --- ---
313 (249) Net income (loss) (40) 96
--- ---- ---------------- --- ---
(1) In the year ended December 31, 2017,
Interest expenses includes the charge of $56
million related to the repurchase/early
redemption of notes. In the three months and
year ended December 31, 2016, this item
included the charge of $22 million and $60
million, respectively, related to the
repurchase of notes.
(2) In the three months and year ended
December 31, 2017, Other, net includes a non-
cash charge of $92 million due to the
deconsolidation of Venezuelan operations
effective December 31, 2017. In the three
months and year ended December 31, 2016, this
item included the non-recurring charge of $34
million due to the re-measurement and
impairment of certain assets in Venezuela. In
the year ended December 31, 2016, Other, net
also included the non-recurring charge of
$551 million related to the European
Commission settlement.
(3) In the three months and year ended
December 31, 2017, Income tax (expense)
includes a non-cash tax charge of $123
million due to the U.S. Act and tax
legislation changes in the UK and certain
other countries. In the three months and year
ended December 31, 2016, Income tax (expense)
included a non-cash tax charge of $59 million
accounted for in connection with the
reorganization of Latin American operations,
intended to simplify corporate structure and
promote operational efficiencies, and
including changes in valuation allowances
recorded against deferred tax assets in the
region.
(4) In the three months and year ended
December 31, 2016, Equity in income of
unconsolidated subsidiaries and affiliates
included a net positive impact of $19 million
and a net negative impact of $9 million,
respectively, due to the restructuring of our
joint ventures in China.
CNH INDUSTRIAL
Reconciliation of Total Debt to Net debt under U.S. GAAP ($ million)
Consolidated Industrial Activities Financial Activities
------------ --------------------- --------------------
December 31, December 31, December 31, December 31, December 31, December 31,
2017 2016 2017 2016 2017 2016
---- ---- ---- ---- ---- ----
Third party debt 25,895 25,276 6,461 6,694 19,434 18,582
---------------- ------ ------ ----- ----- ------ ------
Intersegment notes payable - - 935 997 1,641 1,479
-------------------------- --- --- --- --- ----- -----
Total Debt(1) 25,895 25,276 7,396 7,691 21,075 20,061
------------ ------ ------ ----- ----- ------ ------
Less: 5,430 5,017 4,901 4,649 529 368
Cash and cash equivalents
-------------------------
Restricted cash 770 837 - - 770 837
--------------- --- --- --- --- --- ---
Intersegment notes receivable - - 1,641 1,479 935 997
----------------------------- --- --- ----- ----- --- ---
Derivatives hedging debt (7) 2 (7) 2 - -
------------------------ --- --- --- --- --- ---
Net debt (cash)(2) 19,702 19,420 861 1,561 18,841 17,859
----------------- ------ ------ --- ----- ------ ------
(1) Total Debt of Industrial Activities includes Intersegment notes payable to Financial Services of $935 million and $997 million as of December 31, 2017 and 2016, respectively. Total Debt of Financial Services includes Intersegment notes payable to Industrial Activities of
$1,641 million and $1,479 million as of December 31, 2017 and 2016, respectively.
(2) The net intersegment receivable/payable balance owed by Financial Services to Industrial Activities was $706 million and $482 million as of December 31, 2017 and 2016, respectively.
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
CNH INDUSTRIAL
Reconciliation of Cash and cash equivalents to Available liquidity under U.S. GAAP
($ million)
December 31, 2017 December 31, 2016
----------------- -----------------
Cash and cash equivalents 5,430 5,017
------------------------- ----- -----
Restricted cash 770 837
--------------- --- ---
Undrawn committed facilities 3,180 2,890
---------------------------- ----- -----
Available liquidity 9,380 8,744
------------------- ----- -----
CNH INDUSTRIAL N.V.
Other Supplemental Financial Information
(Unaudited)
CNH INDUSTRIAL
Change in Net industrial debt under U.S. GAAP ($ million)
Year Ended December 31, Three Months Ended December 31,
----------------------- -------------------------------
2017 2016 2017 2016
---- ---- ---- ----
(1,561) (1,578) Net industrial (debt)/cash at beginning
of period (2,575) (2,673)
------ ------ ---------------------------------------- ------ ------
313 (249) Net income (loss) (40) 96
--- ---- ---------------- --- ---
- 551 Add back European Commission
settlement(1) - -
--- --- ----------------------------- --- ---
56 60 Add back cost of repurchase/early
redemption of notes(1) - 22
--- --- ---------------------------------- --- ---
720 710 Amortization and depreciation(2) 184 177
--- --- ------------------------------- --- ---
485 194 Changes in provisions and similar(3) 418 91
--- --- ----------------------------------- --- ---
130 330 Change in working capital 1,274 1,319
--- --- ------------------------- ----- -----
(488) (501) Investments in property, plant and
equipment, and intangible assets(2) (211) (211)
---- ---- ----------------------------------- ---- ----
73 (50) Other changes 59 50
--- --- ------------- --- ---
1,289 1,045 Net industrial cash flow 1,684 1,544
----- ----- ------------------------ ----- -----
(193) (221) Capital increases and dividends(4) (11) (2)
---- ---- --------------------------------- --- ---
(396) (807) Currency translation differences and
other(5) 41 (430)
---- ---- ------------------------------------- --- ----
700 17 Change in Net industrial debt 1,714 1,112
--- --- ----------------------------- ----- -----
(861) (1,561) Net industrial (debt)/cash at end of
period (861) (1,561)
---- ------ ------------------------------------- ---- ------
(1) Add back item to be excluded from the calculation of net industrial
cash flow.
(2) Excluding assets sold under buy-back commitments and assets under
operating leases.
(3) 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 December 31, 2016, this item excluded the funds utilization
due to the payment of the $551 million following European Commission
settlement.
(4) This item also includes share buy-back transactions.
(5) In the year ended December 31, 2017, this item includes the charge of
$56 million related to the repurchase/early redemption of notes. In the
three months and year ended December 31, 2016, this item included the
charge of $22 million and $60 million, respectively, related to the
repurchase of notes. In the year ended December 31, 2016, this item also
included the payment of the European Commission settlement.
---------------------------------------------------------------------------
CNH INDUSTRIAL N.V.
Other Supplemental Financial Information
(Unaudited)
CNH INDUSTRIAL
Reconciliation of Adjusted net income and Adjusted income tax (expense) to Net income (loss) and Income tax (expense) and calculation of Adjusted diluted EPS and Adjusted ETR under U.S.GAAP
($ million, except per share data)
Year Ended December 31, Three Months Ended December 31,
----------------------- -------------------------------
2016 2017 2016 2017
---- ---- ---- ----
313 (249) Net income (loss) (40) 96
--- ---- ---------------- --- ---
249 689 Adjustments impacting Income (loss)
before income tax (expense) and equity
in income of unconsolidated subsidiaries
and affiliates (a) 116 69
--- --- ----------------------------------------- --- ---
107 33 Adjustments impacting Income tax
(expense) (b) 121 51
--- --- --------------------------------- --- ---
- 9 Adjustments impacting Equity in income of
unconsolidated subsidiaries and
affiliates (c) - (19)
--- --- ----------------------------------------- --- ---
669 482 Adjusted net income 197 197
--- --- ------------------- --- ---
651 478 Adjusted net income attributable to CNH
Industrial N.V. 191 195
--- --- ---------------------------------------- --- ---
1,367 1,364 Weighted average shares outstanding -
diluted (million) 1,367 1,364
----- ----- -------------------------------------- ----- -----
0.48 0.35 Adjusted diluted EPS ($) 0.14 0.14
---- ---- ----------------------- ---- ----
680 (9) Income (loss) before income tax (expense)
and equity in income of unconsolidated
subsidiaries and affiliates 168 162
--- --- ----------------------------------------- --- ---
249 689 Adjustments impacting Income (loss)
before income tax (expense) and equity
in income of unconsolidated subsidiaries
and affiliates (a) 116 69
--- --- ----------------------------------------- --- ---
929 680 Adjusted income (loss) before income tax
(expense) and equity in income of
unconsolidated subsidiaries and
affiliates (A) 284 231
--- --- ----------------------------------------- --- ---
(455) (298) Income tax (expense) (230) (119)
---- ---- ------------------- ---- ----
107 33 Adjustments impacting Income tax
(expense) (b) 121 51
--- --- --------------------------------- --- ---
(348) (265) Adjusted income tax (expense) (B) (109) (68)
---- ---- -------------------------------- ---- ---
37% 39% Adjusted Effective Tax Rate (Adjusted
ETR) (C=B/A) 38% 29%
--- --- -------------------------------------- --- ---
a) Adjustments impacting Income (loss) before income tax (expense) and
equity in income of unconsolidated subsidiaries and affiliates
93 44 Restructuring expenses 16 13
--- --- ---------------------- --- ---
92 34 Venezuelan re-measurement and impairment
of assets, and 2017 year-end
deconsolidation of Venezuelan operations 92 34
--- --- ----------------------------------------- --- ---
- 551 European Commission settlement - -
--- --- ------------------------------ --- ---
64 60 Cost of repurchase/early redemption of
notes 8 22
--- --- --------------------------------------- --- ---
249 689 Total 116 69
--- --- ----- --- ---
b) Adjustments impacting Income tax (expense)
------------------------------------------------
Tax effect of adjustments impacting
Income (loss) before income tax
(expense) and equity in income of
unconsolidated subsidiaries and
(16) (26) affiliates (2) (8)
--- --- ------------------------------------ --- ---
123 - Tax charges due to the U.S. Act and tax
legislation changes in the UK and
certain other countries(1) 123 -
--- --- ---------------------------------------- --- ---
- 59 Tax charge on LATAM corporate
reorganization - 59
--- --- ------------------------------ --- ---
107 33 Total 121 51
--- --- ----- --- ---
c) Adjustments impacting Equity in income of unconsolidated subsidiaries
and affiliates
- 9 Chinese JVs restructuring - (19)
--- --- ------------------------- --- ---
- 9 Total - (19)
--- --- ----- --- ---
(1) This item includes the estimated impact from the U.S. Act. This estimate may
change, potentially materially, as a result of regulations or regulatory guidance
that may be issued, changes in interpretations affecting assumptions underlying
the estimate, refinement of our calculations, and actions that may be taken,
including actions in response to the U.S. Act.
CNH INDUSTRIAL N.V.
Other Supplemental Financial Information
(Unaudited)
CNH INDUSTRIAL
Revenues by Segment under EU-IFRS ($ million)
Year Ended December 31, Three Months Ended December 31,
----------------------- -------------------------------
2017 2016 % change 2017 2016 % change
---- ---- -------- ---- ---- --------
11,130 10,120 10.0 Agricultural
Equipment 3,240 2,829 14.5
------ ------ ---- ------------- ----- ----- ----
2,626 2,304 14.0 Construction
Equipment 785 578 35.8
----- ----- ---- ------------- --- --- ----
10,668 9,748 9.4 Commercial
Vehicles 3,292 2,852 15.4
------ ----- --- ----------- ----- ----- ----
4,374 3,713 17.8 Powertrain 1,160 953 21.7
----- ----- ---- ---------- ----- --- ----
(2,375) (2,015) - Eliminations
and other (598) (476) -
------ ------ --- ------------- ---- ---- ---
26,423 23,870 10.7 Total of
Industrial
Activities 7,879 6,736 17.0
------ ------ ---- ----------- ----- ----- ----
2,035 1,924 5.8 Financial
Services 537 512 4.9
----- ----- --- ---------- --- --- ---
(511) (466) - Eliminations
and other (134) (117) -
---- ---- --- ------------- ---- ---- ---
27,947 25,328 10.3 Total 8,282 7,131 16.1
------ ------ ---- ----- ----- ----- ----
CNH INDUSTRIAL
Trading profit/(loss)(1) by Segment under EU-IFRS ($ million)
Year Ended December 31, Three Months Ended December 31,
----------------------- -------------------------------
2017 2016 Change 2017 2016 Change
---- ---- ------ ---- ---- ------
621 523 98 Agricultural
Equipment 183 201 -18
--- --- --- ------------- --- --- ---
(50) (86) 36 Construction
Equipment 0 (60) 60
--- --- --- ------------- --- --- ---
134 214 -80 Commercial
Vehicles 38 84 -46
--- --- --- ----------- --- --- ---
355 219 136 Powertrain 109 64 45
--- --- --- ---------- --- --- ---
(93) (94) 1 Eliminations
and other (19) (20) 1
--- --- --- ------------- --- --- ---
967 776 191 Total of
Industrial
Activities 311 269 42
--- --- --- ----------- --- --- ---
470 472 -2 Financial
Services 109 113 -4
--- --- --- ---------- --- --- ---
- - - Eliminations
and other - - -
--- --- --- ------------- --- --- ---
1,437 1,248 189 Total 420 382 38
----- ----- --- ----- --- --- ---
(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)
December 31, 2017 December 31, 2016
----------------- -----------------
Total Assets 50,769 47,834
------------ ------ ------
Total Equity 6,846 6,634
------------ ----- -----
Equity attributable to CNH
Industrial N.V. 6,831 6,623
--------------------------- ----- -----
Net debt (19,835) (19,734)
-------- ------- -------
Of which Net industrial
debt(1) (976) (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 N.V.
Other Supplemental Financial Information
(Unaudited)
CNH INDUSTRIAL
Net income reconciliation U.S. GAAP to EU-IFRS ($ million)
Year Ended December 31, Three Months Ended December 31,
----------------------- -------------------------------
2017 2016 2017 2016
---- ---- ---- ----
313 (249) Net income (loss) in
accordance with U.S.
GAAP (40) 96
--- ---- --------------------- --- ---
Adjustments to
conform with EU-
IFRS:
-----------------
(92) (126) Development costs (12) (35)
--- ---- ----------------- --- ---
86 49 Other adjustments 47 5
--- --- ----------------- --- ---
99 48 Tax impact on
adjustments 78 30
--- --- -------------- --- ---
71 (93) Deferred tax assets
and tax
contingencies
recognition 103 (70)
--- --- -------------------- --- ---
164 (122) Total adjustments 216 (70)
--- ---- ----------------- --- ---
477 (371) Profit (loss) in
accordance with EU-
IFRS 176 26
--- ---- -------------------- --- ---
CNH INDUSTRIAL
Total Equity reconciliation U.S. GAAP to EU-IFRS ($ million)
December 31, 2017 December 31, 2016
----------------- -----------------
Total Equity under U.S.
GAAP 4,400 4,451
------------------------ ----- -----
Adjustments to conform
with EU-IFRS:
-----------------------
Development costs 2,477 2,374
----------------- ----- -----
Other adjustments (112) (121)
----------------- ---- ----
Tax impact on
adjustments (645) (655)
-------------- ---- ----
Deferred tax assets and
tax contingencies
recognition 726 585
------------------------ --- ---
Total adjustments 2,446 2,183
----------------- ----- -----
Total Equity under EU-
IFRS 6,846 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:
Average 2017 At December 31, 2017 Average 2016 At December 31, 2016
------------ -------------------- ------------ --------------------
Euro 0.885 0.834 0.903 0.949
---- ----- ----- ----- -----
Pound
sterling 0.776 0.740 0.740 0.812
--------- ----- ----- ----- -----
Swiss
franc 0.984 0.976 0.985 1.019
------ ----- ----- ----- -----
Polish
zloty 3.768 3.483 3.941 4.184
------ ----- ----- ----- -----
Brazilian
real 3.192 3.313 3.485 3.254
--------- ----- ----- ----- -----
Canadian
dollar 1.297 1.254 1.324 1.346
-------- ----- ----- ----- -----
Argentine
peso 16.539 18.840 14.750 15.850
--------- ------ ------ ------ ------
Turkish
lira 3.648 3.791 3.020 3.517
------- ----- ----- ----- -----
CNH INDUSTRIAL N.V.
Condensed Consolidated Income Statement
For The Three Months and The Years Ended December 31, 2017 and 2016
(Unaudited)
(EU-IFRS)
Three Months Ended December 31, Years Ended December 31,
($ million) 2017 2016 2017 2016
---------- ---- ---- ---- ----
Net revenues 8,282 7,131 27,947 25,328
------------ ----- ----- ------ ------
Cost of sales(1) 6,859 5,900 23,064 20,866
--------------- ----- ----- ------ ------
Selling, general and
administrative costs 621 541 2,230 2,129
--------------------- --- --- ----- -----
Research and development
costs 338 292 1,098 1,017
------------------------ --- --- ----- -----
Other income/(expenses) (44) (16) (118) (68)
----------------------- --- --- ---- ---
TRADING PROFIT/(LOSS) 420 382 1,437 1,248
--------------------- --- --- ----- -----
Gains/(losses) on the
disposal of investments - 1 - 1
------------------------ --- --- --- ---
Restructuring costs 15 12 91 43
------------------- --- --- --- ---
Other unusual income/
(expenses)(2) (63) (8) (55) (568)
--------------------- --- --- --- ----
OPERATING PROFIT/(LOSS) 342 363 1,291 638
----------------------- --- --- ----- ---
Financial income/
(expenses)(3) (143) (230) (626) (713)
----------------- ---- ---- ---- ----
Result from
investments(4): 26 52 97 47
---------------- --- --- --- ---
Share of the profit/
(loss) of investees
accounted for using the
equity method 26 58 97 53
------------------------ --- --- --- ---
Other income/(expenses)
from investments - (6) - (6)
----------------------- --- --- --- ---
PROFIT/(LOSS) BEFORE
TAXES 225 185 762 (28)
-------------------- --- --- --- ---
Income tax (expense)(5) (49) (159) (285) (343)
---------------------- --- ---- ---- ----
PROFIT/(LOSS) FROM
CONTINUING OPERATIONS 176 26 477 (371)
---------------------- --- --- --- ----
PROFIT/(LOSS) 176 26 477 (371)
------------- --- --- --- ----
PROFIT/(LOSS) ATTRIBUTABLE TO:
------------------------------
Owners of the parent 170 26 460 (373)
-------------------- --- --- --- ----
Non-controlling interests 6 - 17 2
------------------------- --- --- --- ---
(in $)
-----
BASIC EARNINGS/(LOSS)
PER COMMON SHARE 0.13 0.02 0.34 (0.27)
--------------------- ---- ---- ---- -----
DILUTED EARNINGS/(LOSS)
PER COMMON SHARE 0.13 0.02 0.34 (0.27)
----------------------- ---- ---- ---- -----
Notes:
(1) In the three months and year ended
December 31, 2017, Cost of sales includes
the charge of $8 million related to the
early redemption of notes.
(2) In the three months and year ended
December 31, 2017, Other unusual income/
(expenses) includes a non-cash charge of
$50 million due to the deconsolidation of
the Venezuelan operations effective
December 31, 2017. In the year ended
December 31, 2016, this item included the
non-recurring charge of $551 million
related to the European Commission
settlement.
(3) In the year ended December 31, 2017,
Financial income/(expenses) includes the
charge of $56 million related to the
repurchase/early redemption of notes. In
the three months and year ended December
31, 2016, this item included the charge
of $22 million and $60 million,
respectively, related to the repurchase
of notes, as well as the non-recurring
charge of $34 million due to the re-
measurement and impairment of certain
assets in Venezuela.
(4) In the three months and year ended
December 31, 2016, Result from
investments included a net positive
impact of $15 million and a net negative
impact of $27 million, respectively, due
to the restructuring of our joint
ventures in China.
(5) In the three months and year ended
December 31, 2017, Income tax (expense)
includes a non-cash tax benefit of $22
million due to the U.S. Act and tax
legislation changes in the UK and certain
other countries. In the three months and
year ended December 31, 2016, this item
included a non-cash tax charge of $74
million accounted for in connection with
the reorganization of Latin American
operations, intended to simplify
corporate structure and promote
operational efficiencies, and including
changes in valuation allowances recorded
against deferred tax assets in the
region.
CNH INDUSTRIAL N.V.
Condensed Consolidated Statement of Financial Position
As of December 31, 2017 and 2016
(Unaudited)
(EU-IFRS)
($ million) December 31, 2017 December 31, 2016
---------- ----------------- -----------------
ASSETS
------
Intangible assets 5,644 5,504
----------------- ----- -----
Property, plant and
equipment and Leased
assets 8,675 8,185
--------------------- ----- -----
Inventories 6,453 5,732
----------- ----- -----
Receivables from
financing activities 19,842 18,662
--------------------- ------ ------
Cash and cash
equivalents 6,200 5,854
------------- ----- -----
Other receivables and
assets 3,955 3,897
--------------------- ----- -----
TOTAL ASSETS 50,769 47,834
------------ ------ ------
EQUITY AND LIABILITIES
----------------------
Issued capital and
reserves attributable
to owners of the parent 6,831 6,623
------------------------ ----- -----
Non-controlling
interests 15 11
--------------- --- ---
Total Equity 6,846 6,634
------------ ----- -----
Debt 26,014 25,434
---- ------ ------
Other payables and
liabilities 17,909 15,766
------------------ ------ ------
Total Liabilities 43,923 41,200
----------------- ------ ------
TOTAL EQUITY AND
LIABILITIES 50,769 47,834
---------------- ------ ------
CNH INDUSTRIAL N.V.
Condensed Consolidated Statement of Cash Flows
For The Years Ended December 31, 2017 and 2016
(Unaudited)
(EU-IFRS)
($ million) 2017 2016
---------- ---- ----
CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR 5,854 6,311
-------------------------------------- ----- -----
Profit/(loss) 477 (371)
------------- --- ----
Adjustments to reconcile profit/
(loss) to cash flows from/(used in)
operating activities 1,963 1,738
------------------------------------ ----- -----
CASH FLOWS FROM/(USED IN) OPERATING
ACTIVITIES 2,440 1,367
----------------------------------- ----- -----
CASH FLOWS FROM/(USED IN) INVESTMENT
ACTIVITIES (1,349) (453)
------------------------------------ ------ ----
CASH FLOWS FROM/(USED IN) FINANCING
ACTIVITIES (1,140) (1,340)
----------------------------------- ------ ------
Translation exchange differences 395 (31)
-------------------------------- --- ---
TOTAL CHANGE IN CASH AND CASH
EQUIVALENTS 346 (457)
----------------------------- --- ----
CASH AND CASH EQUIVALENTS AT END OF
YEAR 6,200 5,854
----------------------------------- ----- -----
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SOURCE CNH Industrial N.V.
