CNH Industrial NV : 2015 Fourth Quarter and Full Year Results

Microsoft Word - CNHI Q4 and FY 2015_PRESS RELEASE Jan29.docx

CNH Industrial closes the year with strong results. Fourth quarter 2015 revenues of $7.1 billion, operating profit of Industrial Activities of $563 million, up 50%, at a margin of 8.2%, net income before restructuring and other exceptional items of $262 million and net industrial debt at $1.6 billion. Highest agricultural equipment operating margin amongst major OEMs, at 11.7% for the fourth quarter.

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

• Revenues totaled $7.1 billion for the fourth quarter and $25.9 billion for the full year 2015. Net sales of Industrial Activities were $6.9 billion for the quarter and $24.7 billion for the year.
• Operating profit of Industrial Activities was $563 million for the quarter, an increase of 50%, at an operating margin at 8.2%, up 3.5 p.p. compared to the same period in 2014. For the full year, operating profit of Industrial Activities was $1,432 million, with operating margin at 5.8%.
• Net income was $231 million ($0.17 per share) for the quarter and $248 million ($0.19 per share) for the full year. Net income before restructuring and other exceptional items was $262 million ($0.19 per share) for the quarter and $474 million ($0.35 per share) for the full year.
• Net industrial debt was $1.6 billion at December 31, 2015, a decrease of $1.1 billion or 40% from December 31, 2014. Available liquidity totaled $9.3 billion ($8.9 billion at December 31, 2014).
• The Board of Directors is recommending for 2015 a dividend of €0.13 per common share, or approximately $200 million (€177 million).
• The Board of Directors announces a buy-back of Company's common shares of up to $300 million.
• For 2016 CNH Industrial expects net sales of Industrial Activities between $23 billion and $24 billion, with operating margin of Industrial Activities between 5.2% and 5.8%. Net industrial debt expected between $1.5 billion and $1.8 billion.

  
  

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

  Full Year	4th Quarter
  2015	2014	Change	2015	2014 Change

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

  
  

  
  

  CNH INDUSTRIAL Summary Income Statement ($ million)

  
  

  25,912	32,555 -20.4% Revenues	7,144	8,365 -14.6%
  248	708 -460 Net income	231	87 144
  474	Net income before restructuring and other exceptional 940 -466 items (1)	262	167 95
  253	710 -457 Net income attributable to CNH Industrial N.V.	231	83 148
  0.19	0.52 -0.33 Basic EPS ($)	0.17	0.06 0.11
  0.19	0.52 -0.33 Diluted EPS ($)	0.17	0.06 0.11
  0.35	Basic EPS before restructuring and other exceptional 0.69 -0.34 items (1) ($)	0.19	0.12 0.07

• This is a non-GAAP measure. Refers to the non-GAAP Financial Information section of this press release for information regarding non-GAAP financial measures.

CNH Industrial N.V.

Corporate Office:

25 St James's Street London, SW1A 1HA United Kingdom

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

24,677	31,198 -20.9% Net sales of Industrial Activities	6,869	8,018 -14.3%
1,432	1,988 -556 Operating profit of Industrial Activities (2)	563	376 187
5.8	6.4 -0.6 p.p. Operating margin of Industrial Activities (%)	8.2	4.7 3.5 p.p.

Full Year	4th Quarter
2015	2014	Change	2015	2014	Change

1. Industrial Activities represent the activities carried out by the four industrial segments Agricultural Equipment, Construction Equipment, Commercial Vehicles, and Powertrain, as well as Corporate functions.

2. Operating profit of Industrial Activities is a non-GAAP measure and is defined as net sales less cost of goods sold, selling, general and administrative expenses, and research and development expenses.

   
   

   Full Year	4th Quarter
   2015	2014	% change	2015	2014	% change

   London (UK) - (January 29, 2016) CNH Industrial N.V. (NYSE:CNHI / MI:CNHI) today announced consolidated revenues of $7,144 million for the fourth quarter 2015, down 4.1% compared to Q4 2014 on a constant currency basis (down 14.6% on a reported basis). Net sales of Industrial Activities were $6,869 million in Q4 2015, down 3.6% compared to Q4 2014 on a constant currency basis (down 14.3% on a reported basis). The full year 2015 consolidated revenues were $25,912 million, down 9.2% compared to 2014 on a constant currency basis (down 20.4% on a reported basis). Net sales of Industrial Activities were $24,677 million in 2015, down 9.6% compared to 2014 on a constant currency basis (down 20.9% on a reported basis). Net sales of Commercial Vehicles increased 4.8% excluding the negative impact of currency translation, due to increased demand and market share gains in the EMEA region. Net sales of Agricultural Equipment declined 19.6% excluding the negative impact of currency translation, driven by lower industry volumes in the NAFTA and LATAM row crop sectors offset by positive net price realization. Net sales also decreased in Construction Equipment, due primarily to negative industry volumes in LATAM, and in Powertrain, due to lower volume to captive customers.

   
   

   CNH INDUSTRIAL Revenues by Segment ($ million)

   
   

   11,025	15,204 -27.5	Agricultural Equipment	2,982	3,403	-12.4
   2,542	3,346 -24.0	Construction Equipment	609	800	-23.9
   9,542	10,888 -12.4	Commercial Vehicles	2,846	3,354	-15.1
   3,560	4,464 -20.3	Powertrain	912	988	-7.7
   (1,992)	(2,704) -	Eliminations and other	(480)	(527) -
   24,677	31,198 -20.9	Total Industrial Activities	6,869	8,018	-14.3
   1,603	1,828 -12.3	Financial Services	377	465	-18.9
   (368)	(471) -	Eliminations and other	(102)	(118) -
   25,912	32,555 -20.4	Total	7,144	8,365	-14.6

   
   

   
   

   Operating profit of Industrial Activities was $563 million for the fourth quarter, a $187 million increase compared to the same period in 2014, with an operating margin of 8.2%, up 3.5 p.p. compared to Q4 2014. Operating profit for the quarter increased in Agricultural Equipment and in Construction Equipment, driven by net price realization, structural cost reductions and favorable material costs. Commercial Vehicles' operating profit improved due to favorable pricing in all regions and manufacturing efficiencies in EMEA. Net of the impact of currency translation, Powertrain's operating profit increased as a result of positive product mix and

   
   

   
   

   Full Year	4th Quarter
   2015	2014	Change	2015	2014	Change

   selling, general and administrative ("SG&A") expense reductions. For the full year 2015, operating profit of Industrial Activities totaled $1,432 million, a $556 million decrease compared to 2014, with an operating margin for the year at 5.8%. Excluding the negative impact of foreign exchange translation, Commercial Vehicles' operating profit improved due to increased volume in EMEA, positive pricing, manufacturing efficiencies and a reduction in SG&A expenses as a result of the Company's Efficiency Program. Construction Equipment's operating profit increased as net price realization and cost containment actions more than offset the negative impact of lower volumes in LATAM. Operating profit declined in Agricultural Equipment, driven primarily by reduced industry volume in the NAFTA and LATAM row crop sectors and by foreign exchange translation impact, partially offset by net price realization, material and structural cost reductions. Powertrain's operating profit decreased mainly as a result of lower agricultural equipment demand and foreign exchange translation.

   
   

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

   
   

   952	1,770 -818	Agricultural Equipment	348	241	107
   90	79 11	Construction Equipment	18	9	9
   283	29 254	Commercial Vehicles	155	100	55
   186	223 -37	Powertrain	62	66	-4
   (79)	(113) 34	Eliminations and other	(20)	(40) 20
   1,432	1,988 -556	Total Industrial Activities	563	376	187
   515	554 -39	Financial Services	118	147	-29
   (312)	(343) 31	Eliminations and other	(85)	(88) 3
   1,635	2,199 -564	Total	596	435	161

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










CNH INDUSTRIAL Reconciliation of Operating Profit to Net Income ($ million)

Full Year 4th Quarter

2015 2014 2015 2014




1,635	2,199 Total Operating Profit	596	435
84	184 Restructuring expenses	32	86
479	Interest expenses of Industrial Activities, net of interest 613 income and eliminations	138	164
(505)	(313) Other, net	(102)	(59)
567	Income before income taxes and equity in income 1,089 of unconsolidated subsidiaries and affiliates	324	126
360	467 Income taxes	101	59
41	Equity in income of unconsolidated subsidiaries and 86 affiliates	8	20
248	708 Net income	231	87







Restructuring expenses totaled $32 million in the quarter, $54 million lower than Q4 2014. In 2015, restructuring expenses were $84 million, $100 million lower than 2014, due to actions included in the Company's Efficiency Program launched in 2014.




Interest expense, net totaled $138 million in the fourth quarter, a decrease of $26 million or 16% compared to the same period in 2014. In 2015, interest expense, net was $479 million, a reduction of $134 million or 22% compared to 2014 as a result of reduced average indebtedness. Other, net was a charge of $102 million for the fourth quarter 2015 (charge of $59 million for Q4 2014), an increase of $43 million compared to the same period in 2014 mainly due to higher foreign exchange losses. In 2015, other, net was a charge of $505 million (charge of $313 million for 2014). The increase of $192 million was mainly the result of the third quarter exceptional pre-tax charge of $150 million related to the re- measurement of the net monetary assets of the Venezuelan operations. Income taxes were $101 million in the fourth quarter 2015, representing an effective tax rate of 31.2%. In 2015, income taxes totaled $360 million, representing an effective tax rate of 63.5%. Excluding the impact of the exceptional pre-tax charge relating to the re-measurement of the Venezuelan operations, and the impact of the inability to record deferred tax assets on losses in certain jurisdictions, primarily Brazil, the effective tax rate for 2015 was 37%. The long-term effective tax rate target of between 34% to 36% range remains unchanged. Equity in income of unconsolidated subsidiaries and affiliates totaled $8 million for Q4 2015. Full year equity in income was $41 million. The decrease compared to 2014 was mainly due to lower results of joint ventures in the APAC region, including the negative impact of foreign currency differences. Net income of Financial Services was $91 million for Q4 2015, lower by $7 million due to reduced net interest margin and the negative impact of currency translation, partially offset by lower income taxes. For the full year 2015, Financial Services' net income was $368 million, an increase of $4 million, due to lower provisions for credit losses, lower SG&A expenses and reduced income taxes, partially offset by the negative impact of currency translation. Net income attributable to CNH Industrial N.V. was $231 million for the quarter, or $0.17 per share. Net income before restructuring and other exceptional items was $262 million for the quarter, or $0.19 per share. Net income attributable to CNH Industrial N.V. was $253 million for 2015, or $0.19 per share. Net income before restructuring and other exceptional items was $474 million for 2015, or $0.35 per share. Net industrial debt of $1.6 billion at December 31, 2015 was $1.8 billion lower than at September 30, 2015 and

$1.1 billion lower than at December 31, 2014. Net industrial cash flow was a net inflow of $1.8 billion in the fourth quarter and $0.8 billion in the year, as a result of reductions in working capital.

Available liquidity at December 31, 2015 was $9.3 billion, inclusive of $3.0 billion in undrawn committed facilities, compared to $8.9 billion at December 31, 2014.