• 27-APR-2017

  • SOURCE: CNH Industrial

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

CNH Industrial Logo
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
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(4)(5) for the first quarter of 2017 were $51 million ($43 million in the first quarter of 2016). The adjusted effective tax rate (adjusted ETR)(4)(5) 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(4)(5) 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.

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(6) as follows:
  • Net sales of Industrial Activities between $23 billion and $24 billion;
  • Adjusted diluted EPS(7) between $0.39 and $0.41;
  • Net industrial debt at the end of 2017 between $1.4 billion and $1.6 billion. 

(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.
(4) 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.
(5) 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.
(6) At the exchange rate of 1.05 EUR/USD.
(7) 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.

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.

London (UK) - April 27, 2017