First Quarter 2005 Financial Results. April 28, 2005

Transcription

1 First Quarter 2005 Financial Results April 28, 2005

2 Management Harold Boyanovsky President and Chief Executive Officer and President, Worldwide Construction Equipment Business Michel Lecomte Chief Financial Officer Roland Sundén President, Worldwide Agricultural Equipment Business Giovanni Maggiora Vice President & Treasurer Al Trefts Senior Director Investor Relations & Corporate Finance CNH Global NV First Quarter Results April 28,

3 Forward Looking Statements This presentation includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of All statements other than statements of historical fact contained or incorporated by reference in this presentation, including statements regarding our competitive strengths, business strategy, future financial position, budgets, projected costs and plans and objectives of management, are forward-looking statements. These statements may include terminology such as "may," "will," "expect," "should," "intend," "estimate," "anticipate," "believe," outlook, "continue, remain, on track, goal, or similar terminology. Our outlook is predominantly based on our interpretation of what we consider key economic assumptions and involves risks and uncertainties that could cause actual results to differ. Crop production and commodity prices are strongly affected by weather and can fluctuate significantly. Housing starts and other construction activity are sensitive to interest rates and government spending. Some of the other significant factors for us include general economic and capital market conditions, the cyclical nature of our business, customer buying patterns and preferences, foreign currency exchange rate movements, our hedging practices, our and our customers access to credit, actions by rating agencies concerning the ratings of our debt securities and asset-backed securities and the ratings of Fiat S.p.A., risk related to our relationship with Fiat S.p.A., political uncertainty and civil unrest or war in various areas of the world, pricing, product initiatives and other actions taken by competitors, disruptions in production capacity, excess inventory levels, the effect of changes in laws and regulations (including government subsidies and international trade regulations), the results of legal proceedings, technological difficulties, results of our research and development activities, changes in environmental laws, employee and labor relations, pension and health care costs, raw material costs and availability, energy prices, real estate values, animal diseases, crop pests, harvest yields, government farm programs and consumer confidence, housing starts and construction activity, concerns related to modified organisms and fertilizer costs. Additionally, our achievement of the anticipated benefits of our profit improvement initiatives depends upon, among other things, industry volumes as well as our ability to effectively rationalize our operations and to execute our dual brand strategy. Further information concerning factors that could significantly affect expected results is included in our Form 20-F. We can give no assurance that the expectations reflected in our forward-looking statements will prove to be correct. Our actual results could differ materially from those anticipated in these forward-looking statements. All written and oral forward looking statements attributable to us are expressly qualified in their entirety by the factors we disclose that could cause our actual results to differ materially from our expectations. We undertake no obligation to update or revise publicly any forward-looking statements. CNH Global NV First Quarter Results April 28,

4 Q1 Agricultural Equipment Industry Volume Trend Tractors Combines 150,000 10, ,000 8, ,000 6,000 75,000 50,000 4,000 25,000 2, North America Western Europe Latin America Rest Of World Total Combines CNH Global NV First Quarter Results April 28,

5 Q1 AG Industry & Share [Preliminary Results] Industry % Change CNH Share Change Tractors - World Wide +1 FLAT North America Under 40 HP (2) FLAT - Over 40 HP Western Europe (2) - Latin America (4) FLAT Rest of World FLAT + Combines - World Wide (20) - North America Western Europe (6) + Latin America (52) - Rest of World CNH Global NV First Quarter Results April 28,

6 Q1 Construction Equipment Industry Volume Trend Units in 000 s Q1 98 Q1 99 Q1 00 Q1 01 Q1 02 Q1 03 Q1 04 Q1 05 Heavy Skid Steer Loaders & Backhoe Loaders Other Light CNH Global NV First Quarter Results April 28,

7 Q1 CE Industry & Share [Preliminary Results] Industry % Change CNH Share Change Loader Backhoes - World Wide North America Western Europe Latin America Skid Steer Loaders - World Wide North America Western Europe Latin America (6) - Heavy Equipment - World Wide (5) FLAT - North America +19 FLAT - Western Europe Latin America +26 FLAT CNH Global NV First Quarter Results April 28,

8 Q1 Equipment Operations Net Sales Trend ($ Mils, US GAAP) $3,000 $2,663 $2,823 $2,743 $2,500 $2,277 $744 $892 $871 $2,000 $677 $1,500 $1,000 $1,600 $1,919 $1,931 $1,872 $500 Q Q Actual AG Net Sales Q CE Net Sales Q1 Q FX CNH Global NV First Quarter Results April 28,

9 Q1 Industrial Operating Margin* Evolution Compared With Prior Year ($ Mils, US GAAP) $117 $99 Q Volume/M ix Net Pricing Economics & Currency S,G&A R&D M fg. Effic. And Other Q Variance by Causal Factor * See Appendix for Definition and GAAP Reconciliation CNH Global NV First Quarter Results April 28,

10 P&L and Adjusted EBITDA* Trend ($ Mils, US GAAP) Net Income (Loss) Adjusted EBITDA* Q1 160 Q (20) ($46) ($9) $ $65 $128 $130 (60) * See Appendix for Definition and GAAP Reconciliation CNH Global NV First Quarter Results April 28,

11 Q1 Equipment Operations Change in Net Debt** ($ Mils, US GAAP) Q Q '05 B/(W) Than '04 Net Income (Loss) $ (9) $ 15 $ 24 Depreciation & Amortization (5) Subtotal Working Capital, Net of FX Impact For The Period * (125) (466) (341) Other Net Cash From Operating Activities (31) (257) (226) Net Cash From Investing Activities, Excluding Net (Deposits In) Withdrawls From Fiat Cash Pools (31) (25) 6 All Other, Including FX Impact for the Period (3) (Increase) / Decrease in Net Debt** $ (42) $ (265) $ (223) * Net change in receivables, inventories and payables including inter-segment ** See Appendix for definition and GAAP reconciliation CNH Global NV First Quarter Results April 28,

12 Q Recap + CE worldwide industry strength Pricing covering material, other economics and currency Consolidation of New Holland Construction brands in Europe and Latin America UAW contract settlement Financial Services portfolio quality and successful ABS Latin American combine market Year over year impact of East Moline closure on North American combine production Material cost increases Component shortages Skid steer loader launch delayed CNH Global NV First Quarter Results April 28,

13 Q2 and Full Year 2005 AG Industry Volume Outlook Percent Change in Industry Unit Volume Q Full Year Tractors - World Wide (5) (0-5) North America Under 40 HP (0-5) FLAT - Over 40 HP Western Europe (5-10) (5) Latin America (20) (20) Combines - World Wide (20) (15-20) North America Western Europe 5-10 FLAT Latin America (60) (55) CNH Global NV First Quarter Results April 28,

14 Q2 and Full Year 2005 CE Industry Volume Outlook Percent Change in Industry Unit Volume Q Full Year Light Equipment - Worldwide North America Western Europe Latin America Heavy Equipment - World Wide North America Western Europe Latin America Rest of World (0-5) FLAT CNH Global NV First Quarter Results April 28,

15 2005 Highlights Q2 Launch of new generation skid steer loader. Production of combines to remain below 2004 levels. Second quarter price increase should help maintain net price recovery. SG&A and R&D investments in new initiatives. Similar improvement in Financial Services results to that of Q1. Net income should be approximately same level as in second quarter FY North American combine production to be higher in 2H 2005 than in 2H Materials costs decline in 2H of 2005; net price recovery improves. Component shortages resolved. Improved Western European CE profitability from brand consolidation. Logistics reorganization generates cost savings. Launch of totally new compact track loader. CNH Global NV First Quarter Results April 28,

16 Ongoing Initiatives Enhanced customer and dealer support Commitment to product quality and reliability improvements Consolidation of New Holland brand construction equipment family Reorganization of European logistics Pricing to recover increased costs Financial Services continuing improvements $500 million in cost reductions CNH Global NV First Quarter Results April 28,

17 CNH Perspective Focus: Revenue and profit growth Increased responsiveness to dealer and customer needs Increased emphasis on product excellence: Improved product quality Greater product reliability Our employees, our independent dealers and our suppliers, working together, poised to deliver superior results in % improvement in net income before restructuring costs for full year 2005 CNH Global NV First Quarter Results April 28,

18 For Further Information: Please Contact: Albert S. Trefts, Jr. Senior Director, Investor Relations & Corporate Finance CNH Global N.V. Case New Holland, Inc. 100 South Saunders Road Lake Forest, Illinois USA Tel: Fax: Website: CNH Global NV First Quarter Results April 28,

19 Appendix

20 Industrial Operating Margin ($ Mils, US GAAP) CNH defines industrial gross margin as Equipment Operations net sales less cost of goods sold. CNH defines industrial operating margin as Equipment Operations gross margin less selling, general and administrative and research and development costs. The following table summarizes the computation of Equipment Operations industrial gross and operating margin for all periods presented: Q Q Net sales $2,663 $2,823 Less: Cost of goods sold 2,249 2,414 Gross margin Less: Selling, general and administrative Research and development Industrial operating margin $117 $99 Industrial operating margin as a percentage of net sales 4.4% 3.5% CNH Global NV First Quarter Results April 28,

21 Equipment Operations Adjusted EBITDA and Interest Coverage Ratio Adjusted EBITDA is defined as net income (loss) of Equipment Operations excluding (i) net interest expense, (ii) income tax provision (benefit) (iii) depreciation and amortization and (iv) restructuring. Net interest expense is defined as (i) interest expense (excluding interest compensation to financial services) less (ii) finance and interest income. We believe that Adjusted EBITDA is a measure commonly used by financial analysts because of its usefulness in evaluating operating performance. Adjusted EBITDA does not represent cash flows from operations as defined by U.S. GAAP, is not necessarily indicative of cash available to fund all cash flow needs and should not be considered an alternative to net income or net cash provided (used) by operating activities under U.S. GAAP for purposes of evaluating results of operations and cash flows. Adjusted EBITDA is a non-gaap financial measure as this term is defined under the Securities Act. As a result, the following slide reconciles net cash provided (used) by operating activities, the U.S. GAAP financial measure which we believe to be most directly comparable, to Adjusted EBITDA. CNH defines interest coverage for Equipment Operations as adjusted EBITDA, as defined above, divided by net interest expense, as defined above. CNH Global NV First Quarter Results April 28,

22 Equipment Operations Adjusted EBITDA and Interest Coverage Ratio ($ Mils, US GAAP) Q Q Q Net Cash from Operating Activities $ (87) $ (31) $ (257) Net Interest Expense: Interest Expense Less: Finance and Interest Income (21) (16) (26) Net Interest Expense Income Tax Provision (Benefit) (20) (11) (9) Restructuring: Equipment Operations Financial Services Change in Other Operating Activities Adjusted EBITDA $ 65 $ 128 $ 130 Net Interest Expense $ 67 $ 63 $ 58 Interest Coverage Ratio CNH Global NV First Quarter Results April 28,

23 Q1 Equipment Operations Results* ($ Mils, US GAAP) Q % of Net Sales Q % of Net Sales Net Sales $ 2,663 $ 2,823 Cost of Goods Sold 2,249 2,414 Gross Margin % % SG&A R&D Industrial Operating Margin % % Other, Net (59) (50) Net Income in Unconsolidated Subs * Less: Interest Compensation to Fin. Services (25) (32) Minority Interest (1) (4) Plus: Depreciation & Amortization Adjusted EBITDA $ % $ % * Includes Financial Services, excluding Restructuring, on the equity method of accounting CNH Global NV First Quarter Results April 28,

24 Equipment Operations Change in Net Debt We believe that the change in net debt of Equipment Operations, as defined elsewhere in this presentation, is a useful analytical tool for measuring changes in our effective borrowing requirements, excluding our inter-segment notes receivable from Financial Services and the effect of certain of our cash management practices. The change in net debt should not be considered an alternative to the statement of cash flows prepared under U.S. GAAP for purposes of evaluating sources and uses of cash and cash equivalents. Change in net debt is a non-gaap financial measure as this term is defined under the securities act. As a result, the following slide reconciles the increase (decrease) in cash and cash equivalents, the U.S. GAAP financial measure which we believe to be most comparable, to (increase) decrease in net debt. CNH Global NV First Quarter Results April 28,

25 Q1 Equipment Operations Change in Net Debt ($ Mils, US GAAP) Q Q Increase (Decrease) In Cash and Cash Equivalents $ (91) $ (268) Intersegment Financing Activities (92) (47) Increase (Decrease) in Cash and Cash Equivalents Excluding Intersegment Financing Activities (183) (315) Net (Increase) Decrease in Indebtedness 75 (86) Net Deposits In (Withdrawls From) Fiat Cash Pools Other - Primarily Effect of Foreign Exchange Rate Changes on Indebtedness and Intersegment Notes Receivable (Increase) Decrease in Net Debt $ (42) $ (265) CNH Global NV First Quarter Results April 28,

26 Equipment Operations Working Capital ($ Mils, US GAAP) Working capital is defined as accounts and notes receivable, excluding inter-segment notes receivable, plus inventories less accounts payable. We believe that working capital, as defined, is a useful analytical tool for measuring our consumption of cash from our purchases of materials from our suppliers to our ultimate collection of cash from our end customers. The calculation of working capital is shown below: December 31, March 31, December 31, March 31, Accounts, Notes Receivable and Other Net $ 2,347 $ 2,215 $ 1,596 $ 1,900 Inventories 2,478 2,711 2,515 2,711 Accounts Payable (1,836) (1,840) (1,679) (1,769) Working Capital $ 2,989 $ 3,086 $ 2,432 $ 2,842 CNH Global NV First Quarter Results April 28,

27 Net Income (Loss) Before Restructuring and Goodwill ($ Mils, US GAAP) CNH defines net income (loss) before restructuring and goodwill as U.S. GAAP net income (loss), less restructuring charges, net of tax and goodwill. We believe that net income (loss) before restructuring and goodwill is a useful figure for measuring the performance of our operations. Net income (loss) before restructuring and goodwill is a non-gaap financial measure as this term is defined under the securities act. As a result, the following table reconciles U.S. GAAP net income (loss) to net income (loss) before restructuring and goodwill for all periods presented: Q Q Q Net income (loss) $ (46) $ (9) $ 15 Restructuring, net of tax: Restructuring Tax (2) (6) (1) Restructuring, net of tax Goodw ill Net Income (loss) before $ (40) $ 4 $ 19 CNH Global NV First Quarter Results April 28,

28 Credit Lines & Facilities ($ Mils, US GAAP) The following table summarizes CNH Credit lines and debt position at December 31, 2004 and March 31, 2005: Amount Consolid. December 31, 2004 March 31, 2005 Drawn Consolid. Drawn Eq. Op. Available Consolid. Amount Consolid. Drawn Consolid. Drawn Eq. Op. Available Consolid. Committed lines - backup $ 2,025 $ - $ - $ 2,025 $ 1,975 $ - $ - $ 1,975 Other committed lines 2,546 1, ,634 1, $ 685 Uncommitted lines $ 74 Asset Backed C.P. Facilities 1, ,251 2, $ 1,754 Total credit lines * $ 6,962 $ 2,887 $ 1,035 $ 4,075 $ 7,203 $ 2,715 $ 1,117 $ 4,488 Bonds 2,107 1,983 2,107 1,983 Term loans with Fiat 1, , Other short term debt Other long term debt Intersegment debt Total notes, bonds, other debt $ 4,076 $ 3,137 $ 4,032 $ 3,101 Total Debt $ 6,963 $ 4,172 $ 6,747 $ 4,218 * Includes facilities with Fiat / guaranteed by Fiat $ 4,172 $ 1,503 $ 310 $ 2,669 $ 4,315 $ 1,717 $ 371 $ 2,598 CNH Global NV First Quarter Results April 28,

29 Equipment Operations Net Debt ($ Mils, US GAAP) Net debt of Equipment Operations is defined as total debt of Equipment Operations less cash and cash equivalents and inter-segment notes receivables. We believe that net debt, as defined, is a useful analytical tool for measuring our effective borrowing requirements, excluding our inter-segment Notes Receivable from Financial Services and the effect of certain of our cash management practices. The calculation of net debt is shown below: December 31, 2004 March 31, 2005 Credit Credit Lines Other Total Lines Other Total Short Term Debt With Fiat Affiliates $ 248 $ 83 $ 331 $ 295 $ 71 $ 366 Other Intersegment Total ,088 1, ,137 Long Term Debt* With Fiat Affiliates Other 2,192 2, ,180 2,182 Intersegment Total 62 3,022 3, ,003 3,081 Total debt $ 1,035 $ 3,137 4,172 $ 1,118 $ 3,100 4,218 less: Cash and Cash Equivalents Deposits in Fiat Cash Pools 1,136 1,237 Intersegment Notes Receivable 1,114 1,062 Net Debt $1,285 $1,550 CNH Global NV First Quarter Results April 28,

30 Equipment Operations Long-Term Debt* ($ Mils, US GAAP) The following table summarizes CNH's Equipment Operations long-term debt maturities at March 31, 2004 and March 31, 2005: December 31, 2004 March 31, 2005 Public Notes Payable in 2005 $ 218 $ 218 Payable in Payable in ,052 1,052 Payable in Total Public notes 1,998 1,998 Notes with Fiat Affiliates Payable in Usd note Payable in Euro note Other Total Notes with Fiat Affiliates Long Term Uses of Credit Lines Other Long Term Debt Total $ 3,084 $ 3,081 *Including Current Maturities of Long Term Debt CNH Global NV First Quarter Results April 28,

31 End