Q Results Review

Transcription

1 Q Results Review (U.S. GAAP Preliminary) The American contribution to global carco

2 Forward Looking Statement This document contains forward looking statements that reflect management's current views with respect to future events. The words anticipate, assume, believe, estimate, expect, intend, may, plan, project, should and similar expressions identify forwardlooking statements. Such statements are subject to risks and uncertainties, including, but not limited to: the effective implementation of the Chrysler Group LLC Business Plan outlined on November 4, 2009, including successful vehicle launches; industry SAAR levels; continued economic weakness, especially in North America, including continued high unemployment levels and limited available financing for our dealers and consumers; introduction of competing products and competitive pressures which may limit our ability to reduce sales incentives; supply disruptions resulting from natural disasters and other events impacting our supply chain; and our ability to realize benefits from our industrial alliance with Fiat. If any of these or other risks and uncertainties occur, or if the assumptions underlying any of these statements prove incorrect, then actual results may be materially different from those expressed or implied by such statements. We do not intend or assume any obligation to update any forward looking statement, which speaks only as of the date on which it is made. Further details of potential risks that may affect Chrysler Group are described in Chrysler Group s Form 10 filed with the U.S. Securities and Exchange Commission. 1

3 Agenda Executive Summary Highlights Financial and Sales Summary Business and Product Update Appendix 2

4 Q Financial Highlights Net Revenue ($B) Growth primarily driven by increased volumes and positive pricing and mix (including positive effect of lower fleet mix) Worldwide shipments up 15% to 469k units (467k shipments adjusted for GDP units) % Q3 10 Q3 11 (84) 212 Q3 10 Q3 11 Net Result ($M) Q reflects a nearly $300 million increase in net income over the prior year Represents the largest quarterly net income since the Company began operations Modified Operating Profit ($M) Modified Operating Profit more than double the prior year Improved performance primarily attributable to increased volumes and positive pricing and mix, partially offset by increased advertising and industrial costs % Margin % Margin Q3 10 Q Jun 30, 11 Sept 30, 11 Cash ($B) Decrease primarily due to seasonal working capital fluctuations and increased capital expenditures Modified EBITDA ($M) An increase of 19% versus prior year driven by higher volumes and a continued positive trend in margins % Margin 1, % Margin Net Industrial Debt ($B) Net Industrial Debt at $2.9B Increase primarily due to reduced cash level at September 30 Q3 10 Q3 11 Jun 30, 11 Sept 30, 11 3

5 Q Operating, Product and Business Highlights Worldwide vehicle sales in Q increased 24% to 496k vehicles vs. Q3 2010, reflecting continued success of new and significantly refreshed products U.S. market share at 11.4%, up 180 bps vs. Q Fleet sales mix of total sales was 26% versus 34% in Q3 2010; Retail of retail market share 1 up 250 bps vs. Q Continued strong performance in Canada with market share increasing to 14.5%, up 170 bps vs. Q U.S. dealer inventory at 277k units, or 54 days of supply vs. 68 days in Q and 58 days in Q3 2010; decrease due to strong September sales and parts shortages Chrysler Group Board of Directors changes: New Chairman elected: Sergio Marchionne New members appointed: Léo W. Houle and John B. Lanaway New Lead Director elected: Ronald L. Thompson Full year guidance revised: Net Revenues: >$55B Modified Operating Profit: >$2.0B Modified EBITDA: >$4.8B Adjusted Net Income 2 : ~$0.6B (revised from $0.2 $0.5 billion) Free Cash Flow: >$1.2B (revised from >$1.0B) 1 Company calculation; retail sales (excluding fleet) versus industry retail sales (excluding fleet) 2 Excludes loss on extinguishment of debt of $551 million in Q

6 New 4 Year UAW Labor Agreement Highlights Ratified in October Win Win for Chrysler Group and UAW New plant and product investments $4.5B in investments; 2,100 new entry level jobs Ratification, Performance, and Quality / WCM Bonuses Ratification bonus of $3,500, 50% delayed until a financial milestone is achieved; Performance and Quality bonuses total $4,000 over the contract period with 100% upside potential Gains for new hires Highest maximum rate increases to $19.28 per hour by end of contract; no cap on new hires No additional cost for traditional employee defined benefit pension plans New hire pension plan changed to a defined contribution plan; Legal Services Plan eliminated after 2013 Maintained overall labor cost competitiveness with foreign transplants ~$51 / hour all in Simplified and transparent profit sharing formula Based on 85% of reported worldwide Modified Operating Profit New 4 year national labor agreement with the UAW maintains Chrysler Group s cost competitiveness and links variable compensation directly to company performance and product quality 5

7 Q Financial Results $ Millions Q Q Q B/(W) Q Q3 YTD 2011 Q3 YTD 2010 YTD 2011 B/(W) YTD 2010 Worldwide Shipments Units (000) ,468 1, Net Revenue 13,067 11,018 2,049 39,852 31,183 8,669 Modified Operating Profit % of Net Revenues Modified EBITDA % of Net Revenues % 1, % % % ppt ppt Net Income (Loss) 212 (84) 296 (42) (453) 411 Adjusted Net Income (Loss) 212 (84) (453) 962 1, % 3, % % 2, % ppt 1, ppt Free Cash Flow (699) 32 (731) 2,001 2,171 (170) Cash 9,454 8,260 1,194 Gross Industrial Debt (12,322) (12,026) (296) Net Industrial Debt (2,868) (3,766) Before GDP adjustments (see details in Appendix) 2 Excludes loss on extinguishment of debt of $551 million in Q

8 Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss), Modified Operating Profit and Modified EBITDA $ Millions Q Q Q B/(W) Q Q3 YTD 2011 Q3 YTD 2010 YTD 2011 B/(W) YTD 2010 Net Income (Loss) 212 (84) 296 (42) (453) 411 Loss on Extinguishment of Debt Adjusted Net Income (Loss) 212 (84) (453) 962 Income Tax Expense Net Interest Expense (35) Restructuring Expenses, Net & Other (5) (13) (35) Other Employee Benefit Gains 1 (44) (11) (33) (132) (38) (94) Modified Operating Profit , Depreciation and Amortization Expense (62) 2,116 2, Modified EBITDA 1, ,583 2,579 1,004 1 Includes interest cost and expected return on plan assets 2 Excludes depreciation and amortization expense for vehicles held for lease 7

9 Modified Operating Profit Walk $ Millions $244 (78) (123) (14) 483 Volume increase of 62k units (57k units adjusted for GDP see Appendix) period over period related to continued success of new and significantly refreshed products Mix and net price improved primarily due to 2011 model year vehicle launches and increased U.S. retail penetration % 3.7% Industrial costs primarily impacted by higher commodity, transportation and ER&D costs, partially offset by lower depreciation/amortization costs SG&A primarily reflects increased advertising expenditures Q Volume Mix and Net Price Industrial Costs SG&A Other Q Modified Operating Profit more than doubled primarily driven by volume and net pricing 8

10 Structural Costs and Capital Expenditures $ Billions Structural Costs /1 Capital Expenditures ER&D ~3.0* Sales & Marketing Depreciation & Amortization * Plant / Corporate Q Q Q3 YTD 2011 FY 2011E Higher advertising expenditures continue to drive the increase in structural costs on a period over period basis Capital expenditures YTD total $2.0B*; ~$1.0 billion expected in Q /1 Previously referred to as Fixed Costs in Form 10 Registration Statement filed with the U.S. SEC * Includes non-cash expenditures of $0.1B 9

11 Cash Walk June 30, 2011 to September 30, 2011 $ Billions Change in Cash $(0.7) Free Cash Flow $(0.7) (0.6) (0.7) (0.1) (0.4) Free Cash Flow was negative in the quarter due to unfavorable seasonal working capital fluctuations and capital expenditures, partially offset by strong operating performance Taxes and Interest includes a $0.3B scheduled payment on the VEBA Trust Note June 30, 2011 Modified EBITDA Working Capital & Other Capital Expenditures Pension / OPEB Taxes & Interest Net Principal Payments / Receipts & FX Sept 30, 2011 Note: Numbers may not add due to rounding 10

12 Net Industrial Debt $ Billions Carrying Value as of Sept 30, 2011 Carrying Value as of June 30, 2011 Sept 30, 2011 B/(W) June 30, 2011 Cash (0.7) Term Loan B Senior Secured Notes UAW VEBA Trust Note (0.2) CAW Health Care Trust Notes Mexican Development Banks Loan Other Financial Liabilities Gross Industrial Debt Net Industrial Debt (0.8) 1 Excludes Gold Key Lease (GKL) self liquidating debt 2 Excludes pension and OPEB underfunding Note: Numbers may not add due to rounding 11

13 Worldwide Vehicle Sales Third Quarter Units (000s) By Market By Brand Int l Mexico Canada % / U.S / Fleet Mix 34% Fleet Mix 26% Q Q Q Q year to date worldwide vehicle sales totaled 1,376k (compared to 1,142k vehicles for the same period a year ago) representing an increase of 20% Note Excludes contract manufactured vehicles, primarily for Fiat (17k in Q and 4k in Q3 2010) 12

14 U.S. Dealer Inventory and Days Supply Units (000s) Dealer Inventory Days Supply Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Days supply at U.S. dealers decreased due to a strong September sales performance and parts shortages 13

15 U.S. Retail Average Transaction Price $ Per Unit 27,000 26,800 27,000 27,300 27,800 28,200 28,000 Average Transaction Price Average Incentive ~3,600 ~4,000 ~3,600 ~3,300 ~3,100 ~3,000 ~3,200 Q Q Q Q Q Q Q Maintaining strong transaction prices (+$1,000 per unit compared to the same period a year ago); increase in Q incentives versus Q primarily due to model year changeover Source: Company calculation based on J.D. Power and Associates data (at constant Q sales nameplate mix) 14

16 Sales in U.S. & Canada Continue to Outpace Industry 18 consecutive months of year over year sales gains in the U.S. Industry Units (000s) Chrysler Group performance (Q vs. Q3 2010) Sales Market share Key Messages (period over period) 3,051 3,254 Retail sales (excluding fleet) increased 41% Retail of retail market share* increased to 10.2%, up 250 bps Q Q % 11.4% (up 180 bps) Fleet mix at 26%, down from 34% Key performers included: Jeep Compass (+208%) Jeep Wrangler (+52%) Jeep Grand Cherokee (+38%) Chrysler 300 (+18%) Chrysler 200 (26k vehicles sold) Dodge Durango (16k vehicles sold) Retail sales (excluding fleet) increased 10% Q Q % 14.5% (up 170 bps) Retail of retail market share* increased to 13.4%, up 160 bps Key performers included: Jeep Wrangler (+52%) Jeep Compass (+35%) Jeep Grand Cherokee (+31%) Ram Pickup (+9%) * - Company calculation; retail sales (excluding fleet) versus industry retail sales (excluding fleet) 15

17 Residual Value Improvement New and significantly refreshed models show strong progress 200 Wrangler & Wrangler Unlimited 8 ppt +20% 9 ppt +18% Grand Caravan 10 ppt +23% 9 ppt +25% Chrysler Group residual values overall increased at a higher rate than the industry, improving competitiveness on lease rates and trade in values Source: ALG, Inc. Sept/Oct 2011 Edition, electronic version as of 10/17/2011 Note Percentage point improvement based on non-sales weighted average improvement of all trim levels for each vehicle (2011 MY vs MY at 36 months; 15,000 miles per year) 16

18 Ram Truck Success New versions contribute to share increases Ram Pickup Period-over-Period U.S. Sales Gains 38% 23% 18% Ram pickups continue to gain momentum in the marketplace with quarterly yearover year gains during 2011 Q1 Q2 Q3 Segment share increase (period over period) +1.6 ppt +3.3 ppt +1.3 ppt New versions driving share gains (versus 2010) in the Large Pickup segment Ram Tradesman Designed for the commercial buyer who is looking for capability and low cost of ownership 5.7L HEMI V8 engine Tows up to 10,400 pounds thousands more than similar priced competitors Ram Express Designed for the cost conscious new truck buyer who is looking for style and performance Available in regular, quad or crew cab 5.7L HEMI V 8 engine 17

19 2012 Chrysler 300 New model builds on history as most awarded new car ever New If You re Gonna advertisements link the 300 to Imported from Detroit campaign First eight speed automatic transmission in a domestic, luxury sedan 3.6L Pentastar V 6 engine with 292 horsepower Best in class highway fuel economy, with 31 mpg highway Best in class V 6 AWD fuel economy, with 18 mpg city and 27 mpg highway World class interior takes domestic luxury to new level All new luxury sedan earned excellent rating from a leading consumer magazine U.S. sales gaining momentum as vehicle availability increases since Q Q1 Q2 Q3 U.S. Sales

20 Brand in U.S. and Canada Fiat Dealers (U.S. & Canada) , ,721 Q Q Q ,000 Fiat Brand Sales (U.S. & Canada) 5,000 0 FIAT Jennifer Lopez Advertising Campaign The news about the Fiat 500 and Jennifer Lopez advertising campaign generated almost 240 million overall media impressions FIAT brand sales increasing in U.S. and Canada; dealers, new editions and marketing campaigns continue to launch Fiat 500 and Fiat 500 Cabrio by Gucci New special editions customized by Gucci in partnership with FIAT s Centro Stile Unique interior and exterior Available December 2011 Call it the J Lo Factor. Santa Monica based auto site Edmunds.com said today that interest in the new for 2012 Fiat 500 has been dramatically boosted by the appearance of actress singer Jennifer Lopez in a recently introduced television commercial. In the ad, Lopez jukes and drives a Fiat 500 around a crowd of pursuing, adoring fans. Edmunds.com said consumer consideration for the Fiat 500 on its site has climbed 31 percent since the ad made its debut on the Sept. 12 telecast of ESPN's Monday Night Football. On Sept. 18, when the ad aired throughout an entire Sunday of NFL telecasts, Fiat 500 consideration spiked 95 percent. Edmunds Auto Observer 9/28/11 19

21 2012 Jeep Grand Cherokee The Most Awarded SUV Ever ; worldwide sales success Jeep Grand Cherokee is the most awarded SUV ever, receiving over 30 awards from automotive journalist associations, print/on line/television media outlets and industry organizations Also, recently voted SUV of Texas and the Overland Summit model won top honors in the Luxury SUV category by the Texas Auto Writers Association 3.6L Pentastar V 6 engine delivers up to 23 MPG (highway) fuel efficiency and 550 mile driving range Jeep Grand Cherokee SRT8 for Europe shown at Frankfurt Motor Show (September 2011); to be available in Europe starting Q Sales increases in all markets (Q3 YTD 2011 versus Q3 YTD 2010) U.S. + 78% Canada + 86% Mexico +101% International + 73% Jeep Grand Cherokee Period-over-Period Worldwide Sales Gains 59% 174% 47% The 2012 Grand Cherokee, with its well trimmed and roomier interior, powerful V6 and more refined performance and ride, is in fighting shape as a top contender among midsize SUVs. Edmunds.com Q1 Q2 Q

22 2011 Guidance Revised Worldwide Shipments Net Revenues Modified Operating Profit Modified EBITDA Adjusted Net Income Free Cash Flow > 2.0 M > $55 B > $2.0 B > $4.8 B ~ $0.6 B* (revised from $0.2 $0.5 B*) > $1.2 B (revised from >$1.0 B) * Excludes loss on extinguishment of debt of $551 million 21

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24 Appendix 23

25 Worldwide Vehicle Shipments Third Quarter Units (000s) By Market By Brand +15% / / Contract Mfg Int l Mexico Canada Contract Mfg U.S Q Q Q Q year to date worldwide vehicle shipments totaled 1,468k (compared to 1,220k vehicles for the same period a year ago) representing an increase of 20% 24

26 Guaranteed Depreciation Program Adjusted Shipments Units (000s) Q Q Q B/(W) Q Q3 YTD 2011 Q3 YTD 2010 YTD 2011 B/(W) YTD 2010 Worldwide Shipments ,468 1, Guaranteed Depreciation Program (GDP) Subtract: Shipments during period (8) (4) (4) (71) (55) (16) Add: Returns/auctions during period 6 7 (1) Net (shipments) / returns (2) 3 (5) (35) (36) 1 GDP Adjusted Shipments ,433 1,

27 Reconciliation of Cash Flows From Operating Activities to Free Cash Flow $ Millions Q Q Q B/(W) Q Q3 YTD 2011 Q3 YTD 2010 YTD 2011 B/(W) YTD 2010 Net Cash Provided By (Used In) Operating Activities (171) 648 (819) 3,537 4,227 (690) Net Cash Used In Investing Activities (481) (290) (191) (874) (652) (222) Investing activities excluded from Free Cash Flow Change in Loans and Notes Receivable Proceeds from USDART 1 2 (2) (4) (96) (37) 33 (96) Financing activities included in Free Cash Flow Proceeds from Gold Key Lease Financing 266 (266) Repayments of Gold Key Lease Financing (47) (328) 281 (562) (1,633) 1,071 Free Cash Flow (699) 32 (731) 2,001 2,171 (170) 1 U.S. Dealer Automotive Receivables Transitions LLC 26

28 Reconciliation of Financial Liabilities to Gross Industrial Debt and Net Industrial Debt $ Millions Sept 30, 2011 June 30, 2011 Mar 31, 2011 Dec 31, 2010 Financial Liabilities (Carrying Value) 12,384 12,403 13,445 13,731 Less: Gold Key Lease obligations Short term asset backed notes payable Long term asset backed notes payable Gold Key Lease credit facility Total Gold Key Lease obligations (62) (62) (63) (53) (116) (66) (45) (80) (191) (130) (43) (438) (611) Gross Industrial Debt 12,322 12,287 13,254 13,120 Less: Cash (9,454) (10,175) (9,877) (7,347) Net Industrial Debt 2,868 2,112 3,377 5,773 27

29 Gross Industrial Debt $ Billions As of September 30, 2011 Carrying Value Face Value Term Loan B Senior Secured Notes VEBA Trust Note Canadian Health Care Trust Notes Mexico Development Banks Loan Other Financial Liabilities Gross Industrial Debt Excluding GKL self liquidating debt Note: Numbers may not add due to rounding 28

30 Pension Disclosure $ Millions NET PERIODIC BENEFIT COST Q Q Q3 YTD 2011 Q3 YTD 2010 Service Cost Interest Cost Net of Expected Return (78) (60) (226) (184) Special Early Retirement Costs Total Net Periodic Benefit Cost WORLDWIDE PENSION FUND CONTRIBUTIONS WORLDWIDE ASSUMPTIONS (Dec 31) Expected Long Term Asset Return 7.41% 7.42% Discount Rate Ongoing Benefits (Weighted Average) 5.33% 5.54% 29

31 OPEB Disclosure $ Millions NET PERIODIC BENEFIT COST Q Q Q3 YTD 2011 Q3 YTD 2010 Service Cost Interest Cost Net of Expected Return Amortization of ActuarialLoss Gain on VEBA claims adjustment (15) Total Net Periodic Benefit Cost BENEFITS PAID WORLDWIDE ASSUMPTIONS (Dec 31) Expected Long Term Asset Return 7.50% Discount Rate Ongoing Benefits (Weighted Average) 5.57% 5.38% 30

32 Non U.S. GAAP Financial Information and Other Items (a) (b) (c) (d) (e) The following non U.S. GAAP financial definitions apply when the presentation is referring to Adjusted Net Income, Modified Operating Profit (Loss), Modified EBITDA, Cash, Free Cash Flow and Gross and Net Industrial Debt Adjusted Net Income (Loss) is defined as net income (loss) excluding the loss on extinguishment of debt. The reconciliation of net income (loss) to Adjusted Net Income, Modified Operating Profit (defined below) and Modified EBITDA (defined below) for the three and nine months ended September 30, 2011 is detailed on Page 7 Modified Operating Profit (Loss) is computed starting with net income (loss) and then adjusting the amount to (i) add back the provision for income taxes, (ii) add back net interest expense (excluding interest expense related to Gold Key Lease financing activities), (iii) add back all pension, other postretirement benefit obligations ( OPEB ) and other employee benefit costs other than service costs, (iv) add back restructuring expenses and exclude restructuring income, (v) add back other financial expense, (vi) add back losses and exclude gains due to cumulative change in accounting principles, and (vii) add back certain other costs, charges and expenses. The reconciliation of net income (loss) to Adjusted Net Income, Modified Operating Profit and Modified EBITDA (defined below) for the three and nine months ended September 30, 2011 and 2010 is detailed on Page 7 Modified EBITDA is computed starting with net income (loss) adjusted to Modified Operating Profit (Loss) as described above, and then adding back depreciation and amortization expense (excluding depreciation and amortization expense for vehicles held for lease). The reconciliation of net income (loss) to Adjusted Net Income, Modified Operating Profit and Modified EBITDA for the three and nine months ended September 30, 2011 and 2010 is detailed on Page 7 Cash is defined as Cash and Cash Equivalents Free Cash Flow is defined as cash flows from operating and investing activities, excluding any debt related investing activities, reduced for financing activities related to Gold Key Lease financing. A reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow for the three and nine months ended September 30, 2011 and 2010 is detailed on Page 26 (f) A reconciliation of Financial Liabilities to Gross Industrial Debt and Net Industrial Debt at September 30, 2011, June 30, 2011, March 31, 2011 and December 31, 2010 is detailed on Page 27 31

33 Contacts Chrysler Investor Relations Timothy Krause phone: Chrysler Communications Gualberto Ranieri phone: Website 32