First Quarter 2005 Financial Results April 28, 2005
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, 2005 2
Forward Looking Statements This presentation includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. 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, 2005 3
Q1 Agricultural Equipment Industry Volume Trend Tractors Combines 150,000 10,000 125,000 8,000 100,000 6,000 75,000 50,000 4,000 25,000 2,000-98 99 00 01 02 03 04 05 - North America Western Europe Latin America Rest Of World Total Combines CNH Global NV First Quarter Results April 28, 2005 4
Q1 AG Industry & Share [Preliminary Results] Industry % Change CNH Share Change Tractors - World Wide +1 FLAT North America +6 - - Under 40 HP (2) FLAT - Over 40 HP +14 - Western Europe (2) - Latin America (4) FLAT Rest of World FLAT + Combines - World Wide (20) - North America +39 - Western Europe (6) + Latin America (52) - Rest of World +24 + CNH Global NV First Quarter Results April 28, 2005 5
Q1 Construction Equipment Industry Volume Trend Units in 000 s 140 120 100 80 60 40 20 0 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, 2005 6
Q1 CE Industry & Share [Preliminary Results] Industry % Change CNH Share Change Loader Backhoes - World Wide +21 + - North America +20 + - Western Europe +2 + - Latin America +63 - Skid Steer Loaders - World Wide +5 - - North America +4 - - Western Europe +20 - - Latin America (6) - Heavy Equipment - World Wide (5) FLAT - North America +19 FLAT - Western Europe +16 - - Latin America +26 FLAT CNH Global NV First Quarter Results April 28, 2005 7
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 $500 Q1 2003 Q1 2004 Actual AG Net Sales Q1 2005 CE Net Sales Q1 2005 @ Q1 2004 FX CNH Global NV First Quarter Results April 28, 2005 8
Q1 Industrial Operating Margin* Evolution Compared With Prior Year ($ Mils, US GAAP) $117 $99 Q1 2004 Volume/M ix Net Pricing Economics & Currency S,G&A R&D M fg. Effic. And Other Q1 2005 Variance by Causal Factor * See Appendix for Definition and GAAP Reconciliation CNH Global NV First Quarter Results April 28, 2005 9
P&L and Adjusted EBITDA* Trend ($ Mils, US GAAP) Net Income (Loss) Adjusted EBITDA* Q1 160 Q1 20 0 (20) ($46) ($9) $15 120 80 40 $65 $128 $130 (60) 2003 2004 2005 0 2003 2004 2005 * See Appendix for Definition and GAAP Reconciliation CNH Global NV First Quarter Results April 28, 2005 10
Q1 Equipment Operations Change in Net Debt** ($ Mils, US GAAP) Q1 2004 Q1 2005 '05 B/(W) Than '04 Net Income (Loss) $ (9) $ 15 $ 24 Depreciation & Amortization 66 61 (5) Subtotal 57 76 19 Working Capital, Net of FX Impact For The Period * (125) (466) (341) Other 37 133 96 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 20 17 (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, 2005 11
Q1 2005 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, 2005 12
Q2 and Full Year 2005 AG Industry Volume Outlook Percent Change in Industry Unit Volume Q2 2005 Full Year Tractors - World Wide (5) (0-5) North America 5 5 - Under 40 HP (0-5) FLAT - Over 40 HP 10-15 10 Western Europe (5-10) (5) Latin America (20) (20) Combines - World Wide (20) (15-20) North America 0-5 10 Western Europe 5-10 FLAT Latin America (60) (55) CNH Global NV First Quarter Results April 28, 2005 13
Q2 and Full Year 2005 CE Industry Volume Outlook Percent Change in Industry Unit Volume Q2 2005 Full Year Light Equipment - Worldwide 5-10 5-10 - North America 5-10 10 - Western Europe 10 5 - Latin America 20-30 10-15 Heavy Equipment - World Wide 0-5 0-5 - North America 10 5 - Western Europe 5 5 - Latin America 10 0-5 - Rest of World (0-5) FLAT CNH Global NV First Quarter Results April 28, 2005 14
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 2004. FY North American combine production to be higher in 2H 2005 than in 2H 2004. 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, 2005 15
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 $500 million 2005-2007 in cost reductions CNH Global NV First Quarter Results April 28, 2005 16
CNH Perspective Focus: Revenue and profit growth Increased responsiveness to dealer and customer needs Increased emphasis on product excellence: Improved product quality Greater product reliability Our employees, our independent dealers and our suppliers, working together, poised to deliver superior results in 2005 15% improvement in net income before restructuring costs for full year 2005 CNH Global NV First Quarter Results April 28, 2005 17
For Further Information: Please Contact: Albert S. Trefts, Jr. Senior Director, Investor Relations & Corporate Finance CNH Global N.V. Case New Holland, Inc. 100 South Saunders Road Lake Forest, Illinois 60045 USA Tel: 1-847-955-3821 Fax: 1-847-955-3961 E-mail: al.trefts@cnh.com Website: http://www.cnh.com CNH Global NV First Quarter Results April 28, 2005 18
Appendix
Industrial Operating Margin ($ 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: Q1 2004 Q1 2005 Net sales $2,663 $2,823 Less: Cost of goods sold 2,249 2,414 Gross margin 414 409 Less: Selling, general and administrative 232 243 Research and development 65 67 Industrial operating margin $117 $99 Industrial operating margin as a percentage of net sales 4.4% 3.5% CNH Global NV First Quarter Results April 28, 2005 20
Equipment Operations Adjusted EBITDA and Interest Coverage Ratio Adjusted EBITDA is defined as net income (loss) of Equipment Operations excluding (i) net interest expense, (ii) income tax provision (benefit) (iii) depreciation and amortization and (iv) restructuring. Net interest expense is defined as (i) interest expense (excluding interest compensation to financial services) less (ii) finance and interest income. We believe that Adjusted EBITDA is a measure commonly used by financial analysts because of its usefulness in evaluating operating performance. Adjusted EBITDA does not represent cash flows from operations as defined by U.S. GAAP, is not necessarily indicative of cash available to fund all cash flow needs and should not be considered an alternative to net income or net cash provided (used) by operating activities under U.S. GAAP for purposes of evaluating results of operations and cash flows. Adjusted EBITDA is a non-gaap financial measure as this term is defined under the Securities Act. As a result, the following slide reconciles net cash provided (used) by operating activities, the U.S. GAAP financial measure which we believe to be most directly comparable, to Adjusted EBITDA. CNH defines interest coverage for Equipment Operations as adjusted EBITDA, as defined above, divided by net interest expense, as defined above. CNH Global NV First Quarter Results April 28, 2005 21
Equipment Operations Adjusted EBITDA and Interest Coverage Ratio ($ Mils, US GAAP) Q1 2003 Q1 2004 Q1 2005 Net Cash from Operating Activities $ (87) $ (31) $ (257) Net Interest Expense: Interest Expense 88 79 84 Less: Finance and Interest Income (21) (16) (26) Net Interest Expense 67 63 58 Income Tax Provision (Benefit) (20) (11) (9) Restructuring: Equipment Operations 6 18 5 Financial Services 2 1 - Change in Other Operating Activities 97 88 333 Adjusted EBITDA $ 65 $ 128 $ 130 Net Interest Expense $ 67 $ 63 $ 58 Interest Coverage Ratio 1.0 2.0 2.2 CNH Global NV First Quarter Results April 28, 2005 22
Q1 Equipment Operations Results* ($ Mils, US GAAP) Q1 2004 % of Net Sales Q1 2005 % of Net Sales Net Sales $ 2,663 $ 2,823 Cost of Goods Sold 2,249 2,414 Gross Margin 414 15.5% 409 14.5% SG&A 232 243 R&D 65 67 Industrial Operating Margin 117 4.4% 99 3.5% Other, Net (59) (50) Net Income in Unconsolidated Subs * 30 56 Less: Interest Compensation to Fin. Services (25) (32) Minority Interest (1) (4) Plus: Depreciation & Amortization 66 61 Adjusted EBITDA $ 128 4.8% $ 130 4.6% * Includes Financial Services, excluding Restructuring, on the equity method of accounting CNH Global NV First Quarter Results April 28, 2005 23
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, 2005 24
Q1 Equipment Operations Change in Net Debt ($ Mils, US GAAP) Q1 2004 Q1 2005 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 49 117 Other - Primarily Effect of Foreign Exchange Rate Changes on Indebtedness and Intersegment Notes Receivable 17 19 (Increase) Decrease in Net Debt $ (42) $ (265) CNH Global NV First Quarter Results April 28, 2005 25
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, 2003 2004 2004 2005 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, 2005 26
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: Q1 2003 Q1 2004 Q1 2005 Net income (loss) $ (46) $ (9) $ 15 Restructuring, net of tax: Restructuring 8 19 5 Tax (2) (6) (1) Restructuring, net of tax 6 13 4 Goodw ill 0 0 0 Net Income (loss) before $ (40) $ 4 $ 19 CNH Global NV First Quarter Results April 28, 2005 27
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 1,800 498 746 2,634 1,949 603 $ 685 Uncommitted lines 692 639 537 53 588 514 514 $ 74 Asset Backed C.P. Facilities 1,699 448-1,251 2,006 252 - $ 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 1,283 916 1,267 894 Other short term debt 99 8 85 5 Other long term debt 587 206 573 198 Intersegment debt - 24-21 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, 2005 28
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 725 8 733 745 5 750 Intersegment - 24 24-21 21 Total 973 115 1,088 1,040 97 1,137 Long Term Debt* With Fiat Affiliates 62 830 892 76 823 899 Other 2,192 2,192 2 2,180 2,182 Intersegment - - - - - - Total 62 3,022 3,084 78 3,003 3,081 Total debt $ 1,035 $ 3,137 4,172 $ 1,118 $ 3,100 4,218 less: Cash and Cash Equivalents 637 369 Deposits in Fiat Cash Pools 1,136 1,237 Intersegment Notes Receivable 1,114 1,062 Net Debt $1,285 $1,550 CNH Global NV First Quarter Results April 28, 2005 29
Equipment Operations Long-Term Debt* ($ 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 2009 474 474 Payable in 2011 1,052 1,052 Payable in 2016 254 254 Total Public notes 1,998 1,998 Notes with Fiat Affiliates Payable in 2006 - Usd note 700 700 Payable in 2006 - Euro note 109 104 Other 21 19 Total Notes with Fiat Affiliates 830 823 Long Term Uses of Credit Lines 62 76 Other Long Term Debt 194 184 Total $ 3,084 $ 3,081 *Including Current Maturities of Long Term Debt CNH Global NV First Quarter Results April 28, 2005 30
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