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CNH Industrial N.V. — Earnings Release 2018
Nov 7, 2018
6229_iss_2018-11-07_9ed499b9-c2cc-45e1-856e-5a6971a7d11c.pdf
Earnings Release
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CNH Industrial reported 2018 third quarter consolidated revenues of \$6.7 billion, with net income up 285% to \$231 million, or \$0.16 per share. Net industrial debt(3)(4) at \$2.0 billion
Financial results presented under U.S. GAAP(1)(2)
- Industrial Activities net sales were flat compared to the third quarter of 2017 (up 4% on a constant currency basis), with an 18% improvement in Construction Equipment and a 4% increase in Agricultural Equipment offset by declines in Commercial Vehicles and Powertrain
- Adjusted EBIT(3)(4) of Industrial Activities increased 24% to \$321 million, with a 5.1% margin (up 1.0 percentage points). Adjusted EBITDA(3)(4) of Industrial Activities was \$591 million, with a 9.5% margin (up 1.1 percentage points)
- Adjusted net income(3)(4) was \$222 million (a \$71 million increase, or up 47%, compared to the third quarter of 2017), with adjusted diluted EPS(3)(4) of \$0.16 (up \$0.05 per share)
- Net industrial debt was \$2.0 billion at September 30, 2018, \$0.7 billion higher than at June 30, 2018, due to the seasonal increase in net working capital
- On August 8, S&P Global Ratings raised its long-term issuer credit ratings on both CNH Industrial N.V. and CNH Industrial Capital LLC to "BBB" from "BBB-" with a "stable" outlook
- In the quarter, CNH Industrial Capital LLC issued \$500 million in principal amount of 4.200% Notes due 2024, and CNH Industrial Finance Europe S.A. issued €500 million in principal amount of 1.875% Notes due 2026
- In September, CNH Industrial was named as Industry Leader in Machinery and Electrical Equipment in the Dow Jones Sustainability Indices (DJSI), World and Europe, for the 8th consecutive year
- Full year guidance for net sales of Industrial Activities, adjusted diluted EPS and net industrial debt is confirmed, with adjusted diluted EPS expected now at the high end of the range
| CNH INDUSTRIAL Summary of Results |
(\$ million except EPS) | |||||
|---|---|---|---|---|---|---|
| Nine Months ended September 30, | Three Months ended September 30, | |||||
| 2018 | 2017 | Change | 2018 | 2017 | Change | |
| 21,504 | 19,477 | 10.4% | Consolidated revenues | 6,686 | 6,689 | 0.0% |
| 841 | 342 | 499 | Net income | 231 | 60 | 171 |
| 823 | 461 | 362 | Adjusted net income | 222 | 151 | 71 |
| 0.60 | 0.24 | 0.36 | Basic EPS (\$) | 0.16 | 0.04 | 0.12 |
| 0.60 | 0.24 | 0.36 | Diluted EPS (\$) | 0.16 | 0.04 | 0.12 |
| 0.58 | 0.33 | 0.25 | Adjusted diluted EPS (\$) | 0.16 | 0.11 | 0.05 |
London (UK) - (November 7, 2018) CNH Industrial N.V. (NYSE:CNHI / MI:CNHI) today announced consolidated revenues of \$6,686 million for the third quarter of 2018, in line with the third quarter of 2017. Net sales of Industrial Activities were \$6,245 million in the third quarter of 2018, flat compared to the third quarter of 2017 (up 4% on a constant currency basis). Net income of \$231 million for the third quarter of 2018 included a pretax gain of \$30 million (\$23 million net of tax impact) as a result of the amortization over approximately 4.5 years
(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) On January 1, 2018, the Company adopted, on a retrospective basis, updated FASB accounting standards for revenue recognition (ASC 606), retirement benefits accounting (ASU 2017-07) and cash flow presentation (ASU 2016-18) and began using Adjusted EBIT and Adjusted EBITDA. Please refer to "About this Press Release" section of this press release for additional information.
(3) This item is a non-GAAP financial measure. Refer to the "About this Press Release" and "Non-GAAP Financial Information" sections of this press release for information regarding non-GAAP financial measures.
(4) 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.
2018 THIRD QUARTER RESULTS
of the \$527 million positive impact from the modification of a healthcare plan following the favorable judgment issued by the United States Supreme Court, as previously announced by the Company on April 16, 2018. In the third quarter of 2017, net income included a charge of \$39 million related to the repurchase of Notes, as well as \$53 million of restructuring charges (compared to \$8 million in the third quarter of 2018).
Adjusted net income was \$222 million for the third quarter of 2018 compared to \$151 million in the third quarter of 2017, with an adjusted diluted EPS of \$0.16 (\$0.11 in the third quarter of 2017).
Adjusted EBIT of Industrial Activities was \$321 million in the third quarter of 2018, an increase of \$63 million (or up 24%) compared to the third quarter of 2017. Adjusted EBIT margin increased 1.0 percentage points ("p.p.") to 5.1%.
Adjusted EBITDA of Industrial Activities was up 13% to \$591 million for the third quarter of 2018 compared to \$522 million in the third quarter of 2017, with an adjusted EBITDA margin of 9.5%, up 1.1 p.p. compared to the third quarter of 2017, as a result of improvements in operating profitability.
Income taxes were \$131 million in the third quarter of 2018 (\$62 million in the third quarter of 2017). Adjusted income taxes(1)(2) for the third quarter of 2018 were \$118 million (\$63 million in the third quarter of 2017). The adjusted effective tax rate (adjusted ETR)(1)(2) was 36% in the quarter (33% in the third quarter of 2017). The adjusted ETR year-to-date was 28%, in line with the Company's full year 2018 expectation.
Net industrial debt of \$2.0 billion at September 30, 2018 increased by \$0.7 billion from June 30, 2018 due to the seasonal increase in net working capital. Total debt of \$24.0 billion at September 30, 2018 was down \$0.4 billion compared to June 30, 2018. At September 30, 2018, available liquidity(1)(2) was \$8.3 billion, down \$0.1 billion compared to June 30, 2018.
On August 8, 2018, S&P Global Ratings raised its long-term issuer credit ratings on CNH Industrial N.V. and its subsidiary, CNH Industrial Capital LLC, to "BBB" from "BBB-". The short-term rating was raised to "A-2" from "A-3". The outlook of both companies is "stable".
During the quarter, CNH Industrial Capital LLC issued \$500 million in principal amount of 4.200% Notes due 2024, and CNH Industrial Finance Europe S.A. issued €500 million in principal amount of 1.875% Notes due 2026.
(1) This item is a non-GAAP financial measure. Refer to the "About this Press Release" and "Non-GAAP Financial Information" sections of this press release for information regarding non-GAAP financial measures.
(2) 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.
Segment Results
| CNH INDUSTRIAL Revenues by Segment |
(\$ million) | |||||||
|---|---|---|---|---|---|---|---|---|
| Nine Months ended September 30, | Three Months ended September 30, | |||||||
| 2018 | 2017 | % change |
% change excl. FX(1) |
2018 | 2017 | % change |
% change excl. FX(1) |
|
| 8,527 | 7,553 | 12.9 | 12.8 | Agricultural Equipment | 2,636 | 2,547 | 3.5 | 8.4 |
| 2,207 | 1,770 | 24.7 | 24.6 | Construction Equipment | 726 | 618 | 17.5 | 21.2 |
| 7,788 | 7,296 | 6.7 | 2.4 | Commercial Vehicles | 2,404 | 2,573 | -6.6 | -3.0 |
| 3,376 | 3,211 | 5.1 | 0.0 | Powertrain | 972 | 1,074 | -9.5 | -6.4 |
| (1,774) | (1,777) | - | - | Eliminations and other | (493) | (574) | - | - |
| 20,124 | 18,053 | 11.5 | 9.2 | Total Industrial Activities | 6,245 | 6,238 | 0.1 | 4.2 |
| 1,469 | 1,492 | -1.5 | -0.7 | Financial Services | 469 | 478 | -1.9 | 2.3 |
| (89) | (68) | - | - | Eliminations and other | (28) | (27) | - | - |
| 21,504 | 19,477 | 10.4 | 8.4 | Total | 6,686 | 6,689 | 0.0 | 4.0 |
(1) Change excl. FX" or "constant currency" is a non-GAAP financial measure. Refer to the "About this Press Release" and "Non-GAAP Financial Information" sections of this press release for information regarding non-GAAP financial measures.
CNH INDUSTRIAL
| Nine Months ended September 30, Three Months ended September 30, 2018 2017 2018 2017 adjusted adjusted adjusted adjusted \$ EBIT EBIT \$ EBIT EBIT 2017 change margin margin 2018 2017 change margin margin |
|||||
|---|---|---|---|---|---|
| 2018 | |||||
| 549 229 9.1% 7.3% Agricultural Equipment 196 173 23 7.4% 6.8% |
778 | ||||
| 59 (22) 81 2.7% (1.2)% Construction Equipment 26 2 24 3.6% 0.3% |
|||||
| 132 77 2.7% 1.8% Commercial Vehicles 68 43 25 2.8% 1.7% |
209 | ||||
| 259 26 8.4% 8.1% Powertrain 82 88 -6 8.4% 8.2% |
285 | ||||
| Unallocated items, (123) -55 - - eliminations and other (51) (48) -3 - - |
(178) | ||||
| 795 358 5.7% 4.4% Total Industrial Activities 321 258 63 5.1% 4.1% |
1,153 | ||||
| 381 26 27.7% 25.5% Financial Services 123 126 -3 26.2% 26.4% |
407 | ||||
| - - - - - Eliminations and other - - - - - |
|||||
| 1,176 384 7.3% 6.0% Total 444 384 60 6.6% 5.7% |
1,560 |
| Nine Months ended September 30, | Three Months ended September 30, | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2018 | 2017 | \$ change |
2018 adjusted EBITDA margin |
2017 adjusted EBITDA margin |
2018 | 2017 | \$ change |
2018 adjusted EBITDA margin |
2017 adjusted EBITDA margin |
|
| 1,009 | 786 | 223 | 11.8% | 10.4% | Agricultural Equipment | 272 | 255 | 17 | 10.3% | 10.0% |
| 105 | 26 | 79 | 4.8% | 1.5% | Construction Equipment | 41 | 18 | 23 | 5.6% | 2.9% |
| 661 | 522 | 139 | 8.5% | 7.2% | Commercial Vehicles | 216 | 177 | 39 | 9.0% | 6.9% |
| 383 | 352 | 31 | 11.3% | 11.0% | Powertrain | 113 | 120 | -7 | 11.6% | 11.2% |
| (177) | (123) | -54 | - | - | Unallocated items, eliminations and other |
(51) | (48) | -3 | - | |
| 1,981 | 1,563 | 418 | 9.8% | 8.7% | Total Industrial Activities | 591 | 522 | 69 | 9.5% | 8.4% |
| 595 | 583 | 12 | 40.5% | 39.1% | Financial Services | 182 | 198 | -16 | 38.8% | 41.4% |
| - | - | - | - | - | Eliminations and other | - | - | - | - | |
| 2,576 | 2,146 | 430 | 12.0% | 11.0% | Total | 773 | 720 | 53 | 11.6% | 10.8% |
Agricultural Equipment's net sales increased 4% in the third quarter of 2018 compared to the third quarter of 2017 (up 8% on a constant currency basis). The increase was primarily the result of price realization across all regions and higher sales volumes in NAFTA, partially offset by a revenue decrease in APAC, primarily Australia.
Adjusted EBIT was \$196 million in the third quarter of 2018, a \$23 million increase compared to the third quarter of 2017. Adjusted EBIT margin increased 0.6 p.p. to 7.4% compared to the third quarter of 2017. The increase was mainly attributable to favorable net price realization, while the anticipated raw material cost increase was offset by manufacturing efficiencies and lower warranty cost due to improved quality performance. Similar to previous quarters, Agricultural Equipment maintained increased product development spending by 10%, related primarily to precision farming and compliance with Stage V emissions requirements.
Construction Equipment's net sales increased 18% in the third quarter of 2018 compared to the third quarter of 2017 (up 21% on a constant currency basis), as a result of positive net price realization and favorable enduser demand, primarily in NAFTA and APAC.
Adjusted EBIT was \$26 million in the third quarter of 2018, a \$24 million increase compared to the third quarter of 2017, with an adjusted EBIT margin increase of 3.3 p.p. to 3.6%, as a result of higher volume, favorable product mix, and net price realization, more than offsetting raw material cost increases. In the quarter, production levels were 13% above retail demand, in anticipation of the fourth quarter retail seasonality.
Commercial Vehicles' net sales decreased 7% in the third quarter of 2018 compared to the third quarter of 2017 (down 3% on a constant currency basis), as a result of lower sales volume primarily in heavy vehicle trucks in EMEA partially offset by favorable pricing across all regions. Total deliveries were down 8% year-over-year, as increased volumes in light commercial vehicles and in buses (as a result of increased end-user demand in EMEA and Brazil) were more than offset by the impact of lower EMEA volumes in heavy vehicles. The decline in heavy vehicle sales is attributable to a strategy shift, which focuses sales on a more profitable product portfolio, including alternative propulsion vehicles.
Adjusted EBIT was \$68 million for the third quarter of 2018, a 58% increase compared to the third quarter of 2017, with an adjusted EBIT margin of 2.8% (up 1.1 p.p. compared to the third quarter of 2017). The increase was the result of favorable product mix and positive net price realization, primarily in the truck product line-up.
Powertrain's net sales decreased 10% in the third quarter of 2018 compared to the third quarter of 2017 (down 6% on a constant currency basis), due to lower sales volume, primarily attributable to a different calendarization
2018 THIRD QUARTER RESULTS
of the engine sales associated with the transition to the new Stage V regulation. Sales to external customers accounted for 52% of total net sales (48% in the third quarter of 2017).
Adjusted EBIT was \$82 million for the third quarter of 2018 compared to \$88 million for the third quarter of 2017. Adjusted EBIT margin slightly increased to 8.4% as favorable product mix more than offset a 9% decline in engine volumes and higher product development spending.
Financial Services' revenues totaled \$469 million in the third quarter of 2018, a 2% decrease compared to the third quarter of 2017 (up 2% on a constant currency basis), primarily due to a lower average portfolio balance in NAFTA, partially offset by growth in other regions.
In the third quarter of 2018, retail loan originations (including unconsolidated joint ventures) were \$2.4 billion, relatively flat compared to the third quarter of 2017. The managed portfolio (including unconsolidated joint ventures) was \$25.5 billion as of September 30, 2018 (of which retail was 63% and wholesale 37%), down \$0.5 billion compared to September 30, 2017. Excluding the impact of currency translation, the managed portfolio increased \$0.4 billion compared to the same period in 2017.
Net income was \$92 million in the third quarter of 2018, an increase of \$6 million compared to the third quarter of 2017.
2018 Outlook(1)
Despite increasing uncertainties related to the trade policy environment and raw material inflationary headwinds, together with foreign exchange volatility in the emerging economies, CNH Industrial is confirming its 2018 guidance as follows:
- Net sales of Industrial Activities at approximately \$28 billion;
- Adjusted diluted EPS(2) between \$0.67 and \$0.71 per share. In light of the 2018 third quarter earnings results, current expectations are at the high end of the range;
- Net industrial debt at the end of 2018 between \$0.7 billion and \$0.9 billion.
(1) 2018 guidance does not include any impacts deriving from the gain resulting from the modification of the healthcare plan in the U.S. previously mentioned and anticipated on April 16, 2018, as this gain has been considered non-recurring and therefore treated as an adjusting item for the purpose of the adjusted diluted EPS calculation. In addition, 2018 guidance does not include any impacts deriving from possible further repurchases of Company's shares under the plan authorized by the AGM on April 13, 2018.
(2) 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.
About CNH Industrial
CNH Industrial N.V. (NYSE: CNHI /MI: CNHI) is a global leader in the capital goods sector with established industrial experience, a wide range of products and a worldwide presence. Each of the individual brands belonging to the Company is a major international force in its specific industrial sector: Case IH, New Holland Agriculture and STEYR for tractors and agricultural machinery; CASE and New Holland Construction for earth moving equipment; IVECO for commercial vehicles; IVECO BUS and Heuliez Bus for buses and coaches; IVECO ASTRA for quarry and construction vehicles; Magirus for firefighting vehicles; Iveco Defence Vehicles for defence and civil protection; and FPT Industrial for engines and transmissions. More information can be found on the corporate website: www.cnhindustrial.com
About this Press Release
On January 1, 2018, the Company adopted, on a retrospective basis, updated FASB accounting standards for revenue recognition (ASC 606), retirement benefits accounting (ASU 2017-07) and cash flow presentation (ASU 2016-18). 2017 figures presented in this press release have been recast to reflect the adoption of such updated accounting standards.
Furthermore, concurrently with the change in accounting standards, the Company reviewed the metrics on which the operating segments will be assessed. Effective January 1, 2018, the Chief Operating Decision Maker began to assess segment performance and make decisions about resource allocation based upon Adjusted EBIT and Adjusted EBITDA.
As such, we have introduced Adjusted EBIT and Adjusted EBITDA as new non-GAAP measures in our earnings releases this year. These measures replaced our previous Operating Profit non-GAAP measure. The Company believes Adjusted EBIT and Adjusted EBITDA more fully reflect segment and consolidated profitability. See "Non-GAAP Financial Information" for information about these measures, including how CNH Industrial calculates them.
On April 16, 2018, the Company published a presentation and a webcast to summarize the key impacts on its prior periods' consolidated financial statements deriving from the adoption of the new accounting standards, as well as the introduction of the new metrics Adjusted EBIT and Adjusted EBITDA.
Additional Information
Today, at 3:30 p.m. CET / 2:30 p.m. GMT/ 9:30 a.m. EST, management will hold a conference call to present 2018 third quarter and first nine months results to financial analysts and institutional investors. The call can be followed live online at: http://bit.ly/CNH\_Industrial\_Q3\_2018 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.
Non-GAAP Financial Information
CNH Industrial monitors its operations through the use of several non-GAAP financial measures. CNH Industrial's management believes that these non-GAAP financial measures provide useful and relevant information regarding its results and allow management and investors to assess CNH Industrial's and our segments' operating trends, financial performance and financial position. Management uses these non-GAAP measures to identify operational trends, as well as make decisions regarding future spending, resource allocations and other operational decisions as they provide additional transparency with respect to our and our business segments' core operations. These non-GAAP financial measures have no standardized meaning presented in U.S. GAAP or EU-IFRS and are unlikely to be comparable to other similarly titled measures used by other companies due to potential differences between the companies in calculations. As a result, the use of these non-GAAP measures has limitations and they should not be considered as substitutes for measures of financial performance and financial position as prepared in accordance with U.S. GAAP and/or EU-IFRS.
CNH Industrial non-GAAP financial measures are defined as follows:
• Adjusted EBIT under U.S. GAAP: is defined as net income (loss) before income taxes, interest expenses of Industrial Activities, net, restructuring expenses, the finance and non-service component of pension and other post-employment benefit costs, foreign exchange gains/(losses), and certain non-recurring items. In particular, non-recurring items are specifically disclosed items that management considers rare or discrete events that are infrequent in nature and not reflective of on-going operational activities.
2018 THIRD QUARTER RESULTS
- Adjusted EBITDA under U.S. GAAP: is defined as Adjusted EBIT plus depreciation and amortization (including on assets sold under operating leases and assets sold under buy-back commitments).
- Adjusted EBIT under EU-IFRS: is defined as profit/(loss) before taxes, financial income/(expense) of Industrial Activities, restructuring costs, and certain non-recurring items.
- Adjusted EBITDA under EU-IFRS: is defined as Adjusted EBIT plus depreciation and amortization (including on assets sold under operating leases and assets sold under buy-back commitments).
- Adjusted Net Income (Loss): is defined as net income (loss), less restructuring charges and non-recurring items, after tax.
- Adjusted Diluted EPS: is computed by dividing Adjusted Net Income (loss) attributable to CNH Industrial N.V. by a weighted-average number of common shares outstanding during the period that takes into consideration potential common shares outstanding deriving from the CNH Industrial share-based payment awards, when inclusion is not antidilutive. When we provide guidance for adjusted diluted EPS, we do not provide guidance on a earnings per share basis because the GAAP measure will include potentially significant items that have not yet occurred and are difficult to predict with reasonable certainty prior to year-end.
- Adjusted Income Taxes: is defined as income taxes less the tax effect of restructuring expenses and non-recurring items and non-recurring tax charges.
- Adjusted Effective Tax Rate (Adjusted ETR): is computed by dividing a) adjusted income taxes by b) income (loss) before income taxes and equity in income of unconsolidated subsidiaries and affiliates, less restructuring expenses and nonrecurring items.
- Net Debt and Net Debt of Industrial Activities (or Net Industrial Debt): Net Debt is defined as total debt less intersegment notes receivable, cash and cash equivalents, restricted cash and derivative hedging debt. CNH Industrial provides the reconciliation of Net Debt to Total Debt, which is the most directly comparable measure included in the consolidated balance sheets. Due to different sources of cash flows used for the repayment of the debt between Industrial Activities and Financial Services (by cash from operations for Industrial Activities and by collection of financing receivables for Financial Services), management separately evaluates the cash flow performance of Industrial Activities using Net Debt of Industrial Activities.
- Available Liquidity: is defined as cash and cash equivalents plus restricted cash and undrawn committed facilities.
- Change excl. FX or Constant Currency: CNH Industrial discusses the fluctuations in revenues on a constant currency basis by applying the prior year average exchange rates to current year's revenues expressed in local currency in order to eliminate the impact of foreign exchange rate fluctuations.
The tables attached to this press release provide reconciliations of the non-GAAP measures used in this press release to the most directly comparable GAAP measures.
Forward-looking statements
All statements other than statements of historical fact contained in this earning release including statements regarding our competitive strengths; business strategy; future financial position or operating results; budgets; projections with respect to revenue, income, earnings (or loss) per share, capital expenditures, dividends, capital structure or other financial items; costs; and plans and objectives of management regarding operations and products, are forward-looking statements. These statements may include terminology such as "may", "will", "expect", "could", "should", "intend", "estimate", "anticipate", "believe", "outlook", "continue", "remain", "on track", "design", "target", "objective", "goal", "forecast", "projection", "prospects", "plan", or similar terminology. Forward-looking statements are not guarantees of future performance. Rather, they are based on current views and assumptions and involve known and unknown risks, uncertainties and other factors, many of which are outside our control and are difficult to predict. If any of these risks and uncertainties materialize or other assumptions underlying any of the forward-looking statements prove to be incorrect, the actual results or developments may differ materially from any future results or developments expressed or implied by the forward-looking statements. Factors, risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements include, among others: the many interrelated factors that affect consumer confidence and worldwide demand for capital goods and capital goods-related products; general economic conditions in each of our markets; changes in government policies regarding banking, monetary and fiscal policies; legislation, particularly relating to capital goods-related issues such as agriculture, the environment, debt relief and subsidy program policies, trade and commerce and infrastructure development; government policies on international trade and investment, including sanctions, import quotas, capital controls and tariffs; actions of competitors in the various industries in which we compete; development and use of new technologies and technological difficulties; the interpretation of, or adoption of new, compliance requirements with respect to engine emissions,
2018 THIRD QUARTER RESULTS
safety or other aspects of our products; production difficulties, including capacity and supply constraints and excess inventory levels; labor relations; interest rates and currency exchange rates; inflation and deflation; energy prices; prices for agricultural commodities; housing starts and other construction activity; our ability to obtain financing or to refinance existing debt; a decline in the price of used vehicles; the resolution of pending litigation and investigations on a wide range of topics, including dealer and supplier litigation, follow-on private litigation in various jurisdictions after the settlement of the EU antitrust investigation announced on July 19, 2016, intellectual property rights disputes, product warranty and defective product claims, and emissions and/or fuel economy regulatory and contractual issues; our pension plans and other post-employment obligations; political and civil unrest; volatility and deterioration of capital and financial markets, including possible effects of "Brexit", terror attacks in Europe and elsewhere, and other similar risks and uncertainties and our success in managing the risks involved in the foregoing. Further information concerning factors, risks, and uncertainties that could materially affect the Company's financial results is included in our annual report on Form 20-F for the year ended December 31, 2017, prepared in accordance with U.S. GAAP, and in the Company's EU Annual Report at December 31, 2017, prepared in accordance with EU-IFRS. Investors should refer to and consider the incorporated information on risks, factors, and uncertainties in addition to the information presented here.
Forward-looking statements are based upon assumptions relating to the factors described in this earnings release, which are sometimes based upon estimates and data received from third parties. Such estimates and data are often revised. Our actual results could differ materially from those anticipated in such forward-looking statements. Forward-looking statements speak only as of the date on which such statements are made, and we undertake no obligation to update or revise publicly our forward-looking statements. Further information concerning CNH Industrial and its businesses, including factors that potentially could materially affect CNH Industrial's financial results, is included in CNH Industrial's reports and filings with the U.S. Securities and Exchange Commission ("SEC"), the Autoriteit Financiële Markten ("AFM") and Commissione Nazionale per le Società e la Borsa ("CONSOB").
All future written and oral forward-looking statements by CNH Industrial or persons acting on the behalf of CNH Industrial are expressly qualified in their entirety by the cautionary statements contained herein or referred to above.
Contacts
United Kingdom United Kingdom
Richard Gadeselli Federico Donati
Laura Overall United States Tel: +44 207 7660 338
E-mail: [email protected] www.cnhindustrial.com
Media Inquiries Investor Relations
Tel: +44 207 7660 346 Tel: +44 207 7660 386
Noah Weiss Tel: +1 630 887 3745
CNH INDUSTRIAL N.V. Condensed Consolidated Statements of Operations For The Three and Nine Months Ended September 30, 2018 and 2017 (Unaudited)
(U.S. GAAP)
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||
|---|---|---|---|---|
| (\$ million) | 2018 | 2017(*) | 2018 | 2017(*) |
| Revenues | ||||
| Net sales | 6,245 | 6,238 | 20,124 | 18,053 |
| Finance, interest and other income | 441 | 451 | 1,380 | 1,424 |
| TOTAL REVENUES | 6,686 | 6,689 | 21,504 | 19,477 |
| Costs and Expenses | ||||
| Cost of goods sold | 5,162 | 5,229 | 16,606 | 15,104 |
| Selling, general and administrative expenses | 523 | 555 | 1,706 | 1,665 |
| Research and development expenses | 254 | 243 | 743 | 662 |
| Restructuring expenses | 8 | 53 | 16 | 77 |
| Interest expense(1) | 189 | 258 | 581 | 710 |
| Other, net(2) | 199 | 250 | 752 | 760 |
| TOTAL COSTS AND EXPENSES | 6,335 | 6,588 | 20,404 | 18,978 |
| INCOME BEFORE INCOME TAXES AND EQUITY IN INCOME OF UNCONSOLIDATED SUBSIDIARIES AND AFFILIATES |
351 | 101 | 1,100 | 499 |
| Income tax (expense) | (131) | (62) | (312) | (223) |
| Equity in income of unconsolidated subsidiaries and affiliates | 11 | 21 | 53 | 66 |
| NET INCOME | 231 | 60 | 841 | 342 |
| Net income attributable to noncontrolling interests | 9 | 4 | 27 | 12 |
| NET INCOME ATTRIBUTABLE TO CNH INDUSTRIAL N.V. | 222 | 56 | 814 | 330 |
| (in \$) | ||||
| Earnings per share attributable to common shareholders | ||||
| Basic | 0.16 | 0.04 | 0.60 | 0.24 |
| Diluted | 0.16 | 0.04 | 0.60 | 0.24 |
| Cash dividends declared per common share | - | - | 0.173 | 0.118 |
Notes:
(*) 2017 figures have been recast following the retrospective adoption, on January 1, 2018, of the updated accounting standards for revenue recognition (ASC 606) and retirement benefits accounting (ASU 2017-07).
(1) In the three and nine months ended September 30, 2017, Interest expense included the charge of \$39 million and \$56 million, respectively, related to the repurchase/early redemption of Notes.
(2) In the three and nine months ended September 30, 2018, Other, net includes the pre-tax gain of \$30 million and \$50 million, respectively, related to the modification of a healthcare plan in the U.S.
CNH INDUSTRIAL N.V. Condensed Consolidated Balance Sheets As of September 30, 2018 and December 31, 2017 (Unaudited)
(U.S. GAAP)
| (\$ million) | September 30, 2018 | December 31, 2017(*) |
|---|---|---|
| ASSETS | ||
| Cash and cash equivalents | 4,113 | 5,430 |
| Restricted cash | 708 | 770 |
| Trade receivables, net | 478 | 496 |
| Financing receivables, net | 18,366 | 19,795 |
| Inventories, net | 7,339 | 6,452 |
| Property, plant and equipment, net | 6,050 | 6,831 |
| Investments in unconsolidated subsidiaries and affiliates | 525 | 561 |
| Equipment under operating leases | 1,772 | 1,845 |
| Goodwill | 2,460 | 2,472 |
| Other intangible assets, net | 759 | 792 |
| Deferred tax assets(1) | 662 | 852 |
| Derivative assets | 119 | 77 |
| Other assets | 1,861 | 1,925 |
| TOTAL ASSETS | 45,212 | 48,298 |
| LIABILITIES AND EQUITY | ||
| Debt | 23,999 | 25,895 |
| Trade payables | 5,626 | 6,060 |
| Deferred tax liabilities | 93 | 94 |
| Pension, postretirement and other postemployment benefits(1) | 1,613 | 2,300 |
| Derivative liabilities | 115 | 98 |
| Other liabilities | 8,990 | 9,594 |
| Total Liabilities | 40,436 | 44,041 |
| Redeemable noncontrolling interest | 29 | 25 |
| Equity(1) | 4,747 | 4,232 |
| TOTAL LIABILITIES AND EQUITY | 45,212 | 48,298 |
Notes:
(*) 2017 figures have been recast following the retrospective adoption, on January 1, 2018, of the updated accounting standard for revenue recognition (ASC 606).
(1) In the nine months ended September 30, 2018, the liability for Pension, postretirement and other postemployment benefits decreased by \$527 million as a result of the modification of a healthcare plan in the U.S., with a corresponding reduction of \$128 million in Deferred tax assets. As a consequence Equity increased by \$399 million.
These Condensed Consolidated Balance Sheets should be read in conjunction with the Company's Audited Consolidated Financial Statements and Notes for the Year Ended December 31, 2017 included in the Annual Report on Form 20-F. These Condensed Consolidated Balance Sheets represent the consolidation of all CNH Industrial N.V. subsidiaries.
CNH INDUSTRIAL N.V. Condensed Consolidated Statements of Cash Flows For The Nine Months Ended September 30, 2018 and 2017 (Unaudited)
(U.S. GAAP)
| Nine Months Ended September 30, | ||
|---|---|---|
| (\$ million) | 2018 | 2017(*) |
| Operating activities: | ||
| Net income | 841 | 342 |
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization expense, net of assets under operating leases and assets sold under buy-back commitments |
538 | 540 |
| Depreciation and amortization expense of assets under operating leases and assets sold under buy-back commitments |
478 | 430 |
| Loss from disposal of assets | - | 6 |
| Loss on repurchase/early redemption of notes | - | 56 |
| Undistributed income (loss) of unconsolidated subsidiaries | (4) | (22) |
| Other non-cash items | 109 | 114 |
| Changes in operating assets and liabilities: | ||
| Provisions | (85) | 148 |
| Deferred income taxes | 7 | (81) |
| Trade and financing receivables related to sales, net | 448 | 28 |
| Inventories, net | (848) | (596) |
| Trade payables | (35) | 232 |
| Other assets and liabilities | (253) | 2 |
| NET CASH PROVIDED BY OPERATING ACTIVITIES | 1,196 | 1,199 |
| Investing activities: | ||
| Additions to retail receivables | (3,040) | (2,857) |
| Collections of retail receivables | 3,029 | 3,104 |
| Proceeds from the sale of assets, net of assets under operating leases and assets sold under buy-back commitments |
3 | 11 |
| Expenditures for property, plant and equipment and intangible assets, net of assets under operating leases and assets sold under buy-back commitments |
(293) | (278) |
| Expenditures for assets under operating leases and assets sold under buy-back commitments |
(959) | (1,196) |
| Other | 265 | (94) |
| NET CASH USED IN INVESTING ACTIVITIES | (995) | (1,310) |
| Financing activities: | ||
| Net decrease in debt | (922) | (1,085) |
| Dividends paid | (240) | (166) |
| Other | (156) | (16) |
| NET CASH USED IN FINANCING ACTIVITIES | (1,318) | (1,267) |
| Effect of foreign exchange rate changes on cash and cash equivalents | (262) | 305 |
| DECREASE IN CASH AND CASH EQUIVALENTS | (1,379) | (1,073) |
| CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR | 6,200 | 5,854 |
| CASH AND CASH EQUIVALENTS, END OF PERIOD | 4,821 | 4,781 |
Notes:
(*) 2017 figures have been recast following the retrospective adoption, on January 1, 2018, of the updated accounting standards for revenue recognition (ASC 606) and cash flow presentation (ASU 2016-18).
These Condensed Consolidated Statements of Cash Flows should be read in conjunction with the Company's Audited Consolidated Financial Statements and Notes for the Year Ended December 31, 2017 included in the Annual Report on Form 20-F. These Condensed Consolidated Statements of Cash Flows represent the consolidation of all CNH Industrial N.V. subsidiaries.
CNH INDUSTRIAL N.V. Supplemental Statements of Operations For The Three and Nine Months Ended September 30, 2018 and 2017
(Unaudited)
(U.S. GAAP)
| Three Months Ended | September 30, | Industrial Activities Ended September 30, |
Nine Months | Three Months Ended | September 30, | Financial Services Ended September 30, |
Nine Months | |
|---|---|---|---|---|---|---|---|---|
| (\$ million) | 2018 | 2017(*) | 2018 | 2017(*) | 2018 | 2017(*) | 2018 | 2017(*) |
| Revenues | ||||||||
| Net sales | 6,245 | 6,238 | 20,124 | 18,053 | - | - | - | - |
| Finance, interest and other income | 23 | 28 | 73 | 93 | 469 | 478 | 1,469 | 1,492 |
| TOTAL REVENUES | 6,268 | 6,266 | 20,197 | 18,146 | 469 | 478 | 1,469 | 1,492 |
| Costs and Expenses | ||||||||
| Cost of goods sold | 5,162 | 5,229 | 16,606 | 15,104 | - | - | - | - |
| Selling, general and administrative expenses |
481 | 491 | 1,553 | 1,480 | 42 | 64 | 153 | 185 |
| Research and development expenses | 254 | 243 | 743 | 662 | - | - | - | - |
| Restructuring expenses | 8 | 53 | 16 | 75 | - | - | - | 2 |
| Interest expense | 102 | 172 | 333 | 461 | 138 | 141 | 410 | 409 |
| Other, net | 24 | 96 | 228 | 224 | 175 | 154 | 524 | 537 |
| TOTAL COSTS AND EXPENSES | 6,031 | 6,284 | 19,479 | 18,006 | 355 | 359 | 1,087 | 1,133 |
| INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN INCOME OF UNCONSOLIDATED SUBSIDIARIES AND AFFILIATES |
237 | (18) | 718 | 140 | 114 | 119 | 382 | 359 |
| Income tax (expense) | (100) | (22) | (202) | (104) | (31) | (40) | (110) | (119) |
| Equity in income of unconsolidated subsidiaries and affiliates |
2 | 14 | 28 | 46 | 9 | 7 | 25 | 20 |
| Results from intersegment investments | 92 | 86 | 297 | 260 | - | - | - | - |
| NET INCOME | 231 | 60 | 841 | 342 | 92 | 86 | 297 | 260 |
Notes:
(*) 2017 figures have been recast following the retrospective adoption, on January 1, 2018, of the updated accounting standards for revenue recognition (ASC 606) and retirement benefits accounting (ASU 2017-07).
These Supplemental Statements of Operations are presented for informational purposes. The supplemental Industrial Activities data in these statements (with Financial Services on the equity basis) include CNH Industrial N.V.'s Agricultural Equipment, Construction Equipment, Commercial Vehicles and Powertrain segments, as well as Corporate functions. The supplemental Financial Services data in these statements refer to CNH Industrial N.V.'s Financial Services segment. Transactions between Industrial Activities and Financial Services have been eliminated to arrive at the consolidated financial statements.
CNH INDUSTRIAL N.V. Supplemental Balance Sheets As of September 30, 2018 and December 31, 2017 (Unaudited)
(U.S. GAAP)
| Industrial Activities | Financial Services | |||
|---|---|---|---|---|
| (\$ million) | September 30, 2018 |
December 31, 2017(*) |
September 30, 2018 |
December 31, 2017(*) |
| ASSETS | ||||
| Cash and cash equivalents | 3,549 | 4,901 | 564 | 529 |
| Restricted cash | - | - | 708 | 770 |
| Trade receivables | 478 | 490 | 31 | 53 |
| Financing receivables | 1,161 | 1,718 | 19,283 | 20,699 |
| Inventories, net | 7,131 | 6,236 | 208 | 216 |
| Property, plant and equipment, net | 6,048 | 6,829 | 2 | 2 |
| Investments in unconsolidated subsidiaries and affiliates |
3,193 | 3,173 | 215 | 205 |
| Equipment under operating leases | 37 | 35 | 1,735 | 1,810 |
| Goodwill | 2,306 | 2,316 | 154 | 156 |
| Other intangible assets, net | 746 | 779 | 13 | 13 |
| Deferred tax assets | 627 | 869 | 160 | 198 |
| Derivative assets | 116 | 73 | 10 | 14 |
| Other assets | 1,645 | 1,742 | 291 | 358 |
| TOTAL ASSETS | 27,037 | 29,161 | 23,374 | 25,023 |
| LIABILITIES AND EQUITY | ||||
| Debt | 6,627 | 7,443 | 19,449 | 21,075 |
| Trade payables | 5,523 | 5,936 | 143 | 193 |
| Deferred tax liabilities | 9 | 94 | 211 | 215 |
| Pension, postretirement and other postemployment benefits |
1,583 | 2,280 | 30 | 20 |
| Derivative liabilities | 97 | 88 | 25 | 20 |
| Other liabilities | 8,422 | 9,063 | 635 | 686 |
| Total Liabilities | 22,261 | 24,904 | 20,493 | 22,209 |
| Redeemable noncontrolling interest | 29 | 25 | - | - |
| Equity | 4,747 | 4,232 | 2,881 | 2,814 |
| TOTAL LIABILITIES AND EQUITY | 27,037 | 29,161 | 23,374 | 25,023 |
Notes:
(*) 2017 figures have been recast following the retrospective adoption, on January 1, 2018, of the updated accounting standard for revenue recognition (ASC 606).
These Supplemental Balance Sheets are presented for informational purposes. The supplemental Industrial Activities data in these statements (with Financial Services on the equity basis) include CNH Industrial N.V.'s Agricultural Equipment, Construction Equipment, Commercial Vehicles and Powertrain segments, as well as Corporate functions. The supplemental Financial Services data in these statements refer to CNH Industrial N.V.'s Financial Services segment. Transactions between Industrial Activities and Financial Services have been eliminated to arrive at the consolidated financial statements.
CNH INDUSTRIAL N.V. Supplemental Statements of Cash Flows For The Nine Months Ended September 30, 2018 and 2017 (Unaudited)
(U.S. GAAP)
| Industrial Activities | Financial Services | |||
|---|---|---|---|---|
| (\$ million) | Nine Months Ended September 30, |
Nine Months Ended September 30, |
||
| Operating activities: | 2018 | 2017(*) | 2018 | 2017(*) |
| Net income | 841 | 342 | 297 | 260 |
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |
||||
| Depreciation and amortization expense, net of assets under operating leases and assets sold under buy-back commitments |
535 | 536 | 3 | 4 |
| Depreciation and amortization expense of assets under operating leases and assets sold under buy-back commitments |
293 | 232 | 185 | 198 |
| Loss from disposal of assets | - | 6 | - | - |
| Loss on repurchase/early redemption of notes | - | 56 | - | - |
| Undistributed loss of unconsolidated subsidiaries | (147) | (4) | (25) | (20) |
| Other non-cash items | 80 | 54 | 29 | 60 |
| Changes in operating assets and liabilities: | ||||
| Provisions | (88) | 150 | 3 | (2) |
| Deferred income taxes | (8) | (85) | 15 | 4 |
| Trade and financing receivables related to sales, net | (56) | 89 | 513 | (53) |
| Inventories, net | (1,186) | (940) | 338 | 344 |
| Trade payables | (10) | 228 | (36) | 3 |
| Other assets and liabilities | (306) | (72) | 55 | 67 |
| NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | (52) | 592 | 1,377 | 865 |
| Investing activities: | ||||
| Additions to retail receivables | - | - | (3,040) | (2,857) |
| Collections of retail receivables | - | - | 3,029 | 3,104 |
| Proceeds from the sale of assets, net of assets sold under operating leases and assets sold under buy-back commitments |
3 | 11 | - | - |
| Expenditures for property, plant and equipment and intangible assets, net of assets under operating leases and assets sold under buy-back |
(288) | (277) | (5) | (1) |
| commitments Expenditures for assets under operating leases and assets sold under |
||||
| buy-back commitments | (505) | (717) | (454) | (479) |
| Other | 696 | (156) | (470) | 17 |
| NET CASH USED IN INVESTING ACTIVITIES | (94) | (1,139) | (940) | (216) |
| Financing activities: | ||||
| Net decrease in debt | (603) | (616) | (319) | (469) |
| Dividends paid | (240) | (166) | (129) | (258) |
| Other | (156) | (16) | 39 | 45 |
| NET CASH USED IN FINANCING ACTIVITIES | (999) | (798) | (409) | (682) |
| Effect of foreign exchange rate changes on cash and cash equivalents | (207) | 265 | (55) | 40 |
| INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (1,352) | (1,080) | (27) | 7 |
| CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR | 4,901 | 4,649 | 1,299 | 1,205 |
| CASH AND CASH EQUIVALENTS, END OF PERIOD | 3,549 | 3,569 | 1,272 | 1,212 |
Notes:
(*) 2017 figures have been recast following the retrospective adoption, on January 1, 2018, of the updated accounting standards for revenue recognition (ASC 606) and cash flow presentation (ASU 2016-18).
These Supplemental Statements of Cash Flows are presented for informational purposes. The supplemental Industrial Activities data in these statements (with Financial Services on the equity basis) include CNH Industrial N.V.'s Agricultural Equipment, Construction Equipment, Commercial Vehicles and Powertrain segments, as well as Corporate functions. The supplemental Financial Services data in these statements refer to CNH Industrial N.V.'s Financial Services segment. Transactions between Industrial Activities and Financial Services have been eliminated to arrive at the consolidated financial statements.
CNH INDUSTRIAL N.V.
Other Supplemental Financial Information
(Unaudited)
CNH INDUSTRIAL
Reconciliation of Net Income to Adjusted EBIT and Adjusted EBITDA by segment under U.S. GAAP
| (\$ million) | ||||||||
|---|---|---|---|---|---|---|---|---|
| Three Months ended September 30, 2018 | ||||||||
| Agricultural Equipment |
Construction Equipment |
Commercial Vehicles |
Powertrain | Unallocated items, eliminations and other |
Total Industrial Activities |
Financial Services |
Total | |
| Net income(1) | 139 | 92 | 231 | |||||
| Add back: | ||||||||
| Interest expenses of Industrial Activities, net of interest income and eliminations |
79 | - | 79 | |||||
| Foreign exchange (gains) losses, net | 12 | - | 12 | |||||
| Finance and non-service component of Pension and other post-employment benefit costs(2) |
(17) | - | (17) | |||||
| Income tax expense | 100 | 31 | 131 | |||||
| Adjustments: | ||||||||
| Restructuring expenses | 3 | - | 5 | - | - | 8 | - | |
| Adjusted EBIT | 196 | 26 | 68 | 82 | (51) | 321 | 123 | 444 |
| Depreciation and Amortization | 75 | 15 | 53 | 31 | - | 174 | - | 174 |
| Depreciation of assets under operating leases and assets sold with buy-back commitments |
1 | - | 95 | - | - | 96 | 59 | 155 |
| Adjusted EBITDA | 272 | 41 | 216 | 113 | (51) | 591 | 182 | 773 |
| Three Months ended September 30, 2017 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Agricultural Equipment |
Construction Equipment |
Commercial Vehicles |
Powertrain | Unallocated items, eliminations and other |
Total Industrial Activities |
Financial Services |
Total | |
| Net income (loss)(1) | (26) | 86 | 60 | |||||
| Add back: | ||||||||
| Interest expenses of Industrial Activities, net of interest income and eliminations |
144 | - | 144 | |||||
| Foreign exchange (gains) losses, net | 41 | - | 41 | |||||
| Finance and non-service component of Pension and other post-employment benefit costs |
24 | - | 24 | |||||
| Income tax expense | 22 | 40 | 62 | |||||
| Adjustments: | ||||||||
| Restructuring expenses | 2 | - | 51 | - | - | 53 | - | 53 |
| Adjusted EBIT | 173 | 2 | 43 | 88 | (48) | 258 | 126 | 384 |
| Depreciation and Amortization | 82 | 16 | 54 | 32 | - | 184 | 2 | 186 |
| Depreciation of assets under operating leases and assets sold with buy-back commitments |
- | - | 80 | - | - | 80 | 70 | 150 |
| Adjusted EBITDA | 255 | 18 | 177 | 120 | (48) | 522 | 198 | 720 |
(1) For Industrial Activities, net income net of "Results from intersegment investments".
(2) This item includes the pre-tax gain of \$30 million as a result of the amortization over approximately 4.5 years of the \$527 million positive impact from the modification of a healthcare plan in the U.S.
CNH INDUSTRIAL N.V.
Other Supplemental Financial Information
(Unaudited)
CNH INDUSTRIAL
Reconciliation of Net Income to Adjusted EBIT and Adjusted EBITDA by segment under U.S. GAAP
| Agricultural Equipment |
Construction Equipment |
Commercial Vehicles |
Powertrain | Unallocated items, eliminations and other |
Total Industrial Activities |
Financial Services |
Total |
|---|---|---|---|---|---|---|---|
| 544 | 297 | 841 | |||||
| 260 | - | 260 | |||||
| 134 | - | 134 | |||||
| (3) | - | (3) | |||||
| 202 | 110 | 312 | |||||
| 4 | - | 11 | 1 | - | 16 | - | 16 |
| 778 | 59 | 209 | 285 | (178) | 1,153 | 407 | 1,560 |
| 229 | 46 | 161 | 98 | 1 | 535 | 3 | 538 |
| 2 | - | 291 | - | - | 293 | 185 | 478 |
| 1,009 | 105 | 661 | 383 | (177) | 1,981 | 595 | 2,576 |
| Nine Months ended September 30, 2018 |
| Nine Months ended September 30, 2017 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Agricultural Equipment |
Construction Equipment |
Commercial Vehicles |
Powertrain | Unallocated items, eliminations and other |
Total Industrial Activities |
Financial Services |
Total | |
| Net income(1) | 82 | 260 | 342 | |||||
| Add back: | ||||||||
| Interest expenses of Industrial Activities, net of interest income and eliminations |
368 | - | 368 | |||||
| Foreign exchange (gains) losses, net | 97 | - | 97 | |||||
| Finance and non-service component of Pension and other post-employment benefit costs |
69 | - | 69 | |||||
| Income tax expense | 104 | 119 | 223 | |||||
| Adjustments: | ||||||||
| Restructuring expenses | 12 | 4 | 58 | 1 | - | 75 | 2 | 77 |
| Adjusted EBIT | 549 | (22) | 132 | 259 | (123) | 795 | 381 | 1,176 |
| Depreciation and Amortization | 237 | 48 | 158 | 93 | - | 536 | 4 | 540 |
| Depreciation of assets under operating leases and assets sold with buy-back commitments |
- | - | 232 | - | - | 232 | 198 | 430 |
| Adjusted EBITDA | 786 | 26 | 522 | 352 | (123) | 1,563 | 583 | 2,146 |
(1) For Industrial Activities, net income net of "Results from intersegment investments".
(2) This item includes the pre-tax gain of \$50 million as a result of the amortization over approximately 4.5 years of the \$527 million positive impact from the modification of a healthcare plan in the U.S.
CNH INDUSTRIAL N.V. Other Supplemental Financial Information
(Unaudited)
| CNH INDUSTRIAL Reconciliation of Total Debt to Net debt under U.S. GAAP (\$ million) |
|||||||
|---|---|---|---|---|---|---|---|
| Consolidated | Industrial Activities | Financial Activities | |||||
| September 30, 2018 |
December 31, 2017 |
September 30, 2018 |
December 31, 2017 |
September 30, 2018 |
December 31, 2017 |
||
| Third party debt | 23,999 | 25,895 | 5,651 | 6,461 | 18,348 | 19,434 | |
| Intersegment notes payable | - | - | 976 | 982 | 1,101 | 1,641 | |
| Total Debt(1) | 23,999 | 25,895 | 6,627 | 7,443 | 19,449 | 21,075 | |
| Less: Cash and cash equivalents |
4,113 | 5,430 | 3,549 | 4,901 | 564 | 529 | |
| Restricted cash | 708 | 770 | - | - | 708 | 770 | |
| Intersegment notes receivable | - | - | 1,101 | 1,641 | 976 | 982 | |
| Derivatives hedging debt | (12) | (7) | (12) | (7) | - | - | |
| Net debt (cash)(2) | 19,190 | 19,702 | 1,989 | 908 | 17,201 | 18,794 |
(1) Total Debt of Industrial Activities includes Intersegment notes payable to Financial Services of \$976 million and \$982 million as of September 30, 2018 and December 31, 2017, respectively. Total Debt of Financial Services includes Intersegment notes payable to Industrial Activities of \$1,101 million and \$1,641 million as of September 30, 2018 and December 31, 2017, respectively.
(2) The net intersegment receivable/payable balance owed by Financial Services to Industrial Activities was \$125 million and \$659 million as of September 30, 2018 and December 31, 2017, respectively.
CNH INDUSTRIAL
Reconciliation of Cash and cash equivalents to Available liquidity under U.S. GAAP
| (\$ million) | |||
|---|---|---|---|
| September 30, 2018 | June 30, 2018 | December 31, 2017 | |
| Cash and cash equivalents | 4,113 | 4,560 | 5,430 |
| Restricted cash | 708 | 657 | 770 |
| Undrawn committed facilities | 3,459 | 3,141 | 3,180 |
| Available liquidity | 8,280 | 8,358 | 9,380 |
CNH INDUSTRIAL
| (\$ million) | Change in Net industrial debt under U.S. GAAP | ||
|---|---|---|---|
| Three Months ended September 30, | Nine Months ended September 30, | ||
| 2018 2017 |
2017 | 2018 | |
| (1,291) (2,112) |
Net industrial (debt)/cash at beginning of period | (1,609) | (908) |
| 591 522 |
Adjusted EBITDA of Industrial Activities | 1,563 | 1,981 |
| (175) (116) |
Cash interest and taxes | (389) | (465) |
| (95) (15) |
Changes in provisions and similar(1) | (191) | (374) |
| (941) (543) |
Change in working capital | (1,116) | (1,706) |
| (620) (152) |
Operating cash flow | (133) | (564) |
| (130) (112) |
Investments in property, plant and equipment, and intangible assets(2) |
(277) | (288) |
| 20 (22) |
Other changes | 14 | (22) |
| (730) (286) |
Net industrial cash flow | (396) | (874) |
| (24) (12) |
Capital increases and dividends(3) | (182) | (396) |
| 56 (214) |
Currency translation differences and other(4) | (437) | 189 |
| (698) (512) |
Change in Net industrial debt | (1,015) | (1,081) |
| (1,989) (2,624) |
Net industrial (debt)/cash at end of period | (2,624) | (1,989) |
(1) Including other cash flow items related to operating lease and buy-back activities.
(2) Excluding assets sold under buy-back commitments and assets under operating leases.
(3) Including share buy-back transactions.
(4) In the three and nine months ended September 30, 2017, this item also included the charge of \$39 million and \$56 million, respectively, related to the repurchase/early redemption of Notes.
CNH INDUSTRIAL N.V. Other Supplemental Financial Information
(Unaudited)
| (\$ million, except per share data) | Reconciliation of Adjusted net income and Adjusted income tax (expense) to Net income and Income tax (expense) and calculation of Adjusted diluted EPS and Adjusted ETR under U.S. GAAP |
|||
|---|---|---|---|---|
| Nine Months ended September 30, | Three Months ended September 30, | |||
| 2018 | 2017 | 2018 | 2017 | |
| 841 | 342 | Net income | 231 | 60 |
| (34) | 133 | Adjustments impacting Income before income tax (expense) and equity in income of unconsolidated subsidiaries and affiliates (a) |
(22) | 92 |
| 16 | (14) | Adjustments impacting Income tax (expense) (b) | 13 | (1) |
| 823 | 461 | Adjusted net income | 222 | 151 |
| 796 | 449 | Adjusted net income attributable to CNH Industrial N.V. | 213 | 147 |
| 1,362 | 1,366 | Weighted average shares outstanding – diluted (million) | 1,358 | 1,367 |
| 0.58 | 0.33 | Adjusted diluted EPS (\$) | 0.16 | 0.11 |
| 1,100 | 499 | Income before income tax (expense) and equity in income of unconsolidated subsidiaries and affiliates |
351 | 101 |
| (34) | 133 | Adjustments impacting Income before income tax (expense) and equity in income of unconsolidated subsidiaries and affiliates (a) |
(22) | 92 |
| 1,066 | 632 | Adjusted income before income tax (expense) and equity in income of unconsolidated subsidiaries and affiliates (A) |
329 | 193 |
| (312) | (223) | Income tax (expense) | (131) | (62) |
| 16 | (14) | Adjustments impacting Income tax (expense) (b) | 13 | (1) |
| (296) | (237) | Adjusted income tax (expense) (B) | (118) | (63) |
| 28% | 38% | Adjusted Effective Tax Rate (Adjusted ETR) (C=B/A) | 36% | 33% |
| a) affiliates |
Adjustments impacting Income before income tax (expense) and equity in income of unconsolidated subsidiaries and | |||
| 16 | 77 | Restructuring expenses | 8 | 53 |
| - | 56 | Cost of repurchase/early redemption of notes | - | 39 |
| (50) | - | Pre-tax gain related to the modification of a healthcare plan in the U.S. |
(30) | |
| (34) | 133 | Total | (22) | 92 |
| b) Adjustment impacting Income tax (expense) |
||||
| 11 | (14) | Tax effect of adjustments impacting Income before income tax (expense) and equity in income of unconsolidated subsidiaries and affiliates |
8 | (1) |
| 12 | - | Valuation allowance on deferred tax assets | 12 | |
| (7) | - | Adjustment to the 2017 impact of U.S. tax reform | (7) | |
| 16 | (14) | Total | 13 | (1) |
CNH INDUSTRIAL N.V. Other Supplemental Financial Information (Unaudited)
| (\$ million) | CNH INDUSTRIAL Revenues by Segment under EU-IFRS |
||||
|---|---|---|---|---|---|
| Three Months ended September 30, | Nine Months ended September 30, | ||||
| 2017 | 2018 | 2018 2017 % change |
|||
| 2,547 | 2,681 | Agricultural Equipment | 13.5 | 7,553 | 8,572 |
| 618 | 726 | Construction Equipment | 24.7 | 1,770 | 2,207 |
| 2,573 | 2,395 | Commercial Vehicles | 6.6 | 7,296 | 7,779 |
| 1,075 | 961 | Powertrain | 4.8 | 3,213 | 3,366 |
| (574) | (487) | Eliminations and other | - | (1,777) | (1,768) |
| 6,239 | 6,276 | Total Industrial Activities | 11.6 | 18,055 | 20,156 |
| 478 | 471 | Financial Services | -1.4 | 1,492 | 1,471 |
| (47) | (43) | Eliminations and other | - | (128) | (140) |
| 6,670 | 6,704 | Total | 10.6 | 19,419 | 21,487 |
| CNH INDUSTRIAL | Adjusted EBIT(1)(2) by Segment under EU-IFRS | (\$ million) | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Nine Months ended September 30, | Three Months ended September 30, | |||||||||
| 2018 | 2017 | \$ change |
2018 adjusted EBIT margin |
2017 adjusted EBIT margin |
2018 | 2017 | \$ change |
2018 adjusted EBIT margin |
2017 adjusted EBIT margin |
|
| 776 | 503 | 273 | 9.1% | 6.7% | Agricultural Equipment | 221 | 157 | 64 | 8.2% | 6.2% |
| 41 | (48) | 89 | 1.9% | (2.7)% | Construction Equipment | 21 | (5) | 26 | 2.9% | (0.8)% |
| 214 | 122 | 92 | 2.8% | 1.7% | Commercial Vehicles | 71 | 49 | 22 | 3.0% | 1.9% |
| 281 | 251 | 30 | 8.3% | 7.8% | Powertrain | 83 | 88 | -5 | 8.6% | 8.2% |
| (190) | (126) | -64 | - | - | Unallocated items, eliminations and other |
(59) | (51) | -8 | - | - |
| 1,122 | 702 | 420 | 5.6% | 3.9% | Total Industrial Activities | 337 | 238 | 99 | 5.4% | 3.8% |
| 412 | 381 | 31 | 28.0% | 25.5% | Financial Services | 125 | 126 | -1 | 26.5% | 26.4% |
| - | - | - | - | - | Eliminations and other | - | - | - | - | - |
| 1,534 | 1,083 | 451 | 7.1% | 5.6% | Total | 462 | 364 | 98 | 6.9% | 5.5% |
(1) Concurrently with the changes following the adoption of the new accounting standards, the Company reviewed the metrics on which the operating segments will be assessed. Starting in 2018, the Chief Operating Decision Maker began to assess segment performance and make decisions about resource allocation based upon Adjusted EBIT and Adjusted EBITDA.
(2) This item is a non-GAAP financial measure. Refer to the "About this Press Release" and "Non-GAAP Financial Information" sections of this press release for information regarding non-GAAP financial measures.
CNH INDUSTRIAL N.V. Other Supplemental Financial Information (Unaudited)
| CNH INDUSTRIAL | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Adjusted EBITDA(1)(2) by Segment under EU-IFRS | (\$ million) | |||||||||
| Nine Months ended September 30, | Three Months ended September 30, | |||||||||
| 2018 | 2017 | \$ change |
2018 adjusted EBITDA margin |
2017 adjusted EBITDA margin |
2018 | 2017 | \$ change |
2018 adjusted EBITDA margin |
2017 adjusted EBITDA margin |
|
| 1,183 | 905 | 278 | 13.8% | 12.0% | Agricultural Equipment | 351 | 292 | 59 | 13.1% | 11.5% |
| 123 | 41 | 82 | 5.6% | 2.3% | Construction Equipment | 48 | 24 | 24 | 6.6% | 3.9% |
| 775 | 619 | 156 | 10.0% | 8.5% | Commercial Vehicles | 255 | 220 | 35 | 10.6% | 8.6% |
| 412 | 376 | 36 | 12.2% | 11.7% | Powertrain | 124 | 132 | -8 | 12.9% | 12.3% |
| (189) | (126) | -63 | - | - | Unallocated items, eliminations and other |
(59) | (51) | -8 | - | - |
| 2,304 | 1,815 | 489 | 11.4% | 10.1% | Total Industrial Activities | 719 | 617 | 102 | 11.5% | 9.9% |
| 600 | 584 | 16 | 40.8% | 39.1% | Financial Services | 184 | 198 | -14 | 39.1% | 41.4% |
| - | - | - | - | - | Eliminations and other | - | - | - | - | - |
| 2,904 | 2,399 | 505 | 13.5% | 12.4% | Total | 903 | 815 | 88 | 13.5% | 12.2% |
(1) Concurrently with the changes following the adoption of the new accounting standards, the Company reviewed the metrics on which the operating segments will be assessed. Starting in 2018, the Chief Operating Decision Maker began to assess segment performance and make decisions about resource allocation based upon Adjusted EBIT and Adjusted EBITDA.
(2) This item is a non-GAAP financial measure. Refer to the "About this Press Release" and "Non-GAAP Financial Information" sections of this press release for information regarding non-GAAP financial measures.
CNH INDUSTRIAL
| Key Balance Sheet data under EU-IFRS (\$ million) | |||
|---|---|---|---|
| September 30, 2018 | June 30, 2018 | December 31, 2017 | |
| Total Assets | 47,629 | 48,912 | 50,798 |
| Total Equity | 6,991 | 6,971 | 6,684 |
| Equity attributable to CNH Industrial N.V. | 6,966 | 6,948 | 6,671 |
| Net debt | (19,264) | (19,223) | (19,835) |
| Of which Net industrial debt(1) | (1,981) | (1,356) | (1,023) |
(1) This item is a non-GAAP financial measure. Refer to the "About this Press Release" and "Non-GAAP Financial Information" sections of this press release for information regarding non-GAAP financial measures.
CNH INDUSTRIAL N.V. Other Supplemental Financial Information (Unaudited)
| Nine Months ended September 30, | Three Months ended September 30, | |||
|---|---|---|---|---|
| 2018 | 2017 | 2018 | 2017 | |
| 841 | 342 | Net income in accordance with U.S. GAAP | 231 | 60 |
| Adjustments to conform with EU-IFRS: | ||||
| (38) | (80) | Development costs | (17) | (16) |
| 424 | 39 | Other adjustments(1) | (89) | 13 |
| (111) | 21 | Tax impact on adjustments(1) | 9 | 13 |
| 1 | (32) | Deferred tax assets and tax contingencies recognition | 14 | (23) |
| 276 | (52) | Total adjustments | (83) | (13) |
| 1,117 | 290 | Profit in accordance with EU-IFRS | 148 | 47 |
CNH INDUSTRIAL Total Equity reconciliation U.S. GAAP to EU-IFRS (\$ million)
| September 30, 2018 | December 31, 2017 | |
|---|---|---|
| Total Equity under U.S. GAAP | 4,747 | 4,232 |
| Adjustments to conform with EU-IFRS: | ||
| Development costs | 2,354 | 2,477 |
| Other adjustments | (179) | (112) |
| Tax impact on adjustments | (591) | (645) |
| Deferred tax assets and tax contingencies recognition | 660 | 732 |
| Total adjustments | 2,244 | 2,452 |
| Total Equity under EU-IFRS | 6,991 | 6,684 |
Translation of financial statements denominated in a currency other than the U.S. dollar
The principal exchange rates used to translate into U.S. dollars the financial statements prepared in currencies other than the U.S. dollar were as follows:
| Nine Months Ended September 30, 2018 | At December 31, 2017 | Nine Months Ended September 30, 2017 | |||
|---|---|---|---|---|---|
| Average | At September 30 | Average | At September 30 | ||
| Euro | 0.837 | 0.864 | 0.834 | 0.898 | 0.847 |
| Pound sterling | 0.740 | 0.767 | 0.740 | 0.784 | 0.747 |
| Swiss franc | 0.972 | 0.978 | 0.976 | 0.983 | 0.970 |
| Polish zloty | 3.558 | 3.695 | 3.483 | 3.829 | 3.646 |
| Brazilian real | 3.598 | 4.020 | 3.313 | 3.173 | 3.188 |
| Canadian dollar | 1.287 | 1.301 | 1.254 | 1.306 | 1.244 |
| Turkish lira | 4.614 | 6.017 | 3.791 | 3.593 | 3.559 |
CNH INDUSTRIAL N.V. Condensed Consolidated Income Statement(*) For The Three and Nine Months Ended September 30, 2018 and 2017 (Unaudited)
(EU-IFRS)
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||
|---|---|---|---|---|
| (\$ million) | 2018 | 2017(**) | 2018 | 2017(**) |
| Net revenues | 6,704 | 6,670 | 21,487 | 19,419 |
| Cost of sales | 5,418 | 5,495 | 17,416 | 15,972 |
| Selling, general and administrative costs | 527 | 535 | 1,685 | 1,609 |
| Research and development costs | 278 | 265 | 804 | 760 |
| Result from investments: | 11 | 23 | 55 | 71 |
| Share of the profit/(loss) of investees accounted for using the equity method |
11 | 23 | 55 | 71 |
| Other income/(expenses) from investments | - | - | - | - |
| Gains/(losses) on the disposal of investments | (1) | - | (1) | - |
| Restructuring costs | 7 | 53 | 17 | 76 |
| Other income/(expenses)(1) | (29) | (34) | 425 | (66) |
| Financial income/(expenses)(2) | (199) | (191) | (505) | (483) |
| PROFIT/(LOSS) BEFORE TAXES | 256 | 120 | 1,539 | 524 |
| Income tax (expense) | (108) | (73) | (422) | (234) |
| PROFIT/(LOSS) FROM CONTINUING OPERATIONS | 148 | 47 | 1,117 | 290 |
| PROFIT/(LOSS) FOR THE PERIOD | 148 | 47 | 1,117 | 290 |
| PROFIT/(LOSS) FOR THE PERIOD ATTRIBUTABLE TO: | ||||
| Owners of the parent | 140 | 44 | 1,091 | 279 |
| Non-controlling interests | 8 | 3 | 26 | 11 |
| (in \$) | ||||
|---|---|---|---|---|
| BASIC EARNINGS/(LOSS) PER COMMON SHARE(3) | 0.10 | 0.03 | 0.80 | 0.20 |
| DILUTED EARNINGS/(LOSS) PER COMMON SHARE(3) | 0.10 | 0.03 | 0.80 | 0.20 |
Notes:
(*) Concurrently with the changes following the adoption of the new accounting standards, CNH Industrial reviewed the metrics on which the operating segments will be assessed. Starting in 2018, the Chief Operating Decision Maker began to assess segment performance and make decision about resource allocation based upon Adjusted EBIT and Adjusted EBITDA. As a consequence, CNH Industrial no longer reports Trading Profit and Operating Profit on the face of the Income Statement.
(**) 2017 figures have been recast following the retrospective adoption, on January 1, 2018, of the updated accounting standard for revenue recognition (IFRS 15).
(1) In the nine months ended September 30, 2018, Other income/(expenses) includes the pre-tax gain of \$527 million related to the modification of a healthcare plan in the U.S.
(2) In the three and nine months ended September 30, 2017, Financial income/(expenses) included the charge of \$39 million and \$56 million, respectively, related to the early redemption of Notes.
(3) In the nine months ended September 30, 2018, basic and diluted earnings per common share include the positive impact of \$399 million, net of taxes, of the pre-tax gain of \$527 million related to the modification of a healthcare plan in the U.S. Excluding this impact, basic and diluted earnings per common share would have been \$0.51.
This Condensed Consolidated Income Statement should be read in conjunction with the Company's Audited Consolidated Financial Statements and Notes for the Year Ended December 31, 2017 included in the EU Annual Report. This Condensed Consolidated Income Statement represents the consolidation of all CNH Industrial N.V. subsidiaries.
CNH INDUSTRIAL N.V. Condensed Consolidated Statement of Financial Position As of September 30, 2018, December 31, 2017 and January 1, 2017 (Unaudited)
(EU-IFRS)
| (\$ million) | September 30, 2018 | December 31, 2017(*) | January 1, 2017(*) |
|---|---|---|---|
| ASSETS | |||
| Intangible assets | 5,482 | 5,644 | 5,504 |
| Property, plant and equipment | 6,091 | 6,830 | 6,278 |
| Investments and other financial assets: | 579 | 631 | 554 |
| Investments accounted for using the equity method | 545 | 590 | 505 |
| Other investments and financial assets | 34 | 41 | 49 |
| Leased assets | 1,772 | 1,845 | 1,907 |
| Defined benefit plan assets | 24 | 28 | 5 |
| Deferred tax assets(1) | 883 | 982 | 997 |
| Total Non-current assets | 14,831 | 15,960 | 15,245 |
| Inventories | 7,283 | 6,453 | 5,729 |
| Trade receivables | 474 | 496 | 623 |
| Receivables from financing activities | 18,365 | 19,795 | 18,614 |
| Current tax receivables | 306 | 303 | 430 |
| Other current assets | 1,420 | 1,501 | 1,234 |
| Current financial assets: | 119 | 77 | 95 |
| Current securities | - | - | - |
| Other financial assets | 119 | 77 | 95 |
| Cash and cash equivalents | 4,821 | 6,200 | 5,854 |
| Total Current assets | 32,788 | 34,825 | 32,579 |
| Assets held for sale | 10 | 13 | 22 |
| TOTAL ASSETS | 47,629 | 50,798 | 47,846 |
| EQUITY AND LIABILITIES | |||
| Issued capital and reserves attributable to owners of the parent | 6,966 | 6,671 | 6,497 |
| Non-controlling interests | 25 | 13 | 10 |
| Total Equity(1) | 6,991 | 6,684 | 6,507 |
| Provisions: | 5,097 | 5,977 | 5,351 |
| Employee benefits(1) | 1,841 | 2,587 | 2,532 |
| Other provisions | 3,256 | 3,390 | 2,819 |
| Debt: | 24,089 | 26,014 | 25,434 |
| Asset-backed financing | 11,081 | 12,028 | 11,784 |
| Other debt | 13,008 | 13,986 | 13,650 |
| Other financial liabilities | 115 | 98 | 249 |
| Trade payables | 5,626 | 6,060 | 5,185 |
| Current tax payables | 134 | 86 | 229 |
| Deferred tax liabilities | 213 | 138 | 186 |
| Other current liabilities | 5,364 | 5,741 | 4,705 |
| Liabilities held for sale | - | - | - |
| Total Liabilities | 40,638 | 44,114 | 41,339 |
| TOTAL EQUITY AND LIABILITIES | 47,629 | 50,798 | 47,846 |
| Notes: |
(*) 2017 figures have been recast following the retrospective adoption, on January 1, 2018, of the updated accounting standard for revenue recognition (IFRS 15).
(1) In the nine months ended September 30, 2018, the provision for Employee benefits decreased by \$527 million as a result of the modification of a healthcare plan in the U.S., with a corresponding reduction of \$128 million in Deferred tax assets. As a consequence Total Equity increased by \$399 million.
This Condensed Consolidated Statement of Financial Position should be read in conjunction with the Company's Audited Consolidated Financial Statements and Notes for the Year Ended December 31, 2017 included in the EU Annual Report. This Condensed Consolidated Statement of Financial Position represents the consolidation of all CNH Industrial N.V. subsidiaries.
CNH INDUSTRIAL N.V. Condensed Consolidated Statement of Cash Flows For The Nine Months Ended September 30, 2018 and 2017 (Unaudited)
(EU-IFRS)
| Nine Months Ended September 30, | ||
|---|---|---|
| (\$ million) | 2018 | 2017(*) |
| A) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD B) CASH FLOWS FROM/(USED IN) OPERATING ACTIVITIES: |
6,200 | 5,854 |
| Profit/(loss) for the period | 1,117 | 290 |
| Amortization and depreciation (net of vehicles sold under buy-back commitments and | ||
| operating leases) | 892 | 885 |
| (Gains)/losses on disposal of non-current assets (net of vehicles sold under buy-back commitments) |
- | 6 |
| Other non-cash items | (1) | (2) |
| Loss on repurchase/early redemption of notes | - | 56 |
| Dividends received | 49 | 42 |
| Change in provisions | (617) | 87 |
| Change in deferred income taxes | 108 | (89) |
| Change in items due to buy-back commitments(1) | 24 | 24 |
| Change in operating lease items(2) | 59 | 47 |
| Change in working capital | (1,467) | (848) |
| TOTAL | 164 | 498 |
| C) CASH FLOWS FROM/(USED IN) INVESTMENT ACTIVITIES: | ||
| Investments in: | ||
| Property, plant and equipment and intangible assets (net of vehicles sold under buy back commitments and operating leases) |
(613) | (550) |
| Consolidated subsidiaries and other equity investments | - | (7) |
| Proceeds from the sale of non-current assets (net of vehicles sold under buy-back commitments) |
8 | 10 |
| Net change in receivables from financing activities | 443 | 237 |
| Change in current securities | - | - |
| Other changes | 231 | (161) |
| TOTAL | 69 | (471) |
| D) CASH FLOWS FROM/(USED IN) FINANCING ACTIVITIES: | ||
| Net change in debt and other financial assets/liabilities | (936) | (1,223) |
| Capital increase | - | 13 |
| Dividends paid | (240) | (166) |
| (Purchase)/sale of treasury shares | (156) | (29) |
| (Purchase)/sale of ownership interests in subsidiaries | - | - |
| TOTAL | (1,332) | (1,405) |
| Translation exchange differences | (280) | 305 |
| E) TOTAL CHANGE IN CASH AND CASH EQUIVALENTS | (1,379) | (1,073) |
| F) CASH AND CASH EQUIVALENTS AT END OF PERIOD | 4,821 | 4,781 |
Notes:
These Condensed Consolidated Statement of Cash Flows should be read in conjunction with the Company's Audited Consolidated Financial Statements and Notes for the Year Ended December 31, 2017 included in the EU Annual Report. This Condensed Consolidated Statement of Cash Flows represents the consolidation of all CNH Industrial N.V. subsidiaries.
(*) 2017 figures have been recast following the retrospective adoption, on January 1, 2018, of the updated accounting standard for revenue recognition (IFRS 15).
(1) Cash generated by the sale of vehicles under buy-back commitments, net of the amounts included in Profit/(loss), is recognized under operating activities in a single line item, which includes changes in working capital, capital expenditure, depreciation and impairment losses. The item also includes gains and losses arising from the sale of vehicles subject to buy-back commitments before the end of the agreement and without repossession of the vehicle.
(2) Cash from operating lease is recognized under operating activities in a single line item which includes capital expenditure, depreciation, write-down and changes in inventory.