FCA US LLC - FCA Group

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Nov 5, 2015 - Modified EBITDA (defined below) for the three and nine months ended September 30, 2015, and ... email: gua
FCA US LLC Third Quarter 2015 Results (U.S. GAAP)

November 5, 2015

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FCA US LLC – Q3 2015 preliminary results prepared in accordance with U.S. GAAP (refer to Appendix for definitions of non-U.S. GAAP financial measures)

November 5, 2015

1

Q3 2015 highlights Vehicle shipments (000’s)

Q3

YTD

2015

750

2014

700

2,248 2,095

Vehicle shipments increased 7% primarily due to the Jeep brand, including the all-new Renegade

Adjusted net income ($M)

Q3

YTD

2015

743

2014

1,781 1,716

611

Adjusted net income increase reflects higher MOP partially offset by increased taxes due to tax status change in Q1 2015 Q3 2015 Net income was $70M, which includes $(1,022)M of net pretax charges, $(673)M after-tax, primarily related to:

YTD

Q3

Net revenues ($B)

2015

21.8

2014

20.7

65.3 60.1

 $(848)M recall campaign reserve adjustment  $(159)M negative impact related to Tianjin (China) port explosion (expected to be recovered through insurance)

Net revenues increased 5% primarily from increased shipments Net industrial cash ($B)

Modified operating profit ($M)

Q3

YTD

2015 2014

1,271 946

3,305

3.6

Sep 30 '15 Jun 30 '15

2.1

Net industrial cash increase of $1.5B primarily reflecting positive Free cash flow

2,517

Modified operating profit (MOP) increased 34%  Margin of 5.8% in Q3 2015 vs. 4.6% in Q3 2014  The FCA US MOP margin of 5.8% differs from the FCA N.V. reported NAFTA Adjusted EBIT margin of 6.7% under IFRS (~6.5% under US GAAP) primarily due to adjustments from IFRS to US GAAP1 along with inclusion of international operations and other adjustments.

Total available liquidity3 ($B)

13.0

Sep 30 '15

11.7

Jun 30 '15 Cash & Cash Equivalents

1.3

1.3

14.3

13.0

Undrawn committed credit lines

Total available liquidity increased $1.3B from June 30, 2015 reflecting the increase in Cash

1 Differences primarily relate to the capitalization of certain R&D costs under IFRS versus being expensed under US GAAP – refer to FCA N.V.’s Q3 2015 earnings release under the Investors tab of the FCA website for the definition of Adjusted EBIT (under IFRS) 2 Excludes undisbursed $0.4B on the Mexico Bank Loan, which can be drawn subject to meeting certain preconditions Note: Graphs not to scale FCA US LLC – Q3 2015 preliminary results prepared in accordance with U.S. GAAP (refer to Appendix for definitions of non-U.S. GAAP financial measures)

November 5, 2015

2

Modified operating profit walk $ Millions

325 140 385

42

1,271 (35)

(207)

• Volume improvement mainly driven by Jeep brand products, including the allnew Renegade • Net price increase due to positive pricing actions and dealer discount reduction

946

5.8% of net revenues

4.6% of net revenues

• Industrial costs increase reflects higher recall accrual rates and higher product costs for vehicle content enhancements, partially offset by purchasing efficiencies • Other reflects FX translation

Q3 2014

Volume & mix

Net price

Industrial costs

SG&A

FCA US LLC – Q3 2015 preliminary results prepared in accordance with U.S. GAAP (refer to Appendix for definitions of non-U.S. GAAP financial measures)

Other

Q3 2015

November 5, 2015

3

Cash walk $ Billions

Change in Cash 1.3 Free Cash Flow 1.5

2.0

0.3

13.0

(0.5)

(0.1)

(0.1)

Pension / OPEB

Taxes & interest

11.7

Jun 30, 2015

Modified EBITDA

Working capital Capital & other expenditures

Special Distribution to Parent

Net principal pmts/FX/other

Free Cash Flow 3.4

Dec 31, 2014

14.5

(0.3)

5.4

1.1

(2.1)

Sep 30, 2015 Sep 30, 2015

(0.2)

(0.8)

(1.3)

(3.7)

13.0

Note: Numbers may not add due to rounding

FCA US LLC – Q3 2015 preliminary results prepared in accordance with U.S. GAAP (refer to Appendix for definitions of non-U.S. GAAP financial measures)

November 5, 2015

4

Reconciliation of Net industrial cash $ Billions

Face value as of Sep 30, 2015

Cash

Carrying value as of Sep 30, 2015

Carrying value as of Jun 30, 2015

Sep 30, 2015 B/(W) Jun 30, 2015

Carrying value as of Dec 31, 2014

Sep 30, 2015 B/(W) Dec 31, 2014

13.0

11.7

1.3

14.5

(1.6)

3.1

Term loan B – Due 2017

3.1

3.1

-

3.1

-

1.7

Term loan B – Due 2018

1.7

1.7

-

1.7

-

-

Secured senior notes – due 2019

-

-

-

2.9

2.9

3.1

Secured senior notes – due 2021

3.2

3.2

-

3.2

-

0.4

Canadian health care trust notes

0.4

0.6

0.2

0.8

0.4

0.5

Mexico bank loan – due 2022

0.5

0.5

-

-

(0.5)

-

-

-

0.5

0.5

0.5

0.5

-

0.6

0.1

9.3

9.6

0.3

12.8

3.4

3.6

2.1

1.5

1.8

1.8

0.5

9.3

Mexican development banks credit facilities Other financial liabilities

Total financial liabilities Net industrial cash

Note: Numbers may not add due to rounding

FCA US LLC – Q3 2015 preliminary results prepared in accordance with U.S. GAAP (refer to Appendix for definitions of non-U.S. GAAP financial measures)

November 5, 2015

5

Worldwide vehicle sales Q3 2015 versus Q3 2014 Vehicles (000s)

By market 2015 B/(W) 2014

+4%

711 79 18

78

By brand 2015 B/(W) 2014

737 63 22

79

(16) Int’l +4 Mexico +1 Canada

711 14

Q3 2014

573

-

14

153

161

+8

93

87

(6)

164

(19)

268

311

+43

Q3 2014

Q3 2015

183 536

737

+37 U.S.

Q3 2015

FCA US LLC – Q3 2015 preliminary results prepared in accordance with U.S. GAAP (refer to Appendix for definitions of non-U.S. GAAP financial measures)

November 5, 2015

6

U.S. & Canada vehicle sales Q3 2015 versus Q3 2014

FCA US performance

Industry volume (000’s)

4,350

Sales

4,620

+7%

Q3 2014

Q3 2015

526

534

+1%

Q3 2014

Market share

12.4% (up 10 bps)

14.9% (flat)

Key messages (period-over-period) • Retail sales increased 6% • Retail of retail market share* at 11.9%, down 10 bps from the prior year • Fleet mix at 18%, flat with the prior year • Key performers included: • • • • •

Jeep Renegade +22K vehicles (new) Chrysler 200 sedan +11k vehicles (+38%) Jeep Compass +5k vehicles (+36%) Dodge Journey +5k vehicles (+19%) Jeep Cherokee +8k vehicles (+17%)

• Market leader for 9 months YTD 2015 • Retail sales increased 3% • Key performers included: • Jeep Cherokee +4k vehicles (+59%) • Ram 1500 pickup +3k vehicles (+19%)

Q3 2015

* Company calculation; retail sales versus industry retail sales Note: Graphs not to scale

FCA US LLC – Q3 2015 preliminary results prepared in accordance with U.S. GAAP (refer to Appendix for definitions of non-U.S. GAAP financial measures)

November 5, 2015

7

U.S. fleet mix, dealer inventory & days supply

U.S. fleet mix

U.S dealer inventory & days supply

Percentage of total U.S. sales

Vehicles (000s)

Dealer inventory 31% 27%

509 24% 22%

591

579 578

28%

22% 21% 18%

538 510 500

24% 23%

23%

22%

526

427 419 408

20% 18%

18%

369 347 358

67 59

79

73 65

387

66

68

71

72

71

72

73

78

76

62

Days supply

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2012

2013

2014

2015

FCA US LLC – Q3 2015 preliminary results prepared in accordance with U.S. GAAP (refer to Appendix for definitions of non-U.S. GAAP financial measures)

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2012

2013

2014

November 5, 2015

2015

8

Appendix

Worldwide vehicle shipments Q3 2015 versus Q3 2014 Vehicles (000s)

By market 2015 B/(W) 2014

+7%

700 11

78 17

By brand

750 5

60 23

76

(6) (18) +6 +6

2015 B/(W) 2014

Contract Mfg Int’l Mexico Canada

700 11 14

750 5 18

(6) +4

143

+9

87

(22)

187

+16

310

+49

Contract Mfg

134

70 109 171 524

586

+62 U.S.

261

Q3 2014

Q3 2015

Q3 2014

Q3 2015

Note: Military and Puerto Rico / Caribbean shipments classified as U.S. in Q3 2015 (3k) versus Int’l in Q3 2014 (3k)

FCA US LLC – Q3 2015 preliminary results prepared in accordance with U.S. GAAP (refer to Appendix for definitions of non-U.S. GAAP financial measures)

November 5, 2015

10

Guaranteed depreciation program (GDP) adjusted shipments

Vehicles (000s)

Q3 2015

Q3 2014

Q3 2015 B/(W) Q3 2014

750

700

50

2,248

2,095

153

Subtract: Shipments during period

(5)

(15)

10

(64)

(89)

25

Add: Returns/auctions during period

17

13

4

73

47

26

12

(2)

14

9

(42)

51

762

698

64

2,257

2,053

204

Worldwide shipments

9 months YTD 2015

9 months YTD 2014

YTD 2015 B/(W) YTD 2014

Guaranteed depreciation program (GDP)

Net shipments

GDP adjusted worldwide shipments

FCA US LLC – Q3 2015 preliminary results prepared in accordance with U.S. GAAP (refer to Appendix for definitions of non-U.S. GAAP financial measures)

November 5, 2015

11

Reconciliation of worldwide vehicle sales to shipments

Vehicles (000s) Q3 2015

Q3 2014

9 months YTD 2015

9 months YTD 2014

737

711

2,160

2,055

Increase (decrease) in U.S. dealer inventory

13

(10)

53

(9)

Decrease in Canada dealer inventory

(3)

(8)

(4)

(2)

3

7

39

51

750

700

2,248

2,095

Worldwide sales

Contract manufacturing & other

Worldwide shipments

FCA US LLC – Q3 2015 preliminary results prepared in accordance with U.S. GAAP (refer to Appendix for definitions of non-U.S. GAAP financial measures)

November 5, 2015

12

Reconciliation of Adjusted net income, Modified operating profit and Modified EBITDA $ Millions Q3 2015

Q3 2014

Q3 2015 B/(W) Q3 2014

9 months YTD 2015

9 months YTD 2014

YTD 2015 B/(W) YTD 2014

70

611

(541)

3,249

540

2,709

-

-

-

(2,279)

-

(2,279)

Change in estimate for future recall campaign costs

848

-

848

848

-

848

Tianjin (China) port explosion

159

-

159

159

-

159

-

-

-

90

-

90

(18)

-

(18)

63

504

(441)

-

-

-

-

672

(672)

33

-

33

33

-

33

(349)

-

(349)

(382)

-

(382)

743

611

132

1,781

1,716

65

Income tax expense

455

162

293

1,193

213

980

Net interest expense

122

192

(70)

447

597

(150)

Net pension, OPEB and other employee benefit costs (gains) other than service costs 1

(67)

(20)

(47)

(145)

(18)

(127)

18

1

17

29

9

20

1,271

946

325

3,305

2,517

788

708

720

(12)

2,130

2,128

2

1,979

1,666

313

5,435

4,645

790

Net income Tax status change

NHTSA consent order (Gain) loss on extinguishment of debt, net Charge for MOU with the UAW Other Tax effect of adjustments

Adjusted net income

Restructuring & other (income) expense, net

Modified operating profit Depreciation and amortization expense 2

Modified EBITDA

1 Includes interest cost, expected return on plan assets and amortization of unrecognized losses 2 Excludes depreciation and amortization expense for vehicles held for lease FCA US LLC – Q3 2015 preliminary results prepared in accordance with U.S. GAAP (refer to Appendix for definitions of non-U.S. GAAP financial measures)

November 5, 2015

13

Reconciliation of Free cash flow

Q3 2015

Q3 2014

Q3 2015 B/(W) Q3 2014

Net cash provided by operating activities

2,069

1,292

777

5,592

4,842

750

Net cash used in investing activities

(534)

(880)

346

(2,160)

(2,542)

382

1,535

412

1,123

3,432

2,300

1,132

$ Millions

Free cash flow

FCA US LLC – Q3 2015 preliminary results prepared in accordance with U.S. GAAP (refer to Appendix for definitions of non-U.S. GAAP financial measures)

9 months YTD 2015

9 months YTD 2014

YTD 2015 B/(W) YTD 2014

November 5, 2015

14

Pension disclosure

$ Millions Q3 2015

Q3 2014

9 months YTD 2015

9 months YTD 2014

53

57

158

168

(119)

(76)

(335)

(201)

Recognition of net actuarial losses

18

15

80

58

Amortization of prior service cost

4

2

14

10

(44)

(2)

(83)

35

30

236

63

269

2014

2013

Benefit obligations at December 31: Discount rate – ongoing benefits

4.03%

4.69%

Periodic costs: Discount rate – ongoing benefits Expected return on plan assets

4.69% 6.80%

3.98% 7.41%

NET PERIODIC PENSION (INCOME) COST Service cost Interest cost net of expected return

Total net periodic pension (income) cost PENSION FUND CONTRIBUTIONS

WEIGHTED AVERAGE ASSUMPTIONS

FCA US LLC – Q3 2015 preliminary results prepared in accordance with U.S. GAAP (refer to Appendix for definitions of non-U.S. GAAP financial measures)

November 5, 2015

15

OPEB disclosure

$ Millions Q3 2015

Q3 2014

9 months YTD 2015

9 months YTD 2014

Service cost

6

6

19

21

Interest cost

27

32

82

100

Recognition of net actuarial losses

5

6

20

17

Amortization of prior service credit

-

-

1

-

Total net periodic benefit cost

38

44

122

138

42

42

128

131

2014

2013

4.11%

4.87%

4.87%

4.07%

NET PERIODIC BENEFIT COST

BENEFITS PAID

WEIGHTED AVERAGE ASSUMPTIONS Benefit obligations at December 31: Discount rate – ongoing benefits Periodic Costs: Discount rate – ongoing benefits

FCA US LLC – Q3 2015 preliminary results prepared in accordance with U.S. GAAP (refer to Appendix for definitions of non-U.S. GAAP financial measures)

November 5, 2015

16

Non-U.S. GAAP financial measures The following non-U.S. GAAP financial measures definitions apply when the presentation is referring to Adjusted net income, Modified operating profit, Modified EBITDA, Cash, Free cash flow and Net industrial cash

(a) Adjusted net income is defined as net income, including income attributable to non-controlling interests, excluding the impact of items that are considered infrequent. The reconciliation of Adjusted net income, Modified operating profit (defined below) and Modified EBITDA (defined below) for the three and nine months ended September 30, 2015, and 2014, is detailed on slide 13 (b) Modified operating profit is computed starting with net income, including income attributable to non-controlling interests, and then adjusting the amount to (i) add back income tax expense and exclude income tax benefits, (ii) add back net interest expense, (iii) add back (exclude) all pension, other postretirement benefit (OPEB) and other employee benefit costs (gains) other than service costs, (iv) add back restructuring expense and exclude restructuring income, (v) add back other financial expense, (vi) add back losses and exclude gains due to cumulative change in accounting principles, (vii) exclude non-controlling interests and (viii) add back certain other costs, charges and expenses, which include the impact of infrequent items factored into the calculation of Adjusted net income. The reconciliation of Adjusted net income, Modified operating profit and Modified EBITDA (defined below) for the three and nine months ended September 30, 2015, and 2014,is detailed on slide 13 (c) Modified EBITDA is computed starting with net income adjusted to Modified operating profit as described above, and then adding back depreciation and amortization expense (excluding depreciation and amortization expense for vehicles held for lease). The reconciliation of Adjusted net income (loss), Modified operating profit and Modified EBITDA for the three and nine months ended September 30, 2015, and 2014, is detailed on slide 13 (d) Cash is defined as cash and cash equivalents (e) Free cash flow is defined as cash flows from operating and investing activities, excluding any debt-related investing activities. A reconciliation of Free cash flow for the three and nine months ended September 30, 2015 and 2014, is detailed on slide 14 (f) Net industrial cash is defined as Cash less total financial liabilities. A reconciliation of Net industrial cash at September 30, 2015, June 30, 2015, and December 31, 2014, is detailed on slide 5

FCA US LLC – Q3 2015 preliminary results prepared in accordance with U.S. GAAP (refer to Appendix for definitions of non-U.S. GAAP financial measures)

November 5, 2015

17

Contacts

Investor Relations Joe Veltri

phone: email:

248-576-9257 [email protected]

Erin Banyas

phone: email:

248-512-3224 [email protected]

Tim Krause

phone: email:

248-512-2923 [email protected]

Alois Monger

phone: email:

248-512-1549 [email protected]

phone: email:

248-512-2226 [email protected]

Communications Gualberto Ranieri

Websites www.fcagroup.com www.fcausllc.com

FCA US LLC – Q3 2015 preliminary results prepared in accordance with U.S. GAAP (refer to Appendix for definitions of non-U.S. GAAP financial measures)

November 5, 2015

18