fca us llcfca us llc – q3 2015 preliminary results prepared in accordance with u.s. gaap (refer to...
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FCA US LLC Third Quarter 2015 Results (U.S. GAAP)
November 5, 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
This document conta ins forward-
look ing statements that ref lect
management 's current v iews wi th
respect to future events . The words
“ant ic ipate, ” “assume,” “bel ieve,”
“est imate,” “expect ,” “ intend,” “may,”
“p lan,” “project,” “should” and s im i lar
express ions ident i f y forward- look ing
statements . Such statements are
subject to r isks and uncerta int ies ,
inc luding, but not l im ited to:
successful vehic le launches; industr y
SAAR levels ; economic condit ions,
espec ia l ly in Nor th America, inc luding
unemployment levels and the
avai labi l i t y of af fordably pr iced
f inanc ing for our dealers and
consumers; int roduct ion of competing
products and competi t ive pressures
which may l im it our abi l i t y to reduce
sales incent ives; supply d isrupt ions
result ing f rom disasters and other
events af fect ing our supply chain;
changes in laws, regulat ions and
government pol ic ies; and our
dependence on our parent, F iat
Chrys ler Automobi les N.V. (FCA). I f
any of these or other r isks and
uncerta int ies occur, or i f the
assumptions under lying any of these
statements prove incorrect, then actual
results may be mater ia l ly d if ferent
f rom those expressed or impl ied by
such statements . W e do not intend or
assume any obl igat ion to update any
forward- look ing statement, which
speaks only as of the date on which i t
is made. Fur ther detai ls of potent ia l
r isks that may af fect FCA US LLC
(FCA US) are descr ibed in FCA US
LLC per iodic repor ts f i led wi th the U.S.
Securit ies and Exchange Commission.
Forward-looking statements
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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
Net revenues ($B) 20.7
21.8
2014
2015
Q3
Modified
operating
profit ($M)
946
1,271
2014
2015
Q3
Total available
liquidity3
($B)
Net industrial
cash ($B)
Vehicle
shipments (000’s) 700
750
2014
2015
Q3
2.1
3.6
Jun 30 '15
Sep 30 '15
Q3 2015 highlights
Adjusted net
income ($M)
11.7
13.0
1.3
1.3
Jun 30 '15
Sep 30 '15
Cash & Cash Equivalents
13.0
Undrawn committed credit lines
2,095
2,248
YTD
60.1
65.3
YTD
2,517
3,305
YTD
1,716
1,781
YTD
611
743
2014
2015
14.3
Vehicle shipments increased 7% primarily due to the Jeep brand, including the all-new Renegade
Net revenues increased 5% primarily from increased shipments
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.
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 pre-tax charges, $(673)M after-tax, primarily related to:
$(848)M recall campaign reserve adjustment
$(159)M negative impact related to Tianjin (China) port explosion (expected to be recovered through insurance)
Total available liquidity increased $1.3B from June 30, 2015 reflecting the increase in Cash
Net industrial cash increase of $1.5B primarily reflecting positive Free cash flow
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
Q3
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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
Modified operating profit walk
Q3 2014 Volume& mix
Net price Industrialcosts
SG&A Other Q3 2015
$ Millions
4.6% of net
revenues
5.8% of net
revenues
• Volume improvement
mainly driven by Jeep brand
products, including the all-
new Renegade
• Net price increase due to
positive pricing actions and
dealer discount reduction
• 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
946
42
(35)
1,271
(207)
385
140
3
325
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
Cash walk
Jun 30,2015
ModifiedEBITDA
Working capital& other
Capitalexpenditures
Pension /OPEB
Taxes &interest
SpecialDistribution
to Parent
Net principalpmts/FX/other
Sep 30,2015
Change in Cash 1.3
Free Cash Flow 1.5
Note: Numbers may not add due to rounding
11.7 (0.1)
13.0 (0.1)
0.3
(0.5)
2.0
$ Billions
4
(0.3)
(0.2) 1.1 13.0 (0.8) 14.5 5.4 (2.1) (1.3)
Sep 30, 2015
Dec 31, 2014
Free Cash Flow 3.4
(3.7)
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
Reconciliation of Net industrial cash
Face
value as of
Sep 30, 2015
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
Cash 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)
- Mexican development banks credit facilities
- - - 0.5 0.5
0.5 Other financial liabilities 0.5 0.5 - 0.6 0.1
9.3 Total financial liabilities 9.3 9.6 0.3 12.8 3.4
Net industrial cash 3.6 2.1 1.5 1.8 1.8
Note: Numbers may not add due to rounding
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$ Billions
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
Worldwide vehicle sales Q3 2015 versus Q3 2014
268 311
183 164
93 87
153 161
14 14
Q3 2014 Q3 2015
536 573
78 79 18 22 79 63
Q3 2014 Q3 2015
U.S.
Canada
Mexico
Int’l
By market By brand
711 737
+37
+1
+4
(16)
2015 B/(W) 2014
+43
(6)
+8
-
(19)
+4%
711 737
6
Vehicles (000s)
2015 B/(W) 2014
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
U.S. & Canada vehicle sales Q3 2015 versus Q3 2014
Industry volume (000’s)
FCA US performance
Sales Market share Key messages (period-over-period)
+7% 12.4%
(up 10 bps)
+1%
14.9% (flat)
4,350 4,620
Q3 2014 Q3 2015
526 534
Q3 2014 Q3 2015
* Company calculation; retail sales versus industry retail sales
Note: Graphs not to scale
• 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%)
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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
U.S. fleet mix, dealer inventory & days supply
347 358
369
427 419 408
387
509 526
510 500
538
579 578 591
59
67 65
73 66 68
62
79
71 72 71 72 73 78 76
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
31%
27%
24% 22%
28%
22%
18%
22%
23%
21%
18%
24% 23%
20%
18%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
Percentage of total U.S. sales Vehicles (000s)
Dealer inventory
Days supply
2014
U.S. fleet mix U.S dealer inventory & days supply
8
2015 2012 2013 2014 2015 2012 2013
Appendix
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
Worldwide vehicle shipments Q3 2015 versus Q3 2014
10
Vehicles (000s)
261 310
171
187
109 87
134 143 14
18 11
5
Q3 2014 Q3 2015
524 586
70
76 17
23 78
60 11
5
Q3 2014 Q3 2015
U.S.
Canada
Mexico Int’l
By market By brand
700 750
+62
+6
+6 (18)
+49
(22)
+9
+4
+16
+7%
Contract Mfg (6) Contract Mfg
700 750 (6)
Note: Military and Puerto Rico / Caribbean shipments classified as U.S. in Q3 2015 (3k) versus Int’l in Q3 2014 (3k)
2015 B/(W) 2014
2015 B/(W) 2014
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
Guaranteed depreciation program (GDP) adjusted shipments
Vehicles (000s)
Q3 2015 Q3 2014 Q3 2015
B/(W) Q3 2014
9 months YTD 2015
9 months YTD 2014
YTD 2015 B/(W)
YTD 2014
Worldwide shipments 750 700 50 2,248 2,095 153
Guaranteed depreciation program (GDP)
Subtract: Shipments during period (5) (15) 10 (64) (89) 25
Add: Returns/auctions during period 17 13 4 73 47 26
Net shipments 12 (2) 14 9 (42) 51
GDP adjusted worldwide shipments 762 698 64 2,257 2,053 204
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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
Reconciliation of worldwide vehicle sales to shipments
Vehicles (000s)
Q3 2015 Q3 2014 9 months YTD 2015
9 months YTD 2014
Worldwide sales 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)
Contract manufacturing & other 3 7 39 51
Worldwide shipments 750 700 2,248 2,095
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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
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
Net income 70 611 (541) 3,249 540 2,709
Tax status change - - - (2,279) - (2,279)
Change in estimate for future recall campaign costs 848 - 848 848 - 848
Tianjin (China) port explosion 159 - 159 159 - 159
NHTSA consent order - - - 90 - 90
(Gain) loss on extinguishment of debt, net (18) - (18) 63 504 (441)
Charge for MOU with the UAW - - - - 672 (672)
Other 33 - 33 33 - 33
Tax effect of adjustments (349) - (349) (382) - (382)
Adjusted net income 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)
Restructuring & other (income) expense, net 18 1 17 29 9 20
Modified operating profit 1,271 946 325 3,305 2,517 788
Depreciation and amortization expense 2 708 720 (12) 2,130 2,128 2
Modified EBITDA 1,979 1,666 313 5,435 4,645 790
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
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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
Reconciliation of Free cash flow
$ 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
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
Free cash flow 1,535 412 1,123 3,432 2,300 1,132
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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
Pension disclosure
$ Millions
NET PERIODIC PENSION (INCOME) COST
Q3 2015 Q3 2014 9 months YTD 2015
9 months YTD 2014
Service cost 53 57 158 168
Interest cost net of expected return (119) (76) (335) (201)
Recognition of net actuarial losses 18 15 80 58
Amortization of prior service cost 4 2 14 10
Total net periodic pension (income) cost (44) (2) (83) 35
PENSION FUND CONTRIBUTIONS 30 236 63 269
WEIGHTED AVERAGE ASSUMPTIONS 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%
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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
OPEB disclosure
$ Millions
NET PERIODIC BENEFIT COST
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
BENEFITS PAID 42 42 128 131
WEIGHTED AVERAGE ASSUMPTIONS 2014 2013
Benefit obligations at December 31: Discount rate – ongoing benefits
4.11%
4.87%
Periodic Costs: Discount rate – ongoing benefits
4.87%
4.07%
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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
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
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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
Contacts
Investor Relations
Joe Veltri phone: 248-576-9257 email: [email protected]
Erin Banyas phone: 248-512-3224 email: [email protected]
Tim Krause phone: 248-512-2923 email: [email protected]
Alois Monger phone: 248-512-1549 email: [email protected]
Communications
Gualberto Ranieri phone: 248-512-2226 email: [email protected]
Websites
www.fcagroup.com www.fcausllc.com
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