LISLE, Ill., June 5, 2018 /PRNewswire/ -- Navistar
International Corporation (NYSE: NAV) today announced a second
quarter 2018 net income of $55
million, or $0.55 per diluted
share, compared to a second quarter 2017 net loss of $80 million, or $0.86 per diluted share.
Revenues in the quarter were $2.4
billion, up 16 percent compared to $2.1 billion in the second quarter last year. The
increase primarily reflects higher volumes in the company's Core
(Class 6-8 trucks and buses in the United
States and Canada) market,
where chargeouts were up 17 percent.
Second quarter 2018 EBITDA was $174
million, compared to second quarter 2017 EBITDA of
$47 million. Second quarter adjusted
EBITDA was $182 million, compared to
adjusted EBITDA of $65 million in the
comparable period last year.
"We had a great second quarter, delivering stronger than
expected results by taking advantage of the robust market
conditions," said Troy A. Clarke,
Navistar chairman, president and chief executive officer. "The
market continues to respond favorably to our new products,
especially our LT Series on highway tractor and the 13-liter A26
engine, which helped us capture two points of year-over-year share
growth in the Class 8 segment."
Navistar ended second quarter 2018 with $1.14 billion in consolidated cash, cash
equivalents and marketable securities. Manufacturing cash, cash
equivalents and marketable securities were $1.10 billion at the end of the quarter. "We are
also pleased to report that on a trailing 12 month basis, we were
manufacturing free cash flow positive by nearly $100 million," Clarke added.
During the quarter, the company launched the
International® MV™ Series line of medium-duty trucks.
The MV Series launch completed the company's Project Horizon
product refresh, and reflects that initiative's improved cab
design, along with the same driver-centric enhancements already
launched in Class 8 vehicles.
"We expect to see our medium share improve as we ramp up
deliveries of our new MV model in the second half, and we are also
expanding our bus product portfolio this summer with gasoline and
rear-engine models," said Persio
Lisboa, Navistar executive vice president and chief
operating officer. "Given this and our strong order performance in
Q2, we're confident we are on track to hit our 2018 goal of
increasing our total Core market share."
In the second quarter the company announced its plans to expand
its ReNEWed® remanufactured components business product
line-up as well as its Fleetrite® private label parts
business.
Also during the quarter, Navistar demonstrated its electric
school bus, chargE™, which was developed with alliance
partner Volkswagen Truck & Bus, on the road for the first time.
The national tour kicked off on the West Coast with a number of
demonstrations for customers and government officials in March and
April, and will visit a number of U.S. locations throughout 2018.
Additionally, the company noted that in the first 15 months of
operation, Global Truck & Bus Procurement LLC, the procurement
joint venture created by Navistar and Volkswagen Truck & Bus,
is on track to reach its synergy targets.
Based on stronger industry conditions, the company raised its
2018 full-year guidance:
- Industry retail deliveries of Class 6-8 trucks and buses in
the United States and Canada are forecast to be 380,000 units to
410,000 units, with Class 8 retail deliveries of 250,000 to 280,000
units.
- Navistar revenues are expected to be between $9.75 billion and $10.25
billion.
- The company's adjusted EBITDA is expected to be between
$725 million and $775 million.
- Year-end manufacturing cash is expected to be about
$1.2 billion.
"The work we've done in the first half of the year growing Class
8 share, building our backlog and managing costs, combined with
strong industry conditions, positions us to deliver an even
stronger second half," Clarke said.
|
SEGMENT
REVIEW
|
|
Summary of
Financial Results:
|
|
|
(Unaudited)
|
|
Three Months
Ended
April 30,
|
|
Six Months
Ended
April 30,
|
|
(in millions,
except per share data)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
Sales and revenues,
net
|
$
|
2,422
|
|
|
$
|
2,096
|
|
|
$
|
4,327
|
|
|
$
|
3,759
|
|
|
Segment
Results:
|
|
|
|
|
|
|
|
|
Truck
|
$
|
42
|
|
|
$
|
(56)
|
|
|
$
|
35
|
|
|
$
|
(125)
|
|
|
Parts
|
132
|
|
|
153
|
|
|
269
|
|
|
302
|
|
|
Global
Operations
|
1
|
|
|
(7)
|
|
|
(6)
|
|
|
(11)
|
|
|
Financial
Services
|
19
|
|
|
15
|
|
|
39
|
|
|
28
|
|
|
Net income
(loss)(A)
|
55
|
|
|
(80)
|
|
|
(18)
|
|
|
(142)
|
|
|
Diluted income (loss)
per share(A)
|
$
|
0.55
|
|
|
$
|
(0.86)
|
|
|
$
|
(0.18)
|
|
|
$
|
(1.62)
|
|
|
|
|
|
|
|
(A)
|
Amounts attributable
to Navistar International Corporation.
|
Truck Segment – Truck segment net sales increased
22 percent to $1.7 billion in second
quarter 2018 compared to second quarter 2017, due to higher volumes
in the company's Core markets, higher export truck volumes, an
increase in military sales, and a shift in model mix, partially
offset by a decline in Mexico
truck volumes. Truck chargeouts in the company's Core market were
up 17 percent year-over-year.
The Truck segment profit increased to $42
million in second quarter 2018, versus a second quarter 2017
loss of $56 million. The improvement
was driven by the impact of higher volumes in the company's Core
markets and a decline in used truck losses.
Parts Segment – Parts segment second quarter 2018
net sales were $601 million, down
$9 million, or one percent, compared
to second quarter 2017, driven by lower U.S. volumes and Blue
Diamond Parts (BDP) sales, partially offset by higher Mexico volumes and parts sales related to the
Fleetrite™ brand.
The Parts segment recorded a quarterly profit of $132 million in second quarter 2018, down 14
percent versus the same period one year ago, primarily due to lower
U.S. margins, higher freight-related expenses and intercompany
access fees.
Global Operations Segment – Global Operations
segment second quarter 2018 net sales grew 39 percent to
$97 million compared to second
quarter 2017. This was primarily driven by higher engine volumes in
the company's South America engine
operations due to the improving Brazilian economy.
The Global Operations segment recorded a $1 million profit in second quarter 2018 compared
to a $7 million loss in the same
period one year ago. The year-over-year change was due to higher
engine volumes and cost-reduction actions initiated in 2017.
Financial Services Segment – Financial Services segment
second quarter 2018 net revenues increased 13 percent to
$63 million versus the same period
one year ago, primarily driven by higher overall finance receivable
balances in the U.S. and Mexico.
Financial Services segment recorded a profit of $19 million in second quarter 2018, an increase
of $4 million versus second quarter
2017, primarily due to improved interest margins.
About Navistar
Navistar International Corporation (NYSE: NAV) is a holding
company whose subsidiaries and affiliates produce International
brand commercial and military trucks, proprietary diesel engines,
and IC Bus brand school and commercial buses. An affiliate also
provides truck and diesel engine service parts. Another affiliate
offers financing services. Additional information is available at
www.Navistar.com.
Forward-Looking Statement
Information provided and statements contained in this report
that are not purely historical are forward-looking statements
within the meaning of the federal securities laws. Such
forward-looking statements only speak as of the date of this report
and the company assumes no obligation to update the information
included in this report. Such forward-looking statements include
information concerning our possible or assumed future results of
operations, including descriptions of our business strategy. These
statements often include words such as believe, expect, anticipate,
intend, plan, estimate, or similar expressions. These statements
are not guarantees of performance or results and they involve
risks, uncertainties, and assumptions. For a further description of
these factors, see the risk factors set forth in our filings with
the Securities and Exchange Commission, including our annual report
on Form 10-K for the fiscal year ended October 31, 2017, which was filed on December 19, 2017 and our Quarterly Report on
Form 10-Q for the quarter ended January 31,
2018, which was filed on March 8,
2018. Although we believe that these forward-looking
statements are based on reasonable assumptions, there are many
factors that could affect our actual financial results or results
of operations and could cause actual results to differ materially
from those in the forward-looking statements. All future written
and oral forward-looking statements by us or persons acting on our
behalf are expressly qualified in their entirety by the cautionary
statements contained or referred to above. Except for our ongoing
obligations to disclose material information as required by the
federal securities laws, we do not have any obligations or
intention to release publicly any revisions to any forward-looking
statements to reflect events or circumstances in the future or to
reflect the occurrence of unanticipated events.
|
Navistar
International Corporation and Subsidiaries
|
|
Consolidated
Statements of Operations
|
|
(Unaudited)
|
|
|
Three Months
Ended
April 30,
|
|
Six Months
Ended
April 30,
|
|
(in millions,
except per share data)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
Sales and
revenues
|
|
|
|
|
|
|
|
|
Sales of manufactured
products, net
|
$
|
2,382
|
|
|
$
|
2,063
|
|
|
$
|
4,249
|
|
|
$
|
3,692
|
|
|
Finance
revenues
|
40
|
|
|
33
|
|
|
78
|
|
|
67
|
|
|
Sales and revenues,
net
|
2,422
|
|
|
2,096
|
|
|
4,327
|
|
|
3,759
|
|
|
Costs and
expenses
|
|
|
|
|
|
|
|
|
Costs of products
sold
|
1,987
|
|
|
1,776
|
|
|
3,519
|
|
|
3,146
|
|
|
Restructuring
charges
|
1
|
|
|
2
|
|
|
(2)
|
|
|
9
|
|
|
Asset impairment
charges
|
1
|
|
|
5
|
|
|
3
|
|
|
7
|
|
|
Selling, general and
administrative expenses
|
220
|
|
|
221
|
|
|
442
|
|
|
421
|
|
|
Engineering and
product development costs
|
75
|
|
|
65
|
|
|
150
|
|
|
128
|
|
|
Interest
expense
|
79
|
|
|
89
|
|
|
158
|
|
|
171
|
|
|
Other expense
(income), net
|
(9)
|
|
|
9
|
|
|
40
|
|
|
1
|
|
|
Total costs and
expenses
|
2,354
|
|
|
2,167
|
|
|
4,310
|
|
|
3,883
|
|
|
Equity in income of
non-consolidated affiliates
|
—
|
|
|
2
|
|
|
—
|
|
|
5
|
|
|
Income (loss) before
income tax
|
68
|
|
|
(69)
|
|
|
17
|
|
|
(119)
|
|
|
Income tax
expense
|
(7)
|
|
|
(6)
|
|
|
(22)
|
|
|
(10)
|
|
|
Net income
(loss)
|
61
|
|
|
(75)
|
|
|
(5)
|
|
|
(129)
|
|
|
Less: Net income
attributable to non-controlling interests
|
6
|
|
|
5
|
|
|
13
|
|
|
13
|
|
|
Net income (loss)
attributable to Navistar International Corporation
|
$
|
55
|
|
|
$
|
(80)
|
|
|
$
|
(18)
|
|
|
$
|
(142)
|
|
|
|
|
|
|
|
|
|
|
Income (loss) per
share attributable to Navistar International
Corporation:
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.56
|
|
|
$
|
(0.86)
|
|
|
$
|
(0.18)
|
|
|
$
|
(1.62)
|
|
|
Diluted
|
0.55
|
|
|
(0.86)
|
|
|
(0.18)
|
|
|
(1.62)
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
98.8
|
|
|
93.3
|
|
|
98.7
|
|
|
87.5
|
|
|
Diluted
|
99.5
|
|
|
93.3
|
|
|
98.7
|
|
|
87.5
|
|
|
Navistar
International Corporation and Subsidiaries
|
|
Consolidated
Balance Sheets
|
|
|
April
30,
|
|
October
31,
|
|
(in millions,
except per share data)
|
2018
|
|
2017
|
|
ASSETS
|
(Unaudited)
|
|
|
|
Current
assets
|
|
|
|
|
Cash and cash
equivalents
|
$
|
1,100
|
|
|
$
|
706
|
|
|
Restricted cash and
cash equivalents
|
40
|
|
|
83
|
|
|
Marketable
securities
|
40
|
|
|
370
|
|
|
Trade and other
receivables, net
|
313
|
|
|
391
|
|
|
Finance receivables,
net
|
1,656
|
|
|
1,565
|
|
|
Inventories,
net
|
1,167
|
|
|
857
|
|
|
Other current
assets
|
201
|
|
|
188
|
|
|
Total current
assets
|
4,517
|
|
|
4,160
|
|
|
Restricted
cash
|
52
|
|
|
51
|
|
|
Trade and other
receivables, net
|
13
|
|
|
13
|
|
|
Finance receivables,
net
|
242
|
|
|
220
|
|
|
Investments in
non-consolidated affiliates
|
54
|
|
|
56
|
|
|
Property and
equipment (net of accumulated depreciation and amortization of
$2,462 and $2,474, respectively)
|
1,299
|
|
|
1,326
|
|
|
Goodwill
|
38
|
|
|
38
|
|
|
Intangible assets
(net of accumulated amortization of $139 and $135,
respectively)
|
34
|
|
|
40
|
|
|
Deferred taxes,
net
|
129
|
|
|
129
|
|
|
Other noncurrent
assets
|
109
|
|
|
102
|
|
|
Total
assets
|
$
|
6,487
|
|
|
$
|
6,135
|
|
|
LIABILITIES and
STOCKHOLDERS' DEFICIT
|
|
|
|
|
Liabilities
|
|
|
|
|
Current
liabilities
|
|
|
|
|
Notes payable and
current maturities of long-term debt
|
$
|
1,504
|
|
|
$
|
1,169
|
|
|
Accounts
payable
|
1,500
|
|
|
1,292
|
|
|
Other current
liabilities
|
1,057
|
|
|
1,184
|
|
|
Total current
liabilities
|
4,061
|
|
|
3,645
|
|
|
Long-term
debt
|
3,846
|
|
|
3,889
|
|
|
Postretirement
benefits liabilities
|
2,422
|
|
|
2,497
|
|
|
Other noncurrent
liabilities
|
685
|
|
|
678
|
|
|
Total
liabilities
|
11,014
|
|
|
10,709
|
|
|
Stockholders'
deficit
|
|
|
|
|
Series D
convertible junior preference stock
|
2
|
|
|
2
|
|
|
Common stock, $0.10
par value per share (103.1 shares issued and 220 shares authorized
at both dates)
|
10
|
|
|
10
|
|
|
Additional paid-in
capital
|
2,729
|
|
|
2,733
|
|
|
Accumulated
deficit
|
(4,951)
|
|
|
(4,933)
|
|
|
Accumulated other
comprehensive loss
|
(2,154)
|
|
|
(2,211)
|
|
|
Common stock held in
treasury, at cost (4.3 and 4.6 shares, respectively)
|
(166)
|
|
|
(179)
|
|
|
Total stockholders'
deficit attributable to Navistar International
Corporation
|
(4,530)
|
|
|
(4,578)
|
|
|
Stockholders' equity
attributable to non-controlling interests
|
3
|
|
|
4
|
|
|
Total
stockholders' deficit
|
(4,527)
|
|
|
(4,574)
|
|
|
Total liabilities
and stockholders' deficit
|
$
|
6,487
|
|
|
$
|
6,135
|
|
|
Navistar
International Corporation and Subsidiaries
|
|
Condensed
Consolidated Statements of Cash Flows
|
|
(Unaudited)
|
|
|
Six Months Ended
April 30,
|
|
(in
millions)
|
2018
|
|
2017
|
|
Cash flows from
operating activities
|
|
|
|
|
Net loss
|
$
|
(5)
|
|
|
$
|
(129)
|
|
|
Adjustments to
reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
73
|
|
|
75
|
|
|
Depreciation of
equipment leased to others
|
36
|
|
|
37
|
|
|
Deferred taxes,
including change in valuation allowance
|
1
|
|
|
(2)
|
|
|
Asset impairment
charges
|
3
|
|
|
7
|
|
|
Amortization of debt
issuance costs and discount
|
15
|
|
|
23
|
|
|
Stock-based
compensation
|
21
|
|
|
12
|
|
|
Provision for
doubtful accounts
|
3
|
|
|
7
|
|
|
Equity in income of
non-consolidated affiliates, net of dividends
|
4
|
|
|
1
|
|
|
Write-off of debt
issuance costs and discount
|
43
|
|
|
4
|
|
|
Other non-cash
operating activities
|
(13)
|
|
|
(9)
|
|
|
Changes in other
assets and liabilities, exclusive of the effects of businesses
disposed
|
(278)
|
|
|
(133)
|
|
|
Net cash used in
operating activities
|
(97)
|
|
|
(107)
|
|
|
Cash flows from
investing activities
|
|
|
|
|
Purchases of
marketable securities
|
(148)
|
|
|
(589)
|
|
|
Sales of marketable
securities
|
460
|
|
|
440
|
|
|
Maturities of
marketable securities
|
18
|
|
|
17
|
|
|
Net change in
restricted cash and cash equivalents
|
42
|
|
|
(48)
|
|
|
Capital
expenditures
|
(53)
|
|
|
(66)
|
|
|
Purchases of
equipment leased to others
|
(92)
|
|
|
(37)
|
|
|
Proceeds from sales
of property and equipment
|
5
|
|
|
14
|
|
|
Investments in
non-consolidated affiliates
|
—
|
|
|
(2)
|
|
|
Net payments for
sales of affiliates
|
(3)
|
|
|
—
|
|
|
Net cash provided
by (used in) investing activities
|
229
|
|
|
(271)
|
|
|
Cash flows from
financing activities
|
|
|
|
|
Proceeds from
issuance of securitized debt
|
27
|
|
|
5
|
|
|
Principal payments on
securitized debt
|
(34)
|
|
|
(56)
|
|
|
Net change in secured
revolving credit facilities
|
5
|
|
|
21
|
|
|
Proceeds from
issuance of non-securitized debt
|
2,805
|
|
|
383
|
|
|
Principal payments on
non-securitized debt
|
(2,589)
|
|
|
(278)
|
|
|
Net change in notes
and debt outstanding under revolving credit facilities
|
74
|
|
|
42
|
|
|
Principal payments
under financing arrangements and capital lease
obligations
|
—
|
|
|
(1)
|
|
|
Debt issuance
costs
|
(33)
|
|
|
(18)
|
|
|
Proceeds from
financed lease obligations
|
38
|
|
|
16
|
|
|
Issuance of common
stock
|
—
|
|
|
256
|
|
|
Stock issuance
costs
|
—
|
|
|
(11)
|
|
|
Proceeds from
exercise of stock options
|
5
|
|
|
3
|
|
|
Dividends paid by
subsidiaries to non-controlling interest
|
(14)
|
|
|
(15)
|
|
|
Other financing
activities
|
(15)
|
|
|
(3)
|
|
|
Net cash provided
by financing activities
|
269
|
|
|
344
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
(7)
|
|
|
1
|
|
|
Increase
(decrease) in cash and cash equivalents
|
394
|
|
|
(33)
|
|
|
Cash and cash
equivalents at beginning of the period
|
706
|
|
|
804
|
|
|
Cash and cash
equivalents at end of the period
|
$
|
1,100
|
|
|
$
|
771
|
|
Navistar International Corporation and
Subsidiaries
Segment Reporting
(Unaudited)
We define segment profit (loss) as net income (loss)
attributable to Navistar International Corporation, excluding
income tax expense. The following tables present selected financial
information for our reporting segments:
|
(in
millions)
|
Truck
|
|
Parts
|
|
Global
Operations
|
|
Financial
|Services(A)
|
|
Corporate
and
Eliminations
|
|
Total
|
|
Three Months Ended
April 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
External sales and
revenues, net
|
$
|
1,688
|
|
|
$
|
601
|
|
|
$
|
89
|
|
|
$
|
40
|
|
|
$
|
4
|
|
|
$
|
2,422
|
|
|
Intersegment sales
and revenues
|
16
|
|
|
—
|
|
|
8
|
|
|
23
|
|
|
(47)
|
|
|
—
|
|
|
Total sales and
revenues, net
|
$
|
1,704
|
|
|
$
|
601
|
|
|
$
|
97
|
|
|
$
|
63
|
|
|
$
|
(43)
|
|
|
$
|
2,422
|
|
|
Income (loss)
attributable to NIC, net of tax
|
$
|
42
|
|
|
$
|
132
|
|
|
$
|
1
|
|
|
$
|
19
|
|
|
$
|
(139)
|
|
|
$
|
55
|
|
|
Income tax
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7)
|
|
|
(7)
|
|
|
Segment profit
(loss)
|
$
|
42
|
|
|
$
|
132
|
|
|
$
|
1
|
|
|
$
|
19
|
|
|
$
|
(132)
|
|
|
$
|
62
|
|
|
Depreciation and
amortization
|
$
|
34
|
|
|
$
|
1
|
|
|
$
|
2
|
|
|
$
|
14
|
|
|
$
|
3
|
|
|
$
|
54
|
|
|
Interest
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
21
|
|
|
58
|
|
|
79
|
|
|
Equity in income
(loss) of non-consolidated affiliates
|
1
|
|
|
—
|
|
|
(1)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Capital
expenditures(B)
|
30
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
(8)
|
|
|
23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
millions)
|
Truck
|
|
Parts
|
|
Global
Operations
|
|
Financial
Services(A)
|
|
Corporate
and
Eliminations
|
|
Total
|
|
Three Months Ended
April 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
External sales and
revenues, net
|
$
|
1,391
|
|
|
$
|
604
|
|
|
$
|
66
|
|
|
$
|
33
|
|
|
$
|
2
|
|
|
$
|
2,096
|
|
|
Intersegment sales
and revenues
|
7
|
|
|
6
|
|
|
4
|
|
|
23
|
|
|
(40)
|
|
|
—
|
|
|
Total sales and
revenues, net
|
$
|
1,398
|
|
|
$
|
610
|
|
|
$
|
70
|
|
|
$
|
56
|
|
|
$
|
(38)
|
|
|
$
|
2,096
|
|
|
Income (loss)
attributable to NIC, net of tax
|
$
|
(56)
|
|
|
$
|
153
|
|
|
$
|
(7)
|
|
|
$
|
15
|
|
|
$
|
(185)
|
|
|
$
|
(80)
|
|
|
Income tax
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6)
|
|
|
(6)
|
|
|
Segment profit
(loss)
|
$
|
(56)
|
|
|
$
|
153
|
|
|
$
|
(7)
|
|
|
$
|
15
|
|
|
$
|
(179)
|
|
|
$
|
(74)
|
|
|
Depreciation and
amortization
|
$
|
31
|
|
|
$
|
3
|
|
|
$
|
4
|
|
|
$
|
12
|
|
|
$
|
3
|
|
|
$
|
53
|
|
|
Interest
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
21
|
|
|
68
|
|
|
89
|
|
|
Equity in income of
non-consolidated affiliates
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
Capital expenditures(B)
|
14
|
|
|
1
|
|
|
2
|
|
|
1
|
|
|
2
|
|
|
20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
millions)
|
Truck
|
|
Parts
|
|
Global
Operations
|
|
Financial
Services(A)
|
|
Corporate
and
Eliminations
|
|
Total
|
|
Six Months Ended
April 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
External sales and
revenues, net
|
$
|
2,916
|
|
|
$
|
1,165
|
|
|
$
|
161
|
|
|
$
|
78
|
|
|
$
|
7
|
|
|
$
|
4,327
|
|
|
Intersegment sales
and revenues
|
39
|
|
|
4
|
|
|
17
|
|
|
44
|
|
|
(104)
|
|
|
—
|
|
|
Total sales and
revenues, net
|
$
|
2,955
|
|
|
$
|
1,169
|
|
|
$
|
178
|
|
|
$
|
122
|
|
|
$
|
(97)
|
|
|
$
|
4,327
|
|
|
Income (loss)
attributable to NIC, net of tax
|
$
|
35
|
|
|
$
|
269
|
|
|
$
|
(6)
|
|
|
$
|
39
|
|
|
$
|
(355)
|
|
|
$
|
(18)
|
|
|
Income tax
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(22)
|
|
|
(22)
|
|
|
Segment profit
(loss)
|
$
|
35
|
|
|
$
|
269
|
|
|
$
|
(6)
|
|
|
$
|
39
|
|
|
$
|
(333)
|
|
|
$
|
4
|
|
|
Depreciation and
amortization
|
$
|
69
|
|
|
$
|
3
|
|
|
$
|
5
|
|
|
$
|
27
|
|
|
$
|
5
|
|
|
$
|
109
|
|
|
Interest
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
42
|
|
|
116
|
|
|
158
|
|
|
Equity in income
(loss) of non-consolidated affiliates
|
1
|
|
|
1
|
|
|
(2)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Capital expenditures(B)
|
55
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
(4)
|
|
|
53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
millions)
|
Truck
|
|
Parts
|
|
Global
Operations
|
|
Financial
Services(A)
|
|
Corporate
and
Eliminations
|
|
Total
|
|
Six Months Ended
April 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
External sales and
revenues, net
|
$
|
2,408
|
|
|
$
|
1,167
|
|
|
$
|
112
|
|
|
$
|
67
|
|
|
$
|
5
|
|
|
$
|
3,759
|
|
|
Intersegment sales
and revenues
|
17
|
|
|
13
|
|
|
8
|
|
|
43
|
|
|
(81)
|
|
|
—
|
|
|
Total sales and
revenues, net
|
$
|
2,425
|
|
|
$
|
1,180
|
|
|
$
|
120
|
|
|
$
|
110
|
|
|
$
|
(76)
|
|
|
$
|
3,759
|
|
|
Income (loss)
attributable to NIC, net of tax
|
$
|
(125)
|
|
|
$
|
302
|
|
|
$
|
(11)
|
|
|
$
|
28
|
|
|
$
|
(336)
|
|
|
$
|
(142)
|
|
|
Income tax
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10)
|
|
|
(10)
|
|
|
Segment profit
(loss)
|
$
|
(125)
|
|
|
$
|
302
|
|
|
$
|
(11)
|
|
|
$
|
28
|
|
|
$
|
(326)
|
|
|
$
|
(132)
|
|
|
Depreciation and
amortization
|
$
|
68
|
|
|
$
|
6
|
|
|
$
|
7
|
|
|
$
|
25
|
|
|
$
|
6
|
|
|
$
|
112
|
|
|
Interest
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
41
|
|
|
130
|
|
|
171
|
|
|
Equity in income of
non-consolidated affiliates
|
2
|
|
|
2
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
Capital expenditures(B)
|
57
|
|
|
1
|
|
|
3
|
|
|
1
|
|
|
4
|
|
|
66
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
millions)
|
Truck
|
|
Parts
|
|
Global
Operations
|
|
Financial
Services
|
|
Corporate
and
Eliminations
|
|
Total
|
|
Segment assets, as
of:
|
|
|
|
|
|
|
|
|
|
|
|
|
April 30,
2018
|
$
|
1,902
|
|
|
$
|
632
|
|
|
$
|
345
|
|
|
$
|
2,298
|
|
|
$
|
1,310
|
|
|
$
|
6,487
|
|
|
October 31,
2017
|
1,621
|
|
|
632
|
|
|
378
|
|
|
2,207
|
|
|
1,297
|
|
|
6,135
|
|
|
|
|
|
|
|
|
(A)
|
Total sales and
revenues in the Financial Services segment include interest
revenues of $44 million and $85 million for the three and six
months ended April 30, 2018, respectively, and $40 million and $76
million for the three and six months ended April 30, 2017,
respectively.
|
|
(B)
|
Exclusive of
purchases of equipment leased to others.
|
SEC Regulation G Non-GAAP Reconciliation
The financial measures presented below are unaudited and not
in accordance with, or an alternative for, financial measures
presented in accordance with U.S. generally accepted accounting
principles ("GAAP"). The non-GAAP financial information presented
herein should be considered supplemental to, and not as a
substitute for, or superior to, financial measures calculated in
accordance with GAAP and are reconciled to the most appropriate
GAAP number below.
Earnings (loss) Before Interest, Income Taxes,
Depreciation, and Amortization ("EBITDA"):
We define EBITDA as our consolidated net income (loss)
attributable to Navistar International Corporation, net of tax,
plus manufacturing interest expense, income taxes, and depreciation
and amortization. We believe EBITDA provides meaningful information
to the performance of our business and therefore we use it to
supplement our GAAP reporting. We have chosen to provide this
supplemental information to investors, analysts and other
interested parties to enable them to perform additional analyses of
operating results.
Adjusted EBITDA:
We believe that adjusted EBITDA, which excludes certain
identified items that we do not consider to be part of our ongoing
business, improves the comparability of year to year results, and
is representative of our underlying performance. Management uses
this information to assess and measure the performance of our
operating segments. We have chosen to provide this supplemental
information to investors, analysts and other interested parties to
enable them to perform additional analyses of operating results, to
illustrate the results of operations giving effect to the non-GAAP
adjustments shown in the below reconciliations, and to provide
an additional measure of performance.
Manufacturing Cash, Cash Equivalents, and Marketable
Securities:
Manufacturing cash, cash equivalents, and marketable
securities represent the Company's consolidated cash, cash
equivalents, and marketable securities excluding cash, cash
equivalents, and marketable securities of our financial services
operations. We include marketable securities with our cash and cash
equivalents when assessing our liquidity position as our
investments are highly liquid in nature. We have chosen to provide
this supplemental information to investors, analysts and other
interested parties to enable them to perform additional analyses of
our ability to meet our operating requirements, capital
expenditures, equity investments, and financial
obligations.
Structural costs consist of Selling, general
and administrative expenses and Engineering and product development
costs.
|
EBITDA
reconciliation:
|
|
|
Three Months
Ended
April 30,
|
|
Six Months
Ended
April 30,
|
|
(in
millions)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
Income (loss)
attributable to NIC, net of tax
|
$
|
55
|
|
|
$
|
(80)
|
|
|
$
|
(18)
|
|
|
$
|
(142)
|
|
|
Plus:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization expense
|
54
|
|
|
53
|
|
|
109
|
|
|
112
|
|
|
Manufacturing
interest expense(A)
|
58
|
|
|
68
|
|
|
116
|
|
|
130
|
|
|
Adjusted
for:
|
|
|
|
|
|
|
|
|
Income tax
expense
|
(7)
|
|
|
(6)
|
|
|
(22)
|
|
|
(10)
|
|
|
EBITDA
|
$
|
174
|
|
|
$
|
47
|
|
|
$
|
229
|
|
|
$
|
110
|
|
|
|
|
|
|
|
|
(A)
|
Manufacturing
interest expense is the net interest expense primarily generated
for borrowings that support the manufacturing and corporate
operations, adjusted to eliminate intercompany interest expense
with our Financial Services segment. The following table reconciles
Manufacturing interest expense to the consolidated interest
expense:
|
|
Three Months
Ended
April 30,
|
|
Six Months
Ended
April 30,
|
|
(in
millions)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
Interest
expense
|
$
|
79
|
|
|
$
|
89
|
|
|
$
|
158
|
|
|
$
|
171
|
|
|
Less: Financial
services interest expense
|
21
|
|
|
21
|
|
|
42
|
|
|
41
|
|
|
Manufacturing
interest expense
|
$
|
58
|
|
|
$
|
68
|
|
|
$
|
116
|
|
|
$
|
130
|
|
|
|
|
Adjusted EBITDA
Reconciliation:
|
|
|
Three Months
Ended
April 30,
|
|
Six Months
Ended
April 30,
|
|
(in
millions)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
EBITDA
(reconciled above)
|
$
|
174
|
|
|
$
|
47
|
|
|
$
|
229
|
|
|
$
|
110
|
|
|
Adjusted for
significant items of:
|
|
|
|
|
|
|
|
|
Adjustments to
pre-existing warranties(A)
|
6
|
|
|
7
|
|
|
—
|
|
|
(10)
|
|
|
Asset impairment
charges(B)
|
1
|
|
|
5
|
|
|
3
|
|
|
7
|
|
|
Restructuring of
manufacturing operations(C)
|
1
|
|
|
2
|
|
|
(2)
|
|
|
9
|
|
|
EGR product
litigation(D)
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
Debt refinancing
charges(E)
|
—
|
|
|
4
|
|
|
46
|
|
|
4
|
|
|
Pension
settlement(F)
|
—
|
|
|
—
|
|
|
9
|
|
|
—
|
|
|
Total
adjustments
|
8
|
|
|
18
|
|
|
57
|
|
|
10
|
|
|
Adjusted
EBITDA
|
$
|
182
|
|
|
$
|
65
|
|
|
$
|
286
|
|
|
$
|
120
|
|
|
|
|
|
|
|
|
(A)
|
Adjustments to
pre-existing warranties reflect changes in our estimate of warranty
costs for products sold in prior periods. Such adjustments
typically occur when claims experience deviates from historic and
expected trends. Our warranty liability is generally affected by
component failure rates, repair costs, and the timing of
failures. Future events and circumstances related to these
factors could materially change our estimates and require
adjustments to our liability. In addition, new product
launches require a greater use of judgment in developing estimates
until historical experience becomes available.
|
|
(B)
|
In the first and
second quarters of 2018, we recorded $2 million and $1 million,
respectively, of impairment charges related to the sale of our
railcar business in Cherokee, Alabama and certain assets under
operating leases. In the first and second quarters of 2017, we
recorded $2 million and $5 million respectively, of asset
impairment charges related to certain assets under operating
leases.
|
|
(C)
|
In the first and
second quarters of 2018, we recorded a benefit of $3 million and a
restructuring charge of $1 million, respectively, related to
adjustments for restructuring in our Truck, Global Operations and
Corporate segments. In the first and second quarters of 2017, we
recorded $7 million of restructuring charges related to the
2011 closure of our Chatham, Ontario plant and $2 million of
Corporate restructuring charges, respectively.
|
|
(D)
|
In the first quarter
of 2018, we recognized an additional charge of $1 million for a
jury verdict related to the Milan Maxxforce engine EGR product
litigation in our Truck segment.
|
|
(E)
|
In the first quarter
of 2018, we recorded a charge of $46 million for the write off of
debt issuance costs and discounts associated with the repurchase of
our 8.25% Senior Notes and the refinancing of our previously
existing Term Loan.
|
|
(F)
|
In the first quarter
of 2018, we purchased a group annuity contract for certain retired
pension plan participants resulting in a plan
remeasurement. As a result, we recorded a pension settlement
accounting charge of $9 million in SG&A
expenses.
|
|
Manufacturing
segment cash, cash equivalents, and marketable securities
reconciliation:
|
|
|
As of April 30,
2018
|
|
(in
millions)
|
Manufacturing
Operations
|
|
Financial
Services
Operations
|
|
Consolidated
Balance Sheet
|
|
Assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
1,060
|
|
|
$
|
40
|
|
|
$
|
1,100
|
|
|
Marketable
securities
|
40
|
|
|
—
|
|
|
40
|
|
|
Total cash, cash
equivalents, and marketable securities
|
$
|
1,100
|
|
|
$
|
40
|
|
|
$
|
1,140
|
|
View original content with
multimedia:http://www.prnewswire.com/news-releases/navistar-reports-second-quarter-2018-results-300659777.html
SOURCE Navistar International Corporation