LISLE, Ill., Sept. 9, 2020 /PRNewswire/ -- Navistar
International Corporation (NYSE: NAV) today announced a third
quarter 2020 net loss of $37 million,
or $0.37 per diluted share, compared
to third quarter 2019 net income of $156
million, or $1.56 per diluted
share.
Revenues in the quarter were $1.7 billion, down 45 percent
from third quarter 2019, and Core (Class 6-8 trucks and buses in
the United States and Canada) charge outs were down 53 percent. The
decrease was primarily driven by the impact of COVID-19, as well as
prior year comparable quarter results that were near the peak of
the prior industry cycle.
Third quarter 2020 EBITDA was $73 million, compared to
$281 million in third quarter 2019.
Adjusted EBITDA in third quarter 2020 was $104 million versus $266
million a year ago. Adjusted net income for the quarter
was a loss of $8 million compared to
income of $147 million in the third
quarter last year.
Navistar finished third quarter 2020 with $1.65 billion in consolidated cash, cash
equivalents and marketable securities, including $1.6 billion in manufacturing cash, cash
equivalents and marketable securities.
"Our fiscal third quarter opened during the middle of many
stay-at-home orders and ended with sections of the economy
beginning to reopen, and our results certainly reflect this," said
Persio Lisboa, president and chief
executive officer, Navistar. "While marketplace uncertainties
continue, we are accelerating the pace of progress on our Navistar
4.0 strategy for financial improvement, so we can pull forward its
benefits and take full advantage of a stronger industry when it
arrives."
The company's Navistar 4.0 strategy lays out a plan to increase
the company's EBITDA margins to 12 percent by 2024.
During the quarter, in addition to naming Lisboa president and
chief executive officer and Troy
Clarke to the new role of executive chairman, the company
made several leadership changes aimed at accelerating the pace of
the company's Navistar 4.0 progress with a focus on opportunities
in advanced technologies. These executive appointments included
naming Bob Walsh vice president of
Emerging Technologies, Strategy and Planning; appointing
Friedrich Baumann president of
Sales, Marketing and Aftersales; and adding new global
responsibilities to the role of Phil
Christman, president of Operations.
Earlier this year, the company took several actions to conserve
cash and bolster its liquidity in response to the COVID-19
pandemic. These actions have been successful, as the company ended
the third quarter with $1.6 billion
of manufacturing cash, allowing it to cease its employee salary
deferral program on September 1,
several months earlier than initially planned. Additionally,
actions taken due to the pandemic drove the company's selling,
general and administrative (SG&A) expenses down 29 percent
year-over-year, after adjusting for a one-time gain in the prior
year. Using learnings gained during COVID-19, the company is
pursuing additional sustainable cost savings opportunities.
"We are targeting SG&A costs between 7 percent to 9 percent
of revenues," said Walter Borst,
chief financial officer, Navistar. "Our focus has moved from
temporary cash conservation actions to sustainable cost savings
that support our Navistar 4.0 goals and better position us for
profitability at all points in the cycle."
With its new leadership, learnings from the COVID-19 pandemic
and benefits from previous cost conservation actions in place, the
company is redirecting more resources to advanced technologies;
leading to several announcements during the quarter.
In autonomous, the company announced a strategic partnership
with TuSimple to co-develop SAE Level 4 self-driving trucks
targeted for production by 2024. The partnership also includes
Navistar taking a minority stake in the company.
In connectivity, the company announced strategic partnerships
with fleet management solutions providers Samsara and Geotab to
allow International customers to seamlessly add their choice of
fleet management solutions without the installation of additional
vehicle hardware.
In electric, the company's NEXT eMobility Solutions business
unit signed a master services agreement with In-Charge Energy to
provide charging infrastructure and consulting services to electric
vehicle customers.
The company has been making progress on the construction of its
production facility in San
Antonio, which is scheduled to open in the spring of 2022.
The facility will be capable of building both diesel and fully
electric vehicles, and the first vehicle off the line will be an
electric truck, entirely built on the main assembly line.
"As a result of the pandemic, we had the opportunity to revisit
our investment portfolio and retime noncritical programs, and
cancel others," said Lisboa. "By streamlining our investments, we
were able to free up significant capacity, which is being
redeployed into advanced technology programs and strategic
partnerships that accelerate our pace of progress."
SEGMENT REVIEW
Summary of
Financial Results:
|
|
|
(Unaudited)
|
|
Three Months
Ended
July 31,
|
|
Nine Months
Ended
July 31,
|
(in millions,
except per share data)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Sales and revenues,
net
|
$
|
1,675
|
|
|
$
|
3,042
|
|
|
$
|
5,438
|
|
|
$
|
8,471
|
|
Segment
Results:
|
|
|
|
|
|
|
|
Truck
|
$
|
(22)
|
|
|
$
|
167
|
|
|
$
|
(131)
|
|
|
$
|
183
|
|
Parts
|
97
|
|
|
149
|
|
|
319
|
|
|
437
|
|
Global
Operations
|
1
|
|
|
1
|
|
|
(12)
|
|
|
10
|
|
Financial
Services
|
10
|
|
|
30
|
|
|
51
|
|
|
93
|
|
Loss from continuing
operations, net of tax(A)
|
$
|
(37)
|
|
|
$
|
156
|
|
|
$
|
(111)
|
|
|
$
|
119
|
|
Net
income(loss)(A)
|
(37)
|
|
|
156
|
|
|
(111)
|
|
|
119
|
|
Diluted (income) per
share(A)
|
(0.37)
|
|
|
1.56
|
|
|
(1.11)
|
|
|
1.20
|
|
|
________________
|
(A)
Amounts attributable to Navistar International
Corporation.
|
Truck Segment – In third quarter 2020, the Truck
segment net sales were $1.2 billion,
a 50 percent decrease compared to third quarter last year. The
year-over-year decrease is primarily due to lower volumes driven by
weaker industry conditions resulting in part from the COVID-19
pandemic.
The Truck segment incurred a net loss of $22 million in third quarter 2020 compared to a
profit of $167 million in third
quarter 2019. The year-over-year decrease was a result of lower
volumes and a reversal of a non-recurring legal settlement charge
in 2019.
Parts Segment – For third quarter 2020, the Parts segment
net sales were $414 million, a 27
percent decrease from third quarter 2019. The decrease is primarily
due to lower North America volumes
attributable to the COVID-19 impact in the U.S. and Canada and a decrease in Blue Diamond Parts
sales.
The Parts segments saw a third quarter profit of $97 million, compared to $149 million in third quarter 2019. The decrease
is due to the impact of lower sales volumes, partially offset by
lower SG&A expenses.
Global Operations Segment – In third quarter 2020,
the Global Operations segment net sales decreased 48 percent to
$47 million. The decrease was
primarily driven by lower volumes in our South America operations triggered by
temporary production stoppages related to COVID-19.
The Global Operation segment recorded a profit of $1 million in the third quarter of 2020 and 2019.
The segment benefited from restructuring actions taken earlier this
year.
Financial Services Segment – In third quarter 2020,
the Financial Services segment net revenues decreased to
$49 million, a 34 percent decrease
from third quarter 2019. The decrease was primarily driven by lower
average yields due to lower interest rates and lower average
finance receivables due to lower volumes.
The Financial Services segment recorded a profit of $10 million in the quarter, compared to
$30 million in third quarter 2019.
The decrease was primarily driven by the impact of lower revenues,
partially offset by lower interest expense resulting from lower
borrowing requirements.
About Navistar
Navistar International
Corporation (NYSE: NAV) is a holding company whose
subsidiaries and affiliates produce
International® brand commercial 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
Section 27A of the Securities Act of 1933, as amended
("Securities Act"), Section 21E of the Securities Exchange Act
of 1934, as amended ("Exchange Act"), and the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements only
speak as of the date of this report and Navistar International
Corporation 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, 2019, which was filed on December 17, 2019, and our Quarterly Report on
Form 10-Q for the period ended April 30,
2020. 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
July 31,
|
|
Nine Months
Ended
July 31,
|
(in millions,
except per share data)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Sales and
revenues
|
|
|
|
|
|
|
|
Sales of manufactured
products, net
|
$
|
1,639
|
|
|
$
|
2,996
|
|
|
$
|
5,310
|
|
|
$
|
8,330
|
|
Finance
revenues
|
36
|
|
|
46
|
|
|
128
|
|
|
141
|
|
Sales and revenues,
net
|
1,675
|
|
|
3,042
|
|
|
5,438
|
|
|
8,471
|
|
Costs and
expenses
|
|
|
|
|
|
|
|
Costs of products
sold
|
1,388
|
|
|
2,501
|
|
|
4,541
|
|
|
6,973
|
|
Restructuring
charges
|
4
|
|
|
—
|
|
|
5
|
|
|
1
|
|
Asset impairment
charges
|
12
|
|
|
3
|
|
|
25
|
|
|
6
|
|
Selling, general and
administrative expenses
|
141
|
|
|
167
|
|
|
493
|
|
|
726
|
|
Engineering and
product development costs
|
73
|
|
|
81
|
|
|
237
|
|
|
242
|
|
Interest
expense
|
71
|
|
|
76
|
|
|
199
|
|
|
243
|
|
Other expense,
net
|
14
|
|
|
25
|
|
|
27
|
|
|
140
|
|
Total costs and
expenses
|
1,703
|
|
|
2,853
|
|
|
5,527
|
|
|
8,331
|
|
Equity in income of
non-consolidated affiliates
|
2
|
|
|
1
|
|
|
—
|
|
|
4
|
|
Income (loss) before
income taxes
|
(26)
|
|
|
190
|
|
|
(89)
|
|
|
144
|
|
Income tax
expense
|
(8)
|
|
|
(29)
|
|
|
(10)
|
|
|
(9)
|
|
Net income
(loss)
|
(34)
|
|
|
161
|
|
|
(99)
|
|
|
135
|
|
Less: Net income
attributable to non-controlling interests
|
3
|
|
|
5
|
|
|
12
|
|
|
16
|
|
Net income (loss)
attributable to Navistar International Corporation
|
$
|
(37)
|
|
|
$
|
156
|
|
|
$
|
(111)
|
|
|
$
|
119
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
share attributable to Navistar International Corporation
|
|
|
|
|
|
|
|
Basic:
|
$
|
(0.37)
|
|
|
$
|
1.57
|
|
|
$
|
(1.11)
|
|
|
$
|
1.20
|
|
Diluted:
|
(0.37)
|
|
|
1.56
|
|
|
(1.11)
|
|
|
1.20
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
99.7
|
|
|
99.4
|
|
|
99.6
|
|
|
99.2
|
|
Diluted
|
99.7
|
|
|
99.7
|
|
|
99.6
|
|
|
99.5
|
|
Navistar
International Corporation and Subsidiaries
Consolidated
Balance Sheets
|
|
|
July
31,
|
|
October
31,
|
(in millions,
except per share data)
|
2020
|
|
2019
|
ASSETS
|
(Unaudited)
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
|
1,648
|
|
|
$
|
1,370
|
|
Restricted cash and
cash equivalents
|
232
|
|
|
133
|
|
Trade and other
receivables, net
|
266
|
|
|
338
|
|
Finance receivables,
net
|
1,403
|
|
|
1,923
|
|
Inventories,
net
|
896
|
|
|
911
|
|
Other current
assets
|
247
|
|
|
277
|
|
Total current
assets
|
4,692
|
|
|
4,952
|
|
Restricted
cash
|
54
|
|
|
54
|
|
Trade and other
receivables, net
|
8
|
|
|
10
|
|
Finance receivables,
net
|
250
|
|
|
274
|
|
Investments in
non-consolidated affiliates
|
30
|
|
|
31
|
|
Property and
equipment (net of accumulated depreciation and amortization of
$2,328 and $2,488, respectively)
|
1,241
|
|
|
1,309
|
|
Operating lease right
of use assets
|
119
|
|
|
—
|
|
Goodwill
|
38
|
|
|
38
|
|
Intangible assets
(net of accumulated amortization of $139 and $142,
respectively)
|
20
|
|
|
25
|
|
Deferred taxes,
net
|
115
|
|
|
117
|
|
Other noncurrent
assets
|
108
|
|
|
107
|
|
Total
assets
|
$
|
6,675
|
|
|
$
|
6,917
|
|
LIABILITIES and
STOCKHOLDERS' DEFICIT
|
|
|
|
Liabilities
|
|
|
|
Current
liabilities
|
|
|
|
Notes payable and
current maturities of long-term debt
|
$
|
865
|
|
|
$
|
871
|
|
Accounts
payable
|
1,154
|
|
|
1,341
|
|
Other current
liabilities
|
1,096
|
|
|
1,363
|
|
Total current
liabilities
|
3,115
|
|
|
3,575
|
|
Long-term
debt
|
4,694
|
|
|
4,317
|
|
Postretirement
benefits liabilities
|
2,013
|
|
|
2,103
|
|
Other noncurrent
liabilities
|
681
|
|
|
645
|
|
Total
liabilities
|
10,503
|
|
|
10,640
|
|
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
|
2,726
|
|
|
2,730
|
|
Accumulated
deficit
|
(4,333)
|
|
|
(4,409)
|
|
Accumulated other
comprehensive loss
|
(2,100)
|
|
|
(1,912)
|
|
Common stock held in
treasury, at cost (3.6 and 3.9 shares, respectively)
|
(135)
|
|
|
(147)
|
|
Total stockholders'
deficit attributable to Navistar International
Corporation
|
(3,830)
|
|
|
(3,726)
|
|
Stockholders' equity
attributable to non-controlling interests
|
2
|
|
|
3
|
|
Total
stockholders' deficit
|
(3,828)
|
|
|
(3,723)
|
|
Total liabilities
and stockholders' deficit
|
$
|
6,675
|
|
|
$
|
6,917
|
|
Navistar
International Corporation and Subsidiaries
Condensed
Consolidated Statements of Cash Flows
(Unaudited)
|
|
|
Nine Months Ended
July 31,
|
(in
millions)
|
2020
|
|
2019
|
Cash flows from
operating activities
|
|
|
|
Net income
(loss)
|
$
|
(99)
|
|
|
$
|
135
|
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
103
|
|
|
99
|
|
Depreciation of
equipment leased to others
|
43
|
|
|
45
|
|
Deferred taxes,
including change in valuation allowance
|
(5)
|
|
|
(41)
|
|
Asset impairment
charges
|
25
|
|
|
6
|
|
Gain on sales of
investments and businesses, net
|
—
|
|
|
(56)
|
|
Amortization of debt
issuance costs and discount
|
11
|
|
|
15
|
|
Stock-based
compensation
|
14
|
|
|
20
|
|
Provision for
doubtful accounts
|
13
|
|
|
8
|
|
Equity in (income)
loss of non-consolidated affiliates, net of dividends
|
—
|
|
|
(3)
|
|
Write-off of debt
issuance costs and discount
|
—
|
|
|
6
|
|
Other non-cash
operating activities
|
(9)
|
|
|
(6)
|
|
Changes in other
assets and liabilities, exclusive of the effects of businesses
disposed
|
36
|
|
|
(124)
|
|
Net cash provided
by operating activities
|
132
|
|
|
104
|
|
Cash flows from
investing activities
|
|
|
|
Maturities of
marketable securities
|
—
|
|
|
98
|
|
Capital
expenditures
|
(115)
|
|
|
(90)
|
|
Purchases of
equipment leased to others
|
(69)
|
|
|
(130)
|
|
Proceeds from sales
of property and equipment
|
11
|
|
|
12
|
|
Proceeds from sales
of investments and businesses
|
10
|
|
|
100
|
|
Other investing
activities
|
(4)
|
|
|
1
|
|
Net cash used in
investing activities
|
(167)
|
|
|
(9)
|
|
Cash flows from
financing activities
|
|
|
|
Proceeds from
issuance of securitized debt
|
316
|
|
|
331
|
|
Principal payments on
securitized debt
|
(45)
|
|
|
(300)
|
|
Net change in secured
revolving credit facilities
|
(241)
|
|
|
120
|
|
Proceeds from
issuance of non-securitized debt
|
622
|
|
|
144
|
|
Principal payments on
non-securitized debt
|
(108)
|
|
|
(988)
|
|
Net change in notes
and debt outstanding under revolving credit facilities
|
(90)
|
|
|
469
|
|
Debt issuance
costs
|
(17)
|
|
|
(9)
|
|
Proceeds from
financed lease obligations
|
—
|
|
|
13
|
|
Proceeds from
exercise of stock options
|
3
|
|
|
3
|
|
Dividends paid by
subsidiaries to non-controlling interest
|
(13)
|
|
|
(18)
|
|
Other financing
activities
|
(2)
|
|
|
(2)
|
|
Net cash provided
by (used in) financing activities
|
425
|
|
|
(237)
|
|
Effect of exchange
rate changes on cash, cash equivalents and restricted
cash
|
(13)
|
|
|
(7)
|
|
Increase
(decrease) in cash, cash equivalents and restricted
cash
|
377
|
|
|
(149)
|
|
Cash, cash
equivalents and restricted cash at beginning of the
period
|
1,557
|
|
|
1,445
|
|
Cash, cash
equivalents and restricted cash at end of the period
|
$
|
1,934
|
|
|
$
|
1,296
|
|
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 benefit (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
July 31, 2020
|
|
|
|
|
|
|
|
|
|
|
|
External sales and
revenues, net
|
$
|
1,177
|
|
|
$
|
413
|
|
|
$
|
46
|
|
|
$
|
39
|
|
|
$
|
—
|
|
|
$
|
1,675
|
|
Intersegment sales
and revenues
|
26
|
|
|
1
|
|
|
1
|
|
|
10
|
|
|
(38)
|
|
|
—
|
|
Total sales and
revenues, net
|
$
|
1,203
|
|
|
$
|
414
|
|
|
$
|
47
|
|
|
$
|
49
|
|
|
$
|
(38)
|
|
|
$
|
1,675
|
|
Net income (loss)
attributable to NIC
|
$
|
(22)
|
|
|
$
|
97
|
|
|
$
|
1
|
|
|
$
|
10
|
|
|
$
|
(123)
|
|
|
$
|
(37)
|
|
Income tax
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8)
|
|
|
(8)
|
|
Segment profit
(loss)
|
$
|
(22)
|
|
|
$
|
97
|
|
|
$
|
1
|
|
|
$
|
10
|
|
|
$
|
(115)
|
|
|
$
|
(29)
|
|
Depreciation and
amortization
|
$
|
27
|
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
16
|
|
|
$
|
2
|
|
|
$
|
47
|
|
Interest
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
16
|
|
|
55
|
|
|
71
|
|
Equity in income of
non-consolidated affiliates
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
Capital
expenditures(B)
|
18
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
5
|
|
|
25
|
|
|
|
(in
millions)
|
Truck
|
|
Parts
|
|
Global
Operations
|
|
Financial
Services(A)
|
|
Corporate
and
Eliminations
|
|
Total
|
Three Months Ended
July 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
External sales and
revenues, net
|
$
|
2,342
|
|
|
$
|
569
|
|
|
$
|
82
|
|
|
$
|
46
|
|
|
$
|
3
|
|
|
$
|
3,042
|
|
Intersegment sales
and revenues
|
45
|
|
|
2
|
|
|
8
|
|
|
28
|
|
|
(83)
|
|
|
—
|
|
Total sales and
revenues, net
|
$
|
2,387
|
|
|
$
|
571
|
|
|
$
|
90
|
|
|
$
|
74
|
|
|
$
|
(80)
|
|
|
$
|
3,042
|
|
Net income (loss)
attributable NIC
|
$
|
167
|
|
|
$
|
149
|
|
|
$
|
1
|
|
|
$
|
30
|
|
|
$
|
(191)
|
|
|
$
|
156
|
|
Income tax
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(29)
|
|
|
(29)
|
|
Segment profit
(loss)
|
$
|
167
|
|
|
$
|
149
|
|
|
$
|
1
|
|
|
$
|
30
|
|
|
$
|
(162)
|
|
|
$
|
185
|
|
Depreciation and
amortization
|
$
|
26
|
|
|
$
|
1
|
|
|
$
|
3
|
|
|
$
|
16
|
|
|
$
|
1
|
|
|
$
|
47
|
|
Interest
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
27
|
|
|
49
|
|
|
76
|
|
Equity in income of
non-consolidated affiliates
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
Capital
expenditures(B)
|
17
|
|
|
2
|
|
|
1
|
|
|
—
|
|
|
4
|
|
|
24
|
|
|
|
(in
millions)
|
Truck
|
|
Parts
|
|
Global
Operations
|
|
Financial
Services(A)
|
|
Corporate
and
Eliminations
|
|
Total
|
Nine Months Ended
July 31, 2020
|
|
|
|
|
|
|
|
|
|
|
|
External sales and
revenues, net
|
$
|
3,800
|
|
|
$
|
1,347
|
|
|
$
|
154
|
|
|
$
|
135
|
|
|
$
|
2
|
|
|
$
|
5,438
|
|
Intersegment sales
and revenues
|
34
|
|
|
3
|
|
|
12
|
|
|
35
|
|
|
(84)
|
|
|
—
|
|
Total sales and
revenues, net
|
$
|
3,834
|
|
|
$
|
1,350
|
|
|
$
|
166
|
|
|
$
|
170
|
|
|
$
|
(82)
|
|
|
$
|
5,438
|
|
Net income (loss)
attributable to NIC
|
$
|
(131)
|
|
|
$
|
319
|
|
|
$
|
(12)
|
|
|
$
|
51
|
|
|
$
|
(338)
|
|
|
$
|
(111)
|
|
Income tax
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10)
|
|
|
(10)
|
|
Segment profit
(loss)
|
$
|
(131)
|
|
|
$
|
319
|
|
|
$
|
(12)
|
|
|
$
|
51
|
|
|
$
|
(328)
|
|
|
$
|
(101)
|
|
Depreciation and
amortization
|
$
|
83
|
|
|
$
|
5
|
|
|
$
|
5
|
|
|
$
|
48
|
|
|
$
|
5
|
|
|
$
|
146
|
|
Interest
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
55
|
|
|
144
|
|
|
199
|
|
Equity in income
(loss) of non-consolidated affiliates
|
(1)
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Capital
expenditures(B)
|
93
|
|
|
6
|
|
|
3
|
|
|
—
|
|
|
13
|
|
|
115
|
|
|
|
(in
millions)
|
Truck
|
|
Parts
|
|
Global
Operations
|
|
Financial
Services(A)
|
|
Corporate
and
Eliminations
|
|
Total
|
Nine Months Ended
July 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
External sales and
revenues, net
|
$
|
6,405
|
|
|
$
|
1,693
|
|
|
$
|
223
|
|
|
$
|
141
|
|
|
$
|
9
|
|
|
$
|
8,471
|
|
Intersegment sales
and revenues
|
75
|
|
|
5
|
|
|
27
|
|
|
85
|
|
|
(192)
|
|
|
—
|
|
Total sales and
revenues, net
|
$
|
6,480
|
|
|
$
|
1,698
|
|
|
$
|
250
|
|
|
$
|
226
|
|
|
$
|
(183)
|
|
|
$
|
8,471
|
|
Net income (loss)
attributable to NIC
|
$
|
183
|
|
|
$
|
437
|
|
|
$
|
10
|
|
|
$
|
93
|
|
|
$
|
(604)
|
|
|
$
|
119
|
|
Income tax
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9)
|
|
|
(9)
|
|
Segment profit
(loss)
|
$
|
183
|
|
|
$
|
437
|
|
|
$
|
10
|
|
|
$
|
93
|
|
|
$
|
(595)
|
|
|
$
|
128
|
|
Depreciation and
amortization
|
$
|
78
|
|
|
$
|
4
|
|
|
$
|
7
|
|
|
$
|
48
|
|
|
$
|
7
|
|
|
$
|
144
|
|
Interest
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
83
|
|
|
160
|
|
|
243
|
|
Equity in income
(loss) of non-consolidated affiliates
|
3
|
|
|
2
|
|
|
(1)
|
|
|
—
|
|
|
—
|
|
|
4
|
|
Capital
expenditures(B)
|
69
|
|
|
3
|
|
|
2
|
|
|
2
|
|
|
14
|
|
|
90
|
|
|
_________________________
|
(A) Total
sales and revenues in the Financial Services segment include
interest revenues of $29 million and $103 million for the three and
nine months ended July 31, 2020, respectively, and $53 million and
$161 million for the three and nine months ended July 31, 2019,
respectively.
|
|
(B)
Exclusive of purchases of equipment leased to others.
|
|
|
(in
millions)
|
Truck
|
|
Parts
|
|
Global
Operations
|
|
Financial
Services
|
|
Corporate
and
Eliminations
|
|
Total
|
Segment assets, as
of:
|
|
|
|
|
|
|
|
|
|
|
|
July 31,
2020
|
$
|
1,721
|
|
|
$
|
641
|
|
|
$
|
202
|
|
|
$
|
2,285
|
|
|
$
|
1,826
|
|
|
$
|
6,675
|
|
October 31,
2019
|
1,705
|
|
|
688
|
|
|
296
|
|
|
2,774
|
|
|
1,454
|
|
|
6,917
|
|
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 and Adjusted Net Income
(loss):
We believe that adjusted EBITDA and Adjusted
Net Income (loss), 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 and Cash
Equivalents:
Manufacturing cash and cash equivalents
represent the Company's consolidated cash and, cash equivalents
excluding cash and cash equivalents of our financial services
operations. 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
July 31,
|
|
Nine Months
Ended
July 31,
|
(in
millions)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net income(loss)
attributable to NIC
|
$
|
(37)
|
|
|
$
|
156
|
|
|
$
|
(111)
|
|
|
$
|
119
|
|
Plus:
|
|
|
|
|
|
|
|
Depreciation and
amortization expense
|
47
|
|
|
47
|
|
|
146
|
|
|
144
|
|
Manufacturing
interest expense(A)
|
55
|
|
|
49
|
|
|
144
|
|
|
160
|
|
Adjusted
for:
|
|
|
|
|
|
|
|
Income tax (expense)
benefit
|
(8)
|
|
|
(29)
|
|
|
(10)
|
|
|
(9)
|
|
EBITDA
|
$
|
73
|
|
|
$
|
281
|
|
|
$
|
189
|
|
|
$
|
432
|
|
|
|
______________________
|
(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
July 31,
|
|
Nine Months
Ended
July 31,
|
(in
millions)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Interest
expense
|
$
|
71
|
|
|
$
|
76
|
|
|
$
|
199
|
|
|
$
|
243
|
|
Less: Financial
services interest expense
|
16
|
|
|
27
|
|
|
55
|
|
|
83
|
|
Manufacturing
interest expense
|
$
|
55
|
|
|
$
|
49
|
|
|
$
|
144
|
|
|
$
|
160
|
|
|
|
Adjusted EBITDA
Reconciliation:
|
|
|
Three Months
Ended
July 31,
|
|
Nine Months
Ended
July 31,
|
(in
millions)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
EBITDA
(reconciled above)
|
$
|
73
|
|
|
$
|
281
|
|
|
$
|
189
|
|
|
$
|
432
|
|
Adjusted for
significant items of:
|
|
|
|
|
|
|
|
Adjustments to
pre-existing warranties(A)
|
9
|
|
|
5
|
|
|
26
|
|
|
7
|
|
Asset impairment
charges(B)
|
12
|
|
|
3
|
|
|
25
|
|
|
6
|
|
Restructuring of
manufacturing operations(C)
|
4
|
|
|
—
|
|
|
5
|
|
|
1
|
|
MaxxForce Advanced
EGR engine lawsuits(D)
|
(1)
|
|
|
(31)
|
|
|
—
|
|
|
128
|
|
Gain (loss) on
sales(E)
|
—
|
|
|
3
|
|
|
—
|
|
|
(56)
|
|
Debt refinancing
charges(F)
|
—
|
|
|
6
|
|
|
—
|
|
|
6
|
|
Pension
settlement(G)
|
7
|
|
|
—
|
|
|
7
|
|
|
142
|
|
Settlement
gain(H)
|
—
|
|
|
(1)
|
|
|
(1)
|
|
|
(3)
|
|
Total
adjustments
|
31
|
|
|
(15)
|
|
|
62
|
|
|
231
|
|
Adjusted
EBITDA
|
$
|
104
|
|
|
$
|
266
|
|
|
$
|
251
|
|
|
$
|
663
|
|
|
|
Adjusted Net
Income (Loss) attributable to NIC:
|
|
|
Three Months
Ended
July 31,
|
|
Nine Months
Ended
July 31,
|
(in
millions)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net income
(loss) attributable to NIC
|
$
|
(37)
|
|
|
$
|
156
|
|
|
$
|
(111)
|
|
|
$
|
119
|
|
Adjusted for
significant items of:
|
|
|
|
|
|
|
|
Adjustments to
pre-existing warranties(A)
|
9
|
|
|
5
|
|
|
26
|
|
|
7
|
|
Asset impairment
charges(B)
|
12
|
|
|
3
|
|
|
25
|
|
|
6
|
|
Restructuring of
manufacturing operations(C)
|
4
|
|
|
—
|
|
|
5
|
|
|
1
|
|
MaxxForce Advanced
EGR engine lawsuits(D)
|
(1)
|
|
|
(31)
|
|
|
—
|
|
|
128
|
|
Gain (loss) on
sales(E)
|
—
|
|
|
3
|
|
|
—
|
|
|
(56)
|
|
Debt refinancing
charges(F)
|
—
|
|
|
6
|
|
|
—
|
|
|
6
|
|
Pension
settlement(G)
|
7
|
|
|
—
|
|
|
7
|
|
|
142
|
|
Settlement
gain(H)
|
—
|
|
|
(1)
|
|
|
(1)
|
|
|
(3)
|
|
Total
adjustments
|
31
|
|
|
(15)
|
|
|
62
|
|
|
231
|
|
Tax effect
(I)
|
(2)
|
|
|
6
|
|
|
(2)
|
|
|
(41)
|
|
Adjusted net
income (loss) attributable to NIC
|
$
|
(8)
|
|
|
$
|
147
|
|
|
$
|
(51)
|
|
|
$
|
309
|
|
|
|
|
|
_____________________
|
(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 nine
months of 2020, we recorded $12 million of asset impairment charges
related to long lived assets in our Brazil asset group in our
Global Operations segment. In the third quarter and first nine
months of 2020, we recorded $12 million and $13 million of asset
impairment charges related to certain assets under operating leases
in our Truck segment. In the third quarter and first nine months of
2019 we recorded $3 million and $6 million, respectively, of asset
impairment charges related to certain assets under operating leases
in our Truck segment.
|
(C)
|
In the third quarter
of 2020, we recorded restructuring charges of $4 million and $5
million, respectively, due to restructuring activity throughout the
organization. In the first nine months of 2019 we recorded a
restructuring charge of $1 million in our Truck segment.
|
(D)
|
In the third quarter
and first nine months of 2020 and 2019, we recognized a net benefit
of $1 million and $31 million, respectively, related to the
MaxxForce Advanced EGR engine class action settlement and related
litigation in our Truck Segment. In the first nine months of 2019,
we recognized a charge of $128 million related to the MaxxForce
Advanced EGR engine class action settlement and related litigation
in our Truck Segment.
|
(E)
|
In the third quarter
of 2019, we recognized a charge of $3 million in our Truck segment
for adjustments to the purchase price of the sale of a majority
interest in the Navistar Defense business. In the first nine months
of 2019, we recognized a gain of $51 million related to the sale of
a majority interest in the Navistar Defense business in our Truck
segment, and a gain of $5 million related to the sale of our joint
venture in China with JAC in our Global Operations
segment.
|
(F)
|
In the third quarter
and first nine months of 2019, we recorded a charge of $6 million
for the write off of debt issuance costs and discounts associated
with NFC Term Loan.
|
(G)
|
In the third quarter
and first nine months of 2020, we recorded pension settlement
accounting charges of $7 million in Other expense, net in
Corporate. In the first nine months of 2019, we purchased group
annuity contracts for certain retired pension plan participants
resulting in plan remeasurements. As a result, we recorded
pension settlement accounting charges of $142 million in Other
expense, net in Corporate.
|
(H)
|
In the first nine
months of 2020, we recorded interest income of $1 million,
in Other expense, net derived from the prior year
settlement of a business economic loss claim relating to our former
Alabama engine manufacturing facility in Corporate. For the same
claim, we recorded interest income in Other expense, net of
$1 million and $3 million, for the third quarter and first nine
months of 2019, respectively.
|
(I)
|
Tax effect is
calculated by excluding the impact of the non-GAAP adjustments from
the interim period tax provision calculations.
|
Manufacturing
segment cash and cash equivalents reconciliation:
|
|
|
As of July 31,
2020
|
(in
millions)
|
Manufacturing
Operations
|
|
Financial
Services
Operations
|
|
Consolidated
Balance Sheet
|
Total cash, cash
equivalents, and marketable securities
|
$
|
1,610
|
|
|
$
|
38
|
|
|
$
|
1,648
|
|
|
|
|
|
|
|
|
|
|
|
|
|
View original content to download
multimedia:http://www.prnewswire.com/news-releases/navistar-reports-third-quarter-2020-results-301126239.html
SOURCE Navistar International Corporation