LISLE, Ill., March 8, 2019 /PRNewswire/ -- Navistar
International Corporation (NYSE: NAV) today announced first quarter
2019 net income of $11 million, or
$0.11 per diluted share, compared to
a first quarter 2018 net loss of $73
million, or $0.74 per diluted
share.
Revenues in the quarter were $2.4 billion, a 28 percent
increase compared to $1.9 billion in
the first quarter last year. The revenue increase was driven by a
50 percent increase in the company's Core volumes, which represent
its sales of Class 6-8 trucks and buses in the United States and Canada.
First quarter 2019 EBITDA was $96 million, compared to
first quarter 2018 EBITDA of $55 million. Adjusted EBITDA was
$173 million versus $104 million in first quarter 2018. Results
were impacted by certain one-time items, including a non-cash
charge related to a Canadian pension annuity transaction of
$142 million (or $104 million after-tax), and aggregate gains of
$59 million from the sales of 70
percent of the Navistar Defense business and the company's
ownership interest in the JND joint venture.
Navistar finished the first quarter 2019 with $1.24 billion in consolidated cash, cash
equivalents and marketable securities and $1.19 billion in manufacturing cash, cash
equivalents and marketable securities.
"We had our best first quarter since 2010 as customer acceptance
of our new products translated to extended gains in our Core market
share," said Troy A. Clarke,
Chairman, President and CEO. "In addition to our ongoing growth in
Class 8, our medium-duty market share grew by six points during the
quarter, the largest year-over-year medium share gain in the
industry."
The company's first quarter featured a number of positive
marketplace developments. Continuing its cadence of new product
launches, Navistar unveiled its new International®
CV™ Series line of Class 4/5 vehicles, the only Class
4/5 truck that is designed, distributed and supported by a
manufacturer specializing in commercial vehicles. Year-over-year
growth in the company's Core market share was up 1.8 points, led by
a six-point share increase in Class 6/7, which was attributable to
strong sales of the MV® Series of medium-duty trucks.
Additionally, the company's International®
HX™ Series and International® HV™
Series vehicles built improved vocational order share resulting in
a strong backlog. The company reported backlog growth of more than
8,000 units in its Core markets, up 18 percent since the end of
fourth quarter 2018.
Also in the quarter, the company completed group annuity
transactions with two Canadian insurers that transferred
$268 million in pension obligations
of defined benefit pension plans in Canada, reducing the company's non-operating
financial risk and administrative costs.
Announced just yesterday, Navistar entered a service partnership
agreement with Love's Travel Stops, which adds more than 315 Love's
Truck Tire Care and Speedco locations to the
International® service network, creating the commercial
transportation industry's largest service network and bringing the
total International® service network to more than 1,000
locations in North America.
Building on the company's commitment to Uptime leadership, this
partnership will expand customers' access to same-day service for a
wide array of light mechanical repairs, and will also provide
customers with increased repair velocity, so more customers can get
their trucks repaired the same day.
The company reiterated its 2019 industry guidance and raised the
following financial guidance:
- Industry retail deliveries of Class 6-8 trucks and buses in
the United States and Canada are forecast to be 395,000 to 425,000
units, with Class 8 retail deliveries of 265,000 to 295,000
units.
- Revenues are expected to be between $10.75 billion and $11.25
billion.
- Adjusted EBITDA is expected to be between $850 million and $900
million.
"As our ongoing improvements demonstrate, the company has strong
opportunities to benefit from capturing additional market share,
growing parts revenue, improving margins and further de-risking the
balance sheet," Clarke said. "Given the progress made in the
first quarter, and our positive outlook for the remainder of the
year, we are confident that 2019 will move Navistar forward on the
path to generate superior shareholder returns compared to the
industry."
SEGMENT
REVIEW
|
|
Summary of
Financial Results:
|
|
|
(Unaudited)
|
|
Three Months
Ended
January 31,
|
(in millions,
except per share data)
|
2019
|
|
2018
|
Sales and revenues,
net
|
$
|
2,433
|
|
|
$
|
1,905
|
|
Segment
Results:
|
|
|
|
Truck
|
$
|
90
|
|
|
$
|
(7)
|
|
Parts
|
144
|
|
|
137
|
|
Global
Operations
|
6
|
|
|
(7)
|
|
Financial
Services
|
31
|
|
|
20
|
|
Net income
(loss)(A)
|
11
|
|
|
(73)
|
|
Diluted income (loss)
per share(A)
|
0.11
|
|
|
(0.74)
|
|
________________
|
(A)
|
Amounts attributable
to Navistar International Corporation.
|
Truck Segment – Truck segment first quarter 2019 net
sales increased 44 percent to $1.8
billion, primarily due to higher volumes in the company's
Core markets and an increase in Mexico truck volumes. This was partially
offset by lower defense sales due to the sale of a majority
interest in Navistar Defense during the quarter.
The Truck segment profit was $90
million in the first quarter 2019, versus a loss of
$7 million in the same period one
year ago. The improvement was primarily driven by the result of
higher volumes in the company's Core markets, partially offset by
higher material and freight costs and the impact of the sale of a
majority interest in Navistar Defense.
Parts Segment – In the first quarter of 2019, the Parts
segment net sales decreased four percent to $548 million, primarily due to the adoption of a
new revenue recognition standard and to lower Blue Diamond Parts
(BDP) sales, partially offset by higher sales in our North American
markets. On a comparable basis, revenues grew one percent
year-over-year.
The Parts segment profit was $144
million, up five percent, primarily due to higher U.S.
margins and lower intercompany access fees, partially offset by
lower BDP volumes and higher freight-related expenses.
Global Operations Segment – In the first quarter of
2019, the Global Operations segment net sales decreased slightly to
$73 million, primarily driven by the
depreciation of the Brazilian real against the U.S. dollar, as the
average conversion rate has weakened by 14 percent compared with
the prior year period. This was partially offset by higher volumes
in our South America
operations.
For the first quarter 2019, the Global Operations segment profit
was $6 million versus a $7 million loss in the first quarter 2018. The
increase is primarily driven by higher volumes, higher other income
of $5 million related to the sale of
the its ownership interest in a joint venture in China and the impact of prior year
cost-reduction actions.
Financial Services Segment – In the first quarter of
2019, the Financial Services segment net revenues increased to
$74 million, primarily due to higher
interest rates and greater average portfolio balances in the U.S.
and Mexico.
The Financial Services segment profit increased 55 percent to
$31 million, primarily due to higher
interest margin from improved funding strategies and income from an
intercompany loan. The increase was partially offset by increased
depreciation expense on operating leases.
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, 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
January 31,
|
(in millions,
except per share data)
|
2019
|
|
2018
|
Sales and
revenues
|
|
|
|
Sales of manufactured
products, net
|
$
|
2,386
|
|
|
$
|
1,867
|
|
Finance
revenues
|
47
|
|
|
38
|
|
Sales and revenues,
net
|
2,433
|
|
|
1,905
|
|
Costs and
expenses
|
|
|
|
Costs of products
sold
|
1,979
|
|
|
1,532
|
|
Restructuring
charges
|
—
|
|
|
(3)
|
|
Asset impairment
charges
|
2
|
|
|
2
|
|
Selling, general and
administrative expenses
|
186
|
|
|
191
|
|
Engineering and
product development costs
|
86
|
|
|
75
|
|
Interest
expense
|
85
|
|
|
79
|
|
Other expense,
net
|
97
|
|
|
80
|
|
Total costs and
expenses
|
2,435
|
|
|
1,956
|
|
Equity in income of
non-consolidated affiliates
|
—
|
|
|
—
|
|
Loss before income
taxes
|
(2)
|
|
|
(51)
|
|
Income tax benefit
(expense)
|
19
|
|
|
(15)
|
|
Net income
(loss)
|
17
|
|
|
(66)
|
|
Less: Net income
attributable to non-controlling interests
|
6
|
|
|
7
|
|
Net income (loss)
attributable to Navistar International Corporation
|
$
|
11
|
|
|
$
|
(73)
|
|
|
|
|
|
Income (loss) per
share attributable to Navistar International
Corporation:
|
|
|
|
Basic:
|
$
|
0.11
|
|
|
$
|
(0.74)
|
|
Diluted:
|
$
|
0.11
|
|
|
$
|
(0.74)
|
|
|
|
|
|
Weighted average
shares outstanding:
|
|
|
|
Basic
|
99.1
|
|
|
98.6
|
|
Diluted
|
99.4
|
|
|
98.6
|
|
Navistar
International Corporation and Subsidiaries
|
Consolidated
Balance Sheets
|
|
|
January
31,
|
|
October
31,
|
(in millions,
except per share data)
|
2019
|
|
2018
|
ASSETS
|
(Unaudited)
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
|
1,201
|
|
|
$
|
1,320
|
|
Restricted cash and
cash equivalents
|
83
|
|
|
62
|
|
Marketable
securities
|
41
|
|
|
101
|
|
Trade and other
receivables, net
|
429
|
|
|
456
|
|
Finance receivables,
net
|
1,818
|
|
|
1,898
|
|
Inventories,
net
|
1,211
|
|
|
1,110
|
|
Other current
assets
|
291
|
|
|
189
|
|
Total current
assets
|
5,074
|
|
|
5,136
|
|
Restricted
cash
|
65
|
|
|
63
|
|
Trade and other
receivables, net
|
31
|
|
|
49
|
|
Finance receivables,
net
|
272
|
|
|
260
|
|
Investments in
non-consolidated affiliates
|
32
|
|
|
50
|
|
Property and
equipment (net of accumulated depreciation and amortization of
$2,452 and $2,498, respectively)
|
1,275
|
|
|
1,370
|
|
Goodwill
|
38
|
|
|
38
|
|
Intangible assets
(net of accumulated amortization of $141 and $140,
respectively)
|
29
|
|
|
30
|
|
Deferred taxes,
net
|
123
|
|
|
121
|
|
Other noncurrent
assets
|
98
|
|
|
113
|
|
Total
assets
|
$
|
7,037
|
|
|
$
|
7,230
|
|
LIABILITIES and
STOCKHOLDERS' DEFICIT
|
|
|
|
Liabilities
|
|
|
|
Current
liabilities
|
|
|
|
Notes payable and
current maturities of long-term debt
|
$
|
942
|
|
|
$
|
946
|
|
Accounts
payable
|
1,484
|
|
|
1,606
|
|
Other current
liabilities
|
1,225
|
|
|
1,255
|
|
Total current
liabilities
|
3,651
|
|
|
3,807
|
|
Long-term
debt
|
4,552
|
|
|
4,521
|
|
Postretirement
benefits liabilities
|
1,961
|
|
|
2,097
|
|
Other noncurrent
liabilities
|
686
|
|
|
731
|
|
Total
liabilities
|
10,850
|
|
|
11,156
|
|
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
|
2,732
|
|
|
2,731
|
|
Accumulated
deficit
|
(4,609)
|
|
|
(4,593)
|
|
Accumulated other
comprehensive loss
|
(1,791)
|
|
|
(1,920)
|
|
Common stock held in
treasury, at cost (4.1 and 4.2 shares, respectively)
|
(160)
|
|
|
(161)
|
|
Total stockholders'
deficit attributable to Navistar International
Corporation
|
(3,816)
|
|
|
(3,931)
|
|
Stockholders' equity
attributable to non-controlling interests
|
3
|
|
|
5
|
|
Total
stockholders' deficit
|
(3,813)
|
|
|
(3,926)
|
|
Total liabilities
and stockholders' deficit
|
$
|
7,037
|
|
|
$
|
7,230
|
|
Navistar
International Corporation and Subsidiaries
|
Condensed
Consolidated Statements of Cash Flows
|
(Unaudited)
|
|
|
Three Months Ended
January 31,
|
(in
millions)
|
2019
|
|
2018
|
Cash flows from
operating activities
|
|
|
|
Net income
(loss)
|
$
|
17
|
|
|
$
|
(66)
|
|
Adjustments to
reconcile net income (loss) to net cash used in operating
activities:
|
|
|
|
Depreciation and
amortization
|
33
|
|
|
37
|
|
Depreciation of
equipment leased to others
|
15
|
|
|
18
|
|
Deferred taxes,
including change in valuation allowance
|
(41)
|
|
|
6
|
|
Asset impairment
charges
|
2
|
|
|
2
|
|
Gain on sales of
investments and businesses, net
|
(59)
|
|
|
—
|
|
Amortization of debt
issuance costs and discount
|
6
|
|
|
8
|
|
Stock-based
compensation
|
—
|
|
|
9
|
|
Provision for
doubtful accounts
|
1
|
|
|
1
|
|
Equity in income of
non-consolidated affiliates, net of dividends
|
—
|
|
|
3
|
|
Write-off of debt
issuance costs and discount
|
—
|
|
|
42
|
|
Other non-cash
operating activities
|
(1)
|
|
|
(6)
|
|
Changes in other
assets and liabilities, exclusive of the effects of businesses
disposed
|
(213)
|
|
|
(130)
|
|
Net cash used in
operating activities
|
(240)
|
|
|
(76)
|
|
Cash flows from
investing activities
|
|
|
|
Purchases of
marketable securities
|
—
|
|
|
(61)
|
|
Sales of marketable
securities
|
—
|
|
|
150
|
|
Maturities of
marketable securities
|
61
|
|
|
5
|
|
Capital
expenditures
|
(44)
|
|
|
(30)
|
|
Purchases of
equipment leased to others
|
(42)
|
|
|
(52)
|
|
Proceeds from sales
of property and equipment
|
3
|
|
|
3
|
|
Proceeds from sales
of affiliates
|
95
|
|
|
—
|
|
Other investing
activities
|
1
|
|
|
—
|
|
Net cash provided
by investing activities
|
74
|
|
|
15
|
|
Cash flows from
financing activities
|
|
|
|
Proceeds from
issuance of securitized debt
|
—
|
|
|
16
|
|
Principal payments on
securitized debt
|
(22)
|
|
|
(16)
|
|
Net change in secured
revolving credit facilities
|
48
|
|
|
(150)
|
|
Proceeds from
issuance of non-securitized debt
|
27
|
|
|
2,747
|
|
Principal payments on
non-securitized debt
|
(61)
|
|
|
(2,521)
|
|
Net change in notes
and debt outstanding under revolving credit facilities
|
83
|
|
|
(38)
|
|
Debt issuance
costs
|
(1)
|
|
|
(33)
|
|
Proceeds from
financed lease obligations
|
6
|
|
|
16
|
|
Proceeds from
exercise of stock options
|
1
|
|
|
4
|
|
Dividends paid by
subsidiaries to non-controlling interest
|
(8)
|
|
|
(7)
|
|
Other financing
activities
|
—
|
|
|
(12)
|
|
Net cash provided
by financing activities
|
73
|
|
|
6
|
|
Effect of exchange
rate changes on cash, cash equivalents and restricted
cash
|
(3)
|
|
|
2
|
|
Decrease in cash,
cash equivalents and restricted cash
|
(96)
|
|
|
(53)
|
|
Cash, cash
equivalents and restricted cash at beginning of the
period
|
1,445
|
|
|
840
|
|
Cash, cash
equivalents and restricted cash at end of the period
|
$
|
1,349
|
|
|
$
|
787
|
|
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
January 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
External sales and
revenues, net
|
$
|
1,776
|
|
|
$
|
546
|
|
|
$
|
61
|
|
|
$
|
47
|
|
|
$
|
3
|
|
|
$
|
2,433
|
|
Intersegment sales
and revenues
|
21
|
|
|
2
|
|
|
12
|
|
|
27
|
|
|
(62)
|
|
|
—
|
|
Total sales and
revenues, net
|
$
|
1,797
|
|
|
$
|
548
|
|
|
$
|
73
|
|
|
$
|
74
|
|
|
$
|
(59)
|
|
|
$
|
2,433
|
|
Net income (loss)
attributable to NIC
|
$
|
90
|
|
|
$
|
144
|
|
|
$
|
6
|
|
|
$
|
31
|
|
|
$
|
(260)
|
|
|
$
|
11
|
|
Income tax
benefit
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19
|
|
|
19
|
|
Segment profit
(loss)
|
$
|
90
|
|
|
$
|
144
|
|
|
$
|
6
|
|
|
$
|
31
|
|
|
$
|
(279)
|
|
|
$
|
(8)
|
|
Depreciation and
amortization
|
$
|
26
|
|
|
$
|
1
|
|
|
$
|
2
|
|
|
$
|
16
|
|
|
$
|
3
|
|
|
$
|
48
|
|
Interest
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
29
|
|
|
56
|
|
|
85
|
|
Equity in income
(loss) of non-consolidated affiliates
|
1
|
|
|
1
|
|
|
(1)
|
|
|
—
|
|
|
(1)
|
|
|
—
|
|
Capital
expenditures(B)
|
31
|
|
|
2
|
|
|
1
|
|
|
1
|
|
|
9
|
|
|
44
|
|
|
(in
millions)
|
Truck
|
|
Parts
|
|
Global
Operations
|
|
Financial
Services(A)
|
|
Corporate and Eliminations
|
|
Total
|
Three Months Ended
January 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
External sales and
revenues, net
|
$
|
1,228
|
|
|
$
|
564
|
|
|
$
|
72
|
|
|
$
|
38
|
|
|
$
|
3
|
|
|
$
|
1,905
|
|
Intersegment sales
and revenues
|
23
|
|
|
4
|
|
|
9
|
|
|
21
|
|
|
(57)
|
|
|
—
|
|
Total sales and
revenues, net
|
$
|
1,251
|
|
|
$
|
568
|
|
|
$
|
81
|
|
|
$
|
59
|
|
|
$
|
(54)
|
|
|
$
|
1,905
|
|
Net income (loss)
attributable to NIC
|
$
|
(7)
|
|
|
$
|
137
|
|
|
$
|
(7)
|
|
|
$
|
20
|
|
|
$
|
(216)
|
|
|
$
|
(73)
|
|
Income tax
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15)
|
|
|
(15)
|
|
Segment profit
(loss)
|
$
|
(7)
|
|
|
$
|
137
|
|
|
$
|
(7)
|
|
|
$
|
20
|
|
|
$
|
(201)
|
|
|
$
|
(58)
|
|
Depreciation and
amortization
|
$
|
35
|
|
|
$
|
2
|
|
|
$
|
3
|
|
|
$
|
13
|
|
|
$
|
2
|
|
|
$
|
55
|
|
Interest
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
21
|
|
|
58
|
|
|
79
|
|
Equity in income
(loss) of non-consolidated affiliates
|
—
|
|
|
1
|
|
|
(1)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Capital
expenditures(B)
|
25
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
4
|
|
|
30
|
|
|
(in
millions)
|
Truck
|
|
Parts
|
|
Global
Operations
|
|
Financial
Services
|
|
Corporate
and
Eliminations
|
|
Total
|
Segment assets, as
of:
|
|
|
|
|
|
|
|
|
|
|
|
January 31,
2019
|
$
|
2,031
|
|
|
$
|
676
|
|
|
$
|
316
|
|
|
$
|
2,618
|
|
|
$
|
1,396
|
|
|
$
|
7,037
|
|
October 31,
2018
|
2,085
|
|
|
636
|
|
|
331
|
|
|
2,648
|
|
|
1,530
|
|
|
7,230
|
|
_________________________
|
(A)
|
Total sales and
revenues in the Financial Services segment include interest
revenues of $53 million and $41 million for the three months ended
January 31, 2019 and 2018, 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 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
January 31,
|
(in
millions)
|
2019
|
|
2018
|
Net income (loss)
attributable to NIC
|
$
|
11
|
|
|
$
|
(73)
|
|
Plus:
|
|
|
|
Depreciation and
amortization expense
|
48
|
|
|
55
|
|
Manufacturing
interest expense(A)
|
56
|
|
|
58
|
|
Adjusted
for:
|
|
|
|
Income tax benefit
(expense)
|
19
|
|
|
(15)
|
|
EBITDA
|
$
|
96
|
|
|
$
|
55
|
|
______________________
|
(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
January 31,
|
(in
millions)
|
2019
|
|
2018
|
Interest
expense
|
$
|
85
|
|
|
$
|
79
|
|
Less: Financial
services interest expense
|
29
|
|
|
21
|
|
Manufacturing
interest expense
|
$
|
56
|
|
|
$
|
58
|
|
Adjusted EBITDA
Reconciliation:
|
|
|
Three Months
Ended
January 31,
|
(in
millions)
|
2019
|
|
2018
|
EBITDA
(reconciled above)
|
$
|
96
|
|
|
$
|
55
|
|
Adjusted for
significant items of:
|
|
|
|
Adjustments to
pre-existing warranties(A)
|
(7)
|
|
|
(6)
|
|
Asset impairment
charges(B)
|
2
|
|
|
2
|
|
Restructuring of
manufacturing operations(C)
|
—
|
|
|
(3)
|
|
EGR product
litigation(D)
|
—
|
|
|
1
|
|
Gain on
sales(E)
|
(59)
|
|
|
—
|
|
Debt refinancing
charges(F)
|
—
|
|
|
46
|
|
Pension
settlement(G)
|
142
|
|
|
9
|
|
Settlement
gain(H)
|
(1)
|
|
|
—
|
|
Total
adjustments
|
77
|
|
|
49
|
|
Adjusted
EBITDA
|
$
|
173
|
|
|
$
|
104
|
|
___________________
|
(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 quarter
of 2019, we recorded $2 million of asset impairment charges
relating to certain assets under operating leases. In the
first quarter of 2018, we recorded $2 million of impairment charges
related to the sale of our railcar business in Cherokee,
Alabama.
|
(C)
|
In the first quarter
of 2018, we recorded benefits of $3 million for
restructuring in our Truck and Global segments.
|
(D)
|
In the first quarter
of 2018, we recognized an additional charge of $1 million for a
jury verdict related to the MaxxForce engine EGR product litigation
in our Truck segment.
|
(E)
|
In the first quarter
of 2019, we recognized a gain of $54 million related to the sale of
a majority interest in the Navistar Defense business in our Truck
segment. In the first quarter of 2019, we also recognized a gain of
$5 million related to the sale of our joint venture in China with
Anhui Jianghuai Automobile Co. in our Global Operations
segment.
|
(F)
|
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 previously existing 8.25% Senior Notes and the refinancing of
our previously existing Term Loan.
|
(G)
|
In the first quarter
of 2019 and 2018, 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 and $9 million, respectively, in
Other expense, net.
|
(H)
|
In the first quarter
of 2019, 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.
|
Manufacturing
segment cash, cash equivalents, and marketable securities
reconciliation:
|
|
|
As of January 31,
2019
|
(in
millions)
|
Manufacturing
Operations
|
|
Financial
Services
Operations
|
|
Consolidated
Balance Sheet
|
Assets
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
1,151
|
|
|
$
|
50
|
|
|
$
|
1,201
|
|
Marketable
securities
|
41
|
|
|
—
|
|
|
41
|
|
Total cash, cash
equivalents, and marketable securities
|
$
|
1,192
|
|
|
$
|
50
|
|
|
$
|
1,242
|
|
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SOURCE Navistar International Corporation