LISLE, Ill., Sept. 19, 2019 /PRNewswire/ -- Navistar
International Corporation (NYSE: NAV) will present the 2020-24
strategy, "Navistar 4.0," at its Investor Day event today, laying
out a plan to increase the company's EBITDA margins to 12%.
Navistar 4.0 includes the following elements:
- Improve EBITDA margins to 10% by 2022 and 12% by 2024;
- Grow market share and become the number one choice of the
customer through new product offerings and customer
segmentation;
- Implement a single platform strategy to optimize use of R&D
resources and commonization of parts and tooling;
- Increase modular design resulting in customer benefits, speed
to market and lower product costs;
- Build a new truck assembly facility in San Antonio, Texas, reducing logistics and
manufacturing costs;
- Use the TRATON alliance to provide significant procurement
savings, more efficient R&D spend and new integrated powertrain
offerings for customers;
- Grow Aftersales revenues with an expanding distribution
network, growing private label sales and e-commerce
initiatives;
- Improve financial results allowing the company to invest in
growth initiatives, de-lever the balance sheet and fully fund its
defined benefit pension plans by 2025.
Building on the major advances achieved in the last five years,
including gains from an alliance with TRATON Group, Navistar 4.0
lays out a clear path for the company's ongoing
transformation.
"Navistar is committed to building on the gains of the past five
years to improve financial returns to shareholders," said
Troy A. Clarke, Navistar chairman,
president and chief executive officer. "Navistar 4.0 establishes a
clear road map to grow EBITDA margins to 12%, while also winning in
the marketplace."
Announces $250 Million
Investment in New Manufacturing Plant
Building on the
recently announced $125 million
investment in the Huntsville
engine plant, Navistar also intends to create the most
cost-competitive manufacturing network in the industry. For this
reason, as part of Navistar 4.0, the company separately announced
its intent to invest more than $250
million in a new, industry benchmark assembly facility in
San Antonio, Texas, contingent on
incentive approval.
"The new facility will have the flexibility to build Class 6-8
trucks incorporating the most advanced lean manufacturing
practices, enabling lower conversion costs and an optimized supply
chain," said Persio Lisboa,
Navistar's chief operating officer.
Procurement and Product Strategy Builds on Success of TRATON
Alliance
Another contributor to Navistar's future
improvement is the alliance with TRATON Group. Increased benefits
from the two companies' procurement joint venture are achieved by
leveraging global scale, ultimately through common powertrains and
other systems.
"Our savings from the global alliance with TRATON are on track
to yield $500 million in the first
five years, with $200 million in
annual savings by year five," said Walter
Borst, Navistar's chief financial officer.
Provides 2020 and Longer-Term Financial Guidance
In
its presentation, Navistar also provided industry and company
financial guidance for 2020, including:
- Industry retail deliveries of Class 6-8 trucks and buses in
the United States and Canada are forecast to be between 335,000 and
365,000 units
- Revenues are expected to be between $10.0 billion and $10.5
billion
- Adjusted EBITDA is expected to be $775
million to $825 million
- Manufacturing free cash flow is expected to be breakeven
excluding changes in working capital
In addition, Navistar plans to grow EBITDA margin from the 8%
currently anticipated for 2019 to 10% by 2022, and has laid out
plans to achieve this result. Components of this improvement
include higher revenues and market share through new product
offerings and market segmentation initiatives; incremental product
cost improvements in procurement and manufacturing through supply
and logistics savings and lean manufacturing activities; and lower
structural costs from active cost management and lower pension and
OPEB costs.
12% EBITDA Margins Planned by 2024
The company plans
to achieve EBITDA margins of 12% by 2024. Components of this
additional improvement include development of integrated
powertrain offerings, a single platform strategy, modular product
design and optimization of the company's manufacturing
footprint.
The company summed up its vision by citing unique
opportunities:
- Its new product lineup, quality improvements and uptime focus
are gaining market share.
- Gross margins will grow with the lower costs derived from the
TRATON alliance and enhanced manufacturing strategy.
- Aftersales revenue will grow as market share gains add to the
vehicle parc and integrated powertrains improve the parts mix.
- Substantial improvements in net income as free cash flow is
used to pay down debt and fund pension plans.
"Navistar's recent improvements in both market share and
financial returns are sustainable and will grow in the years
ahead," Clarke said. "I believe Navistar is the best investment
opportunity in the commercial vehicle space."
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 the Company assumes no obligation to update the
information included in this report. Such forward-looking
statements include information concerning our plans to increase
EBITDA margin, our plans for market share growth through
segmentation and lower product costs through increased
modularization, our plans to build a new manufacturing plant and
realize reduced logistics and manufacturing costs, our expectations
from the TRATON alliance, our expectations for Aftersales revenue
growth, our plans for de-levering the balance sheet and fully
funding pension plans and other possible or assumed future results
of operations, including further 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, which was filed on December 18, 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.
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SOURCE Navistar International Corporation