LISLE, Ill., Dec. 17, 2019 /PRNewswire/ -- Navistar
International Corporation (NYSE: NAV) today announced fourth
quarter 2019 net income of $102
million, or $1.02 per diluted
share, compared to fourth quarter 2018 net income of $188 million, or $1.89 per diluted share. Navistar reported net
income of $221 million, or
$2.22 per diluted share for fiscal
year 2019, versus net income of $340
million, or $3.41 per diluted
share, for fiscal year 2018.
Adjusted net income for the fourth quarter was $114 million versus $189
million in the same period one year ago. Adjusted net income
for fiscal year 2019 increased 29 percent to $423 million versus $327
million in 2018.
Fourth quarter 2019 adjusted EBITDA was $219 million versus $322
million one year ago. Fiscal year 2019 adjusted EBITDA
increased seven percent to $882
million, versus $826 million
in 2018. This marks the company's seventh consecutive year of
annual growth in adjusted EBITDA.
Revenues in the quarter were $2.8
billion, down 16 percent compared to fourth quarter 2018.
The revenue decrease was largely driven by very strong fourth
quarter 2018 vehicle chargeouts following supplier production
constraints in the third quarter of that year, the impact of the
sale of Navistar Defense in December
2018, and lower industry demand in the quarter. Revenue for
fiscal year 2019 was up 10 percent to $11.25
billion, led by a 26 percent increase in worldwide
chargeouts to 106,500 units for the year. During the year,
Navistar's Core market share grew by 1.3 points, to 18.8 percent.
The company increased its school bus market share to 35.8 percent,
where it is once again the industry leader, increased its Class 6-7
medium duty market share to 27 percent, as well as increased its
Class 8 market share to 14.1 percent. This marks the company's
third consecutive year of Core market share growth.
Navistar finished fourth quarter 2019 with $1.4 billion in consolidated cash, cash
equivalents and marketable securities, and with $1.3 billion in manufacturing cash, cash
equivalents and marketable securities. For the year, the
company generated $263 million of
manufacturing free cash flow.
"During 2019, we grew adjusted EBITDA and adjusted net income
while growing our Core market share to 19 percent, for a total of
three points of share gain in the last three years," said
Troy A. Clarke, Navistar chairman,
president and CEO. "Our Navistar 4.0 strategy builds on this
performance and incorporates major investments in the business that
will deliver strong benefits for both customers and
shareholders."
Navistar 4.0, the company's five-year improvement strategy which
was presented at the company's Investor Day in September, lays out
a plan to increase the company's EBITDA margins to 12 percent
by the end of 2024. The plan commits to advanced operational
approaches, including a unified enterprise platform strategy,
advanced modular architecture and the most capable manufacturing
network in the industry. The company also announced it plans a
capital investment of more than $250
million in a new industry benchmark manufacturing facility
in San Antonio, Texas, which will
have best-in-class lean processes and will be Industry 4.0 ready.
This is in addition to the company's June announcement of investing
$125 million in its Huntsville, Alabama manufacturing facilities
to produce next-generation, big-bore powertrains being developed
with Navistar's global alliance partner TRATON GROUP.
In October, Navistar launched NEXT eMobility Solutions, a
business unit that is dedicating a world-class, lean engineering
team to develop the best products in the electric vehicle space,
using a unique consultative philosophy that embraces the full range
of customers' needs. Navistar also unveiled a prototype electric
version of the International® MV™ Series
medium-duty vehicle. Additionally, the company launched
International® 360, a groundbreaking service
communications and fleet management platform that delivers
seamless, transparent communications with the
International® service network.
2020 INDUSTRY AND FINANCIAL GUIDANCE
The company reiterated its 2020 industry guidance and updated
the following full-year financial guidance:
- Industry retail deliveries of Class 6-8 trucks and buses in
the United States and Canada are forecasted to be in the range of
335,000 to 365,000 units, with Class 8 retail deliveries between
210,000 and 240,000 units.
- Revenues are expected to be in the range of $9.25 billion to $9.75
billion.
- Adjusted EBITDA is expected to be in the range of $700 million to $750
million.
"With a proven track record of managing costs and improving
operating results, Navistar is in a much better position than in
the past to do well even during cyclical downturns," Clarke said.
"We are taking actions to adjust our business to current market
conditions, including reducing production rates and SG&A
expenses while restructuring our global and export operations.
Building on the strong gains achieved over the last several years,
Navistar has a clear roadmap in place for sustained growth that
will set it apart from the industry."
|
SEGMENT
REVIEW
|
|
|
Summary of
Financial Results:
|
|
|
(Unaudited)
|
|
|
|
Quarters Ended
October 31,
|
|
Years Ended
October 31,
|
|
(in millions,
except per share data)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Sales and revenues,
net
|
$
|
2,780
|
|
|
$
|
3,317
|
|
|
$
|
11,251
|
|
|
$
|
10,250
|
|
|
Segment
Results:
|
|
|
|
|
|
|
|
|
Truck
|
$
|
86
|
|
|
$
|
197
|
|
|
$
|
269
|
|
|
$
|
397
|
|
|
Parts
|
161
|
|
|
156
|
|
|
598
|
|
|
569
|
|
|
Global
Operations
|
(10)
|
|
|
4
|
|
|
—
|
|
|
2
|
|
|
Financial
Services
|
30
|
|
|
26
|
|
|
123
|
|
|
88
|
|
|
Income from
continuing operations, net of tax(A)
|
$
|
102
|
|
|
$
|
188
|
|
|
$
|
221
|
|
|
$
|
340
|
|
|
Net
income(A)
|
102
|
|
|
188
|
|
|
221
|
|
|
340
|
|
|
Diluted earnings per
share(A)
|
1.02
|
|
|
1.89
|
|
|
2.22
|
|
|
3.41
|
|
|
|
|
|
|
|
|
|
(A)
|
Amounts attributable
to Navistar International Corporation.
|
Truck Segment – For the fourth quarter 2019, the
Truck segment recorded a profit of $86
million, compared with a year-ago fourth quarter profit of
$197 million. The year-over-year
decline was primarily due to an 18 percent decline in the company's
Core chargeouts, as well as the impact of the sale of a majority
interest in the Navistar Defense business.
For the 2019 fiscal year, the Truck segment recorded a profit of
$269 million, compared with a fiscal
year 2018 profit of $397 million. The
decrease was primarily driven by charges related to a legacy engine
class action settlement and the impact of the sale of a majority
interest in Navistar Defense. These items were partially offset by
higher volumes in the company's Core markets.
Parts Segment — For the fourth quarter 2019, the Parts
segment recorded a profit of $161
million, compared with a year-ago fourth quarter profit of
$156 million. For the 2019 fiscal
year, the Parts segment recorded a profit of $598 million, compared to a fiscal year 2018
profit of $569 million. The results
were primarily driven by improved North American operating results,
reflecting the company's growing private label business, partially
offset by lower Blue Diamond Parts volumes.
Global Operations Segment — For the fourth quarter 2019,
the Global Operations segment recorded a loss of $10 million, compared to a year-ago fourth
quarter profit of $4 million. The
year-over-year change was driven largely by a $14 million restructuring charge related to cost
reduction actions, including ceasing production at the company's
MWM Argentina engine plant and restructuring activities in
Brazil.
For the 2019 fiscal year, the Global Operations segment operated
at breakeven compared to a year-ago fiscal year profit of
$2 million. The Global Operations
segment results decrease was primarily driven by the impact of
product mix and an increase in restructuring charges related to
cost reduction actions, partially offset by lower SG&A expenses
and the impact of the sale of the company's former joint venture in
China with JAC.
Financial Services Segment— For the fourth quarter 2019,
the Financial Services segment recorded a profit of $30 million, up slightly compared with fourth
quarter 2018. The results were primarily driven by lower interest
expense due to the payoff of the company's $400 million Term Loan in May.
For the 2019 fiscal year, the Financial Services segment
recorded a profit of $123 million,
compared to a year-ago fiscal year profit of $88 million. The increase is primarily driven by
higher revenue, an improved funding strategy to manage borrowing
costs, and higher income from an intercompany loan.
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
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. 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)
|
|
|
|
|
|
For the
Quarters
Ended October 31,
|
|
For the Years
Ended October 31,
|
|
(in millions,
except per share data)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Sales and
revenues
|
|
|
|
|
|
|
|
|
Sales of manufactured
products, net
|
$
|
2,731
|
|
|
$
|
3,275
|
|
|
$
|
11,061
|
|
|
$
|
10,090
|
|
|
Finance
revenues
|
49
|
|
|
42
|
|
|
190
|
|
|
160
|
|
|
Sales and revenues,
net
|
2,780
|
|
|
3,317
|
|
|
11,251
|
|
|
10,250
|
|
|
Costs and
expenses
|
|
|
|
|
|
|
|
|
Costs of products
sold
|
2,272
|
|
|
2,702
|
|
|
9,245
|
|
|
8,317
|
|
|
Restructuring
charges
|
11
|
|
|
—
|
|
|
12
|
|
|
(1)
|
|
|
Asset impairment
charges
|
1
|
|
|
3
|
|
|
7
|
|
|
14
|
|
|
Selling, general and
administrative expenses
|
208
|
|
|
215
|
|
|
934
|
|
|
828
|
|
|
Engineering and
product development costs
|
77
|
|
|
75
|
|
|
319
|
|
|
297
|
|
|
Interest
expense
|
69
|
|
|
87
|
|
|
312
|
|
|
327
|
|
|
Other income,
net
|
24
|
|
|
12
|
|
|
164
|
|
|
48
|
|
|
Total costs and
expenses
|
2,662
|
|
|
3,094
|
|
|
10,993
|
|
|
9,830
|
|
|
Equity in income of
non-consolidated affiliates
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
Income before income
taxes
|
118
|
|
|
223
|
|
|
262
|
|
|
420
|
|
|
Income tax
expense
|
(10)
|
|
|
(27)
|
|
|
(19)
|
|
|
(52)
|
|
|
Net income
|
108
|
|
|
196
|
|
|
243
|
|
|
368
|
|
|
Less: Net income
attributable to non-controlling interests
|
6
|
|
|
8
|
|
|
22
|
|
|
28
|
|
|
Net income
attributable to Navistar International Corporation
|
$
|
102
|
|
|
$
|
188
|
|
|
$
|
221
|
|
|
$
|
340
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
attributable to Navistar International Corporation:
|
|
|
|
|
|
|
|
|
Basic:
|
$
|
1.03
|
|
|
$
|
1.90
|
|
|
$
|
2.23
|
|
|
$
|
3.44
|
|
|
Diluted:
|
$
|
1.02
|
|
|
$
|
1.89
|
|
|
$
|
2.22
|
|
|
$
|
3.41
|
|
|
Weighted average
shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
99.4
|
|
|
99.1
|
|
|
99.3
|
|
|
98.9
|
|
|
Diluted
|
99.6
|
|
|
99.7
|
|
|
99.5
|
|
|
99.6
|
|
|
Navistar
International Corporation and Subsidiaries
|
|
Consolidated
Balance Sheets
|
|
|
As of October
31,
|
|
(in millions,
except per share data)
|
2019
|
|
2018
|
|
ASSETS
|
|
|
|
|
Current
assets
|
|
|
|
|
Cash and cash
equivalents
|
$
|
1,370
|
|
|
$
|
1,320
|
|
|
Restricted cash and
cash equivalents
|
133
|
|
|
62
|
|
|
Marketable
securities
|
—
|
|
|
101
|
|
|
Trade and other
receivables, net
|
338
|
|
|
456
|
|
|
Finance receivables,
net
|
1,923
|
|
|
1,898
|
|
|
Inventories,
net
|
911
|
|
|
1,110
|
|
|
Other current
assets
|
277
|
|
|
189
|
|
|
Total current
assets
|
4,952
|
|
|
5,136
|
|
|
Restricted
cash
|
54
|
|
|
63
|
|
|
Trade and other
receivables, net
|
10
|
|
|
49
|
|
|
Finance receivables,
net
|
274
|
|
|
260
|
|
|
Investments in
non-consolidated affiliates
|
31
|
|
|
50
|
|
|
Property and
equipment, net
|
1,309
|
|
|
1,370
|
|
|
Goodwill
|
38
|
|
|
38
|
|
|
Intangible assets,
net
|
25
|
|
|
30
|
|
|
Deferred taxes,
net
|
117
|
|
|
121
|
|
|
Other noncurrent
assets
|
107
|
|
|
113
|
|
|
Total
assets
|
$
|
6,917
|
|
|
$
|
7,230
|
|
|
LIABILITIES and
STOCKHOLDERS' DEFICIT
|
|
|
|
|
Liabilities
|
|
|
|
|
Current
liabilities
|
|
|
|
|
Notes payable and
current maturities of long-term debt
|
$
|
871
|
|
|
$
|
946
|
|
|
Accounts
payable
|
1,341
|
|
|
1,606
|
|
|
Other current
liabilities
|
1,363
|
|
|
1,255
|
|
|
Total current
liabilities
|
3,575
|
|
|
3,807
|
|
|
Long-term
debt
|
4,317
|
|
|
4,521
|
|
|
Postretirement
benefits liabilities
|
2,103
|
|
|
2,097
|
|
|
Other noncurrent
liabilities
|
645
|
|
|
731
|
|
|
Total
liabilities
|
10,640
|
|
|
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
|
2,730
|
|
|
2,731
|
|
|
Accumulated
deficit
|
(4,409)
|
|
|
(4,593)
|
|
|
Accumulated other
comprehensive loss
|
(1,912)
|
|
|
(1,920)
|
|
|
Common stock held in
treasury, at cost (3.9 and 4.2 shares, respectively)
|
(147)
|
|
|
(161)
|
|
|
Total stockholders'
deficit attributable to Navistar International
Corporation
|
(3,726)
|
|
|
(3,931)
|
|
|
Stockholders' equity
attributable to non-controlling interests
|
3
|
|
|
5
|
|
|
Total
stockholders' deficit
|
(3,723)
|
|
|
(3,926)
|
|
|
Total liabilities
and stockholders' deficit
|
$
|
6,917
|
|
|
$
|
7,230
|
|
|
Navistar
International Corporation and Subsidiaries
|
|
Condensed
Consolidated Statements of Cash Flows
|
|
|
For the Years
Ended
October 31,
|
|
(in
millions)
|
2019
|
|
2018
|
|
Cash flows from
operating activities
|
|
|
|
|
Net income
|
$
|
243
|
|
|
$
|
368
|
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
132
|
|
|
140
|
|
|
Depreciation of
equipment leased to others
|
61
|
|
|
71
|
|
|
Deferred taxes,
including change in valuation allowance
|
(31)
|
|
|
4
|
|
|
Asset impairment
charges
|
7
|
|
|
14
|
|
|
Gain on sales of
investments and businesses, net
|
(56)
|
|
|
—
|
|
|
Amortization of debt
issuance costs and discount
|
19
|
|
|
31
|
|
|
Stock-based
compensation
|
23
|
|
|
32
|
|
|
Provision for
doubtful accounts, net of recoveries
|
4
|
|
|
10
|
|
|
Equity in income of
non-consolidated affiliates, net of dividends
|
(2)
|
|
|
5
|
|
|
Write-off of debt
issuance cost and discount
|
6
|
|
|
43
|
|
|
Other non-cash
operating activities
|
(9)
|
|
|
(23)
|
|
|
Changes in other
assets and liabilities, exclusive of the effects of businesses
disposed:
|
|
|
|
|
Trade and other
receivables
|
141
|
|
|
(109)
|
|
|
Finance
receivables
|
(42)
|
|
|
(405)
|
|
|
Inventories
|
103
|
|
|
(257)
|
|
|
Accounts
payable
|
(250)
|
|
|
317
|
|
|
Other assets and
liabilities
|
101
|
|
|
26
|
|
|
Net cash provided
by operating activities
|
450
|
|
|
267
|
|
|
Cash flows from
investing activities
|
|
|
|
|
Purchases of
marketable securities
|
—
|
|
|
(251)
|
|
|
Sales of marketable
securities
|
—
|
|
|
460
|
|
|
Maturities of
marketable securities
|
102
|
|
|
60
|
|
|
Capital
expenditures
|
(134)
|
|
|
(113)
|
|
|
Purchases of
equipment leased to others
|
(152)
|
|
|
(232)
|
|
|
Proceeds from sales
of property and equipment
|
14
|
|
|
11
|
|
|
Proceeds from
(payments for) sales of affiliates
|
100
|
|
|
(3)
|
|
|
Other investing
activities
|
2
|
|
|
2
|
|
|
Net cash used in
investing activities
|
(68)
|
|
|
(66)
|
|
|
Cash flows from
financing activities
|
|
|
|
|
Proceeds from
issuance of securitized debt
|
363
|
|
|
339
|
|
|
Principal payments on
securitized debt
|
(316)
|
|
|
(364)
|
|
|
Net change in secured
revolving credit facilities
|
12
|
|
|
135
|
|
|
Proceeds from
issuance of non-securitized debt
|
209
|
|
|
3,248
|
|
|
Principal payments on
non-securitized debt
|
(1,044)
|
|
|
(2,920)
|
|
|
Net change in notes
and debt outstanding under revolving credit facilities
|
527
|
|
|
(10)
|
|
|
Debt issuance
costs
|
(9)
|
|
|
(41)
|
|
|
Proceeds from
financed lease obligations
|
22
|
|
|
63
|
|
|
Proceeds from
exercise of stock options
|
4
|
|
|
8
|
|
|
Dividends paid by
subsidiaries to non-controlling interest
|
(24)
|
|
|
(27)
|
|
|
Other financing
activities
|
(2)
|
|
|
(17)
|
|
|
Net cash provided
by (used in) financing activities
|
(258)
|
|
|
414
|
|
|
Effect of exchange
rate changes on cash, cash equivalents and restricted
cash
|
(12)
|
|
|
(10)
|
|
|
Increase in cash,
cash equivalents and restricted cash
|
112
|
|
|
605
|
|
|
Cash, cash
equivalents and restricted cash at beginning of the
year
|
1,445
|
|
|
840
|
|
|
Cash, cash
equivalents and restricted cash at end of the year
|
$
|
1,557
|
|
|
$
|
1,445
|
|
|
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
October 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
External sales and
revenues, net
|
$
|
2,096
|
|
|
$
|
546
|
|
|
$
|
86
|
|
|
$
|
52
|
|
|
$
|
—
|
|
|
$
|
2,780
|
|
|
Intersegment sales
and revenues
|
9
|
|
|
1
|
|
|
7
|
|
|
19
|
|
|
(36)
|
|
|
—
|
|
|
Total sales and
revenues, net
|
$
|
2,105
|
|
|
$
|
547
|
|
|
$
|
93
|
|
|
$
|
71
|
|
|
$
|
(36)
|
|
|
$
|
2,780
|
|
|
Income (loss) from
continuing operations attributable to NIC, net of tax
|
$
|
86
|
|
|
$
|
161
|
|
|
$
|
(10)
|
|
|
$
|
30
|
|
|
$
|
(165)
|
|
|
$
|
102
|
|
|
Income tax
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10)
|
|
|
(10)
|
|
|
Segment profit
(loss)
|
$
|
86
|
|
|
$
|
161
|
|
|
$
|
(10)
|
|
|
$
|
30
|
|
|
$
|
(155)
|
|
|
$
|
112
|
|
|
Depreciation and
amortization
|
$
|
26
|
|
|
$
|
1
|
|
|
$
|
4
|
|
|
$
|
16
|
|
|
$
|
2
|
|
|
$
|
49
|
|
|
Interest
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
22
|
|
|
47
|
|
|
69
|
|
|
Equity in income
(loss) of non-consolidated affiliates
|
(1)
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Capital
expenditures(B)
|
32
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|
44
|
|
|
|
(in
millions)
|
Truck
|
|
Parts
|
|
Global
Operations
|
|
Financial
Services(A)
|
|
Corporate
and
Eliminations
|
|
Total
|
|
Three Months Ended
October 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
External sales and
revenues, net
|
$
|
2,576
|
|
|
$
|
631
|
|
|
$
|
76
|
|
|
$
|
42
|
|
|
$
|
(8)
|
|
|
$
|
3,317
|
|
|
Intersegment sales
and revenues
|
43
|
|
|
2
|
|
|
17
|
|
|
28
|
|
|
(90)
|
|
|
—
|
|
|
Total sales and
revenues, net
|
$
|
2,619
|
|
|
$
|
633
|
|
|
$
|
93
|
|
|
$
|
70
|
|
|
$
|
(98)
|
|
|
$
|
3,317
|
|
|
Income (loss) from
continuing operations attributable to NIC, net of tax
|
$
|
197
|
|
|
$
|
156
|
|
|
$
|
4
|
|
|
$
|
26
|
|
|
$
|
(195)
|
|
|
$
|
188
|
|
|
Income tax
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(27)
|
|
|
(27)
|
|
|
Segment profit
(loss)
|
$
|
197
|
|
|
$
|
156
|
|
|
$
|
4
|
|
|
$
|
26
|
|
|
$
|
(168)
|
|
|
$
|
215
|
|
|
Depreciation and
amortization
|
$
|
30
|
|
|
$
|
1
|
|
|
$
|
2
|
|
|
$
|
14
|
|
|
$
|
4
|
|
|
$
|
51
|
|
|
Interest
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
28
|
|
|
59
|
|
|
87
|
|
|
Equity in income
(loss) of non-consolidated affiliates
|
—
|
|
|
1
|
|
|
(1)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Capital
expenditures(B)
|
25
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
7
|
|
|
34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
millions)
|
Truck
|
|
Parts
|
|
Global
Operations
|
|
Financial
Services(A)
|
|
Corporate
and
Eliminations
|
|
Total
|
|
Year Ended October
31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
External sales and
revenues, net
|
$
|
8,501
|
|
|
$
|
2,239
|
|
|
$
|
309
|
|
|
$
|
193
|
|
|
$
|
9
|
|
|
$
|
11,251
|
|
|
Intersegment sales
and revenues
|
84
|
|
|
6
|
|
|
34
|
|
|
104
|
|
|
(228)
|
|
|
—
|
|
|
Total sales and
revenues, net
|
$
|
8,585
|
|
|
$
|
2,245
|
|
|
$
|
343
|
|
|
$
|
297
|
|
|
$
|
(219)
|
|
|
$
|
11,251
|
|
|
Income (loss) from
continuing operations attributable to NIC, net of tax
|
$
|
269
|
|
|
$
|
598
|
|
|
$
|
—
|
|
|
$
|
123
|
|
|
$
|
(769)
|
|
|
$
|
221
|
|
|
Income tax
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(19)
|
|
|
(19)
|
|
|
Segment profit
(loss)
|
$
|
269
|
|
|
$
|
598
|
|
|
$
|
—
|
|
|
$
|
123
|
|
|
$
|
(750)
|
|
|
$
|
240
|
|
|
Depreciation and
amortization
|
$
|
104
|
|
|
$
|
5
|
|
|
$
|
11
|
|
|
$
|
64
|
|
|
$
|
9
|
|
|
$
|
193
|
|
|
Interest
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
105
|
|
|
207
|
|
|
312
|
|
|
Equity in income
(loss) of non-consolidated affiliates
|
2
|
|
|
3
|
|
|
(1)
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
Capital
expenditures(B)
|
101
|
|
|
7
|
|
|
2
|
|
|
2
|
|
|
22
|
|
|
134
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
millions)
|
Truck
|
|
Parts
|
|
Global
Operations
|
|
Financial
Services(A)
|
|
Corporate
and
Eliminations
|
|
Total
|
|
Year Ended October
31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
External sales and
revenues, net
|
$
|
7,386
|
|
|
$
|
2,399
|
|
|
$
|
305
|
|
|
$
|
160
|
|
|
$
|
—
|
|
|
$
|
10,250
|
|
|
Intersegment sales
and revenues
|
104
|
|
|
8
|
|
|
55
|
|
|
97
|
|
|
(264)
|
|
|
—
|
|
|
Total sales and
revenues, net
|
$
|
7,490
|
|
|
$
|
2,407
|
|
|
$
|
360
|
|
|
$
|
257
|
|
|
$
|
(264)
|
|
|
$
|
10,250
|
|
|
Income (loss) from
continuing operations attributable to NIC, net of tax
|
$
|
397
|
|
|
$
|
569
|
|
|
$
|
2
|
|
|
$
|
88
|
|
|
$
|
(716)
|
|
|
$
|
340
|
|
|
Income tax
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(52)
|
|
|
(52)
|
|
|
Segment profit
(loss)
|
$
|
397
|
|
|
$
|
569
|
|
|
$
|
2
|
|
|
$
|
88
|
|
|
$
|
(664)
|
|
|
$
|
392
|
|
|
Depreciation and
amortization
|
$
|
130
|
|
|
$
|
6
|
|
|
$
|
10
|
|
|
$
|
55
|
|
|
$
|
10
|
|
|
$
|
211
|
|
|
Interest
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
92
|
|
|
235
|
|
|
327
|
|
|
Equity in income
(loss) of non-consolidated affiliates
|
2
|
|
|
3
|
|
|
(5)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Capital
expenditures(B)
|
99
|
|
|
2
|
|
|
3
|
|
|
1
|
|
|
8
|
|
|
113
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
millions)
|
Truck
|
|
Parts
|
|
Global
Operations
|
|
Financial
Services
|
|
Corporate
and
Eliminations
|
|
Total
|
|
Segment assets, as
of:
|
|
|
|
|
|
|
|
|
|
|
|
|
October 31,
2019
|
$
|
1,705
|
|
|
$
|
688
|
|
|
$
|
296
|
|
|
$
|
2,774
|
|
|
$
|
1,454
|
|
|
$
|
6,917
|
|
|
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 $208 million and $182 million for the years ended
October 31, 2019 and 2018, respectively.
|
|
|
|
(B)
|
Exclusive of
purchases of equipment leased to others and liabilities related to
capital expenditures.
|
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 and Adjusted Net Income (loss)
attributable to NIC:
We believe that adjusted EBITDA
and adjusted Net Income (loss) attributable to NIC, 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.
Manufacturing free cash flow consists of Net
cash from operating activities and Capital Expenditures, all from
our Manufacturing operations.
|
EBITDA
reconciliation:
|
|
|
(Unaudited)
|
|
|
|
|
|
For the
Quarters
Ended October 31,
|
|
For the Years
Ended
October 31,
|
|
(in
millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Income from
continuing operations attributable to NIC, net of tax
|
$
|
102
|
|
|
$
|
188
|
|
|
$
|
221
|
|
|
$
|
340
|
|
|
Plus:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization expense
|
49
|
|
|
51
|
|
|
193
|
|
|
211
|
|
|
Manufacturing
interest expense(A)
|
47
|
|
|
59
|
|
|
207
|
|
|
235
|
|
|
Adjusted
for:
|
|
|
|
|
|
|
|
|
Income tax
expense
|
(10)
|
|
|
(27)
|
|
|
(19)
|
|
|
(52)
|
|
|
EBITDA
|
$
|
208
|
|
|
$
|
325
|
|
|
$
|
640
|
|
|
$
|
838
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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.
|
|
(Unaudited)
|
|
|
|
|
|
For the
Quarters
Ended October 31,
|
|
For the Years
Ended October 31,
|
|
(in
millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Interest
expense
|
$
|
69
|
|
|
$
|
87
|
|
|
$
|
312
|
|
|
$
|
327
|
|
|
Less: Financial
services interest expense
|
22
|
|
|
28
|
|
|
105
|
|
|
92
|
|
|
Manufacturing
interest expense
|
$
|
47
|
|
|
$
|
59
|
|
|
$
|
207
|
|
|
$
|
235
|
|
|
|
Adjusted EBITDA
Reconciliation:
|
|
|
(Unaudited)
|
|
|
|
|
|
For the
Quarters
Ended October 31,
|
|
For the Years
Ended October 31,
|
|
(in
millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
EBITDA
(reconciled above)
|
$
|
208
|
|
|
$
|
325
|
|
|
$
|
640
|
|
|
$
|
838
|
|
|
Adjusted for
significant items of:
|
|
|
|
|
|
|
|
|
Adjustments to
pre-existing warranties(A)
|
(4)
|
|
|
(5)
|
|
|
3
|
|
|
(9)
|
|
|
Asset impairment
charges(B)
|
1
|
|
|
3
|
|
|
7
|
|
|
14
|
|
|
Restructuring of
manufacturing operations(C)
|
13
|
|
|
—
|
|
|
14
|
|
|
(1)
|
|
|
MaxxForce Advanced
EGR engine lawsuits(D)
|
1
|
|
|
—
|
|
|
129
|
|
|
1
|
|
|
Gain on
sale(E)
|
—
|
|
|
—
|
|
|
(56)
|
|
|
—
|
|
|
Debt refinancing
charges(F)
|
—
|
|
|
—
|
|
|
6
|
|
|
46
|
|
|
Pension
settlement(G)
|
—
|
|
|
—
|
|
|
142
|
|
|
9
|
|
|
Settlement
gain(H)
|
—
|
|
|
(1)
|
|
|
(3)
|
|
|
(72)
|
|
|
Total
adjustments
|
11
|
|
|
(3)
|
|
|
242
|
|
|
(12)
|
|
|
Adjusted
EBITDA
|
$
|
219
|
|
|
$
|
322
|
|
|
$
|
882
|
|
|
$
|
826
|
|
|
|
Adjusted Net
Income attributable to NIC:
|
|
|
(Unaudited)
|
|
|
|
|
|
For the
Quarters
Ended October 31,
|
|
For the Years
Ended October 31,
|
|
(in
millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Net income from
continuing operations attributable to NIC
|
$
|
102
|
|
|
$
|
188
|
|
|
$
|
221
|
|
|
$
|
340
|
|
|
Adjusted for
significant items of:
|
|
|
|
|
|
|
|
|
Adjustments to
pre-existing warranties(A)
|
(4)
|
|
|
(5)
|
|
|
3
|
|
|
(9)
|
|
|
Asset impairment
charges(B)
|
1
|
|
|
3
|
|
|
7
|
|
|
14
|
|
|
Restructuring of
manufacturing operations(C)
|
13
|
|
|
—
|
|
|
14
|
|
|
(1)
|
|
|
MaxxForce Advanced
EGR engine lawsuits(D)
|
1
|
|
|
—
|
|
|
129
|
|
|
1
|
|
|
Gain on
sale(E)
|
—
|
|
|
—
|
|
|
(56)
|
|
|
—
|
|
|
Debt refinancing
charges(F)
|
—
|
|
|
—
|
|
|
6
|
|
|
46
|
|
|
Pension
settlement(G)
|
—
|
|
|
—
|
|
|
142
|
|
|
9
|
|
|
Settlement
gain(H)
|
—
|
|
|
(1)
|
|
|
(3)
|
|
|
(72)
|
|
|
Total
adjustments
|
11
|
|
|
(3)
|
|
|
242
|
|
|
(12)
|
|
|
Tax effect
(I)
|
1
|
|
|
4
|
|
|
(40)
|
|
|
(1)
|
|
|
Adjusted net
income attributable to NIC
|
$
|
114
|
|
|
$
|
189
|
|
|
$
|
423
|
|
|
$
|
327
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 historical 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)
|
During 2019, we
recorded $7 million of asset impairment charges relating to certain
assets under operating leases in our Truck segment. During 2018, we
recorded $14 million of impairment charges related to the exit of
our railcar business in Cherokee, Alabama, certain long-lived
assets and certain assets under operating leases in our Truck and
Financial Services segments.
|
|
|
|
(C)
|
During 2019, we
recorded charges of $14 million primarily related to cost reduction
actions recorded in Costs of product sold and
Restructuring charges in our Global Operations
segment. During 2018, we recognized a benefit of $1 million
related to adjustments for restructuring charges in our Truck,
Global Operations and Corporate segments.
|
|
|
|
(D)
|
During 2019, we
recognized a net charge of $129 million related to the MaxxForce
Advanced EGR engine class action settlement and related litigation
in our Truck segment. During 2018, we recognized a charge of $1
million for a jury verdict related to the MaxxForce Advanced EGR
engine lawsuits in our Truck segment.
|
|
|
|
(E)
|
During 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)
|
During 2019, we
recorded a charge of $6 million for the write-off of debt issuance
costs and discounts associated with the NFC Term Loan. During 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.
|
|
|
|
(G)
|
During 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 charges of $142 million and
$9 million respectively, in Other expense, net in
Corporate.
|
|
|
|
(H)
|
During 2019, we
recorded interest income of $3 million in Other expense,
net derived from the prior year settlement of a business
economic loss claim. During 2018, we settled a business economic
loss claim relating to our Alabama engine manufacturing facility
from the Deepwater Horizon Settlement Program. As a result, we
recorded the net present value of the settlement of $70 million and
related interest income of $2 million in Other expense,
net.
|
|
|
|
(I)
|
Tax effect is
calculated by excluding the tax impact of the non-GAAP adjustments
from the tax provision calculations.
|
|
Manufacturing
segment cash, cash equivalents, and marketable securities
reconciliation:
|
|
|
As of October 31,
2019
|
|
(in
millions)
|
Manufacturing
Operations
|
|
Financial
Services
Operations
|
|
Consolidated
Balance Sheet
|
|
Assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
1,328
|
|
|
$
|
42
|
|
|
$
|
1,370
|
|
|
Marketable
securities
|
—
|
|
|
—
|
|
|
—
|
|
|
Total cash, cash
equivalents, and marketable securities
|
$
|
1,328
|
|
|
$
|
42
|
|
|
$
|
1,370
|
|
|
Manufacturing free
cash flow reconciliation:
|
|
|
(in
millions)
|
|
October 31,
2019
|
|
Consolidated net cash
from operating activities
|
|
$
|
450
|
|
|
Less: Net cash from
Financial Services Operations
|
|
55
|
|
|
Net cash from
Manufacturing Operations(A)
|
|
395
|
|
|
Less: Manufacturing
capital expenditures
|
|
132
|
|
|
Manufacturing free
cash flow
|
|
$
|
263
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(A)
|
Net of adjustments
required to eliminate certain intercompany transactions between
Manufacturing operations and Financial Services
operations.
|
View original content to download
multimedia:http://www.prnewswire.com/news-releases/navistar-reports-2019-fourth-quarter-and-full-year-results-300975998.html
SOURCE Navistar International Corporation