LISLE, Ill., June 4, 2020 /PRNewswire/ -- Navistar
International Corporation (NYSE: NAV) today announced a second
quarter 2020 net loss of $38 million,
or $0.38 per diluted share, compared
to second quarter 2019 net loss of $48
million, or $0.48 per diluted
share.
Revenues in the quarter were $1.9 billion, down 36 percent
from second quarter 2019. The decrease was primarily driven by the
impact of COVID-19, resulting in lower volumes in the company's
Core (Class 6-8 trucks and buses in the
United States and Canada)
market, with chargeouts being down nearly 40 percent compared to
the same period one year ago.
Second quarter 2020 EBITDA was $61 million, compared
to $55 million in second quarter
2019. Adjusted EBITDA in second quarter 2020 was $88 million versus $224
million a year ago.
Adjusted net income for the quarter was a loss of $10 million compared to income of $105 million in the second quarter last year.
Navistar finished second quarter 2020 with $1.5 billion in consolidated cash, cash
equivalents and marketable securities, including $1.5 billion in manufacturing cash, cash
equivalents and marketable securities.
"Like a number of businesses, our company has been impacted by
the COVID-19 pandemic and that is reflected in our results," said
Troy A. Clarke, Navistar chairman,
president and chief executive officer. "Our team has done a
tremendous job managing the business throughout this challenging
time, and we have taken a number of steps to position the company
to weather this crisis."
During the quarter, the company took several actions to position
itself in response to the global pandemic. In April, the company
announced a series of actions to conserve over $300 million of cash for the year, without
jeopardizing its strategic plans. The actions include savings from
provisions of the CARES Act, postponing capital expenditures and
spending, and deferring the base salary of U.S. based exempt,
non-represented employees. Also in April, the company completed the
issuance of $600 million senior
secured notes.
"We are focused on preserving cash and reducing cost, but not at
the risk of sacrificing our future," said Walter Borst, Navistar chief financial officer.
"We remain steadfast in pursuing Navistar 4.0, and while some
programs and expenditures have been delayed, they have not been
cancelled. It's important that we continue to invest in our
company, even in these difficult times, to ensure our long-term
success."
Additionally, the company and its facilities have largely
remained in operation throughout the quarter. Its production
facilities have experienced limited disruptions that can be
measured in weeks as opposed to months due mostly to supplier work
stoppages. Its parts distribution centers have remained open
throughout the quarter with only minor changes to hours of
operation. The company's dealer network has also continued to
operate. In maintaining operation, the company has strictly
followed CDC recommendations to prevent the spread of COVID-19,
taking extensive measures to ensure the health and safety of its
employees and their communities.
"As an essential business, we took early actions to protect our
people so that we could fulfill our duty to keep our assembly
plants running and parts distribution centers in operation to serve
our customers and dealers who are keeping the economy moving by
delivering essential goods and services to our communities," said
Persio Lisboa, chief operating
officer. "Throughout the quarter, we have worked closely with our
suppliers to overcome significant disruptions to the flow of parts
to our facilities and have been moderately successful in
maintaining operations."
The company also took several actions to support its customers
and trucking professionals. Working with its partners, the company
provided meals, coupons and personal protective equipment such as
masks and hand sanitizer to trucking professionals in need. For its
customers, the company launched International Cares, which offered
no payments for six months, free access to International 360 and
worry-free vehicle service coverage.
"There are several theories as to the shape of economic
recovery, but we have plans in place to respond accordingly," said
Clarke. "Recovery will likely be gradual as businesses reassess
operating plans to return to a 'new normal,' but this 'new normal'
will still require trucks. The actions we've taken over the past
few months have us in position to succeed, no mater the shape of
recovery."
SEGMENT REVIEW
Summary of
Financial Results:
|
|
|
(Unaudited)
|
|
Three Months
Ended
April 30,
|
|
Six Months
Ended
April 30,
|
(in millions,
except per share data)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Sales and revenues,
net
|
$
|
1,925
|
|
|
$
|
2,996
|
|
|
$
|
3,763
|
|
|
$
|
5,429
|
|
Segment
Results:
|
|
|
|
|
|
|
|
Truck
|
$
|
(51)
|
|
|
$
|
(74)
|
|
|
$
|
(109)
|
|
|
$
|
16
|
|
Parts
|
103
|
|
|
144
|
|
|
222
|
|
|
288
|
|
Global
Operations
|
(13)
|
|
|
3
|
|
|
(13)
|
|
|
9
|
|
Financial
Services
|
24
|
|
|
32
|
|
|
41
|
|
|
63
|
|
Loss from continuing
operations, net of tax(A)
|
$
|
(38)
|
|
|
$
|
(48)
|
|
|
$
|
(74)
|
|
|
$
|
(37)
|
|
Net
loss(A)
|
(38)
|
|
|
(48)
|
|
|
(74)
|
|
|
(37)
|
|
Diluted loss per
share(A)
|
(0.38)
|
|
|
(0.48)
|
|
|
(0.74)
|
|
|
(0.37)
|
|
|
|
|
|
|
|
|
|
(A)
|
Amounts attributable
to Navistar International Corporation.
|
Truck Segment – In second quarter 2020, the Truck
segment net sales were $1.4 billion,
a decrease of $907 million compared
to second quarter last year. The year-over-year decrease is
primarily due to lower volumes in the company's Core markets
attributable in part to the COVID-19 pandemic, lower Mexico volumes and a decrease in GM-branded
units.
The Truck segment incurred a net loss of $51 million in second quarter 2020 compared to a
loss of $74 million in second quarter
2019. The year-over-year improvement was due to a non-recurring EGR
settlement charge of $159 million
recorded in the second quarter of 2019, offset by the impact of
lower volumes in the company's Core markets attributable in part to
the COVID-19 pandemic, higher used truck losses and lower
Mexico volumes in the second
quarter 2020.
Parts Segment – For second quarter 2020, the Parts
segment net sales were $443 million,
a 23 percent decrease from second quarter 2019. The decrease is
primarily due to lower North
America volumes due to the impact of COVID-19 and a decrease
in Blue Diamond Parts (BDP) sales.
The Parts segments saw a second quarter profit of $103 million, a 28 percent decrease from second
quarter 2019. The decrease is primarily due to the impact of lower
North America volumes related to
COVID-19 and lower BDP sales, partially offset by lower
intercompany access fees.
Global Operations Segment – In second quarter 2020,
the Global Operations segment net sales decreased $36 million to $51
million. The decrease was primarily driven by a 21 percent
year-over-year depreciation of the Brazilian real against the U.S.
dollar and lower volumes in our South
America operations due to temporary production stoppages
related to the COVID-19 pandemic.
The Global Operation segment recorded a loss of $13 million in the second quarter. The higher
loss was primarily driven by the recognition of asset impairment
charges of $12 million. Excluding
this one-time item, results would have been near breakeven.
Financial Services Segment – In second quarter 2020,
the Financial Services segment net revenues decreased to
$64 million, a $14 million decrease from second quarter 2019.
The decrease was primarily driven by lower average finance
receivables and a reduction in finance fees.
The Financial Services segment recorded a profit of $24 million in the quarter, an $8 million decrease from second quarter 2019. The
decrease was primarily driven by lower revenues, partially offset
by the results of an improved funding strategy.
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
April 30,
|
|
Six Months
Ended
April 30,
|
(in millions,
except per share data)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Sales and
revenues
|
|
|
|
|
|
|
|
Sales of manufactured
products, net
|
$
|
1,877
|
|
|
$
|
2,948
|
|
|
$
|
3,671
|
|
|
$
|
5,334
|
|
Finance
revenues
|
48
|
|
|
48
|
|
|
92
|
|
|
95
|
|
Sales and revenues,
net
|
1,925
|
|
|
2,996
|
|
|
3,763
|
|
|
5,429
|
|
Costs and
expenses
|
|
|
|
|
|
|
|
Costs of products
sold
|
1,624
|
|
|
2,493
|
|
|
3,153
|
|
|
4,472
|
|
Restructuring
charges
|
—
|
|
|
1
|
|
|
1
|
|
|
1
|
|
Asset impairment
charges
|
13
|
|
|
1
|
|
|
13
|
|
|
3
|
|
Selling, general and
administrative expenses
|
170
|
|
|
373
|
|
|
352
|
|
|
559
|
|
Engineering and
product development costs
|
78
|
|
|
75
|
|
|
164
|
|
|
161
|
|
Interest
expense
|
63
|
|
|
82
|
|
|
128
|
|
|
167
|
|
Other expense,
net
|
2
|
|
|
18
|
|
|
13
|
|
|
115
|
|
Total costs and
expenses
|
1,950
|
|
|
3,043
|
|
|
3,824
|
|
|
5,478
|
|
Equity in income
(loss) of non-consolidated affiliates
|
(1)
|
|
|
3
|
|
|
(2)
|
|
|
3
|
|
Loss before income
taxes
|
(26)
|
|
|
(44)
|
|
|
(63)
|
|
|
(46)
|
|
Income tax benefit
(expense)
|
(7)
|
|
|
1
|
|
|
(2)
|
|
|
20
|
|
Net loss
|
(33)
|
|
|
(43)
|
|
|
(65)
|
|
|
(26)
|
|
Less: Net income
attributable to non-controlling interests
|
5
|
|
|
5
|
|
|
9
|
|
|
11
|
|
Net loss
attributable to Navistar International Corporation
|
$
|
(38)
|
|
|
$
|
(48)
|
|
|
$
|
(74)
|
|
|
$
|
(37)
|
|
|
|
|
|
|
|
|
|
Net loss per share
attributable to Navistar International Corporate
|
|
|
|
|
|
|
|
Basic:
|
$
|
(0.38)
|
|
|
$
|
(0.48)
|
|
|
$
|
(0.74)
|
|
|
$
|
(0.37)
|
|
Diluted:
|
(0.38)
|
|
|
(0.48)
|
|
|
(0.74)
|
|
|
(0.37)
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
99.7
|
|
|
99.2
|
|
|
99.6
|
|
|
99.2
|
|
Diluted
|
99.7
|
|
|
99.2
|
|
|
99.6
|
|
|
99.2
|
|
Navistar
International Corporation and Subsidiaries
|
Consolidated
Balance Sheets
|
|
|
April
30,
|
|
October
31,
|
(in millions,
except per share data)
|
2020
|
|
2019
|
ASSETS
|
(Unaudited)
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
|
1,547
|
|
|
$
|
1,370
|
|
Restricted cash and
cash equivalents
|
60
|
|
|
133
|
|
Trade and other
receivables, net
|
225
|
|
|
338
|
|
Finance receivables,
net
|
1,416
|
|
|
1,923
|
|
Inventories,
net
|
1,012
|
|
|
911
|
|
Other current
assets
|
265
|
|
|
277
|
|
Total current
assets
|
4,525
|
|
|
4,952
|
|
Restricted
cash
|
71
|
|
|
54
|
|
Trade and other
receivables, net
|
8
|
|
|
10
|
|
Finance receivables,
net
|
204
|
|
|
274
|
|
Investments in
non-consolidated affiliates
|
28
|
|
|
31
|
|
Property and
equipment (net of accumulated depreciation and amortization of
$2,333 and $2,488, respectively)
|
1,207
|
|
|
1,309
|
|
Operating lease right
of use assets
|
121
|
|
|
—
|
|
Goodwill
|
38
|
|
|
38
|
|
Intangible assets
(net of accumulated amortization of $138 and $142,
respectively)
|
19
|
|
|
25
|
|
Deferred taxes,
net
|
117
|
|
|
117
|
|
Other noncurrent
assets
|
102
|
|
|
107
|
|
Total
assets
|
$
|
6,440
|
|
|
$
|
6,917
|
|
LIABILITIES and
STOCKHOLDERS' DEFICIT
|
|
|
|
Liabilities
|
|
|
|
Current
liabilities
|
|
|
|
Notes payable and
current maturities of long-term debt
|
$
|
570
|
|
|
$
|
871
|
|
Accounts
payable
|
1,038
|
|
|
1,341
|
|
Other current
liabilities
|
1,075
|
|
|
1,363
|
|
Total current
liabilities
|
2,683
|
|
|
3,575
|
|
Long-term
debt
|
4,859
|
|
|
4,317
|
|
Postretirement
benefits liabilities
|
2,032
|
|
|
2,103
|
|
Other noncurrent
liabilities
|
722
|
|
|
645
|
|
Total
liabilities
|
10,296
|
|
|
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
|
2,725
|
|
|
2,730
|
|
Accumulated
deficit
|
(4,296)
|
|
|
(4,409)
|
|
Accumulated other
comprehensive loss
|
(2,163)
|
|
|
(1,912)
|
|
Common stock held in
treasury, at cost (3.6 and 3.9 shares, respectively)
|
(136)
|
|
|
(147)
|
|
Total stockholders'
deficit attributable to Navistar International
Corporation
|
(3,858)
|
|
|
(3,726)
|
|
Stockholders' equity
attributable to non-controlling interests
|
2
|
|
|
3
|
|
Total
stockholders' deficit
|
(3,856)
|
|
|
(3,723)
|
|
Total liabilities
and stockholders' deficit
|
$
|
6,440
|
|
|
$
|
6,917
|
|
Navistar
International Corporation and Subsidiaries
|
Condensed
Consolidated Statements of Cash Flows
|
(Unaudited)
|
|
|
Six Months Ended
April 30,
|
(in
millions)
|
2020
|
|
2019
|
Cash flows from
operating activities
|
|
|
|
Net loss
|
$
|
(65)
|
|
|
$
|
(26)
|
|
Adjustments to
reconcile net loss to net cash used in operating
activities:
|
|
|
|
Depreciation and
amortization
|
70
|
|
|
66
|
|
Depreciation of
equipment leased to others
|
29
|
|
|
31
|
|
Deferred taxes,
including change in valuation allowance
|
(9)
|
|
|
(41)
|
|
Asset impairment
charges
|
13
|
|
|
3
|
|
Gain on sales of
investments and businesses, net
|
—
|
|
|
(59)
|
|
Amortization of debt
issuance costs and discount
|
7
|
|
|
12
|
|
Stock-based
compensation
|
13
|
|
|
14
|
|
Provision for
doubtful accounts
|
9
|
|
|
6
|
|
Equity in income of
non-consolidated affiliates, net of dividends
|
2
|
|
|
(2)
|
|
Other non-cash
operating activities
|
(5)
|
|
|
(4)
|
|
Changes in other
assets and liabilities, exclusive of the effects of businesses
disposed
|
(182)
|
|
|
(190)
|
|
Net cash used in
operating activities
|
(118)
|
|
|
(190)
|
|
Cash flows from
investing activities
|
|
|
|
Maturities of
marketable securities
|
—
|
|
|
79
|
|
Capital
expenditures
|
(90)
|
|
|
(66)
|
|
Purchases of
equipment leased to others
|
(16)
|
|
|
(76)
|
|
Proceeds from sales
of property and equipment
|
7
|
|
|
5
|
|
Proceeds from sales
of investments and businesses
|
10
|
|
|
95
|
|
Net cash provided
by (used in) investing activities
|
(89)
|
|
|
37
|
|
Cash flows from
financing activities
|
|
|
|
Proceeds from
issuance of securitized debt
|
16
|
|
|
—
|
|
Principal payments on
securitized debt
|
(30)
|
|
|
(34)
|
|
Net change in secured
revolving credit facilities
|
(167)
|
|
|
275
|
|
Proceeds from
issuance of non-securitized debt
|
620
|
|
|
73
|
|
Principal payments on
non-securitized debt
|
(107)
|
|
|
(508)
|
|
Net change in notes
and debt outstanding under revolving credit facilities
|
24
|
|
|
126
|
|
Debt issuance
costs
|
(10)
|
|
|
(2)
|
|
Proceeds from
financed lease obligations
|
—
|
|
|
9
|
|
Proceeds from
exercise of stock options
|
3
|
|
|
2
|
|
Dividends paid by
subsidiaries to non-controlling interest
|
(10)
|
|
|
(13)
|
|
Other financing
activities
|
(2)
|
|
|
(2)
|
|
Net cash provided
by (used in) financing activities
|
337
|
|
|
(74)
|
|
Effect of exchange
rate changes on cash, cash equivalents and restricted
cash
|
(9)
|
|
|
(10)
|
|
Increase
(decrease) in cash, cash equivalents and restricted
cash
|
121
|
|
|
(237)
|
|
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
|
$
|
1,678
|
|
|
$
|
1,208
|
|
Navistar International Corporation and
Subsidiaries
Segment
Reporting
(Unaudited)
We define segment profit (loss) as net income (loss)
attributable to Navistar International Corporation, excluding
income tax expense. The following tables present selected financial
information for our reporting segments:
(in
millions)
|
Truck
|
|
Parts
|
|
Global
Operations
|
|
Financial
Services(A)
|
|
Corporate
and
Eliminations
|
|
Total
|
Three Months Ended
April 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
External sales and
revenues, net
|
$
|
1,385
|
|
|
$
|
442
|
|
|
$
|
47
|
|
|
$
|
50
|
|
|
$
|
1
|
|
|
$
|
1,925
|
|
Intersegment sales
and revenues
|
4
|
|
|
1
|
|
|
4
|
|
|
14
|
|
|
(23)
|
|
|
—
|
|
Total sales and
revenues, net
|
$
|
1,389
|
|
|
$
|
443
|
|
|
$
|
51
|
|
|
$
|
64
|
|
|
$
|
(22)
|
|
|
$
|
1,925
|
|
Net income (loss)
attributable to NIC
|
$
|
(51)
|
|
|
$
|
103
|
|
|
$
|
(13)
|
|
|
$
|
24
|
|
|
$
|
(101)
|
|
|
$
|
(38)
|
|
Income tax
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7)
|
|
|
(7)
|
|
Segment profit
(loss)
|
$
|
(51)
|
|
|
$
|
103
|
|
|
$
|
(13)
|
|
|
$
|
24
|
|
|
$
|
(94)
|
|
|
$
|
(31)
|
|
Depreciation and
amortization
|
$
|
29
|
|
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
15
|
|
|
$
|
1
|
|
|
$
|
49
|
|
Interest
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
20
|
|
|
43
|
|
|
63
|
|
Equity in income
(loss) of non-consolidated affiliates
|
(2)
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1)
|
|
Capital
expenditures(B)
|
28
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
2
|
|
|
31
|
|
|
(in
millions)
|
Truck
|
|
Parts
|
|
Global
Operations
|
|
Financial
Services(A)
|
|
Corporate
and
Eliminations
|
|
Total
|
Three Months Ended
April 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
External sales and
revenues, net
|
$
|
2,287
|
|
|
$
|
578
|
|
|
$
|
80
|
|
|
$
|
48
|
|
|
$
|
3
|
|
|
$
|
2,996
|
|
Intersegment sales
and revenues
|
9
|
|
|
1
|
|
|
7
|
|
|
30
|
|
|
(47)
|
|
|
—
|
|
Total sales and
revenues, net
|
$
|
2,296
|
|
|
$
|
579
|
|
|
$
|
87
|
|
|
$
|
78
|
|
|
$
|
(44)
|
|
|
$
|
2,996
|
|
Net income (loss)
attributable NIC
|
$
|
(74)
|
|
|
$
|
144
|
|
|
$
|
3
|
|
|
$
|
32
|
|
|
$
|
(153)
|
|
|
$
|
(48)
|
|
Income tax
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
Segment profit
(loss)
|
$
|
(74)
|
|
|
$
|
144
|
|
|
$
|
3
|
|
|
$
|
32
|
|
|
$
|
(154)
|
|
|
$
|
(49)
|
|
Depreciation and
amortization
|
$
|
26
|
|
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
16
|
|
|
$
|
3
|
|
|
$
|
49
|
|
Interest
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
27
|
|
|
55
|
|
|
82
|
|
Equity in income
(loss) of non-consolidated affiliates
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
3
|
|
Capital
expenditures(B)
|
21
|
|
|
(1)
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
22
|
|
|
(in
millions)
|
Truck
|
|
Parts
|
|
Global
Operations
|
|
Financial
Services(A)
|
|
Corporate
and
Eliminations
|
|
Total
|
Six Months Ended
April 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
External sales and
revenues, net
|
$
|
2,623
|
|
|
$
|
934
|
|
|
$
|
108
|
|
|
$
|
96
|
|
|
$
|
2
|
|
|
$
|
3,763
|
|
Intersegment sales
and revenues
|
8
|
|
|
2
|
|
|
11
|
|
|
25
|
|
|
(46)
|
|
|
—
|
|
Total sales and
revenues, net
|
$
|
2,631
|
|
|
$
|
936
|
|
|
$
|
119
|
|
|
$
|
121
|
|
|
$
|
(44)
|
|
|
$
|
3,763
|
|
Net income (loss)
attributable to NIC
|
$
|
(109)
|
|
|
$
|
222
|
|
|
$
|
(13)
|
|
|
$
|
41
|
|
|
$
|
(215)
|
|
|
$
|
(74)
|
|
Income tax
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2)
|
|
|
(2)
|
|
Segment profit
(loss)
|
$
|
(109)
|
|
|
$
|
222
|
|
|
$
|
(13)
|
|
|
$
|
41
|
|
|
$
|
(213)
|
|
|
$
|
(72)
|
|
Depreciation and
amortization
|
$
|
56
|
|
|
$
|
4
|
|
|
$
|
4
|
|
|
$
|
32
|
|
|
$
|
3
|
|
|
$
|
99
|
|
Interest
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
39
|
|
|
89
|
|
|
128
|
|
Equity in income
(loss) of non-consolidated affiliates
|
(3)
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2)
|
|
Capital
expenditures(B)
|
75
|
|
|
5
|
|
|
2
|
|
|
—
|
|
|
8
|
|
|
90
|
|
|
(in
millions)
|
Truck
|
|
Parts
|
|
Global
Operations
|
|
Financial
Services(A)
|
|
Corporate
and
Eliminations
|
|
Total
|
Six Months Ended
April 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
External sales and
revenues, net
|
$
|
4,063
|
|
|
$
|
1,124
|
|
|
$
|
141
|
|
|
$
|
95
|
|
|
$
|
6
|
|
|
$
|
5,429
|
|
Intersegment sales
and revenues
|
30
|
|
|
3
|
|
|
19
|
|
|
57
|
|
|
(109)
|
|
|
—
|
|
Total sales and
revenues, net
|
$
|
4,093
|
|
|
$
|
1,127
|
|
|
$
|
160
|
|
|
$
|
152
|
|
|
$
|
(103)
|
|
|
$
|
5,429
|
|
Income (loss) from
continuing operations attributable to NIC, net of tax
|
$
|
16
|
|
|
$
|
288
|
|
|
$
|
9
|
|
|
$
|
63
|
|
|
$
|
(413)
|
|
|
$
|
(37)
|
|
Income tax
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20
|
|
|
20
|
|
Segment profit
(loss)
|
$
|
16
|
|
|
$
|
288
|
|
|
$
|
9
|
|
|
$
|
63
|
|
|
$
|
(433)
|
|
|
$
|
(57)
|
|
Depreciation and
amortization
|
$
|
52
|
|
|
$
|
3
|
|
|
$
|
4
|
|
|
$
|
32
|
|
|
$
|
6
|
|
|
$
|
97
|
|
Interest
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
56
|
|
|
111
|
|
|
167
|
|
Equity in income of
non-consolidated affiliates
|
3
|
|
|
1
|
|
|
(1)
|
|
|
—
|
|
|
—
|
|
|
3
|
|
Capital
expenditures(B)
|
52
|
|
|
1
|
|
|
1
|
|
|
2
|
|
|
10
|
|
|
66
|
|
|
|
|
|
|
|
|
(A)
|
Total sales and
revenues in the Financial Services segment include interest
revenues of $40 million and $75 million for the three and six
months ended April 30, 2020, respectively, and $55 million and $108
million for the three and six months ended April 30, 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:
|
|
|
|
|
|
|
|
|
|
|
|
April 30,
2020
|
$
|
1,840
|
|
|
$
|
648
|
|
|
$
|
186
|
|
|
$
|
2,081
|
|
|
$
|
1,685
|
|
|
$
|
6,440
|
|
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, 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
April 30,
|
|
Six Months
Ended
April 30,
|
(in
millions)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net loss attributable
to NIC
|
$
|
(38)
|
|
|
$
|
(48)
|
|
|
$
|
(74)
|
|
|
$
|
(37)
|
|
Plus:
|
|
|
|
|
|
|
|
Depreciation and
amortization expense
|
49
|
|
|
49
|
|
|
99
|
|
|
97
|
|
Manufacturing
interest expense(A)
|
43
|
|
|
55
|
|
|
89
|
|
|
111
|
|
Less:
|
|
|
|
|
|
|
|
Income tax (expense)
benefit
|
(7)
|
|
|
1
|
|
|
(2)
|
|
|
20
|
|
EBITDA
|
$
|
61
|
|
|
$
|
55
|
|
|
$
|
116
|
|
|
$
|
151
|
|
|
|
|
|
|
|
|
|
(A)
|
Manufacturing
interest expense is the net interest expense primarily generated
for borrowings that support the manufacturing and corporate
operations, adjusted to eliminate intercompany interest expense
with our Financial Services segment. The following table reconciles
Manufacturing interest expense to the consolidated interest
expense:
|
|
Three Months
Ended
April 30,
|
|
Six Months
Ended
April 30,
|
(in
millions)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Interest
expense
|
$
|
63
|
|
|
$
|
82
|
|
|
$
|
128
|
|
|
$
|
167
|
|
Less: Financial
services interest expense
|
20
|
|
|
27
|
|
|
39
|
|
|
56
|
|
Manufacturing
interest expense
|
$
|
43
|
|
|
$
|
55
|
|
|
$
|
89
|
|
|
$
|
111
|
|
Adjusted EBITDA
Reconciliation:
|
|
|
Three Months
Ended
April 30,
|
|
Six Months
Ended
April 30,
|
(in
millions)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
EBITDA
(reconciled above)
|
$
|
61
|
|
|
$
|
55
|
|
|
$
|
116
|
|
|
$
|
151
|
|
Adjusted for
significant items of:
|
|
|
|
|
|
|
|
Adjustments to
pre-existing warranties(A)
|
13
|
|
|
9
|
|
|
17
|
|
|
2
|
|
Asset impairment
charges(B)
|
13
|
|
|
1
|
|
|
13
|
|
|
3
|
|
Restructuring of
manufacturing operations(C)
|
—
|
|
|
1
|
|
|
1
|
|
|
1
|
|
MaxxForce Advanced
EGR engine lawsuits(D)
|
1
|
|
|
159
|
|
|
1
|
|
|
159
|
|
Gain on
sales(E)
|
—
|
|
|
—
|
|
|
—
|
|
|
(59)
|
|
Pension
settlement(F)
|
—
|
|
|
—
|
|
|
—
|
|
|
142
|
|
Settlement
gain(G)
|
—
|
|
|
(1)
|
|
|
(1)
|
|
|
(2)
|
|
Total
adjustments
|
27
|
|
|
169
|
|
|
31
|
|
|
246
|
|
Adjusted
EBITDA
|
$
|
88
|
|
|
$
|
224
|
|
|
$
|
147
|
|
|
$
|
397
|
|
Adjusted Net
Income (Loss) attributable to NIC:
|
|
|
Three Months
Ended
April 30,
|
|
Six Months
Ended
April 30,
|
(in
millions)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net loss
attributable to NIC
|
$
|
(38)
|
|
|
$
|
(48)
|
|
|
$
|
(74)
|
|
|
$
|
(37)
|
|
Adjusted for
significant items of:
|
|
|
|
|
|
|
|
Adjustments to
pre-existing warranties(A)
|
13
|
|
|
9
|
|
|
17
|
|
|
2
|
|
Asset impairment
charges(B)
|
13
|
|
|
1
|
|
|
13
|
|
|
3
|
|
Restructuring of
manufacturing operations(C)
|
—
|
|
|
1
|
|
|
1
|
|
|
1
|
|
MaxxForce Advanced
EGR engine lawsuits(D)
|
1
|
|
|
159
|
|
|
1
|
|
|
159
|
|
Gain on
sales(E)
|
—
|
|
|
—
|
|
|
—
|
|
|
(59)
|
|
Pension
settlement(F)
|
—
|
|
|
—
|
|
|
—
|
|
|
142
|
|
Settlement
gain(G)
|
—
|
|
|
(1)
|
|
|
(1)
|
|
|
(2)
|
|
Total
adjustments
|
27
|
|
|
169
|
|
|
31
|
|
|
246
|
|
Tax effect
(H)
|
1
|
|
|
(16)
|
|
|
—
|
|
|
(47)
|
|
Adjusted net
income (loss) attributable to NIC
|
$
|
(10)
|
|
|
$
|
105
|
|
|
$
|
(43)
|
|
|
$
|
162
|
|
|
|
|
|
|
|
|
|
(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 second quarter
and first half 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 second quarter of 2020, we
recorded $1 million of asset impairment charges related to certain
assets under operating leases in our Truck segment. In the second
quarter and first half of 2019 we recorded $1 million and $3
million, respectively, of asset impairment charges related to
certain assets under operating leases in our Truck
segment.
|
(C)
|
In the first half of
2020, we recorded a restructuring charge of $1 million in our Truck
segment. In the second quarter and first half of 2019 we recorded a
restructuring charge of $1 million in our Truck segment.
|
(D)
|
In the second quarter
and first half of 2020 and 2019, we recorded charges of $1 million
and $159 million, respectively, related to the MaxxForce Advanced
EGR engine class action settlement and related litigation in our
Truck Segment.
|
(E)
|
In the first half 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, 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 first half 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.
|
(G)
|
In the second 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 in Corporate. In the first
half of 2020 and 2019, we recorded interest income of $1 million
and $2 million, respectively, 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.
|
(H)
|
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 April 30,
2020
|
(in
millions)
|
Manufacturing
Operations
|
|
Financial
Services
Operations
|
|
Consolidated
Balance Sheet
|
Total cash, cash
equivalents, and marketable securities
|
$
|
1,497
|
|
|
$
|
50
|
|
|
$
|
1,547
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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SOURCE Navistar International Corporation