LISLE, Ill., Dec. 17, 2020 /PRNewswire/ -- Navistar
International Corporation (NYSE: NAV) today announced a fourth
quarter 2020 net loss of $236
million, or $2.36 per diluted
share, compared to fourth quarter 2019 net income of $102 million, or $1.02 per diluted share. Navistar reported a net
loss of $347 million, or $3.48 per diluted share for fiscal year 2020,
versus net income of $221 million, or
$2.22 per diluted share, for fiscal
year 2019.
Revenues in the quarter were $2.1 billion versus
$2.8 billion a year ago. Fourth
quarter 2020 Core (Class 6-8 trucks and buses in the United States and Canada) charge outs were 13,200 versus 20,200
in fourth quarter 2019. Revenue for fiscal year 2020 was
$7.5 billion versus $11.25 billion in 2019. Fiscal 2020 Core charge
outs were 50,400 versus 87,200 in fiscal 2019. The decrease in
revenue and charge outs was primarily driven by the impact of
COVID-19 on the trucking industry.
Fourth quarter 2020 results were impacted by $297 million of tax-affected significant items.
Included in this amount is a $289
million accrual related to a profit sharing dispute, a
$58 million settlement with the
Department of Justice related to Navistar Defense and a
$14 million charge related to
pre-existing warranties.
Adjusted net income for the fourth quarter was $61 million versus $114
million in the fourth quarter of last year. Adjusted net
income for fiscal year 2020 was $10
million versus $423 million in
2019.
Fourth quarter 2020 adjusted EBITDA was $169 million versus $219
million one year ago. Fiscal year 2020 adjusted EBITDA was
$420 million versus $882 million in 2019.
Navistar finished fourth quarter 2020 with $1.8 billion in consolidated cash and cash
equivalents.
"While our results were affected by the pandemic and the impact
of certain legal matters, we have experienced consistent sequential
improvement in our business since April, which reflects broader
improvement in the economy and trucking industry as well as our
business performance from the implementation of our Navistar 4.0
strategy," said Persio Lisboa, chief
executive officer. "I believe that the actions and investments we
have made in the business during 2020 position us to emerge from
the pandemic a much stronger company."
The company continued to make progress on Navistar 4.0, its
multi-year strategic plan. Navistar 4.0 is focused on achieving
sustained success through putting the customer at the core of the
company's decision-making process, while increasing the company's
EBITDA margins by four percentage points by 2025. The company
launched a new version of its International HX Series severe
service truck, the first new product developed under Project
Compass. Navistar also continued to make progress on emerging
technologies, announcing that it will deliver a full
electrification solution, including charging, route planning and
infrastructure, to a school bus customer in British Columbia. The company also conducted a
successful West Coast tour of its electric school bus.
In connectivity, Navistar launched Intelligent Fleet Care, the
industry's most comprehensive standard suite of connected vehicle
solutions, which is standard for Navistar's new on-highway
vehicles. In addition to its Gateway Integrations partnerships now
in place with seven leading telematics providers that enable
customers to avoid hardware installation costs by using Navistar's
own factory-installed device, Intelligent Fleet Care adds
additional solutions driven by vehicle performance and telematics
data.
Navistar continues to make progress on capital investments that
will help transform the company's manufacturing and supply
footprint, including the Huntsville,
Ala., plant, where the company will produce its next
generation of big-bore powertrains, and its new manufacturing
facility in San Antonio,
Texas.
The most significant announcement during the fourth quarter was
Navistar's planned merger with TRATON SE. The merger will
accelerate Navistar's growth, providing it with access to new
technologies, products and services while taking advantage of
TRATON's global scale.
"Despite the challenges of 2020, the company pressed ahead with
new steps that position Navistar well for the future, including
sustained investments in our business and products and important
strategic partnerships in emerging technologies," said Lisboa.
"Looking forward, our exciting opportunity with TRATON will build
further on this foundation, accelerating our progress and
delivering long-term, sustainable benefits for our
stakeholders."
|
SEGMENT
REVIEW
|
|
|
|
|
Summary of
Financial Results:
|
|
|
|
Quarters Ended
October 31,
|
|
Years Ended
October
31,
|
|
(in millions,
except per share data)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Sales and revenues,
net...........................................................................................................................................
|
$
|
2,065
|
|
|
$
|
2,780
|
|
|
$
|
7,503
|
|
|
$
|
11,251
|
|
|
Segment
Results:...................................................................................................................................................
|
|
|
|
|
|
|
|
|
Truck..................................................................................................................................................................
|
$
|
(10)
|
|
|
$
|
86
|
|
|
$
|
(141)
|
|
|
$
|
269
|
|
|
Parts..................................................................................................................................................................
|
129
|
|
|
161
|
|
|
448
|
|
|
598
|
|
|
Global
Operations..............................................................................................................................................
|
12
|
|
|
(10)
|
|
|
—
|
—
|
|
—
|
|
|
Financial
Services..............................................................................................................................................
|
14
|
|
|
30
|
|
|
65
|
|
|
123
|
|
|
Income (loss) from
continuing operations, net of
tax(A)............................................................................................
|
$
|
(236)
|
|
|
$
|
102
|
|
|
$
|
(347)
|
|
|
$
|
221
|
|
|
Net income
(loss)(A)..................................................................................................................................................
|
(236)
|
|
|
102
|
|
|
(347)
|
|
|
221
|
|
|
Diluted earnings
(loss) per
share(A)...........................................................................................................................
|
(2.36)
|
|
|
1.02
|
|
|
(3.48)
|
|
|
2.22
|
|
________________
|
(A)
|
Amounts attributable
to Navistar International Corporation.
|
Truck Segment – In fourth quarter 2020, the Truck
segment net sales were $1.5 billion,
a 30 percent decrease compared to fourth quarter last year. In
fiscal year 2020, the Truck segment net sales decreased by
$3.3 billion, or 38 percent, to
$5.3 billion. The decrease was
primarily due to lower volumes in Core markets due to the
pandemic.
The Truck segment incurred a net loss of $10 million in fourth quarter 2020, compared to a
profit of $86 million in fourth
quarter 2019. For fiscal year 2020, the Truck segment incurred a
net loss of $141 million, compared to
profit of $269 million in full-year
2019. The decrease was a result of lower revenues and reflects the
impact of legal settlements and the sale of Navistar Defense in
2019.
Parts Segment – For fourth quarter 2020, the Parts
segment net sales were $496 million,
a nine percent decrease from fourth quarter 2019. In fiscal year
2020, the Parts segment net sales decreased by $399 million, or 18 percent, to $1.85 billion. The decrease was primarily due to
lower volumes in the U.S. and Canada due to the pandemic.
The Parts segments saw a fourth quarter profit of $129 million, compared to $161 million in fourth quarter 2019. In fiscal
year 2020, the Parts segment profit decreased by $150 million, or 25 percent, to $448 million. The decrease was due to the impact
of lower revenues.
Global Operations Segment – In fourth quarter 2020,
the Global Operations segment net sales decreased six percent
versus fourth quarter 2019 to $87
million. In fiscal year 2020, the Global Operations segment
net sales decreased by $90 million,
or 26 percent, to $253 million. The
decrease was primarily driven by lower volumes in South American
operations triggered by temporary production stoppages related to
the pandemic as well as unfavorable foreign currency impact.
The Global Operation segment recorded a profit of $12 million in the fourth quarter of 2020 versus
a loss of $10 million in fourth
quarter 2019 that included a restructuring charge. In fiscal year
2020, the Global Operations segment recorded breakeven results
comparable to 2019.
Financial Services Segment – In fourth quarter 2020,
the Financial Services segment net revenues decreased to
$47 million, a 34 percent decrease
from fourth quarter 2019. In fiscal year 2020, Financial Services
segment net revenues were $217
million, a 27 percent decrease versus 2019. Revenues were
lower in 2020 due to lower average yields from lower interest rates
and lower average finance receivables on lower volumes.
The Financial Services segment recorded a profit of $14 million in the quarter, compared to
$30 million in fourth quarter 2019.
The Financial Services segment recorded a profit of $65 million in fiscal year 2020, a 47 percent
decrease from 2019. The decrease was due to lower revenues,
partially offset by lower interest expense resulting from lower
borrowing requirements and rates.
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 31,2020. 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
|
|
|
|
|
|
Quarters Ended
October 31,
|
|
Years Ended
October
31,
|
|
(in millions,
except per share data)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Sales and
revenues
|
|
|
|
|
|
|
|
|
Sales of manufactured
products,
net...........................................................................................................................
|
$
|
2,025
|
|
|
$
|
2,731
|
|
|
$
|
7,335
|
|
|
$
|
11,061
|
|
|
Finance
revenues........................................................................................................................................................
|
40
|
|
|
49
|
|
|
168
|
|
|
190
|
|
|
Sales and revenues,
net......................................................................................................................................
|
2,065
|
|
|
2,780
|
|
|
7,503
|
|
|
11,251
|
|
|
Costs and
expenses........................................................................................................................................................
|
|
|
|
|
|
|
|
|
Costs of products
sold.................................................................................................................................................
|
1,680
|
|
|
2,272
|
|
|
6,221
|
|
|
9,245
|
|
|
Restructuring
charges.................................................................................................................................................
|
(3)
|
|
|
11
|
|
|
2
|
|
|
12
|
|
|
Asset impairment
charges...........................................................................................................................................
|
3
|
|
|
1
|
|
|
28
|
|
|
7
|
|
|
Selling, general and
administrative
expenses.............................................................................................................
|
528
|
|
|
208
|
|
|
1,021
|
|
|
934
|
|
|
Engineering and
product development
costs..............................................................................................................
|
84
|
|
|
77
|
|
|
321
|
|
|
319
|
|
|
Interest
expense.........................................................................................................................................................
|
69
|
|
|
69
|
|
|
268
|
|
|
312
|
|
|
Other expense,
net.....................................................................................................................................................
|
5
|
|
|
24
|
|
|
32
|
|
|
164
|
|
|
Total costs and
expenses...................................................................................................................................
|
2,366
|
|
|
2,662
|
|
|
7,893
|
|
|
10,993
|
|
|
Equity in income of
non-consolidated
affiliates.................................................................................................................
|
2
|
|
|
—
|
|
|
2
|
|
|
4
|
|
|
Income (loss) before
income
taxes..................................................................................................................................
|
(299)
|
|
|
118
|
|
|
(388)
|
|
|
262
|
|
|
Income tax
expense.........................................................................................................................................................
|
69
|
|
|
(10)
|
|
|
59
|
|
|
(19)
|
|
|
Net income
(loss).............................................................................................................................................................
|
(230)
|
|
|
108
|
|
|
(329)
|
|
|
243
|
|
|
Less: Net income
attributable to non-controlling
interests...............................................................................................
|
6
|
|
|
6
|
|
|
18
|
|
|
22
|
|
|
Net income (loss)
attributable to Navistar International
Corporation.......................................................................
|
$
|
(236)
|
|
|
$
|
102
|
|
|
$
|
(347)
|
|
|
$
|
221
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
share attributable to Navistar International
Corporate...................................................................
|
|
|
|
|
|
|
|
|
Basic:.........................................................................................................................................................................
|
$
|
(2.36)
|
|
|
$
|
1.03
|
|
|
$
|
(3.48)
|
|
|
$
|
2.23
|
|
|
Diluted:.......................................................................................................................................................................
|
(2.36)
|
|
|
1.02
|
|
|
(3.48)
|
|
|
2.22
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares
outstanding:............................................................................................................................
|
|
|
|
|
|
|
|
|
Basic.....................................................................................................................................................................
|
99.8
|
|
|
99.4
|
|
|
99.7
|
|
|
99.3
|
|
|
Diluted...................................................................................................................................................................
|
99.8
|
|
|
99.6
|
|
|
99.7
|
|
|
99.5
|
|
|
Navistar
International Corporation and Subsidiaries
Consolidated
Balance Sheets
|
|
|
|
As of October
31,
|
|
(in millions,
except per share data)
|
2020
|
|
2019
|
|
ASSETS
|
|
|
|
|
Current
assets
|
|
|
|
|
Cash and cash
equivalents.................................................................................................................................................................................................
|
$
|
1,843
|
|
|
$
|
1,370
|
|
|
Restricted cash and
cash
equivalents.................................................................................................................................................................................
|
64
|
|
|
133
|
|
|
Trade and other
receivables,
net........................................................................................................................................................................................
|
273
|
|
|
338
|
|
|
Finance receivables,
net....................................................................................................................................................................................................
|
1,371
|
|
|
1,923
|
|
|
Inventories,
net..................................................................................................................................................................................................................
|
763
|
|
|
911
|
|
|
Other current
assets..........................................................................................................................................................................................................
|
263
|
|
|
277
|
|
|
Total current
assets....................................................................................................................................................................................................
|
4,577
|
|
|
4,952
|
|
|
Restricted
cash...........................................................................................................................................................................................................................
|
66
|
|
|
54
|
|
|
Trade and other
receivables,
net................................................................................................................................................................................................
|
7
|
|
|
10
|
|
|
Finance receivables,
net............................................................................................................................................................................................................
|
251
|
|
|
274
|
|
|
Investments in
non-consolidated
affiliates..................................................................................................................................................................................
|
31
|
|
|
31
|
|
|
Property and
equipment,
net......................................................................................................................................................................................................
|
1,298
|
|
|
1,309
|
|
|
Operating lease right
of use
assets............................................................................................................................................................................................
|
119
|
|
|
—
|
|
|
Goodwill......................................................................................................................................................................................................................................
|
38
|
|
|
38
|
|
|
Intangible assets,
net.................................................................................................................................................................................................................
|
18
|
|
|
25
|
|
|
Deferred taxes,
net....................................................................................................................................................................................................................
|
117
|
|
|
117
|
|
|
Other noncurrent
assets............................................................................................................................................................................................................
|
115
|
|
|
107
|
|
|
Total
assets..............................................................................................................................................................................................................
|
$
|
6,637
|
|
|
$
|
6,917
|
|
|
LIABILITIES and
STOCKHOLDERS' DEFICIT
|
|
|
|
|
Liabilities
|
|
|
|
|
Current
liabilities
|
|
|
|
|
Notes payable and
current maturities of long-term
debt.....................................................................................................................................................
|
$
|
640
|
|
|
$
|
871
|
|
|
Accounts
payable...............................................................................................................................................................................................................
|
1,278
|
|
|
1,341
|
|
|
Other current
liabilities........................................................................................................................................................................................................
|
1,453
|
|
|
1,363
|
|
|
Total current
liabilities.................................................................................................................................................................................................
|
3,371
|
|
|
3,575
|
|
|
Long-term
debt...........................................................................................................................................................................................................................
|
4,690
|
|
|
4,317
|
|
|
Postretirement
benefits
liabilities................................................................................................................................................................................................
|
1,705
|
|
|
2,103
|
|
|
Other noncurrent
liabilities..........................................................................................................................................................................................................
|
693
|
|
|
645
|
|
|
Total
liabilities................................................................................................................................................................................................................
|
10,459
|
|
|
10,640
|
|
|
Stockholders'
deficit
|
|
|
|
|
Series D
convertible junior preference
stock..............................................................................................................................................................................
|
2
|
|
|
2
|
|
|
Common stock, $0.10
par value per share (103.1 shares issued and 220 shares authorized
at
both
dates)..................................................................................................................................................................................................................................
|
10
|
|
|
10
|
|
|
Additional paid-in
capital.............................................................................................................................................................................................................
|
2,726
|
|
|
2,730
|
|
|
Accumulated
deficit.....................................................................................................................................................................................................................
|
(4,566)
|
|
|
(4,409)
|
|
|
Accumulated other
comprehensive
loss.....................................................................................................................................................................................
|
(1,865)
|
|
|
(1,912)
|
|
|
Common stock held in
treasury, at cost (3.5 and 3.9 shares,
respectively)................................................................................................................................
|
(133)
|
|
|
(147)
|
|
|
Total stockholders'
deficit attributable to Navistar International
Corporation......................................................................................................................
|
(3,826)
|
|
|
(3,726)
|
|
|
Stockholders' equity
attributable to non-controlling
interests......................................................................................................................................................
|
4
|
|
|
3
|
|
|
Total
stockholders'
deficit.............................................................................................................................................................................................
|
(3,822)
|
|
|
(3,723)
|
|
|
Total liabilities
and stockholders'
deficit................................................................................................................................................................
|
$
|
6,637
|
|
|
$
|
6,917
|
|
|
Navistar
International Corporation and Subsidiaries
Condensed
Consolidated Statements of Cash Flows
|
|
|
|
For the Years
Ended October 31,
|
|
|
|
(in
millions)
|
2020
|
|
2019
|
|
|
|
Cash flows from
operating activities
|
|
|
|
|
|
|
Net income
(loss)..............................................................................................................................................................................................................................
|
$
|
(329)
|
|
|
$
|
243
|
|
|
|
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
|
|
|
Depreciation and
amortization..................................................................................................................................................................................................
|
136
|
|
|
132
|
|
|
|
|
Depreciation of
equipment leased to
others.............................................................................................................................................................................
|
63
|
|
|
61
|
|
|
|
|
Deferred taxes,
including change in valuation
allowance.........................................................................................................................................................
|
(80)
|
|
|
(31)
|
|
|
|
|
Asset impairment
charges.........................................................................................................................................................................................................
|
28
|
|
|
7
|
|
|
|
|
Gain on sales of
investments and businesses,
net....................................................................................................................................................................
|
—
|
|
|
(56)
|
|
|
|
|
Amortization of debt
issuance costs and
discount....................................................................................................................................................................
|
14
|
|
|
19
|
|
|
|
|
Stock-based
compensation.......................................................................................................................................................................................................
|
25
|
|
|
23
|
|
|
|
|
Provision for
doubtful accounts, net of
recoveries....................................................................................................................................................................
|
16
|
|
|
4
|
|
|
|
|
Equity in income of
non-consolidated affiliates, net of
dividends..............................................................................................................................................
|
(2)
|
|
|
(2)
|
|
|
|
|
Write-off of debt
issuance cost and
discount...........................................................................................................................................................................
|
5
|
|
|
6
|
|
|
|
|
Other non-cash
operating
activities..........................................................................................................................................................................................
|
(5)
|
|
|
(9)
|
|
|
|
|
Changes in other
assets and liabilities, exclusive of the effects of businesses
disposed:
|
|
|
|
|
|
|
Trade and other
receivables.....................................................................................................................................................................................
|
36
|
|
|
141
|
|
|
|
|
Finance
receivables..................................................................................................................................................................................................
|
490
|
|
|
(42)
|
|
|
|
|
Inventories................................................................................................................................................................................................................
|
136
|
|
|
103
|
|
|
|
|
Accounts
payable....................................................................................................................................................................................................
|
(77)
|
|
|
(250)
|
|
|
|
|
Other assets and
liabilities.......................................................................................................................................................................................
|
18
|
|
|
101
|
|
|
|
|
Net cash provided
by operating
activities..........................................................................................................................................................................
|
474
|
|
|
450
|
|
|
|
|
Cash flows from
investing activities
|
|
|
|
|
|
|
Maturities of
marketable
securities.................................................................................................................................................................................................
|
—
|
|
|
102
|
|
|
|
|
Capital
expenditures.......................................................................................................................................................................................................................
|
(148)
|
|
|
(134)
|
|
|
|
|
Purchases of
equipment leased to
others......................................................................................................................................................................................
|
(97)
|
|
|
(152)
|
|
|
|
|
Proceeds from sales
of property and
equipment............................................................................................................................................................................
|
13
|
|
|
14
|
|
|
|
|
Investments in
non-consolidated
affiliates......................................................................................................................................................................................
|
(5)
|
|
|
—
|
|
|
|
|
Proceeds from
(payments for) sales of
affiliates.............................................................................................................................................................................
|
19
|
|
|
100
|
|
|
|
|
Other investing
activities.................................................................................................................................................................................................................
|
1
|
|
|
2
|
|
|
|
|
Net cash used in
investing
activities..................................................................................................................................................................................
|
(217)
|
|
|
(68)
|
|
|
|
|
Cash flows from
financing activities
|
|
|
|
|
|
|
Proceeds from
issuance of securitized
debt..................................................................................................................................................................................
|
389
|
|
|
363
|
|
|
|
|
Principal payments on
securitized
debt..........................................................................................................................................................................................
|
(352)
|
|
|
(316)
|
|
|
|
|
Net change in secured
revolving credit
facilities...........................................................................................................................................................................
|
(255)
|
|
|
12
|
|
|
|
|
Proceeds from
issuance of non-securitized
debt..........................................................................................................................................................................
|
847
|
|
|
209
|
|
|
|
|
Principal payments on
non-securitized
debt.................................................................................................................................................................................
|
(341)
|
|
|
(1,044)
|
|
|
|
|
Net change in notes
and debt outstanding under revolving credit
facilities.................................................................................................................................
|
(74)
|
|
|
527
|
|
|
|
|
Debt issuance
costs.....................................................................................................................................................................................................................
|
(18)
|
|
|
(9)
|
|
|
|
|
Proceeds from
financed lease
obligations....................................................................................................................................................................................
|
—
|
|
|
22
|
|
|
|
|
Proceeds from
exercise of stock
options......................................................................................................................................................................................
|
4
|
|
|
4
|
|
|
|
|
Dividends paid by
subsidiaries to non-controlling
interest............................................................................................................................................................
|
(17)
|
|
|
(24)
|
|
|
|
|
Other financing
activities...............................................................................................................................................................................................................
|
(2)
|
|
|
(2)
|
|
|
|
|
Net cash provided
by (used in) financing
activities.........................................................................................................................................................
|
181
|
|
|
(258)
|
|
|
|
|
Effect of exchange
rate changes on cash, cash equivalents and restricted
cash......................................................................................................................
|
(22)
|
|
|
(12)
|
|
|
|
|
Increase in cash,
cash equivalents and restricted
cash................................................................................................................................................................
|
416
|
|
|
112
|
|
|
|
|
Cash, cash
equivalents and restricted cash at beginning of the
year..........................................................................................................................................
|
1,557
|
|
|
1,445
|
|
|
|
|
Cash, cash
equivalents and restricted cash at end of the
year....................................................................................................................................................
|
$
|
1,973
|
|
|
$
|
1,557
|
|
|
|
|
Navistar
International Corporation and Subsidiaries
Segment
Reporting
|
|
|
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
|
|
Quarter Ended
October 31, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
External sales and
revenues,
net.....................................................................................
|
$
|
1,440
|
|
|
$
|
495
|
|
|
$
|
89
|
|
|
$
|
42
|
|
|
$
|
(1)
|
|
|
$
|
2,065
|
|
|
Intersegment sales
and
revenues.....................................................................................
|
38
|
|
|
1
|
|
|
(2)
|
|
|
5
|
|
|
(42)
|
|
|
—
|
|
|
Total sales and
revenues,
net..................................................................................
|
$
|
1,478
|
|
|
$
|
496
|
|
|
$
|
87
|
|
|
$
|
47
|
|
|
$
|
(43)
|
|
|
$
|
2,065
|
|
|
Net income (loss)
attributable to
NIC................................................................................
|
$
|
(10)
|
|
|
$
|
129
|
|
|
$
|
12
|
|
|
$
|
14
|
|
|
$
|
(381)
|
|
|
$
|
(236)
|
|
|
Income tax
expense.........................................................................................................
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
69
|
|
|
69
|
|
|
Segment profit
(loss)...............................................................................................
|
$
|
(10)
|
|
|
$
|
129
|
|
|
$
|
12
|
|
|
$
|
14
|
|
|
$
|
(450)
|
|
|
$
|
(305)
|
|
|
Depreciation and
amortization..........................................................................................
|
$
|
31
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
17
|
|
|
$
|
1
|
|
|
$
|
50
|
|
|
Interest
expense...............................................................................................................
|
—
|
|
|
—
|
|
|
—
|
|
|
14
|
|
|
55
|
|
|
69
|
|
|
Equity in income of
non-consolidated
affiliates................................................................
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
Capital
expenditures(B)....................................................................................................
|
31
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
33
|
|
|
(in
millions)
|
Truck
|
|
Parts
|
|
Global
Operations
|
|
Financial
Services(A)
|
|
Corporate
and
Eliminations
|
|
Total
|
|
Quarter 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
|
|
|
Net income (loss)
attributable
NIC..................................................................................
|
$
|
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 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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended October 31, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
External sales and
revenues,
net....................................................................
|
$
|
5,240
|
|
|
$
|
1,841
|
|
|
$
|
242
|
|
|
$
|
177
|
|
|
$
|
3
|
|
|
$
|
7,503
|
|
|
Intersegment sales
and
revenues...................................................................
|
72
|
|
|
5
|
|
|
11
|
|
|
40
|
|
|
(128)
|
|
|
—
|
|
|
Total sales and
revenues,
net.................................................................
|
$
|
5,312
|
|
|
$
|
1,846
|
|
|
$
|
253
|
|
|
$
|
217
|
|
|
$
|
(125)
|
|
|
$
|
7,503
|
|
|
Income (loss) from
continuing operations
attributable to NIC, net of
tax..........................................................................
|
$
|
(141)
|
|
|
$
|
448
|
|
|
$
|
—
|
|
|
$
|
65
|
|
|
$
|
(719)
|
|
|
$
|
(347)
|
|
|
Income tax
expense........................................................................................
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
59
|
|
|
59
|
|
|
Segment profit
(loss).............................................................................
|
$
|
(141)
|
|
|
$
|
448
|
|
|
$
|
—
|
|
|
$
|
65
|
|
|
$
|
(778)
|
|
|
$
|
(406)
|
|
|
Depreciation and
amortization........................................................................
|
$
|
116
|
|
|
$
|
6
|
|
|
$
|
6
|
|
|
$
|
65
|
|
|
$
|
6
|
|
|
$
|
199
|
|
|
Interest
expense.............................................................................................
|
—
|
|
|
—
|
|
|
—
|
|
|
69
|
|
|
199
|
|
|
268
|
|
|
Equity in income
(loss) of non-consolidated
affiliates..........................................................................................................
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
Capital
expenditures(B)...................................................................................
|
124
|
|
|
8
|
|
|
3
|
|
|
—
|
|
|
13
|
|
|
148
|
|
|
(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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
_________________________
|
(A)
|
Total sales and
revenues in the Financial Services segment include interest
revenues of $130 million and $208 million for the years ended
October 31, 2020, and 2019 respectively.
|
|
(B)
|
Exclusive of
purchases of equipment leased to others and liabilities related to
capital expenditures.
|
|
(in
millions)
|
Truck
|
|
Parts
|
|
Global
Operations
|
|
Financial
Services
|
|
Corporate
and
Eliminations
|
|
Total
|
|
Segment assets, as
of:
|
|
|
|
|
|
|
|
|
|
|
|
|
October 31,
2020................................................................................
|
$
|
1,619
|
|
|
$
|
663
|
|
|
$
|
216
|
|
|
$
|
2,191
|
|
|
$
|
1,948
|
|
|
$
|
6,637
|
|
|
October 31,
2019.................................................................................
|
1,705
|
|
|
688
|
|
|
296
|
|
|
2,774
|
|
|
1,454
|
|
|
6,917
|
|
SEC Regulation G Non-GAAP Reconciliation
The
financial measures presented below are unaudited and not in
accordance with, or an alternative for, financial measures
presented in accordance with U.S. generally accepted accounting
principles ("GAAP"). The non-GAAP financial information presented
herein should be considered supplemental to, and not as a
substitute for, or superior to, financial measures calculated in
accordance with GAAP and are reconciled to the most appropriate
GAAP number below.
Earnings (loss) Before Interest, Income Taxes,
Depreciation, and Amortization ("EBITDA"):
We define
EBITDA as our consolidated net income (loss) attributable to
Navistar International Corporation, net of tax, plus manufacturing
interest expense, income taxes, and depreciation and amortization.
We believe EBITDA provides meaningful information to the
performance of our business and therefore we use it to supplement
our GAAP reporting. We have chosen to provide this supplemental
information to investors, analysts and other interested parties to
enable them to perform additional analyses of operating
results.
Adjusted EBITDA and Adjusted Net Income
(loss):
We believe that adjusted EBITDA and Adjusted
Net Income (loss), which excludes certain identified items that we
do not consider to be part of our ongoing business, improves the
comparability of year to year results, and is representative of our
underlying performance. Management uses this information to assess
and measure the performance of our operating segments. We have
chosen to provide this supplemental information to investors,
analysts and other interested parties to enable them to perform
additional analyses of operating results, to illustrate the results
of operations giving effect to the non-GAAP adjustments shown in
the below reconciliations, and to provide an additional
measure of performance.
Manufacturing Cash and Cash
Equivalents:
Manufacturing cash and cash equivalents
represent the Company's consolidated cash and cash equivalents
excluding cash and cash equivalents of our financial services
operations. We have chosen to provide this supplemental information
to investors, analysts and other interested parties to enable them
to perform additional analyses of our ability to meet our operating
requirements, capital expenditures, equity investments, and
financial obligations.
Structural costs consist of Selling, general
and administrative expenses and Engineering and product development
costs.
|
EBITDA
reconciliation:
|
|
|
|
|
|
Quarters Ended
October 31,
|
|
Years Ended
October
31,
|
|
(in
millions)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Net loss attributable
to
NIC.............................................................................................................................
|
$
|
(236)
|
|
|
$
|
102
|
|
|
$
|
(347)
|
|
|
$
|
221
|
|
|
Plus:................................................................................................................................................................
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
expense...................................................................................................
|
53
|
|
|
49
|
|
|
199
|
|
|
193
|
|
|
Manufacturing
interest
expense(A)...........................................................................................................
|
55
|
|
|
47
|
|
|
199
|
|
|
207
|
|
|
Less:..............................................................................................................................................................
|
|
|
|
|
|
|
|
|
Income tax (expense)
benefit.................................................................................................................
|
69
|
|
|
(10)
|
|
|
59
|
|
|
(19)
|
|
|
EBITDA.........................................................................................................................................................
|
$
|
(197)
|
|
|
$
|
208
|
|
|
$
|
(8)
|
|
|
$
|
640
|
|
______________________
|
(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.
|
|
Quarters Ended
October 31,
|
|
Years Ended
October
31,
|
|
(in
millions)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Interest
expense.........................................................................................................................................
|
$
|
69
|
|
|
$
|
69
|
|
|
$
|
268
|
|
|
$
|
312
|
|
|
Less: Financial
services interest
expense.................................................................................................
|
14
|
|
|
22
|
|
|
69
|
|
|
105
|
|
|
Manufacturing
interest
expense..................................................................................................................
|
$
|
55
|
|
|
$
|
47
|
|
|
$
|
199
|
|
|
$
|
207
|
|
|
Adjusted EBITDA
Reconciliation:
|
|
|
|
|
|
Quarters Ended
October 31,
|
|
Years Ended
October
31,
|
|
(in
millions)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
EBITDA
(reconciled
above)...............................................................................................................................
|
$
|
(197)
|
|
|
$
|
208
|
|
|
$
|
(8)
|
|
|
$
|
640
|
|
|
Adjusted for
significant items
of:.....................................................................................................................
|
|
|
|
|
|
|
|
|
Adjustments to
pre-existing
warranties(A)........................................................................................................
|
14
|
|
|
(4)
|
|
|
40
|
|
|
3
|
|
|
Asset impairment
charges(B)...........................................................................................................................
|
3
|
|
|
1
|
|
|
28
|
|
|
7
|
|
|
Restructuring of
manufacturing
operations(C).................................................................................................
|
(3)
|
|
|
13
|
|
|
2
|
|
|
14
|
|
|
MaxxForce Advanced
EGR engine
lawsuits(D)...............................................................................................
|
—
|
—
|
|
1
|
|
|
—
|
|
|
129
|
|
|
Legal settlement
(E)
|
58
|
|
|
—
|
|
|
58
|
|
|
—
|
|
|
Shy profit-sharing
accrual(F)
|
289
|
|
|
—
|
|
|
289
|
|
|
—
|
|
|
Gain (loss) on
sales(G)....................................................................................................................................
|
—
|
|
|
—
|
|
|
—
|
|
|
(56)
|
|
|
Debt refinancing
charges(H)............................................................................................................................
|
5
|
|
|
—
|
|
|
5
|
|
|
6
|
|
|
Pension
settlement(I).......................................................................................................................................
|
—
|
|
|
—
|
|
|
7
|
|
|
142
|
|
|
Settlement
gain(J)............................................................................................................................................
|
—
|
|
|
—
|
|
|
(1)
|
|
|
(3)
|
|
|
Total
adjustments................................................................................................................................................
|
366
|
|
|
11
|
|
|
428
|
|
|
242
|
|
|
Adjusted
EBITDA..............................................................................................................................................
|
$
|
169
|
|
|
$
|
219
|
|
|
$
|
420
|
|
|
$
|
882
|
|
|
Adjusted Net
Income (Loss) attributable to NIC:
|
|
|
|
|
|
Quarters Ended
October 31,
|
|
Years Ended
October
31,
|
|
(in
millions).....................................................................................................................................................................
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Net loss
attributable to
NIC...........................................................................................................................................
|
$
|
(236)
|
|
|
$
|
102
|
|
|
$
|
(347)
|
|
|
$
|
221
|
|
|
Adjusted for
significant items
of:.................................................................................................................................
|
|
|
|
|
|
|
|
|
Adjustments to
pre-existing
warranties(A).....................................................................................................................
|
14
|
|
|
(4)
|
|
|
40
|
|
|
3
|
|
|
Asset impairment
charges(B)........................................................................................................................................
|
3
|
|
|
1
|
|
|
28
|
|
|
7
|
|
|
Restructuring of
manufacturing
operations(C)...............................................................................................................
|
(3)
|
|
|
13
|
|
|
2
|
|
|
14
|
|
|
MaxxForce Advanced
EGR engine
lawsuits(D)............................................................................................................
|
—
|
—
|
|
1
|
|
|
—
|
|
|
129
|
|
|
Legal
settlement(E)
|
58
|
|
|
—
|
|
|
58
|
|
|
—
|
|
|
Shy profit-sharing
accrual(F)
|
289
|
|
|
—
|
|
|
289
|
|
|
—
|
|
|
Gain on
sales(G)..........................................................................................................................................................
|
—
|
|
|
—
|
|
|
—
|
|
|
(56)
|
|
|
Debt refinancing
charges(H)........................................................................................................................................
|
5
|
|
|
—
|
|
|
5
|
|
|
6
|
|
|
Pension
settlement(I)..................................................................................................................................................
|
—
|
|
|
—
|
|
|
7
|
|
|
142
|
|
|
Settlement
gain(J)........................................................................................................................................................
|
—
|
|
|
—
|
|
|
(1)
|
|
|
(3)
|
|
|
Total
adjustments............................................................................................................................................................
|
366
|
|
|
11
|
|
|
428
|
|
|
242
|
|
|
Tax effect
(K)....................................................................................................................................................................
|
(69)
|
|
|
1
|
|
|
(71)
|
|
|
(40)
|
|
|
Adjusted net
income (loss) attributable to
NIC...........................................................................................................
|
$
|
61
|
|
|
$
|
114
|
|
|
$
|
10
|
|
|
$
|
423
|
|
_____________________
|
(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 2020, we
recorded $28 million of asset impairment charges, comprised of $16
million of asset impairment charges related to certain assets
under
operating leases and certain other long-lived assets in our Truck
segment and $12 million of asset impairment charges related to
long-lived assets in our
Brazil asset group in our Global Operations segment. 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 2020, we
recorded net restructuring charges of $2 million due to
restructuring activity throughout the organization. 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 2020, we
recorded a charge of $58 million, including $8 million of legal and
other fees, related to a proposed legal settlement with the
Department
of Justice, related to Navistar Defense.
|
|
(F)
|
During 2020, we
recorded a charge of $289 million related to the Shy profit-sharing
accrual.
|
|
(G)
|
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.
|
|
(H)
|
During 2020 we
recorded a charge of $5 million for the write-off of debt issuance
costs and discounts associated with the 6.75% Tax Exempt Bonds.
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.
|
|
(I)
|
During 2020, 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 $7 million, $142
million and $9 million, respectively, in Other expense, net
in Corporate.
|
|
(J)
|
During 2020 and 2019,
we recorded interest income of $1 million and $3 million,
respectively, 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.
|
|
(K)
|
Tax effect is
calculated by excluding the tax impact of the non-GAAP adjustments
from the tax provision calculations.
|
|
Manufacturing
segment cash and cash equivalents reconciliation:
|
|
|
|
As of October 31,
2020
|
|
(in
millions)
|
Manufacturing
Operations
|
|
Financial Services
Operations
|
|
Consolidated
Balance Sheet
|
|
Total cash and
cash
equivalents.......................................................
|
$
|
1,749
|
|
|
$
|
94
|
|
|
$
|
1,843
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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SOURCE Navistar International Corporation