LISLE, Ill., Dec. 19, 2017 /PRNewswire/ -- Navistar
International Corporation (NYSE: NAV) today announced a fourth
quarter 2017 net income of $135
million, or $1.36 per diluted
share, compared to a fourth quarter 2016 net loss of $34 million, or $0.42 per diluted share. Navistar reported net
income of $30 million, or
$0.32 per diluted share for fiscal
year 2017, versus a net loss of $97
million, or $1.19 per diluted
share, for fiscal year 2016.
Fourth quarter 2017 adjusted EBITDA was $268 million, which included $11 million of adjustments. Adjusted EBITDA
margins increased to 10.3 percent. Fiscal year 2017 adjusted EBITDA
was $582 million, versus $508 million adjusted EBITDA for 2016. Full-year
adjusted EBITDA margins increased to 6.8 percent.
Revenues in the quarter increased 26 percent, to $2.6 billion, compared to fourth quarter 2016.
The revenue increase was largely driven by a 31-percent increase in
the company's Core (Class 6-8 trucks and buses in the United States and Canada) volumes. Revenue for fiscal year 2017
was up six percent to $8.6 billion,
compared to $8.1 billion in fiscal
year 2016.
Navistar finished the fourth quarter 2017 with $1.1 billion in consolidated cash, cash
equivalents and marketable securities including $1.0 billion in manufacturing cash, cash
equivalents and marketable securities.
"Our 2017 was a breakthrough year, as we returned to
profitability and grew our market share 1.5 points," said
Troy A. Clarke, chairman, president
and CEO. "These results were driven by stronger sales, our steady
investment in the industry's newest product lineup, early results
from our strategic alliance with Volkswagen Truck & Bus and our
ongoing focus on cost."
The company finished 2017 with strong momentum across the board.
During the quarter, the company launched the
International® HV™ Series line of vocational
trucks. The HV Series, in addition to the HX Series premium
vocational truck lineup, now has the option of being powered by the
International A26 engine. The company also announced plans for its
next-generation powertrains with alliance partner Volkswagen Truck
& Bus, including big bore diesel, as well as electric
medium-duty and electric bus platforms launching as early as
2019.
Also during the fourth quarter, Navistar and Volkswagen Truck
& Bus announced their intention to converge their connected
vehicle activities – OnCommand® Connection and RIO,
Volkswagen Truck & Bus's digital brand. OnCommand Connection
now has an industry leading 370,000 connected vehicles.
Navistar refinanced its manufacturing debt in early November,
which improved its debt profile and provided greater financial
flexibility. The transaction yielded $200
million of additional liquidity and extended the company's
debt maturities by four years. Additionally, it will save
approximately $25 million in
annualized interest in 2018 and $34
million in 2019, following the repayment of convertible debt
that comes due in 2018.
The company provided the following 2018 fiscal year
guidance:
- Retail deliveries of Class 6-8 trucks and buses in the United States and Canada are forecast to be in the range of
345,000 units to 375,000 units.
- Revenues are expected to be between $9
billion and $9.5 billion.
- Adjusted EBITDA is expected to be between $675 million and $725
million.
- Year-end manufacturing cash is expected to be about
$1 billion.
"We think 2018 is shaping up to be one of the strongest industry
years this decade, and we're positioned to make it a breakout year
for Navistar," Clarke said. "We'll drive even greater customer
consideration with our commitment to uptime and our ongoing cadence
of new product launches, which will include the introduction of our
new medium-duty vehicle, as well as new IC Bus offerings. At the
same time, we will build on our alliance with Volkswagen Truck
& Bus by investing in and collaborating on the major
technologies that are reshaping our industry, including electric,
connectivity and autonomous."
Summary of
Financial Results:
|
|
|
(Unaudited)
|
|
|
|
|
|
Quarters Ended
October 31,
|
|
Years
Ended
October
31,
|
(in millions,
except per share data)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Sales and revenues,
net
|
$
|
2,598
|
|
|
$
|
2,063
|
|
|
$
|
8,570
|
|
|
$
|
8,111
|
|
Segment
Results:
|
|
|
|
|
|
|
|
Truck
|
$
|
112
|
|
|
$
|
(61)
|
|
|
$
|
(6)
|
|
|
$
|
(189)
|
|
Parts
|
157
|
|
|
162
|
|
|
616
|
|
|
640
|
|
Global
Operations
|
1
|
|
|
(2)
|
|
|
(7)
|
|
|
(21)
|
|
Financial
Services
|
26
|
|
|
23
|
|
|
77
|
|
|
100
|
|
Income (loss) from
continuing operations, net of tax(A)
|
$
|
135
|
|
|
$
|
(34)
|
|
|
$
|
29
|
|
|
$
|
(97)
|
|
Net income
(loss)(A)
|
135
|
|
|
(34)
|
|
|
30
|
|
|
(97)
|
|
Diluted earnings
(loss) per share from continuing
operations(A)
|
$
|
1.36
|
|
|
$
|
(0.42)
|
|
|
$
|
0.31
|
|
|
$
|
(1.19)
|
|
Diluted earnings
(loss) per share(A)
|
$
|
1.36
|
|
|
$
|
(0.42)
|
|
|
$
|
0.32
|
|
|
$
|
(1.19)
|
|
________________
|
(A)
Amounts attributable to Navistar International
Corporation.
|
Truck Segment – For the fourth quarter 2017, the
Truck segment recorded a profit of $112
million, compared with a year-ago fourth quarter loss of
$61 million. The year-over-year
change was primarily due to the impact of higher volume in the
company's Core markets and a decrease in used truck losses.
For the 2017 fiscal year, the Truck segment recorded a loss of
$6 million, compared with a fiscal
year 2016 loss of $189 million. The
improvement was primarily driven by the impact of higher volumes in
the company's Core markets and Mexico and a decrease in used truck losses,
partially offset by market pressures and charges related to EGR
product litigation.
Parts Segment — For the fourth quarter 2017, the Parts
segment recorded a profit of $157
million, down slightly from year-ago fourth quarter,
primarily driven by the gradual runoff of the Blue Diamond Parts
business, partially offset by double digit revenue growth from its
Fleetrite and the remanufactured parts businesses.
For the 2017 fiscal year, the Parts segment recorded its
second-largest profit ever at $616
million, compared to a fiscal year 2016 profit of
$640 million. The four-percent
decrease was primarily driven by margin declines in Blue Diamond
Parts, partially offset by a slight year-over-year increase in
North America Core market volumes.
Global Operations Segment — For the fourth quarter 2017,
the Global Operations segment recorded a profit of $1 million, compared to a year-ago fourth quarter
loss of $2 million. The
year-over-year change was driven by higher volumes due to
improvements in the Brazilian economy, offset by restructuring
charges.
For the 2017 fiscal year, the Global Operations segment recorded
a loss of $7 million compared to a
year-ago fiscal year loss of $21
million. The Global Operations segment results improvement
was primarily due to lower manufacturing and SG&A expenses as a
result of the company's cost reduction efforts and a one-time
benefit of $9 million recognized as
an adjustment to pre-existing warranties, partially offset by
restructuring charges.
Financial Services Segment — For the fourth quarter 2017,
the Financial Services segment recorded a profit of $26 million, compared with fourth quarter 2016
profit of $23 million. The
year-over-year change was primarily driven by higher receivable
balances and a lower provision for losses in the company's
Mexico portfolio.
For the 2017 fiscal year, the Financial Services segment
recorded a profit of $77 million,
compared to a year-ago fiscal year profit of $100 million. The decrease is primarily driven by
the paydown of certain intercompany loan receivables and lower
interest margin resulting from an increase in the company's average
borrowing rate.
About Navistar
Navistar International Corporation
(NYSE: NAV) is a holding company whose subsidiaries and affiliates
produce International® brand commercial and military
trucks, proprietary diesel engines, and IC Bus® brand
school and commercial buses. An affiliate also provides truck and
diesel engine service parts. Another affiliate offers financing
services. Additional information is available at
www.Navistar.com.
Forward-Looking Statement
Information provided and
statements contained in this report that are not purely historical
are forward-looking statements within the meaning of the federal
securities laws. Such forward-looking statements only speak as of
the date of this report and the company assumes no obligation to
update the information included in this report. Such
forward-looking statements include information concerning our
possible or assumed future results of operations, including
descriptions of our business strategy. These statements often
include words such as believe, expect, anticipate, intend, plan,
estimate, or similar expressions. These statements are not
guarantees of performance or results and they involve risks,
uncertainties, and assumptions. For a further description of these
factors, see the risk factors set forth in our filings with the
Securities and Exchange Commission, including our annual report on
Form 10-K for the fiscal year ended October
31, 2017. Although we believe that these forward-looking
statements are based on reasonable assumptions, there are many
factors that could affect our actual financial results or results
of operations and could cause actual results to differ materially
from those in the forward-looking statements. All future written
and oral forward-looking statements by us or persons acting on our
behalf are expressly qualified in their entirety by the cautionary
statements contained or referred to above. Except for our ongoing
obligations to disclose material information as required by the
federal securities laws, we do not have any obligations or
intention to release publicly any revisions to any forward looking
statements to reflect events or circumstances in the future or to
reflect the occurrence of unanticipated events.
Navistar
International Corporation and Subsidiaries
Consolidated
Statements of Operations
|
|
|
(Unaudited)
|
|
|
|
|
|
For the Quarters
Ended October 31,
|
|
For the Years
Ended October 31,
|
(in millions,
except per share data)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Sales and
revenues
|
|
|
|
|
|
|
|
Sales of manufactured
products, net
|
$
|
2,558
|
|
|
$
|
2,030
|
|
|
$
|
8,428
|
|
|
$
|
7,976
|
|
Finance
revenues
|
40
|
|
|
33
|
|
|
142
|
|
|
135
|
|
Sales and revenues,
net
|
2,598
|
|
|
2,063
|
|
|
8,570
|
|
|
8,111
|
|
Costs and
expenses
|
|
|
|
|
|
|
|
Costs of products
sold
|
2,088
|
|
|
1,744
|
|
|
7,037
|
|
|
6,812
|
|
Restructuring
charges
|
7
|
|
|
(1)
|
|
|
3
|
|
|
10
|
|
Asset impairment
charges
|
—
|
|
|
10
|
|
|
13
|
|
|
27
|
|
Selling, general and
administrative expenses
|
224
|
|
|
198
|
|
|
878
|
|
|
802
|
|
Engineering and
product development costs
|
62
|
|
|
66
|
|
|
251
|
|
|
247
|
|
Interest
expense
|
89
|
|
|
81
|
|
|
351
|
|
|
327
|
|
Other income,
net
|
(14)
|
|
|
(14)
|
|
|
(21)
|
|
|
(76)
|
|
Total costs and
expenses
|
2,456
|
|
|
2,084
|
|
|
8,512
|
|
|
8,149
|
|
Equity in income of
non-consolidated affiliates
|
—
|
|
|
3
|
|
|
6
|
|
|
6
|
|
Income (loss) from
continuing operations before income taxes
|
142
|
|
|
(18)
|
|
|
64
|
|
|
(32)
|
|
Income tax
expense
|
—
|
|
|
(8)
|
|
|
(10)
|
|
|
(33)
|
|
Income (loss) from
continuing operations
|
142
|
|
|
(26)
|
|
|
54
|
|
|
(65)
|
|
Income from
discontinued operations, net of tax
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
Net income
(loss)
|
142
|
|
|
(26)
|
|
|
55
|
|
|
(65)
|
|
Less: Net income
attributable to non-controlling interests
|
7
|
|
|
8
|
|
|
25
|
|
|
32
|
|
Net income (loss)
attributable to Navistar International Corporation
|
$
|
135
|
|
|
$
|
(34)
|
|
|
$
|
30
|
|
|
$
|
(97)
|
|
|
|
|
|
|
|
|
|
Amounts
attributable to Navistar International Corporation common
shareholders:
|
|
|
|
|
|
|
Income (loss) from
continuing operations, net of tax
|
$
|
135
|
|
|
$
|
(34)
|
|
|
$
|
29
|
|
|
$
|
(97)
|
|
Income from
discontinued operations, net of tax
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
Net income
(loss)
|
$
|
135
|
|
|
$
|
(34)
|
|
|
$
|
30
|
|
|
$
|
(97)
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share:
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
1.37
|
|
|
$
|
(0.42)
|
|
|
$
|
0.31
|
|
|
$
|
(1.19)
|
|
Discontinued
operations
|
—
|
|
|
—
|
|
|
0.01
|
|
|
—
|
|
|
$
|
1.37
|
|
|
$
|
(0.42)
|
|
|
$
|
0.32
|
|
|
$
|
(1.19)
|
|
Diluted:
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
1.36
|
|
|
$
|
(0.42)
|
|
|
$
|
0.31
|
|
|
$
|
(1.19)
|
|
Discontinued
operations
|
—
|
|
|
—
|
|
|
0.01
|
|
|
—
|
|
|
$
|
1.36
|
|
|
$
|
(0.42)
|
|
|
$
|
0.32
|
|
|
$
|
(1.19)
|
|
Weighted average
shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
98.4
|
|
|
81.7
|
|
|
93.0
|
|
|
81.7
|
|
Diluted
|
99.2
|
|
|
81.7
|
|
|
93.5
|
|
|
81.7
|
|
Navistar
International Corporation and Subsidiaries
Consolidated
Balance Sheets
|
|
|
October
31,
|
|
October
31,
|
(in millions,
except per share data)
|
2017
|
|
2016
|
ASSETS
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
|
706
|
|
|
$
|
804
|
|
Restricted cash and
cash equivalents
|
83
|
|
|
64
|
|
Marketable
securities
|
370
|
|
|
46
|
|
Trade and other
receivables, net
|
391
|
|
|
276
|
|
Finance receivables,
net
|
1,565
|
|
|
1,457
|
|
Inventories,
net
|
857
|
|
|
944
|
|
Other current
assets
|
188
|
|
|
168
|
|
Total current
assets
|
4,160
|
|
|
3,759
|
|
Restricted
cash
|
51
|
|
|
48
|
|
Trade and other
receivables, net
|
13
|
|
|
16
|
|
Finance receivables,
net
|
220
|
|
|
220
|
|
Investments in
non-consolidated affiliates
|
56
|
|
|
53
|
|
Property and
equipment, net
|
1,326
|
|
|
1,241
|
|
Goodwill
|
38
|
|
|
38
|
|
Intangible assets,
net
|
40
|
|
|
53
|
|
Deferred taxes,
net
|
129
|
|
|
161
|
|
Other noncurrent
assets
|
102
|
|
|
64
|
|
Total
assets
|
$
|
6,135
|
|
|
$
|
5,653
|
|
LIABILITIES and
STOCKHOLDERS' DEFICIT
|
|
|
|
Liabilities
|
|
|
|
Current
liabilities
|
|
|
|
Notes payable and
current maturities of long-term debt
|
$
|
1,169
|
|
|
$
|
907
|
|
Accounts
payable
|
1,292
|
|
|
1,113
|
|
Other current
liabilities
|
1,184
|
|
|
1,183
|
|
Total current
liabilities
|
3,645
|
|
|
3,203
|
|
Long-term
debt
|
3,889
|
|
|
3,997
|
|
Postretirement
benefits liabilities
|
2,497
|
|
|
3,023
|
|
Other noncurrent
liabilities
|
678
|
|
|
723
|
|
Total
liabilities
|
10,709
|
|
|
10,946
|
|
Stockholders'
deficit
|
|
|
|
Series D
convertible junior preference stock
|
2
|
|
|
2
|
|
Common stock, $0.10
par value per share (103.1 and 86.8 shares issued, respectively,
and 220 shares authorized at both dates)
|
10
|
|
|
9
|
|
Additional paid-in
capital
|
2,733
|
|
|
2,499
|
|
Accumulated
deficit
|
(4,933)
|
|
|
(4,963)
|
|
Accumulated other
comprehensive loss
|
(2,211)
|
|
|
(2,640)
|
|
Common stock held in
treasury, at cost (4.6 and 5.2 shares, respectively)
|
(179)
|
|
|
(205)
|
|
Total stockholders'
deficit attributable to Navistar International
Corporation
|
(4,578)
|
|
|
(5,298)
|
|
Stockholders' equity
attributable to non-controlling interests
|
4
|
|
|
5
|
|
Total
stockholders' deficit
|
(4,574)
|
|
|
(5,293)
|
|
Total liabilities
and stockholders' deficit
|
$
|
6,135
|
|
|
$
|
5,653
|
|
Navistar
International Corporation and Subsidiaries
Condensed
Consolidated Statements of Cash Flows
|
|
|
For the Years
Ended October 31,
|
(in
millions)
|
2017
|
|
2016
|
Cash flows from
operating activities
|
|
|
|
Net income
(loss)
|
$
|
55
|
|
|
$
|
(65)
|
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
150
|
|
|
146
|
|
Depreciation of
equipment leased to others
|
73
|
|
|
79
|
|
Deferred taxes,
including change in valuation allowance
|
(6)
|
|
|
(9)
|
|
Asset impairment
charges
|
13
|
|
|
27
|
|
Loss (gain) on sales
of investments and businesses, net
|
(5)
|
|
|
2
|
|
Amortization of debt
issuance costs and discount
|
49
|
|
|
37
|
|
Stock-based
compensation
|
28
|
|
|
16
|
|
Provision for
doubtful accounts, net of recoveries
|
7
|
|
|
13
|
|
Equity in income of
non-consolidated affiliates, net of dividends
|
1
|
|
|
6
|
|
Write-off of debt
issuance cost and discount
|
5
|
|
|
—
|
|
Other non-cash
operating activities
|
(28)
|
|
|
(12)
|
|
Changes in other
assets and liabilities, exclusive of the effects of businesses
disposed:
|
|
|
|
Trade and other
receivables
|
(125)
|
|
|
134
|
|
Finance
receivables
|
(123)
|
|
|
251
|
|
Inventories
|
82
|
|
|
205
|
|
Accounts
payable
|
159
|
|
|
(193)
|
|
Other assets and
liabilities
|
(226)
|
|
|
(370)
|
|
Net cash provided
by operating activities
|
109
|
|
|
267
|
|
Cash flows from
investing activities
|
|
|
|
Purchases of
marketable securities
|
(1,011)
|
|
|
(485)
|
|
Sales of marketable
securities
|
659
|
|
|
555
|
|
Maturities of
marketable securities
|
28
|
|
|
43
|
|
Net change in
restricted cash and cash equivalents
|
(22)
|
|
|
5
|
|
Capital
expenditures
|
(102)
|
|
|
(116)
|
|
Purchases of
equipment leased to others
|
(137)
|
|
|
(132)
|
|
Proceeds from sales
of property and equipment
|
35
|
|
|
24
|
|
Investments in
non-consolidated affiliates
|
(1)
|
|
|
(2)
|
|
Proceeds from sales
of affiliates
|
9
|
|
|
41
|
|
Net cash used in
investing activities
|
(542)
|
|
|
(67)
|
|
Cash flows from
financing activities
|
|
|
|
Proceeds from
issuance of securitized debt
|
322
|
|
|
413
|
|
Principal payments on
securitized debt
|
(336)
|
|
|
(346)
|
|
Net change in secured
revolving credit facilities
|
111
|
|
|
(148)
|
|
Proceeds from
issuance of non-securitized debt
|
582
|
|
|
222
|
|
Principal payments on
non-securitized debt
|
(489)
|
|
|
(315)
|
|
Net change in notes
and debt outstanding under revolving credit facilities
|
(112)
|
|
|
(149)
|
|
Principal payments
under financing arrangements and capital lease
obligations
|
—
|
|
|
(3)
|
|
Debt issuance
costs
|
(29)
|
|
|
(16)
|
|
Proceeds from
financed lease obligations
|
61
|
|
|
22
|
|
Issuance of common
stock
|
256
|
|
|
—
|
|
Stock issuance
costs
|
(11)
|
|
|
—
|
|
Proceeds from
exercise of stock options
|
12
|
|
|
—
|
|
Dividends paid by
subsidiaries to non-controlling interest
|
(26)
|
|
|
(34)
|
|
Other financing
activities
|
(3)
|
|
|
1
|
|
Net cash provided
by (used in) financing activities
|
338
|
|
|
(353)
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
(3)
|
|
|
45
|
|
Decrease in cash
and cash equivalents
|
(98)
|
|
|
(108)
|
|
Cash and cash
equivalents at beginning of the year
|
804
|
|
|
912
|
|
Cash and cash
equivalents at end of the year
|
$
|
706
|
|
|
$
|
804
|
|
Navistar
International Corporation and Subsidiaries
Segment
Reporting
(Unaudited)
|
|
We define segment
profit (loss) as net income (loss) from continuing operations
attributable to Navistar International Corporation, excluding
income tax expense. The following tables present selected financial
information for our reporting segments:
|
|
|
(in
millions)
|
Truck
|
|
Parts
|
|
Global
Operations
|
|
Financial
Services(A)
|
|
Corporate
and
Eliminations
|
|
Total
|
Three Months Ended
October 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
External sales and
revenues, net
|
$
|
1,841
|
|
|
$
|
622
|
|
|
$
|
93
|
|
|
$
|
40
|
|
|
$
|
2
|
|
|
$
|
2,598
|
|
Intersegment sales
and revenues
|
12
|
|
|
4
|
|
|
12
|
|
|
23
|
|
|
(51)
|
|
|
—
|
|
Total sales and
revenues, net
|
$
|
1,853
|
|
|
$
|
626
|
|
|
$
|
105
|
|
|
$
|
63
|
|
|
$
|
(49)
|
|
|
$
|
2,598
|
|
Income (loss) from
continuing operations attributable to NIC, net of tax
|
$
|
112
|
|
|
$
|
157
|
|
|
$
|
1
|
|
|
$
|
26
|
|
|
$
|
(161)
|
|
|
$
|
135
|
|
Income tax
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Segment profit
(loss)
|
$
|
112
|
|
|
$
|
157
|
|
|
$
|
1
|
|
|
$
|
26
|
|
|
$
|
(161)
|
|
|
$
|
135
|
|
Depreciation and
amortization
|
$
|
34
|
|
|
$
|
2
|
|
|
$
|
3
|
|
|
$
|
13
|
|
|
$
|
2
|
|
|
$
|
54
|
|
Interest
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
21
|
|
|
68
|
|
|
89
|
|
Equity in income
(loss) of non-consolidated affiliates
|
1
|
|
|
—
|
|
|
(1)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Capital
expenditures(B)
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
9
|
|
|
|
|
(in
millions)
|
Truck
|
|
Parts
|
|
Global
Operations
|
|
Financial
Services(A)
|
|
Corporate
and
Eliminations
|
|
Total
|
Three Months Ended
October 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
External sales and
revenues, net
|
$
|
1,345
|
|
|
$
|
607
|
|
|
$
|
75
|
|
|
$
|
33
|
|
|
$
|
2
|
|
|
$
|
2,062
|
|
Intersegment sales
and revenues
|
51
|
|
|
6
|
|
|
12
|
|
|
25
|
|
|
(93)
|
|
|
1
|
|
Total sales and
revenues, net
|
$
|
1,396
|
|
|
$
|
613
|
|
|
$
|
87
|
|
|
$
|
58
|
|
|
$
|
(91)
|
|
|
$
|
2,063
|
|
Income (loss) from
continuing operations attributable to NIC, net of tax
|
$
|
(61)
|
|
|
$
|
162
|
|
|
$
|
(2)
|
|
|
$
|
23
|
|
|
$
|
(156)
|
|
|
$
|
(34)
|
|
Income tax
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8)
|
|
|
(8)
|
|
Segment profit
(loss)
|
$
|
(61)
|
|
|
$
|
162
|
|
|
$
|
(2)
|
|
|
$
|
23
|
|
|
$
|
(148)
|
|
|
$
|
(26)
|
|
Depreciation and
amortization
|
$
|
37
|
|
|
$
|
3
|
|
|
$
|
5
|
|
|
$
|
13
|
|
|
$
|
3
|
|
|
$
|
61
|
|
Interest
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
21
|
|
|
60
|
|
|
81
|
|
Equity in income of
non-consolidated affiliates
|
2
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
Capital
expenditures(B)
|
27
|
|
|
—
|
|
|
2
|
|
|
1
|
|
|
3
|
|
|
33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
millions)
|
Truck
|
|
Parts
|
|
Global
Operations
|
|
Financial
Services(A)
|
|
Corporate
and
Eliminations
|
|
Total
|
Year Ended October
31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
External sales and
revenues, net
|
$
|
5,770
|
|
|
$
|
2,369
|
|
|
$
|
279
|
|
|
$
|
142
|
|
|
$
|
10
|
|
|
$
|
8,570
|
|
Intersegment sales
and revenues
|
39
|
|
|
23
|
|
|
30
|
|
|
93
|
|
|
(185)
|
|
|
—
|
|
Total sales and
revenues, net
|
$
|
5,809
|
|
|
$
|
2,392
|
|
|
$
|
309
|
|
|
$
|
235
|
|
|
$
|
(175)
|
|
|
$
|
8,570
|
|
Income (loss) from
continuing operations attributable to NIC, net of tax
|
$
|
(6)
|
|
|
$
|
616
|
|
|
$
|
(7)
|
|
|
$
|
77
|
|
|
$
|
(651)
|
|
|
$
|
29
|
|
Income tax
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10)
|
|
|
(10)
|
|
Segment profit
(loss)
|
$
|
(6)
|
|
|
$
|
616
|
|
|
$
|
(7)
|
|
|
$
|
77
|
|
|
$
|
(641)
|
|
|
$
|
39
|
|
Depreciation and
amortization
|
$
|
137
|
|
|
$
|
11
|
|
|
$
|
13
|
|
|
$
|
51
|
|
|
$
|
11
|
|
|
$
|
223
|
|
Interest
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
86
|
|
|
265
|
|
|
351
|
|
Equity in income
(loss) of non-consolidated affiliates
|
4
|
|
|
3
|
|
|
(1)
|
|
|
—
|
|
|
—
|
|
|
6
|
|
Capital
expenditures(B)
|
82
|
|
|
2
|
|
|
5
|
|
|
1
|
|
|
12
|
|
|
102
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
millions)
|
Truck
|
|
Parts
|
|
Global
Operations
|
|
Financial
Services(A)
|
|
Corporate
and
Eliminations
|
|
Total
|
Year Ended October
31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
External sales and
revenues, net
|
$
|
5,271
|
|
|
$
|
2,398
|
|
|
$
|
296
|
|
|
$
|
135
|
|
|
$
|
10
|
|
|
$
|
8,110
|
|
Intersegment sales
and revenues
|
132
|
|
|
29
|
|
|
45
|
|
|
100
|
|
|
(305)
|
|
|
1
|
|
Total sales and
revenues, net
|
$
|
5,403
|
|
|
$
|
2,427
|
|
|
$
|
341
|
|
|
$
|
235
|
|
|
$
|
(295)
|
|
|
$
|
8,111
|
|
Income (loss) from
continuing operations attributable to NIC, net of tax
|
$
|
(189)
|
|
|
$
|
640
|
|
|
$
|
(21)
|
|
|
$
|
100
|
|
|
$
|
(627)
|
|
|
$
|
(97)
|
|
Income tax
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(33)
|
|
|
(33)
|
|
Segment profit
(loss)
|
$
|
(189)
|
|
|
$
|
640
|
|
|
$
|
(21)
|
|
|
$
|
100
|
|
|
$
|
(594)
|
|
|
$
|
(64)
|
|
Depreciation and
amortization
|
$
|
129
|
|
|
$
|
13
|
|
|
$
|
18
|
|
|
$
|
50
|
|
|
$
|
15
|
|
|
$
|
225
|
|
Interest
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
80
|
|
|
247
|
|
|
327
|
|
Equity in income
(loss) of non-consolidated affiliates
|
5
|
|
|
4
|
|
|
(3)
|
|
|
—
|
|
|
—
|
|
|
6
|
|
Capital
expenditures(B)
|
97
|
|
|
2
|
|
|
4
|
|
|
2
|
|
|
11
|
|
|
116
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
millions)
|
Truck
|
|
Parts
|
|
Global
Operations
|
|
Financial
Services
|
|
Corporate
and
Eliminations
|
|
Total
|
Segment assets, as
of:
|
|
|
|
|
|
|
|
|
|
|
|
October 31,
2017
|
$
|
1,621
|
|
|
$
|
632
|
|
|
$
|
378
|
|
|
$
|
2,207
|
|
|
$
|
1,297
|
|
|
$
|
6,135
|
|
October 31,
2016
|
1,520
|
|
|
594
|
|
|
407
|
|
|
2,116
|
|
|
1,016
|
|
|
5,653
|
|
_________________________
|
(A)
|
Total sales and
revenues in the Financial Services segment include interest
revenues of $44 million and $165 million for the three months and
year ended October 31, 2017, respectively, and $40 million and $167
million for the three months and year ended October 31, 2016,
respectively.
|
(B)
|
Exclusive of
purchases of equipment leased to others.
|
SEC Regulation G Non-GAAP
Reconciliation:
The financial measures presented
below are unaudited and not in accordance with, or an alternative
for, financial measures presented in accordance with U.S. generally
accepted accounting principles ("GAAP"). The non-GAAP financial
information presented herein should be considered supplemental to,
and not as a substitute for, or superior to, financial measures
calculated in accordance with GAAP and are reconciled to the most
appropriate GAAP number below.
Earnings (loss) Before Interest, Income Taxes,
Depreciation, and Amortization ("EBITDA"):
We define
EBITDA as our consolidated net income (loss) from continuing
operations 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:
We believe that adjusted
EBITDA, which excludes certain identified items that we do not
consider to be part of our ongoing business, improves the
comparability of year to year results, and is representative of our
underlying performance. Management uses this information to assess
and measure the performance of our operating segments. We have
chosen to provide this supplemental information to investors,
analysts and other interested parties to enable them to perform
additional analyses of operating results, to illustrate the results
of operations giving effect to the non-GAAP adjustments shown in
the below reconciliations, and to provide an additional
measure of performance.
Adjusted EBITDA margin:
We define Adjusted
EBITDA margin as a percentage of the Company's consolidated sales
and revenues. We have chosen to provide this supplemental
information to investors, analysts and other interested parties to
enable them to perform additional analyses of operating results, to
illustrate the results of operations giving effect to the non-GAAP
adjustments shown in the below reconciliations, and to provide an
additional measure of performance.
Manufacturing Cash, Cash Equivalents, and Marketable
Securities:
Manufacturing cash, cash equivalents, and
marketable securities represent the Company's consolidated cash,
cash equivalents, and marketable securities excluding cash, cash
equivalents, and marketable securities of our financial services
operations. We include marketable securities with our cash and cash
equivalents when assessing our liquidity position as our
investments are highly liquid in nature. We have chosen to provide
this supplemental information to investors, analysts and other
interested parties to enable them to perform additional analyses of
our ability to meet our operating requirements, capital
expenditures, equity investments, and financial
obligations.
Structural costs consist of selling, general
and administrative expenses and engineering and product development
costs.
EBITDA
reconciliation:
|
|
|
(Unaudited)
|
|
|
|
|
|
For the Quarters
Ended October 31,
|
|
For the Years
Ended October 31,
|
(in
millions)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Income (loss) from
continuing operations attributable to NIC, net of tax
|
$
|
135
|
|
|
$
|
(34)
|
|
|
$
|
29
|
|
|
$
|
(97)
|
|
Plus:
|
|
|
|
|
|
|
|
Depreciation and
amortization expense
|
54
|
|
|
61
|
|
|
223
|
|
|
225
|
|
Manufacturing
interest expense(A)
|
68
|
|
|
60
|
|
|
265
|
|
|
247
|
|
Less:
|
|
|
|
|
|
|
|
Income tax
expense
|
—
|
|
|
(8)
|
|
|
(10)
|
|
|
(33)
|
|
EBITDA
|
$
|
257
|
|
|
$
|
95
|
|
|
$
|
527
|
|
|
$
|
408
|
|
______________________
|
(A)
|
Manufacturing
interest expense is the net interest expense primarily related to
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 consolidated interest
expense:
|
|
(Unaudited)
|
|
|
|
|
|
For the Quarters
Ended October 31,
|
|
For the Years
Ended October 31,
|
(in
millions)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Interest
expense
|
$
|
89
|
|
|
$
|
81
|
|
|
$
|
351
|
|
|
$
|
327
|
|
Less: Financial
Services interest expense
|
21
|
|
|
21
|
|
|
86
|
|
|
80
|
|
Manufacturing
interest expense
|
$
|
68
|
|
|
$
|
60
|
|
|
$
|
265
|
|
|
$
|
247
|
|
Adjusted EBITDA
Reconciliation:
|
|
|
(Unaudited)
|
|
|
|
|
|
For the Quarters
Ended October 31,
|
|
For the Years
Ended October 31,
|
(in
millions)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
EBITDA (reconciled
above)
|
$
|
257
|
|
|
$
|
95
|
|
|
$
|
527
|
|
|
$
|
408
|
|
Less significant
items of:
|
|
|
|
|
|
|
|
Adjustments to
pre-existing warranties(A)
|
3
|
|
|
8
|
|
|
(1)
|
|
|
78
|
|
Asset impairment
charges(B)
|
—
|
|
|
10
|
|
|
13
|
|
|
27
|
|
Restructuring of
manufacturing operations(C)
|
7
|
|
|
(1)
|
|
|
13
|
|
|
10
|
|
EGR product
litigation(D)
|
—
|
|
|
—
|
|
|
31
|
|
|
—
|
|
Gain on sale
(E)
|
—
|
|
|
—
|
|
|
(6)
|
|
|
—
|
|
Debt refinancing
charges(F)
|
1
|
|
|
—
|
|
|
5
|
|
|
—
|
|
One-time fee
received(G)
|
—
|
|
|
—
|
|
|
—
|
|
|
(15)
|
|
Total
adjustments
|
11
|
|
|
17
|
|
|
55
|
|
|
100
|
|
Adjusted
EBITDA
|
$
|
268
|
|
|
$
|
112
|
|
|
$
|
582
|
|
|
$
|
508
|
|
_____________________
|
(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 2017, we
recorded $13 million of asset impairment charges in our Truck
segment relating to assets held for sale of our Conway, Arkansas
fabrication business and for certain assets under operating leases.
During 2016, the charges primarily included $17 million related to
certain long-lived assets and $8 million related to certain
operating leases. We also determined that $1 million of trademark
asset carrying value was impaired.
|
(C)
|
During 2017, we
recorded a charge of $13 million. We recorded $41 million of
charges related to our plan to cease production at our Melrose Park
Facility, a net benefit of $43 million related to the resolution of
the closing agreement for our Chatham, Ontario plant, and the
release of $1 million in OPEB liabilities in connection with the
sale of our fabrication business in Conway, Arkansas. We recorded
$6 million of restructuring charges in Brazil related to cost
reduction actions consisting of personnel costs for employee
separation and related benefits. During 2016, we recorded $7
million of charges related to the 2011 closure of our Chatham,
Ontario plant.
|
(D)
|
During 2017, we
recognized a charge of $31 million for a jury verdict related to
Maxxforce engine EGR product litigation in our Truck
segment.
|
(E)
|
During 2017, we
recognized a gain of $6 million related to the sale of a business
line in our Parts segment.
|
(F)
|
During 2017, we
recorded a charge of $5 million related to third party fees and
debt issuance costs associated with the repricing of our Term Loan
and the refinancing of the revolving portion of the NFC bank credit
facility in our Financial Services segment.
|
(G)
|
During 2016, we
received a $15 million one-time fee from a third party.
|
Manufacturing
segment cash, cash equivalents, and marketable securities
reconciliation:
|
|
|
|
As of October 31,
2017
|
(in
millions)
|
Manufacturing
Operations
|
|
Financial Services
Operations
|
|
Consolidated
Balance Sheet
|
Assets
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
666
|
|
|
$
|
40
|
|
|
$
|
706
|
|
Marketable
securities
|
370
|
|
|
—
|
|
|
370
|
|
Total cash, cash
equivalents, and marketable securities
|
$
|
1,036
|
|
|
$
|
40
|
|
|
$
|
1,076
|
|
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SOURCE Navistar International Corporation