![]() NYSE: NAV 1 For more than 175 years we’ve been helping people from every corner of the world move the goods that move the welfare of entire nations. 1 st Quarter 2012 Earnings Presentation March 8, 2011 Exhibit 99.2 1 st Quarter 2012 Earnings Call March 8, 2012 |
![]() NYSE: NAV 2 2 Safe Harbor Statement Information provided and statements contained in this presentation that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Such forward-looking statements only speak as of the date of this presentation and the Company assumes no obligation to update the information included in this presentation. 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 Item 1A, Risk Factors, included within our Form 10-K for the year ended October 31, 2011, which was filed on December 20, 2011, and Part II, Item 1A, Risk Factors, included within our Form 10-Q for the period ended January 31, 2012, which was filed on March 8, 2012. 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. 1 st Quarter 2012 Earnings Call March 8, 2012 |
![]() NYSE: NAV 3 3 Other Cautionary Notes • The financial information herein contains audited and unaudited information and has been prepared by management in good faith and based on data currently available to the Company. • Certain non-GAAP measures are used in this presentation to assist the reader in understanding our core manufacturing business. We believe this information is useful and relevant to assess and measure the performance of our core manufacturing business as it illustrates manufacturing performance without regard to selected historical legacy costs (i.e. pension and other postretirement costs). It also excludes financial services and other items that may not be related to the core manufacturing business or underlying results. Measures may also be adjusted to exclude certain adjustments which are not considered to be part of our ongoing business and are not representative of our underlying performance. Management often uses this information to assess and measure the underlying 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. The non-GAAP numbers are reconciled to the most appropriate GAAP number is in the appendix of this presentation. 1 st Quarter 2012 Earnings Call March 8, 2012 |
![]() NYSE: NAV 4 4 Agenda 1 st Quarter 2012 Earnings Call March 8, 2012 • 1 st quarter results • Actions for 2012 • Cash • Margin expansion |
![]() NYSE: NAV 5 5 First Quarter Results (Adjusted Non-GAAP) 2012 Q1 Actual (With Warranty) 2012 Q1 Actual (Without Warranty) Revenue (Billions) $3.1 $3.1 Manufacturing Segment Profit (Loss) (Millions) $(102) $10 Profit (Loss) Before Tax (Millions) $(209) $(97) Net Income (Loss)* (Millions) $(145) $(71) Diluted Earnings (Loss) Per Share $(2.08) $(1.02) Note: This slide contains non-GAAP information; please see the REG G in appendix for a detailed reconciliation. Assuming a similar share count in Q1 2012 as we had in Q1 2011 adjusted EPS would have improved approximately $0.08. *Attributable to Navistar International Corporation 1 st Quarter 2012 Earnings Call March 8, 2012 |
![]() NYSE: NAV 6 6 1 st Quarter 2012 Earnings Call March 8, 2012 Engine Warranty • ($112M) – Accrual Adjustment – 45% Legacy Products (2006-2008) – 45% Early launch 2010 – 10% Brazil – correction • Actions to remediate – Legacy Products • Late in life (2006 – 2008) • Field fixes identified – 2010 Early launches/proactive field actions • Production fixes in 2011 • Administrative and field actions in 2012 Opportunity for Recovery in 2012 |
![]() NYSE: NAV 7 7 1 st Quarter 2012 Earnings Call March 8, 2012 First Quarter Results Q1 Impact Full Year Impact • Healthcare costs - Retiree ($49M) ~($200M) – anticipated • Engine ($20M) - resolved Foundry start-up - resolved South America customer disruption • Truck Military mix • Global Business ($16M) India Brazil - anticipated Purchased engine supply - unanticipated - resolved |
![]() NYSE: NAV 8 8 1 st Quarter 2012 Earnings Call March 8, 2012 Actions for 2012 Q1 Q2 Last Half Warranty ($112M) Actions in place Opportunity of $50M - $60M Volume North America 19% 25% 56% N.A. – Cost reduction/Integration Mostly Carryover Mostly Carryover $100M S.A. – Diesels Loss Profitable 8%-10% Global ($16) Improving 2% - 3% Earnings Q1 EPS (Adjusted non-GAAP) Full Year EPS (Adjusted non-GAAP) 2012 ($2.08) $4.25 - $5.25 Memo: 2011 Actuals $0.16 $5.28 Note: This slide contains non-GAAP information; please see the REG G in appendix for a detailed reconciliation. |
![]() NYSE: NAV 9 9 U.S. & Canada Chargeouts We define our “traditional” markets to include U.S. and Canada School bus and Class 6 through 8 medium and heavy truck. We classify militarized commercial vehicles sold to the U.S. and Canadian militaries as Class 8 severe service within our “traditional” markets. Q3 Q4 0 10,000 20,000 30,000 40,000 50,000 60,000 Q1 Q2 2H FY 2011 19% 58% 23% Q3 Q4 0 10,000 20,000 30,000 40,000 50,000 60,000 Q1 Q2 2H FY 2012 19% 25% 56% 1 st Quarter 2012 Earnings Call March 8, 2012 |
![]() NYSE: NAV 10 10 North America Actions Q1 Q2 Last Half Cost Reduction Carryover Carryover ~$100M Big Bore Diesel $15M-$20M Excess freight Elimination of waste $800-$1,000 per unit cost reduction 1 st Quarter 2012 Earnings Call March 8, 2012 |
![]() NYSE: NAV 11 11 1 st Quarter 2012 Earnings Call March 8, 2012 South America Diesels • Q1 takeaways: – Loss of $14M – Production stoppage in December – Thailand floods resulted in parts shortages • Full year takeaways: – ~60% of volume in second half of year, compared to 54% last year – Growth in Parts – Strong second half results Q3 Q4 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 Q1 Q2 LH FY 2012 |
![]() NYSE: NAV 12 12 1 st Quarter 2012 Earnings Call March 8, 2012 Global Major Markets Q1 Q2 2 nd Half Full Year ($16M) ( ) + 2-3% ROS • Engine Supply Constraints • Slower growth in developing markets • Substitute ISM for ISX • Accelerate sales • Additional Engine capacity • Improve margins • Expand distribution • Expand product offering Latin America ROW (India/ South America/ Australia) Brazil Mature Steady growth Margins on target Products in place Growing distribution Leveraging brands Startup in 2011 Expanding product lineup Developing distribution |
![]() NYSE: NAV 13 13 1 st Quarter 2012 Earnings Call March 8, 2012 Integration Integrated Product Integrated Product Development Center Development Center |
![]() NYSE: NAV 14 14 1 st Quarter 2012 Earnings Call March 8, 2012 FEET FIRST – Integrated Growth Opportunities |
![]() NYSE: NAV 15 15 1 st Quarter 2012 Earnings Call March 8, 2012 Navistar Defense Changing the Game in an Efficiency Era Advantage Navistar - Anticipating needs to provide low-cost solutions today through integration, flexible manufacturing and solid sustainment services Anticipating the need New Ideas – Ready Now Navistar, DRS and Allison Transmission break multiple logistics paradigms - 1/3 the cost Transfer Body to New Rolling Chassis Remove Body From Base Chassis Install Body to New Rolling Chassis On contract Ready Now A look at our performance Rolling chassis MaxxPro ® Plus Independent suspension kits MaxxPro ® Dash Ambulance MXT™ MaxxPro ® Recovery Vehicle MaxxPro ® Plus Residual chassis option Saratoga™ MaxxPro ® residual chassis/ commercial cab option Old Humvee shelter Integrated starter generator – no need to tow power |
![]() NYSE: NAV 16 16 1 st Quarter 2012 Earnings Call March 8, 2012 Changing the Landscape Leading Our Industry Navistar Advances Commitment to Natural Gas through Partnership with Clean Energy |
![]() NYSE: NAV 17 17 1 st Quarter 2012 Earnings Call March 8, 2012 Why Natural Gas? Economics – Natural Gas Price Stability – Life Cycle Economics Technology – Natural Gas Extraction & Delivery – Navistar Advanced Emissions Sustainability – Corporate Sustainability – Energy Independence – Large Job Creation Changing the Landscape |
![]() NYSE: NAV 18 1 st Quarter 2012 Earnings Call March 8, 2012 18 Compressed Natural Gas (CNG) Payback Initial Investment $25K to $40K Fuel Cost Savings Diesel CNG Savings $4.00 $2.50 $1.50 Annual Usage 10,000 gallons $15K per year 20,000 gallons $30K per year |
![]() NYSE: NAV 19 1 st Quarter 2012 Earnings Call March 8, 2012 19 Navistar Uniquely Positioned for Natural Gas Leadership Integrated Transportation Solution Integrated Vehicle Solutions Navistar Dealer Network Natural Gas Fuel Provider Fueling Infrastructure Transportation Fleets |
![]() NYSE: NAV 20 1 st Quarter 2012 Earnings Call March 8, 2012 20 Building Blocks • Integrated Diesel – 13L vs. 15L – Fuel economy/weight – Service parts – Dealer strength – Global engine business – Global truck business – Feet first • Global emissions platform • Platform for alternative fuels |
![]() NYSE: NAV 21 21 1 st Quarter 2012 Earnings Call March 8, 2012 Revised 2012 Guidance – $4.25 - $5.25 EPS Original 2012 Guidance as shown on 2/1/2012 (adjusted non-GAAP) Revised 2012 Guidance (adjusted non-GAAP) Revenue (Billions) $15.0 - $16.0 $15.0 - $16.0 Adj. Mfg. Segment Profit (Millions) $1,000 - $1,150 $900 - $1,000 Adj. Net Income (Millions) $350 - $400 $295 - $365 Share Count (Millions) ~ 70 ~ 70 Adj. Diluted EPS GAAP Net Income (Millions) $280 - $345 $225 - $310 • Integration benefits • Cost reductions • Legacy engine warranty • Foundry start-up • Inefficiencies from supplier disruptions (-) (-) (-) + + Note: This slide contains non-GAAP information; please see the REG G in appendix for a detailed reconciliation. $5.00 - $5.75 $4.25 - $5.25 |
![]() WHQ, Warrenville, IL • Executive Management • Truck Management • Parts Management • Sales & Marketing • Corporate Functions (Legal, Finance, Treasury, HR, etc.) • Global Purchasing Fort Wayne, IN • Truck Engineering Other Locations • NFC, Schaumburg, IL • Global Manufacturing Systems, Springfield, OH • Midwest Regional Sales Office, West Chicago, IL • TBD Downers Grove, IL • IT Services Melrose Park, IL • Engine Management • Engine Engineering Integration – We Said $60 Million Plus 22 NYSE: NAV 1 st Quarter 2012 Earnings Call March 8, 2012 |
![]() NYSE: NAV 23 23 1 st Quarter 2012 Earnings Call March 8, 2012 Integration/Differentiation Status • Bus • Military • Latin America • Parts Actions Complete Breakthroughs 2012 Future • North America Truck • Engine • Natural Gas • Global Truck • Global Bus ProStar ® 40T/49T 25T Tipper CT610 CT630 ProStar ® with MaxxForce ® 15 Sloped Nose WorkStar ® MaxxForce ® 11/13 LoneStar ® with 500HP MaxxForce ® 13 13L 13L |
![]() NYSE: NAV 24 24 1 st Quarter 2012 Earnings Call March 8, 2012 Manufacturing Cash Flow Note: This slide contains non-GAAP information; please see the Reg G disclosure in the appendix for a detailed reconciliation. Here’s what we said at Analyst Day: Here’s what we said at Analyst Day: • Cash guidance unchanged • Warranty expense is non- cash • Working capital initiatives underway ~$1,200 ~$1,200 $950 $300 $275 $210 $75 $90 $0 $500 $1,000 $1,500 $2,000 2011 Mfg Cash Cash from operations Pension/OPEB Funding Maintenance CapEx Strategic Investments Share buyback Other 2012 Mfg Cash Free Cash Flow $375M |
![]() NYSE: NAV 1 st Quarter 2012 Earnings Call March 8, 2012 Strategic Goals: Margin Expansion • Strategic Goal: – $20B of Sales – $1.8B of Segment Profit or 9% Return on Sales 2012 Full Year 2012 Outgoing Run Rate Strategic Target Truck - N.A. w/Parts 6-7% 8-9% 9-10% Truck - Global w/Parts 1-2% 2-3% 6-8% Engine - Worldwide w/Parts 6-7% 7-8% 8-10% Total Manufacturing Margin ~6% ~8% ~9% Note: This slide contains non-GAAP information; please see the REG G in appendix for a detailed reconciliation. 25 |
![]() NYSE: NAV 26 1 st Quarter 2012 Earnings Call March 8, 2012 Appendix |
![]() NYSE: NAV 1 st Quarter 2012 Earnings Call March 8, 2012 Medium Truck Great Products – Market Share Severe Service Truck Heavy Truck FY10 59% FY11 49% Trailing 6 mos. 51% Q1’12 48% FY10 38% FY11 41% Trailing 6 mos. 36% Q1’12 27% FY10 40% FY11 35% Trailing 6 mos. 34% Q1’12 31% FY10 24% FY11 17% Trailing 6 mos. 17% Q1’12 17% Class 8 School Bus (U.S. & Canada) Class 4-5 Q1’12 Industry 10K Navistar 600 Market Share ~6% 27 Note: Market share based on brand and rankings based on full year 2011. 19% Market Share Q1’12 School Bus & Combined Class 6-8 Market Share – FY10: 34%; FY11: 28%; Trailing 6 mos.: 26%; Q1 FY12: 22% We define our “traditional” markets to include U.S. and Canada School bus and Class 6 through 8 medium and heavy truck. We classify militarized commercial vehicles sold to the U.S. and Canadian militaries as Class 8 severe service within our “traditional” markets. Beginning in 2011, our competitors are reporting certain RV and commercial bus chassis units consistently with how we report these units. |
![]() NYSE: NAV 28 28 1 st Quarter 2012 Earnings Call March 8, 2012 Supplemental Information - Truck Worldwide Truck Chargeouts 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 Analyst Day 2012 Actual Analyst Day Analyst Day Analyst Day Q1 Q2 Q3 Q4 Traditional Expansionary Towables We define our “traditional” markets to include U.S. and Canada School bus and Class 6 through 8 medium and heavy truck. We classify militarized commercial vehicles sold to the U.S. and Canadian militaries as Class 8 severe service within our “traditional” markets. |
![]() NYSE: NAV 29 1 st Quarter 2012 Earnings Call March 8, 2012 $248 $220 $85 $31 $- $50 $100 $150 $200 $250 $300 $350 Q1 2011 Q1 2012 Truck Parts 49,000 47,900 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 Q1 2011 Q1 2012 19,500 24,900 0 5,000 10,000 15,000 20,000 25,000 30,000 Q1 2011 Q1 2012 Q1 Operational Results Consolidated Revenues ($ in millions) Quarterly Truck Chargeouts Quarterly Engine Shipments Charge outs increased 28% Military Revenues ($ in millions) Engine shipments decreased 2% Truck Revenues decreased 11% Parts Revenues decreased 64% $2,743 $3,052 $333 $251 $1,867 $2,116 $543 $685 $- $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 Q1' 2011 Q1 2012 Military U.S. & Canada ROW |
![]() NYSE: NAV 30 30 1 st Quarter 2012 Earnings Call March 8, 2012 Quarter over Quarter Financial Information: Q1 Adj. Manufacturing Segment Profit (Loss) ($ in millions) Q1 Adj. Earnings (Loss) Per Share Q1 Adj. Net Income (Loss) ($ in millions) Note: This slide contains non-GAAP information; please see the REG G in appendix for a detailed reconciliation. $98 $(102) -$150 -$100 -$50 $0 $50 $100 $150 Q1 2011 Q1 2012 $12 $(145) -$160.0 -$140.0 -$120.0 -$100.0 -$80.0 -$60.0 -$40.0 -$20.0 $0.0 $20.0 Q1 2011 Q1 2012 $0.16 $(2.08) -$2.50 -$2.00 -$1.50 -$1.00 -$0.50 $0.00 $0.50 Q1 2011 Q1 2012 |
![]() NYSE: NAV 31 31 1 st Quarter 2012 Earnings Call March 8, 2012 Market Share – U.S. & Canada School Bus and Class 6-8 Traditional Market Share Q1 Q2 Q3 Q4 Full Year Q1 Q2 Q3 Q4 Full Year Q1 Q2 Q3 Q4 Full Year School buses 60% 63% 53% 61% 59% 49% 45% 47% 53% 49% 48% 48% Class 6 and 7 medium trucks 33% 44% 36% 36% 38% 36% 36% 46% 44% 41% 27% 27% Class 8 heavy trucks 23% 22% 30% 20% 24% 17% 16% 17% 18% 17% 17% 17% Class 8 severe service trucks 40% 41% 38% 40% 40% 33% 32% 36% 37% 35% 31% 31% Combined Class 8 28% 28% 32% 25% 28% 21% 19% 21% 22% 21% 19% 19% Total Traditional Market Share 33% 35% 35% 32% 34% 27% 26% 29% 29% 28% 22% 22% Market Share U.S. & Canada School Bus and Class 6-8 2011 2010 2012 We define our “traditional” markets to include U.S. and Canada School bus and Class 6 through 8 medium and heavy truck. We classify militarized commercial vehicles sold to the U.S. and Canadian militaries as Class 8 severe service within our “traditional” markets. Beginning in 2011, our competitors are reporting certain RV and commercial bus chassis units consistently with how we report these units. |
![]() NYSE: NAV 32 32 1 st Quarter 2012 Earnings Call March 8, 2012 Worldwide Truck Chargeouts We define our “traditional” markets to include U.S. and Canada School bus and Class 6 through 8 medium and heavy truck. We classify militarized commercial vehicles sold to the U.S. and Canadian militaries as Class 8 severe service within our “traditional” markets. Q1 Q2 Q3 Q4 Full Year BUS 3,100 3,000 2,400 3,900 12,400 MEDIUM 3,900 5,300 3,900 5,400 18,500 HEAVY 5,200 4,600 6,400 5,400 21,600 SEVERE 3,900 3,800 2,200 4,100 14,000 TOTAL 16,100 16,700 14,900 18,800 66,500 NON-TRADITIONAL MILITARY 100 200 1,000 100 1,400 EXPANSIONARY 3,900 4,500 4,700 6,000 19,100 WORLDWIDE TRUCK 20,100 21,400 20,600 24,900 87,000 Q1 Q2 Q3 Q4 Full Year BUS 2,100 2,000 2,200 2,900 9,200 MEDIUM 4,600 7,200 7,400 7,900 27,100 HEAVY 4,700 5,200 6,800 9,000 25,700 SEVERE 2,700 3,200 3,700 3,700 13,300 TOTAL 14,100 17,600 20,100 23,500 75,300 NON-TRADITIONAL MILITARY 100 400 200 700 1,400 EXPANSIONARY 5,300 7,600 8,600 10,200 31,700 WORLDWIDE TRUCK 19,500 25,600 28,900 34,400 108,400 Q1 Q2 Q3 Q4 Full Year BUS 1,700 1,700 MEDIUM 4,300 4,300 HEAVY 8,000 8,000 SEVERE 3,100 3,100 TOTAL 17,100 - - - 17,100 NON-TRADITIONAL MILITARY 200 200 EXPANSIONARY 7,600 7,600 WORLDWIDE TRUCK 24,900 - - - 24,900 Worldwide Truck Chargeouts 2010 2012 2011 |
![]() NYSE: NAV 33 33 1 st Quarter 2012 Earnings Call March 8, 2012 Worldwide Engine Shipments Q1 Q2 Q3 Q4 Full Year OEM sales - South America 30,700 34,600 33,600 33,900 132,800 Ford sales - U.S. and Canada 24,700 200 - - 24,900 Other OEM sales 2,000 3,600 3,700 4,900 14,200 Intercompany sales 16,400 17,700 15,600 18,800 68,500 Total Shipments 73,800 56,100 52,900 57,600 240,400 Q1 Q2 Q3 Q4 Full Year OEM sales - South America 27,200 37,100 38,200 36,100 138,600 Other OEM sales 4,500 4,400 3,700 3,600 16,200 Intercompany sales 17,300 23,500 22,300 25,700 88,800 Total Shipments 49,000 65,000 64,200 65,400 243,600 Q1 Q2 Q3 Q4 Full Year OEM sales - South America 24,100 24,100 Other OEM sales 2,200 2,200 Intercompany sales 21,600 21,600 Total Shipments 47,900 - - - 47,900 Worldwide Engine Shipments 2010 2011 2012 |
![]() NYSE: NAV 34 34 1 st Quarter 2012 Earnings Call March 8, 2012 Order Receipts – U.S. & Canada Percentage 2012 2011 Change Change 2,100 1,500 600 40 5,400 7,600 (2,200) (29) Class 8 heavy trucks 8,100 7,700 400 5 Class 8 severe service trucks 3,900 3,300 600 18 19,500 20,100 (600) (3) 12,000 11,000 1,000 9 Three Months Ended January 31, Order Receipts: U.S. & Canada (Units) Total "Traditional" Markets Combined Class 8 (Heavy and Severe Service) "Traditional" Markets School buses Class 6 and 7 medium trucks We define our “traditional” markets to include U.S. and Canada School bus and Class 6 through 8 medium and heavy truck. We classify militarized commercial vehicles sold to the U.S. and Canadian militaries as Class 8 severe service within our “traditional” markets. |
![]() NYSE: NAV 1 st Quarter 2012 Earnings Call March 8, 2012 Navistar Financial Corporation Note: profitability relates to total financial services • Profitability strong: $27M in Q1 2012 Expected decline as U.S. retail loan portfolio runs off due to G.E. Capital alliance • Long-term liquidity in place with better terms, $545M U.S. availability New 5-year $840M bank credit facility New 2-year $224M wholesale securitization • Service leverage of 4.3 to 1 and declining as GE Capital alliance sources retail originations Over $1.2B since inception Retail Notes Bank Facility • $840M facility refinanced in December 2011, maturity extended from 2012 to 2016 – Funding for retail notes, wholesale notes, retail accounts, and dealer open accounts On balance sheet • Situation as of Jan 31, 2012 – $1.1B funding facility (NFSC) – $280M available • NFSC wholesale trust – Variable portion matures July 2012 – Public portions mature October 2012 and October 2013 On balance sheet • Broader product offering • Enhanced ability to support large fleets • Better access to less expensive capital Leveraging Assets & Controlling Our Destiny Dealer Floor Plan 35 |
![]() NYSE: NAV 36 36 1 st Quarter 2012 Earnings Call March 8, 2012 U.S. and Canada Dealer Stock Inventory* *Includes U.S. and Canada Class 4-8 and school bus inventory, but does not include U.S. IC Bus or Workhorse Custom Chassis inventory. |
![]() NYSE: NAV 37 37 1 st Quarter 2012 Earnings Call March 8, 2012 Frequently Asked Questions Q1: What is in your Dealcor debt? A: Dealcor debt is comprised of wholesale (floor plan) financing and also retail financing on lease and rental fleets for company owned dealers. Q2: How many Dealcor dealers did you have as of January 31, 2012? A: Of our 271 primary NAFTA dealers, we have ownership interest in 7 DealCor dealers as of January 31, 2012. Q3: How are your dealers doing? A: The operational and financial strength of our industry leading dealer network continues to improve in all areas of the business. We continue to add new dealers to the distribution network, attracted by the breadth of our product lines and significant opportunities in major markets, both in North America and globally. Considerable investments in facility upgrades and acquisitions continue by aggressive and growth oriented existing dealers, further strengthening our footprint, service capabilities and accessibility to our customers. Additional fixed operational demand, as a result of our proprietary engine lineup, has resulted in significant investments across the network in technicians, tooling and hours of service expansion. Q4: What kind of rates do you charge your dealers and customers? A: Generally, our rates vary (those with higher credit risk have always had to pay higher interest rates) and are usually in line with the market. Q5: How do you fund your wholesale business? A: We primarily finance our wholesale portfolio through NFC, funded with traditional private or public securitizations, and through NFC’s bank facility. Q6: How is your NFC portfolio performing? A: NFC‘s wholesale portfolio performed exceptionally well in 2011 and is expected to see minimal losses again in 2012. NFC’s retail notes portfolio in the U.S. is in run-off mode now that Navistar Capital, the new GE Capital retail program, is financing retail customers. Q7: What is your total amount of capacity at NFC? A: As of January 31, 2012, total availability in our U.S. funding facilities is $545 million. |
![]() NYSE: NAV 38 38 1 st Quarter 2012 Earnings Call March 8, 2012 Frequently Asked Questions Q8: What is the status of the retail financing alliance with GE Capital in the United States? A: Navistar Capital – the alliance we formed with GE Capital in the United States to support the sale of Navistar products – is progressing consistent with expectations. Since its inception in 2010, the alliance has funded more than $1.2 billion in retail financings. Q9: What is included in Corporate and Eliminations? A: The primary drivers of Corporate and Eliminations are Corporate SG&A, pension and OPEB expense (excluding amounts allocated to the segments), annual incentive, manufacturing interest expense, and the elimination of intercompany sales and profit between segments. Q10: What is the status of the High Mobility Multipurpose Wheeled Vehicle (HMMWV) Modernized Expanded Capacity Vehicle (MECV) program? A: This program has been canceled as part of a five-year plan to reduce defense spending. Q11: What is the current Joint Light Tactical Vehicle (JLTV) program status? A: A response to the request for proposals is currently due on March 13. Q12: What are your margins for military vehicles? A: We do not break out margins specific to our military vehicles. These numbers are reported as part of our Truck segment financials. Q13: How will the changing Department of Defense (DoD) budget affect Navistar in FY 2012? A: The coming year will present challenges, but Navistar’s commercial expertise may be an advantage when the DoD is asked to “do more with less”. In addition, the Company continues to pursue a number of foreign military opportunities, especially in the Middle East, where defense spending is growing. Finally, the Company has a fleet of more than 32,000 vehicles in operation in approximately 26 countries, including more than 9,000 vehicles operating with Afghan Security Forces. These vehicles will require parts and sustainment support throughout their lifecycles. |
![]() NYSE: NAV 39 39 1 st Quarter 2012 Earnings Call March 8, 2012 Frequently Asked Questions Q14: How does your FY 2012 Class 8 industry compare to ACT Research? A: Q15: What were the 2010 emissions requirements? A: Through the use of credits manufacturers can go to a maximum of 0.50g NOx if they reduced emissions earlier with advanced technology; manufacturers need to be at 0.20g NOx if they chose not to introduce advanced technologies to reduce their emissions earlier. For many years Navistar introduced cleaner emission engines than the EPA required, so we were able to generate some credit before we needed to go to the 0.20g NOx standard. Q16: What is your estimate of future effective tax rates? A: Beginning in 2012, we would estimate future effective tax rates to fall in the upper 20% to low 30% range. For FY 2012, we expect our annual ETR to fall between 25% and 30%, excluding the impact of releasing valuation allowances, if any. Q17: What is your expectation for future cash tax payments? A: Our cash tax payments will remain low in FY 2012 and will gradually increase as we exhaust available NOLs and tax credits over the next few years. Reconciliation to ACT 2012 ACT* 247,377 CY to FY adjustment (2,806) Other misc. specialty vehicles Included in ACT (5,500) Total (ACT comparable Class 8 to Navistar) 239,071 Navistar Industry Retail Deliveries Combined Class 8 Trucks 216,500 Navistar difference from ACT: 22,571 10.4% *Source: ACT N.A. Commercial Vehicle Outlook - Feb, 2012 U.S. and Canadian Class 8 Truck Sales |
![]() NYSE: NAV 40 40 1 st Quarter 2012 Earnings Call March 8, 2012 Frequently Asked Questions Q18: What is the current balance of net operating losses as compared to other deferred tax assets? A: As of October 31, 2011 the Company has U.S. federal net operating losses (NOLs) valued at $126 million, state NOLs valued at $79 million and foreign NOLs valued at $102 million, for a total undiscounted cash value of $307 million. In addition to NOLs, the Company has accumulated tax credits of $208 million and other deferred tax assets of $1.5 billion resulting in net deferred tax assets of approximately $2 billion. Q19: When do you expect to release the remaining balance of valuation allowances? A: The Company continues to evaluate various business strategies which would allow us to realize the value of deferred tax assets that are currently subject to a valuation allowance. To the extent these strategies enable us to demonstrate, on a more-likely-than not basis, that we will be able to realize these deferred tax assets in the future, we will then release the associated valuation allowances. Q20: How will $2 billion of deferred tax assets be used to offset future taxable income? A: Simply put, deferred tax assets represent the value of future tax deductions attributable to items that have already been expensed or deducted for book purposes. The most commonly understood component of deferred tax assets is the value of our net operating losses, which will serve to immediately reduce taxable income in the future. In addition, we have several other major components of deferred taxes which will reduce taxable income in the future. For example, the Company has accrued significant OPEB, pension and other employee benefit expenses during prior years based on expected payments to be made in the future. As these payments are made, the Company will realize tax deductions to offset future taxable income. Q21: How would future tax proposals to reduce U.S. tax rates impact Navistar? A: While lower tax rates would favorably impact future tax expense, because of the Company’s large balance of deferred tax assets we would incur a one-time adverse impact to our P&L to reset/reduce our deferred tax balances to the lower statutory rates. We estimate that for every 1% reduction in tax rates, we would incur an immediate, one-time tax increase of $50 million. |
![]() NYSE: NAV 41 41 Frequently Asked Questions Q22: What are your expected 2012 and beyond pension funding requirements? A: Current forecasts indicate that we may need to contribute approximately $189 million in 2012 to our U.S. and Canadian pension plans (the Plan). Future contributions are dependent upon a number of factors, principally the changes in values of plan assets, changes in interest rates, and the impact of any funding relief currently under consideration. We currently expect that from 2013 through 2015, the Company will be required to contribute at least $170 million per year to the Plan, depending on asset performance and discount rates. Q23: What causes the variance between manufacturing cash interest payments and GAAP interest expense? A: The main variance between cash and GAAP interest results from our manufacturing segment’s $1 billion of senior unsecured high yield notes and $570 million of senior subordinated convertible notes. As a result of these issuances, future manufacturing interest expense will be higher than cash interest payments due to the amortization of debt issuance costs which are amortized over the life of each note ($36 million), amortization of the original issue discount of the high yield notes ($37 million) and amortization of the embedded call option in the convertible notes ($114 million). In addition, cash interest payments are remitted to the holders of the $225 million of Recovery Zone Facility Bonds (RZFBs) but a portion of the interest is capitalized and does not impact our income statement in the current quarter. The expectation is that we will cease capitalizing a portion of the interest beginning sometime in fiscal 2013. Lastly, the timing of interest payments also impacts the overall variance on a quarterly basis, but not on a fiscal year basis. Q24: What should we assume for capital expenditures in fiscal 2012? A: We plan to continue capital spending within the traditionally guided range of $250 million to $350 million for products and development. Capital spending related to Engineering Integration is funded through the RZFBs and is not included in that range. Q25: What are the $225 million of RZFBs Series 2010 due October 15, 2040 being used for? A: We are using the proceeds to invest in our product development strategy and our headquarter consolidation. Great products are a key pillar of our three pronged strategy. Streamlining and improving our product development processes will continue to provide competitive advantages for us in the marketplace. The funding from the RZFBs allowed us to consolidate many facilities into a new facility and make necessary renovations to that facility. Additionally we are investing in an existing facility, which includes investments in equipment and technology that will help us create and improve our product development process and thus shareholder value. 1 st Quarter 2012 Earnings Call March 8, 2012 |
![]() NYSE: NAV 42 42 1 st Quarter 2012 Earnings Call March 8, 2012 Frequently Asked Questions Q26: Why did you use RZFB financing? A: The RZFBs are a cost effective, long-term form of capital that is complementary to our capital structure. The bonds have a 30 year maturity and a fixed rate coupon of 6.50% per annum. They are callable at par any time after 10 years (October 15, 2020). Issuing bonds in the tax-exempt market gave us exposure to a new source of investors that we wouldn’t otherwise have access to if not for the RZFB program. Q27: What are the differences between the accounting vs. economic dilution on your convertible debt? A: Please see the presentation on the IR website (http://ir.navistar.com/dilution.cfm) entitled Dilution overview resulting from the Convertible Notes issued on October 2009. Q28: Why are the convertible debt holders no longer able to convert their notes? A: The indenture in our convertible notes contains a provision that allows the note holders to convert anytime during the following fiscal quarter should the price of Navistar’s common stock close 130% above the conversion price for any 20 day period (consecutive or non-consecutive) out of the last 30 consecutive day trading period of each fiscal quarter. Our fiscal second quarter ended on April 30, 2011; the conversion price of the notes is $50.274 per share of Navistar’s common stock; 130% of the conversion price equals $65.356 per share of Navistar’s common stock. Since Navistar’s common stock closed above $65.356 per share for more than 20 trading days during the 30 consecutive trading day period ending on April 30, 2011, the note holders had the right to convert their notes any time from May 2, 2011 through July 31, 2011. A very small minority of note holders chose to convert their notes during the conversion period. Navistar opted to settle the conversion in cash instead of shares, therefore there was a 40 trading day observation period to determine the value that was remitted in cash, so the note holders did not receive the cash for almost two months after their respective conversion notices were received. Navistar’s common stock did not close above $65.356 per share for 20 trading days (consecutive or non-consecutive) during the 30 day consecutive trading day period ending January 31, 2012, therefore the note holders do not have the right to convert their notes, however that threshold could be triggered once again in the future. |
![]() NYSE: NAV 43 43 1 st Quarter 2012 Earnings Call March 8, 2012 Frequently Asked Questions Q29: Are you ready for the 2013 Greenhouse Gas (GHG) regulation? A: Yes, Navistar is ready to meet the standards when they go into effect January 2014. As a leader in fuel efficiency and in delivering innovative technologies, such as aerodynamics, lighter weight vehicles, fuel efficient engines, hybrids, plug-in hybrids and electric vehicles, our current approach is to consistently deliver the most practical advance technology and fuel-efficient vehicles to our customers. Our customer-focused approach aligns Navistar with the intent of the new proposed GHG rule, and provides us with a strong basis for meeting the new standards. Q30: How are you addressing the 2014 GHG regulations? A: Navistar has invested in the development of fuel efficient engines, powertrain optimization, and unmatched vehicle level aerodynamics as well as other vehicle level attributes that result in the lowering fuel consumption or the CO2 of the entire vehicle. Further, our non-SCR engines have an advantage where we do not release any N2O in the environment, which is one of the GHG elements and more potent than CO2. We are planning on meeting the GHG standard through 2016 with no changes to the vehicle. We are now working on 2017 GHG standards and we are confident that we will meet these standards with minimum changes. |
![]() NYSE: NAV 44 44 1 st Quarter 2012 Earnings Call March 8, 2012 Manufacturing Cash Flow Beginning Mfg. Cash 1 Balance Fiscal 2010 Fiscal 2011 Q1 - 2012 October 31, 2009 $1,152 October 31, 2010 $1,100 October 31, 2011 $1,186 Approximate Cash Flows: From Operations $409 $680 ($142) From Investing / (Cap Ex) ($350) ($485) ($125) From Financing / (Debt Pay Down) ($110) ($106) ($85) Exchange Rate Effect ($1) ($3) $3 Net Cash Flow ($52) $86 ($349) Blue Diamond Consolidation $0 $0 $0 Ending Mfg. Cash 1 Balance: October 31, 2010 $1,100 October 31, 2011 $1,186 January 31, 2012 $837 1 Cash = Cash, Cash Equivalents & Marketable Securities |
![]() NYSE: NAV 45 45 1 st Quarter 2012 Earnings Call March 8, 2012 Outstanding Debt Balances January 31, 2012 October 31, 2011 (in millions) Manufacturing operations 8.25% Senior Notes, due 2021, net of unamortized discount of $29 and $33 at the respective dates $ 871 $ 967 3.0% Senior Subordinated Convertible Notes, due 2014, net of unamortized discount of $68 and $73 at the respective dates 502 497 Debt of majority-owned dealerships 92 94 Financing arrangements and capital lease obligations 160 118 Loan Agreement related to 6.5% Tax Exempt Bonds, due 2040 225 225 Promissory Note 38 40 Asset-Based Credit Facility 100 — Other 42 39 Total manufacturing operations debt 2,030 1,980 Less: Current portion 200 99 Net long-term manufacturing operations debt $ 1,830 $ 1,881 Financial services operations Asset-backed debt issued by consolidated SPEs, at variable rates, due serially through 2018 $ 1,371 $ 1,664 Bank revolvers, at fixed and variable rates, due dates from 2013 through 2017 997 1,072 Commercial paper, at variable rates, due serially through 2012 63 70 Borrowings secured by operating and finance leases, at various rates, due serially through 2017 72 70 Total financial services operations debt 2,503 2,876 Less: Current portion 897 1,280 Net long-term financial services operations debt $ 1,606 $ 1,596 |
![]() SEC Regulation G Non-GAAP Reconciliation 46 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. Manufacturing Segment Results: We believe manufacturing segment results, which includes the segment results of our Truck, Engine, and Parts reporting segments, provide meaningful information of our core manufacturing business and therefore we use it to supplement our GAAP reporting by identifying items that may not be related to the core manufacturing business. Management often 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 reconciliation, and to provide an additional measure of performance. Adjusted Net Income and Diluted Earnings Per Share Attributable To Navistar International Corporation and Adjusted Manufacturing Segment Profit: We believe that adjusted net income, diluted earnings per share attributable to Navistar International Corporation, and adjusted manufacturing segment profit excluding certain adjustments which are not considered to be part of our ongoing business, improve the comparability of year to year results and are representative of our underlying performance. 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 Manufacturing Earnings Before Interest, Income Taxes, Depreciation, and Amortization (“EBITDA”): Adjusted manufacturing segment EBITDA is defined as our consolidated net income (loss) from continuing operations minus the net income (loss) from our financial services operations plus interest expense, income taxes, and depreciation and amortization, adjusted to exclude certain items that may not be related to the core manufacturing business. EBITDA is a measure commonly used and is presented to aid in developing an understanding of the ability of our operations to generate cash for debt service and taxes, as well as cash for investments in working capital, capital expenditures, and other liquidity needs. This information is presented as a supplement to the other data provided because it provides information which we believe is useful to investors for additional analysis. EBITDA should not be considered in isolation or as a substitute for net income, cash flows from operating activities or other consolidated operations, or cash flow statement data prepared in accordance with GAAP, or as a measure of our profitability or liquidity as determined in accordance with GAAP. Manufacturing Cash Flow and Manufacturing Cash, Cash Equivalents, and Marketable Securities: Manufacturing cash flow is used and is presented to aid in developing an understanding of the ability of our operations to generate cash for debt service and taxes, as well as cash for investments in working capital, capital expenditures and other liquidity needs. This information is presented as a supplement to the other data provided because it provides information which we believe is useful to investors for additional analysis. Our manufacturing cash flow is prepared with marketable securities being treated as a cash equivalent. Manufacturing cash, cash equivalents, and marketable securities represents 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 operating results, to illustrate the results of operations giving effect to the non-GAAP adjustments shown in the below reconciliation, and to provide an additional measure of performance. |
![]() NYSE: NAV 47 47 1 st Quarter 2012 Earnings Call March 8, 2012 SEC Regulation G – Adjusted Manufacturing EBITDA Three Months Ended January 31, 2012 ($ in Millions) Net loss attributable to NIC (153) $ Less income tax benefit (90) Loss before income tax benefit (243) $ Less equity income from financial service operations (17) Loss before income tax benefit and equity income from financial service operations (260) $ Add back manufacturing interest expense 37 Manufacturing EBIT (223) $ Add back manufacturing depreciation and amortization 1 70 Adjusted manufacturing EBITDA (153) $ 1 Includes depreciation of equipment leased to others and excludes debt issuance cost/discount amortization Navistar International Corporation (Manufacturing operations with financial services operations on a pre-tax equity basis) |
![]() NYSE: NAV 48 48 1 st Quarter 2012 Earnings Call March 8, 2012 SEC Regulation G – Manufacturing Cash Fiscal Year Comparison Manufacturing cash, cash equivalents, and marketable securities reconciliation: ($ in Millions) January 31, 2012 October 31, 2011 October 31, 2010 October 31, 2009 Manufacturing segment cash and cash equivalents 418 $ 488 $ 534 $ 1,152 $ Financial services segment cash and cash equivalents 70 51 51 60 Consolidated cash and cash equivalents 488 $ 539 $ 585 $ 1,212 $ Manufacturing marketable securities 419 $ 698 $ 566 $ - $ Financial services segment marketable securities 20 20 20 - Consolidated marketable securities 439 $ 718 $ 586 $ - $ Manufacturing segment cash and cash equivalents 418 $ 488 $ 534 $ 1,152 $ Manufacturing marketable securities 419 698 566 - Manufacturing segment cash, cash equivalents and marketable securities 837 $ 1,186 $ 1,100 $ 1,152 $ |
![]() NYSE: NAV 49 49 1 st Quarter 2012 Earnings Call March 8, 2012 SEC Regulation G – Manufacturing Cash Manufacturing Operations Financial Services Operations Adjustments Condensed Consolidated Cash Flows ($ in Millions) For the year ended October 31, 2009 Cash flows from operations 534 - 1,238 Cash flows from investing / capital expenditures: (284) 22 (212) Cash flows from financing / debt pay down 36 (20) (764) Effect of exchange rate changes 9 - 9 Net cash flows 295 2 271 Blue Diamond Consolidation 80 - 80 Beginning cash, cash equivalents and marketable securities balance 777 (2) 861 Ending cash, cash equivalents and marketable securities balance 1,152 704 50 (780) - (26) - 86 60 - 1,212 Manufacturing segment cash flow reconciliation: Manufacturing Operations Financial Services Operations Adjustments Condensed Consolidated Cash Flows ($ in Millions) For the year ended October 31, 2010 Cash flows from operations 409 - 1,107 Cash flows from investing / capital expenditures: (350) (576) (434) Cash flows from financing / debt pay down (110) (10) (1,300) Effect of exchange rate changes (1) - - Net cash flows (52) (586) (627) Beginning cash, cash equivalents and marketable securities balance 1,152 - 1,212 Ending cash, cash equivalents and marketable securities balance 1,100 698 492 (1,180) 1 11 60 71 (586) 585 Manufacturing segment cash flow reconciliation: |
![]() NYSE: NAV 50 50 1 st Quarter 2012 Earnings Call March 8, 2012 SEC Regulation G – Manufacturing Cash Manufacturing Operations Financial Services Operations Adjustments Condensed Consolidated Cash Flows ($ in Millions) For the year ended October 31, 2011 Cash flows from operations 680 200 - 880 Cash flows from investing / capital expenditures: (485) (206) (132) (823) Cash flows from financing / debt pay down (106) 6 - (100) Effect of exchange rate changes (3) - - (3) Net cash flows 86 - (132) (46) Beginning cash, cash equivalents and marketable securities balance 1,100 71 (586) 585 Ending cash, cash equivalents and marketable securities balance 1,186 71 (718) 539 Manufacturing segment cash flow reconciliation: Manufacturing Operations Financial Services Operations Adjustments Condensed Consolidated Cash Flows ($ in Millions) For the three months ended January 31, 2012 Cash flows from operations (142) 261 - 119 Cash flows from investing / capital expenditures: (125) 147 279 301 Cash flows from financing / debt pay down (85) (393) (478) Effect of exchange rate changes 3 4 - 7 Net cash flows (349) 19 279 (51) Beginning cash, cash equivalents and marketable securities balance 1,186 71 (718) 539 Ending cash, cash equivalents and marketable securities balance 837 90 (439) 488 Manufacturing segment cash flow reconciliation: |
![]() NYSE: NAV 51 51 1 st Quarter 2012 Earnings Call March 8, 2012 SEC Regulation G – Adjusted Net Income, Diluted EPS and Manufacturing Segment Profit – Three Months Ended January 31, 2012 and 2011 (A) Engineering integration costs relate to the consolidation of our truck and engine engineering operations, as well as the relocation of our world headquarters. For the three months ended January 31, 2012, the charge included related costs of $12 million, offset by a tax benefit of $4 million. For the three months ended January 31, 2011, all costs were recognized as restructuring charges. Our Manufacturing segment recognized pre-tax costs of $9 million and $18 million relating to these actions, for the three months ended January 31, 2012 and 2011, respectively. The adjustment for the three months ended January 31, 2011 was not adjusted to reflect its income tax effect, as the Company's income tax expense on U.S. and Canadian operations was limited to current state income taxes, alternative minimum tax net of refundable credits, and other discrete items, during the period the adjustment was recorded. (B) For both the first quarters of 2012 and 2011, on a GAAP basis, no dilutive securities were included in the computation of diluted loss per share because they were anti-dilutive since there was a net loss attributable to Navistar International Corporation. For the first quarter of 2011, the diluted weighted shares outstanding for the computation of adjusted diluted income per share have been adjusted for the impact of dilutive securities. 2012 2011 ($ in millions, except per share data) Net loss attributable to Navistar International Corporation $ (153) $ (6) Plus: Engineering integration costs, net of tax (A) 8 18 Adjusted net income (loss) attributable to Navistar International Corporation $ (145) $ 12 Diluted loss per share attributable to Navistar International Corporation $ (2.19) $ (0.08) Effect of adjustments on diluted loss per share attributable to Navistar International Corporation 0.11 0.24 Adjusted diluted earnings (loss) per share attributable to Navistar International Corporation $ (2.08) $ 0.16 Diluted weighted shares outstanding (B) 69.9 75.9 2012 2011 ($ in millions) Net loss attributable to Navistar International Corporation $ (153) $ (6) Less: Financial services segment profit 27 32 Corporate and eliminations (150) (118) Income tax benefit 81 - Manufacturing segment profit (loss) (111) 80 Plus: Engineering integration costs (A) 9 18 Adjusted manufacturing segment profit (loss) $ (102) $ 98 Adjusted net income (loss) attributable to Navistar International Corporation reconciliation: Manufacturing segment profit (loss) and adjusted manufacturing segment profit (loss) reconciliation: Three Months Ended January 31, Three Months Ended January 31, |
![]() NYSE: NAV 52 52 1 st Quarter 2012 Earnings Call March 8, 2012 SEC Regulation G – Pro Forma Net Income, Diluted EPS and Manufacturing Segment Profit – Three Months Ended January 31, 2012 (A) Engineering integration costs relate to the consolidation of our truck and engine engineering operations, as well as the relocation of our world headquarters. For the three months ended January 31, 2012, the charge included related costs of $12 million, offset by a tax benefit of $4 million. For the three months ended January 31, 2011, all costs were recognized as restructuring charges. Our Manufacturing segment recognized pre-tax costs of $9 million and $18 million relating to these actions, for the three months ended January 31, 2012 and 2011, respectively. The adjustment for the three months ended January 31, 2011 was not adjusted to reflect its income tax effect, as the Company's income tax expense on U.S. and Canadian operations was limited to current state income taxes, alternative minimum tax net of refundable credits, and other discrete items, during the period the adjustment was recorded. (B ) The warranty adjustment represents an unanticipated increase in warranty spend for certain 2007 and 2010 emission standard engines, with the majority relating to the initial build of 2010 emission standard engines. Component complexity associated with meeting new emission standards have contributed to higher repair costs, which have exceeded those that we have historically experienced. In the first quarter of 2012, our Engine segment recorded adjustments for changes in estimates of $112 million, or $1.60 per diluted share. Net of tax, the adjustments for changes in estimates amounted to $74 million, or $1.06 per diluted share. Adjusted net loss attributable to Navistar International Corporation excluding warranty adjustment reconciliation: ($ in millions, except per share data) Net loss attributable to Navistar International Corporation Plus: Engineering integration costs, net of tax (A) Adjusted net loss attributable to Navistar International Corporation Plus: Warranty adjustment, net of tax (B) Adjusted net loss attributable to Navistar International Corporation excluding warranty adjustment Diluted loss per share attributable to Navistar International Corporation Effect of adjustments on diluted loss per share attributable to Navistar International Corporation Adjusted diluted loss per share attributable to Navistar International Corporation excluding warranty adjustment Diluted weighted shares outstanding (B) Adjusted manufacturing segment profit (loss) excluding warranty adjustment reconciliation: ($ in millions) Net loss attributable to Navistar International Corporation Less: Financial services segment profit, Corporate and eliminations, and income taxes Manufacturing segment loss Plus: Engineering integration costs (A) Adjusted manufacturing segment loss Plus: Warranty adjustment (B) Adjusted manufacturing segment profit excluding warranty adjustment ($ in millions) Loss before income tax benefit Plus: Engineering integration costs (A) Adjusted loss before income tax benefit Plus: Warranty adjustment (B) Adjusted loss before income tax benefit excluding warranty adjustment (102) 112 $ 10 112 $ (97) (42) $ (153) (111) 9 $ (221) 12 (209) $ (153) 8 (145) $ (2.19) 1.17 Three Months Ended January 31, 2012 Three Months Ended January 31, 2012 Adjusted loss before income tax benefit excluding warranty adjustment reconciliation: Three Months Ended January 31, 2012 $ (1.02) 69.9 74 $ (71) |
![]() NYSE: NAV 53 53 1 st Quarter 2012 Earnings Call March 8, 2012 SEC Regulation G – 2012 Guidance – Original (A) Engineering integration costs relate to the consolidation of our truck and engine engineering operations as well as the move of our world headquarters, as we continue to develop plans for efficient transitions related to these activities and the optimization of our operations and management structure. Restructuring of North American manufacturing operations are charges primarily related to our plans to close our Chatham, Ontario heavy truck plant and Workhorse chassis plant in Union City, Indiana, and to significantly scale back operations at our Monaco recreational vehicle headquarters and motor coach manufacturing plant in Coburg, Oregon. Adjusted net income and diluted earnings per share attributable to Navistar International Corporation reconciliation: Lower Upper ($ in millions, except per share data) Net income attributable to Navistar International Corporation $ 280 $ 345 Plus: Engineering integration costs & restructuring of North American manufacturing operations, net of tax (A) 70 55 Adjusted net income attributable to Navistar International Corporation $ 350 $ 400 Diluted earnings per share attributable to Navistar International Corporation $ 4.00 $ 4.95 Effect of adjustments on diluted earnings per share attributable to 1.00 0.80 Adjusted diluted earnings per share attributable to Navistar International Corporation $ 5.00 $ 5.75 Approximate diluted weighted shares outstanding 69.8 69.8 Manufacturing segment profit and adjusted manufacturing segment profit reconciliation: Lower Upper ($ in millions) Net income attributable to Navistar International Corporation $ 280 $ 345 Less: Financial services segment profit, Corporate and eliminations, and income taxes (620) (725) Manufacturing segment profit 900 1,070 Plus: Engineering integration costs & restructuring of North American manufacturing operations (A) 100 80 Adjusted manufacturing segment profit $ 1,000 $ 1,150 Original fiscal 2012 guidance Original fiscal 2012 guidance Navistar International Corporation |
![]() NYSE: NAV 54 54 1 st Quarter 2012 Earnings Call March 8, 2012 SEC Regulation G – 2012 Guidance – Revised (A) Engineering integration costs relate to the consolidation of our truck and engine engineering operations as well as the move of our world headquarters, as we continue to develop plans for efficient transitions related to these activities and the optimization of our operations and management structure. Restructuring of North American manufacturing operations are charges primarily related to our plans to close our Chatham, Ontario heavy truck plant and Workhorse chassis plant in Union City, Indiana, and to significantly scale back operations at our Monaco recreational vehicle headquarters and motor coach manufacturing plant in Coburg, Oregon. Adjusted net income and diluted earnings per share attributable to Navistar International Corporation reconciliation: Lower Upper ($ in millions, except per share data) Net income attributable to Navistar International Corporation $ 225 $ 310 Plus: Engineering integration costs & restructuring of North American manufacturing operations, net of tax (A) 70 55 Adjusted net income attributable to Navistar International Corporation $ 295 $ 365 Diluted earnings per share attributable to Navistar International Corporation $ 3.20 $ 4.45 Effect of adjustments on diluted earnings per share attributable to Navistar International Corporation 1.05 0.80 Adjusted diluted earnings per share attributable to Navistar International Corporation $ 4.25 $ 5.25 Approximate diluted weighted shares outstanding 69.8 69.8 Manufacturing segment profit and adjusted manufacturing segment profit reconciliation: Lower Upper ($ in millions) Net income attributable to Navistar International Corporation $ 225 $ 310 Less: Financial services segment profit, Corporate and eliminations, and income taxes (575) (610) Manufacturing segment profit 800 920 Plus: Engineering integration costs & restructuring of North American manufacturing operations (A) 100 80 Adjusted manufacturing segment profit $ 900 $ 1,000 Revised fiscal 2012 guidance Revised fiscal 2012 guidance |
![]() NYSE: NAV 55 55 1 st Quarter 2012 Earnings Call March 8, 2012 SEC Regulation G – Adjusted Net Income and Diluted EPS – Year Ended October 31, 2011 For the Year Ended October 31, 2011 (in millions, except per share data) Net income (loss) attributable to Navistar International Corporation $ 1,723 Plus: Engineering integration costs (A) 64 Restructuring of North American manufacturing operations (B) 127 Medicare Part D ruling (C) 15 Less: Income tax valuation allowance release, net (D) 1,527 Adjusted net income attributable to Navistar International Corporation $ 402 For the Year Ended October 31, 2011 (in millions) Diluted earnings (loss) per share attributable to Navistar International Corporation $ 22.64 Effect of adjustments on diluted earnings per share attributable to Navistar International Corporation (17.36) Adjusted diluted earnings per share attributable to Navistar International Corporation $ 5.28 Diluted weighted shares outstanding 76.1 Adjusted net income attributable to Navistar International Corporation reconciliation: Adjusted diluted earnings per share attributable to Navistar International Corporation reconciliation: |
![]() NYSE: NAV 56 56 1 st Quarter 2012 Earnings Call March 8, 2012 SEC Regulation G – Adjusted Net Income and Diluted EPS – Year Ended October 31, 2011 (Continued) (A) Engineering integration costs relate to the consolidation of our truck and engine engineering operations as well as the move of our world headquarters. These costs include restructuring charges for activities at our Fort Wayne facility of $6 million and $29 million for the three months and year ended October 31, 2011, respectively. We also incurred $17 million and $35 million of other related costs for the three months and year ended October 31, 2011, respectively. Our manufacturing segment recognized $18 million and $51 million of the engineering integration costs for the three months and year ended October 31, 2011, respectively. (B) Restructuring of North American manufacturing operations are charges primarily related to our plans to close our Chatham, Ontario heavy truck plant and Workhorse chassis plant in Union City, Indiana, and to significantly scale back operations at our Monaco recreational vehicle headquarters and motor coach manufacturing plant in Coburg, Oregon. These costs include restructuring charges of $5 million and $58 million for the three months and year ended October 31, 2011. We also incurred $5 million of other related costs for the year ended October 31, 2011. In addition, the Company recognized $64 million of impairment charges related to certain intangible assets and property plant and equipment primarily related to these facilities. The Truck segment recognized $5 million and $124 million of restructuring of North American manufacturing operation charges for the three months and year ended October 31, 2011. (C) In the fourth quarter of 2011, the Company had an unfavorable ruling related to a 2010 administrative change the Company made to the prescription drug program under the OPEB plan affecting plan participants who are Medicare eligible. As a result the Company recognized approximately $15 million of expense for postretirement benefits. (D) In the third quarter of 2011, we recognized an income tax benefit of $1.476 billion from the release of a portion of our income tax valuation allowance. In the fourth quarter of 2011, we recognized an additional income tax benefit of $61 million related to the release of a portion of our income tax valuation allowance. As domestic earnings are now taxable with the release of the income tax valuation allowance we recognized $10 million of domestic income tax expense for 2011 that would not have been recognized had we not released a portion of the income tax valuation allowance. The $10 million of domestic income taxes were netted against the total benefit of $1.537 billion from the release of a portion of the income tax valuation allowance. In addition, the other adjustments included in the table above have not been adjusted to reflect their income tax effect as the adjustments are intended to represent the impact on the Company's Consolidated Statement of Operations without the incremental income tax effect that would result from the release of the income tax valuation allowance. The charges related to our Canadian operations would not be impacted as a full income tax valuation allowance remains for Canada. |
![]() NYSE: NAV 57 57 1 st Quarter 2012 Earnings Call March 8, 2012 SEC Regulation G – Margin Expansion Sales Segment Profit Approx. Truck Engine Parts Total Truck Engine Parts Total Range Truck - N.A. w/Parts 10,000 $ 1,225 $ 11,225 $ 530 $ 200 $ 730 $ 6-7% Truck - Global w/Parts 1,300 140 1,440 10 20 30 1-2% Engine - Worldwide w/Parts 2,100 $ 735 2,835 75 $ 115 190 6-7% Total Consolidated 11,300 $ 2,100 $ 2,100 $ 16,040 $ 540 $ 75 $ 335 $ 950 $ ~6% Sales Segment Profit Approx. Truck Engine Parts Total Truck Engine Parts Total Range Truck - N.A. w/Parts 11,500 $ 1,450 $ 12,950 $ 865 $ 250 $ 1,115 $ 8-9% Truck - Global w/Parts 1,400 150 1,550 15 30 45 2-3% Engine - Worldwide w/Parts 3,000 $ 850 3,850 150 $ 150 300 7-8% Total Consolidated 12,900 $ 3,000 $ 2,450 $ 19,230 $ 880 $ 150 $ 430 $ 1,460 $ ~8% Sales Segment Profit Approx. Truck Engine Parts Total Truck Engine Parts Total Range Truck - N.A. w/Parts 12,225 $ 1,450 $ 13,675 $ 1,060 $ 265 $ 1,325 $ 9-10% Truck - Global w/Parts 1,800 160 1,960 85 30 115 6-8% Engine - Worldwide w/Parts 3,475 $ 880 4,355 200 $ 160 360 8-10% Total Consolidated 14,025 $ 3,475 $ 2,490 $ 21,135 $ 1,145 $ 200 $ 455 $ 1,800 $ ~9% 2012 Full Year 2012 Annualized Outgoing Run Rate Target |