Navistar International (NAV) 8-K Navistar Reports Second Quarter Results

Q2 2015 EARNINGS PRESENTATION

JUNE 4, 2015

Exhibit 99.2

2

NYSE: NAV

Q2 2015 Earnings –

6/4/2015

Safe Harbor

Statement

Information provided and statements contained in this report that are not purely historical are forward-

looking statements within the meaning of Section

27A of the Securities Act of 1933, as amended,

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 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 year ended

October 31, 2014 and our quarterly report on Form 10-Q for the quarter ended April 30,

2015.

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.

3

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Q2 2015 Earnings –

6/4/2015

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. It also excludes financial services and other items that may not be related to the core

manufacturing business or underlying results. 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 in the appendix of this presentation.

4

NYSE: NAV

Q2 2015 Earnings –

6/4/2015

Agenda

Overview

Troy Clarke

Financial Results

Walter Borst

Summary

Troy Clarke

NYSE: NAV

2

QUARTER

2015

RESULTS

Troy Clarke, President & CEO

*

*

*

*

*

*

*

*

*

*

*

6

NYSE: NAV

Q2 2015 Earnings –

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Q2 Performance

•

Generated positive manufacturing cash flow

•

Increased

core

chargeouts

(A)

to

18,600

trucks

-

Up 38% from Q1 2015

-

Up 10% from Q2 2014

•

Grew adjusted EBITDA

•

Achieving cost reductions

•

Taking actions towards improving capacity utilization

•

Investing in the core business

2nd Quarter Summary

(A)

Includes U.S. and Canada School bus and Class 6-8

medium and heavy truck.

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NYSE: NAV

Q2 2015 Earnings –

6/4/2015

Industry Momentum Expected to Continue

Optimistic Class 8 industry outlook

•

Lower energy costs

•

Favorable business conditions

•

Better new truck fuel economy and safety

Positive Medium-duty truck industry outlook

•

Business investment growth

•

Housing market expansion

8

NYSE: NAV

Q2 2015 Earnings –

6/4/2015

It’s Uptime at International!

•

Over 130,000 connected

vehicles

•

Announced making

OnCommand

Connection

standard on all new truck sales

•

Trained over 100 dealer

specialists covering dealers in

all major markets

•

Expanded service into Canada

•

Entering School Bus market

with dedicated product

NYSE: NAV

FINANCIAL RESULTS

Walter Borst, Executive Vice President & CFO

*

*

*

*

*

*

*

*

*

*

*

NYSE: NAV

Q2 2015 Earnings –

6/4/2015

Income Statement Summary

Note:

This slide contains non-GAAP information; please see the

REG G in appendix for a detailed reconciliation. 

(A)

Includes U.S. and Canada School bus and Class 6-8 medium

and heavy truck.

(B)   Amounts attributable to Navistar International Corporation.

$ in millions, except per share and units

Quarters Ended

April 30

2015

2014

Chargeouts

(A)

18,600

16,900

Sales and Revenues

$2,693

$2,746

Income

(Loss)

from

Continuing

Operations,

Net

of

Tax

(B)

$(64)

($298)

Diluted Income (Loss) Per Share from Continuing Operations

(B)

($0.78)

($3.66)

EBITDA

$85

($119)

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Q2 2015 Earnings –

6/4/2015

$85

$102

($1)

$18

$0

$50

$100

$150

Q2 2015

Actual EBITDA

Pre-existing Warranty

Adjustment

One-time Items

Q2 2015

Adjusted EBITDA

Q2

Guidance:                       

$100-$150

Q2 2015 EBITDA

$ in millions

Note:

This slide contains non-GAAP information; please see the

REG G in appendix for a detailed reconciliation. 

* Excluding pre-existing warranty and one-time items.

*

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Q2 2015 Earnings –

6/4/2015

Q2 2015 Segment Results

$ in millions

Beginning in the first quarter of 2015, the Company realigned its reporting

segments. The segment results have been restated to reflect this change.

Sales and Revenues

Segment Profit

Quarters Ended

April 30

Quarters Ended

April 30

Segment

2015

2014

2015

2014

Truck

$1,966

$1,889

($51)

($129)

Parts

$613

$630

$133

$133

Global Operations

$130

$271

$1

($162)

Financial Services

$60

$57

$22

$24

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Q2 2015 Earnings –

6/4/2015

Second Quarter Progress

(A)

Includes U.S. and Canada School bus and Class 6-8 medium

and heavy truck.

(B)   Excludes amounts related to pre-existing warranties.

Note:

This slide contains non-GAAP information; please see the

REG G in appendix for a detailed reconciliation. 

15,000

17,500

20,000

2Q14

2Q15

Chargeouts

(A)

7%

10%

13%

2Q14

2Q15

Structural Costs %

Manufacturing Revenue

2.5%

3.0%

3.5%

2Q14

2Q15

Current Warranty Expense

(B)

%           

Manufacturing Revenue

2%

3%

4%

2Q14

2Q15

Adjusted EBITDA Margin

13

NYSE: NAV

Q2 2015 Earnings –

6/4/2015

Operational Cost Savings

1.2%

1.7%

1.5 –

1.8%

0%

1%

2%

2013

2014

2015

Gross Material Savings*

% Manufacturing Revenue

*Excludes incremental SCR costs

$44

$79

$40 –

$60

$0

$25

$50

$75

$100

2013

2014

2015

Manufacturing Savings

Actual

Forecast

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NYSE: NAV

Q2 2015 Earnings –

6/4/2015

Used Truck Update

•

Q2 ending gross

inventory balance

of $375 million

•

Inventory expected

to peak at $425

million

15

Q2 2015 Earnings –

6/4/2015

Q2 2015 Manufacturing Cash Update

$ in millions

*Guidance as provided on 3/3/2015   **Cash balance includes marketable

securities   ^ Excluding one-time items and pre-existing warranty

Note:

This slide contains non-GAAP information; please see the

REG G in appendix for a detailed reconciliation. 

Guidance*

Actual

Q1 2015 Manufacturing

Cash Balance**

$733

$733

Consolidated Adjusted EBITDA

^

$100 -

$150

$102

Capex/Cash Interest/Pension & OPEB Funding

($120) -

($110)

($114)

Change in Net Working Capital/Debt and

Warranty/Other ^

($13) –

$27

$63

Q2 2015 Manufacturing Cash Balance**

$700-800   

$784

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Q2 2015 Earnings –

6/4/2015

Guidance: Q3 2015 Manufacturing Cash

$ in millions

* Cash balance includes marketable securities.

** Excluding one-time items and pre-existing warranty

Note:

This slide contains non-GAAP information; please see the

REG G in appendix for a detailed reconciliation. 

Q3 2015

Guidance

Q2 2015 Manufacturing

Cash Balance*

$784

Consolidated Adjusted EBITDA**

$125 -

$175

Capex/Cash Interest/Pension & OPEB Funding

($155) -

($145)

Change in Net Working Capital/Debt and Warranty/Other

($4) -

$36

Q3 2015 Manufacturing Cash Balance*

$750 -

$850

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Q2 2015 Earnings –

6/4/2015

3.8%

0%

2%

4%

6%

8%

10%

Q1

Q2

Q3

Q4

8-10%

Adjusted EBITDA Margin Improvement

$ in millions

Note:

This slide contains non-GAAP information; please see the

REG G in appendix for a detailed reconciliation. 

•

Q2 adjusted EBITDA

margin up 160 basis

points sequentially

•

Cost improvements

expected to continue in

second half of 2015

•

Q3 chargeouts expected

to be up 8% year-over-

year

2.2%

4.3-

6.3%

2015 Adjusted EBITDA Margin

2015 Actual

2015 Forecast

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NYSE: NAV

Q2 2015 Earnings –

6/4/2015

Q2 2015 Accomplishments:

•

Increased

core

truck

chargeouts

by

1,700

units

year-over-year

•

Higher market share sequentially

•

Additional cost reductions

•

Improved working capital

•

Positive manufacturing cash flow

Adjusted EBITDA goal exiting 2015: On track

Summing It Up

19

NYSE: NAV

SUMMARY

Troy Clarke, President & CEO

*

*

*

*

*

*

*

*

*

*

*

NYSE: NAV

Q2 2015 Earnings –

6/4/2015

Q3 2015

•

Chargeouts

up 8% year-over-year

•

Adjusted EBITDA of $125-$175 million

•

Manufacturing cash balance of $750-$850 million

2015 Full Year

•

Class 6-8 truck and bus industry: 350,000 to 380,000

-

Class 8 industry: 250,000 to 280,000

•

Additional cost reduction opportunities

•

Expect Q4 adjusted EBITDA margin exceeding 8%

2016 Full Year

•

Class 6-8 truck and bus industry: 350,000-380,000

Expectations

21

NYSE: NAV

APPENDIX

*

*

*

*

*

*

*

*

*

*

*

*

*

NYSE: NAV

Q2 2015 Earnings –

6/4/2015

Navistar Financial Corporation

Highlights

•

Financial Services Segment profit of $22 million for Q2 2015, $46 million YTD

•

U.S. financing availability of $232 million as of April 30, 2015

•

Financial Services Debt/Equity Leverage of 3.9:1

•

Retail accounts funding facility renewed in May 2015 for $100 million

•

GE announced intent to sell assets of GE Capital which include Navistar Capital

Retail Notes

Bank Facility

Dealer Floor Plan

•

$840 million facility ($500 million

revolver and $340 million term

loan matures in December 2016)

–

Funding for retail notes,

wholesale notes, retail accounts,

and dealer open accounts

•

On balance sheet

•

NFSC wholesale trust as of April

2015

–

$1 billion funding facility 

–

Variable portion matures January

2016

–

Term portions mature September

2015 and October 2016

•

On balance sheet

•

Broader product offering

•

Enhanced ability to support large

fleets

•

Better access to less expensive

capital

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NYSE: NAV

Q2 2015 Earnings –

6/4/2015

Chargeouts

-

1,000

2,000

3,000

4,000

Q2 2014

Q3 2014

Q4 2014

Q1 2015

Q2 2015

School Bus

-

2,000

4,000

6,000

8,000

Q2 2014

Q3 2014

Q4 2014

Q1 2015

Q2 2015

Class 6-7 Medium

-

2,000

4,000

6,000

8,000

Q2 2014

Q3 2014

Q4 2014

Q1 2015

Q2 2015

Class 8 Heavy

-

1,000

2,000

3,000

Q2 2014

Q3 2014

Q4 2014

Q1 2015

Q2 2015

Class 8 Severe

24

NYSE: NAV

Q2 2015 Earnings –

6/4/2015

Retail

Market

Share

in

Commercial

Vehicle

Segments

Class 6/7

Medium-Duty

Class 8

Severe Service

Class 8

Heavy

Three Months Ended

April 30,

January 31,

October 31,

July 31,

April 30,

2015

2015

2014

2014

2014

Core Markets (U.S. and Canada)

Class 6 and 7 medium trucks ................................................

27%

21%

19%

20%

26%

Class 8 heavy trucks ..............................................................

12%

10%

15%

14%

14%

Class 8 severe service trucks ................................................

15%

14%

14%

15%

17%

Combined class 8 trucks ........................................................

13%

11%

15%

14%

15%

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NYSE: NAV

Q2 2015 Earnings –

6/4/2015

Worldwide

Truck

Chargeouts

We define chargeouts as trucks that have been invoiced to customers. The units held in dealer inventory represent the principal difference between retail

deliveries and chargeouts. This table summarizes our approximate worldwide chargeouts from our continuing operations.

We define our Core markets to include U.S. and Canada School bus and Class 6 through 8 medium and heavy truck.  Our Core markets include CAT-

branded units sold to Caterpillar under our North America supply agreement.

(A)

Other markets primarily consist of Export Truck and Mexico and also includes chargeouts

related to BDT of 2,600 units and 2,100 units during the

three months ended April 30, 2015 and 2014, respectively, and 6,000 and 4,500 during the six months ended April 30, 2015 and 2014.

Three Months Ended

April 30,

%

Change

Six Months Ended

April 30,

%

Change

(in

units)

2015

2014

Change

2015

2014

Change

Core Markets (U.S. and Canada)

School buses .........................................

2,300

2,700

(400)

(15)%

5,000

4,700

300

6 %

Class 6 and 7 medium trucks.................

6,700

5,400

1,300

24 %

10,700

8,600

2,100

24 %

Class 8 heavy trucks .............................

7,300

6,700

600

9 %

12,100

11,200

900

8 %

Class 8 severe service trucks ................

2,300

2,100

200

10 %

4,300

3,900

400

10 %

Total Core Markets..................................

18,600

16,900

1,700

10 %

32,100

28,400

3,700

13 %

Non "core" military ...............................

—

100

(100)

—

%

—

100

(100)

—

%

Other markets

(A)

.....................................

5,400

6,700

(1,300)

(19)%

12,400

12,100

300

2 %

Total worldwide unit................................

24,000

23,700

300

1 %

44,500

40,600

3,900

10 %

Combined class 8 trucks........................

9,600

8,800

800

9 %

16,400

15,100

1,300

9 %

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Q2 2015 Earnings –

6/4/2015

Worldwide

Engine

Shipments

Three Months Ended

April 30,

%

Change

Six Months Ended

April 30,

%

Change

(in units)

2015

2014

Change

2015

2014

Change

OEM sales-South America..................

11,600

24,500

(12,900)

(53)%

27,300

44,900

(17,600)

(39)%

Intercompany sales..............................

7,000

10,100

(3,100)

(31)%

13,600

19,600

(6,000)

(31)%

Other OEM sales.................................

2,600

2,900

(300)

(10)%

5,500

5,300

200

4 %

Total sales.....................................

21,200

37,500

(16,300)

(43)%

46,400

69,800

(23,400)

(34)%

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NYSE: NAV

Q2 2015 Earnings –

6/4/2015

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.

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NYSE: NAV

Q2 2015 Earnings –

6/4/2015

Frequently Asked Questions

Q1:

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.

Q2:

What is included in your equity in loss of non-consolidated affiliates?

A:

Equity in loss of non-consolidated affiliates is derived from our ownership interests in partially-owned affiliates that are not

consolidated.

Q3:

What is your net income attributable to non-controlling interests?

A:

Net income attributable to non-controlling interests is the result of the consolidation of subsidiaries in which we do not own 100%,

and is primarily comprised of Ford's non-controlling interest in our Blue Diamond Parts joint venture.

Q4:

What are your expected 2015 and beyond pension funding requirements?

A:

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. For the three and six months ended April 30, 2015, we

contributed $32 million and $62 million, respectively, to our U.S. and Canadian pension plans (the “Plans”) to meet the minimum

required contributions for all plans. We currently anticipate additional contributions of approximately $51 million to the Plans

during the remainder of 2015. Future contributions are dependent upon a number of factors, principally the changes in values of plan

assets,

changes

in

interest

rates,

the

impact

of

any

future

funding

relief,

and

the

impact

of

funding

resulting

from

the

closure

of

our

Chatham plant.

We currently expect that from 2016 through 2018, the Company will be required to contribute at least $100 million

per year to the Plans, depending on asset performance and discount rates.

29

NYSE: NAV

Q2 2015 Earnings –

6/4/2015

Frequently Asked Questions

Q5:

What is your expectation for future cash tax payments?

A:

Our cash tax payments are expected to remain low in 2015 and will gradually increase as we utilize available net operating losses

(NOLs) and tax credits in future years.

Q6:

What is the current balance of net operating losses as compared to other deferred tax assets?

A:

As of October 31, 2014 the Company has deferred tax assets for U.S. federal NOLs valued at $870 million, state NOLs valued at

$144

million,

and

foreign

NOLs

valued

at

$199

million,

for

a

total

undiscounted

cash

value

of

$1.2

billion.

In

addition

to

NOLs,

the

Company has deferred tax assets for accumulated tax credits of $256 million and other deferred tax assets of $1.9 billion resulting in

net

deferred

tax

assets

before

valuation

allowances

of

approximately

$3.4

billion.

Of

this

amount,

$3.2

billion

is

subject

to

a

valuation allowance at the end of FY2014.

Q7:

How does your FY 2015 Class 8 industry outlook compare to ACT Research?

A:

U.S. and Canadian Class 8 Truck Sales

Reconciliation to ACT

-

Retail Sales

2015

ACT*

302,500

CY to FY adjustment

(4,935)

Total (ACT comparable Class 8 to Navistar)

297,565

Navistar Industry Retail Deliveries Combined Class 8 Trucks

250,000

280,000

Navistar difference from ACT

47,565

17,565

*Source:

ACT

N.A.

Commercial

Vehicle

Outlook

-

May

2015

16.0%

5.9%

30

NYSE: NAV

Q2 2015 Earnings –

6/4/2015

Frequently Asked Questions

Q8:

What is your manufacturing interest expense for Fiscal Year 2015?

A:

For the three and six months ended April 30, 2015, Manufacturing interest was $57 million and $114 million, respectively. Annual

manufacturing interest for 2015 is forecasted to be down approximately 5% compared to 2014. For reference, interest expense was

$243 million and $251 million for FY 2014 and 2013, respectively.

Q9:

What should we assume for capital expenditures in Fiscal Year 2015?

A:

For the three and six months ended April 30, 2015, capital expenditures were $28 million and $45 million, respectively. Annual

Capital

expenditures

for

2015

is

forecasted

to

be

between

$125

-

150

million.

In

comparison,

capital

expenditures

were

$88

million

and $167 million for FY 2014 and 2013, respectively.

31

NYSE: NAV

Q2 2015 Earnings –

6/4/2015

Outstanding Debt Balances

April 30,

October 31,

(in millions)

2015

2014

Manufacturing operations

Senior Secured Term Loan Credit Facility, as amended, due 2017, net of unamortized discount of

$3, at both dates………………………………………………………………………………………

$

694

$

694

8.25% Senior Notes, due 2021, net of unamortized discount of $19 and $20, respectively…………

1,181

1,180

4.50% Senior Subordinated Convertible Notes, due 2018, net of unamortized discount of $17 and

$19, respectively……………………………………………………………………………………...

183

181

4.75% Senior Subordinated Convertible Notes, due 2019, net of unamortized discount of $36 and

$40, respectively…………………………………………………………………………..………….

375

371

Debt of majority-owned dealerships………………………………………………………………….

28

30

Financing arrangements and capital lease obligations……………………………………………….

50

54

Loan Agreement related to 6.5% Tax Exempt Bonds, due 2040…………………………….………

225

225

Promissory Note……………………………………………………………………………...………

5

10

Financed lease obligations……………………………………………………………………………

141

184

Other…………………….......................…………………………………..........................................

24

29

Total Manufacturing operations debt……………. …………………………….............................

2,906

2,958

Less: Current

Portion……………………………………………………………………………........

115

100

Net long-term Manufacturing operations debt………………………………………………….....

$

2,791

$

2,858

April 30,

October 31,

(in millions)

2015

2014

Financial Services operations

Asset-backed debt issued by consolidated SPEs, at fixed and variable rates, due serially through

2018…………………………………………………………………………………………………..

$

986

$

914

Bank revolvers, at fixed and variable rates, due dates from 2015 through 2020…………………….

1,205

1,242

Commercial paper, at variable rates, program matures in 2017……………………………………...

77

74

Borrowings secured by operating and finance leases, at various rates, due serially through 2018….

29

36

Total Financial Services operations debt …………………………………………………………

2,297

2,266

Less: Current portion ………………………………………………………………………………...

1,096

1,195

Net long-term Financial Services operations debt………………………………………………...

$

1,201

$

1,071

32

NYSE: NAV

Q2 2015 Earnings –

6/4/2015

SEC Regulation G Non-GAAP Reconciliation

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

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 our ability to meet our operating requirements, capital

expenditures, equity investments, and financial obligations.

Structural costs consists of Selling, general and administrative expenses and Engineering and product development costs.

33

NYSE: NAV

Q2 2015 Earnings –

6/4/2015

SEC Regulation G Non-GAAP Reconciliations

Manufacturing segment cash and cash equivalents and marketable securities reconciliation:

April 31,

January 31,

(in millions)

2015

2015

Manufacturing Operations:

Cash and cash equivalents…………………………………………………………….

$

536

$

583

Marketable securities………………………………………………………….………

248

150

Manufacturing Cash and cash equivalents and Marketable securities……………….

$

784

$

733

Financial Services Operations:

Cash and cash equivalents…………………………………………………………….

$

47

$

37

Marketable securities………………………………………………………….………

25

25

Financial Services Cash and cash equivalents and Marketable securities……………

$

72

$

62

Consolidated Balance Sheet:

Cash and cash equivalents…………………………………………………………….

$

583

$

620

Marketable securities………………………………………………………….………

273

175

Consolidated Cash and cash equivalents and Marketable securities…………………

$

856

$

795

34

NYSE: NAV

Q2 2015 Earnings –

6/4/2015

SEC Regulation G Non-GAAP Reconciliations

Earnings (loss) before interest, taxes, depreciation, and amortization ("EBITDA") reconciliation

______________________

(A)

Manufacturing interest expense is the net interest expense primarily generated for borrowings that support the manufacturing and corporate

operations, adjusted to eliminate intercompany interest expense with our Financial Services segment. The following table reconciles

Manufacturing interest expense to the consolidated interest expense:

______________________

* For more detail on the items noted, please see slide 36 footnotes (A),(C),(D),(E), and (F).

(in millions)

EBITDA (reconciled above) …......……………………………………

$

                  85

$

                 101

$

                 (119)

Less significant items of:

Adjustments to pre-existing warranties

(A)

………………………......

18

(57)

42

Asset impairment charges

(C)

………...………………………………..

1

7

151

Restructuring charges and strategic initiatives

(D)

………..….……

2

3

8

Gain on settlement

(E)

…………………………………………………..

(10)

—

—

Brazil truck business actions

(F)

…….....………………………………

6

—

—

Total adjustments

17

(47)

201

Adjusted EBITDA …......………………………………………….....……

$

102

$

54

$

82

Adjusted EBITDA Margin …......………………………………….....…..

3.8%

2.2%

3.0%

Quarters Ended

April 30, 2015

April 30, 2014

January 31, 2015

(in millions)

Loss from continuing operations attributable to NIC, net of tax …………

$

(64)

$

(42)

$

(298)

Plus:

Depreciation and amortization expense ………………………………..

74

79

99

Manufacturing interest expense

(A)

………………………………….….

57

57

57

Less:

Income tax benefit (expense) ……………………………………………

(18)

(7)

(23)

EBITDA …………………………………………………………………………

$

85

$

101

$

(119)

Quarters Ended

April 30, 2015

April 30, 2014

Janaury 31, 2015

(in millions)

Interest expense ………………………………………………………………..

$

75

$

77

$

74

Less:  Financial services interest expense …………………………………..

18

20

17

Manufacturing interest expense ……………………..………………………

$

57

$

57

$

57

Quarters Ended

April 30, 2015

April 30, 2014

January 31, 2015

35

NYSE: NAV

Q2 2015 Earnings –

6/4/2015

Significant Items Included Within Our Results

Quarters Ended

(in millions)

April 30,

2015

January 31,

2015

April 30,

2014

Expense (income):

Adjustments to pre-existing warranties

(A)

…………………………………

$

18

$

(57)

$

42

Accelerated depreciation

(B)

………………………………………………..

12

13

—

Asset impairment charges

(C)

……………………………………………….

1

7

151

Other restructuring charges and strategic initiatives

(D)

……………………...

2

3

8

Gain on settlement

(E)

………………………………………………………

(10)

—

—

Brazil truck business actions

(F)

……………………………………………

6

—

—

Brazilian tax adjustments

(G)

……………………………………………….

—

—

29

______________________

(A)  Adjustments to pre-existing warranties reflect changes in our estimate of warranty costs for products sold in prior periods. Such adjustments typically occur

when claims experience deviates from historic and expected trends. Our warranty liability is generally affected by component failure rates, repair costs, and

the timing of failures.

Future events and circumstances related to these factors could materially change our estimates and require adjustments to our

liability.

In addition, new product launches require a greater use of judgment in developing estimates until historical experience becomes available.

(B)

In

the

first

and

second

quarter

of

2015,

the

Truck

segment

recognized

charges

of

$13

million

and

$12

million,

respectively,

for

the

acceleration

of

depreciation of certain assets related to the foundry facilities.

(C)

In

the

first

and

second

quarter

of

2015,

the

Company

concluded

it

had

a

triggering

event

related

to

certain

operating

leases,

as

a

result,

the

Truck segment

recorded

$7

million

and

$1

million,

respectively,

of

asset

impairment

charges.

In

the

second

quarter

of

2014,

we

recognized

a

non-cash

charge

of

$149

million

for

the

impairment

of

certain

intangible

assets

of

our

Brazilian

engine

reporting

unit.

Due

to

slower

than

expected

growth

in

the

Brazilian 

economy

causing

declines

in

actual

and

forecasted

results,

we

tested

the

goodwill

of

our

Brazilian

engine

reporting

unit

and

trademark

for

potential

impairment.

As

a

result,

we

determined

that

the

entire

$142

million

balance

of

goodwill

and

$7

million

of

trademark

were

impaired.

(D)

In

the

second

quarter

of

2014,

we

incurred

restructuring

charges

of

$8

million

related

to

cost

reduction

actions

that

included

a

reduction-in-force

in

the

U.S.

(E)

In

the

second

quarter

of

2015,

the

Global

Operations

segment

recognized

a

$10

million

gain

resulting

from

a

customer

settlement,

which

includes

an

offsetting restructuring charge of $4 million.

(F)

In

the

second

quarter

of

2015

our

Global

Operations

segment

recorded

$6

million

in

inventory

charges

to

right

size

the

Brazil

Truck

business.

(G)

During

the

second

quarter

of

2014,

our

evaluation

of

the

realizability

of

our

Brazilian

deferred

tax

assets

resulted

in

a

determination

that

a

valuation

allowance was required, due to a deterioration of operating performance in Brazil, an increase in net operating loss carryforwards, and the impairment

of

certain

Brazilian

intangible

assets.

As

a

result,

we

recorded

a

net

expense

of

$29

million

related

to

establishment

of

the

valuation

allowance

and

tax

impact

from

the

impairment

of

certain

intangible

assets.

The above items, except for the Brazilian tax adjustments, did not have a material impact on taxes due to the valuation allowances on our U.S. deferred tax

assets,

which

was

established

in

the

fourth

quarter

of

2012.

36