NAV - Earnings call transcript Q4 2017 | Navistar International Corp

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Operator

Good day, ladies and gentlemen, and welcome to Navistar's Fourth Quarter 2017 Earnings Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. It is now my pleasure to hand the conference over to call to Mr. Marty Ketelaar, Vice President of Investor Relations. Sir, you may begin.

Marty Ketelaar

Brian. Thanks, and Year joining End everyone, Fourth for you and Quarter XXXX thank morning, us for Navistar's Good Conference Call. the period XXXX. discuss for we'll financial Navistar of Today, International the fiscal ended XX, October performance Corporation Chief With me Clarke, Officer. President and Troy today Vice Borst, Executive Chief Executive President our our Walter and Officer; Chairman, are and Financial conducting prepared our remarks, After we'll take your questions.

Lisboa, President Operating and Walter, and President the Truck are Persio for Officer; Parts; joining Q&A Chief and Cancelliere, today Troy Executive us to Phil President addition of of In and Operations. Michael Vice session Christman,

Before non-GAAP can few as the to Relations press Investor includes materially we of be made measures call in this financial and statements and suggested release been statements. begin, to release I'd A this those as morning's the for future The like to page to discussed U.S. obligation expressly in the that the of has presentation cover this could GAAP results reconciled slides Actual comments Today's equivalents these posted well from items. by found are a our and website the the presentation the in reference. copy deck. performance, Company to here. morning disclaims appendix some the our slide expectations any issued we update about press differ forward-looking presentation for

most call for Troy? With refer for you that, other over disclaimer our the results materially refer material in the from notes presented differ subject. cautionary information the to statement turn to SEC those would Clarke more opening Troy to concerning and actual today's information Safe Harbor comments. today's I'll cause additional in presentation, could For please that factors filings. to included also recent We on

Troy Clarke

going breakthrough everyone. our financials Okay, the I'm fourth hey, our XXXX for then were quarter, And for questions. thanks, XXXX. ask share first full about us your all eight our numbers, year market Navistar's the consecutive year. thoughts and since overview single-year largest the Walter We and we'll was second the the of the profitable This in last through a XXXX. years. walk full profitable and quarter, the time for Then achieved morning, to outlook We to I'll take guidance. provide the concluded it brief and gain good a year Marty, year

advanced & our generating Volkswagen savings for adjusted advantage ground also Bus EBITDA second we new slow, took its we EBITDA our the X year highest adjusted product and of speeding hit running, Our market. progress since start truck with started through Truck row. our QX, increased alliance cadence but steady the the In a and the margin of global a in reached finished Class launches. fifth turnaround. of X level growth the our on in And technologies. managed it half XXXX And strong,

Our sales XX% for period sales by same the in increased a up were from before. year X%, year QX, and the

earning. segment's Our also Parts all full X.X saw recorded year XXXX grew points was in we share share gains second-highest launch the segment on XX-liter share an that Class like in driving is in And of customers we X. new which higher the our launched. We record by core truck and the recently engine, was AXX year market segments. important new for products XXXX

bus. regional in long-haul customers new X%, we Third-party fuel includes hall series, engine LT in became new offerings, noticing. the leads school of CE In updated we the both series. the AXX Series. and in the and truck, the is Lone RH economy product launch with of testing it medium-duty XXXX, in and HV that also new when XXXX Star, average our heavy available RE pipeline our our by bus On LT top vocational an And will indicates gasoline-powered are HX teamed an AXX a and XXXX, our are it industry these reintroducing the

we'll the also Class truck of have calendar market. lineup. X/X end will the entirely enter Before of By the an renewed year, XXXX, the we end

Our or value. call cloud-based we Connection, live OCC offering, as marketplace, levels of our the we creating driver are new QX, starting with support other In service telematics for connected OCC with apps. OnCommand customer platform e-commerce went open-architecture, it, and

times more own the hours federal which The OnCommand industry performance first improve our downtime the of the and leads connected in unplanned data uptime, electronic lead automates well vehicles a app service was to real-time we helping making thing transmitting Connection service Thanks compliance. with our log, of than strength per the several industry past. positioned to of XXX,XXX customers driver offerings, minute. are

The Volkswagen deliver of XXX with million is accelerating. to annualized years, to million alliance Navistar on the an the alliance first rate in savings Truck & that cumulative five track Bus over is period. run with savings time $XXX Our exiting

the And including connected We technologies, medium-duty and next-generation and integrated collaborating school new or we're convergence are advanced two also working already platforms. on telematics, our electric bus on of we've powertrains. vehicle, together diesel truck electric big-bore announced, fully the

the reached to growth X% that above to and robust, and a are Class growing solid sales X%; which remained by latest freight another market history GDP ahead permits, personal third-best include foresee of year transportation expected to with X%. but all-time and year and making X% this X and projections. X%. headwinds, economy course the our will And over the grow Class last see There grow an factors, steady decade. Class and the see grow a X%, Retail which housing it are expected freight XX.X% indicators to growth year. XXXX few we a Looking we have are is in translates strong between Yet XXXX, headwinds services index X%. by U.S. like time these income X the starts, these project trucks. and the building projected we industry. could market Other shortage grow rates over this and also large is Spot believe a XXXX sales high. of about upside will include over driver used And truckload to of to stronger of nothing year. by supply the even we shows With growth we of Class ongoing X will X, ease X some increase X.X% to XXXX, These

that the capacity advantage required production have We to upside of any take develops.

want stream We favorable and Navistar, To are and was contribute gain their our The customers' XXXX into thank market well more XXXX, to and industry positioned go detail. it a will and up, new employees for launches work in product to in share our making in will I sum this Walter XXXX to growth more the dedication hard reaction. profitability, which year breakout share thanks for higher possible. to of

Looking we growth, on are future, and now to leadership sustainable profitability. market the focused

additional We market let we And through in to Walter. for efficiencies and have the momentum With are turn over XXXX reductions it believe more, pipeline. in the newest and already year with me will cost that, numbers. breakout the product and go the the Navistar. lineup, Walter renewed this be to

Walter Borst

our I'm market truck Thank profitability you, all super morning, gains and share return excited annual to segments. and in Troy, our about good everyone.

& million per review year-over-year to guidance. to In adjusted Truck our year grew X.X% even to This products Full with $XX million of or of core American market increase $X.XX a ongoing year. results the by better outpaced up million $XX $XX new $X.XX $XXX This $XXX was or basis. QX billion. net EBITDA The business. share restructuring or XX% quarter, or XXXX led Volkswagen $X.XX primarily $XXX I'll related last marks fifth was core was adjusted million stage per Net year-over-year and and per on share Our EBITDA to year of percentage loss a EBITDA last the to revenue $X.XX year. XXXX. we've and the the in XXXX sets $X.X loss our a year grew which million, improvement XXXX $XX industry, to dollar for charges the Bus million was morning, XX% up XX%, per for increased alliance was excluded volumes. revenue. growing income consecutive or share to which million of driven compared and Adjusted in South both the XX% full quarter share an a XX%. provide truck and the our share income versus

Our X,XXX trucks over used by truck the operation in took another record step forward selling as set it quarter. a

This at to Warranty of $XX industry-related This to As quarter by operations. gross levels a XX% in inventory level under The end. net reflecting of offset fell, result, of additions compares truck higher reserve million $X XXXX. partially used range gross of to by the pricing reserve continues was reflecting expense fell fall. additions, inventory year to fourth inventory balance the fell pressures. of $XXX million million. is sales. Reserves also This $XXX million normal in

reflection In products' our was and annual lowest at of improved expense a the quality fact, reliability. XXXX warranty since level XXXX,

Excluding warranty ago. liability as end. running still our pre-existing million quarter was than also a at expense. manufacturing warranty expense percentage Since a October revenue year but to X.X% Cash is of X.X% to versus has XXXX, $XXX year higher continues this XX% fall charges, spend warranty declined warranty by

our comparable Absent parts revenue Diamond were performance a year, volumes Parts. of straight reporting which resulted gradual reflecting improved reflecting in growth. charge sales $XXX Fleetrite In legal surpassing in industry to our and growth generated were would by year For share quarter, across from the market million Parts by Truck all the last and the In million. driven brands This portfolio, for was generated grew offset by XXXX, the segment and in profitability the businesses. label year. conditions business, label profitable last Higher revenues, private Truck the the quarterly billion. segment runoff and segments the second compared truck $XXX remanufactured $X.X XX% been to include higher business. revenues profits have sales than profitable. more to quarter, growth was Parts also Blue brands, sales Blue third The the private strong Diamond our of volumes XX% used

job improve. to million which segment over in segment team quarter, segment, in million. during in profitable volumes its And global Services Financial conditions. second a the reported grew segment begun maintaining more led included an in of grew. to Our profits The Brazil. truck economic Conditions grew In Revenues to higher financing Services million performance have has that $XXX to million $XX engine to sales Mexico the Brazil opportunities results. $XX quarter, in $X the straight done excellent breakeven revenues increased difficult as drove and charge restructuring Financial for

improved cash. manufacturing EBITDA strong net on working the positive results, with over of and of timing truck We ended to volume. to payments Moving from flow capital cash. the results fiscal lower billion We cash due quarter higher capital in generated to $XXX $X the year of million vendors expenditures

of transactions, For we Early term aggregate, and billion cash two were flow, impacting uses in $XXX the also guidance a balance $X.X cash used the to raised billion to $X.X The last debt. major cash resulting offering. line the of a $X.X completed notes year, billion a capital The basis. repay provided month, liquidity manufacturing markets our transaction senior free of forma which sheet, with billion in in largely proceeds year. billion $X.X on for $X.X million pro added loan from fell

a by X our we've maturities transactions, As these result debt of extended years.

XXXX. upcoming XXXX in decline debt, expect address interest We to convertible to and maturity financial to flexibility expense the for greater of $XXX approximately our we million have

status experienced to which $X.X a over also our and liabilities, million to higher rates. meaningful favorable due $XXX pension returns the billion underfunded OPEB investment trend We claim by to and improvement decreased of OPEB

XXXX on let's our to thoughts Now hand. and the year our focus shift at

expected XX.X% with solid year bus, $X units, about items X the billion. of combination from industry by These us Truck due savings to up material the part growth. commodity the $X.X define see growth venture manufacturing volumes, engineering again, segment, unfavorable offset from In revenues truck, is combined Consolidated expected set X as relatively Bus, industry improve sales units. point. up costs, in more impact Class Class joint largely from XX% XXX,XXX higher rise should We another Parts X to achieve and we billion of Volkswagen gross XXXX X our to volumes higher growth Structural of expenses, higher is to This from will than performance. to to profit & $X.X revenues. plus SG&A the improved higher to to procurement and prices efficiencies share than up to and sales which approximately billion. growing and lower XXX,XXX First, XXX,XXX to used costs, driven will XXX,XXX market with truck mix truck margin

Truck and part our IT services, VW growth Bus increase activities volume infrastructure. we as increased increased new and conjunction As engineering in alliance, with our and OnCommand the investments Connection in marketing sales & upgrade projects of

grow we income regard, approximately As in debt charges in level to to expect recorded million first to costs, the the debt net XXXX. even result, we be a XXXX. adjusted part And million issuance previous unamortized quarter related this associated have $XXX XXXX, in we to of in $XX In at extinguishment of EBITDA million activities. more with of than our XXXX refinancing to expect $XXX of the securities as profitable our

will The again first once be quarter weak. seasonably

approximately adjusted past EBITDA represented three results. our has QX the years, of Over XX% annual

due being capital $XXX spending, of notes OPEB to interest the EBITDA forecast $X expected outflows handle shutdown about end contributions QX new benefits We cash after Class used offset sales. period warranty about Additionally, upgrade an adjusted see payments, volumes. XXXX in two of truck the million Escobedo expenditures, support We truck to related we'll of billion the by to operations have cash to October. X repaying weeks pension manufacturing our with facility paint and higher convertible higher to extended and

As operator our the over be experienced year. our expect the the back Navistar for we we results was to year past, will of to balance in that, remainder expect XXXX cash we in the Q&A. year improved deliver turn drive an and the With the begin first to rebuild we then quarter XXXX better have breakthrough consume a it even value cash as for to I'll greater all shareholders. fiscal that

Operator

first And question our Sponheimer Instructions] from proceed. Gabelli. [Operator will Brian Please come with

Brian Sponheimer

OPEB. And A first, sheet. was in couple the questions, The on more discount obligation, pension that the on correct? balance rate, year-over-year none decline the of

Troy Clarke

due returns. so more rate's really strong pension The fairly discount it's consistent year-over-year, to

Brian Sponheimer

Okay.

see we're XXX thinking increase, we points XXXX $XXX another basis about million So that'll if down? and that, if that's come

Walter Borst

same, and OPEB in million on it's points still Principally and past, XXX the for about said Yes. together. pension the OPEB basis and We each but about $XXX pension together. pension,

Brian Sponheimer

it. Got

your ordering so we're basis. change potentially here. seen taking Okay, tax from you or ahead we'll on any of the -- the customers corporate at eve dealer seen end Have the Have delivery reform just level start any the activity of customer of you year? in

Troy Clarke

of I and are we've would think Brian, -- of the because actions just came anticipation studying the No, bill be, kind no where it it that just -- because But out, seen they industry we still would thought it. in end up.

course think next do the be information this will they the So I that processing that probably. and over several, week of

Brian Sponheimer

own obviously And can about talk it bill puts then and to of it's your if some thinking you the in as quickly? takes early, the results, just that relates about you but

Walter Borst

and and But and statement, expect not a income Yes. impact. been see our given by We've material sheet it at Obviously, relates we taken situations look it's don't balance to Congress signed a by President specific passed hasn't the yet. it. our on been as what based we

purposes for operations. We on domestic have our accounting valuation a allowance

either. wouldn't And the the rates in anything XX% kind expect we'll material of corporate passed. tax our as provisions we we so pieces to to terms a of other don't But gets any of from the tax move result through in to see individual finally it, bill the run of of related XX%. And impact what P&L need

industry. hand, comment, obviously react And that we if economy, kind. other the that's hope would the to On our great would it earlier customers the for stimulates in truck your

Troy Clarke

comments, how GDP X.X% you -- X%, really back the I of I in market think to fleets you above that's growth players excess anything industry back in truck means vernacular, the to think go drives range, kind -- successful that large in tax of means of of the Brian, our go my and view replacement prospects demand. it most And sales cut. that

Operator

you. Thank

Our the from Ann Please next come proceed. line with questions JPMorgan. will Duignan of

Abdul Tambal

this Hi, good morning, for on Ann. is Abdul

So I quick just had question. a

in QX sequential the share market the could segment. comment heavy-duty on you gain If in

looks is about forward, lost some Navistar you in the like what orders since going where there. incentives? do do just market imply that November see So and current And share to especially it share related they year-end

Troy Clarke

ask I'd Cancelliere to comments that. couple on make a Michael

Michael Cancelliere

we in the -- the that what earlier basis. product, Class year, started -- to year-over-year and in were for of LT to It's we -- on were look delivery market our new take at and those We of the start ordered lot trucks sequentially, increase year. the a X, particularly finish had trucks, a So quarter-over-quarter the strong the really up accounted a series, they share. that's customer

to board, trajectory that in and both look our a share look we on at have to positive we we order believe -- retail we're continue share. and our order momentum -- we're As out

Troy Clarke

This that depends quarter just is And a and really can Fourth just If around. starting -- buying third season the move little fleets, -- deliveries, Troy. come then the for on rental I share is actually, market the in major will companies. bit. upon depending back quarter into large leasing

fiscal ends the year of Our of results and so end reporting. competitors are the XXst, December. for we're ends that The October these fiscal year really our

And they're basically so you deliveries pushing in period. imagine that can time

So fourth run -- slips quarter. here it months the market that it the of looks just is tad not in like uncommon the as share fourth we latter into our a

do. right. that's our of of about the given order Mike's year pressure, comment dynamics the kind is And and board just so where the theirs closes exactly

to We that anticipate a build XXXX, going back engine there. share a had new the We in And would into is on really segment, market. products got the in line X the exactly on that we hoped we what Class we to forward. which have carving XX-liter do. product got of trajectory it that in largely are newest market anticipate off additional gains We the improved up

Operator

you. Thank

of Andy Wells the with Fargo. next question line will Our Casey come from

Jorge Pica

implies quarter, margin the X.X% for Great Jorge Pica This EBITDA, especially little excellent and maintenance. on predictive been Andy. channel feedback on on the dealers is outlook the new has the from The products anything a goal. bit that's than impacting that? is lower Can of the this there And the a roughly, is conservatism? little bit range a XX% or X% you guide? comment long-term to on Or

Walter Borst

will at in another for The EBITDA sixth XXXX. to row. in we're Walter. way have we it's up year margins a year going a Jorge, strong look it, be

and see as to our absolute higher suggests happy both higher EBITDA margins So that'll well. than EBITDA that be guidance 'XX adjusted

we to did X% And to march in of did quarter. XX% quarter to year, third continue X% the over in fourth XX% this we EBITDA margins. We the over

Our quarter that. business, which in tight first building to on weaker market we in as here December. expect the be the tends up, our of But we And keep we'll new period over keep our of control and to bring lineup to and proud we're this due that holiday seasonality costs. to our be margins product covers time

Troy Clarke

of products. Yes, business, saying will the great second We'll I through have year. about thought talked these faster all is those Troy. course when and back this even in accelerate is half EBITDA a past. in mean, George, see that results accrue, the this the just get halfway margins at we're we new the year. of as our pulls the We're kind the And very same similar out from you'll about Nothing we're the this launching looking of to will always over year,

Operator

you. Thank

Our line David Leiker next will come Baird. questions from from of the

Joe Vruwink

over David. nice or of The incremental in typically, billion, forecast in a EBITDA it, structural for for the you've call some is discretion limiting the This but question. So structural growth another that done follow been maybe Vruwink reducing of much cost up spending $X.X there's I'll core, costs. number job there budget I'll 'XX? on is Joe even how

gross savings right be is forecast kind and you might billion the as there so And it now, for along see opportunities the way? $X.X of

Walter Borst

it to what 'XX, particular going And to Yes. structural going have business. in on that of Well, means couple our expense able we'll read engineering keep we been you costs efficient in we're be think than the in should alliance, One, in that much was invest invest some things. do of SG&A. But the for into is It'll in projects because able a to be will our the we're that be more past to tight, continue long-term would to I otherwise guidance higher. own. but

as we our see helps parts and move Connection, a those we principally expenses additional And that through then industry kind and that costs if we've our And We in other in SG&A grow to that that think segment continue activities. marketing want this a thirdly, to invest business growth lead shown, doesn't to our times. And of in of in those the see Secondly, run some that the business as SG&A the continue to in to industry I demonstrated It market good the share, expectation well. going ability sales put way, costs business. if in make tremendous expected of to to monies we we'll is the OnCommand for then all curtail our invest business. us part and of forward. our keep sure we want towards

is going. where So really money the that's

So percentage years. things we're to it to year-on-year. our the get in And the corporate on as over to right continuing functions last continue focus our will come we've spend of is higher revenue, while going done few leaner The down.

Troy Clarke

Two pieces. think Walter it very well. So up mean, summed I I

we're drive are got is time, of through. pulling that the to And to marketing going managing we've that the indicated, investments. efficiencies that the kind expenditures into those that been be be accelerating in to year results market vehicles, the You to the to accrue reductions electric next and continue additional in given future. that'll Walter invest new Investments also But products we're are as pieces additional in, we'll now the consideration and telematics, launching.

Joe Vruwink

it And flow color. question. a with cash really That's I'll up helpful follow

cash think the I intend in 'XX free conversion on As business generation horizon Can obviously that and that should is don't flow? free are think free of 'XX, in should about becomes if to the incremental And cash then use Or the into cover we for it. better. how the how know How the you instance? convert positive territory, cash metric are way EBITDA, revenues right maturities about much it? a to cash?

Walter Borst

Yes.

of mention done didn't on remarks, in the with consistent the I some cash flow specific but materials, provided XX past. presentation we've So, the what Page guidance we've numbers on my in items,

can the on generate, about So the way to hand, we again and is that we grow EBITDA in expect one we it think much how XXXX.

the the of do to the cash capital other areas On make expense that contributions two hand, greater between liability we difference is years, expense have the couple expense, we pension into We expenditures. unfunded expect result interest spend narrowing. of although higher And as plan for pension uses still contributions this warranty will and OPEB in eating a be than keep to to in cash than well.

flow. our after impacts in So we end about the year of that balance, to repaying our convertible comes October expect balance on cash of obviously debt billion. million. XXXX $X again with that strong of a $XXX that's free And cash But due

Operator

you. Thank

of from Mike with Our Stifel. next Please proceed. come line the Baudendistel will questions

Mike Baudendistel

I that are At you least mean, sort billion. give years? mentioned costs directionally? us longer over do next some the of term of going where guidance You think be sort structural to few rise to $X.X to you can going that's

Walter Borst

tightly, manage to sales, but with -- Well, the we we invest to other I continue where wouldn't than grow to in very that business. it plan little the in put areas to in dollar-for-dollar it a surely But there. will bit we'll think we continue want

Troy Clarke

of still cost structural come percentage a revenue, as think anticipate I down. we mean, I to

Walter to is now, growth, lean that something have We're the initiatives going the couple but like as underlying IT at. core part capabilities haven't systems, we we that is, invest manufacturing that had years. led the ability indicated, in revenue But enterprise a good of it's watch to on -- and some to systems which ability last the Okay? of us in Now work of efficiency it. we're that

expect percentage down. come to we it continue of a As revenue, to

Walter Borst

so Yes. don't our We hard to point worked want spending very to start we lower unwisely. and breakeven

Troy Clarke

to Yes. stuff. here, this know intend future. distant the too kind of who we the we at best and there benchmarks best are be the And And not out

Mike Baudendistel

of Also higher to some mean, while. any wanted in, Are you're ask you into create product of or impact? product any margin just sort that getting lower you, I been haven't categories a mix a in those that could new

Troy Clarke

than I bus because the think to an for at about impact the next referencing opportunity in my kind bus, over of regulatory segments think product. cost these there. follow -- course then there's What or gasoline think the, like need the participate of X/X these the think mind when and/or is, of the RE instance are you We are the X/X we the minimum, we competitive. to characteristics, sure segment, where, to that cost in when you're make the Class certainly, in we have in us Thus, we delivery, to the the pressure these us, And revenue we in segments be they don't last-mile sell the beginning segments, segments anticipate these you if going. right the do about decade, this of that potentially own General Motors able traditional of keeps their do. with product to and stuff between partnership segments of Class a two this be be more, kind code can of zip volume tend in other volume These segments some that market. have to a little I sensitive think, the

So it's all incremental.

Walter Borst

And the couple And of a volumes new. here to is on we've times our all is 'XX already, are increasing. call said that as of product Class X be in going real opportunity the

to product categories medium So next talked year we heavy vocational Troy addition new the new product that in have about. product, get we new We'll product. have

product So will category portfolio -- the XXXX. of product be whole whole new by end the

Operator

will line of proceed. Jerry question Revich from Instructions] come Our the Sachs. [Operator with you Please Thank next Goldman

Ben Burud

Jerry. Burud for on Ben is This

wondering minute can you And your period. expected will projections get a think you truck of customer $XX spend system. monthly into rates above at come to you new guys whether if the based for guys I end the wanted subscription discuss your Just on promo play OnCommand. a renewal could the fee that was on

Troy Clarke

Yes.

they're you not Connection aimed And brand trucks international the really of which why, Connection is we how vehicles. that. the of one to to for there's market other a -- this is we uptime our up traction our the Whether customers our with of And reasons really improving OnCommand free. based OnCommand our really basically, brand really is proposition. It's I that, a base service in provide It's so uptime that's associated we're know, truck, revenue some at is customers' or as live getting part promise. far more think,

and One introduction the however, things, Marketplace call is the the we what of our Connection exciting OnCommand most own of device. telematics

the that of over device Now be summer. launched that happens the course -- to

renewal it offering. talk about product You can there we're still that that is TA with launching, point, that can it of Sales fee associated rates, We're and at segment stop. it's our activation. on you to really When you tell initial you. a product. just monthly too are of buy the Amazon, at And a particular early applies truck to it really buy

So we've a to a required. had renewal, there's point basically, where nobody get

mature So that's is particular a a more a think question -- little us. segment that great question, little when but for I bit that's we're a product for

kind service kind business, more And highlight to pools. with would are three as continue of we forthcoming sources OnCommand revenue. we'll that. I be there at We other Connection as However, of look having of grow this

So our is brand uptime uptime. around support first pool promise and

we're to companies be revenue which will also marketplace, and this -- insurance in are to And is product, but ultimately second parts kind the opportunity all Fleetrite thing the selling other renewed the backbone coming and to only our sell where gain load really like access the which the parts. branded makes not for is for purpose apps And fact of us those and sell are generators. remanufactured marketplace things of parts The of also then the like through the the to gives digital things underrepresented the become market third and providers. things and series segments telematics of market

So it's we're great nascent point a it's this those directions. but a into time, I particular pushing little question, think at in

Ben Burud

touch had on And the what the And the inning share a could you the of think idea I you give cycle what school main of you smaller pie, a an year? of on it. us but spend Got we're think you loss know just during of and then maybe piece minute retail you in? were then drivers bus it's can

Mike Cancelliere

Yes, this let one. is me Mike that take Cancelliere,

have school recently important of our part in up an It's business be business, success bus yes, a and it. terrific distribution network we've that product. towards we So of investments continues a the ramped to dedicated

profane invested a of So lot the propane, the gas. the product, our expanded configurations introduced engine. demands gas We've all market. we've orders for we've meet to introduced in of gasoline additional to -- recently the offerings. for a lot We've engines of the Got

fairly a it's fairly So industry. small stable,

tend could of a to customers. just share or by So deals handful sway different market

investments competition ongoing with well other the alternative renewed school will in that our on share confidence the product -- direction. head all bus and in our our have to fuels focus and on than services different strategy investment with So better product, as we in we've and connected made that safety, segment be the as focus the we're right

Troy Clarke

is Yes, Troy. and this

of to point strategic just be honest, fast very we've So a a follower ago, to product some took going we're the view just side. that from years be

We propane, be weren't electric market first we'll with And the there. see we the regards so after. the gasoline, regards after. the We to to with first year out bus followed saying that's although we're with with electric the we the you have following bit We an weren't share. have little the the to first vehicle, a weren't what year first may

Our goal fact, not in is the be first, but to to be best.

fact, favorably each has the in offerings. do believe, in to of those product best the we And responded categories, have so we offering. And market product those

has having we small It's advantage. Michael market, us not as a worried this indicated. three So There's only be that really players. told about shouldn't first-mover

this The of sure, really brand brand make to when possibly Edulog is segment, soup applications is our That's telematics We soup most our that's say we're in the inspection in that we our we that ready ready, with carry. precious particular have automated and need promise that thing part of could cargo And promise. advent that bunch doing a to we're whole solid other relationships. you Because very new of regards okay? buses. features, the carrying and

those the violated of we best there have because for out putting so is this business future product bright purposes. And the basically never

And reverse this So share those numbers think to coming begin you'll we're market see real I year. excited.

Ben Burud

oh, any up, -- following just And sorry.

Persio Lisboa

the alternative line, lineup adding completely the will complete on in 'XX. we ready Just of in comment now truck full just bus segment, have we'll to 'XX, honestly which new have fuel we have products the the full the here. Max, like on side, didn't

So we'll us for participate with segment alternative of strong the full presence 'XX. on that as on that the market in wasn't

Troy Clarke

Those Thanks, are good... Persio.

Ben Burud

cycle? color Of specifically? where school any cycle, then in the And are that bus on we

Troy Clarke

strong. be to expect that to continue We

Michael Cancelliere

with kind up economy the Yes. I to I are a goes are funding. more mean, shared that municipal municipal to level, generated they goes it think of And the tax tend dollars or over fleets. and their change then in as want

the with at that think we've particular for market. looking I couple good a this talked we're So about growth I years that think of GDP earlier, as

Operator

Please of question next the will O'Dea Our come Vertical proceed. from Research. Joe line with

Joe O'Dea

as along and recently share I about And the and question XXXX. and And demand order the XXXX X% on in fronts? own we some right your of seeing of in is First you the mix of happening for share, can U.S. what what of see in top we have XX-liter on in XXXX? initiatives, some think, Canada just there. kind liter talked progress share that those shift XX the kind boards you in of and sleeper now expectations think about And we're

Troy Clarke

you pass to Mike. ask question? I can we'll XX on Persio, And that us it to off liter over kick then

Persio Lisboa

are truck, product just field units and adoption And in order. more at That product in our all, into is than more even three, we terms of end excited the for of actually, haul in X,XXX that in basically market the launched then product. RH, we going at share thought the in think launched know regional NACV. months gets -- in that really, performance announced that really, LP, the what now, the first first Well, in sure. up units the the the really And four AXX we marketplace. service, honestly, of just was of than June. right on you performance field, the of the than with we and I the now this faster HV, the the early we super severe the AXX then the we And Yes, the of is just have we X,XXX saw

that product, first, initial acceptance really So we phenomenal. is see

other but came than with close And I fuel X% I you And LT performance competition. important already day that Second, get that point one in the think to data are is the independent test. economy back share, the close being know, now better is this AXX drive fuel of that the with market pair growth XX% on the don't be the cab, when want share. to have long today, XX-liter think here. to we're term, specific thought you to guidance, shouldn't that in us if if market in that expect the complete I the think AXX you honestly, what we the went the think economy you through an place. don't Mike, going we I same results that's will reflected we

Michael Cancelliere

order fleets helped done AXX, that's our with in equates have the points Remember, Persio been as lighter the product well in it's many many, $X,XXX not the overall retail think the talked that. in it's that we we together, many, the has to business I just the No, just improvement weight a key of uptime economy, get the about combination have Persio a in series. The in vehicle. fuel years. that Yes. really with And ramped covered haven't share centricity, X% share about lot and focus on of us the fuel economy, AXX in some as intake that combination driver segment. the XX-liter LT up that, a our

year one so and if series. LT largest And in to could of that or be the all it's our aspects on so, AT, performance the about that you costs face, in So AXX excited the of fleet we're it, of savings. pretty XXX-truck customers think the about a $XXX,XXX date, per the

Troy Clarke

Persio, And September the think me I about were segment. of XX-liter earlier versus June you talking the penetration to

Michael Cancelliere

that. Yes. in numbers I have latest the

in of as your at were through the So that introduced last for early point, X% Troy, to X% on range. June, the rate, last in -- X% And year. year, to tracking we we almost July as our October, Because share. remember, look penetration, in about was XX-day we it August the timeframe run it just

be the of the consistent future series very fuel When that haven't for in we combination next really, we'd look have And again, we at than success in put in the believe reliability, So launched market severe trajectory running that service. double been what the yet we it year. HX, would the early equal And segment economy, will at segment the we with of HV be part will the it'll be the that and severe what on-highway remember, service more in the for the early as in AXX. orders, acceptance we year, really the AXX. believe will with it positive durability in be and outlook

Joe O'Dea

have believe be would this when at are XX-liter, that's to XX-liter, These share. buyers share so incremental the XX-liter gaining that expense your Navistar a you're clarification, of and a not share. the preference in And I for a

Michael Cancelliere

was the fourth the our well, earlier, said follow-up not the at the segment. a segment the growing XX-liter I in the also for segment success in as we've had at that at quarter, as example, it's well I the question. XX-liter -- tells number XX-liter. looking And success That's no. the of in it's I and look coming great of me Yes, trajectory share expense that which as also XX-liter as segment

Joe O'Dea

those look mean, And looks the and parts several Blue revenues halved in curve, if say When on the then just over revenues have decline willing for last kind to it try years. XXXX. I of I at roughly Diamond segment like you're Parts the we know don't to expectations

would elsewhere. So just those of trying some that gains you on declines you could to appreciate of see facing top be

Blue kind in Parts next the what really, segment revenue is Parts overall, expect what question And the Diamond in years? the So declines do 'XX. over be of should few growth you then

Walter Borst

and that time to that, runoff add Walter. period. a Yes, for have continuing commentary. seen will color continue start about will Parts maybe some Mike some Diamond and so long a runoff. long It's then it's to years time and yet. We've We've I'll Blue talked a decline want over

than shared key label $XXX take think the Parts, brands, entities. million is business, to from first private our call Diamond it, our revenue this we now Blue those Fleetrite from year of I -- item we've over which today, more revenue the away that ReNEWed do of time and

growth probably to continue as we to BDP slow year the the brands. and our we runoff that will had which even time, in quarter. comment have Fleetrite for higher Mike fourth growth, ReNEWed even And continue to double-digit grow on, in runoff, remanufactured and they So over the look

label and to continue So business very, of proud There very grow accomplish the over puts some been to Parts we but again. time. team the private has able what this in there, business to looking our takes are are year

Mike Cancelliere

Walter. Yes, Again, hit the thank you, Walter points. really high

but XXXX best reach The not important just, remains our is private invest -- business label in to our new add thing our it, competitive is only we on The year strong. mix business was as Parts continue that customers, well. products, reach reach record.

strategy. growth overall the of part that's So

Operator

Thank you.

line Weber Our of next questions with the Capital from will Seth ABC come Markets.

Brendan Shea

that's This coming on bigger the of or wondering is combination strength, from on the source owner the smaller some two? some or order if recent you your fleets of of the I operators kind Brendan could give color of was some for Seth. whether

Mike Cancelliere

Yes, Brendan, is this Michael.

So we orders segments. have receiving different been from all

and the our the the the the we have the American was haven't basis dealer the the dealers recently about it's to result received small our -- both years. that freight haven't products segment. we're And fleets to segment, selling dealer AXX, with the and benefiting importantly, value, and fleet So overall more -- industry, We as part customers investments have, RH, enthusiastic I highest a as have to our that up in survey LT, we They, all business talked customers. general industry, of earlier, large our products many tend every franchise really, the -- about we're basement been dealer business the of we never In to the year-over-year consideration as truck from, midsize with hit a product done that in leasing of the result on course, offer. feedback indicated technology, made sentiment most -- customers. in a from we in truck year-over-year increasing

really coming different the your industry. So from truck of answer to it's all segments question,

Brendan Shea

running if I you an wondering update, VW, that could sort towards there. you then that, on was savings the track give savings so in getting where X-year are And said of you're back that to Okay. for we plan.

Troy Clarke

that. Yes. I of pieces mean, couple a there's to obviously,

ahead first contract been neighborhood contact We've the to the more The first procurement piece actually intended It's in XXX operation. that $XX actually of months about joint procurement be venture. in are would ahead and XX or in ourselves be of suppliers. immediate about we're designed with thought to of about of book million of months, The the that. we operation savings about different short-term XX in revised XX agreements or is actually or venture our is to able We joint focus schedule. had we

excited purchasing joint on procurement forward, about the making. the moving So that venture and we're or very progress we're is track

not announcement, this That's for to be last & able think, of were on engineering is the I the we timeframe, spend I technology opportunities -- as we vehicle to of those Truck to that on of And colleagues. cost find additional track We our the piece the interact second our Volkswagen opportunities Bus actually in transition been wasn't as big-bore made that new really Walter product. and year, diesel time launching enter an the The talked into that electric with make. think couldn't thing the it some we've powertrains that powertrains is the we're we've XXXX market. really And our well. and about, integrated do then able finding like board engineering, things things announcements if integrated beginning is the third we the into

grow, standpoint, continues the and my thing, So the I I say continues would the to say same accelerate. relationship would to progress from they think

the we're all alliance. surprised think with pleasantly be results going to this of I

Operator

Sachs. Goldman the line will Our proceed. questions with from come of Justine Please Fisher next

Justine Fisher

the a anything is lot the else that Because that, is aware we I of, anything in the that guide. like that question there you including of to first EBITDA just guide in there guide to though was guide charge reversal? below as product a as guys noncash was. sales the But clarify noncash surprised for seems on The on mentioned. Is I that where spending structural you well. spending inventory kind an had it of wanted reasonably were be and that were And we Street that was whether and need as

Walter Borst

booked. adjusted about mind of We would did the for as quarter the million thing only that purposes, for really refinancing, comes EBITDA back first $XX but add part we've at of that's that mention that We moment. the charges to that the

Justine Fisher

the question Okay. And tax of then the next just on is reforms. impact

tax that the something have that that for a so might allow has extend we've taxpayer of that other lower Some NOL rate them cash covered the longer affect not their companies may that NOLs to balances large that Navistar? for longer. they're said Is

Walter Borst

first. legislation a give I don't when you then our view more see in that in-depth And come at the of moment, but us let back see we'll quarter the we any get first passed call, impact.

year material result of I as over not as footnote to the that. is first sure because impact There legislation's the disclosure any be But As some don't will the like. we'll need yet. that a that'll earlier, do and our passed we and come said I'm it NOLs our to in expect quarter relates

Justine Fisher

We're as recently And management balance didn't the to but heading repay question that of sheet truck head last pointed the we we've the for have balance a any good cycle. Company did as obviously some their sheet then the into credit And refi the on out, just year very Okay. cycle. talked investors debt. the is through

I'm how thinking to is be though Company with issuing which to XXXX ramp to where the business the in equity Is about XXXX, approaching guys going going are turn the if year, next is? is? as the in so are not it wondering it spend all on price guys XXXX. you the or cycle, stock more turns, you at the back cycle for additionally, over And whenever And that going does come obviously even it's preparation the

Walter Borst

we've months the significantly of over for pushed the we've our think interest billion We just cost. $X.X last lowered that of four job refinanced I great mean, future. debt. and a I couple Yes. our done preparing stack debt We've of out years

management. a I see we've done think last job balance kind I on years well. pretty done few the good sheet of the for We'll to we've watch as So it a might to opportunities us. of personally, And that present job think markets over what continue great

here track what I'll So years. and our stand record did in November we over by the just and few last

Troy Clarke

upon first restructuring than of last I tranche did year cash And debt done to flexibility ability flow converts created in the address out how Company, than us the a several forward. level this with what of night to really the fortune other that we've our of of balance the the that And on I us improving a sheet did -- sleep know, debt pathways time mean, tonight I this, take and what we've dependent I lot going better ago might then largely our think Walter I or XXXX. with be indicated, to to ready with available options timeframe. don't we the that I manage had is in the gives regards

night would this and it's we I today to were time where last So Walter's comments. endorse we're We're where year. compared -- like day, in at

Operator

the to no queue, Thank my closing hand Sir? remarks. the Troy it's over Clarke back comments to so Mr. conference or further are some in questions for you. pleasure There

Troy Clarke

for talking us but helpful excited place, We're you the in us, We everyone you to make to product is questions to next us. those what's probably do more year. much and believe thank who really we completed. And able questions I are very year some team right. you forward your breakout a to also year timeframe for Obviously, thank Thanks. Hey, early joyful want the to want excited Okay. XXXX. to Thank we're your strategy, the the season. give we you you XXXX answer in your of again to just follow Navistar. today. holiday a look offering, team hopefully, joining happy have wish we've much. more sincerely And March for about are -- very very right insights, all about questions our just new for right of We coming and

Operator

day. program, Ladies participation conclude and all and gentlemen, Everybody, disconnect. today's have your for will you may on wonderful we a This our thank conference.

Navistar International (NAV) 20 Dec 172017 Q4 Earnings call transcript