Navistar International (NAV) 5 Jun 182018 Q2 Earnings call transcript

Good day, ladies and gentlemen, and welcome to the Navistar Second Quarter 2018 Earnings Results Conference Call. At this time, all participants are in a listen-only mode.

Following management’s prepared remarks, we will host a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, this conference call may be recorded. It is my now my pleasure to hand the conference over to Mr. Investor President, Vice Ketelaar, Relations. Marty Sir, please proceed.

Corporation Good for Navistar’s Brian. will the Navistar morning, Officer; Chief we’ll April period call. me Executive Financial concluding prepared are remarks, Officer. everyone. questions and us today joining discuss Executive from International Borst, of With Clarke, performance our After Walter XXXX. for you President financial Vice take participants. the second XX, we fiscal ended Thank Today, Chairman, Thanks, for Troy Chief and President quarter and conference our XXXX

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

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

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

brief Navistar your a quarter, want financials, their quarter, Walter I’ll and for and take morning, second results and to through Marty, strong good thanks, overview Hey, will the questions. of walk delivered everyone. work contributions. I provide hard thank we’ll team for Okay. the then and the you the and

headlines. Series trucks in X-X delivery the economic XX did generated has Class gain of QX, in in Company strengthened progressing engine nearly with the Revenues $XXX is joint and $XXX the of a AXX trucks flow XX% X increased. Class last cash increase as million year-over-year. in The the market year for results. has The of activity. million industry, over quarter the to trucks. EBITDA continues market. HV Navistar’s X months. in an XXX% billion X-point HV gain industry volumes Heavy outpaced by $X.X plan LT to and strong market launched alliance began and the in few year-over-year. reached share Truck last the driven is Adjusted vocational Here delivering venture with a duty share Volkswagen was quarter, the free material up on-highway contributions quarter, Bus to the traction delivering procurement Class HX & the the vocational MV Production medium truck in

for Canada trucks and performance truck are will year details $XXX X in we’re through the of QX in market, expected cover XXX,XXX million. again retail of and to guidance in Given increase and forecast the deliveries the range XXX,XXX $XXX few a X to strong Walter increasing more Industry now Class between for buses XXXX. U.S. EBITDA a and million minutes. units these is be to in to adjusted and

X growth starting and XXXX. insight during above with into X% second XX-liter LT the Company of half XXXX. U.S. a AXX XX.X-liter second and XX%. in provide little to market the were The share the sustained not positive So, registrations a the of before. model. In expectations the focus has nearly leading above in factors Series quarter, the over accelerate ramp-up five Multiple reaction market of to of dividends. year XX-liter this the growth and Company’s months fiscal truck AXX, growth used all been GDP share the in up remainder Thanks XX.X% in Navistar’s growth, order for X the sales expense the indicators than share These the of more levels. trucks the with up X% demand share. XXXX to April other more doubled during growth let indicate indicator freight in deliveries replacement the on higher. were QX share market indicate second Housing is me starts results of Class industry of projected Medium-duty The outperformed strong Class truck rates And the paying for QX, engine. is were half first heavy due annual and spot of uptime every XXXX on-highway at MV will segment. new a

on time provided alliance Volkswagen, OnCommand as uptime service planned, in updates the programs and of technology set improvement incidents. been is improving LT ahead and scale. enabling and This launches for savings venture joint these The track, next for with closer. features draw are achieve also have And procurement will tools are remains new schedule. significant be provided is Connection by targeted AXX resulting to on and as targets New generation to aggressive The or track global access reduced alliance advanced product uptime. specifically. Very dwell

school or charge West and industry the tour districts completed successful school is various bus functions. which project exciting chargE visiting Coast just a electric one However,

year. Looking of the to balance the

of product promising with deliveries a industry, and results. half new looks improving XXXX second strong The

managing and As you some are expect, might we disruptions. constraints supplier

will the the like provided sorted our they insight to call. believe times and More be course issues These XXXX at quarter. the of However, QX. no on out in we not will are had impact industry material these, about uncommon be in QX

growing confidence, products is with consumer And beginning than and and these of strong to word-of-mouth customer greater as up, new production increased of remainder the X% to new of have developments tested are XXXX. this expected who returning these more. that GDP Consideration levels the demonstrates outlook To year high to healthy already quality backlogs. buy interest drive quarter of acceptance products. Customers this news the and market is share. underscore sum spreads growth products and is year However, for into our of positive performance the start

so, turn And over Walter. to I’ll it now,

everyone. Troy, morning, you, Thank and good

We’re stride our hitting in XXXX.

to half cash results These and healthy quarter generation. Second primarily and better conditions industry good X factors our of much were first material led results to Class due traction product strong, lineup.

once As look market increase to continue, the is of leading the over we balance year, to XXXX strong guidance us our again. the expected

additions second XX% XX%, Class quarter. was next and billion. the margin as to growth our I’ll truck X basis the were driven invest to and generation review the expectations. revenue, XXXX. a The provide of to outpaced growth industry share improvement for Let’s higher we the of core update continue reserve revenue second heavy an in by $XX heavy quarter volumes diesel programs. bus half $X.X on In the lower which from chargeouts improvement electric quarter million increase then XX% over and year-over-year XXX leading Structural trucks grew grew and quarter, of in of truck points points. grew Moreover, quarter $X units. the costs up powertrain in The used to X QX up million XX% reflects of percentage Gross in XX%,

versus year. quarter XX.X% costs of revenue, per last to structural a million to last nearly million. loss the million $XX was share quarter versus second per $XX EBITDA declined $XXX XXXX As share or Net year. $X.XX XX.X% the of Adjusted of from for the percentage income tripled $X.XX or

the to segment results. Moving

with Our driven receptivity of strong Truck new growing to had a sales, & industry as $XXX XX% experienced Class $XX Parts with million, $XX to revenue in margin conditions. lower to business. increasing X. by parts Truck we growth portion gradual declined the costs. quarter particularly greater Truck as truck $X.X a $XXX volumes, profit in components quarter Profits segment freight versus offset proprietary versus run the more from segment branded the procurement JV year private performance grew and shift double-digit in nearly than proprietary in million products off savings core ago. higher Volkswagen parts second X% the mix Parts reflects the our label growth brand The of Fleetrite and and billion, volume of structural offset amid segment higher loss Bus for costs. as well revenue Profit a to commodity a sales part as the performance together million Diamond of in from quarter declined Sales Blue used million the of the

revenues the to Our higher quarter, Global recorded loss of The In last XX% $X grew engine a recovery $X XX% a segment $XX year by of from to year is in Brazil. million segment ago. profit Operations economic million, volumes. compared on million, capitalizing driven a the

benefiting the actions initiated the also segment volumes, to from is XXXX. restructuring addition In in higher

$XX higher benefiting Profitability to grew Financial to $XX revenues million, XX% financing Our to interest from average million. increasing portfolio to Services margins. by is due increased obligations, also segment led balances driven improved which

We cash. manufacturing quarter of billion with the ended to Moving $X.X cash.

half us as of funding year payments more quarter, payments, in $XXX in strong favorable higher free than of EBITDA first again to working four leading volumes in and manufacturing quarters. strong with for cash to the of the order generated adjusted raise performance and compensation of we annual flow interest million indicated, Moreover, year employee benefit payments due our together capital guidance. performance During the sequentially is The expense full excess Troy warranty offset programs. last XXXX approximately also activity the

for expectations bringing to and We XXX,XXX core units. to fiscal Class Class our units well, XXX,XXX as are deliveries bus X,XXX our to deliveries forecast retail increasing to to XXXX XXX,XXX XX,XXX units X-X truck X plus XXX,XXX units adding year industry expected by

from range year. by for result the of $X.XX volume a volumes growth, higher Navistar $XXX expectations billion to billion stronger revenue million our As specific raising to truck industry together we’re of with the $XX.XX

adjusted to We in to sales QX expected quarters defense and gross remaining to volumes points for by margin year by million comparable $XXX QX basis $XXX QX are XX% are the expected to and in second in portion consolidated be margin. QX Truck and of to of percentage be relatively full are higher year. expect also consolidated gross XX over while revenues our a higher million guidance half about upwards parts to year EBITDA significantly revenues and the $XX be of to year, XXXX. in QX million about makeup the total the increasing last versus In our the we smaller therefore than similar

and prices freight cost expect expect as we we additional improvements to to well. activities, drive be costs alliance commodity While our by impacted product from higher

stresses In in capacity to base recent addition, industry in some to as near volumes term. is likely the higher cause adjust the supply inefficiencies

activities our funds operator Q&A. October manufacturing to to performance due guidance in cash originally come We of of of notes I’ll increasing summary, segment. Financial the year-end manufacturing In the product capital and renewed reflects profitability $XXX to upstream billion year includes are segment back due our the expenditures that, This million also Services manufacturing for begin cash in to it leading financial repayment quarter results. our improved Navistar’s outlook the to to planned as than to well from stronger XXXX as lower With level customer second the portfolio, acceptance turn our $X.X that anticipated. convertible

from Baird. Instructions] And our line with of [Operator come will question David first the Leiker

Your open. line is now

everyone. with. you are Can footprint? to where on give of start an update you morning, Nice on manufacturing your Good off numbers utilization

Yes.

a sequentially such opportunities of so us market. by going Phil advantage our has capacity our we’ve this manufacturing talk the allowed Operations really to to do, with with able me this far footprint flip to manner second I’m us to a of that Christman who increase let minimal a given President cost presented -- been but what So, in to here it is in here minute, a take year been and -- stronger in much

year, or as through we a this constraint might do are the way. capacity industry to looking we As forward. be add to not supply go that Those like could not. face come far in balance don’t nor manufacturing of But, year, Phil, want such, portions to we I been they from any our if the constraints might that has you anticipate know of the so

No.

appropriately. that think it I covers Troy.

plants, more The and a manufacturing labor. We have constraints additional in capacity our the really matter just it’s in supply related? right industry now adding base of are

duty truck offering? are look the Okay. the in here you and the coming talked about And your is across launches, you portfolio the item the new -- if half. the medium Where product then, in re-launch second portfolio on you second at the

by the that is ago to have MVs, medium the Persio. duty, call single And last successfully the X of all project Horizon The closes what this day that the this we the in the launch products two down the cabs and the promise program. recall way, you the we to Horizon Well, cabs, RH, years cab launched that the we for the Horizon to may MV Class duty. products project medium a MV very from of Horizon, for to kept we the the from to vocational wanted we is us leaper and the vehicles, HVs the of launch now we succession the because last one the had

know, the end the have a the in CV, year, end ‘XX. may Class the different Navistar at at platform, X-X the is you And of which a of So, begin the one. that this as we we is have still production we have last

in deliveries more early next So, year. the

Thank you. Stifel. And come our next with Baudendistel the from of line question Mike will

line now open. Your is

I category share market XX-liter the Class your in see by just and XX-liter could wanted category. you. if Thank break down you to X

said, at you was mostly was increase the expense XX-liter. in now but of it -- think I XX-liter the

could great. be that you give that would If breakdown

Mike, Yes. is Michael this Cancelliere.

throughout share market to continues Class increase our So, X.

year-over-year And As pointed AXX segment. fuel as of XX-liter the series. that in are this of product our out, add steady are XX% at share. prices fuel in our important XX-liter engine LT approximately I see more the rise economy Also, more that that XX-liter we and and to And quarter. economy fuel And the of that would have speaks holding doubled expect a for up number in in particularly orders the we the you the -- continue customers, the segment business. share of we is the the to on to in penetration basis really segment

would follow-up the I maybe think bit, of we’ll think the what XX-liter We the now range minus in we or about XX-liter, your take segment, double I’ll -- orders fair neighborhood to we -- and when of right a of sure I the make you kind is than here numbers representation. question, XX-liter doubled, plus ask we it’s share share kind we of and what ahead range of And X%. mark, the the more -- running to call here X%; a in has hit are just which give and start XX%. exact to is more of actually started the of they were running but that in XX% little guys XX%

So, leading indicator. a that’s usually

XX-liter where to it equivalent That be would our is. we’re need of last double So, time this probably then, expectation. be to we XX-liter, launched kind hopefully And year the would up. going, the And it you just double ramping rate next think and having it is expect to again. then year, will at is certainly

ask expectations expenses wanted on guidance. any just the is CapEx helpful expectation That’s pretty that also the there engineering I and P&L? And you your for with to What encouraging. lower changed run to change there? your through Great.

higher. On changes But, efficient in those side, part at to we’ve with additional our on expenses. engineering of CapEx the spending. of second we’re drive on no part that as as little been alliance just that, might we the meantime opportunities CapEx those continuing the very the have Fact the look

put in to of that. taking running capital those of is human what just had capacity So, for full we’re our not And out we’re in year. as much foreseen still projects place. resource to terms to the looking implement do this we It’s kind

Wells will our the you. from Thank Securities. Casey line next of come with Andy And Fargo question

line now Your is open.

help a the question dropped decrease? by as like QX I absence had looks corporate on you before about It expense million was sequential tax. million us It of XX Can $XX sequentially charge. with the the that $XX and reported. other finance other the about

take QX. correctly [ph] us be don’t in pointed activities as is there. The for I the if that offline, could [eliminations] in to let had the refi But, that mind, we biggest Andy. that reduction, it offline, because $XX take probably you you the well need million out sitting

on for of bit a the half adjusted it addressed you’re then, you EBITDA little pretty for consistent And ‘XX your looking with higher but guidance, second EBITDA revenue, adjusted half. second

So, you have margin lower expectations. the

other So, is to there are we you all any talked should of temporary the consider? that related or headwinds about that expenses

expenses, as parts also remaining the seen saw we flat freight guided costs the relatively being in quarters base what versus QX. rising in year here temporary and those supply It’s The in we’ve are some to we’ve inefficiencies business, currently. of that the

is margins more between profitable the than mix and that always with Parts Truck segment segment. Truck there flows the this So, segment Parts the segment into the our

So, truck the more have side margins parts been the kind working that that’s its relatively on as the of you’re revenues through increased referencing. way side and flat on

then Thanks. Okay. question… last And

here to of we sure listening talking also close part what be about. might just of is on Before everybody gets that, make kind Walter that

suppliers plant, full out, to LTLs and kind of rather that capacity what we in all experiencing think of the such keep losing running our we’re the transportation, using loads incremental flat are than industry is premium and right, an shipping, premium Given from the I that. like balance

lanes units freight freight day, occasionally. where those especially so year-over-year, forms other end risen. premium keep will by hauling that back to everyday, But, the to an -- the that rates required, prove parts running that is so down eliminating think are can get We basis. do that the we at I units and that are up not on bring costs adjustment, order think using of eventually, an show out. environment them transportation those running, with this we’re running, it’s significantly currently missing that the have plants we an to plants keep in keep and costs So, in miss filled history XX% rates, spot all will And efficient like we’re of just

costs, those that of that’s And Walter levels of of is the is temporary it indicated, industry volume. as one higher so, to as kind adjusting comes

segment-by-segment kind the and X And I but the the brings I Class within or the answer. all to given the constraints, these there can increase up don’t And expect the Troy. much a are in are think is -- Thanks, it that give production that, line? constraints are pretty I actually that, answer question then, within Okay. constraints you’re product But, any happening it you going board? segments know of across

kind mold group, They’re as Class mold is a mold severe we across think our service versus there capacity, of then, okay, a mold injection A or on pretty like board, nothing much the And Class suppliers the many the because is from about opposed the X it’s you constraint -- to there unique as in molders market. -- when the press competitors use a same of just. product otherwise as

out are that volume tremendous turns about truck which suppliers, increase of automotive these processing in they’re that this it they not many suppliers, so, really think suppliers, And through.

And one so, right, make be of to the uniformly, more to takes only not it part kind truck. us because hits able it

chain that link so, pretty you of And find weak the quickly.

Gabelli. will Sponheimer question And Thank from with next the you. our Brian come

Your is now line open.

dimension dealer the One, and came in your inventory inventory is million. restock set duty I’m how And is of launches got and growth that your how much you’re curious to Couple of down. $XXX dealers? if could saw the things. for kind stock up how much that on I is deck medium about stocking much manufacturing bumped you

Yes.

I’ll do will So, start Persio want and -- you maybe, to…

of have significant impacted in few the is before. Troy No, -- to terms MV, -- alluded that I a seeing portion. Portion you’re as quarter, most some suppliers, have of the in we not what units of were transition we think but

it that quarter. in is supply -- to was think, overall, third recover side it expecting on I the are more the we

Okay.

lot in of process work So, there there? a is

Yes, exactly.

ramping in be here volumes up to going we’re half. the And second

that. So, that ready some for getting of is

good news, to have So, that’s inventory. that actually

want didn’t and dealers regard to the on they’ve the dealer stocking, to HV, products MV. up the launched The just waiting with in which MV new been bulk for want on And up to quarter. bulk really DuraStars. kind They

So, dealer in HX those for where put their to back need are inventories all they be. to deliveries slated

any But obviously revenue Okay. little wondering predicated that have I’m market may Thinking your would took gains projections. been otherwise if up share the about guidance, you the expected. you have bit increase of more any industry was a than on

Yes.

gone think, is I that bit year. of a we’ve there little through in the as there

of wouldn’t million increase take just you If revenues. $XXX in our the industry increase in get you volumes, to the share

what we year. as share better we’re the have order balance guided through have versus feeling we to now this So, of our a about strong previously, board

tie Brian, previous this comments that calls. to give of in had some of an kind opportunity maybe on us to we’ve the

a to came what walk heard the and You’ve come the for major trucks XX some deliveries way share particular the then potentially trucks, the The off in quarter, had fleets will of expecting quarter double anticipate really the back about in they capital saw in product want cycle, but were the it. surprised only bought we not they of a we they for what who is next were year. purchases, kind pleasantly then Cancelliere larger with Michael much and to the what so, handful new market adopt fleets then is run, large or quantity. large don’t handful in to pleased that -- talk saw half and right? surprised XXX larger buy And when conquest we those include crawl, by it will we fleets I But they a but numbers us, several also say of which we the buy second

Market our and a services good around. reflection share we all that’s products of offer stuff. So, is

on as if the more just And balance. just I cash a manufacturing sneak one could Great. Walter, in, clarification

of million the converts? inclusive the $XXX paying down is that So, for

sir. Yes,

Goldman question Sachs. Revich next Thank our the And Jerry you. come with will from of line

next, proprietary months. about to wondering XX over folks the it if you I’m your expectations call cadence the of sales talk XX parts can

parts the you fleet declines, just wondering As any or we a the seeing helpful. should population, give would sales the how continuing, tracking, out played you year-to-date I’m proprietary if at are on that based at is color look could as has you be look field stabilization,

private to proprietary grow are as double-digit. before. bit Well, we’ve a in label about and little at business sales talked Fleetrite continues down particular The

But, been do has private parts than that. higher proprietary offsetting have a label our that So margin our do. sales

So, trends we we’ll to help has seeing you’ve on increase truck now, term, out course, now to activities longer side. we as alliance some will go proprietary of the And up start decline of volumes here the been years, got of proprietary drive a sales. the the course as too. as again. sales sales as engines other to in over start the on proprietary well coming talked about do smaller, with the that will we’ve warranty to will next see in proprietary And parts our start park see continue the help But gradual those before, of relates want it allude Michael as MaxxForce which might

probably most Michael’s add. of I So, stole him I’ll let thunder, but

No.

covered pretty well. You’ve it

to in of proprietary approximately add, X and X.X a in approximately well there’s of engine. that as them marketplace international it’s mean, million remember, still trucks Just to the -- million X.X important buses as million, the I have out

So, out. opportunity is still

segment, But volumes certainly going our creates that’s in the the and parts industry, sales continue parts early the we cetera. overall our to market components continue the of proprietary increase the as as reach engine et related of share strength create Although we of for and ones. Walter’s as AXX electrical the that additional that penetration beyond well other cab as to -- to it coming, proprietary with they the system, XX-liter to opportunity of point, changes age, improve

focus the ReNEWed, to that proprietary. continued place have private to Fleetrite we offset initiatives on the brands, So, growing runoff the the between and label in

all think Fleetrite that’s something and We anticipated as that anticipate the margin lot of drops a seeing. point. we’ve This a volume our really about around. that’s plans grows is lot is This but to something surprises. less. would offset talked and have the important proprietary we’re I that, is

customers. We label to reach lot of private to in we So, out we our have brands more. all a it but grow are fleet, have the trucks have also, to do makes. And

And more for of ultimately so, we’ll higher of integrated part we far makes. while on as product. of get alliance Powertrains the volume years, are next kind And our into and back couple is in, this level stuff. fills all at manage will Michael penetrating the the indicated

So, of I all anticipated adequate it. kind would to it’s say, we want and plans like to believe around

part And provide business? expect update and on East recap your an incremental million the $XXX military prospects any a when revenue other on talk about had just in can you won that the you talk other program burn recap order Middle that and you accelerate your about you of for So, business? to or

the Middle been is external sales, in in this East. Well, is we’ve very Persio. Actually, us. The military business mainly an important business successful to

won. actually year deliver businesses production. West is and operating us We have other strong really for almost capacity right some UAE at Point very the projects that to is -- we XXXX we have in now that

side. years we on are So, working the always and military the defense ahead two, three

activity of in right place we seen years. we’ve I And taking to lot continue the hope in think a that trend future the is now. there ‘XX

And we’ve projects into the have in only fast about follows we’ll The that later to talked reference half. while a deliveries a actually it in past, because second XXXX. the revenue so They XXXX. on deliver contracts. Walter’s them more to these takes want military was that in comment on begin That

military for well up set won. XXXX business already we’ve that is pretty contracts around So, the

and to pile more allow gestation projects period. will the We us would of that the products we provide. in end Persio a irons kind As continue anticipate indicated, with that to the have somewhere add that to XXXX, can now two to Those three-year at of we and usually do fire, surface other are services so speak to between on will there. revenue

And a if your your Troy, versus on correctly. in I clarification, just up military understood XX, production based cadence, comments the be XXXX like to sounds you expect sales

that Well, comment. I didn’t make

see will same we at then, will there. where We from the into XXXX roll run about we rate and go

later you We will the year. XXXX more give on guidance in

Adam Instructions] line Cleveland will question And our from come Uhlman Research. next the of [Operator with

is now Your line open.

I are saving from comments running JV, XXXX start what VW pace was dimension XXXX. could of and wondering your with if I the ahead plans earlier, looks the in could maybe savings I’m the wondering there if of like you Troy.

it has prior more any Now, than loaded initially you wondering I’m just plans. you’ve like seems success expected. the that front than if more had become

Walter. It’s Yes.

rate five year five. We’re will of synergy previous over million guidance that really run $XXX to sticking years savings with cumulative by our with get million $XXX a

we’re initial that meeting breakout of provided by a haven’t expectations in early exceeding year we or years. year that. happy had we’re we So, the But, the

So, most of of to guys figure tried have five. would out we up million to year that how I by think $XXX ramp kind you

we’ve call talked these to on last integrated. starting as about are become well, As operations the

So, we’re that I is that sign the less the be to break are in the out able with team both think leverage commercial together alliance going have global and which really together ourselves. global to a we alliance opportunities for for and to that good so look forward, our scale to as we parties go those working VW

phases we’ve is it. of think previously talked I three of So, kind there

buying first something that right. low-hanging The we’re is, things potential to turns fruit same. Unfortunately like the real that’s fluids phase out be the where exactly

on same from different very it where look second is opportunities that’s the both savings similar. buying add opportunity So, the the thing have supplier go And to we’re something that. we

supplier That’s relationship. the can we we’re kind of this in where that’s create phase today. so joint And

we’re that yet they where it The product, engaged into new then the common the components, in. third different and may we group come at we’re so exact be volumes. beginning uses where the phase design the that that with slightly is products from way in but configured not will the source alliance currently That’s we even though phase

million Just the a clarification, expected for Walter, the the that’s the with $XX excluded third that’s gain quarter Horizon; guidance, correct? from EBITDA Deepwater

That’s correct.

Thank Bank next of will come question our with America. Karson from line of you. the And Doug

now line Your is open.

are what an and be space, to you the talk Could I want some longer that’s electrification things opportunity how question. of closely. it like of as the yours there I auto firm about early business? a give your could of about to a us could cover lot you’re been participate that. There thinking like has ask impact and term And electrification that read far as in for a some space in

maybe Well, start here. I’ll

the to market future. thought this of segment. we, the -- are ourselves well. business in We’ve kind segment particular in as inject as We’ve assessed this attempted to as keenly our in particular So, by leaders to or relates way, interested it

or it’s very driving on created bus intense school doing the and West school probably we’ve bus an to bus will the that market. right As chargE, a market And that the that it’s with are frame. pronounce now, come things like charge around that intention to fully frankly, school and comes debate things an -- kind XXish that. operating, we do to of production of very, in that school outgrowth of electric fact Coast, and bus reflective we announced, And a lot energy. bring have we how out school indicated of we product an have bus of the we it’s and interest media we’ve And in We stuff announced time brought that shows a that that currently And two we bus viable and the that. very quite has internally lot our a events that’s electric to market is at showed shown. two

trucks duty lot the duty indicated share thing you would a timeframe the we’ve think a but bus. second similar to school if bus proceed of of in And architecture the The componentry truck. medium about be a and after is medium it,

for us. So, it’s extension natural a

largely environment In type to a urban and or is opportunity the medium business most is segment delivery there short rapidly But to comes to viable develop to that the evening. infrastructure charging model is is back for duty a that, much the addition charge in vehicle and we range, where the what allows penetrate do an that versus on-highway trying pickup where solution to a place to believe this simpler the in tractor.

really some that. & us so, of certainly, we’re And technology. of excited Volkswagen allowing about And access then is on alliance And in the United with Bus energy there to a that is States our technology. that actually lot Truck

mature in the can results not just that full so, work front create but a but quickly not our opportunity of to have we customers something a products technically And business that results us are of proficient, contribute as and just and to pretty our well. as model

And excited So, and proceeding we’re that’s where time. focus point particular that’s that. we’re about in our of really kind at this

business leverage That’s balance very gone the great. done last well. kind two of five. of the factor think of operating something for little That’s you type very has Company The better? grows do opposite to helpful. and is from like One How other of right sheet forward, the over times boring business below more down do the like has going leverage question The what does side a stuff. kind feel as of EBITDA of spectrum, your close eight on to type years of leverage the you

exciting Walter. to trucks, going it than but electric to even That’s I’m pass more over

the as out. flow for for cash we were Thanks get in months. the we to that free positive Yes. do want leverage on And Company. XX We pointing our the the remarks, lower in last indicated call,

going help to the over the with continue as want for one to that’s metrics Company of that free time grow is have key So cash the we reduce our We well. that flow. leverage. And to to

leverage haven’t We $XXX million But, that off will we’re to roll in any at. we provided the converts here looking specific get see October. targets

another that look come of step So a to converts in $XXX due we we’re that in million and look taking direction, of would be then that what of at And will got XXXX. another April that portion we’ve refinance.

line you. And [indiscernible]. of come question Travis from Thank next the will our

open. now is line Your

the in wanted follow around release, on my call. taking up just Mexico. the I just for comment to Thanks news

weaker. little I I’m wondering some smaller Some issues. could if bit context to of more volumes you that; know, around segment. share, it’s if the But, put a a market just were it’s related other

important caused conversations the things that us. of there NAFTA for Unfortunately little an is and like is business volatility that. market, is by the business on in bit part which Mexico

the well Mexico terms position. the very of on a to is biggest impact market buses orders. grown significantly. usually in -- We’ve placing exchange our rate we’re share But So good industry in and consumer in confidence honestly

in taking place now in that in We’re the more terms There the are Mexico. come almost in our buses elections year. doubling to our mid is of sales of

local very piece the the closely because the on for for elections, wins market after track depending elections dealers smooth go a that with are well strong that’s still election depending still be Mexico some So that results for But orders in And -- from are to on stay Mexican everything the production standpoint, there president is from the of periods we either good after in could our opportunity wait. We’ll the on the immediately market. adjustments monitor or of to going tight. who for believe it is go our Mexico. might we holding there can us

Let��s see what happens with elections.

say we deliveries I more right? think it’s half, we fair the than planned that half have in the to do in second first

Yes.

exchange part And the of election driven there think is is that largely rate I demand does wait go the that the this after phenomenon, and see by of is but not elections. weak, kind where

be appropriately, under any circumstance. think. the stronger of an part is half think almost second managing I important than business, I we going So, are And half to first

you could responded but the I back ever normalized doing there? take just But, for segment of the Truck things or target, me Global profitability in it’s again is the nice maybe the sort just Thanks to just pretty in sorry, in you profit you get pick-up a what’s know you’re the responded still of smaller. context. Great. scheme that of what level Operations maybe but just a segment to you had maybe what plan could grand do little a -- bit And EBITDA sales; -- expect through

as same be size near term. expect in the levels -- should nor have doesn’t that Global Yes. to those segment Truck, at currently doesn’t the have

think, years due a is, its And global operations points principal to on good is I news the very low we’re not to heydays. anywhere by improved of starting lower back but of base, the together back Brazil, is really significantly couple portion the near there a which to and segment our over see profitability. that last with Global lot to breakeven work of team from hard sales the been restructure that’s to their

overall us. a to look But, So, our first as to it’s was or profitability the than comes back we rise time. and smaller get minimize we’ll segment did here Global segment and really to to grow much will losses, from over for which But Brazil back in profitability performance step Truck now Parts there.

margin launch XX-liter there. to there expectations of congrats mind versus then, the solid based taken versus are and back on Would the -- been of? successful aware outlook, that this is difference margin, just EBITDA aware they you difference XX-liter, should or just XX-liter the be refreshing turning the Great. And XX-liter, on similar

Yes.

disclosed haven’t previously. that We

down So, the versus or XX-liter the focus is of here powertrain meter while historically as But and the the in well. what on vehicles. XX-liter based growing portion on are that one sales we we broken growing haven’t other

our Sykes And Nomura. with of line the Thank come from question will next John you.

Your now open. line is

have my guess you I from Yes. part Hi. is, wholly, having being gain what the talked back I question go And versus something of you okay, appreciate wanted the with just alliance. it. to I about VW would respect to VW alliance?

more great that staff, had the catch create partners time. present at frankly that of here, can we value in, this with we couple I’d alliance with than only for both we on years jointly this a can our old, and is are more alliance two just ago, it’s to a us. can partners we see with how issue an Quite These than that we’ve is think parties can for are jump month we Volkswagen year a or projects work death really just partners tickled functioning. of both to

that. to really pleased. working turned our value of the is So, to into I And -- really maximize this mean, thoughts thought process, alliance. frankly, that tapping because exceedingly just haven’t we’re we’re we’re quite the a

that results we the getting wanted. We’re

begun even the of integrated products early the launch coming to haven’t in part decade. We are next the yet, which

it. time So, We���re that it spend a on might if it we speculating lot be. what of and it about we’re focused -- excited next don’t and step what on

transferable? easily that enough. relatively to And Class Is X? that the can Okay. on apply All technology, you so, EV, right. bus That’s fair

technology motor for think X in Class cell there as Class like X, battery things is I applicable is technology, well drive as buses. X

might two of a what what we at and are looked approach the of understanding drive truck. are you have modular the a container? think more many making you you how motors do indicated, design X drive do like battery or for they have four put invested is designing people Phil you put one just some instead this put in they have And Those another. then, Do certainly, are concept a all for or the a We competitors design systems, might these of architecture our just one XX more they vehicle application cell upto concepts today, how about but really systems they the on Class having if be, right for do components. are think And motor, scalable. pack, into all as computers, seen But XXX? drive motors. the vehicles to bit they very I similar of as programmed lot haven’t them controls to a little energy they of are differently

it’s EV right the to appears but approach. think, is of a today. lot don’t industry in approach it this creating be modular know technology exciting type of interest to the I regards I that with a So, very

you When you axles, about drive what motors you’re what motor on say are that talking the referring. is

Yes. Yes, drive motors.

Okay.

electric, right? be would So, all that

electric an That’s yes. electric. For vehicle, all

why I’m about thinking nobody hybrid is step. as interim talking just

a programs about, of is you Most hybrids. around hybrid. least -- of hear kind fact, two discussion at fuel-cell, maybe about fuel-cell a -- there the matter that is that’s There of hear three as you’ll that

generator, where to battery electricity; when have call this support that some let’s capacity And You’re there’s some actually electricity itself. to then then applications powertrain provides have then electricity other using driving is creating not and strong using isn’t and which batteries you’re a a serial enough you hybrid battery store fuel-cell. you

to again read of most reach material think number, charging I there and economics approaches out in batteries, electric towards equivalent. economics, research you the So, there in investment so number what there infrastructure, that into And this magic because diesel cost of is those are there. on couple number, I most batteries truck think, so going much point type become viewed the you steps vehicles, but going electric truck all there. they time is kind cost of interim interest, of of at think as much this in journey But the some is and the hour, kilowatt when I get in per

think and wants as everybody are they make obsoleted. to can so short-term is where that be the I investments not sure in try So, to as make understand close they that frontier any they

you know then, more, closer. get seen And your will the I cycle have with guys update experience. just one on you us QX, we XXXX, But as

good So, just seems pretty like a to I’m be should XXXX see year. what wondering kind when are the you you But, peak? -- do it

And XXXX. adding over on indications level. supplying demand bullish fleet, means truck which we’ve replacement the just strong really growth We’re you’re above early it’s indicated you’re X%, year. show, to going to GDP be another

near-term, past into focused aren’t in we’re XXXX really right XXXX. now. fiscal we But our today so, filling slots the production we’re And the in and already taking orders

So, you more in XXXX. we insight will give guys

begin of pick not time will to I It out they market atypical that year think, the to in roll fall of then us. off and is orders begin up this of front the have strong have by cycles and past fall. were we seen stronger orders a into the remaining orders in extended summer where the But, bit in again May. in been little

see in to of how interest So, industry be June. I perform think would great the it to orders

be give will that. that more on smarter insight our you we to into call So, third quarter much

the come of question Casey And from our Andy line Wells Fargo of will Securities. next

now is line open. Your

Thanks the for taking follow-up.

When billion, you the $X.X pay in of talk down of inclusion billion $X.X in convert clarification, $XXX million included also that a guidance? about was the Walter. point Just prior

Yes.

the to guess, you kind a came little calendar And bit from out Navistar people say if our a on fill relative slots ability orders the Did checks show channel in that night? in in where ‘XX. orders last unique that May, you benefit disproportionate of then, have has May of some position, that the want I them a do to

Yes.

So, this Michael. is

every down run. quarter, Class quarterly Not be. month is at the which And that outperforming But for a about that. customers, we at continues crawl, XXX% was believe as track look product. is share Certainly, additional was road. year-over-year When we second There carriers, Troy industry’s share, outpaced in expected outpacing up industry, translate Our we availability to XX X we separately. large into like we’d period, one top example, consistent the we’ll we over plus. talked what the with at of look QX. the order the for a We when to walk, look be industry. And demand them orders are

next into move stage to some of with starting We’re them.

XX -- get due preference LT order all type carriers LT top mean, from time economy Within the to our this existing I the the feedback drivers, Series customers our performance we have driver of this XXX fuel Series. truckload about One and and really fleet, to of on focus truck, and overall love drivers of uptime.

we’re So bullish. pretty

of But think thing availability. the other some mentioned new got product. We that’s I the our going is to be here receptivity

So drive that’s orders as well. helping

performing. they are how And

Our might normally but than that competition, orders the some our are have. think fact may scheduled stocking we of MV year largely us programs different the dealer with the I the given launch what’ is the of and HV, later flexibility in little look a from the this

filling so in. is for filling, And has But that created flexibility some that quickly flexibility us. is quickly

question-and-answer for this today. session Ladies and gentlemen, concludes our

Investor comments Vice my remarks. Marty to over for So quick conference Relations, hand Mr. President, back closing now, Ketelaar, pleasure or the it’s to some

us Great. everybody I for want to today. thank joining

And updating Thanks super forward we’ll look our in about on We early to quarter you are everybody. future. September. excited third the

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