Navistar International (NAV) 6 Sep 182018 Q3 Earnings call transcript

Good day, ladies and gentlemen and welcome to the Navistar third quarter 2018 earnings results conference call. At this time, all participants are in a listen-only mode. [Operator Instructions]. Later, we will conduct a question-and-answer session and instructions will follow at that time.

As a reminder, today's conference is being recorded. to host like Mr. today's now would introduce for your conference, I Ketelaar, Relations. President, Marty Investor Vice go please Sir, ahead.

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

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

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

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

after and In with Marty Walter morning minutes, joining call for the today. provide Thanks you through walk and quarter want brief our will Hi. the financials quarter all then to really a the QX best to will our of Navistar, few next will good team the overview strong that Thanks for you was questions. the everyone. that I then a I and here went and thank take work we hard into it. do for your

$XXX positive flow EBITDA on the technology an with proceeds exciting Traton an in The Class cash the into settle joint according Group, to million, Here’s and retail an couple July the alliance headlines. Truck Volkswagen we The was three was was XXXX. year. year-over-year. year-over-year. QX to free and a increase as XX%, projects. array quarter, Revenue was Adjusted and with the on remain all-time We achieve venture industry the market up XX% in the $X.X billion fourth Class X quarter strong Navistar up X setting points in we nearly strong of Bus, progress of track remain in procurement record. of share think & heavy for the plan orders with will market now

December last the QX coming will we insight. provide like Given Walter in on to provide and call, the some market, strong for guidance although would we minute. XXXX, a talk about and will early normally I again performance increase the And details not truck year but the least,

the units. buses those X Class believe trucks. trucks XXX,XXX a it in and X, Class numbers, and are to bullish in X range through like markets look We lot of to on coming within in XXXX XXX,XXX a core our XXXX, with at that of XXX,XXX range we will XXX,XXX

going am this rest the little me on costs. So, three results year. QX a of more and for into I and supplier expectations by orders, industry topics, do constraints, provide to the touching insight let fiscal

a These QX First rates, orders. X fleet level a for of numbers QX These the business. created since and XXXX. well utilization, managers year-to-date, since the conditions is industry the time was XXXX. it's great in improved Look, level July And Class higher to confidence In highest strongest XX,XXX highest carrier QX X.X%, July, to quarter XXXX. ISM support the units. GDP index over growth rose at purchasing the orders backlogs let's of into freight profits. XXXX. above just truck XXX.X, in index talk be month the XX, since have was record consumer

all if questioning now built. be are you of these orders will Some

well. slots if are ready several are be customers can first is or are We or cancellations. of that attempt accurately later as don't a canceled units lot orders possible. at awarded manage good delivered a placeholders out date. questions. There with all as how as reserved us at expect placing Navistar, moved the OEMs, for for was Look, reporting Our one, we orders our a good month to or to stock order July other many cancel

market point growth registrations QX, heavy as core XX-liter third through retail month that share month many were me the and the big company's truck X than a heavy by strong dealers OEM the XX%. X is and also of year-over-year more medium sold share need the to is which In of and timeframe. July order Class XX.X-liter were The was order year-to-date, engine. percentage quarter, tell order was Class this in At old for why. third the you the the in orders up to market July duty on The series medium now real Navistar's new than XX%. XX% only and share X first receipt excitement, order orders Let X share, grew our from to down thanks through highest And restock. in year-over-year. and the net detract the fiscal grew during share In MV generating truck X the to the did quarter, XXXX. DuraStar not the end during our Navistar the highway July July, receipts we June up the for year. AXX MV retail share, doubled LT decade. was company’s in of Class achieved performance series have grown year-over-year XX-liter Navistar's more

forward. we see So, of don't took QX, order July in in changing a lot stable have incidental very and much XX orders Yet, months, the particular. remained last in we cancellations going it for

We expect to our in backlog. units the build

of If produced on chargeouts constraints that we did issues shipped experience is resulted were for and that quarter. built, build reduced in potential charged a supplier-related part. These a in to have disruptions would the out truck. to second not I the will The best to deliver issues, shipped the these number awaiting manufacturing some the not supplier and We topic quarter. way or is more avoid cancellation units in touch but the capacity all, After production. not trucks others and

things As inventories to a trucks line to delivery our so system dealers, we quantities a to tight, running industry ready and summer, early the to realistic Hey, capability related they requiring or Offline trucks to buffers, to and some now of of returned or cause in equipment to productivity our work suppliers increased like these of tend industry we bring improve without part. power complete support basically but be handful schedules. in outages the of stoppages. transport are backlog supplier and us, scale, supply behind forecast as the suppliers, even build really we weather are parts a The sufficient to chain issues have have revised and we and our suppliers can we parts and working The downtime, can't or normal, guidance. are through believe had more customers a view and available we minor these is events and any suppliers tools production are remains disruptions in delays spring in supply and most to with key support well. tooling capacity but increased other rates to online, resource

commodity additional issues, due to the increased charges to increased third topic cost, these In we and other freight, to transportation premium issues experienced due cost of some some and increases. are relates supplier procurement as and These are through The savings. these quarter, hedging design more than offsetting prices, cost all increases year, affect this In similarly. as that we well OEMs industry particularly steel.

early major to increases price published market increases, strong next they QX won't support performance realized we X% and and to monitor backlog supply year. supplier current And summary, economy constraints, our calendar various a closely the to very going July, the be addition, disruptions. into ranging avoid we impacted by is of backlog for across and X% base In strong until all Like continue in although XXXX. units year into the In order truck well from the will price models. the remainder impact

as The market. are we We are in increasing LT is the QX, the expecting and a such guidance. share LT the with gaining AXX and strong

will the best And our X, for the CV it remember. We Our to orders And X believe with for industry the the uptime anyone Class now are of that for medium truck MV taking international order growing trucks delivering share is all and the can new customers were turn the very calendar good end launches that, year. be over of and before for let XXXX year Walter. me which series, Navistar. another new

grew am happy financial to morning on good year-over-year our several strong headwinds. despite and Troy We results supplier you I report Thank facing quarter. everyone. another

XXXX We by Against increasing we quarter our X also in healthy a grew guidance. are heavy industry very our led this market backdrop, Class the in products. further share

XX.X% pre-existing, points lower volumes percentage expense. of revenue, to truck from for the the the QX XX% XX%, share. lowest quality heavy provide Let's Moreover, was the XX%, resulting indicated, trucks compared remainder growth review the to to higher volumes. will the our percentage our grew last warranty an X.X expectations reflecting improved In Class increase industry year. X X.X reflects by improvement In this excluding increased quarter the quarter, X.X% then expense, our and of in The driven heavy revenue The points billion. grew higher on fell Troy percentage new up the double as of quarter, core XX% margin improvement bus X.X% $X.X chargeouts year-over-year XXXX. and the I update warranty revenue QX, decade rate Gross and products. third of a for of of in to quarter

freight which continue to and over for commodity steel, prices, calendar has year higher costs began. XX% since increased the higher face particularly We

suppliers impacted These freight way supplier higher units through Supplier expenses our as largely in the we with minimize work higher chargeouts, employee actively are inventories, the powertrain experienced these earlier April, lower programs from Troy to components, fourth investments and certain Structural continue higher the to the we sharing generation but $XX cost inefficiencies diesel quarter related accruals demand performance. in higher Since up were that next reflected and compensation supplemental additional well expenses, assembly of as in delivery to certain their year-over-year growth issues. million constraints for will be and remain initiatives profit to benefits costs. process industry making to bottlenecks costs electric leading retirees. process company Additionally, in from mentioned resulting now related our delays and development sales.

XX.X% quarter, XX% share loss from costs XX.X% claim. As $X.XX gain versus in the the of XXXX. year. of third Net totaling related was million diluted or year. to $XX $XX declined per million, diluted a $XXX which quarter percentage Adjusted or In included a share million recognized economic $XXX of quarter income increased $X.XX a settlement one-time for to $XX a revenue, million versus EBITDA million per the $XXX structural items business to million last gain we last versus

freight offset year X as savings volumes the our Class heavy Turning grew including gradual increased of Class segment to parts and experienced growth from expenses earlier. trucks. X, for runoff well the core volumes, and as volumes segment procurement benefited the double-digit truck supplier segment of cost proprietary industry X duty $XX reflects including and more one-time to to $XXX declined sales Fleetrite resulted parts revenue initiatives The the Sales Group, million JV quarter The truck as higher the Class mentioned strong million branded to brand sales $XXX quarter mix allocation growth revenue Profit billion, higher Diamond in the segment. medium The items, million from $XXX and business. reflecting together X private in million constraints. more market than of profitability XX% to ago. particularly segment label settlement components in conditions. I Truck segment Blue $X.X a Traton well we the the robust expenses results. growth higher from as also quarter grew million third as costs from with increase those performance higher higher development Parts to shift impact the Parts and share structural as the from gain X% by $X to in engineering including in commodity with profits a in of offset internal

Additionally, sale our fuel included of the business. related year to prior the income injector

assets. the comparable equipment profit In percentage of from first Segment last the grew part the a in year segment nearly our year's to increase $XX to last conditions margin included was X% related sale Brazil XX%. profit that economic of to the X% of revenue, by global engine volumes. The rebounded As half year an machinery are improving the results million, revenues excess $X quarter, driven quarterly and from segment. operations for to in million, quarter supporting income

$XXX provision small Our via B financing in higher from to the in and increase average Segment was intercompany seven-year of interest Mexico portfolio increasing was to Also revenues the asset reflecting charge. to last offset upstream year, million $XXX million an in quarter, that margins comparable completed by originations which a due an the $XX $XX profit quarter, Navistar Loan impairment losses million segment higher services also operations. to Term for manufacturing Financial facility, senior million. were is with a loan X% secured balances benefiting loan new financial this

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

earlier rates. net inventories quarter, line $XXX the increased the I the of million, stemming increased cash capital and impacted mentioned from flow. supplier largely by and negatively constraints impact During This networking free

for the months over several flow to actions these positive taken past year. we to the QX resolve and in However, fiscal cash to strong the be expect issues, due free

convertible balance million April. positions us next notes million to the convertible strong next mature of notes $XXX address month $XXX the adds Our of to cash and repay that flexibility maturing

are XXXX once again financial guidance. increasing We our

quarter. year. our We are and our This chain billion X.XX in to we stronger With to raising that higher raising mitigate the $XX.X our percentage our year-over-year. $XX.X revenue any fourth potential guidance disruptions margin reflects the of increase for be and gross performance point belief to able to guidance a range volumes in warranty, we billion will are improvements supply to-date

the successful range conditions be profitability for to upwards are adjusted With to will we well. shaping turn our the future. growing XXXX back a and summary, As robust $XX increasing industry a to to exciting Navistar of capital while $XXX up result, X a guidance it very by $X.XX than as share for well Troy is million as increasing $XXX breakout due expected ourselves strong further XXXX our the expenditures. operator remain I are In the anticipated we for in year million in we year-end begin to guidance EBITDA industry cash to the year improved billion Navistar positioning XXXX million are as outlook XXXX times mentioned to lower Q&A. manufacturing and greater are than These to be as environment for are as Class that, to

[Operator Instructions].

Our first Fargo. line Casey of the Andy with comes question Wells

Your line is now open.

lot. a Good Thanks morning everybody.

Andy. Hi

on questions on there to between wanted lag cost is ask a the couple increases a that. raw and impact the P&L, of I Recognizing material

hedging that you First, over stabilization or less here, XXXX? expect potentially part you are additional second, of you as a offset are mentioned spill cost seeing could inflation in And into you forward more headwinds the or then the that seeing XXXX and presumably the should of to to off? offsetting increases more costs you benefit year increases material flat are point. the are stay rolling at some enough price hedging offset way than If from that price this also cost

it Yes. is Andy, Walter.

start, jump well. of me want here and maybe to Let Persio Phil will as in

are raw in commodities. We particular closely, watching costs material

commodity the commodity true costs impact previously a have to calls steel that at million We our and directly. that way million are we portion time as have what of and are about of of of that costs About that of steel. kind said have talked us still in had we $XXX that, we what today related on dimensionalized in and directionally costs what particular, is $XXX here

we on beginning since as year XX% So, seen, impact over this increase forward. have material by costs that the prices calendar steel have an of does going

time. As rolling commodity you do those in on contracts, be steel, indicated, we contracts off our with over in suppliers rolling particular and will

we given our commodities, have off do those and hand, and XXXX But versus continue, expect of hedging some well. next as year, so at will that also this on be will contracts hedges We levels that other costs we XXXX, activities higher impact those we for for material negatively maybe and that rolling to for us other roll do in our year. place the in replaced work

costs on the VW that Traton will we is our Group, with so, guidance we Bus, our Truck be & utilizing on that, preliminary reduction have it where call, as December joint we additional offset see procurement cost we we headwinds the commodity will will And including top And to able on of XXXX, with those then goes. we and overall, but venture in pricing at formerly initiatives that material think at the regard. point, look this provide further

across have the those Troy given backlog XXXX As indicated, announced our get board. X% increases into We X% they produced. see the before we to initially timeframe, the sales in starting impact units that would price go to

Troy. this is Andy,

our and to is we a the reflects certainly values, of point things of and absence the increased it net in performance pricing continue demonstrating in to superior just so Things of right in new the with the that performance or there. and as a that’s industry even would level. fact there things, our success at industry, structural residual also our product but market. given are of market, commodities LT regulatory industry like product opportunities impact new me good, content, jump Pricing to in on superior itself an Let economy, pricing the opportunities the fuel be starting in like industry intended some products, that our right, characteristic performing better costs very appear pricing is these that experience certainly reflect the of

much. Okay. very you Thank

next Our Fisher from question with comes Steven UBS.

now line open. is Your

Good Thanks. morning.

just seen trends, could And earlier order color of Have You this case would the orders in the perspective fleet placing large offer for orders you you than maybe guys usual cadence gave here. some the more bit a on base little your calendar what but XXXX? of year? rest be

you want to you and with see? do to do here? of want Persio, what try some direct get you your to insights some Persio, regards

activity Michael up, here so the we me he obviously there have side, with season an is I place, happen. But I answer. fleet think when start we see, and orders is And Yes. which to first, expected on help taking now as can is the seeing a now this think I well, going

movement that have but our there’s a of year is really reserved large of customers, terms in to than with lot next think slots would for what we I trying not expect. different

all I supplier the conscious of we very managing through them. Troy think and that alluded to, we are are now constraints

from we these year, and which in our and good a and There that customers. cancellations. lot about We robust that very how the have when are good so defined. specs second his of backlog and solid, been very first consistent feel that and into have us where it comments, provides and actually makes quarter robust feel I see the us is and Troy is not coming we we today, think order in strong visibility have, quarter mentioned So happening, as production seeing look is of that are don't we the we we at next we activity

We lined have the well up that we build our lines. trucks in need production to

be several I You a enough talk quarters? increase? Okay. the business, And dynamic? truck the calls market finally what guess breakout of a to period Troy, you that you you over X% in Is X% able do price To now to mentioned about the year? great this talked think then to time it about time we new truck year. can is pricing now it's it a to breakout business lot great it really on Walter extent a a the entering be strong reflect last in are the

which we standpoint, what our I have largely in of are are than see, gets to maybe you orders maybe are the Steven, of competitors the that But bit they we What's don't my earlier are The really going I kind coming little off seeing. to we Yes. orders building will but think it, coming units. that a right. give are exciting said, really some And orders to that Persio are currently Greenhouse being from would XXXX Regulations are much on of the new same. will economy LT, color, seasonally. do in principally over trucks the orders these are we costs economy now kind strengthening seeing that see from are old that good replaced time the market replacement fuel use side went the X% products improvement model. service fuel superior units of XXXX obviously a they later, is is out market. have of to of four made truck our like And and model into the years the other in and And XXXX. those the which operating pull It's Gas with, to replacement the

and fleet GDP more I requires X% shift and think piece of the order moving to designated more at consistent the of that Persio growth. a dedicated lot is day transport, demand. given, which activity from that really more There requires slots over a demand replacement what will nailing indicated, of growth that really, mode forward fleet be is as the however we in ultimately expansion which down trucks So reflects end largely a see more are

the particularly to believe, am see this begin fact orders I I we that fall, so will on we through And that. are, reflect bullish

drivers that. more around to been to things So drivers a curtailed stuff this added and arms get XX,XXX how year, has They like their on it year which drivers they get is pool expansion, by have it and had fleet is. into as so have the like much

environment think, as worked XXXX, year best the XXXX, I have our and we next, see that reasons. to environment providing that seriously for is That healthy certainly do have roll and us Now, To made cost are better the for in That's really create and also to industry. handful an early my here in of Steve. some that's only value reflects that a say, products. our are the had going we pricing fiscal then a into opportunity OEMs eight us to recover I have process the fleet we give of truly this how expansion me, to operating customers we we other years investment the balance the not of producing superior but on the thought it,

market. a know say hey, mean, I it's always I competitive we So that.

much will we think been those that see of through. but try better how prices to work I circumstances the stick So never to have

receive ordering? that are the mentioned being customers in your they trucks the confidence to able shortage? have You And driver expressed

of bunch that we Look, we the as am those getting part. sales not increasing being an on do of are a the feedback but worked know customers through there I Customers dealers we dealers know, there is know is and their our but is our from level confidence issues manage here. direct

you. Thank Terrific.

Steve. you Thank

Jefferies. from Steve Our with next Volkmann comes question

open. now is line Your

Good Hi. guys. morning

Hi.

to want I I understood am that waiting trucks Troy, a to bit, just out make that. you are little I sure and about be curious, the shipped talked

a way and with the it's look Is at out So through of basically to settled backlog and the just working issues matter it? that are the supplier doors.

Yes.

the Phil as they ready because It's soon car give the Let cars a me the the delivery leave process the on to Christman little in cars that the to sometimes factory. business. is is, bit a different all more detail little trucking as little have are of you go customers backdoor different a

so there I in little will bit to Phil describe. of here work progress ask is a And that

Those capacity is, as issues ramped you a know, summer trucks put what's the put them. systemic Those us. get Yes. the have as there as modifications supply early those delivery Steve, issues delivery a on in largely And are were on are we period. get really industry-wide those of really parts so the up, industry up, ramp them, and in happened lot trucks put on bodies those of process, they behind process. lot

through that headed process So they are and the to customers.

are Now to to the them the obviously, they chain high-performance process we producing can going customer tight. get The lot to excited That's customer in are vehicles these a their get remains so interest and of through now. hands. we are we supply that right

what unscheduled machine And to continue like disruptions we summer. so in experienced to which and that issues, manage more subject These are things shipping those unlike manage like early are that to we continue through. downtime, things we

And Persio, is if I may Steve, this add too.

with consider that production high. should rates You also really now our we continue

that brand units down doing to we are the we time what So new have those They units. be shipped are line. coming really at the are is taking same off units out of the system, the offline

little capacity now also managed to the is So being right through a delivery and now. it of that the is bit customers

know next through I am if know are question put any I think then buckets XXXX I is next and talking obvious we the themes of maybe Thank this guess just for ready you wondering Okay. we think words am mouth, am next I probably want And to that your million presumably right. about product. And but are Obviously, this, be won't Obviously, about will of better better the can that you for the to curious, numbers little in than $XX don't I sort of talk I things trying don't about to I there am a and bit put you little maybe are trying Walter, am I Troy, All but a you. profitability. settlement some not you And have around the but started some year? profitability? I Walter. new expect tailwinds to to I this headwinds mix should know, see year, bit about to whether year because curious. of margins,

year, sure on our I to it's was as a continue so and pricing been when continues but earlier, what's also have managing breakout what margins the business to call the occur happening cost on front, we to front. only grow to not Well, Yes. alluded this the

I be more grow additional for So favorable favorable earlier We conditions we provide here, for the results including the there able profitability. continue price as but using look we what in headwinds more call, product the our with on industry that do to our and to with more insights me December. joint our be be provide revenue venture offset to able see our will think alluded will December if Traton to will XXXX that share there. being some we we you will this insights cost let But should is reduction year market stop and next to with those initiatives volumes on have our then some is commodity well we given to favorable similar obviously we year our and and take

Are sort there more cost that? structural of we through are Or opportunities?

We are to The never say guys have here team. that done on where structural to because costs. we laughing our are

we costs, results you and costs bit looking at we as engineering what are is at think in structural our SG&A. structural a here well, as as a little when just reminder, the quarter think look see and I third you

portions our of investing some We business. in are

we So programs are that as got alliance of the new in. have we part investing product

investing On given growth the hand, to all we us organization take initiatives driving continue similarly lean the run possible at our the on time, are the the to engineering other as And as But lean focus then in areas be business level. SG&A certain next on efficient. practices to side, more in same operations. need we our are other to to of the

is equal out. maybe there and So there, minuses pluses they

this Steve, is Yes. Troy.

faster. there and a as of uptime many to today to our It's support are especially, out do helps capability. continue to dealers you going are paying us is these But parts planned plan We think investments. need need those? additional reduction which to become of to opportunities improving those invest to being I the mindset those system think, in proposition. And advantage dealers on the yes, able we taking and of we our need big the to we But invest in kind think leader. do investing have in out. are We nominal structural invest that I invest to or we dividends we already story, take I bottomline this our in uptime cost

going we new have And it bear. those and and And that in There then third annotation development partner Walter the diesel our alliance powertrains the board these in and okay. activities our past across great with we in certainly of and and things stuff. localization we have that to we about brand-new his part are costs is product type to business, going that that are is although kind referenced are thing the parts cost new the engineering shared. are alliance have remarks, programs the We electric investing invest talked in vehicles and like about

of addition brands. have We

We have reman activities.

that we our continued We efficiencies and have through in. going systems lean that market the going and we in made stuff able we are a have of breakeven basically enterprise investment lowering continue And point. fund to generate additional a economies are basically adjacencies the and we to invest through this to are lot to

going bet. So invest we and money going we be you be better? take Can are I You better it will we to you for we make and to know, that, shareholders. think, are the more can bet, we

any I year be think a Okay. margins to Is reason higher not on I would lot am investment. sorry. higher there hearing sales? am next of

give Like will I said, some we guidance you December. in

we some themes, gave themes. some wanted You you

themes. gave Yes. some We you

to We will get that December. in

next plans our for still finalizing We are year.

premature. be would it So

Steven. But asking, thanks for

you. Thank

Our comes with W. next Baird. Robert Leiker question from David

now is line Your open.

Vruwink Hi. This is Joe

Hi Joe.

Joe. Hi

a earlier, your I the consequence, just the been retail closer give to been your bit of share offering your XX% I where as might and you of is XX%. kind figure, at not much refresh, would view, market But to XX% some has done typically quarter of all of your a close heard orders completely order trend maybe while coming given you in share was a think retail sustainable where how this share Is July redesigned and on has in point share maybe quite have thoughts over product quarters? I could and imagine probably redesigned?

do that Michael, off? Hi it want one kick you

sure. Yes,

customers a to line the seen of enthusiasm XX% refreshed. influence And gain new was continues with our and the certainly really, dealers. product LT AXX is with year-over-year, greater Particularly, With drivers of Joe, from strong we strong is July up and lot our ever. or demand of fuel a our entire So the have traction. results costs the month than

on We combination we made has continue focus to have almost the the visibility and performance receive what gain. feedback really to really, had the very positive to three which point overall with attractive attributed product the of our the on is in largely steering That, efficiency, fuel share uptime just the LT. customers, quietness,

is add the One of that their less additional AXX continue a we very quantities the LT to view positive the significantly fleet of vote than LT with year to a have that as signs or customers the ago confidence. purchased

really the larger out a customer. stock XXX In increased than conquest pleased demand them, running customer product extremely that are They And fact, the one LT from across dealers less market recently that are every truck fact, but in on building one are They LTs going to dealers new yesterday was performance which with of series just product is line. so the me line. little would units we of had inventory. product from order of just segment And their not within entire load just are reported bullish that stock of and I entire line. XX customers. six across their a our our that good-sized sold to up was added that's are seeing AXXs with the XXX also add pretty a they

me average some share. order even guys And the to to point we of to gains. going that fact, lot share happy because, did. just we translate slightly about, this to maybe market share And about math was year a if hey, at fact, have suggest highlight order Joe, our way. time in not gains And number when are share? you to of our a would did we you actual said, different are share just that reason raise more to Early it's than going in we that has So did we to talk let it talked why last year does the that this mean really

points, So share almost we three X it fact Class points but speak. share we was up or X.X like lag as of a in heavy one-year picked to

your point, share. to plan, share to over order is current have average we it So, our if to share gain our have

and pretty So know our current sounds me. intention to question, our market but higher good than sustainable? it XX% is your I how it's to XX% is answer sustainable, to average share don't

is differences other orders would and way lumpy. The competitors I is units there timing The in lumpy, how stock is the there thing tell manage okay. though, That report are our you, and do, and just enough are orders we worked. way

look three year think, point have but over gain can't at certainly confidence gain, So I market and point experience to last If able back the as you at would I were quarters quarter, of share will share four particular of we year. any order it, to well. period that out to we a

we we thought is the or pull it's question XX% market to gain share. some we other are number, Whether will But don't the that the the math So from in your back yes. out. answer figure let

do to it's a got have explaining how great the work. job We it. to that's We going did products

going I if a up maximum get that then first when on is volume that follow-up could, product to that. fleet a point introduced, you was by brought just go-runs. new typically And good A to on are not

the that's run next for was product capacity lines? other to get new go on front to process, see will, through you you higher of getting that bit natural models newer the kind if the all trial where are penetration, market the of LT, what up end in model a might same So If of a which because be the it's longer, at maybe So of years as typically the you if ticking capture. a been little words, around just buyers expect we other the the would redesigns, share share on now evolution? and you full function a some

it different variations. thing think I Yes. might is One accurately. captured to mean product I add I also very that you

of that transmission which engine final we combination the the On are is launching now LT, we product. one the first that launched, just

orders until the had the have that that it's variations be the MV go bodies The fourth we on that more the for back. We you right. release we tend probably to In be quarter a But focused, number the that most delivering of are less. combination. duty the medium of I of little launched, actually on the truck, particular of year because won't think,

demand for, releasing the don't you after that still by in know, So combinations we I a launch Phil, market. build year-and-a-half year, afterwards, even a are are significant the product

say, just is doesn't Phil, know, or XX months XX trucks vocational, share mature market So the We launch that's after you service severe launched I we of liter AXX don't a important. would critically settle out, segment which vocational XX to product. or in

spot are you So on, Joe.

Just the having isn't end the launched all journey. product to the

hey, the haven't we beginning launched all product, of news, journey. are the at this great You

have we so And expectations. high

you very Thank much. Great. Okay.

Thank you.

Our next with Ann from JPMorgan. question comes Duignan

Your now line open. is

will guidance? despite orders? flat seen be happen X for Class it midpoint, at are for what I Good start year-over-year with morning. industry? Troy, maybe low Hi. your the with guiding to what you. At of would we And end the Yes. Can XXXX have for you guidance explain you to have

just am weren't first in I you tell I Ann am Ann, you, Yes. disappointed queue. going person the to the

You typically are.

there. done If I pretty I So and what Ann, right. like, on we sight the good I as the something of apologize. line wrong, don't we half have industry is know looks does think year happened have what well of it first a

we discussions with to are currently where we the in the with dealers and and the having are pretty year backlogs are think regards I So think have we the of confident customers that orders, we with first the guidance half provided. and

are the the Whether the XXXX? market I then the industry Does at an half takes thought long complicated So those strong second of XXXX, anticipation it's XXXX, strong the of the If and happens we the XXXX we in out half if of first X%? of will half the ground. make think from a than that for it's question we real to numbers. want it. GDP the the I I do we am above this first and hard breath? keep sure we of level second are to actually. one what more about a looking standpoint, are That's think be at how ones year numbers the first directionally, we you any in in adjust stake a won't is, putting there growing order that. But and And a kind of recognize it don't at

the first maybe half, what of Troy, at Yes. half, of percent thinking are But midpoint, half, the today? percent second current to in terms back guiding you looking first your in Just ballpark just what's half?

this tell half you I we first the than at though second time. probably don't to is how half in that stronger point think answer know Yes.

will on Okay. our own introduction particularly just forecast make talking the add the then we well and others. seeing And of I we as LVs, talking fleet as side guess about on fleets are capacity about that. private expansion

per three-year four next with we therefore cycle. that However, miles agree cycle, miles could Troy? If of think thinking, a way in cycle? five Would to have maybe are longer or fewer move do to put that but our we expectation per about then is right to that instead the fleet, put are result year year a we the those cycle. trucks guys new them think to going going Is that? the replacement going and Or will are expand to year fewer that you on you about a how

miles. of underlying the and of sense. okay, first and assumption a fewer designated, as as becomes makes with that's there that more we I agree commercial all, carriers of that I are into less that your And kind Well, if get think more, percentage dedicated phenomenon

it think ownership getting the through why five-years. trucks. question. to the distorted that to might kind more with are is trucks course, as agree had there underlying of fact on a to while, mean sold is it from is guess used a such, in what with as I thought So, used for straightened or one that And that we have of I view of cycle that to have the but of And market good here be reasons of it three-year I four-year trucks do settles part going bullish we And I little into to assumption. is haven't mode. a It's out.

know we a or don't the you to certainly So that believe, make issue. I that. yet, going not the the the to of but out ownership length come it's realm possibilities. claim good correct. are can The is underlying shorten that ownership on I I It's it to back will of have assumption, cycle of

incentivize Okay. Thank replacement I will appreciate your on the in depend of but you. And would it the used guess time. I I will agree, feedback. market, which it I there interest leave

Ann. Thanks

question Frohnapple from next Buckingham Our comes Neil with Research.

Your line is now open.

growth rate? the of bit Parts sales to the we be growth Hi. talk like high-single-digit on to but segment? revenue better to range was And to segment we quarter, into morning. more Thank expect you little a drag accelerate Good at really in when in just Blue you trying get deliver I continue when growth can Thanks. can segment less you a some guess the Parts just I And Diamond the really mid think will you. am competitors? than Do the the expected year-over-year going can about outlook forward?

Walter. it's Neil, Yes.

a on time at burn there here It's Blue and consistent on Parts. outs but is As we calls, some prior have discussed very that. slow declining on Diamond very over ins were We rate.

business, our as and meantime, quarter-after-quarter. the Fleetrite which been commentary, sales Blue the from heard doing get have Parts So we In that higher you in quarter, this sales double-digit good it's continue Diamond to growth our business. renewed private and than again Fleetrite had through business reman label

others that we into will alliance further. additional start new longer some parts additional revenue even we are And slowly business are that BDP. a profit business then opportunities. then that parts as little you so as like nicely, opportunities looking to grow are bit of provide winding have once the we and of And Troy down find So look and the to products on future, parts our the indicated, growing some getting

earlier the were outs. the that happy So similar some quarter a really we see parts were of in to ins third and is We more saw to function margins in what here watch within segment the be lower Because the we different that year. these some parts together And you with businesses and have something higher to margins. want that continues guys. to of

Okay. cycle do the America increasing, quarters? truck be next Got more deliveries think that color helpful. in view? can the Would few you about That's it. can strengthening. risk, pricing occurring your it's the North supply downward truck? start And you start will all is for is pressure that then, Any provide biggest market used Troy, put expect the obviously talk the outlook in that you to to given And used and you you the there? that more in mentioned side But

with Well, ourselves would is, do truthfully, others, so what but think into trucks the customers first the off, that, getting I delivery slower these with the like. we of think happens issues, were fleets I not than just because

longer. So they bit onto have been holding a their little trucks

quantity be that thing. past. this trucks So more large we truck used going is years in would one metered of have seen used flow than into the to out That's market

market, than as into the fleets more reason something bit think, replacement to require longer is, the to come used fleet on little they another I as that a on capacity, a thing other second hold basis. The the more and up, again demand, goes gradual truck again size

demand drive main individuals lot depresses nominal in model. market today. again, shortage trucks and there growth, come used given is I There of wouldn't a fleets this And to and is Again think there then who slug trucks of I trucks demand what's prices. of a demand the is be today. used So anticipate used strong that. used There higher as business their for A the seems are and important. GDP of trucks strong

collapse used the So in be not past. disruptive we truck far it of will past, has seen as pricing. the in and anticipate don't we same think fact I but more in be the gradual will phenomenon I have The happened as

will Thanks it I much. Okay. pass very on.

Sachs. Revich Our with next question comes from Goldman Jerry

now Your open. line is

Good Hi. everyone. Yes. morning

Hi Jerry.

the I can just period, are fleet? free rates of three-year past you that you as a rollout part on offering? renewal provide update folks on you initial am now about many are kind can are connected what seeing wondering if a And talk How you connected an getting offering? folks software of trucks your service as your

about Yes. to that. talk Excited

for And connection not of offering, to our product is largely telematics higher to So our OnCommand that provide to to again heavy uptime a a in an exciting device. is we the intended provide fleet, going intended trucks, timeframe, opportunity we to, our customers. am give just just us provide ingredient owners service all very this began and all of to trucks. the think customers. we not services of truck. to just offering are It's on telematics This this those free. uptime are. improve Very in or and I June our It's our Phil, recently a regular Navistar device and About International I design. that the are we on-highway purchased installing own It's of have provide of handful our trucks basis. basic This we of service, third branded to monitoring to uptime which basic two-thirds XXX,XXX a we are About in something. fact about brand is those a basically

first can a that So June it we additional unfortunately about it's product is heavy are has in purchased subscribed. And that fact This we of in since June, XXX% excited trucks. it. very services the the because on or launched be our

how early to have for period to it's and market free a tell around make of there work great in time it, I it. is fact but plans on it we really think too because

like have do us for this, pilots us automated automated try they contractual to another kind figure you what be. been would might to results into customers out kind And piloted we advanced really revenue probably we We those can we strong things so back type of with to the offer say, kind we the would we give and that before able as of the need I are driver look or pricing services have inspection, paying that. not, and terms part said, right services. the are of year for who That But want. all you of be

we of own brand. you like then the continues to XXX,XXX, our lot stream. proceed. much It to provide because is is the telematics which too which and our of you telematics advanced pot might a for original early a Exciting we just the OCC us something customers give customized revenue have plan as and not look for into allows it's now part of own device for tell to So service to sell the installation to us just insight yet. or It's that services is us what

as Are enough bring the ago? there have industry have taken sense? help far, appreciate down ideally are whole? supply on separately have that's what with been What's chain the adding that supply up rest actions I just that as along the capacity Or been in peak the production to taken compared update. And would supply do cycle? lead your with chain with the catching to the where two time chain of partners feasible quarters Okay. and the cycle the a actions you capacity you so industry, last for this they view your

Yes.

of industry. the backlogs becomes ourselves And the stay not some just that adjusts industry speak, being don't the I organically the more Increments to current about. even added, these course capacity so are think rates, of the the know which as quarter longer the on of part fourth are, think efficient. we over but they system production just of to I

the fourth fourth the have would rates to restored capacity the it the say, think be be stocks could point well, industry of the quarter. safety and of production be that year, end would fair the in And to would of fact someone time. by and buffers that I that the guess will think reflected say, adjusted I system by I quarter calendar banks So the that's by and

take it's line that's going wait all to for because no customer customers, have on today, path say, to to going rates fourth got backlogs would that we days feel expand to, in the I our towards it would XXX are Now is sometime here continue truck, But up, we a quarter. headed and the then stress to we again. we satisfy equilibrium

Okay. Thank you.

Faheem Our Sabeiha next Longbow comes from question Research. with

open. now Your line is

big to it was better military provide may morning your color Are If parts that Hi. shipments end would just of range? be the could I if around wondering builds? Is there great. go quarter? performance? little the higher you wondering it that, that a Is higher truck would your off that thoughts EBITDA your what the EBITDA around Good I for you year? could high guidance was get guys.

guidance. things is that A we our right. of It's go one But obviously revenue number Yes. Walter. that are of within into the would things range, where impact the

the at of range, we higher to guidance. be would of towards end expect So end the higher

sight We will have be got what good units line delivered. a on of

the We working issues. are supplier still through of some

to little of than full And that then there then pop Troy if what's higher do here able stronger side, the additional any would margin on our up, be out to year. been the we are here the this at we So perfectly if that of implied goes end issues have be And the moment. guidance, and margins indicated, if the at are the as higher. to we closer running then kind

come fourth see will we in So where actuals for the quarter. the

you then on has Great. this in NAV could growth And performing about color what's well. if I drive also mean, been brand? doing seems to is parts its strength? great driving if Okay. it double-digit would can you Fleetrite talk And what provide be that some

Michael, some comments do that? you want on to make

Yes, sure.

well parts into is traditional but XX brand we in around for continue brands. not what And availability to known expanding is product invest been over throughout only years. for a Fleetrite industry. also all-makes It lines the is competitive So that's for parts, do

available grills, would competitive many program. of other that own have and would parts our for we brand. be crash components for hoods, launched makes a beyond example, So trucks bumpers It recently

availability also We dealers type reach different at of customer stores at parts-only expanding are looking our looking and to Many opening are Fleetrite reach. a base.

of Some but opened in they more them plans already works. them, the are have

really OE really with are value care production about parts starting offers. used to quality. of overall leverage and as going are of our brand it Fleetrite we Fleetrite So not care the about price, customers just success quality they in the that the Many

to on have bullish very what we and will a there we of the be. offer are So future lot Fleetrite

you. Thank Okay.

comes Our next Research. question O'Dea from Vertical Joseph with

is Your line now open.

Hi. Good morning.

it digits in hare see you for book, the then roughly First share put where that the order and AXX about and the the range? that in might Does timeline the year-over-year. be you on And talk getting question like X% based in going that mid-single the mid-teens? doubling like could something on then X% what what to is looks into that up more

The A great number question. above okay. X%, is

earlier. probably go were want of Michael So have above units here, With don't X%. He to that? of fleets, And back we on go I most pretty expiration provided as part prove you these themselves close their this to about X%. think. It's why I ahead more X% major and Michael, to would they cycle, talk number and some out, you fleets in purchase will they But their again.

Yes, sure.

the we more And it. the at to just So been two reliability, segment you uptime, in to segments segment to the leasing make doing the of heavy continue And experienced are we economy, fantastic fuel job continue drivers product, and segments. love been both add biggest segment, general have and those The inroads continue look freight the it. really quietness with and a from really more and very the get successful if it's they grow. customers to in AXX

fuel, And great. the is XX% price feedback up again, customer So of year-over-year.

tractors. than customers fuel-efficient important ever to to have more it's So

all day are in segments. continue acceptance cab we making as The really are see that now tremendous to the as segment, product it well. the of the and We well in then penetration sleeper segment gains as we offering as vocational in

X continue our And XX segment, share. as grow So to also liter in the the only we optimistic but Class about overall are share not growth. liter segment we XX continued

X% July the Thanks the for And X% pricing, pricing then actually. on a when that. about is side, you talk to wide kind of range

for than also then stocking on end and just whatever then you are X% that's to on could X% are talk able whether the in better about So you you discount offsetting? And net addition, dependent cost so dial to being program, that up realizations the side, back customer discounts or the conquest mix?

Michael, ahead, please. Go go ahead

Yes.

Michael. is this Joe, So

is is the what's product And for get. initial new that price there takes they the that and It focus customers, entire of refreshed really total for of to a is And customers. transitions most ownership. line. increased function with conversation of It the discussion a cost important helped or off demand of So change consideration the value most that's price.

you significant is sales track We quarterly XXX basis, how year, third increases or just to customers when product, economy, varying amount uptime in quarter X% units our and acceptance quarter-to-quarter increase particularly were of the the business. and the seen look of in largest them And product, get versus July of benefits that the about demand for all receive there year degrees our of in are on share the customer. trucks to demand this of has demand in we So increase, of over XXX announced that's more. for really think fuel X% the large of We gains and again actual price many there as that at improvements across recently of the segment the size our a last orders market up market of driver product stickiness. price no positive all the the it that for XX% and is substitute year-over-year increase as segments And sold.

order. So series really sold for dealers, bullish product mentioned, so less position to XX we the that and the are acceptance towing that the the the the tremendous dealer in got dealer interior, there XXX looking of pricing additional finish impressed restocking example it with have cab They had really, this fit industry grow their in the they than their product. the seeing They are MV day on impacts are to but MVs market. improve of I to was a and leader from side, the the as an being share. these of other just he customer a added and demand the and their days that XX And was market on to customers forward lots

demand product. have important, we we So for again, price good and it's about always is demand are really the confident but

the for Clarke to remarks like That turn concludes closing back Troy would today's question-and-answer call I to session.

quarter thanks to in here a very your QX. Just was for market. good It strong interest everybody robust my

We wrong. for I at and great a market Navistar. be to talking time truck your it's a be up XXXX Thanks And they to all to other and is a tell XXXX. got great are said, time fun this strong having you have market, just and are the close mid-December. talking very in to somebody there in a then day not set if man, something and of look interest in to for is great start today's you the you, I to was to forward

participation and may disconnect. in This conference. now your concludes Ladies for today's have a great you program Everyone, you gentlemen, thank and the day.