Navistar International (NAV) 4 Sep 192019 Q3 Earnings call transcript

Good day ladies and gentlemen and welcome to the Navistar, Third Quarter 2019 Earnings Results Conference Call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions].

As a reminder, this conference call may be recorded.

to host like Mr. today’s now would introduce for your conference, I Ketelaar, Relations. Investor President Marty of Vice Sir, begin. you may

Thank you, call. Daniel. International XX, joining discuss us XXXX. Good financial Corporation morning everyone, Navistar’s the period quarter and for third the XXXX ended of conference performance Today fiscal will for we Navistar thanks Jul for

and With Executive Chief our President Borst, President and Operating Officer; Financial Executive are and Chief Executive take Clarke, Lisboa, participants. Chairman, our concluding remarks, Troy today After Walter me President Chief Persio Officer; our and Officer. we’ll from Vice Vice prepared questions

we discussed well reconciled website Before that release A and to reference. of press the for the Relations posted a U.S. press copy this slides to presentation few found Investor has can been as measures The release non-GAAP the and begin, items. slide on are like morning, the I’d as the be to morning’s this our of call equivalents of GAAP deck. this in the presentation cover appendix we issued financial page

and update press results differ and prepared the comments our investor materially expressly and those financial presentation obligation future statements our expectations Actual earnings Today’s forward-looking performance, remarks may industry any disclaims suggested by company these about our statements. release, to include for from could made here.

subject. recent today’s notes to most information to other from those to and or for materially our differ included disclaimed you Safe filings. information additional this results also Harbor presentation, could factors statement presented concerning please today’s actual For in on more our We cautionary refer refer cause that in material would SEC

opening to over With that, for the Clarke I’ll comments. turn Troy? Troy call

of the outlook I’ll through third financial and welcome the performance the and on and for will thanks and rest on Hey, earnings few Walter year. a industry, the more level high the call. with good Marty Okay. thoughts details the walk company's to open you quarter and Navistar’s morning quarter

net strong XX%. EBITDA We growth grow over or XX.X% from rose Retail grew billion. came another income In quarter rose increased to Total Class continues quarter. revenues segment as XX% year-over-year $X adjusted The volumes truck Adjusted X/X and delivered and XX% points Class year-over-year. grew market points third medium grew X XX% to XX.X%. X.X share share the X.X to well. the

From an be more than is key year. the above threshold GDP is The as is of their A when are economic important averages, they industry tends the expected for perspective, is but U.S. add economy around X% of industry and indicators balance GDP remain number lower. long-run to annually. to trending capacity us increases the X% moderating. U.S. softening to X% the

also consumer ISM that new Yet in housing is permits to Manufacturing that Index, economy are signals growth to still trend XX, the lower also spending continues positive, manufacturing something The around us hovering transition. lower and Lots mixed confidence is indicating of indicating we than is expected. neutral. to shifting remain and follow, running but

forecast carriers orders decelerating. of as The trucks. tend truck leading to a economic need their is indicator Truck be activity for market

As freight also in Class orders decline, about tonnage declined trucks for in quarter. and industry X rates the particular XX% have

rising truck deliveries. as slowing, market new than with receipts of year prices also conjunction The as in inventories sleepers old used increased is truck X less have are pressuring trade

peaking industry Build X Class XX% rates to October. have of trucks causing last since backlogs new decline exceeded orders

a well, inventory seen, customer rates balance as to actively are declining you a and create demand, assembly we this backlogs and as healthy are adjusting between by Navistar’s managing levels backlog. line have

all increasing our Class we line X at For demand, example, second in shift November rates meet of last a plants. added truck while year to

we added needed. time as shifts addition, over In weekend and

rates line goal of in resulted an well with orders, plants. actively as We Latin reduce and appropriately U.S. our the as process. the America has Mexico assembly everyday, business of orders our type managing of make these both order decisions weaker in efficient, need truck lower delivery Today to to

As of normal days. XX at at low-end a the company dealer and the range inventories result, remain total

trucks X reduction Over units. Tentatively to up further Class from XX% of to last core fall volumes to range XXXX X/X our season season, XXX,XXX order industry pick the ordering balance trucks. are in and traditional X/X reflecting XXXX. are reduction aging a as trucks continue couple in activity down into and we Currently, planning and be about XX% will corn and in XXXX, levels XXXX of buses should expecting the XX%, carriers replace markets the between to Class Class fleet bus the units. a for due of we XXX,XXX ordering months provide This insight

future. Navistar’s strong to X/X to in do but refine we Class and our the down franchises, much Given view not bus share as expect near we be industry, continue will details you more with the as and

number in several customers, feedback, their investments to our a we've in times their years invest of suggestions. past of We lot Shifting the to a gears, made over business. ideas, listen improve

in flow. volume cash with line which very well been products and by and products, we market growing have retail as our received invested developed improve sales, and new this our we of improved Next understanding share, share; demonstrated selected full delivered earnings a

add existing diesel international trains of currently engine. build with big-bore we to preparation our proprietary million years. Huntsville, the we power our next of investing three TRATON. where we developed Now future. generation this alliance Earlier made in phase AXX next engine announced train over our of This Alabama being our partner quarter to next facility power investment is production The make in time the new the producing being plant it's in will $XXX were investors our in these

cut-off in also our delivery now of for in center invested next parts distribution open We A times commitment. parts. uptime leading is new offering industry Memphis day

network. And Love’s emergency reduced dealer management works partnership orders an service has is our are than and parts updated more our where XXXX needed. inventory Love’s system to service operational, version technicians Speedco adding and locations of Our with significantly now to position XXX they than more parts and

know great was You quarter Navistar. for third our another quarter

Market demonstrates our earnings are deliver uptime. investments increasing, share and progress we're promise off. paying and operational and accelerating on now and revenue operations that our financial improve are growing of Our to investments is

again Investor further to forward I this discuss earnings Day talking look power to at month, the later you plans grow our to where of we’ll Navistar. our

let And me that, so with it Walter. to turn over

quarter. Thanks were net cadence Navistar’s EBITDA, cash morning Troy. results all delivering of adjusted its everyone. third Good income adjusted and the in flow free excellent year-over-year. Revenues, up continued

dive the Let's results. into

in a the in points The share billion. revenues truck mentioned, segments in to improvement XX% $X Core market X.X core XX.X%, volumes. reflecting vehicle all XX% increase quarter higher As Troy to grew grew driven was by year-over-year. share

mix quarter. last as QX XX.X%, up gross substantially gross truck margin the new including grew margins continued point consolidated impact a products to was year-over-year. Class revenues from Segment X/X

long parts are trucks sales in margins truck selling future. the run previously, margins will discussed than today benefit parts and higher we've As more in the

Turning alliance declined expenses largely next million, release partner related to the the million TRATON. structural to from with SG&A of generation our of development power million, engine costs accrual from $XX XX% costs, year-over-year trains increased to a largely litigation. legacy $X $XXX Engineering certain

structural share the percentage revenue Even of costs to if million $XXX $X.XX claim. prior when a SG&A X.X% of a including million to XX.X% $XXX expenses settlement fell income the or diluted from or accrual, diluted the year. as for legal in and engineering $XX income Prior gain in business economic adjusted share. year was included per loss per a $X.XX quarter million related Net

year. income excluding adjusted on in both in third after periods one-time million on net basis. million pretax EBITDA Adjusted to $XXX to the XX% basis, after million XX% $XXX an a items Excluding last $XXX in quarter $XX tax ago onetime versus rose year quarter grew items the a million versus

Moving to the segment results.

sales increase segments, growth grew driven billion. the the segment to XX% in the truck of product ramp-up The $X.X new in Our Class production an trucks. all was by plus X/X quarter sales core

core interest and largely grew and improved XX% items offset two to sale line segment Total earlier, was excluding by grew the majority in partially of Navistar the The vehicles. one-time mentioned impact increase XX% was of a driven XX,XXX segment by Defense. year-over-year. pricing, I the the up higher volumes volumes Truck profit

results delivered at The million. revenue implementation the revenue recognition The were by QX, of adopted which revenue comparable year. this their another from standard flat this $XX by of On parts revenues Navistar impacted beginning the basis, XXXX. solid standard quarter. new Our parts quarter segment business a were reduced largely

year-over-year U.S. partially offset was Profit operations and expected over continues results, XX%. year-over-year margin Blue in X a $XXX our to Diamond Part flat private segment impacted economy by up than due by were X% business, profit reflecting label remain Brazil. segment lower global The be the parts to million growing operations volumes. Revenues grew to to profitable. weaker improved points operating

larger services average benefiting segment is financial balances. Our from portfolio

to margin XX% rose $XX increased debt offset Segment $XX interest million, income by inter-company loan, and revenues the partially result, issuance from million. largely of the profitability write-off costs. a from As higher

a third new closed at liquidity The million During additional and in facility flexibility quarter lower the new issued a credit cost. $XXX its for five borrowing Loan million Term $XXX repaid revolving year, NFC facility with XXXX. nearly B provides increased

quarter ended free with net and million capital manufacturing $X.X of cash cash balance largely working $XXX the from the manufacturing of Company generated the EBITDA strong period company adjusted During the performance. flow, billion.

to XXXX. update me for Next, take moment a let our guidance

of end expect prior come We where increase in we Also, does our guidance. volumes higher from For X/X participate. not we're the volumes believe XXX,XXX and Class XX,XXX XXX,XXX Navistar Class range. greater industry range units, XXXX industry volumes, will our unit the upper prior between a X seeing towards gasoline units including to now

share To-date retail is market XX%.

seasonal expect fourth largely the grow, in the to continue school to we bus increase During registrations. share quarter from

range XX%, higher year market retail than and between XXXX X.X points share result, As market believe we share. a will XX.X% X to fiscal

decline rates we production both the lower plants. $XX.XX export towards to and truck to to in billion Due lower assembly lower decision to and of in half our year. led the range expect line quarter, our mentioned, revenues fourth guidance Troy the the for $XX.XX of the volumes As backlogs orders be domestic of to billion in

To-date consolidated gross margin is XX.X%.

fourth growth the XX.XX% seasonal the larger higher up in will sales. from truck severe believe quarter to margins gross end of year. for XX% margin service between the and of expecting We parts are revenues, mix benefit We now

we EBITDA being SG&A $XXX of Lower million are Consequently aggregate lower and the margin by percentage at offset holding is XXXX volumes lower expenses. midpoint our guidance year. the from gross for adjusted expectations revised production margin

expenditures million of and our versus guidance expected $XXX now are to are prior Finally, be lower $XXX million. capital trending

business show you provide strategy, talking XX, September to on In again and and look we’ll third at market to results market forward I our we've on cash where a our roadmap and the executing growing flow. leader. summary, our quarter of recapturing are strategy Day to share Investor the made as we the revenue, our effectiveness EBITDA to improvements insights becoming

product registered XX. you American from Also, If you see event, in look We for your forward for October we and year's developments details. reach to please to through the this our invite latest haven't XX offerings team out North the attendance. Show IR technology at Vehicle Commercial Atlanta to

I'll Q&A. to turn to that, back With it the operator the begin

Thank you Instructions]. [Operator

Volkmann Our comes from first Jefferies. Stephen with question

Your line is now open.

Steve, there? are you

Yeah, I am.

Good about Sorry morning. that.

Good morning.

give let’s idea you think off know So, us how look business and you'll how significantly, have margins. decremental from you've since down to a industry market have in a preliminary you top-line specifically, be of breakeven a just I lowered guess you thinking but can about yet we your I you great. modeled guys would I about start the in declining know into environment clear kind of help any really maybe just volumes, know kind you XXXX perform this on you I'm you guess provided

insight where even share, We've growing so fact industry been could lower you probably additional much know drop segment years breakeven that versus see a results decline some the give that's know you in Day. would our to continued. we volumes ago. were we Yeah room know point, Investor that that But Walter, we in the to Steve, allude us to breakeven work we couple on you we’ll truck before you the on continue it’s our provide that did to also our

with know XXXX, see know to and we would changing do have you we you expect market product environment the, enter that share given we to industry the As opportunities grow continue supplier headwinds as the we strong our strong offering of continue the this well cost the have to with like. same year costs our wouldn't structure to had and kind to be able the as that and we the we industry improve

profitability will from So you a think industry our position we per even next you know know as improve that volumes for decline, continue perspective. year unit the to

But this. Troy. call openly on you in Steve. this I and mean preparing for industry. obviously I that occasions we've other know this talked been cyclical is We Yeah, This the past, is think a about

So levels looks the on will scenarios XXXX things think the like a to to we and we and share Walter and kind think have of market progress good Navistar XXXX we for good of year modeled out like, as what be indicated. with costs the bad and continued gains

sure said I it that kind you reading EPS and just year Walter, make next saying sounded understand forecast Okay, grow what of so what I wrong? you basically around market, that you’ve am or like down you're can a in you I think the

No, right. think you're don't I that reading

down then you on be overall vis-à-vis that had well. to what got least would our look than a years a at back, think I’d as more a If improve are the unit profitability. down, I breakeven continue lot you to know couple was would our we’ve right. know earnings per we trying we probably basis, to But say units room

it Okay, I'll Alright, great. pass thanks. on

And you. Wells with our question from Andrew next Fargo. Thank comes Casey

Your line is now open.

Thanks lot. morning. a Good

Good morning.

morning. Good

back how you – you retail to expecting be you expect production industry, than during as made, not the do of of or just to the you kind scale reduction are us you orders I'm up specifically to improve? down bit know that a be down XXXX Within, on I basis color the and if can the that give appreciate XX% of X XXXX year down off the for wondering around frame to but line Class to far commentary so view, assembly sales little less

Yeah, I think it's the latter. more

a made we've of and restore taken that ran years backlog, of couple we of a to I normal – look, a for these no you know years you or advantage know this to more, You these very is company last number think backlog with skinny know range. far a

is kind of backlog in average days XXX at industry the Our current over the to XXX. closer

to manage on the because to the as more you rates effectively, production needs, our well some runs inventory ground. maintain delivery that's the basically backlog, as manner of the customer to adjust in pipeline, that’s between more balancing We system needs this order efficient inventory, the know

out with recently, I we Not any we’ll from a larger that. be of are the share stable of large industry their is economy year. we players, adjustments adjustments, then we larger customers very through year-over-year these you it go the the if up as see know see you With orders through to past then we’ve believe supports and should coming that have additional it's see and going know happens seasonality so buy our players, QX encouraging, environment have the QX, announcements, how and the from plays make stable through what we’ll and several thought made we the that in very won't to

time. you at point a in earnings But more certainly particular We’ll call, be topic next as at me to insight it well. have just our would that update know we’ll

Troy. leave you. it thanks I'll thank Okay, at that,

Andy. welcome You’re

Research. our you. Neil comes question Buckingham Thank Frohnapple from with next And

now Your open. line is

can to and thanks Walter, a number cash guys, the range. high from on good it in a in order free remind is EBITDA you generate congrats million to $XXX Is still you adjusted even. flow to Hey that what million break $XXX us level, be need quarter.

cycle market will in Just flow trying you guys even FY’XX of as to is sense a free get the generate cash whether, down?

at to Yeah, Day. I see hope the you Investor

you guidance. Walter the versus discuss margin the Alright, outlook and then could just in your reduction slight gross prior

favorable, outlook it's mix. the see more price more You granularity pricing, news, cost and truck the more new you know takes, puts is whether just less any whether are aggressive on embedded

be that great? any Just help would

been to. up pricings Pricings in actually remarks, items, Yeah, four indicated is probably you as we our know I’d three year-over-year. point good, or

kind in of So as that's we come expected.

margins continued than to commented my versus truck gross What our we’ve the you see parts mix volumes as segment truck that which margins. are I been have our so in because higher is overall stronger, truck know parts the margins our impacts remarks,

with impact know and in rental lease share margins. so grown our our space segments we've the have had some and We've market the you mix. that’s We smartly impact on medium in seen some medium particular grown business, customer so on

which strong see seen, be beginning and the we’ve we impacted the at you higher indicated know in freight a additional material well of headwind we'd supplies, Thirdly with we've costs. would prices the tighter the environment costs year commodity seen so has that as our

some then truck the sleeper in adjustments some of And the his and Troy units lastly trucks, made in used so in used as to we've in mentioned the portfolio. our seen our particular remarks, we've there weakness small market prices

Okay, it thanks. I’ll pass on.

with question J.P. comes our Ann from next you. Morgan. Duignan And Thank

line Your is open. now

Good morning. in fiscal a year. on to us whatever facilities. give bit rate production at lower be more Yeah, it QX you. going is QX into the how if mean is Is production I next of much at to thank going both could you QX. you the fiscal end at wonder lower I color run levels be know

us Just could if specifics a bit more from modeling perspective give those? a you on

while Ann, be Lisboa probably the and going calibrating. this is Persio exit are think we rate, for to I QX

we Troy As are mentioned our rebalancing lines.

lot throughout have the consider of quarters some are we're the also -- will QX. you down overall versus of that in But to We and the QX So to the few is that nominal all removing going XX% them. plants to and close rate. where overtime that's that's we enter level, be used days which a last

quarter to down but keep what intend will and the XX% we for So overall first as go nominal that's know rates well.

about to where in down by that’s so we rates, XXXX. rates December might overall brings And this and year, indicate after increases of we taking earlier rates that the back November just those Ann I daily that the were

that increases, XX% we reduction line about mentioned. production, reported rate with reversing that now effectively So this know Persio earlier we're you calls on

helpful, keep the very that on – that's and year-over-year bear back. production that to in pick did mind, Okay, up especially that we to then

you guys last orders. you to had noted were that the be important very months a just And going then fleet quarter for quick know follow-up; summer

books think now OEM the order opened. XXXX are I all

not months we're hearing yet? share gaining the fall with in you're that Now placing I saying important. said pocket fleets. back They going pushing fleets orders are large is kind large are know and general doing? them, what the be more but of saying you commentary you're them the to are obviously very from the of What

anticipates talked know September you people years or Whatever their following is coming and it strong, Ann order is more XXXX the time traditional Yeah. where up everybody would some the like year seeing. be that the in in about we're you you in was know previously year would that's in frame books July But timeframe. fact the open what

we supports think to fairly timing know this So think you cycle. you for a really know ordering I an what normal, be

put So products. a we frankly can know quite in large with you are plug and just know for engaged customers you the

products deals Our this is to on we and we’re what well continuing our their hearing working we're that's that with and – are them of improve you the what from performing fleets their buy expectation. know from and large seeing are share in them, we're fleets them our on

the we’ll we in certainly with continue large customer. to Class grow that expect So these would space X

we of second have a The is trucks. thing lot

Obviously this the vocational you on and way know the those well us and their building of but momentum impact, side side XXXX. the working momentum we house you real anticipate on are a of know and share units lot business. quite will pretty so TEMs continue the profitable some that business lower through into still and have for good volume the We of vocational

as of in And a the we’ve the to you with of are heard without, as XXXX. but least, medium-duty our indicated five continues business having last buy or much giving into we're market know share buy the discussions as in you then know my traditionally know of not strong, without you customers up piece we currently we that too very look know away, segment. you be who you that And trucks those strong where nearly picked more points in you portion comments,

we share in our have on So certainly competitors. know you advantages that planning a we're you seeding know any segment we not over believe

but know we a yep to a at that insight orders So a today. We’ll and know us, you roll take concept that, is of again target improve you lining-up or that speak. be whole color will as as color numbers if going we this customers we’ll QX give process you they you a of share into know know little a to like lot how the have are as far you that's share wallet look our kind look buy. in continue and more some Day, for thought down, look a contribute goes, we we call Investor XXXX Those but

forward I the and color look more. appreciate Okay, to hearing

So, I’ll it leave there. Thanks.

Thanks Ann.

Instructions] Uhlman comes Cleveland with [Operator Our you. Research. Adam Thank next question from

line Your now is open.

Hey guys, good morning.

morning. good Adam, Hey

on the us with in figure we that the wanted guess mentioned could exist. and year this us progress. if the contacts I believe know into clarification. you a gave XXXX you you profit update about at a material with shouldn't I when Congrats you faced was we year. can had headwinds Walter put we that all that headwinds start you I and so of know the costs, to I costs that, several suppler the with wondering think beginning

I the what year headwinds that would the we cost factors to logistics side we’d performance as costs know impacting that expect case we sit and of at so today, we think you on but procurement here to be I tend the of the positive the still saw. That's given beginning had bottom that line. our it's overall, said less Yeah, we seen, than business. the the Material mentioned the less product pricing and

product venture coming continue with had procurement the to including work we is joint efforts, to our continued TRATON we it's expected in in know that But our the net-net you that have large due part year positive a and still to as for lower. costs from

still headwind Okay s costs. and the that freight is of headwinds, disruptions, meaningful price supplier and outside the

negative impact you forward. of an opportunity as see We know be a to going less that

is per comments call you XXXX headwinds earlier about look did the profitability that to our the know, we know as bait into I in should Steve unit. help those You

Persio, than seeing also we are ever before. is we've supply this much fewer base And disruptions on saw a

So coming I and are supplies down. side, the at that are safe today, levels think rates freight pretty production we the of we on are

days you extra basically we level So supply expedite, more time, we in weekends gone. that over that's on imagine were driving and base and could as all some volume are of generating running capacity the and

the Okay, projects, it came got year underway. plan, you. know then going CapEx but And like know you down, spending on that the capital this forward for big there are you several sounds

we plan for? expecting a material listening you expand You prior know back Thanks. what was pick-up along maybe the be should XXXX, or the that, next then or could should on plan we thinking steps to be Huntsville with and what just through about just year if

me let it as Yeah, a call as into and couple join it in break product pieces and of well.

previously. So that’s In what we the cap to be had we've due said spending, to you indicated this stronger year part we industry than seen. know lower going is that

some the projects, some so and running. we as facilities keep wanted out pushed we’ve in of maintenance our do those So we to on that

know some able more of as a little replacement do be in that volumes. to So industry back the you to work kind XXXX, slows bit we'll of

have some big-bore Huntsville Investor investments we CapEx like be coming. as investment do see power we've as engine, to insights is that the of diesel and related the Day do come provide well that of the in We’ll That years train investments around these some will localization previously. more We or alliance in will mentioned increasing. some at around the over activities diesel few Huntsville next

suggested. been year cash what this we up CapEx this for versus levels, our know to you So but be CapEx will versus favorable year's originally flow had has obviously

Okay, thanks.

comes Leiker with David Thank Baird. question you. And our from next

line now is Your open.

Good morning everyone.

Good morning David.

Good morning.

to to of revenue I I just takes find significant back to the increased want I through the profits wanted this, talked puts revisit. the try and go bit on kind what flat know I Walter, you But truck, margin and contribution that you real some and a know pretty and underneath reconcile us the for the just was of a just moving and to can quarter. pieces get in here help surface. the there's

a the time. Well, I first didn’t I job guess in good

have might Well I missed it too.

so we the we looking did are you truck the strong. comments as I you just know between mix volumes on have truck do make and that parts within earlier segment, then mention of if truck been all have know there, year you which what, the the segment call Yeah, long the

truck think couple times on segment, call, we we I know the you medium share. did mentioned Within a of the our grow

Some of our leasing are rental those some with that with margins customers, and customers. was lower other of than

also so that the as average the average is those profit do are of on margin for income so margins profitability which plants, our year-on-year Class a but as and lower them, as they in vehicles plus through lower have basis, those and a We've a We up high statement, fixed cost aren't ramping our our well General been we profit run X/X Motors that portfolio helps than the those well. produce units margin. largely side as revenue type

profitability this was and have year, which a don't defense to also last the quarter of fourth in business We the contributor third year. big

and would be takes. So couple puts of a those

and And about all backlog then thanks. at of what cleaned look as great, out cancellations think going in is kind into know of XXXX. you if backlog that then the talk at to go XXXX, calendar Okay you we how year-end and as thoughts of looks that the people just Troy we makeup your real like? then You can

decisions here to look we're Chris numbers know because you we’ve looked that at in I here you ask well, quite I comments make sure this I’ll and that making then – I’ll know these the right of know you year, certainly interpretations. just jump second couple a as a think to the have half make and mean are Yeah, of the lot, you know right

say I think, overall. let you just me know

which of I of normal to are, the have the backlog which that say when a where competitors the I high there have quality backlog are there's we range is the is know a very not orders our comparable you think I for cancellation. lot think very in potential in XXX day

There then gets our the attempting delivery. with now value don't their to if some for go and has to below, little loss customers. they know know past very where to are the truck use and in value right customers to with deliver figure units, and that have they And the of book happens we have as in that now very potential it thing truck equation that market dispose large we've happens orders bit that are more, because have out how of have been to, sometimes small markets and a customers the retiming you the that so that into that a slipping to a a they our take of work you way we're they

help so ability the been used have difficulties very, used in we've in well, somewhat okay. in okay, the know very assiduously in that past trucks as you to we're and trucks, We but to working manage

the itself So fairly that’s but we kind high believe backlog say would of the phenomena, I is quality.

of pass make cancellations, quality’s the well, the more is me to numbers keeps kind watches keeps Persio all look really you – his on I it, in on – but than that these to he's Let we I sure it track that he know know our backlog eye guy high. who who say at

come in thank of the from have of very some have throughout no as getting timed the you that types constant to have seeing buy to. of are very orders that Tory to, referred that a – are some as been today year What Troy the two customers the those Troy. we those is are system, Okay, large backlog we referred and the

of the of most use I you Troy track, phenomena described. those customers of think that kind some that, through know the where that's we see working are because the

On that’s always side the retail. term think That's the we the our impacted I with one monitor the and on have short the activity we very dealer also dealers. more in closely that

having dealers inventory, our today of Now that, have the within that is operate. in normal dealer said we you that which range XX know days sales

standpoint. in for as industry signs get abnormal time will a the now tell and seen we but you're haven’t that backlog seeing into any cancellations feel we QX, So of to compared more bit little we a what QX

we've to well been averaged the to as in industry's which quarter of they presenting inside backlog last of have. now think X% pretty us I is cancellation, the X% the

Yeah.

get me could the make. Look, this this, kind of just like guidance really thing that potential softening home. sometimes out. The we get a potential in America sometimes a Mexico happen, those David in provides a fourth and think kind I is where the little I don't if got let put to know, until for they quarter for our out you know those deliveries I'd summarize we So push that just of customers they further for just is back field – to because bit Latin point might orders

of in and efficiently premium roll stranded QX And our units back line haven’t costs to type which guidance a of allows log done, to with with ability other we run we’ve that freight a all inventory, delivery us into. this the without lot to the highlighted previous the the we given order produce of rate healthy a and protect ability to deliver with fact upside allows that to run then that up the adjustments levels might and we've we to into system lot done that our

mean nicely confidence of a we the position and numbers upside. in company of us that because been thing know kind interlock all in lot but to protect I hasn't got have describe to you the for this forecast locked the ability in we've and for hard and our while, a it's the very

you hard do. for industry that’s how Any Great, on thanks. thoughts the I know to sits.

think we look like kind and at lot they numbers numbers. look You I of our know their a

I Persio. I don't So mean, know

are see not anything think only happening I side. we're point ’XX. now think what in the different on I to as but delivered been the more honestly we we've we've weeks continue time early in and the And because products in from don't to few, this position at want the, performance in are us in kind with gaining industry same side experiencing we think But valuing share, the what done on months I last of I all I overall. customers, the think we the customers service customers, that of or

think are on I doors. the We're all same. the all knocking customers same the

one fiscal right, at end the of difference, end are end coming our the think October, you just small customers I same our looking at of what the at year. quarter fiscal the Does thing. is them. in, are calendar and to the year. They orders There telling years they know are Yeah, the what their are tend ends doing

So us you know between minute and them. you kind score the difference last you kind of of little on the cards looks puts to the, the know to a know retarget –

will market way and and calendar for for have they that of push, because see end I year something by year. this kind know that be every pushing between anticipate the that we deliveries forecast share now provides know certainly is the you you of – our So the we

much. Yeah, you very great. Thank

from RBC Markets. Thank our with comes Capital you. And question Seth Weber next

Your line open. is now

is Seth. morning. my Good taking Brendan Thanks question. This for on

share decrease on, a I you’re can healthy any you that the your quarter seeing the I had XX growing gains appreciate this again, color XX.X from I again You XX share you over that know wondering to decision indicated last the market to and to XX% the anticipate XXXX. was you market what give share comments quarter? gain extra drove guess

for we this going an we and of – the think I retail top think know from all there we do, distributors. industry know industry that. effort retail – is have as are I before, control our a I forecast on comment locked a is the the seeing in we units and are have be. What pretty now line what delivers we don't We more we on a the forecast of XXX% more to are what mentioned deliveries. to for point Typically time. at can forecast they The a to

slightly being that higher, thought our to And we not aggressive so the as may now basically as a forced share us be consider forecast now industry it would.

Although, think alluded prepared been year-to-date as in we we've where we last our above performing year comments. I were

industry more and call, we is retailed forecasted the on units than the an a DPUs the We that of else. our deliveries deterioration market. adjustment in and it the forecasting anything see So out in don't of get charged

sure on to year, a of more So the us end the put it as for easier to it's adjustment closer and an of tighter range. forecast we is got overall the making

through our have they'll Yeah, their a the and of we that really increase every as the be It’s be pipeline dealers Walter in one the know so reason by inventories, into in just it's the like increased the units to units softer why the competitors and and reasons believe going comments doing so lots you his those effect we you XX,XXX year the pushing off of know industry the we industry. will that. of at especially XXXX, look

As Persio phenomenon said, had opposed in we think selling quarter fewer math the units it's we than to as a we’ll planned. be

great. you. Okay, Thank

you. our question Jerry with Goldman from Revich And Thank comes next Sachs.

open. now line is Your

Berude Hi, is good This Ben morning Jerry. everyone. for on

are you all cycle the about $XXX to the think the are million more will at layering TRATON that cost Is currently peak billion think the you So in of of savings, how X.X the cost peak this of point. more on guiding like next the about that and if to number EBITDA sourcing this year about around to move we X.X billion. should savings or at TRATON looks already achieving what business we your

the to come Day. you let we’ll Investor Jerry Hopefully

Day. going to need know. but shareholders that that Ben, you more going on case the because the to is little Investor we going to come to all you come okay, talked returns to to about Look, and is you to question, that or Jerry savings no Investor that is second case, are the able Jerry to its XX and needs need the I time. were provides okay a to on and to going we’re bit is know that but need line, TRATON we're not grow particular be explain the there this – we track continue Day you to for Yeah, not say to come do, improve to to business is what know we're answer

to Investor see confidence have of we grow to my what OEM opportunity again are years state it other their business, closing and in cash should you'll next to the you plans lower create that for at But remarks, upside that, additional Day. do has costs, I'll handful flow, the to share, that and and no our gain

all And opportunities XQ obviously we Got at And do seen the across trend it, there portfolio. this horizon in momentum current this more any of strong on understood. the How gain Do into XXXX? share continued this about are keep share we XXXX? share cadence? gains going market think you’ve notable

want that going anything. say what that down say slow I Well, think they – know you to the we -- never are to

been most to rated the continue we've by and that. customers to services of our work We our products and value rewarded

provide on think just in that make but at lot point sure activity I we more continue to service do There to guidance a able the taking right also want call, the place time and our product the things. right the year of stay side. business, again, is now, side but next only in So of not be on the this we to into we'll next course

a launched network. our to transform We plan aggressive very dealer

Love’s customers. have our and you network We lot support how serve Troy about heard we better of talking a and to expanded our

than really that us for we we are customers more valuing see deliver is now sticking. promises product uptime Right just to them. Our that the

that that will continue hope we So XXXX. into

year. expect go to share do we up And our next

mean the to really everybody's but say Yeah, it. yeah. sure same I'm we going thing,

it. Got Thank very you much.

Steven And Thank question with from next comes you. Fisher our UBS.

is now line open. Your

have I'm down outlook, and of holding than but Thanks. is morning starting about you Good service XXXX between your severe feel Within it curious do yet heavy in guys. how initial as come better that service any up trucks. piece your up backlog X for now to share trucks, industry particularly Class well. been that’s would heavy kind the severe

bit you heavy within with up coming look X up that of more see think severe. but Steve, than the numbers, little I’d whole, I to portion we Yeah that a severe the better a service within a to as holding know Class continue the industry down have for

year? your I decline then X to behind behind what’s it a I’ve Class but out for the the for decline the always down have about industry. still you XXXX. market that that, was next thinking and behind Okay it X in relatively We’ll XX% what’s curious business, outlook digit for as the steady thought double

different is seeing in you're what think peaked the as industry I Well, two segments.

one and leasing decline they take traditionally rental start they is on they the with the usually And a that's internal a movement, basically their that's in rental move market. a companies What leasing do, something their that’s you portion, they there leasing industry, If units goes when and the take into is units seeing movement from own so it business. thing. an that rental away

And these then meaningfully starts one. segments, the and are really that housing know impacted and monitoring the things constructions others that also you and

there. level. just You add do together, XX% saw we to I got factors at it But a all those strong still two very is

still considering for demand this duty. are replacement is above that We medium

in XX% on year medium an as think industry we’ll we the last We down don't be down with counting industry. only line being and duty are

particular of XX% then know what of the When you leasing, by medium you the choose rental nobody's bought push for and and units are they indicated, Persio what them to you leasing largest see, unit a As know part see two duty that from their in to of part companies. trucks building rental you that’s number.

we’ll is you continue it that. demand, know years couple to above last traditional the so a on replacement lot that again, this us an do it's But area in strength for built we of and

lot that. thanks Great a

bet. You

our you. Wertheimer next Melius with comes from And Research. Rob Thank question

line now is open. Your

the – can to to only customers, them levels past do you still good at of mentioned know, and know path how just Troy, far got be you trialing are about along I starting or you now are you think you had national trailing weren’t customers. talked few been Any know they levels, that share waters. if trialing Anything the them on and or customers thanks insight gain in normal the high you mean coming on some it there? you in you and testing all that morning as you've fleets you talked back entitlement Hi, everybody. of we’ve and

to I you of it detail, Persio know a little and because complicated think much Michael without Yeah, too sales. of you Cancelliere have you gets charts. color They again, know between of very number give you I’ll kind a on trying and give bit that, complicated,

for you'll out that. that Investor Day see and a plug a just more well, But on in look bit we as little staked putting

never to like experience them bunch we know know bad so and stopped us look, between technology. with out a previous about with them stopped then know submissions you some you those, customers, a business really If of staked a number and had customers do XX doing and you you of us with business major and the think used of

new one a of with both every had design cases, of proposition, cases the couple uptime in philosophy In some feedback. and one had the with those our of new some the of we of for very kind years, quality, okay them new – new units every have our positive them driver have design new us centric given

they largest of of them handful that a contracts. know they're of cases, In the other percentage fleet. in cases years another course handful brands themselves in term some have under they and know you cases working the handful in with two their Now of for you stepped-up to our buy parity to becoming the longer we we their at are buy where out are another supplier from

would we you So over buy a their of that portion that we get gain know time. anticipate would we

lightly. they're badging, color, You make truck manage know don't right, that their those I billboards decisions are their trucks the them these customers reasons. influencers. because right know making that the are These are you that haul, Michael are know total freight companies rolling for you cost the called the as run well operation, that these these they mean endorsements of

they're going they're that to and this largish trucks some XXXX you year you last of that's trucks and would of is mean, these our know customers are us I know a that you – key next know all those I XXX to things those have XX next kind I than of it, look, we so tremendous buy the for progress, others. significant have. year. XX% kind one don't in gives the insight over very customers, of know year, more we encouragement on that tell so just of, But some made trucks it XX going was of buy customers, be And some you,

XX and we'll start that you for expanding know next Now we'll year. that take

we and very we a kind five, value the next take You talk XX process have in, know and you ourselves, we sales the process. a business know know business then introduce intensive we'll proposition next where about of to and sales go good you X the

are So extremely we encouraged.

That very informative. you. Okay, thanks. was Thank

And our question Research. Thank Salmon Wolfe you. Rob with comes from next

line is Your now open.

segwaying guess Hey, good morning guys. kind I that there. question on of

sense had Earlier us could trucks. As larger those weakness you conference you have the a guys of doing. the of going profile noted used sort on that are you have you some in fleets, residual seeing any been you value of guys that high kind call guarantees been into give

how should just business? thinking So piece that the we curious be of about

Well, Persio. this is I –

guarantees. We is that. traditionally don't of to units to used amount of Now for really case. – again every manage the go We a the case have market a value understand lot fare residual when have trade and they value customers

good new really now the is up our new that that we've think news demonstrating the are going or have with the know products launched. I dramatically that products that we been residuals have you all

with is a work guarantees. no it you for not So practice to us really residual know value

it. appreciate commentary is I helpful. That

improvement of in product market more your driving incremental then? from kind just the that So of perspective underline share the

value continue to product. residual confidence the will you the of the that and improve life over Yeah, know cycle, the

negatively saw five guys more those truck, looking what kind We pricing perspective a industry inventory, seeing used get broadly data, both from across but what speak from seeing the well year four, price as at dealers sense. makes perspective? July inventory than less in some are your the of month perspective. then your Could particularly as you're five year the love of That about you to you truck would of inflect and

the you going know – this sales strong seen we’ve up, are volume year. because truck Inventories new that

to third truck up expect those in as used are well quarter in work and QX. inventories lower the Our we

seeing alluded their the on a we between the customers longer are the now happening actually velocity I weakness the saw we that, is was think the higher now to it pricing. what they for particular and is quarter, I And second where past and sleepers right trade. think units trade in to in in now taking first

industries, the that's is So delivered is new old – ones going that’s has returned are not get taking The why I it think happening. up, as inventories units faster. reasons the one what of long, start the as

truck later kind model sense to and contemplating and the softer next we of what should to rise makes we've seen year, use That there. this we just as right look we as we Should relative out pressure contemplating be see inventories additional be year? pricing

Well I mean I yes. think,

will you mean I seeing pricing, already we're softer support know know think I know return as those the mean but You and pricing I you units, know you we the that right. industry –

a effect right. So things truck the of value used that couple

was of If longer hold That to you a bunch little for you trucks you Persio is trucks, to what reversing, are bit is ones. a used tend your whole describing. waiting phenomenon on while need your that new

second when the the of The recover, used is trucks to fleet freight quickest rates. your capacity advantage to take and to phenomenon is market starts way add rising

at this, how think in I I of look, where X time Class sleepers And the are we we kind look as we industry so take mean a supply you make little we’re there of is know be know especially probably – those an over period pressure I on are a that'll a quarters so over think couple until resolved and prices you will that to supplied happen. and that of on

sense. Got it. the That appreciate I time makes guys.

our over question and to the would now Troy like answer for I gentlemen, closing to Thank any remarks. turn this concludes session. Ladies call, you. back Clarke

customers, Navistar deliver want was great closing, strong our results. I a In to thanks. for these QX us dealers quarter Yeah our and our employees, really thank for helping

the truth told, trucking no be know surprise indicated and You U.S. as economy it's moderating. we've market is the

tends for This a industry run four year us. cycles. in Our to isn't surprise

We preparing time. have this for been

of our structure, implementing we strengthening sheet. practices, cost by growing company the our to turnaround, lowered reducing breakeven balance During while point the and lean share market

improvements remain into in Navistar I optimistic for is create be that improve those are this why will that we today to no And cash firm XXXX We lower and gain continue to the better volume, our in another XXXX. position plan year has Navistar. OEM much like flow cost remain share, we a potential increase and good and belief

for your out IR interest to Please to at Day. you time the morning. for our to questions our this details look or talking any those We on company reach events. for in again Thanks Team Investor and additional

day. program This gentleman, may participating conference. concludes and you all and you today’s a Everyone disconnect. thank wonderful Ladies for in today's have