Navistar International (NAV) 17 Dec 192019 Q4 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the Navistar's Fourth Quarter 2019 Earnings Conference Call. At this time all participants are in a listen-only mode. After the speakers presentation there will be a question-and-answer session. [Operator Instructions].

I would now like to hand the conference over to your speaker today, Marty Ketelaar, Vice President, Investor Relations. you. Thank sir. ahead, go Please

Corporation you. Good for call. for us Navistar and we'll October period XX, XXXX. morning XXXX fourth everyone, International of Navistar’s performance conference the thanks the quarter fiscal discuss ended joining financial Thank for and Today year-end

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

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

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

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

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

Then call. open then numbers. highlights the quarter few the the some on and XXXX. some to Walter year-end and welcome Thanks Marty. with will walk and through Good Navistar's on more provide on you year, I'll details and insight the earnings I'll fourth morning quarter

adjusted $X.X revenues Fourth market Okay. the in billion, and $XXX million face Fourth-quarter EBITDA. changing of consolidated a delivered we a quarter of while in income were results; conditions. generating million net solid quarter $XXX

accomplishments We the seventh over in year ending And Adjusted generated cash free of to manufacturing flow with had revenue billion the manufacturing million. to $X.X for we EBITDA of $XXX year XXXX; $XXX XX% consecutive increased million cash. billion. several $XX grew

We third row. also for grew share in the a market year

On grew are the to three results, a in share the In XX%. market retail bus market points to share medium-duty, All-in, significantly closing proud XX%. up I'm the our to points to Class XX%. say, to X retail X/X was again point we gap leader Class increased to and our we growing core four XX%, leader, over share school share

points grown years. In fact over has share last three three the

GM for addition, This Springfield, not Ohio have plant. of in XXXX would International badged first Class over strike and impacted number we In the production. in UAW's the year delivered trucks if higher been that X/X XX,XXX our

delivered we International on over XXX,XXX of Globally, vehicles delivering XXXX, and uptime. brand the quality promise in

of year, second achieved warranty best revenue X.X% the in levels representing For industry XXXX. expense

significant uptime, repair we improvements in frequency repair duration. made and As reducing for

of network. comprehensive the formation availability, parts provide help have and importantly Love's they ensure creating more largest inventories introduction a easy-to-use uses that service platform, telematics to stocking communication of a our industry's service parts and right right parts. system the The manage International the the creation predictive but Travel dealer A include, XXX, fleet level, and of service to to the industry-leading partnership management distribution few of parts key the accomplishments Memphis near data new a with center addition to Stops

and Again, the year. through additional Walter on details quarter go some will the

about some make Now, I'd XXXX. to comments like

good but Investor in be The a year. be will won't repeat of be excuse Day our lower, a September September industry As XXXX. will XXXX XXXX, stated on event, me, still it

the economy is at permits uncertainties. index months and part to improved, declined healthy. remains ISM attributable U.S. spending trade for contraction in consumer a manufacturing four Unemployment yet has confidence the housing XX-year have last low, positive, indicating remains that's

near GDP capacity be are included to growth, is forecast. fleets. driven our than lower GDP and XXXX And was reducing to At demand. shipping We the demand X% industry X%, freight XXXX. pretty need replacement the expect by will what think be in We expand original balanced, that

here school our marketing towards low guide you X to of below for replacement units. that in We're level. But been forecast orders core to Recent range. bus of Class the running X end sitting holding today XXX,XXX XXX,XXX industry have industry I

working is pick the and orders of transition industry the half second then of recover As in I through the a will period believe and up year.

had a lower Let are being of delivered cost. described I record operating Even numbers from year industry's are At the of year large demand more. in trucks explain the of from little put to XXXX. Day, companies XXXX replacement Investor service, new today truck benefiting a in transition me and

trucks for of used taken replace take they some will the out be It time service. to

So which purchase the used hitting there's their in market, of truck differ decision conditions cases value of drops market of the improve. capacity below plenty those potential customers in may market, the pressure a are rates. value prices on the lot trades the to where book With used until trucking And truck puts declining.

work reducing are XX% industry quarter five-year take or over a is XXXX. It industry for of old orders to situation. rates Build still particularly have this case to in down, orders come Class to the second for the X declined half Class will through beginning results exceed This the but two backlogs. sleepers. in X which

QX This fall Orders our this have results we first At well. as backlogs. particularly quarter declining season volumes. the will weaker. order half of production in our XXXX reduced are impact during been have the backlogs Navistar

some industry top this taking actions We're will will QX, color through the and Our the Walter November is falls stabilizes, improve. the rest of adjust transition. how transition more to this as XXXX financial market XXXX period. industry's on right January, sequentially of our provide on the impacting But guidance. levels

to the and necessary intake assembly backlog for plant. order maintain adjusted operation line balance efficient our of We've manufacturing rates

XX%. past reduced daily few the by Over we months production have nearly

premium stable particular less unscheduled Lower venture cost easing logistics freight, Material with and will and as lower schedules. Manufacturing steel. costs improve of with conversion joint prices commodity procurement well are in TRATON costs the lower time. the as by delivered improving

We by We're managing and reflect are global managing adjustments trades staffing to proactively we're to And balance and assembly customers inventory XX%. supporting levels. costs. truck plant reducing volume and we're employment over last, other used SG&A adjusting

better to improved as margins share adjusted we the XX% advance increase XX% we and XXXX but a for a be will good XXXX Navistar. year goals like our in over for and on row, XXXX won't margin be respectively. a XXXX, plan market it year XXXX, In XXXX still EBITDA year of fourth

Powertrain manufacturing service alliance, and Huntsville facility. e-commerce increasing programs share network of Continue Proceed and our investing and creating technology market engine the a with the to our new XXst in Antonio our efforts. San TRATON expansion parts in century our assembly the growing plant brands with all-makes

and resurgent prepared we few industry. are Navistar The market especially the for our And them solutions, prosper. will beginning but the a news late months production manage school at of increase challenges over through we're present next some that eMobility buses electric as limited of challenges is is good the in These activities normal prepared to challenges. these transitions, next will XXXX. XXXX

back his after me then I'll comments over and come to So turn it done. let are Walter,

strong to quarter delivered the grew for Troy. XXXX also look next and a Thanks Market solid again Navistar results on the share Indeed and success financial in year. we build year.

XXXX on by results I our the guidance. update provide an before fourth Let's quarter reviewing begin

the For $X.X revenues reflecting fourth declined quarter, year. XX% consolidated a last were billion, from

of the the not certain third built was by of shipment quarter. during able rapidly You who suppliers summer of may components, constrained XXXX increased in that recall the production delay to production trucks which are

strong quarter in In in prior-year were nearly and the ease originally of XXXX fourth units driving were that QX period results. X,XXX out disruption QX charged this produced very

year-over-year Other XXXX, sale of an of XX% industry the well quarter the earlier in as as in current comparison factors of the defense business which had demand. the the lower strong fourth impacting year, impact exceptionally includes

relatively parts to from the of up volumes. year, to ongoing and and truck last gross quarter mix able half and the and in XXXX quarter XX.X%, offset lower improvements margin operations Fourth sale segment unfavorable last business was defense between point were comparable a as

million. $XXX year. million over Structural SG&A engineering declined year-over-year $XXX notes costs to of XX% slightly convertible and declined expense to repayment in costs Interest expenses of which of April include last the reflecting October back million $XX and

million income Net $X.XX was share. the per million diluted $X.XX per or a The in or year quarter diluted share. prior $XXX a was income $XXX

in Excluding adjusted $XXX in QX, million EBITDA onetime That was net on basis, income QX, an adjusted was income, XXXX. XXXX. $XXX million was items after-tax

annual of $XXX on items fourth to XXXX as Adjusted consecutive after basis. Meanwhile, adjusted nearly EBITDA million EBITDA year revenue. the seventh up X% full-year Full-year onetime up and million was was was quarter adjusted was to million. $XXX or in of pre-tax adjusted income XX% EBITDA. the net a $XXX excluding growth a percentage X%

the for charge-outs the as million, the to majority of segment declines $X.X year business. from Moving truck in of as $XX in well reported sales interest impact segment decline sale the and core the quarter, the units, billion the of our XX% the of profit defense prior to results; the reflects XX,XXX

was Motors. to XX%, were volumes at the albeit These the what QX was partially year. trucks, production Class of by offset than lower the best factors retail strike due quarter market the the expected core new X/X General share ramp-up of originally of UAW

Navistar parts delivered The reduced by ASC-XXX $XX this parts revenue implementation which results of grew Our a to this points business recognition were million. XX%. year-over-year The year. segment fourth quarter the by Profit revenue the new margin revenue strong five beginning impacted standard at adopted quarter. of standard

million basis, Parts improved to flat from Revenues segment label operations operating million, due offset partially results the Profit were our $XX growing private revenues volumes. were for flat a the by $XXX XXXX. Diamond year-over-year. lower was Blue reflecting global up a comparable QX. X% business America to largely North On

due further efficient. incurred operations engine loss cost reductions quarter a $XX the largely segment Argentina plant make million initiating in the and Taxes at in include Brazil The charges. to production restructuring ceasing in more to

would've Excluding these charges, profitable. been the segment

segment million reported comparable XX% year. Financial payoff lower loan sales million, from term related $XX to the rose last a May. largely million $XX to interest of in Segment services $XXX to profitability of expense

from the performance. quarter EBITDA a Company $XXX of largely the During free manufacturing generated adjusted cash flow solid million

in million and $XXX we For year free $X.X billion. generated strong the manufacturing position cash of the manufacturing over cash a ended with year, flow

been a let that XXXX. for our have guidance the industry orders secret It’s past moment Next, our update me take very months. weak for to several

Troy XXXX end the their we're of We customers now our low new approach mentioned, are wait-and-see industry taking at guidance believe volumes for a range. planning needs. As for truck

lease extending where and truck particularly units and rental higher companies true This replacement rental contracts These retiming to prices used penetration. the we leasing the aged until leasing year. with has support in later stabilize. This vehicles their reallocating are have companies of is customers until

also dealers to while recovers the create Class faster. in we're stock time, when same X/X taking with anticipated. we the as growth create the will volumes new And not units. is demand expect not We're to dealer actions we initially excess working market so At as our that accelerate still to XXXX orders increase much

adjusting result, As accordingly. we're volumes production

compared In $XXX and XX% $XXX adjusted million range revenue a $X.XX by Investor $XXX and nearly EBITDA guidance XXXX, particular, QX in $X.XX by our our lowering a to lowering million core to Day range million the are Therefore, provided billion million. of charge-outs year-ago. guidance $XX we will billion down at be to between to

EBITDA we revenues the and funding with $X to manufacturing than capital the more cash Despite after other expenditures, in of expect sheet working items. capital year would billion end weaker balance

expected and A of parts are segment margins revenues. overall company's few on consolidated grow parts XXXX; favorable contribute mix truck, to gross year segment higher comments proportion to should between due as next a the the additional

venture commodities We from expect material savings provide tailwind. slight to joint cost the continue a will procurement benefit from to currently and

more conversion increase and improved expected efficient logistics are of with gross Together freight to XX% expenses, manufacturing to revenues. costs between margins and and XX.X%

and OPEB favorable better returns, near-term versus pension in rates. due costs healthcare to asset to trend interest to expected be stronger expense XXXX less expenses XXXX Additionally, and are related

to conditions. market current As adjust Troy action mentioned, our taking the business we're to

removal Let assembly rebalance provide production production rates line are in at the me shift orders. to to July, the necessary take including XX%. actions November, reduced down a These more color. second our rates in with moment are facilities Escobedo, We've since and the XX% of additional Mexico

Brazil million. in segment restructuring they global $XX including annual to our our also and and earlier year, actions later operations, global implemented export around we expect the We're would this mentioned these are Once Argentina. actions by results I fully for improve

SG&A As also decline, expenses. volumes reducing we're

worked we've expenses. employee months identify Over to contractor the last to few and ways reduce salaried

$X.X XXXX. to structural between and result a expected billion As costs $X.XX to in billion are decrease

In total, restructuring over the result XX% decline above administrative by expect a headcount to as total we'd and of actions. worldwide production,

make products strategic in we However, continue plan new investments to to and technologies.

of new-generation overtime including alliance in the as in in year as the San powertrains plans partner we and in made The well development These announcements improve Investor Day TRATON, as we our part Huntsville help Navistar Antonio. our X.X our margins investments with will discussed recently the our more in earlier September. at of significant facilities

In summary, with the growth, consecutive revenues. our cash. has posted maturing year growth its two debt for outstanding adjusted past strong and $X.X share and paid-off best-in-class billion the was year year manufacturing of company warranty of ending XXXX market year increased levels free years. Reported an Improved third of Navistar. EBITDA generated manufacturing A core seventh reflected flow over cash for quality its in consecutive

by to a look Presently, share believe In actions Navistar to the better further me we're adjusted be Navistar company EBITDA margins conditions performance by to for benefit good market market will Leading longer-term, grow rationalize once four we're to grow our operating business. from executing strategy X.X as points year even our and to improve. XXXX taking we position XXXX.

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

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

Your open. line is now

everyone. morning Good

David. Hi,

speed full-line about was one that Walter, well? gone slowed you running you about were you've I talking rates speed Walter, to or the Is as think, line and on that -- shift it have talking at shift. down utilization

Dave, Hey. we when Usually the we is go try maximize rates down what this do, we to shift. Persio.

can in on waiting full top with There's capacity we one are we that. we shift. right really add with line at always of operating capacity the now shift So be in the should flexibility now. But overtime manned one the that

right works down is incoming of through, adjustment now that orders in lower consistent year? and another there later then be Or these that lower And would pace have production rates? Okay. you order with the inventory as needed that's go the

adjustment I particular the orders in build that our mean, best -- schedule. We're right able Yes. now. to we're support

which indication As think up overtime the would anticipate actually as we adding Persio we then into would to first line be we rates in year I then indicates, that would way. take go need the some

or thoughts the talked the some that past on way. Walter, is? about cash structure, are balance Thanks. revolver And that great. you utilize that? number a revolving something Okay, the way and then, And there's on structure, in what we've the appropriate different could on that if credit cash in What

mean, are Yes. $X cash million above our We're billion included business. $XXX to the with what they've about in to I thoughts a run balances we keep need my consistent been. continuing remarks. We as

to was over ending we the expected the end cash, about So, balances, we'd good feel especially with of pretty XXXX quite year. year $X.X which frankly cash than billion what better

are balance utilizing of with thoughts cash So better the the excess a what that? sheet, for that, of word, on lack terms in

where point a credit we've high to rating in been get could something corporation. cash the where we until for time keeping improves a place in our again, point such Well, revolver

head Given with as liabilities and pair the the changes But we in XXXX, industry outlook. sheet. we're from XXXX our balance cash comfortable we've the seen balances will to our on continue down to we

here. off the to that contributions as got to need pension roll Legislation begins Pension-splitting make We've we

future twice in including investments as So in Huntsville provisioned we technologies. as we much Antonio -- CapEx products and much had our these for XXXX make XXXX as and in we for twice that. We're for San as almost CapEx

the sheet And looking in call opportunity cash So, in Particularly, year future a we the for balance. we're as October. at beginning levels the million to we're balance debt debt the we'll continue well. overtime later an investing have look on strong maintain as to of to $XXX even

date And at we'll so, not. call another want whether exercise as we get that that to closer to look or take we

the recalibrating through expense all of for And you as OPEB had you expense year-end at and cash then went terms in and outflow and of XXXX and those. to looking touching relative mentioned you just on is? the as what pension What current rates lastly

Yes.

it at I is of higher expense out for we in is to think materials of which than that expense, we I have had Investor is But Day. that in below and $XXX alluded cash excess said reason qualitatively lower the in its million what our comments. the my as

books at So that OPEB expenses all the versus that we lower close million. function at cash up as That's year-end. what we about once $XX thought of and a versus expense pension time

Thank very Great. you much.

you. Thank

you. Thank

Our next question from Fisher is from Steven UBS.

is open. now line Your

either how first trucks you curious demand of Curious, bigger mid cycle? own growth obviously of and Thanks. Good North of this affect and for maybe base is markets guys. your case thinking about your thinking might on kind thoughts recent XXXX It's picture maybe or for maybe more for of American agreements this the recent the but later the more you're truck is morning half XXXX? how the for trade to quite what and return your to a in shape timing Are in or possible the revenues? recovery freight

recession. and below of anyway ISM on closely you and highlight anything the a would hovering That's things sell declining I'll is prospect off in agreements to manufacturing the indication to have and is is then XX-point impact I maybe of these that by the start kind the really manufacturing this we activity. that one type scale kick can is manufacturing their trucks is North way. important, that this Troy, they here. index, that they and we around Well, the because it correlates fairly follow trade equivalent America But of XX, which up as that But been think to an of of Walter the of

like recovery in little the place XXXX. transport, describe of that recession under slip that. how we in in manufacturing that late would I make that been orders And first half in challenging. then of the to And a second our some something do some look covered concern early that's transport way has the if I might the that know could circumstance, been takes market a in And a of the in very XXXX. in And similar XXXX maybe or something into we more the look half press that in

issues Mexico, trade these some has more States, really The again that manufacturing the trade with is to and United resolution stimulate agreement to not the and Canada activity prospect to of the seems favorable I trade activity instant the that think to relative increase correlate which could in type opportunity activity we of It's sell or agreements particularly of and manufacturing manufacturing of that we the activities putting. into. trucking very sell,

Okay. as improved I would that lot more when XXXX my confidence made have I things those in a with the sequentially behind comments us. getting -- But

to you're is but the at a I'm have when to less have lot activity time could an and Again, year And you're could activity. seems it more is least, the work not zone me below that on it it appropriate. or be GDP impact recent an there it zone not we're the give X% where when in, currently that modest seems an looking above through it but but way the last impact of developments we're be economist, confidence to And takes that GDP. a transition impact, higher some

Yes.

good is for add I reduced and corporations for think, is I'd uncertainty consumers.

that moving is And as progress is on made being tariff happy that and matters see forward other to so, we're well. USMCA

just flow helpful, question. and a cash then on follow-up That's prior the Great.

balance. missed the given expectation had you I Walter, think, for that. I cash ending your

If it. just could repeat you

I'm isn't inventory tailwind of was just working leading about with wouldn't more really have perspective. particularly capital potentially a why higher there you flow cash I but wondering just why obviously a more think cash know working capital CapEx, reductions tailwind it kind I balance? flat. to be from wondering bigger

Yes.

cash, that, the at in to we with year excess billion we So XXXX. have billion year would expect and XXXX excess $X.X indicated cash of of fiscal what was of I end an $X of the of ended

outlays of include than in that cash business. lower we the that at will that XXXX So to make the end to XXXX. we for does And investments I do alluded the That the have imply. future plan some have of capital

on benefits some capital we'll actions there, working see Specifically we inventories dealer hold to with respect overtime. to actions the really the that question, of on that that these are related benefit books the and of not see our of inventory your we'll so

sell, industry as our So the it the that's have or the or and flowing of working others is then and we the that model capital. are days immediately on almost really through still out payable which XX working autos not we And that we got that our and run average. accounts capital paid others get we so finance for by related to vehicles well in in seen company suppliers,

our And actually working working so our model benefit of as as of a we have to way opposed use capital volumes a from the way capital decline the works.

So I hope helpful. that's

is. you that much. Yep, Thank very

Thank you.

Uhlman question Cleveland Research. is Adam next from Our from

open. Your is now line

Hi, guys. Good morning.

Adam. Hey,

maybe pace I you're It with like of last the in months? few you to And was on more that on the in also the leasing hoping to if trends hearing cancellations? deferrals on pace surprise and expand the customers. the order you was heavy-duty and the just any seeing but maybe or of bigger side a that sounds bit related more change bit to you little medium-duty from what order related you've could clarify little a could you're expand rental, what just seen also

is Adam, Hey, Persio. this

we the flow medium pretty a between and see reductions mainly that all seeing. on of that first we're think segments orders I of and and balanced heavys

start heavy side. me Let with the

their seasonal where was customers monitor to quarter heavy customers the saw the the in seeing industry deferring and Actually the fall. differing some -- decisions -- think for I wanted purchases we for that we're marketing – heavy what -- heading. we is now see are last of typically on to

volumes haven't we there that to -- what are reduced close we of those in that were that the XXXX. now some activity, that So activity but yet, they saw from We are definitely in are deals buying for is see closed the expecting market. seeing

leasing basically rental is, side medium the and it’s the same phenomenon. On

I and leasing rentals which into the -- call and the think, be the or some move rental as think there basically term of that's that, I And units and last leasing is the the Troy only to that getting as arena expiration we is in Walter. alluded not deflating customers they're activity, they seeing all They segment, old about unit of the the of they every returned of units pipeline. that happens, lease, are one that also are see expanded. our time

So that's been pretty typical.

So kind But could could say, the heavys I we've first between it on how medium XXXX now. But that. that seen important would now. to quarter a it's right monitor of QX adjust and to we lines in balanced in of was make we decision that

ph], think adding just to Adam that. I

As these Persio process longer orders the landing it's now. of is certainly it, summarizing is

could at and we But fact capacity in more that I that a And think it, need reflect late numbers what deliberate numbers Persio you out lower it the is orders as the expecting the bit the the takes their haircut those are And if are flowing. been bit the to on for in into are as if consideration two our not coming mean, at timing take being that look least a customers less. things little may summer. longer you have highlighted. you look come just -- in from things needs. of there last but I the market

year that of and and leasing, as lot would think penetration there we across and I kind are coming holding and the of a and should end expect. the of is we board, have good first is Rental well weighted a is the there, thing impact in part little -- demand a the The but so so we pretty medium-duty, that they that see high think the by I that, year. out especially I rest the of think around balanced up in of

may well, than I on call coming, year XXXX. superior years, the the a If that, outgoing products performance them built model in complement side much They we have XXXX. a new model just Exactly. we as which to that the XXXX are heavy

our So important. that's that's case, another customer heavy the of is economy units. that delivered superior have in fuel element all consideration in Particularly we

Day get but units now we're I situation, alluded want in I used think And his well of their the referenced really they trucks, there's unit. And as people remarks, in think a to over kind into from a of used I got have XX of inventory prices from happens inventory. sleepers X,XXX months XX,XXX than is auction of up last you to auction market. went used numbers as, really X,XXX when going Cab those through units lot where mean right to X,XXX on high the And as to and dispose what units inventory, drop. those Walter of I

we And drop. prices auction saw

it in auction. averaged on XXXX all-makes think I is of was an for just going through the November. index month bucks This

We expect similar performance in December.

makes I stabilize the the to related receive And orders. one timing to appreciate major begin and/or that, they factors so And easier. folks think submit again of want when and to their are it trade number because to holding their onto waiting truck for used hopefully, of that that's

you about costs material for XXXX mix you. between et target Thank also And margin I'm gross different your pieces. helpful. between That's and for moving just that and thinking a chance Okay. could any then, bridge XXXX the Walter, the cetera? element provide

Yes.

of think key that I offsetting the on Obviously, the units. with fixed we'll That's absorb you've hit we're lower across a so introduced running couple have plants were material we and process. inefficiencies this full past expect the fiscal In manufacturing year to But out as to strong continued cost negative. that a performance. our have items. with some into remaining more volumes well. lower we costs conversion And

manufacturing current costs freight in those on able better performance, reverse to as the and as and we'll So be see well logistics course environment.

will better. improved Logistics we So, material that the will will and costs have lower costs on offset volume. will incremental be fixed be absorption that efficiency Manufacturing be better.

Thanks. Okay.

Thank you.

Brian Sponheimer Gabelli is Funds. question from from Our next

Your line open. is now

Hey, morning everyone. good

Brian. Hey,

rental the and a of mix maybe on leasing? and in guidance any any XXXX or market guidance as mentioned relative share well, perspective share sort industry question contemplating fiscal a are customer seeding to Just you the market just of from you sort

No.

we year the and is As about stated spite it's XXXX a will segment and and for increasing customers with in phenomenon lease, market that -- those we as this rental interesting and matter of that improve -- with market share anticipate Brian, a in we in talked share fact we row that we the that well. fourth fact, just phenomenon of

But there, issue mix Brian. there is a

do think where that's we're alluding we as I that segment. in to well

from segment we're mix that's negative, so but And performing. within a that a still perspective, the

Yes. We're not share. seeding any market

XXXX mix engine AXX? on mix thoughts any And fiscal of preferences where a heading you higher get into Okay. there may

and -- that I is Well, its performance being want adding that's to XX-liter when the the working what in Class but they're that replacement is to to customers is market the -- all, AXX would not with our right year. to couple it we now of Honestly, half as I to XX-liter definitely not you share seeing about on we our on mix, X LP last first are That's that. we starting know positive the you how say we're improve a market are talking half-and-half total XX. you're some see that. with seems the is and think are tremendous And of and That side think we think now. momentum maybe quarters now seeing we XX-liter Yes. acceptance seeing and the of share

holidays Thank very Okay. to and Happy much. Happy you. Year New you

Thanks Brian.

Thank you.

Thank you.

Duignan Ann from from is JPMorgan. question next Our

now is line open. Your

Hi, good everybody. morning

Hi, Ann.

quarters? of you for I QX I expect talk gross should QX. gross through in margins than we is margins the in this of about XX% the margin, versus segment our in cadence maybe Walter, mean what mean, the terms you. quarters, other volumes Could

that quarter, the Yes, year. Gross to we've of and the well, we profitability weakest this -- improve our additional year. comments to few tend that over historically, to course margins tends then added or a QX got is

volume half parts the our the to over ramp continued the full better improvements the as and well. cost the Second volume, quarter tends to be a that half and is that but lot leasing international second And year. do on those would -- higher in of our rental volume talking material up side year, been second see about. we we've the in tend year as this of of operations And

wouldn't you tend the besides point half the So in where have be year. second to historical anything of margins it kind do of to those pattern better to our

Troy. off But building of would Ann. is highlight those you previous comments, know I This one of

One point to be time we would will in better at particular the of built of basically, the that second come we the a is in give orders more just the do a up channel are why to that half reticent price basically way we believe to dealer at year those we natural this just, like in margin. when through reasons cram margin

things second we have and So material have leasing that not Not doing. think to we half. impact first do cost in movements orders as and cost the rental of half different we stuff of But structural only costs rental, half the of the those of type and a anyway were dealer the richer the I second only versus have tends year. be the orders mix a mix of

So HX. to story it's easier HX tell versus the

those build will capacity have we'll the I we quarter-by-quarter just think and come as in. they that because

question my truck? risk I there you North in lose in really that money will American QX guess any Troy is

if is volume mean, run near -- break-even going calendar on it our It's basis. to quarter took you first a I the

above we're For breakeven we're the even for quarter above the but year, volume, around our will volume, run half, that. rate first first the our and break-even

will that we it right So be -- in zone. will

could a Okay, about exactly more a follow-up backlog just that. talk what's little appreciate bit I like. your you as looks And then

you production pick I to And would have your to production think given back quarter not the gave when see then the us for to exact given again? costs, last orders amount you cut backlog. have you of up backlog,

And actually are front is of in now reduced not a us. us, everybody. and line sure, long, year, we last we what but had period only set for running call, That we this as for

now is today, reasonable So QX the backlog a I the supports way. and QX in think

make We sure at we getting that now the are the keep beginning QX that and we the of orders rates think we between will place want But to fact I support seeing start, said, backlog year, to the us adjusting and January to February. for we now, the we production in right have. right start up production in as

January, and orders and not support I our And intake and the the will took, we most it but to adjustments wait now in dealer happen, are now, will because to place the we doesn't I rates it to will and think expected positive new we're said, the we now is that actions put think the -- don't in stuff they going until future. in as in right put necessary see if the that channel, where not going March, and are of that, really we we monitoring will as now now inventory's Troy if order it February channel. We're keep between products normalized an overflow of come intake order make and goes, we

Okay.

Do And with in So leave quarter know many you days. is? I mean, there told the how days -- I'll you that. was last XXX backlog, it

will We you with on that. up follow

Yes, will that's just... give that. we you But

[Indiscernible]

right. Yes, that backlog of there's we know buildable the -- situation run that I But right side. is and into backlog, kind

until into of So got are the fact lot we that in to built get we orders a all scheduled right. be quarter, second

didn't was to customers built the it first. first not those into The practical quarter. So in want them pull the

have And we just backlog other buildable in fill allows that are the backlog call the and to fact us do so a we concept, this have slots. what's

schedules filled first slots our filled per the quarter. production into So slots well quarter, throughout second are the are

point think in the So keeps time. this kind where this think is going are down the down orders anticipating in taken again you way about take of to again? when the taking rates I the don't we rates is. everybody at why one down we're flowing, talking the are line particular think line And with of them we've industry I line reasons

Okay.

go cut. to as time. we going little the a some try cut, we anything, make orders we'll just how right. over run bit, a think it even be to let's up That's If we're If make running

we're and untoward something the support okay. we see production happens, we unless that going think and cut that Okay, have we going that the quarter, to -- we're right now, into to get how and it then we schedule that's orders second down, --

additional costs, like up adds to of makes then kind And over the set think, an it's we're of economic margins like, chasing that's kind a sense, again if problem I leading pressure think, second to a It we quarter orders of how we for puts come least have anymore, of hope do have adds it build units. then the going ourselves today. spot good doing this, into the to sometime schedule the to on And because I and backlog quarter in here, do just at just that's expression how time we better sweet helpful. that some right. us, by we're don't It management that's to costs, right. intent. We run Company in can second

and Yes, was you. that it. clear straight. absolutely appreciate color I Thank

You bet, thank you.

you. Thank

Our Volkmann from next is Stephen from question Jefferies.

Your line now open. is

maybe a up out starting that. Troy, guys. with morning, follow on Good just quick

able If a little and or the would that add in second upside guidance today, something overtime half you provided the you've to are to be like that, correct? whenever happens that

yes. Nominally,

going The Okay. year. mix can a the Blue this I stronger for looking guess, of All-Make mix, about this And for the I on by was kind think be also down what with then, Diamond, just of might the done parts winding would but stuff, end talk will as I be we fiscal quarter. that margin a not rich minute. in there? came than What's you're

what margin we over go trajectory next in parts Just the of quarters? as few do forward you think terms

as in parts performing after the whole extremely sales team, Yes, a the But and Persio I'll well. as maybe start wants is well. team just to jump

with we've got prepared working working we've and are for. margins, to customers because and to with improve we've to our great high pay private so parts been proprietary that's label So also our been sales, them parts, dealers that quality improve

their to So dealers seeing the improve you're a the there working of is what with within result efforts markets. parts sales

down, but time it's long know, continue done a be you a year. over long period end then don't over that wind does will would indicated it and of I to of Parts fiscal Diamond the at Blue -- continue, why this

label that of remember continuing to growth are the another how had but -- it's be year of time. particular still a do in fleet We down, winding double-digit right some I many now been XXXX. in over again period private and but to And in that's well is row, can't and going business years

well that's been So to continue in the in additional now they're which growth to watch, private-label markets, stores will wonderful and adding future. drive their as

Yes. may is If Persio, add. I Steve. This

We PDC we the and make we provide our breadth actually I analytics sure Memphis. important we pair think, were that our being in also the reflected The stocks revenue shelves but in support in the franchise. right as of took was the in through to now better a that of and additional right get develop we that's mentioned that then launch and in the and XXXX also as replenish with better uptime we more that in well. additional our some within not very team, parts -- actions customers, at meant these time depth tool an dealer predictive can parts much PDC Memphis out-performance to really

XXXX profit that out parts turning, turning velocity think as are launched precise having a in so are well, parts we we So platform you being things, in in really can dealers better we them. e-commerce that combine when are the a and we the these make together, we better that I more those you all the the of put pieces all

Thanks. That's helpful. Okay.

parts to you in be do expect So up XXXX? margins

They pretty are healthy.

So I did we happy in We'd that. think with we XXXX. in did be again what XXXX

Yes.

enough. Fair

Okay. the I the GM that quick Is on Thanks. then And XXXX just one, what's a business? tailwind? final up as in a assume outlook

Yes.

indicated high Day. to as time -- of Investor over high what volumes we as of we not sight production those good XXXX. -- We've baking previously Class of growth out the are the but course projections, we as X-X into as were thought. or I there not we're got at remarks, But Steve, my between As the Their a year overall ourselves the expect year-over-year deliver current GM had in so. and -- year. line will the more us assuming units in days provide XX GM, it

guys. you, Great. Thank

you. Thank

next Weber question Seth RBC from Our is Capital from Markets.

is line open. Your now

Hey. guys. through is structural trying wanted the think restructuring. about that to Good response. versus just cyclical ask guess, morning, how I of much I to I'm

there if be run on, costs other we -- million global that back, rate is Or as ops. should come of $XX mean we any come regions, and about? in volumes those Thanks. the But think are I think I should going back mentioned, that thinking You -- anything is to permanent?

Yes, permanent. as Persio global will provide but we of some actions those color, think

rightsizing we global correct. operations. the that's And in still are South -- America, our all business the Yes, businesses

So more -- them to come, get as but forward. at a is size to going the know level lower idea

sustainable a as restructuring actions. that count should you So

Okay.

As ceased there. example, engine we an where operations

exiting we're operations. So those

Okay.

improvements the our on what reductions level, need we Generally, in or about top do things productivity an we ongoing we enterprise harvest operations enterprise. from plant, that and the -- things engine the that opportunity of the so at can in of new talked to But operations, we balance so need so the like fund our productivity fund background in eMobility, because that of for from to that we the the of will some like can can expansion manufacturing right. that NEXT sustain fund we our

at -- taking timeline Investor all that's in, in time margin place and our we things the moving productivity where on are reallocation the initiatives So know things us that we growth-oriented enterprise. from Day, to the well that keep have we that that new and that shared

Right.

Okay.

so, of adjustments, that out LatAm the that remarks? bulk represent does the the XX% those two you And called in

activities. The XX% is really across all three

there, reductions that's but XX%, and within also its about -- in that but in is in the it's doing So right, area, talked right. own what the surely excess the we've we're then an global SG&A of production

activities, So all it's way. in three their across are which all meaningful own those

Yes.

are in to didn't pieces really they that Walter -- business the three I referenced. think mean the we globally, they the where global segment, referencing into comments entire referred

Thanks, that's Troy. correct. Yes,

helpful. Got it. That's

you, guys. Okay, had. that's all Thank I

Thanks.

Seth. you, Thank

Thank you.

Andy is from Fargo Wells question next Casey Securities. Our from

is now line open. Your

morning, Good everybody. lot. a Thanks

morning. Good

Good few morning. A questions. clean-up

exposure restructuring discussion. South American First closure on any there? post the Do the have Argentinian you to follow-up down

but run of representation a parts think in and small locally, we I operations through business No, there. closed we still brokers basically QX,

in have So this any we don't Argentina point exposures in real at time.

Persio. guidance production expect consumption for Thank the kind Should bit. on a we ending just you want I greater cash in balance in you, cash I of focus a guess, Walter, Okay. the cash against cut -- QX understand And then XXXX. I to gave QX? normal little than

seen than strong a I higher of for at quarter would what working number couple the is, we end the unwind, cash fourth capital One related could it of be a really and again any you've Yes, a little here. reasons. historically, posted since say

So in it. working that some had had capital benefits -- also

So I would that some to of expect QX. unwind in

normal. might see you larger than a unwind So

that And that EGR settlement then our we that aside forecast this in QX. after provisioning be cash the secondly, are we will some announced we've money previously in outflow for set cash could

So as we baked that well. into numbers our

so or end very of But any balances cash I to healthy like balance, business the and QX, about. anything lower a cash don't ability we have We'll concerns have that. fund about at but to the see the nothing worry

exit but performance of improve kind the that year the demonstrated and highlighted quite your then on return you rate for bit the a questions initiatives the be should asked, Thank have follows up in than you. you to of And performance few we the a through then, Okay. QX? margin been based just expect to production it's EBITDA higher the given view, on current

we've talking that yes. here stronger way margin be EBITDA I the second then of year, saw the in at about the this end been what the plays half believe you will out do that year the of QX XXXX

rest season, great the a of Have Great. Okay. holiday guys.

Thank you very much, Andy.

you. Thank

from Jerry Our from Goldman next question is Revich Sachs.

open. now line is Your

dealer sense talk about just midpoint. you would your at a if there XXXX? wonder sales and helpful. bit color I us everyone. Can A more inventories you to of be come anticipate the would of the range much retail morning, exiting unchanged give in good the Hi, midpoint-to-midpoint? out guidance terms How rough updated Yes. outlook you could units would

-- Yes, how. to because colleagues my give about answer frankly that guess question, I'll don't to quite a think know chance how I I

right supply fairly now, about thinking level. still rate but are We XX is days an high on-hand at selling industry the

maybe of go that by first little end the the although units going okay. is up to that quarter bit anticipate -- second is quarter would to number we inch first and end the of of then absolute through down, start the quarter, the So a number will

submitted. up decline basically And picks until will absolute of units and orders are then so business the number their

QX then at the come as goes as up, sales rate the haven't come second And well. what half, hand the the that in point I my XXXX up in units like, down. on to in but maybe first we Days in that of so, pick at of think studied right. quite days starts the time particular we frankly, but phenomenon year, looks looked have market colleagues And the half the down

right what the So come upper the range we and numbers may pick of is of up think set of then down. kind to we

those wouldn't say, but more of we Yes, sales that to the range. days volume, guiding would on I the we -- have probably in

monitoring days So and no the going that's going of the and inventories. we up be QX by ratio much now that And the we of up, end will pretty why quarter, do are -- believe it second see range. we sales in in the

which to much not let traditionally We it that this going XX too of inventory. higher are go days XXX days to is than know the range we operate

probably we end the at be quarter, there. will So of second

second is expect of there should of kind by overall end you quarter inventory a the Now trend. -- as XX% an reduction

of needs under in your retail in totality, the -- production you XX%, to guidance? characterize I think demand terms same in that would under the by magnitude about XX%, retail maybe versus in order produce It's industry what's XX% to Okay. anticipated of

we've sense. cuts. to cut of to than little we're anticipation more Again, reduced I probably that a going think through a in that as if successive half little makes add-back, opposed deeper that,

is our cut peaked, indicated XX% -- kind since which Walter XX%. industry our the of about production we've cut July, production rates of of nearly we've kind As when by

the quarter, X, by of cut production flat. Can vehicle magnitude bit just bus order platform, in is just then us class? first for us color XX, an a Class of And decline the outlook more you can you the give XX% school Okay. the charge-outs in give that down by

-- going proportion of be to kind think in I Yes, to production general, is kind of the segments.

QX, even is heavy’s seeing reduction bus that a lower but school and mediums traditionally pretty we discussed. school the as for the us, you on we between now as bus a much seasonality traditionally but -- So quarter are know the production happens in the

Okay. Thank you.

you. Thank

question Wertheimer with Melius Rob next is Research. from Our

now is Your open. line

think My current everyone. question and be just and industries price on Hey. Good morning, -- recovering with is share little pretty market transitional. softer I bit becomes success and to is you've environment tremendous the in a obviously, share, harder, had

I So and not, really down may on if your share is holding yet is or not, in on my don't read or question be but market? prioritizing in philosophy pricing know a whether what a there's gain

just And are not in does -- that point a of frankly, create prices. we that other if quite in we these particular market, deals to belief results. doesn't elasticity overcapacity of as kind attempted demand of we lower at in there really kind governing truck the of lot lot this look are could pricing that a at the the that, go the lower time, -- influence out we're kind really At a of a change there, or elements structural more used that, the this felt that time creates that of the stimulate much point cycle demand, demand is pricing because

our in we we have margin the that And products, are issued People we've point indicated value. price should products recognize think particular we're going supports I getting so of XXXX. -- market. this for we're the think to quite we And frankly, and and kind our point in of our kind growth time, which for the our at in think understand received well

go right So going because really closer pricing, philosophy Persio, not at and maybe But we let's is, in point answering stimulate to the in And market... to creative demand time. particular it's much do reverse. little to market on this is your our now the you're question this things don't think

is Absolutely cost products is year now, performance that also considering right. element model superior, total their -- is And of our thing other we see of the which operations. the only customers another the that

opportunity our is your is is. something the would what price be to So that competitive, that price point. to it Market adds

we stimulate that think will Now, taking downward that. don't prices up

you I fuel significant course kind of greenhouse gas a in that would a I on which market, to forward thing the this the value is units. think the value. is have how look at XXXX the have that's just time really in for typically of well. improvement Persio, we as to it referencing economy think, provisions, that look And industry alone, we That price results and that And

for your is in sneak if I a Perfect. the can sorry follow fuel your improvement that What engine for engine Cummins and up. And own and I'm economy truck?

the of point heavy think on is in generation Well, in model platform XXXX, the kind XX-liter year But of being XX that on is to the I the on improving launched time. flat X.X% not in now at -- is all this the this January the this XXXX XXXX. baseline

So when you heavy add you can developed the well, truck economy that in substantial. as as we fuel packages our X.X% as go high improved which aero is

owner that I noticed Very range positive very It's material Yes, cost anything is model. of in factor truck. and X% in or user mean and above a by their the material. the

Thanks, Great. gentlemen.

Marty no I further remarks. over I'm this would back closing to like Thank Ketelaar the to time, you. showing questions. call At turn for

Troy over for closing turn Actually, to it remarks. we will

good hope deliver on and want finish was very you customers, would thank And dealers helping and I call always certainly, really all results, these of Yes. our of your for Navistar. hey, interest support another agree. strong our I with a to us today. Well, the you for you Navistar. up employees, for to and year think It's thank year, I XXXX for look, much being very good us

in has Navistar. a cycle will a our actively away much year plans than cycle year-after-year and handle that the market managing support be preparing that As today better our optimistic in place you one been this XXXX, to company position is walk moves this. managing to ability we rationalize I is demonstrated industry. this levels cyclical and why good thing our the another have Navistar to functions. including and slower remain business, in costs our is for our to last that changing industry thinking production confident know conditions. We've And costs for is in I XXXX want downturn, ability proactively We manage during and

going we investing balance In adjusted our improve opportunity. XX% the X% The will in to EBITDA margin XX% Investor current XXXX. today X.X, and Day, sheet. the which continue We stated by simply XXXX and financial from by growth allow We're to unique represents improved to Navistar initiatives investment take goals. Navistar believe our results introduced Company these

to and Happy time and your Thanks I Year. wish Please of all holiday season additional IR the a again team any New reach a out interest for But or want questions you your wonderful follow-up. in I close, our to for before Company.

gentlemen, concludes Ladies call. you for this conference Thank and today’s participating.

You may now disconnect.