Navistar International (NAV) 4 Jun 202020 Q2 Earnings call transcript

Ladies and gentlemen, welcome to the Navistar International Corporation second quarter 2020 earnings conference call. All participant lines will remain muted until the question and answer session. At this time, I’d like to turn the call over to Marty Ketelaar, Vice President of Investor Relations and Communications to begin the call. Please go ahead.

Good morning everyone and thank you for joining us for Navistar’s second quarter 2020 earnings conference call. the period of ended discuss for International will fiscal the April we financial Navistar performance Corporation Today XX, XXXX. are Walter Vice Officer. today Chief Executive Vice Officer; me Troy Chief Chairman, Lisboa, our With Operating and President and Executive Persio Officer; and Borst, President Executive President our Chief Financial Clarke, and prepared our questions concluding we’ll After from participants. take remarks,

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

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

for thanks Okay, thanks morning us. Marty. Good joining and

economy phase. and brief time due so understand the middle wind lot our moving at a QX to We the changes adapt played very during try to many Like allow the quarter. sections unique next nature It’s cover the the for we’ve adequate months economy the worked have pandemic Unfortunately, to of down insight reopening as the trucking of look our the recovery into extend remainder phase QX appropriate. safe, COVID provide which will will been fiscal keep with will to we to team the out and the stay-at-home a our questions. a quarter few the of hard crisis. The busy year We of forward through into the today phase, the businesses, to keep your into industry comments to the with the of ending more our of next. and

I take and subject and backlog, sales the alliance. chain, actions this will and manufacturing truck of and parts orders, Let’s pieces. in and dealer network, supply cash the Traton conservation the comment Navistar X.X, and the finally on cancellations

over XXXX. less in that down We order second replacement with April. per quarter, strong the dropped year due than said February, demand you the were the in in Class X,XXX QX intake orders orders week X of First, already first. throughout would to and month were deliveries to Canada better levels industry our industry second first strengthen the previously would to half than the in orders. per X,XXX then averaged for remind U.S. the week month I around of the

in drop private leasing sudden segments. general With off their truck and As fell. as light new excess the needs of in companies trucking has demand. rental especially This true declined reassessed dropped rates fell freight, fleet freight demand the quarter, in in capacity, and been utilization the orders

not units order Class the need or well, the Earlier Some seen a order have our in we cleaned for year, delayed, about and the incurred re-timed been April, of of had as we have X XXX large up deals pushed X.X% in backlog. pipeline In the we off. cancellations adjustments. board, handful so

share ended of QX. an in truck a orders. from the quarter environment order end low of down units, backlog we with progressed of overall over We improved XX,XXX XX% industry X albeit X Our the orders through about quarter, the of through as firm Class

managing industry. spot with Freight modest economy rates and to schedules are across that truck continue adjust filled We with improvements. new still slots. across build and fewer leading but utilization. of XX% volumes QX to pricing, and coming and indicator used of order today’s It’s delivered backlog. truck XX down off orders, QX of through a year. increase down provide a fleet forecast Demand rates refrigerated are is line increase lower at fill new weeks the volumes being of to Used over for will trucks Used Plant the over order year which demand, backlog precise plant for reopening production represents the are drive-in, even to workable with continues. flatbed orders expect with trucks increase is the to starting as a the early bottoms their the to year, improved we enter we too expect remainder XXXX rate, are

prices well. improves, will demand As as

view could but that of the recovery. the on course the indicates in this year, depends current be the nature calendar Our of fourth of quarter

operations plants to keeping also local of plants out in moderately Turning effective the protocols exceed or authority guidelines. pandemic government in This producing. industry, ability located an were healthcare to with particularly plants were Keeping This due during by stay-at-home we Several suppliers. was true keep as protocols our successful suppliers safety The centers. and the our impacted them distribution and of coronavirus working Mexico. manufacturing, to had were COVID to operating essential plants meet quarter. with our our to directly developing open the required our the requirements. the run We required required curtail and implemented or

the three track so and More the XX our at shortages of we came half industry on engines in The lost were until returning week the of the XXXX, cranked provides closed. through the the the engage in about lost largely lost remaining and and we our were way it Fortunately, disruptions that some Springfield again. days for processes worked to up plant due assembly second cutaway in March implemented across May with base U.S. where G-van war and to as Class requirements production were supply XX production developed procedures days the suspension and the work for Mexico, days of here from stay-at-home cabs than experienced quarter. X/X GM plant of to encountered in plant plants the and later not issues We than trucks we during room suppliers our the

ramp over the are suppliers full down as the production few we weeks issues. we through will up Some supply to and still remaining these next of work

in production of Market Let’s talk deliveries and about the quarter. share. improve April year, The sequentially in charge-outs is impacted from did market truck it lower year share QX. loss days yet over

is and market March and heavy share other the quarter and primarily [Indiscernible] in in leasing large are share call, up the fleets. the bus on to noted share it and medium is fall-off up year-to-date. service As from the down business and due segment rental both

are working is days slightly above which their manage help lots. dealers assisting Company dealer down the the our range. XXX quarter, inventories the through trailing X% in represents normal the them to circumstances, with of the on at end through rate, about these which at them trucks working and We’re sales

payments six and which for free International to vehicle Cares International a worry-free for limited launched features we time quarter, months, the service access During coverage. no XXX,

goods safely We meals, so deliver all of up that our provide protective teamed can makes, personal with to to they also dealers services. and equipment and coupons truck drivers essential

as repair addition, road the Fewer connection of Parts on rates. rental the number quarter our of driven have parts means indicates most in line top were sales a X school with or up On-command XX%. over leasing focused buses deterioration the general that, trucks little the to in for are X%. the In dealers segments with no schools have down closed. on fewer industry haulers in of is miles data at sales. down remained On freight time and idle

demand we a increase, to channel sales as more this number The plans took quarter to parts As Walter trucks with the cash. second can provide parts in manufacturing returning billion good channel but reduce year, traction. could resulting for conserve and as of was imagine, but continue. they current managing was you with rejected. actions don’t comments, fleet the gaining decided with quarter. The process. we ecommerce for necessary levels. the last normal our the been offered will that the you the remains proceed liquidity we X.X. On is returns. news of to public I discussions is increases frankly we more utilization $X.X his an of resources position Traton, actions say share the cash, road board the not table. discussions, early on to company It assure has have is regards shares a the endure These remaining profitable conduct Navistar is in know, has nor the to these slowed to The COVID for the Navistar offer growth the What forum. pandemic offer accepted of Discussions the drive, ended sales more ensure we and enhance will in crisis cash, This that and acquire With public, but they details miles use $XX will not own. sales, liquidity as introduced and can we on in to story on costs,

ending, even With many a orders phase the recovery begun. swoosh. speculation is or and There a of a as has the economy the are being references stay-at-home a and U, V, the the W, shape opening recovery on

modeled of our modify We becomes the scenarios have accordingly clearer. these the recovery as and will nature plans

by gradually, recovery the I return. economy year. then requires increasing of think the trucks the will recovery and will The balance throughout consumer out The trucking, momentum and fleet is gains the utilization. driven starts consumption

return if will will trucks in fallen but available, the in developed year. It and treatment fourth recovery think In not COVID delivered a I could as XXXX or XXXX is or year pace the the off will but have quarter then becomes summary, effective be recovery be quicken. levels, better may improve of strengthen to an XXXX. to XXXX orders and proceeds. modestly the vaccine improve for orders

and Our plants are workable running have a backlog. we

taken the we’re down and assuring driven actions costs proceed projects We’ve are them. managing lower X.X. are working and with we of and to dealers the to Parts while sales through cash resources to support have through lower Navistar our with and Our this year. will increase balance alliance the miles

you it over walk turn through to me the to Let financials. Walter

times, Thanks these unprecedented equipped well Troy. are is challenges. to Yes, handle these but Navistar

second flow operations. few let comments please the me about our cash Before liquidity in financial our quarter earnings, make activities services position, our quarter, discussing first important a and

quarter We a liquidity our billion. position. with with the manufacturing $X.X start cash ended Let’s of strong second with balance XXXX

bolster to steps liquidity several During the took quarter, our position. we

April senior First with debt million secured in maturing operations of offering for provides November in notes liquidity our foreseeable we have term XXXX. scenarios, of due $XXX under the financing XXXX. near this in activities, our issuance we future comes the reasonable and loan manufacturing to operating sufficient until term believe completed maturities don’t significant We

April Second include: via technology of without non-represented XX% by implemented tax provisions conserve three, significantly operating XX%. of on payments over actions to XX% million year this deferring actions, of contributions CARES information series plans. Actions a and pension salaries postponing U.S.-based announced employer salaried capital $XXX projects; million and expenditures cash Act; jeopardizing to the in that we payroll one, also of on deferring spending two, of we $XXX strategic our and

some in to cash the turn let’s important Next, quarter. drivers of flow the free

the is capital. working during the of key One shutdown drivers

our an and operations dealers facilities production job and during great a our the customers distribution pandemic. chain centers our working As doing keep to business, operating is supply serve team to our essential COVID with

a in As albeit Troy capital plant, operating, at run volumes. we working Nevertheless, This capital due is these model. been our successful lower plants call deterioration moderately volumes. Springfield have lower than we experienced what we negative production at keeping to other a because our mentioned, in have we working

production more results through prior of This cash generate of the When to operations. produced how the capital. in prior occurs lower first causing units tend this shortly accounts inflow or we’ve coronavirus explain days this exceed and we factor Manufacturing to impact period. working vehicle volumes. period spread, we prior financial as me quarter; production receivables however, experience This this unwind an supply from appropriately production lower please to given the the earnings March also that let Historically, payables is causes after the this calls, of operations associated current late briefly in and in produced. pay the see down compared While with on sell, fourth are it the the we impact phenomenon disruptions experienced from the materially higher lower chain our the April quarter works. in a more from volumes, typically services they discussed volumes

result, use of impact total. worked payable consolidated our impact were approximately inventories and a million continued continued As trade chain approximately factories trade by ramping effectively our coronavirus accounts in $XXX as suppliers. of to in comes operations receivables quarter to as The payables the our the fell online. net we back million payable lower to May. the $XXX cash in inflows second production net Offsetting accounts we for honor as up supply the are gradually Today

of working capital increases, a production as and be source expect cash. re-wind As we’d to well

EGR MaxForce of interest expenditures, in the outflows engine payments, and $XX during included incentive the of compensation million the settlement payments. million $XX annual legal cash million Additional $XX to announced capital fund U.S., previously quarter

assets me to Finally, liquidity excess either and manufacturing advance loans Financial a capitalized operations. through low on use our of in and are to to payable share form of some liquidate. trade balances. the through during funding financial Typically periods increase history of From standards services operations, strong downturns. operations the as thoughts time, or volumes underwriting well lower in services inherently please liquidity services reduction operations financial managing the operations a let time leverage with these

overall from facilities times and increased at the equity quarter, times manufacturing by the to end used million second increased improved only leverage financial financial inventories. to manufacturing the liquidity by leverage During to of April. January X.X total slightly services The million, debt loans end principally loans of truck services increased $XXX via from increased secured as $XXX to X.X at

in Our NFC government operational Act. taken of funding have U.S. CARES dealer has body opportunities experienced planning remained and floor has dealers and and wholesale for under fully Mexico May the rating its for the advantage several no offers the owners securitization. by extended its successfully dealer credit a NFC $XXX credit on and losses to maintaining while date. million year notes Moreover, funding maturity of in capacity triple-A the our variable

options Bank retail Montreal, with and side, the BMO On provide partner to Canada. the customers U.S. or for in of we financing

a to also BMO sharing generally total agreement first up well. loss of dealers in financed BMO. NFC XX% pandemic, remains to the of wholesale holidays a provides authority. have given retail Navistar’s the the good, the financing we loss Here ranges In the some Overall, have takes loss regulatory from of to as portfolio of to with by amount but BMO for quality generally our one-third two-thirds as while certain Mexico, or Mexico’s financing XX% losses. provided proportion Canada. banking we customers required provides extended terms

the March but of our as beginning with review let’s at late in impact Now the quarter the plans our results. were line weakened in and Results April intensified. of the coronavirus

quarter SG&A last resulted the was year due from coronavirus, last second the of parts Gross sequentially industry truck to costs year-over-year. fell one-time after volumes. and $XX prior and costs, Structural engineering for both million million. and $XXX included the MaxForce engine year charge down XX%. and in Second in quarter units, lower impact and revenues XX.X%, $X.X The the headwinds including structural charge-outs to XX% billion, this year, charge, million, which down EGR $XXX lower fell core XX,XXX margin were legal were from a settlement. excluding Even expenses, down

share, to other notes second senior to repayments to to the expense million loss of secured interest employee balance advertising experience a contractor in expenses, year. prior SG&A million, per or or increase Over a reflecting quarters, for well in new we we expense weeks, In and $X.XX savings of due the information April. expect share reduced the the million the diluted total, net Interest expenses issuance $XX project declined the subsequent to $X.XX quarter work should reduced loss as incurred manufacturing $XX debt in compared $XX in In as XXXX. of diluted of spend, lower marketing per year, we technology events. XX% continue and from

Adjusted the on items quarter. the in basis. was adjusted second excluding pre-tax items $XX QX after an $XX on in million net one-time Excluding was a EBITDA loss one-time after-tax basis, million

worldwide as to $XX segment Truck year-over-year fell loss the also incurred results, lower and to segment XX% weaker coronavirus to a and negatively sales by the Moving million. volumes The declined industry less of segment bus impacted result and due billion $X.X the utilization. conditions. truck service a truck of parts is industry in being repairs with

parts segment XX% by and exchange in revenues of decreased to weaker rate million result, volumes that led resulting The certain unfavorable $XX sales assets. million also was $XX operations conditions $XXX a global a to and segment impacted lower movements, impair to The As in of million. $XXX was took charge segment million. foreign Brazil profit

would item, average one-time were this truck The segment $XX been due volumes results year-over-year receivable was impacted to balances. services Lower also Excluding near results million. lower operations. have breakeven. revenues profit financial were the and weaker $XX originations million and Segment

questions, want gradual low as the open states to we from albeit sequential base. the ease, stay-at-home a June, many May, of our of to we Before which should have the recovery, I month share some forward. lead a restrictions third begun quarter, call orders. to your opened states’ thoughts move first to In amidst

continues modeled to We uncertain. scenarios, rapidly various have remain recovery the outcomes however to evolve, environment current causing

withholding As several debt with financial strong company manufacturing summary, a result, history. near through XXXX In are we term maintains and crisis Navistar its this liquidity weathered industry The storms throughout managing we maturities. guidance. are and no has

taking is Q&A. back X.X. With to margins is emerge this the our Operator right that, the will well. turn I’ll grow team to it to begin the as under situation to stronger Navistar from believe navigate term, goals and confident management preserve we Navistar successfully Our Longer we actions

first Your with instructions] Stephen comes question [Operator Volkmann Jefferies. from

line Your open. is

guys. good Great, morning

Good morning Stephen.

even back It I’m continue a them pace in they are some this those? just top-down helpful, but temporary. at I of do about point. some conservation permanent know. thanks. will like Maybe of come cost are around don’t question assuming would them how would cash and throughout nature be year, more any contractual, savings those of of seems They actions. think may somewhat the be about we that Maybe Then commentary any most fiscal

total. indicated approximately Sure. that’s being Good deferral it’s cash XXXX. conservation morning of we’ve million. contributions are Stephen our remarks, until in that, taken, that we pieces of in and pension are as else, The everybody three Walter. million biggest $XXX actions Those $XXX The deferred - out

We in the support there D.C. from are the next phase watching pension is as for relief stimulus of Washington possibility the additional in

The but do $XX re-timed expenditures, continue intend we’ve XX% years. on those in those We keep about track, relates with piece fiscal to will future in second was occur just we those them projects capital way expenditures a projects, largely million. a that that or reduction to could that

salaried that third salaries was to of workforce. related deferral The piece, for non-represented our

to expect are there That we’ve of to relates taken. the that by just XXXX. expense that, pay the We during timing some XX Within conservation actions year. cash of the course of those March the out reductions

also and number incentive will events traveling anticipate also compensation this mentioned, so on well work. late lower we marketing reduced due results, until year to the have have hours things less, our that there we’ve been of contractors reduced. been impact some the like and to As as be we and I

and of through rate result We pre actions headcount. salaried other the by headcount of We efficiencies the actions had than additional We’d necessary. well. and line in back take as our pandemic and course to some situation to year, as reductions, have actions taken savings we’ll December continue these and of expense in will see already prepared XX% take course we be we���ll going actions forward taken this planned to as down monitor more a

is Stephen, Troy. this

very the this the we’re the allows type revenue that with the further are pattern that’s scenarios. doing can spend key. various expense suits of modeled There think we we’re Navistar track and say so we and to very don’t well things want I to I remain us margin. on recovery we or but on, our guessing, X.X to we’ve scenarios accelerate think to and benefits things that of improve the money want much recovery

there to we’re permanent, portend like are familiar very that the temporary take On said, hand, have and turn you we scenarios into actions those with. and other them are these,

take those actions As those as circumstances may appropriate. unfold, we’ll

and change quick Great, any parts that there then the scope etc.? or the Traton a pace of has you’re on with projects terms in been follow-up, the sourcing working commonality, in of

accelerate like continue activities them can. Those and where we we’d to

Yes, those we’d accelerate track, still Walter are [indiscernible]. to on benefits and into love them and those pull indicated, as

Leiker next Your comes Baird. with question from David

line open. Your is

the Good perhaps to what the on for four morning, this Thank you’re is delivery you’re is first orders question weeks, and versus hauling Erin categories what it on you in freight terms Walkenbach color of just seeing any you. My on production share [ph] five that. seeing color can on in of last, David. pace call any and like vehicles,

The we orders. industry also see basically the see low, you of This number that more factors road, miles we the - time I being starting is tell is the very economy as to the positive point trucks were and on were would more at being more driven, a quarter ended reopening, where orders for in ourselves. Since low I for Troy. both point, and startlingly think,

and determining that the be how traditionally the the particular continue to time order some the time gives trucks trucking reopen, to for excess for economy an used to - The We it’s in pricing largely Again, intelligence delivery enter this of those improving prior some indication orders that an the improve then and Again, then see improves, looking through, expect, and things customers improved, we that as where whatever guardedly kind are basis and of last in to way time. proceeds of economy several happening the have the will of a recovery rates nominally, us capacity the of continue comment recover. because that up trucks. starting that will we the are end talking line on to have We things we written. hopeful will at point and because will has says of if has in that as all well. to a would orders confidence a spot they improve the think use what got in is people in lot used think are weeks It year. the time. has they many truck to in marginally, that market to impact in I continue with off modestly that of our orders Watched truck the existed my were, some again low have form the got frame, have it start I have the we of they fall and they coming you’d again bottom period faster be its optimistic of - base, such industry year, between Again, recovery the pandemic that they April are they’ll orders the as like appears is for used now that there work the be happened. move lot adjective pricing, than is

you. point. think conservation for that, obviously long just your balance can especially you future? towards if help cash Thank that do R&D your this through at then and your your you term penchant spending with investments for wondering Okay, us philosophy How the secondly, given

strategy. and to, actions--you hand-in-hand. projects we strategy performance day. alluded Walter. our move discussed improve way continue We capex, to those on that need X.X, future term do forward our our they’re really thing to The to mentioned with the want Again know, a we changed. timing, and want Troy that I back Navistar - We in follow could impact company we’ve important those for the key as we’re also take believe cash on where continue that’s to while The to being has two the for find is to obviously in financial we planning actions it’s shareholders. take investor Erin, to to projects to the to Yes our go able continue the tried as because demand, but short conserve right

my for questions. Thanks taking Great.

This is Persio.

priorities year, much try X.X, we Just complementing up initiatives as strategic said, key as as I what in that we we Navistar X% can which over even to accelerate you is have set the our quarter in the company. look the to continue is at R&D pull in think and Walter we a development testament year specifically, ahead if

Your next question from JP Ann with comes Duignan Morgan.

Your line open. is

everybody, good Duignan. Hi, morning it’s Ann

Ann, morning. Hey good

fit recession. I maybe analysis going we’re case through scenario be XX,XXX per Maybe above downside little bit you could just breakeven could your the units, versus for XX,XXX breakeven. was on about--you which recession know scenario talk done you the comment times, the Morning. were but analysts in QX flawed doesn’t is should QX an or volumes a or had at meeting, normal a where extraordinary a you know, theoretically just roughly such units quarter, XX,XXX anomaly that fiscal it

If just you helpful. could be address that’d that,

costs in been can Sure we’d crept some time breakeven inefficiencies, in we we to take many plants able many there continue by XX,XXX cost part at your big keep stand supply additional there. that then did of part quarter mention, reduce another of to at to very things. for take what additional indicated We’ve To some It’s One, production units, investor proud we of but what Walter. Ann, Obviously breakeven. normal earlier, of that point, in I’ll that that manufacturing I impacted have anomaly. guess, are some September as and our back during our quarter, and to but have for in we’re our resulted reduction the Steve’s below track an We’ve for would that’s and difficult shared obviously line questions more been a day, companies. respect be with the volumes disruptions continuing couple down. had a actions team wouldn’t we had second running recently will breakeven with it’s our permanent, calculation. a here look

had of year, a we tends typical looked at stronger. Thirdly, in I course look a breakeven the over as the volumes, be that mention at that to that look at little the and we as second half the would just we and year

can we - of a agree here our over second wasn’t the quarter the the with cycle, I well. an it probably through unusual have holidays the parts number I for breakeven all obviously some The but into third think and first industries, was quarter, of days we to production objective, is the time to that continues be all shutdown be as and that we events. and breakeven here know surely lost quarter unforeseen all

a so breakeven you’d the should seasonal to from half back be on basis, what your take we comments? expect is that normal above in Okay,

comments profitability be breakeven you the cycle, haven’t points the and should think are for this here point. our that second looking still at provided of I we guidance at in in all or year take volumes from half we to the

Fair point, the-- and I appreciate

of will various It of scenarios that of a which year. manifest be the running the in function second we’re the half themselves

to volumes to service? light heavy, your Which just you exactly, recover of the about to Class expect school Thank between you. business, different Class X you and bus, of X/X, of Okay. expect faster, severe those would could up, which talk comments markets Then or follow production X would just you in those segments Class lag?

Hey Ann, this Persio. is

districts with buses. a of purchasing really the Let time this the school of School bus, is the year be start where me would lot school bus.

Severe few the the now, reductions getting activity, important how is next as from not thing. of TEMs that positive next we receive more been of the OEMs of will so get so reduced, half, second some pretty but business service one backlogs quarter see they few with year, is the now government it’s impacted of we we manufacturing has some directly orders understand probably the will for equipment end utilities, so be segments room there this that in with that protected the the seen is we We’ve which but in but truck be out general we us in are We used is third supported. haven’t the the closer they a that to steady. being the construction in are are months the in year the long because is What to production, months. pipeline, we noticing monitor for seen we’ll come that that terms

rental to in at that heavy leasing of the We an that this freight, time. really general area are point we know reopening need really market. depressed On that’s the and the side, see

stock residual values, leasing all still one that As segments but That come--will and positive a used the recover values a time. a truck will the have medium leasing side leasing we of us, entire on little medium the of for rental the is although Troy very That from On OEM, but to a is more rental material XX% new fulfill rental and rental any more move this We bit for down. of expectation sales, in de-fleeting is construction rental the is units like buying of where lease I point from requirements news the the duty in the instead and that segment, that see contract truck a that think dragged of this as orders leasing, that’s duty, the at restarts, mix little bit alluded, us recovery monitor medium stability, companies and the haven’t housing an to really retail have economy market, closely. duty we one their of we and start to leasing is almost impacting still of constrained. segment on seen

there interests Appreciate it it. leave of time. the I’ll in

Your next Boeschen Raymond James. with question comes from Felix

open. is line Your

you Diamond everybody. this then Hey, to tracked be revenue segment there a and any Is for way number, may way down share we parts states how quarter. XX% parts morning. by in Blue could a much Thanks seeing for impacted talk hoping so bit, or what as into disaggregate or about the reopen? was May could how I the month the you’re time,

that parts. well Okay, think I talk we about can

business trough calendar good so us of industry at if this the from If at at and point recovery were we the quarter, point see where and the let’s our are fact we the significantly think of for dropped on market, the where quarter pandemic. parts, right, we and and of XX% recover, latter the the you pre-pandemic, we have dealers not part active the indicate in the contraction We at are a time understand the to part would the full in March that--I the believe trough. they time past are middle news not performance, that at data, of started that were you is parts the even a and We pandemic. saw that starting look April to the so it’s the not seeing generating vehicles in evolution this the full rates April running parts were XXX% dropping but as with their of April. The in the is of for of daily that was of really MacKay look of us. beginning of that in right reduce general not we point daily we it month post managing in quarter, not inventories, therefore are consuming rates May, we

May think recovery. is I

We more that to Blue if specifically? on economy want as positive that I hope Walter, side, that are you and we know, trends the on comment reopens. Diamond seeing don’t continues

the well. of we’ve Diamond be continues to talking as Blue elements Yes, prior on that been about one calls

the As revenues as as a here, of surely approximating have annualized days they’re at revenues BDP basis. I take of this look I’d COVID think these an in decline million well. these where year the Persio but quarter big around $XXX indicated a days, probably piece year over are particular on to

business some maybe the in over gives see input. We so directional that you there that run-up time, continue to

capex an or Yes, simply you. or early on deferrals. if at some point. bit Antonio the that’s kind you rollout follow-up, to as talked update too have it’s facility, at if super this I’m impacted your tell been all a Maybe of about the curious helpful. had if Thank has of you San that a construction

make that - announcements regard. to really have we Yes, in look no

thing critically of the make way investments guidance, have projects make the track, that years. the quarter, on actions, we we’re next point the the the to us. fact we’re of through the intend the you kind to handful out conservation with still improvements Walter, capital we during years three business works, of timing you did of return and maybe eventually of stay X.X good it volume just Two, right, those, about, track. on then to to investments, the those this everybody for to the to so on are the said, over market think to have can handful in which of a in over that it, a about dedicated the we right there and cash actions make is important happen. as plays just the exact that that those call, that to the are gets the describe course and out actions time. the about we Navistar actions, changed, these major that changing Our these the function see to we on recovery the purpose investments plans and is any that talk we’re on very in those in with gets was other want at thoughtful so are don’t the The and announcements the as try those, those action the to and critical progress how kind pieces, to of that we we highlight it of keep dozens think but that important any a becomes is against are those thrown top-up of I third against next the providing of execution so of that not When we both product and is ones nature being point how from actions programs timing operational the economy make, think within that I’d really the manner real really plays part is that

We’re still confident manner able such that to a be it will that we’ll deliver. in play out

the appreciate you, Thank color.

with Your Revich Jerry next question from Goldman comes Sachs.

line Your is open.

I’m moment to morning Good we hi. chain. expand your made include if can everyone. comment ago Yes, the wondering a just you Troy, supply

COVID the pandemic, as talk folks course what all, supply how suppliers all of chain talking environment? the we’ve years is that the the are secondary just Can folks or we we you As has through down at over business the for strategy just look you a dealing with at to look are line, source? we about like where of over at a part the two more different if you of strategy this at and at the point three the what learned evolved, course looks

great question. Jerry, Yes

take take second. Persio the that the I’ll first pieces. it to I Let to then want me two for piece, in toss

we know, industries first The a yet, not that’s assessing learned the asking those could to what the what pandemic, for alternatives implications in more strategy? going and everybody take exact we us related something have to That’s here be we’ve few there certainly questions from our that supply piece are what is weeks might finished our finish chain consider determining that going industry forward. but and - experienced think it I of type and you are through

supply stock particular in right a something It’s or move through it period time. a in associated short are know, decisions, allocation incremental many of change that portfolio, your new isn’t more As with programs. you - production chain you you which like product of direction

we an give We it kind be I that know might of in involved and the I fact are exact analysis interest. that today and it is are in in answer ourselves we doing doesn’t think what but those we’re of asking the anticipated middle part of and doing, to questions. of answer, you

up charge-out the and more and however, through as pandemic into importantly the we’re back risks presents that trying these managing immediately thing, The running to and get mode, is second plants probably with to supply Persio a because those are--those are we Really few well. I’d pleased make to effort and ask that comments. risks base, the risks here, to the as us direct have

it, production which problem base what’s is Troy. break, where with to A that production, We manage your we new. to us than know the when as suppliers just doing on have support of it’s the process. we with have can we where assess a a perspective, from layers. and analytics can we to flow. is the nothing several so that how for X,XXX taught post-pandemic, pre-pandemic company process in our quadrants around exposure. for we the be transparent as the have action reality, process a but are of supply a all have in standpoint, for indicators. suppliers big from we we understanding of give X,XXX of a Troy us suppliers, provides really suppliers and to good that in multiple to could we you we leading hands pretty happen XX alluded, our where today active financial a in don’t matrix provide so them see layers can just plop we direct instance, lower doubled we the there is Actually, risk, But take providing them, chain, that exactly you and more XX to add the to we notice we total typically suppliers. you We risk XX,XXX take compromise But going chain be all that react chain top see the risk on, today what support, at just In proactive lot a are is what if to supply and have you wait and pretty place, the suppliers, are we of Sure suppliers parts are

within assessment the appreciate early, supply, natural by but appreciate color. in like that to, would least seems agree dual supply. you companies early that the move would I others-- region towards be coming some Really would it’s inclination It are areas at especially that with to some be those conclusions some the

tell can’t you. I

of and Today, if supply that capital working strategy company. biggest smart that the is, the I one where the so of be to take is I on analytics have power to use sourcing that, more in even we in the you the the To and are assessment and powerful is dual think the duplications implemented. ago, just you based past analytics decisions the your the years the sources thorough all the they cases though, that consumes is one you most understand us we the dual everything chain, there the source, the that take more where you a strong our think will have strategy. really things define would I have forcing it tools the so sourcing tooling dual but you think point, to in was will protect XX but more pandemic analytics like

a content XX% a a ideal, lot of there assembly be is and you’re ships currently closer to ship we’re we of the the think suppliers, dual X now comes point, okay couple suppliers. question, of I to and actually work hour more to Tier Tier comes and base involved. got that strategies the up a relates that sourcing look, operations, involved to supply facility, referencing, the to X nobody is that--you America I there. in within That fortunately where of can as X more have a add the little seen lot that’s little of into into think we right which from lets boatload North to supply in also Tier us is a sea that, which we’re issues, of done or kind to references sea moving Jerry, in--look, have use analysis if can X done where that relocating containers, I it the Look, sea a your say a issue is supply be just would us, X thing a at real and for is makes containers thing drive to from because a the that It’s there Asia it. you’ve seem chain a Tier for look base, tools look final such complex something and this as of fairly Asia the but would single that container, straightforward know, Tier we North The America. Persio or to

We’re analyses. making those

Thank insights. appreciate you. I the

comes question Fargo next Your from Wells Andy Securities. Casey with

open. is line Your

XX-Q, in related the to interpret that impacts of Can more COVID down QX. Good I comment? its us look in about there Escobedo comment wondering How at was morning shut be help that? Is expected know, there April? held looked to Thanks lot. should you I a potentially if--you in a everybody. was that being though most own even May, at we it significant

continues week, here what impact Andy, the supply that Mexico, down Springfield and particular some we it’s some already, hit have--we and The have Walter. as It there, the down facility. in pandemic Escobedo It’s facility from days. of have does did to online course we’ve as relate but up hasn’t expect up to to the May supply, But well did add but in our seen this back week wait rate X next. started Escobedo, should it some week there we Springfield at meantime. back and in for think our line and after Springfield in--I disruptions pandemic is post come we Escobedo next we’re largely coming both for as in yet facilities--I running

we are, time. in are as and in this Tulsa so well at Yes, we point

plant, Persio. our Tulsa, yes. bus Thanks, And

about Okay, May? XX% in Then are you prepared the seen are if to into falling you have even year still those or used remarks, year. Could down thank any prices stabilization, discuss you. sequentially you indicated

Andy. is Persio, This

inflection. an seen haven’t We

basis, to reference here. last which that a the but significantly the weeks, of some prices are think XX% couple on seeing level year-over-year I is there’s stabilization, still you’re lower the

least at traffic little We on more are online seeing the a bit applications.

in I seeing applications. think increase an we’re

kind the deliveries used and today for inventory biggest the for in basically pandemic point trades credit, Inventories are but time. know, to I I with as reduced well. that hit, used up, we moderate truck get used really that got were into and the the through truck credit they as business of they the challenge is of--you coming of new with got trades this think still think the at lending have the for that new, reduced want trucks amount customers availability because trucks are

for the have see price us indicated. recovery an recoveries going opportunity term. to some year. the forecast half, as second there We’re truck be We This as the changing, in the is monitoring the is used well, as a materially don’t of Troy but end by short happens in to

a and the we interesting market back you into I here those we buy phenomenon unemployment can come truck. with applications it’s a week to there, issue think days an truck positive. a egg a there’s the these handful it’s trucks is high that a driven previously, than see that number see loan, starting have people anything, increase, I Persio know, thing think find if Since in rate, rates better doing I’ll driving have not trying to phenomenon spot and - chicken folks a so of so this it’s CDLs credit and notes, an but interesting a of of are and kind we

probably I truck prices. think a stabilization used the to of precursor it’s

Okay, very much. you thank

with Your O’Dea next question Vertical comes from Research. Joe

line is Your open.

morning. good Hi,

volumes go perspective, is charge-out not experience? according a over what at? that free kind flow high you to manufacturing type looking of things the of related what what on level of kind Just a of be you of means of would up sense plan, scenario, course assuming modest anticipating you’re quarter, picking you outflow capital drag, is the to In that any the what cash give if production can that from - that type know, charge-out just scenario? Is working

Walter. It’s

and because times, by and May wouldn’t June couple as in we demand X, but seen February. on will providing a been the the come we daresay to expect in impacted in QX indicated had July and quarter we’ve had than As not in seen I months prior we as guidance has indicated, our up we’re began really production, volumes, as QX be lower fiscal volumes COVID we back to which any

working we the about function some the rewind year, some balance point how as capital demand but improves, the You’re unwind of we’ll to the to see a of again cash working At right of we that a be have over plays is would in that expect out. saw or that but volumes. capital, of source QX

continue end that little pretty key good quarter expect are our billion cash the year our borrowing excess going year the always strong balances will the well, the dollars, the with month help I’m we’re number billion when the to to, is the next bolstered very of is a a $X.X here manage spending with we levels, think looked drop to capital quarter we ended over we cash which a a has ago, and that month that of to as it’s to in of kind levels, makes not I we saying excess can and as now thing but to that business. we’ve sure Navistar programs over ago balance continue us we’re to in the in those liquidity so shape, balances well. of and those with a key X.X of did in and

then recently CEO and Troy, term as Okay, services your you X. until extended July

longer, announcement uncertainty a and timing? CEO Just will something of role your you that given succession that current is more role, not, should of hybrid and as do you environment, Chairman? about the if fluidity and the we envision think how consider Is how that extending

of to But but of be it keep at the onto board have crisis. thing announcements We April on do board felt calls provide be point that force the board you the the executing the oversight, prudent time. to week we’ll I would were largely with feel to there’s contract to make We My like do right duties appraised, the to the any the no of to subject the shareholders and ended didn’t their is was but middle sometimes communications. right agenda. it thing at were it having guys time CEO at announcements today, succession and and the appropriate don’t weekly we’ll think behalf made. We low technically we’re as remains of the then XX. a on going twice the

I turn questions. now back Troy for over the closing will further We remarks. have no for call time Clarke to

and of our and is financial for are position I the heroes to all times. of drivers well dedication and as the a in difficult partners, other in moving stepping our keeping economy of up through Navistar difficult our us America as part customers in of and thanks. very in us, really for - the works suppliers times, these vital our Navistar solid recovery. different who the thank want really dealers business that support phases Okay, during and of these team lot in

right times. right We’re take making the to plans, actions these going the we’re through

be stronger emerge and X.X, a deliver margin. revenue to will in the We of position grows and on which Navistar goals

additional the IR Again, have out interest in day. a follow-ups, you questions. thank you very for much please team for any any reach or to our If company, questions have your great and

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

You disconnect. may now