Navistar International Corporation (NAV)

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Navistar International Corporation (NAV)

F4Q09 Earnings Call

December 22, 2009 10:00 am ET

Executives

Heather Kos – Vice President, Investor Relations

Daniel C. Ustian –President and Chief Executive Officer

A. J. Cederoth – Chief Financial Officer

Jack Allen – President North America Truck

Archie Massicotte – President, Navistar Defense

Analysts

Stephen Volkmann – Jefferies & Co.

Andrew Casey – Wells Fargo Securities

Henry Kirn – UBS

Jerry Revich – Goldman Sachs

Meredith Taylor – Barclays Capital

Brian Sponheimer – Gabelli & Company

Kirk Ludtke – CRT Capital Group

[Vlad Steinberg – Partners]

Presentation

Operator

Welcome to the Navistar International Corporation fourth quarter earnings release. Today’s call is being recorded. For opening remarks and introductions I would like to turn the program over to the Vice President of Investor Relations and Financial Communications, Heather Kos. Please go ahead Ma’am.

Heather Kos

Happy Holidays everybody and thank you for joining us today for our fourth quarter Navistar call. With me today I have Daniel Ustian, Chairman, President and CEO; A.J. Cederoth, Chief Financial Officer; Jack Allen, President of North America Truck and Archie Massicotte, President of Navistar Defense.

Safe Harbor Statement: Information provided in statements contained in this presentation that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Such forward-looking statements only speak as of the date of this presentation and the company assumes no obligation to update the information included in this presentation. Such forward-looking statements include information concerning our possible, or assumed, future results of operations including descriptions of our business strategy.

These statements often include words such as believe, expect, anticipate, intend, plan, estimate or similar expressions. These statements are not guarantees of performance or results and they involve risks, uncertainties and assumptions. For a further description of these factors, see item 1A, Risk Factors, included in our Form 10-K for the year ended October 31, 2009, which was filed on December 21, 2009.

Although we believe that these forward-looking statements are based on reasonable assumptions, there are many factors that could affect our actual financial results or results of operations and could cause actual results to differ materially from those in our forward-looking statements. All future written and/or oral forward-looking statements by us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to above. Except for our ongoing obligations to disclose material information as required by the Federal Securities Laws, we do not have any obligations or intentions to release publically any revisions to any forward-looking statements to reflect events or circumstances in the future or to reflect the occurrence of unanticipated events.

Other Cautionary Notes: The financial information herein contains audited and unaudited information and has been prepared by management in good faith and based on data currently available to the company. Certain non-GAAP measures are used in this presentation to assist the reader in understanding our core manufacturing business. We believe this information is useful and relevant to assess and measure the performance of our core manufacturing business as it illustrates manufacturing performance without regard to selected historical legacy costs, i.e. our pension and other post-retirement costs. It also excludes financial services and other expenses that may not be related to the core manufacturing business. Management often uses this information to access and measure the performance of our operating segments. A reconciliation to the most appropriate GAAP number is included in the appendix of this presentation.

With that, I am going to turn it on to Dan Ustian.

Daniel Ustian

Thanks Heather. Good morning. This morning we will spend a few minutes discussing what happened in the fourth quarter and the full year of 2009. I will turn it over to A.J. and he will talk about cash and our capital structure both for the parent company and for the financial company. We would like to spend some time prepping you for what you can experience if you come and visit us on January 19 for Investor Day.

So those of you that follow us know that we have had a three pillar strategy for quite some time now and our goal was to be a $15 billion company at 415,000 units for the industry. We also said we needed to be profitable at all points in the cycle and certainly 2009 was a point on that as low as we have ever experienced. It was 180,000 units in our fiscal year.

If you will look at slide 5 then it shows what our results were given the difficult times we were in. We had guidance in September on our third quarter call of a range of EPS of $2.55 to $2.85 and as you can see, results were slightly above that. We also said we would have some restructuring on a positive note and kept within $4.95 to $5.25 and I think we ended up at $5.05. We also have been mentioning all year long that especially in our Canadian operations we may have some restructuring and we added $0.59 to that. Let’s clarify what that is. This was not closing our Chatham operation. We were trying to decide for several months whether we should idle it or close it and we have chosen to idle it at this point. If we ever do close it there would be another restructuring action but for now we have idled it.

We also had cash far in exceedance of our guidance and A.J. will talk about that. It was above $1 billion so a strong finish to 2009. If you look at slide six, this is that chart I talked about earlier about the three pillar chart. Our goal at 415,000 industry to have manufacturing segment profits of $1.6 billion. Of course it scales down with volume and you can see that dark line illustrating that at the levels of industry volume for 2009 we would have somewhere around $400 million of segment profit and as we spoke earlier that was $700 million so we substantially exceeded that line. There is more work to do of course.

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