Navistar Announces Management Reorganization, Reports Second Quarter Results

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LISLE, Ill. — Navistar International Corporation (NYSE: NAV) today announced a management realignment designed to give further momentum to its strategy of great products, competitive cost and profitable growth. The company also released second quarter results and acknowledged that discussions with the U.S. Environmental Protection Agency (EPA) for its EGR-only 0.2 NOx emissions engine certification are ongoing.

Navistar reported a loss of $172 million, or $2.50 per diluted share, for the second quarter ended April 30, 2012. After pre-tax adjustments to exclude net impact of pre-existing warranty charges of $104 million related to 2010 emission standard engines, asset impairment charges of $38 million, engineering integration costs of $29 million, a charge of $10 million for non-conformance penalties, and the release of an $181 million income tax valuation allowance related to Canadian deferred tax assets, Navistar’s loss for the second quarter 2012 was $137 million, or a loss of $1.99 per diluted share.

“Certainly, our first half performance was unacceptable. It included a warranty reserve to repair early 2010 and 2011 vehicles,” said Daniel C. Ustian, Navistar chairman, president and chief executive officer. “We were also affected by speculation surrounding our engine certification for our Class 8 engine, which is why we are working tirelessly with the U.S. EPA to get resolution.”

Based on its second quarter 2012 results, the company updated its guidance for adjusted manufacturing segment profit for fiscal year ending October 31, 2012, to be between $600 million and $750 million. This equates to adjusted net income attributable to Navistar International Corporation to be between breakeven and $140 million, or $0 to $2.00 adjusted diluted earnings per share. This expectation also includes the absorption of approximately $90 million in higher post retirement health care costs.

“Going forward, we’ve identified a path for delivering strong profits in the second half of 2012,” Ustian said. “Historically, the second half is stronger across our businesses, and we expect to build on this with improved market share in North America, stronger global performance and further cost reductions across all operations. Additionally, we’re making management and operational structure changes to align our organization in a more effective manner to drive these results.”

Troy Clarke, currently president of Navistar Asia Pacific, will assume responsibility for all Navistar’s operations in the newly-created role of President, Truck and Engine, under which the Truck, Engine, Parts, Product Development and Purchasing organizations will have the opportunity to integrate and deliver the highest quality products and services. Jack Allen will become president of North America Truck and Parts, an expansion of his current role, and Engine Group President Eric Tech will expand his role to become president of Global Truck and Engine, responsible for all of our business operations outside of North America. The changes will take effect July 1, following Board approval.

“I am confident that our new management structure will lead to greater planning and execution around our integration strategy, further enabling us to deliver enterprise-wide profitability, leverage assets more effectively, streamline decision making and bring renewed energy to our team,” Ustian said.

FINANCIALS

Second Quarter Six Months

2012 2011 2012 2011

(in millions, except per share data)

Sales and revenues, net $ 3,298 $ 3,355 $ 6,350 $ 6,098

Segment Results:

Truck $ (89) $ 92 $ (130) $ 124

Engine (108) 2 (228) (6)

Parts 41 74 91 130

Manufacturing segment profit (loss)(A) $ (156) $ 168 $ (267) $ 248

Income (loss) before income taxes $ (295) $ 93 $ (516) $ 99

Net income (loss) attributable to Navistar International Corporation (172) 74 (325) 68

Diluted earnings (loss) per share attributable to Navistar International Corporation (2.50) 0.93 (4.69) 0.87

Adjusted net income (loss) attributable to Navistar International Corporation(A) (137) 102 (201) 123

Adjusted diluted earnings (loss) per share

attributable to Navistar International Corporation(A) (1.99) 1.30 (2.90) 1.59

(A) Non-GAAP measure, see SEC Regulation G Non-GAAP Reconciliation for additional information.

Consolidated net sales and revenues of $3.3 billion declined slightly in the second quarter of 2012, versus the year-ago second quarter, which reflects higher net sales in the truck segment that were more than offset by lower net sales in the engine and parts segments. In the year-ago second quarter, Navistar reported sales and revenues of $3.4 billion and net income of $74 million, or $0.93 per diluted share. Adjusted to exclude engineering integration costs and charges for pre-existing warranties, the company reported income of $102 million, or $1.30 diluted earnings per share.

For the six months ended April 30, 2012, Navistar reported a loss of $325 million, equal to $4.69 per diluted share. After adjustments to exclude the impact of the items previously discussed above, Navistar’s loss for the first half of 2012 is $201 million, equal to $2.90 per diluted share.

Truck – For the second quarter 2012, the truck segment recorded a loss of $89 million, compared with a year-ago second quarter profit of $92 million. Results included unfavorable shifts in military product mix reflective of lower military budgets, industry-wide higher commodity and fuel costs, an asset impairment charge of $28 million relating to the company’s decision to idle its Workhorse Custom Chassis business, and a charge for $24 million for certain extended warranty costs.

The segment sales increased 4 percent due to increased volumes in traditional markets and strong volume in South America. Traditional and worldwide chargeouts were up, partially offset by lower military sales and shifts in military product mix.

Engine – For the second quarter 2012, the engine segment recorded a loss of $108 million, compared with a year-ago second quarter profit of $2 million. Segment sales decreased by 6 percent due to lower sales volumes in South America and a pre-buy of pre-Euro V emissions engines in prior quarters. The segment results include $78 million in pre-existing warranty costs primarily for 2010 emission standard engines.

The engine segment also announced it received government approval for its engine joint venture with Chinese company Anhui Jianghuai Automobile Co (JAC).

Parts – For the second quarter 2012, the parts segment recorded $41 million in profit, compared with a year-ago second quarter profit of $74 million. The decrease in profitability year-over-year is driven by a decrease in military sales, a shift in military order mix and an asset impairment charge of $10 million for Uptime Parts related to the Workhorse Custom Chassis business.

Financial Services – For the second quarter 2012, the financial services segment recorded $26 million in profit, compared with a year-ago second quarter profit of $40 million. Earnings from the company’s financial services segment will continue to slowly decline as its U.S. retail loan portfolio liquidates, reflecting the U.S. retail financing now provided by GE Capital.

MANAGEMENT CHANGES

Troy Clarke assumes the newly created position of president, Truck and Engine, accountable for all Navistar operations. In his current role as president of Navistar Asia Pacific, Clarke led the development of joint ventures in China and India, and worked across regions to execute Navistar’s global growth strategy. He joined Navistar in January 2010 after a 35-year tenure at General Motors where he held numerous leadership positions, including group president of GM North America, president of GM Asia Pacific, president and managing director of GM Mexico, and vice president of manufacturing and labor relations.

Jack Allen is expanding his role as president of North America Truck to now include the Parts business. He will leverage the natural integration between Truck and Parts as well as his previous experience as Parts president. Allen is a 30-year Navistar veteran and was Engine president from 2004 – 2008, where he led major initiatives including the acquisition of Brazilian engine producer MWM Motores Diesel Ltd.

Eric Tech is expanding his role from Engine president to become president of Global Truck and Engine, responsible for all of our business operations outside of North America. Tech joined Navistar six years ago from Ford Motor Company, and he has been instrumental in creating Navistar’s Pure Power Technology business.

About Navistar

Navistar International Corporation (NYSE: NAV) is a holding company whose subsidiaries and affiliates produce International® brand commercial and military trucks, MaxxForce® brand diesel engines, IC Bus™ brand school and commercial buses, Monaco® RV brands of recreational vehicles, and Workhorse® brand chassis for motor homes and step vans. It also is a private-label designer and manufacturer of diesel engines for the pickup truck, van and SUV markets. The company also provides truck and diesel engine service parts. Another affiliate offers financing services. Additional information is available at www.Navistar.com/newsroom.