NAV Navistar International Corporation

Management Discussion

• Our sales and revenues, net, are principally generated via sales of products and services. Sales and revenues, net in our Consolidated Statements of Operations, by reporting segment were as follows:
• In the second quarter and first half of 2019, our Truck segment net sales increased by $592 million and $1,138 million, or 35% and 39%, respectively. The increase is primarily due to higher volumes in our Core markets, an increase in sales of GM-branded units manufactured for GM, an increase in Mexico sales and pricing, partially offset by the impact of the sale of a majority interest in Navistar Defense and a decrease in export sales. In the second quarter of 2019, chargeouts from our Core markets increased by 35% compared to the second quarter of 2018. In the first half of 2019, chargeouts from our Core markets increased by 42% compared to the first half of 2018.
• In the second quarter and first half of 2019, our Parts segment net sales decreased by $22 million and $42 million, respectively, or 4% for both periods. The decrease is primarily due to the impact of the new revenue standard as we are now an agent in certain direct shipment transactions that are recorded on a net basis and due to certain elements of core component transactions that are no longer recognized within revenue and lower BDP sales, partially offset by higher sales in our North American markets.