Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is designed to provide information that is supplemental to, and should be read together with, our consolidated financial statements and the accompanying notes contained in our Annual Report on Form 10-K for the year endedOctober 31, 2020 . Information in MD&A is intended to assist the reader in obtaining an understanding of (i) our consolidated financial statements, (ii) the changes in certain key items within those financial statements from year-to-year, (iii) the primary factors that contributed to those changes, (iv) any changes in known trends or uncertainties from items disclosed within the MD&A of our Annual Report on Form 10-K for the year endedOctober 31, 2020 that we are aware of and that may have a material effect on our future performance, and (v) how certain accounting principles affect our consolidated financial statements. In addition, MD&A provides information about our business segments and how the results of those segments impact our results of operations and financial condition as a whole. Operating results for interim reporting periods are not necessarily indicative of annual operating results. Executive OverviewNavistar is an international manufacturer of International® brand commercial trucks, proprietary brand diesel engines, and IC Bus® ("IC") brand school and commercial buses, as well as a provider of service parts for trucks and diesel engines. Our core business is conducted in the North American truck and parts markets, where we principally participate in theU.S. andCanada school bus and Class 6 through 8 medium and heavy truck markets (our "Core" markets). We also provide retail, wholesale, and lease financing services for our trucks and parts. Second Quarter Summary During the second quarter of 2021, we remained focused onNavistar 4.0, which is our enterprise-wide strategy with our customers at its core, supported by strategic initiatives that guide decision-making and investments. We define success as an unparalleled customer experience, mutually beneficial relationships with employees, dealers, partners, customers and suppliers, and improved financial returns. Even though the economy has begun to recover, the severity and duration of the related global economic crisis is not fully known, and the COVID-19 pandemic is expected to continue to have residual negative impacts. Volumes and demand are rebounding, although the commercial truck and bus industry continues to face disruptions within the supply chain. The supply constraints include overseas freight congestion causing extended lead times, semiconductor allocation, other raw/component material shortages and supplier staffing challenges. TheTexas storms in 2021 further exacerbated an already constrained semiconductor and resin supply chain. Furthermore, the volume rebound in automotive and commercial vehicle sales is challenging the supply base and supply chain to increase production with short notice and at high volume levels. Our cross functional response team continues to monitor these situations and address risks within our supply chain. Currently all parts distribution centers ("PDCs") are open and operational. We have prevention measures in place and transition plans for our packagers, carriers and PDCs if a situation causes us to implement our contingency plans. We expect to continue manufacturing operations at all plants as we navigate the constantly evolving situation. Our facilities are following strict safety measures to protect our employees, visitors and business operations, including increased frequency in cleaning and disinfecting, as well as hygiene and social distancing practices, among other actions, in alignment with guidance from theU.S. Centers for Disease Control ("CDC") and theWorld Health Organization ("WHO") regarding threat assessment protocols. Additionally, many of our non-production employees continue to work remotely in order to reduce the spread of COVID-19. These working conditions allow for the continuation of key business-critical operations, including financial reporting and internal controls facilitated by the appropriate digital tools. InNovember 2020 , we publicly launched our Next Gen HX Series, our first product released under ourNavistar 4.0 strategy and its Project Compass Initiative. Focused on flexible, modular design to meet customer needs, the program was developed with a mission to improve quality, commonality and margins. 47 -------------------------------------------------------------------------------- OnNovember 7, 2020 , we entered into an Agreement and Plan of Merger (the "Merger Agreement") with TRATON SE, a Societas Europaea ("Parent"), andDusk Inc. , aDelaware corporation and a wholly owned indirect subsidiary of Parent ("Merger Subsidiary"), pursuant to which Merger Subsidiary will be merged with and into the Company (the "Merger"), with the Company continuing as the surviving company in the Merger as a wholly owned indirect subsidiary of Parent (the "Surviving Corporation"). Subject to the terms and conditions set forth in the Merger Agreement, at the effective time of the Merger (the "Effective Time"), (a) each share of common stock of the Company, par value$0.10 per share ("Company Stock"), outstanding immediately prior to the Effective Time, unless otherwise provided by the Merger Agreement, shall be automatically canceled and converted into the right to receive$44.50 in cash, without interest (the "Common Merger Consideration"); (b) each share of Series D Convertible Junior Preference Stock of the Company, par value$1.00 per share ("Series D Stock"), outstanding immediately prior to the Effective Time, unless otherwise provided in the Merger Agreement, shall be automatically canceled and converted into an amount in cash, without interest, equal to the portion of the Common Merger Consideration that would have been payable in respect of such share of Series D Stock had such share of Series D Stock been converted into Company Stock pursuant to the terms of the certificate of incorporation of the Company in effect immediately prior to the Effective Time; and (c) the sole share of Series B Nonconvertible Junior Preference Stock of the Company, par value$1.00 ("Series B Stock"), issued and outstanding immediately prior to the Effective Time, shall be unaffected by the Merger and shall remain outstanding as one share of Series B Stock of theSurviving Corporation , with the same rights, powers, preferences and privileges attributable to the sole share of Series B Stock immediately prior to the Effective Time. Consummation of the Merger is subject to various closing conditions, including, (i) the adoption of the Merger Agreement by the affirmative vote of the holders of a majority of the outstanding shares of Company Stock entitled to vote on such matter at a meeting of the Company's stockholders, (ii) the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Waiting Period"), as well as certain non-U.S. regulatory approvals, and (iii) the absence of any law or order (whether temporary, preliminary or permanent) by a governmental entity that restrains or otherwise prohibits the Merger or the other transactions contemplated by the Merger Agreement. The Company's stockholders approved the adoption of the Merger Agreement onMarch 2, 2021 , and the HSR Waiting Period expired onFebruary 12, 2021 . The Merger Agreement also contains customary representations, warranties and covenants of the Company, Parent and Merger Subsidiary. The Company has also made certain covenants in the Merger Agreement, including covenants regarding the operation of the business of the Company and its subsidiaries prior to the Effective Time. InJanuary 2021 , we approved a plan to sell our facility inMelrose Park, IL (the "Melrose Park Facility") and cease all operations at theMelrose Park Facility byNovember 2021 . Due to a reduction in our overall engine manufacturing, the lack of engine manufacturing at the Melrose Park Facility, and the trucking industry's increasing interest in alternative fuel drivetrains, we believe that a property of the size of the Melrose Park Facility is not necessary for the remaining engine testing and administrative functions currently performed. In connection with the cessation of operations at the Melrose Park Facility, we expect to incur total costs of approximately$90 million , of which approximately$80 million will be incurred in 2021 while the remainder will be incurred in 2022. We expect that approximately half of the current workforce of approximately 500 employees at the Melrose Park Facility will be transferred to our other facilities. InJanuary 2021 , we also announced a collaborative arrangement with General Motors Company, andOneH2, Inc. ("OneH2") to introduce a complete solution for customer implementation of a zero-emission long-haul system. We expect to be providing customers with added flexibility through a new hydrogen truck ecosystem. We believe the integrated solution will be competitive with other powertrain offerings with a target range of over 500 miles and a hydrogen fueling time of less than 15 minutes. As part of the arrangement, we have acquired a minority ownership stake in OneH2. InMarch 2021 , we exercised the equity warrants withTuSimple, Inc. ("TuSimple"). These warrants were initially negotiated at the inception of the strategic partnership with TuSimple inJuly 2020 . After exercising the warrants, our ownership stake in TuSimple is slightly less than 5%, with a fair value of approximately$386 million . InMay 2021 , we announced the upcoming availability of Cummins Connected Software Updates and programmable trim parameters for the Cummins X15 engines through our OnCommand® Connection portal. This integration will allow customers to quickly and securely calibrate and optimize engine control modules remotely, to keep fleets running at peak performance. Financial Summary Continuing Operations Results - In the second quarter of 2021, our consolidated net sales and revenues were$2.2 billion , a 12% increase compared to the second quarter of 2020. In the first six months of 2021, our consolidated net sales and revenues were$4.0 billion , a 6% increase compared to the first six months of 2020. The increase for both periods reflects higher volumes from our Truck, Parts and Global Operations segments, partially offset by lower net revenues from our Financial Services segment. 48 -------------------------------------------------------------------------------- In the three and six months endedApril 30, 2021 , we generated income before income taxes of$219 million and$123 million , respectively, compared to a loss of$26 million and$63 million in the respective prior year periods. Our gross margin increased by$130 million and$126 million in the three and six months endedApril 30, 2021 , respectively, primarily due to the impact of higher volumes. In the three and six months endedApril 30, 2021 , we recognized an income tax expense of$51 million and$33 million , respectively, compared to$7 million and$2 million in the respective prior year periods. The change in tax is primarily due to the increase in income before income taxes and earnings and/or losses for which no tax expense or benefit can be recognized due to valuation allowances. Other year over year differences for the three and six months endedApril 30, 2021 , include geographical mix and certain discrete items, primarily related to the change in the value of theU.S. dollar resulting in an income tax expense of$19 million and$23 million for the three and six months endedApril 30, 2021 , respectively. In the three and six months endedApril 30, 2021 , after income taxes, we recognized a net income from continuing operations attributable to NIC of$163 million and$81 million , respectively, or$1.63 and$0.81 per diluted share, respectively, compared to a net loss of$38 million and$74 million or$0.38 and$0.74 per diluted share, in the respective prior year periods. In the three and six months endedApril 30, 2021 , consolidated net income attributable to NIC, before manufacturing interest, taxes, depreciation and amortization expenses ("EBITDA") was$317 million and$320 million , respectively, compared to$61 million and$116 million in the respective prior year periods. Excluding certain net impacts, adjusted EBITDA ("Adjusted EBITDA") in the three and six months endedApril 30, 2021 was$198 million and$310 million , respectively, compared to$88 million and$147 million in the respective prior year periods. In the three and six months endedApril 30, 2021 , adjusted consolidated net income attributable to NIC, excluding certain net impacts ("Adjusted Net Income (Loss)"), was$72 million and$73 million , respectively, compared to losses of$10 million and$43 million in the respective prior year periods. EBITDA, Adjusted EBITDA, and Adjusted Net Income (Loss) are not determined in accordance withU.S. GAAP, nor are they presented as alternatives toU.S. GAAP measures. For more information regarding this non-GAAP financial information, see Non-GAAP Financial Performance Measures. We ended the second quarter of 2021 with$1.2 billion of consolidated cash and cash equivalents compared to$1.8 billion as ofOctober 31, 2020 . The decrease in consolidated cash and cash equivalents was primarily attributable to net repayments of other long-term debt of$123 million ,$191 million of contributions to our pension plans,$143 million of purchases of equity security investments, capital expenditures of$137 million , purchases of equipment leased to others of$76 million , and an increase in inventories of$248 million , partially offset by an increase in accounts payable of$276 million , an increase in other current liabilities of$103 million , an increase in other noncurrent liabilities of$78 million and net proceeds from revolving debt of$241 million . In addition,$300 million of cash was restricted as ofApril 30, 2021 , to repay NFSC investor notes inMay 2021 . 49 -------------------------------------------------------------------------------- Results of Operations The following information summarizes our Consolidated Statements of Operations and illustrates the key financial indicators used to assess our consolidated financial results. Results of Operations for the quarter endedApril 30, 2021 as compared to the quarter endedApril 30, 2020 Three Months Ended April 30, Six Months Ended April 30, (in millions, except per share data and % change) 2021 2020 Change % Change 2021 2020 Change % Change Sales and revenues, net$ 2,162 $ 1,925 $ 237 12 %$ 3,974 $ 3,763 $ 211 6 % Costs of products sold 1,731 1,624 107 7 % 3,238 3,153 85 3 % Restructuring charges 2 - 2 N.M. 23 1 22 N.M. Asset impairment charges 4 13 (9) (69) % 35 13 22 169 % Selling, general and administrative expenses 304 170 134 79 % 509 352 157 45 % Engineering and product development costs 88 78 10 13 % 172 164 8 5 % Interest expense 62 63 (1) (2) % 126 128 (2) (2) % Other (income) expense, net (251) 2 (253) N.M. (256) 13 (269) N.M. Total costs and expenses 1,940 1,950 (10) (1) % 3,847 3,824 23 1 % Equity in loss of non-consolidated affiliates (3) (1) (2) 200 % (4) (2) (2) 100 % Income (loss) before income taxes 219 (26) 245 942 % 123 (63) 186 295 % Income tax expense (51) (7) (44) 629 % (33) (2) (31) N.M. Income (loss) from continuing operations 168 (33) 201 609 % 90 (65) 155 238 % Less: Net income attributable to non-controlling interests 5 5 - - % 9 9 - - % Income (loss) from continuing operations(A) 163 (38) 201 529 % 81 (74) 155 209 % Income from discontinued operations, net of tax - - - - % 1 - 1 N.M. Net income (loss)(A)$ 163 $ (38) $ 201 529 % 82 (74) 156 211 % Diluted income (loss) per share(A) Continuing operations$ 1.63 $ (0.38) $ 2.01 (529) %$ 0.81 $ (0.74) $ 1.55 (209) % Discontinued operations - - - - % 0.01 - 0.01 N.M.$ 1.63 $ (0.38) $ 2.01 (529) %$ 0.82 $ (0.74) $ 1.56 (211) % Diluted weighted average shares outstanding 100.2 99.7 0.5 1 % 100.2 99.6 0.6 1 % _________________________ (A) Amounts attributable to NIC. (B) Not meaningful. 50 -------------------------------------------------------------------------------- Sales and revenues, net 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: Three Months Ended April 30, Six Months Ended April 30, (in millions, except % change) 2021 2020 Change % Change 2021 2020 Change % Change Truck$ 1,485 $ 1,389 $ 96 7 %$ 2,722 $ 2,631 $ 91 3 % Parts 524 443 81 18 % 991 936 55 6 % Global Operations 138 51 87 171 % 233 119 114 96 % Financial Services 50 64 (14) (22) % 101 121 (20) (17) % Corporate and Eliminations (35) (22) (13) 59 % (73) (44) (29) 66 % Total$ 2,162 $ 1,925 $ 237 12 %$ 3,974 $ 3,763 $ 211 6 % For the three and six months endedApril 30, 2021 , our Truck segment net sales increased by$96 million and$91 million , respectively, or 7% and 3%, respectively, compared to the prior year periods. The increase was primarily driven by higher used truck volumes of$67 million and$89 million , respectively, higher sales ofGM branded units forGM of$38 million and$50 million , respectively, and higherMexico volumes of$26 million and$68 million , respectively, partially offset by a reduction in volumes in our Core markets of$28 million and$123 million , respectively. For the three and six months endedApril 30, 2021 , our Parts segment net sales increased by$81 million and$55 million , respectively, or 18% and 6%, respectively, compared to the prior year periods. The increase was primarily driven by lower volumes in theU.S. andCanada in the prior year due to the impact of the COVID-19 pandemic. For the three and six months endedApril 30, 2021 , our Global Operations segment net sales increased by$87 million and$114 million , respectively, or 171% and 96%, respectively, compared to the prior year periods. The increase was primarily driven by higher volumes and parts sales revenues in ourSouth America operations of$74 million and$129 million , respectively, and the recognition of an estimated$28 million related to Brazilian tax credits in both periods, partially offset by a decrease of$16 million and$43 million , respectively, due to the devaluation of the Brazilian real against theU.S. dollar as the average conversion rate weakened by 14% and 23%, compared to the respective prior year periods. For the three and six months endedApril 30, 2021 , our Financial Services segment net revenues decreased by$14 million and$20 million , respectively, or 22% and 17%, respectively, compared to the prior year periods. The decrease was primarily driven by lower average yields of$13 million and$17 million , respectively. In addition to a decline in average yields,$3 million of the decrease in net revenues for the six months endedApril 30, 2021 resulted from lower finance receivables due to lower volumes. Costs of products sold For the three and six months endedApril 30, 2021 , costs of products sold increased by$107 million and$85 million , respectively, or 7% and 3%, respectively, compared to the prior year periods. The increase was primarily driven by the impact of higher overall volumes. For the three and six months endedApril 30, 2021 , we recorded charges of$31 million and$80 million , respectively, for adjustments to pre-existing warranties compared to charges of$13 million and$17 million in the respective prior year periods. For the three months endedApril 30, 2021 , pre-existing warranties were primarily driven by increases from standard warranties as well as proactive campaign actions related to components on prior model year engines. In addition, the six-month period was also impacted by unfavorable costs related to standard Truck warranties. Restructuring charges For the three and six months endedApril 30, 2021 , restructuring charges increased by$2 million and$22 million , compared with the respective prior year periods. The increase in the three-month period was due to severance and relocation costs of$2 million related to our plan to cease all operations at the Melrose Park Facility. For the six months endedApril 30, 2021 , the increase was due primarily to postretirement charges of$12 million and severance charges of$10 million , related to our plan to cease all operations at theMelrose Park Facility. All charges related to the plan to cease operations at the Melrose Park Facility were recorded in our Truck segment. For more information, see Note 3, Restructuring, Impairments and Divestitures, to the accompanying financial statements. 51 -------------------------------------------------------------------------------- Asset impairment charges For the three and six months endedApril 30, 2021 , asset impairment charges decreased by$9 million or 69%, and increased by$22 million or 169%, respectively, compared to the prior year periods. The decrease for the three months endedApril 30, 2021 was due to the recognition of$12 million of asset impairment charges in our Global Operations segment in the second quarter of 2020 triggered by the impact of the COVID-19 pandemic. The increase for the six months endedApril 30, 2021 , was primarily attributable to the recognition of$28 million of asset impairment charges in our Truck segment as a result of the disposition of the Melrose Park Facility. For more information on asset impairments, see Note 3, Restructuring, Impairments and Divestitures, to the accompanying consolidated financial statements. SG&A expenses For the three and six months endedApril 30, 2021 , SG&A expenses increased by$134 million and$157 million , respectively, or 79% and 45%, respectively, compared to the prior year periods. The increase was primarily attributable to increases in certain compensation expenses of$58 million and$83 million , respectively, costs related to the proposed merger with TRATON of$6 million and$16 million , respectively, and increases in SG&A expenses in our Truck segment mainly due to an additional charge for the tentative EPA settlement of$77 million in both periods. Other (income) expense, net For the three and six months endedApril 30, 2021 , other income increased by$253 million and$269 million , compared to the respective prior year periods. The increase was primarily attributable to a gain from an increase in fair value of one of our equity security investments of$242 million and$246 million , respectively. Income tax expense For the three and six months endedApril 30, 2021 , our income tax expense increased by$44 million and$31 million , respectively, compared to the prior year periods. The second quarter and first half of 2021 income tax expense increase is largely the result of the impact of earnings, earnings and/or losses for which no tax expense or benefit can be recognized due to valuation allowances, geographical mix, and certain discrete items, primarily related to the change in value of theU.S. dollar. Net income attributable to non-controlling interests Net income attributable to non-controlling interests is the result of our consolidation of subsidiaries that we do not wholly own. Substantially all of the net income attributable to non-controlling interests in 2021 and 2020 relates to Ford Motor Company's non-controlling interest in BDP. Segment Results of Operations We define segment profit (loss) as net income (loss) attributable to NIC excluding income tax benefit (expense). The following sections analyze operating results as they relate to our four segments and do not include intersegment eliminations. For additional information concerning our segments, see Note 13, Segment Reporting, to the accompanying consolidated financial statements. Truck Segment Three Months Ended April 30, Six Months Ended April 30, (in millions, except % change) 2021 2020 Change % Change 2021 2020 Change % Change Truck segment sales, net$ 1,485 $ 1,389 $ 96 7 %$ 2,722 $ 2,631 $ 91 3 % Truck segment profit (loss) 189 (51) 240 471 % 108 (109) 217 199 % Segment sales For the three and six months endedApril 30, 2021 , our Truck segment net sales increased by$96 million and$91 million , respectively, or 7% and 3%, respectively, compared to the prior year periods. The increase was primarily driven by higher used truck volumes of$67 million and$89 million , respectively, higher sales ofGM branded units forGM of$38 million and$50 million , respectively, and higherMexico volumes of$26 million and$68 million , respectively, partially offset by a reduction in volumes in our Core markets of$28 million and$123 million , respectively. In the three months endedApril 30, 2021 , chargeouts from our Core markets decreased by 2% compared to the three months endedApril 30, 2020 . The decrease represents a 29% decrease in school buses and a 28% decrease in Class 8 severe service trucks, partially offset by a 32% increase in Class 8 heavy trucks. 52 -------------------------------------------------------------------------------- In the six months endedApril 30, 2021 , chargeouts from our Core markets decreased by 5% compared to the six months endedApril 30, 2020 . The decrease represents a 36% decrease in school buses and a 30% decrease in Class 8 severe service trucks, partially offset by a 34% increase in Class 8 heavy trucks. Segment results For the three and six months endedApril 30, 2021 , our Truck segment profit increased by$240 million and$217 million , respectively, or 471% and 199%, respectively, compared to the prior year periods. The increase in profit for the three and six months endedApril 30, 2021 was driven by a gain from an increase in fair value of one of our equity security investments of$242 million and$246 million , respectively, favorable product mix in our Core markets andMexico of$51 million and$73 million , respectively, and higher used truck sales of$45 million and$63 million , respectively, partially offset by an increase in warranty costs of$22 million and$45 million , respectively, and higher legal expenses due to an additional charge for the tentative EPA settlement of$77 million . The six months endedApril 30, 2021 were also impacted by increases in asset impairment charges of$34 million and restructuring charges of$22 million , primarily related to the cessation of the operations at the Melrose Park Facility. For the three and six months endedApril 30, 2021 , we recorded charges of$31 million and$80 million , respectively, for adjustments to pre-existing warranties compared to$13 million and$17 million in the respective prior year periods. For the quarter, pre-existing warranties were primarily driven by increases from standard warranties as well as proactive campaign actions related to components on prior model year engines. In addition, the six-month period was also impacted by unfavorable costs related to standard Truck warranties. Parts Segment Three Months Ended April Six Months Ended April 30, 30, (in millions, except % change) 2021 2020 Change % Change 2021 2020 Change % Change Parts segment sales, net$ 524 $ 443 $ 81 18 %$ 991 $ 936 $ 55 6 % Parts segment profit 135 103 32 31 % 246 222 24 11 % Segment sales For the three and six months endedApril 30, 2021 , our Parts segment net sales increased by$81 million and$55 million , respectively, or 18% and 6%, respectively, compared to the prior year periods. The increase was primarily driven by lower volumes in theU.S. andCanada in the prior year due to the impact of the COVID-19 pandemic. Segment profit For the three and six months endedApril 30, 2021 , our Parts segment profit increased by$32 million and$24 million , respectively, or 31% and 11%, respectively, compared to the prior year periods. The increase in profit was driven by higher volumes in theU.S. andCanada of$33 million and$22 million , respectively. Global Operations Segment Six Months Ended April Three Months Ended April 30, 30, (in millions, except % change) 2021 2020 Change % Change 2021 2020 Change % Change Global Operations segment sales, net$ 138 $ 51 $ 87 171 %$ 233 $ 119 $ 114 96 % Global Operations segment profit (loss) 36 (13) 49 377 % 42 (13) 55 423 % Segment sales For the three and six months endedApril 30, 2021 , our Global Operations segment net sales increased by$87 million and$114 million , respectively, or 171% and 96%, respectively, compared to the prior year periods. The increase was primarily driven by higher volumes and parts sales revenues in ourSouth America operations of$74 million and$129 million , respectively, and the recognition of an estimated$28 million related to Brazilian tax credits in both periods, partially offset by a decrease of$16 million and$43 million , respectively, due to the devaluation of the Brazilian real against theU.S. dollar as the average conversion rate weakened by 14% and 23%, compared to the respective prior year periods. 53 -------------------------------------------------------------------------------- Segment profit For the three and six months endedApril 30, 2021 , our Global Operations segment profit increased by$49 million and$55 million , respectively, or 377% and 423%, respectively, compared to the prior year periods. The increase was primarily due to higher volumes of$13 million and$19 million , respectively, and the recognition of an estimated$26 million related to Brazilian tax credits in both periods, and$12 million of asset impairment charges recognized in the second quarter of 2020. Financial Services Segment Six Months Ended April Three Months Ended April 30, 30, (in millions, except % change) 2021 2020 Change % Change 2021 2020 Change % Change Financial Services segment revenues, net$ 50 $ 64 $ (14) (22) %$ 101 $ 121 $ (20) (17) % Financial Services segment profit 15 24 (9) (38) % 27 41 (14) (34) % Segment revenues For the three and six months endedApril 30, 2021 , our Financial Services segment net revenues decreased by$14 million and$20 million , respectively, or 22% and 17%, respectively, compared to the prior year periods. The decrease was primarily driven by lower average yields of$13 million and$17 million , respectively. In addition to a decline in average yields,$3 million of the decrease in net revenues for the six months endedApril 30, 2021 resulted from lower finance receivables due to lower volumes. Segment profit For the three and six months endedApril 30, 2021 , our Financial Services segment profit decreased by$9 million and$14 million , respectively, or 38% and 34%, respectively, compared to the prior year periods. The decrease was primarily driven by lower revenues of$14 million and$20 million , respectively, and an increase in SG&A expenses of$3 million and$6 million , respectively, due to higher depreciation on operating leases, partially offset by a decrease in interest expense of$8 million and$14 million , respectively, resulting from lower borrowing requirements and lower borrowing rates. Supplemental Information The following tables provide additional information on truck industry retail units, market share data, order units, and chargeout units. These tables present key metrics and trends that provide quantitative measures of our performance. 54 -------------------------------------------------------------------------------- Truck Industry Retail Deliveries The following table summarizes approximate industry retail deliveries for our Core markets, categorized by relevant class, according to Wards Auto and IHS Markit ("Polk") and our Core retail deliveries: Three Months Ended April 30, Six Months Ended April 30, (in units) 2021 2020 Change % Change 2021 2020 Change % Change Core markets (U.S. and Canada) School buses(A) 4,600 4,700 (100) (2) % 11,200 11,300 (100) (1) % Class 6 and 7 medium trucks 21,100 18,700 2,400 13 % 43,700 41,400 2,300 6 % Class 8 heavy trucks 47,200 33,700 13,500 40 % 92,800 77,900 14,900 19 % Class 8 severe service trucks 16,700 16,000 700 4 % 33,300 35,500 (2,200) (6) % Total Core markets 89,600 73,100 16,500 23 % 181,000 166,100 14,900 9 % Combined class 8 trucks 63,900 49,700 14,200 29 % 126,100 113,400 12,700 11 % Navistar Core retail deliveries 13,300 12,100 1,200 10 % 27,300 24,500 2,800 11 %
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(A) The School bus retail market deliveries include buses classified as B, C, and D and are being reported on a one-month lag. Truck Retail Delivery Market Share The following table summarizes our approximate retail delivery market share percentages for the Class 6 through 8 U.S. andCanada truck markets, based on market-wide information from Wards Auto andPolk : Three Months Ended April 30, January 31, October 31, April 30, 2021 2021 2020 July 31, 2020 2020 Class 6-8 Trucks (U.S. andCanada ) Class 6 and 7 medium trucks 23.6 % 21.7 % 19.0 % 22.1 % 22.9 % Class 8 heavy trucks 9.6 % 8.7 % 10.4 % 10.6 % 11.6 % Class 8 severe service trucks 13.4 % 15.0 % 18.9 % 16.5 % 14.6 % Combined class 8 trucks 10.6 % 10.4 % 12.5 % 12.6 % 12.5 % Truck Orders, net We define orders as written commitments received from customers and dealers during the year to purchase trucks. Net orders represent new orders received during the year less order cancellations made during the same year. Orders do not represent guarantees of purchases by customers or dealers and are subject to cancellation. Orders may be either sold orders, which will be built for specific customers, or stock orders, which will generally be built for dealer inventory for eventual sale to customers. These orders may be placed at our assembly plants in theU.S. andMexico for destinations anywhere in the world and include trucks and buses. Historically, we have had an increase in net orders for stock inventory from our dealers at the end of the year due to a combination of demand and, from time to time, incentives to the dealers. Increases in stock orders typically translate to higher future chargeouts. The following table summarizes our approximate net orders for Core units: Three Months Ended April 30, Six Months Ended April 30, (in units) 2021 2020 Change % Change 2021 2020 Change % Change Core markets (U.S. and Canada) School buses 4,500 3,000 1,500 50 % 6,200 7,200 (1,000) (14) % Class 6 and 7 medium trucks 14,200 2,800 11,400 407 % 24,100 6,000 18,100 302 % Class 8 heavy trucks 14,500 2,400 12,100 504 % 25,800 3,400 22,400 659 % Class 8 severe service trucks 6,500 2,000 4,500 225 % 10,200 3,600 6,600 183 % Total Core markets 39,700 10,200 29,500 289 % 66,300 20,200 46,100 228 % Combined class 8 trucks 21,000 4,400 16,600 377 % 36,000 7,000 29,000 414 % 55
-------------------------------------------------------------------------------- Truck Chargeouts We define chargeouts as trucks that have been invoiced to customers. The units held in dealer inventory represent the principal difference between retail deliveries and chargeouts. The following table summarizes our approximate worldwide chargeouts: Three Months Ended April 30, Six Months Ended April 30, (in units) 2021 2020 Change % Change 2021 2020 Change % Change Core markets (U.S. andCanada ) School buses 2,200 3,100 (900) (29) % 3,200 5,000 (1,800) (36) % Class 6 and 7 medium trucks 5,000 4,900 100 2 % 9,300 9,300 - - % Class 8 heavy trucks 4,900 3,700 1,200 32 % 8,200 6,100 2,100 34 % Class 8 severe service trucks 1,800 2,500 (700) (28) % 3,800 5,400 (1,600) (30) % Total Core markets 13,900 14,200 (300) (2) % 24,500 25,800 (1,300) (5) % Other markets(A) 3,900 3,200 700 22 % 8,300 7,600 700 9 % Total worldwide units 17,800 17,400 400 2 % 32,800 33,400 (600) (2) % Combined class 8 trucks 6,700 6,200 500 8 % 12,000 11,500 500 4 %
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(A) Other markets primarily consist of Class 4/5 vehicles, Export Truck,Mexico , and post-saleNavistar Defense . Other markets include certain Class 4/5 vehicle chargeouts of 1,900 and 4,000GM -branded units sold toGM during the three and six months endedApril 30, 2021 , respectively, and 1,100 and 3,200 during the three and six months endedApril 30, 2020 , respectively.
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