Fleet Management

Earnings Watch: Navistar Losses Nearly Double from Year Earlier

March 07, 2017

By Evan Lockridge

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Navistar International Corp. on Tuesday announced its financial losses in the first quarter of 2017 nearly doubled from the same time a year ago due to lower truck volume and softer Class 8 truck sales.

The truck and engine maker reported a net loss of $62 million, or 76 cents per share, greater than a consensus estimate from a poll of analysts, who were forecasting a 45 cents per share loss. This compares to a first quarter 2016 net loss of $33 million, or 40 cent per share. 

Revenue in the most recent quarter totaled $1.7 billion, in line with Wall Street expectations, but a decline of 6% compared to $1.8 billion in the first quarter last year. The quarter marked the company’s eighth consecutive decline in quarterly revenue, according to Reuters.

First quarter 2017 earnings before interest, taxes, depreciation and amortization (EBITDA) was $63 million, compared to first quarter 2016 EBITDA of $82 million. This most recent period included favorable net adjustments of $8 million, primarily resulting from a reversal of pre-existing warranty accruals.

"Our results are on track with our plan for the year, and demonstrate our ability to effectively manage costs at a time of persistent Class 8 industry headwinds," said Troy A. Clarke, chairman, president and CEO. "Our order share continues to outpace our market share, which confirms our confidence in the retail share improvement to come."

Truck-segment first quarter 2017 net sales decreased $105 million, or 9%, primarily due to lower core (Class 6-8 trucks and buses in the United States and Canada) truck volumes “as a result of softer industry conditions, the end of CAT-branded units sold to Caterpillar, and the sale of Pure Power Technologies, both of which occurred in the second quarter of 2016.” 

During the most recent quarter, Navistar’s truck segment loss increased to $69 million versus a loss of $51 million in the same period a year ago.

“This was primarily driven by market pressures, the impact of lower core market volumes, and a decrease in other income due to the receipt of a one-time fee from a third party last year, partially offset by lower used truck losses, improved material costs and lower adjustments to pre-existing warranties,” the company said in a statement.

Its parts-segment net sales were comparable to the prior year while its global-operations segment net sales decreased $42 million, or 46%. The Financial Services segment net revenues decreased by $5 million, or 8%, and profit decreased by $13 million, or 50%.

Last week, Navistar announced the closing of its wide-ranging strategic alliance with Volkswagen Truck & Bus, which included a $256 million equity investment in Navistar by that company and the creation of a procurement joint venture and a strategic technology and supply collaboration, both of which are already up and running. The deal gives the German auto and truck maker a 16.6% stake in Navistar.

Looking ahead, Navistar plans to continue to introduce new products every four to six months through the end of 2018, refreshing its entire product portfolio, while also expanding it with its re-entry into Class 4/5 vehicles through its collaboration with General Motors.

In the first quarter, Navistar began customer deliveries of its new International LT Series Class 8 long-haul truck and last week unveiled its 13-liter A26 engine.

Also on Tuesday, Navistar reiterated and updated its 2017 guidance:

  • Retail deliveries of Class 6-8 trucks and buses in the United States and Canada are forecast to be in the range of 305,000 to 335,000 units for fiscal year 2017
  • Full-year 2017 revenues are expected to be similar to 2016
  • Full-year 2017 adjusted EBITDA is expected to be higher than 2016
  • Fiscal year end 2017 manufacturing cash is now expected to be about $1 billion, including the capital injection from Volkswagen Truck & Bus and a $250 million senior note tack-on completed in the first quarter 2017

Related: Navistar, Volkswagen Close Strategic Alliance Deal

Comments

  1. 1. Archie McArdell [ March 07, 2017 @ 07:37AM ]

    Right on track! In the middle of it, in fact, and that light in the tunnel is a locomotive.

    They burned through $230 million in cash during their Q1, while giving away 1/6th of the company to VW for $256 million. A linear extrapolation projects that they will have given the whole hopeless mess away by the end of their fiscal Q2 in 2019.

  2. 2. Joe Nonnemaker [ March 08, 2017 @ 04:23AM ]

    A little TRUMPISM Righter Failed to mention there focus on making junk caught up with them, now they are reaping the rewards, acknowledging what they did to trucking industry and trying to make it right will take some time. As for me I will come back to NAVISTAR IF THEY MAKE IT THROUGH THE NEXT 5 YEARS AS LONG AS I CAN RECOVER FROM IH. /CAT DEAL

  3. 3. Russ [ March 08, 2017 @ 10:06AM ]

    I run heavy haul in the northwest, I run at 105,000 loaded, whenever I pass an intertrashinal, vulva or freightliner on a 6 percent grade I say to myself that I'm glad I don't drive one of those pieces of garbage, I'm usually out pulling them by about 10 mph and they only are 80,000 gross.

  4. 4. Russ [ March 08, 2017 @ 10:12AM ]

    A truck with a 550 hp with 1850 ft torque cat or cummins running from portland oregon to boise idaho will get the job done with 30 minutes less drive time and use less fuel than the same truck with a 435 hp engine. Drivers need every advantage they can get nowdays. But hey that's just my 23 years experience running the northwest talking.

 

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