Truck and engine manufacturer Navistar International Corp. (NYSE: NAV) on Tuesday surprised many analysts, announcing it narrowed its losses more than expected during its most recent fiscal quarter and saying it’s on track this year to return to profitability.

Its net loss of $33 million and 40 cents per diluted share for the November through January period mark improvements of 21% and 23%, respectively, compared to a first quarter 2015 net loss of $42 million, or 52 cents per diluted share.

This most recent per share performance was far better than a forecast loss of 77 cents from Zacks Investment Research.

Revenue in the quarter totaled $1.8 billion, down 27% from the first quarter last year. The decline reflects lower volumes in its core U.S. and Canadian markets, due to softer industry conditions, according to the company. In addition, it was affected by reduced volumes in Mexico and export markets, resulting from a stronger U.S. dollar, and lower engine volumes in Brazil due to ongoing weak economic conditions in that country. Additionally, one quarter of the year-over-year decline was due to the discontinuation of the company's Blue Diamond Truck joint venture with Ford Motor Co. in mid-2015.

Earnings before interest, taxes, depreciation and amortization (EBITDA) was $82 million, compared to first quarter 2015 EBITDA of $101 million. Adjusted EBITDA was $77 million, up 43%, compared to $54 million in the comparable period last year.

"Despite a lower revenue base, we continued to unlock value by significantly improving adjusted EBITDA through managing and optimizing our costs," said Troy A. Clarke, Navistar president and CEO. "We are encouraged by our first quarter performance and remain on track to achieve our goals of returning to profitability and generating manufacturing free cash flow in 2016."

Navistar did reduce financial expectations for the current year, including lower revenue of $9 billion to $9.25 billion, down from its prior forecast of $9.5 billion to $10 billion. It also tightented 2016 adjusted EBITDA guidance to $600 million to $650 million, from an earlier range of $600 million to $700 million.

"This was a solid quarter in which we made real progress toward our 2016 targets," said Walter G. Borst, Navistar executive vice president and chief financial officer. "We operated within our indicated cash range in what is seasonally our weakest revenue and most cash-intensive quarter, ending the first quarter 2016 with $673 million in manufacturing cash, cash equivalents and marketable securities. We also continued to manage costs out of our business, putting us on track to achieve our annual $200 million cost reduction target."

The Illinois-based company also said during the quarter it achieved $57 million in structural cost reductions and had record parts segment profit of $150 million, while warranty expense, excluding pre-existing adjustments, declined to 2.6% of manufacturing revenue.

Truck segment first quarter 2016 net sales dropped $573 million, or 34%, and that segment loss increased by $33 million to $51 million.

Navistar’s global operations segment results, however, improved $2 million, to a loss of $13 million, compared with the prior year period. Its financial services segment profit increased $2 million to $26 million.

Despite these improvements, Navistar’s used truck inventory increased $50 million to $440 million.

"We expect the industry's oversupply of used trucks will continue in the near term," Borst said. "While our inventory is higher than we planned, I am confident in our abilities to address this issue and bring these inventories down over time."

According to Clark, over the next few years, the company expects to announce a new product on average every six months, completely refreshing the product line by the end of 2018. This follows Navistar in early February unveiling its new HX Series of premium severe service trucks, marking Navistar’s return to a segment from which it had been largely absent since 2010.

More details on Navistar International's financial performance are on the company website.