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Navistar (NAV) Q4 Earnings Top Estimates, Sales Miss Mark

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Navistar International Corporation  reported fourth-quarter fiscal 2020 adjusted earnings of 62 cents per share, surpassing the Zacks Consensus Estimate of 23 cents. The outperformance primarily stemmed from higher-than-expected revenues from the firm’s Truck segment. Precisely, revenues from the segment came in at $1,478 million, outpacing the consensus mark of $1,278 million.

The bottom line, however, deteriorated from the year-ago profit of $1.14 per share amid lower year-over-year revenues due to the coronavirus pandemic.

The truck maker registered revenues of $2,065 million for the October-end quarter, missing the Zacks Consensus Estimate of $2,090 million. Moreover, the top line marked a 25.7% year-over-year plunge due to coronavirus-led lower demand in core markets.

During the quarter, the company announced its merger agreement with Volkswagen’s (VWAGY - Free Report) trucks arm Traton SE. This is expected to buoy the combined entity’s prospects.

Segmental Performance

The Truck segment’s total net sales came in at $1,478 million for the reported quarter, plummeting 30% year over year. The segment witnessed a net loss of $10 million against profit of $86 million reported in the year-ago quarter. This was due to lower volumes on weaker industry conditions resulting from the pandemic.

The Parts segment net sales dropped 9.3% from the year-ago quarter to $496 million. The segment’s profit was $129 million, down 19.8% on a year-over-year basis. The segment’s results were impacted by lower volumes in the United States and Canada.

Net sales in the company’s Global Operations summed $87 million, down from $93 million recorded in the year-ago quarter. Unfavorable forex translations and depressed volumes from South American operations amid temporary production halts due to the coronavirus crisis resulted in this downside. The segment reported a profit of $12 million, turning around from the year-ago quarter’s loss of $10 million that stemmed from a restructuring charge. 

Net sales in Navistar’s Financial Services segment came in at $47 million, reflecting a 34% decrease from the year-ago quarter. The segment recorded a profit of $14 million compared with the year-ago quarter’s $30 million. This deterioration resulted from lower average finance receivables due to dismal volumes and reduction in finance fees on lower interest rates.

Financial Position

The Illinois-based trucking giant had cash and cash equivalents of $1,843 million as of Oct 31, 2020, higher than $1,370 million on Oct 31, 2019. At fiscal fourth quarter-end, long-term debt was $4,690 million, up from $4,317 million as of Oct 31, 2019.

Navistar currently carries a Zacks Rank #2 (Buy). Other top-ranked stocks in the auto space include BRP Inc. (DOOO - Free Report) and Magna International Inc. (MGA - Free Report) , each sporting Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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