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Navistar International Corporation reported second-quarter fiscal 2016 (ended Apr 30, 2016) earnings of 5 cents per share, as against adjusted net loss of 57 cents per share recorded in the year-ago quarter. The Zacks Consensus Estimate for the reported quarter was of a loss of 18 cents per share. Results benefited from continued progress in business operations and initiatives to effectively manage costs, partially offset by lower Class 8 truck volumes.
Navistar’s revenues fell 18% year over year to $2.19 billion in the quarter, missing the Zacks Consensus Estimate of $2.24 billion. The decline resulted from lower volumes in the company's Core U.S. and Canadian markets due to sluggish industry conditions and the discontinuation of the Blue Diamond Truck (BDT) joint venture in mid-2015. Revenues were also adversely affected by lower engine volumes in Brazil owing to ongoing weak economic conditions, partially offset by higher sales in the Parts segment.
Segment Details
Revenues at Navistar’s Truck segment decreased 25% year over year to $1.5 billion. The decline was due to lower Core truck volumes and the adverse impact of a shift in product mix in Core markets. The segment recorded a loss from continuing operations of $23 million, considerably narrower than a loss of $51 million in the prior-year quarter. This improvement was backed by lower structural cost, improved mix, lower accelerated depreciation charges and other income.
Revenues at Navistar’s Parts segment increased 6% year over year to $647 million in the reported quarter. The year-over-year improvement was driven by enhanced retail programs in the U.S. market, partially offset by unfavorable currency exchange rates and market pressures, primarily in Canada and Mexico. The segment registered a profit of $176 million, higher than $133 million recorded in the year-ago period. The increase in profit was driven by margin improvements and cost-reduction mechanisms.
Revenues at Navistar’s Global Operations segment plunged 41% to $77 million. The decline resulted from a downturn in South America engine operations due to lower volumes and unfavorable movements in foreign currency exchange rates. The segment recorded a loss of $1 million in the quarter as against a profit of $1 million a year ago. The year-over-year change was primarily owing to lower manufacturing and structural costs, more than offset by a net gain in second-quarter fiscal 2015 related to customer dispute settlements.
Revenues at Navistar’s Financial Services segment dropped 3% to $58 million from $60 million a year ago. The segment registered a profit of $25 million, up from $22 million in the second quarter of fiscal 2015. The year-over-year improvement can be attributed to an increase in gains on lease terminations and a decrease in the provision for loan losses and cost-reduction initiatives.
Financial Position
Navistar had cash and cash equivalents of $589 million as of Apr 30, 2016, down from $912 million as of Oct 31, 2015. As of Apr 30, 2016, notes payable and long-term debt was $5.2 billion compared to $5.3 billion as of Oct 31, 2015.
Net cash used in operations totaled $104 million in the first six months of fiscal 2016 versus $237 million in the year-ago period. Capital expenditure was $53 million, up from $45 million in the comparable year-ago period.
Guidance
Navistar projects Class 6–8 retail deliveries in the U.S. and Canada in the range of 330,000–360,000 units for fiscal 2016, down from the previous forecast of 350,000–380,000 units. Class 8 deliveries should be in the range of 220,000–250,000 units, down from the previous estimate of 240,000–270,000 units, and 279,000 units in fiscal 2015. Sales volume of the medium, school bus and severe service segments are expected to improve.
Revenues are expected in the band of $8.2–$8.6 billion for fiscal 2016, lower than the $9–$9.25 billion range projected earlier. Adjusted EBITDA is anticipated to be $550–$600 million, compared with the previous guidance of $600–$650 million. Manufacturing cash at the end of fiscal 2016 is expected to be $800 million.
Navistar manufactures and sells commercial trucks, mid-range diesel engines, buses, military vehicles, and chassis for motor homes and step-vans. It also provides service parts for trucks and trailers.
Zacks Rank
Currently, the company carries a Zacks Rank #3 (Hold).
Some better-ranked automobile stocks include Lear Corp. (LEA - Free Report) , Oshkosh Corporation (OSK - Free Report) and Superior Industries International, Inc. (SUP - Free Report) . All these stocks sport a Zacks Rank #1 (Strong Buy).
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Navistar's (NAV) Q2 Earnings Beat Estimates, Improve Y/Y
Navistar International Corporation reported second-quarter fiscal 2016 (ended Apr 30, 2016) earnings of 5 cents per share, as against adjusted net loss of 57 cents per share recorded in the year-ago quarter. The Zacks Consensus Estimate for the reported quarter was of a loss of 18 cents per share. Results benefited from continued progress in business operations and initiatives to effectively manage costs, partially offset by lower Class 8 truck volumes.
Navistar’s revenues fell 18% year over year to $2.19 billion in the quarter, missing the Zacks Consensus Estimate of $2.24 billion. The decline resulted from lower volumes in the company's Core U.S. and Canadian markets due to sluggish industry conditions and the discontinuation of the Blue Diamond Truck (BDT) joint venture in mid-2015. Revenues were also adversely affected by lower engine volumes in Brazil owing to ongoing weak economic conditions, partially offset by higher sales in the Parts segment.
Segment Details
Revenues at Navistar’s Truck segment decreased 25% year over year to $1.5 billion. The decline was due to lower Core truck volumes and the adverse impact of a shift in product mix in Core markets. The segment recorded a loss from continuing operations of $23 million, considerably narrower than a loss of $51 million in the prior-year quarter. This improvement was backed by lower structural cost, improved mix, lower accelerated depreciation charges and other income.
Revenues at Navistar’s Parts segment increased 6% year over year to $647 million in the reported quarter. The year-over-year improvement was driven by enhanced retail programs in the U.S. market, partially offset by unfavorable currency exchange rates and market pressures, primarily in Canada and Mexico. The segment registered a profit of $176 million, higher than $133 million recorded in the year-ago period. The increase in profit was driven by margin improvements and cost-reduction mechanisms.
Revenues at Navistar’s Global Operations segment plunged 41% to $77 million. The decline resulted from a downturn in South America engine operations due to lower volumes and unfavorable movements in foreign currency exchange rates. The segment recorded a loss of $1 million in the quarter as against a profit of $1 million a year ago. The year-over-year change was primarily owing to lower manufacturing and structural costs, more than offset by a net gain in second-quarter fiscal 2015 related to customer dispute settlements.
Revenues at Navistar’s Financial Services segment dropped 3% to $58 million from $60 million a year ago. The segment registered a profit of $25 million, up from $22 million in the second quarter of fiscal 2015. The year-over-year improvement can be attributed to an increase in gains on lease terminations and a decrease in the provision for loan losses and cost-reduction initiatives.
Financial Position
Navistar had cash and cash equivalents of $589 million as of Apr 30, 2016, down from $912 million as of Oct 31, 2015. As of Apr 30, 2016, notes payable and long-term debt was $5.2 billion compared to $5.3 billion as of Oct 31, 2015.
Net cash used in operations totaled $104 million in the first six months of fiscal 2016 versus $237 million in the year-ago period. Capital expenditure was $53 million, up from $45 million in the comparable year-ago period.
Guidance
Navistar projects Class 6–8 retail deliveries in the U.S. and Canada in the range of 330,000–360,000 units for fiscal 2016, down from the previous forecast of 350,000–380,000 units. Class 8 deliveries should be in the range of 220,000–250,000 units, down from the previous estimate of 240,000–270,000 units, and 279,000 units in fiscal 2015. Sales volume of the medium, school bus and severe service segments are expected to improve.
Revenues are expected in the band of $8.2–$8.6 billion for fiscal 2016, lower than the $9–$9.25 billion range projected earlier. Adjusted EBITDA is anticipated to be $550–$600 million, compared with the previous guidance of $600–$650 million. Manufacturing cash at the end of fiscal 2016 is expected to be $800 million.
Navistar manufactures and sells commercial trucks, mid-range diesel engines, buses, military vehicles, and chassis for motor homes and step-vans. It also provides service parts for trucks and trailers.
Zacks Rank
Currently, the company carries a Zacks Rank #3 (Hold).
Some better-ranked automobile stocks include Lear Corp. (LEA - Free Report) , Oshkosh Corporation (OSK - Free Report) and Superior Industries International, Inc. (SUP - Free Report) . All these stocks sport a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>