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Navistar (NAV) Q3 Loss Narrows Y/Y, Revenues Lag Estimates
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Navistar International Corporation reported third-quarter (ended Jul 31, 2016) fiscal 2016 adjusted loss of 13 cents per share, compared with adjusted loss of 19 cents per share recorded in the year-ago quarter. The Zacks Consensus Estimate for the reported quarter was of a profit of 12 cents per share. Results benefited from continued progress in business operations and initiatives to effectively manage costs.
Including non-recurring items, net loss amounted to $34 million or 42 cents per share, compared to a net loss of $28 million or 34 cents per share in the third quarter of fiscal 2015.
Navistar’s revenues fell 18% year over year to $2.09 billion in the reported quarter, missing the Zacks Consensus Estimate of $2.15 billion. The decline resulted from lower chargeouts in the company's core markets due to sluggish industry conditions.
Revenues at Navistar’s Truck segment decreased 24% year over year to $1.4 billion. The decline was due to lower core truck and export truck volumes, the adverse impact of a shift in product mix in core markets, and lower used truck revenue. The segment recorded a loss from continuing operations of $54 million, considerably wider than a loss of $36 million in the prior-year quarter. This deterioration was due to higher adjustments to pre-existing warranty and lower used truck margins, which offset the lower structural cost and product costs, improved purchasing costs and better product mix.
Revenues at Navistar’s Parts segment dropped 4% year over year to $647 million in the reported quarter due to lower volumes. The segment registered a profit of $152 million, in line with the figure recorded in the year-ago period. Margin improvements in the U.S. and cost-reduction initiatives were offset by unfavorable movements in foreign currency exchange rates.
Revenues at Navistar’s Global Operations segment plunged 22% to $85 million. The decline resulted from a downturn in South America engine operations due to lower volumes. The segment recorded a loss of $5 million in the quarter, narrower than a loss of $26 million a year ago. The year-over-year change was primarily due to lower manufacturing and structural costs.
Revenues at Navistar’s Financial Services segment dropped 4.8% to $60 million from $63 million a year ago. The segment registered a profit of $26 million, in line with the third quarter of fiscal 2015. Gains from operating lease early terminations, decreases in the provisions for loan losses in Mexico and ongoing cost reduction initiatives were offset by an increase in interest expense, decrease in revenues and the unfavorable movement in foreign currency exchange rates.
Financial Position
Navistar had cash and cash equivalents of $547 million as of Jul 31, 2016, down from $912 million as of Oct 31, 2015. As of Jul 31, 2016, notes payable and long-term debt was $5.1 billion compared to $5.3 billion as of Oct 31, 2015.
Net cash used in operations totaled $14 million in the first nine months of fiscal 2016, unchanged from the year-ago period. Capital expenditure was $83 million, up from $72 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. Class 8 deliveries should be in the range of 220,000–250,000 units, down from 279,000 units in fiscal 2015. Sales volume of the medium, school bus and severe service segments are expected to improve.
Revenues are anticipated in the band of $8.2–$8.6 billion for fiscal 2016. Adjusted EBITDA is expected to be $550–$600 million. Manufacturing cash at the end of fiscal 2016 is estimated to be $800 million.
Class 6 and 7 medium-duty truck and bus industry volumes are expected to remain strong in fiscal 2017. However, Class 8 industry volumes are likely to decline marginally.
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 diesel engines.
Zacks Rank
Currently, Navistar carries a Zacks Rank #5 (Strong Sell). Some better-ranked automobile stocks include Spartan Motors Inc. , Superior Industries International, Inc. (SUP - Free Report) and Cooper-Standard Holdings Inc. (CPS - Free Report) . All the three stocks sport a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.
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Navistar (NAV) Q3 Loss Narrows Y/Y, Revenues Lag Estimates
Navistar International Corporation reported third-quarter (ended Jul 31, 2016) fiscal 2016 adjusted loss of 13 cents per share, compared with adjusted loss of 19 cents per share recorded in the year-ago quarter. The Zacks Consensus Estimate for the reported quarter was of a profit of 12 cents per share. Results benefited from continued progress in business operations and initiatives to effectively manage costs.
Including non-recurring items, net loss amounted to $34 million or 42 cents per share, compared to a net loss of $28 million or 34 cents per share in the third quarter of fiscal 2015.
Navistar’s revenues fell 18% year over year to $2.09 billion in the reported quarter, missing the Zacks Consensus Estimate of $2.15 billion. The decline resulted from lower chargeouts in the company's core markets due to sluggish industry conditions.
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Segment Details
Revenues at Navistar’s Truck segment decreased 24% year over year to $1.4 billion. The decline was due to lower core truck and export truck volumes, the adverse impact of a shift in product mix in core markets, and lower used truck revenue. The segment recorded a loss from continuing operations of $54 million, considerably wider than a loss of $36 million in the prior-year quarter. This deterioration was due to higher adjustments to pre-existing warranty and lower used truck margins, which offset the lower structural cost and product costs, improved purchasing costs and better product mix.
Revenues at Navistar’s Parts segment dropped 4% year over year to $647 million in the reported quarter due to lower volumes. The segment registered a profit of $152 million, in line with the figure recorded in the year-ago period. Margin improvements in the U.S. and cost-reduction initiatives were offset by unfavorable movements in foreign currency exchange rates.
Revenues at Navistar’s Global Operations segment plunged 22% to $85 million. The decline resulted from a downturn in South America engine operations due to lower volumes. The segment recorded a loss of $5 million in the quarter, narrower than a loss of $26 million a year ago. The year-over-year change was primarily due to lower manufacturing and structural costs.
Revenues at Navistar’s Financial Services segment dropped 4.8% to $60 million from $63 million a year ago. The segment registered a profit of $26 million, in line with the third quarter of fiscal 2015. Gains from operating lease early terminations, decreases in the provisions for loan losses in Mexico and ongoing cost reduction initiatives were offset by an increase in interest expense, decrease in revenues and the unfavorable movement in foreign currency exchange rates.
Financial Position
Navistar had cash and cash equivalents of $547 million as of Jul 31, 2016, down from $912 million as of Oct 31, 2015. As of Jul 31, 2016, notes payable and long-term debt was $5.1 billion compared to $5.3 billion as of Oct 31, 2015.
Net cash used in operations totaled $14 million in the first nine months of fiscal 2016, unchanged from the year-ago period. Capital expenditure was $83 million, up from $72 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. Class 8 deliveries should be in the range of 220,000–250,000 units, down from 279,000 units in fiscal 2015. Sales volume of the medium, school bus and severe service segments are expected to improve.
Revenues are anticipated in the band of $8.2–$8.6 billion for fiscal 2016. Adjusted EBITDA is expected to be $550–$600 million. Manufacturing cash at the end of fiscal 2016 is estimated to be $800 million.
Class 6 and 7 medium-duty truck and bus industry volumes are expected to remain strong in fiscal 2017. However, Class 8 industry volumes are likely to decline marginally.
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 diesel engines.
Zacks Rank
Currently, Navistar carries a Zacks Rank #5 (Strong Sell). Some better-ranked automobile stocks include Spartan Motors Inc. , Superior Industries International, Inc. (SUP - Free Report) and Cooper-Standard Holdings Inc. (CPS - Free Report) . All the three stocks sport a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>