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Navistar's (NAV) Q2 Earnings Beat Estimates, Revenues Miss

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Navistar International Corporation (NAV - Free Report) reported second-quarter fiscal 2018 (ended Apr 30, 2018) earnings per share of 55 cents, beating the Zacks Consensus Estimate of 28 cents. In the prior-year quarter, net loss per share was 86 cents.

Navistar recorded net income of $55 million compared with the net loss of $80 million in the prior-year quarter.

Navistar’s revenues increased 16% year over year to $2.42 billion in the reported quarter. However, revenues missed the Zacks Consensus Estimate of $2.47 billion. This year-over-year improvement was primarily driven by an increase in sales volume of the company’s Class 6-8 vehicles in the United States as well as Canada.

Segment Details

During the quarter under review, revenues at Navistar’s Truck segment increased 22% to $1.7 billion. This improvement primarily occurred on the back of higher volume in the company’s core markets, rise in military sales, higher export truck volume and a shift in model mix. This was partly offset by fall in Mexico and export truck volumes.

Revenues at Navistar’s Parts segment were $601 million, witnessing loss of $9 million compared with the same period last year. The company’s results were affected by lower U.S. volume and Blue Diamond Parts (BDP) sales, partly offset by higher Mexico volume and parts sales related to the Fleetrite brand.

Revenues at the company’s Global Operations segment were $97 million, up 39% year over year. Results were aided by higher engine volume in South America engine operations because of strengthening of the Brazilian economy.

Revenues at Navistar’s Financial Services segment were $63 million, up 13%. This improvement was primarily driven by higher portfolio yields, higher overall finance receivable balances in Mexico and the United States.

Financial Position

Navistar had cash and cash equivalents of $1.1 billion as of Apr 30, 2018, up from $706 million as of Oct 31, 2017. As of Apr 30, 2018, long-term debt was $3.85 billion in comparison with $3.89 billion as of Oct 31, 2017.

During the reported quarter, capital expenditure totaled $53 million, up from $46 million recorded in the year-ago quarter.

Guidance

Navistar has raised full-year fiscal 2018 guidance, driven by solid industry conditions.  In the fiscal, Navistar projects industry retail deliveries of Class 6-8 trucks and buses in the United States as well as Canada between 380,000 and 341,000 units, up from the previous projection of 360,000-380,000 units.

Further, revenues for fiscal 2018 are expected to be $9.75-$10.25 billion, up from the prior projection of $9.25-$9.75 billion. Adjusted EBITDA is anticipated to be $725-$775 million in comparison with the prior estimation of $700-$750 million. Manufacturing cash at the end of fiscal 2018 is projected at around $1.2 billion, up from the prior projection of $1.1 billion.

Navistar currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

A few better-ranked stocks in the auto space are Oshkosh Corporation (OSK - Free Report) , Allison Transmission Holdings, Inc. (ALSN - Free Report) and Ferrari N.V. (RACE - Free Report) . While both Oshkosh and Allison Transmission Holdings sport a Zacks Rank # 1, Ferrari carries a Zacks Rank # 2 (Buy).

Oshkosh has an expected long-term growth rate of 18.3%. Shares of the company have risen 13.4% over the past year.

Allison Transmission Holdings has an expected long-term growth rate of 10%. Over the past year, shares of the company have gained 10.4%.

Ferrari has an expected long-term growth rate of 17.3%. Over the past year, shares of the company have gained 50.8%.

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