Navistar International Swings to Surprise Profit

[kscarbel2]

The Wall Street Journal  /  June 7, 2016

Company cuts guidance, expects reduced retail deliveries of heavy- and medium-duty trucks, buses

Navistar International Corp. swung to a surprise profit in its latest quarter, its first since 2012 as the company slashed costs amid prolonged diminished market demand, but cut its outlook for the year and said it was unlikely to make a full-year profit.

Still, investors seemed to focus on the return to profitability and sent shares up 21% to $14.71 in Tuesday afternoon trading in New York. The stock has risen 69% so far this year.

The Lisle, Ill., truck producer now expects 2016 revenue in a range of $8.2 billion to $8.6 billion, down from its already downbeat prior forecast of $9 billion to $9.25 billion. Analysts had anticipated $8.79 billion, according to Thomson Reuters. The guidance cut comes as Navistar says it now expects retail deliveries of heavy- and medium-duty trucks and buses in the U.S. and Canada to be between 330,000 and 360,000 units, compared with a prior range of 350,000 units to 380,000 units.

The company also lowered its adjusted Ebitda forecast to $550 million to $600 million from its earlier outlook range of $600 million to $650 million.

Chief Executive Troy Clarke said that while the company earned a profit in the latest period, “it will now be difficult for us to be profitable and free cash flow positive for the year as we now see it.”

The company said it won’t be able to increase its anemic market share in heavy-duty trucks this year because of the dismal market conditions. Raising share and getting back to profitability have been management’s key objectives.

But Chief Financial Officer Walter Borst said dealers have drawn down their inventories, further denting Navistar’s production forecast. “We no longer believe we’ll be able to increase our market share as much as we’d originally expected heading into the year,” he said.

Navistar said performance in its second quarter reflected soft industry conditions; a stronger U.S. dollar; lower volumes in Mexico and export markets; and lower engine volumes in Brazil amid weak economic conditions there. The company also noted it had discontinued its Blue Diamond Truck joint venture in mid-2015.

Mr. Clarke said that turning a profit “underscores the tremendous progress we continue to make in managing our costs effectively and improving our operations.”

For the three months ended April 30, Navistar reported a profit of $4 million, or a nickel a share, compared with a year-earlier loss of $64 million, or 78 cents a share. Revenue slipped 18% to $2.2 billion.

Analysts had expected a loss of 16 cents a share on revenue of $2.19 billion.

Costs and expenses declined 21% from a year ago.

[kscarbel2]

Navistar Gains as First Profit Since 2012 Trumps Lower Forecast

Bloomberg  /  June 7, 2016

Navistar International Corp. surged the most in more than three years after the truckmaker reported a surprise quarterly profit, its first since 2012, outweighing concerns as the company lowered its 2016 forecasts.

The shares gained 24 percent to $15.11 at 12:31 p.m. New York time after rising as much as 29 percent, the biggest intraday jump since March 2013.

The company posted fiscal second-quarter net income of $4 million, helped by cost cuts, while the average of analyst estimates compiled by Bloomberg was a $15.2 million loss. The profit ended a 14-quarter streak of net losses and came amid a slump in demand for heavy-duty trucks. That downturn led Navistar to trim its full-year outlook for sales to $8.2 billion to $8.6 billion, from at least $9 billion, and for earnings before interest, taxes, depreciation and amortization to $550 million to $600 million, from a minimum of $600 million.

“We just completed an important quarter that shows the benefit of strong cost management as well as lean enterprise efforts and our ability to earn a profit despite industry headwinds,” Chief Executive Officer Troy Clarke told analysts on on a conference call. “While the second half poses new challenges due to softening industry conditions, we are a resilient organization and we intend to deliver the best achievable results.”

Navistar said in its statement Tuesday that structural cost reductions in its first half reached $113 million and that, including savings from materials and manufacturing, expense cuts for the full year are on track to exceed its goal of $200 million.

Joel Tiss, an analyst at BMO Capital Markets, said that the return to profitability helped ease concern that Navistar would have to restructure its debt. A number of bearish investors banking on that pessimistic outlook were buying back the stock after the results, boosting the share price, he said. Tiss rates the shares market perform.

[kscarbel2]

Navistar Reports First Quarterly Profit in 3 Years

Heavy Duty Trucking  /  June 7, 2016

Navistar International Corp. reported its first quarterly profit in three years, thanks to healthy parts sales and in spite of lower revenue. The company on Tuesday announced second quarter 2016 net income of $4 million, or $0.05 per diluted share, compared to a second quarter 2015 net loss of $64 million, or $0.78 per diluted share.

"For the first time since we launched our turnaround more than three years ago, Navistar reported a quarterly profit," said Troy Clarke, Navistar president and chief executive officer, in a statement. "Our performance this quarter begins to demonstrate the earnings potential of this company.

“The fact that we earned a profit despite lower Class 8 truck volumes that impacted the entire industry, underscores the tremendous progress we continue to make in managing our costs effectively and improving our operations," he added.

Revenues in the quarter were $2.2 billion, down 18% compared to $2.7 billion in the second quarter last year. The decline reflects lower volumes in the company's main American and Canadian markets, due to softer industry conditions and the discontinuation of the company's Blue Diamond Truck joint venture with Ford in mid-2015, the announcement said.

Another factor was lower engine sales volume in Brazil, which is in a deep economic slump amid political turmoil. This was partially offset by higher sales in the company's parts segment, per the announcement.

The company achieved $56 million in structural cost reductions during the second quarter. Year to date, structural cost reductions are at $113 million, the announcement said. When combined with material spending reductions and manufacturing savings, the company is on track to well exceed its total cost reduction goal of $200 million for 2016.

Navistar ended second quarter 2016 with $817 million in consolidated cash, cash equivalents and marketable securities. Manufacturing cash, cash equivalents and marketable securities were $732 million at the end of the quarter.

However, for the second half of 2016, Navistar lowered its industry guidance range by 20,000 units, due to softening Class 8 market conditions. Given this, along with slower than anticipated market share growth domestically, weaker export markets, and the impact of a stronger dollar, the company reduced its full-year revenue and adjusted guidance for earnings before interest, taxes, depreciation and amortization (EBITDA). 

"While we were net income positive in the second quarter, it will now be difficult for us to be profitable for the entire year given the tougher than anticipated market conditions, primarily due to the lower outlook for Class 8 industry volumes," Clarke said. "We are confident we will generate and implement additional performance improvements to partially offset current industry conditions."

Second quarter 2016 EBITDA was $135 million, compared to second quarter 2015 EBITDA of $85 million, the company said. This year's second quarter results included $52 million in adjustments, including $46 million to pre-existing warranty reserves.

As a result, second quarter adjusted EBITDA was $187 million, up 83%, compared to adjusted EBITDA of $102 million in the comparable period last year. The improvement was driven by continued strong cost management, product cost improvement and record Parts segment profitability.

Navistar emphasized bright spots in its products and services offerings. It said that orders for the HX series of premium vocational trucks, introduced in early February, are already more than 70% of what was expected for the fiscal year. Later in the quarter, the company announced the addition of the 8.9-liter Cummins ISL9 diesel as an option for its DuraStar and WorkStar models.

The company also said it made advances on its telematics-based, connected vehicle services during the quarter. OnCommand Connection, Navistar's open-architecture remote diagnostics service to International and other makes of trucks, surpassed the 200,000 subscriber mark.

Navistar also launched what it said is the industry's first Over-the-Air Programming service, which enables drivers or fleet managers to utilize a mobile interface to initiate engine programming over a safe, secure Wi-Fi connection. Since then, Navistar announced that it is offering Over-the-Air Programming with Cummins engines, including Cummins engines in vehicles not built by International.

[kscarbel2]

Navistar Reports First Profit in Three Years

Transport Topics  /  June 7, 2016

Navistar International Corp., the parent company of the International truck brand, said it turned its first profit in three years as second quarter 2016 net income reached $4 million, or five cents per diluted share.

That compares with a net loss of $64 million, or 78 cents, in the year-earlier period, it said.

The company said revenues in the quarter ending April 30 were $2.2 billion, down 18% compared with $2.7 billion in the second quarter last year.

“For the first time since we launched our turnaround more than three years ago, Navistar reported a quarterly profit,” Troy Clarke, Navistar CEO said in a statement. “Our performance this quarter begins to demonstrate the earnings potential of this company. The fact that we earned a profit despite lower Class 8 truck volumes that impacted the entire industry, underscores the tremendous progress we continue to make in managing our costs effectively and improving our operations.”

Two of the company’s four main business units saw income rise in the quarter: the parts segment increased to $176 million — a quarterly record — from $133 million a year earlier, while the financing unit’s income rose to $25 million, up from $22 million in the year-earlier period, it said.

The truck unit had a loss of $23 million compared with a loss of $51 million a year earlier, and global operations reported a loss of $1 million, compared with $1 million in profit in the same period one year ago, it said.

For the second half of 2016, Navistar said it lowered its industry guidance range by 20,000 units, due to softening Class 8 market conditions.

“While we were net income positive in the second quarter, it will now be difficult for us to be profitable for the entire year given the tougher than anticipated market conditions, primarily due to the lower outlook for Class 8 industry volumes,” Clarke said. “We are confident we will generate and implement additional performance improvements to partially offset current industry conditions.”

[DailyDiesel]

I think Troy Clarke has done a decent job managing this damaged company which was no easy task following the bomb job of Ustian.

[RoadwayR]

Not out of the woods yet, but solid progress.  Lots of new product coming, that will not hurt.

[kscarbel2]

And remember, Navistar's upcoming new "LT" range, the replacement for the ProStar, is due out later this year.

http://www.bigmacktrucks.com/topic/42260-navistar-readying-new-truck-lineup-for-2016/

 

[RoadwayR]

What do you hear of a replacement for the DuraStar?  

[kscarbel2]

5 hours ago, RoadwayR said:

What do you hear of a replacement for the DuraStar?  

Nothing yet about a Durastar replacement.....it still sells very well. The Cummins ISB option, available from 2013, has augmented current sales volume

(Ford's new for MY2016 Ohio-produced F-650/750 medium truck range was legless out of the gate because they decided NOT to offer the ISB, and also Allison transmissions).

As mentioned in the link, the new Class 4-5 truck will be called the "CV". I never cared for the aesthetics of the current Class 4-5 Terrastar.....too unattractive, awkward looking, ill proportioned.

[RoadwayR]

This just in:

http://www.trucktrend.com/news/1606-navistar-to-build-gm-cutaway-vans-in-2017/

 

 

 

[kscarbel2]

3 hours ago, RoadwayR said:

This just in:

http://www.trucktrend.com/news/1606-navistar-to-build-gm-cutaway-vans-in-2017/

Good for Navistar.

But the cutaway market is so small, small shuttle buses are the only application that absolutely requires them. I honestly don't see how GM and Ford make any money at it. It's mostly an exercise for image.

Anyone with a box body application (noting the photo in that article) would choose the vastly superior upcoming Chevrolet 4500 COE (Isuzu rebadge), or the GM version of the jointly designed Navistar conventional cab CV.

[RoadwayR]

In some applications the 'walk through' feature of a cut-away is an advantage.  They probably make a little money on them, they stay in production for a very long time so I don't imagine tooling costs are much.