Navistar raises truck delivery forecast; shares jump

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Reuters  /  December 18, 2018

Navistar International Corp reported a better-than-expected quarterly profit and raised its truck delivery forecast for 2019 on Tuesday, sending its shares up about 20 percent.

The company has gained traction from a robust U.S. economy and is seeing strong freight demand drive sales of its high-margin, heavy trucks that haul goods across the country.

The company's shares rose as much as 19.5 percent to $28.50 in morning trade, their biggest percentage gain in two years.

Navistar said it plans to deliver more of its long-haul Class 8 trucks - used by the rigs that transport freight across America's highways - next year, as hauliers rush to replace older vehicles with more fuel-efficient ones.

Production for these trucks is expected to rise 5 percent to 335,000 units in 2019, according to ACT Research, the industry body tracking the commercial vehicle market.

Lisle, Illinois-based Navistar said it now expects to deliver between 265,000 and 295,000 of its Class 8 vehicles in 2019, from the 255,000 units to 285,000 units range it forecast earlier.

The company said 2019 is shaping up as another very good year.

"Class 8 sales remain well above replacement demand ... and volumes grew 60 percent, well above the industry growth rate of 36 percent," Navistar Chief Executive Officer Troy Clarke said on a post-earnings call.

Navistar said volumes next year would get a boost from its recent launches in the Class 4 and Class 5 category. It expects to deliver between 395,000 and 425,000 units of Class 6-8 vehicles in 2019, from an earlier 385,000 units to 415,000 units range.

The company also raised its 2019 EBITDA guidance to between $850 million and $900 million, from an earlier forecast of $775 million to $825 million.

Revenue in the truck business, Navistar's biggest, rose 75.8 percent to $197 million in the fourth quarter ended Oct. 31. The company expects its 2019 revenue to be between $10.75 billion and $11.25 billion.

Net income attributable to the company rose 39 percent to $188 million. Earnings per share rose to $1.89 from $1.36 per share, beating analysts' average expectation of $1.71.

Navistar's revenue rose to $3.32 billion from $2.6 billion, also beating estimates.

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Navistar's Clarke Calls 2018 a 'Breakout Year' in Financial Results

Heavy Duty Trucking (HDT)  /  December 18, 2018

Navistar International announced its fourth quarter 2018 financial results, reporting a net income of $188 million, up $53 million from the same quarter last year.

For the whole fiscal year, Navistar reported a net income of $340 million, way up from just $30 million in net income for fiscal year 2017.

Fourth quarter adjusted EBITDA increased 20% to $322 million, compared to $268 million one year ago. Fiscal year 2018 adjusted EBITDA saw a 42% increase to $826 million from $582 million in 2017. Full-year adjusted EBITDA margins increased to 8.1% up from 6.8% for 2017. This marks the sixth consecutive year of annual growth in adjusted EBITDA on both a dollar and percentage basis for the company.

"2018 was a very strong year for the industry, and a breakout year for Navistar," said Troy Clarke, chairman, president and CEO. "We were the only truck OEM to grow Class 8 share during the year. With the industry's newest product lineup, superior quality, and a strong focus on customer uptime, we expect to gain market share in 2019 for the third year in a row."

Revenues in the quarter increased 28%, to $3.3 billion, compared to fourth quarter 2017. The revenue increase was largely driven by a 45% increase in the company's "Core" volumes, which represent its sales of Class 6-8 trucks and buses in the United States and Canada. For the Class 8 retail market alone, Navistar’s share grew to 13.5% in fiscal year 2018 versus 11.8% in fiscal year 2017.

For 2019, Navistar provided industry and financial guidance. The company expects retail deliveries of Class 6-8 trucks and buses in North America to be 295,000 to 425,000 units, with Class 8 truck deliveries making up 265,000 to 295,000 units. Revenues are expected to be between $10.75 billion and $11.25 billion and adjusted EBITDA is expected to be between $850 million and $900 million.

"While we expect 2019 to be another strong year for Navistar and the industry, it's important to recognize that Navistar as an investment is much more than just a cycle play," said Clarke. "As our ongoing improvements demonstrate, the company also has strong opportunities to benefit by recapturing market share, growing parts revenue, improving margins, generating free cash flow and further de-risking the balance sheet."

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