Class 8 Sales Boost Navistar Profit in ‘Breakout’ Year
Navistar International Corp. reported growth in net income, with a 39.2% increase in profit for its fiscal fourth quarter. The Lisle-Ill.-based original equipment manufacturer said 2018 was a strong year for the trucking industry and a “breakout year” for the company.
For the period ended Oct. 31, net income was $188 million, or $1.89 per diluted share, compared with $135 million, or $1.36, a year earlier, according to a Navistar earnings release issued Dec. 18.
Revenue in the quarter increased 28%, to $3.3 billion, compared with $2.6 billion in the fourth quarter of 2017.
Navistar said its vocational International HV Series improved order share resulting in a strong backlog. (John Sommers II for Transport Topics)
Navistar officials said the revenue surge largely was driven by a 45% increase in the company’s sales of Classes 6, 7 and 8 trucks and buses in the United States and Canada.
“2018 was a very strong year for the industry and a breakout year for Navistar,” Chairman and CEO Troy Clarke said.
The truck segment’s sales in the United States, Canada and Mexico surged in the final quarter of 2018, leaping to $197 million in revenue, compared with $112 million in sales in the final quarter of 2017, a 75.9% increase.
Navistar said the year-over-year change primarily was due to the impact of higher volume in targeted markets and strong defense results, partially offset by higher commodity and structural costs, as well as the impact of supplier constraints.
Earlier this month, Cerberus Capital Management, an investment firm specializing in credit, private equity and real estate, acquired a 70% interest in Navistar Defense. Financial terms were not disclosed.
Navistar Defense manufactures tactical wheeled vehicles, serving military, law enforcement and government agencies internationally.
For fiscal 2018, Navistar’s overall truck segment recorded a profit of $397 million, compared with a fiscal 2017 loss of $6 million.
Navistar cited strong sales of its International LT Series. (John Sommers II for Transport Topics)
Navistar said the truck-profit improvement was driven by the impact of strong volume. It cited strong sales of the International LT Series on-highway truck and the 12.4-liter A26 engine. The company’s IC Bus school buses, led by alternative-fuel offerings, also improved retail share by 1.3 points, according to the earnings release.
Navistar said its medium-duty International MV series and vocational International HV Series improved order share resulting in a strong backlog.
The company reported a backlog of 45,400 various units, up from 15,600 at the end of 2017.
Navistar said it also benefited from markets, higher other income, higher profitability in defense and a decline in used truck losses.
Its global operations reported quarterly revenue of $4 million, compared with $1 million in the fourth quarter of 2017. Navistar officials said that increase was due mostly to Brazil’s stronger economy, and the sales of the MWM engine.
The OEM said it achieved 1.7 share-point growth in the Class 8 market and was the only one to grow Class 8 share during the year.
The company said retail deliveries of Classes 6-8 trucks and buses in the United States and Canada are forecast to range between 395,000 and 425,000 units, with Class 8 retail deliveries of 265,000 to 295,000 units.
Navistar projected 2019 revenue to be between $10.75 billion and $11.25 billion. Adjusted earnings before interest, taxes, depreciation and amortization is expected to be between $850 million and $900 million.
Navistar said it improved its debt profile in October by repaying its 4.5% senior subordinated convertible notes issued in October 2013. Repayment of the outstanding principal of $200 million at maturity was funded with cash on hand.
