Navistar Posts 2Q Profit
Truck and engine manufacturer Navistar International Corp. reported net income of $55 million, or 55 cents per diluted share, for the second quarter of 2018, rebounding from a net loss of $80 million, or 86 cents, in the year-ago period, the company announced.
The Lisle, Ill.-based company said that 2Q revenue rose 16% to $2.4 billion from $2.1 billion a year ago, boosted primarily by higher volume in the United States and Canada in its core Classes 6-8 truck business.
Clarke
“We had a great second quarter, delivering stronger than expected results by taking advantage of the robust market conditions,” Navistar CEO Troy Clarke said. “The market continues to respond favorably to our new products, especially our LT Series on-highway tractor and the 13-liter A26 engine, which helped us capture two points of year-over-year share growth in the Class 8 segment.”
For the quarter, earnings before interest, taxes, depreciation and amortization rose to $174 million from $47 million in the second quarter of 2017. Adjusted EBITDA was $182 million, compared with $65 million in the year-ago period.
Navistar’s truck segment posted a 2Q profit of $42 million, bouncing back from a loss of $56 million in the comparable period. Net sales for the business unit rose 22% to $1.7 billion. In addition to the gains in North America, the company cited higher export volumes, an increase in military sales and a shift in model mix for the segment’s gains. The gains were partially offset, however, by a decline in truck volumes in Mexico, Navistar said.
In the company’s parts segment, 2Q net sales fell 1% to $601 million, a decline of $9 million, on lower U.S. volume that was partially offset by gains in Mexico.
The parts segment recorded a quarterly profit of $132 million in second quarter of 2018, down 14% from last year’s profit of $153 million due primarily due to lower U.S. margins, higher freight-related expenses and intercompany access fees, Navistar said.
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In its global operations segment, net sales grew 39% to $97 million versus 2Q 2017, driven primarily by higher engine volumes in the Navistar’s South America engine operations. The segment recorded a $1 million profit for the quarter, rebounding from a $7 million loss one year ago. Navistar attributed the improvement to higher engine volumes and cost-reduction efforts adopted last year.
Boosted by strong industry conditions, Navistar revised upward its full-year guidance. It now forecasts industry retail deliveries of Classes 6-8 trucks and buses in the United States and Canada of between 380,000 units to 410,000 units, with Class 8 retail deliveries of 250,000 to 280,000 units. It forecasts full-year revenue of between $9.75 billion and $10.25 billion, and adjusted EBITDA of between $725 million and $775 million.
The projections are up from Navistar’s expectations at the end of the first quarter, when it forecast full-year U.S. and Canadian retail deliveries of between 360,000 and 390,000 units, with Class 8 retail deliveries of between 235,000 and 265,000. At that time, it projected 2018 revenue of between $9.25 billion and $9.75 billion, and adjusted EBITDA of between $700 million and $750 million.
“The work we’ve done in the first half of the year growing Class 8 share, building our backlog and managing costs, combined with strong industry conditions, positions us to deliver an even stronger second half,” Clarke said in the company’s second-quarter release.
