Navistar Reports Net Loss in Fiscal Year Q1
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Navistar International Corp. reported a net loss and lower revenue for its fiscal first quarter amid lower volumes as the industry continued to transition to a softer freight market.
For the quarter ended Jan. 31, Navistar reported a net loss of $36 million, or loss of 36 cents per share, compared with earnings of $11 million, or 11 cents, a year earlier. Profit at its truck, parts and financial services segments fell, with the truck business posting a loss that partially was offset by the ramp-up of Class 4 and Class 5 units.
Revenue slipped to $1.8 billion compared with $2.4 billion in the same 2019 period. The decrease primarily was driven by a 39% decline in the company’s core volumes, which represent its sales of classes 6-8 trucks and buses in the United States and Canada.
Clarke
“While revenues are down year-over-year, these results are in line with the guidance we provided in December as the industry works through a transition period,” Chairman and CEO Troy Clarke said in a release. “Throughout the quarter, we implemented actions to lower costs, yet the results were impacted by lower volumes.”
Clarke said he expected the second half of the year to be stronger, and the company is positioned to take advantage of that shift. Previously, the company has noted its first quarter typically is its weakest.
Meanwhile, the truck segment had a loss of $58 million on sales of $1.2 billion, compared with a profit of $90 million and revenue of $1.8 billion a year earlier. The year-over-year decrease primarily is due to lower volumes in the company’s core markets, partially offset by the ramp-up of Classes 4-5 units. The year-over-year decline primarily is attributed to lower volumes in North America, and higher used truck losses and warranty expenses. Additionally, a $54 million gain was recorded in the first quarter of 2019 related to the sale of a 70% equity interest in Navistar Defense.
Today we announced our 2020 first quarter results. Read the full press release at https://t.co/NfEiBrvM8t. — Navistar Newsroom (@NavistarNews) March 4, 2020
For the quarter, the parts segment net sales decreased to $493 million, and segment profit decreased to $119 million, compared with $548 million and $144 million, respectively, a year earlier. The results reflected weaker industry conditions in the U.S. and Canada, which drove lower volumes.
Global operations net sales decreased to $68 million and it broke even compared with sales of $73 million and profits of $6 million a year earlier.
Host Seth Clevenger went to CES 2020 in Las Vegas and met with Rich Mohr of Ryder Fleet Management Solutions and Stephan Olsen of the Paccar Innovation Center to discuss how high-tech the industry has become. Listen to a snippet above, and to hear the full episode, go to RoadSigns.TTNews.com.
Its financial services revenues decreased to $57 million, and segment profit decreased to $17 million, compared with $74 million and $31 million, respectively, in the 2019 period. The year-over-year decrease primarily was driven by lower originations and average receivable balances.
During the quarter, the company received an unsolicited proposal from its Germany-based alliance partner, Traton, regarding a potential transaction to acquire the company. Navistar’s board of directors is reviewing and evaluating the proposal, according to the Lisle, Ill.-based truck maker.
Also in the quarter, Navistar received final approval of the MaxxForce exhaust gas recirculation engine legal settlement in the U.S. As a result, the company funded $85 million in February, relating to the cash portion of the settlement.
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