Truck maker Navistar International Corp. posted a net loss in its fiscal first quarter as revenue climbed 15%. The company described the results as better than expected.
For the quarter ended Jan. 31, the company posted a net loss of $73 million, or 74 cents per diluted share, on revenue of $1.90 billion. That compares with a net loss of $62 million, or 76 cents, on revenue of $1.66 billion in the first quarter of 2017.
“This year’s loss included a $46 million charge for the extinguishment of unamortized debt issuance costs associated with debt securities refinanced in November,” Navistar Chief Financial Officer Walter Borst said in an earnings call with financial analysts.
“The new U.S. tax reform act will not have a material net impact to our consolidated financials in the near term,” he said.
Sales in the truck segment jumped 22% to $1.25 billion, driven largely by Class 8 volumes, but the unit posted a net loss of $7 million compared with a net loss of $63 million in the same period a year ago.
“The volume growth, together with improved military sales and used truck performance, offset higher structural costs. The truck segment was nearly breakeven in what is typically the, seasonally, weakest quarter of the year due to its lower operating days together with this year’s extended shutdown of the Escobedo facility,” Borst said.
The company in December shut down the plant for two weeks for upgrades ahead of expected production increases.
Navistar reported its Class 8 backlog now is filling out the third quarter and it has raised its build rate 27%.
In the parts segment, profit slipped to $137 million, down $8 million year-over-year, reflecting higher freight costs and inter-company access fees and lower Blue Diamond Parts margins.
Profit at its financial services segment rose to $20 million compared with $13 million in the same 2017 quarter. It cited higher revenue, a lower provision for loan losses and improved interest margins as factors in increased profitability.
The Lisle, Ill.-based company raised its expectations for Class 8 retail deliveries this year to 235,000-265,000 units.
Navistar raised expectations for full-year revenue by $250 million to a range of $9.25 billion to $9.75 billion. It adjusted earnings before interest, taxes, depreciation and amortization by $25 million to a range of $700 million to $750 million in 2018.
The alliance with Volkswagen Truck & Bus also is ahead of schedule to deliver an anticipated $500 million in savings, Navistar CEO Troy Clarke said during the earnings call.
The alliance also is “accelerating development of future products. Work on the next-generation big-bore engine is underway, and electric vehicles are being developed in both school bus and medium-duty. These two segments are the sweet spot for electric commercial vehicles because of their shorter routes, less-complex charging infrastructure and near-term potential for environmental impact in urban areas,” he said.
Navistar OnCommand Connection (Navistar International Corp.)
At the same time, Navistar and VW are on track to converge some of the features of Navistar’s connected vehicle platform, OnCommand Connection — which has 425,000 subscribers — with VW’s similar RIO platform.
“This convergence will create benefits of global scale. And we’ll also expand the offerings available through the OnCommand Connection marketplace, which is our cloud-based e-commerce platform for telematics services and other driver support tools,” Clarke said.
Meanwhile, Navistar increased its cash guidance, and expects to end 2018 with about $1.1 billion of manufacturing cash after repaying the $200 million convertible notes due in October.
“Our investments in new products and services are paying off, and we are benefiting from the current market upturn,” Clarke said. “We are confident that 2018 will be the breakout year for Navistar.”