Navistar International Corporation NAV reported fourth-quarter fiscal 2015 (ended Oct 31, 2015) adjusted net earnings from continuing operations of 36 cents per share, compared with adjusted net loss of 52 cents per share recorded in the year-ago quarter. However, earnings per share in the reported quarter missed the Zacks Consensus Estimate of a profit of 58 cents.
On a reported basis, Navistar recorded net loss from continuing operations of $50 million or 61 cents per share, narrower than a loss of $72 million or 88 cents per share in the year-ago quarter.
Navistar’s revenues dropped 17% year over year to $2.49 billion in the quarter, surpassing the Zacks Consensus Estimate of $2.47 billion. Revenues were affected by lower volumes in export and Global Operations segment, lower Class 8 truck chargeouts in its Core market and exit from the Blue Diamond Truck joint venture. However, revenues benefited from higher Class 6/7 medium and bus chargeouts in the U.S. and Canada.
Fiscal 2015 Results
Navistar reported adjusted loss from continuing operations of $49 million or 60 cents per share in fiscal 2015, compared to a loss of $270 million or $3.32 per share in fiscal 2014. The loss of 60 cents per share was narrower than the Zacks Consensus Estimate of loss of $1.02. On a reported basis, Navistar reported a loss from continuing operations of $184 million or $2.25 per share in fiscal 2015, compared to a loss of $619 million or $7.60 per share in fiscal 2014.
Revenues inched dropped 6.2% to $10.1 billion from $10.8 billion in fiscal 2014, beating the Zacks Consensus Estimate of $10.1 billion.
Segment Details
Revenues at Navistar’s Truck segment decreased 18.2% year over year to $1.7 billion. The segment recorded a loss from continuing operations of $36 million, way narrower than a loss of $40 million in the prior-year quarter. The year over year improvement was driven by efficient cost management, favorable mix in the Core market, and improved margins, offset by lower chargeouts in the Core market.
Revenues at Navistar’s Parts division fell 6.1% year over year to $649 million in the reported quarter. The segment registered a profit of $163 million, higher than $150 recorded in the year-ago quarter. The profits can be largely attributed to margin improvement in the commercial markets.
Revenues at Navistar’s Global Operations segment dropped 48.7% to $115 million from $224 million a year ago. The segment recorded a loss of $27 million in the quarter compared with a loss of $56 million a year ago. The year-over-year improvement in results was driven by actions undertaken by the company to lower the company's cost structure in its South American engine business, and the impact of the ongoing downturn in Brazil's economy.
Revenues at Navistar’s Financial Services segment decreased 3.3% to $58 million from $60 million a year ago. The segment registered profits of $26 million, same as the corresponding quarter of fiscal 2014.
Financial Position
Navistar had cash and cash equivalents of $912 million as of Oct 31, 2015, up from $497 million as of Oct 31, 2014. As of Oct 31, 2015, notes payable and long-term debts totaled $5.3 billion compared with $5.2 billion as of Oct 31, 2014.
Net cash flow from operating activities totaled $46 million fiscal 2015 versus cash used from operating activities of $336 million in the same period a year ago. Capital expenditures were $115 million, up from 88 million in the previous fiscal year.
Guidance
Navistar forecasts Class 6–8 retail deliveries for fiscal 2016 in the U.S. and Canada in the range of 350,000–380,000 units. Revenues for fiscal 2016 are expected to be in the range of $9.5 – $10.0 billion. Adjusted EBITDA for 2016 are anticipated in the band of $600–$700 million.
Navistar manufactures and sells commercial trucks, mid-range diesel engines, buses, military vehicles and chassis for motor homes and step-vans. It also provides service parts for trucks and trailers.
Zacks Rank & Stocks to Consider
Currently, Navistar carries a Zacks Rank #3 (Hold). Better ranked automobile stocks include American Axle & Manufacturing Holdings Inc. AXL, Fox Factory Holding Corp. FOXF and O'Reilly Automotive Inc. ORLY. All these stocks carry a Zacks Rank #2.
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