Navistar International Corporation NAV reported fourth-quarter fiscal 2015 (ended Oct 31, 2015) adjusted net earnings from continuing operations of 36 cents per share, as against an adjusted net loss of 52 cents per share posted in the year-ago quarter. However, earnings per share in the reported quarter missed the Zacks Consensus Estimate of 58 cents.
On a reported basis, Navistar recorded a 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 prior-year quarter.
Navistar’s revenues fell 17% year over year to $2.49 billion in the quarter, but marginally surpassed the Zacks Consensus Estimate of $2.47 billion. Revenues were hurt by lower volumes in export and the Global Operations segment, lower Class 8 truck chargeouts in its Core market, and the company’s 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 an adjusted loss from continuing operations of $61 million or 75 cents per share in fiscal 2015, compared with a loss of $270 million or $3.31 per share in fiscal 2014. Loss per share was narrower than the Zacks Consensus Estimate of a 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 with a loss of $619 million or $7.60 per share in fiscal 2014.
Revenues dropped 6.2% to $10.1 billion from $10.8 billion in fiscal 2014. The figure was in line with the Zacks Consensus Estimate.
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, 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 million recorded in the year-ago quarter. The increase can be largely attributed to margin improvement in the commercial markets.
Revenues at Navistar’s Global Operations segment plunged 48.7% to $115 million from $224 million a year ago. The segment recorded a loss of $27 million in the quarter, much narrower than a loss of $56 million a year ago. The year-over-year improvement in results was backed by actions undertaken by the company to lower the cost structure in its South American engine business, along with 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 a profit of $26 million, flat year over year.
Financial Position
Navistar had cash and cash equivalents of $912 million as of Oct 31, 2015, up significantly from $497 million as of Oct 31, 2014. As of Oct 31, 2015, notes payable and long-term debt totaled $5.3 billion, compared with $5.2 billion as of Oct 31, 2014.
Net cash flow from operating activities totaled $46 million in 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 fiscal 2014.
Guidance
Navistar projects 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 in the band of $9.5–$10.0 billion. Adjusted EBITDA for fiscal 2016 is anticipated to be $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.
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 carrying a Zacks Rank #2 (Buy).
(We are reissuing this article to correct a mistake. The original article, issued on Dec 17, 2015, should no longer be relied upon).
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