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Navistar’s (NAV) Q1 Earnings Beat Estimates, Revenues Miss

Zacks

Navistar International Corporation’s NAV adjusted loss was 24 cents per share in first-quarter fiscal 2018 (ended Jan 31, 2018), narrower than the Zacks Consensus Estimate of a loss of 41 cents. In the year-ago period, the company reported the loss of 76 cents per share.

Navistar recorded net loss of $73 million compared with the net loss of $62 million in the prior-year quarter.

Navistar’s revenues increased 15% year over year to $1.91 billion in the reported quarter. However, revenues came in lower than the Zacks Consensus Estimate of $1.94 billion. This year-over-year improvement was primarily driven by a 24% increase in sales volume of the company’s Class 6-8 vehicles in the United States as well as Canada.

Segment Details

During the quarter, revenues at Navistar’s Truck segment increased to $1.25 billion, a surge of $224 million from the year-ago figure. This improvement primarily occurred on the back of higher volumes in the company’s Core markets, a rise in military sales and the production of GM-branded units manufactured at Springfield, OH plant. This was partly offset by a fall in the Mexico and export truck volumes. The segment recorded a loss of $7 million during the quarter.

Revenues at Navistar’s Parts segment were $568 million, a loss of $2 million compared with the level recorded in the same period last year. The results were affected by the expected runoff in Blue Diamond Parts (BDP) sales, partially offset by the higher U.S. and Canada parts sales. The segment registered an income of $137 million, a minor decline from the preceding year.

Revenues at Navistar’s Global Operations segment were $81 million, up 62% year over year. The results were aided by higher engine volumes in South America engine operations because of the strength of the Brazilian economy. However, the segment recorded a loss of $7 million during the reported period.

Revenues at Navistar’s Financial Services segment were $59 million in comparison with the year-ago quarter’s tally of $54 million. This improvement was primarily driven by higher portfolio yields, higher overall finance receivable balances in Mexico and favorable movements in foreign currency exchange rates impacting the Mexican portfolio. The segment registered an income of $20 million during the quarter.

Financial Position

Navistar had cash and cash equivalents of $699 million as of Jan 31, 2018, down from $706 million as of Oct 31, 2017. As of Jan 31, 2018, long-term debt was $4.17 billion in comparison with $3.89 billion as of Oct 31, 2017.

During the quarter, capital expenditure totaled $30 million, down from $46 million recorded in the year-ago quarter.

Guidance

In fiscal 2018, Navistar projects the retail deliveries of Class 6-8 trucks and buses in the United States and Canada between 360,000 and 390,000 units, up from the previous projection of 345,000-375,000 units.

Further, revenues for fiscal 2018 are expected to be $9.25-$9.75 billion, up from the prior projection of $9-$9.5 billion. Adjusted EBITDA is anticipated to be $700-$750 million in comparison with the prior estimation of $675-$725 million. Manufacturing cash at fiscal 2018-end is projected at around $1.1 billion, up from the prior projection of $1 billion.

Navistar carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the auto space are General Motors Company GM, Volkswagen AG VLKAY and AB Volvo VLVLY. While General Motors sports a Zacks Rank #1 (Strong Buy), both Volkswagen and AB Volvo carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

General Motors has an expected long-term growth rate of 8.4%. In the past year, shares of the company rose 2.7%.

Volkswagen has an expected long-term growth rate of 18.7%. The shares of the company gained 28.8% last year.

AB Volvo has an expected long-term growth rate of 15%. Last year, shares of the company rallied 33.8%.

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