Navistar Crushes Third Quarter Revenue And Profit Projections

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Navistar International Corp. (NYSE: NAV) crushed fiscal third quarter analyst estimates, posting  higher revenue, profits and market share.

The Lisle, IL-based truck and bus maker reported net income of $156 million, or $1.56 per diluted share, compared with third quarter 2018 net income of $170 million, or $1.71 per diluted share. 

Navistar said it has reduced assembly production rates at plants in Ohio and Mexico by 15 percent, reversing production added through overtime and weekend shifts earlier in the year. 

Crushing consensus

Ten analysts who cover the company estimated earnings per share of $1.21, according to investor site Seeking Alpha. Navistar shares traded as much as 11% higher in premarket activity on Wednesday, Sept. 4.

Revenues in the quarter were $3 billion, up 17% from the same period a year ago. That was primarily due to a 28% increase in volumes in sales of Class 6-8 trucks and buses in the United States and Canada. The consensus estimate for revenue was $2.92 billion.

Market share for the year is expected to be 18.5% to 19% toward the company implied goal of 25% share by 2025.

“This was another great quarter for Navistar,” said Troy Clarke, Navistar chairman, president and chief executive officer. “Market share increased, revenues and earnings grew at double-digit rates, and we made significant investments in our operations and our Uptime promise.”

Service expansion

Navistar’s partnership with Love’s Travel Stops and Country Stores and its Speedco service centers in August activated the commercial vehicle industry’s largest service network in North America with more than 1,000 outlets.

The company also opened a parts distribution center near Memphis, TN, to meet the growing demand for parts and faster maintenance turnaround times. A retail inventory management system resulted in 50% fewer emergency parts orders.

Navistar forecasts the industry will deliver an estimated 295,000 to 315,000 Class 8 trucks in the United States and Canada this year. It pegs 2020 deliveries between 210,000 and 240,000 units.

Additional financials

Third quarter 2019 adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) was $266 million, compared to $218 million in the fiscal third quarter of 2018. 

Adjusted net income grew 55% to $147 million, compared to $95 million in the same period last year.

Navistar ended the quarter with $1.16 billion in consolidated cash, cash equivalents and marketable securities.  

The company announced during the quarter it would invest $125 million in new and expanded manufacturing facilities at its Huntsville, AL, plant to produce next-generation big-bore powertrains developed with its global alliance partner Traton.

Navistar reaffirmed guidance for 2019 full-year revenues of between $11.25 billion and $11.75 billion. The company expects adjusted EBITDA to be between $875 million and $925 million.

“We are on course for a strong end to 2019, and we’re not standing still,” Clarke said. “The company is recapturing market share and is growing revenue, EBITDA and cash flow. We remain focused on setting ourselves up for long-term success.”

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