Industrials

Navistar Plummets on Loss, Lower Guidance

Paul Ausick

Published: March 8, 2016 11:45 am

Last Updated: January 13, 2020 12:14 pm

Navistar International Corp. (NYSE: NAV) reported first-quarter fiscal 2016 results before markets opened Tuesday. The heavy truck and engine maker reported a net loss per share of $0.40 on revenues of $1.77 billion. In the same period a year ago, Navistar reported a loss of $0.52 on revenue of $2.42 billion. First-quarter results also compare to the Thomson Reuters consensus estimates for a net loss of $0.69 and $2.07 billion in revenue.

The revenue decline reflects lower volumes in Navistar’s core U.S. and Canadian markets, due to softer industry conditions; lower volumes in Mexico and export markets, reflecting a stronger U.S. dollar; and lower engine volumes in Brazil, due to ongoing weak economic conditions in that country. Additionally, one-quarter of the year-over-year decline was due to the discontinuation of the company’s Blue Diamond Truck joint venture in mid-2015.

The company’s CEO said:

Despite a lower revenue base, we continued to unlock value by significantly improving adjusted EBITDA through managing and optimizing our costs. We are encouraged by our Q1 performance and remain on track to achieve our goals of returning to profitability and generating manufacturing free cash flow in 2016.

The company revised its full 2016 fiscal year guidance to a range of $9.0 billion to $9.5 billion and narrowed its adjusted EBITDA range to $600 million to $650 million. The company continues to forecast that it will be profitable and cash-flow positive in its manufacturing by the end of 2016.

Among other troubles, Navistar is dealing with falling demand for commercial trucks. High inventory levels are another weight on the company. It hopes to introduce a new product every six months on average, completely refreshing the product line by 2018.

Shares traded down about 11% late Tuesday morning, at $10.46 in a 52-week range of $5.78 to $31.28. Thomson Reuters had a consensus analyst price target of around $12.22 before the results were announced.