Navistar International Corp. announced a second quarter (Q2) 2017 net loss of $80 million, or $0.86 per diluted share, compared to a second quarter 2016 net income of $4 million, or $0.05 per diluted share.
Revenues in the quarter were $2.1 billion, down 5% compared to $2.2 billion in the second quarter last year. The decrease primarily reflects lower volumes in the company’s Core (Class 6-8 trucks and buses in the United States and Canada) market, where chargeouts were down 5%, but higher than industry core market volumes, which were down 13% year-over-year.
Q2 2017 EBITDA was $47 million, compared to Q2 2016 EBITDA of $135 million. This year’s second quarter results included $18 million in adjustments primarily resulting from pre-existing warranties, asset impairment charges, restructuring of manufacturing operations, and debt financing charges. Second quarter adjusted EBITDA was $65 million, compared to adjusted EBITDA of $187 million in the comparable period last year. Higher used truck losses primarily resulting from a $60 million increase to the used truck reserve for the company’s legacy MaxxForce 13 used truck inventory was the largest contributor to the year-over-year decline. The company is changing its sales strategy for its MaxxForce 13-liter used trucks to take advantage of additional opportunities to sell more units into export markets, a move it expects will accelerate efforts to reduce its inventories of these trucks.
Navistar ended Q2 2017 with $949 million in consolidated cash, cash equivalents and marketable securities. Manufacturing cash, cash equivalents and marketable securities were $918 million at the end of the quarter.
“We are on track to improve on last year’s results, but still have quite a bit of work to do in the second half,” said Troy Clarke, Navistar’s chairman, president and chief executive officer. “However, the work we’ve done in the first six months growing share, building our backlog, and managing costs, combined with improving industry conditions, positions us to deliver a stronger second half.”
The company detailed its second quarter highlights as follows:
- Improving Core market share, with additions to the company’s production schedule and extensions of the company’s backlog into the fourth quarter.
- Strengthening competitive presence in the Class 8 market, including ramped-up deliveries of the new International LT Series with the Cummins ISX 15 liter engine; introduction of the new RH Series of Class 8 regional haul tractors; and unveiling of the new International A26 12.4-liter engine, which launches in the LT and RH Series in the coming weeks.
- Significant defense wins, including two foreign military contracts to reset, upgrade and support 1,085 long wheel base MaxxPro Mine Resistant Ambush Protected (MRAP) vehicles; and to produce and support 40 MaxxPro Dash DXM MRAP vehicles for foreign military sales.
- Progress on new sources of revenue, including full-run-rate production of General Motors’ cutaway G van at Navistar’s Springfield, Ohio plant; expansion of Navistar’s connected vehicle services under the OnCommand Connection brand, which now includes more than 300,000 subscribers; announcing its Electronic Driver Log app, which will assist smaller fleets and owner-operators in complying with new federal regulations; and the unveiling of OnCommand Connection Marketplace, a new, open-architecture, cloud-based technology platform for a broad range of driver support tools and applications.
- Closing its wide-ranging strategic alliance with Volkswagen Truck & Bus, under which the two companies are already collaborating on a number of potential technology projects, and in a procurement joint venture, which is identifying cost-saving opportunities and is expected to be accretive year one.
- Naming Persio V. Lisboa as executive vice president and chief operating officer. “Persio played a key role in creating our alliance with Volkswagen Truck & Bus, and led many of the initiatives to improve our operations during the turnaround,” Clarke said. “His focus in this new role will be to build on the progress we’ve made over the last four years.”