Navistar International Corp. has announced a fourth quarter 2015 net loss of $50 million, or 61 cents per diluted share, compared to a fourth quarter 2014 net loss of $72 million, or 88 cents per diluted share. Revenues in the quarter were $2.5 billion.
This year’s fourth quarter included $69 million in restructuring-related and impairment charges; $40 million in pre-existing warranty adjustments; and $14 million in debt refinancing fees and costs. As a result, adjusted fourth quarter 2015 EBITDA was $209 million, equating to a fourth quarter adjusted EBITDA margin of 8.4 percent.
Revenues in the quarter declined 17 percent compared to fourth quarter 2014. Higher Class 6/7 medium and bus chargeouts in the company’s core (U.S. and Canada) market were more than offset by reduced volumes in the company’s export and global operations, lower Class 8 truck chargeouts in its core market and Navistar’s exit earlier this year from the Blue Diamond Truck joint venture.
“We delivered on our adjusted EBITDA end-of year run rate target of 8 percent or better, thanks to a favorable mix of truck sales and record parts profitability in our core North America market in the fourth quarter,” said Troy Clarke, Navistar president and CEO. “We also benefited from our continued focus on cost management across our operations, marked by a $74 million improvement in structural costs in the quarter.”
Navistar finished the fourth quarter 2015 with $1.01 billion in manufacturing cash, cash equivalents and marketable securities.
During the quarter, the company announced a long-term agreement with General Motors Co. (GM) to develop and assemble medium-duty, conventional cab Class 4/5 commercial vehicles, allowing Navistar to strengthen its product lineup. The trucks, which are scheduled to go into production in 2018 and will be built at Navistar’s Springfield, Ohio, plant, will be jointly developed using Navistar’s expertise in commercial vehicles and manufacturing capabilities and GM’s commercial components and engines.
As for full-year 2015 results, Navistar reported a net loss of $184 million, or $2.25 per diluted share, versus a net loss of $619 million, or $7.60 per diluted share, for fiscal year 2014. Fiscal year 2015 adjusted EBITDA was $494 million versus $306 million adjusted EBITDA for 2014. Revenue for fiscal year 2015 was $10.1 billion, compared to $10.8 billion in fiscal year 2014.
Chargeouts in the company’s core North America market increased by 3,500 units, or 6 percent, in 2015, reflecting an 18-percent increase in Class 6/7 medium trucks, a 10-percent increase in school buses, and a 7-percent increase in Class 8 severe service, partially offset by a 4-percent decline in Class 8 heavy truck. Total market share for Class 6-8 and bus for the year was 16 percent. Operationally, the company reduced its total costs by more than $300 million in 2015, including $114 million in structural cost reductions, with the remainder coming from reduced material and logistics spending and lower manufacturing costs.
“For the third consecutive year, we generated around $200 million in adjusted EBITDA improvement, and we expect this improvement trend to continue in 2016,” Clarke said. “We are building the best products we’ve ever built, and we are winning back customers. We have identified and begun implementing actions to further lower our material spend and structural costs, while driving greater efficiencies in our manufacturing operations. As a result, we expect to build on our 2015 progress, and our goal is to achieve profitability and be free cash flow positive in 2016.”
