Navistar International Corp. has announced second quarter 2019 net loss of $48 million, or 48 cents per diluted share, compared to second quarter 2018 net income of $55 million, or 55 cents per diluted share. The loss reflected a one-time charge of $159 million to address a legal class action settlement and related litigation from legacy engines.
Adjusted net income for the second quarter grew 57 percent to $105 million versus $67 million in the same period one year ago.
Revenues in the quarter were $3 billion, up 24 percent compared to $2.4 billion in the second quarter last year. The increase primarily reflects higher volumes in the company’s core (Class 6-8 trucks and buses in the United States and Canada) market, where chargeouts were up 35 percent.
Second quarter adjusted EBITDA was up 23 percent to $224 million, compared to adjusted EBITDA of $182 million in the comparable period last year.
“In the second quarter, Navistar accelerated market share growth, demonstrating the success of our new product lineup,” said Troy Clarke, Navistar chairman, president and CEO. “We grew revenue and adjusted EBITDA, stepped up our Uptime value proposition, and lowered our risk profile, enabling the company to focus intensely on the road ahead.”
Navistar ended second quarter 2019 with $1 billion in consolidated cash, cash equivalents and marketable securities. Manufacturing cash, cash equivalents and marketable securities were $950 million at the end of the quarter.
During the quarter, Navistar announced multiple new initiatives that will improve customer uptime. First, the company created a new Aftersales function that will manage every facet of the business after the sale of the truck, including oversight of parts and service, warranty and dealer development, in order to drive improved customer total cost of ownership. In addition, a new partnership with Love’s Travel Stops created the commercial transportation industry’s largest service network with more than 1,000 locations in North America, increasing customers’ repair velocity and their options for same-day repairs. To expedite parts deliveries, Navistar is establishing a new Parts Distribution Center (PDC) in Memphis, Tennessee, while also enhancing its dealer parts inventory management system to increase the breadth of parts already on its dealers’ shelves.
Navistar also took additional actions to further improve its balance sheet and reduce its risk profile. First, the company repaid its $411 million in subordinated convertible notes issued in 2014 with cash on hand. In addition, just last week, Navistar Financial Corp. closed a new five-year, nearly $750 million credit facility with a syndicate of 15 banks and repaid its $400 million Term Loan B issued in July 2018. The new facility provides additional liquidity at a lower cost of borrowing.
Based on strong industry conditions, the company raised its 2019 full-year industry and financial guidance to include the following:
• Industry retail deliveries of Class 6-8 trucks and buses in the United States and Canada are forecast to be 425,000 to 445,000 units, with Class 8 retail deliveries of 290,000 to 310,000 units.
• Navistar revenues are expected to be between $11.25 billion and $11.75 billion.
• The company’s adjusted EBITDA is expected to be between $875 million and $925 million.
Navistar’s 2019 industry and financial guidance does not include the impact of possible tariffs from goods crossing the Mexican border. When additional information becomes available, the company said its industry and financial guidance will be reassessed and, if necessary, adjusted accordingly.