NAVISTAR REPORTS 2016 FOURTH QUARTER RESULTS

ISLE, Ill., Dec. 20, 2016 /PRNewswire/ -- Navistar International Corporation (NYSE: NAV) today announced a fourth quarter 2016 net loss of $34 million, or $0.42 per diluted share, compared to a fourth quarter 2015 net loss of $50 million, or $0.61 per diluted share. Revenues in the quarter were $2.1 billion.

Fourth quarter 2016 EBITDA was $95 million versus EBITDA of $86 million in the same period one year ago. This year's fourth quarter included $9 million in net charges for asset impairments and restructurings, and $8 million in pre-existing warranty adjustments. As a result, adjusted fourth quarter 2016 EBITDA was $112 million.

Revenues in the quarter declined 17 percent compared to fourth quarter 2015. The revenue decrease was largely driven by an 18 percent decline in the company's Core (Class 6-8 trucks and buses in the United States and Canada) charge-outs, to 13,000 units. This decline largely reflects continued softening of Class 8 industry volumes in the U.S. and Canadian markets.  

Navistar finished the fourth quarter 2016 with $850 million in consolidated cash, cash equivalents and marketable securities and $800 million in manufacturing cash, cash equivalents and marketable securities.

"In the fourth quarter and throughout the full year, we've demonstrated our ability to lower our break-even point and improve our operations," said Troy A. Clarke, Navistar president and chief executive officer. "We recorded our fourth consecutive year of adjusted EBITDA improvement and significantly improved our adjusted EBITDA margin year on year, despite a substantial decline in revenues primarily due to the challenging conditions in the Class 8 market."

During the fourth quarter, the company launched the International® LT™ Series, its new flagship line of Class 8 over-the-road trucks featuring advanced technologies that deliver unrivaled fuel efficiency, best-in-class uptime and unparalleled driver appeal. It also announced plans for a wide-ranging strategic alliance with Volkswagen Truck & Bus, which includes an equity investment in Navistar, strategic technology and supply collaboration and a procurement joint venture.

"We continued to invest and launch new products in 2016 and had our third consecutive year of record Parts profits," Clarke said. "We also saw solid truck and bus order share performance, which positions us for higher retail market share in the future. As for our pending alliance with Volkswagen Truck & Bus, we are excited by the opportunities it will provide."

Navistar provided an update on its pending strategic alliance, confirming that all appropriate regulatory filings have been made, and that it has already received antitrust approvals in the United States and Poland. In addition, other regulatory approvals are pending, and other agreements between the parties that constitute closing conditions remain on track, including final terms for the procurement joint venture and the companies' first powertrain collaboration, the details of which will be announced soon after the closure of the alliance. The company expects the transaction to close in the first quarter of calendar year 2017.

As for full-year 2016 results, Navistar reported a net loss of $97 million, or $1.19 per diluted share, versus a net loss of $184 million, or $2.25 per diluted share, for fiscal year 2015. Fiscal year 2016 adjusted EBITDA was $508 million, versus $494 million adjusted EBITDA for 2015. Full-year adjusted EBITDA margins increased 140 basis points to 6.3 percent. Revenue for the fiscal year 2016 was $8.1 billion, compared to $10.1 billion in fiscal year 2015.

"Although we expect tough industry conditions to continue through the first half of 2017, we see further opportunities to continue to reduce our break-even point, including leveraging some early cost synergies from the Volkswagen Truck & Bus alliance," Clarke said. "The alliance announcement has been positively received by our customers, which when combined with our ongoing cadence of new product offerings, confirms our confidence in our improving standing in the market."

The company provided the following guidance:

  • Retail deliveries of Class 6-8 trucks and buses in the United States and Canada are forecast to be in the range of 305,000 units to 335,000 units for fiscal year 2017.
  • Full-year 2017 revenues are expected to be similar to 2016.
  • Full-year 2017 adjusted EBITDA is expected to be higher than 2016.
  • Fiscal year end 2017 manufacturing cash is expected to be about $800 million, including the capital injection from Volkswagen Truck & Bus.

Truck Segment – For the fourth quarter 2016, the Truck segment recorded a loss of $61 million, compared with a year-ago fourth quarter loss of $36 million. The year-over-year change was primarily due to increased used truck losses and a mix shift to units with lower margins in our Core market, partially offset by lower adjustments to pre-existing warranties and the non-recurrence of restructuring charges recorded in the prior year from a voluntary separation program.

For the 2016 fiscal year, the Truck segment recorded a loss of $189 million, compared with a fiscal year 2015 loss of $141 million. The increase in segment loss was primarily driven by higher adjustments to pre-existing warranties of $70 million, increased used truck losses, lower Mexico margins due to the strengthening of the U.S. dollar, and lower export volumes. These impacts were partially offset by improved purchasing and structural costs.

Parts Segment — For the fourth quarter 2016, the Parts segment recorded profits of $162 million, similar to the year-ago fourth quarter, as cost-reduction initiatives and lower inter-company access fees offset the impact of the expected decline of our Blue Diamond Parts, LLC joint venture with Ford.  

For the 2016 fiscal year, the Parts segment recorded record profits of $640 million, compared to a fiscal year 2015 profit of $592 million. The 8-percent increase was primarily driven by margin improvements in the U.S. market, cost-reduction initiatives, and lower intercompany access fees, partially offset by unfavorable movements in foreign currency exchange rates.

Global Operations Segment — For the fourth quarter 2016, the Global Operations segment recorded a loss of $2 million, compared to a year-ago fourth quarter loss of $27 million. The year-over-year improvement was primarily driven by ongoing actions to lower the company's break-even point in its South American engine business to offset the impact of the ongoing downturn in Brazil's economy.

For the 2016 fiscal year, the Global Operations segment recorded a loss of $21 million compared to a year-ago fiscal year loss of $67 million. The Global Operations segment results improved by 69 percent, primarily due to lower manufacturing and structural costs as a result of the company's prior year restructuring and cost reduction efforts and foreign currency exchange rates.

Financial Services Segment— For the fourth quarter 2016, the Financial Services segment recorded a profit of $23 million, compared with fourth quarter 2015 profit of $26 million. The year-over-year change was primarily driven by the impact on interest expense of higher interest rates, partially offset by our cost reduction initiatives.

For the 2016 fiscal year, the Financial Services segment recorded a profit of $100 million, slightly higher than in fiscal year 2015. The increase is primarily driven by operating lease early terminations, decreases in the provision for loan losses in Mexico and cost reduction initiatives. These increases were partially offset by a decrease in revenue and an increase in interest expense due to rate increases.

SOURCE:  Navistar.com

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About Navistar | Navistar International Corporation (NYSE: NAV) is a holding company whose subsidiaries and affiliates produce International® brand commercial and military trucks, proprietary diesel engines, and IC Bus™ brand school and commercial buses. An affiliate also provides truck and diesel engine service parts. Another affiliate offers financing services. Additional information is available at www.Navistar.com.

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