Navistar International Corporation on Wednesday announced a first quarter 2020 net loss of $36 million, compared with first quarter 2019 net income of $11 million.
Revenues in the quarter were $1.8 billion compared with $2.4 billion in the first quarter last year. The decrease was primarily driven by a 39 percent decrease in the company’s core volumes, which represent its sales of Class 6-8 trucks and buses in the United States and Canada, the company says.
First quarter 2020 EBITDA was $55 million, compared with $96 million in first quarter 2019. Adjusted EBITDA in first quarter 2020 was $59 million versus $173 million a year ago.
Adjusted net income for the quarter was a loss of $33 million compared with a gain of $57 million in the first quarter last year.
Navistar reports it finished first quarter 2020 with $1 billion in consolidated cash and cash equivalents and $977 million in manufacturing cash and cash equivalents.
“While revenues are down year-over-year, these results are in line with the guidance we provided in December as the industry works through a transition period,” says Troy A. Clarke, chairman, president and CEO. “Throughout the quarter, we implemented actions to lower costs, yet the results were impacted by lower volumes.”
During the quarter, the company received an unsolicited proposal from its alliance partner Traton regarding a potential transaction to acquire the company. Navistar’s board of directors is carefully reviewing and evaluating the proposal to determine the course of action it believes is in the best interest of the company and its stakeholders.
Also in the quarter, Navistar received final approval of the MaxxForce EGR engine legal settlement in the U.S. As a result, the company funded $85 million in February, relating to the cash portion of the settlement.
Late last month, the company broke ground on the expansion of its Huntsville, Ala., engine plant. The company will be investing $125 million in the manufacturing facility to produce next-generation, big-bore powertrains being developed with Traton. The expansion will add 110,000 sq. ft. and 145 skilled manufacturing jobs to its existing facility, Navistar says.
“As market conditions improve throughout the year, we have confidence that the company is positioned to build upon its first quarter performance and take advantage of what we expect to be a stronger second half,” says Clarke.
The company reiterated both its 2020 industry guidance and full-year financial guidance, pending any change to operations from the coronavirus:
- Industry retail deliveries of Class 6-8 trucks and buses in the United States and Canada are forecasted to be in the range of 335,000 to 365,000 units, with Class 8 retail deliveries between 210,000 and 240,000 units.
- Revenues are expected to be in the range of $9.25 billion to $9.75 billion.
- Adjusted EBITDA is expected to be in the range of $700 million to $750 million.
The Truck segment’s net sales were $1.2 billion in the first quarter of 2020. The year-over-year decrease is primarily due to lower volumes in the company’s core markets, partially offset by the ramp up of Class 4/5 units, Navistar reports.
The truck segment incurred a loss of $58 million in the first quarter of 2020. The year-over-year decline is primarily due to lower volumes in North America, and higher used truck losses and warranty expenses, the company says. Additionally, a $54 million gain was recorded in the first quarter of 2019 related to the sale of a 70 percent equity interest in Navistar Defense, which also impacted year-over-year sales and segment profit comparisons.
The Parts segment’s net sales decreased to $493 million in the first quarter of 2020 and segment profit decreased to $119 million. The results were impacted by weaker industry conditions in the U.S. and Canada, which drove lower volumes.
In the first quarter of 2020, the Global Operations segment’s net sales decreased to $68 million and maintained breakeven profitability. The year-over-year decrease was primarily driven by depreciation of the Brazilian real against the U.S. dollar compared with the first quarter of 2019, as well as lower volumes in South American operations. Additionally, a $5 million gain was recorded in the first quarter of 2019 related to the sale of a former joint venture in China, the company says.
The Financial Services segment’s net revenues decreased to $57 million in the first quarter of 2020 and segment profit decreased to $17 million. The year-over-year decrease was primarily driven by lower originations and average receivable balances, Navistar reports.
