Jonathan S. Reiskin |
Truck and engine maker Navistar International Corp. returned to profitability during the fiscal quarter ended July 31, posting net income of $37 million, or 38 cents a share, as sales rose by 6.1% to $2.21 billion.
During the same time in 2016, Navistar lost $34 million, or 42 cents, on quarterly revenue of $2.09 billion.
The results reported Sept. 6 were the original equipment manufacturer’s second profitable quarter in the last 20. The most recent quarter with positive net income was the three months ended April 2016.
Bloomberg News reported the consensus on earnings per share for the most recent quarter as 28.6 cents.
Among the Lisle, Ill., OEM’s four major segments, all were profitable, with the biggest change coming at the truck division, which had operating income of $7 million on quarterly sales of $1.52 billion. In the comparable 2016 quarter, Navistar’s largest division lost $54 million on sales of $1.39 billion.
“We returned to profitability this quarter thanks to strong operational performance across the board, highlighted by a 15% increase in charge-outs and solid market-share gains amid flat industry conditions, and strengthening margins,” Troy Clarke, Navistar chairman and CEO, said in the company statement.
“We also moved ahead with new products and solutions that position us well for ongoing growth, while continuing to restructure our business to improve our future competitiveness,” Clarke said.
Among various product launches, Navistar has had three for heavy-duty highway trucks over the last 12 months: the RH regional tractors in April, the 12.4-liter A26 engine in March and the LT linehaul tractors in October.
The profit did not come without challenges, as the company said it recorded $34 million in adjustments, including a $31 million charge for a litigation matter over its older MaxxForce engine, and $6 million of pre-existing warranty charges. MaxxForce was developed by previous Navistar management and contributed to the string of losses. Clarke was brought in to rebuild the company.
The company said improvements at the truck division included higher sales volumes in the core market of Class 6-8 North American trucks and buses, and a ramp-up in Navistar’s Class 4 and 5 vehicles built with General Motors.
Parts remained the most profitable division, kicking in $157 million in the quarter just ended, up from $152 million a year ago.
The two smaller operations are global operations and financial services.
Stock analyst David Leiker told clients of Robert W. Baird & Co. that Navistar was able to produce “strong results as pieces fall into place.”
“While a strong truck [division] with lower parts would normally present negative margin ‘mix,’ the core profitability of the North American truck business dramatically improved, year-over-year, while Global Operations returned to a profit versus last year’s loss,” Leiker said.
“This helped drive a 56% increase in manufacturing profit, which was nearly 10% better than our estimate,” he added.