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Navistar reports FY2018 net income of $340M vs. $30M in FY 2017

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LISLE, Ill. — Navistar International Corp. had a fourth quarter 2018 net income of $188 million, or $1.89 per diluted share, compared to fourth quarter 2017 net income of $135 million, or $1.36 per diluted share, company officials have revealed.

Navistar reported net income of $340 million, or $3.41 per diluted share for fiscal year 2018, versus net income of $30 million, or $0.32 per diluted share, for fiscal year 2017.

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Navistar reported it was the only OEM to grow its Class 8 market share during its fiscal year that ended September 30, 2018. Pictured is International LT Series Class 8 tractor. (Courtesy: NAVISTAR)

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Navistar said it was the only OEM to show growth in the Class 8 market during its fiscal year which ended September 30, 2018.

Fourth quarter 2018 adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) increased 20 percent to $322 million, versus $268 million one year ago.

Fiscal year 2018 adjusted EBITDA increased 42 percent to $826 million, versus $582 million in 2017. Full-year adjusted EBITDA margins increased to 8.1 percent, up from 6.8 percent for 2017. This marks the company’s sixth consecutive year of annual growth in adjusted EBITDA on both a dollar and percentage basis.

Revenues in the fourth quarter increased 28 percent, to $3.3 billion, compared to fourth quarter 2017.

The revenue increase was largely driven by a 45 percent increase in the company’s core volumes, which represent its sales of Class 6-8 trucks and buses in the United States and Canada.

Revenue for fiscal year 2018 was up 20 percent to $10.25 billion, compared to $8.6 billion in fiscal year 2017, attributable to annual revenue growth in all four operating segments.

Class 8 retail market share grew to 13.5 percent in fiscal year 2018 versus 11.8 percent in fiscal year 2017.

Navistar finished fourth quarter 2018 with $1.42 billion in consolidated cash, cash equivalents and marketable securities, and with $1.36 billion in manufacturing cash, cash equivalents and marketable securities. For the year, the company generated $307 million of manufacturing free cash flow.

“2018 was a very strong year for the industry, and a breakout year for Navistar,” said Troy Clarke, chairman, president and chief executive officer. “We were the only truck OEM to grow Class 8 share during the year. With the industry’s newest product line-up, superior quality and a strong focus on customer uptime, we expect to gain market share in 2019 for the third year in a row.”

The company finished 2018 with strong momentum across the board, Clarke said.

During the fourth quarter, the company launched the International CV Series line of Class 4/5 trucks, the only Class 4/5 truck that is designed, distributed and supported by a manufacturer specializing in commercial vehicles. Year-over-year growth in heavy retail market share, up 2.5 share points, was attributable to strong sales of the International LT Series on-highway truck and the 12.4-liter A26 engine. The company’s IC Bus school buses, led by alternative-fuel offerings, also improved retail share by 1.3 share points.

Additionally, its medium-duty International MV Series and vocational International HV Series built improved order share resulting in a strong backlog. The company reported a backlog of 45,400 units in its Core markets, up from 15,600 at the end of 2017.

Last month, Navistar announced a definitive agreement under which affiliates of Cerberus Capital Management, L.P. will acquire a majority interest in Navistar’s defense business, Navistar Defense.

Following the close of the transaction, Cerberus will become a 70 percent owner and Navistar will remain a 30 percent owner. The agreement also includes an exclusive long-term supply agreement for commercial parts and chassis. The transaction, subject to regulatory approval, is expected to close in the first quarter of 2019.

In October, Navistar improved its debt profile by repaying its 4.5% senior subordinated convertible notes issued in October 2013. Repayment of the outstanding principal of $200 million at maturity was funded with cash on hand.

The company provided the following 2019 industry and financial guidance, including the fully consolidated financial impact of Navistar Defense:

  • Industry retail deliveries of Class 6-8 trucks and buses in the United States and Canada are forecast to be 395,000 to 425,000 units, with Class 8 retail deliveries of 265,000 to 295,000 units.
  • Revenues are expected to be between $10.75 billion and $11.25 billion.
  • Adjusted EBITDA is expected to be between $850 million and $900 million.

Following the completion of the partial sale of Navistar Defense, the company will update its 2019 guidance.

“While we expect 2019 to be another strong year for Navistar and the industry, it’s important to recognize that Navistar as an investment is much more than just a cycle play,” Clarke said. “As our ongoing improvements demonstrate, the company also has strong opportunities to benefit by recapturing market share, growing parts revenue, improving margins, generating free cash flow and further de-risking the balance sheet. For all these reasons, looking forward the company is well positioned to generate superior shareholder value.”

 

 

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Business

DAT: Spot rates weaken as weather clouds a sunny forecast

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This chart shows that both van and reefer rates were down based on a seven-day average compiled on March 16. (Courtesy: DAT)

PORTLAND, Ore. — Just when spot truckload rates and demand seemed ready for an upward swing, they took another hit last week.

With weather disruptions on vital truck routes in the Midwest and Rockies, van and refrigerated load-to-truck ratios slipped during the week ending March 16, said DAT Solutions, which operates the DAT network of load boards:

  • Van: 1.6 loads per truck
  • Reefer: 2.9 loads per truck
  • Flatbed: 22 loads per truck

The DAT load-to-truck ratio measures the number of loads moved on the spot market relative to the number of available trucks. National average rates declined as well compared to the previous week:

  • Van: $1.86/mile, down 2 cents
  • Reefer: $2.19/mile, down 2 cents
  • Flatbed: $2.34/mile, unchanged

Van trends

Spot van volumes remain ahead of March 2018 levels but so far this month demand for trucks is no better than it was in February 2019. Capacity is abundant and spot van rates are drifting: On DAT’s top 100 van lanes last week, pricing fell on 53 and rose on 36. Eleven lanes were neutral.

Where Rates Were Up: With freight markets in the Midwest struggling with unusual weather, there was a ripple effect for supply chains. For instance, the challenge of getting freight into Denver last week led to an 18-cent increase in the average rate from Seattle to Salt Lake City ($1.90/mile). On the other hand, the extra West Coast trucks in Salt Lake City caused rates on the lane from there to Stockton, California, to decline.

What to Watch: Expect a boost in flatbed pricing as the demand to move heavy machinery and construction materials into the region picks up. High demand for flatbeds in the coming weeks may cause van availability to tighten on some lanes.

Reefer trends

The national average spot reefer rate has declined in seven of the last eight weeks. On the top 72 reefer lanes, 26 lanes moved up while 43 lanes fell and three were neutral. We’re waiting on California and Florida produce to pull rates higher.

Where Rates Were Up: Sacramento, California, to Salt Lake City jumped 40 cents to $2.35/mile, possibly due to trouble getting into Denver. In the Midwest, two lanes from Grand Rapids, Michigan, rebounded from last week:

  • Grand Rapids to Madison, Wisconsin, increased 22 cents to $2.58/mile
  • Grand Rapids to Atlanta added 21 cents to $2.71/mile

Where Rates Fell: Many of the prior week’s gainers came back to earth, including Elizabeth, New Jersey, to Boston (down 38 cents to $3.81/mile) and Philadelphia to Miami (off 22 cents to $1.96/mile).

DAT Trendlines are generated using DAT RateView, which provides real-time reports on spot market and contract rates, as well as historical rate and capacity trends. The RateView database is comprised of more than $60 billion in freight payments.

DAT load boards average 1.2 million load posts searched per business day.

For the latest spot market load availability and rate information, visit dat.com/trendlines and follow @LoadBoards on Twitter.

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ACT: Current Class 8 story is big backlogs, slowing orders

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ACT says heavy commercial vehicle markets continue to benefit from key triggers and new technologies, (Courtesy: VOLVO TRUCKS)

COLUMBUS, Ind. — In the release of its Commercial Vehicle Dealer Digest, ACT Research said that recently softer Class 8 orders are attributed to backlogs that are still out about 10 months.

Many of the orders normally booked in the year’s first quarter were actually placed in the rush to get into the queue in the second half of 2018.

The report provides monthly analysis on transportation trends, equipment markets, and the economy.

“The rolling-over of ACT’s dashboard guidance suggests today’s order weakness will transition from ‘too much backlog’ to an equipment supply-freight demand imbalance in the near future,” said Kenny Vieth, ACT’s president and senior analyst. “That said, heavy commercial vehicle markets continue to benefit from key triggers, including still-strong freight rates (being marked-down from record levels) and new technologies, like better fuel efficiency and safety technologies, as well as increased demand generated in the trailer segment for drop-and-hook to keep drivers moving.”

ACT Research is a publisher of commercial vehicle truck, trailer, and bus industry data, market analysis and forecasting services for the North American and China markets. ACT’s analytical services are used by all major North American truck and trailer manufacturers and their suppliers, as well as banking and investment companies.

More information can be found at www.actresearch.net.

 

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ATA truck tonnage index down 0.2 percent in February

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Despite the February decline, the index was 5.4 percent higher than February 2018. (The Trucker file photo)

ARLINGTON, Va. — The American Trucking Associations’ advanced seasonally adjusted (SA) For-Hire Truck Tonnage Index was down 0.2 percent in February after increasing 2.5 percent in January. In February, the index equaled 117.4 (2015=100) compared with 117.6 in January.

“After a strong January, I’m pleasantly surprised that the index didn’t fall much last month,” said ATA Chief Economist Bob Costello. “I continue to expect tonnage to moderate like other indicators, including retail sales, manufacturing activity and housing starts. Additionally, the level of inventories throughout the supply chain have increased, which is a drag on truck freight.”

January’s reading was revised up slightly compared with our February press release.

Compared with February 2018, the SA index increased 5.4 percent, down from January’s 5.8 percent gain. In 2018, the index increased 6.7 percent over 2017, which was the largest annual gain since 1998.

The not seasonally adjusted index, which represents the change in tonnage actually hauled by the fleets before any seasonal adjustment, equaled 106.9 in February, 5.7 percent below January’s level (113.3). In calculating the index, 100 represents 2015.

Trucking serves as a barometer of the U.S. economy, representing 70.2 percent of tonnage carried by all modes of domestic freight transportation, including manufactured and retail goods. Trucks hauled 10.77 billion tons of freight in 2017. Motor carriers collected $700.1 billion, or 79.3 percent of total revenue earned by all transport modes.

ATA calculates the tonnage index based on surveys from its membership and has been doing so since the 1970s. This is a preliminary figure and subject to change in the final report issued around the 5th day of each month. The report includes month-to-month and year-over-year results, relevant economic comparisons, and key financial indicators.

 

 

 

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