Navistar back in black during second quarter

LISLE, IL – Navistar International reported a $4-million net income in the second quarter of 2016, in sharp contrast to a $64-million net loss in the second quarter of 2015. Cost controls, higher parts-related profits, and demand for HX vocational trucks have all been credited for making a difference despite a soft sales market.

“For the first time since we launched our turnaround more than three years ago, Navistar reported a quarterly profit,” said Troy A. Clarke, president and chief executive officer. “Our performance this quarter begins to demonstrate the earnings potential of this company. The fact that we earned a profit despite lower Class 8 truck volumes that impacted the entire industry, underscores the tremendous progress we continue to make in managing our costs effectively and improving our operations.”

The sagging truck market is still affecting the balance sheet. Revenues in the quarter were down 18% to $2.2 billion, compared to $2.7 billion in the same quarter last year. General market conditions, the discontinuation of the Blue Diamond Truck joint venture in 2015, and lower engine volumes in Brazil all played a role. But parts sales did increase.

Still, the profitability may be short lived. Navistar cites growth in domestic market shares to be slower than expected, weaker export markets, and a strong dollar among existing headwinds.

“While we were net income positive in the second quarter, it will now be difficult for us to be profitable for the entire year given the tougher than anticipated market conditions, primarily due to the lower outlook for Class 8 industry volumes,” Clarke said. “We are confident we will generate and implement additional performance improvements to partially offset current industry conditions.”

The EBITDA in the second quarter of 2016 amounted to $135 million, compared to $85 million in the second quarter of last year. This year’s results also included $52 million in adjustments, including $46 million for pre-existing warranty reserves. The adjusted EBITDA was actually $187 million, up 83% over the second quarter of 2015.

“The improvement was driven by continued strong cost management, product cost improvement and record Parts segment profitability,” the company says. “When combined with material spend reductions and manufacturing savings, the company is on track to well exceed its total cost reduction goal of $200 million for 2016.”

Orders for the HX Series of vocational trucks, introduced in the second quarter, are already 70% higher than what Navistar expected to sell in the fiscal year. The company also added the Cummins ISL 9-liter engine among the options for DuraStar and WorkStar models.

For more information on the financial filing, visit


John G. Smith is the editorial director of Newcom Media's trucking and supply chain publications -- including Today's Trucking,, TruckTech, Transport Routier, Inside Logistics, Solid Waste & Recycling, and Road Today. The award-winning journalist has covered the trucking industry since 1995.

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