Navistar International (NAV 29.51, -0.42) has given up 1.4% after reporting second quarter results that may not be comparable to market expectations.
The manufacturer of commercial trucks, buses, engines, and defense vehicles reported a second quarter loss of $0.86 per share on a 4.6% year-over-year decline in revenue to $2.10 billion, which was just ahead of expectations.
The decline in revenue was driven by lower volumes in the core U.S. and Canadian Class 6-8 markets. However, Navistar's decline in sales volume was smaller than the overall industry.
Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization totaled $65 million in the second quarter, down from $187 million one year ago. Adjustments resulting from pre-existing warranties, asset impairment charges, restructuring of manufacturing operations, and debt financing charges led to the decline.
Looking at the segment breakdown, Truck segment revenue fell 6.0% to $1.40 billion due to lower core volumes, a shift in product mix in the company's core markets, and cessation of sales of CAT-branded units to Caterpillar. The decline was partially offset by higher Truck volumes in Mexico. Segment net loss widened to $56 million from $23 million one year ago.
Parts revenue also declined 6.0%, falling to $610 million. Lower sales from Blue Diamond Parts and lower U.S. export volumes were partially offset by higher parts sales related to Fleetrite brand in the U.S. and Canada. Segment net profit declined to $153 million from $176 million one year ago.
Global Operations net sales fell 9.0% to $70 million due to lower volumes in the South American engine operation. Segment net loss widened to $7 million from a loss of $1 million in 2016.
Financial Services net revenue declined 3.0% to $56 million due to lower interest revenues resulting from lower overall finance receivables. Segment net profit fell to $15 million from $25 one year ago.
Although Navistar reported declines across the board, company management remains confident in its ability to deliver on targets for the full year. The company reaffirmed its full year guidance for retail deliveries of Class 6-8 trucks in the U.S. and Canada, expecting deliveries between 305,000 and 335,000 units. Revenue for the full year is expected to be close to the 2016 total.