Navistar International Corporation (NYSE: NAV) chairman Daniel C. Ustian lauded “good earnings and strong cash flow” after the company reported second-quarter adjusted net income of $80 million.
The second quarter, which ended April 30, featured $1.02 diluted earnings per share, resulting from stronger industry demand and company expansion. Including the engineering integration costs, reported net income attributable to Navistar International Corporation for the 2011 second quarter was $74 million, equal to $0.93 diluted earnings per share.
“The second quarter results represent good earnings and strong cash flow from operations while building to deliver to our 2011 and beyond objectives,” said Ustian, also the president and chief executive officer. “We continue to see increasing customer acceptance of all our engine and vehicle families, confirming we have the right strategy in place and that we will deliver full-year results toward the higher side of our previous guidance.
“In the second quarter, our growth strategy continued to unfold as we introduced a number of products to the marketplace. Our core business has seen an increase in volume and our military and service parts continue to deliver strong results. We also delivered solid results while investing in our future and growing globally.”
Included in the above second-quarter earnings were $19 million in equity losses from start-up costs related to the company’s separate joint ventures with NC2 and Mahindra. The company continues to implement its global business strategy and, through its NC2 and Mahindra joint ventures, is producing and selling commercial truck products in India, Brazil, South Africa and Australia.
Built around second-quarter results and the outlook for the remainder of the year, Navistar tightened its forecasted adjusted net income attributable to Navistar International Corporation for fiscal year ending Oct. 31, 2011, to be between $427 million and $465 million, equal to $5.50 to $6.00 diluted earnings per share, excluding transition costs associated with the integration of the truck and engine engineering operation. Additionally, the company confirmed its full-year forecast for manufacturing cash of $1.43 billion.
Navistar earned $43 million, equal to $0.60 diluted earnings per share in the year-ago second quarter. Sales and revenues for the 2011 second quarter were $3.4 billion, compared with $2.7 billion in the year-ago second quarter.
Sales and revenues for the 2011 six months were $6.1 billion, compared with $5.6 billion in the year-ago six months. For the six months ending April 30, 2011, adjusted net income attributable to Navistar International Corporation was $94 million, equal to $1.22 diluted earnings per share, excluding the impact of engineering integration costs. Including the engineering integration costs, reported net income attributable to Navistar International Corporation for the 2011 six months was $68 million, equal to $0.87 diluted earnings per share.
For the six months ending April 30, 2010, adjusted earnings were $45 million, equal to $0.62 diluted earnings per share, excluding the impact of benefits from the Ford restructuring and related activity. Including the restructuring benefit, six months 2010 reported earnings were $62 million, equal to $0.86 diluted earnings per share.
Truck — For the second quarter, the truck segment realized a profit of $92 million, compared with a year-ago second-quarter profit of $76 million. Worldwide chargeouts were up on a stronger industry, while Navistar continues to introduce new products such as the International TerraStar. The increase in second-quarter revenues was driven by higher commercial volumes, favorable pricing due to the use of 2010 emissions-compliant engines and increased military revenue associated with Mine Resistant Ambush Protected (MRAP) vehicle deliveries. Improvements in the core operations were partially offset by increased commodity pressures and fuel prices of approximately $30 million. Additionally, 2010 second-quarter profits included $30 million of value added tax recovery in Brazil.
Engine — The engine segment saw improved intercompany sales, mainly from the big bore product, a commercial truck industry recovery, and growth in rest-of-world OEM markets, such as Brazil. Segment profitability quarter-over-quarter decreased primarily due to increased engineering and warranty costs on legacy products.
Parts — The parts segment continues to deliver solid profits, which is reflective of improved overall truck market share and an expanded engine product offering.