In the face of the worst truck market in 47 years, Navistar International Corporation (NYSE: NAV) delivered strong fourth-quarter net income, resulting in net income of $320 million for the fiscal year ended Oct. 31, 2009.
“Despite current economic challenges, we have remained focused on our three-pillar strategy which includes being profitable in the toughest of times while investing in our future for profitable growth,” said Daniel C. Ustian, Navistar’s chairman, president and chief executive officer.
Driven by a pickup in fourth-quarter commercial truck volume and continued military sales, the company reported 2009 fourth-quarter net income of $86 million, equal to $1.19 of diluted earnings per share, on sales and revenues of $3.3 billion. Fourth-quarter 2009 earnings were reduced by charges and costs that totaled $42 million (pre-tax), or $0.58 per diluted share. These charges included a $31 million asset impairment charge related to the idling of the Chatham, Ontario, and Conway, Ark., manufacturing facilities and an $11 million charge related to company’s refinancing of its capital structure. In the fourth quarter a year ago, Navistar reported a loss of $343 million, equal to $4.81 of diluted loss per share, on sales and revenues of $3.9 billion. The 2008 fourth-quarter loss resulted from asset impairment and related charges of $385 million (pre-tax), or $5.37 per diluted share, arising from strategic changes in the company’s Ford diesel engine business.
Net income for the fiscal year ended Oct. 31, 2009 totaled $320 million, equal to $4.46 of diluted earnings per share, on net sales and revenues of $11.6 billion. Net income benefited from a settlement with Ford Motor Co. that totaled $160 million (pre-tax), equal to $2.19 of diluted earnings per share. Excluding the Ford settlement and fourth-quarter charges and costs as referenced above, fiscal 2009 net income would have totaled $205 million, equal to $2.86 of diluted earnings per share.
In fiscal 2008, Navistar reported net income of $134 million, equal to $1.82 of diluted earnings per share, on net sales and revenues of $14.7 billion. Earnings in 2008 were impacted by asset impairment and other related charges of $395 million (pre-tax), or $5.39 per diluted share, arising from strategic changes in its Ford diesel engine business. Without these costs, net income would have been $528 million, equal to $7.21 of diluted earnings per share.
Manufacturing segment profit was $232 million for the 2009 fourth quarter and $836 million for the full year, compared with a manufacturing segment loss of $168 million for the 2008 fourth quarter and manufacturing segment profit of $693 million for the full year.
“During one of the weakest economies we can recall, we are pleased with our performance and our ability to continue to invest in the long-term future of the business,” said A.J. Cederoth, Navistar’s executive vice president and chief financial officer. “As a result, we believe we are well positioned to capitalize on a variety of opportunities that lie ahead.”
The company had previously stated it anticipated manufacturing cash balances for the year in the range of $700 million to $800 million and it in fact closed 2009 with a manufacturing cash balance of $1.2 billion compared with $751 million as of the prior quarter ended July 31, 2009. “The steps taken in 2009 have positioned us to move forward with our operations when the economy continues to recover in 2010,” Cederoth said.
Continuing on its path to meet the latest emissions requirements through its advanced EGR (exhaust gas recirculation) MaxxForce engines, the company said it is prepared for a successful engine launch in the months ahead. In early December, 28 IC Bus school buses meeting 2010 emissions requirements were delivered to the Columbus, Miss., school district, marking the first 2010-compliant diesel buses to be delivered to its customers. In preparation for the launch of its 2010-compliant engines, Navistar engineers have conducted extensive testing and validation over the last two years, accumulating more than 15.7 million test miles.
The company continues to advance strategic joint venture and acquisitions that align with its strategic goals, including NC2, the company’s global commercial truck joint venture with Caterpillar Inc., the all-electric commercial truck venture with Modec Limited of the United Kingdom, and the acquisition of the engine components business from Continental Diesel Systems US, LLC. In December, Navistar also completed its acquisition of the cement mixer manufacturing business of Continental Mfg. Company, Inc., and invested in Danish technology company Amminex, which will offer it another tool to explore cost-effective, customer-friendly technologies that fit the company’s advanced EGR platform. The company believes these initiatives and expansions will be key contributors to its future success.
“Our actions have enabled us to deliver exceptional 2009 results, while simultaneously making it possible for us to succeed in an improving economy and deliver continued profitability over the next several years,” said Ustian. “The momentum established in the wake of these accomplishments positions us well for long-term success and to take on the challenges that 2010 will pose for all in our industry.”
The company anticipates that total truck industry retail sales volume for Class 6-8 trucks and school buses in the United States and Canada for the year ending Oct. 31, 2010, will be in the range of 175,000 to 215,000 units.