Navistar reported a net loss of $62 million or $0.76 per share in the first quarter but remained on track with previously announced annual guidance following the close of the Volkswagen Truck & Bus alliance.
The deal includes a $256 million equity investment into Navistar, a new procurement joint venture and a collaboration on both strategic technology and supply chain, both of the latter being already up and running.
“Now that the transaction has closed, we can start collaborating with Volkswagen Truck & Bus to increase our global scale, strengthen our competitiveness, and provide our customers with expanded access to cutting-edge products, technology and services,” said Troy Clarke, chairman and CEO for Navistar. “This marks an exciting new chapter in Navistar’s history, and another step in our journey to becoming a stronger, more profitable company.”
Clarke added during an investor call on Tuesday that the company remains confident that savings from the alliance will become accretive within the next 12 months, with cumulative synergies for Navistar numbering $500 million over the first five years. By year five, he said the company expects annual synergies of $250 million a year going forward.
Overall, Navistar said retail deliveries of Class 6-8 trucks and buses in the United States and Canada are forecast to be in the range of 305,000 units to 335,000 units for fiscal year 2017. Full-year 2017 revenues are expected to be similar to 2016, with full-year 2017 adjusted EBITDA is expected to be higher than last year's results.
First-quarter revenues came in at $1.7 billion, down six percent from the same period last year and attributed to lower truck volume tied to an overall soft Class 8 market and lower global sales.
EBIDTA for the first quarter was $63 million, compared to $82 million for the first quarter of 2016, with Adjusted EBITDA coming in at $55 million.
Navistar also announced it has surpassed 270,000 subscribers to its OnCommand Connection telematics system.
On the parts side, Navistar said net sales were comparable to the prior year. The company cited higher U.S. and Canada parts sales related to FleetriteT brand and remanufactured parts sales, offset by lower volumes in export and Mexico.
The financial services segment saw net revenues decrease by $5 million, or eight percent. Navistar said the decrease is primarily driven by lower overall finance receivable balances and unfavorable movements in foreign currency exchange rates impacting its Mexican portfolio, partially offset by higher revenues from operating leases.
Meanwhile, Clarke commented that Navistar’s “toes are in the water” on electric vehicles as the cost of batteries continue to come down. He said electric is increasingly becoming “a compelling source of fuel” for commercial vehicles, especially school buses operating in urban areas.
“The indicator is cost per kilowatt-hour, or storage, which has been coming down 14 percent over the last decade, and 16 percent over the last three years,” he said.
He added that electric buses and other vehicles will begin to “stick” by the start of the next decade as the costs become very comparable to diesel.