Editor’s Note: CORRECTS chargeouts to falling from rising and adds market share data in 8th graf; adds details on TRATON merger timing in last paragraph.
Navistar International Corp. (NYSE: NAV) reported a big jump in its Q2 fiscal-year earnings due in part to gains on its investment in autonomous trucking software startup TuSimple Holdings.
Navistar and TuSimple (NASDAQ: TSP) are working together to bring a Class 8 high-autonomy truck to market in 2024.
Adjusted net income was $72 million, or 72 cents per fully diluted share, nearly twice a consensus of analysts compiled by investor site Seeking Alpha. Navistar reported an adjusted net loss of $10 million, or negative 10 cents, in the February-April quarter a year ago. Revenues in the quarter were $2.2 billion, compared to $1.9 billion in the second quarter last year.
Second-quarter 2021 adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) was $198 million, or 9.2% of revenue compared to year-ago EBITDA of $88 million or 4.6% of revenue.
“We delivered strong operating results in our second quarter,” Persio Lisboa, Navistar CEO, said in a press release. “The strong trucking industry, fueled by robust economic growth, is supporting higher order activity by our customers and our team is working hard to overcome the supply chain challenges to best support their transportation needs.”
Gains and charges
Navistar’s truck segment reported a net profit of $189 million compared to a loss of $51 million in the year-ago quarter when the pandemic led to weeks of manufacturing shutdowns. Navistar’s 10% investment in TuSimple resulted in a gain when the startup went public in April.
The gains were partially offset by the $50 million settlement in a whistleblower case involving falsified invoices to the U.S. Marines for truck suspension and components, and higher warranty costs that included a second recall for connector rod defects in Class 8 trucks recalled a year ago.
Truck and bus chargeouts, including units held in dealer inventory, fell to 13,900 trucks and buses from 14,200 in the year-ago quarter. Navistar added a second production shift at its truck plant in Escobedo, Mexico. Class 6-8 market share was 13.8% at the end of the quarter compared to 13.4% at the end of Q1. Year-over-year share fell 1.6 percentage points from 15.4% a year ago.
Parts sales grew 18% in the quarter to $135 million, up 31% year over year. Financial Services’ revenue fell to $50 million from $64 million, and profits of $15 million compared unfavorably to $24 million a year ago.
Navistar expects its $3.7 billion merger with Volkswagen AG’s TRATON Group to close by midyear. Navistar shareholders approved the merger March 2. All jurisdictional and regulatory filings have been made. The Hart-Scott-Rodino antitrust waiting period allowing federal officials to review the merger expired Feb.12.