Navistar International Corp. announced a third quarter 2020 net loss of $37 million compared to third quarter 2019 net income of $156 million.
Revenues in the quarter were $1.7 billion, down 45% from third quarter 2019, and its core (Class 6-8 trucks and buses in the United States and Canada) charge outs were down 53%, the company said. The decrease was primarily driven by the impact of COVID-19, as well as prior year comparable quarter results that were near the peak of the prior industry cycle, Navistar said.
“Our fiscal third quarter opened during the middle of many stay-at-home orders and ended with sections of the economy beginning to reopen, and our results certainly reflect this,” said Persio Lisboa, president and chief executive officer, Navistar. “While marketplace uncertainties continue, we are accelerating the pace of progress on our Navistar 4.0 strategy for financial improvement, so we can pull forward its benefits and take full advantage of a stronger industry when it arrives.”
The company’s Navistar 4.0 strategy lays out a plan to increase the company’s EBITDA margins to 12% by 2024.
During the quarter, in addition to naming Lisboa president and chief executive officer and Troy Clarke to the new role of executive chairman, the company made several leadership changes aimed at accelerating the pace of the company’s Navistar 4.0 progress with a focus on opportunities in advanced technologies. These executive appointments included naming Bob Walsh vice president of Emerging Technologies, Strategy and Planning; appointing Friedrich Baumann president of Sales, Marketing and Aftersales; and adding new global responsibilities to the role of Phil Christman, president of Operations.
Earlier this year, the company took several actions to conserve cash and bolster its liquidity in response to the COVID-19 pandemic. These actions have been successful, as the company ended the third quarter with $1.6 billion of manufacturing cash, allowing it to cease its employee salary deferral program on Sept. 1, several months earlier than initially planned.
The company said it has been making progress on the construction of its production facility in San Antonio, which is scheduled to open in the spring of 2022. The facility will be capable of building both diesel and fully electric vehicles, and the first vehicle off the line will be an electric truck, entirely built on the main assembly line.
Looking at the company’s business units, in third quarter 2020, the Truck segment net sales were $1.2 billion, a 50% decrease compared to third quarter last year. The year-over-year decrease is primarily due to lower volumes driven by weaker industry conditions resulting in part from the COVID-19 pandemic.
The Truck segment incurred a net loss of $22 million in third quarter 2020 compared to a profit of $167 million in third quarter 2019.
For third quarter 2020, the Parts segment net sales were $414 million, a 27% decrease from third quarter 2019. The decrease is primarily due to lower North America volumes attributable to the COVID-19 impact in the U.S. and Canada and a decrease in Blue Diamond Parts sales, Navistar said.
Global Operations segment net sales decreased 48% in the third quarter, to $47 million. The decrease was primarily driven by lower volumes in Navistar’s South America operations triggered by temporary production stoppages related to COVID-19.