Navistar International has reported a fourth quarter 2018 net income of $188 million compared to fourth quarter 2017 net income of $135 million during the same period last year. Navistar reported net income of $340 million versus net income of $30 million for fiscal year 2017.
Fourth quarter 2018 adjusted EBITDA increased 20 percent to $322 million, versus $268 million one year ago. Fiscal year 2018 adjusted EBITDA increased 42 percent to $826 million, versus $582 million in 2017. Full-year adjusted EBITDA margins increased to 8.1 percent, up from 6.8 percent for 2017. This marks the company’s sixth consecutive year of annual growth in adjusted EBITDA on both a dollar and percentage basis.
Revenues in the quarter increased 28 percent, to $3.3 billion, compared to fourth quarter 2017. The revenue increase was largely driven by a 45-percent increase in the company’s Core volumes, which represent its sales of Class 6-8 trucks and buses in the U.S. and Canada. Revenue for fiscal year 2018 was up 20 percent to $10.25 billion, compared to $8.6 billion in fiscal year 2017, attributable to annual revenue growth in all four operating segments. Class 8 retail market share grew to 13.5 percent in fiscal year 2018 versus 11.8 percent in fiscal year 2017.
Navistar finished fourth quarter 2018 with $1.42 billion in consolidated cash, cash equivalents and marketable securities, and with $1.36 billion in manufacturing cash, cash equivalents and marketable securities. For the year, the company generated $307 million of manufacturing free cash flow.
“2018 was a very strong year for the industry, and a breakout year for Navistar,” said Troy Clarke, chairman, president and CEO. “We were the only truck OEM to grow Class 8 share during the year. With the industry’s newest product line-up, superior quality and a strong focus on customer uptime, we expect to gain market share in 2019 for the third year in a row.”
The company finished 2018 with strong momentum across the board. During the fourth quarter, the company launched the International CV Series line of Class 4/5 trucks, the only Class 4/5 truck that is designed, distributed and supported by a manufacturer specializing in commercial vehicles. Year-over-year growth in heavy retail market share, up 2.5 share points, was attributable to strong sales of the International LT Series on-highway truck and the 12.4-liter A26 engine.
Earlier this month, Navistar announced a definitive agreement under which affiliates of Cerberus Capital Management, L.P. will acquire a majority interest in Navistar’s defense business, Navistar Defense. Following the close of the transaction, Cerberus will become a 70 percent owner and Navistar will remain a 30 percent owner. The agreement also includes an exclusive long-term supply agreement for commercial parts and chassis. The transaction, subject to regulatory approval, is expected to close in the first quarter of 2019.
In October, Navistar improved its debt profile by repaying its 4.5 percent senior subordinated convertible notes issued in October 2013. Repayment of the outstanding principal of $200 million at maturity was funded with cash on hand.
For the fourth quarter 2018, the truck segment recorded a profit of $197 million, compared with a year-ago fourth quarter profit of $112 million. The year-over-year change was primarily due to the impact of higher volume in the company’s core markets and strong defense results, partially offset by higher commodity and structural costs, as well as the impact of supplier constraints.
For the 2018 fiscal year, the truck segment recorded a profit of $397 million, compared with a fiscal year 2017 loss of $6 million.