Even though Navistar International
Navistar's revenues for the quarter jumped 22% to $3.4 billion, up from $2.7 billion in the year-ago period. All business segments saw increasing revenues, with the truck segment reporting the strongest boost at 22.5%, from $76 million a year ago to $92 million. Higher volumes and favorable pricing from better engines boosted the bottom line. The engine business saw revenue growth of 18%, but year-over-year net income for the segment dipped from $15 million to $2 million this quarter, mainly because of one-time warranty expenses, and costs incurred on new launches. The company recently launched its own 13-liter and-15 liter engines, instead of continuing to rely on Cummins
Other segments, including parts and financial services, recorded their own significant jumps. Navistar is also a supplier of military vehicles, and its military revenues got a boost as well.
Navistar's cash flow from operations rose to $221 million from $141 million last year. Its overall financial position looks better, with a reduction in the total debt-to-capital ratio from 135.9% last year quarter to 118.6% this quarter.
Across the board, the global truck industry is looking positive. The American Trucking Association says the industry will witness faster growth and a good decade ahead, post-recession. I'm not sure I buy into all of that, but it's potentially good news for a large truck maker like Navistar.
Nevertheless, the industry is not competition-free. Paccar
Navistar's demand for military trucks faced a temporary setback, when the military selected competitor Oshkosh
Another factor that will probably work in Navistar's favor will be the expansion into other global markets and the introduction of new, innovative products, such as natural-gas engines.
Last year, the company entered into a joint venture with India's Mahindra & Mahindra to introduce trucks the sprawling Indian market. To show that it means business, the company has also entered into another global venture with Caterpillar
The Foolish bottom line
Navistar expects a good year ahead, with increased production and earnings. Further, with industry recovery and expansion plans in place, Navistar looks like a good bet in the near future.