Share price of Navistar International Corporation (NAV) rallied 3.7% to $39.83 after the company reported third-quarter fiscal 2014 (ended Jul 31, 2014) financial numbers. The company posted net loss from continuing operations of $3 million or 4 cents per share in the quarter, significantly narrower than $237 million or $2.94 per share in the year-ago quarter. Also, the loss of 4 cents a share was considerably lower than the Zacks Consensus Estimate of a loss of 82 cents. The results benefited from better profitability in North America Truck and North America Parts segment.

Including the results from discontinued operations, Navistar posted a loss of $2 million or 2 cents per share in the quarter, drastically narrower than the loss of $247 million or $3.06 per share a year ago. In the quarter under review, the company benefited from increased production, improvement in warranty charges, cost reduction strategies and continuous cash management.

Meanwhile, Navistar’s revenues dropped 0.6% year over year to $2.84 billion in the quarter, missing the Zacks Consensus Estimate of $2.99 billion.

Segment Details

Revenues at Navistar’s North America Truck segment increased 0.9% year over year to $1.9 billion. The segment recorded a loss from continuing operations of $12 million, considerably narrower than a loss of $143 million in the prior-year quarter. The improvement was driven by lower adjustment charges to pre-existing warranties and higher structural cost savings.

Revenues at Navistar’s North America Parts segment increased 4.2% year over year to $621 million in the quarter. The improvement was driven by higher sales in commercial markets, partially offset by lower military sales. The segment registered a 29.6% increase in profits to $127 million against $98 million a year ago, driven by better performance in commercial markets.

Revenues at Navistar’s Global Operations segment declined 18.4% to $407 million. The segment recorded a narrower loss of $2 million in the quarter compared with $22 million a year ago. The improvement was led by geographic mix from export truck operations, lower foreign exchange losses and reduced Selling General & Administrative expenses, partially offset by a decline in South America engine volumes.

Revenues at Navistar’s Financial Services segment marginally dropped to $60 million from $61 million a year ago. The segment registered a profit of $24 million, up from $23 million in the corresponding quarter last year. The year-over-year upside can be attributed to lower structural costs.

Financial Position

Navistar had cash and cash equivalents of $547 million as of Jul 31, 2014, up from $425 million as of Jul 31, 2013. Notes payable and long-term debt stood at $5.2 billion as of Jul 31, 2014, up from $3.9 billion as of Jul 31, 2013.

Net cash used in operations totaled $344 million in the first nine months of fiscal 2014 versus $34 million a year ago. Capital expenditure was $57 million in the period, down from $136 million in the year-ago period.

Guidance

Navistar forecasts Class 8 industry sales for 2014 in the U.S. and Canada in the range of 235,000–240,000 units, up from the previous guidance of 225,000–235,000 units. The company also expects structural cost savings of $300 million compared with the previous estimate of $250 million. Cash and cash equivalents along with marketable securities are expected between $1 billion and $1.1 billion by the end of fourth-quarter 2014. The company will utilize this cash to repay the remaining $166 million of the 3% senior subordinated convertible notes due in the month of October.

Navistar manufactures and sells commercial trucks, mid-range diesel engines, buses, military vehicles and chassis for motor homes and step-vans. It also provides service parts for trucks and trailers. Currently, the company carries a Zacks Rank #3 (Hold).

Other well-performing stocks that warrant a look include STRATTEC Security Corporation (STRT), Visteon Corporation (VC) and China Automotive Systems Inc. (CAAS). All the stocks sport a Zacks Rank #1 (Strong Buy).

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