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Navistar Expects Big Gains in Fiscal 2011

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January 25, 2011 by   Leave a Comment

Daniel C. Ustian

Daniel C. Ustian

Navistar International Corp. announced today (Jan. 25) it expects substantial gains in fiscal 2011 earnings as the result of the successful implementation of its three-pillar growth strategy and improving economic conditions.

Navistar said it believes that net income attributable to Navistar International Corp. for fiscal year ending Oct. 31, 2011, is expected to be between $388 million and $466 million, equal to $5 to $6 diluted earnings per share, excluding transition costs associated with the integration of the truck and engine engineering operation and the potential positive impact of income tax valuation adjustments, according to a news release.

Navistar is the parent company of RV maker Monaco RV LLC.

“As evidenced by our guidance, our strategy continues to drive value for our shareholders,” said Daniel C. Ustian, Navistar chairman, president and CEO. “Coming out of the recession, we have developed today’s earning guidance around a stronger economy, further expansion of our after-market service parts business and continued benefit from great products, a competitive cost structure and profitable growth.”

The company raised its guidance for industry volume and now anticipates that total truck industry retail sales volume for Class 6-8 trucks and school buses in the United States and Canada for its fiscal year ending Oct. 31, 2011, will be in the range of 240,000 to 260,000 units. Truck industry volume in fiscal 2010 was 191,300 units.

Growth strategy transition costs associated with the integration of the truck and engine engineering operation into a single facility could be between $75 million and $80 million. Including the integration costs net income attributable to Navistar International Corp. for fiscal year ending Oct. 31, 2011 is expected to be between $311 million and $388 million, equal to $4 to $5 diluted earnings per share. Navistar earned $223 million, equal to $3.05 diluted earnings per share in fiscal 2010.

Additionally, Navistar continues to evaluate its ability to realize certain U.S. deferred tax assets which have previously been fully reserved. Once the company concludes that it is more likely than not that these assets will be realized, it expects to release the valuation allowance and restore these deferred tax assets on the balance sheet. As of Oct. 31, 2010, the company had about $1.5 billion of U.S. federal and state valuation allowances, out of a total of $1.8 billion, which it is evaluating for release and its impact on diluted earnings per share.

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