Navistar Reports Fourth Quarter Net Loss of $154 Million

Navistar International (NYSE: NAV) has announced a fourth quarter 2013 net loss of $154 million, or $1.91 per diluted share, compared to a fourth quarter 2012 net loss of $2.8 billion, or $40.13 per diluted share.

Current quarter results include an income tax benefit of $220 million related to an intra-period tax allocation, a non-cash charge of $77 million related to a goodwill impairment in its North American operations and $152 million in additional pre-existing warranty reserves. Fourth quarter 2012 results included increased non-cash tax expense of $2 billion for the increase in deferred tax valuation allowance on U.S. deferred tax assets and $149 million in additional pre-existing warranty reserves.

Revenues in the quarter were $2.8 billion, down from $3.2 billion in the fourth quarter of 2012. The decrease reflects lower sales across all business segments, primarily due to weaker industry conditions and lower market share during the company’s emissions strategy transition. The company reduced its structural costs by $94 million in the quarter compared to fourth quarter 2012, and finished the full year with reduced structural costs of $330 million versus 2012.

Navistar achieved its fourth quarter cash guidance, finishing the quarter with approximately $1.52 billion in manufacturing cash and marketable securities, which included net proceeds of $196 million from the issuance of new senior subordinated convertible notes and an intercompany loan of $270 million in the quarter. Excluding these transactions, manufacturing cash would have been $1.06 billion, in line with its guidance of $1.0 billion to $1.1 billion.

“Operationally, we hit our plan this quarter, and we ended the year with an order backlog that is up 26 percent compared to this time last year. Those are just two examples of the continued progress we are making on our Drive to Deliver turnaround plan,” said Troy A. Clarke, Navistar’s president and chief executive officer. “During the quarter, we strengthened our cash position, continued to reduce structural costs, completed our on-highway Class 8 transition to SCR emissions technology, and progressed with our medium-duty product transition launches, resulting in 500 medium duty SCR trucks and buses built this month, as planned.

“Clearly, we are disappointed that our previous engine strategy continues to negatively impact us in the form of additional warranty expense, but we will continue to stand behind our products and manage this issue as these engines work their way through the standard and extended warranty cycles,” Clarke said. “We’re not letting it overshadow the strong progress we’ve made to fundamentally change Navistar’s operations and culture in 2013. We still have a lot of hard work ahead of us, but we are pleased to be entering 2014 in a much stronger position than we were one year ago.”

The net loss for fiscal year 2013 was $898 million, or $11.17 per diluted share, versus a net loss of $3 billion, or $43.56 per diluted share, for fiscal year 2012.

2014 Outlook

Navistar is forecasting a Class 8 industry of 220,000 to 230,000 retail sales in the U.S. and Canada for its fiscal year 2014. It expects to generate an additional $175 million in structural cost savings in fiscal year 2014, and projects its capital expenditures will be similar to 2013 spending. The company expects to end first quarter 2014 with manufacturing cash and marketable securities between $1 billion and $1.1 billion.

“Traditionally, our first quarter represents the low period of the year as volumes are lower due to the Thanksgiving and winter break downtimes, which is compounded this year by significantly lower military sales and the late-in-the-quarter ramp up of our Cummins ISB engine offering in our medium-duty trucks and buses,” Clarke said. “However, we anticipate stronger year-over-year performance starting in the second quarter, driven by higher volumes in truck, parts and our global operations and slightly improved pricing, coupled with ongoing structural and material cost improvements.”

About Navistar

Navistar International Corporation (NYSE: NAV) is a holding company whose subsidiaries and affiliates produce International® brand commercial and military trucks, MaxxForce® brand diesel engines, and IC Bus™ brand school and commercial buses. The company also provides truck and diesel engine service parts. Another affiliate offers financing services. More information at: www.Navistar.com.

 

Tags: Navistar

Category: General Update, Vehicles