Navistar Reports 1Q Loss; Clarke Named CEO
Navistar International Corp. today (March 7) announced a first quarter net loss of $123 million, or $1.53 per diluted share, compared to a net loss of $153 million, or $2.19 per diluted share, a year ago. Sales during the period totaled $2.6 billion versus $3 billion in the year ago quarter.
Excluding discontinued operations, Navistar recorded a first quarter loss from continuing operations of $114 million, or $1.42 per diluted share, compared to a first quarter 2012 loss from continuing operations of $144 million, or $2.06 per diluted share. The Lisle, Ill.-based company builds RVs through its Navistar RV division.
In a separate announcement, Navistar reported that its board appointed Troy A. Clarke as president and CEO, effective April 15. Clarke, currently the company’s president and COO, will also join the board. At the same time, Lewis B. Campbell, who has served as executive chairman and interim CEO since August 2012, will step down from those positions and from the board. James H. Keyes, who has served as a board member since 2002, will become non-executive chairman, also effective April 15.
The company reported year-over-year EBITDA increased $163 million mainly due to $109 million in lower warranty adjustments and $70 million in reduced SG&A expenses, partially offset by lower volumes. Manufacturing revenues in the quarter were $2.6 billion, down 12 percent from the first quarter of 2012. The decline was reflective of lower overall industry demand and lower market share resulting from the company’s clean engine strategy transition.
“We are beginning to see concrete progress on each of our near-term priorities – improving our quality, launching our new SCR engine programs on schedule and delivering on our 2013 operating plan, which will put us on a path to profitability. Although we reported a first quarter loss, we believe we made solid progress in the first quarter toward these goals,” said Campbell. “That progress includes submitting our 13-liter SCR engine for certification ahead of schedule, kicking off of pilot production for ProStar+ vehicles with the 13-liter SCR engine earlier this week, strengthening our quality performance and effectively managing things that we can control. These include aggressively managing inventories and significantly reducing discretionary spending enterprisewide.”
The company finished the first quarter with $1.19 billion in manufacturing cash and marketable securities, exceeding its cash guidance range of $950 million to $1.05 billion. Contributing factors included improvements in net working capital, delayed capital expenditures and better than expected structural costs.
“In order to move forward on our path to profitability, we recognize the need to do even more given current industry volumes and our short-term market share outlook in North America,” said Campbell. “We believe our market share will begin to improve in the second half of 2013 with the full launch of our clean engine lineup. And while we are already on track to exceed our goal of reducing structural costs by $175 million this year, we recently launched a benchmarking initiative that has already identified additional cost savings to further lower our breakeven point in 2013.”
The company also continues to make progress on its return on invested capital (ROIC) initiatives. Already in the second quarter, Navistar completed the sale of its equity interests in its India truck and engine joint ventures; completed the sale of its Workhorse Custom Chassis brand; and subleased a portion of its Cherokee, Alabama manufacturing facility to a railcar manufacturing company.
Navistar’s manufacturing cash guidance for the end of the second quarter ranges from $1 billion to $1.1 billion.