- Reports first quarter net loss of $123 million compared to $153 million loss in 2012
- First quarter cash balance greater than forecast
- Pilot production of ProStar+ with 13-liter SCR engine begins
Navistar International Corporation (NYSE: NAV) today announced a first quarter 2013 net loss of $123 million, or $1.53 per diluted share, compared to a first quarter 2012 net loss of $153 million, or $2.19 per diluted share. Excluding discontinued operations, Navistar recorded a first quarter 2013 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 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 Lewis B. Campbell, Navistar chairman and chief executive officer. “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 enterprise-wide.”
The company finished the first quarter 2013 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 2013 ranges from $1.0 billion to $1.1 billion.
| Summary Financial Results: | |||||||
| First Quarter | |||||||
| (in millions, except per share data) | 2013 | 2012 | |||||
| Sales and revenues, net | $ | 2,637 | $ | 3,009 | |||
| Segment Results: | |||||||
| Truck | $ | (58) | $ | (27) | |||
| Engine | (27) | (120) | |||||
| Parts | 86 | 50 | |||||
| Financial Services | 22 | 27 | |||||
| Loss from continuing operations before income taxes | $ | (84) | $ | (207) | |||
| Loss from continuing operations, net of tax* | (114) | (144) | |||||
| Net loss* | (123) | (153) | |||||
| Diluted loss per share from continuing operations* | $ | (1.42) | $ | (2.06) | |||
| Diluted loss per share* | (1.53) | (2.19) | |||||
| ________________ | ||
| * | Attributable to Navistar International Corporation (“NIC”) | |
SEGMENT REPORTING
Truck — For the first quarter 2013, the truck segment recorded a loss of $58 million, compared with a year-ago first quarter loss of $27 million. The segment’s loss was mainly driven by a decline in traditional truck volumes and $12 million of accelerated depreciation related to the planned closure of the Garland, Texas, facility. The segment loss was minimized by $40 million in lower SG&A expenses from 2012 cost-reduction initiatives.
Engine — For the first quarter 2013, the engine segment recorded a loss of $27 million, compared with a year-ago first quarter loss of $120 million. The segment improvement is predominantly due to $83 million in lower charges for pre-existing warranties; $10 million in lower engineering and product development spend primarily in South America; and $9 million in lower SG&A expenses from 2012 cost-reduction initiatives. This was reduced by lower net sales, $10 million in charges for non-conformance penalties on certain 13-liter engines and $10 million of accelerated depreciation related to the discontinuation of the MaxxForce 15-liter engine.
Parts — For the first quarter 2013, the parts segment recorded profit of $86 million, compared with a year-ago first quarter profit of $50 million. The profit increase was primarily driven by volume and pricing strategies and $12 million in lower SG&A expenses that reflect the impact of 2012 cost-reduction initiatives.
Financial Services – For the first quarter 2013, Financial Services profit decreased by $5 million to $22 million due to lower net interest margin, reflecting the decline in average finance receivables balances. This decrease is consistent with the transition of retail loans to GE Capital.
