Navistar Int'l Q3 Results Miss Estimates, To Cut 500 Jobs In 2013

(RTTNews) - Truck and engine maker Navistar International Corp. (NAV) reported Wednesday a loss for the third quarter compared to a profit last year, which was boosted by an income tax benefit. Loss from continuing operation came in significantly wider than analysts' expectations, and quarter revenues also missed their estimates.

Navistar attributed the loss to lower volumes in its core North America truck business amid the the company's transition to SCR-based products and weaker industry conditions.

The company also initiated new cost reduction actions that is projected to generate $50 million to $60 million in annual savings starting in fiscal 2014. The move will see an enterprise-wide global workforce reduction that is expected to impact a combined 500 salaried employees and long-term contractor positions. The company expects to complete nearly all of the job reductions by the end of fiscal 2013.

"We were pleased with our strong cash performance in the quarter. We also continued to make solid progress on key elements of our Drive to Deliver turnaround plan, especially the on-time launches of our new Class 8 product offerings, which drove Navistar's order share up to more than 20 percent in the quarter, compared to 12 percent in the second quarter. We're encouraged by the growing customer acceptance of our new products," President and CEO Troy Clarke said in a statement.

The Warrenville, Illinois-based world's fourth-largest truck maker posted a net loss of $247 million or $3.06 per share for the third quarter, compared to net income of $84 million or $1.22 per share in the prior-year quarter, which included an income tax benefit of $188 million.

Excluding discontinued operations, loss from continuing operations for the quarter was $237 million or $2.94 per share, compared to income of $80 million or $1.16 per share in the year-ago quarter.

On average, 15 analysts polled by Thomson Reuters expected Navistar to report a loss of $1.30 per share for the quarter. Analysts' estimates typically exclude special items.

Sales and revenues for the quarter declined 12 percent to $2.86 billion from $3.25 billion in the same quarter last year, and missed fifteen Wall Street analysts' consensus estimate of $2.92 billion.

The sales decline reflects lower net sales across all classes of its core truck business amid the company's SCR emissions transition for both heavy- and medium-duty vehicles and a 9 percent drop in overall industry demand in North America. This was partially offset by stronger year-over-year volumes in the South America engine business.

Truck sales for the quarter declined 15 percent to $1.92 billion, and engine sales totaled $723 million, down 14 percent from the prior-year quarter. Parts sales decreased 9 percent to $491 million from last year.

The company noted that it expects Cummins ISB engine to drive medium-duty truck and bus recovery in 2014 while providing customers with a market-proven engine. The company added that it will also open the door to new customers, while strengthening demand with existing ones.

"At the same time, we clearly need to accelerate progress with our financial results, and we are already implementing additional cost reduction and business improvement actions to counter our near-term volume challenges. This includes resizing our company to match our current business environment," Clarke added.

In Thursday's regular trading session, NAV is currently trading at $33.03, up $0.98 or 2.88% on a volume of 0.22 million shares.