Navistar will secure a $1 billion loan and revise its full-year 2012 fiscal outlook in September, following release of its Q3 results. It also announced an agreement to purchase urea-based aftertreatment from Cummins in order to “accelerate” delivery of its ICT+ engine solution
Navistar will purchase urea-based aftertreatment systems from Cummins in order to “accelerate” delivery of its ICT+ engine solution.
The company also said it will secure a $1 billion loan and will revise its full-year 2012 fiscal outlook in September, following release of its Q3 results.
Navistar 3Q Financial Outlook
- Market share: Class 8 at 17-18%; Class 6-7 at 35-36%; and school bus at 48-49%.
- Revenues: $2.8 billion to $3 billion.
- Adjusted manufacturing segment profit: between $15 and $40 million. Including the impact of the company’s engineering integration and nonconformance penalties, between a $15 million loss to $15 million of profit.
- Adjusted pretax loss: between $115 million and $80 million. Including the impact of the engineering integration and nonconformance penalties, between $145 and $105 million.
Navistar also announced a transition plan as it moves to the urea-based emissions strategy. Navistar will continue to build and ship current model EPA-compliant trucks in all vehicle classes using appropriate combinations of earned emissions credits and/or nonconformance penalties (NCPs).
As part of the expanded relationship with Cummins, Navistar plans to offer the Cummins ISX15 engine in certain models, expanding the company’s vehicle lineup and on-highway market opportunity. Navistar plans to introduce the Cummins ISX15 engine as a part of its North American on-highway truck line-up beginning in January 2013 and to begin the introduction of ICT+ in its MaxxForce 13-liter in early 2013.
The company anticipates that its manufacturing cash will be between $575 million and $625 million at the end of the third quarter. To support these actions and to improve its financial flexibility, Navistar has entered into a firm commitment letter with a group of banks led by JPMorgan Chase Bank, N.A. and Goldman Sachs Lending Partners LLC and including Merrill Lynch, Pierce, Fenner & Smith Incorporated and Credit Suisse. The groups have committed to loan the company $1.0 billion in a senior secured term loan for up to five years.
Navistar also provided an outlook for fiscal third quarter 2012 and withdrew its full-year fiscal 2012 guidance until the company releases its third quarter results in September, at which time it will provide an updated full-year outlook.
The changes reflect the company’s transition to the ICT+ engine solution, its ongoing work with EPA regarding this solution, and uncertainty regarding overall global demand for trucks and engines, particularly in key markets such as India and Brazil.
“We expect to sustain our current market share through the balance of the year, and with the addition of ICT+ and an expanded model lineup, improve our market share in 2013,” Ustian said. “We expect to return to profitability in the fourth quarter and believe the company will be in a position to improve margins in 2013 as we realize the benefits of our integration and ongoing cost reduction initiatives. We look forward to providing further details of our plan to drive shareholder value on our third quarter results conference call in September.”
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