Navistar International Corporation announced a first quarter net loss of $248 million, or $3.05 per diluted share, compared to a first quarter 2013 net loss of $123 million, or $1.53 per diluted share.
Revenues in the quarter were $2.2 billion, down from $2.6 billion in the first quarter of 2013. Lower sales volumes, primarily due to the company's medium-duty emissions strategy transition and lower military sales, drove the year-over-year performance decline, which was partially offset by $67 million in reduced structural costs.
First quarter 2014 results include an unfavorable impact of $21 million due to fluctuations in foreign exchange rates and $18 million in asset impairment charges.
"We signaled that this would be a tough quarter due to our mid-range product transition, the ongoing reduced sales in our military business, and because the first quarter, historically, represents the weakest operational period of the year for us. Given all this, we are encouraged we hit our cash and adjusted EBITDA guidance," said Troy A. Clarke, Navistar's president and CEO. "Clearly, we have more hard work to do to rebuild our market share and further reduce our costs, but we continue to make progress on our Drive to Deliver, and we feel we're off to a solid start in 2014."
Navistar delivered at the high end of its first quarter manufacturing cash guidance range of $1 billion to $1.1 billion, ending the quarter with approximately $1.1 billion in manufacturing cash, cash equivalents and marketable securities. First quarter 2014 EBITDA was a loss of $110 million, which included $52 million in pre-existing warranty adjustments and a net $21 million in one-time items. Adjusted EBITDA was a loss of $37 million, which was better than the company's first quarter guidance of a loss between $50 million to $100 million, excluding pre-existing warranty and one-time items.
First quarter product highlights included the successful launch of the Cummins ISB engine offering in the medium-duty International DuraStar and IC Bus CE Series school bus. These and other actions helped the company achieve Class 6/7 retail share of 22 percent and Class 8 retail share of 18 percent in January. Both represented the highest monthly retail share performance Navistar has attained in the last six months, and helped offset lower than expected retail performance in the first two months of the quarter. The company finished the quarter with an order backlog 56 percent higher than this time one year ago.
Last month, the company announced plans to consolidate mid-range engine manufacturing into its Melrose Park, Ill., engine plant. Once completed later this summer, these actions—which include idling the Huntsville, Ala., mid-range engine plant—are expected to reduce Navistar's operating costs by more than $22 million annually.
As a next step in its engine business restructuring, the company will add selective catalytic reduction (SCR) emissions technology to its high horsepower inline six-cylinder (I-6) engine platforms to complement the recent launch of the Cummins ISB. The company is already taking orders with deliveries scheduled for this summer.
"These actions will help us deliver on one of our biggest opportunities—reclaiming our market position in medium-duty and bus, which historically have been important businesses for us and our dealers," Clarke said. "We're gaining momentum in the marketplace. As we fully launch our mid-range SCR portfolio in the coming months and complete this phase of our engine restructuring, we anticipate we will improve our financial performance throughout 2014 and remain on path to achieving our guidance of an 8 to 10 percent EBITDA margin run rate exiting 2015."