Navistar Sales Decline in 4Q

December 23, 2013

Navistar reported fourth quarter revenues of $2.8 billion in 2013, compared to $3.2 billion in revenue for the same period in 2012. The decrease reflects lower sales across all business segments, primarily due to weaker industry conditions and lower market share during the company's emissions strategy transition.

The company reduced its structural costs by $94 million in the quarter compared to fourth quarter 2012, and finished the full year with reduced structural costs of $330 million versus 2012.

"Clearly, we are disappointed that our previous engine strategy continues to negatively impact us in the form of additional warranty expense, but we will continue to stand behind our products and manage this issue as these engines work their way through the standard and extended warranty cycles," said Troy A. Clarke, Navistar's president and CEO. "We're not letting it overshadow the strong progress we've made to fundamentally change Navistar's operations and culture in 2013. We still have a lot of hard work ahead of us, but we are pleased to be entering 2014 in a much stronger position than we were one year ago."

The company also reported a net loss of $154 million in the fourth quarter of 2013, compared to a net loss of $2.8 billion for the same period in 2012.

The net loss for fiscal year 2013 was $898 million, or $11.17 per diluted share, versus a net loss of $3 billion, or $43.56 per diluted share, for fiscal year 2012.

Current quarter results include an income tax benefit of $220 million related to an intra-period tax allocation, a non-cash charge of $77 million related to a goodwill impairment in its North American operations and $152 million in additional pre-existing warranty reserves. Fourth quarter 2012 results included increased non-cash tax expense of $2 billion for the increase in deferred tax valuation allowance on U.S. deferred tax assets and $149 million in additional pre-existing warranty reserves.

Navistar achieved its fourth quarter cash guidance, finishing the quarter with approximately $1.52 billion in manufacturing cash and marketable securities, which included net proceeds of $196 million from the issuance of new senior subordinated convertible notes and an intercompany loan of $270 million in the quarter. Excluding these transactions, manufacturing cash would have been $1.06 billion, in line with its guidance of $1.0 billion to $1.1 billion.

"Operationally, we hit our plan this quarter, and we ended the year with an order backlog that is up 26 percent compared to this time last year. Those are just two examples of the continued progress we are making on our Drive to Deliver turnaround plan," Clarke said. "During the quarter, we strengthened our cash position, continued to reduce structural costs, completed our on-highway Class 8 transition to SCR emissions technology, and progressed with our medium-duty product transition launches, resulting in 500 medium duty SCR trucks and buses built this month, as planned.”