The Lisle, Ill.-based truck and engine maker reported a fourth quarter 2012 net loss of $2.8 billion, or $40.13 per diluted share, compared to fourth quarter 2011 net income of $255 million, or $3.48 per diluted share.
The company reported a pre-tax loss of $566 million in the fourth quarter 2012 versus a $275 million pre-tax profit in the fourth quarter 2011.
Revenues in the quarter were $3.3 billion, down 24% from the fourth quarter of 2011.
"Unfortunately, we saw a spike in warranty spend in late October and early November for the few remaining engine issues and the cost to take the proactive actions to support our customers and fix those items is higher than we anticipated," said Lewis B. Campbell, Navistar chairman and chief executive officer.
Campbell also said the company continues to make significant progress with its turnaround plans, which recently have included selling off Navistar's share in a joint venture with Mahindra in India and closing its Garland, Texas, truck plant.
"The complexity of this quarter's results is reflective of the actions necessary during this time of transition," Campbell says. The company is positioned to exceed its goal of reducing structural costs by $175 million, he says.
"The team has delivered numerous successes, including exceeding our cash guidance, launching the ProStar with the ISX 15-liter ahead of schedule and moving forward with several opportunities identified during our ROIC-focused business reviews," Campbell says.
In an investor conference call Wednesday, Campbell said he plans to return the company to profitability by the end of 2013, according to published reports.
The net loss for fiscal year 2012 was $3 billion, or $43.56 per diluted share, versus net income for fiscal 2011 of $1.7 billion, or $22.64 per diluted share.
Truck For the fourth quarter 2012, the truck segment recorded a loss of $160 million, compared with a year-ago fourth quarter profit of $287 million. For the fiscal year 2012, the truck segment recorded a loss of $320 million compared with fiscal year 2011 profit of $336 million.
The segment's 2012 loss was primarily driven by decreased military sales and product mix, higher commodity costs and warranty expense related to extended warranty contracts on 2010 emission engines. The realization of certain benefits from manufacturing cost efficiencies partially offset these factors.
Engine For the fourth quarter 2012, the engine segment recorded a loss of $287 million, compared with a year-ago fourth quarter profit of $58 million. For the fiscal year 2012, the engine segment posted a loss of $562 million compared to the prior year profit of $84 million. The 2012 loss is predominantly due to increased warranty expense for 2010 emission engines and lower sales at South American operations.
Segment results for fiscal year 2012 included the company's non conformance penalty charges of $34 million. SG&A and engineering expense were lower by $48 million and $25 million, respectively.
Parts For the fourth quarter 2012, the parts segment recorded profit of $76 million, compared with a year-ago fourth quarter profit of $87 million. For the fiscal year 2012, the parts segment realized a profit of $240 million compared to the prior year profit of $287 million. The year-over-year decrease was driven by lower military volume partially offset by increased commercial sales and lower SG&A expense.
Financial Services For the fourth quarter 2012, the financial services segment recorded profit of $16 million, down from fourth quarter 2011 profit of $27 million. For the fiscal year 2012, the financial services segment recorded a profit of $91 million compared to a year-ago profit of $129 million, primarily due to expected lower portfolio balances.
Corporate For fiscal year 2012, tax expense was $1.8 billion or $25.76 per share. This included the negative impact of the non-cash U.S. valuation allowance of $2 billion and a tax benefit of $189 million related to the release of the Canadian valuation allowance. In fiscal 2011, the company realized a $1.5 billion tax valuation release benefit.
10/31/2012 Navistar To Close Garland Truck Plant
9/6/2012 Navistar Reports Third-Quarter Results, Accelerates Cost Cutting