Navistar International Corp. today announced a second quarter 2013 net loss of $374 million — or $4.65 per diluted share — compared to a second quarter 2012 net loss of $172 million, or $2.50 per diluted share.
Excluding discontinued operations, Navistar recorded a second quarter 2013 loss from continuing operations of $353 million, or $4.39 per diluted share, compared to a second quarter 2012 loss from continuing operations of $138 million, or $2.01 per diluted share. Second quarter 2012 results included a gain of $181 million for the release of an income tax valuation allowance related to Canadian deferred tax assets.
The year-over-year decline was mainly due to lower volumes and higher pre-existing warranty adjustments of $164 million in the second quarter 2013, primarily related to EPA 2010 emissions level engines. This was partially offset by $60 million in lower SG&A expenses and $32 million in reduced engineering and product development costs this quarter versus the same period one year ago.
Manufacturing revenue in the quarter was $2.5 billion — down 23 percent from the second quarter of 2012. The decline reflects a 14 percent drop in industry demand and lower market share during the company’s emissions strategy transition.
“We are not satisfied with our overall financial results this quarter, but we are pleased with the continued progress we made in a number of areas on our turnaround plan,” said Troy A. Clarke, Navistar president and chief executive officer. “We still face some significant, yet solvable challenges, primarily in the areas of higher pre-existing warranty costs for our earlier EPA 2010 emissions level engines, as well as in rebuilding sales and restoring market share. However, we are already implementing the right leadership and business process changes to effectively address these priority issues.”
Navistar finished the second quarter 2013 with $1.16 billion in manufacturing cash and marketable securities, exceeding its cash guidance range of $1.0 billion to $1.1 billion. Navistar’s manufacturing cash guidance for the end of the third quarter 2013 ranges from $1.0 billion to $1.1 billion.
“We exceeded our cash guidance, continued to over-achieve on our structural cost reduction efforts, and obtained regulatory approval for our MaxxForce 13-liter engine with SCR, which we launched on time in our ProStar truck the last week of April,” Clarke added. “We were also pleased with our ongoing progress in shedding non-core assets that are not providing adequate returns on investment.”
“Our new SCR-based heavy-duty offerings are the highest quality trucks we have built in more than a decade and they have improved fuel economy — a combination that positions us to hit our previously stated goal of stronger sales and increasing market share during the second half of 2013 and into 2014,” said Jack Allen, Navistar’s chief operating officer. “We are off to a strong start as May orders were up 38 percent versus the average sales rate for the previous quarter, driven higher by strong interest in the MaxxForce 13-liter with SCR and the ProStar ISX.”
With its heavy duty launches essentially completed, the company is turning its focus to adding SCR aftertreatment to its medium duty products. Navistar announced it will use Cummins SCR on medium duty engines, which it will begin to make available in the first quarter of calendar year 2014.