Tags: navistar | shares | loss | truck

Navistar Shares Jump as Loss Is Smaller than Expected

Thursday, 06 Sep 2012 03:29 PM

 

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Shares of Navistar International Corp., which ousted its chief executive officer amid an inquiry from regulators, climbed the most in almost three months Thursday after the company said third-quarter results topped analysts’ estimates.

Navistar shares were up 17 percent at $23.87 in the last half-hour of regular trading on the New York Stock Exchange, the biggest intraday gain since June 8. The shares slid 46 percent this year through Wednesday after tumbling 35 percent in 2011.

Net income fell 94 percent to $84 million, or $1.22 a share, compared with $1.4 billion, or $18.24, a year earlier. The 2012 quarter included a $196 million tax benefit while the year-earlier period had a $1.46 billion benefit, according to a statement. The adjusted loss was 20 cents a share, the company said in a regulatory filing. The average estimate of 15 analysts surveyed was for a loss $1.41 a share. Navistar had a pretax loss of $100 million in the quarter ended July 31.

Navistar withdrew its 2012 forecast Aug. 2 after disclosing a U.S. Securities and Exchange Commission inquiry. On Aug. 27, the company said CEO Dan Ustian had stepped down “effective immediately.” The company named former Textron Inc. CEO Lewis Campbell executive chairman and interim chief. He said Thursday that he expects “significant improvements” in the next 12 to 18 months.

“Clearly we are not pleased with these results,” Campbell said in the statement. “I believe we have a good line of sight and a keen sense of urgency for moving forward.”

No Forecast

Sales fell 6.2 percent to $3.32 billion, compared with $2.95 billion, the average estimate of 11 analysts’ estimates. Navistar is reviewing its “non-core” businesses with an eye toward return on invested capital, Campbell said on a conference call. Navistar’s truck, engine and parts unit in North America is its core business, he said. The company also makes Monaco recreational vehicles, International school buses and military vehicles.

The company isn’t issuing a forecast for the current quarter, according to the statement. Navistar has sufficient cash reserves to fund the business during the turnaround, Andrew Cederoth, chief financial officer, said on the conference call with investors and analysts.

Navistar said it’s completing a buyout program to cut jobs, which it estimated will save $70 million to $80 million a year. About 500 people have accepted offers, Chief Operating Officer Troy Clarke said on the call. The company wants to cut expenses as much as $175 million annually starting in fiscal 2013, which begins Nov. 1.

SEC Request

Navistar is cooperating with a request from the SEC related to accounting and disclosure matters, according to an Aug. 2 regulatory filing. The company also has been under regulatory pressure after a new engine failed to meet U.S. emissions standards. Ustian, 62, had been Navistar’s chairman, president and CEO since 2004.

The company also said Aug. 2 it reached a supply agreement with Columbus, Indiana-based Cummins Inc. on an engine that will comply with Environmental Protection Agency 2010 emissions standards after abandoning its embrace of a competing technology.

Cummins will provide Navistar with its urea-based aftertreatment system, which will be added to Navistar’s in- cylinder engine. Cummins engineers are at Navistar working on the integration, Campbell said today. Navistar is “on track” to complete the Cummins accord by the end of October, according to the company’s earnings statement.

“No one is trying to resurrect the technology that almost got us there but didn’t,” Campbell said on the call. “We’ve totally turned the page on that.”

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