Navistar Reports Massive Losses

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Navistar International Corp. (NYSE: NAV) reported fourth-quarter and full fiscal year 2012 results before markets opened this morning. The heavy truck and engine maker reported diluted earnings per share (EPS) loss of $40.13 on revenues of $3.28 billion. In the same period a year ago, Navistar reported EPS of $3.48 on revenue of $4.32 billion. Today’s results also compare to the Thomson Reuters consensus estimates for a net loss of $1.12 per share and $3.18 billion in revenue.

The massive net loss includes a noncash tax expense of $2 billion ($28.59 per share) and other pretax charges totaling more than $100 million. Excluding those charges, the company posted a net loss of $566 million. Based on a diluted share count of 69 million shares, a back-of-the-envelope calculation indicates a quarterly net loss of about $8.20 per share.

For the full year, Navistar reported a net loss of $43.56 per share on revenues of $12.95 billion, compared with EPS of $22.64 on revenues of $13.96 billion a year ago. The consensus analysts’ estimate called for a loss of $4.14 per share on revenues of $12.84 billion.

The company’s CEO said:

We continue to make significant progress on our turnaround and the complexity of this quarter’s results is reflective of the actions necessary during this time of transition. … 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. However, the fact is that customer feedback and positive three- and nine-months-in-service data show today we are delivering the highest quality trucks since the 2010 launch, and quality will continue to be our top priority.

Navistar did not provide any fiscal 2013 guidance. The consensus estimates call for a per-share loss of $0.20 on revenues of $13.04 billion for the full year and a net loss of $1.12 per share on revenue of $2.81 billion for the first fiscal quarter ending in January.

The company raised about $200 million in an October secondary offering that was priced well below last night’s closing price of $22.85. The problem is that last’s night’s closing price is less than half the 52-week high. Navistar remains precariously perched on the edge of its own cliff.

Shares are down 4.8% in premarket trading this morning, at $21.75 in a 52-week range of $18.17 to $48.18. Thomson Reuters had a consensus analyst price target of around $27.85 before today’s results were announced.

Paul Ausick

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