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Navistar International Corporation (NAV - Analyst Report) reported a loss of $145 million or $2.08 per share (excluding special items) in the first quarter of its fiscal year ended January 31, 2012 in sharp contrast to a profit of $12 million or 16 cents per share in the comparable quarter a year ago. The company’s loss was broader than the Zacks Consensus Estimate of a loss of 25 cents per share.

The company had a manufacturing loss of $111 million in the quarter compared with a profit of $80 million in the prior-year quarter. Revenues during the quarter went up 11% to $3.05 billion driven by higher truck volumes in traditional and global markets.

Segment Results

Truck: Revenues in the segment rose 20% to $2.15 billion driven by continued industry recovery in North America and higher volumes in Latin America. However, the segment recorded a loss of $41 million in the quarter in contrast to a profit of $32 million in the first quarter of fiscal 2011. The decrease in profit was attributable to higher commodity and fuel costs, higher product development, as well as the non-recurrence of a commodity hedging gain in 2011.

Engine: Revenues in the segment dipped 13% to $420 million. Consequently, the segment reported a broader loss of $120 million (which included $112 million in warranty costs for 2007 inline and initial-built 2010 engines) compared with a loss of $8 million in the first quarter of fiscal 2011.

Parts: Revenues in the segment inched up 5% to $434 million. The segment recorded a decline in profit to $50 million from $56 million a year ago due to a decrease in segment sales and a shift in product mix.

Financial Services: Revenues in the segment slipped 12% to $44 million. Consequently, profits in the segment decreased to $27 million from $32 million a year ago.

Financial Update

Navistar had cash and cash equivalents of $488 million as of January 31, 2012, a decrease from $539 million as of January 31, 2011. Total debt stood at $4.53 billion as of January 31, 2012 compared with $4.86 billion as of January 31, 2011. The debt-to-capitalization ratio was 1.05 as of January 31, 2012 compared with 1.00 as of January 31, 2011.

In the quarter, Navistar’s net cash flow from operations improved significantly to $119 million from $5 million in the year-ago quarter despite a decline in profit. The improvement was attributable to favorable changes in other assets and liabilities. Meanwhile, capital expenditure increased to $103 million from $95 million in the first quarter of fiscal 2011.

Outlook

Illinois-based Navistar International Corporation, a Zacks #3 Rank (Hold) stock, manufactures and markets commercial trucks, mid-range diesel engines, buses, military vehicles and chassis for motor homes and step-vans, and provides service parts for various trucks and trailers.

The company is one of the largest truck producers after Daimler AG (DDAIF) and PACCAR Inc. (PCAR - Analyst Report). It anticipates generating a profit of $295million–$365 million, or $4.25–$5.25 per share for fiscal 2012. The company anticipates truck demand in North America to increase 5%–18% during the year to 275,000–310,000 units.

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