Navistar Sees Narrower Loss

Navistar International Corporation ( NAV - Analyst Report ) recorded a narrower loss of $114.0 million or $1.42 per share in the first quarter of fiscal 2013 (ended Jan 31, 2013) compared with $144.0 million or $2.06 per share in the year-ago quarter. However, the loss per share was better than the Zacks Consensus Estimate of a loss of $1.63 per share.

The company expects to be profitable with the improvement in quality, launch of new SCR engine programs and delivery according to the 2013 operating plan in the near future.

Revenues declined 12.4% year over year to $2.6 billion in the quarter, missing the Zacks Consensus Estimate of $2.8 billion. The year-over-year decline in revenues was due to sluggish industry demand and lower market share of the company due to its transition to clean engine systems as per EPA regulation.

Segment Details

Revenues from the Truck segment declined 20.9% to $1.7 billion. The segment recorded a loss of $58 million compared to a loss of $27 million in the first quarter of fiscal 2012. The wider loss was attributable to the decline in traditional truck volumes and increase in depreciation owing to the closure of the Garland, Texas, facility.

Revenues from the Engine segment fell 13.9% to $740.0 million in the quarter. The segment registered a loss of $27 million compared with a loss of $120 million in the corresponding quarter last year. The improvement was driven by lower charges for pre-existing warranties; decline in engineering and product development expenditures in South America and lower SG&A expenses.

Revenues from the Parts segment rose 17.7% to $552.0 million. Profits from the segment increased 72% to $86 million from $50 million in the first quarter of 2012. The year-over-year rise in profits was driven by favorable volume and pricing strategies as well as lower SG&A expenses.

Revenues from the Financial Services segment slipped 13.2% to $59.0 million. Segment profit dropped 18.5% to $22 million from $27 million in the corresponding quarter last year. The decrease was driven by lower net interest margin.

Financial Position

Navistar had cash and cash equivalents of $497.0 million as of Jan 31, 2013, compared with $1.1 billion as of Oct 31, 2012. Total debt was $4.5 billion as of Jan 31, 2013, compared with $4.8 billion as of Oct 31, 2012.

Net cash flow from operations decreased to $66.0 million in the first three months of fiscal 2013 from $119.0 million a year ago. Capital expenditure declined to $72.0 million from $103.0 million in the same period a year ago.

Our Take

Warrenville, Ill-based Navistar manufactures and sells commercial trucks, mid-range diesel engines, buses, military vehicles and chassis for motor homes and step-vans. It also provides service parts for various trucks and trailers. Currently, the company retains a Zacks Rank #3 (Hold) on its stock.

Few stocks that are performing well in the industry where Navistar operates include Oshkosh Corporation ( OSK - Snapshot Report ) , STRATTEC Security Corporation ( STRT - Snapshot Report ) and Gentherm Incorporated ( THRM - Snapshot Report ) . Oshkosh and Strattec Security are Zacks Rank #1 (Strong Buy) stocks while Gentherm carries a Zacks Rank #2 (Buy).