Navistar International Corp., the truck maker under pressure from shareholders including Carl Icahn to boost its performance, fell the most since August after a $2 billion tax expense led a quarterly loss of $2.77 billion.
The Lisle-based company, which has posted losses in three of the last four quarters, today also cited pretax charges totaling $252 million for warranty expenses linked to big bore engines, cost cuts, restructuring and engineering integration and nonconformance penalties. The company will exceed its goal of reducing structural costs by $175 million, Chief Executive Officer Lewis B. Campbell said in the statement.
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While the truck maker's report was "messy" it provided "encouraging" details of its turnaround effort, David Leiker, a Milwaukee-based analyst with Robert W. Baird & Co., said in a note. Leiker has an outperform rating on Navistar.
The fiscal fourth-quarter loss of $40.13 per share compared with net income of $255 million, or $3.48 a share, in the year-earlier quarter. The noncash tax expense, which accounted for more than 70 percent of the per-share loss, was for an increase in deferred tax valuation allowance, the company said.
Lower sales, warranty costs and cost-cutting charges caused Navistar to lose $566 million on a pretax basis, down from a pretax profit of $275 million a year earlier, according to the statement. The company said it exceeded its guidance on liquidity by having $1.5 billion in cash and near-cash items.
Revenue for the period ended Oct. 31 fell 24 percent to $3.28 billion. That compared to an average estimate of $3.18 billion, according to data compiled by Bloomberg.
"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," Campbell, who became Navistar's CEO in August, said in the statement.
Navistar's truck segment recorded a loss of $160 million in the fourth quarter. The company said the loss was primarily driven by decreased military sales and product mix, higher commodity costs and warranty expense related to extended warranty contracts on 2010 emission engines. The company's engine segment recorded a loss of $287 million for the quarter, predominantly due to increased warranty expense for 2010 emission engines and lower sales at our South American operations, the company said.
Segment results for fiscal year 2012 included the company's nonconformance penalty charges of $34 million. SG&A and engineering expense were lower by $48 million and $25 million, respectively. The parts segment recorded a quarterly profit of $76 million, which was lower that the fourth quarter 2011 profit of $87 million. Navistar said lower military contract volume was partially offset by increased commercial sales and lower expenses.
Navistar announced a number of changes during the last few months, including the closing of a manufacturing plant in Garland, Texas last month, the delivery of commercial trucks with EPA emissions-compliant engines built by Cummins Inc this week, and the recent selling of its stake in a joint venture operation in India.
The company held off a proxy fight by Icahn and other shareholders earlier this year by appointing three new members to the board of directors.
• Daily Herald wire services contributed to this report