Navistar unveils new truck in turnaround bid
LISLE - Navistar International Corp. is introducing its first new trucks in six years, just as Wall Street is wondering if the company that counts billionaire Carl Icahn as its biggest investor has enough cash to survive.
At the World of Concrete trade show in Las Vegas on Monday, Navistar was scheduled to unveil a line of premium work trucks called International HX. With up to 600 horsepower, the behemoths are designed to roar around construction, mining and drilling sites with specialized equipment like cranes or cement mixers mounted on their backs.
Navistar had to kill most versions of its so-called premium vocational trucks in 2010 because they lacked diesel engines that could comply with federal emissions limits. Overall, the company's pollution-control strategy failed so miserably that its market share has dropped by half since 2009 - to 10.4 percent of U.S. heavy-duty truck sales in December.
By beefing up its work-truck offerings now and redesigning its entire lineup - including long-distance freight haulers - by 2018, Navistar hopes to demonstrate that it's recovering through smart engineering and not just plant closings, Chief Executive Officer Troy Clarke said in an interview.
"This is the first tranche of investment that's not focused on a do-over," said Clarke, 60, a former General Motors Co. executive who's run Navistar since 2013. "It's focused on creating the future."
The question is whether Clarke will have enough time, especially because his new products are arriving after heavy- duty truck sales have peaked. Industrywide U.S. production could fall 20 percent in 2016, Clarke said.
To add even more pressure, a pair of activist investors - Icahn and Mark Rachesky - have accumulated almost 40 percent of Navistar's shares. Starting in 2011, Icahn paid an average of $33.79 for each of his 16.3 million shares, according to Bloomberg data. The stock closed at $7.27 a share on Friday and is down 48 percent since Dec. 1. Icahn declined to comment on his Navistar investment.
The company's 8.25 percent bonds due in November 2021 yielded 19.4 percent on Friday, rivaling the borrowing costs of subprime credit cards.
"Should the economy take a turn for the worse, Navistar could see liquidity risks," said Brian Sponheimer, a Gabelli & Co. analyst in Rye, New York. "It's a very real concern."