Navistar Names Clarke CEO, Reports 1Q Loss
Mar 8, 2013 8:30 AM
Troy A. Clarke has been named president & CEO of Navistar International, effective April 15th. In addition, Navistar announced a first-quarter 2013 net loss of $123 million, or $1.53 per diluted share, compared to a first quarter 2012 net loss of $153 million, or $2.19 per diluted share.
Clarke, currently the company's president & COO, will also join the Board of Directors.
At the same time, Lewis B. Campbell, who has served as executive chairman and interim CEO since August 2012, will step down from those positions and from the board. James H. Keyes, who has served as a board member since 2002, will become non-executive chairman, also effective April 15.
"On behalf of the Board of Directors, I want to thank Lewis for his valuable contributions to Navistar,” Keyes said. "The board is also extremely pleased to name Troy as chief executive officer. He is a proven leader and has been a valuable asset to the executive team since joining the company in early 2010. During his recent tenure as president and chief operating officer, Troy has been instrumental in implementing Navistar's Drive to Deliver plan focused on clear accountability and functional excellence; driving the company's transition to its clean engine strategy; and taking aggressive actions to improve Navistar's cost structure.
"We believe that separating the chairman and CEO roles at this time will enable Troy to focus exclusively on continuing to successfully execute the company's turnaround plan and putting the company on a path to profitability entering fiscal year 2014," Keyes added
"I am honored to take on the role of CEO and join the board of Navistar," said Clarke. "In six short months, we have made significant progress on our turnaround, and I want to thank Lewis for his guidance and leadership during this period. Working together, we have implemented a number of important actions to set Navistar on the right path, and the company now has a strong platform to build upon going forward.”
Excluding discontinued operations, Navistar recorded a first quarter 2013 loss from continuing operations of $114 million, or $1.42 per diluted share, compared to a first quarter 2012 loss from continuing operations of $144 million, or $2.06 per diluted share.
The company reported year-over-year EBITDA increased $163 million mainly due to $109 million in lower warranty adjustments and $70 million in reduced SG&A expenses, partially offset by lower volumes.
Manufacturing revenues in the quarter were $2.6 billion, down 12 percent from the first quarter of 2012. The decline was reflective of lower overall industry demand and lower market share resulting from the company's clean engine strategy transition.
"We are beginning to see concrete progress on each of our near-term priorities – improving our quality, launching our new SCR engine programs on schedule and delivering on our 2013 operating plan, which will put us on a path to profitability,” said chairman & CEO Campbell.
“Although we reported a first quarter loss, we believe we made solid progress in the first quarter toward these goals," he continued, "That progress includes submitting our 13-liter SCR engine for certification ahead of schedule, kicking off of pilot production for ProStar+ vehicles with the 13-liter SCR engine earlier this week, strengthening our quality performance, and effectively managing things that we can control. These include aggressively managing inventories and significantly reducing discretionary spending enterprise-wide."
The company said it finished the first quarter 2013 with $1.19 billion in manufacturing cash and marketable securities, exceeding its cash guidance range of $950 million to $1.05 billion. Stated contributing factors were improvements in net working capital, delayed capital expenditures and better than expected structural costs.
"In order to move forward on our path to profitability, we recognize the need to do even more given current industry volumes and our short-term market share outlook in North America," said Campbell.
"We believe our market share will begin to improve in the second half of 2013 with the full launch of our clean engine lineup,” he continued. “And while we are already on track to exceed our goal of reducing structural costs by $175 million this year, we recently launched a benchmarking initiative that has already identified additional cost savings to further lower our breakeven point in 2013."
According to Campbell, Navistar also continues to make progress on its return on invested capital (ROIC) initiatives: In the second quarter, Navistar completed the sale of its equity interests in its India truck and engine joint ventures; completed the sale of its Workhorse Custom Chassis brand; and subleased a portion of its Cherokee, AlL manufacturing facility.
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