Navistar Reports 3Q Net Income of $1.4 Billion

Sept. 7, 2011
Navistar International Corporation (NYSE: NAV) reported net income of $1.4 billion for the third quarter, ending July 31, equal to $18.24 diluted earnings per share

Navistar International Corporation (NYSE: NAV) reported net income of $1.4 billion for the third quarter, ending July 31, equal to $18.24 diluted earnings per share.

These results include an income tax valuation allowance release and costs associated with the restructuring of North American manufacturing operations and engineering integration. Excluding these items, adjusted net income attributable to Navistar for the third quarter was $61 million, equal to $0.79 diluted earnings per share.

“The industry continued its recovery in the third quarter, and our results reflect this strengthening as well as our continued investments for future growth. We introduced new products for our growing global presence, invested in our engineering integration and heavy engine strategies, and took additional actions to reduce costs and further increase our manufacturing flexibility,” said Daniel C. Ustian, Navistar chairman, president and chief executive officer. “As a result, we are well-positioned to deliver a strong fourth quarter, achieve our adjusted full-year earnings of $5 to $6 per share, and enter 2012 with positive momentum.”

Included in the third-quarter results were charges of $137 million for the company’s plans to close its Chatham, Ontario operations; restructuring of its custom products business unit; and costs associated with engineering integration. Results also include $1.48 billion in net tax benefit from an income tax valuation allowance release.

“Our proven ability to deliver consistent earnings, even in the toughest of times, coupled with our future growth prospects gives us the confidence that we can capture the benefits of these deferred tax assets. As a result, Navistar is now in its best equity position in the last ten years,” said Ustian. “Given our strong cash position, we are launching a significant buyback of our stock, which we believe is currently undervalued. We are also evaluating additional return on capital options and look forward to announcing them early in 2012.”

The company plans to undertake share repurchases of up to $175 million – approximately 5 percent – of Navistar’s common stock in the upcoming months using a combination of approaches to execute the repurchase including open market repurchases and an accelerated repurchase program. The company has sufficient liquidity for this transaction and plans to use excess cash reserves for the repurchase.

Navistar reports its adjusted net income attributable to Navistar International Corporation guidance for fiscal year ending Oct. 31, 2011, to be between $388 million and $465 million, equal to $5.00 to $6.00 diluted earnings per share. Additionally, the company confirmed its full year forecast for manufacturing cash of $1.2 to $1.4 billion.

The company earned $117 million, equal to $1.56 diluted earnings per share in the year-ago third quarter. Sales and revenues for the 2011 third quarter were $3.5 billion, compared with $3.2 billion in the year-ago third quarter.