Navistar lost $248 million in its first quarter — more than double what it lost during the same time last year — due in part to earlier problems getting approval of its engine technology and a decline in military sales.
Some analysts said the results released Wednesday show the truckmaker that employs more than 800 people in its Springfield plant and has thousands of local retirees continues to face financial woes, while the manufacturer and others said Navistar remains competitive and is well-positioned to improve its revenues as the economy grows.
The truckmaker is one of Clark County’s most prominent employers and has grown since 2010 when it had as few as 300 employees at its Springfield manufacturing plant.
Navistar officials said they have made progress in reducing costs and are focused on rebuilding their market share this year.
Decisions the company has made in recent months will put it in a better position as the economy improves, said Jack Allen, Navistar executive vice president and chief operating officer.
“This is a quarter where we continue to make progress and I expect you’ll see much more of that moving forward,” he said.
The first quarter loss represents a loss of about $3.05 per share. The losses were higher than at the same time last year, when Navistar reported a net loss of about $123 million, or $1.53 per share.
Revenue for the first quarter of this year was $2.2 billion, according to information from the company, down from about $2.6 billion during the first quarter of 2013. Company officials cited lower sales due to its emissions strategy transition and lower military sales.
However, it said those losses were partially offset by $67 million in reduced structural costs.
The company announced earlier this year it will consolidate the production of its MaxxForce mid-range engines at one site. That means engine production will move from a facility in Huntsville, Ala., to a plant in Melrose Park, Ill., saving as much as $22 million in operating costs but also resulting in the loss of about 280 jobs in Alabama.
Troy Clarke, president and CEO of Navistar compared that decision to an earlier move to close a manufacturing plant in Garland, Texas, which he said saved the company about $35 million annually. The closing of the Garland facility meant additional work for employees in Springfield, and at a separate plant in Escobedo, Mexico.
However, the decision to consolidate work at the Alabama facility will have no effect on operations in Springfield, said Steve Schrier, a spokesman for Navistar.
Company officials also pointed to other positive indicators, including that its backlog for orders is 56 percent higher than it was a year ago.
However, Vicki Bryan, an analyst with Gimme Credit, noted reasons remain to be concerns about Navistar and that its performance fell short of market expectations.
“Orders are one thing, but it doesn’t turn into cash until it’s a delivery,” Bryan said. “That’s what I’m concerned about.”
The company’s North America truck segment reported a loss of $207 million, compared to a loss of $101 million in the same time frame last year, which the company attributed to previous struggles with its engine technology and lower demand for the company’s military products due to reduced federal spending.
Navistar slumped after its engine technology for heavy duty trucks couldn’t meet 2010 carbon emissions standards set by the U.S. Environmental Protection Agency. In 2012 the company abandoned the technology it developed to start anew.
“Sales were down across the board in all truck and engine categories when, as we projected, Navistar failed to convert its growing backlog anywhere near the pace of previous order growth,” Bryan said.
Other analysts said Navistar is in a good position to regain its share of the market as the economy improves. Many potential customers are reluctant to spend or hire as the economy continues to slowly recover, said David Cole, chairman emeritus of the Center for Automotive Research in Michigan.
But the company is one of the leaders in the truck manufacturing industry and eventually customers will have to replace aging vehicles.
“The basic deal right now is a real reluctance for people to spend,” Cole said.
Staying with the story
The Springfield News-Sun provides in-depth coverage of major local employers such as Navistar, Honda and Speedway.
Navistar by the numbers
800 — Production and maintenance workers in Springfield
$248 million — Net loss in Navistar’s first quarter this year
$123 million — Net loss at the same time last year
56 percent — Percent backlog of orders increased from last year