LISLE, Ill. -- Navistar has appointed Troy A. Clarke as its president and CEO, effective April 15. Clarke, currently the company's president and chief operating officer, 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, 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.
Campbell pointed to the “significant progress” Navistar has made over the past six months. "When I assumed the interim CEO role last August, I was prepared to stay as long as necessary to oversee the company through a transition period, and today I am pleased to announce our turnaround is firmly underway and our return to profitability is clearly in sight,” he said. “I am also delighted that the board and I have decided that Troy is the right executive to lead the company forward at this time, and I am confident Navistar will continue to build on its momentum – improving performance and quality for customers and creating shareholder value."
Keyes thanked Campbell "for his valuable contributions to Navistar,” helping to “align our board and management around a clear path forward," during the company’s recent transition period.
Keyes also praised the board’s decision to install Clarke as president and CEO. “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,” he said.
"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.
For his part, Clarke thanked Lewis for “his guidance and leadership” during the transition 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,” he said.
"Navistar has a great leadership team and a talented group of employees. I look forward to continuing to work with them as we take further steps to strengthen our North American core businesses, improve quality and customer satisfaction, drive future profitability, and deliver value to shareholders."
Execs see ‘concrete progress’ despite first quarter losses
The announced changes in management coincide with the release of Navistar’s first quarter results. Navistar reported a first quarter 2013 net loss of $123 million, compared to a first quarter 2012 net loss of $153 million. Excluding discontinued operations, Navistar recorded a first quarter 2013 loss from continuing operations of $114 million, compared to a first quarter 2012 loss from continuing operations of $144 million.
The company’s year-over-year earnings 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, according to company officials. Manufacturing revenues in the quarter were $2.6 billion, down 12% 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. Although we reported a first quarter loss, we believe we made solid progress in the first quarter toward these goals," Campbell said. "That progress includes submitting our 13-litre SCR engine for certification ahead of schedule, kicking off of pilot production for ProStar+ vehicles with the 13-litre 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."
Campbell noted the company must “do even more” to continue on its path toward profitability given current industry volumes and its current North American market share. "We believe our market share will begin to improve in the second half of 2013 with the full launch of our clean engine lineup. 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."
So far in the second quarter, Navistar has 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, Ala. manufacturing facility to a railcar manufacturing company.