Navistar may face SEC lawsuit, posts 12th consecutive loss

The company said it suffered from restructuring and product warranty costs and poor sales in Brazil and Mexico.

Navistar said it received Wells notices from the U.S. Securities and Exchange Commission that recommended enforcement action against the company and former Chief Executive Officer Daniel Ustian for allegedly violating regulations of disclosures and financial statements.

A Wells notice usually gives the recipient one last chance to persuade regulators not to file a lawsuit.

During a conference call with analysts, Navistar officials said they could not comment on the case beyond saying the company was working on its response to the Wells notices.

The SEC staff may also recommend the agency pursue action involving Navistar's Environmental Protection Agency certification and disclosures about Ustian's exit in August 2012.

The SEC has been sending Navistar subpoenas since 2012 as part of a probe into whether the company misstated its efforts to win EPA certification that its engines comply with clean air laws.

Navistar has been struggling with high warranty costs for an emission reduction system that failed to meet regulatory standards in 2012.

The net loss attributable to Navistar widened to $28 million, or 34 cents per share, in the third quarter ended on July 31 from $2 million, or 2 cents per share, a year earlier.

Revenue fell nearly 11 percent to $2.54 billion, below the analysts' average estimate of $2.75 billion, according to Thomson Reuters I/B/E/S.

The company said poor economic conditions in Brazil and Mexico, plus the strong U.S. dollar, hurt its results.

Navistar executives said during the conference call that ongoing restructuring actions would help the company become profitable and have positive cash flow in 2016.

The company said it had seen a marked increase in interest from U.S. customers for its new trucks.

In morning New York Stock Exchange trading, Navistar shares were down 6.7 percent at $16.19. At Tuesday's close, the stock had fallen about 48 percent this year, compared with a 16.2 percent decline in the Dow Jones U.S. commercial vehicles & trucks index <.djushr>.

(Reporting by Ankit Ajmera in Bengaluru and Nick Carey in Chicago; Editing by Sayantani Ghosh and Lisa Von Ahn)