Meritor announces first quarter earnings, supplier agreement with Paccar

Meritor logoMeritor announced this week its earnings for the first quarter of fiscal year 2020 as well as a new agreement with Paccar to be a non-exclusive supplier of electric powertrains for its Kenworth T680 and Peterbilt 579 and 520 battery-electric vehicles.

Regarding its Q1, Meritor says it posted sales of $901 million, down $137 million, or approximately 13 percent, from the same period last year. The decrease in sales was driven by lower global production volumes, partially offset by sales from the company’s AxleTech business, which was acquired in the fourth quarter of fiscal year 2019.

Broken down by segment, Meritor says its Commercial Truck sales were down 20 percent compared to the same period last year; its Aftermarket, Industrial and Trailer segment saw sales rise by 20 percent.

Meritor adds its adjusted EBITDA was $98 million, compared to $119 million in the first quarter of fiscal year 2019. Adjusted EBITDA margin for the first quarter of fiscal year 2020 was 10.9 percent, compared to 11.5 percent in the same period last year. The decrease in adjusted EBITDA and adjusted EBITDA margin year over year was driven primarily by lower revenue, partially offset by lower material and labor and burden costs. Adjusted EBITDA margin was also negatively impacted from the AxleTech business, as the expected benefit from executed synergies continue to ramp up to full run rate, the company says.

Commercial Truck sales for the first quarter of fiscal year 2020 were $622 million, down $157 million, or 20 percent, compared to the same period last year. Meritor says the decrease in sales was driven primarily by decreased market volumes for most regions across the segment.

Segment adjusted EBITDA for Commercial Truck was $56 million, or 9.0 percent of sales for the quarter, compared to $77 million, or 9.9 percent of sales in the prior year. The decrease in segment adjusted EBITDA and segment adjusted EBITDA margin was driven primarily by lower volumes, partially offset by lower freight, labor and burden and material costs, the company says.

Conversely, the Aftermarket, Industrial and Trailer segment posted sales of $317 million, up $14 million, or 5 percent, from the same period a year ago. The increase in sales was primarily driven by revenue from the company’s AxleTech business, partially offset by decreased volumes across the segment.

Meritor says segment adjusted EBITDA for Aftermarket, Industrial and Trailer was $40 million, or 12.6  percent of sales for the quarter, compared to $40 million, or 13.2 percent of sales a year ago. The decrease in segment adjusted EBITDA margin was driven primarily by the impact from the AxleTech business, the company says, as the benefit from executed synergies continue to ramp up to full run rate.

“Overall, this was a solid quarter for us, even as we managed declining production volumes in our global end markets,” said Jay Craig, CEO and president, Meritor. “We are driving strong operational performance, executing our share repurchase plan and winning meaningful new business, as demonstrated by the electrification award we announced from Paccar this quarter.”

Kenworth T680 electricKenworth T680 electric

The Paccar agreement, announced Thursday, states Meritor will be the initial launch partner and primary supplier for the integration of functional battery-electric systems on the aforementioned chassis. Production is targeted to begin in early 2021.

“The opportunity to equip Kenworth and Peterbilt battery-electric vehicles with Meritor’s products allows us to partner with a valued customer and to continue bringing advanced technologies to market,” says T.J. Reed, vice president, Global Electrification, Meritor. “We look forward to delivering on our goal to be the premier supplier of electrification technologies for commercial vehicles.”

Meritor says the award further establishes the value of Meritor’s Blue Horizon brand, which represents the company’s emerging platform of advanced technologies centered on electrification.

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