Meritor announced this week that for the fourth quarter of fiscal year 2019, the company posted sales of $1,028 million, down $52 million or approximately 5 percent, from the same period last year. This decrease in sales was driven primarily by lower production in India, Europe and China, partially offset by revenues from AxleTech, which was acquired in July 2019.
Meritor states adjusted EBITDA was $116 million, compared to $118 million in the fourth quarter of fiscal year 2018. Adjusted EBITDA margin for the fourth quarter of fiscal year 2019 was 11.3 percent, compared with 10.9 percent in the same period last year. The company says the increase in adjusted EBITDA margin was primarily driven by lower net steel, premium and freight costs, pricing initiatives and material performance that more than offset the conversion impact from lower revenue in the quarter.
Additionally, cash flow provided by operating activities in the fourth quarter of fiscal year 2019 was $62 million, compared to $60 million in the same period last year. Lower working capital investments was mostly offset by the $48 million contribution of cash and repayment of a loan to fund the Maremont 524(g) Trust following the confirmation of the bankruptcy filing.
Free cash flow for the fourth quarter of fiscal year 2019 was $22 million, compared to free cash flow of $8 million in the same period last year. Meritor says the increase in free cash flow was driven by lower capital expenditures as compared to the same period last year.
Broken down by segment, Meritor says Commercial Truck sales were $728 million in the fourth quarter of fiscal year 2019, down 11 percent compared to the fourth quarter of fiscal year 2018. The decrease in sales was driven primarily by lower production in India, Europe and China.
Aftermarket, Industrial and Trailer sales were $341 million in the fourth quarter of fiscal year 2019, up 11 percent compared to the fourth quarter of fiscal year 2018. In this segment, Meritor says the increase in sales was primarily attributable to revenue from the acquisition of AxleTech. Segment adjusted EBITDA for Aftermarket, Industrial and Trailer was $44 million in the fourth quarter of fiscal year 2019, up $2 million from the same period in the prior year. Segment adjusted EBITDA margin decreased to 12.9 percent compared to 13.7 percent in the fourth quarter of fiscal year 2018. Segment adjusted EBITDA margin was down primarily due to the acquisition of AxleTech which was decretive to margins as certain targeted synergies, primarily from the elimination of cost overlap, have not yet been fully realized, the company says.
Overall, Meritor posted sales of $4.4 billion for fiscal year 2019, up $210 million or approximately 5 percent from the prior year, driven by higher truck production, primarily in North America, and increased Aftermarket and Industrial volumes across North America partially offset by the strengthening of the U.S. dollar against most currencies. Sales were also favorably impacted by revenue outperformance.
“Fiscal 2019 was a great year for Meritor,” says Jay Craig, CEO and president. “New business, strong operational execution and conversion on higher revenue drove excellent performance. We are pleased to have successfully completed our M2019 plan and we remain confident in our ability to drive even more shareholder value as we build on this momentum for M2022.”
The company says its adjusted EBITDA was $520 million in fiscal year 2019, compared with $474 million in fiscal year 2018. Adjusted EBITDA margin was 11.9 percent in fiscal year 2019, up 60 basis points compared with the prior fiscal year. Higher adjusted EBITDA and adjusted EBITDA margin year over year were driven primarily by conversion on higher revenue and the impact of Aftermarket pricing actions implemented earlier this year, partially offset by higher material costs and the strengthening of the U.S. dollar against most currencies, the company says.
