Meritor reports $32 million net income for Q1

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Meritor posted sales of $889 million for the first quarter of fiscal year 2021, ended Dec. 31, 2020, down $12 million, or approximately one percent, from the same period last year.

The decrease in sales was driven primarily by the impact from the termination of the WABCO distribution arrangement, which occurred in the second quarter of fiscal year 2020, largely offset by higher truck production.

Net income attributable to Meritor and net income from continuing operations attributable to Meritor were $32 million, or $0.44 per diluted share, compared to $39 million, or $0.48 per diluted share, in the same period last year. Lower net income year over year was driven primarily by higher interest expense, which included $8 million of debt extinguishment costs incurred in the first quarter of fiscal year 2021, partially offset by cost reduction actions executed in the second half of fiscal year 2020, the company says.

Adjusted income from continuing operations attributable to the company in the first quarter of fiscal year 2021 was $44 million, or $0.60 per adjusted diluted share, compared to $52 million, or $0.64 per adjusted diluted share, in the same period last year.

Adjusted EBITDA was $102 million, compared to $98 million in the first quarter of fiscal year 2020. Adjusted EBITDA margin for the first quarter of fiscal year 2021 was 11.5 percent, compared to 10.9 percent in the same period last year. The increase in adjusted EBITDA and adjusted EBITDA margin year over year was driven primarily by cost reduction actions executed in the second half of the prior fiscal year which more than offset the impact of lower sales, Meritor reports.

Cash provided by operating activities was $44 million in the first quarter of fiscal year 2021, compared to cash used for operating activities of $19 million in the first quarter of fiscal year 2020. The increase in operating cash flow year over year was driven primarily by the impact of accounts receivable factoring as a result of higher balances available under the factoring programs and lower incentive compensation payments.

Commercial Truck sales for the first quarter of fiscal year 2021 were $691 million, up $28 million, or 4 percent, compared to the same period last year. The increase in sales in the first quarter of fiscal year 2021 was primarily due to slightly higher market volumes in Europe and India.

Segment adjusted EBITDA for Commercial Truck was $63 million, up $6 million compared to the first quarter of fiscal year 2020. Segment adjusted EBITDA margin increased to 9.1 percent in the first quarter of fiscal year 2021, compared to 8.6 percent in the same period of the prior year. The increase in segment adjusted EBITDA and segment adjusted EBITDA margin was driven primarily by conversion on higher revenue, cost reduction actions, and recognition of a one-time value added tax credit of $6 million at our joint venture in Brazil, partially offset by higher premium freight and electrification costs, the company says.

The Aftermarket and Industrial segment posted sales of $234 million, down $41 million, or 15 percent, from the same period a year ago. The decrease in sales in the first quarter of fiscal year 2021 was primarily due to the impact of the termination of the WABCO distribution arrangement.

Segment adjusted EBITDA for Aftermarket and Industrial was $35 million, down $4 million, compared to the first quarter of fiscal year 2020. Segment adjusted EBITDA margin increased to 15.0 percent in the first quarter of fiscal year 2021, compared to 14.2 percent in the same period of the prior year. Segment adjusted EBITDA margin increased due to cost reduction actions, which more than offset the impact of the termination of the WABCO distribution arrangement.

“We are pleased with our operational and financial performance this quarter” says Jay Craig, Meritor president and CEO. “The rebound in Class 8 truck markets, combined with our growing electrification business and new awards in Meritor’s Truck and Industrial businesses, gives us a clear path to successfully completing M2022.”        

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