Meritor reports sales of $1.15 billion in second quarter

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Updated May 5, 2022

For the second quarter of fiscal year 2022, Meritor reports sales of $1,154 million, up $171 million, or approximately 17 percent, from the same period last year. The increase in sales was primarily driven by higher truck production in most global markets and pricing actions.

Net income attributable to Meritor was $62 million, or $0.86 per diluted share, compared to $63 million, or $0.86 per diluted share, in the same period last year. Net income from continuing operations attributable to Meritor was $61 million, or $0.85 per diluted share, compared to $63 million, or $0.86 per diluted share, in the same period last year.

Flat net income year over year was driven primarily by higher sales volumes, pricing actions and lower tax expense, partially offset by increased steel and freight costs, and the recognition of value-added tax credits in Brazil during the second quarter of fiscal year 2021, Meritor reports.

Adjusted income from continuing operations attributable to the company in the second quarter of fiscal year 2022 was $70 million, or $0.98 of adjusted diluted earnings per share, compared to $50 million, or $0.68 of adjusted diluted earnings per share, in the same period last year.

Adjusted EBITDA was $127 million, compared to $111 million in the second quarter of fiscal year 2021. The increase in adjusted EBITDA was driven primarily by higher sales volumes and pricing actions, partially offset by higher steel and freight costs. Adjusted EBITDA margin decreased to 11.0 percent compared to 11.3 percent in the same period last year. The decrease in adjusted EBITDA margin was driven primarily by higher net steel and freight costs which unfavorably impacted the conversion on sales.

Cash used for operating activities was $17 million in the second quarter of fiscal year 2022, compared to cash provided by operating activities of $63 million in the second quarter of fiscal year 2021. The decrease in operating cash flow year over year was driven primarily by an increase in working capital requirements.

Q2 segment results

Commercial truck sales for the second quarter of fiscal year 2022 were $938 million, up $161 million, or approximately 21 percent, compared to the same period last year. The increase in sales was primarily driven by higher truck production in most global markets and pricing actions.

Segment adjusted EBITDA for commercial truck was $78 million, up $5 million, compared to the second quarter of fiscal year 2021. The increase in segment adjusted EBITDA was driven primarily by higher sales volumes, partially offset by higher net steel and freight costs. Segment adjusted EBITDA margin was 8.3 percent in the second quarter of fiscal year 2022, compared to 9.4 percent in the same period of the prior year. The decrease in segment adjusted EBITDA margin was primarily driven by higher net steel and freight costs which unfavorably impacted the conversion on sales.

Aftermarket & Industrial sales for the second quarter of fiscal year 2022 were $262 million, up $15 million, or 6 percent, from the same period a year ago. The increase in sales in the second quarter of 2022 was primarily due to pricing actions.

Segment adjusted EBITDA for Aftermarket & Industrial was $44 million, up $10 million, compared to the second quarter of fiscal year 2021. Segment adjusted EBITDA margin was 16.8 percent in the second quarter of fiscal year 2022, compared to 13.8 percent in the same period of the prior year. The increase in segment adjusted EBITDA and segment adjusted EBITDA margin was primarily driven by pricing actions, partially offset by higher freight costs.

In the second fiscal quarter of 2022, the company announced the planned acquisition of Meritor by Cummins. The Hart-Scott-Rodino (HSR) antitrust waiting period expired on April 6, 2022. A special shareholder meeting will be held on May 26, 2022, seeking the approval of Meritor's shareholders for the proposed transaction.

“I am extremely proud of the team’s outstanding performance in the second quarter,” says Chris Villavarayan, Meritor CEO and president. “Despite severe macro headwinds, we continue to deliver strong financial results. In addition, we expect the Cummins transaction to close by year-end, subject to all closing conditions being met.”

More earnings information can be found here.        

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