) posted a 27% rise in earnings to 38 cents per share in the third
quarter of its fiscal year ending June 30, 2012 from 30 cents in
the year-ago quarter, missing the Zacks Consensus Estimate by a
penny. Net income increased 28% to $37 million from $29 million in
the year ago quarter.
Reported earnings were $50 million or 51 cents per share compared
with $27 million or 28 cents in the third quarter of fiscal 2011.
The earnings growth was attributable to lower effective tax rate
leading to a decrease in income tax expenses.
Total revenues in the quarter went down 12.5% to $1.11 billion,
missing the Zacks Consensus Estimate of $1.24 billion. Lower sales
volume in Brazil, Europe, China and India along with weak currency
translation had adverse effects on revenues.
Adjusted EBITDA was $92 million compared with $103 million in the
third quarter of fiscal 2011. However, adjusted EBITDA margin
increased marginally to 8.3% from 8.1% in the same quarter last
year. The growth in EBITDA margin was driven by favorable pricing
in North America and completion of rationalization in Europe.
Revenues from the
segment fell 10% to $690 million in the reported quarter. A dip in
Brazilian and European sales volume and weak currency translation
offset the favorable impacts from higher sales volumes in North
America. Segment EBITDA decreased $1 million to $48 million in the
quarter. However, EBITDA margin increased marginally to 7% from
Revenues from the
segment went down 21% to $242 million due to low volume sales in
both China and India. Segment EBITDA was $20 million compared to
$21 million in the year-ago quarter. However, EBITDA margin
improved to 8.3% from 6.8% recorded a year ago.
Revenues from the
Aftermarket & Trailer
segment decreased 5% to $265 million, driven by a decline in
European aftermarket volumes and weak currency translation. Segment
EBITDA slid 31% to $25 million from $36 million in the third
quarter of fiscal 2011. EBITDA margin declined to 9.4% from 12.9%
due to a hike in material costs and negative impact of foreign
Meritor's cash and cash equivalents rose to $226 million as of June
30, 2012 compared with $217 million as of September 30, 2011. Total
debt increased to $1.06 billion from $1.03 billion as of September
In the first nine months of fiscal 2012, the company had cash
inflow from operating activities of $22 million compared to a cash
outflow of $19 million in the year-ago period. Capital expenditure
declined to $65 million from $68 million in the year ago. Free cash
flow from continuing operations was $46 million compared to a free
cash outflow of $1 million in the third quarter of fiscal 2011.
For fiscal 2012, the company expects revenues in the range of $4.4
billion to $4.5 billion, which is lower than the previous estimate
of $4.8 billion. Adjusted EBITDA is expected in the range of 7.6%
to 8.0%, down from the previous estimate of 8.2% to 8.6%.
The company has also lowered its adjusted income guidance to $85
million-$110 million from the previous estimate of $105
million-$135 million. Adjusted earnings per share are expected
between $0.90 and $1.15 for the year.
In addition, the company expects capital expenditures between $90
million and $100 million for the fiscal year. Free cash flow before
restructuring payments is expected to go up to $50 million.
Headquartered in Troy, Michigan, Meritor is a global automotive
parts manufacturer and supplier to various customers in North
America, Europe and other parts of the world. The company operates
manufacturing facilities in countries across North America, South
America, Europe and Asia-Pacific.
Some of its big customers include
Navistar International Corporation
). Currently, it retains a Zacks #5 Rank, which translates into a
short-term (1 to 3 months) Strong Sell rating.
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