Meritor Inc. ( MTOR - Analyst Report ) reported net income of $38 million or 40 cents per share from continuing operations in the fourth quarter of fiscal 2011, up significantly from $9 million or 9 cents per share in the year-ago quarter.

Adjusted income from continuing operations amounted to $43 million or 44 cents per share compared with $14 million or 15 cents per share in the corresponding quarter of fiscal 2010. Adjusted income was significantly ahead of the Zacks Consensus Estimate of 25 cents per share.

Sales in the quarter climbed 29% year over year to $1.22 billion, driven by increased demand for commercial trucks globally. Adjusted EBITDA stood at $97 million versus $75 million in the fourth quarter of fiscal 2010. However, the adjusted EBITDA margin remained flat year over year at 8%.

Segment Performance

Commercial truck sales surged 40% to $768 million, mainly on the back of higher volumes across all segments. Segment EBITDA increased to $49 million from $32 million in the year-ago quarter, primarily driven by higher sales as well as higher earnings from the company’s unconsolidated joint ventures.

Industrial segment sales improved 22% to $269 million, attributable to higher sales in the Asia-Pacific region and improved sales of products associated with the Caiman defense program. Segment EBITDA was $18 million compared with $14 million in the prior-year quarter.

The Aftermarket & Trailer segment rose 16% to $274 million, driven by an increase in truck tonnage in North America and Europe. Segment EBITDA was $32 million versus $22 million in the fourth quarter of fiscal 2010.

Fiscal 2011 Summary

The company reported adjusted income of $82 million or 85 cents per share from continuing operations in fiscal 2011 compared with $18 million or 21 cents per share a year ago. Adjusted income comprehensively beat the Zacks Consensus Estimate of 60 cents.

Total sales stood at $4.62 billion, up 31% year over year, aided by improving truck demand across the globe. Adjusted EBITDA amounted to $347 million versus $260 million in fiscal year 2010.

Financial Position

Meritor had cash and cash equivalents of $217 million as of September 30, 2011, a decline from $343 million as of September 30, 2010. Long-term debt decreased to $950 as of September 30, 2011 from $1.03 billion as of September 30, 2010. The company had a shareholder deficit of $995 million at the end of the reported quarter.

During the twelve-month period ending September 30, 2011, Meritor’s operating cash flow fell substantially to $41 million from $211 million a year ago, primarily driven by unfavorable changes in assets and liabilities.

Capital expenditures increased to $105 million from $55 million in the year-ago period. Consequently, free cash flow was negative $7 million during the period under study compared with $92 million a year ago.

Guidance

Meritor expects to generate about $4.8 billion in revenues for fiscal 2012 and earn income from continuing operations (adjusted) in the range of $105 million to $135 million. Further, for full fiscal 2012, the company expects capital expenditures in the range of $100 million to $110 million.

Overview

Headquartered in Troy, Michigan,Meritor, a Zacks#3 Rank (Hold rating) stock, is a global automotive parts manufacturer and supplier to various customers in North America, Europe and other parts of the world. Meritor is a worldwide supplier of a broad range of integrated systems, modules and components for commercial, specialty and light vehicles worldwide, and has developed leading positions in most of its markets.

The company operates manufacturing facilities in 19 countries across North America, South America, Europe and Asia-Pacific. Some of its big customers include Volvo AB ( VOLVY ) , Navistar International Corporation ( NAV - Analyst Report ) and Daimler AG ( DDAIF ) .