Meritor, Inc. posted adjusted earnings per share of 60 cents in first-quarter fiscal 2021 (ended Dec 31, 2020), marginally surpassing the Zacks Consensus Estimate of 59 cents. Higher-than-anticipated adjusted EBITDA from the Commercial Truck & Trailer and Aftermarket & Industrial segments resulted in this outperformance.
The bottom line, however, declined marginally from the year-ago adjusted earnings of 64 cents a share. Adjusted income from continuing operations was $44 million in the reported quarter compared with the $52 million recorded in the prior-year period.
Sales edged down 1.3% year over year to $889 million in the fiscal first quarter. This year-over-year decline primarily resulted from the unfavorable impact of the termination of the WABCO distribution arrangement, which took place in second-quarter fiscal 2020, largely offset by higher truck production. Nonetheless, the reported figure surpassed the Zacks Consensus Estimate of $815 million.
Adjusted EBITDA went up to $102 million from the year-earlier quarter’s $98 million. Adjusted EBITDA margin was 11.5% compared with the prior year’s 10.9%.
Segment Results
For the December-end quarter, revenues in the Commercial Truck & Trailer segment amounted to $691 million, up 4% year over year on slightly higher market volumes in Europe and India. Moreover, the figure outpaced the Zacks Consensus Estimate of $607 million. The segment reported adjusted EBITDA of $63 million, up from the $57 million witnessed in the year-ago quarter. The figure also handily surpassed the consensus mark of $42.81 million. EBITDA margin expanded to 9.1% during the quarter from the 8.6% recorded in the prior-year quarter.
Quarterly revenues in the Aftermarket & Industrial segment totaled $234 million, dropping 15% from the year-ago level, on account of the termination of the WABCO distribution arrangement. The revenue figure, nonetheless, beat the Zacks Consensus Estimate of $226 million. The segment’s adjusted EBITDA was $35 million, down $4 million from the prior-year period. Nevertheless, EBITDA margin inched up 0.8% year on year to 15% during the October-December period.
Financial Position
In the reported quarter, Meritor’s cash and cash equivalents summed $283 million as of Dec 31, 2020, compared with $108 million as of Dec 31, 2019. Long-term debt was $1,189 million at the end of the fiscal first quarter, up from the $901 million as of Dec 31, 2019.
Meritor’s cash flow from operating activities as of Dec 31, 2020, was $44 million, compared with the cash used for operating activities of $19 million witnessed in the year-ago quarter. Free cash flow for the fiscal first quarter was $34 million compared with the negative $35 million recorded in the same period last year. For the quarter ended Dec 31, 2020, capital expenditure was $10 million compared with the $16 million incurred in the year-ago quarter.
Upbeat Fiscal 2021 Outlook
For fiscal 2021, Meritor projects sales in the range of $3.65-$3.8 billion, up from the previous guidance of $3.1-$3.35 billion. Cash flow from operations and free cash flow are anticipated in the band of $205-$220 million and $110-$125 million, respectively, up from the guidance of $145-$185 million and $60-$100 million, respectively, issued in the last quarter.
Further, the firm projects net income from continuing operations at $115-$140 million, significantly higher than the previous estimate of $45-$75 million.
Zacks Rank & Other Key Picks
Meritor currently carries a Zacks Rank of 2 (Buy). Shares of the company have appreciated 28.2% in the past year compared with the industry’s rally of 18.9%.
Other top-ranked stocks in the same sector are Adient Plc (ADNT - Free Report) , American Axle & Manufacturing Holdings (AXL - Free Report) and Magna International (MGA - Free Report) , all of which currently flaunt a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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Meritor, Inc. posted adjusted earnings per share of 60 cents in first-quarter fiscal 2021 (ended Dec 31, 2020), marginally surpassing the Zacks Consensus Estimate of 59 cents. Higher-than-anticipated adjusted EBITDA from the Commercial Truck & Trailer and Aftermarket & Industrial segments resulted in this outperformance.
The bottom line, however, declined marginally from the year-ago adjusted earnings of 64 cents a share. Adjusted income from continuing operations was $44 million in the reported quarter compared with the $52 million recorded in the prior-year period.
Sales edged down 1.3% year over year to $889 million in the fiscal first quarter. This year-over-year decline primarily resulted from the unfavorable impact of the termination of the WABCO distribution arrangement, which took place in second-quarter fiscal 2020, largely offset by higher truck production. Nonetheless, the reported figure surpassed the Zacks Consensus Estimate of $815 million.
Adjusted EBITDA went up to $102 million from the year-earlier quarter’s $98 million. Adjusted EBITDA margin was 11.5% compared with the prior year’s 10.9%.
Segment Results
For the December-end quarter, revenues in the Commercial Truck & Trailer segment amounted to $691 million, up 4% year over year on slightly higher market volumes in Europe and India. Moreover, the figure outpaced the Zacks Consensus Estimate of $607 million. The segment reported adjusted EBITDA of $63 million, up from the $57 million witnessed in the year-ago quarter. The figure also handily surpassed the consensus mark of $42.81 million. EBITDA margin expanded to 9.1% during the quarter from the 8.6% recorded in the prior-year quarter.
Quarterly revenues in the Aftermarket & Industrial segment totaled $234 million, dropping 15% from the year-ago level, on account of the termination of the WABCO distribution arrangement. The revenue figure, nonetheless, beat the Zacks Consensus Estimate of $226 million. The segment’s adjusted EBITDA was $35 million, down $4 million from the prior-year period. Nevertheless, EBITDA margin inched up 0.8% year on year to 15% during the October-December period.
Financial Position
In the reported quarter, Meritor’s cash and cash equivalents summed $283 million as of Dec 31, 2020, compared with $108 million as of Dec 31, 2019. Long-term debt was $1,189 million at the end of the fiscal first quarter, up from the $901 million as of Dec 31, 2019.
Meritor’s cash flow from operating activities as of Dec 31, 2020, was $44 million, compared with the cash used for operating activities of $19 million witnessed in the year-ago quarter. Free cash flow for the fiscal first quarter was $34 million compared with the negative $35 million recorded in the same period last year. For the quarter ended Dec 31, 2020, capital expenditure was $10 million compared with the $16 million incurred in the year-ago quarter.
Upbeat Fiscal 2021 Outlook
For fiscal 2021, Meritor projects sales in the range of $3.65-$3.8 billion, up from the previous guidance of $3.1-$3.35 billion. Cash flow from operations and free cash flow are anticipated in the band of $205-$220 million and $110-$125 million, respectively, up from the guidance of $145-$185 million and $60-$100 million, respectively, issued in the last quarter.
Further, the firm projects net income from continuing operations at $115-$140 million, significantly higher than the previous estimate of $45-$75 million.
Zacks Rank & Other Key Picks
Meritor currently carries a Zacks Rank of 2 (Buy). Shares of the company have appreciated 28.2% in the past year compared with the industry’s rally of 18.9%.
Other top-ranked stocks in the same sector are Adient Plc (ADNT - Free Report) , American Axle & Manufacturing Holdings (AXL - Free Report) and Magna International (MGA - Free Report) , all of which currently flaunt a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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