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Meritor, Inc. recorded adjusted earnings of 62 cents per share in first-quarter fiscal 2018 (ended Dec 31, 2017), comfortably surpassing the Zacks Consensus Estimate of 46 cents. The year-ago figure was 25 cents per share.
Adjusted income from continuing operations was $55 million compared with $22 million in the first quarter of fiscal 2017.
Revenues increased 29% year over year to $903 million. The top line also beat the Zacks Consensus Estimate of $826.3 million.
Meritor’s adjusted EBITDA (earnings before interest, tax, depreciation and amortization) increased to $99 million from $64 million a year ago. Adjusted EBITDA margin was 11% compared with 9.2% in the comparable quarter last year. Both adjusted EBITDA and EBITDA margin increased on a year-over-year basis, driven by high revenue growth and a positive impact of changes in the company's retiree medical benefits.
Segment Results
Revenues from the Commercial Truck & Industrial segment shot up to $738 million, up $199 million from the same period last year. This upside was primarily driven by higher production across all regions with North America witnessing the highest gain. Segment adjusted EBITDA jumped to $80 million, up $38 million from the year-ago quarter. EBITDA margin rose to 10.8% in comparison to 7.8% in the prior-year quarter.
Revenues from the Aftermarket & Trailer segment were $195 million, up $11 million from the year-ago quarter, primarily on higher volumes across all segments. Segment EBITDA was $21 million compared with $22 million from the same time frame a year ago. EBITDA margin decreased to 10.8% in comparison to 12% in the preceding year. This reduction in Segment EBITDA and EBITDA margin was due to incremental investments as part of revenue growth initiatives.
Financial Position
Meritor’s cash and cash equivalents totaled $116 million as of Dec 31, 2017 compared with $88 million as of Sep 30, 2017. Long-term debt climbed to $751 million as of Dec 31, 2017 from $750 million as of Sep 30, 2017.
At the end of first-quarter fiscal 2018, Meritor’s cash flow from operating activities was $33 million compared with the cash flow of $14 million used for operating activities in the same period a year ago. Capital expenditures increased to $18 million from the year-ago figure of $17 million.
Outlook
For fiscal 2018, Meritor expects revenues within the band of $3.8-$3.9 billion compared with the previous expectation of approximately $3.6 billion. Adjusted earnings from continuing operations are anticipated in the range of $2.5-$2.7 per share compared with the past projection of $2.2-$2.4. Adjusted EBITDA margin is forecast within 11-11.2% as compared to the prior prediction of 10.8-11%.
Further, the company estimates its free cash flow for fiscal 2018 within the range of $110-$125 million, an increase from the preceding guidance of $90-$100 million. Similarly, operating cash flow is likely to be in the band of $210-$225 million, a rise from the previous view of $190-$200 million.
Price Performance
Shares of Meritor have soared 49.9% in the last six months, outperforming the 19.9% rise of the industry it belongs to.
Oshkosh has an expected long-term growth rate of 14.5%. Shares of the company have surged 34.6% in the last six months.
Daimler has an expected long-term growth rate of 2.8%. In the last six months, shares of the company have rallied 25.3%.
Volkswagen has an expected long-term growth rate of 18.7%. The stock has gained 14.5% in the last three months.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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Meritor (MTOR) Q1 Earnings & Revenues Surpass Estimates
Meritor, Inc. recorded adjusted earnings of 62 cents per share in first-quarter fiscal 2018 (ended Dec 31, 2017), comfortably surpassing the Zacks Consensus Estimate of 46 cents. The year-ago figure was 25 cents per share.
Adjusted income from continuing operations was $55 million compared with $22 million in the first quarter of fiscal 2017.
Revenues increased 29% year over year to $903 million. The top line also beat the Zacks Consensus Estimate of $826.3 million.
Meritor, Inc. Price, Consensus and EPS Surprise
Meritor, Inc. Price, Consensus and EPS Surprise | Meritor, Inc. Quote
Meritor’s adjusted EBITDA (earnings before interest, tax, depreciation and amortization) increased to $99 million from $64 million a year ago. Adjusted EBITDA margin was 11% compared with 9.2% in the comparable quarter last year. Both adjusted EBITDA and EBITDA margin increased on a year-over-year basis, driven by high revenue growth and a positive impact of changes in the company's retiree medical benefits.
Segment Results
Revenues from the Commercial Truck & Industrial segment shot up to $738 million, up $199 million from the same period last year. This upside was primarily driven by higher production across all regions with North America witnessing the highest gain. Segment adjusted EBITDA jumped to $80 million, up $38 million from the year-ago quarter. EBITDA margin rose to 10.8% in comparison to 7.8% in the prior-year quarter.
Revenues from the Aftermarket & Trailer segment were $195 million, up $11 million from the year-ago quarter, primarily on higher volumes across all segments. Segment EBITDA was $21 million compared with $22 million from the same time frame a year ago. EBITDA margin decreased to 10.8% in comparison to 12% in the preceding year. This reduction in Segment EBITDA and EBITDA margin was due to incremental investments as part of revenue growth initiatives.
Financial Position
Meritor’s cash and cash equivalents totaled $116 million as of Dec 31, 2017 compared with $88 million as of Sep 30, 2017. Long-term debt climbed to $751 million as of Dec 31, 2017 from $750 million as of Sep 30, 2017.
At the end of first-quarter fiscal 2018, Meritor’s cash flow from operating activities was $33 million compared with the cash flow of $14 million used for operating activities in the same period a year ago. Capital expenditures increased to $18 million from the year-ago figure of $17 million.
Outlook
For fiscal 2018, Meritor expects revenues within the band of $3.8-$3.9 billion compared with the previous expectation of approximately $3.6 billion. Adjusted earnings from continuing operations are anticipated in the range of $2.5-$2.7 per share compared with the past projection of $2.2-$2.4. Adjusted EBITDA margin is forecast within 11-11.2% as compared to the prior prediction of 10.8-11%.
Further, the company estimates its free cash flow for fiscal 2018 within the range of $110-$125 million, an increase from the preceding guidance of $90-$100 million. Similarly, operating cash flow is likely to be in the band of $210-$225 million, a rise from the previous view of $190-$200 million.
Price Performance
Shares of Meritor have soared 49.9% in the last six months, outperforming the 19.9% rise of the industry it belongs to.
Zacks Rank & Other Key Picks
Meritor has a Zacks Rank #2 (Buy). A few other top-ranked stocks in the auto space are Oshkosh Corporation (OSK - Free Report) , Daimler A.G. and Volkswagen A.G. , each carrying a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Oshkosh has an expected long-term growth rate of 14.5%. Shares of the company have surged 34.6% in the last six months.
Daimler has an expected long-term growth rate of 2.8%. In the last six months, shares of the company have rallied 25.3%.
Volkswagen has an expected long-term growth rate of 18.7%. The stock has gained 14.5% in the last three months.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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