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Meritor Reports 2012 Fourth Quarter Results, Projections for 2013

November 14, 2012

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For the fourth quarter of fiscal year 2012, Meritor posted sales of $986 million, down 19% from the same period last year due to lower sales volumes in global markets as well as weaker currency translation.


Net income from continuing operations, on a GAAP basis, was $4 million or $0.04 per diluted share, compared to $38 million or $0.40 per diluted share in the prior year. The decline in net income from continuing operations was due primarily to an $18 million charge associated with a change in actuarial assumptions for the company's year-end valuation of asbestos-related liabilities as well as lower earnings from unconsolidated affiliates associated with weaker volumes in their respective markets.

Adjusted income from continuing operations in the fourth quarter of fiscal year 2012 was $31 million, or $0.32 per diluted share, compared to $43 million, or $0.45 per diluted share, a year ago.

Fourth-Quarter Segment Results

Commercial Truck sales were $583 million, down $185 million compared with the same period last year.

The company's Aftermarket & Trailer segment posted sales of $248 million, down $26 million from the same period last year, primarily due to lower Aftermarket volumes and weaker currency translation.

2012 Fiscal Year Results

For fiscal year 2012, Meritor posted sales of $4.4 billion, down $204 million or 4% from the prior fiscal year due to lower sales volumes in global markets outside the U.S. and weaker currency translation.

Net income on a GAAP basis was $52 million compared to $63 million in the prior fiscal year. Net income from continuing operations, on a GAAP basis, for fiscal year 2012 was $70 million or $0.72 per diluted share, compared to $65 million or $0.67 per diluted share in the prior fiscal year.

Adjusted income from continuing operations in fiscal year 2012 was $111 million, or $1.14 per diluted share, compared to $82 million, or $0.85 per diluted share, a year ago.

Free cash flow for fiscal year 2012 was negative $12 million, compared to negative $70 million in fiscal year 2011.

Looking ahead

For fiscal year 2013, the company expects the following from continuing operations:

- Revenue to be approximately $4 billion.
- Adjusted earnings per share from continuing operations in the range of $0.25 to $0.35.
- Free cash flow from continuing operations before restructuring payments to be about breakeven.
- Effective tax rate to be approximately 50%.

For fiscal year 2013, the company anticipates the following for the entire company:

- Capital expenditures in the range of $65 million to $75 million.
- Interest expense in the range of $90 million to $100 million.
- Cash interest in the range of $75 million to $85 million.
- Cash income taxes in the range of $50 million to $60 million.

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