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Earnings Watch: Meritor Reports Loss, Westport Sees More Red Ink

One truck component supplier moved from a profit to a loss in the third quarter of the year while a natural gas engine provider took on more red ink.

Evan Lockridge
Evan LockridgeFormer Business Contributing Editor
November 11, 2015
Earnings Watch: Meritor Reports Loss, Westport Sees More Red Ink

 

4 min to read


One truck component supplier moved from a profit to a loss in the third quarter of the year while a natural gas engine provider took on more red ink.

Meritor Inc. (MTOR) reported a net loss of $21 million for the period, compared to net income of $3 million a year earlier, or a loss of 22 cents per diluted share versus net income of 3 cents per diluted share.

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This happened as revenue fell to $853 million from $933 million in the third quarter of 2014.

According to the company, the decline in revenue was primarily due to weaker foreign currency exchange rates relative to the stronger U.S. dollar.

It says net earnings were affected by a pension settlement loss of $55 million associated with its German and Canadian pension plans and asset impairment charges of $13 million related to its defense business.

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Adjusted net income was $37 million, or adjusted diluted earnings per share 39 cents, compared to $35 million, or adjusted diluted earnings per share of 35 cents in the prior year.

Commercial truck and industrial sales were $650 million in the most recent quarter, down 11%, compared the 2014 third quarter

“Revenue was unfavorably impacted by the strengthening U.S. dollar against most currencies, primarily the euro and the Brazilian real. Higher truck production in North America driven by a strong Class 8 truck market partially offset lower production in South America and China,” Meritor said in a statement.

Its aftermarket and trailer segment posted sales of $231 million, down 4%, which was blamed on the strengthening U.S. dollar against the euro resulting in lower revenue in the company's aftermarket business in Europe.

Earnings in both segments were down slightly from a year earlier.

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In wrapping up its 2015 fiscal year, Meritor posted sales of $3.505 billion, down 7%  from the prior year. Net income totaled $64 million compared to $249 million in the prior fiscal year. In Meritor's 2014 fiscal year net income included a gain of $209 million from the settlement of antitrust litigation against competitor Eaton Corp. This resulted in adjusted income of $155 million compared to $101 million for fiscal 2014.

For its 2016 fiscal year Meritor expects revenue to be in the range of $3.4 billion to $3.5 billion with adjusted diluted earnings per share in the range of $1.60 to $1.70.

There is more information on the Meritor website.

Westport Innovations Revenue and Earnings Fall

Meantime, the third quarter of the year was even less kind for natural gas engine manufacturer Westport Innovations Inc. (WRPT), though performance in a joint venture with Cummins Inc. was better.

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Overall, its net loss increased to $37.4 million, or 58 cents per share, from $25.5 million, or 40 cents per share, in the third quarter of 2014 as revenue declined 11.8% to $22.3 million.

“The reduction in revenue year-over-year is due primarily to the unfavorable impact of foreign currency translation from euro to the U.S. dollar and weakness in Westport's North American product lines [and was] affected by volatility in energy pricing,” Westport said in a statement.

During the third quarter, Westport announced the intention to merge with Fuel Systems Solutions Inc.

"The proposed merger with Fuel Systems Solutions brings deep OEM relationships, broad global reach, and combined technological expertise and product development spanning from passenger cars to heavy-duty trucks to locomotives,” Westport said. “The combined company will be positioned to capitalize on industry opportunities in foreign markets where the economics for natural gas versus petroleum-based fuels have held up despite the volatility in oil pricing."

Despite the overall decline in numbers, Westport reported stronger results at Cummins Westport Inc. (CWI) compared to last year.

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Revenue was $82.4 million on 2,343 units for the quarter, an increase of 16.7% in revenue over the same period last year. Revenue increased on a year-over-year basis due to strong performance in North American core segments of transit and refuse, according to the company.

CWI operating income to Westport for the quarter was $3.5 million compared with $0.9 million for the same period last year. The 286.4% increase was attributed to improvement in warranty expenses and the strength in sales of transit and refuse segments.

More details are on the Westport Innovations website.

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