Meritor Reports Lower Fiscal-Year Q1 Earnings, Revenue
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Meritor Inc. reported a decline in net income, largely due to interest expenses, and a dip in revenue during its fiscal first quarter.
“We are pleased with our operational and financial performance this quarter,” Meritor CEO Jay Craig said in a release. “The rebound in Class 8 truck markets, combined with our growing electrification business and new awards in Meritor’s truck and industrial businesses, gives us a clear path to successfully completing M2022.”
Meritor’s M2022 objectives are to accelerate global sales and growth by leveraging the company’s core competencies to grow strategically in adjacent markets.
FY21 Q1 Earnings Presentation by Transport Topics
Net income for the quarter ended Dec. 31 was $33 million, or 44 cents per diluted share, down 15% compared with $39 million, 48 cents, a year earlier.
Lower net income year-over-year was driven primarily by higher interest expense, which included $8 million of debt extinguishment costs incurred in the first quarter of fiscal 2021, partially offset by cost reduction in the second half of fiscal 2020, the Troy, Mich.-based company reported.
Revenue slipped to $889 million, or 1%, compared with $901 million a year earlier.
Meritor attributed the decrease in sales to the termination of its distribution arrangement with Wabco, which occurred in the second quarter of fiscal 2020, but was largely offset by higher truck production.
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Meritor previously distributed in North America Wabco-branded anti-lock brake system technologies, stability control, advanced driver assistance systems, air systems and other replacement products.
Sales for the commercial truck segment were $691 million in the quarter, up $28 million, or 4% compared to the same period the year before. The increase in sales was primarily due to slightly higher market volumes in Europe and India.
Its aftermarket and industrial segment posted sales of $234 million, down $41 million, or 15%, compared with the same period a year ago — and it cited, again, the impact of the termination of the Wabco distribution arrangement.
In related news, Meritor announced Feb. 3 production of its 14Xe all-electric, fully integrated, commercial electric powertrain for medium- and heavy-duty commercial vehicles will begin mid-2021.
The 14Xe is part of Meritor’s Blue Horizon advanced technology portfolio.
The axle will be produced at Meritor’s North Carolina facilities in Asheville and Forest City.
Key advantages of the 14Xe ePowertrain, according to the top-tier supplier, compared with remote-mount systems include tighter turning radius due to a shorter wheelbase; increased room between frame rails for additional battery capacity, which extends the range of the vehicle; and lighter weight (up to 800 pounds).
Want to learn more about #electrification at Meritor? Visit our electric truck page to read more about our 12Xe™, 14Xe™ and 17Xe™ ePowertrains! https://t.co/D5BwmtjL00 #BlueHorizon #ElectricAxle pic.twitter.com/jhNpWbkuh1 — Meritor (@Meritor) February 3, 2021
Additionally, Meritor announced a series of 14Xe production deals for this year:
- It was awarded a three-year supply agreement with Lion Electric, a Canadian manufacturer of medium- and heavy-duty zero-emission vehicles. Meritor will supply Lion Electric Class 8 tractors with its 14Xe integrated ePowertrain. Production is scheduled for mid-2021.
- It entered into a five-year supply agreement with Autocar Trucks, an American specialty truck manufacturer, to supply its refuse vehicles with 14Xe integrated ePowertrains. Production is scheduled to begin in 2022.
- It entered into a three-year supply agreement for the 14Xe with Volta Trucks, a London-based electric commercial vehicle startup.
The 14Xe will be equipped on the Volta Zero, which Volta Trucks introduced in September 2020, and designed specifically for inner-city parcel and freight distribution. The truck is anticipated to go into production in 2022 in the U.K.
“With a traditional OEM, we have existing business where there is obviously connections into sales, purchasing and engineering organizations. So we have those touch states all the way to the executive level quite often. We continually show our road map and where we are with our progress. So that has been happening behind the scenes for three or four years now, not only locally here but globally,” said T.J. Reed, vice president of global electrification at Meritor Inc.
As for working with startups, Reed said, “it is truly a partnership that goes back many, many months. It is not a request for quotes and six months later you have a production contract. It usually takes two or three years to get to that point.”
Meritor is a global supplier of drivetrain, mobility, braking and aftermarket solutions for commercial vehicle and industrial markets. It has 7,000 employees in manufacturing facilities, engineering centers, joint ventures, distribution centers and global offices in 19 countries.
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