Meritor Reports Lower Net Income, Revenue for Fiscal First Quarter
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Commercial vehicle supplier Meritor Inc. reported lower net income and revenue for its fiscal-year first quarter, citing rapid declines in global end markets and restructuring costs, among other factors — at the same time highlighting its growing business opportunities with electric vehicles.
For the period ended Dec. 31, 2019, net income dropped to $39 million or 48 cents per diluted share, compared with $90 million or $1.03 in the same 2018 period.
Revenue fell to $901 million, down $137 million or about 13% from the 2018 period.
“Overall, this was a solid quarter for us, even as we managed declining production volumes in our global end markets,” CEO Jay Craig said in a release. “We are driving strong operational performance, executing our share repurchase plan and winning meaningful new business, as demonstrated by the electrification award we announced from Paccar this quarter.”
Meritor Awarded PACCAR Business for Battery-Electric Refuse and Heavy-Duty Vehicles. Learn more by visiting https://t.co/PtOJRIioKF. #MeritorNews #MeritorToday — Meritor (@Meritor) January 30, 2020
Under that agreement, Meritor will be the nonexclusive supplier for Paccar Inc.— the parent company of Kenworth Truck Co. and Peterbilt Motors Co. — of electric powertrains for the Kenworth T680 and Peterbilt 579 and 520 battery-electric vehicles. Meritor will be the initial launch partner and primary supplier for the integration of functional battery-electric systems on these refuse and heavy-duty chassis. Production is targeted to begin in early 2021.
“We are ramping up our capabilities on the production side, particularly at TransPower [which Meritor bought recently], to deliver those vehicles in 2021,” Craig said, with full production coming in 2022. “This is somewhere between prototype and low-volume production, so the prices are quite a bit higher than we would expect when it reaches full production.”
Craig said there was a lot of global “whitespace growth” with electric vehicles in all segments: buses, refuse, medium-duty and heavy-duty trucks.
Craig said he would be devoting more of his time to electrification after the recent promotion of Chris Villavarayan to chief operating officer.
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“The pace of investment and opportunities in this space is accelerating more quickly than we originally foresaw,” he said. “We believe this will result in additional production awards for us over the next 12 months. Today, our book of expected business is greater than $200 million and growing. We also have line of sight to other potential production awards that could drive our revenue pipeline north of $500 million.”
Meanwhile, sales in the commercial truck business were $622 million, down $157 million or 20% compared with the 2018 period. The decline in sales primarily was driven by decreased market volumes for most regions across the segment, the Troy, Mich.-based company reported.
Meritor’s aftermarket, industrial and trailer segment posted sales of $317 million, up $14 million, or 5%, from the same period a year ago. The increase in sales primarily was driven by revenue from the company’s AxleTech business, partially offset by decreased volumes across the segment.
AxleTech has a complementary product portfolio, including a full line of independent suspensions, axles, braking solutions and drivetrain components.
At the same time, Meritor announced it revised its guidance for fiscal 2020 due to weakening end markets globally.
The company expects net income to be about $150 million compared with the prior outlook of $145 million to $155 million. It expects revenue to be about $3.7 billion compared with the prior outlook of $3.7 billion to $3.8 billion
Meritor is a global supplier of drivetrain, mobility, braking and aftermarket products for commercial vehicle and industrial markets.
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