In This Article:
It has been about a month since the last earnings report for Meritor (MTOR). Shares have lost about 1.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Meritor due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Meritor’s Q3 Earnings & Revenues Drive Past Estimates
Meritor recorded adjusted earnings of 89 cents per share in third-quarter fiscal 2018 (ended Jun 30, 2018) compared with 64 cents a year ago. The figure comfortably surpassed the Zacks Consensus Estimate of 78 cents.
Adjusted income from continuing operations was $80 million compared with $60 million in third-quarter fiscal 2017.
Sales increased approximately 23% year over year to $1.13 billion. The top line also beat the Zacks Consensus Estimate of $1.06 billion. This rise was due to revenue outperformance through improved market share and business wins.
Meritor’s adjusted EBITDA (earnings before interest, tax, depreciation and amortization) increased to $135 million from $103 million a year ago. Adjusted EBITDA margin was 12% compared with 11.2% a year ago. The gain in adjusted EBITDA and EBITDA margin is driven by an increase in revenues and the positive impact of changes in the company's pension and retiree medical benefits. These positives were partly offset by a decrease of $8 million in earnings due to the selling of the company's interest in Meritor WABCO joint venture.
Segmental Results
Revenues from the Commercial Truck & Trailer segment increased to $904 million, up 24% from the same period last year. This upside was primarily driven by higher production across all major markets. Segment adjusted EBITDA jumped to $103 million, up $32 million from the year-ago quarter. EBITDA margin rose to 11.4% in comparison with 9.8% in the same period last year.
Revenues from the Aftermarket & Industrial segment were $273 million, up 15% from the year-ago quarter. The gain was primarily due to higher volumes in the Aftermarket business. Segment adjusted EBITDA was $35 million, up $4 million from the same time frame a year ago. EBITDA margin moved up to 12.8% in comparison with 12.7% in the preceding year. Rise in both adjusted EBITDA and EBITDA margin were due to higher sales and the favorable impact of changes in retiree medical benefits. The gain was partly offset by elevated material and freight costs.