US: ArvinMeritor reports Q1 loss; to change name
ArvinMeritor has reported financial results for its first fiscal quarter ended Dec. 31, 2010. The company, which recently sold its body systems business, is also planning a name change to Meritor, Inc. by the end of March.
ArvinMeritor reported that sales were $971 million, up $171 million or 21 percent, from the same period last year; net loss on a GAAP basis was $2 million compared to breakeven in the prior year's first quarter; adjusted EBITDA was $62 million, up $11 million or 22 percent from the same period last year and cash flow from operations was negative $49 million in the first quarter of fiscal year 2011, compared to positive $27 million in the same period last year.
"Recovering commercial truck sales in all regions helped us to deliver a 22- percent increase in EBITDA year-over-year," said Chairman, CEO and President Chip McClure.
For the first quarter of fiscal year 2011, ArvinMeritor posted sales of $971 million, up 21 percent from the same period last year. This increase in sales was primarily due to stronger truck demand in all regions. As compared to the fourth quarter of fiscal year 2010, sales in the first quarter were essentially flat.
Loss from continuing operations, on a GAAP basis, was $9 million or $0.10 per diluted share, compared to a loss from continuing operations of $4 million or $0.06 per diluted share in the prior year. The company said that the loss from continuing operations 'reflects an effective tax rate of approximately 133 percent driven by strong earnings in emerging markets and the ongoing impact of valuation allowances against income tax loss carryforwards in the United States and Europe'.
Adjusted loss from continuing operations in the first quarter of fiscal year 2011 was $6 million, or $0.07 per diluted share, compared to an adjusted loss from continuing operations of $4 million, or $0.06 per diluted share, a year ago.
Adjusted EBITDA was $62 million, compared to $51 million in the first quarter of fiscal year 2010. Adjusted EBITDA margin for the first quarter of fiscal year 2011 was flat with the same period last year at 6.4 percent. Compared to the fourth quarter of fiscal year 2010, adjusted EBITDA was lower primarily due to the non-recurrence of a $7 million pension curtailment gain in the fourth fiscal quarter of 2010.
Commercial truck sales were $575 million, up $142 million from the same period last year. Adjusted EBITDA for the Commercial truck segment was $33 million for the quarter, up $20 million from the first quarter of fiscal year 2010, primarily driven by increased sales from recovering markets in all regions.
Sales for the company's Industrial segment were $230 million, up $4 million from the first quarter of fiscal year 2010. Adjusted EBITDA for the company's Industrial segment was $17 million, down $7 million from the same period last year. The favorable impact of increased sales in our Asia Pacific region was more than offset by the impact of lower defense sales as production of the Family of Medium Tactical Vehicles (FMTV) shifts to a new prime contractor.
The Aftermarket & Trailer segment posted sales of $225 million, up $3 million from the same period last year. Adjusted EBITDA for Aftermarket & Trailer was $13 million, down $4 million or 24 percent from the first quarter of fiscal year 2010. The favorable impact of higher on-highway aftermarket and trailer sales was more than offset by a decrease in defense aftermarket sales, primarily in Mine Resistant Ambush Protection (MRAP) service parts.
On Jan. 3, 2011, the company announced that it had completed the sale of its Body Systems business. This divestiture substantially completes ArvinMeritor's transformation. The company is now entirely focused on its three core global business groups: Commercial Truck, Industrial, and Aftermarket & Trailer.
ArvinMeritor shareowners approved a company name change from ArvinMeritor, Inc. to Meritor, Inc. at the company's 2011 Annual Meeting of Shareowners held Jan. 20, 2011.
"The company is taking this action because the Meritor name is recognized by our commercial vehicle and industrial customers around the world," said McClure. "With our recent sale of the Body Systems business, this change makes sense. We are now organized to focus entirely on innovative products and technologies that offer superior performance, energy efficiency and reliability."
McClure continued, "Changing the name back to Meritor gives us the opportunity to leverage the strong reputation we've developed, and to build on it as we continue to define ourselves as the recognized leader in drivetrain, mobility, braking and aftermarket solutions in commercial vehicle and industrial markets."
Over the last decade, the company has continued to market and sell its commercial vehicle and industrial products under the Meritor brand. In late March 2011, the company is planning to launch its name officially which will include a change to its ticker symbol.
For the second quarter of fiscal year 2011, the company forecasts revenue in the range of $1,125 million to $1,175 million: adjusted EBITDA in the range of $85 million to $95 million; adjusted income from continuing operations in the range of $5 million to $15 million; and free cash flow to be around breakeven.
For fiscal year 2011, ArvinMeritor continues to expect results for continuing operations in the following ranges for capital expenditures, interest expense, cash interest, income tax expense and cash income taxes with capital expenditures in the range of $75 million to $90 million; interest expense in the range of $100 million to $110 million; cash interest in the range of $85 million to $95 million; income tax expense in the range of $70 million to $90 million and cash income taxes in the range of $50 million to $70 million.
"As we anticipated, commercial truck sales in North America are increasing rapidly, while truck sales in other markets around the world continue to strengthen," said McClure. "Higher sales, combined with a continued focus on controlling structural cost and executing growth initiatives are key to achieving our long-term 10 percent EBITDA margin target."