ArvinMeritor, which last month said it was on course to exit the passenger car parts sector by the end of the year, on Tuesday said sales and operating and net profits for the second fiscal quarter of 2010 were up year on year.
Net income from continuing operations rose $64m and positive free cash flow was achieved for a fourth consecutive quarter, the supplier said in a statement.
Troy, Michigan-based ArvinMeritor said sales for the quarter ended 31 March, 2010, were up about US$245m or 25% to $1.2bn. This increase was primarily due to strengthening in most original equipment markets globally.Net operating income of $16m, or $0.20 per share, compared to a net loss of $48m (-$0.66 per share) in the same period last year.
Adjusted EBITDA was $64m, up $32m year on year. The company had strong margin conversion on incremental sales despite the return of temporary cost reductions implemented in fiscal 2009 and the reduction in demand for certain military OEM and service products versus 2009.
Net income was $13m, up $62m year on year.
Cash flow from operations was $65m in the second quarter of fiscal 2010 and free cash flow of $45m compared to an outflow of $138m a year earlier.
“We are pleased to report favourable earnings this quarter, primarily due to ongoing strength in emerging markets and slightly improved commercial vehicle volumes in North America and Europe,” said chairman, CEO and president Chip McClure. “I am also proud of the hard work we’ve done to convert our earnings to cash which resulted in our fourth consecutive quarter of positive free cash flow.”
Commercial truck sales, on which ArvinMeritor plans to concentrate from the end of this year, were $458m, up $109m year on year. EBITDA for the commercial truck segment was $15m for the quarter, up $43m from a year ago, primarily due to increased revenue.
Sales for the light vehicle systems (LVS) segment were $339m, up from $224m last year. EBITDA for LVS was $8m, up $25m year on year, due to incremental sales and results of cost-cutting actions.
“ArvinMeritor is actively pursuing its strategy to divest its remaining LVS business. The company is working with interested parties toward a successful conclusion by the end of calendar year 2010,” it reiterated today.
For the third fiscal quarter, ArvinMeritor expects revenue and adjusted EBITDA to be flat with adjusted income from continuing operations lower due to taxes, free cash flow before factoring and restructuring to be approximately break-even and free cash flow to be slightly positive.
“We anticipate markets in Europe, South America and Asia Pacific to continue to strengthen, while the North American market may soften in the short-term as a result of the emissions changeover and a lower demand for military products,” added McClure.
“We will stay focused on achieving our priorities for 2010 that include a continued focus on cost management, divestiture of the light vehicle business, successful execution during the rebound in global markets, product innovation, profitable growth and balance sheet management.”