Meritor Automotive Reports Fiscal First Quarter Sales up 21 Percent; Earnings Per Share Increase 31 Percent
22 January 1998
Meritor Automotive Reports Fiscal First Quarter Sales up 21 Percent; Earnings Per Share Increase 31 Percent
TROY, Mich., Jan. 22 -- Meritor Automotive, Inc. ,
today reported fiscal 1998 first quarter sales growth of 21 percent and an EPS
gain of 31 percent for its first quarter as a public company as compared to
1997 pro forma first quarter results. Sales of $911 million, an increase of
$155 million over the same period last year, generated operating earnings of
$63 million compared to $42 million last year, an increase of $21 million or
50 percent. Net income was $32 million, or 47 cents per share, compared to
$25 million, or 36 cents per share, last year.
"Building shareowner value is a central goal of our long-term strategy and
Meritor's first quarter results are an excellent reflection of that focus.
During our first year as a stand-alone public company, our performance for the
quarter provides strong momentum for the achievement of our stated long-term
financial goals to grow, on an average annual basis, sales by 8 percent and
earnings per share by 15 percent," said Meritor Chairman and Chief Executive
Officer, Larry D. Yost. "The strong sales growth for the quarter was driven
by a robust North American heavy truck market, which was up substantially
compared to a modestly weak first quarter last year, and higher penetration
across most product lines of Heavy Vehicle and Light Vehicle Systems. The
improvement in our quarterly operating margins from 5.6 percent in last year's
quarter to 6.9 percent in this year's, was driven by the higher sales levels
and the impact of our ongoing productivity and cost improvement programs."
The increase in net income and earnings per share over the prior period
was achieved even with a decrease of $6 million in other income and an
increase of $3 million in interest expense. The decrease in other income was
due primarily to a $5 million one-time gain in the first quarter of fiscal
1997, related to an environmental insurance settlement. The increase in
interest expense was a result of higher working capital financing levels as
compared to the prior first quarter.
"We saw strong activity in the heavy truck market for our first quarter.
If current market conditions continue, we are expecting to see in excess of a
10 percent growth rate in the heavy truck market in fiscal 1998," Yost said.
"Assuming generally favorable economic conditions and the anticipated benefits
of our restructuring programs, our long-term average annual sales and EPS
growth objectives should be achievable in fiscal 1998."
Yost continued: "Although our sales in the Asia/Pacific region represent
only 3 percent of our total annual sales volumes, we are closely watching the
economic situation in the Asia/Pacific region to assess its effect on the
North American, European and other economies."
Heavy Vehicle Systems
Heavy Vehicle Systems sales were $557 million in the first quarter of
fiscal 1998, an increase of $144 million, or 35 percent, compared to the first
quarter of fiscal 1997. This sales increase was the result of the strong
North America heavy truck market, greater market penetration in North America
by the company's truck axle, brake and transmission products, and increased
volumes in its off-highway and specialty vehicle product lines. The company's
Brazilian business was steady, while its European trailer axle business, based
in the UK, experienced pricing pressure due to the strength of the British
pound compared to other European currencies.
Light Vehicle Systems
Light Vehicle Systems sales were reported at $354 million, an increase of
$11 million, or 3 percent, over the first quarter of fiscal 1997. The sales
growth was driven by strong market penetration in the door, suspension, access
control, seat adjusting systems and wheel product lines. This growth was
substantially offset by a decline in European sales due to lower sunroof
demand and the impact of a stronger U.S. dollar in the first quarter this year
versus last year.
Meritor, with 1997 sales of more than $3.3 billion, is a global supplier
of a broad range of components and systems for commercial, specialty and light
vehicles. Meritor consists of two businesses: Heavy Vehicle Systems, a
leading supplier of drivetrain systems and components for medium-and heavy-
duty trucks, trailers and off-highway equipment and specialty vehicles,
including military, bus and coach, and fire and rescue; and Light Vehicle
Systems, a major supplier of roof, door, access control and seat adjusting
systems, electric motors and electronic controls, suspension systems and
wheels for passenger cars, light trucks and sport utility vehicles.
For more information, visit the Meritor website at
http://www.meritorauto.com
MERITOR AUTOMOTIVE, INC.
SALES AND EARNINGS INFORMATION
($ in millions, except per share amounts)
Quarter Ended
December 31
1997 1996 (a)
Sales
Heavy Vehicle Systems $557 $413
Light Vehicle Systems 354 343
Total Sales $911 $756
Gross Margin $120 $93
Selling, General and Administrative 57 51
Operating Earnings $63 $42
Other Income-net 1 7
Interest Expense (10) (7)
Income Before Income Taxes 54 42
Provision for Income Taxes (22) (17)
Net Income $32 $25
Basic and Diluted Earnings Per Share $.47 $.36
Average Shares Outstanding (in millions) 69.0 68.9
(a) The quarter ended December 31, 1996 is presented on a pro forma
basis, see attached reconciliation from historical to pro forma.
MERITOR AUTOMOTIVE, INC.
SUMMARY BALANCE SHEET
($ in millions)
December 31, September 30,
1997 1997
Assets:
Cash $117 $133
Other Current Assets 972 1,018
Property, net 626 635
Goodwill 40 42
Other Assets 172 174
Total $1,927 $2,002
Liabilities & Shareowners' Equity:
Short-term debt $57 $21
Current Liabilities 803 895
Accrued Retirement Benefits 391 387
Other Liabilities 46 46
Long-term Debt 434 465
Equity & Minority Interest 196 188
Total $1,927 $2,002
MERITOR AUTOMOTIVE, INC.
PRO FORMA SALES AND EARNINGS INFORMATION
($ in millions, except per share amounts)
Quarter Ended December 31, 1996
Pro Forma
Historical Adjustments (a) Pro Forma
Sales
Heavy Vehicle Systems $413 $ - $413
Light Vehicle Systems 343 - 343
Total Sales $756 $ - $756
Gross Margin $93 $ - $93
Selling, General and
Administrative 53 (2) 51
Operating Earnings $40 $2 $42
Other Income-net 7 - 7
Interest Expense (1) (6) (7)
Income Before Income Taxes 46 (4) 42
Provision for Income Taxes (18) 1 (17)
Net Income $28 $(3) $25
Pro Forma Earnings Per Share $.36
Shares Outstanding (in millions) 68.9
(a) Pro Forma information reflects (a) the 68.9 million shares of common
stock issued at the date of the spin-off from Rockwell International, (b)
management's estimate that corporate costs would have been $2 million lower on
a stand-alone basis for the quarter than those allocated to the Automotive
Business by Rockwell and (c) $6 million of interest expense at 6.0% for the
quarter ended December 31, 1996 related to the debt incurred by the Company in
connection with the $445 million pre-distribution payment to Rockwell.
SOURCE Meritor Automotive