Drivetrain and braking systems supplier Meritor Inc. has booked nearly $500 million worth of electrification business, executives said Nov. 17 after reporting fourth-quarter results and forecasting fiscal 2022 profits below analysts’ expectations.
Michigan-based Meritor said it earned $65 million on sales of $945 million in the three months ending Sept. 30. Those numbers comfortably exceeded analysts’ expectations and were a solid improvement from the same period of 2020, boosted primarily by higher production levels and gross margins of 11.6% versus about 8% in 2020’s Q3.
“While 2021 was a challenging industry environment, we performed well,” President and CEO Chris Villavarayan said in a statement. “We remain focused on earnings and growth, particularly as we expand our customer base in the growing commercial vehicle electrification market.”
Meritor’s electrification customer base includes Volta, Hyliion, and Lion Electric among others, and the company has gotten a recent boost via two new deals. Villavarayan and his team on Nov. 17 also announced that Meritor will provide its zero-emission battery electric drivetrains to Paccar for the latter’s work on the medium- and heavy-duty SuperTruck 3 program. (Meritor also was a part of the previous two SuperTruck projects.) The U.S. Department of Energy early this month awarded $127 million to five vehicle manufacturers – Volvo Group, Daimler Trucks North America, Ford Motor Co. and General Motors Corp. in addition to Paccar–working on higher efficiency and zero emissions concepts.
Separately, Meritor also announced it will supply its Blue Horizon 14Xe integrated ePowertrain to Electra Commercial Vehicles for testing on Electra’s Iveco-based electric road sweeper platform. Meritor will deliver a prototype to Electra in the coming fiscal year.
Looking ahead, Villavarayan and his team are forecasting Meritor will book fiscal 2022 sales of about $4.2 billion (versus $3.8 billion this past year) and net income somewhere between $220 million and $225 million (up from $199 million). On a per-share basis, profits are expected to be $3.25 to 3.75, below the $3.89 expected by S&P Capital IQ Consensus even though Meritor executives expect their EBITDA margins to grow to between 11.5% and 12.5% from 10.7% this past fiscal year.
Capital spending in the coming year is forecast to grow to a range of $100 million to $120 million from $90 million this past year. After topping $100 million in fiscal 2018 and 2019, capex had fallen to $85 million in 2020. Relatedly, CFO Carl Anderson said research and development expenses in the coming year will amount to about $85 million.
Shares of Meritor (Ticker: MTOR) were down about 1.5% in afternoon trading on Nov. 17. They are up slightly over the past six months, growing the company’s market capitalization to nearly $2 billion.
