ArvinMeritor Swings to Profit

The second quarter beats by 2 cents.
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ArvinMeritor

(ARM)

, the auto and truck parts supplier, said it swung to a profit in the second quarter, helped by improved margins.

The Troy, Mich.-based company earned $45 million, or 64 cents a share, in the quarter, compared with a loss of $33 million, or 48 cents a share, a year ago. Excluding restructuring costs and other one-time items, the company earned $28 million, or 40 cents a share from continuing operations. On that basis, analysts surveyed by Thomson First Call were expecting earnings of $26.3 million, or 38 cents a share in the most recent quarter.

Second-quarter revenue rose 2.5% from a year-ago period to $2.3 billion as against analysts' expectation of $2.2 billion.

The company expects to earn 60 cents a share to 70 cents a share from continuing operations before one-time items for its third quarter, on revenue of $2.4 billion. Analysts are expecting earnings of 67 cents a share, on revenue of $2.3 billion in the third quarter. Full year earnings from continuing operations before special items are expected to be $1.60 a share to $1.70 a share compared with $1.50 a share to $1.70 a share forecast earlier. Revenue for the full year is expected to be $8.8 billion as against analysts' expectation of $1.6 a share, on revenue of $8.7 billion.

"The actions we implemented to retire debt strengthened our balance sheet, improved liquidity and positioned the company for sustained financial stability. We are very pleased with the results of these efforts, and will continue to work on improving the company's performance by completing our restructuring actions and focusing on strong operational performance," the company said.

First-quarter gross profit rose 11.7% from a year ago period to $172 million and gross margin increased 61 basis points to 7.4%. The company swung to an operating profit of $50 million in the quarter compared with the operating loss of 5 million, a year ago. Operating margin also swung to a positive 2.2% compared with the negative margin of 0.2%, a year ago.

During the quarter, the company issued $300 million of convertible notes that mature in 2026 with an initial redemption and repurchase date of 2016 and retired $600 million of 2007 - 2009 term debt, resulting in only $93 million of term debt maturing before 2012.

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