It has been about a month since the last earnings report for Meritor (MTOR). Shares have added about 0.5% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Meritor due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Meritor Q2 Earnings & Sales Top Estimates, Increase Y/Y

Meritor posted adjusted earnings per share of 98 cents in second-quarter fiscal 2022, increasing 44.12% from 68 cents in the year-ago quarter. The metric marginally beat the Zacks Consensus Estimate of 96 cents. Adjusted income from continuing operations was $70 million in the reported quarter, increasing from $50 million recorded in the prior-year quarter.

Sales grew 17.4% year over year to $1,154 million in the fiscal second quarter. The top line also beat the Zacks Consensus Estimate of $1,074.9 million.

Adjusted EBITDA went up to $127 million from the year-earlier quarter’s $111 million. The upside stemmed from higher sales volumes, partially offset by higher steel and freight costs. Adjusted EBITDA margin decreased to 11% from 11.3%.

Segment Results

In the reported quarter, revenues from the Commercial Truck & Trailer segment amounted to $938 million, growing 21% year over year on higher global truck production in all markets and pricing actions. The segment reported an adjusted EBITDA of $78 million, rising $5 million from the year-ago quarter level. EBITDA margin came in at 8.3% during the quarter, down from 9.4%. The decline was due to higher net steel and freight costs, which unfavorably impacted the conversion on sales.

Quarterly revenues in the Aftermarket & Industrial segment totaled $262 million, up 6% from the year-ago level on higher pricing in the quarter. The segment’s adjusted EBITDA was $44 million, an increase of $10 million from the year-ago quarter. EBITDA margin came in at 16.8%, up from 13.8% recorded in the prior-year quarter, primarily due to pricing actions.

Financial Position

In the reported quarter, Meritor’s cash and cash equivalents summed $115 million as of Mar 31, 2022, rising from $101 million as of Sep 30, 2021. Long-term debt was $1,025 million at the end of the quarter, up from $1,008 million reported on Sep 30, 2021.

During the fiscal second quarter, Meritor’s cash used for operating activities was $17 million against $63 million of cash provided by operating activities in the year-ago quarter.

Free cash flow (FCF) in the reported quarter was a negative $38 million against a positive FCF of $47 million recorded in the same period last year. In the reported quarter, capital expenditure was $21 million compared with $16 million incurred in the year-ago quarter.