Cover Page
Cover Page - shares | 9 Months Ended | |
Jun. 30, 2022 | Aug. 01, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jul. 03, 2022 | |
Document Transition Report | false | |
Entity File Number | 1-15983 | |
Entity Registrant Name | MERITOR, INC. | |
Entity Incorporation, State or Country Code | IN | |
Entity Tax Identification Number | 38-3354643 | |
Entity Address, Address Line One | 2135 West Maple Road | |
Entity Address, City or Town | Troy | |
Entity Address, State or Province | MI | |
Entity Address, Postal Zip Code | 48084-7186 | |
City Area Code | 248 | |
Local Phone Number | 435-1000 | |
Title of 12(b) Security | Common Stock, $1 Par Value | |
Trading Symbol | MTOR | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding (in shares) | 70,864,196 | |
Amendment Flag | false | |
Entity Central Index Key | 0001113256 | |
Current Fiscal Year End Date | --09-30 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q3 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Income Statement [Abstract] | ||||
Sales | $ 1,212 | $ 1,016 | $ 3,350 | $ 2,888 |
Cost of sales | (1,058) | (884) | (2,932) | (2,493) |
GROSS PROFIT | 154 | 132 | 418 | 395 |
Selling, general and administrative | (63) | (69) | (195) | (203) |
Other operating expense, net | (2) | (4) | (6) | (13) |
OPERATING INCOME | 89 | 59 | 217 | 179 |
Other income, net | 10 | 12 | 38 | 49 |
Equity in earnings of affiliates | 12 | 8 | 30 | 24 |
Interest expense, net | (14) | (20) | (39) | (65) |
INCOME BEFORE INCOME TAXES | 97 | 59 | 246 | 187 |
Provision for income taxes | (21) | (14) | (48) | (43) |
INCOME FROM CONTINUING OPERATIONS | 76 | 45 | 198 | 144 |
INCOME FROM DISCONTINUED OPERATIONS, net of tax | 0 | 0 | 1 | 0 |
NET INCOME | 76 | 45 | 199 | 144 |
Less: Net income attributable to noncontrolling interests | (3) | (3) | (10) | (7) |
Net income | 73 | 42 | 189 | 137 |
NET INCOME ATTRIBUTABLE TO MERITOR, INC. | ||||
Net income from continuing operations | 73 | 42 | 188 | 137 |
Income from discontinued operations | 0 | 0 | 1 | 0 |
Net income | $ 73 | $ 42 | $ 189 | $ 137 |
BASIC EARNINGS PER SHARE | ||||
Continuing operations (in usd per share) | $ 1.03 | $ 0.58 | $ 2.67 | $ 1.90 |
Discontinued operations (in usd per share) | 0 | 0 | 0.01 | 0 |
Basic earnings per share (in usd per share) | 1.03 | 0.58 | 2.68 | 1.90 |
DILUTED EARNINGS PER SHARE | ||||
Continuing operations (in usd per share) | 1.02 | 0.58 | 2.63 | 1.87 |
Discontinued operations (in usd per share) | 0 | 0 | 0.01 | 0 |
Diluted earnings per share (in usd per share) | $ 1.02 | $ 0.58 | $ 2.64 | $ 1.87 |
Basic average common shares outstanding (in shares) | 70.7 | 72 | 70.5 | 72.2 |
Diluted average common shares outstanding (in shares) | 71.8 | 72.8 | 71.5 | 73.2 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 76 | $ 45 | $ 199 | $ 144 |
Foreign currency translation adjustments: | ||||
Attributable to Meritor, Inc. | (61) | 15 | (60) | 48 |
Attributable to noncontrolling interests | (3) | 0 | (3) | 0 |
Pension and other postretirement benefit related adjustments | 1 | 3 | 4 | 8 |
Unrealized gain (loss) on cash flow hedges | (1) | 0 | (1) | 1 |
Other comprehensive income (loss), net of tax | (64) | 18 | (60) | 57 |
Total comprehensive income | 12 | 63 | 139 | 201 |
Less: Comprehensive income attributable to noncontrolling interests | 0 | (3) | (7) | (7) |
Comprehensive income attributable to Meritor, Inc. | $ 12 | $ 60 | $ 132 | $ 194 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEET - USD ($) $ in Millions | Jun. 30, 2022 | Sep. 30, 2021 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 105 | $ 101 |
Receivables, trade and other, net | 753 | 534 |
Inventories | 710 | 601 |
Other current assets | 60 | 50 |
TOTAL CURRENT ASSETS | 1,628 | 1,286 |
NET PROPERTY | 501 | 517 |
GOODWILL | 497 | 507 |
OTHER ASSETS | 628 | 628 |
TOTAL ASSETS | 3,254 | 2,938 |
CURRENT LIABILITIES: | ||
Short-term debt | 19 | 19 |
Accounts and notes payable | 797 | 573 |
Other current liabilities | 301 | 308 |
TOTAL CURRENT LIABILITIES | 1,117 | 900 |
LONG-TERM DEBT | 1,023 | 1,008 |
RETIREMENT BENEFITS | 160 | 191 |
OTHER LIABILITIES | 220 | 224 |
TOTAL LIABILITIES | 2,520 | 2,323 |
COMMITMENTS AND CONTINGENCIES (See Note 17) | ||
EQUITY: | ||
Common stock (June 30, 2022 and September 30, 2021, 104.7 and 104.0 shares issued and 70.9 and 70.1 shares outstanding, respectively) | 106 | 105 |
Additional paid-in capital | 770 | 798 |
Retained earnings | 1,141 | 935 |
Treasury stock, at cost (June 30, 2022 and September 30, 2021, 33.9 and 33.9 shares, respectively) | (632) | (632) |
Accumulated other comprehensive loss | (689) | (632) |
Total equity attributable to Meritor, Inc. | 696 | 574 |
Noncontrolling interests | 38 | 41 |
TOTAL EQUITY | 734 | 615 |
TOTAL LIABILITIES AND EQUITY | $ 3,254 | $ 2,938 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEET (Parenthetical) - shares shares in Millions | Jun. 30, 2022 | Sep. 30, 2021 |
Statement of Financial Position [Abstract] | ||
Common shares issued (in shares) | 104.7 | 104 |
Common shares outstanding (in shares) | 70.9 | 70.1 |
Treasury stock (in shares) | 33.9 | 33.9 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($) $ in Millions | 9 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
OPERATING ACTIVITIES | ||
Net income | $ 199 | $ 144 |
Less: Income from discontinued operations, net of tax | 1 | 0 |
Income from continuing operations | 198 | 144 |
Adjustments to income from continuing operations to arrive at cash provided by operating activities: | ||
Depreciation and amortization | 75 | 78 |
Deferred income tax expense | 0 | 1 |
Restructuring costs | 5 | 9 |
Stock compensation expense | 13 | 14 |
Equity in earnings of affiliates | (30) | (24) |
Pension and retiree medical income | (40) | (39) |
Loss on debt extinguishment | 0 | 11 |
Dividends received from equity method investments | 15 | 7 |
Pension and retiree medical contributions | (7) | (8) |
Restructuring payments | (9) | (11) |
Changes in off-balance sheet accounts receivable securitization and factoring programs | 134 | 35 |
Changes in receivables, inventories and accounts payable | (251) | (103) |
Changes in other current assets and liabilities | (19) | 26 |
Changes in other assets and liabilities | (2) | 6 |
Operating cash flows provided by continuing operations | 82 | 146 |
Operating cash flows used for discontinued operations | (3) | 0 |
CASH PROVIDED BY OPERATING ACTIVITIES | 79 | 146 |
INVESTING ACTIVITIES | ||
Capital expenditures | (63) | (47) |
Other investing activities | 5 | (3) |
CASH USED FOR INVESTING ACTIVITIES | (58) | (50) |
FINANCING ACTIVITIES | ||
Redemption of notes | 0 | (458) |
Proceeds from debt issuances | 0 | 275 |
Redemption of convertible notes | 0 | (53) |
Debt issuance costs | 0 | (5) |
Term loan payments | (13) | (9) |
Other financing activities | 0 | (1) |
Net change in debt | (13) | (251) |
Repurchase of common stock | 0 | (25) |
CASH USED FOR FINANCING ACTIVITIES | (13) | (276) |
EFFECT OF CHANGES IN FOREIGN CURRENCY EXCHANGE RATES ON CASH AND CASH EQUIVALENTS | (4) | 3 |
CHANGE IN CASH AND CASH EQUIVALENTS | 4 | (177) |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 101 | 315 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ 105 | $ 138 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENT OF EQUITY - USD ($) $ in Millions | Total | Cumulative Effect, Period of Adoption, Adjustment | Common Stock | Additional Paid-in Capital | Additional Paid-in Capital Cumulative Effect, Period of Adoption, Adjustment | Retained Earnings | Retained Earnings Cumulative Effect, Period of Adoption, Adjustment | Treasury Stock | Accumulated Other Comprehensive Loss | Total Equity Attributable to Meritor, Inc. | Total Equity Attributable to Meritor, Inc. Cumulative Effect, Period of Adoption, Adjustment | Noncontrolling Interests |
Beginning balance at Sep. 30, 2020 | $ 495 | $ 105 | $ 808 | $ 736 | $ (573) | $ (614) | $ 462 | $ 33 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Comprehensive income | 201 | 137 | 57 | 194 | 7 | |||||||
Repurchase of convertible notes | (30) | (30) | (30) | |||||||||
Equity based compensation expense | 14 | 14 | 14 | |||||||||
Vesting of equity based awards | 0 | 1 | (1) | |||||||||
Noncontrolling interest dividends | (1) | (1) | ||||||||||
Repurchase of common stock | (25) | (25) | (25) | |||||||||
Other equity adjustments | 1 | 1 | 1 | |||||||||
Ending Balance at Jun. 30, 2021 | 655 | 106 | 792 | 873 | (598) | (557) | 616 | 39 | ||||
Beginning balance at Sep. 30, 2020 | 495 | 105 | 808 | 736 | (573) | (614) | 462 | 33 | ||||
Ending Balance at Sep. 30, 2021 | $ 615 | $ (23) | 105 | 798 | $ (40) | 935 | $ 17 | (632) | (632) | 574 | $ (23) | 41 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Accounting Standards Update [Extensible Enumeration] | Accounting Standards Update 2020-06 | |||||||||||
Beginning balance at Mar. 31, 2021 | $ 613 | 106 | 788 | 831 | (573) | (575) | 577 | 36 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Comprehensive income | 63 | 42 | 18 | 60 | 3 | |||||||
Equity based compensation expense | 4 | 4 | 4 | |||||||||
Repurchase of common stock | (25) | (25) | (25) | |||||||||
Ending Balance at Jun. 30, 2021 | 655 | 106 | 792 | 873 | (598) | (557) | 616 | 39 | ||||
Beginning balance at Sep. 30, 2021 | 615 | $ (23) | 105 | 798 | $ (40) | 935 | $ 17 | (632) | (632) | 574 | $ (23) | 41 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Comprehensive income | 139 | 189 | (57) | 132 | 7 | |||||||
Equity based compensation expense | 13 | 13 | 13 | |||||||||
Vesting of equity based awards | 0 | 1 | (1) | |||||||||
Noncontrolling interest dividends | (10) | (10) | ||||||||||
Ending Balance at Jun. 30, 2022 | 734 | 106 | 770 | 1,141 | (632) | (689) | 696 | 38 | ||||
Beginning balance at Mar. 31, 2022 | 720 | 106 | 765 | 1,068 | (632) | (628) | 679 | 41 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Comprehensive income | 12 | 73 | (61) | 12 | ||||||||
Equity based compensation expense | 5 | 5 | 5 | |||||||||
Noncontrolling interest dividends | (3) | (3) | ||||||||||
Ending Balance at Jun. 30, 2022 | $ 734 | $ 106 | $ 770 | $ 1,141 | $ (632) | $ (689) | $ 696 | $ 38 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Jun. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation Meritor, Inc. (the "company" or "Meritor"), headquartered in Troy, Michigan, is a premier global supplier of a broad range of integrated products, systems, modules and components to original equipment manufacturers ("OEMs") and the aftermarket for the commercial vehicle, transportation and industrial sectors. The company serves commercial truck, trailer, military, bus and coach, construction and other industrial OEMs and certain aftermarkets. The Condensed Consolidated Financial Statements are those of the company and its consolidated subsidiaries. As previously announced, on February 21, 2022, Meritor, Cummins Inc., an Indiana corporation (“Cummins”), and Rose NewCo Inc., an Indiana corporation (“Merger Sub”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) pursuant to which, among other things, Merger Sub will merge with and into the company (the “Merger”), with the company surviving the Merger as a wholly owned subsidiary of Cummins. On May 26, 2022, the company's shareholders voted in favor of the Merger. The companies are working to complete the acquisition in the coming week as all regulatory approvals to close the transaction have been received. In the opinion of the company, the unaudited Condensed Consolidated Financial Statements contain all adjustments, consisting solely of adjustments of a normal, recurring nature, necessary to present fairly the financial position, results of operations and cash flows for the periods presented. These statements should be read in conjunction with the company’s audited Consolidated Financial Statements and notes thereto included in the company's Annual Report on Form 10-K for the fiscal year ended September 30, 2021. The Condensed Consolidated Balance Sheet data as of September 30, 2021 was derived from audited financial statements but does not include all annual disclosures required by accounting principles generally accepted in the United States of America. The results of operations for the three and nine months ended June 30, 2022 are not necessarily indicative of the results for the full year. The company’s fiscal year ends on the Sunday nearest September 30, and its fiscal quarters generally end on the Sundays nearest December 31, March 31 and June 30. The third quarter of fiscal years 2022 and 2021 ended on July 3, 2022 and July 4, 2021, respectively. Fiscal year 2021 ended on October 3, 2021. All year and quarter references relate to the company’s fiscal year and fiscal quarters, unless otherwise stated. For ease of presentation, September 30 and June 30 are used consistently throughout this report to represent the fiscal year end and third fiscal quarter end, respectively. COVID-19 Pandemic Update The COVID-19 pandemic adversely affected our financial performance during the beginning of fiscal year 2021, however the direct adverse impacts of the pandemic on our operations and financial performance started to dissipate over the course of the third fiscal quarter of fiscal year 2021. All of our facilities have been fully operational since the end of fiscal year 2020 and our salaried employees have returned to work on a hybrid in person basis consistent with local, regional and business requirements, in each case under enhanced safety guidelines. Although we are optimistic that the worst of the pandemic is behind us, the progression of the pandemic, and its direct and indirect impacts on our markets, operations and financial performance, have been unpredictable. As a result of this continued uncertainty, there may still be impacts on our industry, operations, workforce, supply chains, distribution systems and demand for our products in the future which cannot be reasonably estimated at this time. |
Earnings per Share
Earnings per Share | 9 Months Ended |
Jun. 30, 2022 | |
Earnings Per Share [Abstract] | |
Earnings per Share | Earnings per ShareBasic earnings per share is calculated using the weighted average number of shares outstanding during each period. The diluted earnings per share calculation includes the impact of dilutive common stock options, restricted shares, restricted share units, performance share unit awards and convertible securities, if applicable. A reconciliation of basic average common shares outstanding to diluted average common shares outstanding is as follows (in millions): Three Months Ended June 30, Nine Months Ended June 30, 2022 2021 2022 2021 Basic average common shares outstanding 70.7 72.0 70.5 72.2 Impact of restricted shares, restricted share units and performance share units 1.1 0.8 1.0 1.0 Diluted average common shares outstanding 71.8 72.8 71.5 73.2 In November 2021, the Board of Directors approved a grant of 0.4 million performance share units to all executives eligible to participate in the long-term incentive plan. Each performance share unit represents the right to receive one share of common stock or its cash equivalent upon achievement of certain performance and time vesting criteria. The fair value of each performance share unit was $25.65, which was the company’s share price on the grant date of December 1, 2021. The Board of Directors also approved a grant of 0.3 million restricted share units to these executives. The restricted share units vest at the earlier of three years from the date of grant or upon termination of employment with the company under certain circumstances. The fair value of each restricted share unit was $25.65, which was the company's share price on the grant date of December 1, 2021. The actual number of performance share units that will vest depends upon the company’s performance relative to the established performance metrics for the three-year performance period of October 1, 2021 to September 30, 2024, measured at the end of the performance period. The number of performance share units that vest will depend on adjusted EBITDA margin and adjusted diluted earnings per share from continuing operations which are each weighted at 50%. The number of performance share units that vest will be between 0% and 200% of the grant date amount of 0.4 million performance share units. |
New Accounting Standards
New Accounting Standards | 9 Months Ended |
Jun. 30, 2022 | |
Accounting Changes and Error Corrections [Abstract] | |
New Accounting Standards | New Accounting Standards Accounting standards implemented during fiscal year 2022 On October 1, 2021, the company adopted Accounting Standards Update ("ASU") 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (Subtopic 815-40). As a result of adopting this ASU, entities are no longer required to separately present in equity an embedded conversion feature in such debt and instead should account for a convertible debt instrument wholly as debt. ASU 2020-06 also amended the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. The company elected to adopt the ASU using the modified retrospective method. The cumulative effect of the changes following implementation on October 1, 2021 was as follows: Balance at September 30, 2021 Adjustments Upon Adoption of ASU 2020-06 Balance at Liabilities Long-Term debt $ 1,008 $ 23 $ 1,031 Equity Additional paid-in capital $ 798 $ (40) $ 758 Retained earnings $ 935 $ 17 $ 952 |
Revenue
Revenue | 9 Months Ended |
Jun. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | Revenue Disaggregation of revenue In the following tables, revenue is disaggregated for each of our operating segments by primary geographical market for the three and nine months ended June 30, 2022 and 2021 (in millions). Three Months Ended June 30, 2022 Primary Geographical Market Commercial Truck Aftermarket & Industrial Total U.S. $ 482 $ 206 $ 688 Canada — 15 15 Mexico 59 9 68 Total North America 541 230 771 Sweden 80 — 80 Italy 65 3 68 United Kingdom 39 2 41 Other Europe 3 27 30 Total Europe 187 32 219 Brazil 117 — 117 China 26 — 26 India 52 — 52 Other Asia-Pacific 27 — 27 Total sales $ 950 $ 262 $ 1,212 Three Months Ended June 30, 2021 Primary Geographical Market Commercial Truck Aftermarket & Industrial Total U.S. $ 365 $ 183 $ 548 Canada — 16 16 Mexico 49 6 55 Total North America 414 205 619 Sweden 65 — 65 Italy 61 4 65 United Kingdom 37 3 40 Other Europe 3 39 42 Total Europe 166 46 212 Brazil 82 1 83 China 41 — 41 India 30 — 30 Other Asia-Pacific 31 — 31 Total sales $ 764 $ 252 $ 1,016 Nine Months Ended June 30, 2022 Primary Geographical Market Commercial Truck Aftermarket & Industrial Total U.S. $ 1,275 $ 577 $ 1,852 Canada — 41 41 Mexico 154 23 177 Total North America 1,429 641 2,070 Sweden 234 — 234 Italy 188 12 200 United Kingdom 116 6 122 Other Europe 5 96 101 Total Europe 543 114 657 Brazil 306 — 306 China 77 — 77 India 153 — 153 Other Asia-Pacific 87 — 87 Total sales $ 2,595 $ 755 $ 3,350 Nine Months Ended June 30, 2021 Primary Geographical Market Commercial Truck Aftermarket & Industrial Total U.S. $ 1,012 $ 530 $ 1,542 Canada — 42 42 Mexico 129 16 145 Total North America 1,141 588 1,729 Sweden 216 — 216 Italy 172 14 186 United Kingdom 114 8 122 Other Europe 8 109 117 Total Europe 510 131 641 Brazil 219 2 221 China 105 1 106 India 113 — 113 Other Asia-Pacific 78 — 78 Total sales $ 2,166 $ 722 $ 2,888 As of June 30, 2022 and September 30, 2021, Trade receivables, net, which are included in Receivables, trade and other, net, on the Condensed Consolidated Balance Sheet, were $656 million and $471 million, respectively. |
Restructuring Costs
Restructuring Costs | 9 Months Ended |
Jun. 30, 2022 | |
Restructuring and Related Activities [Abstract] | |
Restructuring Costs | Restructuring Costs Restructuring reserves were $2 million at June 30, 2022 and $6 million at September 30, 2021. Restructuring costs are recorded within Other operating expense, net within the Condensed Consolidated Statement of Operations. The changes in restructuring reserves for the nine months ended June 30, 2022 and 2021 are as follows (in millions): Employee Termination Benefits Plant Total Balance at September 30, 2021 $ 5 $ 1 $ 6 Activity during the period: Charges 2 3 5 Cash payments (5) (4) (9) Other — — — Total restructuring reserves at June 30, 2022 2 — 2 Less: non-current restructuring reserves (1) — (1) Restructuring reserves – current, at June 30, 2022 $ 1 $ — $ 1 Balance at September 30, 2020 $ 10 $ — $ 10 Activity during the period: Charges 6 3 9 Cash payments (11) — (11) Other — (3) (3) Total restructuring reserves at June 30, 2021 5 — 5 Less: non-current restructuring reserves (1) — (1) Restructuring reserves – current, at June 30, 2021 $ 4 $ — $ 4 |
Income Taxes
Income Taxes | 9 Months Ended |
Jun. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income TaxesFor the three months ended June 30, 2022 and 2021, the company recognized tax expense of $21 million and $14 million, respectively. This resulted in effective tax rates of 22% and 24%, respectively. For the nine months ended June 30, 2022 and 2021, the company recognized tax expense of $48 million and $43 million, respectively. This resulted in effective tax rates of 19% and 23%, respectively. |
Acquisition
Acquisition | 9 Months Ended |
Jun. 30, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Acquisition | Acquisition Acquisition of Siemens Commercial Vehicles Business On May 19, 2022, the company entered into a Master Sale and Purchase Agreement (the "Agreement") with Siemens Aktiengesellschaft ("Siemens") to acquire its Commercial Vehicles business. Pursuant to the terms of the Agreement, the company will pay approximately €190 million in cash, subject to certain purchase price adjustments. The company expects to close the transaction by the end of calendar year 2022, subject to receipt of regulatory approvals and satisfaction of customary closing conditions. In accordance with the terms of the previously announced Merger Agreement under which Cummins agreed to acquire Meritor, Cummins consented to and is supportive of the company entering into the agreement and completing its acquisition of the Siemens Commercial Vehicles business. |
Accounts Receivable Factoring a
Accounts Receivable Factoring and Securitization | 9 Months Ended |
Jun. 30, 2022 | |
Accounts Receivable Factoring And Securitization [Abstract] | |
Accounts Receivable Factoring and Securitization | Accounts Receivable Factoring and Securitization The company has a U.S. accounts receivable securitization facility with PNC Bank and participates in various accounts receivable factoring programs, primarily with Nordea Bank for trade receivables from AB Volvo, as follows: Current Expiration Total Facility Size as of 6/30/22 Utilized as of 6/30/22 Utilized as of 9/30/21 EUR USD EUR USD EUR USD On-balance sheet arrangement Committed U.S. accounts receivable securitization (1) March 2024 N/A $ 110 N/A $ 2 N/A $ 3 Total on-balance sheet arrangement: (1) N/A $ 110 N/A $ 2 N/A $ 3 Off-balance sheet arrangements Committed Swedish factoring facility (2)(3) March 2024 € 155 $ 162 € 142 $ 149 € 75 $ 88 Committed U.S. factoring facility (2) February 2023 N/A 75 N/A 77 N/A 49 Uncommitted U.K. factoring facility (4) February 2025 25 26 6 6 2 2 Uncommitted Italy factoring facility June 2025 30 32 27 28 14 17 Other uncommitted factoring facilities (5) None N/A N/A 20 21 15 17 Total off-balance sheet arrangements € 210 $ 295 € 195 $ 281 € 106 $ 173 (1) Availability subject to adequate eligible accounts receivable available for sale. The utilized amount includes $2 million of letters of credit as of June 30, 2022 and $3 million as of September 30, 2021. (2) Actual amounts may exceed the bank's commitment at the bank's discretion. (3) The facility is backed by a 364-day liquidity commitment from Nordea Bank which extends through June 22, 2023. (4) On March 23, 2022, the company's U.K. factoring facility was amended to enable the factoring of Pound Sterling denominated accounts receivable in addition to Euro denominated accounts receivable. (5) There is no explicit facility size under the agreement, but the counterparty approves the purchase of receivable tranches at its discretion. Off-balance sheet arrangements |
Inventories
Inventories | 9 Months Ended |
Jun. 30, 2022 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories are stated at the lower of cost (using FIFO or average methods) or market (determined on the basis of estimated realizable values) and are summarized as follows (in millions): June 30, September 30, Finished goods $ 163 $ 137 Work in process 50 47 Raw materials, parts and supplies 497 417 Total $ 710 $ 601 |
Net Property
Net Property | 9 Months Ended |
Jun. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
Net Property | Net Property Net property is summarized as follows (in millions): June 30, September 30, Property at cost: Land and land improvements $ 41 $ 41 Buildings 228 231 Machinery and equipment 1,029 1,051 Company-owned tooling 165 164 Construction in progress 66 63 Total 1,529 1,550 Less: accumulated depreciation (1,028) (1,033) Net property $ 501 $ 517 |
Other Assets
Other Assets | 9 Months Ended |
Jun. 30, 2022 | |
Other Assets, Noncurrent [Abstract] | |
Other Assets | Other Assets Other assets are summarized as follows (in millions): June 30, September 30, Prepaid pension costs $ 196 $ 191 Deferred income tax assets 42 42 Investments in non-consolidated joint ventures 140 132 Other 250 263 Other assets $ 628 $ 628 |
Other Current Liabilities
Other Current Liabilities | 9 Months Ended |
Jun. 30, 2022 | |
Other Liabilities, Current [Abstract] | |
Other Current Liabilities | Other Current Liabilities Other current liabilities are summarized as follows (in millions): June 30, September 30, Compensation and benefits $ 93 $ 125 Income taxes 16 17 Product warranties 18 15 Other 174 151 Other current liabilities $ 301 $ 308 Compensation and benefits includes the current portion of pension and retiree medical liability, accrued incentive compensation, salary and wages and accrued vacation, holiday and sick leave pay. A summary of the changes in product warranties is as follows (in millions): Nine Months Ended June 30, 2022 2021 Total product warranties – beginning of period $ 43 $ 54 Accruals for product warranties 23 15 Payments (15) (11) Change in estimates and other (5) (7) Total product warranties – end of period 46 51 Less: non-current product warranties (28) (33) Product warranties – current $ 18 $ 18 |
Other Liabilities
Other Liabilities | 9 Months Ended |
Jun. 30, 2022 | |
Other Liabilities Disclosure [Abstract] | |
Other Liabilities | Other Liabilities Other liabilities are summarized as follows (in millions): June 30, September 30, Asbestos-related liabilities (see Note 17) $ 47 $ 52 Liabilities for uncertain tax positions 62 52 Product warranties (see Note 12) 28 28 Other 83 92 Other liabilities $ 220 $ 224 |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Jun. 30, 2022 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt Long-Term debt, net of discounts where applicable, is summarized as follows (in millions): June 30, September 30, 3.25 percent convertible notes due 2037 (1) $ 321 $ 321 4.50 percent notes due 2028 271 270 6.25 percent notes due 2025 297 296 Term loan due 2024 140 153 Finance lease obligation 13 10 Unamortized discount on convertible notes (1) — (23) Subtotal 1,042 1,027 Less: short-term debt (19) (19) Long-term debt $ 1,023 $ 1,008 (1) Unamortized debt discount on the 3.25 Percent Convertible Notes was derecognized upon adoption of ASU 2020-06 on October 1, 2021 (see Note 3). Revolving Credit Facility The company has a $685 million senior secured revolving credit facility that matures in June 2024. The availability under the senior secured revolving credit facility is subject to a financial covenant based on the ratio of the company’s priority debt (consisting principally of amounts outstanding under the revolving credit facility, the U.S. accounts receivable securitization and factoring programs, and third-party non-working capital foreign debt) to EBITDA. The company is required to maintain a total priority-debt-to-EBITDA ratio, as defined in the credit agreement, of 2.25 to 1.00 or less as of the last day of each fiscal quarter throughout the term of the agreement. Availability under the senior secured revolving credit facility was constrained to $646 million on the last day of the third quarter of fiscal year 2022 due primarily to an elevated priority debt balance. The company has full availability until the next measurement date at the end of the fourth quarter of fiscal year 2022. At June 30, 2022 and September 30, 2021, there were no borrowings outstanding under the senior secured revolving credit facility. The senior secured revolving credit facility includes $100 million of availability for the issuance of letters of credit. At June 30, 2022 and September 30, 2021, there were no letters of credit outstanding under the senior secured revolving credit facility. Other |
Financial Instruments
Financial Instruments | 9 Months Ended |
Jun. 30, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Financial Instruments | Financial Instruments Fair values of financial instruments are summarized as follows (in millions): June 30, 2022 September 30, 2021 Carrying Fair Carrying Fair Cash and cash equivalents $ 105 $ 105 $ 101 $ 101 Short-term debt 19 19 19 19 Long-term debt 1,023 1,071 1,008 1,082 Foreign exchange forward contracts (other assets) 1 1 1 1 The following table reflects the offsetting of derivative assets (in millions): June 30, 2022 September 30, 2021 Gross Gross Amounts Net Amounts Gross Gross Amounts Net Amounts Derivative Assets Foreign exchange forward contracts 1 — 1 1 — 1 Fair Value Fair value of financial instruments by the valuation hierarchy at June 30, 2022 is as follows (in millions): Level 1 Level 2 Level 3 Cash and cash equivalents $ 105 $ — $ — Short-term debt — — 19 Long-term debt — 936 135 Foreign exchange forward contracts (other assets) — 1 — Fair value of financial instruments by the valuation hierarchy at September 30, 2021 is as follows (in millions): Level 1 Level 2 Level 3 Cash and cash equivalents $ 101 $ — $ — Short-term debt — — 19 Long-term debt — 937 145 Foreign exchange forward contracts (other assets) — 1 — No transfers of assets between any of the Levels occurred during the three and nine months ended June 30, 2022 and 2021. Cash and cash equivalents — All highly liquid investments purchased with an original maturity of three months or less are considered to be cash equivalents. The carrying value approximates fair value because of the short maturity of these instruments. Short- and long-term debt — Fair values are based on transaction prices at public exchange for publicly traded debt. For debt instruments that are not publicly traded, fair values are based on interest rates that would be currently available to the company for issuance of similar types of debt instruments with similar terms and remaining maturities. Foreign exchange forward contracts — The company uses foreign exchange forward purchase and sale contracts with varying terms that extend through fiscal year 2025 to hedge its exposure to changes in foreign currency exchange rates. As of June 30, 2022 and September 30, 2021, the notional amount of the company's foreign exchange contracts outstanding under its foreign currency cash flow hedging program was $43 million and $107 million, respectively. The fair value of foreign exchange forward contracts is based on a model which incorporates observable inputs including quoted spot rates, forward exchange rates and discounted future expected cash flows utilizing market interest rates with similar quality and maturity characteristics. For derivative instruments that are designated and qualify as cash flow hedges, changes in the fair value of the contracts is recorded in Accumulated Other Comprehensive Loss in the Condensed Consolidated Statement of Equity and is recognized in operating income when the underlying forecasted transaction impacts earnings. Foreign currency option contracts — The company uses option contracts to mitigate foreign exchange exposure on expected future foreign currency-denominated purchases. As of June 30, 2022, the company had no foreign exchange contracts outstanding. As of September 30, 2021, the notional amount of the company's foreign exchange contracts outstanding was $49 million. The company did not elect hedge accounting for these derivatives. Changes in fair value associated with these contracts are recorded in cost of sales in the Condensed Consolidated Statement of Operations. The company uses option contracts to mitigate the risk of volatility in the translation of foreign currency earnings to U.S. dollars. As of June 30, 2022 and September 30, 2021, the company had no option contracts outstanding. These option contracts did not qualify for a hedge accounting election. Changes in fair value associated with these contracts are recorded in the Condensed Consolidated Statement of Operations in other income, net. The fair value of foreign currency option contracts is based on third-party proprietary models, which incorporate inputs at varying unobservable weights of quoted spot rates, market volatility, forward rates and time utilizing market instruments with similar quality and maturity characteristics. |
Retirement Benefit Liabilities
Retirement Benefit Liabilities | 9 Months Ended |
Jun. 30, 2022 | |
Retirement Benefits [Abstract] | |
Retirement Benefit Liabilities | Retirement Benefit Liabilities Retirement benefit liabilities consisted of the following (in millions): June 30, September 30, Retiree medical liability $ 40 $ 42 Pension liability 112 141 Other 18 19 Subtotal 170 202 Less: current portion (included in compensation and benefits, Note 12) (10) (11) Retirement benefits $ 160 $ 191 The components of net periodic pension and retiree medical income included in continuing operations for the three months ended June 30 are as follows (in millions): 2022 2021 Pension Retiree Medical Pension Retiree Medical Interest cost $ (9) $ — $ (9) $ — Assumed return on plan assets 23 — 25 — Amortization of prior service benefit — 9 — 9 Recognized actuarial loss (7) (3) (8) (4) Total income $ 7 $ 6 $ 8 $ 5 The components of net periodic pension and retiree medical income included in continuing operations for the nine months ended June 30 are as follows (in millions): 2022 2021 Pension Retiree Medical Pension Retiree Medical Interest cost $ (28) $ (1) $ (26) $ (1) Assumed return on plan assets 72 — 73 — Amortization of prior service benefit — 26 — 27 Recognized actuarial loss (21) (8) (24) (10) Total income $ 23 $ 17 $ 23 $ 16 |
Contingencies
Contingencies | 9 Months Ended |
Jun. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | Contingencies Environmental Federal, state and local requirements relating to the discharge of substances into the environment, the disposal of hazardous wastes and other activities affecting the environment have, and will continue to have, an impact on the operations of the company. The process of estimating environmental liabilities is complex and dependent upon evolving physical and scientific data at the sites, uncertainties as to remedies and technologies to be used and the outcome of discussions with regulatory agencies. The company records liabilities for environmental issues in the accounting period in which they are considered to be probable and the cost can be reasonably estimated. At environmental sites in which more than one potentially responsible party has been identified, the company records a liability for its allocable share of costs related to its involvement with the site, as well as an allocable share of costs related to insolvent parties or unidentified shares. At environmental sites in which Meritor is the only potentially responsible party, the company records a liability for the total probable and estimable costs of remediation before consideration of recovery from insurers or other third parties. The company has been designated as a potentially responsible party at ten Superfund sites, excluding sites as to which the company’s records disclose no involvement or as to which the company’s liability has been finally determined. Superfund is a United States federal government program designed to fund the cleanup of sites contaminated with hazardous substances and pollutants. Management estimates the total reasonably possible costs the company could incur for the remediation of th e ten Superfund sites at June 30, 2022 to be approximately $20 million, of which $9 million is probable and recorded as a liability. Included in reasonably possible amounts are estimates for certain remediation actions that may be required if current actions are deemed inadequate by the regulators. In addition to the Superfund sites, various other lawsuits, claims and proceedings have been asserted against the company, alleging violations of federal, state and local environmental protection requirements, or seeking remediation of alleged environmental impairments, principally at previously disposed-of properties. For these matters, management has estimated the total reasonably possible costs the company could incur at June 30, 2022 to be approximately $9 million, of which $3 million is probable and recorded as a liability. Included in the company’s environmental liabilities are costs for on-going operation, maintenance and monitoring at environmental sites in which remediation has been put into place. This liability is discounted using discount rates in the range of 0 to 2.00 percent and is approximately $13 million at June 30, 2022. The undiscounted estimate of these costs is approximately $14 million. The following are the components of the Superfund and non-Superfund environmental reserves (in millions): Superfund Sites Non-Superfund Sites Total Beginning Balance at September 30, 2021 $ 9 $ 4 $ 13 Payments and other (1) (1) (2) Accruals 1 — 1 Ending Balance at June 30, 2022 $ 9 $ 3 $ 12 Environmental reserves are included in Other Current Liabilities (see Note 12) and Other Liabilities (see Note 13) in the Condensed Consolidated Balance Sheet. The actual amount of costs or damages for which the company may be held responsible could materially exceed the foregoing estimates because of uncertainties, including the financial condition of other potentially responsible parties, the success of the remediation, discovery of new contamination and other factors that make it difficult to predict actual costs accurately. However, based on management’s assessment, after consulting with outside advisors that specialize in environmental matters, and subject to the difficulties inherent in estimating these future costs, the company believes that its expenditures for environmental capital investment and remediation necessary to comply with present regulations governing environmental protection and other expenditures for the resolution of environmental claims will not have a material effect on the company’s business, financial condition or results of operations. In addition, in future periods, new laws and regulations, changes in remediation plans, advances in technology and additional information about the ultimate clean-up remedies could significantly change the company’s estimates. Management cannot assess the possible effect of compliance with future requirements. Asbestos Rockwell International Corporation ("Rockwell") — ArvinMeritor, Inc. ("AM"), a predecessor of Meritor, along with many other companies, has been named as a defendant in lawsuits alleging personal injury as a result of exposure to asbestos used in certain components of Rockwell products many years ago. Liability for these claims was transferred at the time of the spin-off of the automotive business from Rockwell in 1997. There were approximately 600 pending active asbestos claims in lawsuits that name AM, together with many other companies, as defendants as of June 30, 2022 and September 30, 2021. A significant portion of the claims do not identify any Rockwell products or specify which of the claimants, if any, were exposed to asbestos attributable to Rockwell products, and past experience has shown that the vast majority of the claimants will likely never identify any Rockwell products. Historically, AM has been dismissed from the vast majority of similar claims filed in the past with no payment to claimants. For those claimants who do show that they worked with Rockwell products, management nevertheless believes it has meritorious defenses, in substantial part due to the integrity of the products involved and the lack of any impairing medical condition on the part of many claimants. Pending and Future Claims : The company engaged a third-party advisor with extensive experience in assessing asbestos-related liabilities to conduct a study to estimate its potential undiscounted liability for pending and future asbestos-related claims as of September 30, 2021. Management continuously monitors the underlying claims data and experience for the purpose of assessing the appropriateness of the assumptions used to estimate the liability. As of September 30, 2021, the best estimate of the company's obligation for asbestos-related claims over the next 37 years was $60 million. The company recognized a liability for pending and future claims over the next 37 years of $55 million as of June 30, 2022. The ultimate cost of resolving pending and future claims is estimated based on the history of claims and expenses for plaintiffs represented by law firms in jurisdictions with an established history with Rockwell. Recoveries : AM has insurance coverage that management believes covers indemnity and defense costs, over and above self-insurance retentions, for a significant portion of these claims. The company recognizes insurance recoveries when the claim for recovery is deemed probable and to the extent an insurable loss has been recognized in the financial statements. The company’s determination is based on analysis of the underlying insurance policies, historical experience with insurers, ongoing review of the solvency of insurers, and consideration of any insurance settlements. In the first quarter of fiscal year 2022, the company entered into a legally binding term sheet with an insurer for a $6 million lump-sum settlement to resolve coverage relating to Rockwell asbestos claims. A settlement agreement, fully documenting the binding term sheet signed in the first quarter of fiscal 2022, was executed in the second quarter of fiscal 2022. The insurance receivables for Rockwell asbestos-related liabilities totaled $48 million and $51 million as of June 30, 2022 and September 30, 2021, respectively. The amounts recorded for the asbestos-related reserves and recoveries from insurance companies are based upon assumptions and estimates derived from currently known facts. All such estimates of liabilities and recoveries for asbestos-related claims are subject to considerable uncertainty because such liabilities and recoveries are influenced by variables that are difficult to predict. The future litigation environment for Rockwell could change significantly from its past experience, due, for example, to changes in the mix of claims filed against Rockwell in terms of plaintiffs’ law firm, jurisdiction and disease; legislative or regulatory developments; the company’s approach to defending claims; or payments to plaintiffs from other defendants. Estimated recoveries are influenced by coverage issues among insurers and the continuing solvency of various insurance companies. If the assumptions with respect to the estimation period, the nature of pending claims, the cost to resolve claims and the amount of available insurance prove to be incorrect, the actual amount of liability for Rockwell asbestos-related claims, and the effect on the company, could differ materially from current estimates and, therefore, could have a material impact on the company’s financial condition and results of operations. However, the amount of reasonably possible and estimable losses in excess of the recorded asbestos-related liabilities was determined to be immaterial. Indemnification The company has provided indemnities in conjunction with certain transactions, primarily divestitures. These indemnities address a variety of matters, which may include environmental, tax, asbestos, labor and employment-related matters, and the periods of indemnification vary in duration. The company is not aware of any claims or other information that would give rise to material payments under such indemnification obligations. Other |
Shareholders' Equity
Shareholders' Equity | 9 Months Ended |
Jun. 30, 2022 | |
Equity [Abstract] | |
Shareholders' Equity | Shareholders' Equity There were no dividends declared or paid in the third quarter of fiscal years 2022 and 2021. The payment of cash dividends and the amount of any dividend are subject to review and change at the discretion of the company's Board of Directors. Common Stock and Debt Repurchase Authorizations On July 28, 2021, the Board of Directors authorized the repurchase of up to $250 million of the company's common stock. Repurchases can be made from time to time through open market purchases, privately negotiated transactions or otherwise, subject to compliance with legal and regulatory requirements and the company’s debt covenants. As of June 30, 2022 and September 30, 2021, the amount remaining available for repurchases was $250 million under this common stock repurchase authorization. On February 21, 2022, the company suspended activity under its share repurchase program due to the Merger Agreement. On November 7, 2019, the Board of Directors authorized the repurchase of up to $325 million of the company's common stock. Repurchases could be made from time to time through open market purchases, privately negotiated transactions or otherwise, subject to compliance with legal and regulatory requirements and the company’s debt covenants. During fiscal year 2021, the company repurchased 2.5 million shares of common stock for $59 million (including commission costs) pursuant to this authorization. No amounts remained outstanding under this common stock repurchase authorization as of September 30, 2021. On November 2, 2018, the Board of Directors authorized the repurchase of up to $100 million aggregate principal amount of any of the company's debt securities (including convertible debt securities), from time to time through open market purchases, privately negotiated transactions or otherwise, subject to compliance with legal and regulatory requirements and the company's debt covenants. As of June 30, 2022 and September 30, 2021, the amount remaining available for repurchase under this debt repurchase authorization was $76 million. Accumulated Other Comprehensive Loss ("AOCL") The components of AOCL and the changes in AOCL by components, net of tax, for the three months ended June 30, 2022 and 2021 are as follows (in millions): Foreign Currency Translation Employee Benefit Related Adjustments Unrealized Income (Loss) on cash flow hedges Total Balance at March 31, 2022 $ (104) $ (523) $ (1) $ (628) Other comprehensive loss before reclassification (61) — (1) (62) Amounts reclassified from accumulated other comprehensive loss — 1 — 1 Net current-period other comprehensive income (loss) (61) 1 (1) (61) Balance at June 30, 2022 $ (165) $ (522) $ (2) $ (689) Details about Accumulated Other Comprehensive Income Components Amount Reclassified from Accumulated Other Comprehensive Income Affected Line Item in the Consolidated Statement of Operations Employee Benefit Related Adjustment Prior service benefit $ (9) (a) Actuarial losses 10 (a) 1 Total before tax — Tax benefit Total reclassifications for the period $ 1 Net of tax (a) These accumulated other comprehensive income components are included in the computation of net periodic pension and retiree medical expense (see Note 16 for additional details), which is recorded in other income (expense), net. Foreign Currency Translation Employee Benefit Related Adjustments Unrealized Income (Loss) on cash flow hedges Total Balance at March 31, 2021 $ (96) $ (478) $ (1) $ (575) Other comprehensive income before reclassification 15 — — 15 Amounts reclassified from accumulated other comprehensive loss — 3 — 3 Net current-period other comprehensive income 15 3 — 18 Balance at June 30, 2021 $ (81) $ (475) $ (1) $ (557) Details about Accumulated Other Comprehensive Income Components Amount Reclassified from Accumulated Other Comprehensive Income Affected Line Item in the Consolidated Statement of Operations Employee Benefit Related Adjustment Prior service benefit $ (9) (b) Actuarial losses 12 (b) 3 Total before tax — Tax benefit Total reclassifications for the period $ 3 Net of tax (b) These accumulated other comprehensive income components are included in the computation of net periodic pension and retiree medical expense (see Note 16 for additional details), which is recorded in other income (expense), net. The components of AOCL and the changes in AOCL by components, net of tax, for the nine months ended June 30, 2022 and 2021 are as follows (in millions): Foreign Currency Translation Employee Benefit Related Adjustments Unrealized Income (Loss) on cash flow hedges Total Balance at September 30, 2021 $ (105) $ (526) $ (1) $ (632) Other comprehensive income (loss) before reclassification (60) 1 (1) (60) Amounts reclassified from accumulated other comprehensive loss — 3 — 3 Net current-period other comprehensive income (loss) (60) 4 (1) (57) Balance at June 30, 2022 $ (165) $ (522) $ (2) $ (689) Details about Accumulated Other Comprehensive Income Components Amount Reclassified from Accumulated Other Comprehensive Income Affected Line Item in the Consolidated Statement of Operations Employee Benefit Related Adjustment Prior service benefit $ (26) (a) Actuarial losses 29 (a) 3 Total before tax — Tax benefit Total reclassifications for the period $ 3 Net of tax (a) These accumulated other comprehensive income components are included in the computation of net periodic pension and retiree medical expense (see Note 16 for additional details), which is recorded in other income (expense), net. Foreign Currency Translation Employee Benefit Related Adjustments Unrealized Income (Loss) on cash flow hedges Total Balance at September 30, 2020 $ (129) $ (483) $ (2) $ (614) Other comprehensive income before reclassification 48 1 1 50 Amounts reclassified from accumulated other comprehensive loss — 7 7 Net current-period other comprehensive income 48 8 1 57 Balance at June 30, 2021 $ (81) $ (475) $ (1) $ (557) Details about Accumulated Other Comprehensive Income Components Amount Reclassified from Accumulated Other Comprehensive Income Affected Line Item in the Consolidated Statement of Operations Employee Benefit Related Adjustment Prior service benefit $ (27) (b) Actuarial losses 34 (b) 7 Total before tax — Tax benefit Total reclassifications for the period $ 7 Net of tax (b) These accumulated other comprehensive income components are included in the computation of net periodic pension and retiree medical expense (see Note 16 for additional details), which is recorded in other income (expense), net. |
Business Segment Information
Business Segment Information | 9 Months Ended |
Jun. 30, 2022 | |
Segment Reporting [Abstract] | |
Business Segment Information | Business Segment Information Segment information is summarized as follows (in millions): Commercial Truck Aftermarket & Industrial Eliminations Total Three Months Ended June 30, 2022 External Sales $ 950 $ 262 $ — $ 1,212 Intersegment Sales 41 5 (46) — Total Sales $ 991 $ 267 $ (46) $ 1,212 Three Months Ended June 30, 2021 External Sales $ 764 $ 252 $ — $ 1,016 Intersegment Sales 36 6 (42) — Total Sales $ 800 $ 258 $ (42) $ 1,016 Commercial Truck Aftermarket & Industrial Eliminations Total Nine Months Ended June 30, 2022 External Sales $ 2,595 $ 755 $ — $ 3,350 Intersegment Sales 119 15 (134) — Total Sales $ 2,714 $ 770 $ (134) $ 3,350 Nine Months Ended June 30, 2021 External Sales $ 2,166 $ 722 $ — $ 2,888 Intersegment Sales 102 17 (119) — Total Sales $ 2,268 $ 739 $ (119) $ 2,888 Three Months Ended June 30, Nine Months Ended June 30, 2022 2021 2022 2021 Segment adjusted EBITDA: Commercial Truck $ 92 $ 69 $ 239 $ 205 Aftermarket & Industrial 45 36 127 105 Segment adjusted EBITDA 137 105 366 310 Unallocated legacy and corporate income, net (1) 5 2 16 10 Interest expense, net (14) (20) (39) (65) Provision for income taxes (21) (14) (48) (43) Depreciation and amortization (25) (26) (75) (78) Noncontrolling interests (3) (3) (10) (7) Loss on sale of receivables (2) (1) (5) (3) Restructuring (1) (1) (5) (9) Brazil VAT Credit (2) — — — 22 Transaction costs (3) (3) — (12) — Income from continuing operations attributable to Meritor, Inc. $ 73 $ 42 $ 188 $ 137 (1) Unallocated legacy and corporate income, net represents items that are not directly related to the company's business segments. These items primarily include pension and retiree medical costs associated with sold businesses and other legacy costs for environmental. (2) Amount relates to a pre-tax loss recovery, net of legal expenses, on the overpayment of VAT in Brazil. (3) Represents transaction expenses primarily related to the Merger. June 30, September 30, Segment Assets: Commercial Truck $ 2,318 $ 1,961 Aftermarket & Industrial 708 654 Total segment assets 3,026 2,615 Corporate (1) 509 496 Less: Accounts receivable sold under off-balance sheet factoring programs (2) (281) (173) Total assets $ 3,254 $ 2,938 (1) Corporate assets consist primarily of cash, deferred income taxes and prepaid pension costs. (2) At June 30, 2022 and September 30, 2021, segment assets include $281 million and $173 million, respectively, of accounts receivable sold under off-balance sheet accounts receivable factoring programs (see Note 8). These sold receivables are included in segment assets as the CODM reviews segment assets inclusive of these balances. |
New Accounting Standards (Polic
New Accounting Standards (Policies) | 9 Months Ended |
Jun. 30, 2022 | |
Accounting Changes and Error Corrections [Abstract] | |
New Accounting Standards | New Accounting Standards Accounting standards implemented during fiscal year 2022 On October 1, 2021, the company adopted Accounting Standards Update ("ASU") 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (Subtopic 815-40). As a result of adopting this ASU, entities are no longer required to separately present in equity an embedded conversion feature in such debt and instead should account for a convertible debt instrument wholly as debt. ASU 2020-06 also amended the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. The company elected to adopt the ASU using the modified retrospective method. The cumulative effect of the changes following implementation on October 1, 2021 was as follows: Balance at September 30, 2021 Adjustments Upon Adoption of ASU 2020-06 Balance at Liabilities Long-Term debt $ 1,008 $ 23 $ 1,031 Equity Additional paid-in capital $ 798 $ (40) $ 758 Retained earnings $ 935 $ 17 $ 952 |
Inventories | InventoriesInventories are stated at the lower of cost (using FIFO or average methods) or market (determined on the basis of estimated realizable values) |
Environmental | Environmental Federal, state and local requirements relating to the discharge of substances into the environment, the disposal of hazardous wastes and other activities affecting the environment have, and will continue to have, an impact on the operations of the company. The process of estimating environmental liabilities is complex and dependent upon evolving physical and scientific data at the sites, uncertainties as to remedies and technologies to be used and the outcome of discussions with regulatory agencies. The company records liabilities for environmental issues in the accounting period in which they are considered to be probable and the cost can be reasonably estimated. At environmental sites in which more than one potentially responsible party has been identified, the company records a liability for its allocable share of costs related to its involvement with the site, as well as an allocable share of costs related to insolvent parties or unidentified shares. At environmental sites in which Meritor is the only potentially responsible party, the company records a liability for the total probable and estimable costs of remediation before consideration of recovery from insurers or other third parties. |
Earnings per Share (Tables)
Earnings per Share (Tables) | 9 Months Ended |
Jun. 30, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of Reconciliation of Basic Average Common Shares Outstanding | A reconciliation of basic average common shares outstanding to diluted average common shares outstanding is as follows (in millions): Three Months Ended June 30, Nine Months Ended June 30, 2022 2021 2022 2021 Basic average common shares outstanding 70.7 72.0 70.5 72.2 Impact of restricted shares, restricted share units and performance share units 1.1 0.8 1.0 1.0 Diluted average common shares outstanding 71.8 72.8 71.5 73.2 |
New Accounting Standards (Table
New Accounting Standards (Tables) | 9 Months Ended |
Jun. 30, 2022 | |
Accounting Changes and Error Corrections [Abstract] | |
Accounting Standards Update and Change in Accounting Principle | The company elected to adopt the ASU using the modified retrospective method. The cumulative effect of the changes following implementation on October 1, 2021 was as follows: Balance at September 30, 2021 Adjustments Upon Adoption of ASU 2020-06 Balance at Liabilities Long-Term debt $ 1,008 $ 23 $ 1,031 Equity Additional paid-in capital $ 798 $ (40) $ 758 Retained earnings $ 935 $ 17 $ 952 |
Revenue (Tables)
Revenue (Tables) | 9 Months Ended |
Jun. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregation of Revenue by Operating Segment | In the following tables, revenue is disaggregated for each of our operating segments by primary geographical market for the three and nine months ended June 30, 2022 and 2021 (in millions). Three Months Ended June 30, 2022 Primary Geographical Market Commercial Truck Aftermarket & Industrial Total U.S. $ 482 $ 206 $ 688 Canada — 15 15 Mexico 59 9 68 Total North America 541 230 771 Sweden 80 — 80 Italy 65 3 68 United Kingdom 39 2 41 Other Europe 3 27 30 Total Europe 187 32 219 Brazil 117 — 117 China 26 — 26 India 52 — 52 Other Asia-Pacific 27 — 27 Total sales $ 950 $ 262 $ 1,212 Three Months Ended June 30, 2021 Primary Geographical Market Commercial Truck Aftermarket & Industrial Total U.S. $ 365 $ 183 $ 548 Canada — 16 16 Mexico 49 6 55 Total North America 414 205 619 Sweden 65 — 65 Italy 61 4 65 United Kingdom 37 3 40 Other Europe 3 39 42 Total Europe 166 46 212 Brazil 82 1 83 China 41 — 41 India 30 — 30 Other Asia-Pacific 31 — 31 Total sales $ 764 $ 252 $ 1,016 Nine Months Ended June 30, 2022 Primary Geographical Market Commercial Truck Aftermarket & Industrial Total U.S. $ 1,275 $ 577 $ 1,852 Canada — 41 41 Mexico 154 23 177 Total North America 1,429 641 2,070 Sweden 234 — 234 Italy 188 12 200 United Kingdom 116 6 122 Other Europe 5 96 101 Total Europe 543 114 657 Brazil 306 — 306 China 77 — 77 India 153 — 153 Other Asia-Pacific 87 — 87 Total sales $ 2,595 $ 755 $ 3,350 Nine Months Ended June 30, 2021 Primary Geographical Market Commercial Truck Aftermarket & Industrial Total U.S. $ 1,012 $ 530 $ 1,542 Canada — 42 42 Mexico 129 16 145 Total North America 1,141 588 1,729 Sweden 216 — 216 Italy 172 14 186 United Kingdom 114 8 122 Other Europe 8 109 117 Total Europe 510 131 641 Brazil 219 2 221 China 105 1 106 India 113 — 113 Other Asia-Pacific 78 — 78 Total sales $ 2,166 $ 722 $ 2,888 |
Restructuring Costs (Tables)
Restructuring Costs (Tables) | 9 Months Ended |
Jun. 30, 2022 | |
Restructuring and Related Activities [Abstract] | |
Schedule of Changes in Restructuring Reserves | The changes in restructuring reserves for the nine months ended June 30, 2022 and 2021 are as follows (in millions): Employee Termination Benefits Plant Total Balance at September 30, 2021 $ 5 $ 1 $ 6 Activity during the period: Charges 2 3 5 Cash payments (5) (4) (9) Other — — — Total restructuring reserves at June 30, 2022 2 — 2 Less: non-current restructuring reserves (1) — (1) Restructuring reserves – current, at June 30, 2022 $ 1 $ — $ 1 Balance at September 30, 2020 $ 10 $ — $ 10 Activity during the period: Charges 6 3 9 Cash payments (11) — (11) Other — (3) (3) Total restructuring reserves at June 30, 2021 5 — 5 Less: non-current restructuring reserves (1) — (1) Restructuring reserves – current, at June 30, 2021 $ 4 $ — $ 4 |
Accounts Receivable Factoring_2
Accounts Receivable Factoring and Securitization (Tables) | 9 Months Ended |
Jun. 30, 2022 | |
Accounts Receivable Factoring And Securitization [Abstract] | |
Schedule of Accounts Receivable Factoring and Securitization | The company has a U.S. accounts receivable securitization facility with PNC Bank and participates in various accounts receivable factoring programs, primarily with Nordea Bank for trade receivables from AB Volvo, as follows: Current Expiration Total Facility Size as of 6/30/22 Utilized as of 6/30/22 Utilized as of 9/30/21 EUR USD EUR USD EUR USD On-balance sheet arrangement Committed U.S. accounts receivable securitization (1) March 2024 N/A $ 110 N/A $ 2 N/A $ 3 Total on-balance sheet arrangement: (1) N/A $ 110 N/A $ 2 N/A $ 3 Off-balance sheet arrangements Committed Swedish factoring facility (2)(3) March 2024 € 155 $ 162 € 142 $ 149 € 75 $ 88 Committed U.S. factoring facility (2) February 2023 N/A 75 N/A 77 N/A 49 Uncommitted U.K. factoring facility (4) February 2025 25 26 6 6 2 2 Uncommitted Italy factoring facility June 2025 30 32 27 28 14 17 Other uncommitted factoring facilities (5) None N/A N/A 20 21 15 17 Total off-balance sheet arrangements € 210 $ 295 € 195 $ 281 € 106 $ 173 (1) Availability subject to adequate eligible accounts receivable available for sale. The utilized amount includes $2 million of letters of credit as of June 30, 2022 and $3 million as of September 30, 2021. (2) Actual amounts may exceed the bank's commitment at the bank's discretion. (3) The facility is backed by a 364-day liquidity commitment from Nordea Bank which extends through June 22, 2023. (4) On March 23, 2022, the company's U.K. factoring facility was amended to enable the factoring of Pound Sterling denominated accounts receivable in addition to Euro denominated accounts receivable. (5) There is no explicit facility size under the agreement, but the counterparty approves the purchase of receivable tranches at its discretion. |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Jun. 30, 2022 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | Inventories are stated at the lower of cost (using FIFO or average methods) or market (determined on the basis of estimated realizable values) and are summarized as follows (in millions): June 30, September 30, Finished goods $ 163 $ 137 Work in process 50 47 Raw materials, parts and supplies 497 417 Total $ 710 $ 601 |
Net Property (Tables)
Net Property (Tables) | 9 Months Ended |
Jun. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Net Property | Net property is summarized as follows (in millions): June 30, September 30, Property at cost: Land and land improvements $ 41 $ 41 Buildings 228 231 Machinery and equipment 1,029 1,051 Company-owned tooling 165 164 Construction in progress 66 63 Total 1,529 1,550 Less: accumulated depreciation (1,028) (1,033) Net property $ 501 $ 517 |
Other Assets (Tables)
Other Assets (Tables) | 9 Months Ended |
Jun. 30, 2022 | |
Other Assets, Noncurrent [Abstract] | |
Schedule of Other Assets | Other assets are summarized as follows (in millions): June 30, September 30, Prepaid pension costs $ 196 $ 191 Deferred income tax assets 42 42 Investments in non-consolidated joint ventures 140 132 Other 250 263 Other assets $ 628 $ 628 |
Other Current Liabilities (Tabl
Other Current Liabilities (Tables) | 9 Months Ended |
Jun. 30, 2022 | |
Other Liabilities, Current [Abstract] | |
Schedule of Other Current Liabilities | Other current liabilities are summarized as follows (in millions): June 30, September 30, Compensation and benefits $ 93 $ 125 Income taxes 16 17 Product warranties 18 15 Other 174 151 Other current liabilities $ 301 $ 308 |
Schedule of Changes in Product Warranties | A summary of the changes in product warranties is as follows (in millions): Nine Months Ended June 30, 2022 2021 Total product warranties – beginning of period $ 43 $ 54 Accruals for product warranties 23 15 Payments (15) (11) Change in estimates and other (5) (7) Total product warranties – end of period 46 51 Less: non-current product warranties (28) (33) Product warranties – current $ 18 $ 18 |
Other Liabilities (Tables)
Other Liabilities (Tables) | 9 Months Ended |
Jun. 30, 2022 | |
Other Liabilities Disclosure [Abstract] | |
Schedule of Other Liabilities | Other liabilities are summarized as follows (in millions): June 30, September 30, Asbestos-related liabilities (see Note 17) $ 47 $ 52 Liabilities for uncertain tax positions 62 52 Product warranties (see Note 12) 28 28 Other 83 92 Other liabilities $ 220 $ 224 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 9 Months Ended |
Jun. 30, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt | Long-Term debt, net of discounts where applicable, is summarized as follows (in millions): June 30, September 30, 3.25 percent convertible notes due 2037 (1) $ 321 $ 321 4.50 percent notes due 2028 271 270 6.25 percent notes due 2025 297 296 Term loan due 2024 140 153 Finance lease obligation 13 10 Unamortized discount on convertible notes (1) — (23) Subtotal 1,042 1,027 Less: short-term debt (19) (19) Long-term debt $ 1,023 $ 1,008 (1) Unamortized debt discount on the 3.25 Percent Convertible Notes was derecognized upon adoption of ASU 2020-06 on October 1, 2021 (see Note 3). |
Financial Instruments (Tables)
Financial Instruments (Tables) | 9 Months Ended |
Jun. 30, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Fair Value of Financial Instruments | Fair values of financial instruments are summarized as follows (in millions): June 30, 2022 September 30, 2021 Carrying Fair Carrying Fair Cash and cash equivalents $ 105 $ 105 $ 101 $ 101 Short-term debt 19 19 19 19 Long-term debt 1,023 1,071 1,008 1,082 Foreign exchange forward contracts (other assets) 1 1 1 1 |
Schedule of Offsetting Assets | The following table reflects the offsetting of derivative assets (in millions): June 30, 2022 September 30, 2021 Gross Gross Amounts Net Amounts Gross Gross Amounts Net Amounts Derivative Assets Foreign exchange forward contracts 1 — 1 1 — 1 |
Schedule of Fair Value of Financial Instruments by Valuation Hierarchy | Fair value of financial instruments by the valuation hierarchy at June 30, 2022 is as follows (in millions): Level 1 Level 2 Level 3 Cash and cash equivalents $ 105 $ — $ — Short-term debt — — 19 Long-term debt — 936 135 Foreign exchange forward contracts (other assets) — 1 — Fair value of financial instruments by the valuation hierarchy at September 30, 2021 is as follows (in millions): Level 1 Level 2 Level 3 Cash and cash equivalents $ 101 $ — $ — Short-term debt — — 19 Long-term debt — 937 145 Foreign exchange forward contracts (other assets) — 1 — |
Retirement Benefit Liabilities
Retirement Benefit Liabilities (Tables) | 9 Months Ended |
Jun. 30, 2022 | |
Retirement Benefits [Abstract] | |
Schedule of Retirement Benefit Liabilities | Retirement benefit liabilities consisted of the following (in millions): June 30, September 30, Retiree medical liability $ 40 $ 42 Pension liability 112 141 Other 18 19 Subtotal 170 202 Less: current portion (included in compensation and benefits, Note 12) (10) (11) Retirement benefits $ 160 $ 191 |
Schedule of Components of Net Periodic Pension and Retiree Medical Income | The components of net periodic pension and retiree medical income included in continuing operations for the three months ended June 30 are as follows (in millions): 2022 2021 Pension Retiree Medical Pension Retiree Medical Interest cost $ (9) $ — $ (9) $ — Assumed return on plan assets 23 — 25 — Amortization of prior service benefit — 9 — 9 Recognized actuarial loss (7) (3) (8) (4) Total income $ 7 $ 6 $ 8 $ 5 The components of net periodic pension and retiree medical income included in continuing operations for the nine months ended June 30 are as follows (in millions): 2022 2021 Pension Retiree Medical Pension Retiree Medical Interest cost $ (28) $ (1) $ (26) $ (1) Assumed return on plan assets 72 — 73 — Amortization of prior service benefit — 26 — 27 Recognized actuarial loss (21) (8) (24) (10) Total income $ 23 $ 17 $ 23 $ 16 |
Contingencies (Tables)
Contingencies (Tables) | 9 Months Ended |
Jun. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Environmental Reserves | The following are the components of the Superfund and non-Superfund environmental reserves (in millions): Superfund Sites Non-Superfund Sites Total Beginning Balance at September 30, 2021 $ 9 $ 4 $ 13 Payments and other (1) (1) (2) Accruals 1 — 1 Ending Balance at June 30, 2022 $ 9 $ 3 $ 12 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 9 Months Ended |
Jun. 30, 2022 | |
Equity [Abstract] | |
Schedule of Accumulated Other Comprehensive Loss | The components of AOCL and the changes in AOCL by components, net of tax, for the three months ended June 30, 2022 and 2021 are as follows (in millions): Foreign Currency Translation Employee Benefit Related Adjustments Unrealized Income (Loss) on cash flow hedges Total Balance at March 31, 2022 $ (104) $ (523) $ (1) $ (628) Other comprehensive loss before reclassification (61) — (1) (62) Amounts reclassified from accumulated other comprehensive loss — 1 — 1 Net current-period other comprehensive income (loss) (61) 1 (1) (61) Balance at June 30, 2022 $ (165) $ (522) $ (2) $ (689) Foreign Currency Translation Employee Benefit Related Adjustments Unrealized Income (Loss) on cash flow hedges Total Balance at March 31, 2021 $ (96) $ (478) $ (1) $ (575) Other comprehensive income before reclassification 15 — — 15 Amounts reclassified from accumulated other comprehensive loss — 3 — 3 Net current-period other comprehensive income 15 3 — 18 Balance at June 30, 2021 $ (81) $ (475) $ (1) $ (557) The components of AOCL and the changes in AOCL by components, net of tax, for the nine months ended June 30, 2022 and 2021 are as follows (in millions): Foreign Currency Translation Employee Benefit Related Adjustments Unrealized Income (Loss) on cash flow hedges Total Balance at September 30, 2021 $ (105) $ (526) $ (1) $ (632) Other comprehensive income (loss) before reclassification (60) 1 (1) (60) Amounts reclassified from accumulated other comprehensive loss — 3 — 3 Net current-period other comprehensive income (loss) (60) 4 (1) (57) Balance at June 30, 2022 $ (165) $ (522) $ (2) $ (689) Foreign Currency Translation Employee Benefit Related Adjustments Unrealized Income (Loss) on cash flow hedges Total Balance at September 30, 2020 $ (129) $ (483) $ (2) $ (614) Other comprehensive income before reclassification 48 1 1 50 Amounts reclassified from accumulated other comprehensive loss — 7 7 Net current-period other comprehensive income 48 8 1 57 Balance at June 30, 2021 $ (81) $ (475) $ (1) $ (557) |
Schedule of Reclassification Out of Accumulated Other Comprehensive Income | Details about Accumulated Other Comprehensive Income Components Amount Reclassified from Accumulated Other Comprehensive Income Affected Line Item in the Consolidated Statement of Operations Employee Benefit Related Adjustment Prior service benefit $ (9) (a) Actuarial losses 10 (a) 1 Total before tax — Tax benefit Total reclassifications for the period $ 1 Net of tax (a) These accumulated other comprehensive income components are included in the computation of net periodic pension and retiree medical expense (see Note 16 for additional details), which is recorded in other income (expense), net. Details about Accumulated Other Comprehensive Income Components Amount Reclassified from Accumulated Other Comprehensive Income Affected Line Item in the Consolidated Statement of Operations Employee Benefit Related Adjustment Prior service benefit $ (9) (b) Actuarial losses 12 (b) 3 Total before tax — Tax benefit Total reclassifications for the period $ 3 Net of tax (b) These accumulated other comprehensive income components are included in the computation of net periodic pension and retiree medical expense (see Note 16 for additional details), which is recorded in other income (expense), net. Details about Accumulated Other Comprehensive Income Components Amount Reclassified from Accumulated Other Comprehensive Income Affected Line Item in the Consolidated Statement of Operations Employee Benefit Related Adjustment Prior service benefit $ (26) (a) Actuarial losses 29 (a) 3 Total before tax — Tax benefit Total reclassifications for the period $ 3 Net of tax (a) These accumulated other comprehensive income components are included in the computation of net periodic pension and retiree medical expense (see Note 16 for additional details), which is recorded in other income (expense), net. Details about Accumulated Other Comprehensive Income Components Amount Reclassified from Accumulated Other Comprehensive Income Affected Line Item in the Consolidated Statement of Operations Employee Benefit Related Adjustment Prior service benefit $ (27) (b) Actuarial losses 34 (b) 7 Total before tax — Tax benefit Total reclassifications for the period $ 7 Net of tax (b) These accumulated other comprehensive income components are included in the computation of net periodic pension and retiree medical expense (see Note 16 for additional details), which is recorded in other income (expense), net. |
Business Segment Information (T
Business Segment Information (Tables) | 9 Months Ended |
Jun. 30, 2022 | |
Segment Reporting [Abstract] | |
Schedule of Segment Information | Segment information is summarized as follows (in millions): Commercial Truck Aftermarket & Industrial Eliminations Total Three Months Ended June 30, 2022 External Sales $ 950 $ 262 $ — $ 1,212 Intersegment Sales 41 5 (46) — Total Sales $ 991 $ 267 $ (46) $ 1,212 Three Months Ended June 30, 2021 External Sales $ 764 $ 252 $ — $ 1,016 Intersegment Sales 36 6 (42) — Total Sales $ 800 $ 258 $ (42) $ 1,016 Commercial Truck Aftermarket & Industrial Eliminations Total Nine Months Ended June 30, 2022 External Sales $ 2,595 $ 755 $ — $ 3,350 Intersegment Sales 119 15 (134) — Total Sales $ 2,714 $ 770 $ (134) $ 3,350 Nine Months Ended June 30, 2021 External Sales $ 2,166 $ 722 $ — $ 2,888 Intersegment Sales 102 17 (119) — Total Sales $ 2,268 $ 739 $ (119) $ 2,888 |
Schedule of Segment Income Attributable to Parent | Three Months Ended June 30, Nine Months Ended June 30, 2022 2021 2022 2021 Segment adjusted EBITDA: Commercial Truck $ 92 $ 69 $ 239 $ 205 Aftermarket & Industrial 45 36 127 105 Segment adjusted EBITDA 137 105 366 310 Unallocated legacy and corporate income, net (1) 5 2 16 10 Interest expense, net (14) (20) (39) (65) Provision for income taxes (21) (14) (48) (43) Depreciation and amortization (25) (26) (75) (78) Noncontrolling interests (3) (3) (10) (7) Loss on sale of receivables (2) (1) (5) (3) Restructuring (1) (1) (5) (9) Brazil VAT Credit (2) — — — 22 Transaction costs (3) (3) — (12) — Income from continuing operations attributable to Meritor, Inc. $ 73 $ 42 $ 188 $ 137 (1) Unallocated legacy and corporate income, net represents items that are not directly related to the company's business segments. These items primarily include pension and retiree medical costs associated with sold businesses and other legacy costs for environmental. (2) Amount relates to a pre-tax loss recovery, net of legal expenses, on the overpayment of VAT in Brazil. |
Schedule of Segment Assets | June 30, September 30, Segment Assets: Commercial Truck $ 2,318 $ 1,961 Aftermarket & Industrial 708 654 Total segment assets 3,026 2,615 Corporate (1) 509 496 Less: Accounts receivable sold under off-balance sheet factoring programs (2) (281) (173) Total assets $ 3,254 $ 2,938 (1) Corporate assets consist primarily of cash, deferred income taxes and prepaid pension costs. (2) At June 30, 2022 and September 30, 2021, segment assets include $281 million and $173 million, respectively, of accounts receivable sold under off-balance sheet accounts receivable factoring programs (see Note 8). These sold receivables are included in segment assets as the CODM reviews segment assets inclusive of these balances. |
Earnings per Share - Reconcilia
Earnings per Share - Reconciliation of Average Common Shares Outstanding (Details) - shares shares in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Earnings Per Share [Abstract] | ||||
Basic average common shares outstanding (in shares) | 70.7 | 72 | 70.5 | 72.2 |
Impact of restricted shares, restricted share units and performance share units (in shares) | 1.1 | 0.8 | 1 | 1 |
Diluted average common shares outstanding (in shares) | 71.8 | 72.8 | 71.5 | 73.2 |
Earnings per Share - Additional
Earnings per Share - Additional Information (Details) - Executives - $ / shares | 1 Months Ended | |
Dec. 01, 2021 | Nov. 30, 2021 | |
Performance shares | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares authorized for grant (in shares) | 400,000 | |
Number or shares issuable per performance share unit (in shares) | 1 | |
Fair value on grant date (in usd per share) | $ 25.65 | |
Performance period | 3 years | |
Shares granted (in shares) | 400,000 | |
Performance shares | Vesting after three-year performance period | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Weighting for each of four performance metrics | 50% | |
Performance shares | Vesting after three-year performance period | Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting percentage | 0% | |
Performance shares | Vesting after three-year performance period | Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting percentage | 200% | |
Restricted share units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares authorized for grant (in shares) | 300,000 | |
Fair value on grant date (in usd per share) | $ 25.65 | |
Vesting period | 3 years |
New Accounting Standards (Detai
New Accounting Standards (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Oct. 01, 2021 | Sep. 30, 2021 |
Liabilities | |||
Long-Term debt | $ 1,023 | $ 1,008 | |
Equity | |||
Additional paid-in capital | 770 | 798 | |
Retained earnings | $ 1,141 | 935 | |
3.25 percent convertible notes due 2037 | Convertible Notes Payable | |||
Equity | |||
Interest rate | 3.25% | 3.25% | |
Cumulative Effect, Period of Adoption, Adjustment | |||
Liabilities | |||
Long-Term debt | $ 1,031 | ||
Equity | |||
Additional paid-in capital | 758 | ||
Retained earnings | $ 952 | ||
Cumulative Effect, Period of Adoption, Adjustment | Accounting Standards Update 2020-06 | |||
Liabilities | |||
Long-Term debt | 23 | ||
Equity | |||
Additional paid-in capital | (40) | ||
Retained earnings | $ 17 |
Revenue (Details)
Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Sep. 30, 2021 | |
Disaggregation of Revenue [Line Items] | |||||
Sales | $ 1,212 | $ 1,016 | $ 3,350 | $ 2,888 | |
Trade receivables, net | 656 | 656 | $ 471 | ||
U.S. | |||||
Disaggregation of Revenue [Line Items] | |||||
Sales | 688 | 548 | 1,852 | 1,542 | |
Canada | |||||
Disaggregation of Revenue [Line Items] | |||||
Sales | 15 | 16 | 41 | 42 | |
Mexico | |||||
Disaggregation of Revenue [Line Items] | |||||
Sales | 68 | 55 | 177 | 145 | |
Total North America | |||||
Disaggregation of Revenue [Line Items] | |||||
Sales | 771 | 619 | 2,070 | 1,729 | |
Sweden | |||||
Disaggregation of Revenue [Line Items] | |||||
Sales | 80 | 65 | 234 | 216 | |
Italy | |||||
Disaggregation of Revenue [Line Items] | |||||
Sales | 68 | 65 | 200 | 186 | |
United Kingdom | |||||
Disaggregation of Revenue [Line Items] | |||||
Sales | 41 | 40 | 122 | 122 | |
Other Europe | |||||
Disaggregation of Revenue [Line Items] | |||||
Sales | 30 | 42 | 101 | 117 | |
Total Europe | |||||
Disaggregation of Revenue [Line Items] | |||||
Sales | 219 | 212 | 657 | 641 | |
Brazil | |||||
Disaggregation of Revenue [Line Items] | |||||
Sales | 117 | 83 | 306 | 221 | |
China | |||||
Disaggregation of Revenue [Line Items] | |||||
Sales | 26 | 41 | 77 | 106 | |
India | |||||
Disaggregation of Revenue [Line Items] | |||||
Sales | 52 | 30 | 153 | 113 | |
Other Asia-Pacific | |||||
Disaggregation of Revenue [Line Items] | |||||
Sales | 27 | 31 | 87 | 78 | |
Commercial Truck | |||||
Disaggregation of Revenue [Line Items] | |||||
Sales | 950 | 764 | 2,595 | 2,166 | |
Commercial Truck | U.S. | |||||
Disaggregation of Revenue [Line Items] | |||||
Sales | 482 | 365 | 1,275 | 1,012 | |
Commercial Truck | Canada | |||||
Disaggregation of Revenue [Line Items] | |||||
Sales | 0 | 0 | 0 | 0 | |
Commercial Truck | Mexico | |||||
Disaggregation of Revenue [Line Items] | |||||
Sales | 59 | 49 | 154 | 129 | |
Commercial Truck | Total North America | |||||
Disaggregation of Revenue [Line Items] | |||||
Sales | 541 | 414 | 1,429 | 1,141 | |
Commercial Truck | Sweden | |||||
Disaggregation of Revenue [Line Items] | |||||
Sales | 80 | 65 | 234 | 216 | |
Commercial Truck | Italy | |||||
Disaggregation of Revenue [Line Items] | |||||
Sales | 65 | 61 | 188 | 172 | |
Commercial Truck | United Kingdom | |||||
Disaggregation of Revenue [Line Items] | |||||
Sales | 39 | 37 | 116 | 114 | |
Commercial Truck | Other Europe | |||||
Disaggregation of Revenue [Line Items] | |||||
Sales | 3 | 3 | 5 | 8 | |
Commercial Truck | Total Europe | |||||
Disaggregation of Revenue [Line Items] | |||||
Sales | 187 | 166 | 543 | 510 | |
Commercial Truck | Brazil | |||||
Disaggregation of Revenue [Line Items] | |||||
Sales | 117 | 82 | 306 | 219 | |
Commercial Truck | China | |||||
Disaggregation of Revenue [Line Items] | |||||
Sales | 26 | 41 | 77 | 105 | |
Commercial Truck | India | |||||
Disaggregation of Revenue [Line Items] | |||||
Sales | 52 | 30 | 153 | 113 | |
Commercial Truck | Other Asia-Pacific | |||||
Disaggregation of Revenue [Line Items] | |||||
Sales | 27 | 31 | 87 | 78 | |
Aftermarket & Industrial | |||||
Disaggregation of Revenue [Line Items] | |||||
Sales | 262 | 252 | 755 | 722 | |
Aftermarket & Industrial | U.S. | |||||
Disaggregation of Revenue [Line Items] | |||||
Sales | 206 | 183 | 577 | 530 | |
Aftermarket & Industrial | Canada | |||||
Disaggregation of Revenue [Line Items] | |||||
Sales | 15 | 16 | 41 | 42 | |
Aftermarket & Industrial | Mexico | |||||
Disaggregation of Revenue [Line Items] | |||||
Sales | 9 | 6 | 23 | 16 | |
Aftermarket & Industrial | Total North America | |||||
Disaggregation of Revenue [Line Items] | |||||
Sales | 230 | 205 | 641 | 588 | |
Aftermarket & Industrial | Sweden | |||||
Disaggregation of Revenue [Line Items] | |||||
Sales | 0 | 0 | 0 | 0 | |
Aftermarket & Industrial | Italy | |||||
Disaggregation of Revenue [Line Items] | |||||
Sales | 3 | 4 | 12 | 14 | |
Aftermarket & Industrial | United Kingdom | |||||
Disaggregation of Revenue [Line Items] | |||||
Sales | 2 | 3 | 6 | 8 | |
Aftermarket & Industrial | Other Europe | |||||
Disaggregation of Revenue [Line Items] | |||||
Sales | 27 | 39 | 96 | 109 | |
Aftermarket & Industrial | Total Europe | |||||
Disaggregation of Revenue [Line Items] | |||||
Sales | 32 | 46 | 114 | 131 | |
Aftermarket & Industrial | Brazil | |||||
Disaggregation of Revenue [Line Items] | |||||
Sales | 0 | 1 | 0 | 2 | |
Aftermarket & Industrial | China | |||||
Disaggregation of Revenue [Line Items] | |||||
Sales | 0 | 0 | 0 | 1 | |
Aftermarket & Industrial | India | |||||
Disaggregation of Revenue [Line Items] | |||||
Sales | 0 | 0 | 0 | 0 | |
Aftermarket & Industrial | Other Asia-Pacific | |||||
Disaggregation of Revenue [Line Items] | |||||
Sales | $ 0 | $ 0 | $ 0 | $ 0 |
Restructuring Costs - Narrative
Restructuring Costs - Narrative (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Sep. 30, 2021 | Jun. 30, 2021 | Sep. 30, 2020 |
Restructuring and Related Activities [Abstract] | ||||
Restructuring reserves | $ 2 | $ 6 | $ 5 | $ 10 |
Restructuring Costs - Changes i
Restructuring Costs - Changes in Restructuring Reserves (Details) - USD ($) $ in Millions | 9 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Restructuring Reserve [Roll Forward] | ||
Beginning balance | $ 6 | $ 10 |
Activity during the period: | ||
Charges | 5 | 9 |
Cash payments | (9) | (11) |
Other | 0 | (3) |
Ending balance | 2 | 5 |
Less: non-current restructuring reserves | (1) | (1) |
Restructuring reserves - current | 1 | 4 |
Employee Termination Benefits | ||
Restructuring Reserve [Roll Forward] | ||
Beginning balance | 5 | 10 |
Activity during the period: | ||
Charges | 2 | 6 |
Cash payments | (5) | (11) |
Other | 0 | 0 |
Ending balance | 2 | 5 |
Less: non-current restructuring reserves | (1) | (1) |
Restructuring reserves - current | 1 | 4 |
Plant Shutdown & Other | ||
Restructuring Reserve [Roll Forward] | ||
Beginning balance | 1 | 0 |
Activity during the period: | ||
Charges | 3 | 3 |
Cash payments | (4) | 0 |
Other | 0 | (3) |
Ending balance | 0 | 0 |
Less: non-current restructuring reserves | 0 | 0 |
Restructuring reserves - current | $ 0 | $ 0 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Income Tax Disclosure [Abstract] | ||||
Income tax expense (benefit) | $ 21 | $ 14 | $ 48 | $ 43 |
Effective income tax rate, percent | 22% | 24% | 19% | 23% |
Acquisition - Additional Inform
Acquisition - Additional Information (Details) € in Millions | May 19, 2022 EUR (€) |
Siemens | |
Business Acquisition [Line Items] | |
Purchase price | € 190 |
Accounts Receivable Factoring_3
Accounts Receivable Factoring and Securitization (Details) € in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | |||||
Jun. 30, 2022 USD ($) | Jun. 30, 2021 USD ($) | Jun. 30, 2022 USD ($) | Jun. 30, 2021 USD ($) | Jun. 30, 2022 EUR (€) | Sep. 30, 2021 USD ($) | Sep. 30, 2021 EUR (€) | |
Accounts Receivable Factoring And Securitization [Line Items] | |||||||
On-balance sheet arrangement, total facility size | $ 110 | $ 110 | |||||
On-balance sheet arrangement, utilized | 2 | 2 | $ 3 | ||||
Off-balance sheet arrangement, total facility size | 295 | 295 | € 210 | ||||
Off-balance sheet arrangement, utilized | 281 | 281 | 195 | 173 | € 106 | ||
Costs associated with off balance sheet factoring arrangements | 2 | $ 1 | 5 | $ 3 | |||
Committed U.S. Accounts Receivable Securitization | |||||||
Accounts Receivable Factoring And Securitization [Line Items] | |||||||
On-balance sheet arrangement, total facility size | 110 | 110 | |||||
On-balance sheet arrangement, utilized | 2 | 2 | 3 | ||||
Committed U.S. Accounts Receivable Securitization | Letter of Credit | |||||||
Accounts Receivable Factoring And Securitization [Line Items] | |||||||
Letters of credit outstanding | 2 | 2 | 3 | ||||
Committed Swedish Factoring Facility | |||||||
Accounts Receivable Factoring And Securitization [Line Items] | |||||||
Off-balance sheet arrangement, total facility size | 162 | 162 | 155 | ||||
Off-balance sheet arrangement, utilized | 149 | $ 149 | 142 | 88 | 75 | ||
Liquidity commitment | 364 days | ||||||
Committed U.S. Factoring Facility | |||||||
Accounts Receivable Factoring And Securitization [Line Items] | |||||||
Off-balance sheet arrangement, total facility size | 75 | $ 75 | |||||
Off-balance sheet arrangement, utilized | 77 | 77 | 49 | ||||
Uncommitted U.K. Factoring Facility | |||||||
Accounts Receivable Factoring And Securitization [Line Items] | |||||||
Off-balance sheet arrangement, total facility size | 26 | 26 | 25 | ||||
Off-balance sheet arrangement, utilized | 6 | 6 | 6 | 2 | 2 | ||
Uncommitted Italy factoring facility | |||||||
Accounts Receivable Factoring And Securitization [Line Items] | |||||||
Off-balance sheet arrangement, total facility size | 32 | 32 | 30 | ||||
Off-balance sheet arrangement, utilized | 28 | 28 | 27 | 17 | 14 | ||
Other Uncommitted Factoring Facilities | |||||||
Accounts Receivable Factoring And Securitization [Line Items] | |||||||
Off-balance sheet arrangement, utilized | $ 21 | $ 21 | € 20 | $ 17 | € 15 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Sep. 30, 2021 |
Inventory Disclosure [Abstract] | ||
Finished goods | $ 163 | $ 137 |
Work in process | 50 | 47 |
Raw materials, parts and supplies | 497 | 417 |
Total inventories | $ 710 | $ 601 |
Net Property (Details)
Net Property (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Sep. 30, 2021 |
Property, Plant and Equipment [Line Items] | ||
Property at cost | $ 1,529 | $ 1,550 |
Less: accumulated depreciation | (1,028) | (1,033) |
Net property | 501 | 517 |
Land and land improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property at cost | 41 | 41 |
Buildings | ||
Property, Plant and Equipment [Line Items] | ||
Property at cost | 228 | 231 |
Machinery and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property at cost | 1,029 | 1,051 |
Company-owned tooling | ||
Property, Plant and Equipment [Line Items] | ||
Property at cost | 165 | 164 |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Property at cost | $ 66 | $ 63 |
Other Assets - Summary of Other
Other Assets - Summary of Other Assets (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Sep. 30, 2021 |
Other Assets, Noncurrent [Abstract] | ||
Prepaid pension costs | $ 196 | $ 191 |
Deferred income tax assets | 42 | 42 |
Investments in non-consolidated joint ventures | 140 | 132 |
Other | 250 | 263 |
Other assets | $ 628 | $ 628 |
Other Current Liabilities - Sum
Other Current Liabilities - Summary of Other Current Liabilities (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Sep. 30, 2021 | Jun. 30, 2021 |
Other Liabilities, Current [Abstract] | |||
Compensation and benefits | $ 93 | $ 125 | |
Income taxes | 16 | 17 | |
Product warranties | 18 | 15 | $ 18 |
Other | 174 | 151 | |
Other current liabilities | $ 301 | $ 308 |
Other Current Liabilities - S_2
Other Current Liabilities - Summary of Changes in Product Warranties (Details) - USD ($) $ in Millions | 9 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Sep. 30, 2021 | |
Movement in Standard Product Warranty Accrual [Roll Forward] | |||
Total product warranties – beginning of period | $ 43 | $ 54 | |
Accruals for product warranties | 23 | 15 | |
Payments | (15) | (11) | |
Change in estimates and other | (5) | (7) | |
Total product warranties – end of period | 46 | 51 | |
Less: non-current product warranties | (28) | (33) | $ (28) |
Product warranties – current | $ 18 | $ 18 | $ 15 |
Other Liabilities (Details)
Other Liabilities (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Sep. 30, 2021 | Jun. 30, 2021 |
Other Liabilities Disclosure [Abstract] | |||
Asbestos-related liabilities (see Note 17) | $ 47 | $ 52 | |
Liabilities for uncertain tax positions | 62 | 52 | |
Product warranties (see Note 12) | 28 | 28 | $ 33 |
Other | 83 | 92 | |
Other liabilities | $ 220 | $ 224 |
Long-Term Debt - Schedule of Lo
Long-Term Debt - Schedule of Long-term Debt (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Oct. 01, 2021 | Sep. 30, 2021 |
Debt Instrument [Line Items] | |||
Finance lease obligation | $ 13 | $ 10 | |
Subtotal | 1,042 | 1,027 | |
Less: short-term debt | (19) | (19) | |
Long-term debt | 1,023 | 1,008 | |
Convertible Notes | |||
Debt Instrument [Line Items] | |||
Unamortized discount on convertible notes | $ 0 | (23) | |
3.25 percent convertible notes due 2037 | Convertible Notes | |||
Debt Instrument [Line Items] | |||
Interest rate | 3.25% | 3.25% | |
Debt | $ 321 | 321 | |
4.50 percent notes due 2028 | Senior Notes | |||
Debt Instrument [Line Items] | |||
Interest rate | 4.50% | ||
Long-term debt outstanding | $ 271 | 270 | |
6.25 percent notes due 2025 | Senior Notes | |||
Debt Instrument [Line Items] | |||
Interest rate | 6.25% | ||
Long-term debt outstanding | $ 297 | 296 | |
Term loan due 2024 | Term Loan | |||
Debt Instrument [Line Items] | |||
Long-term debt outstanding | $ 140 | $ 153 |
Long-Term Debt - Revolving Cred
Long-Term Debt - Revolving Credit Facility (Details) - Revolving Credit Facility - Amended Revolving Credit Facility | Jun. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) |
Line of Credit Facility [Line Items] | ||
Maximum borrowing capacity | $ 685,000,000 | |
Priority-debt-to-EBITDA ratio | 2.25 | |
Current borrowing capacity | $ 646,000,000 | |
Borrowings outstanding | 0 | $ 0 |
Maximum limit on issuance, letters of credit | 100,000,000 | |
Letters of credit outstanding | $ 0 | $ 0 |
Long-Term Debt - Other (Details
Long-Term Debt - Other (Details) - China - Notes Payable to Banks - Other Export Financing Arrangements - USD ($) $ in Millions | Jun. 30, 2022 | Sep. 30, 2021 |
Debt Instrument [Line Items] | ||
Debt default, amount | $ 35 | |
Long-term debt outstanding | $ 21 | $ 25 |
Financial Instruments - Fair Va
Financial Instruments - Fair Value of Financial Instruments (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Sep. 30, 2021 |
Carrying Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash and cash equivalents | $ 105 | $ 101 |
Short-term debt | 19 | 19 |
Long-term debt | 1,023 | 1,008 |
Carrying Value | Foreign exchange forward contracts | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Foreign exchange forward contracts (other assets) | 1 | 1 |
Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash and cash equivalents | 105 | 101 |
Short-term debt | 19 | 19 |
Long-term debt | 1,071 | 1,082 |
Fair Value | Foreign exchange forward contracts | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Foreign exchange forward contracts (other assets) | $ 1 | $ 1 |
Financial Instruments - Offsett
Financial Instruments - Offsetting of Derivative Assets and Liabilities (Details) - Foreign exchange forward contracts - USD ($) $ in Millions | Jun. 30, 2022 | Sep. 30, 2021 |
Derivative Assets | ||
Gross Amounts Recognized | $ 1 | $ 1 |
Gross Amounts Offset | 0 | 0 |
Net Amounts Reported | $ 1 | $ 1 |
Financial Instruments - Fair _2
Financial Instruments - Fair Value of Financial Instruments by Valuation Hierarchy (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Sep. 30, 2021 |
Level 1 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash and cash equivalents | $ 105 | $ 101 |
Short-term debt | 0 | 0 |
Long-term debt | 0 | 0 |
Level 1 | Foreign exchange forward contracts | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Foreign exchange forward contracts (other assets) | 0 | 0 |
Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash and cash equivalents | 0 | 0 |
Short-term debt | 0 | 0 |
Long-term debt | 936 | 937 |
Level 2 | Foreign exchange forward contracts | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Foreign exchange forward contracts (other assets) | 1 | 1 |
Level 3 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash and cash equivalents | 0 | 0 |
Short-term debt | 19 | 19 |
Long-term debt | 135 | 145 |
Level 3 | Foreign exchange forward contracts | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Foreign exchange forward contracts (other assets) | $ 0 | $ 0 |
Financial Instruments - Additio
Financial Instruments - Additional Information (Details) - USD ($) | Jun. 30, 2022 | Sep. 30, 2021 |
Foreign exchange forward contracts | Cash flow hedge | Designated as hedging instrument | ||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Aggregate notional amount | $ 43,000,000 | $ 107,000,000 |
Foreign currency option contracts, purchase risk | ||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Aggregate notional amount | 0 | 49,000,000 |
Foreign currency option contracts, translation risk | ||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Aggregate notional amount | $ 0 | $ 0 |
Retirement Benefit Liabilitie_2
Retirement Benefit Liabilities - Summary of Retirement Benefits (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Sep. 30, 2021 |
Retirement Benefits [Abstract] | ||
Retiree medical liability | $ 40 | $ 42 |
Pension liability | 112 | 141 |
Other | 18 | 19 |
Subtotal | 170 | 202 |
Less: current portion (included in compensation and benefits, Note 12) | (10) | (11) |
Retirement benefits | $ 160 | $ 191 |
Retirement Benefit Liabilitie_3
Retirement Benefit Liabilities - Components of Net Periodic Pension and Retiree Medical Income (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Pension | ||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
Interest cost | $ (9) | $ (9) | $ (28) | $ (26) |
Assumed return on plan assets | 23 | 25 | 72 | 73 |
Amortization of prior service benefit | 0 | 0 | 0 | 0 |
Recognized actuarial loss | (7) | (8) | (21) | (24) |
Total income | 7 | 8 | 23 | 23 |
Retiree Medical | ||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
Interest cost | 0 | 0 | (1) | (1) |
Assumed return on plan assets | 0 | 0 | 0 | 0 |
Amortization of prior service benefit | 9 | 9 | 26 | 27 |
Recognized actuarial loss | (3) | (4) | (8) | (10) |
Total income | $ 6 | $ 5 | $ 17 | $ 16 |
Retirement Benefit Liabilitie_4
Retirement Benefit Liabilities - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Retirement Benefits [Abstract] | ||||
Non-service cost components of the net periodic pension and OPEB income | $ 13 | $ 13 | $ 40 | $ 39 |
Contingencies - Additional Info
Contingencies - Additional Information (Details) $ in Millions | 9 Months Ended | 12 Months Ended | |
Jun. 30, 2022 USD ($) claim site | Sep. 30, 2021 USD ($) claim | Dec. 31, 2021 USD ($) | |
Loss Contingencies [Line Items] | |||
Environmental accrual balance | $ 12 | $ 13 | |
Discounted amount environmental accrual for on-going operations maintenance and monitoring | 13 | ||
Undiscounted amount environmental accrual for on-going operations maintenance and monitoring | $ 14 | ||
Rockwell Asbestos | |||
Loss Contingencies [Line Items] | |||
Number of pending claims | claim | 600 | 600 | |
Obligation period for asbestos personal injury claims | 37 years | 37 years | |
Pending and future claims | $ 55 | ||
Insurance settlement | $ 6 | ||
Asbestos-related insurance recoveries | $ 48 | $ 51 | |
Low Range | |||
Loss Contingencies [Line Items] | |||
Site contingency, accrual, discount rate | 0% | ||
Low Range | Rockwell Asbestos | |||
Loss Contingencies [Line Items] | |||
Possible loss | 60 | ||
High Range | |||
Loss Contingencies [Line Items] | |||
Site contingency, accrual, discount rate | 2% | ||
Superfund Sites | |||
Loss Contingencies [Line Items] | |||
Number of superfund environmental sites | site | 10 | ||
Environmental costs reasonably possible | $ 20 | ||
Environmental accrual balance | 9 | 9 | |
Non-Superfund Sites | |||
Loss Contingencies [Line Items] | |||
Environmental costs reasonably possible | 9 | ||
Environmental accrual balance | $ 3 | $ 4 |
Contingencies - Summary of Envi
Contingencies - Summary of Environmental Reserves (Details) $ in Millions | 9 Months Ended |
Jun. 30, 2022 USD ($) | |
Environmental Reserves | |
Beginning balance | $ 13 |
Payments and other | (2) |
Accruals | 1 |
Ending balance | 12 |
Superfund Sites | |
Environmental Reserves | |
Beginning balance | 9 |
Payments and other | (1) |
Accruals | 1 |
Ending balance | 9 |
Non-Superfund Sites | |
Environmental Reserves | |
Beginning balance | 4 |
Payments and other | (1) |
Accruals | 0 |
Ending balance | $ 3 |
Shareholders' Equity - Common S
Shareholders' Equity - Common Stock and Debt Repurchase Authorizations (Details) - USD ($) shares in Millions | 3 Months Ended | 12 Months Ended | ||||
Jun. 30, 2022 | Jun. 30, 2021 | Sep. 30, 2021 | Jul. 28, 2021 | Nov. 07, 2019 | Nov. 02, 2018 | |
Class of Stock [Line Items] | ||||||
Dividends declared or paid | $ 0 | $ 0 | ||||
Repurchase Program, November 2018 | Debt Securities | ||||||
Class of Stock [Line Items] | ||||||
Debt repurchase program, amount authorized | $ 100,000,000 | |||||
Remaining authorized repurchase amount under debt repurchase | 76,000,000 | $ 76,000,000 | ||||
Common Stock | Repurchase Program, July 2021 | ||||||
Class of Stock [Line Items] | ||||||
Authorized repurchase of securities, with debt reduction target (up to) | $ 250,000,000 | |||||
Remaining authorized repurchase amount under the stock repurchase program | $ 250,000,000 | 250,000,000 | ||||
Common Stock | Repurchase Progam, November 2019 | ||||||
Class of Stock [Line Items] | ||||||
Authorized repurchase of securities, with debt reduction target (up to) | $ 325,000,000 | |||||
Common Stock | Repurchase Program, July And November 2019 | ||||||
Class of Stock [Line Items] | ||||||
Remaining authorized repurchase amount under the stock repurchase program | $ 0 | |||||
Number of shares authorized to be repurchased (in shares) | 2.5 | |||||
Shares repurchased during period | $ 59,000,000 |
Shareholders' Equity - Schedule
Shareholders' Equity - Schedule of Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Accumulated Other Comprehensive Income (Loss), Net Of Tax [Roll Forward] | ||||
Beginning Balance | $ 574 | |||
Other comprehensive income before reclassification | $ (62) | $ 15 | (60) | $ 50 |
Amounts reclassified from accumulated other comprehensive loss | 1 | 3 | 3 | 7 |
Net current-period other comprehensive income (loss) | (61) | 18 | (57) | 57 |
Ending Balance | 696 | 696 | ||
Foreign Currency Translation | ||||
Accumulated Other Comprehensive Income (Loss), Net Of Tax [Roll Forward] | ||||
Beginning Balance | (104) | (96) | (105) | (129) |
Other comprehensive income before reclassification | (61) | 15 | (60) | 48 |
Amounts reclassified from accumulated other comprehensive loss | 0 | 0 | 0 | 0 |
Net current-period other comprehensive income (loss) | (61) | 15 | (60) | 48 |
Ending Balance | (165) | (81) | (165) | (81) |
Employee Benefit Related Adjustments | ||||
Accumulated Other Comprehensive Income (Loss), Net Of Tax [Roll Forward] | ||||
Beginning Balance | (523) | (478) | (526) | (483) |
Other comprehensive income before reclassification | 0 | 0 | 1 | 1 |
Amounts reclassified from accumulated other comprehensive loss | 1 | 3 | 3 | 7 |
Net current-period other comprehensive income (loss) | 1 | 3 | 4 | 8 |
Ending Balance | (522) | (475) | (522) | (475) |
Unrealized Income (Loss) on cash flow hedges | ||||
Accumulated Other Comprehensive Income (Loss), Net Of Tax [Roll Forward] | ||||
Beginning Balance | (1) | (1) | (1) | (2) |
Other comprehensive income before reclassification | (1) | 0 | (1) | 1 |
Amounts reclassified from accumulated other comprehensive loss | 0 | 0 | 0 | |
Net current-period other comprehensive income (loss) | (1) | 0 | (1) | 1 |
Ending Balance | (2) | (1) | (2) | (1) |
Accumulated Other Comprehensive Loss | ||||
Accumulated Other Comprehensive Income (Loss), Net Of Tax [Roll Forward] | ||||
Beginning Balance | (628) | (575) | (632) | (614) |
Ending Balance | $ (689) | $ (557) | $ (689) | $ (557) |
Shareholders' Equity - Changes
Shareholders' Equity - Changes in Accumulated Other Comprehensive Income (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Employee Benefit Related Adjustment | $ 10 | $ 12 | $ 38 | $ 49 |
Tax benefit | (21) | (14) | (48) | (43) |
NET INCOME | 76 | 45 | 199 | 144 |
Amount Reclassified from Accumulated Other Comprehensive Income | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
NET INCOME | 1 | 3 | 3 | 7 |
Amount Reclassified from Accumulated Other Comprehensive Income | Prior service benefit | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Employee Benefit Related Adjustment | (9) | (9) | (26) | (27) |
Amount Reclassified from Accumulated Other Comprehensive Income | Actuarial losses | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Employee Benefit Related Adjustment | 10 | 12 | 29 | 34 |
Amount Reclassified from Accumulated Other Comprehensive Income | Employee Benefit Related Adjustments | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Total before tax | 1 | 3 | 3 | 7 |
Tax benefit | $ 0 | $ 0 | $ 0 | $ 0 |
Business Segment Information -
Business Segment Information - Summary of Segment Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Segment Reporting Information [Line Items] | ||||
Sales | $ 1,212 | $ 1,016 | $ 3,350 | $ 2,888 |
External Sales | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 1,212 | 1,016 | 3,350 | 2,888 |
Intersegment Sales | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 0 | 0 | 0 | 0 |
Commercial Truck | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 950 | 764 | 2,595 | 2,166 |
Aftermarket & Industrial | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 262 | 252 | 755 | 722 |
Reportable Segments | Commercial Truck | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 991 | 800 | 2,714 | 2,268 |
Reportable Segments | Commercial Truck | External Sales | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 950 | 764 | 2,595 | 2,166 |
Reportable Segments | Commercial Truck | Intersegment Sales | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 41 | 36 | 119 | 102 |
Reportable Segments | Aftermarket & Industrial | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 267 | 258 | 770 | 739 |
Reportable Segments | Aftermarket & Industrial | External Sales | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 262 | 252 | 755 | 722 |
Reportable Segments | Aftermarket & Industrial | Intersegment Sales | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 5 | 6 | 15 | 17 |
Eliminations | ||||
Segment Reporting Information [Line Items] | ||||
Sales | (46) | (42) | (134) | (119) |
Eliminations | External Sales | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 0 | 0 | 0 | 0 |
Eliminations | Intersegment Sales | ||||
Segment Reporting Information [Line Items] | ||||
Sales | $ (46) | $ (42) | $ (134) | $ (119) |
Business Segment Information _2
Business Segment Information - Segment Income Attributable to Parent (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Segment Reporting Information [Line Items] | ||||
Interest expense, net | $ (14) | $ (20) | $ (39) | $ (65) |
Provision for income taxes | (21) | (14) | (48) | (43) |
Depreciation and amortization | (75) | (78) | ||
Noncontrolling interests | (3) | (3) | (10) | (7) |
Restructuring | (5) | (9) | ||
Income from continuing operations attributable to Meritor, Inc. | 73 | 42 | 188 | 137 |
Reportable Segments | ||||
Segment Reporting Information [Line Items] | ||||
Segment adjusted EBITDA | 137 | 105 | 366 | 310 |
Reportable Segments | Commercial Truck | ||||
Segment Reporting Information [Line Items] | ||||
Segment adjusted EBITDA | 92 | 69 | 239 | 205 |
Reportable Segments | Aftermarket & Industrial | ||||
Segment Reporting Information [Line Items] | ||||
Segment adjusted EBITDA | 45 | 36 | 127 | 105 |
Segment Reconciling Items | ||||
Segment Reporting Information [Line Items] | ||||
Unallocated legacy and corporate income net | 5 | 2 | 16 | 10 |
Interest expense, net | (14) | (20) | (39) | (65) |
Provision for income taxes | (21) | (14) | (48) | (43) |
Depreciation and amortization | (25) | (26) | (75) | (78) |
Noncontrolling interests | (3) | (3) | (10) | (7) |
Loss on sale of receivables | (2) | (1) | (5) | (3) |
Restructuring | (1) | (1) | (5) | (9) |
Brazil VAT credit | 0 | 0 | 0 | 22 |
Transaction costs | $ (3) | $ 0 | $ (12) | $ 0 |
Business Segment Information _3
Business Segment Information - Schedule of Segment Assets (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Sep. 30, 2021 |
Segment Reporting Information [Line Items] | ||
Total assets | $ 3,254 | $ 2,938 |
Reportable Segments | ||
Segment Reporting Information [Line Items] | ||
Total assets | 3,026 | 2,615 |
Reportable Segments | Commercial Truck | ||
Segment Reporting Information [Line Items] | ||
Total assets | 2,318 | 1,961 |
Reportable Segments | Aftermarket & Industrial | ||
Segment Reporting Information [Line Items] | ||
Total assets | 708 | 654 |
Corporate | ||
Segment Reporting Information [Line Items] | ||
Total assets | 509 | 496 |
Segment Reconciling Items | ||
Segment Reporting Information [Line Items] | ||
Less: Accounts receivable sold under off-balance sheet factoring programs | (281) | (173) |
Accounts receivable sold under off-balance sheet factoring programs | $ 281 | $ 173 |