WABCO Holdings today
reported record quarterly sales in the third-quarter of $595.5 million,
up 18 percent from the third-quarter of 2006. Excluding favorable
translational foreign exchange effects, sales for the quarter were up 10
percent versus prior year. The increase demonstrates the Company’s
continued ability to outperform the truck and bus market. Double-digit
growth rates in Europe, China and South America helped offset the steep
decline in commercial vehicle production in North America resulting from
the introduction of new emission regulations.
Net loss for the quarter
was $0.3 million on a U.S. GAAP reported basis, versus U.S. GAAP net
income of $38.1 million in the third-quarter of 2006. The decrease
resulted from costs associated with the separation from American
Standard Companies Inc. and lower equity income from the Company’s joint
ventures in India and North America. Separation costs included one-time
tax charges of $38 million and $6.2 million of other separation-related
charges. On a performance basis, excluding separation costs, operational
streamlining expenses and one-time and discrete tax items, net income
increased 27.5 percent to $45.0 million, or 65 cents per diluted share,
compared with $35.3 million, or 51 cents per diluted share a year ago.
“We are pleased with our
strong sales performance in the quarter,” said Jacques Esculier, WABCO
Chief Executive Officer. “This was driven by our continued focus on
outperforming the market in Europe and our ability to rapidly increase
content per vehicle in key emerging markets. However, capacity
constraints in our supply chain driven by the unexpected high level of
demand prevented us from taking full advantage of the volume increase.
The Company was able to achieve 27.5 percent growth in net income for
the third- quarter on a performance basis primarily due to its post-spinoff
sustainable tax rate and the increased sales.”
For the third-quarter the
Company generated $46.4 million in net cash from operating activities
and $29.4 million of free cash flow, which was negatively impacted by
the timing of working capital changes. Cash in excess of third party
debt, as of the spinoff date, was approximately $83 million higher than
previously anticipated. During the third-quarter, the Company
repurchased approximately 785,000 shares for $35.6 million in open
market transactions. “We plan to utilize some of the additional cash to
fund one-time tax charges relating to the separation that were incurred
in the third-quarter and to repurchase shares,” Esculier said.
FULL-YEAR PERFORMANCE
ESTIMATES
“Our continued focus on
advanced management systems through the implementation of our WABCO
Operating System (WOS) will help eliminate capacity constraints that
currently limit our performance improvement, and should yield benefits
in the quarters to come,” Esculier said.
“For the rest of the
year, we expect to see continued high truck and bus production levels in
Europe, in addition to further growth in demand in South America and
China. Although our aftermarket growth was limited to 6.7 percent by
capacity constraints, we expect these to be resolved by the end of 2007,
with aftermarket growth returning to historical double-digit levels in
2008,” Esculier said.
“We also confirm our
previous estimate of full-year net income per diluted share of $2.85 on
a performance basis, which excludes separation costs, one- time and
discrete tax items, and operational streamlining expenses. We have also
updated our full year net income per diluted share on a U.S. GAAP basis
to $1.81,” Esculier said.
THIRD-QUARTER 2007
BUSINESS HIGHLIGHTS
During the quarter, WABCO
continued to grow its business in Asia with the nomination by China
National Heavy Duty Truck Group Co. (CNHTC) as its exclusive supplier of
braking system components for several platforms. In addition, DCEC, a
joint venture between Cummins Inc. and the Dongfeng Motor Corporation in
China, awarded WABCO the air compressor business for one of its
platforms, and Russian passenger car manufacturer TagAZ which
manufactures cars for Hyundai, chose WABCO as its exclusive supplier of
vacuum pumps for diesel applications. Additionally, Iveco nominated
WABCO to supply its hydraulic Anti-Lock Braking System (ABS) on a new
SUV to be manufactured in Spain beginning in 2008.
About WABCO
WABCO is one of the
world’s leading providers of electronic braking, stability, suspension
and transmission control systems for heavy duty commercial vehicles.
Customers include the world’s leading commercial truck, trailer and bus
manufacturers. Founded in the U.S. in 1869 as Westinghouse Air Brake
Company, WABCO was acquired by American Standard in 1968 and spun off in
2007. Headquartered in Brussels, Belgium, WABCO employs more than 7,000
people in 34 offices and production facilities worldwide. In 2006,
WABCO’s total sales were $2 billion. WABCO is a publicly traded company
and is listed on the New York Stock Exchange under the stock symbol WBC.
Web site:
www.wabco-auto.com.
Forward-Looking
Statements
Comments in this document
contain certain forward-looking statements, which are based on
management’s good faith expectations and beliefs concerning future
developments. Actual results may differ materially from these
expectations as a result of many factors. These factors include, but are
not limited to, the risks and uncertainties described in the “Risk
Factors” section and the “Forward Looking Statements” section of WABCO’s
Information Statement included in the Form 10 filing made in connection
with WABCO’s spinoff from American Standard Companies Inc., as well as
in the “Management’s Discussion and Analysis of Financial Condition and
Results of Operations - Information Concerning Forward Looking
Statements” section of WABCO’s Form 10- Q Quarterly Report for the
Quarter Ended June 30, 2007. WABCO does not undertake any obligation to
update such forward-looking statements. All market and industry data are
based on Company estimates.
Non-GAAP Financial
Measures
To facilitate
understanding of third-quarter results, several tables follow this news
release. Sales excluding the effects of foreign exchange are a non-GAAP
financial measure. Additionally, income and income per diluted share on
a “performance basis” are non-GAAP financial measures that exclude
operational streamlining expenses, one-time and discrete tax items and
separation costs. Lastly, “free cash flow” presents our cash provided by
operating activities less capital expenditures. These measures should be
considered in addition to, not as a substitute for, GAAP measures.
Management believes that presenting these non-GAAP measures is useful to
shareholders because it enhances their understanding of how management
assesses the operating performance of the Company’s business. Certain
non-GAAP measures may be used, in part, to determine incentive
compensation for current employees.
Source: WABCO Press Release