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29th
October 2008 - WABCO Reports
Third Quarter 2008 Results
Continues Growth of
Quarterly Sales and Net Income Year on Year; Takes Actions to Mitigate
Industry Downturn; Updates Full-Year Projections
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Record third
quarter sales of $655 million, up 10 percent over prior
year; up 2 percent in local currencies; all organic growth
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EBIT margin of
10.1 percent, an expansion of 136 basis points over prior
year; EBIT margin of 11.4 percent on a performance basis, an
expansion of 97 basis points over prior year in local
currencies |
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Quarterly
diluted EPS of $0.97 on a U.S. GAAP basis; diluted EPS of
$0.94 on a performance basis, up 45 percent over prior year |
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Updates
full-year 2008 earnings projections; U.S. GAAP diluted EPS
range estimated at $3.42 - $3.52, a decrease of $0.29 to
$0.33 from prior projection; performance diluted EPS range
estimated at $3.85 - $3.95, a decrease of $0.27 to $0.31
from prior projection |
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Initiated a $20
million profit improvement plan for Second Half 2008.
Additionally, intends a reduction in workforce of
approximately 1,000 positions, nearly half through attrition
of temporary workers |
WABCO Holdings Inc.
(NYSE: WBC), a global technology leader and tier-one supplier to the
commercial vehicle industry, today reported Q3 2008 sales of $655
million, up 10 percent over prior year and up 2 percent in local
currencies, continuing the Company’s long track record of quarterly
growth.
“This quarter, we continued to grow sales, increase income and
demonstrate our ability to outperform the global commercial vehicle
industry in all regions. At IAA Commercial Vehicles 2008, the world’s
largest trade show for commercial vehicles, we introduced a powerful
suite of new technologies and innovative systems, including OnGuardMax™,
a breakthrough driver assistance technology, and the industry’s first
autonomous emergency braking system,” said Jacques Esculier, WABCO Chief
Executive Officer. “In October, we also initiated a major new
opportunity in China for further growth in air disc brakes through our
intended joint venture with GuangDong Fuwa Engineering Manufacturing
Co., Ltd. (Fuwa), the world’s largest manufacturer of commercial trailer
axles.”
WABCO reported Q3 2008 operating income of $62.2 million, up 14 percent
over prior year on a U.S. GAAP basis. Performance operating income,
which excludes separation and streamlining costs, rose to $71.1 million,
up 10 percent over prior year and up 1 percent over prior year in local
currencies.
“We continued to improve execution through the implementation of our
WABCO Operating System. We achieved $15 million of productivity during
Q3 2008 in spite of a decrease in production volume,” said Esculier. “We
also realized $4 million out of a $20 million profit improvement plan
for second half 2008 that was launched in Q3 in rapid response to
reports of a potential slowdown in the demand for new commercial
vehicles.”
WABCO reported Q3 2008 EBIT of $65.9 million, up 27 percent over prior
year. Performance EBIT, which excludes separation and streamlining
costs, rose to $74.8 million, up 21 percent over prior year and up 11
percent over prior year in local currencies.
WABCO’s EBIT margin in Q3 2008 increased to 10.1 percent, expanding 136
basis points over prior year. Performance EBIT margin increased to 11.4
percent, expanding 97 basis points over prior year in local currencies.
On a U.S. GAAP basis, Q3 2008 net income increased to $63.7 million or
$0.97 per diluted share from a net loss of $0.3 million or $0.00 per
diluted share a year ago. Included in reported net income for Q3 2008
was a one-time tax benefit of approximately $10.0 million for the
reduction in a provision stemming from WABCO’s separation from the
former American Standard Companies Inc. Excluding separation and
streamlining costs, and one-time and discrete tax items, Q3 2008
performance net income increased by 36 percent to $61.3 million versus
$45 million a year ago. Performance earnings per diluted share increased
by 45 percent to $0.94 versus $0.65 per diluted share a year ago.
WABCO generated $103.9 million in net cash from operating activities in
Q3 2008 and $78.4 million of free cash flow. Under its share buy-back
program announced on August 1, 2007, the Company repurchased
approximately 1.3 million shares for $53.5 million in open market
transactions in Q3 2008, bringing the total number of repurchased shares
year-to-date to 3.4 million shares for $153.5 million. Since
commencement of this program, WABCO has repurchased 6.0 million shares
or 8.8 percent of diluted shares outstanding at the time of spin-off.
WABCO also paid $4.5 million in dividends in Q3 2008.
Recent Highlights
WABCO recently announced it has signed a letter of intent with Fuwa, the
world’s and China’s largest manufacturer of commercial trailer axles, to
form a joint venture for production of air disc brakes in China. The
agreement is expected to be finalized by year-end. By partnering with
Fuwa, WABCO expects to further enhance its development of the Chinese
market as a major driver of growth as the Company prepares for the
future expansion of the market for air disc brakes in China.
Also as reported, WABCO won a multi-year contract with ZF to supply
commercial vehicle transmission automation systems. WABCO’s contract
with ZF, one of the world’s leading automotive industry suppliers
specializing in driveline and chassis technologies, is worth several
hundred million U.S. dollars in cumulative sales into the next decade.
During the IAA 2008 trade show, WABCO introduced 14 new products and
systems, including OnGuardMax™, a breakthrough driver assistance
technology, and the commercial vehicle industry’s first system for
autonomous emergency braking (AEB) in collision imminent situations with
moving or stopped vehicles. WABCO’s revolutionary AEB system will be
available worldwide to truck and bus original equipment manufacturers in
2010.
Updated Full-Year 2008 Projections
Due to current global economic conditions affecting industrial markets,
WABCO has updated its expectation for 2008 sales growth to be between
5.5 and 6.5 percent in local currencies. WABCO has also updated its
full-year U.S. GAAP and performance diluted EPS projections. The revised
range for U.S. GAAP diluted EPS is $3.42 to $3.52, a decrease of $0.29
on the low end to $0.33 on the high end from prior projection; the
revised range for performance diluted EPS is $3.85 to $3.95, a decrease
of $0.27 on the low end to $0.31 on the high end from prior projection,
$0.05 of which is due to updated foreign exchange rates. EPS on a
performance basis excludes separation and streamlining costs, and
one-time and discrete tax items. Additionally, WABCO has suspended share
repurchases under the buy-back program.
In anticipation of further market declines, WABCO is initiating a
process to reduce its total workforce by approximately 1,000 positions,
nearly half through attrition of temporary workers, in accordance with
local labor laws and practices.
“We are confident in our ability to continue outperforming the market,
powered by our pipeline of new technologies, continuous global
expansion, and increasing content-per-vehicle,” said Esculier. “Near
term, we are taking the necessary actions to secure the continued
success of WABCO.”
About WABCO
WABCO Vehicle Control
Systems is one of the world's leading providers of electronic braking,
stability, suspension and transmission automation 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 7,700 people in 31 countries worldwide. In 2007,
WABCO’s total sales were $2.4 billion. WABCO is a publicly traded
company and is listed on the New York Stock Exchange with the stock
symbol WBCSource:
WABCO Press Release |
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