WABCO Delivers Record Sales and Operating Income in 2018; Continues to Solidly Outperform Global Commercial Vehicle Market; Provides Guidance for 2019
|•||Q4 2018 sales of $911.6 million, 2.4% lower versus a year ago, while up 1.4% in local currencies|
|•||Full year 2018 sales of $3,831.0 million, up 15.9% from a year ago and up 13.9% in local currencies|
|•||Q4 2018 reported operating margin of 12.3% versus 13.4% a year ago; performance operating margin of 13.8% versus 15.4% a year ago|
|•||Full year 2018 reported operating margin of 13.4%, up from 13.2% a year ago; performance operating margin of 14.2% versus 14.9% a year ago|
|•||Q4 2018 reported diluted EPS of $2.20 versus $3.12 a year ago; performance diluted EPS of $2.13, up from $2.00 a year ago|
|•||Full year 2018 reported diluted EPS of $7.43 versus $7.50 a year ago; performance diluted EPS of $7.87, up from $6.86 a year ago|
|•||For full year 2018, WABCO continued to strongly convert income into cash, resulting in net cash from operating activities of $468.5 million, up 11.2% from a year ago|
|•||Provides guidance for full year 2019: sales growth to range from 1.5% to 6.5% in local currencies; reported diluted EPS guidance to range from $6.88 to $7.38 and performance diluted EPS to range from $7.60 to $8.10|
BRUSSELS, Belgium, February 15, 2019 – WABCO Holdings Inc. (NYSE: WBC), the leading global supplier of braking control systems and other advanced technologies that improve the safety, efficiency and connectivity of commercial vehicles, today reported Q4 and full year 2018 results.
WABCO Q4 2018
|U.S. Dollars in millions except EPS or otherwise indicated||Q4 2018||Q4 2017|
|Sales change – in U.S. Dollars year on year||Down 2.4||%||—|
|Sales change – in local currencies year on year||Up 1.4||%||—|
|Operating Income – Reported||$||112.0||$||124.9|
|Operating Income – Performance||$||125.7||$||144.2|
|Operating Margin – Reported||12.3||%||13.4||%|
|Operating Margin – Performance||13.8||%||15.4||%|
|Net Income Attributable to the Company – Reported||$||114.5||$||168.3|
|Net Income Attributable to the Company – Performance||$||110.6||$||107.7|
|Diluted EPS – Reported||$||2.20||$||3.12|
|Diluted EPS – Performance||$||2.13||$||2.00|
“In Q4 2018, WABCO faced a slowdown in key global markets, notably in Europe as well as China and India, which was partially offset by growth in the Americas, Japan and Thailand,” said Jacques Esculier, WABCO Chairman and Chief Executive Officer.
“Navigating this environment, WABCO again demonstrated its resilience and proven ability to continue to outperform global truck and bus production,” said Esculier. “Further helped by a favorable tax resolution, WABCO also achieved record quarterly earnings per share on a performance basis.”
WABCO Full Year 2018
|U.S. Dollars in millions except EPS or otherwise indicated||FY 2018||FY 2017|
|Sales change – in U.S. Dollars year on year||Up 15.9||%||—|
|Sales change – in local currencies year on year||Up 13.9||%||—|
|Operating Income – Reported||$||512.5||$||435.0|
|Operating Income – Performance||$||545.7||$||492.1|
|Operating Margin – Reported||13.4||%||13.2||%|
|Operating Margin – Performance||14.2||%||14.9||%|
|Net Income Attributable to the Company – Reported||$||394.1||$||406.1|
|Net Income Attributable to the Company – Performance||$||417.8||$||371.6|
|Diluted EPS – Reported||$||7.43||$||7.50|
|Diluted EPS – Performance||$||7.87||$||6.86|
“On a full year basis, WABCO propelled sales to a record level of over $3.8 billion, up 15.9% from the previous year and up 13.9% in local currencies,” said Esculier. “Marking its twelfth consecutive year of solid outperformance of the commercial vehicle industry, WABCO also delivered record performance operating income of $545.7 million and record annual earnings per share on a performance basis, up 14.7% versus a year ago.”
In 2018, in spite of significant industry supply chain challenges, WABCO still delivered a solid 5.0% of gross materials productivity and 7.7% of conversion productivity totaling $74.9 million of net savings.
WABCO also continued to strongly convert income into cash in 2018, resulting in net cash from operating activities of $468.5 million, up 11.2% versus the prior year.
WABCO Share Buyback Program
During the fourth quarter of 2018, WABCO repurchased 808,964 shares for $90 million through its share buyback program. Between June 2011 and December 31, 2018, WABCO repurchased 21,807,366 shares for $1,891 million in open market transactions. This includes the repurchase of shares during 2018 for a total of $300 million. As previously reported, WABCO is further authorized to repurchase shares up to a total of $600 million through December 31, 2020. WABCO intends to repurchase $400 million of shares in 2019, subject to market conditions and applicable legal and regulatory requirements.
WABCO Announces New Corporate Headquarters
As part of its change in organizational logic, WABCO decided to relocate its corporate headquarters to Bern, Switzerland, with the objective of creating a singular focus on fully globalizing WABCO’s advanced technology strategy. The current Brussels base will become the headquarters of its newly formed division covering Europe, Middle East and Africa.
“Decoupling WABCO’s corporate headquarters from its four business regions creates a better platform to globally manage the next wave of advanced technologies and scale their adoption in all regions of the world,” said Esculier. “Switzerland is world-renowned for providing a highly favorable environment for breakthrough innovations and offers many distinct advantages for corporate headquarters.”
Recent WABCO Highlights
In Q4 2018, WABCO disclosed that it had extended and expanded its relationship with one of the world’s top original equipment manufacturers (OEMs) by signing a $950 million long-term agreement. Under the eight-year agreement, WABCO will equip two of the OEM’s brands with its leading braking, advanced driver assistance systems (ADAS) and efficiency technologies. Representing a further industry endorsement of WABCO’s global leadership in braking system platforms, this agreement confirms WABCO as the OEM’s sole supplier for electronic braking systems (EBS) in Europe. The OEM also is confirmed as WABCO’s lead customer for its next generation OnGuardACTIVETM Advanced Emergency Braking System (AEBS) solution. With more than 450,000 OnGuard safety systems sold world-wide, WABCO is the global industry leader, independent of OEMs, for collision mitigation systems and ADAS.
WABCO disclosed in January 2019 that it had entered a global long-term agreement to supply its next generation automated manual transmission (AMT) control technology to Daimler, one of the world’s largest commercial vehicle producers. WABCO will develop and introduce its next generation AMT control technology into Daimler’s global truck and bus series production. With a lighter-weight, robust and more compact design, WABCO’s new gearbox control unit reduces noise levels, optimizes gear shifting performance and increases driver comfort. In addition, the innovative new system is designed to support an extensive range of different truck types, gearboxes and market specific functionalities, which will support global AMT technology to further increase penetration in all regions. With more than four million systems sold, WABCO is the global market leader for AMT control solutions.
In Q4 2018, WABCO reported that it had signed a long-term agreement with Hyundai Motor Company, South Korea’s leading manufacturer of commercial vehicles. Under this latest supply agreement with Hyundai, WABCO will furnish the manufacturer with a broad portfolio of its advanced technologies to support series production of Hyundai’s new medium-duty trucks. WABCO will equip Hyundai’s range of medium-duty trucks with EBS, anti-lock braking systems (ABS), electronic stability control (ESC) and electronically controlled air suspension (ECAS) systems as well as air processing units (APU). WABCO also will become the first supplier to equip Hyundai with EBS and integrated pedal units (IPU) for its medium-duty trucks.
In February 2019, WABCO announced that it had signed a long-term agreement to develop and supply innovative air suspension technology for one of the world’s largest manufacturers of premium passenger cars, based in Europe. Under this 10-year agreement, WABCO will develop and deliver an innovative air supply module along with control software to operate a range of air suspension system configurations for one of the manufacturer’s high-volume global premium passenger car platforms. Air suspension is now a standard feature on most of the manufacturer’s electric and plug-in hybrid vehicles, so WABCO will support a 30% increase in air suspension production volumes compared to the manufacturer’s preceding car platform.
WABCO Full Year 2019 Guidance
Based on its estimate of future economic and market conditions, WABCO provides guidance for 2019.
|Full Year 2019|
|Sales – in millions||$3,800 – $4,000|
1 Euro = $1.15
|Sales growth – in local currencies||1.5% – 6.5%|
|Operating Margin – Reported||12.4% – 12.8%|
|Operating Margin – Performance||13.4% – 13.8%|
|Diluted EPS – Reported||$6.88 – $7.38|
|Diluted EPS – Performance||$7.60 – $8.10|
“WABCO remains laser-focused in its commitment to deliver continued market outperformance, which fuels top-line growth and delivers enhanced bottom-line results,” said Esculier. “We also reaffirm our unwavering confidence in our ability to again deliver superb value for shareowners in 2019.”
WABCO Conference Call Today
Jacques Esculier, Chairman and Chief Executive Officer, and Roberto Fioroni, Chief Financial Officer, will discuss WABCO’s results and outlook on a conference call at 9:00 a.m. Eastern Time today. It will be webcast at ir.wabco-auto.com where the press release and financial information will be available under “WABCO Q4 and Full Year 2018 Results.”
The call also is accessible by telephone in listen only mode. The dial-in number is +1 408 940 3818 and the U.S. toll-free dial-in number is 877 844 0834. A replay of the call will be available from Noon Eastern Time on February 15, 2019 until Noon Eastern Time on February 22, 2019. The replay dial-in number is +1 404 537 3406 and the U.S. toll-free dial-in number is 855 859 2056. The Conference ID is 6697048.
WABCO (NYSE: WBC) is the leading global supplier of braking control systems and other advanced technologies that improve the safety, efficiency and connectivity of commercial vehicles. Originating from the Westinghouse Air Brake Company founded nearly 150 years ago, WABCO is powerfully “Mobilizing Vehicle Intelligence” to support the increasingly autonomous, connected and electric future of the commercial vehicle industry. WABCO continues to pioneer innovations to address key technology milestones in autonomous mobility and apply its extensive expertise to integrate the complex control and fail-safe systems required to efficiently and safely govern vehicle dynamics at every stage of a vehicle’s journey – on the highway, in the city and at the depot. Today, leading truck, bus and trailer brands worldwide rely on WABCO’s differentiating technologies. Powered by its vision for accident-free driving and greener transportation solutions, WABCO is also at the forefront of advanced fleet management systems and digital services that contribute to commercial fleet efficiency. In 2018, WABCO reported sales of over $3.8 billion and has more than 16,000 employees in 40 countries. For more information, visit www.wabco-auto.com.
WABCO Forward-Looking Statements
This document contains certain “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995 that are based on management’s good faith expectations and beliefs concerning future developments. Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “anticipates,” “strategies,” “prospects,” “intends,” “projects,” “estimates,” “plans,” “may increase,” “may fluctuate,” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may” and “could” are generally forward looking in nature and not historical facts. Actual results may differ materially from these expectations as a result of many factors. These factors include, but are not limited to, the actual level of commercial vehicle production in our end markets, adverse developments in the business of our key customers, pricing changes to our supplies or products, our ability to successfully integrate any acquired businesses or our acquired businesses not performing as planned, our ability to mitigate any tax risks, including, but not limited to, those risks associated with changes in legislation, tax audits and the loss of the benefits associated with our tax rulings and incentives in certain jurisdictions, our ability to complete and realize the tax benefits associated with certain projects relating to the reorganization of our treasury function and the establishment of a regulated insurance company to better manage our group unfunded pension liabilities and the other risks and uncertainties described in the “Risk Factors” section and the “Information Concerning Forward Looking Statements” section of WABCO’s Form 10-K, 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 Reports. 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 the understanding of Q4 and full year 2018 results, several tables follow this news release. Sales, gross profit, operating expenses, and operating income, which are adjusted to exclude the effects of foreign exchange, as well as EBIT, are non-GAAP financial measures and are denoted by the word “adjusted” in the line item. Additionally, gross profit, operating expenses, operating income, operating margin, EBIT, tax rate, pre-taxincome attributable to the company, net income attributable to the company, and net income attributable to the company per diluted share on a “performance basis” are non-GAAP financial measures that exclude items for separation, streamlining and acquisition, discrete and one-time tax items, and other items that management believes may mask the underlying operating results of the company, as applicable. These measures should be considered in addition to, not as a substitute for, GAAP measures. These measures may not be comparable to similar measures of other companies as not all companies calculate these measures in the same manner. 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-GAAPmeasures may be used, in part, to determine incentive compensation for current employees.
WABCO Financial Attachment
|•||Consolidated Statements of Operations|
|•||Consolidated Balance Sheets|
|•||Consolidated Statements of Cash Flows|
|•||Three Months Ended December 31, 2018 Data Supplement Sheet|
|•||Twelve Months Ended December 31, 2018 Data Supplement Sheet|
|•||Reconciliation of GAAP to Non-GAAP Financial Measures for Full Year 2019 Guidance|
WABCO media, investors and analysts contact
Sean Deason, +1 248 270 9287, [email protected]
Full details and financial filings available from the SEC report.