WABCO's Sales Growth in 2014 Solidly Outperforms Volatile and Decreased Global Market; Company Achieves New Record for Full Year Performance Earnings; Provides Guidance for 2015
(firmenpresse) - BRUSSELS, BELGIUM -- (Marketwired) -- 02/13/15 -- WABCO Holdings Inc. (NYSE: WBC) -
WABCO Holdings Inc. (), a leading global supplier of technologies to improve the safety and efficiency of commercial vehicles, today reported Q4 and full year 2014 results.
WABCO reported Q4 2014 sales of $679.1 million, up 1.6 percent in local currencies from a year ago and down 5.7 percent in U.S. dollars, of which 2.9 percent comes from the Q4 2014 consolidated results in local currencies of Transics International, WABCO's newly acquired subsidiary.
WABCO reported Q4 2014 performance operating income of $88.6 million, up from $86.5 million a year ago, and operating income was $68.7 million on a U.S. GAAP basis versus $76.8 million a year ago.
WABCO's performance operating margin for Q4 2014 was 13.0 percent, up from 12.0 percent a year ago, and operating margin was 10.1 percent on a U.S. GAAP basis versus 10.7 percent a year ago.
For Q4 2014, WABCO reported performance net income attributable to the company of $81.6 million or $1.38 per diluted share, up from $80.6 million or $1.29 per diluted share a year ago, and Q4 2014 U.S. GAAP net income attributable to the company of $65.1 million or $1.10 per diluted share versus $416.3 million or $6.65 per diluted share a year ago primarily due to a previously disclosed one-time gain of $279.5 million in Q4 2013 when the European Commission reimbursed WABCO as a result of the company's successful appeal of a fine on former entities of American Standard Companies.
Full Year 2014
For full year 2014, WABCO reported sales of $2,851.0 million, up 6.0 percent in local currencies from a year ago and up 4.8 percent in U.S. dollars, of which 2.4 percent comes from the 2014 consolidated results in local currencies of Transics International, which WABCO acquired in February 2014.
"Q4 2014 sales increased by 1.6 percent in local currencies, despite a significant market decline of 18 percent in Europe, where a year ago market demand surged due to the anticipated pre-buy ahead of Euro VI emission standards that came into effect in January 2014 in Europe, our largest market," said Jacques Esculier, WABCO Chairman and Chief Executive Officer.
"Indeed, Q4 2014 sales further contributed to WABCO's full-year revenues growth in a global market that remains volatile and uncertain," said Esculier.
"For full year 2014, we grew our revenues by 6.0 percent in local currencies, and we once again solidly outperformed in every region, despite an overall decline of 2 percent in global truck and bus production. Throughout 2014, we continued to increase levels of WABCO content per vehicle," said Esculier.
"For full year 2014, we grew global aftermarket sales by 12.7 percent, setting a new record for annual aftermarket revenues on a currency adjusted basis," said Esculier. "WABCO's record aftermarket percentage growth also reflects our acquisition in February 2014 of Transics International, a leading provider of fleet management solutions, which further supports a WABCO strategic objective to expand business relationships with fleets around the world."
WABCO reported full year 2014 performance operating income of $371.4 million, up from $355.4 million a year ago, and operating income was $331.0 million on a U.S. GAAP basis versus $331.9 million a year ago.
WABCO's full year 2014 performance operating margin was 13.0 percent versus 13.1 percent a year ago, and operating margin was 11.6 percent on a U.S. GAAP basis versus 12.2 percent a year ago.
WABCO reported full year 2014 performance net income attributable to the company of $334.0 million or $5.52 per diluted share, up from $317.4 million or $5.01 per diluted share a year ago, and full year 2014 U.S. GAAP net income attributable to the company of $291.5 million or $4.81 per diluted share versus $653.2 million or $10.31 per diluted share a year ago primarily due to a previously disclosed one-time gain of $279.5 million in Q4 2013 when the European Commission reimbursed WABCO as a result of the company's successful appeal of a fine on former entities of American Standard Companies.
"Throughout 2014, we continued to demonstrate the agility and adaptability of WABCO's Operating System, our globally standardized management and manufacturing environment," said Esculier. "Due to our early anticipation of market slowdown in the second half of 2014 versus the first half, we accelerated operational flexibility, adjusting direct labor in production facilities, reducing indirect labor and costs, and leveraging leaner support functions across our global footprint. This timely implementation of WABCO's countermeasures delivered $12 million of savings in operating expenses."
"For full year 2014, we continued to demonstrate our ability to transform top-line growth into robust bottom-line results," said Esculier. "WABCO delivered a healthy incremental operating margin of 15 percent, excluding year on year currency transactional effects, which is still well within our financial operating framework." Incremental operating margin refers to the ratio of increase in performance operating income in 2014 and WABCO's growth in sales.
"During 2014, WABCO's Operating System continued to enable fast, flexible responses to volatile market changes, while at the same time propelling robust productivity gains," said Esculier. "It delivered $76.5 million of materials and conversion productivity, while also continuing to contain price erosion. It generated gross materials productivity of 5.4 percent and delivered a new annual record in conversion productivity of 6.4 percent."
During full year 2014, WABCO generated $314.4 million in net cash from operating activities and $275.8 million of free cash flow, resulting in a conversion rate of 83 percent of performance net income attributable to the company. Free cash flow excludes payments for streamlining, separation and acquisition items, and a previously disclosed one-time item in Q3 2014 associated with expiration of the accounts receivable securitization program.
Since June 2011, WABCO has repurchased 13,578,361 shares for $971.8 million in open market transactions as of December 31, 2014. WABCO is further authorized to repurchase up to $500 million of additional shares through December 31, 2016.
"Throughout 2014, we continued to further differentiate WABCO through solid market outperformance, healthy incremental operating margin, a free cash flow conversion rate of 83 percent, and an allocation of capital that is shareowner friendly," said Esculier. "For full year 2014, WABCO also delivered earnings of $5.52 per share on a performance basis, up 10 percent versus a year ago, marking a new annual record as we demonstrate once again how WABCO continues to deliver outstanding value for our shareowners."
Recent Highlights
Recently, WABCO became the first supplier of advanced emergency braking systems (AEBS) homologated in Europe in accordance with European Union regulations. WABCO's OnGuardPLUS™ AEBS technology is currently available on new trucks produced by a major commercial vehicle manufacturer based in Europe. In accordance with EU legislation, newly registered medium- and heavy-duty trucks as well as buses must be equipped with AEBS from November 2015 onward. OnGuardPLUS detects moving, decelerating and stationary vehicles ahead; it alerts the truck or bus driver; it autonomously applies the brakes, and it can bring the vehicle to a complete stop, helping to prevent or mitigate rear-end collisions.
In January 2015, WABCO disclosed that its fleet management business, Transics International, has entered into a new agreement with ASKO NorgesGruppen, Norway's largest grocery company. Transics will supply ASKO's entire commercial vehicle fleet with its industry-leading fleet management solutions (FMS). The customer's fleet of 700 combined trucks and trailers will be equipped with advanced FMS, including on-board computers, mobile technologies and back-office software. Through this new business contract, Transics will help ASKO to further enhance its fleet's safety performance and operational efficiency.
For full year 2014, WABCO increased penetration of advanced vehicle safety and efficiency technologies in North America. For example, in 2014, sales of WABCO's automated manual transmission (AMT) technologies increased by 110 percent as major global truck makers increased their adoption of AMT systems. Sales of WABCO's OnGuard™ collision mitigation system (CMS), the first with active braking in North America, increased by 49 percent as WABCO continued to expand its CMS market leadership through further adoption of OnGuard among major commercial vehicle makers and national fleets. WABCO North America further enhanced its engineering and new product development capability for local applications at a new center in Rochester Hills near Detroit, Michigan.
Recently, WABCO India announced that it has renewed its commitment to the Tata Motors T1 PRIMA Truck-Racing Championship for the second year in a row. During 2015, WABCO will continue to serve as Official Braking Technology Partner to India's premier truck-racing event, which showcases 12 of Tata's state-of-the-art PRIMA model trucks. WABCO will provide all competing trucks with a range of innovative products from its portfolio of industry-leading safety and efficiency technologies, including WABCO's high-performance air management system and anti-lock braking system (ABS). WABCO will also supply high-output, modular compressor technology; advanced air actuation systems, integrated pedal units, and other braking components. Introduced in 2014, Tata Motors' T1 PRIMA Truck-Racing represents extreme operating conditions for heavy-duty trucks.
Recently, WABCO announced that it has supplied advanced, high-performance safety and efficiency technologies to KAMAZ-master, the winning truck-racing team of the 2015 . KAMAZ-master heavy-duty truck teams crossed the finish line in first, second and third place. Their 2015 championship also marks the thirteenth time that KAMAZ-master has won the Dakar Rally. Supplying KAMAZ-master with technologies since 1997, WABCO equipped KAMAZ's 2015 heavy-duty trucks with , wheel-end solutions and WABCO , one of the industry's most reliable piston-type spring-brake cylinders. The 2015 Dakar Rally ran two weeks through Argentina, Bolivia and Chile amid the most challenging terrain on Earth.
As of Q4 2014, WABCO in China has been so far recognized by 8 different major customers with a total of 17 awards. These prestigious awards associated with WABCO's performance in China during 2014 cover superlative achievements such as supplier excellence, best manufacturing quality, technology innovation, service excellence and stellar on-site support. Leading original equipment and vehicle manufacturers granting these awards include Beiben Trucks Group, Beijing Foton Cummins Engine Company, Beiqi Foton Motor, China National Heavy Duty Truck, Dongfeng Liuzhou Motor, Foton AUV Bus, Shanghai General Motors and Shenzhen BYD Automotive. In addition, WABCO in China has won several awards from leading industry publications as well as the China Association of Remanufacturing.
Full Year 2015 Guidance
Based on our current estimates of future market conditions, WABCO expects full year 2015 sales growth to range from 6 to 11 percent in local currencies; performance operating margin to range from 14.2 to 15.1 percent; and operating margin on a U.S. GAAP basis to range from 13.2 to 14.1 percent, resulting in diluted EPS on a performance basis to range from $5.80 to $6.30 and diluted EPS on a U.S. GAAP basis to range from $5.09 to $5.59.
WABCO expects in 2015 to convert between 80 and 90 percent of its performance net income attributable to the company into free cash flow, excluding payments associated with items for streamlining, separation and acquisition.
"During 2014, WABCO's differentiation continued to yield solid results as we further extended our leadership position as preferred supplier in the global commercial vehicle industry through our three-pillar strategy of technology leadership, globalization and excellence in execution," said Esculier.
"Entering 2015, we remain committed to further anticipate market conditions and respond quickly and efficiently to sudden changes in customer demand, while still continually bringing innovative, cost-effective, value-based solutions to vehicle makers and fleet operators in every region of the world," said Esculier. "Our continued ability to outperform the market globally - together with further initiatives to drive productivity - strongly sustains confidence in our ability to continue to deliver outstanding value for WABCO's shareowners."
Conference Call
Jacques Esculier, Chairman and Chief Executive Officer, and Prashanth Mahendra-Rajah, 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 where the press release and financial information will be available under "WABCO Q4 and Full Year 2014 Results."
The call is also accessible by telephone in listen only mode. Dial-in number is +1 408 940 3818 and U.S. toll-free dial-in number is 877 844 0834.
A replay of the call will be available from 12:00 Noon Eastern Time on February 13 until midnight February 19, 2015. Replay dial-in number is +1 404 537 3406 and U.S. toll-free dial-in number is 855 859 2056. Conference ID is 62021033.
About WABCO
WABCO (NYSE: WBC) is a leading innovator and global supplier of technologies that improve the safety and efficiency of commercial vehicles. Founded nearly 150 years ago, WABCO continues to pioneer breakthrough products and systems for braking, stability, suspension, transmission automation, and aerodynamics. Today, all of the world's leading truck, bus and trailer manufacturers have WABCO technologies onboard. In addition, WABCO provides the industry with advanced fleet management solutions and aftermarket services. WABCO reported sales of $2.9 billion in 2014. The company is headquartered in Brussels, Belgium, and has 11,000 employees worldwide. For more information, visit .
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 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 2014 results, several tables follow this news release. Sales excluding the effects of foreign exchange and EBIT are non-GAAP financial measures. Additionally, operating income, operating margin, EBIT, 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 streamlining, separation, and acquisition; the one-time impact of a reimbursement from the European Commission; and discrete and other one-time tax items, as applicable. Free cash flow presents our net cash provided by operating activities less net cash used for purchases of property, plant, equipment, and computer software; payments for streamlining and separation; acquisition related payments; the one-time impact of a reimbursement from the European Commission, and expiration of the accounts receivable securitization program. 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.
Attachment
Note: The presentation of the performance measures above are not in conformity with generally accepted accounting principles (GAAP). These measures may not be comparable to similar measures of other companies as not all companies calculate these measures in the same manner.
Note: The presentation of the performance measures above are not in conformity with generally accepted accounting principles (GAAP). These measures may not be comparable to similar measures of other companies as not all companies calculate these measures in the same manner.
(A) Represents EUR 205.8 million reimbursement from the European Commission made on Oct 28, 2013 translated at a Euro to USD rate of approximately 1.37855 on the date of payment.
Note: This statement reconciles net cash provided by operating activities to free cash flow. Management uses free cash flow, which is not defined by US GAAP, to measure the Company's operating performance. Free cash flow is also one of the several measures used to determine incentive compensation for certain employees.
Note: The presentation of performance net income and performance net income per diluted common share is not in conformity with generally accepted accounting principles (GAAP). These measures may not be comparable to similar measures of other companies as not all companies calculate these measures in the same manner.
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Media, investors and analysts: WABCO Holdings Inc.
Christian Fife
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