WABCO Holdings Inc., a leading global supplier of technologies and services that improve the safety, efficiency and connectivity of commercial vehicles, has reported Q1 2018 results.
"In Q1 2018, WABCO again solidly outperformed the market relative to truck and bus production globally. Further enhanced by a favorable global market, we also set another successive quarterly record for sales which were up 23% in local currencies compared to the first quarter of 2017," says Jacques Esculier, WABCO Chairman and Chief Executive Officer. "We also achieved superb quarterly earnings per share on a performance basis, up 34% year over year.
"Accelerating demand for WABCO's industry-leading portfolio combined with our recent strategic acquisitions continues to boost the adoption of WABCO technology onboard vehicles across all markets. Through an unrivalled breadth of offerings for advanced driver assistance systems, efficiency-related technologies and fleet management solutions, WABCO is unlocking new levels of differentiation and value for commercial vehicle manufacturers and fleet operators world-wide," says Esculier.
In Q1 2018, WABCO's Operating System, the company's globally standardized management environment, delivered a total of $25.5 million of materials and conversion productivity, net of material inflation and including a supplier related productivity settlement. WABCO generated robust gross materials productivity of 6.4% and conversion productivity of 7.8% in Q1 2018.
WABCO delivered net cash from operating activities of $89.0 million.
"Our relentless drive for flexibility and cost-efficiency across WABCO's globally integrated supply chain during the quarter enabled us to superbly transform top line growth into strong bottom line results and healthy cash flow from operations," adds Esculier.
WABCO Share Buyback Program
During the first quarter of 2018 WABCO also reinstated its share buyback program, with 221,000 shares bought back for $30.7 million. Between June 2011 and March 31, 2018, WABCO has repurchased 19,549,912 shares for $1,621.7 million in open market transactions. WABCO intends to repurchase shares up to a total of $300 million during 2018, subject to market conditions and applicable regulatory requirements.
Recent WABCO Highlights
WABCO recently disclosed that - from Q2 2017 to Q1 2018 - it has entered into contracts in local currencies with customers worldwide that total $745 million of expected cumulative incremental business. These awards specify $502 million in new business earmarked from 2018 through to 2022 inclusively. Representing new incremental business for WABCO, these contracts are separate from revenues gained from the replacement and renewal of existing contracts. WABCO reaffirms sales growth is expected to outperform market growth long term within the 6% to 10% range.
In Q1 2018, WABCO disclosed that it has signed a new agreement to extend its strategic partnership with Sinotruk (Hong Kong) Limited, one of China's leading heavy truck manufacturers. Building on more than 30 years of close cooperation, the agreement leverages WABCO's global capabilities to further support Sinotruk's China and international market development. Sinotruk will adopt a wide range of WABCO's industy-leading technologies. This includes Advanced Driver Assistance Systems (ADAS), Automated Manual Transmission (AMT), Electronic Braking Systems (EBS), and Electronically Controlled Air Suspension Systems (ECAS).
In March 2018, WABCO announced its largest ever Fleet Management Solutions (FMS) contract with Girteka Logistics, Europe's leading asset-based transport company. Under the multi-year agreement, 2,700 trucks across Girteka Logistics' European fleet will be equipped with WABCO-owned Transics' comprehensive FMS portfolio, including advanced TX-SKY on-board computers and TX-FLEX mobile app connectivity as well as TX-CONNECT back-office IT and software integration via the TX-TANGO web service platform.
Demonstrating WABCO's increased commitment to North America, it is locating its Americas headquarters to Auburn Hills, MI. Representing a substantial investment, construction of the 102,000 sq.-ft. facility is underway with its opening scheduled for Q3 2018. WABCO has significantly expanded its presence in the region since 2016, tripling its workforce and acquiring leading technology businesses: MICO Inc., Laydon Composites Ltd., R.H. Sheppard Co. Inc., as well as the buyout of Meritor WABCO Vehicle Control Systems, its joint venture with Meritor.
In March 2018, WABCO INDIA launched WABCO's award-winning Intelligent Trailer Program in India. Bringing advanced technology to India's fast-growing market, the Intelligent Trailer Program leverages the capabilities of WABCO's trailer anti-lock or electronic braking control systems to provide a platform for up to 40 innovative trailer operating functions. Designed to enhance trailer safety, security and efficiency, the Intelligent Trailer Program offers significant added value for trailer manufacturers, fleet operators and cargo owners.
WABCO was recognized in Q1 2018 with nine customer and industry awards for excellence in the APAC region. Commended with top honors for, among other distinctions, quality, delivery, service and cost efficiency, these awards include recognition for extraordinary performance by Sinotruk Jinan Truck Co., Ltd., a leading heavy-duty truck manufacturer in China. WABCO received two awards for Top Supplier and for Quality from Sinotruk.
WABCO announced two appointments to its executive management team in Q1 2018. Further strengthening WABCO's financial excellence, WABCO has appointed Roberto Fioroni to the role of Chief Financial Officer. Starting on June 1, 2018, Fioroni will bring to WABCO over 20 years of multinational financial management experience. Additionally, Dr. Christian Brenneke was promoted as WABCO's new Chief Technology Officer, underlining WABCO's commitment to differentiate through the development of pioneering technology for increasingly autonomous, connected and electrified commercial vehicles. In addition to leading WABCO's global engineering organization, Dr. Brenneke now spearheads WABCO's global innovation and advanced product development strategy.
WABCO Raises Sales and EPS Guidance for Full Year 2018
Based on its estimate of future economic and market conditions, WABCO updates its previously disclosed guidance for full year 2018, increasing sales and EPS but recognizing additional headwinds driven by raw material cost inflation and pension costs.
"We continue to accelerate WABCO's differentiation through technology leadership while delivering excellence in operating performance globally," says Esculier. "Our updated guidance for the full year 2018 reflects our relentless focus on driving growth and profitability. Equally, the restart of our share buyback program during this quarter underlines our continued commitment to return superior value to shareholders."
