WABCO Holdings Inc., a leading global supplier of technologies and services that improve the safety, efficiency and connectivity of commercial vehicles, has reported Q2 2018 results.
“In Q2 2018, we achieved over $1 billion in sales for the second consecutive quarter as we benefited from strong global market growth while continuing to outperform the commercial vehicle industry relative to global truck and bus production,” says Jacques Esculier, WABCO Chairman and Chief Executive Officer. “We also delivered robust quarterly earnings per share on a reported basis, up over 21%, and on a performance basis, up over 18%, versus a year ago.
“WABCO generated $17.4 million of net materials and conversion productivity in the second quarter as a result of our relentless drive to sustain cost-efficiency. This reflects another quarterly record for conversion productivity of 8.2% in our factories and solid gross materials productivity of 4.5%. During this quarter we faced a significant increase in raw material costs alongside supply chain constraints which are currently impacting the industry. These supply chain constraints also hampered WABCO’s ability to fully capitalize on growth opportunities, particularly in the aftermarket,” adds Esculier.
WABCO continued to generate cash at healthy levels in Q2 2018, resulting in net cash from operating activities of $77.2 million.
WABCO Share Buyback Program
During the second quarter of 2018 WABCO repurchased 708,000 shares for $89.2 million through its share buyback program. Between June 2011 and June 30, 2018, WABCO has repurchased 20,257,912 shares for $1,710.9 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 its first major steering system deal in India following its September 2017 acquisition of U.S.-based R.H. Sheppard, a key supplier of industry-leading steering technologies for commercial vehicles. Demonstrating WABCO’s strong commitment to expand and to globalize its steering business beyond the U.S., this latest supply agreement with Tata Motors in India represents an important first milestone in delivering steering solutions to customers internationally. As a full systems supplier to Tata Motors, WABCO is equipping the manufacturer with its hydraulic power steering systems, helping them to meet increasing demand for new heavy-duty trucks in India.
WABCO recently announced its largest ever contract in South Korea. Under a multi-year agreement with Hyundai Motor Company, the country’s leading commercial vehicle manufacturer, WABCO will supply its breakthrough MAXX single-piston air disc brake technology for series production on Hyundai’s new medium-duty trucks starting in August 2019. With over five million systems sold, WABCO is the global market leader for single-piston air disc brakes (ADB) and its pioneering MAXX ADB range represents the industry’s lightest and highest performing. Hyundai Motors will now become the first manufacturer to adopt ADB technology on all axles as standard on medium-duty trucks in the South Korean market.
In June 2018, WABCO disclosed that it has extended its long-term agreement to supply automated manual transmission (AMT) control technology for a leading global OEM, which is headquartered in Europe. Under this extended agreement which is valued at over $500 million, WABCO will continue to supply this global manufacturer with its current generation of AMT control technology. WABCO will also develop and introduce the next generation AMT control unit which will enable the latest technical advancements to be integrated into this customer’s global truck and bus series production. The contract is expected to continue until December 2027. With over four million systems sold, WABCO is the global market leader for AMT control solutions.
Further demonstrating WABCO’s commitment to offer differentiating solutions for commercial fleets of all sizes, TRAXEE, WABCO’s new Fleet Management System (FMS), was announced in Q2 2018. Designed to meet the specific needs of operators of small- to medium-size commercial fleets, WABCO will leverage its extensive distributor and service network to support the product’s launch throughout Europe, the Middle East and Turkey. WABCO’s pioneering TRAXEE solution is designed to address growing demand from small to medium-size commercial fleets. Launched as a scalable and rapid pay-back solution, TRAXEE enables operators to better coordinate fleet capacity, manage driver activity and improve administrative efficiency.
In Q2 2018, WABCO announced the extension of its long-term agreement to supply air compressor technology for a major global manufacturer of trucks and buses, which is headquartered in Europe. Under the agreement, valued at almost $100 million, WABCO will continue to supply the commercial vehicle manufacturer with a range of air compressors, across Europe, the Americas and Asia.
WABCO achieved a new annual record for customer awards and industry recognition in China for 2017. WABCO’s extraordinary performance for the year was commended with 29 top honors for, among other distinctions, quality, delivery, cost-efficiency, seamless collaboration and technology leadership. A total of 24 customer awards were bestowed on WABCO by major Chinese commercial vehicle manufacturers including ‘Top Performance’ awards from Sinotruk Jinan Truck Co., Ltd., Dongfeng Liuzhou Motor Co., Ltd., and the FAW Group. Furthermore, a total of five industry awards were also received, including two for innovations that contribute to commercial vehicle fleet safety and efficiency: WABCO’s Trailer Fleet Management System and Trailer Electronic Braking System.
WABCO Full Year 2018 Guidance
Based on its estimate of future economic and market conditions, WABCO updates its previously disclosed sales and EPS guidance for full year 2018.
“While mitigating headwinds from raw material cost inflation and industry supply chain constraints, alongside a continued year-over-year increase in engineering spend, particularly in the second half of the year, we confirm our commitment to deliver solid EPS growth for 2018,” says Esculier.
