WABCO Holdings Inc., the leading global supplier of braking control systems and other advanced technologies that improve the safety, efficiency and connectivity of commercial vehicles, has reported Q3 2018 results.
“In Q3 2018, global truck and bus production declined by 8% year-over-year driven by a drop of 27% in China, partially offset by further market growth in the Americas and India. In this environment, WABCO continued to outperform the commercial vehicle industry and achieved $915 million in sales, an increase of 10.5% from a year ago and up 13.4% in local currencies,” says Jacques Esculier, WABCO Chairman and Chief Executive Officer.
WABCO’s Operating System, the company’s globally standardized management environment, delivered $16.6 million of net materials and conversion productivity representing 3.8% of gross materials productivity and 7.7% of conversion productivity.
“WABCO delivered performance operating income of $117 million in line with the previous year at equal exchange rates only partially mitigating headwinds related to the continued supply chain constraints within certain areas of the industry, raw material cost inflation, as well as increased engineering expenses,” adds Esculier.
Subsequent to quarter end, WABCO has been notified of a favorable arbitration settlement that reduces WABCO’s 2018 full year performance tax rate to 17.1% and to 10.0% for the third quarter.
“In this challenging global market environment, WABCO delivered solid performance EPS growth of 4% and strongly converted income into cash, resulting in net cash from operating activities of $134 million, up almost 60% compared with the third quarter of 2017,” says Esculier.
WABCO Share Buyback Program
During the third quarter of 2018 WABCO repurchased 740,490 shares for $90.2 million through its share buyback program. Between June 2011 and September 30, 2018, WABCO has repurchased 20,998,402 shares for $1,801.1 million in open market transactions. This includes the repurchase of shares during 2018 for a total of $210.1 million, as at September 30, 2018. 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
In September 2018, in Hanover, Germany, WABCO showcased its newest suite of industry-leading technologies at IAA Commercial Vehicles 2018 (IAA), the industry’s most global trade show. Under its new ‘Mobilizing Vehicle Intelligence’ brand promise, WABCO powerfully demonstrated how it is enabling original equipment manufacturers and fleet operators to enhance their strategies for differentiation as the industry advances toward increasingly autonomous, connected and electric vehicles. What follows are some of the key announcements made in Q3 2108, primarily at IAA:
- WABCO announced its first simultaneous release of a full range of new generation of high-performance single-piston MAXX air disc brakes (ADB) for trucks, buses and trailers worldwide. With over six million single-piston ADB systems sold, including more than one million systems proven in the field for heavy-duty applications, WABCO is the well-established global market leader for this advanced technology. Designed to further increase its market penetration, WABCO’s fifth generation range of single-piston ADB technology is suitable for all types of light-, medium- and heavy-duty vehicles. Superbly engineered, MAXX’s new lighter weight, high-performance and low drag-torque design further boosts fuel efficiency and enables increased transport payloads.
- WABCO disclosed that it has signed an agreement for 60% of a new joint venture for vehicle control systems with FAW Jiefang Automotive Company, an innovative and market-leading Chinese commercial vehicle manufacturer, initially focusing on accelerating WABCO’s single-piston ADB technology leadership in China. The joint venture will commence with the manufacture of WABCO's advanced MAXX single-piston ADB from 2019.
- WABCO announced that it has extended its global leadership for truck, bus and trailer braking control systems with multiple new and long-term agreement extensions, valued at more than $660 million, across Europe, the U.S. and Asia-Pacific. Building on WABCO’s track-record of innovating and globalizing advanced anti-lock braking systems (ABS) and electronic braking systems (EBS), including its award-winning modular braking system platform (mBSP), these agreements represent the latest industry endorsements of WABCO’s leadership in braking system platforms.
- WABCO announced that it will launch the industry’s first global modular braking platform covering all types of trailers. This latest breakthrough in trailer braking systems design furthers WABCO’s worldwide leadership in intelligent trailer technologies by offering trailer builders and commercial fleets the industry’s most comprehensive portfolio of safety and efficiency functions specifically for trailers. It provides the foundation for WABCO’s new generation Trailer Anti-Lock Braking System (iABS) and Electronic Braking System (iEBS). It also features simplified interchange between iABS and iEBS, enhances trailer system functionality and supports the globalization strategies of trailer manufacturers due to increased standardization and modularity.
- Presenting a range of the latest functionalities added to its industry-leading suite of OnGuard collision mitigation systems (CMS) at IAA, WABCO announced that it has furthered its market leadership while innovating advanced driver assistance systems (ADAS) technology with IVECO. IVECO is collaborating with WABCO to enhance the safety, efficiency and market competitiveness of its Stralis and Eurocargo trucks having applied its most advanced OnGuardACTIVE and OnGuardMAX Autonomous Emergency Braking System (AEBS) solutions, as well as a wide portfolio of additional WABCO safety technologies including ESCsmart electronic stability control (ESC) and braking systems.
- WABCO disclosed that it is working with qualified technology partners to develop a gateway for Level 1 to 3 autonomous driving, including applications that will connect to and be interoperable with WABCO’s vehicle dynamics control systems. WABCO’s Autonomous Driving Open Platform Technology (ADOPT), will be piloted in China where numerous technology startups are already working to develop applications to help advance autonomous driving. ADOPT will allow these startups to more easily connect into the distinctive requirements of the commercial vehicle world.
- WABCO announced its collaboration with Baidu to develop a best-in-class, cost-effective and highly standardized suite of solutions to enable Level 4 and 5 autonomous driving in hub-to-hub highway applications for commercial vehicles. This will be a cornerstone of an open platform allowing OEMs and fleets to utilize WABCO’s and Baidu’s core safety and AI technologies while providing them an opportunity to develop customized, differentiated solutions. Baidu will bring the power of Apollo, its open autonomous driving software platform, proven in the passenger car segment, while WABCO will provide access to the ADOPT ecosystem.
- WABCO disclosed that it has signed a Memorandum of Understanding with Valeo, an automotive technology leader at the center of several automotive industry innovations. Within the scope of this agreement, the parties intend to develop sensor technologies helping pave the way for Valeo to supply WABCO with advanced short and mid-range sensors, including 77GHz radar and solid-state LiDAR, to develop and industrialize the next generation of ADAS, among the key building blocks for vehicle autonomy.
- WABCO announced that it has joined the ENSEMBLE consortium, co-funded by the European Union, to develop advanced safety technologies for multi-brand platooning on roads in Europe. This, in addition to WABCO’s close collaboration on the platooning programs of two global original equipment manufacturers, headquartered in Europe, marks another industry milestone toward autonomous driving for commercial vehicles on highways.
- WABCO disclosed that it has signed a Memorandum of Understanding with Nidec Motor Corporation (Nidec), a subsidiary of Nidec Corporation, the world’s number one Comprehensive Motor Manufacturer, to define, develop, manufacture and commercialize fully integrated electric drivetrain and brake control solutions for longitudinal control of commercial vehicles. Developing a fully integrated, electric drivetrain solution by combining WABCO’s industry leading vehicle dynamics and controls with Nidec’s leading edge motors and inverter technologies will enable breakthrough efficiencies across all operating modes for fully electric operated buses, trucks and trailers.
- WABCO presented a prototype of its first electric trailer developed to maximize operating efficiency and lower fuel consumption. WABCO’s new electric trailer equipped with an electric motor and its associated control system – named eTrailer – marks the company’s first prototype that uniquely connects truck and trailer vehicle controls and uses an intelligent electric motor control to recuperate electric energy during braking, which can then be reutilized to power the vehicle’s traction or to operate onboard electric auxiliaries. Furthermore, commercial fleet operators that connect eTrailer to a truck equipped with WABCO’s intelligent braking and stability control systems will further enhance the operating efficiency of the truck-trailer combination. WABCO estimates that its eTrailer could deliver fuel savings up to 20% on short haul routes and up to 10% for long hauls in a truck-trailer combination.
- WABCO announced that it has signed a strategic agreement with RIO, the groundbreaking digital brand of the newly renamed TRATON GROUP, a global commercial vehicle manufacturer. RIO will leverage WABCO’s advanced Fleet Management Solutions (FMS) within its fast-growing cloud-based connectivity environment to support the European logistics industry. This important agreement extends WABCO’s FMS portfolio into a fully digital, cloud-based open platform for freight transport supporting all brands of truck.
- WABCO unveiled a series of new technologies specifically developed to improve overall fleet productivity including TX-TRAILERPULSE – an innovative, cost-efficient trailer-specific telematics solution, TX-DIAGNOSTIX advanced FMS enabled remote diagnostics solution and TX-FUELCOMPASS ‘big-data’ enabled telematics solution which monitors fuel consumption and provides best-cost-routing without the need to install a fuel sensor.
- In August 2018, WABCO opened its new state-of-the-art Global Technology and Innovation Center in Hanover, Germany. Significantly expanding WABCO’s global product development and engineering capabilities, the nearly $30 million facility will play an important role in ensuring WABCO’s technology leadership is sustained through future generations of innovation.
WABCO Full Year 2018 Guidance
Based on its estimate of future economic and market conditions, WABCO updates its previously disclosed guidance for full year 2018.
“As we continue to address supply chain related constraints, our revised guidance confirms our commitment to again deliver solid market out-performance and healthy EPS growth for 2018,” says Esculier.