WABCO Holdings Inc. (NYSE: WBC), a leading global supplier of technologies and services that improve the safety, efficiency and connectivity of commercial vehicles, reported Q4 and full year 2016 results.
“In Q4 2016, we continued to increase market penetration in key regions, such as China, the world’s largest market for commercial vehicles, where in particular we augmented adoption of WABCO anti-lock braking systems on light- and medium-duty trucks,” said Jacques Esculier, WABCO Chairman and Chief Executive Officer.
Altogether, 2016 marked WABCO’s tenth consecutive year of solid outperformance of the commercial vehicle industry relative to global truck and bus production,” said Esculier. “We continued to increase levels of WABCO content per vehicle through market share gains and additional uptake of our industry-leading safety and efficiency technologies globally.”
In 2016, WABCO’s Operating System, the company’s globally standardized management environment, delivered $83.0 million of materials and conversion productivity. It generated gross materials productivity of 5.5 percent, another robust result. At the same time, WABCO delivered over $15 million cost savings in operating expenses for full year 2016.
“In 2016, we sustained further cost efficiency across WABCO’s global value chain, and in particular in our factories we delivered conversion productivity of 7.0 percent, an annual record,” said Esculier. “With robust improvement in our operating margin, we once again demonstrated WABCO’s commitment to deliver further profitability derived from growth.”
In 2016, WABCO continued to strongly convert income into cash, resulting in net cash from operating activities of $405.4 million.
WABCO Share Buyback Program.
Since June 2011, WABCO has repurchased 18,295,912 shares for $1,471.0 million in open market transactions as of December 31, 2016, including 609,000 shares bought back for $62.5 million during Q4 2016. As previously disclosed, WABCO is further authorized to repurchase up to $600 million of additional shares through December 31, 2018.
Recent WABCO Highlights
Recently, WABCO announced that it has extended its long-term agreement with KAMAZ to supply a range of advanced technologies, including WABCO’s breakthrough mBSP™ modular braking system platform. KAMAZ is Russia’s largest manufacturer of heavy-duty trucks. This major agreement will support KAMAZ’s series production in Russia and the Commonwealth of Independent States, resulting in new incremental business for WABCO, including WABCO’s support as sole supplier for KAMAZ’s newest heavy-duty vehicle platform. This extended agreement marks further expansion of WABCO’s partnership with KAMAZ for supply of anti-lock braking and electronic braking systems, automatic traction control, electronic stability control, and OptiRide™ electronically controlled air suspension.
WABCO China recently entered into a new long-term agreement with Shaanxi Fast Gear Company to continue to develop and supply automated manual transmission (AMT) technology. Fast Gear is the world’s largest manufacturer of heavy-duty transmissions. Through its differentiated “design-for-China” customer focus, WABCO continues to successfully expand its strategic partnership with Fast Gear. This major contract will result in incremental revenues and will further strengthen WABCO’s market-leading position in AMT systems in China. WABCO’s AMT technology improves fuel savings up to 5% through optimized gear shifting while reducing the overheads associated with driver training. WABCO is the global market leader with nearly 3.5 million AMT systems sold.
In Q4 2016, WABCO delivered a record quarterly number of its Transics TX-SKY™ onboard computer systems for fleets. Additionally, in 2016, WABCO delivered a record annual number of its Transics TX-TRAILERGUARD™ fleet management systems (FMS). As a full systems supplier, WABCO can uniquely connect trucks, trailers, cargo, drivers, business partners and fleet operators in real time. With TX-SKY and TX-TRAILERGUARD, all of this information is integrated – 24/7 – onto the fleet manager’s displays via TX-CONNECT™ web-based back-office technology. This big data translates into actionable management insights, resulting in better fleet performance, improved asset utilization and more connected vehicles. In 2016, WABCO continued successfully to leverage one of the commercial vehicle industry’s most sophisticated FMS platforms. It secures rich data from onboard mission-critical systems while applying innovative control functions that further increase each fleet’s efficiency.
Recently, WABCO announced that it will supply a major German passenger car maker with its breakthrough electric Twin Compressor air suspension technology for the customer’s premium electric sport utility vehicles. WABCO is expected to equip all of these vehicles in global series production starting in late 2018. This new long-term agreement further strengthens WABCO’s leadership position as the passenger car industry’s sole supplier of electronically controlled air supply systems for electric-powered passenger vehicles. Separately, WABCO also extended and expanded its supply of vacuum pumps through agreements with two leading manufacturers involving passenger cars, sport utility vehicles and pick-up trucks. WABCO will supply one global automaker from China for delivery in the United States. WABCO expects to supply another major car manufacturer from India to support series production in India and elsewhere in Asia.
In January 2017, WABCO announced that the company has been ranked in the “Top 3” in its sector for “Best CEO” in the 2017 All-America Executive Team survey conducted by Institutional Investor magazine. It marks the fifth year in a row that WABCO has achieved this high recognition, further differentiating WABCO in its sector across all market capitalizations. In addition, WABCO’s Jacques Esculier was voted “Best CEO” in the 2017 All-America Executive Team Mid-Cap survey. Mid-Cap, meaning mid-capitalization, is a new and separate ranking by Institutional Investor magazine. Mr. Esculier ranked Number 1 across companies surveyed in its sector with a market capitalization up to $10 billion.
WABCO Full Year 2017 Guidance
Based on its estimate of future market conditions, WABCO provides guidance for 2017.
“Our 2017 guidance reflects WABCO’s enduring commitment to outperform the global commercial vehicle market while transforming top-line growth into healthy bottom-line results through our three-pillar strategy of technology leadership, globalization and excellence in execution,” said Esculier. “Moving forward, we also reiterate our confidence in our ability to sustain WABCO’s delivery of outstanding shareowner value.”
WABCO Conference Call Today
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 www.wabco-auto.com where the press release and financial information will be available under “WABCO Q4 and Full Year 2016 Results.”