WABCO Reports Q3 2011 Results; Posts 20% Organic Sales Growth; Delivers Another Quarter of Strong Profitability; Maintains Guidance for 2011
"Q3 2011 marked yet another period of consistently robust results as we generated significant sales growth of 20 percent in local currencies while continuing to deliver a superior level of incremental operating profit margin at 29 percent, thus continuing at near-record levels in profitability," said
"During Q3 2011, the commercial vehicle industry continued to develop strongly as
"Q3
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Since the inception of
Recent Highlights
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In Q3 2011,
During Q3 2011,
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WABCO Maintains Full Year 2011 Guidance
"We continue to leverage
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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, and the other risks and uncertainties described in the "Risk Factors" section and the "Information Concerning Forward Looking Statements" section of
Non-GAAP Financial Measures
To facilitate the understanding of Q3 2011 results, several tables follow this news release. Sales excluding the effects of foreign exchange, incremental gross and operating margin and EBIT are non-GAAP financial measures. Additionally, operating income, EBIT, net income and net income per diluted share on a "performance basis" are non-GAAP financial measures that exclude separation and streamlining items, the EC fine indemnification, 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. 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
-- Consolidated Statements of Income -- Condensed Consolidated Balance Sheet -- Consolidated Statement of Cash Flows -- Q3 2011 Data Supplement Sheet -- Nine Months EndedSeptember 30, 2011 Data Supplement Sheet -- Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow -- Reconciliation of GAAP to Non-GAAP Financial Measures for Full Year 2011 Guidance WABCO HOLDINGS INC. Consolidated Statements of Income (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2011 2010 2011 2010 ------------------------- ------------------------- (Amounts in millions, except share data) (Unaudited) (Audited) (Unaudited) (Audited) Sales $ 706.3 $ 545.2 $ 2,122.2 $ 1,548.5 Cost of sales 501.9 397.0 1,503.7 1,110.9 ------------ ------------ ------------ ------------ Gross profit 204.4 148.2 618.5 437.6 Costs and expenses: Selling and administrative expenses 82.3 72.3 253.2 224.1 Product engineering expenses 28.4 19.8 80.6 60.5 Other operating expense, net 1.3 1.3 5.2 4.9 ------------ ------------ ------------ ------------ Operating income 92.4 54.8 279.5 148.1 European Commission fine indemnification - - - (400.4) Equity income of unconsolidated joint ventures, net 3.9 3.2 12.4 6.9 Other non-operating income/(expense), net 0.1 0.1 (1.7) (4.8) Indemnification and other settlements - - 23.1 - Interest expense, net (0.4) (0.5) (1.6) (1.2) ------------ ------------ ------------ ------------ Income/(loss) before income taxes 96.0 57.6 311.7 (251.4) Income tax expense 9.1 10.4 16.6 30.2 ------------ ------------ ------------ ------------ Net income/(loss) including noncontrolling interest 86.9 47.2 295.1 (281.6) Less: Net income attributable to noncontrolling interest 3.1 3.2 8.0 9.1 ------------ ------------ ------------ ------------ Net income/(loss) $ 83.8 $ 44.0 $ 287.1 $ (290.7) Net income/(loss) per common share Basic $ 1.25 $ 0.68 $ 4.28 $ (4.52) Diluted $ 1.22 $ 0.66 $ 4.13 $ (4.52) Weighted average common shares outstanding Basic 66,811,299 64,478,630 67,154,389 64,350,287 Diluted 68,656,306 66,540,027 69,483,447 64,350,287 WABCO HOLDINGS INC. Condensed Consolidated Balance Sheet September 30, December 31, (Amounts in millions) 2011 2010 ------------- ------------- ASSETS (Unaudited) (Audited) Current assets: Cash and cash equivalents $ 144.7 $ 67.1 Accounts receivable, less allowance for doubtful accounts:$6.1 in 2011; $7.7 in 2010 333.7 265.9 Inventories 243.5 192.6 Taxes receivable on income - 7.6 Future income tax benefits 20.1 7.3 Restricted cash 35.8 51.8 Other current assets 65.7 65.4 ------------- ------------- Total current assets 843.5 657.7 Facilities, less accumulated depreciation 349.4 350.3 Goodwill 384.1 378.4 Long-term future income tax benefits 67.0 57.9 Investments in unconsolidated joint ventures 17.2 13.3 Intangible assets, net 38.0 40.1 Other assets 25.9 27.2 ------------- ------------- Total Assets $ 1,725.1 $ 1,524.9 ------------- ------------- ------------- ------------- LIABILITIES AND EQUITY Current liabilities: Loans payable to banks $ 21.7 $ 16.7 Accounts payable 164.1 158.4 Accrued payroll 121.7 103.0 Current portion of warranties 52.0 41.7 Taxes payable 6.2 - Indemnification liabilities 12.0 33.1 Streamlining liabilities 11.2 11.7 Income tax liabilities 8.6 29.0 Other accrued liabilities 131.4 106.9 ------------- ------------- Total current liabilities 528.9 500.5 Long-term debt 87.0 96.8 Post-retirement benefits 347.9 344.1 Deferred tax liabilities 35.9 26.7 Long-term income tax liabilities 46.6 53.0 Other liabilities 36.1 43.8 ------------- ------------- Total Liabilities 1,082.4 1,064.9 Total Equity 642.7 460.0 ------------- ------------- Total Liabilities & Equity $ 1,725.1 $ 1,524.9 ------------- ------------- ------------- ------------- WABCO HOLDINGS INC. Consolidated Statement of Cash Flows (Unaudited) Three Months Ended September 30, --------------------------- (Amounts in millions) 2011 2010 ------------- ------------ Operating activities: Net income including noncontrolling interest $ 86.9 $ 47.2 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 16.6 17.9 Amortization of intangibles 2.9 4.1 Equity in earnings of unconsolidated joint ventures, net of dividends received (1.2) (1.8) Non-cash stock compensation 3.6 3.1 Deferred income tax benefit 0.2 (0.8) Loss on sale or disposal of property, plant & equipment 0.3 0.8 Changes in assets and liabilities: Accounts receivable, net 3.5 (8.5) Inventories (8.7) (23.8) Accounts payable (4.1) 18.0 Other accrued liabilities and taxes 1.8 (421.8) Post-retirement benefits (0.4) - Other current and long-term assets 2.9 (16.5) Other long-term liabilities (0.6) 0.4 ------------- ------------ Net cash provided by/(used in) operating activities 103.7 (381.7) ------------- ------------ Investing activities: Purchases of property, plant and equipment (27.3) (13.3) Investments in capitalized software (1.8) (1.8) Proceeds from disposal of property, plant and equipment - 3.0 ------------- ------------ Net cash used in investing activities (29.1) (12.1) ------------- ------------ Financing activities: Net repayments of revolving credit facilities 52.0 62.2 Borrowings of long-term debt (0.1) (0.1) Net (repayments)/borrowings of short-term debt (6.4) 18.7 Dividends to noncontrolling interest holders (0.9) (0.3) Proceeds from exercise of stock options - 2.0 Purchases of treasury stock (77.2) - ------------- ------------ Net cash (used in)/provided by financing activities: (32.6) 82.5 ------------- ------------ Effect of exchange rate changes on cash and cash equivalents (5.6) 43.2 Net increase/(decrease) in cash and cash equivalents 36.4 (268.1) Cash and cash equivalents at beginning of period 108.3 379.5 ------------- ------------ Cash and cash equivalents at end of period $ 144.7 $ 111.4 ------------- ------------ ------------- ------------ WABCO HOLDINGS INC. Q3 2011 Data Supplement Sheet (Unaudited) Quarter Ended September 30, (Amounts in millions, % of % of except per share data) 2011 Sales/ 2010 Sales/ Chg % Chg Adj Adj vs. vs. Sales Sales 2010 2010 --------- ------- --------- -------- --------- ------ Sales ----------------------- Reported $ 706.3 $ 545.2 $ 161.1 29.5% Foreign exchange translational effects (53.1) - (53.1) --------- --------- --------- Adjusted Sales $ 653.2 $ 545.2 $ 108.0 19.8% --------- --------- --------- --------- --------- --------- Gross Profit ----------------------- Reported $ 204.4 28.9% $ 148.2 27.2% $ 56.2 37.9% Streamlining costs 0.5 2.3 (1.8) Separation costs 0.3 0.3 (0.0) --------- --------- --------- Performance Gross Profit $ 205.2 29.1% $ 150.8 27.7% $ 54.4 36.0% Foreign exchange translational effects (15.0) - (15.0) --------- --------- --------- Adjusted Gross Profit $ 190.2 29.1% $ 150.8 27.7% $ 39.4 26.1% --------- --------- --------- --------- --------- --------- Selling, Administrative, Product Engineering Expenses and Other ----------------------- Reported $ 112.0 15.9% $ 93.4 17.1% $ 18.6 19.9% Streamlining costs (0.5) 1.6 (2.1) Separation costs (0.8) (0.6) (0.2) --------- --------- --------- Performance Selling, Administrative, Product Engineering Expenses and Other $ 110.7 15.7% $ 94.4 17.3% $ 16.3 17.3% Foreign exchange translational effects (8.1) - (8.1) --------- --------- --------- Adjusted Selling, Administrative, Product Engineering Expenses and Other $ 102.6 15.7% $ 94.4 17.3% $ 8.2 8.7% --------- --------- --------- --------- --------- --------- Operating Income ----------------------- Reported $ 92.4 13.1% $ 54.8 10.1% $ 37.6 68.6% Streamlining costs 1.0 0.7 0.3 Separation costs 1.1 0.9 0.2 --------- --------- --------- Performance Operating Income $ 94.5 13.4% 56.4 10.3% 38.1 67.5% Foreign exchange translational effects (6.9) - (6.9) --------- --------- --------- Adjusted Operating Income $ 87.6 13.4% $ 56.4 10.3% $ 31.2 55.3% --------- --------- --------- --------- --------- --------- EBIT (Earnings Before Interest and Taxes) ----------------------- Reported Operating Income/(Loss) $ 92.4 $ 54.8 $ 37.6 Equity in Income of Unconsolidated Joint Venture 3.9 3.2 0.7 Other non-operating expenses, net 0.1 0.1 - EC fine - - - Indemnification and Other settlements - - - Net income attributable to noncontrolling interest (3.1) (3.2) 0.1 --------- --------- --------- EBIT $ 93.3 13.2% $ 54.9 10.1% $ 38.4 69.9% Streamlining costs 1.0 0.7 0.3 Separation costs 0.8 1.7 (1.0) EC fine - - - --------- --------- --------- Performance EBIT (Earnings Before Interest and Taxes) $ 95.1 13.5% $ 57.3 10.5% $ 37.7 65.8% Foreign exchange translational effects (6.9) - (6.9) --------- --------- --------- Adjusted EBIT (Earnings Before Interest and Taxes) $ 88.2 13.5% $ 57.3 10.5% $ 30.8 53.7% --------- --------- --------- --------- --------- --------- Pre-Tax Income ----------------------- EBIT $ 93.3 $ 54.9 $ 38.4 Interest (expense)/income, net (0.4) (0.5) 0.1 --------- --------- --------- Pre-Tax Income $ 92.9 $ 54.4 $ 38.5 Streamlining costs 1.0 0.7 0.3 Separation costs 0.8 1.7 (1.0) EC fine - - - --------- --------- --------- Performance Pre-Tax Income $ 94.7 $ 56.8 $ 37.8 Tax rate on a performance basis 13.5% 17.1% Net Income ----------------------- Reported Net Income $ 83.8 $ 44.0 $ 39.8 Streamlining cost, net of tax 0.8 0.5 0.3 Tax items (3.1) 1.1 (4.2) Separation costs, net of tax and separation related taxes 0.4 1.5 (1.1) EC fine - - - --------- --------- --------- Performance Net Income $ 81.9 $ 47.1 $ 34.8 --------- --------- --------- --------- --------- --------- Performance Net Income per Diluted Common Share $ 1.19 $ 0.71 Common Shares Outstanding - Diluted 68.7 66.5 --------------------------------------------------------------------- Incremental Gross Profit and Operating Gross Operating Income Margin Profit Income ----------------------- Increase in adjusted sales from '10 108.0 108.0 Increase in adjusted income from '10 39.4 31.2 --------- --------- Incremental Income as a % of Sales 36% 29% --------------------------------------------------------------------- (iii) Percentage Not Meaningful
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.
WABCO HOLDINGS INC.
Nine Months Ended September 30, 2011 Data Supplement Sheet
(Unaudited)
Nine Months Ended September 30,
(Amounts in millions,
except per share % of % of
data) 2011 Sales/ 2010 Sales/ Chg % Chg
Adj Adj vs. vs.
Sales Sales 2010 2010
--------- ------- --------- ------- --------- -------
Sales
---------------------
Reported $2,122.2 $1,548.5 $ 573.7 37.0%
Foreign exchange
translational
effects (141.4) - (141.4)
--------- --------- ---------
Adjusted Sales $1,980.8 $1,548.5 $ 432.3 27.9%
--------- --------- ---------
--------- --------- ---------
Gross Profit
---------------------
Reported $ 618.5 29.1% $ 437.6 28.3% $ 180.9 41.3%
Streamlining costs 1.8 2.7 (0.9)
Separation costs 0.8 0.8 (0.0)
--------- --------- ---------
Performance Gross
Profit $ 621.1 29.3% $ 441.1 28.5% $ 180.0 40.8%
Foreign exchange
translational
effects (38.4) - (38.4)
--------- --------- ---------
Adjusted Gross Profit $ 582.7 29.4% $ 441.1 28.5% $ 141.6 32.1%
--------- --------- ---------
--------- --------- ---------
Selling,
Administrative,
Product Engineering
Expenses and Other
---------------------
Reported $ 339.0 16.0% $ 289.5 18.7% $ 49.5 17.1%
Streamlining costs (0.5) 0.8 (1.3)
Separation costs (2.2) (2.8) 0.6
--------- --------- ---------
Performance Selling,
Administrative,
Product Engineering
Expenses and Other $ 336.3 15.8% $ 287.5 18.6% $ 48.8 17.0%
Foreign exchange
translational
effects (20.3) - (20.3)
--------- --------- ---------
Adjusted Selling,
Administrative,
Product Engineering
Expenses and Other $ 316.0 16.0% $ 287.5 18.6% $ 28.5 9.9%
--------- --------- ---------
--------- --------- ---------
Operating Income
---------------------
Reported $ 279.5 13.2% $ 148.1 9.6% $ 131.4
Streamlining costs 2.3 1.9 0.4
Separation costs 3.0 3.6 (0.6)
--------- --------- ---------
Performance Operating
Income $ 284.8 13.4% 153.6 9.9% 131.2 85.4%
Foreign exchange
translational
effects (18.1) - (18.1)
--------- --------- ---------
Adjusted Operating
Income $ 266.7 13.5% $ 153.6 9.9% $ 113.1 73.6%
--------- --------- ---------
--------- --------- ---------
EBIT (Earnings Before
Interest and Taxes)
---------------------
Reported Operating
Income/(Loss) $ 279.5 $ 148.1 $ 131.4
Equity in Income of
Unconsolidated
Joint Venture 12.4 6.9 5.5
Other non-operating
expenses, net (1.7) (4.8) 3.1
EC fine - (400.4) 400.4
Indemnification and
Other settlements 23.1 - 23.1
Net income
attributable to
noncontrolling
interest (8.0) (9.1) 1.1
--------- --------- ---------
EBIT $ 305.3 14.4% $ (259.3) -16.7% $ 564.6 +++
Streamlining costs 2.3 1.9 0.4
Separation costs (19.5) 7.2 (26.7)
EC fine - 400.4 (400.4)
--------- --------- ---------
Performance EBIT
(Earnings Before
Interest and Taxes) $ 288.1 13.6% $ 150.2 9.7% $ 137.9 91.8%
Foreign exchange
translational
effects 0.8 - 0.8
--------- --------- ---------
Adjusted EBIT
(Earnings Before
Interest and Taxes) $ 288.9 14.6% $ 150.2 9.7% $ 138.7 92.3%
--------- --------- ---------
--------- --------- ---------
Pre-Tax Income/(Loss)
---------------------
EBIT $ 305.3 $ (259.3) $ 564.6
Interest
(expense)/income,
net (1.6) (1.2) (0.4)
--------- --------- ---------
Pre-Tax Income/(Loss) $ 303.7 $ (260.5) $ 564.2
Streamlining costs 2.3 1.9 0.4
Separation costs (19.5) 7.2 (26.7)
EC fine - 400.4 (400.4)
--------- --------- ---------
Performance Pre-Tax
Income $ 286.5 $ 149.0 $ 137.5
Tax rate on a
performance basis 14.5% 18.0%
Net Income/(Loss)
---------------------
Reported Net
Income/(Loss) $ 287.1 $ (290.7) $ 577.8
Streamlining cost,
net of tax 2.3 1.6 0.7
Tax items (23.9) 4.9 (28.8)
Separation costs,
net of tax and
separation related
taxes (20.5) 6.0 (26.5)
EC fine - 400.4 (400.4)
--------- --------- ---------
Performance Net
Income $ 245.0 $ 122.2 $ 122.8
--------- --------- ---------
--------- --------- ---------
Performance Net
Income per Diluted
Common Share $ 3.53 $ 1.85
Common Shares
Outstanding -
Diluted 69.5 66.2
----------------------------------------------------------
Incremental Gross
Profit and Operating Gross Operating
Income Margin Profit Income
---------------------
Increase in adjusted
sales from '10 432.3 432.3
Increase in adjusted
income from '10 141.6 113.1
--------- ---------
Incremental Income as
a % of Sales 33% 26%
----------------------------------------------------------
(iii) Percentage Not
Meaningful
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.
WABCO HOLDINGS INC.
Reconciliation of Net Cash Provided
By Operating Activities to Free Cash Flow
(Unaudited)
Three Months Ended September
(Amounts in millions) 30,
-----------------------------
2011 2010
-------------- --------------
Net Cash Provided by Operating Activities $ 103.7 $ (381.7)
Deductions or Additions to Reconcile to Free
Cash Flow :
Net purchases of property, plant, equipment and
computer software (29.1) (12.1)
-------------- --------------
Free Cash Flow $ 74.6 $ (393.8)
-------------- --------------
-------------- --------------
Less: EC fine indemnification
payment (A) $ - $ (437.2)
Less: accounts receivable sold into
securitization program $ - $ (7.5)
Less: Streamlining & separation
payments $ (8.5) $ (1.5)
-------------- --------------
Free Cash Flow excluding streamlining &
separation payments $ 83.1 $ 52.4
-------------- --------------
-------------- --------------
(A) Represents 326 million Euro payment made in September 2010 translated
at a Euro to USD rate of approx. 1.34 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.
WABCO HOLDINGS INC.
Reconciliation of GAAP to Non-GAAP Financial Measures for Full Year 2011
Guidance
(Unaudited)
(Amounts in millions, except per share data)
Full Year 2011 Guidance
-------------------------
Operating Income
------------------------------------------------
Reported Operating Income Margin 12.8% - 13.4%
Streamlining cost, impact to margin 0.3%
Separation costs, impact to margin 0.1%
-------------------------
Performance Operating Income Margin 13.2% - 13.8%
-------------------------
-------------------------
Net Income
------------------------------------------------
Reported Net Income $349.4 - $366.9
Streamlining cost, net of tax 7.0
Tax items (20.5)
Separation costs, net of tax and separation
related taxes (19.0)
-------------------------
Performance Net Income $316.9 - $334.4
-------------------------
-------------------------
Reported Net Income per Diluted Common Share $5.01 - $5.26
Performance Net Income per Diluted Common Share $4.55 - $4.80
Diluted common shares outstanding 69.7
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.
Contacts: Media, investors and analysts contact:WABCO Holdings Inc. Jason Campbell +1 732 369 7477 jason.campbell@wabco-auto.com
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