WABCO Holdings Inc. today reported Q3 2008 sales of $655 million, up 10 percent over the prior year and up 2 percent in local currencies.
"This quarter, we continued to grow sales, increase income and demonstrate our ability to outperform the global commercial vehicle industry in all regions,” said Jacques Esculier, WABCO Chief Executive Officer.
WABCO reported Q3 2008 operating income of $62.2 million, up 14 percent over prior year on a U.S. GAAP basis. Performance operating income, which excludes separation and streamlining costs, rose to $71.1 million, up 10 percent over prior year and up 1 percent over prior year in local currencies.
"We continued to improve execution through the implementation of our WABCO Operating System. We achieved $15 million of productivity during Q3 2008 in spite of a decrease in production volume," said Esculier. "We also realized $4 million out of a $20 million profit improvement plan for second half 2008 that was launched in Q3 in rapid response to reports of a potential slowdown in the demand for new commercial vehicles."
WABCO reported Q3 2008 EBIT of $65.9 million, up 27 percent over prior year. Performance EBIT, which excludes separation and streamlining costs, rose to $74.8 million, up 21 percent over prior year and up 11 percent over prior year in local currencies.
WABCO's EBIT margin in Q3 2008 increased to 10.1 percent, expanding 136 basis points over prior year. Performance EBIT margin increased to 11.4 percent, expanding 97 basis points over prior year in local currencies.
On a U.S. GAAP basis, Q3 2008 net income increased to $63.7 million, or $0.97 per diluted share from a net loss of $0.3 million, or $0.00 per diluted share a year ago. Included in reported net income for Q3 2008 was a one-time tax benefit of approximately $10.0 million for the reduction in a provision stemming from WABCO's separation from the former American Standard Companies Inc. Excluding separation and streamlining costs, and one-time and discrete tax items, Q3 2008 performance net income increased by 36 percent to $61.3 million versus $45 million a year ago. Performance earnings per diluted share increased by 45 percent to $0.94 versus $0.65 per diluted share a year ago.
WABCO recently announced it has signed a letter of intent with Fuwa, the world's and China's largest manufacturer of commercial trailer axles, to form a joint venture for production of air disc brakes in China. The agreement is expected to be finalized by year-end. By partnering with Fuwa, WABCO expects to further enhance its development of the Chinese market as a major driver of growth as the company prepares for the future expansion of the market for air disc brakes in China.
Also as reported, WABCO won a multi-year contract with ZF to supply commercial vehicle transmission automation systems. WABCO's contract with ZF, one of the world's leading automotive industry suppliers specializing in driveline and chassis technologies, is worth several hundred million U.S. dollars in cumulative sales into the next decade.
During the IAA 2008 trade show, WABCO introduced 14 new products and systems, including OnGuardMax, a breakthrough driver assistance technology, and the commercial vehicle industry's first system for autonomous emergency braking (AEB) in collision imminent situations with moving or stopped vehicles. WABCO's revolutionary AEB system will be available worldwide to truck and bus original equipment manufacturers in 2010.
Due to current global economic conditions affecting industrial markets, WABCO has updated its expectation for 2008 sales growth to be between 5.5 and 6.5 percent in local currencies. WABCO has also updated its full-year U.S. GAAP and performance diluted EPS projections. The revised range for U.S. GAAP diluted EPS is $3.42 to $3.52, a decrease of $0.29 on the low end to $0.33 on the high end from prior projection; the revised range for performance diluted EPS is $3.85 to $3.95, a decrease of $0.27 on the low end to $0.31 on the high end from prior projection, $0.05 of which is due to updated foreign exchange rates. EPS on a performance basis excludes separation and streamlining costs, and one-time and discrete tax items. Additionally, WABCO has suspended share repurchases under the buy-back program.