WABCO Holdings Beats Quarterly Consensus EPS, Misses Revenue Expectations

WABCO Holdings Inc. WBC beat Wall Street's consensus fourth quarter expectations of non-GAAP earnings per share (EPS) of $1.98 by over 7 percent and GAAP EPS of $1.97 by over 11 percent according to Seeking Alpha. Quarterly non-GAAP diluted EPS increased over 6 percent Y/Y from $2.00 to $2.13 while GAAP diluted EPS decreased nearly 30 percent Y/Y from $3.12 to $2.20.

WABCO Holdings, based in Rochester Hills, Michigan, is a leading global supplier of technologies and services that improve the connectivity, efficiency and safety of commercial vehicles. The company has 15,000 employees in 40 countries.

However, WABCO missed Wall Street consensus fourth quarter revenue expectations of $963.86 million by 5 percent according to Seeking Alpha. Quarterly sales decreased 2.4 percent year-over-year (Y/Y), from $934.1 million to $911.6 million. The company also missed its 2018 sales guidance range of $3.85 billion to $3.9 billion with annual revenue of $3.831 billion, an increase of 15.9 percent Y/Y from $3.304 billion.

The quarterly earnings report said that operating income decreased 10 percent Y/Y, from $124.9 million to $112 million. WABCO's operating margin for the quarter decreased Y/Y from 13.4 percent to 12.3 percent. Quarterly net income decreased 32 percent Y/Y, or $53.8 million, from $168.3 million to $114.5 million.

Quarterly reported gross profit increased 0.5 percent Y/Y, or $1.5 million from $276.6 million to $278.1 million. Operating expenses for the quarter increased over 9 percent Y/Y, or $14.4 million, from $151.7 million to $166.1 million.

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Quarterly earnings before interest and taxes (EBIT) decreased nearly 72 percent, or $257.5 million from $358.7 million to $101.2 million.   

"In Q4 2018, WABCO faced a slowdown in key global markets, notably in Europe as well as China and India, which was partially offset by growth in the Americas, Japan and Thailand," said Jacques Esculier, WABCO Chairman and Chief Executive Officer. "Navigating this environment, WABCO again demonstrated its resilience and proven ability to continue to outperform global truck and bus production. Further helped by a favorable tax resolution, WABCO also achieved record quarterly earnings per share on a performance basis."

WABCO full-year gross materials productivity (ratio of output to input materials) decreased over 5 percent Y/Y from 5.3 percent to 5 percent. Conversion productivity (manufacturing) decreased 10 percent Y/Y, or $8.3 million from $83.2 million to $74.9 million.

During the fourth quarter of 2018, WABCO repurchased 808,964 shares for $90 million. In 2018 the company repurchased shares valued at $300 million. It plans to repurchase shares valued at $400 million in 2019.

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