Presentation is loading. Please wait.

Presentation is loading. Please wait.

CREDIT SUISSE SMALL AND MID CAP CONFERENCE

Similar presentations


Presentation on theme: "CREDIT SUISSE SMALL AND MID CAP CONFERENCE"— Presentation transcript:

1 CREDIT SUISSE SMALL AND MID CAP CONFERENCE
JACQUES ESCULIER Chairman & Chief Executive Officer September 14, 2010 © 2010 WABCO Holdings Inc. All rights reserved.

2 FORWARD LOOKING STATEMENTS
Comments in this document contain certain forward-looking statements, which are based on management’s good faith expectations and beliefs concerning future developments. Actual results may differ materially from these expectations as a result of many factors. These factors include, but are not limited to, the risks and uncertainties described in the “Risk Factors” section and the “Forward Looking Statements” section of WABCO’s Form 10-K, as well as in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Information Concerning Forward Looking Statements” section of WABCO’s Form 10-Q Quarterly Reports. WABCO does not undertake any obligation to update such forward-looking statements. All market and industry data are based on Company estimates. This presentation contains certain non-GAAP financial measures as that term is defined by the SEC. EBIT and sales excluding the effects of foreign exchange are non-GAAP financial measures. Additionally, gross profit, gross profit margin, operating income, operating income margin, EBIT, EBIT margin, net income and net income per diluted share on a "performance basis" are non-GAAP financial measures that exclude separation and streamlining items, the European Commission fine indemnification, one-time impact from the Indian joint venture transactions, and one-time and discrete tax items, as applicable. Lastly, "free cash flow" presents our net cash provided by operating activities less 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. Reconciliations of the non-GAAP financial measures to the most comparable GAAP measures are available in WABCO’s quarterly results presentations posted on the company’s website.

3 TECHNOLOGY LEADERSHIP
WABCO is THE TECHNOLOGY LEADER in our industry. WABCO has brought to market the OVERWHELMING MAJORITY of the key innovations and technology breakthroughs in braking and control systems for the global commercial vehicle industry. For more than 30 years, WABCO has achieved the most number of INDUSTRY FIRSTS for trucks, buses and trailer systems. © 2010 WABCO Holdings Inc. All rights reserved.

4 INNOVATION TRACK RECORD
WABCO COMPETITION Industry First(1) Innovation(2) 2009 ESCsmart Trailer OptiTurn, Trailer OptiLoad, EcoSmart 2008 OnGuardMax AEB High-output compressor, OptiDrive Modular AMT, New Generation IVTM Blind-spot detection? 2007 OnGuard CMS RSSPlus (US) Roll Mitigation, WW Modular Compressor 2006 Two-stage compressor 2004 Hydraulic Transmission Automation New Generation ADB, Air System Protector, Trailer SmartBoard 2003 Electronic Air Processing Unit IVTM 2001 ESC Adaptive Cruise Control 2000 RSS for trailers Mechatronic Gearbox controllers 1998 Trailer EBS 1996 EBS CAN data bus for inter-system communication All-wheel disc brake for heavy duty trucks 1995 All-wheel disc brake for medium duty trucks First mechatronic device, TCS trailer ABS for US 1993 Trailer Compact Lift axle valve 1990 ECAS for Cars, SUVs, Light CVs 1985 Pneumatic AMT, ECAS, ASR 1982 Electronic Climate Control, Electronic Door Control for buses 1981 ABS 1973 Dual-line air braking system (1) Industry First: technology which is introduced in the industry for the first time and is set up for mass production and broad market adoption (2) Innovation: significant technology advancement which is not new to the industry © 2010 WABCO Holdings Inc. All rights reserved.

5 PRODUCT PORTFOLIO Air Compressors 13% Anti-Lock Braking Systems 11%
Air Processing 11% Conventional Brake Controls 13% Actuators 10% Foundation Brakes 6% Suspension Control 6% Others 6% % 2009 Sales Anti-Lock Braking Systems 11% Car Products 4% Transmission Automation, Clutch Control 11% Electronic Braking and Stability Control Systems 9% © 2010 WABCO Holdings Inc. All rights reserved.

6 TRUCK & BUS REGIONAL ATTRIBUTES
$ Estimated content per vehicle based on total applicable market $K Typical heavy truck price in market NORTH AMERICA <$1,000 $80K SOUTH AMERICA <$1,500 $65K Less advanced technology vs.Western Europe Large OEMs: Daimler, Volvo, PACCAR, ITE Large fleets, able to influence OEM design Less advanced technology – mostly from Brazil Main OEMs: Daimler, VW, Volvo, Scania WESTERN EUROPE >$3,000 $130K JAPAN & KOREA <$1,000 $80K Advanced technology, high electronics penetration 6 OEMs: Daimler, Volvo, MAN, Iveco, PACCAR, Scania Few large, pan European fleets Technology moving towards Western Europe Main OEMs: Hyundai, Hino, Isuzu, ND Targeting global market EASTERN EUROPE <$500 $70K CHINA & INDIA <$300 $30K Expected to Return to Fast growing production in the Future Improving quality and safety Global and local OEMs: KamAZ, MAZ, Basic technology; advanced technology penetration under 10% of total market 3 large OEMs: FAW, DFM, CNHTC; TATA Motors, many small © 2010 WABCO Holdings Inc. All rights reserved.

7 COMPETITIVE OVERVIEW KNORR HALDEX LCC COMPETITORS LCC COMPETITORS
Technical capabilities similar to WABCO No position in transmission automation or cars Strong position in North America following BENDIX acquisition Trailing in emerging markets Challenger position Lower electronics capabilities compared to WABCO and KNORR Strong automatic slack adjuster business Entering into special products for diesel engines Strong low cost / low tech solutions Mainly mechanical capabilities Targeting specific markets with specific product ranges Low price strategy in Aftermarket WABCO KNORR HALDEX LCC competitors (2009 Estimated Commercial Vehicle Sales) ($1.5B ) (~$1.7B ) (~$0.4B) (All Under ~$0.1B) Anti-lock Braking Systems Electronic Braking Systems Conventional Products Transmission Automation Air Compressors Air Processing Actuators Suspension Control Foundation Brakes Complete Offering Partial Offering Niche Offering sources: KNORR-BREMSE website, HALDEX website © 2010 WABCO Holdings Inc. All rights reserved.

8 SALES BY REGION AND CUSTOMER TYPE
2009 SALES BY CUSTOMER TYPE 3% Other 32% South America 6% Aftermarket 55% Truck & Bus North America 8% 65% Europe 18% 9% Asia Trailer 4% Car SALES 5-YEAR CAGR* Percentage * Compound annual growth rate in local currencies from to 2009 © 2010 WABCO Holdings Inc. All rights reserved.

9 WABCO VISION & CORE STRATEGY
Innovation/technology leadership Bring value as technology development/systems integration partner Global capability Connect with customers in every region Excellence in execution Differentiate WABCO through service and quality excellence additional value as a solutions partner maximum operational efficiency (backbone is Six Sigma Lean) © 2010 WABCO Holdings Inc. All rights reserved.

10 CUSTOMER VALUES WABCO is working on global TECHNOLOGY trends relevant to our customers We have a clear path to enhance VEHICLE EFFICIENCY and ENVIRONMENTAL SUSTAINABILITY by 20% Our vision is to improve ADVANCED SAFETY and DRIVER EFFECTIVENESS, and reduce the number of commercial vehicle accidents by 50% by 2020 We are involved in developing PRODUCTS and FUNCTIONALITIES to better meet these needs © 2010 WABCO Holdings Inc. All rights reserved.

11 VEHICLE EFFICIENCY ROADMAP
Smart Air Supply E-APU EcoSmart Clutch Compressor Energy Recovery E-comp - electrical driven compressor Fuel Efficiency Transmission automation Emission & retarder controls TPMS – Tire pressure monitoring New light weight heavy truck brake NG22MAX Weight Reduction 2-stage Compressor High Output Compressor Alu-Crankcase © 2010 WABCO Holdings Inc. All rights reserved.

12 ADVANCED SAFETY & DRIVER EFFECTIVENESS
Mission Provide advanced and integrated safety solutions Crash Normal Driving Critical Situation Pre Crash Phase After Crash Driving Situations Integrated Active Safety Concept Passive Safety Advanced Driver Assistance Systems Chassis Systems Braking Suspension Telematics ECASNG EBSNG Innovations NG22MAX CALMNG - Extract - i-range Actuators Event Recording Future Path EMH Data Logging - Extract - EPH EMB © 2010 WABCO Holdings Inc. All rights reserved. 12

13 GLOBALIZATION Local Supply Chain Product Development Local Market
Connectivity Local Manufacturing Local Supply Chain Product Development All regions managed by local teams No expats in key leadership positions 9 Nationalities from 4 continents in leadership team Took over JV in India #1 Position in all Asia countries, especially in China and India #1 Position at Kamaz 4 factories in China - Benchmark Lean processes - 2 new factories opened in 2010 3 factories in India - Multiple Award Winning 1 Factory in Brazil - Lean transformation under way Local strategic sourcing teams connected to global commodities Strong supply base covering core commodities Local supplier management Leveraging BCC capabilities for global manufacturing sites 2nd Product Development pillar in India to address emerging countries specificity and conventional product design (150 engineers) Software development center in Chennai (85 engineers) Test & design center in Poland to support Hanover (100 engineers) © 2010 WABCO Holdings Inc. All rights reserved.

14 WABCO OPERATING SYSTEM
Pillars Vision Organizational Development Accountability and alignment across the value chain Six Sigma Lean Integrated supply chain supported by Lean processes from suppliers to customers Common Development Process Processes based on Design For Six Sigma driving speed and reliability Customer Partnership Establish partnerships as competitive differentiator Total Employee Involvement Hoshin-like management system in place © 2010 WABCO Holdings Inc. All rights reserved.

15 PERFORMANCE FROM GROWTH
OE TRUCK, BUS AND TRAILER INCREASING VALUE PER VEHICLE Air Disc Brakes Transmission Automation Controls Electronic Stability Control Driver Assistance Systems GLOBALIZATION China Eastern Europe / Russia India AFTERMARKET EXPANSION Enhanced Penetration 10% Year-of-year New Product Ranges New Services (e.g. Diagnostics, Training) East Europe, North America and Asia AUTOMOTIVE PENETRATION Electronic Air Suspension Vacuum Pumps ABOVE MARKET SALES GROWTH THROUGH 2014* CAGR 4 - 6% Cars Aftermarket Expansion OE Truck, Bus and Trailer 2009 2014 *Assumes commercial vehicle production flat at 2009 levels © 2010 WABCO Holdings Inc. All rights reserved.

16 GLOBALIZATION: CHINA SALES PROJECTIONS
Indexed (2009 Sales = 100) CAGR 25% 300 2005 to 2008 sales grew at 70% CAGR Signed long term agreement with CNHTC through 2016 including sole supplier of transmission automation systems Joint venture with Fuwa, world’s largest maker of trailer axles, to produce air disc brakes in China Growing weight in WABCO’s global manufacturing network and an internal benchmark for Six Sigma Lean 190 100 2009 2011 2014 © 2010 WABCO Holdings Inc. All rights reserved.

17 GLOBALIZATION: INDIA SALES PROJECTIONS Strongly anchored market leader
Indexed (2009 Sales = 100) CAGR 21% 214 Strongly anchored market leader Preferred supplier for all OEMs Nationwide sales and service network Extensive product & software development capabilities Lean and TPM driven manufacturing High record of industry awards 155 100 2009 2011 2014 © 2010 WABCO Holdings Inc. All rights reserved. 17

18 FINANCIAL PERFORMANCE Q2 2010
Q2 Q2 vs. 2009 Reported Performance In Local Curr. Performance Drivers (In $ Millions except per share data) (2),(3) (1) Sales $512.3 $ % Gross Profit % 29.1% 29.3% +698 bps OPEX & Other (99.2) (97.4) (31.7%) (19.4%) (19.0%) +487 bps Operating Income 9.8% 10.3% +1,185 bps Equity Income EBIT ($353.0) $50.5 (68.9%) 9.9% Taxes Net Income ($365.4) $41.5 EPS ($5.68) $0.63 +9% versus Q1 ’10 Order Book at $818M, Up 60% YoY Price: ($7.5) or (1.4%) Volume & Mix: $41.8 Productivity: Materials: $11.7 Conversion: $4.6 OH Absorption & Other: $23.8 OPEX & Other: ($24.3): Reinstate suspended costs: ($7.3) Labor inflation/India Opex: ($4.1) Bonus Accrual Above Target: ($5.4) New investments/one-time items: ($7.5) Meritor WABCO JV Up $1.6M Versus Last Year EC Fine - $400.4 in Q2 ‘10 Other Separation ($1.9) vs. $3.9 in ’09 Streamlining ($1.2) vs. ($6.0) in ’09 ~18.5% Performance Tax Rate Full Year Versus ’09 Reported of ($0.27) and Performance of ($0.07) (1) Adjusted for currency translation, streamlining and separation costs (2) Adjusted for streamlining and separation costs (3) Adjusted for streamlining and separation costs, and discrete and other one-time tax items © 2010 WABCO Holdings Inc. All rights reserved. 40% Incremental Gross Profit & 28% Incremental Operating Income (1)

19 MARKET DYNAMICS Recovery in European Production Building Momentum
Percent of WABCO Sales in Q2 Percent of Q2 Global T&B Production 65% 59% ‘09 ‘10 Europe 15% North America 7% 7% 7% WABCO’s order book continues increasing trend (+12% in last 2 months) 2009 Inventory impact stopped Production driven by increasing demand from WE and exports Expect T&B production to grow ~ 50% full year ‘10 Recovery of freight demand Continue to anticipate significant market growth in 2011 ~15% T&B production increase expected for 2010 China 52% India 10% 7% 8% 2% 8% T&B production anticipated to decrease from ~400k in Q1/Q2 to ~300k in Q3/Q4 Impact of government support going down slowing speed of construction vehicle demand ~30% T&B production growth expected for 2010 Q2 T&B production levels down from peak in Q1 as anticipated Several global OE’s establishing local production 2010 T&B growth of ~40% vs. ’09, with H2 down 20% from H1 © 2010 WABCO Holdings Inc. All rights reserved. Recovery in European Production Building Momentum

20 MARKET DYNAMICS Market Demand Continues Growing Japan/Korea Brazil
Percent of WABCO Sales in Q2 Percent of Q2 Global T&B Production ‘09 ‘10 Japan/Korea 8% Brazil 8% 7% 8% 7% 8% Domestic demand continues to drive growth Stable production levels have been reached 2010 T&B production growth expected to be ~30% vs. ‘09 Q2 ’10 continued to benefit from extended government stimulus program in the CV industry Q3 T&B production estimated to be on Q2 production levels 2010 growth expected to be ~40% vs. ’09, with H2 weaker than H1 33% Aftermarket 26% Trailer 8% 7% Leading indicator for stronger recovery to come in Europe and N. America European utilization rates back to normal levels Annual sales growth level of ~15% still anticipated Q2 ’10 production up 20% from Q1 ‘10 All markets recovering globally Production outlook for 2010 indicates ~50% growth © 2010 WABCO Holdings Inc. All rights reserved. Market Demand Continues Growing

21 Targeting New Revenues in a Rapidly Growing Market
WABCO REMAN SOLUTIONS Strategic Purpose Leveraging our leading position as supplier of electronic and mechatronic components and mechanical products for commercial vehicles and passenger cars Addressing the issues related to aging electronic products Helps lower cost of warranty Will offer our services directly to OEM’s and tier 1 suppliers 2010 Key Highlights Engaged industry leading experts Outstanding response from major customers Facilities in Poland and the US operational by September 2010 Financial Objectives Minimal revenues in 2010 Mid-term objective to ~$60 million in annual sales by 2014 © 2010 WABCO Holdings Inc. All rights reserved. Targeting New Revenues in a Rapidly Growing Market

22 FY 2010 GUIDANCE Raising Full Year 2010 Guidance
Key Inputs ($ Millions, except per share data) Previous Updated Price erosion level of 1.7% or better Maintaining strong levels of productivity Raw materials pricing expected to degrade margins by ~90 bps in H2 vs. H1 Net interest expense at current rates Performance tax rate of ~18.5% Streamlining & separation cash payments, including EC fine indemnification: ~$450M as of July 28, 2010 (1 EURO = 1.28 USD) (1 EURO = 1.28 USD) Low End – High End Low End – High End Sales $1,860 - $1,942 30% - 35% $1,930 - $2,000 35% - 40% (1) (1) Performance Op Margin 8.0% – 9.0% 8.5% – 9.5% Structural Incremental Margin (2) 2010 Incremental Margin Performance EPS $ $2.05 $ $2.20 (3) Free Cash Flow Conversion 80% - 90% (Excluding Stream. & Separation) 80% - 90% (Excluding Stream. & Separation) (4) Note: Guidance as announced on July 28, Inclusion of this information in this presentation is not an update or reaffirmation of those financial assumptions (1) Adjusted for currency translation (2) Adjusted for streamlining and separation costs (3) Adjusted for streamlining and separation costs, discrete and other one-time tax items and the EC fine indemnification (4) Net cash provided by operating activities less net cash used for the purchases of PP&E and computerware as a percentage of net income © 2010 WABCO Holdings Inc. All rights reserved. Raising Full Year 2010 Guidance

23 WABCO SUMMARY Industry leader, we continue to be well prepared and sufficiently FLEXIBLE to take full advantage of increasing demand for new commercial vehicles in 2010, while maintaining our commitment to long term growth STRATEGY Power to remain THE TECHNOLOGY LEADER adding breakthroughs to portfolio of technologies and products for full connectivity to all markets WABCO Operating System, one of our industry’s most advanced management environments, delivers continuous OPERATIONAL improvements We drive PERFORMANCE by connecting with and adapting to CUSTOMERS everywhere in the world and continuing to anticipate and satisfy their needs © 2010 WABCO Holdings Inc. All rights reserved.

24 PASSION © 2010 WABCO Holdings Inc. All rights reserved.


Download ppt "CREDIT SUISSE SMALL AND MID CAP CONFERENCE"

Similar presentations


Ads by Google