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WABCO Profits Fall 10.7%

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WABCO Holdings Inc. (WBC - Free Report) posted a 10.7% decrease in earnings per share to $1.08 in the fourth quarter of 2012 from $1.21 in the corresponding quarter last year. However, profits surpassed the Zacks Consensus Estimate by 13 cents. In absolute terms, profits declined 13.8% to $69.6 million from $80.7 million in the year-ago quarter.

Revenues for the quarter fell 11.2% to $596.5 million from $672.0 million in the year-ago quarter. However, revenues were ahead of the Zacks Consensus Estimate of $591.0 million.

The year-over-year fall in revenues was due to the uncertainty and instability in the global markets, which resulted in a 12% decline in global truck and bus production. Meanwhile, the company reported a 9% increase in aftermarket sales in the quarter.

Operating income declined 17.1% to $75.0 million or 12.6% of net sales from $90.5 million or 13.5% in the fourth quarter of 2011.

WABCO reported a profit of $291.6 million or $4.46 per share in 2012, down from $325.7 million or $4.73 a year ago. The company’s revenues for the year dropped 11.3% to $2.5 billion, owing to the weak market conditions.

The company reported a 5% increase in global aftermarket sales in 2012. Operating income decreased 10.5% to $335.6 million or 13.5% of net sales from $375.1 million or 13.4% in 2011.

Financial Position

WABCO had cash and cash equivalents of $175.0 million as of Dec 31, 2012, up from $102.4 million as of Dec 31, 2011. The company has no long-term debt at the end of 2012.

For full year 2012, the company’s operating cash flow increased to $358.3 million from $332.0 million in the prior year. Capital expenditures (net) declined to $91.7 million from $98.3 million a year ago.


For 2013, WABCO expects annual sales increase between 2% and 7% in local currencies. Operating margin is projected between 12.3% and 13.3% for the year. This will lead to earning per share from $4.30 to $4.80 based on performance.

Our Take

WABCO is the world's leading providers of electronic braking, stability, suspension and transmission control systems for heavy duty commercial vehicles. Currently, it retains a Zacks Rank #4 (Sell).

Oshkosh Corporation (OSK - Free Report) , Strattec Security Corporation and Magna International Inc. (MGA - Free Report) are performing well in the same industry where WABCO operates. Oshkosh and Strattec Security are Zacks Rank #1 (Strong Buy) stocks while Magna International carries a Zacks Rank #2 (Buy).

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