Non-GAAP Financial Measures
To facilitate the understanding of Q1 2013 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 attributable to the company and net income attributable to the company per diluted share on a "performance basis" are non-GAAP financial measures that exclude separation and streamlining items, 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
-- Condensed Consolidated Statements of Income-- Condensed Consolidated Balance Sheets-- Condensed Consolidated Statements of Cash Flows-- Q1 2013 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 2013 Guidance WABCO HOLDINGS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME Three Months Ended March 31, 2013 2012 ---------------------------(Amounts in millions, except share and per share data)Sales $ 644.7 $ 657.3Cost of sales 447.0 461.2 ---------------------------Gross profit 197.7 196.1Costs and expenses:Selling and administrative expenses 82.5 79.1Product engineering expenses 30.3 26.1Other operating expense, net 3.2 1.4 ---------------------------Operating income 81.7 89.5 Equity income of unconsolidated joint ventures, net 2.9 4.9 Other non-operating expense, net (0.1) (0.7) Interest expense, net (0.3) (0.3) ---------------------------Income before income taxes 84.2 93.4Income tax expense 8.2 1.4 ---------------------------Net income including noncontrolling interests 76.0 92.0 Less: Net income attributable to noncontrolling interests 2.3 2.8 ---------------------------Net income attributable to Company $ 73.7 $ 89.2Net income attributable to Company per common share Basic $ 1.17 $ 1.38 Diluted $ 1.15 $ 1.34Cash dividend per share of common stock $ - $ -Weighted average common shares outstanding Basic 62,921,412 64,648,494 Diluted 64,071,002 66,399,459 WABCO HOLDINGS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS March 31, December 31,(Amounts in millions, except share data) 2013 2012 -----------------------------ASSETSCurrent assets: Cash and cash equivalents $ 175.7 $ 175.0 Accounts receivable, less allowance for doubtful accounts: $4.0 in 2013; $3.6 in 2012 348.6 301.5 Inventories 202.3 191.8 Future income tax benefits 11.1 13.8 Restricted cash 24.7 26.0 Guaranteed notes receivable 44.9 41.2 Other current assets 47.6 43.3 ----------------------------- Total current assets 854.9 792.6Property, plant and equipment, less accumulated depreciation 378.4 389.0Goodwill 362.2 371.7Long-term future income tax benefits 91.7 91.5Investments in unconsolidated joint ventures 19.8 20.5Intangible assets, net 41.4 39.4Other assets 42.5 42.3 -----------------------------TOTAL ASSETS $ 1,790.9 $ 1,747.0 ----------------------------- -----------------------------LIABILITIES AND EQUITYCurrent liabilities: Loans payable to banks $ 63.6 $ 76.2 Accounts payable 156.2 115.4 Accrued payroll 98.1 94.2 Current portion of warranties 30.7 33.8 Taxes payable - 5.70 Other accrued liabilities 122.7 120.4 ----------------------------- Total current liabilities 471.3 445.7Post-retirement benefits 418.6 430.6Deferred tax liabilities 30.5 29.9Long-term income tax liabilities 47.9 47.7Other liabilities 61.8 64.4 -----------------------------Total Liabilities 1,030.1 1,018.3Shareholders' equity: Preferred stock, 4,000,000 shares authorized; none issued and outstanding Common stock, $.01 par value, 400,000,000 shares authorized; shares issued: 76,545,044 in 2013; 75,755,306 in 2012; and shares outstanding: 62,791,142 in 2013; 62,747,151 in 2012 0.7 0.7 Capital surplus 752.8 735.5 Treasury stock, at cost: 13,753,902 shares in 2013; 13,008,155 shares in 2012 (707.7) (655.8) Retained earnings 792.2 718.6 Accumulated other comprehensive income Foreign currency translation adjustments (27.3) (15.4) Unrealized losses on benefit plans, net of tax (103.5) (107.2) -----------------------------Total shareholders' equity 707.2 676.4Noncontrolling interests 53.6 52.3 -----------------------------Total equity 760.8 728.7 -----------------------------TOTAL LIABILITIES AND EQUITY $ 1,790.9 $ 1,747.0 ----------------------------- ----------------------------- WABCO HOLDINGS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended March 31, --------------------- 2013 2012 ---------------------(Amounts in millions)Operating activities: Net income including noncontrolling interests $ 76.0 $ 92.0 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 18.3 16.7 Amortization of intangibles 3.0 2.7 Equity in earnings of unconsolidated joint ventures, net of dividends received 0.7 (1.4) Non-cash stock compensation 3.2 3.6 Deferred income tax benefit (1.0) (1.4) Loss on sale or disposal of property, plant and equipment - 0.1 Changes in assets and liabilities: Accounts receivable, net (53.2) (13.0) Inventories (14.8) (24.5) Accounts payable 45.1 28.6 Other accrued liabilities and taxes (3.8) 3.4 Other current and long-term assets (8.2) 6.1 Other long-term liabilities (1.3) (18.6) ---------------------Net cash provided by operating activities 64.0 94.3 ---------------------Investing activities: Purchases of property, plant and equipment (15.5) (16.7) Investments in capitalized software (4.9) (2.2) ---------------------Net cash used in investing activities (20.4) (18.9) ---------------------Financing activities: Net repayments of revolving credit facilities (13.1) - Net borrowings/repayments of short-term debt 2.3 (6.4) Purchases of treasury stock (43.8) (48.6) Dividends to noncontrolling interest holders (1.3) (1.4) Proceeds from exercise of stock options 15.7 8.9 ---------------------Net cash used in financing activities (40.2) (47.5) ---------------------Effect of exchange rate changes on cash and cash equivalents (2.7) 2.1 ---------------------Net decrease in cash and cash equivalents 0.7 30.0Cash and cash equivalents at beginning of period 175.0 102.4 ---------------------Cash and cash equivalents at end of period $ 175.7 $ 132.4 --------------------- --------------------- WABCO HOLDINGS INC. Q1 2013 Data Supplement Sheet (Unaudited) Quarter Ended March 31,(Amounts in % of % of millions, except Sales/ Sales/ % Chg per share data) 2013 Adj 2012 Adj Chg vs. vs. Sales Sales 2012 2012SalesReported $ 644.7 $ 657.3 $ (12.6) -1.9% Foreign exchange translational effects 8.3 - 8.3 -------- -------- --------Adjusted Sales $ 653.0 $ 657.3 $ (4.3) -0.7% -------- -------- -------- -------- -------- --------Gross ProfitReported $ 197.7 30.7% $ 196.1 29.8% $ 1.6 0.8% Streamlining costs 2.9 0.0 2.9 Separation costs 0.2 0.2 - -------- -------- --------Performance Gross Profit $ 200.8 31.1% $ 196.3 29.9% $ 4.5 2.3% Foreign exchange translational effects 1.4 - 1.4 -------- -------- --------Adjusted Gross Profit $ 202.2 31.0% $ 196.3 29.9% $ 5.9 3.0% 110 bps -------- -------- -------- -------- -------- --------Selling, Administrative, Product Engineering Expenses and OtherReported $ 116.0 18.0% $ 106.6 16.2% $ 9.4 8.8% Streamlining costs (2.3) (1.2) (1.1) Separation costs (0.5) (0.4) (0.1) -------- -------- --------Performance Selling, Administrative, Product Engineering Expenses and Other$ 113.2 17.6% $ 105.0 16.0% $ 8.2 7.8% Foreign exchange translational effects 0.3 - 0.3 -------- -------- --------Adjusted Selling, Administrative, Product Engineering Expenses and Other$ 113.5 17.4% $ 105.0 16.0% $ 8.5 8.1% 141 bps -------- -------- -------- -------- -------- --------Operating IncomeReported $ 81.7 12.7% $ 89.5 13.6% $ (7.8) -8.7% -94 bps Streamlining costs 5.2 1.2 4.0 Separation costs 0.7 0.6 0.1 -------- -------- --------Performance Operating Income $ 87.6 13.6% $ 91.3 13.9% (3.7) -4.1% -31 bps Foreign exchange translational effects 1.1 - 1.1 -------- -------- --------Adjusted Operating Income $ 88.7 13.6% $ 91.3 13.9% $ (2.6) -2.9% -31 bps -------- -------- -------- -------- -------- --------EBIT (Earnings Before Interest and Taxes)Reported Operating Income/(Loss) $ 81.7 $ 89.5 $ (7.8) Equity in Income of Unconsolidated Joint Venture 2.9 4.9 (2.0) Other non- operating expense, net (0.1) (0.7) 0.6 Net income attributable to noncontrolling interest (2.3) (2.8) 0.5 -------- -------- --------EBIT $ 82.2 12.8% $ 90.9 13.8% $ (8.7) -9.6% -108 bps Streamlining costs 5.2 1.2 4.0 Separation costs 1.0 0.9 0.1 -------- -------- --------Performance EBIT (Earnings Before Interest and Taxes) $ 88.4 13.7% $ 93.0 14.1% $ (4.6) -4.9% -43 bps Foreign exchange translational effects 1.0 - 1.0 -------- -------- --------Adjusted EBIT (Earnings Before Interest and Taxes) $ 89.4 13.7% $ 93.0 14.1% $ (3.6) -3.8% -45 bps -------- -------- -------- -------- -------- --------Pre-Tax IncomeEBIT $ 82.2 $ 90.9 $ (8.7) Interest (expense)/income, net (0.3) (0.3) - -------- -------- --------Pre-Tax Income $ 81.9 $ 90.6 $ (8.7) Streamlining costs 5.2 1.2 4.0 Separation costs 1.0 0.9 0.1 -------- -------- --------Performance Pre-Tax Income $ 88.1 $ 92.7 $ (4.6) Tax rate on a performance basis 15.0% 16.5%Net Income Attributable to CompanyReported Net Income Attributable to Company $ 73.7 $ 89.2 $ (15.5) Streamlining cost, net of tax 4.3 1.1 3.2 Tax items (3.9) (13.6) 9.7 Separation costs, net of tax and separation related taxes 0.8 0.7 0.1 -------- -------- --------Performance Net Income Attributable to Company $ 74.9 $ 77.4 $ (2.5) -------- -------- -------- -------- -------- --------Performance Net Income Attributable to Company per Diluted Common Share $ 1.17 $ 1.17Common Shares Outstanding - Diluted 64.1 66.4Note: 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 March(Amounts in millions) 31, ------------------------- 2013 2012 -------------------------Net Cash Provided by Operating Activities $ 64.0 $ 94.3Deductions or Additions to Reconcile to Free Cash Flow:Net purchases of property, plant, equipment and computer software (20.4) (18.9) -------------------------Free Cash Flow $ 43.6 $ 75.4 ------------------------- ------------------------- Less: Streamlining & separation payments $ (5.8) $ (3.4) -------------------------Free Cash Flow excluding streamlining & separation payments $ 49.4 $ 78.8 ------------------------- -------------------------Note: This statement reconciles net cash provided by operating activities to free cash flow. Management uses free cash flow and free cash flow excluding streamlining and separation payments, which are not defined by US GAAP, to measure the Company's operating performance. Free cash flow excluding streamlining and separation payments 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 2013 Guidance (Unaudited)(Amounts in millions, except per share data) Previous Updated Full Year 2013 Full Year 2013 Guidance Guidance ---------------------------------------Operating IncomeReported Operating Income Margin 11.7% - 12.7% 12.1% - 12.7% Streamlining cost, impact to margin 0.4% 0.4% Separation costs, impact to margin 0.2% 0.2% ---------------------------------------Performance Operating Income Margin 12.3% - 13.3% 12.7% - 13.3% --------------------------------------- ---------------------------------------Net Income Attributable to CompanyReported Net Income Attributable to Company $ 459.7 - $491.3 $ 469.2 - $494.5 Streamlining cost, net of tax 8.5 8.5 Tax items (200.0) (200.0) Separation costs, net of tax and separation related taxes 4.0 4.0 ---------------------------------------Performance Net Income Attributable to Company $ 272.2 - $303.8 $ 281.7 - $307.0 --------------------------------------- ---------------------------------------Reported Net Income Attributable to Company per Diluted Common Share $ 7.26 - $7.76 $ 7.41 - $7.81Performance Net Income Attributable to Company per Diluted Common Share $ 4.30 - $4.80 $ 4.45 - $4.85Diluted common shares outstanding approx. 63.3 approx. 63.3Note: 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.
Christian Fife
+1 732 369 7465
christian.fife@wabco-auto.com
www.wabco-auto.com
