WABCO Holdings' Business Update - Conference Call Transcript

WABCO Holdings Inc. (WBC)

Business Update Call

September 8, 2011 9:00 AM ET


Jason Campbell – Director-Financial Reporting & IR

Jacques Esculier – Chairman and CEO

Ulrich Michel – CFO


Jeffrey Hammond – KeyBanc Capital Market

Peter Chang – Credit Suisse

Stephan Tusa – JPMorgan



Good day, ladies and gentlemen, and welcome to the WABCO’s September 2011 Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time (Operator Instructions) As a reminder, this conference is being recorded.

I would now like to introduce your host for today’s conference Jason Campbell, Investor Relations Director. You may begin, sir.

Jason Campbell

Thank you, Jen. Good morning everyone and welcome to WABCO’s September investor conference call. With us this morning is Jacques Esculier, our Chairman and CEO and Uli Michel, our Chief Financial Officer. As a reminder, this call, webcast and the presentation that we are using this morning are available on our website wabco-auto.com under the heading WABCO September 2011 conference call. The replay of this call will be available through September 22.

Also, as shown on chart two of the presentation, certain forward-looking statements that we’ll make today are based on management’s good faith, expectations and beliefs concerning future developments. As you know, actual results may differ materially from these expectations as a result of many factors, examples of which can be found on our company’s form 10-K and quarterly report.

Lastly, some of our remarks contain non-GAAP financial measures as defined by the SEC. Reconciliations of the non-GAAP financial measures for the most comparable GAAP measures are attached as an appendix to this presentation, which is posted on our website.

So now I’ll turn the call over to Jacques.

Jacques Esculier

Why thank you, Jason. Good afternoon, good morning to all of you and thank you for joining this call today. But before we jump in the core of our discussion, I would like to frame this exceptional dialogue that we have triggered with you today and really share the purpose of it with you.

In the last couple of months, we have seen a significant increase in the level of uncertainty around the economy, around our industry that have raised significantly also the level of anxiety across the market. This has resulted into a fairly significant dive in the stock price across the board, particularly for companies in our industry and even more particularly for those companies in our industry that have strong roots in Europe.

Naturally, we have received a lot of request from shareholders and analysts lately to provide valuable and material information on the status of our business and the status of our company. But as you know, we are not in a position to exchange that kind of information without doing it as part of a formal, official framework like this call. And actually this is the purpose of this call today to do it with you, and we’ll do it by first sharing information in our current view on our markets, then we’ll provide some insights on a couple of, what WABCO’s considered to be leading indicators for the markets. Because those indicators were actually very useful to us back in 2008 as we anticipated the significant drop in truck manufacturing in our industry, six months ahead of that drop. And then we’ll provide you with a view of our order book, which is actually, certainly reflecting the way our customers are anticipating the evolution of production of trucks in the coming month.

Actually, you will see that after reading all this data, it leads us to confirm the 2011 financial guidance that we have upgraded and shared with you during our last quarterly call back in late July. And actually, we also share with you that we decided that it was in the best interest of our shareholders to accelerate our buyback program that we have started in early June. And actually today – as of today, we have already purchased back $400 million of WABCO’s shares.

Now, again, before we proceed and to be clear, the purpose of the call is not to eliminate the uncertainty around the economy, around our industry, around WABCO. That is to share the relevant and timely information that will allow you to make the best informed decisions.

So turning to next page, as I said we’re going to share with you our current view of the market and more specifically of our truck manufacturers, and we’re going to start with Europe; as Europe, as you all know, still represent a significant share of our revenue base.

On the graph we share with you here, which shows the index level of order intakes for the four key European manufacturers that are public companies and that actually cover, very frankly, a large portion of the European builds for trucks and buses. You see that this level of order intake peak back in 2007. That during the first half of 2008, we already witnessed a significant drop, that this truck actually further amplified in the second half of 2008 to reach the deep level that we have – that has created the crisis in our industry. So that’s the profile of those order intakes back one year before the triggering of the recession in our business.

In contrast to that, we also share with you the evolution of order intakes. Since the beginning of 2009, you can see that actually that level of order intakes has been gradually increasing, that increase has been fairly smooth and consistent across the board and has continued during the first half and the last month between January 2011 and now.

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