A World of Difference for Shareowners
WABCO delivered a new annual record for earnings per share (EPS) of $5.62 on a performance basis and continued to outperform the S&P Auto Parts & Equipment Index in 2015. We beat this key financial benchmark by 30 percentage points in cumulative 5-year total returns to Shareowners.
WABCO also grew sales by 6.6% in local currencies from a year ago to $2.6 billion in a market where truck and bus production dropped by 7% globally.
Demonstrating deep connectivity with customers globally, in April 2015, WABCO announced a record in new contracts from Q2 2014 through Q1 2015, totaling $1.1 billion of expected cumulative incremental business. It includes $810 million from 2015 through 2019, outperforming the previous five-year period by 30%.
Sales in 2015 grew by 6.6% in local currencies although truck and bus production dropped by 7% worldwide.
We also superbly demonstrated—once again—WABCO’s ability to sustain Shareowner value at any point in the market cycle through the flexibility and rigor of our operations, overcoming profitability challenges in significant market changes. For example, in South America, WABCO outperformed the local market and remained profitable, despite truck and bus builds collapsing by 44% there.
WABCO’s operating efficiency underpins our outstanding ability to transform top-line growth into robust bottom-line results. Excluding significant headwinds due to foreign exchange effects and exceptional non-cash pension costs, WABCO delivered a strong core of 21% incremental operating margin. This means every incremental dollar in sales contributed an additional 21 cents in performance operating income.
WABCO’s Operating System, our globally standardized management environment, enabled superior customer service, alongside fast, flexible responses to volatile market demand. In 2015, it delivered $72.5 million of materials and conversion productivity, another robust result.
For the year, WABCO converted 98% of performance net income into a healthy $321 million of free cash flow, and we maintained a solid and flexible balance sheet that is further differentiated by being continuously cash positive.
In turn, we take cash and deliver on WABCO’s commitment to return it regularly to Shareowners. Since June 2011, WABCO has repurchased shares for over $1.2 billion as of December 31, 2015, with authorization to buy up to $251 million of additional shares by the end of 2016.
Powering WABCO’s differentiating performance is our decade-long, three-pillar strategy of technology leadership, globalization and excellence in execution.
Indeed, we continue to implement this proven strategy across two dimensions of our industry.
The first is where WABCO is solidly anchored as a leading global supplier of a broad portfolio of vehicle safety and efficiency technologies to original equipment manufacturers (OEMs).
The other is WABCO’s expansion within the world of commercial vehicle fleets by providing differentiated services and products over the vehicle’s operating lifecycle.