jacques esculier chairman & chief executive officer credit suisse small and mid cap conference...

JACQUES ESCULIERChairman & Chief Executive Officer

CREDIT SUISSE SMALL AND MID CAP CONFERENCE

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 onmanagement’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.

For more than 30 years, WABCO has achieved the most

number of INDUSTRY FIRSTS for trucks, buses and trailer systems.

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.

© 2010 WABCO Holdings Inc. All rights reserved.

4

INNOVATION TRACK RECORD

Industry First(1) Innovation(2) 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

WABCO COMPETITION


5

Others 6%

% 2009 Sales

PRODUCT PORTFOLIO

Air Compressors 13%

Air Processing 11%

Conventional Brake Controls 13%

Actuators 10%

Foundation Brakes 6%

Suspension Control 6%

Anti-Lock Braking Systems 11%

Car Products 4%

Transmission Automation,Clutch Control 11%

Electronic Braking and StabilityControl Systems 9%


6

TRUCK & BUS REGIONAL ATTRIBUTES

SOUTH AMERICA <$1,500 $65K

JAPAN & KOREA <$1,000 $80K

CHINA & INDIA <$300 $30K

NORTH AMERICA <$1,000 $80K

WESTERN EUROPE >$3,000 $130K

EASTERN EUROPE <$500 $70K

Typical heavy truckprice in market

Estimated content per vehicle based on total applicable market$ $K

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

Advanced technology, high electronics penetration 6 OEMs: Daimler, Volvo, MAN, Iveco,

PACCAR, Scania Few large, pan European fleets

Expected to Return to Fast growing production in the Future

Improving quality and safety Global and local OEMs: KamAZ, MAZ,

Technology moving towards Western Europe Main OEMs: Hyundai, Hino, Isuzu, ND Targeting global market

Basic technology; advanced technology penetration under 10% of total market

3 large OEMs: FAW, DFM, CNHTC;

TATA Motors, many small


7

COMPETITIVE OVERVIEW

KNORR HALDEX 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

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

LCC COMPETITORS

Strong low cost / low tech solutions Mainly mechanical capabilities Targeting specific markets

with specific product ranges Low price strategy in Aftermarket

sources: KNORR-BREMSE website, HALDEX website


8

Global

North AmericaEurope

Asia

South America

-10%

-5%

0%

5%

10%

15%

20%

Car

SALES BY REGION AND CUSTOMERTYPE

2009 SALES BY REGION 2009 SALES BY CUSTOMER TYPE

South America

North America

Europe

Trailer

Aftermarket

Truck & Bus 55%

4%

32%

9%65%

6%8%

Asia 18%

Other 3%

Pe

rce

nta

ge

SALES 5-YEAR CAGR*

* Compound annual growth rate in local currencies from 2004 to 2009


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


11

VEHICLE EFFICIENCY ROADMAP

EcoSmart Clutch Compressor

New light weight heavy truck

brake NG22MAX

E-comp - electrical

driven compressor

Smart Air Supply

E-APU

Transmission automation

2-stage Compressor

TPMS – Tire pressure monitoring

Fuel Efficiency

Emission & retarder controls

High Output Compressor

Alu-Crankcase

Energy Recovery

Weight Reduction


12

Mission Provide advanced and integrated safety solutions

Driving Situations

Normal Driving Critical Situation Pre Crash Phase

Crash

Integrated Active Safety Concept

Future Path

InnovationsEBSNG

ECASNG

After Crash

Passive Safety

TelematicsAdvanced Driver

Assistance SystemsChassis Systems

Braking Suspension

Data Logging

Event Recording

- Extract -

- Extract -

NG22MAX

2005-2009

CALMNG

i-range Actuators

EPHEMH

EMB

ADVANCED SAFETY & DRIVER EFFECTIVENESS


13

GLOBALIZATION

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

Local MarketConnectivity

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

LocalManufacturing

Local SupplyChain

Local strategic

sourcing teams

connected to global

commodities

Strong supply base

covering core

commodities

Local supplier

management

Leveraging BCC

capabilities for

global

manufacturing sites

ProductDevelopment

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)


14

WABCO OPERATING SYSTEM

Accountability and alignment across the

value chain

Integrated supply chain supported by Lean

processes from suppliers to customers

Processes based on Design For Six Sigma drivingspeed and reliability

Establish partnerships as competitive differentiator

Hoshin-like management system

in place

Vision

Organizational

Development

Six Sigma Lean

Common Development

Process

Customer Partnership

Total Employee Involvement

Pillars


15

PERFORMANCE FROM GROWTH

ABOVE MARKET SALES GROWTH THROUGH 2014*

2014

CAGR4 - 6%

2009

Cars

AftermarketExpansion

OE Truck,Bus andTrailer

OE TRUCK, BUS AND TRAILERINCREASING 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

*Assumes commercial vehicle production flat at 2009 levels


16

GLOBALIZATION: CHINA

SALES PROJECTIONS

Indexed (2009 Sales = 100)

100

190

300

2009 2011 2014

CAGR 25%

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 © 2010 WABCO Holdings Inc. All rights reserved.

17

GLOBALIZATION: INDIA

SALES PROJECTIONS

Indexed (2009 Sales = 100)

100

155

214

2009 2011 2014

CAGR 21%

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


18

FINANCIAL PERFORMANCE Q2 2010

Sales $512.3 $512.3 64.7%

Gross Profit 149.3 150.0 115.5%

29.1% 29.3% +698 bps

OPEX & Other (99.2) (97.4) (31.7%)

(19.4%) (19.0%) +487 bps

Operating Income 50.1 52.6

9.8% 10.3% +1,185 bps

Equity Income 1.9 1.9

EBIT ($353.0) $50.5

(68.9%) 9.9%

Taxes 12.1 8.7

Net Income ($365.4) $41.5

EPS ($5.68) $0.63

PerformanceQ2 Q2 vs. 2009

Reported Performance In Local Curr. Performance Drivers

(In $ Millions except per share data)

(2),(3) (1)

• 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)

40% Incremental Gross Profit & 28% Incremental Operating Income

• +9% versus Q1 ’10• Order Book at $818M, Up 60% YoY• Price: ($7.5) or (1.4%)

• Meritor WABCO JV Up $1.6M Versus Last Year

• Versus ’09 Reported of ($0.27) and Performance of ($0.07)

• 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

(1)

(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.

19

North America

• Recovery of freight demand

• Continue to anticipate significant market growth in 2011

• ~15% T&B production increase expected for 2010

• 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

MARKET DYNAMICS

Recovery in European Production Building Momentum

Europe

65% 59%

7% 7%

Percent of WABCO

Sales in Q2

15% 7%

• 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

China7% 8% 52%

• 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

India2% 8% 10%

Percent of Q2 Global T&B Production

‘09 ‘10


20

Aftermarket

• 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

MARKET DYNAMICS

Market Demand Continues Growing

Trailer

• Q2 ’10 production up 20% from Q1 ‘10

• All markets recovering globally

• Production outlook for 2010 indicates ~50% growth

33% 26%8% 7%

• Domestic demand continues to drive growth

• Stable production levels have been reached

• 2010 T&B production growth expected to be ~30% vs. ‘09

Japan/Korea7% 8% 8% Brazil

• 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

7% 8% 8%

Percent of WABCO

Sales in Q2

Percent of Q2 Global T&B Production

‘09 ‘10


21

WABCO REMAN SOLUTIONS

Targeting New Revenues in a Rapidly Growing Market

● Engaged industry leading experts

● Outstanding response from major customers

● Facilities in Poland and the US operational by September 2010

2010 Key Highlights

● 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

Strategic Purpose

● Minimal revenues in 2010

● Mid-term objective to ~$60 million in annual sales by 2014

Financial Objectives


22

Key InputsKey InputsFull Year 2010 GuidanceFull Year 2010 Guidance

FY 2010 GUIDANCE

Raising Full Year 2010 Guidance

Structural Incremental Margin 2010

Incremental Margin

SalesSales

Performance Performance Op MarginOp Margin

PerformancePerformanceEPSEPS

8.0% – 9.0%

$1.75 - $2.05

$1,930 - $2,000

35% - 40%

8.5% – 9.5%

$1.95 - $2.20

Previous Updated

(2)

(3)

($ Millions, except per share data)

Low End – High End Low End – High End

Free Cash Free Cash Flow Flow

ConversionConversion(4)

80% - 90% (Excluding Stream. &

Separation)

80% - 90% (Excluding Stream. &

Separation)

• 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

(1 EURO = 1.28 USD)(1 EURO = 1.28 USD)

(1)

(1 EURO = 1.28 USD)(1 EURO = 1.28 USD)

$1,860 - $1,942

30% - 35%(1)

Note: Guidance as announced on July 28, 2010. 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

as of July 28, 2010as of July 28, 2010


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


jacques esculier chairman & chief executive officer credit suisse small and mid cap conference...

Documents

certain nongaap measures

comparable gaap measures

wabco holdings

operating income margin

net income

industry data

ebit margin

operating performance