- Sales Growth of 13.9% to $2.19 Billion; Sales Up 16.8%
Excluding Impacts of Foreign Currency Exchange
- First Quarter Reported GAAP Earnings Per Share of $0.93;
Adjusted Earnings Per Share Up 13.3% to $1.28
- Returned $209 Million to Shareholders via Dividends and
Share Repurchases
- Strong Visibility From $22.3 Billion Multi-Year
Backlog
Wabtec Corporation (NYSE: WAB) today reported first quarter 2023
GAAP earnings per diluted share of $0.93, up 16.3% versus the first
quarter of 2022. Adjusted earnings per diluted share were $1.28, up
13.3% versus the same quarter a year ago. First quarter sales were
$2.19 billion driven by strong sales across the portfolio.
“The Wabtec team delivered a strong start to 2023 demonstrating
continued momentum across both our Freight and Transit segments
supporting a double-digit percentage increase in earnings per
share,” said Rafael Santana, Wabtec’s President and CEO. “We
remained resilient in the face of considerable macro-economic
challenges by focusing on operational excellence as we continued to
deliver for our customers and shareholders. The underlying business
fundamentals strengthened in the first quarter despite a
challenging environment.”
“Looking forward, Wabtec is well-positioned to navigate the
current economic environment, and we remain confident in our
ability to execute against our strategic growth plans as we deliver
for our customers. Our differentiated portfolio of products and
technologies, expansive global installed base, and multi-year
backlog position us to remain highly resilient and drive long-term
profitable growth for our shareholders.”
2023 First Quarter Consolidated Results
Wabtec Corporation Consolidated Financial
Results
$ in millions except earnings per share
and percentages; margin change in percentage points (pts)
First Quarter
2023
2022
Change
Net Sales
$2,194
$1,927
13.9%
GAAP Gross Margin
30.3%
30.9%
(0.6 pts)
Adjusted Gross Margin
30.5%
31.1%
(0.6 pts)
GAAP Operating Margin
12.6%
12.4%
0.2 pts
Adjusted Operating Margin
16.4%
16.5%
(0.1 pts)
GAAP Diluted EPS
$0.93
$0.80
16.3%
Adjusted Diluted EPS
$1.28
$1.13
13.3%
Cash Flow from Operations
$(25)
$161
$(186)
Operating Cash Flow Conversion
(8)%
59%
- Sales increased 13.9% compared to the year-ago quarter driven
by significantly higher Freight segment sales and increased Transit
segment sales. On a constant currency basis, consolidated sales
were up 16.8%.
- GAAP operating margin was slightly higher than prior year at
12.6% and adjusted operating margin was slightly lower at
16.4%.
- GAAP EPS and adjusted EPS increased from the year-ago quarter
primarily due to higher sales, partially offset by higher interest
expense.
2023 First Quarter Freight Segment Results
Wabtec Corporation Freight Segment
Financial Results
Net sales $ in millions; margin change in
percentage points (pts)
First Quarter
2023
2022
Change
Net Sales
$1,566
$1,322
18.5%
GAAP Gross Margin
30.6%
32.1%
(1.5 pts)
Adjusted Gross Margin
30.7%
32.2%
(1.5 pts)
GAAP Operating Margin
14.5%
14.3%
0.2 pts
Adjusted Operating Margin
19.0%
19.6%
(0.6 pts)
- Freight segment sales for the first quarter were up across all
product lines, with very strong growth in Equipment, Components and
Digital Intelligence. On a constant currency basis, Freight segment
sales were up 20.0%.
- Both GAAP and adjusted operating margins benefited from higher
sales and operational efficiencies, offset by unfavorable sales mix
between business groups and higher next generation product
development costs in our Digital Intelligence business.
2023 First Quarter Transit Segment Results
Wabtec Corporation Transit Segment
Financial Results
Net sales $ in millions; margin change in
percentage points (pts)
First Quarter
2023
2022
Change
Net Sales
$628
$605
3.8%
GAAP Gross Margin
29.5%
28.2%
1.3 pts
Adjusted Gross Margin
29.9%
28.7%
1.2 pts
GAAP Operating Margin
11.0%
10.7%
0.3 pts
Adjusted Operating Margin
13.1%
12.3%
0.8 pts
- Transit segment sales for the first quarter were up due to
strong aftermarket sales partially offset by unfavorable foreign
currency exchange. On a constant currency basis, Transit segment
sales were up 9.6%.
- GAAP and adjusted operating margins were up as a result of
higher sales and Integration 2.0 savings.
Backlog
Wabtec Corporation Consolidated Backlog
Comparison
Backlog $ in millions
March 31,
2023
2022
Change
12-Month Backlog
$6,925
$6,631
4.4%
Total Backlog
$22,334
$22,759
(1.9) %
The Company’s multi-year backlog continues to provide strong
visibility. At March 31, 2023 the 12-month backlog was $294 million
higher than March 31, 2022. At March 31, 2023, the multi-year
backlog was $425 million lower than March 31, 2022 and excluding
unfavorable foreign currency exchange, the multi-year backlog
decreased $101 million, down 0.4%.
Cash Flow and Liquidity Summary
- During the first quarter, cash used for operations was $25
million versus cash provided from operations of $161 million in the
year ago period due primarily to higher working capital.
- At the end of the quarter, the Company had cash, cash
equivalents and restricted cash of $417 million and total debt of
$4.16 billion. At March 31, 2023 the Company’s total available
liquidity was $2.01 billion, which includes cash, cash equivalents
and restricted cash plus $1.59 billion available under current
credit facilities.
- During the first quarter, the Company repurchased $178 million
of shares and raised the regular quarterly common dividend by 13%
to 17 cents per share.
2023 Financial Guidance
- Wabtec’s 2023 financial guidance continues with sales expected
to be in a range of $8.7 billion to $9.0 billion and adjusted
earnings per diluted share to be in a range of $5.15 to $5.55.
- For full year 2023, Wabtec expects strong cash flow generation
with operating cash flow conversion of greater than 90
percent.
Conference Call Information
Wabtec will host a call with analysts and investors at 8:30
a.m., ET, today. To listen via webcast, go to Wabtec’s new website
at www.WabtecCorp.com and click on “Events & Presentations” in
the “Investor Relations” section. Also, an audio replay of the call
will be available by calling 1-877-344-7529 or 1-412-317-0088
(access code: 4647602).
About Wabtec
Wabtec Corporation (NYSE: WAB) is revolutionizing the way the
world moves for future generations. The company is a leading global
provider of equipment, systems, digital solutions and value-added
services for the freight and transit rail industries, as well as
the mining, marine and industrial markets. Wabtec has been a leader
in the rail industry for over 150 years and has a vision to achieve
a zero-emission rail system in the U.S. and worldwide. Visit
Wabtec’s website at www.wabteccorp.com
Information about non-GAAP Financial Information and
Forward-Looking Statements
Wabtec’s earnings release and 2023 financial guidance mentions
certain non-GAAP financial performance measures, including adjusted
gross profit, adjusted operating expenses, adjusted operating
margin, EBITDA, adjusted EBITDA, adjusted effective tax rate,
adjusted income tax expense, adjusted income from operations,
adjusted interest and other expense, adjusted earnings per diluted
share and operating cash flow conversion. Wabtec is not presenting
a quantitative reconciliation of our forecasted GAAP earnings per
diluted share to forecasted adjusted earnings per diluted share as
we are unable to predict with reasonable certainty and without
unreasonable effort the impact and timing of restructuring-related
and other charges, including acquisition-related expenses and the
outcome of certain regulatory, legal and tax matters. The financial
impact of these items is uncertain and is dependent on various
factors, including timing, and could be material to our
Consolidated Statements of Earnings. Wabtec defines EBITDA as
earnings before interest, taxes, depreciation and amortization.
Wabtec defines operating cash flow conversion as net cash provided
by operating activities divided by net income plus depreciation and
amortization including deferred debt cost amortization. While
Wabtec believes these are useful supplemental measures for
investors, they are not presented in accordance with GAAP.
Investors should not consider non-GAAP measures in isolation or as
a substitute for net income, cash flows from operations, or any
other items calculated in accordance with GAAP. In addition, the
non-GAAP financial measures included in this release have inherent
material limitations as performance measures because they add back
certain expenses incurred by the Company to GAAP financial
measures, resulting in those expenses not being taken into account
in the applicable non-GAAP financial measure. Because not all
companies use identical calculations, Wabtec’s presentation of
non-GAAP financial measures may not be comparable to other
similarly titled measures of other companies. Included in this
release are reconciliation tables that provide details about how
adjusted results relate to GAAP results.
This communication contains “forward-looking” statements as that
term is defined in Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended by the Private Securities Litigation Reform Act of 1995,
including statements regarding the impact of acquisitions by
Wabtec, statements regarding Wabtec’s expectations about future
sales and earnings, and statements about the impact of evolving
global conditions on Wabtec’s business. All statements, other than
historical facts, including statements regarding synergies and
other expected benefits from acquisitions; statements regarding
Wabtec’s plans, objectives, expectations and intentions; and
statements regarding macro-economic conditions and evolving
production and demand conditions; and any assumptions underlying
any of the foregoing, are forward-looking statements.
Forward-looking statements concern future circumstances and results
and other statements that are not historical facts and are
sometimes identified by the words “may,” “will,” “should,”
“potential,” “intend,” “expect,” “endeavor,” “seek,” “anticipate,”
“estimate,” “overestimate,” “underestimate,” “believe,” “could,”
“project,” “predict,” “continue,” “target” or other similar words
or expressions. Forward-looking statements are based upon current
plans, estimates and expectations that are subject to risks,
uncertainties and assumptions. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those indicated
or anticipated by such forward-looking statements. The inclusion of
such statements should not be regarded as a representation that
such plans, estimates or expectations will be achieved. Important
factors that could cause actual results to differ materially from
such plans, estimates or expectations include, among others, (1)
changes in general economic and/or industry specific conditions,
including the impacts of tax and tariff programs, inflation, supply
chain disruptions, foreign currency exchange, and industry
consolidation; (2) changes in the financial condition or operating
strategies of Wabtec’s customers; (3) unexpected costs, charges or
expenses resulting from acquisitions and potential failure to
realize synergies and other anticipated benefits of acquisitions,
including as a result of integrating acquired targets into Wabtec;
(4) inability to retain and hire key personnel; (5) evolving legal,
regulatory and tax regimes; (6) changes in the expected timing of
projects; (7) a decrease in freight or passenger rail traffic; (8)
an increase in manufacturing costs; (9) actions by third parties,
including government agencies; (10) the severity and duration of
the evolving COVID-19 pandemic and the resulting impact on the
global economy and, in particular, our customers, suppliers and
end-markets, (11) potential disruptions, instability, and
volatility in global markets from the imposition of economic
sanctions on Russia resulting from the invasion of Ukraine; (12)
cybersecurity and data protection risks and (13) other risk factors
as detailed from time to time in Wabtec’s reports filed with the
SEC, including Wabtec’s annual report on Form 10-K, periodic
quarterly reports on Form 10-Q, current reports on Form 8-K and
other documents filed with the SEC. The foregoing list of important
factors is not exclusive. Any forward-looking statements speak only
as of the date of this communication. Wabtec does not undertake any
obligation to update any forward-looking statements, whether as a
result of new information or development, future events or
otherwise, except as required by law. Readers are cautioned not to
place undue reliance on any of these forward-looking
statements.
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION CONDENSED
CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED
MARCH 31, 2023 AND 2022 (AMOUNTS IN MILLIONS EXCEPT PER
SHARE DATA) (UNAUDITED)
Three Months Ended
March 31,
2023
2022
Net sales
$
2,194
$
1,927
Cost of sales
(1,529
)
(1,332
)
Gross profit
665
595
Gross profit as a % of Net Sales
30.3
%
30.9
%
Selling, general and administrative expenses
(263
)
(238
)
Engineering expenses
(51
)
(45
)
Amortization expense
(75
)
(73
)
Total operating expenses
(389
)
(356
)
Operating expenses as a % of Net Sales
17.7
%
18.4
%
Income from operations
276
239
Income from operations as a % of Net Sales
12.6
%
12.4
%
Interest expense, net
(48
)
(43
)
Other income, net
5
4
Income before income taxes
233
200
Income tax expense
(60
)
(50
)
Effective tax rate
25.5
%
25.1
%
Net income
173
150
Less: Net income attributable to noncontrolling interest
(4
)
(1
)
Net income attributable to Wabtec shareholders
$
169
$
149
Earnings Per Common Share Basic Net income
attributable to Wabtec shareholders
$
0.94
$
0.80
Diluted Net income attributable to Wabtec
shareholders
$
0.93
$
0.80
Basic
179.9
184.5
Diluted
180.6
185.0
Segment Information Freight Net Sales
$
1,566
$
1,322
Freight Income from Operations
$
227
$
189
Freight Operating Margin
14.5
%
14.3
%
Transit Net Sales
$
628
$
605
Transit Income from Operations
$
69
$
65
Transit Operating Margin
11.0
%
10.7
%
Backlog Information (Note: 12-month is a sub-set of total)
March 31, 2023 December 31, 2022 March 31, 2022 Freight Total
$
18,362
$
18,641
$
19,024
Transit Total
3,972
3,800
3,735
Wabtec Total
$
22,334
$
22,441
$
22,759
Freight 12-Month
$
4,978
$
4,901
$
4,812
Transit 12-Month
1,947
1,859
1,819
Wabtec 12-Month
$
6,925
$
6,760
$
6,631
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION CONDENSED
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
March 31, 2023 December 31, 2022 In
millions Cash, cash equivalents and restricted cash
$
417
$
541
Receivables, net
1,576
1,519
Inventories
2,228
2,034
Other current assets
275
233
Total current assets
4,496
4,327
Property, plant and equipment, net
1,422
1,429
Goodwill
8,540
8,508
Other intangible assets, net
3,333
3,402
Other noncurrent assets
878
850
Total assets
$
18,669
$
18,516
Current liabilities
$
4,165
$
3,467
Long-term debt
3,189
3,751
Long-term liabilities - other
1,181
1,151
Total liabilities
8,535
8,369
Shareholders' equity
10,085
10,102
Noncontrolling interest
49
45
Total shareholders' equity
10,134
10,147
Total Liabilities and Shareholders' Equity
$
18,669
$
18,516
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended March
31,
2023
2022
In millions Operating
activities Net income
$
173
$
150
Non-cash expense
124
122
Receivables
(51
)
93
Inventories
(188
)
(137
)
Accounts Payable
47
48
Other assets and liabilities
(130
)
(115
)
Net cash (used for) provided by operating activities
(25
)
161
Net cash used for investing activities
(32
)
(18
)
Net cash used for financing activities
(72
)
(133
)
Effect of changes in currency exchange rates
5
5
(Decrease) increase in cash
(124
)
15
Cash, cash equivalents and restricted cash, beginning of
period
541
473
Cash, cash equivalents and restricted cash, end of period
$
417
$
488
Set forth below is the calculation of the non-GAAP
performance measures included in this press release. We believe
that these measures provide useful supplemental information to
assess our operating performance and to evaluate period-to-period
comparisons. Non-GAAP financial measures should be viewed in
addition to, and not as an alternative for, Wabtec's reported
results prepared in accordance with GAAP.
Wabtec Corporation
Reconciliation of Reported Results to Adjusted Results
(in millions) First Quarter 2023 Actual Results
Gross Operating Income from Interest
& Noncontrolling Wabtec Net Sales Profit Expenses Operations Other
Exp Tax
Net Income Interest Net
Income EPS
Reported Results
$
2,194
$
665
$
(389
)
$
276
$
(43
)
$
(60
)
$
173
$
(4
)
$
169
$
0.93
Restructuring costs
-
4
5
9
-
(2
)
7
-
7
$
0.04
Non-cash Amortization expense
-
-
75
75
-
(20
)
55
-
55
$
0.31
Adjusted Results
$
2,194
$
669
$
(309
)
$
360
$
(43
)
$
(82
)
$
235
$
(4
)
$
231
$
1.28
Fully Diluted Shares Outstanding
180.6
Wabtec Corporation Reconciliation of
Reported Results to Adjusted Results (in millions)
First Quarter 2022 Actual Results Gross
Operating Income from Interest &
Noncontrolling Wabtec Net
Sales Profit
Expenses Operations Other
Exp Tax
Net Income Interest Net
Income EPS
Reported Results
$
1,927
$
595
$
(356
)
$
239
$
(39
)
$
(50
)
$
150
$
(1
)
$
149
$
0.80
Restructuring costs
-
5
2
7
-
(2
)
5
-
5
$
0.03
Non-cash Amortization expense
-
-
73
73
-
(18
)
55
-
55
$
0.30
Adjusted Results
$
1,927
$
600
$
(281
)
$
319
$
(39
)
$
(70
)
$
210
$
(1
)
$
209
$
1.13
Fully Diluted Shares Outstanding
185.0
Set forth below is the calculation of the non-GAAP
performance measures included in this press release. We believe
that these measures provide useful supplemental information to
assess our operating performance and to evaluate period-to-period
comparisons. Non-GAAP financial measures should be viewed in
addition to, and not as an alternative for, Wabtec's reported
results prepared in accordance with GAAP.
Wabtec Corporation
2023 Q1 EBITDA Reconciliation (in millions)
Reported Income + Other Income +
Depreciation & = EBITDA + Restructuring =
Adjusted from Operations
(Expense) Amortization Costs EBITDA Consolidated Results
$
276
$
5
$
121
$
402
$
6
$
408
Wabtec Corporation 2022 Q1 EBITDA
Reconciliation (in millions) Reported Income
+ Other Income + Depreciation &
= EBITDA +
Restructuring = Adjusted from Operations (Expense) Amortization Costs EBITDA Consolidated Results
$
239
$
4
$
121
$
364
$
7
$
371
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION
SALES BY PRODUCT LINE (UNAUDITED)
Three Months Ended March
31,
In millions
2023
2022
Freight Segment Equipment
$
393
$
274
Components
279
229
Digital Intelligence
187
153
Services
707
666
Total Freight Segment
$
1,566
$
1,322
Transit Segment Original Equipment Manufacturer
$
282
$
292
Aftermarket
346
313
Total Transit Segment
$
628
$
605
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION
RECONCILIATION OF REPORTED RESULTS TO ADJUSTED RESULTS - BY
SEGMENT (UNAUDITED)
Three Months Ended March
31,
2023
2022
In millions
Gross
Profit
Income
from Operations
Gross
Profit
Income
from Operations
Freight Segment Reported Results
$
480
$
227
$
424
$
189
Freight Segment Reported Margin
30.6
%
14.5
%
32.1
%
14.3
%
Restructuring costs
1
2
2
2
Non-cash Amortization expense
-
68
-
68
Freight Segment Adjusted Results
$
481
$
297
$
426
$
259
Freight Segment Adjusted Margin
30.7
%
19.0
%
32.2
%
19.6
%
Transit Segment Reported Results
$
185
$
69
$
171
$
65
Transit Segment Reported Margin
29.5
%
11.0
%
28.2
%
10.7
%
Restructuring costs
3
7
3
4
Non-cash Amortization expense
-
7
-
5
Transit Segment Adjusted Results
$
188
$
83
$
174
$
74
Transit Segment Adjusted Margin
29.9
%
13.1
%
28.7
%
12.3
%
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION
RECONCILIATION OF CHANGES IN NET SALES - BY SEGMENT
(UNAUDITED) Three Months Ended March 31,
Freight Transit Consolidated 2022 Net Sales
$
1,322
$
605
$
1,927
Acquisitions
21
-
21
Foreign Exchange
(21
)
(35
)
(56
)
Organic
244
58
302
2023 Net Sales
$
1,566
$
628
$
2,194
Change ($)
244
23
267
Change (%)
18.5
%
3.8
%
13.9
%
Set forth below is the calculation of the non-GAAP
performance measures included in this press release. We
believe that these measures provide useful supplemental information
to assess our operating performance and to evaluate
period-to-period comparisons. Non-GAAP financial measures
should be viewed in addition to, and not as an alternative for,
Wabtec's reported results prepared in accordance with GAAP.
Wabtec Corporation
2023 Q1 Cash Conversion Calculation
(in millions) Reported
Cash ÷ (Net Income
+ Depreciation &
Amortization) = Cash
Conversion from
Operations Consolidated Results
($25
)
$
173
$
123
(8
%)
Wabtec Corporation
2022 Q1 Cash Conversion
Calculation (in millions)
Reported Cash ÷ (Net
Income + Depreciation
& Amortization) = Cash Conversion from Operations Consolidated
Results
$
161
$
150
$
122
59
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230426005053/en/
Wabtec Investor Contact Kristine Kubacki, CFA /
Kristine.Kubacki@wabtec.com / 412-450-2033
Wabtec Media Contact Tim Bader / Tim.Bader@wabtec.com /
682-319-7925
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