- First Quarter Reported GAAP Earnings Per Share of $0.58;
Adjusted EPS of $0.97
- First Quarter Reported GAAP Income From Operations of $217
Million (11.3% Margin); Adjusted Income From Operations of $303
Million (15.7% Margin)
- Strong Financial Position with Available Liquidity of About
$1.2 Billion at Quarter Close; Additional Actions Post Quarter
Further Enhanced Liquidity by $600 Million
- Multi-Year Backlog of $22 Billion Provides Forward
Visibility
Wabtec Corporation (NYSE: WAB) today reported first quarter 2020
earnings per diluted share of $0.58 and adjusted earnings per
diluted share of $0.97 (on 191.4 million fully diluted shares)
versus a loss per diluted share of $0.04 and adjusted earnings per
diluted share of $1.21 (on 132.5 million fully diluted shares) a
year ago. Total sales were $1.9 billion versus $1.6 billion a year
ago.
Rafael Santana, Wabtec’s president and chief executive officer,
said: “Wabtec delivered a solid first quarter despite increased
headwinds from the COVID-19 pandemic that included operational and
supply chain disruptions primarily in India, China and Europe. This
is a testament to the perseverance and experience of our employees.
Despite the weaker environment in the quarter, we continued to
reduce cost, improve operational performance and deliver on our
synergy targets. As we continue to navigate today’s rapidly
changing environment, we remain committed to improving segment
margins, controlling what we can and protecting the health and
safety of our workforce, while maintaining our operational
capabilities and delivering for customers.
“We are taking swift and prudent actions to reduce cost, manage
cash and maintain our strong liquidity position. Even with the
uncertain environment, we are committed to delivering on our
synergy plans and aligning production capacity to prevailing demand
conditions. Additionally, we are taking actions to reduce working
capital and to cut non-essential capital spending.
“Through these efforts and other actions, and by leveraging the
strength, scale and diversity of our business, we will continue to
position Wabtec as an even stronger and more resilient
company.”
Business Update
Due to the impacts of the pandemic and the global government
actions to contain it, some of Wabtec’s customers have been
adversely affected, and certain of our operations and supply chains
have, and continue to be, impacted. Rail transportation in North
America and other parts of the world has been deemed critical to
moving essential goods and commodities. At this time, a majority of
Wabtec’s global operations, including those in the United States,
continue to operate to support the critical needs of customers.
However, Wabtec operations (most notably in China, India, and parts
of Europe) were partially or fully impacted due to government
issued lockdowns to protect against the spread of the virus.
In accordance with (and in addition to) guidance from both the
World Health Organization (WHO) and the U.S. Centers for Disease
Control and Prevention (CDC), Wabtec has taken significant
proactive measures to protect the health and safety of employees,
including temperature screenings, enhanced social distancing,
expanded work from home protocols, the implementation of deep
cleaning and sanitization efforts, and the distribution of
additional personal protective equipment (PPE) where needed.
2020 Guidance Update
Wabtec previously issued 2020 financial guidance, which did not
include the impacts of the coronavirus, on February 18, 2020. The
situation created by the COVID-19 pandemic is rapidly evolving and
there remains a high degree of uncertainty regarding the duration
and severity of the pandemic, government actions to contain it and
the potential impact on global economic activity, global supply
chain operations, and our customers. As a result of this
uncertainty, Wabtec is withdrawing its 2020 financial guidance at
this time.
Wabtec remains confident in the long-term fundamentals of the
company and its ability to navigate the challenging environment
ahead. Our strong backlog, recurring service revenues, aftermarket
reach, significant installed base, technology differentiation,
international footprint and globally diverse business model have
positioned the Company to successfully manage market headwinds over
the long-term.
Our team is focused on taking the necessary steps in response to
the pandemic. We are reducing our controllable costs by delivering
on our original synergy targets, continuing to consolidate our
operational footprint by an additional 9% in 2020, and lowering
fixed costs by driving down SG&A expense. These cost actions,
along with working capital management and a more than 40% reduction
in capital expenditures this year will improve our liquidity and
further strengthen Wabtec’s financial position.
2020 First Quarter Consolidated Results
- Sales were $1.9 billion versus $1.6 billion in the same period
a year ago. The increase compared to the year-ago quarter are
primarily due to sales from acquisitions, mainly of GE
Transportation, partially offset by lower sales in Freight
Components and Equipment, and Transit and unfavorable foreign
exchange rates.
- Income from operations was $217 million (11.3% of sales) and
adjusted income from operations was $303 million (15.7% of sales),
which were favorably impacted by improvement in Transit operations,
offset somewhat by disruption due to the COVID-19 pandemic.
Adjusted income from operations excluded pre-tax expenses of $86
million, of which $69 million is for non-cash amortization expense
and $17 million is for restructuring and transaction costs (see
reconciliation table).
- Net interest expense was $53 million and other income (expense)
was $15M of expense, primarily related to foreign currency exchange
losses.
- The reported and adjusted effective tax rate for the quarter
was 25.5%.
- Earnings per diluted share were $0.58 and adjusted earnings per
diluted share were $0.97 (see reconciliation table). Adjusted
earnings per diluted share excluded after-tax expenses of $0.39 as
follows: $0.27 for non-cash amortization expense; $0.07 for
transaction and restructuring; and $0.05 for foreign exchange loss
(see reconciliation table).
- EBITDA, which Wabtec defines as earnings before interest,
taxes, depreciation and amortization, was $317 million and adjusted
EBITDA was $334 million. Adjusted EBITDA excluded pre-tax expenses
of $17 million for transaction and restructuring costs (see
reconciliation table).
2020 First Quarter Segment Results
- Freight segment sales of $1.3 billion increased by 42% from the
year-ago quarter or $386 million. The increase was due to sales
from acquisitions of $506 million, which was partially offset by an
organic decrease of $108 million and unfavorable changes in foreign
currency exchange rates of $13 million. Freight segment organic
sales were negatively impacted by lower sales in Equipment and
Components, offset somewhat by growth in Digital Electronics and
Services.
- Freight segment income from operations of $162 million (or
12.4% of segment sales) increased from the year-ago quarter by $81
million mainly as a result of acquisitions. Freight segment income
from operations was reduced by $14 million due to restructuring and
transaction expenses noted. Excluding restructuring, transaction
and non-cash amortization expense, Freight segment adjusted income
from operations as a percent of sales was 18.5%.
- Transit segment sales of $629 million decreased by 7% from the
year-ago quarter or $49 million. Acquisitions of $3 million were
more than offset by an organic sales decline of $34 million and
unfavorable changes in foreign currency exchange rates of $18
million. Transit segment sales were negatively impacted by COVID-19
disruption on operations and supply chain.
- Transit segment income from operations of $69 million (or 10.9%
of segment sales) increased from the year-ago quarter by $9 million
as a result of improved mix and operational efficiencies, offset
somewhat by lower volume. Excluding restructuring and non-cash
amortization expense of $6 million, Transit segment adjusted income
from operations as a percent of sales was 11.9%.
Cash Flow and Liquidity Summary
- The company used cash for operations of $82 million for the
first quarter compared to cash provided by operations of $31
million in the year-ago quarter, with the decrease resulting from
current year cash outflows from the GE Transportation transaction
and prior year restructuring and litigation charges offset somewhat
by higher net income.
- At March 31, the company had cash and cash equivalents of $616
million and debt of $4.7 billion. At the quarter end, the company’s
total available liquidity, which includes $616 million in cash and
cash equivalents plus $598 million available under current credit
facilities, was $1.2 billion. This amount does not reflect a $600
million 364-day credit facility, which we entered into following
the close of the quarter.
Backlog
At March 31, Wabtec’s total, multi-year backlog was $21.5
billion, and its 12-month backlog was $5.6 billion, slightly lower
than at December 31, 2019.
Conference Call Information
Wabtec will host a call with analysts and investors at 10 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: 10138395).
About Wabtec Corporation
Wabtec Corporation is a leading global provider of equipment,
systems, digital solutions and value-added services for freight and
transit rail. Drawing on nearly four centuries of collective
experience across Wabtec, GE Transportation and Faiveley Transport,
the company has unmatched digital expertise, technological
innovation, and world-class manufacturing and services, enabling
the digital-rail-and-transit ecosystems. Wabtec is focused on
performance that drives progress, creating transportation solutions
that move and improve the world. The freight portfolio features a
comprehensive line of locomotives, software applications and a
broad selection of mission-critical controls systems, including
Positive Train Control (PTC). The transit portfolio provides highly
engineered systems and services to virtually every major rail
transit system around the world, supplying an integrated series of
components for buses and all train-related market segments that
deliver safety, efficiency and passenger comfort. Along with its
industry-leading portfolio of products and solutions for the rail
and transit industries, Wabtec is a leader in mining, marine, and
industrial solutions. Based in Pittsburgh, PA, Wabtec has
approximately 27,000 employees in facilities throughout the world.
Visit: www.WabtecCorp.com
Information about non-GAAP Financial Information and
Forward-Looking Statements
Wabtec’s earnings release 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 and adjusted earnings per diluted share. Wabtec defines
EBITDA as earnings before interest, taxes, depreciation and
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 presentation 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 acquisition by Wabtec of GE
Transportation (the “GE Transportation merger”), 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 from the GE Transportation
merger; 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) unexpected costs, charges or expenses
resulting from the GE Transportation merger; (2) uncertainty of
Wabtec’s expected financial performance; (3) failure to realize the
anticipated benefits of the GE Transportation merger, including as
a result of integrating GE Transportation into Wabtec; (4) Wabtec’s
ability to implement its business strategy; (5) difficulties and
delays in achieving revenue and cost synergies; (6) inability to
retain and hire key personnel; (7) evolving legal, regulatory and
tax regimes; (8) changes in general economic and/or industry
specific conditions, including the impacts of tax and tariff
programs, industry consolidation and changes in the financial
condition or operating strategies of our customers; (9) changes in
the expected timing of projects; (10) a decrease in freight or
passenger rail traffic; (11) an increase in manufacturing costs;
(12) actions by third parties, including government agencies; (13)
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, and (14) 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, periodic 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 STATEMENT OF INCOME FOR THE THREE MONTHS ENDED
MARCH 31, 2020 AND 2019 (AMOUNTS IN MILLIONS EXCEPT PER
SHARE DATA) (UNAUDITED)
For the For the Three Months Three Months
2020
2019
Net sales
$ 1,929.9
$ 1,593.6
Cost of sales
(1,351.2)
(1,204.6)
Gross profit
578.7
389.0
Gross profit as a % of Net Sales
30.0%
24.4%
Selling, general and administrative expenses
(243.4)
(259.8)
Engineering expenses
(49.0)
(34.5)
Amortization expense
(69.0)
(27.4)
Total operating expenses
(361.4)
(321.7)
Operating expenses as a % of Net Sales
18.7%
20.2%
Income from operations
217.3
67.3
Income from operations as a % of Net Sales
11.3%
4.2%
Interest expense, net
(53.3)
(44.6)
Other income (expense), net
(14.8)
(8.2)
Income from operations before income taxes
149.2
14.5
Income tax expense
(38.0)
(18.5)
Effective tax rate
25.5%
127.6%
Net income (loss)
111.2
(4.0)
Less: Net loss (gain) attributable to noncontrolling
interest
0.4
(0.5)
Net income (loss) attributable to Wabtec shareholders
$ 111.6
$ (4.5)
Earnings Per Common Share Basic
Net income (loss) attributable to Wabtec shareholders
$ 0.58
$ (0.04)
Diluted Net income (loss) attributable
to Wabtec shareholders
$ 0.58
$ (0.04)
Basic
190.8
121.2
Diluted
191.4
121.2
Segment Information Freight Net Sales
$ 1,301.0
$ 915.5
Freight Income from Operations
$ 161.7
$ 80.9
Freight Operating Margin
12.4%
8.8%
Transit Net Sales
$ 628.9
$ 678.1
Transit Income from Operations
$ 68.6
$ 59.9
Transit Operating Margin
10.9%
8.8%
Backlog Information (Note:
12-month is a sub-set of total)
March 31, 2020
December 31, 2019 Freight Total
18,099.6
18,945.3
Transit Total
3,431.3
3,486.4
Wabtec Total
21,530.9
22,431.7
Freight 12-Month
3,819.0
3,911.0
Transit 12-Month
1,801.0
1,692.8
Wabtec 12-Month
5,620.0
5,603.8
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION CONDENSED
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
March 31, 2020 December 31, 2019 In
millions Cash and cash equivalents
$ 615.9
$ 604.2
Receivables, net
1,672.0
1,663.9
Inventories
1,785.7
1,773.1
Current assets - other
167.5
150.9
Total current assets
4,241.1
4,192.1
Property, plant and equipment, net
1,623.0
1,655.8
Goodwill
8,273.7
8,360.6
Other intangibles, net
4,010.0
4,104.0
Other long term assets
625.3
631.7
Total assets
$ 18,773.1
$ 18,944.2
Current liabilities
$ 2,981.6
$ 3,258.0
Long-term debt
4,655.1
4,333.6
Long-term liabilities - other
1,338.7
1,359.0
Total liabilities
8,975.4
8,950.6
Shareholders' equity
9,761.8
9,956.5
Non-controlling interest
35.9
37.1
Total shareholders' equity
9,797.7
9,993.6
Total Liabilities and Shareholders' Equity
$ 18,773.1
$ 18,944.2
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended March 31,
2020
2019
In millions Net cash (used for)
provided by operating activities
$ (81.9)
$ 31.3
Net cash used for investing activities
(62.6)
(2,739.6)
Net cash provided by financing activities
183.5
883.0
Effect of changes in currency exchange rates
(27.3)
(4.2)
Increase (decrease) in cash
11.7
(1,829.5)
Cash, cash equivalents, and restricted cash, beginning of period
604.2
2,342.4
Cash and cash equivalents, end of period
$ 615.9
$ 512.9
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 Reconciliation
of Reported Results to Adjusted Results (in millions)
First Quarter 2020 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
$ 1,929.9
$ 578.7
$ (361.4)
$ 217.3
$ (68.1)
$ (38.0)
$ 111.2
$ 0.4
$ 111.6
$ 0.58
Restructuring & Transaction costs
-
1.4
15.5
16.9
-
(4.3)
12.6
-
12.6
$ 0.07
Non-cash Amortization expense
-
-
69.0
69.0
-
(17.6)
51.4
-
51.4
$ 0.27
Foreign Exchange Loss
-
-
-
-
13.8
(3.5)
10.3
-
10.3
$ 0.05
Adjusted Results
$ 1,929.9
$ 580.1
$ (276.9)
$ 303.2
$ (54.3)
$ (63.4)
$ 185.5
$ 0.4
$ 185.9
$ 0.97
Fully Diluted Shares Outstanding
191.4
Wabtec Corporation Reconciliation of
Reported Results to Adjusted Results (in millions)
First Quarter 2019 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
$ 1,593.6
$ 389.0
$ (321.7)
$ 67.3
$ (52.8)
$ (18.5)
$ (4.0)
$ (0.5)
$ (4.5)
$ (0.04)
Restructuring & Transaction costs
-
-
58.7
58.7
14.4
(17.7)
55.4
-
55.4
$ 0.42
Non-cash Amortization expense
-
-
27.4
27.4
-
(6.6)
20.8
-
20.8
$ 0.16
One-time PPA
-
80.0
-
80.0
-
(19.4)
60.6
-
60.6
$ 0.46
Foreign Exchange Loss
-
-
-
-
12.7
(3.1)
9.6
-
9.6
$ 0.07
Tax on Transaction Costs
-
-
-
-
-
18.0
18.0
-
18.0
$ 0.14
Adjusted Results
$ 1,593.6
$ 469.0
$ (235.6)
$ 233.4
$ (25.7)
$ (47.3)
$ 160.4
$ (0.5)
$ 159.9
$ 1.21
Fully Diluted Shares Outstanding
132.5
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 2020 Q1 EBITDA
Reconciliation (in millions)
Reported Income
+
Other Income
+
Depreciation &
=
EBITDA
+
Restructuring &
=
Adjusted
from
Operations
(Expense)
Amortization
Transaction Costs
EBITDA
Consolidated Q1 Results
$217.3
($14.8)
$114.4
$316.9
$16.9
$333.8
Wabtec Corporation
2019 Q1 EBITDA Reconciliation
(in millions)
Reported Income
+
Other Income
+
Depreciation &
=
EBITDA
+
Restructuring &
=
Adjusted
from
Operations
(Expense)
Amortization
Transaction Costs
EBITDA
Consolidated Q1 Results
$67.3
($8.2)
$54.6
$113.7
$138.7
$252.4
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200504005162/en/
Wabtec Investor Contact Kristine Kubacki, CFA /
Kristine.Kubacki@wabtec.com / 412-450-2033
Wabtec Media Contact Deia Campanelli /
Deia.Campanelli@wabtec.com / 773-297-0482
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