- Third Quarter Reported GAAP Earnings Per Share of $0.69;
Adjusted Earnings Per Share Up 20.0% to $1.14
- Sales Growth of 2.2% to $1.91 Billion; GAAP Operating Margin
of 11.4%; Adjusted Operating Margin +130 bps to 17.0%
- Year-to-Date Cash Flow from Operations up 66% to $759
Million; 103% Year-to-Date Cash Conversion
- Achieved $250 Million of Run-Rate Synergies One Year Earlier
Than Forecasted
- Repurchased 2.3 Million Shares During the Third Quarter for
$199 Million
Wabtec Corporation (NYSE: WAB) today reported third quarter 2021
earnings per diluted share of $0.69, up 3.0% versus the third
quarter of 2020. Adjusted earnings per diluted share were $1.14, up
20.0% versus the same quarter a year ago. Total sales were $1.91
billion and cash from operations was strong at $244 million.
“Our team delivered strong execution in the third quarter and
strengthened our financial position, despite growing global supply
chain disruptions and rising costs,” said Rafael Santana, Wabtec’s
President and CEO. “Our team is taking aggressive actions to
mitigate these significant challenges, as demonstrated by our
ability to deliver $250 million of run-rate synergies a full year
earlier than originally forecasted. Based on our strong
year-to-date results, and in consideration of the volatile cost and
supply chain environment, we are narrowing Wabtec’s full-year
revenue and earnings per share guidance. We are confident we will
continue to position the company for long-term profitable
growth.”
2021 Third Quarter Consolidated Results
- Sales were $1.91 billion versus $1.87 billion in the same
period a year ago. The increase compared to the year-ago quarter
was primarily driven by higher sales in Freight Services and
Freight Components, along with the acquisition of Nordco in the
second quarter of 2021 and favorable foreign currency exchange.
During the quarter, we estimate that sales results were adversely
impacted by 2 to 3 percent due to supply chain disruptions.
- Income from operations was $217 million, up 5.0 percent versus
prior year. Adjusted income from operations was $325 million, up
10.6 percent from last year as result of improved mix and strong
productivity, partially offset by $15 to $20 million in escalating
costs associated with metals, transportation and labor.
2021 Third Quarter Freight Segment Results
- Freight segment sales of $1.30 billion increased by 4.7 percent
from the year-ago quarter. Freight segment sales benefited from
higher demand for Services and increased Components sales, along
with the acquisition of Nordco. This growth was partially offset by
lower deliveries of locomotives in North America and higher supply
chain inputs.
- Freight segment income from operations was $195 million, up
21.8 percent versus the prior year quarter. Adjusted income from
operations of $266 million, up 13.7 percent versus the same quarter
a year ago. The increase was primarily driven by favorable mix and
operational efficiencies, partially offset by higher costs.
2021 Third Quarter Transit Segment Results
- Transit segment sales of $612 million decreased by 2.5 percent
versus the same quarter last year. Transit segment sales were down
versus last year due primarily to supply chain issues and
COVID-related disruptions.
- Transit segment income from operations was $44 million, down
31.5 percent due to restructuring expenses incurred during the
quarter. Adjusted income from operations was $77 million, up 1.9
percent versus last year primarily driven by strong productivity
gains, partially offset by higher costs.
Backlog
At September 30, 2021 the multi-year backlog was $21.84 billion
which was $314 million higher than June 30, 2021 due in most part
from increased orders in Freight Services. Wabtec’s 12-month
backlog was $5.71 billion at September 30, 2021.
Cash Flow and Liquidity Summary
- During the third quarter, the company generated cash from
operations of $244 million versus $230 million in the same period a
year ago. Year-to-date the company generated strong cash from
operations of $759 million resulting in 103% cash conversion for
the year.
- At the end of the quarter, the company had cash, cash
equivalents and restricted cash of $456 million and total debt of
$4.07 billion. At September 30, 2021 the company’s total available
liquidity, which includes cash and cash equivalents plus $1.19
billion available under current credit facilities, was $1.62
billion.
- During the third quarter, the company repurchased 2.3 million
shares for $199 million.
2021 Financial Guidance
- Wabtec tightened its 2021 sales guidance to a range of $7.90
billion to $8.05 billion, GAAP earnings per diluted share guidance
to between $2.87 to $2.97 and adjusted earnings per diluted share
to between $4.20 to $4.30.
- Wabtec expects higher commodity costs and shortages of
component, chip and labor to create a more challenging sales and
cost environment in the fourth quarter and into 2022. Wabtec is
working to mitigate these pressures through price escalation,
surcharges, and accelerated cost actions.
- For full year 2021, Wabtec expects strong cash flow generation
with operating cash flow of about $1 billion.
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: 10160751).
About Wabtec Corporation
Wabtec Corporation (NYSE: WAB) is focused on creating
transportation solutions that move and improve the world. 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 2021 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 book-to-bill ratio. Wabtec defines EBITDA as earnings
before interest, taxes, depreciation and amortization. Wabtec
defines book-to-bill ratio, for which there is no comparable GAAP
financial measure, as orders divided by sales. 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 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 acquisitions, including the GE Transportation
merger; (2) uncertainty of Wabtec’s expected financial performance;
(3) failure to realize the anticipated benefits of acquisitions,
including the GE Transportation merger, including as a result of
integrating acquired targets 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,
supply chain disruptions, 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 STATEMENTS OF INCOME FOR THE THREE AND NINE
MONTHS ENDED SEPTEMBER 30, 2021 AND 2020 (AMOUNTS IN
MILLIONS EXCEPT PER SHARE DATA) (UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
2021
2020
2021
2020
Net sales
$
1,906.9
$
1,865.1
$
5,749.4
$
5,532.4
Cost of sales
(1,304.6
)
(1,298.9
)
(4,032.8
)
(3,900.8
)
Gross profit
602.3
566.2
1,716.6
1,631.6
Gross profit as a % of Net Sales
31.6
%
30.4
%
29.9
%
29.5
%
Selling, general and administrative expenses
(269.0
)
(252.7
)
(766.5
)
(712.9
)
Engineering expenses
(43.8
)
(36.5
)
(123.5
)
(123.7
)
Amortization expense
(72.5
)
(70.3
)
(214.7
)
(211.6
)
Total operating expenses
(385.3
)
(359.5
)
(1,104.7
)
(1,048.2
)
Operating expenses as a % of Net Sales
20.2
%
19.3
%
19.2
%
18.9
%
Income from operations
217.0
206.7
611.9
583.4
Income from operations as a % of Net Sales
11.4
%
11.1
%
10.6
%
10.5
%
Interest expense, net
(42.2
)
(45.6
)
(134.7
)
(150.3
)
Other income (expense), net
0.5
14.3
25.0
5.8
Income before income taxes
175.3
175.4
502.2
438.9
Income tax expense
(43.5
)
(46.9
)
(130.5
)
(113.4
)
Effective tax rate
24.8
%
26.7
%
26.0
%
25.8
%
Net income
131.8
128.5
371.7
325.5
Less: Net (income) loss attributable to noncontrolling
interest
(1.2
)
(0.4
)
(3.9
)
1.0
Net income attributable to Wabtec shareholders
$
130.6
$
128.1
$
367.8
$
326.5
Earnings Per Common Share Basic Net income
attributable to Wabtec shareholders
$
0.69
$
0.67
$
1.95
$
1.71
Diluted Net income attributable to Wabtec
shareholders
$
0.69
$
0.67
$
1.95
$
1.71
Basic
187.6
189.8
188.2
190.1
Diluted
188.0
190.2
188.6
190.6
Segment Information Freight Net Sales
$
1,295.0
$
1,237.3
$
3,814.2
$
3,743.0
Freight Income from Operations
$
195.2
$
160.2
$
510.2
$
463.4
Freight Operating Margin
15.1
%
12.9
%
13.4
%
12.4
%
Transit Net Sales
$
611.9
$
627.8
$
1,935.2
$
1,789.4
Transit Income from Operations
$
43.9
$
64.1
$
159.3
$
172.9
Transit Operating Margin
7.2
%
10.2
%
8.2
%
9.7
%
Backlog Information (Note:
12-month is a sub-set of total)
September 30, 2021
June 30, 2021 Freight Total
$
18,211.0
$
17,836.3
Transit Total
3,632.5
3,693.3
Wabtec Total
$
21,843.5
$
21,529.6
Freight 12-Month
$
4,060.2
$
4,098.1
Transit 12-Month
1,647.5
1,724.8
Wabtec 12-Month
$
5,707.7
$
5,822.9
WESTINGHOUSE AIR BRAKE TECHNOLOGIES
CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED) September 30, 2021
December 31, 2020 In
millions Cash, cash equivalents and restricted cash
$
456.4
$
598.7
Receivables, net
1,367.0
1,412.5
Inventories
1,689.6
1,642.1
Other current assets
247.1
226.5
Total current assets
3,760.1
3,879.8
Property, plant and equipment, net
1,509.0
1,601.6
Goodwill
8,604.7
8,485.2
Other intangible assets, net
3,779.8
3,869.2
Other noncurrent assets
698.3
618.7
Total assets
$
18,351.9
$
18,454.5
Current liabilities
$
2,811.6
$
3,226.3
Long-term debt
4,067.2
3,792.2
Long-term liabilities - other
1,281.9
1,283.3
Total liabilities
8,160.7
8,301.8
Shareholders' equity
10,156.6
10,122.3
Noncontrolling interest
34.6
30.4
Total shareholders' equity
10,191.2
10,152.7
Total Liabilities and Shareholders' Equity
$
18,351.9
$
18,454.5
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED) Nine Months Ended September 30,
2021
2020
In millions Operating
activities Net income
$
371.7
$
325.5
Non-cash expense
373.7
303.0
Receivables
34.9
245.2
Inventories
(32.3
)
7.8
Accounts Payable
41.1
(203.4
)
Other assets and liabilities
(29.8
)
(220.0
)
Net cash provided by operating activities
759.3
458.1
Net cash used for investing activities
(475.3
)
(119.9
)
Net cash used for financing activities
(433.3
)
(360.8
)
Effect of changes in currency exchange rates
7.0
(22.3
)
Decrease in cash
(142.3
)
(44.9
)
Cash and cash equivalents, beginning of period
598.7
604.2
Cash, cash equivalents and restricted cash, end of period
$
456.4
$
559.3
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) Third Quarter 2021 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
$
1,906.9
$
602.3
$
(385.3
)
$
217.0
$
(41.7
)
$
(43.5
)
$
131.8
$
(1.2
)
$
130.6
$
0.69
Restructuring & Transaction costs
-
23.2
11.9
35.1
-
(8.7
)
26.4
-
$
26.4
$
0.14
Non-cash Amortization expense
-
-
72.5
72.5
-
(18.0
)
54.5
-
54.5
$
0.29
Foreign Exchange Loss
-
-
-
-
3.5
(0.9
)
2.6
-
2.6
$
0.02
Adjusted Results
$
1,906.9
$
625.5
$
(300.9
)
$
324.6
$
(38.2
)
$
(71.1
)
$
215.3
$
(1.2
)
$
214.1
$
1.14
Fully Diluted Shares Outstanding
188.0
Wabtec Corporation Reconciliation of
Reported Results to Adjusted Results (in millions)
Third Quarter Year-to-Date 2021 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
$
5,749.4
$
1,716.6
$
(1,104.7
)
$
611.9
$
(109.7
)
$
(130.5
)
$
371.7
$
(3.9
)
$
367.8
$
1.95
Restructuring & Transaction costs
-
48.4
31.8
80.2
-
(19.4
)
60.8
-
$
60.8
$
0.32
Non-cash Amortization expense
-
-
214.7
214.7
-
(55.8
)
158.9
-
158.9
$
0.84
Foreign Exchange Gain
-
-
-
-
(7.4
)
2.0
(5.4
)
-
(5.4
)
$
(0.03
)
Adjusted Results
$
5,749.4
$
1,765.0
$
(858.2
)
$
906.8
$
(117.1
)
$
(203.7
)
$
586.0
$
(3.9
)
$
582.1
$
3.08
Fully Diluted Shares Outstanding
188.6
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) Third 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
$
1,865.1
$
566.2
$
(359.5
)
$
206.7
$
(31.3
)
$
(46.9
)
$
128.5
$
(0.4
)
$
128.1
$
0.67
Restructuring & Transaction costs
-
4.7
11.7
16.4
-
(4.4
)
12.0
-
12.0
$
0.06
Non-cash Amortization expense
-
-
70.3
70.3
-
(18.8
)
51.5
-
51.5
$
0.27
Foreign Currency and Interest Gain
-
-
-
-
(12.8
)
3.4
(9.4
)
-
(9.4
)
$
(0.05
)
Adjusted Results
$
1,865.1
$
570.9
$
(277.5
)
$
293.4
$
(44.1
)
$
(66.7
)
$
182.6
$
(0.4
)
$
182.2
$
0.95
Fully Diluted Shares Outstanding
190.2
Wabtec Corporation Reconciliation of
Reported Results to Adjusted Results (in millions)
Third Quarter Year-to-Date 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
$
5,532.4
$
1,631.6
$
(1,048.2
)
$
583.4
$
(144.5
)
$
(113.4
)
$
325.5
$
1.0
$
326.5
$
1.71
Restructuring & Transaction costs
-
23.3
40.6
63.9
-
(16.4
)
47.5
-
47.5
$
0.25
Non-cash Amortization expense
-
-
211.6
211.6
-
(54.4
)
157.2
-
157.2
$
0.82
Foreign Exchange Loss
-
-
-
-
7.7
(1.9
)
5.8
-
5.8
$
0.03
Adjusted Results
$
5,532.4
$
1,654.9
$
(796.0
)
$
858.9
$
(136.8
)
$
(186.1
)
$
536.0
$
1.0
$
537.0
$
2.81
Fully Diluted Shares Outstanding
190.6
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 2021 Q3 EBITDA Reconciliation
(in millions) Reported Income + Other
Income + Depreciation & =
EBITDA +
Restructuring & = Adjusted from Operations (Expense) Amortization Transaction Costs EBITDA Consolidated Results
$217.0
$0.5
$120.9
$338.4
$35.1
$373.5
Wabtec Corporation 2021 Q3 YTD EBITDA
Reconciliation (in millions) Reported Income
+ Other Income + Depreciation &
= EBITDA +
Restructuring & = Adjusted from Operations (Expense) Amortization Transaction Costs EBITDA Consolidated Results
$611.9
$25.0
$364.0
$1,000.9
$80.2
$1,081.1
Wabtec Corporation 2020 Q3 EBITDA
Reconciliation (in millions) Reported Income
+ Other Income + Depreciation &
= EBITDA +
Restructuring & = Adjusted from Operations (Expense) Amortization Transaction Costs EBITDA Consolidated Results
$206.7
$14.3
$116.4
$337.4
$16.4
$353.8
Wabtec Corporation 2020 Q3 YTD EBITDA
Reconciliation (in millions) Reported Income
+ Other Income + Depreciation &
= EBITDA +
Restructuring & = Adjusted from Operations (Expense) Amortization Transaction Costs EBITDA Consolidated Results
$583.4
$5.8
$347.2
$936.4
$63.9
$1,000.3
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION
SALES BY PRODUCT LINE (UNAUDITED) Three
Months Ended September 30, In
millions
2021
2020
Freight Segment Equipment
$
335.2
$
355.3
Components
222.1
208.2
Digital Electronics
155.2
161.0
Services
582.5
512.8
Total Freight Segment
1,295.0
1,237.3
Transit Segment Original Equipment Manufacturer
$
286.9
$
303.1
Aftermarket
325.0
324.7
Total Transit Segment
611.9
627.8
Nine Months Ended September 30,
In millions
2021
2020
Freight Segment Equipment
$
924.8
$
1,098.2
Components
648.9
624.1
Digital Electronics
473.5
500.1
Services
1,767.0
1,520.6
Total Freight Segment
3,814.2
3,743.0
Transit Segment Original Equipment Manufacturer
$
894.1
$
817.4
Aftermarket
1,041.1
972.0
Total Transit Segment
1,935.2
1,789.4
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION
RECONCILIATION OF REPORTED RESULTS TO ADJUSTED RESULTS - BY
SEGMENT (UNAUDITED) Three Months Ended
September 30, Nine Months Ended September 30,
In millions
2021
2020
2021
2020
Freight Segment Reported Income from Operations
$
195.2
$
160.2
$
510.2
$
463.4
Freight Segment Reported Margin
15.1
%
12.9
%
13.4
%
12.4
%
Restructuring & Transaction costs
3.4
8.8
17.0
43.5
Non-cash Amortization expense
67.6
65.2
199.8
196.8
Freight Segment Adjusted Income from Operations
$
266.2
$
234.2
$
727.0
$
703.7
Freight Segment Adjusted Margin
20.6
%
18.9
%
19.1
%
18.8
%
Transit Segment Reported Income from
Operations
$
43.9
$
64.1
$
159.3
$
172.9
Transit Segment Reported Margin
7.2
%
10.2
%
8.2
%
9.7
%
Restructuring & Transaction costs
27.7
5.9
54.4
13.3
Non-cash Amortization expense
4.9
5.1
14.9
14.8
Transit Segment Adjusted Income from Operations
$
76.5
$
75.1
$
228.6
$
201.0
Transit Segment Adjusted Margin
12.5
%
12.0
%
11.8
%
11.2
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211027005293/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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