Westinghouse Air Brake Technologies Corporation
CEO : Mr. Rafael O. Santana
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2023 Q2 | 17.5% YoY | 18.2% | 16.5% | 2023-07-27 |
John Olin says,
Q2 2023 Sales and Earnings
- Q2 sales were $2.41 billion, reflecting a 17.5% increase compared to the previous year.
- GAAP operating income increased by $48 million due to higher sales.
- Adjusted operating margin in Q2 was 16.4%, down 0.3 percentage points.
- GAAP earnings per diluted share were $1.06, up 16.5% from Q2 2022.
- Adjusted earnings per diluted share were $1.41, up 14.6% from the previous year.
Product Lines Performance
- Equipment sales were up 8.9%, driven by higher locomotive sales.
- Components sales increased by 23.1%, driven by higher OE railcar build and increased demand for industrial products.
- Digital Intelligence sales grew by 18.9%, driven by strong demand for onboard locomotive products and international PTC.
- Services sales grew by 13.9%, driven by increased modernization deliveries and parts sales.
- In the Transit segment, OE and aftermarket sales significantly increased by 25.3% to $699 million.
Margin and Cost Analysis
- Gross profit margin was slightly lower due to a less rich mix and higher manufacturing costs.
- Raw material costs remained elevated but were largely flat compared to the previous year.
- Foreign currency exchange negatively impacted sales by $7 million and gross profits by $2 million.
- Manufacturing costs were positively impacted by favorable fixed cost absorption.
- Adjusted operating margin declined 0.3 percentage points to 16.4%.
Segment Results
- Freight segment sales were strong, up 14.6%, with a segment operating income of $271 million and an operating margin of 15.9%.
- Transit segment sales increased by 25.3%, with a segment operating income of $66 million and an operating margin of 11.1%.
- Freight segment multiyear backlog was $18.3 billion, down 6.8% from last year, while the 12-month backlog was $5.3 billion, up 10.3%.
- Transit segment multiyear backlog for the quarter was $4.1 billion, up 15.4%.
Financial Position
- Q2 cash from operations was $115 million.
- Debt leverage ratio was 2.4x, flat compared to the previous year.
- Completed acquisition of L&M for $223 million in cash, expected to have 2023 sales of about $130 million.
- Returned $105 million of capital back to shareholders through share repurchases and dividends.
Rafael Santana says,
Business Update and Financial Performance
- Sales for Q2 2023 were $2.41 billion, a growth of 17.5% compared to the previous year.
- Total cash flow from operations was $115 million.
- The 12-month backlog was $7.2 billion, up 10%.
End Market Expectations for 2023
- North America carloads were down, but locomotive parkings improved.
- Significant opportunities exist for new locomotives, modernizations, railcar builds, and digital solutions globally.
- North American railcar builds demand is expected to reach around 45,000 cars in 2023.
- Strong demand and order pipeline in core international markets.
Recent Business Highlights
- Secured orders for 30 new locomotives, 69 locomotives under the certified preowned program, and 60 modernizations from Canadian National.
- Won a strategic order for 17 locomotives from CBH in Australia.
- Signed a strategic order with Vale for 3 flex drive locomotives for the world’s largest iron ore train.
- Won a major order for passenger information systems and Pentagraphs for up to 504 stabler cars in Germany and Austria.
- Completed the acquisition of L&M, enhancing heat transfer portfolio and expanding mining installed base.
Efficient Solutions and Decarbonization
- Wabtec aims to provide efficient solutions, reduce fuel consumption, and improve safety.
- Leading industry decarbonization through advancements in renewable and biofuels, battery electric applications, hydrogen technology, and digital solutions.
- Working towards a zero-emissions rail network.
Q & A sessions,
Financial Guidance
- Wabtec expects 2023 sales of $9.25 billion to $9.5 billion, up 12% from last year at the midpoint.
- Adjusted EPS is projected to be between $5.50 and $5.80 per share, up 16% at the midpoint.
- Cash flow conversions are expected to be greater than 90%.
Business Performance
- Sales for the quarter were $2.41 billion, up 17.5% compared to the previous year.
- The Freight and Transit segments both performed well.
- Total cash flow from operations was $115 million.
- The 12-month backlog increased by 10% to $7.2 billion, indicating growing momentum and visibility.
- The total multiyear backlog was $22.4 billion.
Market Expectations
- Despite North America carloads being down, there are significant opportunities for new locomotives, modernizations, and digital solutions globally.
- Demand for railcar builds in North America is expected to show growth.
- Strong activity and investments in core markets like Brazil, Australia, India, and the CIS region.
- The transit sector continues to see demand for clean, safe, and efficient transportation solutions worldwide.
Recent Business Highlights
- Secured key wins in North America, including orders for new locomotives and modernizations.
- Won strategic orders in Australia and signed a major order in transit for passenger information systems.
- Completed the acquisition of L&M, enhancing the heat transfer portfolio and providing a platform for profitable growth in mining.
Long-term Value Creation
- Wabtec is well-positioned to drive profitable long-term growth and maximize shareholder returns.
- The company’s results remain on track to deliver on the 5-year outlook provided at the Investor Day last year.
- Strong momentum, a strengthening order pipeline, and a focus on execution contribute to Wabtec’s positive outlook.
No bad stock 