Westinghouse Air Brake Technologies Corporation · NYSE:WAB
Westinghouse Air Brake Technologies — Q1 2023 Earnings Presentation
25 slides from Westinghouse Air Brake Technologies's earnings presentation, Apr 26, 2023
Slide 1: First Quarter 2023 Wabtec Financial Results and Company Highlights
1 F I R S T Q U A R T E R 2 0 2 3 Wabtec Financial Results and Company Highlights
Slide 2: Forward looking statements & non-GAAP financial information
2 Forward looking statements & non-GAAP financial information 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 Litiga
Slide 3: Today's participants
3 RAFAEL SANTANA President and Chief Executive Officer W A B T E C Today’s participants JOHN OLIN Executive Vice President and Chief Financial Officer KRISTINE KUBACKI Vice President, Investor Relations 3
Slide 4: 1Q 2023 overview
4 1Q 2023 overview Increased sales were driven by strong Freight segment growth … excluding impacts of FX, sales were up 16.8% YoY Operating margin benefited from higher sales growth and lower SG&A as a percentage of sales GAAP EPS up 16.3% … Adjusted EPS up 13.3% YoY from higher Freight sales Opera
Slide 5: 2023 Market Expectations
5 5.1% 20.2% (0.1%) (4.9%) (3.7%) (3.3%) 0.2% (0.8%) (3.6%) 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 F R E I G H T NA Carloads -/↔ Locomotive and Railcars Unparkings ↔/- International Freight Volumes + NA Railcar Deliveries + Mining Commodities ↔/- T R A N S I T Infrastructure Investment + Globa
Slide 6: Executing on our value creation framework
6 DRIVERS OF PORTFOLIO GROWTH RECENT WINS Signed strategic order with VLI in Brazil for new locomotives Secured key order for mining drive systems in high altitude applications Moody’s upgrade of senior unsecured debt … reflects resiliency of the business, balance sheet strength and strong cash gene
Slide 7: 1Q 2023 financial summary
7 STRONG SALES GROWTH DESPITE DISRUPTIONS AND MACRO VOLATILITY (1) Adjusted numbers represent non-GAAP financial measures. See Appendix for additional details and reconciliations 1Q 2023 financial summary W A B T E C OP INCOME/OP MARGIN 13.9% INCREASE $239M 12.4% 2022 GAAP SALES EPS $1.93B 2022 $2.1
Slide 8: 1Q 2023 sales
8 W A B T E C 1Q 2023 sales P R O D U C T L I N E 1 Q 2 3 Y O Y Equipment $393 43.4% Components $279 21.8% Digital Intelligence $187 22.2% Services $707 6.2% Freight Segment $1,566 18.5% Transit Segment $628 3.8% T O T A L S A L E S $2,194 13.9% E Q U I P M E N T Higher international locomotives sal
Slide 9: 1Q 2023 consolidated gross profit
9 W A B T E C 1Q 2023 consolidated gross profit 1 Q K E Y D R I V E R S 2 0 2 2 G R O S S P R O F I T $595 $600 % Gross Profit Margin 30.9% 31.1% Volume ↑↑ ↑↑ Mix/Pricing ↔ ↔ Raw Materials ↔ ↔ Currency ↓ ↓ Manufacturing/Other ↓ ↓ 2 0 2 3 G R O S S P R O F I T $665 $669 % Gross Profit Margin 30.3% 30
Slide 10: 1Q 2023 consolidated operating income
10 2 0 2 2 O P I N C O M E $239 $319 % Operating Margin 12.4% 16.5% Gross Profit 70 69 SG&A (25) (22) Engineering (6) (6) Amortization (2) - 2 0 2 3 O P I N C O M E $276 $360 % Operating Margin 12.6% 16.4% W A B T E C 1Q 2023 consolidated operating income (1) Adjusted numbers represent non-GAAP fina
Slide 11: 1Q 2023 Freight segment performance
11 (1) Adjusted numbers represent non-GAAP financial measures. See Appendix for additional details and reconciliations (2) Freight segment operating income was positively impacted by below-market intangible amortization of $12 million; flat versus 1st quarter 2022 (3) Foreign exchange negatively imp
Slide 12: 1Q 2023 Transit segment performance
12 (1) Adjusted numbers represent non-GAAP financial measures. See Appendix for additional details and reconciliations (2) Foreign exchange negatively impacted Transit sales by $35 million; Foreign exchange rates had a negative $109 million impact on segment backlog 1Q 2023 Transit segment performan
Slide 13: Resilient business allows for execution on financial priorities
13 W A B T E C Resilient business allows for execution on financial priorities STRONG FINANCIAL POSITION LEVERAGE FOCUSED ON CASH CONVERSION (1) CASH FROM OPS RETURN CAPITAL TO SHAREHOLDERS YoY cash generation impacted by higher working capital investment … in particular, higher receivables and inve
Slide 14: 2023 outlook and guidance
14 Adjusted operating margin up - Favorable productivity/absorption offset by mix - SG&A as % of sales down - Engineering as % of sales flat Tax rate ~25.5% Capex ~2% of sales W A B T E C 2023 outlook and guidance R E V E N U E S $8.7B to $9.0B (1) Cash from operations conversion % is defined as GAA
Slide 15: Key takeaways
15 W A B T E C Key takeaways 02 Well-positioned to drive profitable growth with strong momentum across the portfolio and increased multi-year visibility 03 Productivity driven by continuous cost improvement combined with initial realization of Integration 2.0 savings 04 Strong long-term business fun
Slide 16: Income statement
16 Income statement Appendix A ( 1 of 2) 2023 2022 Net sales 2,194$ 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 oper
Slide 17: Income statement (cont.)
17 Appendix A ( 2 of 2) Income statement (cont.) 2023 2022 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
Slide 18: Balance sheet
18 Balance sheet Appendix B March 31, 2023 December 31, 2022 In mill ions 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,
Slide 19: Cash flow
19 Appendix C Cash flow 2023 2022 In mill ions 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 fo
Slide 20: EPS and non-GAAP Reconciliation
20 EPS and non-GAAP Reconciliation Appendix D Wabtec Corporation Reconciliation of Reported Results to Adjusted Results (in millions) Gross Operating Income from Interest & Noncontrolling Wabtec Net Sales Profit Expenses Operations Other Exp Tax Net Income Interest Net Income EPS Reported Results 2,
Slide 21: EBITDA reconciliation
21 EBITDA reconciliation Appendix E Wabtec Corporation 2023 Q1 EBITDA Reconciliation (in millions) Reported Income Other Income Depreciation & Restructuring Adjusted from Operations (Expense) Amortization Costs EBITDA Consolidated Results $276 $5 $121 $402 $6 $408 Wabtec Corporation 2022 Q1 EBITDA R
Slide 22: Sales by product line
22 Sales by product line Appendix F In mill ions 2023 2022 Freight Segment Equipment 393$ 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$
Slide 23: Segment gross margin & operating margin reconciliation
23 Segment gross margin & operating margin reconciliation Appendix G In mill ions 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
Slide 24: Segment sales reconciliation
24 Segment sales reconciliation Appendix H 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% (UNAUDITED) Three Months Ended March 3
Slide 25: Cash conversion reconciliation
25 Cash conversion reconciliation Appendix I Wabtec Corporation 2023 Q1 Cash Conversion Calculation (in millions) Reported Cash from Operations Consolidated Results ($25) $173 $123 (8%) Wabtec Corporation 2022 Q1 Cash Conversion Calculation (in millions) Reported Cash from Operations Consolidated Re
Westinghouse Air Brake Technologies — Q1 2023 Earnings Presentation on 6ix