Westinghouse Air Brake Technologies Corporation · NYSE:WAB
Westinghouse Air Brake Technologies — Q3 2022 Earnings Presentation
27 slides from Westinghouse Air Brake Technologies's earnings presentation, Nov 1, 2022
Slide 1: Third Quarter 2022 Wabtec Financial Results & Company Highlights
1 T H I R D Q U A R T E R 2 0 2 2 Wabtec Financial Results & 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 P R E S E N T E R S RAFAEL SANTANA President & Chief Executive Officer W A B T E C Today’s participants I N V E S T O R R E L A T I O N S JOHN OLIN Executive Vice President & Chief Financial Officer KRISTINE KUBACKI Vice President, Investor Relations 3
Slide 4: 3Q 2022 overview
4 3Q 2022 overview Sales were up 14.3% excluding foreign currency exchange … driven by strong Freight segment growth Higher sales growth and improved productivity … offset by mix driven by higher locomotive sales Adjusted EPS up 7.0% YoY … driven by strong Freight segment sales YTD cash flow from op
Slide 5: 2022 Market Expectations
5 (6.4%) 3.2% 5.1% 20.2% (0.1%) (4.9%) (3.7%) (3.3%) 0.2% 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 F R E I G H T NA Carloads ↔/- Locomotive and Railcars Unparkings + International Freight Volumes + NA Railcar Production ++ Mining Commodities +/↔ T R A N S I T Infrastructure Investment + Global R
Slide 6: Executing on our value creation framework
6 DRIVERS OF PORTFOLIO GROWTH RECENT WINS Signed strategic $600 million MOU in Kazakhstan for 150 FLXdrive shunters, LNG kits and digital solutions Signed key orders in Australia and Africa for kits and locomotives 300 platform door order in Central America Signed 5-year European locomotive services
Slide 7: Resilient portfolio through the cycle
7 Strong 12-month and multi-year backlog provides resiliency and visibility despite macro volatility Significant recurring revenue base drives ~60% of profits W A B T E C Resilient portfolio through the cycle Favorable end-markets Robust backlog & recurring revenue Demonstrated execution S T R O
Slide 8: 3Q 2022 financial summary
8 STRONG SALES GROWTH AND INCREASED ADJ EPS DESPITE DISRUPTIONS AND MACRO VOLATILITY (1) Adjusted numbers represent non-GAAP financial measures, see Appendix for additional details and reconciliations 3Q 2022 financial summary W A B T E C OPERATING INCOME/ OPERATING MARGIN 9.1% INCREASE 0.6 PTS OF A
Slide 9: 3Q 2022 sales
9 W A B T E C 3Q 2022 sales P R O D U C T L I N E 3 Q 2 2 Y O Y Equipment $443 32.2% Components $232 4.5% Digital Electronics $187 20.6% Services $669 14.8% Freight Segment $1,531 18.2% Transit Segment $550 (10.1%) T O T A L S A L E S $2,081 9.1% E Q U I P M E N T Significantly higher international
Slide 10: 3Q 2022 consolidated adjusted gross profit
10 W A B T E C 3Q 2022 consolidated adjusted gross profit 3 Q K E Y D R I V E R S 2 0 2 1 A D J G R O S S P R O F I T $626 % Adj Gross Profit Margin 32.8% Volume ↑↑ Mix/Pricing ↑ Raw Materials ↓ Currency ↓ Manufacturing/Other ↑ 2 0 2 2 A D J G R O S S P R O F I T $653 % Adj Gross Profit Margin 31.4%
Slide 11: 3Q 2022 consolidated adjusted operating income
11 W A B T E C 3Q 2022 consolidated adjusted operating income (1) Adjusted numbers represent non-GAAP financial measures. See Appendix for additional details and reconciliations (2) 3Q 2021 GAAP operating income was $217M (GAAP operating margin of 11.4%). 3Q 2022 GAAP operating income was $261M (GAA
Slide 12: 3Q 2022 Freight segment performance
12 (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 $14 million, down $2 million from 3Q 2021 (3) Foreign exchange negatively imp
Slide 13: 3Q 2022 Transit segment performance
13 (1) Adjusted numbers represent non-GAAP financial measures, see Appendix for additional details and reconciliations (2) Foreign exchange negatively impacted Transit sales by $78 million; Foreign exchange rates had a negative $458 million impact on segment backlog 3Q 2022 Transit segment performan
Slide 14: Resilient business allows for execution on financial priorities
14 W A B T E C Resilient business allows for execution on financial priorities STRONG FINANCIAL POSITION ADJ LEVERAGE FOCUSED ON CASH CONVERSION CASH FROM OPS (1) RETURN CAPITAL TO SHAREHOLDERS 3Q cash conv of 72% … full-year cash generation expected to be >90% YTD cash generation impacted by proact
Slide 15: 2022 outlook and guidance
15 Adjusted operating margin up - Favorable productivity/absorption, offset by mix, cost inflation and unfavorable FX - SG&A as % of sales down - Engineering as % of sales up Tax rate ~25% (vs prior ~26%) Capex ~1.75% of sales (vs prior ~2%) W A B T E C 2022 outlook and guidance R E V E N U E S $8.1
Slide 16: Key takeaways
16 W A B T E C Key takeaways 02 Innovative, sustainable technologies to expand Wabtec’s market- share and drive long-term profitable growth 03 Growth strategy driving strong cash flow and margin expansion 04 Strong long-term business fundamentals driving long-term value creation for shareholders 01
Slide 17: Income statement
17 Income statement Appendix A ( 1 of 2) 2022 2021 2022 2021 Net sales 2,081$ 1,907$ 6,056$ 5,749$ Cost of sales (1,433) (1,304) (4,168) (4,032) Gross profit 648 603 1,888 1,717 Gross profit as a % of Net Sales 31.1% 31.6% 31.2% 29.9% Selling, general and administrative expenses (260) (269) (757) (7
Slide 18: Income statement (cont.)
18Appendix A ( 2 of 2) Income statement (cont.) 2022 2021 2022 2021 Segment Information Freight Net Sales 1,531$ 1,295$ 4,343$ 3,814$ Freight Income from Operations 233$ 195$ 655$ 510$ Freight Operating Margin 15.2% 15.1% 15.1% 13.4% Transit Net Sales 550$ 612$ 1,713$ 1,935$ Transit Income from Oper
Slide 19: Balance sheet
19Balance sheet Appendix B September 30, 2022 December 31, 2021 In mill ions Cash and cash equivalents 514$ 473$ Receivables, net 1,462 1,477 Inventories 2,023 1,689 Other current assets 200 193 Total current assets 4,199 3,832 Property, plant and equipment, net 1,402 1,497 Goodwill 8,361 8,587 Othe
Slide 20: Cash flow
20Appendix C Cash flow 2022 2021 In mill ions Operating activities Net income 482$ 372$ Non-cash expense 355 373 Receivables (39) 35 Inventories (401) (32) Accounts Payable 232 41 Other assets and liabilities (1) (30) Net cash provided by operating activities 628 759 Net cash used for investing acti
Slide 21: EPS and non-GAAP Reconciliation (1 of 2)
21 EPS and non-GAAP Reconciliation Appendix D (1 of 2) 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 R
Slide 22: EPS and non-GAAP Reconciliation (2 of 2)
22 EPS and non-GAAP Reconciliation Appendix D (2 of 2) 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 R
Slide 23: EBITDA reconciliation
23 EBITDA reconciliation Appendix E Wabtec Corporation 2022 Q3 EBITDA Reconciliation (in millions) Reported Income Other Income Depreciation & Restructuring & Adjusted from Operations (Expense) Amortization Transaction Costs EBITDA Consolidated Results $261 $4 $117 $382 $9 $391 Wabtec Corporation 20
Slide 24: Sales by product line
24 Sales by product line Appendix F In mill ions 2022 2021 Freight Segment Equipment 443$ 335$ Components 232 222 Digital Electronics 187 155 Services 669 583 Total Freight Segment 1,531$ 1,295$ Transit Segment Original Equipment Manufacturer 264$ 287$ Aftermarket 286 325 Total Transit Segment 550$
Slide 25: Segment gross margin & operating margin reconciliation
25Segment gross margin & operating margin reconciliation Appendix G In millions Gross Profit Income from Operations Gross Profit Income from Operations Gross Profit Income from Operations Gross Profit Income from Operations Freight Segment Reported Results 497$ 233$ 444$ 195$ 1,414$ 655$ 1,214$ 510$
Slide 26: Segment sales reconciliation
26 Segment sales reconciliation Appendix H In mill ions Freight Transit Consolidated 2021 Net Sales 1,295$ 612$ 1,907$ Acquisitions 18 1 19 Foreign Exchange (21) (78) (99) Organic 239 15 254 2022 Net Sales 1,531$ 550$ 2,081$ Change ($) 236 (62) 174 Change (%) 18.2% -10.1% 9.1% Freight Transit Consol
Slide 27: Cash conversion reconciliation
27 Cash conversion reconciliation Appendix I Wabtec Corporation 2022 Q3 Cash Conversion Calculation (in millions) Reported Cash from Operations Consolidated Results $204 $163 $119 72% Wabtec Corporation 2022 Q3 YTD Cash Conversion Calculation (in millions) Reported Cash from Operations Consolidated
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