Westinghouse Air Brake Technologies Corporation · NYSE:WAB
Westinghouse Air Brake Technologies — Q3 2023 Earnings Presentation
27 slides from Westinghouse Air Brake Technologies's earnings presentation, Oct 25, 2023
Slide 1: Wabtec Financial Results and Company Highlights
THIRD QUARTER 2023 Wabtec Financial Results and Company Highlights 1
Slide 2: Forward looking statements & non-GAAP financial information
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 Litigati
Slide 3: Today's participants
WABTEC Today’s participants RAFAEL SANTANA JOHN OLIN KRISTINE KUBACKI President and Chief Executive Vice President Vice President, Executive Officer and Chief Financial Officer Investor Relations 3 3
Slide 4: 3Q 2023 overview
WABTEC 3Q 2023 overview 3Q 2023 HIGHLIGHTS SALES $2.55 B Up 22.5% YoY Increased sales were driven by strong growth across the Freight and Transit segments OPERATING MARGIN 14.5% 17.9% Operating margin benefited from sales growth and lower SG&A as a percentage of sales GAAP Adjusted(2) GAAP EPS up 51
Slide 5: 2023 Market Expectations
WABTEC 2023 Market NORTH AMERICAN FREIGHT CARLOADS Source: Association of American Railroads Expectations (0.1%) 0.2% (0.8%) FAVORABLE / FREIGHT UNFAVORABLE NA Carloads - (3.7%) (3.3%) (3.2%) (3.4%) Locomotive and Railcars (4.6%) Parkings ↔/- (4.9%) 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 Inter
Slide 6: Executing on our value creation framework
WABTEC Executing on our value creation framework DRIVERS OF RECENT PORTFOLIO GROWTH WINS $2+ billion MOU in Kazakhstan … expected to drive significant Accelerate innovation of scalable technologies growth in 2024 and beyond Grow and refresh expansive global installed base Mining orders $150+ million
Slide 7: Spotlight on international markets
WABTEC 7 Spotlight on international markets RESILIENT GROWTH IN THE INTERNATIONAL INSTALLED BASE KEY MARKETS & GROWTH DRIVERS SOUTH AMERICA CIS 2017 2018 2019 2020 2021 2022 2023 2024 - 2026 New concessions Gateway Asia Europe *Excludes Canada & Mexico Agriculture + mining growth Fleet renewal & e
Slide 8: 3Q 2023 financial summary
WABTEC 3Q 2023 financial summary I N CR EASED S AL E S , M AR GI N E XP AN SION AN D E P S GR O WT H DE S PITE M ACR O UN CE R TAINT Y SALES OP INCOME/OP MARGIN EPS $457M $2.55B $1.70 $370M 17.9% +39.3% $2.08B $343M YoY 14.5% $261M 16.4% $1.33 $1.22 +51.1% 12.5% YoY $0.88 2022 2023 2022 2023 2022 20
Slide 9: 3Q 2023 sales
WABTEC 3Q 2023 sales 3Q KEY DRIVERS ($ in millions) EQUIPMENT Higher North American and international locomotives sales … PRODUCT LINE 3Q23 YOY increased mining sales Equipment $615 38.8% COMPONENTS Higher OE railcar build and increased demand for industrial products Components $307 32.3% (14.2% YoY
Slide 10: 3Q 2023 consolidated gross profit
WABTEC 3Q 2023 consolidated gross profit 3Q KEY DRIVERS ($ in millions) GAAP Adjusted (1) VOLUME 2022 GROSS PROFIT $648 $653 Significantly higher Freight and Transit segment sales % Gross Profit Margin 31.1% 31.4% MIX/PRICING Volume ↑↑ ↑↑ Favorable mix of products between and within segments Mix/Pri
Slide 11: 3Q 2023 consolidated operating income
WABTEC 3Q 2023 consolidated operating income ($ in millions) GAAP Adjusted (1) 2022 OP INCOME $261 $343 % Operating Margin 12.5% 16.4% Gross Profit 144 152 SG&A (35) (39) Engineering 1 1 Amortization (1) - 2023 OP INCOME $370 $457 % Operating Margin 14.5% 17.9% OP MARGIN BENEFITED FROM HIGHER SALES
Slide 12: 3Q 2023 Freight segment performance
WABTEC 3Q 2023 Freight segment performance SALES OP INCOME/OP MARGIN MULTI-YEAR BACKLOG $399M $1.89B(3) $327M $19.17B $307M 21.2% $17.61B(3) $1.53B 19.9% $233M 17.3% 15.2% 2022 2023 2022 2023 2022 2023 2022 2023 GAAP GAAP ADJ(1,2) ADJ(1,2) 23.4% INCREASE 8.1% DECREASE YoY (23.3% INCREASE EX-CURRENCY
Slide 13: 3Q 2023 Transit segment performance
WABTEC 3Q 2023 Transit segment performance SALES OP INCOME/OP MARGIN MULTI-YEAR BACKLOG $83M $3.87B(2) $660M(2) $68M $3.44B $60M 12.5% $550M $53M 11.0% 10.3% 9.6% 2022 2023 2022 2023 2022 2023 2022 2023 GAAP GAAP ADJ(1) ADJ(1) 20.0% INCREASE 12.6% INCREASE YoY (14.5% INCREASE EX-CURRENCY) 6.4% INCRE
Slide 14: Resilient business allows for execution on financial priorities
WABTEC Resilient business allows for execution on financial priorities FOCUSED ON CASH CONVERSION ( 1 ) STRONG FINANCIAL POSITION RETURN CAPITAL TO SHAREHOLDERS Y TD C A S H F R O M O P S LEVER AGE Share $400M $252M repurchases 2023 $628M $515 Leverage Leverage 2022 3Q22 3Q23 2023 2022 75% cash conv
Slide 15: 2023 updated financial guidance
WABTEC 2023 updated financial guidance (1,2) PRIOR GUIDANCE UPDATED GUIDANCE REVENUES REVENUES $9.25B to $9.50B $9.5B to $9.7B ADJUSTED EPS ADJUSTED EPS $5.50 to $5.80 $5.80 to $6.00 C A S H C O N V E R S I O N (3) C A S H C O N V E R S I O N (3) >90% >90% KEY ASSUMPTIONS Adjusted operating margin u
Slide 16: Key takeaways
WABTEC Key takeaways 5 - Y E A R O U T L O O K (1) MSD CORE ORGANIC GROWTH CAGR Strong operational and financial performance despite significant 01 macro uncertainty and volatility + 250-300 BPS MARGIN EXPANSION Positive productivity driven by continuous cost improvement 02 combined with realization
Slide 17: Income statement
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION Appendix A ( 1 of 2) Income CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022 (AMOUNTS IN MILLIONS EXCEPT PER SHARE DATA) (UNAUDITED) statement Three Months Ended September 30, Nine Months Ended
Slide 18: Income statement (cont.)
Appendix A ( 2 of 2) Income statement WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (cont.) FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022 (AMOUNTS IN MILLIONS EXCEPT PER SHARE DATA) (UNAUDITED) Three Months Ended Nine Months Ended Septe
Slide 19: Balance sheet
Balance Appendix B sheet WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) September 30, 2023 December 31, 2022 In millions Cash, cash equivalents and restricted cash $ 392 $ 541 Receivables, net 1,714 1,519 Inventories 2,246 2,034 Other current assets
Slide 20: Cash flow
Appendix C Cash flow WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Nine Months Ended September 30, 2023 2022 In millions Operating activities Net income $ 608 $ 482 Non-cash expense 372 355 Receivables (214) (39) Inventories (201) (401) A
Slide 21: EPS and non-GAAP Reconciliation (1 of 2)
Appendix D (1 of 2) EPS 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 and non-GAAP evaluate period-to-period comparisons. Non-GA
Slide 22: EPS and non-GAAP Reconciliation (2 of 2)
Appendix D (2 of 2) EPS and non-GAAP 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-GA
Slide 23: EBITDA reconciliation
Appendix E EBITDA 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 measur
Slide 24: Sales by product line
Appendix F Sales by WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION SALES BY PRODUCT LINE product line (UNAUDITED) Three Months Ended September 30, In millions 2023 2022 Freight Segment Equipment $ 615 $ 443 Components 307 232 Digital Intelligence 181 187 Services 787 669 Total Freight Segment $ 1,8
Slide 25: Segment gross margin & operating margin reconciliation
Segment gross margin & Appendix G operating margin reconciliation 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, 2023 2022 2023 2022 Income from Income fr
Slide 26: Segment sales reconciliation
Segment sales Appendix H reconciliation RECONCILIATION OF CHANGES IN NET SALES - BY SEGMENT (UNAUDITED) Three Months Ended September 30, In millions Freight Transit Consolidated 2022 Net Sales $ 1,531 $ 550 $ 2,081 Acquisitions 45 - 45 Foreign Exchange 2 30 32 Organic 312 80 392 2023 Net Sales $ 1,8
Slide 27: Cash conversion reconciliation
Appendix I Cash conversion 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 financi
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