Westinghouse Air Brake Technologies Corporation · NYSE:WAB
Westinghouse Air Brake Technologies — Q4 2023 Earnings Presentation
31 slides from Westinghouse Air Brake Technologies's earnings presentation, Feb 14, 2024
Slide 1: Fourth Quarter 2023 Wabtec Financial Results & Company Highlights
F O U R T H Q U A RT E R 2 0 2 3 Wabtec Financial Results & Company Highlights
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
W A B T E C TODAY’S PARTICIPANTS J O H N O L I N Executive Vice President & Chief Financial Officer R A F A E L S A N T A N A President & Chief Executive Officer K R I S T I N E K U B A C K I Vice President, Investor Relations
Slide 4: 4Q 2023 Overview
W A B T E C 4 4Q 2023 OVERVIEW S A L E S $ 2 . 5 3 B Up 9.5% YOY O P E R A T I N G M A R G I N 1 2 . 2 % G A A P 1 7 . 0 % Adjusted(2) E A R N I N G S P E R S H A R E $ 1 . 2 0 G A A P $ 1 . 5 4 Adjusted(2) C A S H F L O W F R O M O P E R A T I O N S ( 1 ) $ 6 8 6 M 1 2 - M O N T H B A C K L O G $ 7
Slide 5: 2024 Market Expectations
W A B T E C 5 2024 MARKET EXPECTATIONS F R E I G H T NA Carloads +/↔ Active Locomotive Fleet ↔ International Freight Volumes + NA Railcar Deliveries - Mining Commodities ↔ T R A N S I T Infrastructure Investment + Global Ridership +/↔ FAVORABLE / UNFAVORABLE -3.2% -4.6% -3.3% 2.8% 1Q23 2Q23 3Q23 4Q2
Slide 6: Executing on Our Value Creation Framework
W A B T E C EXECUTING ON OUR VALUE CREATION FRAMEWORK DRIVERS OF PORTFOLIO GROWTH RECENT WINS Won a multi-year order from CSX for >200 mods in North America Mining orders $300+ million … up double-digit versus prior year Awarded $150+ million brake order in India Expanded Digital portfolio with entr
Slide 7: Resilient Portfolio Through the Cycle
W A B T E C 7 RESILIENT PORTFOLIO THROUGH THE CYCLE Note: Adjusted numbers represent non-GAAP financial measures. See Appendix for additional details and reconciliations Strong 12-month backlog provides resiliency and visibility despite macro uncertainty Significant recurring revenue base drives
Slide 8: 4Q 2023 Financial Summary
W A B T E C 8 0 0.5 1 1.5 2 2.5 3 Chart Title 4Q 2023 FINANCIAL SUMMARY 0 50 100 150 200 250 300 350 400 450 500 Category 1 Chart Title (1) Adjusted numbers represent non-GAAP financial measures. See Appendix for additional details and reconciliations INCREASED SALES, MARGIN EXPANSION AND EPS GROWTH
Slide 9: 4Q 2023 Sales
W A B T E C 9 4Q 2023 SALES (in millions) P R O D U C T L I N E 4 Q 2 3 Y O Y Equipment $347 (19.3%) Components $283 17.4% Digital Intelligence $210 (6.7%) Services $958 23.9% Freight Segment $1,798 7.7% Transit Segment $728 14.3% T O T A L S A L E S $ 2 , 5 2 6 9 . 5 % 4 Q K E Y D R I V E R S E Q U
Slide 10: 4Q 2023 Consolidated Gross Profit
W A B T E C 10 4Q 2023 CONSOLIDATED GROSS PROFIT ($ in millions) 2 0 2 2 G R O S S P R O F I T $ 6 5 2 $ 6 8 3 % Gross Profit Margin 28.3% 29.6% Volume ↑ ↑ Mix/Pricing ↑ ↑ Raw Materials ↔ ↔ Currency ↑ ↑ Manufacturing/Other ↑ ↑ 2 0 2 3 G R O S S P R O F I T $ 7 6 4 $ 7 7 7 % Gross Profit Margin 30.3%
Slide 11: 4Q 2023 Consolidated Operating Income
W A B T E C 11 4Q 2023 CONSOLIDATED OPERATING INCOME 2 0 2 2 O P I N C O M E $247 $352 % Operating Margin 10.7% 15.3% Gross Profit 112 94 SG&A (24) (14) Engineering (1) (1) Amortization (26) - 2 0 2 3 O P I N C O M E $308 $431 % Operating Margin 12.2% 17.0% O P M A R G I N B E N E F I T E D F R O M
Slide 12: 4Q 2023 Freight Segment Performance
W A B T E C 12 0 1 2 3 4 5 6 Chart Title 0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 2 Chart Title 4Q 2023 FREIGHT SEGMENT PERFORMANCE 0 50 100 150 200 250 300 350 400 Category 1 7.7% INCREASE (7.4% INCREASE EX-CURRENCY) SALES 2 0 2 2 2 0 2 3 2 0 2 2 GAAP 2 0 2 3 GAAP 2 0 2 2 ADJ(1) 2 0 2 3 ADJ(1) $209M 12.
Slide 13: 4Q 2023 Transit Segment Performance
W A B T E C 13 0 0.5 1 1.5 2 2.5 Chart Title 0 100 200 300 400 500 600 700 800 Chart Title 4Q 2023 TRANSIT SEGMENT PERFORMANCE 0 20 40 60 80 100 120 Category 1 14.3% INCREASE (9.9% INCREASE EX-CURRENCY) SALES 2 0 2 2 2 0 2 3 2 0 2 2 GAAP 2 0 2 3 GAAP 2 0 2 2 ADJ(1) 2 0 2 3 ADJ(1) $63M 9.9% $86M 11.9
Slide 14: Integration 2.0 – Unlocking Greater Profitability Across the Portfolio
W A B T E C 14 INTEGRATION 2 .0 – UNLOCKING GREATER PROFITABILITY ACROSS THE PORTFOLIO On track to deliver target run-rate savings by 2025 C O N S O L I D A T E F O O T P R I N T 15+ facilities Headcount redundancy Office/facility rationalization S T R E A M L I N E M A N U F A C T U R I N G Restruc
Slide 15: Portfolio Optimization – Unlocking Greater Profitability Across the Portfolio
W A B T E C PORTFOLIO OPTIMIZATION – UNLOCKING GREATER PROFITABILITY ACROSS THE PORTFOLIO Acquired 100% of L&M in 2Q23 • Leading provider of mining truck radiators; expands Wabtec mining and heat transfer portfolios • Purchase price of $229M (net of cash received) • Accretive to 2023 earnings and RO
Slide 16: Resilient Business Allows for Execution on Financial Priorities
W A B T E C 16 RESILIENT BUSINESS ALLOWS FOR EXECUTION ON FINANCIAL PRIORITIES Strong balance sheet and financial position … liquidity of $2.12B Debt leverage of 1.9x(2) Strategic acquisitions of L&M ($229M) and LKZ ($81M) net of cash received Returning capital to shareholders … $532M returned throu
Slide 17: 2023 Overview
W A B T E C 17 2023 OVERVIEW S A L E S $ 9 . 6 8 B Up 15.7% YOY O P E R A T I N G M A R G I N 1 3 . 1 % G A A P 1 7 . 0 % Adjusted E A R N I N G S P E R S H A R E $ 4 . 5 3 G A A P $ 5 . 9 2 Adjusted C A S H F L O W F R O M O P E R A T I O N S ( 1 ) $ 1 . 2 0 B S T R O N G E X E C U T I O N I N V O
Slide 18: 2024 Outlook and Guidance
W A B T E C 18 2024 OUTLOOK AND GUIDANCE OUTLOOK IN LINE WITH LONG-TERM GROWTH FRAMEWORK Adjusted operating margin up ⁻ Favorable productivity/absorption ⁻ Benefits of Integration 2.0/Portfolio Optimization ⁻ Lower SG&A and Engineering expenses as % of sales Tax rate ~25% Capex ~2% of sales E Q U I
Slide 19: Key Takeaways
W A B T E C 19 KEY TAKEAWAYS (1) Long-term guidance as of March 9, 2022 (on an adjusted earnings basis) Continued momentum across the portfolio and strong order pipeline internationally and in North America Positive productivity driven by continuous cost improvement combined with realization of Inte
Slide 20: Income Statement
Income statement Appendix A ( 1 of 2) 2023 2022 2023 2022 Net sales 2,526$ 2,306$ 9,677$ 8,362$ Cost of sales (1,762) (1,654) (6,733) (5,822) Gross profit 764 652 2,944 2,540 Gross profit as a % of Net Sales 30.3% 28.3% 30.4% 30.4% Selling, general and administrative expenses (296) (272) (1,139) (1,
Slide 21: Income Statement (cont.) and Segment Information
Appendix A ( 2 of 2) Income statement (cont.) 2023 2022 2023 2022 Segment Information Freight Net Sales 1,798$ 1,669$ 6,962$ 6,012$ Freight Income from Operations 246$ 209$ 1,071$ 864$ Freight Operating Margin 13.7% 12.5% 15.4% 14.4% Transit Net Sales 728$ 637$ 2,715$ 2,350$ Transit Income from Oper
Slide 22: Balance Sheet
Balance sheet Appendix B December 31, 2023 December 31, 2022 In mill ions Cash, cash equivalents and restricted cash 620$ 541$ Receivables, net 1,684 1,519 Inventories, net 2,284 2,034 Other current assets 267 233 Total current assets 4,855 4,327 Property, plant and equipment, net 1,485 1,429 Goodwi
Slide 23: Cash Flow
Appendix C Cash flow 2023 2022 In mill ions Operating activities Net income 825$ 641$ Non-cash expense 473 506 Receivables (195) (52) Inventories (58) (368) Accounts Payable (58) 306 Other assets and liabilities 214 5 Net cash provided by operating activities 1,201 1,038 Net cash used for investing
Slide 24: EPS and non-GAAP Reconciliation (1 of 2)
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 Resu
Slide 25: EPS and non-GAAP Reconciliation (2 of 2)
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 Resu
Slide 26: EBITDA Reconciliation
EBITDA reconciliation Appendix E Wabtec Corporation 2023 Q4 EBITDA Reconciliation (in millions) Reported Income Other Income Depreciation & Restructuring Adjusted from Operations (Expense) Amortization Costs EBITDA Consolidated Results $308 $27 $159 $494 ($18) $476 Wabtec Corporation 2023 Q4 YTD EBI
Slide 27: Sales by Product Line
Sales by product line Appendix F In mill ions 2023 2022 Freight Segment Equipment 347$ 430$ Components 283 241 Digital Intelligence 210 225 Services 958 773 Total Freight Segment 1,798$ 1,669$ Transit Segment Original Equipment Manufacturer 326$ 280$ Aftermarket 402 357 Total Transit Segment 728$ 63
Slide 28: Segment Gross Margin & Operating Margin Reconciliation
Segment 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 558$ 246$ 482$ 209$ 2,190$ 1,071$ 1,896$ 864$
Slide 29: Segment Sales Reconciliation
Segment sales reconciliation Appendix H In mill ions Freight Transit Consolidated 2022 Net Sales 1,669$ 637$ 2,306$ Acquisitions 32 - 32 Foreign Exchange 5 28 33 Organic 92 63 155 2023 Net Sales 1,798$ 728$ 2,526$ Change ($) 129 91 220 Change (%) 7.7% 14.3% 9.5% Freight Transit Consolidated 2022 Net
Slide 30: Cash Conversion Reconciliation
Cash conversion reconciliation Appendix I 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. N
Slide 31: Return on Invested Capital Reconciliation
Return on invested capital reconciliation Appendix J 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 com
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