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: Third Quarter 2023 Wabtec Financial Results and Company Highlights
1 T HI R D Q U A RT 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: 3Q 2023 overview
4 3Q 2023 overview Increased sales were driven by strong growth across the Freight and Transit segments Operating margin benefited from sales growth and lower SG&A as a percentage of sales GAAP EPS up 51.1% YoY … Adjusted EPS up 39.3% YoY from higher Freight and Transit sales and adjusted operating
Slide 5: 2023 Market Expectations
5 (0.1%) (4.9%) (3.7%) (3.3%) 0.2% (0.8%) (3.2%) (4.6%) (3.4%) 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 F R E I G H T NA Carloads - Locomotive and Railcars Parkings ↔/- International Freight Volumes + NA Railcar Deliveries + 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 $2+ billion MOU in Kazakhstan … expected to drive significant growth in 2024 and beyond Mining orders $150+ million … up double-digit versus prior year Additional 4Q orders for 22 locomotives in LATAM for 2024 Significant components order with New York City
Slide 7: Spotlight on international markets
7 Spotlight on international markets W A B T E C 7 A U S T R A L I A Mining growth Decarbonization targets S O U T H A M E R I C A New concessions Agriculture + mining growth C I S Gateway Asia Europe Fleet renewal & efficiency I N D I A & A F R I C A Economic growth + mining Transit urbanization
Slide 8: 3Q 2023 financial summary
8 INCREASED SALES, MARGIN EXPANSION AND EPS GROWTH DESPITE MACRO UNCERTAINTY (1) Adjusted numbers represent non-GAAP financial measures. See Appendix for additional details and reconciliations 3Q 2023 financial summary W A B T E C OP INCOME/OP MARGIN 22.5% INCREASE $261M 12.5% 2022 GAAP SALES EPS $2
Slide 9: 3Q 2023 sales
9 W A B T E C 3Q 2023 sales P R O D U C T L I N E 3 Q 2 3 Y O Y Equipment $615 38.8% Components $307 32.3% Digital Intelligence $181 (3.2%) Services $787 17.6% Freight Segment $1,890 23.4% Transit Segment $660 20.0% T O T A L S A L E S $2,550 22.5% E Q U I P M E N T Higher North American and interna
Slide 10: 3Q 2023 consolidated gross profit
10 W A B T E C 3Q 2023 consolidated gross profit 3 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 $648 $653 % Gross Profit Margin 31.1% 31.4% Volume ↑↑ ↑↑ Mix/Pricing ↑ ↑ Raw Materials ↔ ↔ Currency ↑ ↑ Manufacturing/Other ↓ ↓ 2 0 2 3 G R O S S P R O F I T $792 $805 % Gross Profit Margin 31.0% 3
Slide 11: 3Q 2023 consolidated operating income
11 2 0 2 2 O P I N C O M E $261 $343 % Operating Margin 12.5% 16.4% Gross Profit 144 152 SG&A (35) (39) Engineering 1 1 Amortization (1) - 2 0 2 3 O P I N C O M E $370 $457 % Operating Margin 14.5% 17.9% W A B T E C 3Q 2023 consolidated operating income (1) Adjusted numbers represent non-GAAP financ
Slide 12: 3Q 2023 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 $13 million; down $1 million versus 3rd quarter 2022 (3) Foreign exchange pos
Slide 13: 3Q 2023 Transit segment performance
13 (1) Adjusted numbers represent non-GAAP financial measures. See Appendix for additional details and reconciliations (2) Foreign exchange positively impacted Transit sales by $30 million; Foreign exchange rates had a positive $167 million impact on segment multi-year backlog 3Q 2023 Transit segmen
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 LEVERAGE FOCUSED ON CASH CONVERSION(1) YTD CASH FROM OPS RETURN CAPITAL TO SHAREHOLDERS 3rd quarter CFO of $425M driven by strong growth in net income and improved inventory management Full year
Slide 15: 2023 updated financial guidance
15 Adjusted operating margin up - Favorable productivity/absorption offset by mix - SG&A as % of sales down - Engineering as % of sales flat W A B T E C 2023 updated financial guidance(1,2) (1) See Forward looking statements and non-GAAP financial information (2) Wabtec is not presenting a quantitat
Slide 16: Key takeaways
16 W A B T E C Key takeaways 02 Continued momentum across the portfolio and strong order pipeline03 Positive productivity driven by continuous cost improvement combined with realization of Integration 2.0 savings 04 Wabtec is well-positioned to drive higher returns and create significant long-term v
Slide 17: Income statement
17 Income statement Appendix A ( 1 of 2) 2023 2022 2023 2022 Net sales 2,550$ 2,081$ 7,151$ 6,056$ Cost of sales (1,758) (1,433) (4,971) (4,168) Gross profit 792 648 2,180 1,888 Gross profit as a % of Net Sales 31.0% 31.1% 30.5% 31.2% Selling, general and administrative expenses (295) (260) (843) (7
Slide 18: Income statement (cont.) Segment Information
18 Appendix A ( 2 of 2) Income statement (cont.) 2023 2022 2023 2022 Segment Information Freight Net Sales 1,890$ 1,531$ 5,164$ 4,343$ Freight Income from Operations 327$ 233$ 825$ 655$ Freight Operating Margin 17.3% 15.2% 16.0% 15.1% Transit Net Sales 660$ 550$ 1,987$ 1,713$ Transit Income from Ope
Slide 19: Balance sheet
19 Balance sheet Appendix B September 30, 2023 December 31, 2022 In mill ions Cash, cash equivalents and restricted cash 392$ 541$ Receivables, net 1,714 1,519 Inventories 2,246 2,034 Other current assets 282 233 Total current assets 4,634 4,327 Property, plant and equipment, net 1,419 1,429 Goodwil
Slide 20: Cash flow
20 Appendix C Cash flow 2023 2022 In mill ions Operating activities Net income 608$ 482$ Non-cash expense 372 355 Receivables (214) (39) Inventories (201) (401) Accounts Payable (50) 232 Other assets and liabilities - (1) Net cash provided by operating activities 515 628 Net cash used for investing
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) 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 c
Slide 23: EBITDA reconciliation
23 EBITDA reconciliation Appendix E Wabtec Corporation 2023 Q3 EBITDA Reconciliation (in millions) Reported Income Other Income Depreciation & Restructuring Adjusted from Operations (Expense) Amortization Costs EBITDA Consolidated Results $370 $10 $124 $504 $10 $514 Wabtec Corporation 2023 Q3 YTD EB
Slide 24: Sales by product line
24 Sales by product line Appendix F In mill ions 2023 2022 Freight Segment Equipment 615$ 443$ Components 307 232 Digital Intelligence 181 187 Services 787 669 Total Freight Segment 1,890$ 1,531$ Transit Segment Original Equipment Manufacturer 302$ 264$ Aftermarket 358 286 Total Transit Segment 660$
Slide 25: Segment gross margin & operating margin reconciliation
25 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 611$ 327$ 497$ 233$ 1,632$ 825$ 1,414$ 655
Slide 26: Segment sales reconciliation
26 Segment sales reconciliation Appendix H 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 1,890$ 660$ 2,550$ Change ($) 359 110 469 Change (%) 23.4% 20.0% 22.5% Freight Transit Consolidated 20
Slide 27: Cash conversion reconciliation
27 Cash conversion reconciliation Appendix I Wabtec Corporation 2023 Q3 Cash Conversion Calculation (in millions) Reported Cash from Operations Consolidated Results $425 $242 $125 116% Wabtec Corporation 2023 Q3 YTD Cash Conversion Calculation (in millions) Reported Cash from Operations Consolidated
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