Westinghouse Air Brake Technologies Corporation · NYSE:WAB
Westinghouse Air Brake Technologies — Q1 2022 Earnings Presentation
25 slides from Westinghouse Air Brake Technologies's earnings presentation, Apr 27, 2022
Slide 1: First Quarter 2022 Wabtec Financial Results & Company Highlights
1 F I R S T Q U AR 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
Slide 4: 1Q 2022 overview
4 1Q 2022 overview Sales growth driven by Freight Services, Components and Equipment … even with supply chain disruptions Delivered 1.4 percentage points of adj. margin expansion … improvement driven by Freight segment Adj. EPS up 27.0% YoY… driven by sales growth and strong margin expansion partial
Slide 5: Market assumptions: freight and transit volumes
5 (5.9%) (17.7%) (6.4%) 3.2% 5.1% 20.2% (0.1%) (4.9%) (3.7%) 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 F R E I G H T NA Carloads + Locomotive & Railcar Parkings + International Freight Volumes + NA Railcar Production ++ Mining Commodities ++ T R A N S I T Infrastructure Investment + Global Riders
Slide 6: Drivers of portfolio growth and recent wins
6 DRIVERS OF PORTFOLIO GROWTH RECENT WINS Strategic Digital Electronics orders … largest predictive maintenance order in India … next-gen dispatch and PTC upgrade with Class Is 330 modernization order with Norfolk Southern Launch of new lower-carbon, heavy-haul locomotive in Brazil Launched Integrat
Slide 7: 1Q 2022 Financial summary
7 INCREASED SALES, MARGINS AND ADJ EPS DESPITE SUPPLY CHAIN DISRUPTIONS AND COST HEADWINDS (1) Adjusted numbers represent non-GAAP financial measures, see Appendix for additional details and reconciliations 1Q 2022 Financial summary W A B T E C OPERATING INCOME/ OPERATING MARGIN 5.3% INCREASE 1.4 PT
Slide 8: 1Q 2022 sales
8 W A B T E C 1Q 2022 sales P R O D U C T L I N E 1 Q 2 2 Y O Y Equipment $274 4.6% Components $229 12.8% Services $666 18.5% Digital Electronics $153 (1.9%) Freight Segment $1,322 11.7% Transit Segment $605 (6.5%) T O T A L S A L E S $1,927 5.3% E Q U I P M E N T Increased due to higher mining sale
Slide 9: 1Q 2022 consolidated adjusted gross profit
9 W A B T E C 1Q 2022 consolidated adjusted gross profit 1 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 $538 % of Sales 29.4% 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 $600 % of Sales 31.1% M I X / P R I C I N G Favorab
Slide 10: 1Q 2022 consolidated adjusted operating income
10 W A B T E C 1Q 2022 consolidated adjusted operating income (1) Adjusted numbers represent non-GAAP financial measures. See Appendix for additional details and reconciliations (2) 1Q 2021 GAAP operating income was $192M (GAAP operating margin of 10.5%). 1Q 2022 GAAP operating income was $239M (GAA
Slide 11: 1Q 2022 Freight segment performance
11 (1) Adjusted numbers represent non-GAAP financial measures, see Appendix for additional details and reconciliations (2) Foreign exchange rates negatively impacted Freight sales by $4 million; Foreign exchange rates had a positive $67 million impact on segment backlog (3) Freight segment operating
Slide 12: 1Q 2022 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 $33 million; Foreign exchange rates had a negative $135 million impact on segment backlog 1Q 2022 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 NET DEBT FOCUSED ON CASH CONVERSION CASH FROM OPS RETURN CAPITAL TO SHAREHOLDERS Cash generation … impacted by proactive inventory build Full-year cash generation on track >90% cash conversion Ad
Slide 14: 2022 outlook and guidance
14 Adjusted operating margin up - Favorable productivity/absorption, offset by mix & cost inflation - SG&A as % of sales down - Engineering as % of sales up Tax rate ~26% Capex ~2% of sales W A B T E C 2022 outlook and guidance R E V E N U E S $8.3B to $8.6B (1) Cash from operations conversion % is
Slide 15: What you've heard
15 W A B T E C What you’ve heard Portfolio well positioned to deliver long-term profitable growth … resilient large global installed base Strong operational performance in a rising cost environment, continued supply chain disruptions and impacts from Russia Delivering on value creation framework… le
Slide 16: Income statement
16 Income statement Appendix A ( 1 of 2) 2022 2021 Net sales 1,927$ 1,830$ Cost of sales (1,332) (1,296) Gross profit 595 534 Gross profit as a % of Net Sales 30.9% 29.2% Selling, general and administrative expenses (238) (234) Engineering expenses (45) (38) Amortization expense (73) (70) Total oper
Slide 17: Income statement (cont.)
17 Appendix A ( 2 of 2) Income statement (cont.) 2022 2021 Segment Information Freight Net Sales 1,322$ 1,183$ Freight Income from Operations 189$ 142$ Freight Operating Margin 14.3% 12.0% Transit Net Sales 605$ 647$ Transit Income from Operations 65$ 70$ Transit Operating Margin 10.7% 10.8% Backlog
Slide 18: Balance sheet
18 Balance sheet Appendix B March 31, 2022 December 31, 2021 In mill ions Cash and cash equivalents 488$ 473$ Receivables, net 1,382 1,477 Inventories 1,828 1,689 Other current assets 213 193 Total current assets 3,911 3,832 Property, plant and equipment, net 1,468 1,497 Goodwill 8,567 8,587 Other i
Slide 19: Cash flow
19 Appendix C Cash flow 2022 2021 In mill ions Operating activities Net income 150$ 115$ Non-cash expense 122 116 Receivables 93 9 Inventories (137) (11) Accounts Payable 48 47 Other assets and liabilities (115) 16 Net cash provided by operating activities 161 292 Net cash used for investing activit
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 1,
Slide 21: EBITDA reconciliation
21 EBITDA reconciliation Appendix E Wabtec Corporation 2022 Q1 EBITDA Reconciliation (in millions) Reported Income Other Income Depreciation & Restructuring & Adjusted from Operations (Expense) Amortization Transaction Costs EBITDA Consolidated Results $239 $4 $121 $364 $7 $371 Wabtec Corporation 20
Slide 22: Sales by product line
22 Sales by product line Appendix F In mill ions 2022 2021 Freight Segment Equipment 274$ 262$ Components 229 203 Digital Electronics 153 156 Services 666 562 Total Freight Segment 1,322$ 1,183$ Transit Segment Original Equipment Manufacturer 292$ 287$ Aftermarket 313 360 Total Transit Segment 605$
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 424$ 189$ 356$ 142$ Freight Segment Reported Margin 32.1% 14.3% 30.1% 12.0% Restructuring & Transaction costs 2 2
Slide 24: Segment sales reconciliation
24 Segment sales reconciliation Appendix H In mill ions Freight Transit Consolidated 2021 Net Sales 1,183$ 647$ 1,830$ Acquisitions 39 1 40 Foreign Exchange (4) (33) (37) Organic 104 (10) 94 2022 Net Sales 1,322$ 605$ 1,927$ Change ($) 139 (42) 97 Change (%) 11.7% -6.5% 5.3% WESTINGHOUSE AIR BRAKE T
Slide 25: Cash conversion reconciliation
25 Cash conversion reconciliation Appendix I Wabtec Corporation 2022 Q1 Cash Conversion Calculation (in millions) Reported Cash from Operations Consolidated Results $161 $150 $122 59% Wabtec Corporation 2021 Q1 Cash Conversion Calculation (in millions) Reported Cash from Operations Consolidated Resu
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