Westinghouse Air Brake Technologies Corporation · NYSE:WAB
Westinghouse Air Brake Technologies — Investor Presentation (February 2025)
59 slides from Westinghouse Air Brake Technologies's investor presentation, Feb 18, 2025
Slide 1: Wabtec Investor Presentation 2025
1 Wabtec Investor Presentation 2025
Slide 2: Forward-looking statements
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 Litigation Reform Act of 1995. All statements, other than historical
Slide 3: Table of Contents
Table of Contents 3 4 Why Wabtec 10 Company profile & key growth drivers 15 Value creation framework 25 Drive fuel efficiencies thru emerging technologies 32 Strategies to drive profitable growth 43 Disciplined value creation 49 Long-term guidance 53 Appendix
Slide 4: Why Wabtec
4 4 Why Wabtec
Slide 5: Wabtec Has Been A Partner In Rail Innovation
5 Wabtec Has Been A Partner In Rail Innovation For Over 150 Years Freight segment Transit segment ~20% Of the world’s railfreight is moved by a Wabteclocomotive Equipment ~ 8M Messages monitoreddaily on Wabteclocomotives services ~20% Of global freight carshave Wabtec productson them components >500
Slide 6: Wabtec's Financial Performance
Wabtec’s Financial Performance 6 $10.4B SALES 18.9% ADJUSTED OPERATING MARGIN 117% CASH FROM OPS CONVERSION (1) 7.3% YOY 190 bps YOY 27.7% YOY 52.7% YOY Increase in Cash from Ops $ 2024 KEY HIGHLIGHTS 9.9% 300 bps 21.1% 99% Mid Single Digit ORGANIC SALES CAGR Double Digit ADJ. EPS CAGR >90% CASH FRO
Slide 7: Resilient Portfolio Through The Cycle
Resilient Portfolio Through The Cycle 7 Strong 12-month backlog provides resiliency and visibility despite macro uncertainty Significant recurringrevenue base drives~60% of profit ROBUST BACKLOG & RECURRING REVENUE DEMONSTRATED EXECUTION solid outlook supported by resilient earnings 4Q20 4Q23 $7.5B
Slide 8: Driving Continuous Operational Improvement
Driving Continuous Operational Improvement 8 2021 2022 2023 2021 2022 2023 Fixed Asset Productivity ROIC (1) CAPITAL EFFICIENCY METRICS Total net sales/property, plant, and equipment, net (1) Represents a non-GAAP financial measure. See Appendix for details and reconciliation 2024 2024
Slide 9: Disciplined Capital Deployment
Disciplined Capital Deployment 9 Returning capital to shareholders … >50% returned thru Dividends and share repurchases 2020 – 2024 Capital allocation $5.9B Cash from Operations 1 2 3 4 5 Maintain Strong Balance SheetMaintain investment-grade rating Invest In Sustainable GrowthR&D and CapEx Increase
Slide 10: Company Profile & Key Growth Drivers
10 10 Company Profile & Key Growth Drivers
Slide 11: Wabtec Operates Its Business In Two Segments
Wabtec Operates Its Business In Two Segments 11 50+ Countries ~30K Employees GLOBAL LEADER IN FREIGHT AND TRANSIT RAIL TECHNOLOGIES Freight: 72% Transit: 28% 33% Services $10.4B portfolio 2024 revenues 20% Equipment 28% Transit 11% Components 8% Digital Intelligence
Slide 12: Attractive Revenue Profile
12 Attractive Revenue Profile *2024 FY results STRONG GLOBAL INDUSTRIAL PORTFOLIO WITH TRACK RECORD OF INNOVATION AND SIGNIFICANT RECURRING REVENUE 55% 47% 53% 45% Attractiveend markets Robust aftermarket portfolio Broad scale in global markets Strong mix of recurring revenues Freight Transit All Ot
Slide 13: Fixed-Cost Structure Expected To Drive Incremental Margins
15-20% SG&A 13 Sales Growth(1) Expected To Drive Incremental Margins Of ~30% Based On Wabtec’s Fixed-Cost Structure 80-85% 67% of 2024 Revenue 15-20% FIXED MANUFACTURING 80-85% FIXED SG&A ~30% INCREMENTAL MARGIN COST OF GOODS SOLD 12% of 2024 Revenue Variable Costs Variable Costs 15-20% 80-85% Fixed
Slide 14: Mix Dynamics Changing As Industry Renews Aging Locomotive Fleet
14 Mix Dynamics Changing As Industry Renews Aging Locomotive Fleet EQUIPMENT TO GROW FASTER THAN AVERAGE ACROSS WABTEC PORTFOLIO PRODUCT MIX Digital Intelligence Services Components Equipment Transit Margin Drivers Sensitivity to the cycle Equipment High Components High Services Medium Digital Intel
Slide 15: Value Creation Framework
15 15 Value Creation Framework
Slide 16: Growth Drivers
Growth Drivers 16 DIVERSE PORTFOLIO WITH UNIQUE STRATEGIES TO DRIVE GROWTH 1 2 3 4 5 VALUE CREATION FRAMEWORK FOR DELIVERING THE FUTURE OF RAIL Extending our position as a leader in rail technology around the world Drive fuel efficiencies thru emerging technologies Lead the industry in innovative, f
Slide 17: Growth Driver #1: Accelerate Innovation of Scalable Technologies
17 Growth Driver #1 … Accelerate Innovation of Scalable Technologies ~6-7% target annual organic investment in technology as % of sales ENHANCE EXISTING PRODUCTS INVENT, TEST AND SCALE FUTURE technologies TECHNOLOGY
Slide 18: Growth Driver #2: Grow And Refresh Global Installed Base
Growth Driver #2 … Grow And Refresh Expansive Global Installed Base Opportunity for pantograph High-margin friction products transit Pull-through content of up to $250K per new loco Recurring software services DigitalIntelligence 120+ service events over loco life >2,000 Mod units in operation Stron
Slide 19: North America Fleet Replenishment
Growth Driver #2 … North America Fleet Replenishment 19 Current active main-line locomotive fleet size Wabtec North America Locomotives New & Modernizations deliveries ~ 525 units per year ~ 400 units per year 2008 2017 2025 - 2027 ~15K ~25 years ~600 locos North America long-term locomotive fleet r
Slide 20: North America Fleet Renewal Opportunity
1ST WAVE OF MODS - FDL POTENTIAL MODS - EVO Growth Driver #2 … North America Fleet Renewal Opportunity 20 CONTINUE TO INVEST / GROW THE CORE LOComotive Wabtec’s fleet by emission T1 T4 T2+ WABTEC’s fleet by TRACTION DC AC Customer outcomes Reliability 3 Fuel efficiency 2 Productivity 1 fleet profile
Slide 21: International Fleet Growth
Key markets & Growth drivers Growth Driver #2 … International Fleet Growth 21 Resilient Growth in the International INSTALLED BASE 4.6% SSA Mining new projects & volume growth Expand service & repair Digital Mining, PTC 2.0 Australia / APAC Continued growth in Freight rail Fleet renewal, aging fleet
Slide 22: Growth Driver #3: Driving Fuel Efficiency Improvements
22 2x Global demand for transport growing fast…freight and passenger activity projected to grow more than double by 2050 GROWING DEMAND today 22x fewer deaths and injuries per year than trucking SAFER 75% reduction in carbon emissions per ton-mile versus trucking CARBON REDUCTION 3-4x more fuel effi
Slide 23: Growth Driver #4: Expand High-Margin Recurring Revenue Streams
Growth Driver #4 … Expand High-Margin Recurring Revenue Streams 23 ~60% OF COMPANY PROFIT IN 2024 DRIVEN BY RECURRING REVENUES Driven by expansive installed base of locomotives and significant content on transit / freight cars Includes such items as service businesses, replacement parts, software li
Slide 24: Growth Driver #5: Drive Continuous Operational Improvement
Manufacturing excellence Lean/continuous improvement and industry 4.0, 90% On Time Delivery, Rooftop reductions, make vs. buy, local production, Working capital cycle improvement Material cost reduction ~145 manufacturing sites. . . Drive best cost footprint >25% sites in best-cost-countries >35% of
Slide 25: Drive Fuel Efficiencies Through Emerging Technologies
25 25 Drive Fuel Efficiencies Through Emerging Technologies
Slide 26: Committed To Creating A More Sustainable Future
We’re Committed To Creating A More Sustainable Future SUSTAINABILITY PRINCIPLES INNOVATING WITH PURPOSE DRIVING RESPONSIBLE OPERATIONS EMPOWERING PEOPLE AND COMMUNITIES We are committed to developing responsible and sustainable products that minimize the impact on the planet We are committed to prov
Slide 27: Customer Science-Based Targets For CO2 Reduction
Customer Science-Based Targets For CO2 Reduction 27 TECHNOLOGY CO2 BENEFIT COST BENEFIT DC to AC Locomotives + + Trip Optimizer + +++ Engine Advantage + +++ Biodiesel 20% + + Renewable Diesel ++ - FLXdrive Consist ++ ++ Hydrogen +++ -/+ TECHNOLOGY BENEFIT FOR CUSTOMERS UPGRADE OPERATIONAL NEW ASSET
Slide 28: Wabtec's Path To Zero Emissions Locomotives
Up to 60% CO2 Up to 80% CO2 Wabtec’s Path To Zero Emissions Locomotives 28 DEVELOP BEST-IN-CLASS ZERO EMISSIONS TeCHNOLOGY FDL FLEET EVO FLEET Wabtec Advantage: Fleet replacement with Tier 4 locomotives & mods improves fuel efficiency by up to 18%. Wabtec locomotives are up to 6% more fuel efficient
Slide 29: Locomotive Technology Road Map For Sustainability
Locomotive Technology Road Map For Sustainability 29 Diesel engine Battery (Mainline HYBRID CONSIST) hydrogen digital 2016 2023 2026 2030+ Potential Co2 reduction Our technologies, such as Trip OptimizerTM and LOCOTROL® enhance the rail industry’s sustainable journey Tier 4 FDL Advantage EVO Advanta
Slide 30: Digital Technical Solutions Impact
30 Digital Technical Solutions impact Up to ~30% reduction in emissions and fuel utilization 22% efficiencies today … 18% EPA certified products Integrated FUEL Optimization Movement Planner system Locotrol distributed power Trip Optimizer Platform 30% UP TO Total savings* CAPABILITY EVOLUTION Fuel
Slide 31: Transit: Government Funding, Decarbonizing Passenger Transport
Transit – Government Funding, Decarbonizing Passenger Transport 31 UNIQUELY POSITIONED TO CAPTURE GROWTH ACROSS VAST PORTFOLIO AND GEOGRAPHICAL REACH TAILWIND TO TRANSIT SYSTEMS PORTFOLIO U.S. $180B in 2022 -2032 for passenger EUROPEAN UNION $83B in 2021-2027 for rail INDIA $150B in 2024-2029 for ra
Slide 32: Strategies To Drive Profitable Growth
32 32 Strategies To Drive Profitable Growth
Slide 33: Equipment: Primary Growth Drivers
33 Equipment – Primary Growth Drivers 1 2 3 4 SURFACE MINING TRUCK ELECTRIFICATION & FLEET RENEWAL Continued shift from mechanical drives to electric drives Maintain strong position in Ultra Class segment with Power Agnostic platform Sustained copper & iron ore production growth NORTH AMERICA FLEET
Slide 34: Equipment
Equipment 34 REVENUE BY END MARKET REVENUE BY GEOGRAPHY AFTERMARKET REVENUE RECURRING REVENUE $2.1B 2024 Revenue Key customers Diversified global base to drive growth 1% 55% 45% Locomotive Mining, Marine, Drilling, Other 50% 21% North America Europe APAC 88% 12% 84% 16% OE Aftermarket Non-Recurring
Slide 35: Services: Primary Growth Drivers
35 Services – Primary Growth Drivers GLOBAL REMANUFACTURING 20+ global remanufacturing locations for critical components including engines & traction motors MAINTENANCE TECHNOLOGIES Asset management, material management, remote monitoring and technical advisory capabilities INTERNATIONAL EXPANSION A
Slide 36: Services
Services 36 REVENUE BY END MARKET REVENUE BY GEOGRAPHY AFTERMARKET REVENUE RECURRING REVENUE $3.4B 2024 Revenue Key customers ACCELERATING GROWTH ACROSS THE PORTFOLIO 82% 74% 20% Services / Maintenance Modernizations 6% 8% 69% 31% 80% 20% OE Aftermarket Non-Recurring Recurring Maintenance of Way 6%
Slide 37: Components: Primary Growth Drivers
37 Components –Primary Growth Drivers INTERNATIONAL EXPANSION USING ONE WABTEC NETWORK Freight and loco opportunities in LATAM, APAC, India, and EMEA Industrial expansion and global partnerships to support ESG Scaling and developing new products for energy solutions, carbon reduction, and renewable
Slide 38: Components
Components 38 REVENUE BY END MARKET REVENUE BY GEOGRAPHY AFTERMARKET REVENUE RECURRING REVENUE $1.2B 2024 Revenue Key customers Diversified PORTFOLIO BRINGS NEW growth 70% 51% 49% Freight Industrial 12% 13% 70% 30% 58% 42% OE Aftermarket Non-Recurring Recurring Nationalsteel car North America Europe
Slide 39: Digital Intelligence: Primary Growth Drivers
39 Digital Intelligence – Primary Growth Drivers NEXT-GEN NETWORK SOLUTIONS Precision Dispatch 2.0, migrate to Cloud, Pacing & Service Design INTERNATIONAL MARKETS Expand Train Automation, PTC 2.0, KinetiX and Digital Mining across Latin America, Europe, and Asia Pacific EVOLVE LOCOTROL PLATFORM Loc
Slide 40: Digital Intelligence
Digital Intelligence 40 REVENUE BY END MARKET REVENUE BY GEOGRAPHY RECURRING REVENUE $0.8B 2024 Revenue WELL POSITIONED FOR GROWTH 71% 48% 31% Onboard Optimization / KinetiX 14% 1% 70% 30% Non-Recurring Recurring Signaling 21% 5% Key customers North America Europe APAC CIS, MENA, SSA South America 9
Slide 41: Transit: Primary Growth Drivers
41 Transit – Primary Growth Drivers 1 2 3 4 GOVERNMENT FUNDING / SHIFTING TO GREEN TECHNOLOGY Investments in decarbonization and reduction of congestion, aligns with suite of energy management, electrification, and carbon reduction products OPERATIONAL EXCELLENCE AND PORTFOLIO MANAGEMENTDrive global
Slide 42: Transit
Transit 42 REVENUE BY END MARKET REVENUE BY GEOGRAPHY AFTERMARKET REVENUE RECURRING REVENUE $2.9B 2024 Revenue Key customers SAFETY, EFFICIENCY & PASSENGER COMFORT 56% 19% 42% 21% 18% 48% 52% 45% 55% OE Aftermarket Non-Recurring Recurring Rolling Stock Components Transit Services Brakes & Couplers 2
Slide 43: Disciplined Value Creation
43 43 Disciplined Value Creation
Slide 44: Path To The Future: Maximize Shareholder Value
Path To The Future …Maximize Shareholder Value 44 INVEST INTHE BUSINESS Driving long-term profitable growth DRIVERS Deploy proven strategies / accelerate growth drivers Execute on increasing backlog Mix headwinds driven by fleet renewal Invest in innovative technologies that drive profitable growth
Slide 45: Capital Allocation Priorities
Capital Allocation Priorities 45 Net leverage ratio is defined as net debt divided by trailing 12-month adjusted EBITDA. Net debt is defined as total debt minus cash, restricted cash and cash equivalents; represents a non-GAAP financial measure. See Appendix for additional details and reconciliation
Slide 46: Invest In The Future Through Strategic M&A
Invest In The Future Through Strategic M&A 46 FOCUSED ON ACQUISITIONS THAT ARE A STRATEGIC FIT AND DRIVE ATTRACTIVE RETURNS STRATEGIC MARKETS COMPELLING VALUATIONS ATTRACTIVE ASSETS Bolt-ons / adjacencies focused on: Highly engineered products Rail & industrial services Digital technologies & soluti
Slide 47: Disciplined Capital Deployment - 2024
Disciplined Capital Deployment - 2024 47 Accretive Earnings → Strong Cash Flow Conversion → Reinvest & Return Capital Deployment Priorities Maintain Strong Balance SheetMaintain investment-grade rating Invest In Sustainable GrowthR&D and CapEx Increase Dividends $0.05 quarterly dividend increase in
Slide 48: Key Investment Highlights
48 Key Investment Highlights 1 2 3 4 Continued momentum across the portfolio and strong order pipeline and backlog … internationally and in North America Positive productivity driven by continuous cost improvement combined with realization of Integration 2.0 & 3.0 savings Wabtec is well-positioned t
Slide 49: Long-Term Guidance
49 49 Long-Term Guidance
Slide 50: The Next Five Years - Long Term Guidance
50 The Next Five Years – Long Term Guidance 50 BASE YEAR 2024 5-YEAR OUTLOOK (1) $10.4B REVENUE 18.9% ADJUSTED OPERATING MARGIN $7.56 ADJUSTED EPS 117% CASH FROM OPS CONVERSION Mid Single Digit ORGANIC SALES CAGR Double Digit ADJUSTED EPS CAGR >90%(2) CASH FROM OPS CONVERSION 350+ bps ADJUSTED OPERA
Slide 51: Future Revenue Growth & Margin Expansion
Future Revenue Growth & Margin Expansion 51 +2.0 - 3.0% + 1.0% 1.0-2.0% + Innovation-Led Drivers 225 BPS + 85 BPS + 40 BPS ANNUAL REVENUE GROWTH EXPECTATIONS 2025 – 2029: MID-SINGLE DIGITS ADJUSTED MARGIN IMPROVEMENT EXPECTATIONS 2025 – 2029: 350+ BPS ACCELERATED GROWTH Technology-driven growth Pric
Slide 52: Introducing Integration 3.0 & 2025 Portfolio Optimization
INTEGRATION 3.0 (2025 – 2027) Introducing Integration 3.0 & 2025 Portfolio Optimization 52 Consolidate footprint / REDUCE COMPLEXITY Value chain improvement Office/facility rationalization Streamline operation to reduce mfg. complexity Manufacturing, ENGINEERING & PROCUREMENT EXCELLENCE Global suppl
Slide 53: Appendix
53 53 Appendix
Slide 54: Cash Conversion Reconciliation
Cash Conversion Reconciliation 54
Slide 55: Operating Margin Reconciliation
Operating Margin Reconciliation 55
Slide 56: Return On Invested Capital Reconciliation
Return On Invested Capital Reconciliation 56
Slide 57: Net Leverage Ratio
Net Leverage Ratio 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 measu
Slide 58: Earnings Per Share Reconciliation (1 of 2)
Earnings Per Share Reconciliation (1 of 2) 58
Slide 59: Earnings Per Share Reconciliation (2 of 2)
Earnings Per Share Reconciliation (2of 2) 59
Westinghouse Air Brake Technologies — Investor Presentation (February 2025) on 6ix