Westinghouse Air Brake Technologies Corporation · NYSE:WAB
Westinghouse Air Brake Technologies — Q2 2022 Earnings Presentation
27 slides from Westinghouse Air Brake Technologies's earnings presentation, Aug 5, 2022
Slide 1: Second Quarter 2022 Wabtec Financial Results & Company Highlights
1 S E C O N D Q U A R T ER 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 2
Slide 4: 2Q 2022 overview
4 2Q 2022 overview Strong Freight Segment growth … partially offset by lower Transit Segment revenue Delivered 1.5 pts of adjusted margin expansion … driven by strong improvement in Freight segment Adj. EPS up 16.0% YoY … driven by strong margin expansion and positive mix … partially offset by highe
Slide 5: 2022 Market assumptions
5 (17.7%) (6.4%) 3.2% 5.1% 20.2% (0.1%) (4.9%) (3.7%) (3.3%) 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 F R E I G H T NA Carloads ↔/- Locomotive & Railcar Unparkings + International Freight Volumes + NA Railcar Production ++ Mining Commodities ++ T R A N S I T Infrastructure Investment + Global Ri
Slide 6: Drivers of portfolio growth and recent wins
6 DRIVERS OF PORTFOLIO GROWTH RECENT WINS Largest modernization order with Union Pacific for 600 units valued at more than $1 billion Strategic order for over 50 modernized and new tier 4 units, and next-gen Precision Dispatch System North America PTC upgrades Strategic HVAC order with Stadler … fir
Slide 7: Focused on long-term goals
7 W A B T E C Focused on long-term goals S T R A T E G Y D E P LO Y M E N T CUSTOMER + SHAREHOLDER VALUE Product & Project Management N A V I G A T I N G V O L A T I L I T Y • Organizational agility & experienced leadership • Broad portfolio of products & businesses … large global installed base • F
Slide 8: 2Q 2022 financial summary
8 EXPANDED MARGINS AND INCREASED ADJ EPS DESPITE DISRUPTIONS AND VOLATILITY (1) Adjusted numbers represent non-GAAP financial measures, see Appendix for additional details and reconciliations 2Q 2022 financial summary W A B T E C OPERATING INCOME/ OPERATING MARGIN 1.8% INCREASE 1.5 PTS OF ADJ MARGIN
Slide 9: 2Q 2022 sales
9 W A B T E C 2Q 2022 sales P R O D U C T L I N E 2 Q 2 2 Y O Y Equipment $381 16.2% Components $234 4.5% Digital Electronics $164 1.2% Services $711 14.3% Freight Segment $1,490 11.5% Transit Segment $558 (17.5%) T O T A L S A L E S $2,048 1.8% E Q U I P M E N T Increased international locomotives
Slide 10: 2Q 2022 consolidated adjusted gross profit
10 W A B T E C 2Q 2022 consolidated adjusted gross profit 2 Q K E Y D R I V E R S2 0 2 1 A D J G R O S S P R O F I T $601 % of Sales 29.9% 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 $647 % of Sales 31.6% M I X / P R I C I N G Favorab
Slide 11: 2Q 2022 consolidated adjusted operating income
11 W A B T E C 2Q 2022 consolidated adjusted operating income (1) Adjusted numbers represent non-GAAP financial measures. See Appendix for additional details and reconciliations (2) 2Q 2021 GAAP operating income was $203M (GAAP operating margin of 10.1%). 2Q 2022 GAAP operating income was $264M (GAA
Slide 12: 2Q 2022 Freight segment performance
12 (1) Adjusted numbers represent non-GAAP financial measures, see Appendix for additional details and reconciliations (2) Foreign exchange rates negatively impacted Freight sales by $16 million; Foreign exchange rates had a negative $226 million impact on segment backlog (3) Freight segment operati
Slide 13: 2Q 2022 Transit segment performance
13 (1) Adjusted numbers represent non-GAAP financial measures, see Appendix for additional details and reconciliations (2) Foreign exchange negatively impacted Transit sales by $60 million; Foreign exchange rates had a negative $342 million impact on segment backlog 2Q 2022 Transit segment performan
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 ADJ LEVERAGE FOCUSED ON CASH CONVERSION CASH FROM OPS RETURN CAPITAL TO SHAREHOLDERS 2Q cash conv of 92% … full-year cash generation expected to be >90% 1H22 cash generation impacted by proactive
Slide 15: 2022 outlook and guidance
15 Adjusted operating margin up - Favorable productivity/absorption, offset by mix, cost inflation & unfavorable FX - 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 $8.6B (1) Cash from operations
Slide 16: Key takeaways
16 W A B T E C Key takeaways 02 Innovative, sustainable technologies expanding Wabtec’s market share 03 Growth strategy driving strong cash flow and margin expansion 04 Strong long-term business fundamentals driving long-term value creation for shareholders 01 Portfolio positioned to drive long-term
Slide 17: Income statement
17 Income statement Appendix A ( 1 of 2) 2022 2021 2022 2021 Net sales 2,048$ 2,012$ 3,975$ 3,842$ Cost of sales (1,403) (1,432) (2,735) (2,728) Gross profit 645 580 1,240 1,114 Gross profit as a % of Net Sales 31.5% 28.8% 31.2% 29.0% Selling, general and administrative expenses (259) (263) (497) (4
Slide 18: Income statement (cont.) segment information
18Appendix A ( 2 of 2) Income statement (cont.) 2022 2021 2022 2021 Segment Information Freight Net Sales 1,490$ 1,336$ 2,812$ 2,519$ Freight Income from Operations 233$ 173$ 422$ 315$ Freight Operating Margin 15.7% 13.0% 15.0% 12.5% Transit Net Sales 558$ 676$ 1,163$ 1,323$ Transit Income from Oper
Slide 19: Balance sheet
19Balance sheet Appendix B June 30, 2022 December 31, 2021 In mill ions Cash and cash equivalents 501$ 473$ Receivables, net 1,422 1,477 Inventories 1,918 1,689 Other current assets 205 193 Total current assets 4,046 3,832 Property, plant and equipment, net 1,428 1,497 Goodwill 8,459 8,587 Other int
Slide 20: Cash flow
20Appendix C Cash flow 2022 2021 In mill ions Operating activities Net income 319$ 240$ Non-cash expense 238 253 Receivables 45 (29) Inventories (256) 8 Accounts Payable 185 82 Other assets and liabilities (107) (39) Net cash provided by operating activities 424 515 Net cash used for investing activ
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) 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 23: EBITDA reconciliation
23 EBITDA reconciliation Appendix E Wabtec Corporation 2022 Q2 EBITDA Reconciliation (in millions) Reported Income Other Income Depreciation & Restructuring & Adjusted from Operations (Expense) Amortization Transaction Costs EBITDA Consolidated Results $264 $7 $116 $387 $4 $391 Wabtec Corporation 20
Slide 24: Sales by product line
24 Sales by product line Appendix F In mill ions 2022 2021 Freight Segment Equipment 381$ 328$ Components 234 224 Digital Electronics 164 162 Services 711 622 Total Freight Segment 1,490$ 1,336$ Transit Segment Original Equipment Manufacturer 259$ 320$ Aftermarket 299 356 Total Transit Segment 558$
Slide 25: Segment gross margin & operating margin reconciliation
25Segment 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 493$ 233$ 414$ 173$ 917$ 422$ 770$ 315$ Fre
Slide 26: Segment sales reconciliation
26Segment sales reconciliation Appendix H In mill ions Freight Transit Consolidated 2021 Net Sales 1,336$ 676$ 2,012$ Acquisitions 5 1 6 Foreign Exchange (16) (60) (76) Organic 165 (59) 106 2022 Net Sales 1,490$ 558$ 2,048$ Change ($) 154 (118) 36 Change (%) 11.5% -17.5% 1.8% Freight Transit Consoli
Slide 27: Cash conversion reconciliation
27 Cash conversion reconciliation Appendix I Wabtec Corporation 2022 Q2 Cash Conversion Calculation (in millions) Reported Cash from Operations Consolidated Results $263 $169 $118 92% Wabtec Corporation 2022 Q2 YTD Cash Conversion Calculation (in millions) Reported Cash from Operations Consolidated
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