Westinghouse Air Brake Technologies Corporation · NYSE:WAB
Westinghouse Air Brake Technologies — Investor Day (March 2022)
137 slides from Westinghouse Air Brake Technologies's investor day presentation, Mar 9, 2022
Slide 1: Wabtec Investor Day
WABTEC 0PINVESTOR me
Slide 2: Forward-looking statements & non-GAAP financial information
2 W A B T E C 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 Secur
Slide 3: Our agenda
3 W A B T E C Our agenda Wabtec Overview & Our Path Forward Portfolio Spotlights Market-Led Growth Drivers Disciplined Value Creation Wabtec Overview & Our Path Forward Rafael Santana President & CEO Technology Eric Gebhardt Chief Technology Officer Unleashing Further Growth Gina Trombley Executive
Slide 4: What you will hear today
4 W A B T E C What you will hear today 02 Innovative, sustainable technologies expanding Wabtec’s market size 03 Growth strategy driving strong cash flow and margin expansion 04 Strong business fundamentals driving long-term value creation for shareholders 01 Portfolio positioned to drive long-term
Slide 5: Leadership team
5 W A B T E C Leadership team R A F A E L S A N T A N A President & Chief Executive Officer D A V E D E N I N N O Executive Vice President, General Counsel & Secretary J O H N O L I N Executive Vice President Finance & Chief Financial Officer M I K E F E T S K O President, Components R O G E R I O M
Slide 6: Our purpose is clear: Move and improve the world
6 O U R P U R P O S E I S C L E A R Move and improve the world 6
Slide 7: We're committed to creating a more sustainable future
7 W A B T E C We’re committed to creating a more sustainable future SUSTAINABILITY PRINCIPLES Innovating with Purpose We are committed to developing responsible and sustainable products that minimize the impact on the planet SUSTAINABILITY PRINCIPLES Driving Responsible Operations We are committed t
Slide 8: Delivering strong financial performance
8 W A B T E C Delivering strong financial performance GE Transportation synergy run-rate achieved 15 months ahead of schedule$250M Transit margin increase310BPS Annual investment in technology (% of rev.)6-7% Adjusted net debt EBITDA leverage ratio (down from 3.0 post-merger)(1)2.5x Share repurchase
Slide 9: Building a solid foundation for growth
9 Building a solid foundation for growth I N T E G R A T I O N O F 3 R A I L L E A D E R S ✓ Merged 3 market-leading rail companies ✓ Delivered on $250M synergies 15 months ahead schedule W E L L - P O S I T I O N E D T O G R O W , L E V E R A G E C O M P A N Y ’ S I N F R A S T R U C T U R E , D R
Slide 10: Wabtec is well-positioned to lead the industry and deliver shareholder value
10 Wabtec is well-positioned to lead the industry and deliver shareholder value W H E R E W E A R E W H E R E W E A R E G O I N GW H E R E W E H A V E B E E N 2019-2021 Lay the foundation 2022-2023 Lead the recovery 2024+ Deliver the future of sustainable rail W A B T E C 10
Slide 11: Where we are… leading the recovery
11 + Strong international pipeline… Australia, Brazil, Egypt, CIS + Reduced parking of locos and freight car build recovery in NAM + Transit operating levels improving in high speed, regional/metro + Continued global infrastructure spending on sustainable rail ̶ Significant inflationary pressures an
Slide 12: Where we are going… lead the future of sustainable rail
12 Where we are going… lead the future of sustainable rail R E N E W I N G A G I N G F L E E T S 2 0 2 4 + O U T L O O K O P P O R T U N I T Y T O G R O W R E V E N U E A N D E A R N I N G S F A S T E R T H A N I N D U S T R Y V O L U M E S E N A B L I N G C U S T O M E R P R O D U C T I V I T Y T A
Slide 13: Value creation framework for delivering the future of rail
13 Accelerate innovation of scalable technologies Build high-margin, innovative and scalable products to increase customer productivity, automation, utilization, and capacity Grow and refresh expansive global installed base Increase share across asset lifecycle (Locos/Mining, Freight Cars & Transit)
Slide 14: Accelerate innovation of scalable technologies
14 ENHANCE EXISTING PRODUCTS ~6-7% target annual organic investment in technology as % of sales W A B T E C INVENT, TEST AND SCALE FUTURE TECHNOLOGIES Accelerate innovation of scalable technologies 14
Slide 15: Grow and refresh expansive global installed base
15 ✓ Opportunity for pantograph pull through on FLXdrive ✓ High-margin friction products T R A N S I T ✓ Pull-through content of up to $250K per new loco ✓ Recurring software services D I G I T A L E L E C T R O N I C S ✓ 120+ service events over asset life ✓ >1,000 Mod units in operation ✓ High mar
Slide 16: Lead the decarbonization of rail
16 W A B T E C Lead the decarbonization of rail 2x Global demand for transport growing fast… freight and passenger activity projected to grow more than double by 2050 G R O W I N G D E M A N D 22x fewer deaths and injuries per year than trucking SAFER T O D A Y ~300MT O N S Decarbonization drives st
Slide 17: Expand high-margin recurring revenue streams
17 R E C U R R I N G R E V E N U E S 41% 59% Recurring Revenues W A B T E C Expand high-margin recurring revenue streams Driven by expansive installed base of locomotives and significant content on transit / freight cars Includes service businesses, replacement parts, software licenses, digital serv
Slide 18: Drive continuous operational improvement
18 A C C E L E R A T E L E A N D R I V E C O S T C O M P E T I T I V E N E S S C A P I T A L E F F I C I E N C Y M E T R I C S Continual Focus on Fixed Asset Productivity 4.9 4.7 5.3 2019 2020 2021 Improve ROIC 3.3% 3.7% 4.6% 2019 2020 2021 Cash Conversion in Line With Long-Term Targets 141% 89% 102
Slide 19: Operational rigor underpins financial performance
19 W A B T E C Operational rigor underpins financial performance S T R A T E G Y D E P L O Y M E N T CUSTOMER + SHAREHOLDER VALUE Product & Project Management
Slide 20: Capital deployment priorities
20 C A P I T A L D E P L O Y M E N T P R I O R I T I E S Maintain Strong Balance Sheet Maintain investment-grade rating Invest In Sustainable Growth R&D and CapEx Increase Dividends $0.03 quarterly dividend increase in Q1 ‘22 Supplement Organic Growth with M&A Portfolio optimization; accretive inves
Slide 21: Attractive long-term financial profile
21 Attractive long-term financial profile Resiliency tested and validated over past 5 years; proven track record of delivering growth Attractive end markets… building momentum, renewal of locomotive fleets, strong and growing backlog Leading market position and innovative, customer- focused solution
Slide 22: Key takeaways
22 Attractive long-term investment with a clear profitable growth model Strong organic growth profile driven by our industry-leading installed base and services Relentless focus on innovation, customer productivity, efficiency and safety Unwavering focus on and commitment to execution Demonstrated a
Slide 23: Eric Gebhardt – Technology
23 E R I C G E B H A R D T Technology 23
Slide 24: Global technology leadership and scale
24 Global technology leadership and scale 4,000+ Engineers 7,000+ Patents* L E G A C Y O F O N G O I N G I N V E N T I O N … F R O M F O U N D E R S T O T O D A Y 1 8 6 9 Westinghouse Air Brake Company founded 1 9 2 3 Faiveley introduced pantograph 2 0 2 0 Introduced advanced Metroflexx braking syst
Slide 25: Focused on making customers more productive while achieving sustainability goals
25 T E C H N O L O G Y Focused on making customers more productive while achieving sustainability goals E Q U I P M E N T Objective Reliability Power / haulability Fuel efficiency Carbon reduction T R A I N O P E R A T I O N S Objective Automation Smart train & network optimization Improved train ha
Slide 26: Customer science-based targets for CO2 reduction
26 Customer science-based targets for CO2 reduction TARGETS T E CH N OL OGY B E N E F IT F O R CUS T O M E RS TECHNOLOGY CO2 BENEFIT U P G R A D E O P E R A T IO N A L N E W A S S E T +Trip Optimizer Engine Advantage + +Biodiesel 20% Renewable Diesel ++ ++FLXdrive Consist Hydrogen +++ COST BENEFIT +
Slide 27: Digital solutions fuel savings
27 30% Digital solutions FUEL SAVINGS ACROSS THE ENTERPRISE NETWORK 3% → 4% FUEL SAVINGS ON DISTRIBUTED POWER TRAINS 4% →6% FUEL SAVINGS PER LOCOMOTIVE 15% → 22% MOVEMENT PLANNER Optimizes the use of slack time to reduce overall fuel consumption LOCOTROL Optimizes the distribution of power to reduce
Slide 28: Engine advantage
28 Engine advantage FDL - ADVANTAGE >5% fuel savings Leverage high-pressure common rail Available now EVO - ADVANTAGE >5% fuel savings Harvest exhaust energy Available 2023-25 D E L I V E R I N G S I G N I F I C A N T E F F I C I E N C Y A N D G H G R E D U C T I O N S T E C H N O L O G Y * Fuel red
Slide 29: Systems focus… the Wabtec differentiator
29 Systems focus … the Wabtec differentiator W A B T E C V S T H E C O M P E T I T I O N Safety & reliability Fleet integration Performance & efficiency Overall life cycle cost P R O D U C T S O P T I M I Z E D F O R ENERGY MGT HAULAGE RELIABILITY NA FREIGHT UNITS Tier 4 +++ + ++ >1,000 vs <100 Mods
Slide 30: Bio/renewable diesel
30 Bio/renewable diesel F UL L W AB T E C E N GI NE P O R T F O L IO B I O DI ESEL DE V E L OPM ENT P L AN TARGETS BIODIESEL B5 / R30 TODAY Industry partnership to validate performance, durability, and emissions impact FDL Fleet T E S T P A R T N E R S EVO Fleet 20% BIODIESEL 55%+ HDRD T E C H N O L
Slide 31: FLXdrive development progress
31 FLXdrive development progress F L XDRI V E 2 . 0 V S 1 . 0 Energy Density Battery Life Cycle Cost Fuel & CO2 Reduction W A B T E C + G M T E C H N O L O G Y D E L I V E R I N G B E S T I N C L A S S : Safety Overall system performance Reliability Locomotive layout & maintainability Ongoing produc
Slide 32: Alternative propulsion – hydrogen
32 Alternative propulsion – hydrogen H 2 F O R F R E I GHT Longer range option for low/zero emissions Fuel generation cost through public & private investment Complementary to FLX technology… hybrid unit + hybrid consist T E CH N OL OGY O P T I O NS H2 Fuel Cells H2 ICE Dual Fuel T E C H N O L O G
Slide 33: Locomotive technology road map for sustainability
33 Locomotive technology road map for sustainability DIESEL ELECTRIC BATTERY ( H Y B R I D C O N S I S T ) HYDROGEN DIGITAL 2 0 1 6 2 0 2 1 2 0 2 6 2 0 3 0 + C O 2 R E D U C T I O N T A R G E T M O V E M E N T P L A N N E R L O C O T R O L T R I P O P T I M I Z E R S U I T E TIER 4 FDL Advantage EVO
Slide 34: Gina Trombley – Unlocking further growth
34 G I N A T R O M B L E Y Unlocking further growth 34
Slide 35: Key trends influencing growth / global rail forecast
35 Source: Worldbank.org, SCI 2020 Worldwide Market for Railway Industries ; UNIFE World Market for Rail Supply, ITF (2021), ITF Transport Outlook 2021, OECD Publishing, Paris K E Y T R E N D S I N F L U E N C I N G G R O W T H G L O B A L R A I L F O R E C A S T Mainline Psgr ‘21-30 ‘21-’30: 2.8% C
Slide 36: Railroads well-positioned to expand share vs. truck
36 Railroads well-positioned to expand share vs. truck W A B T E C G L O B A L R A I L V S . R O A D O U T L O O K Sustain existing share and focus on customer needs to capture flexible freight commodities Create a diversified supply chain and railcar visibility to help shippers handle variability i
Slide 37: Freight railroad imperatives
37 Freight railroad imperatives W A B T E C G R O W T HP R O D U C T I V I T Y S U S T A I N A B I L I T Y P R O J E C T E D F R E I G H T C A G R % G L O B A L T O N - K M <60% 70-75% >80% S T A T E - O W N E D C L A S S I I N T ’ L P R I V A T E OPERAT ING RAT I O% 2 0 2 1 2 0 3 0 2 0 3 0 2 0 5 0
Slide 38: Class I locomotive illustrative example
38 W A B T E C GO-FORWARD OUTCOMES CLASS I LOCOMOTIVE ILLUSTRATIVE EXAMPLE 36% Longer trains driven by Class I AC adoption Gross ton mile per locomotive for AC adoption 20% 40% Reliability improvement from modernization Wabtec enabling NAM railroads competitiveness R E V E N U E T O N M I L E ( B )
Slide 39: Reimagining rail yards… impacting rail communities
39 Reimagining rail yards … impacting rail communities W A B T E C T O N S O F C O 2 E L I M I N A T E D = 2 K C A R S O F F T H E H I G H W A Y R E D U C T I O N I N L O C O M O T I V E N O I S E P A R T N E R W I T H C O M M U N I T I E S T R A D E S C H O O L S 4 T O N S O F P A R T I C U L A T E
Slide 40: Greg Sbrocco – Global Operations
40 G R E G S B R O C C O Global Operations 40
Slide 41: Wabtec operating model
41 PEOPLE DEVELOPMENT Talent reviews & succession planning Talent acquisition & leadership Employee learning & development STRATEGY Strategic annual planning M&A INNOVATION IP strategy & protection Technology incubation/disruption Investment in strong IRR projects & products COMMERCIAL EXCELLENCE St
Slide 42: Wabtec operating model… operational excellence
42 Wabtec operating model… operational excellence Of shared values and mindset of problem solving and continuous improvement CUSTOMER + SHAREHOLDER VALUE CULTURE Operating reviews monitoring pulse.... Site and division level CADENCE STRATEGY DEVELOPMENT CORE OF COMMON KPI WABTEC MANAGEMENT SYSTEM OP
Slide 43: Responsible operations
43 rising fuel cost+43% ~30% Responsible operations S AF E T Y Y E A R S O F I N J U R Y R A T E R E D U C T I O N S ( 1 2 O F 1 3 Y E A R S ) 12 Employee safety Regulatory compliance excellence Environmentally responsible manufacturing Leadership development GH G R E D U C T I O N I N G H G S C O P
Slide 44: Quality + reliability
44 Quality + reliability Continuous improvement mindset Knowledge sharing Best in class quality performance Fleet performance monitoring + prognostics Commercial partnerships and risk-based commercial tollgates Prevention & responsiveness Minimizing waste & rework Continuous improvement and automati
Slide 45: Customer commitments
45 Customer commitments Strategic commodity evaluations (geographic & sole/single source) Business planning/lean rigor (forecasting, scheduling, inventory, labor planning excellence & tollgate adherence) Strategy and Planning Risk Mitigation Delivery Monitoring (tools to proactively monitor supply b
Slide 46: Cost optimization
46 Cost optimization 3-5% H I S T O R I C A L A V E R A G E M A N U F A C T U R I N G V A R I A B L E C O S T P R O D U C T I V I T Y / Y E A R S I N C E 2 0 1 9 2-3% H I S T O R I C A L A V E R A G E M A T E R I A L C O S T D E F L A T I O N / Y E A R S I N C E 2 0 1 9 (excl. commodities) 30% R O O
Slide 47: Spotlight on Lean and continuous improvement
47 T RAN S F O RM AT I O NAL L E AN B Y 2025 90% CO GS CO V E R AGE Spotlight on: Lean and continuous improvement Wabtec views Lean as the way: We align on strategic deployment We unify the “One Wabtec Culture” We problem solve and eliminate waste We drive productivity We drive velocity in cycle and
Slide 48: GE Transportation synergy progress
48 G E T R A N S P O R T A T I O N S Y N E R G Y P L A N I N T E G R A T I O N E N A B L E M E N T Consolidated operations…120 sites reduced Exited GE Services Agreement…..100+ workstreams Eliminated headcount redundancy Consolidated material/service buy Vertical integration of product lines Transit
Slide 49: Integration 2.0
49 I N T E G R A T I O N 2 . 0 C O N S O L I D A T E / S T R E A M L I N E / S I M P L I F Y 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 Restructure NAM distribution Reman localization Best-
Slide 50: Wabtec's business segments
50 R A F A E L S A N T A N A Wabtec’s business segments 50
Slide 51: Wabtec operates its business in two segments
51 Wabtec operates its business in two segments 50+ ~25K C O U N T R I E S E M P L O Y E E S FREIGHT: 67% TRANSIT: 33% 3 1 % Services $7.8B ~60% Aftermarket P O R T F O L I O 2 0 2 1 R E V I E W 1 1 % Components 1 7 % Equipment 3 3 % Transit 8 % Digital Electronics W A B T E C G L O B A L L E A D E
Slide 52: Industry-leading scale across major rail segments
52 Industry-leading scale across major rail segments MARKET LEADER IN FREIGHT LOCOMOTIVES BROADEST TRANSIT PRODUCT PORTFOLIO IN INDUSTRY 1st HEAVY-HAUL BATTERY-ELECTRIC LOCOMOTIVE RAIL SUPPLIER TO CAR BUILDERS LEADER IN LOCO MODERNIZATIONS LEADER IN FUEL EFFICIENCY AND ENERGY MANAGEMENT LEADER IN FR
Slide 53: Freight and Transit segments
53 F R E I G H T S E G M E N T T R A N S I T S E G M E N T ~20% Of the world’s rail freight is moved by a Wabtec locomotive E Q U I P M E N T ~1.5B Miles traveled by Wabtec’s fleet of locomotives in 2021 S E R V I C E S ~20% Of global freight cars have Wabtec products on them C O M P O N E N T S $1.
Slide 54: Attractive revenue profile
54 50% 58% 42% 44% Attractive revenue profile A T T R A C T I V E E N D M A R K E T S R O B U S T A F T E R M A R K E T P O R T F O L I O B R O A D S C A L E I N G L O B A L M A R K E T S S T R O N G M I X O F R E C U R R I N G R E V E N U E S S T R O N G G L O B A L I N D U S T R I A L P O R T F O
Slide 55: Primary growth drivers
55 Primary growth drivers W A B T E C Rail cycle recovery International expansion / share gains Increase customer productivity, capacity and safety Locomotive fleet renewal Innovative digital technology Lead decarbonization of rail Integration 2.0 Strategic M&A 1 2 3 4 5 55 Equipment Digital Electro
Slide 56: Equipment
56 R O G E R I O M E N D O N C A Equipment 56
Slide 57: Equipment: diversified global base to drive growth
57 Diversified global base to drive growth 24% R E V E N U E B Y G E O G R A P H Y 87% 13% R E C U R R I N G R E V E N U E Non-Recurring Recurring Americas EMEA APAC56% 44% R E V E N U E B Y E N D M A R K E T 83% 17% A F T E R M A R K E T R E V E N U E OE Aftermarket Locomotive Mining, Marine, Drill
Slide 58: Business dynamics – Equipment
58 Business dynamics I N D U S T R Y T R E N D S S T R A T E G Y I N A C T I O N R O A D A H E A D • Best-in-class Tier 4 technology • Alternative fuels for internal combustion • FLXdrive locomotives leading decarbonization • Mining truck systems flexibility to alternative power sources • Integratio
Slide 59: Primary growth drivers – Equipment
59 Primary growth drivers SURFACE MINING TRUCK ELECTRIFICATION & FLEET RENEWAL… VOLUME UP Trolley assist & power agnostic propulsion Sustained copper & iron ore production growth EXPAND FLXDRIVE WINS - CAPITALIZE ON GHG GOALS Product design fit for application, energy & power needs Investor oversigh
Slide 60: Locomotive international markets
60 2011-2015 Locomotive international markets NAM Intl International fleet renewal & upgrades with EVO technology Expand battery electric mainline & switcher Strategic partnership for light weight applications Drive supply chain productivity through regional footprint S T R A T E G Y I N A C T I O N
Slide 61: North America fleet renewal opportunity
61 C O N T I N U E T O I N V E S T / G R O W T H E C O R E D I E S E L E L E C T R I C North America fleet renewal opportunity S T R A T E G Y I N A C T I O N FLEET BY EMISSION T1 T3 T4 T2 FLEET BY TRACTION DC AC Enable & support alternative fuels Continue to invest in fuel improvement technologies
Slide 62: Growth driven by fleet renewal & technology mix
62 Growth driven by fleet renewal & technology mix 20502030 2040 Efficiency w/ AC Fuel economy GHG SBTi targets Low impact to operations Operational flexibility 20% GHG Technology readiness Fleet productivity Net zero commitments Technology maturity Infrastructure availability F L E E T R E N E W
Slide 63: FLXdrive pilot and commercialization
63 FLXdrive pilot Spanned >13,000 miles 6,000 gallons of fuel saved 0 major failures 2 0 2 4 + E X P A N D P O R T F O L I O & P A R T N E R S Tier 4 Hybrid Diesel hybrid FLXdrive 3.0 Integrated charging solutions Wabtec FLX Smart Control Interface Moving AC Charging Option S U C C E S S F U L C A R
Slide 64: FLX value proposition
64 FLX value proposition TRAIN PERFORMANCE & AUTOMATION RAIL PURPOSE BATTERY FLX360 ECOSYSTEM WABTEC DIFFERENCE L E V E R A G I N G P O R T F O L I O T O D E L I V E R A N O P T I M I Z E D T O T A L E N G I N E E R E D S Y S T E M E Q U I P M E N T 64 FLX optimizer… train-level energy management Mo
Slide 65: Comprehensive locomotive portfolio… short & long term
65 Comprehensive locomotive portfolio… short & long term D I E S E L E L E C T R I C DIESEL, HYBRID OPTION Fuel efficiency Reliability Availability F U E L E C O N O M Y & G H G R E D U C T I O N B A T T E R Y E L E C T R I C Safety & energy optimization Operational flexibility REGEN, PLUG-IN Z E R
Slide 66: Mining truck propulsion path to electrification
66 Mining truck propulsion path to electrification D I E S E L P O W E R DIESEL ENGINE ONLY ELECTRIC, MECHANICAL E L E C T R I C P O W E R E D TROLLEY ASSIST, BATTERY, FUEL CELL DIESEL ENGINE & BATTERY H Y B R I D P O W E R E D PRI ME MOVER PROPULSION E L E C T R I C D R I V E A D V A N T A G E Fuel
Slide 67: Key takeaways – Equipment
67 Key takeaways E Q U I P M E N T 02 03 04 01 Introducing new technologies to accelerate customer transition to cleaner power Proven technologies that deliver safety, reliability, productivity and reduced emissions Leverage partnerships to accelerate technology development Globally positioned for l
Slide 68: Services
68 P A S C A L S C H W E I T Z E R Services 68
Slide 69: Accelerating growth across Services
69 Accelerating growth across Services 80% 8% 4% 8% R E V E N U E B Y G E O G R A P H Y 68% 32% R E C U R R I N G R E V E N U E Recurring Non-recurring North America EMEA LATAM APAC 74% 8% R E V E N U E B Y E N D M A R K E T 78% 22% A F T E R M A R K E T R E V E N U E OE Aftermarket S E R V I C E S
Slide 70: Business dynamics – Services
70 Business dynamics I N D U S T R Y T R E N D S S T R A T E G Y I N A C T I O N R O A D A H E A D • Leverage technology to achieve targeted outcomes … partner with customers around comprehensive fleet strategies • Grow MoW to enable productivity gains in engineering • LEAN and cost reduction • Rele
Slide 71: Primary growth drivers – Services
71 Primary growth drivers GLOBAL REMANUFACTURING 20+ global remanufacturing locations for critical components including engines & traction motors PERFORMANCE UPGRADES Leveraging technology to deliver on fuel efficiency and reliability MAINTENANCE TECHNOLOGIES Asset management, material management, r
Slide 72: Modernizations
72 Modernizations Maximize asset value and fleet performance by transforming 20+ year old locomotives to extend life and step-change their performance. Solutions jointly defined with each customer based on modular technology building blocks. Enabling structural changes in railroad dispatch strategie
Slide 73: Leading rail technical innovation
73 Leading rail technical innovation Developing solutions that align with our customers’ desired outcomes, with a focus on operating ratio savings ̶ fuel, asset availability, and labor P R I M E M O V E R T4 engine family with best reliability and no aftertreatment FDL Advantage offering 5-8% fuel e
Slide 74: International expansion
74 International expansion Introducing world-class fleet maintenance 2 fully designed, staffed and operated maintenance sheds Dedicated remote monitoring and diagnostics center … reliability team delivering world-class performance I N D I A Organized territory coverage supporting fleet expansion whi
Slide 75: FLXdrive will accelerate Services growth
75 FLXdrive will accelerate Services growth Integrated system designed for safety, reliability, performance, and maintainability … proprietary spares Service support key to the successful launch and early performance Battery lifecycle economics attractive to customer and Wabtec Total lifecycle cost
Slide 76: Maintenance of way… path to accelerate growth
76 Maintenance of way… path to accelerate growth R O A D W A Y W O R K E Q U I P M E N T I N D U S T R I A L I N S P E C T I O N T E C H N O L O G I E S N O R D C O I S A S T R O N G P L A T F O R M F O R G R O W T H T H R O U G H W O R L D - C L A S S P R O D U C T S A N D E N G I N E E R I N G G R
Slide 77: Key takeaways – Services
77 Key takeaways S E R V I C E S 02 Fast-growing, high-quality recurring revenues through cycles 03 Clear path for further growth: leveraging the fleet; continued innovation; international expansion Nordco is a strong foundation to grow in maintenance of way 01
Slide 78: Components
78 M I K E F E T S K O Components 78
Slide 79: Diversified portfolio brings new growth
79 Diversified portfolio brings new growth 73% 9% 18% R E V E N U E B Y G E O G R A P H Y 71% 29% R E C U R R I N G R E V E N U E Non-Recurring Recurring Americas EMEA APAC 60% 40% R E V E N U E B Y E N D M A R K E T 53% 47% A F T E R M A R K E T R E V E N U E OE Aftermarket Freight / Other Industri
Slide 80: Business dynamics – Components
80 Business dynamics I N D U S T R Y T R E N D S S T R A T E G Y I N A C T I O N R O A D A H E A D • Leverage Wabtec products to expand North American freight car market share • Expand content pull-through on locomotives • Drive innovation into new products and solutions • Extend core competencies a
Slide 81: Primary growth drivers – Components
81 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 wind, grid solutions, carbon reduction, and energy storage DRI
Slide 82: North American car build volume
82 Well-positioned to capitalize on increasing North American car build volume N O R T H A M E R I C A N C A R B U I L D V O L U M E 2019 2020 2021 2022F 58K 33K 30K >40K 5 4 K H I S T O R I C A L 1 0 - Y E A R A V E R A G E Increasing railcar build + Strong share position + Operating leverage REVEN
Slide 83: The power of one Wabtec
83 The power of one Wabtec B A T T E R Y P A C K A I R C O M P R E S S O R C O N T R O L S Y S T E M B O G I E B R A K E E Q U I P M E N T P O W E R S U P P L Y C O U P L E R S H V A C A I R B R A K E C O M P O N E N T S
Slide 84: Industrial growth opportunities
84 Industrial growth opportunities M A R K E T T R E N D S W A B T E C S T R A T E G Y Capture market share … leveraging bundled product packages Capitalize renewables growth with new / existing products Displace competition with aluminum brazing technology Enhance strategic partnerships with select
Slide 85: International growth opportunities
International growth opportunities F R E I GH T AN D I N DUS T R IAL o Growing international opportunities in APAC, LATAM, India, and EMEA o Leveraging one Wabtec to scale across the globe o Develop strategic partnerships to win international share F O C U S E D O N I N T E R N A T I O N A L G R O W
Slide 86: Key takeaways – Components
86 Key takeaways C O M P O N E N T S 02 03 04 01 Well-positioned to drive profitable growth over growing freight & locomotive demand globally Leverage consolidated industrial go-to-market strategy to grow share in traditional and emerging end markets in domestic and international regions Push our st
Slide 87: Digital Electronics
87 N A L I N J A I N Digital Electronics 87
Slide 88: Connecting the physical + digital rail logistics network
Ports Shippers Mainline Mines Intermodal Terminals Signaling & Wayside Rail Back Office Yard Short Lines Connecting the physical + digital rail logistics network D I G I T A L E L E C T R O N I C S 88
Slide 89: Digital Electronics: well-positioned for growth
89 D I G I T A L E L E C T R O N I C S Well-positioned for growth K E Y C U S T O M E R S R E V E N U E B Y G E O G R A P H Y 41% 44% R E V E N U E B Y E N D M A R K E T Train Automation Offboard, Back Office Adjacencies 15% 75% 4% 15% 6% North America ANZ Rest of World LATAM 70% 30% R E C U R R I N
Slide 90: Business dynamics – Digital Electronics
90 I N D U S T R Y T R E N D S S T R A T E G Y I N A C T I O N R O A D A H E A D Business dynamics U N P A R A L L E L E D P O R T F O L I O O F D I G I T A L P R O D U C T S A N D S O L U T I O N S E N A B L I N G P R O D U C T I V I T Y A N D S U S T A I N A B I L I T Y F O R C U S T O M E R S D I
Slide 91: Digital solutions impact operations and fuel emissions
91 PTC Trip Optimizer Suite Locotrol Platform Network Solutions INTEGRATED PRODUCT SUITE F UE L O P T I M IZ AT ION H E L P I N G C U S T O M E R S M E E T E S G & P R O D U C T I V I T Y C O M M I T M E N T S D I G I T A L E L E C T R O N I C S Digital solutions impact operations and fuel emissions
Slide 92: Primary growth drivers – Digital Electronics
92 Primary growth drivers 92 D I G I T A L E L E C T R O N I C S NEXT-GEN NETWORK SOLUTIONS Precision Dispatch 2.0, migrate to Cloud Pacing, Service Design & Yard Planner INTERNATIONAL MARKETS Expand digital capabilities across Latin America, Europe, and Asia Pacific EVOLVE LOCOTROL PLATFORM Locotro
Slide 93: Strong North America product penetration
93 STRONG NORTH AMERICA PRODUCT PENETRATI O N TO New Products 94% Penetrated 5% Penetrated 93% Penetrated LOCOTROL New Products 10% Penetrated 73% Penetrated 12% Penetrated NEW PRODUCT PENETRATI ON OPPORTU NITIE S 100% Penetrated PTC International & Additional Features (US) 2% Penetrated New Network
Slide 94: Automation will unlock the next generation of PSR
94 R E D U C T I O N I N T R A I N D E L A Y S 25% P O T E N T I A L P R O D U C T I V I T Y S A V I N G S 50% R E D U C T I O N I N A C C I D E N T S D U E T O H U M A N E R R O R S 75% F U E L E F F I C I E N C Y I M P R O V E M E N T 30% PTC Trip Optimizer Distributed Power Movement Planner PTC +
Slide 95: Market-leading position… international market opportunity
95 Market-leading position… long-term service agreements driving recurring revenues International market opportunity to expand PTC and other Digital technologies 2x On track toward goal of increasing international sales 2X over 5 years G R O W I N G D E M A N D Leveraging PTC,TO and Track IQ to driv
Slide 96: Key takeaways – Digital Electronics
96 D I G I T A L E L E C T R O N I C S Key takeaways 02 Leverage digital pillar-apps and enhancements to drive recurring revenues 03 International expansion led by PTC, Trip Optimizer and Track IQ 04 Bolt-on M&As to drive increased customer value 01 Digital expected to grow 2-3X the industry growth
Slide 97: Transit
97 L I L I A N L E R O U X Transit 97
Slide 98: Transit: safety, efficiency & passenger comfort
98 T R A N S I T Safety, efficiency & passenger comfort K E Y C U S T O M E R S 63% R E V E N U E B Y G E O G R A P H Y 60% 40% R E C U R R I N G R E V E N U E Non-Recurring Recurring Americas EMEA APAC 53% 42% R E V E N U E B Y E N D M A R K E T 46% A F T E R M A R K E T R E V E N U E Transit Syste
Slide 99: Business dynamics – Transit
99 I N D U S T R Y T R E N D S S T R A T E G Y I N A C T I O N R O A D A H E A D T R A N S I T Business dynamics E N A B L I N G T H E S H I F T T O R A I L • Product development focused on sustainability • Digitalization of operations, digital asset management, and solutions for automated trains •
Slide 100: Transit primary growth drivers
100 T R A N S I T Primary growth drivers G O V E R N M E N T F U N D I N G … F U E L I N G T R A N S I T T R A N S P O R T Investment in rail technologies to decarbonize transport and reduce congestion I N N O V A T I O N A N D S C A L A B L E T E C H N O L O G I E S Enhancing train performance; mai
Slide 101: Government funding, decarbonizing passenger transport
101 T R A N S I T Government funding, decarbonizing passenger transport TAILWIND TO TRANSIT SYSTEMS PORTFOLI O U N I Q U E L Y P O S I T I O N E D T O C A P T U R E G R O W T H A C R O S S V A S T P O R T F O L I O A N D G E O G R A P H I C A L R E A C H U . S . $109B over 5 years for passenger E U
Slide 102: Enhancing train performance
102 Comparison of the current generation of Brakes, HVAC, Doors, Couplers, and Passenger Information Systems offered vs previous generations. Source, internal analysis based on an illustrative EMU and metro T R A N S I T Enhancing train performance L A T E S T P O R T F O L I O O F R A I L T E C H N
Slide 103: Innovations supporting a more attractive commute
T R A N S I T Innovations supporting a more attractive commute G R E E N F R I C T I O N Reduce brake dust and emissions by up to 90% M E T R O F L E X X & R E G I O F L E X X Industry’s most advanced braking system … 50% less weight, 95% recyclability, greater performance G R E E N A I R 1st air co
Slide 104: Redefining braking distance
104 T R A N S I T Redefining braking distance to improve performance, reduce cost and prepare for automation Wabtec Distance Master o Breakthrough braking performance in fall and winter conditions o 90% reduction in braking distance degradation o 50% reduction in costs generated by wheel sliding o I
Slide 105: Spotlight on adjacent opportunities: charging and electrification
105 T R A N S I T Spotlight on adjacent opportunities: charging and electrification solutions M A R I N E M I N I N GP A S S E N G E R B U S
Slide 106: Transit adjusted EBIT margin
106 A D J U S T E D E B I T M A R G I N 2019 2020 2021 9.2% 11.2% 12.3% • Backlog margin ↑ • Project execution ↑ • Engineering in best-cost countries ↑ • Cost of poor quality ↓ • Lean and integration 2.0 ↑ T R A N S I T Successfully turned around business and continuing journey to mid-teens adjusted
Slide 107: Key takeaways – Transit
107 T R A N S I T Key takeaways 02 Sustainability and productivity… new technology as differentiator to win share03 Leveraging installed base and footprint to capture attractive and profitable growth 04 01 Transit rail is benefitting from government transport policies Driving lean culture to continu
Slide 108: Disciplined value creation
108 J O H N O L I N Disciplined value creation 108
Slide 109: Attractive long-term financial profile
109 Resiliency tested and validated over past 5 years; proven track record of delivering growth Attractive end markets… building momentum, renewal of locomotive fleets, strong and growing backlog Leading market position and innovative, customer-focused solutions across major rail and industrial segm
Slide 110: Invest in the business: driving long-term profitable growth
110 I N V E S T I N T H E B U S I N E S S Driving long-term profitable growth D R I V E R S Deploy proven strategies / exploit growth drivers Execute on increasing backlog Mix headwinds driven by fleet renewal Invest in innovative technologies that drive profitable growth Best-in-class productivity
Slide 111: Delivering profitable growth
111 Delivering profitable growth R E V E N UE GR O W T H M AR GI N E XP AN S I ON S T R A T E G Y D E P L O Y M E N T G R O W T H D R I V E R S Accelerate innovation of scalable technology Grow & refresh expansive installed base Lead decarbonization of rail Expand high-margin recurring revenue strea
Slide 112: Expanding long-term backlog while converting near-term orders
112 $22.2 $21.6 $8.7B in orders in 2021… $5.9B in Freight and $2.8B in Transit 13.5% increase in 12-month backlog 75% of 2022 midpoint revenue guidance covered in backlog… 5 points higher than 2021 ‘ 2 2 B A C K L O G D Y N A M I C S W A B T E C Expanding long-term backlog while converting near-term
Slide 113: Mix dynamics changing as industry renews aging locomotive fleet
113 P R O D U C T M I X Digital Electronics Services Components Equipment Transit Margin Drivers Sensitivity to the cycle Equipment High Digital Electronics Medium Services Low Transit Low Components High M A R G I N A C C R E T I O N 5 - Y E A R G R O W T H E X P E C T A T I O N S W A B T E C Mix d
Slide 114: Investing in the core business
114 H I GH RE T URN S O N CAP I T AL DE P L O Y M ENT L O N G - T E R M P R O F I T AB L E GR O W T H C A P I T A L T E C H N O L O G Y Funding business model with capex of ~2% of revenue Managing working capital investment below 20% of sales Continue to invest in engineering & technology at ~6-7% o
Slide 115: Inflation mitigation and margin expansion
115 I N F L AT I O N M I T I GAT I O N M AR GI N E XP AN S I ON C O N T I N U O U S I M P R O V E M E N T C O N S O L I D A T I O N & I N T E G R A T I O N Objective: Cover normal cost inflation and drive sustainable margin expansion Manufacturing productivity Continuous improvement & lean initiativ
Slide 116: Future revenue growth target
116 UNDERLYING RAIL INDUSTRY GROWTH TRENDS Freight carloads Railcar build Passenger ridership Economic strength (GDP) AN N UAL R E V E N UE GR O W T H E XP E CT AT I O N S: MID-SINGLE DIGITS ACCELERATED GROWTH Share gains in portfolio International expansion Technology-driven growth Digital revenue
Slide 117: Incremental margins based on fixed-cost structure
117 15-20% 80-85% 8 2 % O F T O T A L C O S T S 15-20% FIXED MANUFACTURING 80-85% FIXED SG&A 25-30% INCREMENTAL MARGIN C O S T O F G O O D S S O L D S G & A 1 8 % O F T O T A L C O S T S Variable Costs Variable Costs W A B T E C Sales growth expected to drive incremental margins of 25-30% based on W
Slide 118: Expected adjusted margin expansion
118 250 – 300 BPS CAPITAL & TECHNOLOGY INVESTMENT Strong IRR capital projects Technology to expand margins REVENUE GROWTH MSD annual growth CAGR Opportunistic pricing International expansion COST IMPROVEMENT Continuous improvement, lean Integration 2.0 savings of $75-$90M Manufacturing fixed cost ab
Slide 119: Invest in the business: driving long-term profitable growth
119 I N V E S T I N T H E B U S I N E S S Driving long-term profitable growth D R I V E R S Deploy proven strategies / exploit growth drivers Execute on increasing backlog Mix headwinds driven by fleet renewal Invest in innovative technologies that drive profitable growth Best-in-class productivity
Slide 120: Bolt-ons/adjacencies acquisition criteria
120 Bolt-ons/adjacencies focused on: o Highly engineered products o Rail & industrial services o Digital technologies & solutions Secular growth profile/sustainable end- markets Geographic reach High aftermarket & recurring revenue streams Complimentary customer base & technologies Accretive earning
Slide 121: Spotlight on acquisitions
121 W A B T E C Spotlight on acquisitions 02 Large installed base… mission critical products and services… 58% aftermarket revenues 03 Sizeable cost synergy opportunity… >$10M+ run-rate within 3-years with limited integration risk 04 Compelling financial profile… accretive to EBITDA % margin, EPS &
Slide 122: Invest in the business: driving long-term profitable growth
122 I N V E S T I N T H E B U S I N E S S Driving long-term profitable growth D R I V E R S Deploy proven strategies / exploit growth drivers Execute on increasing backlog Mix headwinds driven by fleet renewal Invest in innovative technologies that drive profitable growth Best-in-class productivity
Slide 123: Return value to shareholders through disciplined capital allocation
123 PRIORITY #1 PRIORITY #2 C O N T I N U E T O I N V E S T I N T H E B U S I N E S S M A I N T A I N S T R O N G B A L A N C E S H E E T PRIORITY #3 I N C R E A S E D I V I D E N D S PRIORITY #4 S U P P L E M E N T O R G A N I C G R O W T H W I T H M & A PRIORITY #5 R E T U R N E X C E S S C A S H
Slide 124: Capital allocation priorities, objectives and actions
124 P R I O R I T I E S O B J E C T I V E S A C T I O N S Maintain strong balance sheet to manage through economic cycles & world crises Adjusted net debt leverage ratio of 2.0 to 2.5x. Maintain investment-grade ratings Current ratio at 2.5x… hold debt levels in 2022 as we grow EBITDA Appropriately
Slide 125: Disciplined capital allocation highlighted by improving productivity
125 F I X E D A S S E T P R O D U C T I V I T Y 4.9 4.7 5.3 W A B T E C Disciplined capital allocation highlighted by improving productivity Revenue growth Growth capex = higher return, faster payback, low risk growth projects Capacity utilization Disciplined capex (capex </= depreciation) Maintain
Slide 126: Improving returns on invested capital
126 R E T U R N O N I N V E S T E D C A P I T A L 2020 20212019 3.3% 3.7% 4.6% Revenue growth Margin expansion Cash efficiencies Working capital improvement Capital utilization Accretive M&A Return of cash to shareholders through dividends and share repurchases D R I V E R S O B J E C T I V E : I N
Slide 127: Spotlight on cash tax benefits… $1.1 billion value
127 Tax step-up associated with the GET transaction drives average annual cash tax benefit of ~$150M through 2034 ~$150M First $470M of gross cash tax benefits to be paid to GE by Wabtec (expected to be realized during first 4-5 years) Remaining cash tax benefits accrue to Wabtec A S O F F E B R U A
Slide 128: Strong returns coupled with strong focus on cash generation
128 Strong returns are coupled with strong focus on cash generation W A B T E C 140% 89% 102% >90% 2019 2020 2021 2022-2026 CAS H CO N V E RS ION ( 1 ) 128 (1) Cash from operations conversion % is defined as GAAP cash from operations divided by GAAP net income plus depreciation & amortization
Slide 129: Future cash flows
129 129 EXPECTED TO BE INVESTED IN THE BUSINESS, INVESTED IN THE FUTURE, AND RETURNED TO SHAREHOLDERS 2021 2026 $1.07B A N N U A L C A S H G E N E R A T I O N A C C R E T I V E E A R N I N G S → S T R O N G C A S H F L O W C O N V E R S I O N → R E I N V E S T & R E T U R N W A B T E C Future cash f
Slide 130: Closing comments
130 R A F A E L S A N T A N A Closing comments 130
Slide 131: Attractive long-term financial profile
131 M S D C O R E O R G A N I C G R O W T H C A G R 2 5 0 - 3 0 0 B P S M A R G I N E X P A N S I O N + + D I S C I P L I N E D C A P I T A L D E P L O Y M E N T = D O U B L E - D I G I T E P S G R O W T H W I T H S T R O N G O P E R A T I N G C A S H F L O W C O N V E R S I O N ( 9 0 % + ) 5 - Y E
Slide 132: Key takeaways
132 W A B T E C Key takeaways 02 Innovative, sustainable technologies expanding Wabtec’s market size 03 Growth strategy driving strong cash flow and margin expansion 04 Strong long-term business fundamentals driving long-term value creation for shareholders 01 Portfolio positioned to drive long-term
Slide 133: Wabtec Investor Day
= WABTEC INVESTOR .
Slide 134: Appendix
134 W A B T E C Appendix
Slide 135: Transit segment operating margin reconciliation
135 Transit segment operating margin reconciliation Appendix A In millions 2019 2020 2021 Reported Income from Operations 214$ 230$ 238$ Reported Margin 7.8% 9.3% 9.2% Restructuring & Transaction costs 48 27 59 Non-cash Amortization expense 19 20 20 Adjusted Income from Operations 281$ 277$ 317$ Adj
Slide 136: Cash conversion reconciliation
136 W A B T E C Cash conversion reconciliation Appendix B Wabtec Corporation 2021 Cash Conversion Calculation (in millions) Reported Cash from Operations Consolidated Results $1,073 $565 $491 102% Wabtec Corporation 2020 Cash Conversion Calculation (in millions) Reported Cash from Operations Consoli
Slide 137: Return on invested capital reconciliation
137 W A B T E C Return on invested capital reconciliation Appendix C Wabtec Corporation Return on invested capital calculation (in millions) 2019 2020 2021 Income from operations 663$ 745$ 876$ Annual effective tax rate 26.9% 26.0% 23.2% Net operating profit after tax 485$ 551$ 673$ Total Debt 4,429
Westinghouse Air Brake Technologies — Investor Day (March 2022) on 6ix