Westinghouse Air Brake Technologies Corporation · NYSE:WAB
Westinghouse Air Brake Technologies — Q4 2018 Earnings Presentation
25 slides from Westinghouse Air Brake Technologies's earnings presentation, Feb 25, 2019
Slide 1: The New Wabtec
/// The New Wabtec February 25 , 2019
Slide 2: Disclaimer / Forward-Looking Statements
/// DISCLAIMER / FORWARD-LOOKING STATEMENTS 2 Caution Concerning Forward-Looking StatementsThis presentation 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 t
Slide 3: Today's Presenters & Agenda
/// TODAY’S PRESENTERS & AGENDA Presenters Agenda Tim WesleyVP of Investor Relations Al NeupaverExecutive Chairman Ray Betler President and Chief Executive Officer Rafael Santana President and Chief Executive Officer, Freight Group Pat DuganChief Financial Officer 1 The New Wabtec: Driving the Futur
Slide 4: The New Wabtec: Driving the Future of Transportation
///THE NEW WABTEC: DRIVING THE FUTURE OF TRANSPORTATION
Slide 5: Merger of Two Transportation Industry Leaders Creates New S&P 500 Company
/// MERGER OF TWO TRANSPORTATION INDUSTRY LEADERSCREATES NEW S&P 500 COMPANY Comprehensive, technology-based portfolio and leading positions in freight car products, locomotive electronics, brakes, heat exchangers Leader in transit components, systemsSuccessful financial track record; diversified re
Slide 6: Revised Transaction Terms
/// REVISED TRANSACTION TERMS ¹ Ownership calculation based on the number of shares of Wabtec common stock outstanding immediately after the merger in each case on a fully-diluted, as-converted and as-exercised basis. Structure & Consideration Wabtec existing shareholders to own 50.8% of the combine
Slide 7: A Diversified, Global Leader Positioned to Accelerate the Future of Transportation
/// A DIVERSIFIED, GLOBAL LEADER POSITIONED TOACCELERATE THE FUTURE OF TRANSPORTATION 1 Diversified, Global Technology Leader in Transportation and LogisticsWabtec’s Freight and Transit Components Combined With GE Transportation’s Locomotive / Mining Manufacturing/Service Capabilities; Strong Cultur
Slide 8: GE Transportation: Attractive Point in Cycle, Well Positioned for Industry Rebound
/// GE TRANSPORTATION: ATTRACTIVE POINT IN CYCLE,WELL POSITIONED FOR INDUSTRY REBOUND GE Fleet Age Pyramid Contractual Coverage AC EVO AC4400 Dash 9 Dash7 ~7,900 units Avg. 5 yrs ~4,800 units Avg. 10 yrs ~4,400 units Avg. 15 yrs ~2,200 unitsAvg. 20 yrsDash 8 ~1,600 units Avg. 30 yrs~100 units Avg. 3
Slide 9: Electronics and Digital Technologies Leading to Automated Operation
Trip Optimizer:7-13% in fuel savings; 200M gallons of fuel saved Smart HPT: Incremental 5-8% fuel saved by automatically managing locomotive consist Locotrol Distributed Power: Enables operation of long, heavy and fuel-efficient trains. Fuel Savings 3%; Crew savings 25% Movement Planner: 5-10%
Slide 10: Significant Operating Synergies Will Drive Value Creation
/// SIGNIFICANT OPERATING SYNERGIES WILL DRIVEVALUE CREATION ~$250M of Identified Run-Rate Operating Synergies by Year 4 Revenue SynergiesDigital / ElectronicsSales cross-selling IT SavingsExiting GE shared servicesSystem rationalizationNetwork standardization Sourcing Synergies MRO spendDirect Mate
Slide 11: Q4 and 2018 FY Financial Performance
///Q4 AND 2018 FY FINANCIAL PERFORMANCE
Slide 12: Wabtec Q4 & FY2018 Highlights
11 /// /// WABTEC Q4 & FY2018 HIGHLIGHTS Performance Overview 4Q Revenue of $1.1B (4% YoY Growth)Driven by organic sales growth of $47M and sales from acquisitions of $28M, which more than offset a negative effect from changes in foreign currency exchange rates of $33M4Q EPS of 36 cents and 4Q Adjus
Slide 13: 2019 Outlook
CORPORATION 1112019 OUTLOOK
Slide 14: Key 2019 Assumptions
/// KEY 2019 ASSUMPTIONS 13 /// Global economic growth of 2-3%FX at current ratesMajor tariffs at current ratesLow-single-digit rail traffic growth in NAFTA~10 months of GE Transportation’s results for guidance and adjusted guidanceGlobal locomotive and freight car deliveries up vs. 2018Global trans
Slide 15: 2019 Pro Forma Information
/// 2019 PRO FORMA INFORMATION (US$ in billions) Note: EBITDA represents a non-GAAP metric. See appendix.¹ Full Year Pro Forma Information figures include 12 months of GE Transportation financial performance and exclude purchase price amortization, accounting harmonization and transaction costs. ² W
Slide 16: 2019 Adjusted Guidance
/// 2019 ADJUSTED GUIDANCE Note: EBITDA, Adj. EBITDA, Adj. income from operations and Adj. EPS represent non-GAAP metrics. See appendix¹ Full Year Pro Forma Information figures include 12 months of GE Transportation financial performance and exclude purchase price amortization, accounting harmonizat
Slide 17: 2019 Adjusted Guidance to Guidance
Adjusted Guidance Transaction Costs One-Time PPA Accounting Harmonization Guidance Revenue $ 8.4B - - $(0.1)B $ 8.4B EBITDA¹ $ 1.6B $(0.1)B $(0.1)B $(0.1)B $ 1.3B Income from Operations $ 1.2B $(0.1)B $(0.1)B $(0.1)B $ 0.9B CapEx $ 0.2B - - - $ 0.2B EPS $ 4.00 – $ 4.20 $ 3.00 – $ 3.20 Note: EBITDA,
Slide 18: Pro Forma Financial Profile
$8.3B $9.2B 2018A 2019E /// PRO FORMA FINANCIAL PROFILE Revenue Adj. EBITDA¹ & Margin Adj. Income from Operations & Margin Capital Expenditures $ 1.5B $ 1.7B 18% 18% 2018A 2019E Margin $0.2B $0.2B 2018A 2019E $1.2B $1.4B 14% 15% 2018A 2019E Margin 17 /// (US$ in billions) | Full year basis, excludin
Slide 19: Committed to De-leveraging Over Time
/// COMMITTED TO DE-LEVERAGING OVER TIME Wabtec remains committed to paying its quarterly 12 cents per share dividend to all common shareholdersTop priority for deployment of excess cash will be debt reduction to achieve target leverage levelsWabtec committed to remaining investment gradeAnticipate
Slide 20: The New Wabtec: Driving the Future of Transportation
/// THE NEW WABTEC: DRIVING THE FUTURE OFTRANSPORTATION 1 Diversified, Global Technology Leader in Transportation and Logistics2 Electronics and Digital Technologies Leading to Automated Operations 3 Recurring Revenue Growth in High-Margin Aftermarket and Services4 Highly Compelling Pro Forma Fi
Slide 21: Q&A
CORPORATION O&A
Slide 22: Non-GAAP Reconciliation
///NON-GAAP RECONCILIATION
Slide 23: Wabtec Q4 2018 Reconciliation of Reported Results to Adjusted Results
/// WABTEC Q4 2018 RECONCILIATION OF REPORTEDRESULTS TO ADJUSTED RESULTS 22 /// (US$ in millions)Set forth below is the calculation of the non-GAAP performance measures included in this presentation. We believe that these measures provide useful supplemental information to assess our operating perfo
Slide 24: Wabtec FY 2018 Reconciliation of Reported Results to Adjusted Results
/// WABTEC FY 2018 RECONCILIATION OF REPORTEDRESULTS TO ADJUSTED RESULTS 23 /// (US$ in millions)Set forth below is the calculation of the non-GAAP performance measures included in this presentation. We believe that these measures provide useful supplemental information to assess our operating perfo
Slide 25: Wabtec Reconciliation of 2019 Guidance to Adjusted Guidance
/// WABTEC RECONCILIATION OF 2019 GUIDANCE TOADJUSTED GUIDANCE 24 /// (US$ in billions)Set forth below is a reconciliation of the 2019 guidance to the adjusted guidance included in this presentation. We believe that the adjusted guidance provides useful supplemental information to assess our forecas
Westinghouse Air Brake Technologies — Q4 2018 Earnings Presentation on 6ix