Westinghouse Air Brake Technologies Corporation · NYSE:WAB
Westinghouse Air Brake Technologies — Q3 2024 Earnings Presentation
27 slides from Westinghouse Air Brake Technologies's earnings presentation, Oct 23, 2024
Slide 1: Third Quarter 2024 Wabtec Financial Results & Company Highlights
T HI R D Q U A RT E R 2 0 2 4 Wabtec Financial Results & Company Highlights
Slide 2: Forward Looking Statements & Non-GAAP Financial Information
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 Litigati
Slide 3: Today's Participants
W A B T E C TODAY’S PARTICIPANTS J O H N O L I N Executive Vice President & Chief Financial Officer R A F A E L S A N T A N A President & Chief Executive Officer K Y R A Y A T E S Vice President, Investor Relations
Slide 4: 3Q 2024 Overview
W A B T E C 4 3Q 2024 OVERVIEW Up 4.4% YOY$ 2 . 6 6 BS A L E S 1 9 . 7 % Adjusted 1 6 . 3 % G A A P O P E R A T I N G M A R G I N $ 2 . 0 0 Adjusted $ 1 . 6 3 G A A P E A R N I N G S P E R S H A R E $ 5 4 2 M C A S H F L O W F R O M O P E R A T I O N S ( 1 ) $ 7 . 6 2 B1 2 - M O N T H B A C K L O G
Slide 5: 2024 Market Expectations
W A B T E C 5 3.8% 5.7% 4.8% 8.2% 3.0% Brazil China India South Africa Kazakhstan2020 2021 2022 2023 2024F 33K 30K 41K 45K 41K 2024 MARKET EXPECTATIONS F R E I G H T +NA Carloads Active Locomotive Fleet + International Freight Volumes -NA Railcar Deliveries +/Mining Commodities T R A N S I T +Infras
Slide 6: Executing on Our Value Creation Framework
W A B T E C EXECUTING ON OUR VALUE CREATION FRAMEWORK DRIVERS OF PORTFOLIO GROWTH RECENT WINS Signed multi-year new locomotive order in Kazakhstan for $405 million Won long-term parts contract with Class 1 for $307 million Closed on a Transit Passenger Information Systems contract with Siemens Mobil
Slide 7: 3Q 2024 Financial Summary
W A B T E C 7 0 0.5 1 1.5 2 2.5 3 Chart Title 3Q 2024 FINANCIAL SUMMARY 0 100 200 300 400 500 600 Category 1 Chart Title (1) Adjusted numbers represent non-GAAP financial measures. See Appendix for additional details and reconciliations INCREASED SALES, MARGIN EXPANSION AND EPS GROWTH 4.4% INCREASE
Slide 8: 3Q 2024 Sales
W A B T E C 8 3Q 2024 SALES (in millions) Y O Y3 Q 2 4P R O D U C T L I N E (17.3)%$513Equipment 1.0%$296Components 12.7%$204Digital Intelligence 16.5%$917Services 2.6%$1,930Freight Segment 9.6%$733Transit Segment 4 . 4 %$ 2 , 6 6 3T O T A L S A L E S 3 Q K E Y D R I V E R S E Q U I P M E N T Lower
Slide 9: 3Q 2024 Consolidated Gross Profit
W A B T E C 9 3Q 2024 CONSOLIDATED GROSS PROFIT ($ in millions) $ 8 0 5$ 7 9 22 0 2 3 G R O S S P R O F I T 31.5%31.0%% Gross Profit Margin ↑↑Volume ↑↑Mix/Pricing Raw Materials ↓↓Currency ↑↑Manufacturing/Other $ 8 8 7$ 8 8 02 0 2 4 G R O S S P R O F I T 33.3%33.0%% Gross Profit Margin GAAP Adjusted
Slide 10: 3Q 2024 Consolidated Operating Income
W A B T E C 10 3Q 2024 CONSOLIDATED OPERATING INCOME $457$3702 0 2 3 O P I N C O M E 17.9%14.5%% Operating Margin 8288Gross Profit (18)(23)SG&A 33Engineering -(5)Amortization $524$4332 0 2 4 O P I N C O M E 19.7%16.3%% Operating Margin O P M A R G I N B E N E F I T E D F R O M H I G H E R S A L E S
Slide 11: 3Q 2024 Freight Segment Performance
W A B T E C 11 0 1 2 3 4 5 6 Chart Title 0 0.5 1 1.5 2 2.5 Chart Title 3Q 2024 FREIGHT SEGMENT PERFORMANCE 0 50 100 150 200 250 300 350 400 450 500 Category 1 2.6% INCREASE (3.2% INCREASE EX-CURRENCY) SALES 2 0 2 3 2 0 2 4 2 0 2 3 GAAP 2 0 2 4 GAAP 2 0 2 3 ADJ(1) 2 0 2 4 ADJ(1) $325M 17.3% $390M 20.
Slide 12: 3Q 2024 Transit Segment Performance
W A B T E C 12 0 0.5 1 1.5 2 2.5 Chart Title 0 100 200 300 400 500 600 700 800 Chart Title 3Q 2024 TRANSIT SEGMENT PERFORMANCE 0 10 20 30 40 50 60 70 80 90 100 Category 1 9.6% INCREASE (8.4% INCREASE EX-CURRENCY) SALES 2 0 2 3 2 0 2 4 2 0 2 3 GAAP 2 0 2 4 GAAP 2 0 2 3 ADJ 2 0 2 4 ADJ $70M 10.3% $79M
Slide 13: Resilient Business Allows for Execution on Financial Priorities
W A B T E C 13 RESILIENT BUSINESS ALLOWS FOR EXECUTION ON FINANCIAL PRIORITIES Strong balance sheet and financial position … liquidity of $1.90B FOCUSED ON CASH CONVERSION(1) YTD CASH FROM OPS DISCIPLINED CAPITAL ALLOCATION S T R O N G F I N A N C I A L P E R F O R M A N C E ; I N V E S T I N G F O
Slide 14: 2024 Updated Financial Guidance
W A B T E C 14 2024 Updated F inanc ial Guidance ( 1 , 2 ) - Adjusted operating margin up - Favorable productivity/absorption - Benefits of Integration 2.0/Portfolio Optimization - Lower SG&A & Engineering expenses as % of sales g K E Y A S S U M P T I O N S - Tax rate ~24.5% - Capex ~2% of sales R
Slide 15: Key Takeaways
W A B T E C 15 KEY TAKEAWAYS (1) Long-term guidance as of March 9, 2022 (on an adjusted earnings basis) Continued momentum across the portfolio and strong order pipeline and backlog, internationally and in North America Positive productivity driven by continuous cost improvement combined with realiz
Slide 16: Appendix A: Income Statement
APPENDIX A ( 1 of 2)INCOME STATEMENT 2024 2023 2024 2023 Net sales 2,663$ 2,550$ 7,804$ 7,151$ Cost of sales (1,783) (1,758) (5,235) (4,971) Gross profit 880 792 2,569 2,180 Gross profit as a % of Net Sales 33.0% 31.0% 32.9% 30.5% Selling, general and administrative expenses (318) (295) (915) (843)
Slide 17: Income Statement (Cont.)
INCOME STATEMENT (CONT.) APPENDIX A ( 2 of 2) 2024 2023 2024 2023 Segment Information Freight Net Sales 1,930$ 1,881$ 5,674$ 5,134$ Freight Income from Operations 390$ 325$ 1,149$ 820$ Freight Operating Margin 20.2% 17.3% 20.2% 16.0% Transit Net Sales 733$ 669$ 2,130$ 2,017$ Transit Income from Oper
Slide 18: Appendix B: Balance Sheet
BALANCE SHEET APPENDIX B September 30, 2024 December 31, 2023 In millions Cash, cash equivalents and restricted cash 410$ 620$ Receivables, net 1,782 1,684 Inventories, net 2,380 2,284 Other current assets 202 267 Total current assets 4,774 4,855 Property, plant and equipment, net 1,439 1,485 Goodwi
Slide 19: Appendix C: Cash Flow
CASH FLOW APPENDIX C 2024 2023 In millions Operating activities Net income 854$ 608$ Non-cash expense 387 372 Receivables (92) (214) Inventories (115) (201) Accounts Payable 87 (50) Other assets and liabilities (10) - Net cash provided by operating activities 1,111 515 Net cash used for investing ac
Slide 20: EPS and Non-GAAP Reconciliation (1 of 3)
EPS AND NON-GAAP RECONCILIATION APPENDIX D (1 of 3) 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 Resu
Slide 21: EPS and Non-GAAP Reconciliation (2 of 3)
EPS AND NON-GAAP RECONCILIATION APPENDIX D (2 of 3) 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 Resu
Slide 22: EPS and Non-GAAP Reconciliation (3 of 3)
EPS AND NON-GAAP RECONCILIATION APPENDIX D (3 of 3) 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 Resu
Slide 23: Appendix E: EBITDA Reconciliation
EBITDA RECONCILIATION APPENDIX E Wabtec Corporation 2024 Q3 EBITDA Reconciliation (in millions) Reported Income Other Income Depreciation & Restructuring Adjusted from Operations (Expense) Amortization Costs EBITDA Consolidated Results $433 ($3) $133 $563 $4 $567 Wabtec Corporation 2024 Q3 YTD EBITD
Slide 24: Appendix F: Sales by Product Line
SALES BY PRODUCT LINE APPENDIX F In millions 2024 2023 Freight Segment Equipment 513$ 620$ Components 296 293 Digital Intelligence 204 181 Services 917 787 Total Freight Segment 1,930$ 1,881$ Transit Segment Original Equipment Manufacturer 349$ 308$ Aftermarket 384 361 Total Transit Segment 733$ 669
Slide 25: Appendix G: Segment Gross Margin & Operating Margin Reconciliation
SEGMENT 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 673$ 390$ 609$ 325$ 1,967$ 1,149$ 1,625$ 820$
Slide 26: Appendix H: Segment Sales Reconciliation
SEGMENT SALES RECONCILIATION APPENDIX H In millions Freight Transit Consolidated 2023 Net Sales 1,881$ 669$ 2,550$ Acquisitions 2 - 2 Foreign Exchange (11) 8 (3) Organic 58 56 114 2024 Net Sales 1,930$ 733$ 2,663$ Change ($) 49 64 113 Change (%) 2.6% 9.6% 4.4% Freight Transit Consolidated 2023 Net S
Slide 27: Appendix I: Cash Conversion Reconciliation
APPENDIX ICASH CONVERSION RECONCILIATION Wabtec Corporation 2024 Q3 Cash Conversion Calculation (in millions) Reported Cash from Operations Consolidated Results $542 $286 $134 129% Wabtec Corporation 2024 Q3 YTD Cash Conversion Calculation (in millions) Reported Cash from Operations Consolidated Res
Westinghouse Air Brake Technologies — Q3 2024 Earnings Presentation on 6ix