Westinghouse Air Brake Technologies Corporation · NYSE:WAB
Westinghouse Air Brake Technologies — Q2 2023 Earnings Presentation
27 slides from Westinghouse Air Brake Technologies's earnings presentation, Jul 27, 2023
Slide 1: Wabtec Financial Results and Company Highlights
SECOND QUARTER 2023 Wabtec Financial Results and Company Highlights 1
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
WABTEC Today’s participants RAFAEL SANTANA JOHN OLIN KRISTINE KUBACKI President and Chief Executive Vice President Vice President, Executive Officer and Chief Financial Officer Investor Relations 3 3
Slide 4: 2Q 2023 overview
WABTEC 2Q 2023 overview 2Q 2023 HIGHLIGHTS SALES $2.41 B Up 17.5% YoY Increased sales were driven by strong growth across the Freight and Transit segments OPERATING MARGIN 12.9% 16.4% Operating margin benefited from higher sales growth and lower SG&A as a percentage of sales, offset by mix GAAP Adju
Slide 5: 2023 Market Expectations
WABTEC 20.2% 2023 Market NORTH AMERICAN FREIGHT CARLOADS Expectations FAVORABLE / 0.2% FREIGHT UNFAVORABLE (0.1%) (0.8%) NA Carloads - (3.7%) (3.3%) (3.2%) (4.9%) (4.7%) Locomotive and Railcars Parkings ↔/- 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 Source: Association of American Railroads Intern
Slide 6: Executing on our value creation framework
6 WABTEC Executing on our value creation framework DRIVERS OF RECENT PORTFOLIO GROWTH WINS Won strategic order for 30 new locomotives in North America Accelerate innovation of scalable technologies Won largest Certified Pre-owned program order of 69 locomotives from Gennesse & Wyoming Grow and refre
Slide 7: Wabtec is the best technology partner for the industry
7 WABTEC Wabtec is the best technology partner for the industry KEY CUSTOMER WABTEC PORTFOLIO ALIGNED TO KEY NEXT GEN SOLUTIONS CHALLENGES CUSTOMER PRIORITIES AND TECHNOLOGIES • Age of Fleets IMPACT - 16K locomotives LOCOMOTIVES • Reliability - 25+ years old • Tier 4 in U.S. - Up to 40%+ improvement
Slide 8: 2Q 2023 financial summary
WABTEC 2Q 2023 financial summary S T R O NG S AL E S AN D E P S GR O WTH DE S PIT E M ACR O UN CE R TAINT Y SALES OP INCOME/OP MARGIN EPS $2.41B $395M $1.41 $340M $2.05B $1.23 +14.6% $312M YoY $264M 16.7% 16.4% $1.06 $0.91 +16.5% 12.9% 12.9% YoY 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 GAAP
Slide 9: 2Q 2023 sales
WABTEC 2Q 2023 sales 2Q KEY DRIVERS ($ in millions) EQUIPMENT PRODUCT LINE 2Q23 YOY Higher international locomotives sales COMPONENTS Equipment $415 8.9% Higher due to improving OE railcar build and increased demand for industrial products Components $288 23.1% Digital Intelligence $195 18.9% DIGITA
Slide 10: 2Q 2023 consolidated gross profit
WABTEC 2Q 2023 consolidated gross profit 2Q KEY DRIVERS ($ in millions) GAAP Adjusted (1) VOLUME 2022 GROSS PROFIT $645 $647 Higher Freight and Transit segment sales % Gross Profit Margin 31.5% 31.6% MIX/PRICING Volume ↑↑ ↑↑ Less rich mix of products between and within segments, partially offset by
Slide 11: 2Q 2023 consolidated operating income
WABTEC 2Q 2023 consolidated operating income ($ in millions) GAAP Adjusted (1) 2022 OP INCOME $264 $340 % Operating Margin 12.9% 16.7% Gross Profit 78 84 SG&A (26) (26) Engineering (3) (3) Amortization (1) - 2023 OP INCOME $312 $395 % Operating Margin 12.9% 16.4% OP MARGIN BENEFITED FROM HIGHER SALE
Slide 12: 2Q 2023 Freight segment performance
WABTEC 2Q 2023 Freight segment performance SALES OP INCOME/OP MARGIN MULTI-YEAR BACKLOG $1.71B(3) $346M $301M $19.68B $18.34B(3) $1.49B 20.3% 20.3% $271M $233M 15.9% 15.7% 2022 2023 2022 2023 2022 2023 2022 2023 GAAP GAAP ADJ(1,2) ADJ(1,2) 14.6% INCREASE 6.8% DECREASE YoY (15.2% INCREASE EX-CURRENCY
Slide 13: 2Q 2023 Transit segment performance
WABTEC 2Q 2023 Transit segment performance SALES OP INCOME/OP MARGIN MULTI-YEAR BACKLOG $699M(2) $76M $4.10B(2) $3.55B $558M $66M $58M $50M 11.1% 10.3% 9.5% 9.0% 2022 2023 2022 2023 2022 2023 2022 2023 GAAP GAAP ADJ(1) ADJ(1) 25.3% INCREASE 15.4% INCREASE YoY (24.9% INCREASE EX-CURRENCY) 9.0% INCREA
Slide 14: Resilient business allows for execution on financial priorities
WABTEC Resilient business allows for execution on financial priorities FOCUSED ON CASH CONVERSION ( 1 ) STRONG FINANCIAL POSITION RETURN CAPITAL TO SHAREHOLDERS Y TD C A S H F R O M O P S LEVER AGE Share $399M $252M repurchases 2023 $424M $90 Leverage Leverage 2022 2Q22 2Q23 2023 2022 76% cash conv
Slide 15: 2023 updated financial guidance
WABTEC 2023 updated financial guidance (1) PRIOR GUIDANCE UPDATED GUIDANCE REVENUES REVENUES $8.7B to $9.0B $9.25B to $9.50B ADJUSTED EPS ADJUSTED EPS $5.15 to $5.55 $5.50 to $5.80 C A S H C O N V E R S I O N (2) C A S H C O N V E R S I O N (2) >90% >90% KEY ASSUMPTIONS Adjusted operating margin up
Slide 16: Key takeaways
WABTEC Key takeaways 5 - Y E A R O U T L O O K (1) MSD CORE ORGANIC GROWTH CAGR Strong performance in first half of 2023 despite significant macro 01 uncertainty and volatility + 250-300 BPS MARGIN EXPANSION Productivity driven by continuous cost improvement combined 02 with initial realization of I
Slide 17: Income statement
Appendix A ( 1 of 2) Income WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2023 AND 2022 (AMOUNTS IN MILLIONS EXCEPT PER SHARE DATA) statement (UNAUDITED) Three Months Ended Six Months Ended June 30, June 30, 20
Slide 18: Income statement (cont.)
Appendix A ( 2 of 2) Income statement WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2023 AND 2022 (cont.) (AMOUNTS IN MILLIONS EXCEPT PER SHARE DATA) (UNAUDITED) Three Months Ended Six Months Ended June 30, Jun
Slide 19: Balance sheet
Balance Appendix B sheet WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) June 30, 2023 December 31, 2022 In millions Cash, cash equivalents and restricted cash $ 371 $ 541 Receivables, net 1,698 1,519 Inventories 2,317 2,034 Other current assets 277
Slide 20: Cash flow
Appendix C Cash flow WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Six Months Ended June 30, 2023 2022 In millions Operating activities Net income $ 366 $ 319 Non-cash expense 245 238 Receivables (150) 45 Inventories (248) (256) Accounts
Slide 21: EPS and non-GAAP Reconciliation (1 of 2)
Appendix D (1 of 2) EPS and non-GAAP 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-GA
Slide 22: EPS and non-GAAP Reconciliation (2 of 2)
Appendix D (2 of 2) EPS and non-GAAP 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-GA
Slide 23: EBITDA reconciliation
Appendix E EBITDA reconciliation 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 f
Slide 24: Sales by product line
Appendix F Sales by WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION product line SALES BY PRODUCT LINE (UNAUDITED) Three Months Ended June 30, In millions 2023 2022 Freight Segment Equipment $ 415 $ 381 Components 288 234 Digital Intelligence 195 164 Services 810 711 Total Freight Segment $ 1,708 $
Slide 25: Segment gross margin & operating margin reconciliation
Segment gross margin & Appendix G operating margin reconciliation WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION RECONCILIATION OF REPORTED RESULTS TO ADJUSTED RESULTS - BY SEGMENT (UNAUDITED) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Income from Income from Income f
Slide 26: Segment sales reconciliation
Segment sales Appendix H reconciliation WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION RECONCILIATION OF CHANGES IN NET SALES - BY SEGMENT (UNAUDITED) Three Months Ended June 30, In millions Freight Transit Consolidated 2022 Net Sales $ 1,490 $ 558 $ 2,048 Acquisitions 11 - 11 Foreign Exchange (9)
Slide 27: Cash conversion reconciliation
Appendix I Cash conversion 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 financi
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