Westinghouse Air Brake Technologies Corporation · NYSE:WAB
Westinghouse Air Brake Technologies — Q3 2021 Earnings Presentation
25 slides from Westinghouse Air Brake Technologies's earnings presentation, Oct 27, 2021
Slide 1: Wabtec 3rd Quarter 2021 Financial Results & Company Highlights
Confidential & Proprietary 1 Wabtec 3rd Quarter 2021 Financial Results & Company Highlights October 27, 2021
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 Today’s participants Rafael Santana President & Chief Executive Officer John Olin Executive Vice President & Chief Financial Officer Kristine Kubacki Vice President, Investor Relations PRESENTERS INVESTOR RELATIONS
Slide 4: 3Q 2021 overview
4 3Q 2021 overview (1) 3rd quarter cash from operations was positively impacted by securitization of accounts receivable of $2M. SALES ADJUSTED OPERATING MARGIN ADJUSTED EARNINGS PER SHARE CASH FROM OPERATIONS (1) BACKLOG $1.14 GAAP: $0.69 $1.91B 17.0% $244M $21.84B • Delivered 130 bps of adj. margi
Slide 5: Market outlook
5 Market outlook Average North American Parked Locomotives Key Assumptions YTD Global Freight Volumes 2018 2019 2020 2021 YoY North American Rail Volumes (5.9%) (17.7%) (6.4%) 3.2% 5.1% 20.2% 0.0% 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 0% 5% 10% 15% 20% 25% Kazakhstan Russia China Brazil India Y T D V o
Slide 6: Leading decarbonization and enhanced utilization of rail
Leading decarbonization and enhanced utilization of rail Energy management / charging solutions Weight reduction Dust reduction Reduction in fuel & emissions Driving the transition to a more efficient, utilized, zero-emission rail network World’s 1st heavy-haul battery-electric locomotive 7+MWh … Up
Slide 7: 3Q 2021 wins
7 3Q 2021 wins Class I long-term service agreement International locomotive kits Power collection order for ~600 metro cars in Germany Capturing profitable, growing demand for rail solutions Strategic orders for FLXdrive North American mods orders FREIGHT TRANSIT HVAC order for ~400 metro cars in Sw
Slide 8: Executing in a dynamic environment – supply chain disruptions, escalating costs
8 RISING COSTS IMPACTING MARGINS MITIGATING ACTIONS Executing in a dynamic environment – supply chain disruptions, escalating costs and labor shortages 3Q Impacts • Revenue impacted 2-3% • Costs up $15-20M Future Impacts Costs expected to increase over next few quarters as costs fully flow through i
Slide 9: 3Q 2021 financial summary
9 3Q 2021 financial summary SALES 2021 OPERATING INCOME 2021 EPS 2021 Adj2020 Adj(3) 2021 2020 2021 Adj2020 Adj(2) $1.91B $217M $0.69 $1.87B $293M $325M $0.95 $1.14 Adj. Margin(1) 15.7% 17.0% (1) 3Q 2020 GAAP operating margin was 11.1% and 3Q 2021 GAAP operating margin was 11.4%. (2) 3Q 2020 GAAP op
Slide 10: 3Q 2021 Freight segment performance
10 3Q 2021 Freight segment performance PRODUCT LINE YoY Equipment (5.7%) Lower deliveries of locomotives in NA, largely offset by higher mining sales Components 6.7% Increasing OE railcar & aftermarket demand … improving industrial activity Services 13.6% Positive freight trends, unparking of locos
Slide 11: 3Q 2021 Transit segment performance
11 3Q 2021 Transit segment performance PRODUCT LINE YoY OE (5.3%) Delayed spending due to COVID Aftermarket 0.1% Positive ridership trends, but still below pre-COVID levels SALES 2021 OPERATING INCOME 2021 BACKLOG 3Q212Q212020 2021 Adj2020 Adj(2) $612M $44M $628M $75M $77M(3) $3.69B $3.63B(4) 12.0%
Slide 12: Resilient business allows for execution on financial priorities
12 Resilient business allows for execution on financial priorities FOCUSED ON CASH CONVERSION(1) 2021 YTD2020 YTD $458M $759M Cash from Ops Strong cash generation… improving cash conversion YTD Capex of $23M in 3Q … $79M year-to-date STRONG FINANCIAL POSITION 3Q213Q20 $3.6B Net Debt $3.7B Adjusted n
Slide 13: 2021 financial guidance
13 2021 financial guidance (1) Cash from Operations conversion % is defined as GAAP Cash from Operations divided by GAAP Net Income plus depreciation & amortization Key assumptions • Adjusted SG&A ~12.25% • Depreciation ~$205M • Amortization ~$290M • Interest ~$180M • Tax rate ~26% • Capex ~$120M Pr
Slide 14: What you've heard
What you’ve heard Creating value for customers … leading decarbonization and utilization of rail through innovative, low-carbon technologies Leveraging significant installed base … resilient business model Navigating dynamic supply chain and cost environment Driving margin expansion … accelerated re
Slide 15: Corporation
CORPORATION
Slide 16: Appendix
16 Appendix
Slide 17: Income statement
17 Income statement Appendix A ( 1 of 2)
Slide 18: Income statement (cont.)
18 Appendix A ( 2 of 2) Income statement (cont.) 2021 2020 2021 2020 Segment Information Freight Net Sales 1,295.0$ 1,237.3$ 3,814.2$ 3,743.0$ Freight Income from Operations 195.2$ 160.2$ 510.2$ 463.4$ Freight Operating Margin 15.1% 12.9% 13.4% 12.4% Transit Net Sales 611.9$ 627.8$ 1,935.2$ 1,789.4$
Slide 19: Balance sheet
19 Balance sheet Appendix B September 30, 2021 December 31, 2020 In millions Cash, cash equivalents and restricted cash 456.4$ 598.7$ Receivables, net 1,367.0 1,412.5 Inventories 1,689.6 1,642.1 Other current assets 247.1 226.5 Total current assets 3,760.1 3,879.8 Property, plant and equipment, net
Slide 20: Cash flow
20 Appendix C Cash flow 2021 2020 In millions Operating activities Net income 371.7$ 325.5$ Non-cash expense 373.7 303.0 Receivables 34.9 245.2 Inventories (32.3) 7.8 Accounts Payable 41.1 (203.4) Other assets and liabilities (29.8) (220.0) Net cash provided by operating activities 759.3 458.1 Net c
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 2021 Q3 EBITDA Reconciliation (in millions) Reported Income Other Income Depreciation & Restructuring & Adjusted from Operations (Expense) Amortization Transaction Costs EBITDA Consolidated Results $217.0 $0.5 $120.9 $338.4 $35.1 $373.5 Wabtec C
Slide 24: Sales by product line
24 Sales by product line Appendix F In millions 2021 2020 Freight Segment Equipment 335.2$ 355.3$ Components 222.1 208.2 Digital Electronics 155.2 161.0 Services 582.5 512.8 Total Freight Segment 1,295.0 1,237.3 Transit Segment Original Equipment Manufacturer 286.9$ 303.1$ Aftermarket 325.0 324.7 To
Slide 25: Segment reconciliation
25 Segment reconciliation Appendix G In millions 2021 2020 2021 2020 Freight Segment Reported Income from Operations 195.2$ 160.2$ 510.2$ 463.4$ Freight Segment Reported Margin 15.1% 12.9% 13.4% 12.4% Restructuring & Transaction costs 3.4 8.8 17.0 43.5 Non-cash Amortization expense 67.6 65.2 199.8 1
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