Westinghouse Air Brake Technologies Corporation · NYSE:WAB
Westinghouse Air Brake Technologies — Q2 2024 Earnings Presentation
27 slides from Westinghouse Air Brake Technologies's earnings presentation, Jul 24, 2024
Slide 1: Wabtec Financial Results & Company Highlights
SECOND QUARTER 2024 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
WABTEC TODAY’ S PARTICIPANTS RAFAEL JOHN KYRA SANTANA OLIN YATES President & Executive Vice President & Vice President, Chief Executive Officer Chief Financial Officer Investor Relations
Slide 4: 2Q 2024 Overview
WABTEC 2Q 2024 OVERVIEW 2Q 2024 HIGHLIGHTS SALES $2.64B Up 9.8% YOY Increased sales were driven by strong growth in the Freight Segment of 13.1% OPERATING 16.3% 19.3% Operating margin benefited from sales growth and improved gross margin MARGIN GAAP Adjusted EARNINGS PER $1.64 $1.96 GAAP EPS up 54.7
Slide 5: 2024 Market Expectations
WABTEC NORTH AMERICAN NORTH AMERICAN AVG 2024 MARKET FREIGHT CARLOADS ACTIVE LOCOMOTIVES EXPECTATIONS 2.8% 1.8% 2.1% FAVORABLE / FREIGHT UNFAVORABLE NA Carloads + -3.3% Active Locomotive Fleet 3Q23 4Q23 1Q24 2Q24 2Q21 2Q22 2Q23 2Q24 International Freight Source: Association of American Railroads Sou
Slide 6: Executing on Our Value Creation Framework
WABTEC EXECUTING ON OUR VALUE CREATION FRAMEWORK DRIVERS OF RECENT PORTFOLIO GROWTH WINS Accelerate innovation of scalable technologies Won a multi-year T4 locomotive order in NA for >$600 million Grow and refresh expansive global installed base 1st multi-year service contract with Vale for $244 mil
Slide 7: 2Q 2024 Financial Summary
WABTEC 2Q 2024 FINANCIAL SUMMARY I N CREASED S AL E STitle Chart , M ARGI N E XP AN SION AN D E P S GRO WT H Chart Title 3 SALES OP INCOME / OP MARGIN EPS 600 2.5 $2.64B $2.41B $510M 2.5 500 $1.96 19.3% 2 $430M +39.0% 2 $395M $1.64 YOY 400 16.3% 16.4% 1.5 +54.7% $1.41 $312M YOY 1.5 300 12.9% $1.06 1
Slide 8: 2Q 2024 Sales
WABTEC 2Q 2024 SALES (in millions) PRODUCT LINE 2Q24 YOY 2Q KEY DRIVERS Equipment $570 36.4% EQUIPMENT Higher locomotive deliveries and increased mining sales Components $322 17.5% COMPONENTS Digital Intelligence $199 2.1% Increased demand for industrial products, higher international sales and the
Slide 9: 2Q 2024 Consolidated Gross Profit
WABTEC 2Q 2024 CONSOLIDATED GROSS PROFIT ($ in millions) GAAP Adjusted 2Q KEY DRIVERS 2023 GROSS PROFIT $723 $731 VOLUME % Gross Profit Margin 30.1% 30.4% Higher Freight segment sales Volume ↑ ↑ MIX/PRICING Favorable mix of products between and within segments, despite Mix/Pricing ↑ ↑ significant gr
Slide 10: 2Q 2024 Consolidated Operating Income
WABTEC 2Q 2024 CONSOLIDATED OPERATING INCOME ($ in millions) GAAP Adjusted 2023 OP INCOME $312 $395 % Operating Margin 12.9% 16.4% Gross Profit 151 149 SG&A (31) (30) Engineering (4) (4) Amortization 2 - 2024 OP INCOME $430 $510 % Operating Margin 16.3% 19.3% OP MARGIN BENEFITED FROM HIGHER SALES AN
Slide 11: 2Q 2024 Freight Segment Performance
WABTEC 2Q 2024 FREIGHT SEGMENT PERFORMANCE Chart SALESTitle OP INCOME / OP MARGIN Chart Title 12-MONTH BACKLOG 2.5 6 500 $462M $5.50B $5.29B 450 $1.92B(2) $391M 24.1% 5 2 400 $1.70B $344M 350 20.4% 4 1.5 300 $269M 20.3% 250 3 15.9% 1 200 2 150 0.5 100 1 50 0 0 0 2023 2024 2023 2 0 2 4 Category 12 0
Slide 12: 2Q 2024 Transit Segment Performance
WABTEC 2Q 2024 TRANSIT SEGMENT PERFORMANCE Chart SALESTitle OP INCOME / OP MARGIN Chart Title 12-MONTH BACKLOG 800 2.5 $710M $724M(1) 100 $91M 700 90 $82M $78M 12.7% $1.93B 80 2 $1.83B $68M 11.3% 600 70 11.1% 500 9.6% 1.5 60 400 50 300 40 1 30 200 20 0.5 100 10 0 0 0 2023 2024 2023 2 0 2 4 Category
Slide 13: Resilient Business Allows for Execution on Financial Priorities
WABTEC RESILIENT BUSINESS ALLOWS FOR EXECUTION ON FINANCIAL PRIORITIES FOCUSED ON CASH CONVERSION ( 1 ) DISCIPLINED CAPITAL ALLOCATION YTD CASH FROM OPS $569M (4) Strong balance sheet and financial 70% Cash Conv (1) position … liquidity of $2.09B (3) 1H 2023 1H 2024 $569M Share repurchases Share $37
Slide 14: 2024 Updated Financial Guidance
WABTEC 2 0 2 4 U p d a t e d F i n a n c i a l G u i d a n c e (1,2) PRIOR GUIDANCE UPDATED GUIDANCE REVENUES REVENUES $10.25B to $10.55B $10.25B to $10.55B ADJUSTED DILUTED EPS ADJUSTED DILUTED EPS $7.00 to $7.40 $7.20 to $7.50 C A S H C O N V E R S I O N (3) C A S H C O N V E R S I O N (3) >90% >9
Slide 15: Key Takeaways
WABTEC KEY TAKEAWAYS 5 - Y E A R O U T L O O K (1) MSD CORE ORGANIC GROWTH CAGR 01 Strong revenue growth, margin expansion, increased earnings, and improved cash flow 02 250 – 300 BPS MARGIN EXPANSION Positive productivity driven by continuous cost improvement combined with realization of Integratio
Slide 16: Income Statement
APPENDIX A ( 1 of 2) INCOME WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME STATEMENT FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 AND 2023 (AMOUNTS IN MILLIONS EXCEPT PER SHARE DATA) (UNAUDITED) Three Months Ended Six Months Ended June 30, June 30, 20
Slide 17: Income Statement (cont.)
APPENDIX A ( 2 of 2) INCOME STATEMENT (CONT.) WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 AND 2023 (AMOUNTS IN MILLIONS EXCEPT PER SHARE DATA) (UNAUDITED) Three Months Ended Six Months Ended June 30, Jun
Slide 18: Balance Sheet
APPENDIX B BALANCE SHEET WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) June 30, 2024 December 31, 2023 In millions Cash, cash equivalents and restricted cash $ 595 $ 620 Receivables, net 1,801 1,684 Inventories, net 2,364 2,284 Other current assets
Slide 19: Cash Flow
APPENDIX C CASH FLOW WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Six Months Ended June 30, 2024 2023 In millions Operating activities Net income $ 568 $ 366 Non-cash expense 246 245 Receivables (146) (150) Inventories (120) (248) Accoun
Slide 20: EPS and Non-GAAP Reconciliation (1 of 3)
APPENDIX D (1 of 3) EPS AND NON-GAAP 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 comp
Slide 21: EPS and Non-GAAP Reconciliation (2 of 3)
APPENDIX D (2 of 3) EPS AND NON-GAAP 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 comp
Slide 22: EPS and Non-GAAP Reconciliation (3 of 3)
APPENDIX D (3 of 3) EPS AND NON-GAAP 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 comp
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 2024 2023 Freight Segment Equipment $ 570 $ 418 Components 322 274 Digital Intelligence 199 195 Services 829 810 Total Freight Segment $ 1,920 $
Slide 25: Segment Gross Margin & Operating Margin Reconciliation
APPENDIX G SEGMENT GROSS MARGIN & 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, 2024 2023 2024 2023 Income from Income from Income f
Slide 26: Segment Sales Reconciliation
APPENDIX H SEGMENT SALES 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 2023 Net Sales $ 1,697 $ 710 $ 2,407 Acquisitions 34 - 34 Foreign Exchange (8)
Slide 27: Cash Conversion Reconciliation
APPENDIX I CASH CONVERSION RECONCILIATIONSet 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. No
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