Westinghouse Air Brake Technologies Corporation · NYSE:WAB
Westinghouse Air Brake Technologies — Investor Day (March 2020)
99 slides from Westinghouse Air Brake Technologies's investor day presentation, Mar 10, 2020
Slide 1: 2020 Investor Conference
| -WABTEC 2020 INVESTOR | CONFER
Slide 2: Forward-looking statements
This 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 the Private Securities Litigation Reform Act of 1995, including statements relating to the i
Slide 3: Note regarding 2020 business operations and financial guidance
DURING THE CONFERENCE, WABTEC MANAGEMENT WILL DISCUSS ITS PREVIOUSLY ISSUED GUIDANCE FOR 2020. THIS GUIDANCE HAS NOT BEEN REVISED FOR ANY POTENTIAL IMPACT DUE TO COVID-19, AND MORE RECENTLY WITH VOLATILITY IN THE COMMODITY AND FINANCIAL MARKETS.TO DATE, WABTEC HAS SEEN LIMITED IMPACT TO ITS FIRST QU
Slide 4: Agenda
Agenda 2 8:30 AM ET Opening Remarks and Wabtec Overview Rafael Santana 9:15 AM ET Portfolio Spotlights Spotlight on Technology Dominique Malenfant Spotlight on Freight Services Pascal Schweitzer Spotlight on Digital Electronics Peter Thomas / Bob Bourg Spotlight on Global Operations Alicia Hammersmi
Slide 5: Introduction
IntroductionRafael Santana
Slide 6: What you will hear today
1. Delivering results through the cycles via world-class technology and innovation while leveraging significant installed base 2. Focused on continuous operational improvementand margin expansion 3. Lean operations driving strong cash flow withdisciplined capital allocation 4. Building a stronger an
Slide 7: Our speakers
Our speakers Gokhan Bayhan Regional General Manager, Russia/CIS/MENAT Rafael SantanaPresident & CEO Alicia Hammersmith Vice President, Operations, Transit Sujatha Narayan Regional General Manager, India Bob BourgVice President, Core Electronics and Data Analytics Lilian Leroux Group President, Trans
Slide 8: Strong global industrial portfolio with track record of innovation
Strong global industrial portfolio with track record of innovation and significant recurring revenuePortfolio Geography Market Transit OEM 16% Transit Aftermarket 18% Freight Equipment 21% Freight Components 13% Digital 8% TRANSIT34% 8.2B $ ‘19 GAAP SALES 500 COMPANY ~60%non-U.S. revenues~27KEMPLOYE
Slide 9: Competitive strengths
Competitive strengths Purpose-driven culture … 150 years ofindustry expertise 5. Technology leader … 7,000 patents 1. Significant installed base … mission criticalproducts 3. 2. 9 Track-record of execution … customerpartnerships spanning 50+ countries 4. Lean operations … 120+ manufacturing sites
Slide 10: Wabtec value creation model
Wabtec value creation model VALUE CREATION FOR OUR SHAREHOLDERS INVESTED IN COMMUNITIES CUSTOMER FOCUSED Through our scale and innovation, we will drive average double-digit earnings growth and lead the transportation industry in unprecedented ways. Our vision:We will accelerate the future of transp
Slide 11: Global demand for transport growing fast
Global demand for transport growing fast … freight andpassenger activity will more than double by 2050 North America’s freight ton mile is moved via rail *Popular Science, 2019** AAR Sustainability Fact Sheet, 2019 Rail is improving the world’s transportation challenges SAFER<4% of freight transport
Slide 12: Diverse portfolio of businesses uniquely positioned to outperform
>20% Of the world’s rail freight is moved by a Wabtec locomotive 2.5M Messages monitored daily on Wabtec locomotives > 30% Of content on a Freight car capable of being Wabtec Transit Equipment Services Components DigitalElectronics >30% Of North American freight moved through ports managed by Wabtec
Slide 13: Market update
Market update Markets we’re in 2019 North America Freight NAM carload volume (4.0)% NAM railcar deliveries 5.8% International Freight Int’l rail freight MT 3.1% Sources: AAR, FTR, Bloomberg, UIC, Global Mining Data, Energy Information Administration, Amtrak, Via Rail, Internal analysis ~3-4%TRANSIT~
Slide 14: How we win in the global transportation market
300+ bpsOPERATING MARGINEXPANSION How we win in the global transportation market 1. Customer focusDeepen & transform global capabilities.Help customers compete and win. 2. TechnologyProtect & extend our current market position with world-class technology. 3. Lean cultureCommitment to quality and con
Slide 15: 2019 execution and integration reinforces strategic merger rationale
2019 execution & integration reinforces strategic merger rationale Strategic merger rationale(as communicated at announcement) Diversified, global leader in transportation & logistics Electronics & Digital technologies leading to autonomous operations Recurring revenue growth in high-margin aftermar
Slide 16: Strong cash generation enabling capital allocation flexibility
Strong cash generation enabling capital allocation flexibility Dividends Cap-Ex Availablecash Cash from Operations Excess Cash Cash uses5-year outlook Cash sources Balanced capital allocation priorities to maximize shareholder value Capital allocation approachMaintain strong balance sheet for flexib
Slide 17: Committed to creating a more sustainable world
Committed to creating a more sustainable world … focuson corporate social responsibility Creating a moresustainable world Empowering people andcommunities Innovating with purpose Innovating to serve our customers and minimizing our impact onthe planet Taking action to reduce our environmental impact
Slide 18: Segment Overviews
Segment OverviewsRafael Santana
Slide 19: Freight segment
‘19 ADJ PRO FORMASALES (1) $5.9B ~Flat‘20 SALES GROWTH VS.‘19 ADJ PRO FORMA Growth drivers &industry dynamicsExpanding installed base enabling increased recurring revenue streams Steady international growth … footprint & partnerships are a strategic advantage Digital capability is required for custo
Slide 20: Strategy in action: global dynamics
LocomotiveIB Age Sources: AAR, SCI, UIC Strategy in actionStrongly positioned to capitalize on global dynamics 5 year Outlook Looking ahead 2021-2025 − OEM agreement to grow market share − Modernization & new opportunity for service as Freight carIB ‘20 OEM NORTH 31KAMERICA 19 1.6M 43K asset utiliza
Slide 21: Unlocking opportunity for margin expansion across freight ecosystem
Strategy in action Unlocking opportunity for margin expansion across freight ecosystem LocomotiveWabtec holds significant loco IP contentOpportunity to pull through value on newdeliveries, manufacturing & aftermarket sales Freight Car~10% of Wabtec content on rail carsOpportunity to grow 2X by 2025
Slide 22: Key technologies unlocking $1B revenue in adjacent markets
Strategy in action Key technologies unlocking $1B revenue in adjacent markets MiningPropulsion systemSignificant partnershipswith OEMs Wayside Track ManagementWheel condition monitoring, rail camera, bearing acoustic monitoring Heat Exchangers100+ patents on heat exchanger / cooling system designsIn
Slide 23: Transit segment
Transit segment Growth drivers & industry dynamics Dilutive projects are largely behind us… winning new volume at a bettermargin Regulation changes are creating opportunities ... investing in highly- engineered systems that support shift to green Steady transit growth across the globe with highlight
Slide 24: How we win in Transit profitably
How we win in Transit profitably Aligning portfolio for continuous profitable growth … path to mid-teen margins Stabilize the portfolioPrudent project selection & improved risk management. Capture profitable growthExpand in attractive end markets. Win share of global growth & shift to green opportun
Slide 25: Technology
TechnologyDominique Malenfant
Slide 26: Technical innovation at our core
Technical innovation …at our core st 26 TO MARKET Advanced Adhesion controls system to improve traction efficiency for heavy haul freight locomotives Train Energy Management for freight application AC electric drive system for mining Ultra-Class trucks Global Remote Monitoring & Diagnostic solution
Slide 27: Extending our technology leadership
Extending our technology leadership by enabling advances in transportation Environment Solving our customers largest challenges:Dwell Reliability Velocity OpEx EnergyManagement Automation EcosystemEnablement Sustainabilityin Transit AdditiveTechnology 27
Slide 28: Disrupting the rail industry with battery power
Disrupting the rail industry with battery power 100% BATTERY POWERED Up to 30% FUEL AND EMISSIONS SAVINGS Up to 6,000 KWHr Customer Value DriversEnvironment OpEx FUEL=$7B+ ANNUAL NAM LOCO FUEL SPEND Up to 45 MILES ON BATTERY Autonomy BATTERY-ELECTRIC FREIGHT LOCOMOTIVE 28
Slide 29: Additive is disrupting traditional manufacturing
Customer Value DriversOpEx Reliability LIFE EXTENSION >2x LEAD TIME Up to 90% INVENTORY Up to 75% ‘19 IMPACT ~$4 MILLION 1,250 prototype parts + 12 production part types … target is to grow productioncirculation >25,000 by 2025 29 Additive is disrupting traditional manufacturingFUEL COOLING NOZZLE
Slide 30: Shift to green: technology unlocking opportunity
Target to drive 50% increase in market share & margin over next 10 years WEIGHT 50% BRAKING DISTANCE Up to 15% RECYCLABILITY 95% Customer Value DriversEnvironment OpEx LIFE CYCLE COST 30% 30 Shift to green … technology unlockingopportunity for customers and the worldMETROFLEXX BRAKING SYSTEM
Slide 31: Technology as a competitive growth enabler
Technology as a competitive growth enabler Investing ~5% of revenues in technology development >20%FLEXIBLE WORKFORCE CAPACITY >30%ENGINEERS IN BESTCOST COUNTRIES >3%Y/Y PRODUCTIVITY Capability … delivering innovation Flexibility … variable workforce Competitiveness … driving value 31
Slide 32: Freight Services
Freight ServicesPascal Schweitzer
Slide 33: Striving to be railroads' service partner of choice
Striving to be railroads’ service partner of choiceRolling stock assets and the right maintenance strategy create significant value Significant opportunity over the asset’s lifecycle Why locomotive service matters >30yrsLocomotive life >4MGallons of fuel consumed 120+Service events Why freight car s
Slide 34: Freight Services solutions for our customers
Freight Services solutions for our customers >500 units in operation Up to 10k locomotivemarket potential Modernizations Up to 50%Hauling power Replace 3 units with 2 What: Asset life extension via comprehensive upgradesHow: Modular scope defined with every customer 10k+ engines in operation Up to
Slide 35: A well-positioned, technologically advanced locomotive fleet
A well-positioned, technologically advanced locomotive fleet ~23kINSTALLED BASE 40+COUNTRIES (a – Source: Southwest Research Institute Locomotive Fuel Consumption Testing T4 200+CUSTOMERSINSTALLED BASE DISTRIBUTIONDC EVO AC4400 D9 D7 Modernizations and upgrades 1st overhaul 2nd overhaul 13 Yrs avera
Slide 36: Unique franchise with a proven track record of growth
Unique franchise with a proven track record of growth6% annual revenue growth over the last decade $2.2B2019 ADJ PRO- FORMA SALES-a) $12BBACKLOG ~80%Fleet under digital monitoring 500+Performance upgrades in catalog A global, customer focused team (a – $2.0B 2019 GAAP revenues adjusted for full-year
Slide 37: Long-term fundamentals to deliver growth
Long-term fundamentals to deliver growth Our Strategy Capture entitlementMaximize utilizationTrack loco performance over lifecycleLeverage global service platform andinfrastructure Drive outcomesPartner on RR fleet lifecycle strategyRoll-out new offerings at scaleRevitalize aging assets via Mods Opt
Slide 38: Wabtec Freight Services aligned to PSR
Strategy in action Wabtec Freight Services … aligned to PSR Remote Monitoring50% early failure predictionPerformance upgrades5% fuel savings, 50% in software cycle timeSmart Shopping40% in dwell time Technical support500+ certified technicaladvisorsGlobal logisticsGuaranteed parts availabilitya
Slide 39: Key takeaways
Key takeaways Technology-driven service franchise delivering through the cycles 1. 2. Leveraging fleet dynamics and railroad demand for increased performance to drive mid-single digit annual growth over the next five years Strong cost and growth synergies with Wabtec service business; leveraging exi
Slide 40: Digital Electronics
Digital ElectronicsPeter Thomas & Bob Bourg
Slide 41: Digital Electronics industry dynamics and growth drivers
Digital Electronics Industry dynamics & growth driversManaging a tough cycle globally … overall ‘19 volume down (4%) in North America NA Railroads shift focus toOperations … Precision ScheduledRailroading (PSR) Automation opens next generationof productivity … and growth Opportunity to take capabili
Slide 42: Customer outcomes that matter in the context of PSR
Customer outcomes that matter, in the context of PSR Installed base foundation of automation Safety Communications ~12kTrip Optimizer units~20kLOCOTROL Systems~10kGoLINC Edge devices Fuel savings Asset utilization 14Days advanced visibility1Information source10%Productivity improvement Improve
Slide 43: How we win with our customers
Enhancements and upgrades Market expansion 1. 2. Growth on existing portfolio 3. Path to automation 4. How we win with our customers R INTEGRATION 43 Freight >$15BADDRESSABLE OPEX Transit 3xEST. DEMAND FOR PASSENGETRANSPORT BY 2050 Mining $5B1% IMPROVEMENT IN OP COSTS Shipper / 14Ports DAYS OF ADVAN
Slide 44: Road to rail: harnessing innovation to drive productivity
Road to rail … harnessing innovation to drive productivity 4X Rail is 4 times more fuel efficient than trucks Moving freight by rail instead of truck lowers greenhouse gasemissions by 75% Shift of truckingrevenue to rail Top-line growth of >10% for railroads 1% 75% Sources: Federal Railroad Administ
Slide 45: Enabling productivity and efficiency for customers
Class I Operating Expense Enabling productivity and efficiency for customers 2019 $60B+ Future ↓ $70B+ 2010 Ton (HPT), Locotrol, Zero-to-Zero NetworkOptimization…$500MYard Planner, Smart Intermodal, Movement Planner Asset PerformanceManagement… $500MEdgeLINC, Expert on Alert, Condition Monitoring Pr
Slide 46: Automation building blocks unlock value and capability
*Estimation for North American Class 1 railroads 25% FUEL EFFICIENCYIMPROVEMENT 50%POTENTIALPRODUCTIVITY SAVINGS 25 % REDUCTION IN TRAIN DELAYS 75%REDUCTION IN ACCIDENTS DUE TO HUMAN ERRORS DE-SKILLED ENGINEER Vital standalone PTC . High-bandwidth communication . Yard automation SINGLE PERSON CREW P
Slide 47: Global Operations
Global OperationsAlicia Hammersmith
Slide 48: Global cost-competitive manufacturing strategy
BUILDING FLEXIBILITY >25% SITES IN BEST COST COUNTRIES INSOURCED MATERIAL FROM COMBINED OPERATIONS Global cost-competitive manufacturing strategy ON-TIME DELIVERY TO CUSTOMERS >90% Evolving to lighter asset model 48 Combined manufacturing enabling operations synergiesOptimize footprint for capabilit
Slide 49: Lean in action: transforming Fort Worth
Lean in actionLean operations and multi-modalflexibility … transforming Fort Worth From To A single model, newlocomotive only shop 12 different modelswith modernization mix (15)%LOWER MANUFACTURING ASSEMBLY HOURS 2xCAPACITY EXPANSIONW/O ADD’L FOOTPRINT New locos Modernizations # of uniquemodels 1 3
Slide 50: First mixed moving line in industry: Brazil site
From To Static line…batch production push system Mixed moving line...single piece flow pull system >13,000 ft2 AREA SAVINGS 10%WORKING CAPITAL IMPROVEMENT 3 SITES CONSOLIDATED0 RECORDABLE INJURIES Lean in action First mixed moving line in industry …transforming Brazil site 50
Slide 51: Machine connectivity in Grove City
Lean in actionMachine connectivity in Grove City 51 400+CONNECTED MACHINES ACROSS 13 PLANTS 60%+ improvement in Safety70%+ improvement in Quality30%+ improvement in Lead Time 25%INCREASE IN EFFICIENCY
Slide 52: Electronics Manufacturing COE
From To Product line focused … ruggedelectronic manufacturing Insourcing … integrating 3rd party builds into COE system ~30% LABOR SAVINGS OPPORTUNITY5+ADDITIONAL PRODUCTLINES INSOURCED>75%FACTORY UTILIZATION(over last 5 years)30 DAYSCUSTOMER LEADTIME REDUCTION Lean in actionElectronics Manufacturin
Slide 53: Accelerating Lean, building flexibility, driving transformation
Accelerating Lean Building flexibility Driving transformation 5% MANUFACTURINGCOST PRODUCTIVITY15% MANUFACTURING FOOTPRINT3% MATERIAL COST DEFLATIONLean manufacturing delivering operational efficiency 53 Scalable model driving continuous improvementOPERATIONAL TARGETS
Slide 54: Transit Segment
Transit SegmentLilian Leroux
Slide 55: Focused on driving safety, efficiency and passenger comfort
Focused on driving safety, efficiency and passenger comfort Largest Transit portfolioin the industry>75% of portfolio focusedon 5 core product areasEquipment with high engineering added value 23NEW PRODUCTS INTRODUCED TO MARKET IN 2019 $3.5B in backlogSales up 6%$92B addressable new and Services rol
Slide 56: Transit reset: turnaround underway
Transit reset … turnaround underway Stabilize the portfolioPrudent project selection & improved risk management. Capture profitable growthExpand in attractive end markets. Win share of global growth & shift to green opportunities. Drive lean cultureLeverage integration to drive best cost footprint;c
Slide 57: Stabilizing portfolio and driving lean culture
Stabilizing portfolio & driving lean culture Strategy in action OTHER PIS HVAC DOORS BRAKES SERVICES REFURBISHMENT $3.5B BACKLOGSignificant reduction of refurbishment backlog, in favor of more attractive segments Design and validation of new couplers for Transit to significantly improve comfort on b
Slide 58: Best cost footprint and lean: Transit Brakes
Strategy in action: best cost footprint & lean Transforming Transit Brakes operations COST OF POOR QUALITY OVER 2 YEARS ~45% ~(15)% HOURS INBEST COST COUNTRIES >85%ON-TIME DELIVERY+8PT Driving manufacturing into best cost countriesStrong make or buy actions to improve material costTotal product cost
Slide 59: Growing the portfolio in attractive markets
GROWTH THROUGH BROADER AFTERMARKET OFFERINGCondition based maintenance initiative … 5 projectsstarted in 2019Deployment of digital spare part catalogueIntegration of advanced analytics and 3D printing 59 Growing the portfolio in attractive markets10-15% growth in profitable end markets INCREASED DEM
Slide 60: Expanding product offerings to support the shift to green
Economic factorsGDP, demography, urbanization Energy management Weight reduction Dust reduction CO2 reduction (100kg) per carwith newest MetroFlexx brake control & brake stationUp to 10xfewer micro-particlesfor friction braking Expanding product offerings to support the Shift to GreenCapture profita
Slide 61: Russia / CIS / MENAT
Russia / CIS / MENATGokhan Bayhan
Slide 62: Wabtec in Russia / CIS / MENAT today
Wabtec in Russia / CIS / MENAT today 3-4% Freight Growth >770K ft2OPERATIONAL FOOTPRINT ~300EMPLOYEES ACROSS REGION WITH AGING FLEET OF 40KLOCOMOTIVES & 1.3M RAILCARS Double digit revenue growth through the long-term plan 62 ~$3.5B’20 OPENING BACKLOG
Slide 63: Leveraging local presence to overcome high barriers to entry
Leveraging local presence to overcome high barriers to entry Wabtec AdvantageState-of-the-art technology Localization & partnershipService/supply chain infrastructure Financing solutions #2 Largest diesel locomotive market outside of North America LOCOMOTIVES IN OPERATION1,500+ locos in operation SE
Slide 64: Fueling Egypt's rail infrastructure
Strategy in action Fueling Egypt’s railinfrastructure 100 fuel-efficient new locomotives 15-year sole source parts and technical support agreement for 180 locos (new and current fleet)International / complex full project financing packageENR goal to increase freight market share from 1% → 10% … crea
Slide 65: Leverage Wabtec advantage to expand portfolio
Confidential & Proprietary Leverage Wabtec advantage to expand portfolio 4X total market opportunity post merger Local PresenceUtilize established operational infrastructure and deep relationship with customers, build partners & stake holder Customer SolutionsExpanded product and services portfolio
Slide 66: India
IndiaSujatha Narayan
Slide 67: Building a $1B enterprise in India
Building a $1B* enterprise in India over 5 years #1 ROLLING STOCK & RAIL EQUIPMENT COMPANY IN INDIA ~1Mft2OPERATIONAL FOOTPRINT $450M+RAPID GROWTH FROM LOCO,TRANSIT BRAKES, METRO ~1,200WABTEC INDIA ENGINEERING ~2,750EMPLOYEES ACROSS REGION 67 * Includes intercompany sales
Slide 68: Wabtec's leading advantage: market, talent, costs
MARKET COSTS + + Wabtec’s leading advantage TALENT 68
Slide 69: Leverage the market
Leverage the market 4thLargest rail networkin the world68,000 kmRail route22,700Trains running every day23MPassengers per day3M TonsFreight per day TRANSIT & FREIGHT Protect the profitable coreTransit brakesIR locomotive projectBuild new businessDrive aftermarket service growthIntroduce new products
Slide 70: Leverage the talent India has
Leverage the talent India has~90,000+ analytics professionals 1 in 10Analytics professionalsworldwide from India Working in the B2B space, out of which 700+ work with deep technology ~2,000+Startups India produces more engineering grads than US + Europe 1.5M# Engineers in India WABTEC INDIA TECHNOLO
Slide 71: Leverage the cost
71 Leverage the cost Drive global sourcing to drive Wabtec profitabilityWorld-class factories through Industry 4.0A global hub for manufacturing of Transit & Freight solutions Lower operational costsCommodity, overhead & labor costsSupply ecosystemEntrenched automotive and railway suppliersIndia fin
Slide 72: Financials
FinancialsPatrick Dugan
Slide 73: What you've heard
What you’ve heard Delivering results through the cycles via world-class technology and innovation while leveraging significant installed base Focused on continuous operational improvement and margin expansion Lean operations driving strong cash flow withdisciplined capital allocation Building a stro
Slide 74: 2019 adjusted pro-forma results
2019 adjusted pro-forma results(1) ($ in billions, except per share amounts) FY19GAAP(2) FY19 nonGAAP Policy Partial year Recurringharmonization(3) pro-forma(4) PPA(5) FY19 adj.pro-forma FY20 adj.guidance Revenue $8.2 $8.3 $(0.1) $0.5 - $8.7 $8.7 Income from Operations $0.7 $1.2 $(0.1) $(0.1) $0.3 $
Slide 75: 2020 outlook
2020 outlook Delivering in challenging environment ‘19GAAP ‘19 Adj.Pro-Forma ‘20 Adj.Guidance Sales $8.2B $8.7B ~$8.7B EBIT % 8% 15% ~16% EPS $1.84 $4.26 ~$4.50 to~$4.80 Cash fromOps $1.1B $0.8B ~$0.9B 75 What we are expectingSalesSoftening NAM Freight (loco, freight car, services)Moderate growth in
Slide 76: Diversified and global sales portfolio
Diversified & global sales portfolio Freight $8.2B $8.7B ’19 salesGAAP ’19 salesAdj. pro-forma ’20 outlook Equipment $1.7B $1.9B NAM carload volume flat to down … NAMloco volume partially offset by international Components $1.1B $1.1B Lower freight car build @ ~40K Services $2.0B $2.2B Loco parkin
Slide 77: Significant synergy opportunities
Significant synergy opportunities 2019 2020 BEFORE 2022 $30M Net cumulative synergy $s$250M$150M SG&A Shared servicesCorporate costsLCC optimization Facility consolidation Exit co-located facilitiesOffice consolidationsMfg. footprint optimization Sourcing MRO spendDirect material spendIndirect spend
Slide 78: Adjusted EBIT margins
Adjusted EBIT margins Key driversProven ability to achieve synergiesCulturally engrained lean efforts$22B backlogSignificant installed base with~60% aftermarket revenuesGlobally diverse portfolioPockets of growth offsettingNAM freight slowdown Continuing to drive margin expansion TRANSIT + Synergies
Slide 79: Cash tax benefit driven by transaction
Cash tax benefit driven by transaction Tax step-up associated with the transaction drives average annual cash tax benefits of ~$150M for the next 15 years ~$150MANNUAL BENEFIT First $470M of gross cash tax benefits ($440 NPV) to be paid toGE by Wabtec (expected to be realized during first 3-4 years)
Slide 80: Continuing to drive strong cash generation
Continuing to drive strong cash generation Key driversEBIT growth driven by synergy execution, lean actionsLower interest expense on lower debtGE Tax benefit ~flat versus ’19;effective tax rate slightly upWorking capital pressure due to timing… significant focus area to improveCash outflows of ~$100
Slide 81: Capital allocation strategy
Capital allocation strategy Invest organically Consistent R&D and CapEx investments in new ~5% ~2% products, aftermarket & recurring revenue streams, & TECHNOLOGY CAPEX digitization % SALES % SALES Grow through acquisitions Strategic bolt-on acquisitions that enhance growth > cost of capital strateg
Slide 82: 5-year financial plan
Sales growth Strong recurring revenue base & deep partnerships in long- Mid-singlecycle business enabling growth through the cycle digitsORGANIC GROWTH EBIT marginimprovement Significant synergy opportunities driven by business 300+ bpscombination; Transit stabilizing & delivering accretive growth M
Slide 83: Key takeaways
Key takeaways Positioned to outperform Portfolio is uniquely positioned to deliver strong resultsLeading technologies positioning Wabtec to build further momentum on its track record with customersLean transformation and global capabilities are making Wabtec stronger and enabling significant synergi
Slide 84: Slide 84
Slide 85: Speaker Biographies
Speaker Biographies INVESTOR CONFERENCE
Slide 86: Rafael Santana, President and CEO
Rafael Santana is President and CEO of Wabtec where he brings roughly 25 years of commercial, product management and executive leadership experience to this post, including more than 10 years in the transportation industry. He has a proven track record of transforming businesses, while delivering to
Slide 87: Gokhan Bayhan
Gokhan Bayhan is General Manager for Wabtec’s Russia/CIS, Europe, M. East and N. Africa region. Prior to the merger of GE Transportation and Wabtec, Bayhan joined GE in 1997 and held multiple roles including Regional Sales Manager Russia, CIS & Turkey, Global Locomotive Strategic Marketing Manager,
Slide 88: Bob Bourg
Bob Bourg is Vice President for Core Electronics & Data Analytics at Wabtec Corporation. He has P&L responsibility for a portfolio of products and systems including locomotive electronics, braking systems, event recorders, IoT platforms, and digital solutions for the mining industry.In prior positio
Slide 89: Patrick D. Dugan, CFO
Patrick D. Dugan 89 Chief Financial Officer & Executive Vice PresidentPatrick Dugan is Chief Financial Officer (CFO) and Executive Vice President At Wabtec, where he is responsible for all aspects of Investor Relations, Accounting, Tax and Finance, and Information Technology.Dugan joined Wabtec in 2
Slide 90: Alicia Hammersmith
Alicia Hammersmith is Vice President of Operations for the Transit segment. She brings 29 years of manufacturing operations expertise spanning three large industrial, technically advanced segments of Aviation, Transportation and Oil & Gas. Hammersmith is skilled in acquisitions, divestitures, consol
Slide 91: Kristine Kubacki
Kristine Kubacki is Vice President of Investor Relations. She brings 14 years of experience as a sell-side analyst covering industrials.Kubacki previously served as executive director and senior analyst for the transportation, logistics and equipment sector at Mizuho Securities USA. Prior to this ro
Slide 92: Lilian Leroux
Lilian Leroux has been the president of Wabtec’s Transit business since 2019 and has spent most of his 25 years career in a variety of leadership, commercial and project management roles across the railway sector. After various positions within industrial and railway companies such as the French nat
Slide 93: Dominique Malenfant
Dominique Malenfant is the Global Technology Officer & Senior Vice President Engineering for Wabtec. In this role, he is responsible for the overall global technology strategy and engineering organization for the company.Malenfant previously served as the Vice president Global Technology & Chief Tec
Slide 94: Sujatha Narayan
Sujatha Narayan joined Wabtec in August 2017 and in her 2.5 years as Managing Director of Transit business in India, she has led the company through a period of unprecedented profitable growth with a passionate focus on customer satisfaction, operational efficiency, compliance, profitability and emp
Slide 95: Pascal Schweitzer
Pascal Schweitzer is Group President, Wabtec’s Freight Services business, which helps customers maximize the value of their existing assets, over their entire lifecycle, through innovative technologies and business models. In this role, Schweitzer is responsible for improving critical customer outco
Slide 96: Peter Thomas
Peter Thomas is the Chief Commercial Officer in the Americas for Wabtec’s Digital Electronics business where he and his team are charged with developing a winning commercial strategy and driving customer focused, outcome oriented commercialization efforts for the company’s suite of software and digi
Slide 97: Appendix
Appendix INVESTOR CONFERENCE
Slide 98: EPS and Non-GAAP Reconciliation
EPS and Non-GAAP Reconciliation 98 Wabtec CorporationReconciliation of Reported Results to Adjusted Results(in millions) 2019 Full Year Results Gross Operating Income from Interest & Minority Wabtec Net Sales Profit Expenses Operations Other Exp Tax Net Income Interest Net Income EPS Reported Result
Slide 99: EBITDA Reconciliation
EBITDA Reconciliation 99 Wabtec Corporation Income from Operations$ 663.1229.8185.091.6 Depreciation$ 157.8--- Amortization$ 238.4--- EBITDA (Income from Operations plus Depreciation & Amortization)$ 1,059.3229.8185.091.6 2019 Full Year EBITDA Reconciliation (in millions) Consolidated 2019 Actual Re
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