Westinghouse Air Brake Technologies Corporation · NYSE:WAB
Westinghouse Air Brake Technologies — Q1 2023 Earnings Presentation
25 slides from Westinghouse Air Brake Technologies's earnings presentation, Apr 26, 2023
Slide 1: Wabtec Financial Results and Company Highlights
FIRST 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: 1Q 2023 overview
WABTEC 1Q 2023 overview 1Q 2023 HIGHLIGHTS $2.19 B Increased sales were driven by strong Freight SALES Up 13.9% YoY segment growth … excluding impacts of FX, sales were up 16.8% YoY OPERATING MARGIN 12.6% 16.4% Operating margin benefited from higher sales growth GAAP Adjusted (2) and lower SG&A as a
Slide 5: 2023 Market Expectations
WABTEC 20.2% 2023 Market NORTH AMERICAN FREIGHT CARLOADS Expectations 5.1% 0.2% FREIGHT (0.1%) (0.8%) NA Carloads -/↔ (3.7%) (3.3%) (3.6%) (4.9%) Locomotive and Railcars Unparkings ↔/- 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 Source: Association of American Railroads International Freight Volume
Slide 6: Executing on our value creation framework
WABTEC Executing on our value creation framework DRIVERS OF RECENT PORTFOLIO GROWTH WINS Signed strategic order with VLI in Brazil for new locomotives Accelerate innovation of scalable technologies Secured key order for mining drive systems in high altitude Grow and refresh expansive global installe
Slide 7: 1Q 2023 financial summary
WABTEC 1Q 2023 financial summary STRONG SAL ES GROWTH DESPITE DISRUPTIONS AND MACRO VOL ATIL ITY SALES OP INCOME/OP MARGIN EPS $360M $1.28 $2.19B $319M $1.93B $1.13 $276M $239M 16.5% 16.4% $0.93 $0.80 12.4% 12.6% 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 GAAP GAAP ADJ(1) ADJ(1) GAAP GAAP ADJ
Slide 8: 1Q 2023 sales
WABTEC 1Q 2023 sales 1Q KEY DRIVERS ($ in millions) EQUIPMENT PRODUCT LINE 1Q23 YOY Higher international locomotives sales Equipment $393 43.4% COMPONENTS Higher due to improving OE railcar build, more railcars in operation Components $279 21.8% and increased demand for industrial products Digital I
Slide 9: 1Q 2023 consolidated gross profit
WABTEC 1Q 2023 consolidated gross profit 1Q KEY DRIVERS ($ in millions) GAAP Adjusted (1) 2022 GROSS PROFIT $595 $600 VOLUME Freight segment sales growth of 18.5% % Gross Profit Margin 30.9% 31.1% MIX/PRICING Volume ↑↑ ↑↑ Less rich mix of products between business groups (Equipment and Services), of
Slide 10: 1Q 2023 consolidated operating income
WABTEC 1Q 2023 consolidated operating income ($ in millions) GAAP Adjusted (1) 2022 OP INCOME $239 $319 % Operating Margin 12.4% 16.5% Gross Profit 70 69 SG&A (25) (22) Engineering (6) (6) Amortization (2) - 2023 OP INCOME $276 $360 % Operating Margin 12.6% 16.4% OP MARGIN BENEFITED FROM HIGHER SALE
Slide 11: 1Q 2023 Freight segment performance
WABTEC 1Q 2023 Freight segment performance SALES OP INCOME/OP MARGIN BACKLOG $297M $1.57B(3) $259M $19.02B $18.36B(3) $1.32B $227M 19.6% 19.0% $189M 14.5% 14.3% 2022 2023 2022 2023 2022 2023 2022 2023 GAAP GAAP ADJ(1,2) ADJ(1,2) 18.5% INCREASE 3.5% DECREASE YoY (20.0% INCREASE EX-CURRENCY) (2.3% DEC
Slide 12: 1Q 2023 Transit segment performance
WABTEC 1Q 2023 Transit segment performance SALES OP INCOME/OP MARGIN BACKLOG $628M(2) $83M $3.97B(2) $605M $74M $3.74B $69M $65M 13.1% 12.3% 10.7% 11.0% 2022 2023 2022 2023 2022 2023 2022 2023 GAAP GAAP ADJ(1) ADJ(1) 3.8% INCREASE 6.3% INCREASE YoY (9.6% INCREASE EX-CURRENCY) (9.3% INCREASE EX-CURRE
Slide 13: 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 CASH FR OM OP S LEVER AGE Share $296M $178M repurchases $161M ($25M) Leverage Leverage 2022 2023 1Q22 1Q23 2023 2022 59% cash conv (8%) cash
Slide 14: 2023 outlook and guidance
STRONG MOMENTUM ACROSS THE PORTFOLIO WABTEC 2023 outlook EQUIPMENT Higher deliveries of locomotives and guidance COMPONENTS Higher railcar build and improved demand for industrial components SERVICES Continued demand for reliable, efficient power and higher deliveries of MODs … partially offset by u
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 Strong performance to start the year despite significant macro 01 volatility + 250-300 BPS MARGIN EXPANSION Productivity driven by continuous cost improvement combined with 02 initial realization of Integration 2.0 savin
Slide 16: Income statement
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION Appendix A ( 1 of 2) Income CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022 (AMOUNTS IN MILLIONS EXCEPT PER SHARE DATA) (UNAUDITED) statement Three Months Ended March 31, 2023 2022 Net sales $ 2,194 $ 1,92
Slide 17: Income statement (cont.)
Appendix A ( 2 of 2) Income statement WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION (cont.) CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022 (AMOUNTS IN MILLIONS EXCEPT PER SHARE DATA) (UNAUDITED) Three Months Ended March 31, 2023 2022 Segment Informat
Slide 18: Balance sheet
Balance Appendix B sheet WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) March 31, 2023 December 31, 2022 In millions Cash, cash equivalents and restricted cash $ 417 $ 541 Receivables, net 1,576 1,519 Inventories 2,228 2,034 Other current assets 275
Slide 19: Cash flow
Appendix C Cash flow WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Three Months Ended March 31, 2023 2022 In millions Operating activities Net income $ 173 $ 150 Non-cash expense 124 122 Receivables (51) 93 Inventories (188) (137) Account
Slide 20: EPS and non-GAAP Reconciliation
Appendix D EPS 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 financial measures
Slide 21: 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 22: Sales by product line
Appendix F Sales by product line WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION SALES BY PRODUCT LINE (UNAUDITED) Three Months Ended March 31, In millions 2023 2022 Freight Segment Equipment $ 393 $ 274 Components 279 229 Digital Intelligence 187 153 Services 707 666 Total Freight Segment $ 1,566 $
Slide 23: Segment gross margin & operating margin reconciliation
Segment gross margin & Appendix G operating margin WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION reconciliation RECONCILIATION OF REPORTED RESULTS TO ADJUSTED RESULTS - BY SEGMENT (UNAUDITED) Three Months Ended March 31, 2023 2022 Income from Income from In millions Gross Profit Operations Gross P
Slide 24: 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 March 31, Freight Transit Consolidated 2022 Net Sales $ 1,322 $ 605 $ 1,927 Acquisitions 21 - 21 Foreign Exchange (21) (35) (56)
Slide 25: Cash conversion reconciliation
Appendix I Cash conversion 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. N
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