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: Second Quarter 2024 Wabtec Financial Results & Company Highlights
S E C O N D Q U A R T ER 2 0 2 4 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
W A B T E C TODAY’S PARTICIPANTS J O H N O L I N Executive Vice President & Chief Financial Officer R A F A E L S A N T A N A President & Chief Executive Officer K Y R A Y A T E S Vice President, Investor Relations
Slide 4: 2Q 2024 Overview
W A B T E C 4 2Q 2024 OVERVIEW Up 9.8% YOY$ 2 . 6 4 BS A L E S 1 9 . 3 % Adjusted 1 6 . 3 % G A A P O P E R A T I N G M A R G I N $ 1 . 9 6 Adjusted $ 1 . 6 4 G A A P E A R N I N G S P E R S H A R E $ 2 3 5 M C A S H F L O W F R O M O P E R A T I O N S ( 1 ) $ 7 . 3 3 B1 2 - M O N T H B A C K L O G
Slide 5: 2024 Market Expectations
W A B T E C 5 -8.8% 0.9% 4.8% 4.6% -2.3% Brazil China India South Africa Kazakhstan2020 2021 2022 2023 2024F 33K 30K 41K 45K 38K 2024 MARKET EXPECTATIONS F R E I G H T +NA Carloads Active Locomotive Fleet + International Freight Volumes -NA Railcar Deliveries +/Mining Commodities T R A N S I T +Infr
Slide 6: Executing on Our Value Creation Framework
W A B T E C EXECUTING ON OUR VALUE CREATION FRAMEWORK DRIVERS OF PORTFOLIO GROWTH RECENT WINS Won a multi-year T4 locomotive order in NA for >$600 million 1st multi-year service contract with Vale for $244 million Strategic order for 15 modernizations from Pakistan Railway Green Friction braking sol
Slide 7: 2Q 2024 Financial Summary
W A B T E C 7 0 0.5 1 1.5 2 2.5 3 Chart Title 2Q 2024 FINANCIAL SUMMARY 0 100 200 300 400 500 600 Category 1 Chart Title (1) Adjusted numbers represent non-GAAP financial measures. See Appendix for additional details and reconciliations INCREASED SALES, MARGIN EXPANSION AND EPS GROWTH 9.8% INCREASE
Slide 8: 2Q 2024 Sales
W A B T E C 8 2Q 2024 SALES (in millions) Y O Y2 Q 2 4P R O D U C T L I N E 36.4%$570Equipment 17.5%$322Components 2.1%$199Digital Intelligence 2.3%$829Services 13.1%$1,920Freight Segment 2.0%$724Transit Segment 9 . 8 %$ 2 , 6 4 4T O T A L S A L E S 2 Q K E Y D R I V E R S E Q U I P M E N T Higher l
Slide 9: 2Q 2024 Consolidated Gross Profit
W A B T E C 9 2Q 2024 CONSOLIDATED GROSS PROFIT ($ in millions) $ 7 3 1$ 7 2 32 0 2 3 G R O S S P R O F I T 30.4%30.1%% Gross Profit Margin ↑↑Volume ↑↑Mix/Pricing Raw Materials ↓↓Currency ↑↑Manufacturing/Other $ 8 8 0$ 8 7 42 0 2 4 G R O S S P R O F I T 33.3%33.0%% Gross Profit Margin GAAP Adjusted
Slide 10: 2Q 2024 Consolidated Operating Income
W A B T E C 10 2Q 2024 CONSOLIDATED OPERATING INCOME $395$3122 0 2 3 O P I N C O M E 16.4%12.9%% Operating Margin 149151Gross Profit (30)(31)SG&A (4)(4)Engineering -2Amortization $510$4302 0 2 4 O P I N C O M E 19.3%16.3%% Operating Margin O P M A R G I N B E N E F I T E D F R O M H I G H E R S A L
Slide 11: 2Q 2024 Freight Segment Performance
W A B T E C 11 0 1 2 3 4 5 6 Chart Title 0 0.5 1 1.5 2 2.5 Chart Title 2Q 2024 FREIGHT SEGMENT PERFORMANCE 0 50 100 150 200 250 300 350 400 450 500 Category 1 13.1% INCREASE (13.6% INCREASE EX-CURRENCY) SALES 2 0 2 3 2 0 2 4 2 0 2 3 GAAP 2 0 2 4 GAAP 2 0 2 3 ADJ(1) 2 0 2 4 ADJ(1) $269M 15.9% $391M 2
Slide 12: 2Q 2024 Transit Segment Performance
W A B T E C 12 0 0.5 1 1.5 2 2.5 Chart Title 0 100 200 300 400 500 600 700 800 Chart Title 2Q 2024 TRANSIT SEGMENT PERFORMANCE 0 10 20 30 40 50 60 70 80 90 100 Category 1 2.0% INCREASE (3.4% INCREASE EX-CURRENCY) SALES 2 0 2 3 2 0 2 4 2 0 2 3 GAAP 2 0 2 4 GAAP 2 0 2 3 ADJ(1) 2 0 2 4 ADJ(1) $68M 9.6%
Slide 13: Resilient Business Allows for Execution on Financial Priorities
W A B T E C 13 RESILIENT BUSINESS ALLOWS FOR EXECUTION ON FINANCIAL PRIORITIES Strong balance sheet and financial position … liquidity of $2.09B FOCUSED ON CASH CONVERSION(1) YTD CASH FROM OPS DISCIPLINED CAPITAL ALLOCATION S T R O N G F I N A N C I A L P E R F O R M A N C E ; I N V E S T I N G F O
Slide 14: 2024 Updated Financial Guidance
W A B T E C 14 2024 Updated F inanc ial Guidance ( 1 , 2 ) - Adjusted operating margin up - Favorable productivity/absorption - Benefits of Integration 2.0/Portfolio Optimization - Lower SG&A & Engineering expenses as % of sales g K E Y A S S U M P T I O N S - Tax rate ~24.5% (previously 25%) - Cape
Slide 15: Key Takeaways
W A B T E C 15 KEY TAKEAWAYS (1) Long-term guidance as of March 9, 2022 (on an adjusted earnings basis) Continued momentum across the portfolio and strong order pipeline and backlog, internationally and in North America Positive productivity driven by continuous cost improvement combined with realiz
Slide 16: Appendix A: Income Statement
APPENDIX A ( 1 of 2)INCOME STATEMENT 2024 2023 2024 2023 Net sales 2,644$ 2,407$ 5,141$ 4,601$ Cost of sales (1,770) (1,684) (3,452) (3,213) Gross profit 874 723 1,689 1,388 Gross profit as a % of Net Sales 33.0% 30.1% 32.8% 30.2% Selling, general and administrative expenses (316) (285) (597) (548)
Slide 17: Income Statement (Cont.): Segment Information
INCOME STATEMENT (CONT.) APPENDIX A ( 2 of 2) Segment Information Freight Net Sales 1,920$ 1,697$ 3,744$ 3,253$ Freight Income from Operations 391$ 269$ 759$ 495$ Freight Operating Margin 20.4% 15.9% 20.3% 15.2% Transit Net Sales 724$ 710$ 1,397$ 1,348$ Transit Income from Operations 82$ 68$ 156$ 13
Slide 18: Appendix B: Balance Sheet
BALANCE SHEET APPENDIX B 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 267 267 Total current assets 5,027 4,855 Property, plant and equipment, net 1,439 1,485 Goodwill 8,
Slide 19: Appendix C: Cash Flow
CASH FLOW APPENDIX C 2024 2023 In millions Operating activities Net income 568$ 366$ Non-cash expense 246 245 Receivables (146) (150) Inventories (120) (248) Accounts Payable 93 (5) Other assets and liabilities (72) (118) Net cash provided by operating activities 569 90 Net cash used for investing a
Slide 20: EPS and Non-GAAP Reconciliation (1 of 3)
EPS AND NON-GAAP RECONCILIATION APPENDIX D (1 of 3) 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 Resu
Slide 21: EPS and Non-GAAP Reconciliation (2 of 3)
EPS AND NON-GAAP RECONCILIATION APPENDIX D (2 of 3) 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 Resu
Slide 22: EPS and Non-GAAP Reconciliation (3 of 3)
EPS AND NON-GAAP RECONCILIATION APPENDIX D (3 of 3) 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 Resu
Slide 23: Appendix E: EBITDA Reconciliation
EBITDA RECONCILIATION APPENDIX E Wabtec Corporation 2024 Q2 EBITDA Reconciliation (in millions) Reported Income Other Income Depreciation & Restructuring Adjusted from Operations (Expense) Amortization Costs EBITDA Consolidated Results $430 $4 $116 $550 $5 $555 Wabtec Corporation 2024 Q2 YTD EBITDA
Slide 24: Appendix F: Sales by Product Line
SALES BY PRODUCT LINE APPENDIX F In millions 2024 2023 Freight Segment Equipment 570$ 418$ Components 322 274 Digital Intelligence 199 195 Services 829 810 Total Freight Segment 1,920$ 1,697$ Transit Segment Original Equipment Manufacturer 310$ 334$ Aftermarket 414 376 Total Transit Segment 724$ 710
Slide 25: Segment Gross Profit and Operating Income Reconciliation
In millions Gross Profit Income from Operations Gross Profit Income from Operations Gross Profit Income from Operations Gross Profit Income from Operations Freight Segment Reported Results 669$ 391$ 538$ 269$ 1,294$ 759$ 1,016$ 495$ Freight Segment Reported Margin 34.8% 20.4% 31.8% 15.9% 34.6% 20.3%
Slide 26: Appendix H: Segment Sales Reconciliation
SEGMENT SALES RECONCILIATION APPENDIX H In millions Freight Transit Consolidated 2023 Net Sales 1,697$ 710$ 2,407$ Acquisitions 34 - 34 Foreign Exchange (8) (10) (18) Organic 197 24 221 2024 Net Sales 1,920$ 724$ 2,644$ Change ($) 223 14 237 Change (%) 13.1% 2.0% 9.8% Freight Transit Consolidated 20
Slide 27: Appendix I: Cash Conversion Reconciliation
APPENDIX ICASH CONVERSION RECONCILIATION Wabtec Corporation 2024 Q2 Cash Conversion Calculation (in millions) Reported Cash from Operations Consolidated Results $235 $291 $118 57% Wabtec Corporation 2024 Q2 YTD Cash Conversion Calculation (in millions) Reported Cash from Operations Consolidated Resu
Westinghouse Air Brake Technologies — Q2 2024 Earnings Presentation on 6ix