Slide 1: Wabtec: Investor Presentation
/// Wabtec: Investor Presentation September 10, 2018
Slide 2: Disclaimer / Forward-Looking Statements: Additional Information
/// 1 /// DISCLAIMER / FORWARD-LOOKING STATEMENTS Additional Information and Where to Find It Westinghouse Air Brake Technologies (“Wabtec”) has filed a shelf registration statement (including a prospectus) with the U.S. Securities and Exchange Commission (“SEC”). Any offering of securities will be
Slide 3: Disclaimer / Forward-Looking Statements: Caution Concerning Forward-Looking Statements
/// 2 /// DISCLAIMER / FORWARD-LOOKING STATEMENTS Caution Concerning 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
Slide 4: Today's Presenters & Agenda
/// 3 /// GE Transportation Transaction Overview Wabtec Business Update GE Transportation Business Overview GE Transportation Transaction Rationale Financial Overview TODAY’S PRESENTERS & AGENDA 1 5 2 3 4 Pat Dugan Executive VP & CFO Mondher Bach VP Finance, Global Treasury Presenters Agenda
Slide 5: GE Transportation Transaction Overview
/// GE TRANSPORTATION TRANSACTION OVERVIEW
Slide 6: Structure & Consideration
/// 5 /// 1 Based on Wabtec undisturbed share price of $83.79 on 19-Apr-2018, the last unaffected trading day prior to media speculation regarding a potential transaction, and Wabtec fully diluted share count. Wabtec’s share price has increased significantly since then. 2 Calculated on a fully-dilut
Slide 7: Diversified, Global Leader in Transportation and Logistics
/// 6 /// 1 Adj. EBIT is a non-GAAP metric. Please refer to “Non-GAAP Reconciliation” for reconciliation. 2 Represents Wabtec's Pro Forma Net Sales. See Wabtec's Unaudited Pro Forma Condensed Combined Statements filed as Exhibit 99.3 on Form 8-K filed with the SEC on September 10, 2018. Diversified,
Slide 8: Wabtec Business Update
/// WABTEC BUSINESS UPDATE
Slide 9: Wabtec Q2 2018 Highlights
/// 8 /// WABTEC Q2 2018 HIGHLIGHTS Source: Wabtec public filings and earnings transcript 1 Operating Profit (excl. restructuring) is a non-GAAP metric. Please refer to “Non-GAAP Reconciliation” for reconciliation. Performance Overview Revenue of $1.1b vs. Q2 2017 of $0.9B (↑19% YoY) Operating Pro
Slide 10: Recap: Wabtec At-A-Glance
/// 9 /// RECAP: WABTEC AT-A-GLANCE Business Overview Portfolio Highlights Leading, global provider of equipment, components and value-added services for transit and freight rail History of innovation dating back to 1869 when George Westinghouse invented air brakes – 3,000+ active patents World-c
Slide 11: Update on Wabtec's Segments
/// 10 /// UPDATE ON WABTEC’S SEGMENTS Group Brakes & Safety Energy & Comfort Access & Mobility Transit Services Two Reporting Segments and Six Operational Groups 2017 Sales of $1.4B | 18% Operating Margin 2017 Sales of $2.5B | 8% Operating Margin Group Freight Electronics 1 2 3 4 5 6
Slide 12: Update on Wabtec's Segments: Freight
/// 11 /// UPDATE ON WABTEC’S SEGMENTS Freight Electronics Description Products & Services Illustrative Examples Manufactures and services components for locomotives, freight cars and railroad track and signal products Provides electronic products and related services to optimize performance, increa
Slide 13: Update on Wabtec's Segments: Transit
/// 12 /// UPDATE ON WABTEC’S SEGMENTS Energy & Comfort Description Products & Services Provides products related to passenger comfort railway, energy management railway and industry, as well as information and safety railway HVAC Sanitation Information & Safety Power Collection Relays, Train Protec
Slide 14: GE Transportation Business Overview
/// GE TRANSPORTATION BUSINESS OVERVIEW
Slide 15: GE Transportation Q2 2018 Highlights
/// 14 /// GE TRANSPORTATION Q2 2018 HIGHLIGHTS Source: GE public filings and earnings transcript Performance Overview Revenue of $942M Segment Profit of $155M Segment Profit Margin of 16.5% Orders of $1.1B vs. Q2 2017 Orders of $0.8B (↑42% YoY) Backlog of $18.3B vs. Q2 2017 Backlog of $18.0B (
Slide 16: GE Transportation Is a Leader in the Freight Rail Industry
/// 15 /// •Driving efficiency and productivity for customers •Portfolio spans ecosystem … port, yard, rail network •Proven outcomes … ~10% fuel savings, 10%+ increase in network velocity, ~40% increase in rail volume •Maintain and upgrade fleet through asset lifecycle •~70% installed base under ser
Slide 17: Attractive Point in Cycle, Well Positioned for Industry Rebound
/// 16 /// ATTRACTIVE POINT IN CYCLE, WELL POSITIONED FOR INDUSTRY REBOUND GE Fleet Age Pyramid Contractual Coverage AC EVO AC4400 Dash 9 Dash 8 Dash 7 ~900 units Avg. 3 yrs ~7,900 units Avg. 5 yrs ~1,300 units Avg. 8 yrs ~4,800 units Avg. 10 yrs ~4,400 units Avg. 15 yrs ~2,200 units Avg. 20 yrs ~1,
Slide 18: GE Transportation Strengths
/// 17 /// GE TRANSPORTATION STRENGTHS 1 Adj. EBITDA is a non-GAAP metric. Please refer to “Non-GAAP Reconciliation” for reconciliation. Leading global freight rail provider with an approximately 23K locomotive installed base across both developed and emerging markets Growing services business wit
Slide 19: GE Transportation Customer Landscape
/// 18 /// GE TRANSPORTATION CUSTOMER LANDSCAPE Established Emerging Americas International Indonesia Australia Kazakhstan Pakistan Brazil Australia Brazil Australia South Africa Angola Nigeria Brazil Turkey Egypt Ukraine India Thailand Cuba Sri Lanka Taiwan Cameroon
Slide 20: GE Transportation Transaction Rationale
/// GE TRANSPORTATION TRANSACTION RATIONALE
Slide 21: GE Transportation Strategic Rationale
/// 20 /// GE TRANSPORTATION STRATEGIC RATIONALE Diversified, Global Leader in Transportation and Logistics 1 Electronics and Digital Technologies Leading to Autonomous Operations Opportunity for Recurring Revenue Growth in High-Margin Aftermarket and Services Compelling Pro Forma Financial Profile
Slide 22: Diversified, Global Leader in Transportation and Logistics
/// 21 /// DIVERSIFIED, GLOBAL LEADER IN TRANSPORTATION AND LOGISTICS Combined Entity1 Revenue by Segment Revenue by Geography + Freight 36% Transit 64% $3.9B. United States 34% ROW 66% $3.9B. United States ROW FY17A Sales: FY17A Sales: United States 56% ROW 44% $3.9B 1 Freight Transit Complementary
Slide 23: Electronics and Digital Technologies Leading to Autonomous Operation
/// 22 /// Trip Optimizer: 7-13% in fuel savings; ~200M gallons of fuel saved/year Smart HPT: Incremental 5-8% fuel saved by automatically managing locomotive consist Locotrol Distributed Power: Enables operation of long, heavy and fuel-efficient trains. Fuel Savings 3%; Crew savings 25% Movemen
Slide 24: Opportunity for Recurring Revenue Growth in High-Margin Aftermarket and Services
/// 23 /// OPPORTUNITY FOR RECURRING REVENUE GROWTH IN HIGH-MARGIN AFTERMARKET AND SERVICES Combined entity will be a leading global freight and transit rail provider with installed base of >23,000 locomotives and content on virtually all locomotives and freight cars in NAFTA, enabling opportunities
Slide 25: Highly Compelling Pro Forma Financial Profile
/// 24 /// HIGHLY COMPELLING PRO FORMA FINANCIAL PROFILE … ATTRACTIVE POINT IN CYCLE 4 •Transaction expected to create an ~$8B revenue company with significant scale, higher margins and strong cash flow •Approximately $250M of run-rate operating synergies expected to be achieved by year 4 •Expected
Slide 26: Significant Operating Synergy Potential and Tax Benefit Drive Value Creation
/// 25 /// SIGNIFICANT OPERATING SYNERGY POTENTIAL AND TAX BENEFIT DRIVE VALUE CREATION Experienced Cross-Functional Team To Drive Integration and Synergies 5 Key Areas of Opportunity – Operating Synergies ~$250M of Run-Rate Operating Synergies SG&A Savings Sourcing Savings Facility Consolidation IT
Slide 27: Financial Overview
/// FINANCIAL OVERVIEW
Slide 28: Clear Financial Policy
/// 27 /// CLEAR FINANCIAL POLICY Committed to solid investment grade rating Excess cash flow to be applied toward prudent debt reduction Maintain stable dividend policy Long-term leverage target of 2.5x or less total debt / Adj. EBITDA1 1 2 4 3 1 Adj. EBITDA is a non-GAAP metric. Please refer to “N
Slide 29: Strong Free Cash Flow Profile Enabling Rapid Deleveraging
/// 28 /// STRONG FREE CASH FLOW PROFILE ENABLING RAPID DELEVERAGING Wabtec remains committed to paying its quarterly 12c per share dividend to all shareholders Top priority for deployment of excess cash will be debt reduction to achieve target leverage levels Wabtec expects to remain investment
Slide 30: Historical Financial Performance: Revenue and Adj. EBITDA
/// 29 /// HISTORICAL FINANCIAL PERFORMANCE Wabtec & GE Transportation | Revenue and Adj. EBITDA (US$ in Millions) Revenue Adj. EBITDA1 Wabtec Wabtec GE Transportation GE Transportation2 1 Adj. EBITDA is a non-GAAP metric. Please refer to “Non-GAAP Reconciliation” for reconciliation 2 Calculated as
Slide 31: Historical Financial Performance (Cont'd): Capex and Cash Flow
/// 30 /// HISTORICAL FINANCIAL PERFORMANCE (CONT’D) Wabtec & GE Transportation | Capital Expenditure and Free Cash Flow (US$ in Millions) Capital Expenditure Cash Flow from Operating Activities Wabtec1 Wabtec GE Transportation2 GE Transportation 1 Listed as “Purchase of property, plant and equipmen
Slide 32: Summary Recap
/// 31 /// New Leader in Transportation/ Logistics Attractive Point in Cycle Robust Free Cash Flow Commitment to IG Ratings Disciplined deleveraging plan to < 2.5x Thank You SUMMARY RECAP
Slide 33: Non-GAAP Reconciliation
/// NON-GAAP RECONCILIATION
Slide 34: Wabtec 2015–2017 Non-GAAP Reconciliation
/// 33 /// WABTEC 2015 – 2017 NON-GAAP RECONCILIATION (US$ in millions) Set forth below is the calculation of the non-GAAP performance measures included in this presentation. We believe that these measures provide useful supplemental information to assess our operating performance and to evaluate pe
Slide 35: Wabtec Q2 2017 & 2018 Non-GAAP Reconciliation
/// 34 /// WABTEC Q2 2017 & 2018 NON-GAAP RECONCILIATION (US$ in millions) Set forth below is the calculation of the non-GAAP performance measures included in this presentation. We believe that these measures provide useful supplemental information to assess our operating performance and to evaluate
Slide 36: GET 2015–2017 Non-GAAP Reconciliation
/// 35 /// GET 2015 – 2017 NON-GAAP RECONCILIATION (US$ in millions) Note: GET 2017 adj. EBIT and adj. EBIT margin differ from figures presented at the time of merger announcement due to the subsequent completion of the audited carve-out financials and differences in actual corporate allocations, un
Slide 37: Unaudited Pro Forma Condensed Combined Statement of Income Data
/// 36 /// UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME DATA (US$ in millions) Note: See Wabtec's Unaudited Pro Forma Condensed Combined Statements filed as Exhibit 99.3 on Form 8-K filed with the SEC on September 10, 2018. Note: The following table presents the unaudited pro forma com