UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): February 18, 20 20 (
(Exact Name of Registrant as Specified in Its Charter)
(State or other Jurisdiction
of Incorporation)
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(Former Name or Former Address, if Changed Since Last Report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Securities registered pursuant to Section 12(b) of the Act:
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Name of Exchange on which registered | ||
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02 | Results of Operations and Financial Condition. |
On February 18, 2020, Westinghouse Air Brake Technologies Corporation (the “Company”) issued a press release reporting, among other things, the Company’s 2019 fourth quarter results. A copy of this press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated into this Item 2.02 by reference. The Company is also furnishing an investor presentation relating to its fourth quarter of 2019 (the “Presentation”), which will be used by the management team for presentations to investors and others. A copy of the Presentation is attached hereto as Exhibit 99.2 and incorporated into this Item 2.02 by reference. The Presentation is also available on the Company’s web site at www.wabteccorp.com.
In accordance with General Instruction B.2 of Form 8-K, the information furnished pursuant to this Item 2.02 in this Current Report on Form 8-K, including Exhibits 99.1 and 99.2, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.
| Item 7.01. | Regulation FD Disclosure. |
On February 18, 2020, the Company issued a press release which, among other things, provided earnings guidance for fiscal year 2020. A copy of the press release is attached to this report as Exhibit 99.1 and the paragraph under the heading “2020 Financial Guidance and Pro Forma Financial Information” which discusses 2020 guidance is incorporated into this Item 7.01 by reference. The Company also furnished a Presentation relating to its fourth quarter of 2019, which is incorporated into this Item 7.01 by reference. A copy of the Presentation is attached to this report as Exhibit 99.2.
In accordance with General Instruction B.2 of Form 8-K, the information furnished pursuant to this Item 7.01 in this Current Report on Form 8-K, including Exhibits 99.1 and 99.2, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.
| Item 8.01. | Other Events |
On February 7, 2020, the Board of Directors of the Company authorized and approved a share repurchase program for up to $500 million of the currently outstanding shares of the Company’s common stock. Under the stock repurchase program, the Company intends to repurchase shares through open market purchases, privately negotiated transactions or otherwise in accordance with applicable federal securities laws, including Rule 10b-18 of the Securities Exchange Act of 1934. A copy of the press release outlining this program is attached as Exhibit 99.3 to this Current Report on Form 8-K and is incorporated into this Item 8.01 by reference.
In accordance with General Instruction B.2 of Form 8-K, the information furnished pursuant to this Item 8.01 in this Current Report on Form 8-K, including Exhibit 99.3, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.
| Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits.
The following exhibits are furnished with this report on Form 8-K:
| Exhibit |
Description | |||
| 99.1 |
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| 99.2 |
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| 99.3 |
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| 104 |
Cover Page Interactive Data File (embedded within the Inline XBRL document) | |||
Caution Concerning Forward-Looking Statements
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 Litigation Reform Act of 1995, including statements regarding the acquisition by Wabtec of GE Transportation (the “GE Transportation merger”) and statements regarding Wabtec’s expectations about future sales and earnings. All statements, other than historical facts, including statements regarding the expected benefits of the GE Transportation merger, including anticipated synergy benefits; statements regarding Wabtec’s plans, objectives, expectations and intentions; legal, economic and regulatory conditions; and any assumptions underlying any of the foregoing, are forward-looking statements. Forward-looking statements concern future circumstances and results and other statements that are not historical facts and are sometimes identified by the words “may,” “will,” “should,” “potential,” “intend,” “expect,” “endeavor,” “seek,” “anticipate,” “estimate,” “overestimate,” “underestimate,” “believe,” “could,” “project,” “predict,” “continue,” “target” or other similar words or expressions. Forward-looking statements are based upon current plans, estimates and expectations that are subject to risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. The inclusion of such statements should not be regarded as a representation that such plans, estimates or expectations will be achieved. Important factors that could cause actual results to differ materially from such plans, estimates or expectations include, among others, (1) unexpected costs, charges or expenses resulting from the GE Transportation merger; (2) uncertainty of Wabtec’s expected financial performance; (3) failure to realize the anticipated benefits of the GE Transportation merger, including as a result of integrating GE Transportation into Wabtec; (4) Wabtec’s ability to implement its business strategy; (5) difficulties and delays in achieving revenue and cost synergies; (6) inability to retain and hire key personnel; (7) evolving legal, regulatory and tax regimes; (8) changes in general economic and/or industry specific conditions, including the impacts of tax and tariff programs, industry consolidation and changes in the financial condition or operating strategies of our customers; (9) changes in the expected timing of projects; (10) a decrease in freight or passenger rail traffic; (11) an increase in manufacturing costs; (12) actions by third parties, including government agencies; and (13) other risk factors as detailed from time to time in Wabtec’s reports filed with the SEC, including Wabtec’s annual report on Form 10-K, periodic quarterly reports on Form 10-Q, periodic current reports on Form 8-K and other documents filed with the SEC. The foregoing list of important factors is not exclusive. Any forward-looking statements speak only as of the date of this communication. Wabtec does not undertake any obligation to update any forward-looking statements, whether as a result of new information or development, future events or otherwise, except as required by law. Readers are cautioned not to place undue reliance on any of these forward-looking statements.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION | ||
| By: |
/s/ Patrick D. Dugan | |
| Patrick D. Dugan | ||
| Executive Vice President and Chief Financial Officer | ||
Date: February 18, 2020
Exhibit 99.1
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News Release |
Wabtec Reports Strong 4Q and Full Year 2019 Results
| • | Delivered Full-Year Operating Cash Flow of Over $1.0 Billion |
| • | Fourth Quarter Reported GAAP Earnings Per Share of $0.71; Adjusted EPS of $1.04. Full-Year GAAP Earnings Per Share of $1.84; Adjusted EPS of $4.17 |
| • | Fourth Quarter Reported GAAP and Adjusted Sales of $2.4 Billion; Full-Year GAAP sales of $8.2 billion; Full-Year Adjusted Sales of $8.3 Billion |
| • | Margin Expansion and Strong Cash Flow Expected in 2020 Following Successful Year of Integration |
Pittsburgh, PA, February 18, 2020 – Wabtec Corporation (NYSE: WAB) today reported strong results for the fourth quarter and full year 2019 and issued 2020 financial guidance.
Rafael Santana, Wabtec’s president and chief executive officer, said: “Wabtec delivered strong results for the fourth quarter, concluding a solid year for the company. While we faced increased challenges in the North American freight market, the full year results demonstrate the strength of our portfolio through increased global scale, a more diversified business mix and significant installed base.
“Our multi-year backlog, combined with growth opportunities in services, transit and international markets puts Wabtec in a solid position to manage through the current freight rail cycle. We continue to make significant progress in our synergy and cost initiatives and expect margin expansion in both segments in 2020. We remain confident that we will exceed our synergy target of $250 million before 2022.”
2019 Financial Summary
In the fourth quarter of 2019, Wabtec had cash from operations of $448 million, sales of $2.4 billion and GAAP earnings per diluted share of $0.71. Adjusted earnings per diluted share were $1.04 and included $0.06 for after-tax non-cash policy harmonization and excluded after-tax expenses of $0.29 for restructuring, transaction and litigation costs, offset by $0.02 from increased tax expense for non-deductible transaction costs (see reconciliation table).
For the full year of 2019, Wabtec had cash from operations of $1.0 billion, sales of $8.2 billion and GAAP earnings per diluted share of $1.84. Adjusted earnings per diluted share were $4.17 and included $0.39 for after-tax non-cash policy harmonization and excluded after-tax expenses of $1.94 as follows: $0.79 for one-time, non-cash purchase price accounting charges; $1.08 for restructuring, transaction and litigation costs and $0.07 from increased tax expense for non-deductible transaction costs (see reconciliation table).
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News Release |
Backlog remains strong, despite a challenging market. At December 31, Wabtec’s total, multi-year backlog was $22.4 billion, and its 12-month backlog was $5.6 billion, which was higher than at September 30 as increased OEM orders in both Freight and Transit more than offset changes in foreign currency exchange rates.
2020 Financial Guidance
| • | Wabtec issued 2020 GAAP sales guidance of about $8.7 billion, GAAP income from operations guidance of about $1.1 billion and GAAP earnings per diluted share guidance to between $3.20 to $3.50. Wabtec issued guidance for EBITDA, which Wabtec defines as income from operations plus depreciation and amortization, of about $1.6 billion. |
| • | Wabtec issued guidance for adjusted income from operations of about $1.4 billion and adjusted EBITDA of about $1.6 billion. Wabtec also issued 2020 guidance for adjusted earnings per diluted share to between $4.50 to $4.80. The adjusted guidance excludes estimated expenses for recurring purchase price accounting amortization. Excluding these expenses, the company’s adjusted operating margin target for the full year is about 16% and its adjusted effective tax rate for the full year is expected to be about 25.5%. With aggressive cost actions and synergies stemming from the Wabtec and GE Transportation merger ahead of plan, we expect to see a net synergy benefit of over $150 million in 2020. |
| • | For full year 2020, Wabtec expects GAAP cash flow from operations to be about $900 million and to include approximately $100 million of cash outflows related to prior year restructuring and litigation costs. |
| • | Wabtec anticipates 2020 first quarter sales, adjusted net income, adjusted EBITDA and adjusted earnings per diluted share to be lower when compared to the remainder of 2020, in line with expected first quarter seasonality and project scheduling, with improvement expected through the rest of the year. |
2019 Fourth Quarter Consolidated Results
| • | GAAP sales were $2.4 billion. The increase compared to the year-ago quarter resulted mainly from sales from GE Transportation and higher transit sales partially offset by lower sales in freight components and unfavorable foreign exchange rates. |
| • | Income from operations was $226 million (9.5% of GAAP sales) and adjusted income from operations was $313 million (13.2% of adjusted sales) which was negatively impacted by original equipment (OE) mix and certain transit projects offset somewhat by timing of policy harmonization and locomotive services. Adjusted income from operations included $16 million for non-cash, accounting policy harmonization but excluded pre-tax expense of $71 million for restructuring, transaction, and litigation costs (see reconciliation table). |
| • | Net interest expense was $58 million, with adjusted net interest expense of $55 million. |
| • | Income tax expense was $38 million for an effective tax rate of 21.6%. Excluding the net tax benefit from restructuring, transaction costs related to the GE Transportation merger and litigation costs adjusted income tax expense was $63 million for an adjusted effective tax rate of about 23.8%. |
| • | Earnings per diluted share were $0.71 and adjusted earnings per diluted share were $1.04 (see reconciliation table). Adjusted earnings per diluted share included $0.06 for after-tax non-cash policy harmonization and excluded after-tax expenses of $0.29 for restructuring, transaction and litigation costs, offset by $0.02 from increased tax expense for non-deductible transaction costs (see reconciliation table). |
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News Release |
| • | In addition to the expenses noted above, the company also had after-tax expense of $0.26 per diluted share for non-cash, recurring purchase price accounting charges which is not added back to adjusted earnings per diluted share. |
| • | EBITDA, which Wabtec defines as income from operations plus depreciation and amortization, was $337 million and adjusted EBITDA was $424 million. Adjusted EBITDA included $16 million for policy harmonization and excluded pre-tax expenses of $71 million for restructuring, transaction and litigation costs (see reconciliation table). |
2019 Fourth Quarter Segment Results
| • | Freight segment sales of $1.7 billion increased by 296% from the year-ago quarter or $1.2 billion; the increase resulted from acquisitions of $1.3 billion which was partially offset by an organic decrease of $22 million and unfavorable changes in foreign currency exchange rates of $2 million. Freight segment organic sales were negatively impacted by lower sales in freight car components. |
| • | Freight segment income from operations of $239 million (or 14.3% of segment sales) increased from the year-ago quarter by $164 million mainly as a result of acquisitions. Freight segment income from operations was reduced by $31 million due to the policy harmonization, restructuring, transaction and litigation expenses noted. Excluding those items, Freight segment adjusted income from operations as a percent of adjusted sales was 16.1%. Adjusted Freight segment income from operations benefited from higher sales of electronics offset by negative seasonality in services. |
| • | Transit segment sales of $701 million increased by 1% from the year-ago quarter or $5 million. The increase resulted from organic sales growth of $19 million and acquisitions of $2 million, which was partially offset by unfavorable changes in foreign currency exchange rates of $16 million. Transit segment sales were positively impacted by growth in aftermarket components. |
| • | Transit segment income from operations of $39 million (or 5.6% of segment sales) increased 7% from the year-ago quarter. Excluding restructuring charges of $11 million, Transit segment adjusted income from operations as a percent of sales was 7.1%. Adjusted segment income from operations were impacted by lower margin refurbishment projects, partially offset by better performance in other Transit product areas. |
2019 Fourth Quarter Cash Flow Summary
| • | The company generated cash from operations of $448 million for the fourth quarter compared to cash from operations of $277 million in the year-ago quarter, with the increase resulting from higher financial results (net income plus net add-back for non-cash transactions in earnings) and improved working capital performance. At December 31, the company had cash and cash equivalents of $604 million and total debt of $4.4 billion. Total debt was about $316 million lower than at September 30 due to repayment of debt during the quarter. |
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News Release |
Conference Call Information
Wabtec will host a call with analysts and investors at 10 a.m., ET, today. To listen via webcast, go to Wabtec’s new website at www.WabtecCorp.com and click on “Events & Presentations” in the “Investor Relations” section. Also, an audio replay of the call will be available by calling 1-877-344-7529 or 1-412-317-0088 (access code: 10138395).
About Wabtec Corporation
Wabtec Corporation is a leading global provider of equipment, systems, digital solutions and value-added services for freight and transit rail. Drawing on nearly four centuries of collective experience across Wabtec, GE Transportation and Faiveley Transport, the company has unmatched digital expertise, technological innovation, and world-class manufacturing and services, enabling the digital-rail-and-transit ecosystems. Wabtec is focused on performance that drives progress, creating transportation solutions that move and improve the world. The freight portfolio features a comprehensive line of locomotives, software applications and a broad selection of mission-critical controls systems, including Positive Train Control (PTC). The transit portfolio provides highly engineered systems and services to virtually every major rail transit system around the world, supplying an integrated series of components for buses and all train-related market segments that deliver safety, efficiency and passenger comfort. Along with its industry-leading portfolio of products and solutions for the rail and transit industries, Wabtec is a leader in mining, marine, and industrial solutions. Based in Pittsburgh, PA, Wabtec has approximately 27,000 employees in facilities throughout the world. Visit: www.WabtecCorp.com
Information about non-GAAP Financial Information and Forward-Looking Statements
Wabtec’s earnings release and 2020 financial guidance mention certain non-GAAP financial performance measures, including adjusted sales, adjusted operating margin, EBITDA, adjusted EBITDA, adjusted effective tax rate, adjusted income from operations, adjusted interest and other expense and adjusted earnings per diluted share. Wabtec defines EBITDA as income from operations plus depreciation and amortization. While Wabtec believes these are useful supplemental measures for investors, they are not presented in accordance with GAAP. Investors should not consider non-GAAP measures in isolation or as a substitute for net income, cash flows from operations, or any other items calculated in accordance with GAAP. In addition, the non-GAAP financial measures included in this presentation have inherent material limitations as performance measures because they add back certain expenses incurred by the company to GAAP financial measures, resulting in those expenses not being taken into account in the applicable non-GAAP financial measure. Because not all companies use identical calculations, Wabtec’s presentation of non-GAAP financial measures may not be comparable to other similarly titled measures of other companies. Included in this release are reconciliation tables that provide details about how adjusted results relate to GAAP results.
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 Litigation Reform Act of 1995, including statements regarding the acquisition by Wabtec of GE Transportation (the “GE Transportation merger”) and statements regarding Wabtec’s expectations about future sales and earnings. All
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News Release |
statements, other than historical facts, including statements regarding the expected benefits of the GE Transportation merger, including anticipated synergy benefits; statements regarding Wabtec’s plans, objectives, expectations and intentions; legal, economic and regulatory conditions; and any assumptions underlying any of the foregoing, are forward-looking statements. Forward-looking statements concern future circumstances and results and other statements that are not historical facts and are sometimes identified by the words “may,” “will,” “should,” “potential,” “intend,” “expect,” “endeavor,” “seek,” “anticipate,” “estimate,” “overestimate,” “underestimate,” “believe,” “could,” “project,” “predict,” “continue,” “target” or other similar words or expressions. Forward-looking statements are based upon current plans, estimates and expectations that are subject to risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. The inclusion of such statements should not be regarded as a representation that such plans, estimates or expectations will be achieved. Important factors that could cause actual results to differ materially from such plans, estimates or expectations include, among others, (1) unexpected costs, charges or expenses resulting from the GE Transportation merger; (2) uncertainty of Wabtec’s expected financial performance; (3) failure to realize the anticipated benefits of the GE Transportation merger, including as a result of integrating GE Transportation into Wabtec; (4) Wabtec’s ability to implement its business strategy; (5) difficulties and delays in achieving revenue and cost synergies; (6) inability to retain and hire key personnel; (7) evolving legal, regulatory and tax regimes; (8) changes in general economic and/or industry specific conditions, including the impacts of tax and tariff programs, industry consolidation and changes in the financial condition or operating strategies of our customers; (9) changes in the expected timing of projects; (10) a decrease in freight or passenger rail traffic; (11) an increase in manufacturing costs; (12) actions by third parties, including government agencies; and (13) other risk factors as detailed from time to time in Wabtec’s reports filed with the SEC, including Wabtec’s annual report on Form 10-K, periodic quarterly reports on Form 10-Q, periodic current reports on Form 8-K and other documents filed with the SEC. The foregoing list of important factors is not exclusive. Any forward-looking statements speak only as of the date of this communication. Wabtec does not undertake any obligation to update any forward-looking statements, whether as a result of new information or development, future events or otherwise, except as required by law. Readers are cautioned not to place undue reliance on any of these forward-looking statements.
Wabtec Investor Contact
Kristine Kubacki, CFA / Kristine.Kubacki@wabtec.com / 412-450-2033
Wabtec Media Contact
Deia Campanelli / Deia.Campanelli@wabtec.com / 773-297-0482
Appendix A
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2019 AND 2018
(AMOUNTS IN MILLIONS EXCEPT PER SHARE DATA)
(UNAUDITED)
| Fourth Quarter 2019 |
Fourth Quarter 2018 |
For the Twelve Months 2019 |
For the Twelve Months 2018 |
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| Net sales |
$ | 2,368.4 | $ | 1,117.8 | $ | 8,200.0 | $ | 4,363.5 | ||||||||
| Cost of sales |
(1,693.5 | ) | (820.8 | ) | (5,922.0 | ) | (3,129.6 | ) | ||||||||
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| Gross profit |
674.9 | 297.0 | 2,278.0 | 1,233.9 | ||||||||||||
| Gross profit as a % of Net Sales |
28.5 | % | 26.6 | % | 27.8 | % | 28.3 | % | ||||||||
| Selling, general and administrative expenses |
(323.7 | ) | (168.0 | ) | (1,166.6 | ) | (633.2 | ) | ||||||||
| Engineering expenses |
(59.6 | ) | (25.9 | ) | (209.9 | ) | (87.5 | ) | ||||||||
| Amortization expense |
(65.5 | ) | (9.7 | ) | (238.4 | ) | (39.8 | ) | ||||||||
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| Total operating expenses |
(448.8 | ) | (203.6 | ) | (1,614.9 | ) | (760.5 | ) | ||||||||
| Operating expenses as a % of Net Sales |
18.9 | % | 18.2 | % | 19.7 | % | 17.4 | % | ||||||||
| Income from operations |
226.1 | 93.4 | 663.1 | 473.4 | ||||||||||||
| Income from operations as a % of Net Sales |
9.5 | % | 8.4 | % | 8.1 | % | 10.8 | % | ||||||||
| Interest expense, net |
(58.3 | ) | (36.3 | ) | (219.1 | ) | (112.2 | ) | ||||||||
| Other income (expense), net |
6.9 | 0.4 | 2.8 | 6.4 | ||||||||||||
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| Income from operations before income taxes |
174.7 | 57.5 | 446.8 | 367.6 | ||||||||||||
| Income tax expense |
(37.7 | ) | (22.7 | ) | (120.3 | ) | (75.9 | ) | ||||||||
| Effective tax rate |
21.6 | % | 39.5 | % | 26.9 | % | 20.6 | % | ||||||||
| Net income |
137.0 | 34.8 | 326.5 | 291.7 | ||||||||||||
| Less: Net loss attributable to noncontrolling interest |
(1.3 | ) | (0.5 | ) | 0.2 | 3.2 | ||||||||||
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| Net income attributable to Wabtec shareholders |
$ | 135.7 | $ | 34.3 | $ | 326.7 | $ | 294.9 | ||||||||
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| Earnings Per Common Share | ||||||||||||||||
| Basic | ||||||||||||||||
| Net income attributable to Wabtec shareholders |
$ | 0.71 | $ | 0.36 | $ | 1.91 | $ | 3.06 | ||||||||
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| Diluted | ||||||||||||||||
| Net income attributable to Wabtec shareholders |
$ | 0.71 | $ | 0.35 | $ | 1.84 | $ | 3.05 | ||||||||
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| Basic |
191.1 | 96.3 | 170.5 | 96.0 | ||||||||||||
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| Diluted |
191.6 | 96.7 | 177.3 | 96.5 | ||||||||||||
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| Segment Information | ||||||||||||||||
| Freight Net Sales |
$ | 1,667.1 | $ | 421.6 | $ | 5,441.4 | $ | 1,766.4 | ||||||||
| Freight Income from Operations |
$ | 239.2 | $ | 75.2 | $ | 642.9 | $ | 334.3 | ||||||||
| Freight Operating Margin |
14.3 | % | 17.8 | % | 11.8 | % | 18.9 | % | ||||||||
| Transit Net Sales |
$ | 701.3 | $ | 696.2 | $ | 2,758.6 | $ | 2,597.1 | ||||||||
| Transit Income from Operations |
$ | 39.0 | $ | 36.4 | $ | 214.4 | $ | 192.5 | ||||||||
| Transit Operating Margin |
5.6 | % | 5.2 | % | 7.8 | % | 7.4 | % | ||||||||
| Backlog Information (Note: 12-month is a sub-set of total) | December 31, 2019 | September 30, 2019 | ||||||||||||||
| Freight Total |
$ | 18,945.3 | $ | 18,571.5 | ||||||||||||
| Transit Total |
3,486.4 | 3,359.0 | ||||||||||||||
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| Wabtec Total |
$ | 22,431.7 | $ | 21,930.5 | ||||||||||||
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| Freight 12-Month |
$ | 3,911.0 | $ | 4,133.3 | ||||||||||||
| Transit 12-Month |
1,692.8 | 1,594.0 | ||||||||||||||
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| Wabtec 12-Month |
$ | 5,603.8 | $ | 5,727.3 | ||||||||||||
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Appendix B
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
| December 31, 2019 | December 31, 2018 | |||||||
| In millions |
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| Cash and cash equivalents |
$ | 604.2 | $ | 580.9 | ||||
| Restricted cash |
— | 1,761.4 | ||||||
| Receivables, net |
1,663.9 | 1,146.8 | ||||||
| Inventories |
1,773.1 | 844.9 | ||||||
| Current assets - other |
150.9 | 115.6 | ||||||
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| Total current assets |
4,192.1 | 4,449.6 | ||||||
| Property, plant and equipment, net |
1,655.8 | 563.8 | ||||||
| Goodwill |
8,360.6 | 2,396.5 | ||||||
| Other intangibles, net |
4,104.0 | 1,129.9 | ||||||
| Other long term assets |
573.7 | 109.4 | ||||||
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| Total assets |
$ | 18,886.2 | $ | 8,649.2 | ||||
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| Current liabilities |
$ | 3,258.0 | $ | 1,646.6 | ||||
| Long-term debt |
4,333.6 | 3,792.8 | ||||||
| Long-term liabilities - other |
1,301.0 | 340.7 | ||||||
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|||||
| Total liabilities |
8,892.6 | 5,780.1 | ||||||
| Shareholders’ equity |
9,956.5 | 2,865.2 | ||||||
| Non-controlling interest |
37.1 | 3.9 | ||||||
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| Total shareholders’ equity |
9,993.6 | 2,869.1 | ||||||
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| Total Liabilities and Shareholders’ Equity |
$ | 18,886.2 | $ | 8,649.2 | ||||
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Appendix C
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| Twelve Months Ended December 31, | ||||||||
| 2019 | 2018 | |||||||
| In millions |
||||||||
| Net cash provided by operating activities |
$ | 1,015.5 | $ | 314.7 | ||||
| Net cash used for investing activities |
(3,177.8 | ) | (147.3 | ) | ||||
| Net cash provided by financing activities |
461.5 | 1,978.1 | ||||||
| Effect of changes in currency exchange rates |
(37.3 | ) | (36.6 | ) | ||||
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| (Decrease) increase in cash |
(1,738.1 | ) | 2,108.9 | |||||
| Cash, cash equivalents, and restricted cash, beginning of period |
2,342.3 | 233.4 | ||||||
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| Cash, cash equivalents, and restricted cash, end of period |
$ | 604.2 | $ | 2,342.3 | ||||
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Appendix D
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 should be viewed in addition to, and not as an alternative for, Wabtec’s reported results prepared in accordance with GAAP.
Wabtec Corporation
Reconciliation of Reported Results to Adjusted Results
| (in millions) | Fourth Quarter 2019 Actual Results | |||||||||||||||||||||||||||||||||||||||
| Net Sales | Gross Profit |
Operating Expenses |
Income from Operations |
Interest & Other Exp |
Tax | Net Income | Minority Interest |
Wabtec Net Income |
EPS | |||||||||||||||||||||||||||||||
| Reported Results |
$ | 2,368.4 | $ | 674.9 | $ | (448.8 | ) | $ | 226.1 | $ | (51.4 | ) | $ | (37.7 | ) | $ | 137.0 | $ | (1.3 | ) | $ | 135.7 | $ | 0.71 | ||||||||||||||||
| Restructuring, Transaction, & Litigation costs |
— | 9.9 | 61.1 | 71.0 | 3.5 | (18.0 | ) | 56.5 | — | 56.5 | $ | 0.29 | ||||||||||||||||||||||||||||
| Policy Harmonization |
8.0 | 6.6 | 9.0 | 15.6 | — | (3.8 | ) | 11.8 | — | 11.8 | $ | 0.06 | ||||||||||||||||||||||||||||
| Tax on Transaction Costs |
— | — | — | — | — | (3.5 | ) | (3.5 | ) | — | (3.5 | ) | $ | (0.02 | ) | |||||||||||||||||||||||||
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| Adjusted Results |
$ | 2,376.4 | $ | 691.4 | $ | (378.7 | ) | $ | 312.7 | $ | (47.9 | ) | $ | (63.0 | ) | $ | 201.8 | $ | (1.3 | ) | $ | 200.5 | $ | 1.04 | ||||||||||||||||
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| Fully Diluted Shares Outstanding |
191.6 | |||||||||||||||||||||||||||||||||||||||
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Wabtec Corporation
Reconciliation of Reported Results to Adjusted Results
| (in millions) | Year-to-Date 2019 Actual Results | |||||||||||||||||||||||||||||||||||||||
| Net Sales | Gross Profit |
Operating Expenses |
Income from Operations |
Interest & Other Exp |
Tax | Net Income |
Minority Interest |
Wabtec Net Income |
EPS | |||||||||||||||||||||||||||||||
| Reported Results |
$ | 8,200.0 | $ | 2,278.0 | $ | (1,614.9 | ) | $ | 663.1 | $ | (216.3 | ) | $ | (120.3 | ) | $ | 326.5 | $ | 0.2 | $ | 326.7 | $ | 1.84 | |||||||||||||||||
| Restructuring, Transaction, & Litigation costs |
— | 38.3 | 191.5 | 229.8 | 25.0 | (61.6 | ) | 193.2 | — | 193.2 | $ | 1.08 | ||||||||||||||||||||||||||||
| One-time PPA |
— | 185.0 | — | 185.0 | — | (44.8 | ) | 140.2 | — | 140.2 | $ | 0.79 | ||||||||||||||||||||||||||||
| Policy Harmonization |
123.0 | 65.6 | 26.0 | 91.6 | — | (22.2 | ) | 69.4 | — | 69.4 | $ | 0.39 | ||||||||||||||||||||||||||||
| Tax on Transaction Costs |
— | — | — | — | — | 12.5 | 12.5 | — | 12.5 | $ | 0.07 | |||||||||||||||||||||||||||||
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| Adjusted Results |
$ | 8,323.0 | $ | 2,566.9 | $ | (1,397.4 | ) | $ | 1,169.5 | $ | (191.3 | ) | $ | (236.4 | ) | $ | 741.8 | $ | 0.2 | $ | 742.0 | $ | 4.17 | |||||||||||||||||
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| Fully Diluted Shares Outstanding |
177.3 | |||||||||||||||||||||||||||||||||||||||
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Appendix E
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 should be viewed in addition to, and not as an alternative for, Wabtec’s reported results prepared in accordance with GAAP.
Wabtec Corporation
2019 Q4 EBITDA Reconciliation
| (in millions) | Income from Operations |
Depreciation | Amortization | EBITDA (Income from Operations plus Depreciation & Amortization) |
||||||||||||
| Consolidated Q4 Actual As Reported |
$ | 226.1 | $ | 45.3 | $ | 65.5 | $ | 336.9 | ||||||||
| Restructuring, Transaction, & Litigation costs |
71.0 | — | — | 71.0 | ||||||||||||
| One-time PPA Charges |
— | — | — | — | ||||||||||||
| Policy Harmonization |
15.6 | — | — | 15.6 | ||||||||||||
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| Adjusted Results |
$ | 312.7 | $ | 45.3 | $ | 65.5 | $ | 423.5 | ||||||||
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Wabtec Corporation
2019 YTD EBITDA Reconciliation
| (in millions) | Income from Operations |
Depreciation | Amortization | EBITDA (Income from Operations plus Depreciation & Amortization) |
||||||||||||
| Consolidated YTD Actual As Reported |
$ | 663.1 | $ | 157.8 | $ | 238.4 | $ | 1,059.3 | ||||||||
| Restructuring, Transaction, & Litigation costs |
229.8 | — | — | 229.8 | ||||||||||||
| One-time PPA Charges |
185.0 | — | — | 185.0 | ||||||||||||
| Policy Harmonization |
91.6 | — | — | 91.6 | ||||||||||||
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| Adjusted Results |
$ | 1,169.5 | $ | 157.8 | $ | 238.4 | $ | 1,565.7 | ||||||||
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Appendix F
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION
NET SALES BY PRODUCT LINE
| In millions |
2019 | |||||||||||||||||||
| First Quarter |
Second Quarter |
Third Quarter |
Fourth Quarter |
Full Year | ||||||||||||||||
| Freight Segment |
||||||||||||||||||||
| Equipment |
$ | 267.1 | $ | 531.3 | $ | 263.3 | $ | 638.0 | $ | 1,699.7 | ||||||||||
| Components |
295.2 | 279.5 | 248.7 | 250.1 | 1,073.5 | |||||||||||||||
| Digital Electronics |
121.8 | 159.0 | 185.5 | 210.8 | 677.1 | |||||||||||||||
| Services |
231.4 | 556.5 | 635.0 | 568.2 | 1,991.1 | |||||||||||||||
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|||||||||||
| Total Freight Segment |
915.5 | 1,526.3 | 1,332.5 | 1,667.1 | 5,441.4 | |||||||||||||||
| Transit Segment |
||||||||||||||||||||
| Original Equipment Manufacturer |
327.3 | 335.7 | 309.8 | 313.8 | 1,286.6 | |||||||||||||||
| Aftermarket |
350.8 | 374.3 | 359.4 | 387.5 | 1,472.0 | |||||||||||||||
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| Total Transit Segment |
678.1 | 710.0 | 669.2 | 701.3 | 2,758.6 | |||||||||||||||
| 2018 | ||||||||||||||||||||
| First Quarter |
Second Quarter |
Third Quarter |
Fourth Quarter |
Full Year | ||||||||||||||||
| Freight Segment |
||||||||||||||||||||
| Equipment |
$ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
| Components |
294.2 | 302.1 | 290.5 | 282.3 | 1,169.1 | |||||||||||||||
| Digital Electronics |
110.2 | 130.3 | 126.0 | 107.6 | 474.1 | |||||||||||||||
| Services |
30.2 | 30.4 | 30.9 | 31.7 | 123.2 | |||||||||||||||
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| Total Freight Segment |
434.6 | 462.8 | 447.4 | 421.6 | 1,766.4 | |||||||||||||||
| Transit Segment |
||||||||||||||||||||
| Original Equipment Manufacturer |
272.8 | 298.9 | 300.0 | 322.3 | 1,194.0 | |||||||||||||||
| Aftermarket |
348.8 | 350.0 | 330.4 | 373.9 | 1,403.1 | |||||||||||||||
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| Total Transit Segment |
621.6 | 648.9 | 630.4 | 696.2 | 2,597.1 | |||||||||||||||
Appendix G
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION
SEGMENT FINANCIAL INFORMATION
Initiatives to integrate GE Transportation operations into Wabtec including recent restructuring programs announced in late 2019 resulted in changes to the Company’s organizational structure and the financial reporting utilized by the Company’s chief operating decision maker to assess performance and allocate resources; as a result, certain asset groups were reorganized from Freight to Transit and vice versa. The composition of the Company’s reportable segments was changed effective in the fourth quarter of 2019. The changes to the asset groups comprising the Freight and Transit segments have been reflected through retrospective revision of prior period segment information.
| In millions |
2019 - Freight Segment | |||||||||||||||||||
| First Quarter |
Second Quarter |
Third Quarter |
Fourth Quarter |
Full Year | ||||||||||||||||
| Net sales |
$ | 915.5 | $ | 1,526.3 | $ | 1,332.5 | $ | 1,667.1 | $ | 5,441.4 | ||||||||||
| Cost of sales |
(700.5 | ) | (1,101.4 | ) | (905.2 | ) | (1,152.9 | ) | (3,860.0 | ) | ||||||||||
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|
|
|||||||||||
| Gross profit ($) |
215.0 | 424.9 | 427.3 | 514.2 | 1,581.4 | |||||||||||||||
| Gross profit (%) |
23.5 | % | 27.8 | % | 32.1 | % | 30.8 | % | 29.1 | % | ||||||||||
| Operating expense |
(134.1 | ) | (257.4 | ) | (272.0 | ) | (275.0 | ) | (938.5 | ) | ||||||||||
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|
|||||||||||
| Income from operations ($) |
80.9 | 167.5 | 155.3 | 239.2 | 642.9 | |||||||||||||||
| Income from operations (%) |
8.8 | % | 11.0 | % | 11.7 | % | 14.3 | % | 11.8 | % | ||||||||||
| 2018 - Freight Segment | ||||||||||||||||||||
| First Quarter |
Second Quarter |
Third Quarter |
Fourth Quarter |
Full Year | ||||||||||||||||
| Net sales |
$ | 434.6 | $ | 462.8 | $ | 447.4 | $ | 421.6 | $ | 1,766.4 | ||||||||||
| Cost of sales |
(294.6 | ) | (313.6 | ) | (303.1 | ) | (288.5 | ) | (1,199.8 | ) | ||||||||||
|
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|
|
|||||||||||
| Gross profit ($) |
140.0 | 149.2 | 144.3 | 133.1 | 566.6 | |||||||||||||||
| Gross profit (%) |
32.2 | % | 32.2 | % | 32.3 | % | 31.6 | % | 32.1 | % | ||||||||||
| Operating expense |
(58.6 | ) | (57.9 | ) | (57.9 | ) | (57.9 | ) | (232.3 | ) | ||||||||||
|
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|
|||||||||||
| Income from operations ($) |
81.4 | 91.3 | 86.4 | 75.2 | 334.3 | |||||||||||||||
| Income from operations (%) |
18.7 | % | 19.7 | % | 19.3 | % | 17.8 | % | 18.9 | % | ||||||||||
Appendix H
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION
SEGMENT FINANCIAL INFORMATION
Initiatives to integrate GE Transportation operations into Wabtec including recent restructuring programs announced in late 2019 resulted in changes to the Company’s organizational structure and the financial reporting utilized by the Company’s chief operating decision maker to assess performance and allocate resources; as a result, certain asset groups were reorganized from Freight to Transit and vice versa. The composition of the Company’s reportable segments was changed effective in the fourth quarter of 2019. The changes to the asset groups comprising the Freight and Transit segments have been reflected through retrospective revision of prior period segment information.
| In millions |
2019 - Transit Segment | |||||||||||||||||||
| First Quarter |
Second Quarter |
Third Quarter |
Fourth Quarter |
Full Year | ||||||||||||||||
| Net sales |
$ | 678.1 | $ | 710.0 | $ | 669.2 | $ | 701.3 | $ | 2,758.6 | ||||||||||
| Cost of sales |
(504.1 | ) | (520.2 | ) | (497.1 | ) | (540.6 | ) | (2,062.0 | ) | ||||||||||
|
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|
|
|
|
|
|
|||||||||||
| Gross profit ($) |
174.0 | 189.8 | 172.1 | 160.7 | 696.6 | |||||||||||||||
| Gross profit (%) |
25.7 | % | 26.7 | % | 25.7 | % | 22.9 | % | 25.3 | % | ||||||||||
| Operating expense |
(114.1 | ) | (127.2 | ) | (119.2 | ) | (121.7 | ) | (482.2 | ) | ||||||||||
|
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|
|
|
|
|
|||||||||||
| Income from operations ($) |
59.9 | 62.6 | 52.9 | 39.0 | 214.4 | |||||||||||||||
| Income from operations (%) |
8.8 | % | 8.8 | % | 7.9 | % | 5.6 | % | 7.8 | % | ||||||||||
| 2018 - Transit Segment | ||||||||||||||||||||
| First Quarter |
Second Quarter |
Third Quarter |
Fourth Quarter |
Full Year | ||||||||||||||||
| Net sales |
$ | 621.6 | $ | 648.9 | $ | 630.4 | $ | 696.2 | $ | 2,597.1 | ||||||||||
| Cost of sales |
(450.7 | ) | (474.1 | ) | (472.7 | ) | (532.3 | ) | (1,929.8 | ) | ||||||||||
|
|
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|
|
|
|
|
|
|
|||||||||||
| Gross profit ($) |
170.9 | 174.8 | 157.7 | 163.9 | 667.3 | |||||||||||||||
| Gross profit (%) |
27.5 | % | 26.9 | % | 25.0 | % | 23.5 | % | 25.7 | % | ||||||||||
| Operating expense |
(112.4 | ) | (126.8 | ) | (108.1 | ) | (127.5 | ) | (474.8 | ) | ||||||||||
|
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|
|
|
|
|
|
|||||||||||
| Income from operations ($) |
58.5 | 48.0 | 49.6 | 36.4 | 192.5 | |||||||||||||||
| Income from operations (%) |
9.4 | % | 7.4 | % | 7.9 | % | 5.2 | % | 7.4 | % | ||||||||||
Wabtec 4th Quarter 2019 Financial Results & Company Highlights February 18, 2020 Exhibit 99.2
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 Litigation Reform Act of 1995, including statements regarding the acquisition by Wabtec of GE Transportation (the “GE Transportation merger”) and statements regarding Wabtec’s expectations about future sales and earnings. All statements, other than historical facts, including statements regarding the expected benefits of the GE Transportation merger, including anticipated synergy benefits and statements regarding Wabtec’s plans, objectives, expectations and intentions; legal, economic and regulatory conditions; and any assumptions underlying any of the foregoing, are forward-looking statements. Forward-looking statements concern future circumstances and results and other statements that are not historical facts and are sometimes identified by the words “may,” “will,” “should,” “potential,” “intend,” “expect,” “endeavor,” “seek,” “anticipate,” “estimate,” “overestimate,” “underestimate,” “believe,” “could,” “project,” “predict,” “continue,” “target” or other similar words or expressions. Forward-looking statements are based upon current plans, estimates and expectations that are subject to risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. The inclusion of such statements should not be regarded as a representation that such plans, estimates or expectations will be achieved. Important factors that could cause actual results to differ materially from such plans, estimates or expectations include, among others, (1) unexpected costs, charges or expenses resulting from the GE Transportation merger; (2) uncertainty of Wabtec’s expected financial performance; (3) failure to realize the anticipated benefits of the GE Transportation merger, including as a result of integrating GE Transportation into Wabtec; (4) Wabtec’s ability to implement its business strategy; (5) difficulties and delays in achieving revenue and cost synergies; (6) inability to retain and hire key personnel; (7) evolving legal, regulatory and tax regimes; (8) changes in general economic and/or industry specific conditions, including the impacts of tax and tariff programs, industry consolidation and changes in the financial condition or operating strategies of our customers; (9) changes in the expected timing of projects; (10) a decrease in freight or passenger rail traffic; (11) an increase in manufacturing costs; (12) actions by third parties, including government agencies; and (13) other risk factors as detailed from time to time in Wabtec’s reports filed with the SEC, including Wabtec’s annual report on Form 10-K, periodic quarterly reports on Form 10-Q, periodic current reports on Form 8-K and other documents filed with the SEC. The foregoing list of important factors is not exclusive. Any forward-looking statements speak only as of the date of this communication. Wabtec does not undertake any obligation to update any forward-looking statements, whether as a result of new information or development, future events or otherwise, except as required by law. Readers are cautioned not to place undue reliance on any of these forward-looking statements. This presentation as well as Wabtec’s earnings release and 2020 financial guidance mention certain non-GAAP financial performance measures, including adjusted sales, adjusted operating margin, EBITDA, adjusted EBITDA, adjusted effective tax rate, adjusted income from operations, adjusted interest and other expense and adjusted earnings per diluted share. Wabtec defines EBITDA as income from operations plus depreciation and amortization. While Wabtec believes these are useful supplemental measures for investors, they are not presented in accordance with GAAP. Investors should not consider non-GAAP measures in isolation or as a substitute for net income, cash flows from operations, or any other items calculated in accordance with GAAP. In addition, the non-GAAP financial measures included in this presentation have inherent material limitations as performance measures because they add back certain expenses incurred by the company to GAAP financial measures, resulting in those expenses not being taken into account in the applicable non-GAAP financial measure. Because not all companies use identical calculations, Wabtec’s presentation of non-GAAP financial measures may not be comparable to other similarly titled measures of other companies. Included in this presentation are reconciliation tables that provide details about how adjusted results relate to GAAP results. Forward looking statements & non-GAAP financial information
Executive summary Delivered strong financial results for 2019 despite North American freight market headwinds FY19 GAAP cash from operations of $1.0B FY GAAP EPS of $1.84; adjusted EPS of $4.17 4Q GAAP and adjusted sales of $2.4B GAAP income from ops of $0.2B and adjusted income from ops of $0.3B Ending backlog at $22.4B, up 2% sequentially 1. Integration on-track & synergies gaining momentum in 2020 Achieved ~$30M synergies in 2019 and affirm $250M synergies to be achieved before 2022 Expected to realize $150M in net synergies in 2020 2. 2020 guidance … stable revenue, margin expansion, strong cash generation Sales flat at ~$8.7B Margin expansion of ~100bps Cash from operations at ~$900M Announced $500M share repurchase authorization 3. Strong results and outlook despite NA freight market challenges
Segment Dynamics North America carload volume down (7%) in 4Q’19 and (4%) for the FY19 … expect 2020 to be flat to slightly down North America railcar deliveries at ~58K in 2019 … expected to be ~40K in 2020 Freight services, international and digital growth offsetting North America freight market softness Strong opportunities across international installed base … Russia/CIS, Asia and India Freight Steady growth in ridership and urbanization driven by shift to green initiatives Investment in rail systems across Europe & certain U.S. markets … presenting unique opportunities for growth Increased infrastructure spending across emerging markets Firm multi-year backlog contributes to growth Transit Diversified portfolio yielding ability to manage market headwinds
4Q 2019 performance Sales EBITDA Income from ops Profit margin EPS Cash from ops Backlog Reported $2,368M $337M $226M 9.5% $0.71 $448M $22.4B Adjusted y/y 113% 122% 0.6 pts Freight Sales Income from ops Profit margin % Backlog Transit Sales Income from ops Profit margin % Backlog Adjusted(1) $1,675M $270M 16.1% Adjusted(2) $701M $50M 7.1% Adjusted y/y 297% 259% (1.7 pts) Adjusted y/y 1% (29%) (2.9 pts) Reported $1,667M $239M 14.3% $18.9B Reported $701M $39M 5.6% $3.5B Adjusted $2,376M $424M $313M 13.2% $1.04 Freight Segment sales were adjusted by $8 million due to policy harmonization; Income from operations was adjusted by $31 million due to the policy harmonization, merger-related and restructuring expenses noted. Transit Segment income from operations was adjusted by $11 million due to restructuring charges.
Liquidity & leverage Strong cash flow generation to de-lever the balance sheet … long-term target leverage ~2-2.5X GAAP cash from ops FY19 $1.0B FY20 Guidance ~$0.9B 4Q’19 ~2.6X Long-term target ~2.0-2.5X Net debt / Adj. EBITDA(1) Wabtec uses a leverage ratio of Net Debt to Adj. EBITDA for purposes of tracking compliance with the covenants in our Credit Agreement, which requires Wabtec to comply with a leverage ratio based on substantially similar performance metrics. Management uses this specific performance metric to measure Wabtec’s reduction in debt and other balance sheet liabilities and to assist in the appropriate allocation of capital. Net debt is defined as total debt less unrestricted cash and cash equivalents. See the reconciliations included in the Appendix for this presentation for a reconciliation of Adjusted EBITDA to the most directly comparable GAAP measure.
2019 pro-forma results(1) 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 $1.3 $1.4 EBITDA $1.1 $1.6 $(0.1) $(0.0) - $1.5 $1.6 Cash from Operations $1.0 $1.1 - $(0.3) - $0.8 $0.9 EPS (177M shares) $1.84 $4.17 ($0.39) $(0.37) $1.19 $4.60 N/A EPS (192M shares) $1.70 $3.86 ($0.36) $(0.34) $1.10 $4.26 $4.50-$4.80 Partial year pro-forma(4) Recurring PPA(5) FY19 non GAAP FY19 pro-forma ($ in billions, except per share amounts) FY 2019 pro forma financial results give effect to the GE Transportation merger as if it had occurred on January 1, 2019. The FY 2019 pro forma financial results are not presented in accordance with Article 11 of Regulation S-X, and are presented here for illustrative purposes only and are not indicative of the results of operations that would have actually occurred had the GE Transportation merger occurred on January 1, 2019. The GE Transportation merger closed on Feb. 25, 2019. Accordingly, Wabtec’s FY 2019 results do not include results attributable to the merger of GE Transportation for January and February of 2019. Represents the impact of non-cash accounting policy harmonization, which is included in GAAP results; policy harmonization will no longer be treated as a non-GAAP addback in 2020 results. Represents 2 months of GE Transportation performance, interest expense, additional amortization and PP&E expenses, and impact from intercompany sales This represents intangible amortization amounts which will be excluded from non-GAAP EPS calculations. FY19 GAAP(2) FY20 adj. guidance Policy harmonization(3)
2020 guidance Sales GAAP: ~$8.7B EPS GAAP: $3.20 to $3.50 Adjusted: $4.50 to $4.80 Cash from operations GAAP: ~$900M EBITDA ~$1.6B SG&A ~$1.1B Depreciation ~$180M Amortization ~$280M Interest ~$50M per quarter Tax rate at ~25.5% Capex of ~$200M Shares outstanding ~192M Adjusted EPS guidance excludes ~$1.10 after-tax EPS impact from non-cash recurring PPA charges Well-positioned to deliver through the cycle Income from Operations GAAP: ~$1.1B Adjusted: ~$1.4B 2020 guidance
Focused strategy, positioned for long-term growth Solid 4th quarter performance … well positioned to deliver on 2020 financial guidance Significant installed base across Freight and Transit … resilient business model Cost reductions on track … making great progress to meet synergy target of $250M before 2022 Strong cash generation … 2020 GAAP cash flow guidance of ~$900M which includes $100M of prior year restructuring, transaction and litigation outflows Issued GAAP EPS guidance to between $3.20 to $3.50 and adjusted EPS guidance to between $4.50 to $4.80 Globally diverse business model provides strong foundation for long-term growth
Questions?
Appendix
Income statement Appendix A ( 1 of 2)
Income statement (cont.) Appendix A ( 2 of 2)
Balance sheet Appendix B
Cash flow Appendix C
EPS and non-GAAP Reconciliation Appendix D
EBITDA reconciliation Appendix E
Freight segment Transit segment Product Lines Equipment Components Transit Services Digital & Electronics
Appendix F
Appendix G
Appendix H
Exhibit 99.3
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News Release |
Wabtec Announces $500 Million Share Buyback Authorization
Pittsburgh, PA, February 18, 2020 – Wabtec Corporation (NYSE: WAB) announced that its Board of Directors authorized a share buyback program up to $500 million.
The company intends to buy back shares from time to time on the open market or in negotiated or block trades. There is no time limit set for the completion of the program, which is permitted under the company’s credit agreement and bond indenture. This buyback authorization supersedes any previous authorization.
Rafael Santana, Wabtec’s president and CEO, said: “Today’s announcement underscores our long-term confidence to generate strong cash flows. Our strong financial position allows for ample capacity to continue to invest in organic growth opportunities and strategic acquisitions, as well as returning cash to shareholders.”
About Wabtec Corporation
Wabtec Corporation is a leading global provider of equipment, systems, digital solutions and value-added services for freight and transit rail. Drawing on nearly four centuries of collective experience across Wabtec, GE Transportation and Faiveley Transport, the company has unmatched digital expertise, technological innovation, and world-class manufacturing and services, enabling the digital-rail-and-transit ecosystems. Wabtec is focused on performance that drives progress, creating transportation solutions that move and improve the world. The freight portfolio features a comprehensive line of locomotives, software applications and a broad selection of mission-critical controls systems, including Positive Train Control (PTC). The transit portfolio provides highly engineered systems and services to virtually every major rail transit system around the world, supplying an integrated series of components for buses and all train-related market segments that deliver safety, efficiency and passenger comfort. Along with its industry-leading portfolio of products and solutions for the rail and transit industries, Wabtec is a leader in mining, marine, and industrial solutions. Based in Pittsburgh, PA, Wabtec has approximately 27,000 employees in facilities throughout the world. Visit: www.WabtecCorp.com
Wabtec Investor Contact
Kristine Kubacki, CFA / Kristine.Kubacki@wabtec.com / 412-450-2033
Wabtec Media Contact
Deia Campanelli / Deia.Campanelli@wabtec.com / 773-297-0482