UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________________________
FORM 8-K
____________________________________
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 16, 2022 (February 16, 2022 )
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(Exact name of registrant as specified in its charter)
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| (Commission File No.) | (I.R.S. Employer Identification No.) | ||||||||||
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Not Applicable
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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):
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Securities registered pursuant to Section 12(b) of the Act:
Class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
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 16, 2022 , Westinghouse Air Brake Technologies Corporation (the “Company”) issued a press release reporting, among other things, the Company’s 2021 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 2021 (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 16, 2022 , the Company issued a press release which, among other things, provided earnings guidance for fiscal year 2022. A copy of the press release is attached to this report as Exhibit 99.1 and the paragraph under the heading “2022 Financial Guidance” which discusses 2022 guidance is incorporated into this Item 7.01 by reference. The Company also furnished a Presentation relating to its fourth quarter of 2021, 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 10, 2022, the Board of Directors of the Company authorized an increase of the amount available under its existing share repurchase program such that $750 million is available to purchase outstanding shares of the Company’s common stock. Under the share repurchase program, the Company intends to repurchase shares through the open market or otherwise, including, without limitation, through an accelerated share repurchase, pursuant to the terms of a Rule 10b5-1 plan, in privately negotiated transactions and round lot or block transactions.
Also on February 10, 2022, the Board of Directors of the Company declared a dividend payable on February 28, 2022 to holders of record on February 25, 2022. Additionally, the Company announced that the dividend will be increased by 25% to 15 cents per quarter per share.
| Item 9.01. | Financial Statements and Exhibits | ||||
(d) Exhibits.
The following exhibits are furnished with this report on Form 8-K:
| Exhibit No. | Description | ||||
| 99.1 | |||||
| 99.2 | |||||
| 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 impact of acquisitions by Wabtec, including the acquisition of GE Transportation (the “GE Transportation merger”) and Nordco, statements regarding Wabtec’s expectations about future sales and earnings, and statements about the impact of evolving global conditions on Wabtec’s business. All statements, other than historical facts, including statements regarding synergies and other expected benefits from acquisitions; statements regarding
Wabtec’s plans, objectives, expectations and intentions; and statements regarding macro-economic conditions and evolving production and demand 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 acquisitions, including the GE Transportation merger; (2) uncertainty of Wabtec’s expected financial performance; (3) failure to realize the anticipated benefits of acquisitions, including the GE Transportation merger, including as a result of integrating acquired targets 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, supply chain disruptions, 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; (13) the severity and duration of the evolving COVID-19 pandemic and the resulting impact on the global economy and, in particular, our customers, suppliers and end-markets, and (14) 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.
SIGNATURES
Pursuant to the requirements of Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION | |||||
| By: | /s/ JOHN A. OLIN | ||||
| John A. Olin | |||||
| Executive Vice President and Chief Financial Officer | |||||
| (Duly Authorized Officer and Principal Financial Officer) | |||||
| DATE: | February 16, 2022 | ||||
News Release Exhibit 99.1
Wabtec Reports Strong 4th Quarter 2021 Results
Issues 2022 Financial Guidance
•Fourth Quarter Reported GAAP Earnings Per Share of $1.02; Adjusted Earnings Per Share Up 20.4% to $1.18
•Sales Growth of 2.4% to $2.07 Billion; GAAP Operating Margin of 12.7%; Adjusted Operating Margin Up 210 bps to 16.1%
•Full-Year Cash Flow from Operations up 36.9% to $1.07 Billion; 102% Full-Year Operating Cash Flow Conversion
•Repurchased 1.05 Million Shares During the Fourth Quarter for $100 Million; Total Full-Year Repurchased of $300 Million
•Announced $750 Million Share Buyback Reauthorization and 25% Increase in Quarterly Dividend
PITTSBURGH, February 16, 2022 – Wabtec Corporation (NYSE: WAB) today reported fourth quarter 2021 GAAP earnings per diluted share of $1.02, up 121.7% versus the fourth quarter of 2020. Adjusted earnings per diluted share were $1.18, up 20.4% versus the same quarter a year ago. Fourth quarter sales were $2.07 billion and cash from operations was $314 million. Full year 2021 earnings per diluted share was $2.96, up 36.4% versus full year 2020. Full year adjusted earnings per diluted share were $4.26, up 12.4% versus full year 2020. Total 2021 sales were $7.82 billion and cash from operations was a record high of $1.07 billion.
“The Wabtec team delivered strong execution to close out the year, providing us with momentum into 2022,” said Rafael Santana, Wabtec’s President and CEO. “Our productivity initiatives, realization of synergies and positive mix drove improvement in segment margins for both the fourth quarter and full year despite growing supply chain disruptions and higher costs. Our strong performance in 2021 was complemented by disciplined capital allocation including $300 million in share repurchases, $92 million in dividends and two strategic bolt-on acquisitions that enhance our business with attractive end-market opportunities.
"Wabtec delivered significant progress against our strategic initiatives that will create value for our customers and shareholders. Wabtec’s FLXdrive battery electric locomotive is gaining traction with our customers as they seek solutions that reduce emissions and improve efficiencies.
“Looking forward, we see mixed market conditions improving throughout the year. The breadth of our product portfolio combined with our multi-year backlog provides us with a solid foundation for growth in 2022. Our announced $750 million share buyback reauthorization and 25% increase in the dividend underscore our confidence on continued strong earnings and cash flow generation. We believe we are well-positioned to deliver top-line growth, margin expansion and increased earnings in 2022."
2021 Fourth Quarter Consolidated Results
Wabtec Corporation Consolidated Financial Results
| $ in millions except earnings per share and percentages; margin change in percentage points (pts) | Fourth Quarter | ||||||||||
| 2021 | 2020 | Change | |||||||||
| Net Sales | $ 2,073 | $ 2,024 | 2.4% | ||||||||
| GAAP Gross Margin | 31.5% | 25.0% | 6.5 pts | ||||||||
| Adjusted Gross Margin | 31.7% | 26.0% | 5.7 pts | ||||||||
| GAAP Operating Margin | 12.7% | 8.0% | 4.7 pts | ||||||||
| Adjusted Operating Margin | 16.1% | 14.0% | 2.1 pts | ||||||||
| GAAP Diluted EPS | $1.02 | $0.46 | 121.7% | ||||||||
| Adjusted Diluted EPS | $1.18 | $0.98 | 20.4% | ||||||||
| Cash Flow from Operations | $314 | $326 | (3.7)% | ||||||||
| Operating Cash Flow Conversion | 99% | 158 | % | ||||||||
•Sales increased compared to the year-ago quarter driven by higher Freight segment sales, partially offset by lower Transit segment sales. During the quarter, we estimate that sales results were adversely impacted by 3 to 4 percent due to supply chain disruptions.
•Both GAAP and adjusted operating margin increased from last year as a result of improved mix and strong productivity, partially offset by $20 to $25 million in escalating costs associated with metals, transportation and labor.
•GAAP and adjusted EPS increased from the year-ago quarter primarily due to higher sales and increased income from operations. GAAP EPS further benefited from a favorable effective tax rate, along with lower restructuring and transaction costs.
2021 Fourth Quarter Freight Segment Results
Wabtec Corporation Freight Segment Financial Results
| Net sales $ in millions; margin change in percentage points (pts) | Fourth Quarter | ||||||||||
| 2021 | 2020 | Change | |||||||||
| Net Sales | $ 1,425 | $ 1,339 | 6.4% | ||||||||
| GAAP Gross Margin | 31.9% | 25.3% | 6.6 pts | ||||||||
| Adjusted Gross Margin | 32.1% | 26.4% | 5.7 pts | ||||||||
| GAAP Operating Margin | 14.5% | 9.0% | 5.5 pts | ||||||||
| Adjusted Operating Margin | 18.7% | 16.3% | 2.4 pts | ||||||||
•Freight segment sales for the fourth quarter were driven by demand for Services and Components, along with the acquisition of Nordco. This growth was partially offset by lower deliveries of locomotives and increased supply chain disruptions.
•Both GAAP and adjusted operating margin benefited from higher sales, favorable mix and operational efficiencies, partially offset by higher costs. GAAP operating margin also improved year-over-year as a result of lower restructuring and transactions costs.
2021 Fourth Quarter Transit Segment Results
Wabtec Corporation Transit Segment Financial Results
| Net sales $ in millions; margin change in percentage points (pts) | Fourth Quarter | ||||||||||
| 2021 | 2020 | Change | |||||||||
| Net Sales | $ 648 | $ 685 | (5.4%) | ||||||||
| GAAP Gross Margin | 30.6% | 24.4% | 6.2 pts | ||||||||
| Adjusted Gross Margin | 30.9% | 25.3% | 5.6 pts | ||||||||
| GAAP Operating Margin | 12.2% | 8.3% | 3.9 pts | ||||||||
| Adjusted Operating Margin | 13.6% | 11.3% | 2.3 pts | ||||||||
•Transit segment sales for the fourth quarter were down versus last year due to supply chain issues, COVID-related disruptions and unfavorable foreign currency exchange.
•Both GAAP and adjusted segment operating margin improved versus last year primarily driven by mix and productivity gains, partially offset by higher costs. GAAP operating margin further benefited from lower year-over-year restructuring and transaction costs.
Backlog
Wabtec Corporation Consolidated Backlog Comparison
| Backlog $ in millions | December 31, | ||||||||||
| 2021 | 2020 | Change | |||||||||
| 12-Month Backlog | $ 6,268 | $5,521 | 13.5% | ||||||||
| Total Backlog | $ 22,169 | $ | 21,591 | 2.7% | |||||||
At December 31, 2021 the multi-year backlog was $578 million higher than December 31, 2020 due in most part from increased orders for Freight Equipment and Freight Services.
Cash Flow and Liquidity Summary
•During the fourth quarter, the company generated cash from operations of $314 million versus $326 million in the year ago period. For the full year, the company generated strong cash from operations of $1.07 billion resulting in an operating cash flow conversion of 102%.
•At the end of the quarter, the company had cash and cash equivalents of $473 million and total debt of $4.06 billion. At December 31, 2021 the company’s total available liquidity was $1.67 billion, which includes cash and cash equivalents plus $1.20 billion available under current credit facilities.
•During the fourth quarter, the company repurchased $100 million of shares, bringing the full year total to $300 million.
•Wabtec Board of Directors reauthorized a share buyback program up to $750 million and declared a 25 percent increase in the regular quarterly common dividend to $0.15 payable on February 28, 2022 to holders of record on February 25, 2022.
2022 Financial Guidance
•Wabtec initiated its 2022 financial guidance with sales expected to be in a range of $8.30 billion to $8.60 billion and adjusted earnings per diluted share to be in a range of $4.65 to $5.05.
•For full year 2022, Wabtec expects strong cash flow generation with operating cash flow conversion of greater than 90 percent.
•The company is not presenting a quantitative reconciliation of our forecasted GAAP earnings per diluted share to forecasted adjusted earnings per diluted share as we are unable to predict with reasonable certainty and without unreasonable effort the impact and timing of restructuring-related and other charges, including acquisition-related expenses and the outcome of certain regulatory, legal and tax matters. The financial impact of these items is uncertain and is dependent on various factors, including timing, and could be material to our Consolidated Statements of Earnings.
Conference Call Information
Wabtec will host a call with analysts and investors at 8:30 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: 8527520).
About Wabtec Corporation
Wabtec Corporation (NYSE: WAB) is focused on creating transportation solutions that move and improve the world. The company is a leading global provider of equipment, systems, digital solutions and value-added services for the freight and transit rail industries, as well as the mining, marine and industrial markets. Wabtec has been a leader in the rail industry for over 150 years and has a vision to achieve a zero-emission rail system in the U.S. and worldwide. Visit Wabtec’s website at: www.WabtecCorp.com
Information about non-GAAP Financial Information and Forward-Looking Statements
Wabtec’s earnings release and 2022 financial guidance mentions certain non-GAAP financial performance measures, including adjusted gross profit, adjusted operating expenses, adjusted operating margin, EBITDA, adjusted EBITDA, adjusted effective tax rate, adjusted income tax expense, adjusted income from operations, adjusted interest and other expense adjusted earnings per diluted share and operating cash flow conversion. Wabtec defines EBITDA as earnings before interest, taxes, depreciation and amortization. Wabtec defines operating cash flow conversion as net cash provided by operating activities divided by net income plus depreciation and amortization including deferred debt cost 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 release 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 impact of acquisitions by Wabtec, including the acquisition of GE Transportation (the “GE Transportation merger”) and Nordco, statements regarding Wabtec’s expectations about future sales and earnings, and statements about the impact of evolving global conditions on Wabtec’s business. All statements, other than historical facts, including statements regarding synergies and other expected benefits from acquisitions; statements regarding Wabtec’s plans, objectives, expectations and intentions; and statements regarding macro-economic conditions and evolving production and demand 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 acquisitions, including the GE Transportation merger; (2) uncertainty of Wabtec’s expected financial performance; (3) failure to realize the anticipated benefits of acquisitions, including the GE Transportation merger, including as a result of integrating acquired targets 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, supply chain disruptions, 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; (13) the severity and duration of the evolving COVID-19 pandemic and the resulting impact on the global economy and, in particular, our customers, suppliers and end-markets, and (14) 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 STATEMENTS OF INCOME
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2021 AND 2020
(AMOUNTS IN MILLIONS EXCEPT PER SHARE DATA)
(UNAUDITED)
| Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Net sales | $ | 2,073 | $ | 2,024 | $ | 7,822 | $ | 7,556 | |||||||||||||||
| Cost of sales | (1,421) | (1,518) | (5,453) | (5,419) | |||||||||||||||||||
| Gross profit | 652 | 506 | 2,369 | 2,137 | |||||||||||||||||||
| Gross profit as a % of Net Sales | 31.5 | % | 25.0 | % | 30.3 | % | 28.3 | % | |||||||||||||||
| Selling, general and administrative expenses | (264) | (236) | (1,030) | (948) | |||||||||||||||||||
| Engineering expenses | (52) | (38) | (176) | (162) | |||||||||||||||||||
| Amortization expense | (72) | (71) | (287) | (282) | |||||||||||||||||||
| Total operating expenses | (388) | (345) | (1,493) | (1,392) | |||||||||||||||||||
| Operating expenses as a % of Net Sales | 18.7 | % | 17.0 | % | 19.1 | % | 18.4 | % | |||||||||||||||
| Income from operations | 264 | 161 | 876 | 745 | |||||||||||||||||||
| Income from operations as a % of Net Sales | 12.7 | % | 8.0 | % | 11.2 | % | 9.9 | % | |||||||||||||||
| Interest expense, net | (42) | (49) | (177) | (199) | |||||||||||||||||||
| Other income, net | 13 | 6 | 38 | 11 | |||||||||||||||||||
| Income before income taxes | 235 | 118 | 737 | 557 | |||||||||||||||||||
| Income tax expense | (42) | (31) | (172) | (145) | |||||||||||||||||||
| Effective tax rate | 17.4 | % | 26.6 | % | 23.2 | % | 26.0 | % | |||||||||||||||
| Net income | 193 | 87 | 565 | 412 | |||||||||||||||||||
| Less: Net (income) loss attributable to noncontrolling interest | (3) | 1 | (7) | 2 | |||||||||||||||||||
| Net income attributable to Wabtec shareholders | $ | 190 | $ | 88 | $ | 558 | $ | 414 | |||||||||||||||
| Earnings Per Common Share | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Net income attributable to Wabtec shareholders | $ | 1.02 | $ | 0.46 | $ | 2.96 | $ | 2.18 | |||||||||||||||
| Diluted | |||||||||||||||||||||||
| Net income attributable to Wabtec shareholders | $ | 1.02 | $ | 0.46 | $ | 2.96 | $ | 2.17 | |||||||||||||||
| Weighted average shares outstanding | |||||||||||||||||||||||
| Basic | 186.0 | 189.2 | 187.7 | 189.9 | |||||||||||||||||||
| Diluted | 186.5 | 189.7 | 188.1 | 190.4 | |||||||||||||||||||
| Appendix A | ||||||||
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2021 AND 2020
(AMOUNTS IN MILLIONS EXCEPT PER SHARE DATA)
(UNAUDITED)
| Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Segment Information | |||||||||||||||||||||||
| Freight Net Sales | $ | 1,425 | $ | 1,339 | $ | 5,239 | $ | 5,082 | |||||||||||||||
| Freight Income from Operations | $ | 207 | $ | 121 | $ | 717 | $ | 584 | |||||||||||||||
| Freight Operating Margin | 14.5 | % | 9.0 | % | 13.7 | % | 11.5 | % | |||||||||||||||
| Transit Net Sales | $ | 648 | $ | 685 | $ | 2,583 | $ | 2,474 | |||||||||||||||
| Transit Income from Operations | $ | 79 | $ | 57 | $ | 238 | $ | 230 | |||||||||||||||
| Transit Operating Margin | 12.2 | % | 8.3 | % | 9.2 | % | 9.3 | % | |||||||||||||||
| Backlog Information (Note: 12-month is a sub-set of total) | December 31, 2021 | September 30, 2021 | |||||||||||||||||||||
| Freight Total | $ | 18,502 | $ | 18,211 | |||||||||||||||||||
| Transit Total | 3,667 | 3,633 | |||||||||||||||||||||
| Wabtec Total | $ | 22,169 | $ | 21,844 | |||||||||||||||||||
| Freight 12-Month | $ | 4,520 | $ | 4,060 | |||||||||||||||||||
| Transit 12-Month | 1,748 | 1,648 | |||||||||||||||||||||
| Wabtec 12-Month | $ | 6,268 | $ | 5,708 | |||||||||||||||||||
| Appendix B | ||||||||
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
| December 31, 2021 | December 31, 2020 | ||||||||||
| In millions | |||||||||||
| Cash and cash equivalents | $ | 473 | $ | 599 | |||||||
| Receivables, net | 1,477 | 1,412 | |||||||||
| Inventories | 1,689 | 1,642 | |||||||||
| Other current assets | 193 | 227 | |||||||||
| Total current assets | 3,832 | 3,880 | |||||||||
| Property, plant and equipment, net | 1,497 | 1,601 | |||||||||
| Goodwill | 8,587 | 8,485 | |||||||||
| Other intangible assets, net | 3,705 | 3,869 | |||||||||
| Other noncurrent assets | 833 | 619 | |||||||||
| Total assets | $ | 18,454 | $ | 18,454 | |||||||
| Current liabilities | $ | 2,910 | $ | 3,226 | |||||||
| Long-term debt | 4,056 | 3,792 | |||||||||
| Long-term liabilities - other | 1,249 | 1,283 | |||||||||
| Total liabilities | 8,215 | 8,301 | |||||||||
| Shareholders' equity | 10,201 | 10,123 | |||||||||
| Noncontrolling interest | 38 | 30 | |||||||||
| Total shareholders' equity | 10,239 | 10,153 | |||||||||
| Total Liabilities and Shareholders' Equity | $ | 18,454 | $ | 18,454 | |||||||
| Appendix C | ||||||||
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| Twelve Months Ended December 31, | |||||||||||
| In millions | 2021 | 2020 | |||||||||
| Operating activities | |||||||||||
| Net income | $ | 565 | $ | 412 | |||||||
| Non-cash expense | 571 | 444 | |||||||||
| Receivables | (76) | 315 | |||||||||
| Inventories | (41) | 181 | |||||||||
| Accounts Payable | 109 | (269) | |||||||||
| Other assets and liabilities | (55) | (299) | |||||||||
| Net cash provided by operating activities | 1,073 | 784 | |||||||||
| Net cash used for investing activities | (540) | (155) | |||||||||
| Net cash used for financing activities | (653) | (619) | |||||||||
| Effect of changes in currency exchange rates | (6) | (15) | |||||||||
| Decrease in cash | (126) | (5) | |||||||||
| Cash and cash equivalents, beginning of period | 599 | 604 | |||||||||
| Cash and cash equivalents, end of period | $ | 473 | $ | 599 | |||||||
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-to-Date 2021 Actual Results | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net | Gross | Operating | Income from | Interest & | Net | Noncontrolling | Wabtec | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sales | Profit | Expenses | Operations | Other Exp | Tax | Income | Interest | Net Income | EPS | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reported Results | $ | 2,073 | $ | 652 | $ | (388) | $ | 264 | $ | (29) | $ | (42) | $ | 193 | $ | (3) | $ | 190 | $ | 1.02 | |||||||||||||||||||||||||||||||||||||||||||||
| Restructuring & Transaction costs | — | 5 | (7) | (2) | — | 5 | 3 | — | 3 | 0.01 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-cash Amortization expense | — | — | 72 | 72 | — | (18) | 54 | — | 54 | 0.29 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign Currency Loss | — | — | — | — | (1) | — | (1) | — | (1) | (0.01) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Amended Return, net | — | — | — | — | — | (25) | (25) | — | (25) | (0.13) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted Results | $ | 2,073 | $ | 657 | $ | (323) | $ | 334 | $ | (30) | $ | (80) | $ | 224 | $ | (3) | $ | 221 | $ | 1.18 | |||||||||||||||||||||||||||||||||||||||||||||
| Fully Diluted Shares Outstanding | 186.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Wabtec Corporation Reconciliation of Reported Results to Adjusted Results (in millions) | Q4 Year-to-Date 2021 Actual Results | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net | Gross | Operating | Income from | Interest & | Net | Noncontrolling | Wabtec | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sales | Profit | Expenses | Operations | Other Exp | Tax | Income | Interest | Net Income | EPS | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reported Results | $ | 7,822 | $ | 2,369 | $ | (1,493) | $ | 876 | $ | (139) | $ | (172) | $ | 565 | $ | (7) | $ | 558 | $ | 2.96 | |||||||||||||||||||||||||||||||||||||||||||||
| Restructuring & Transaction costs | — | 53 | 25 | 78 | — | (15) | 63 | — | 63 | 0.33 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-cash Amortization expense | — | — | 287 | 287 | — | (74) | 213 | — | 213 | 1.13 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign Currency Loss | — | — | — | — | (8) | 2 | (6) | — | (6) | (0.03) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Amended Return, net | — | — | — | — | — | (25) | (25) | — | (25) | (0.13) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted Results | $ | 7,822 | $ | 2,422 | $ | (1,181) | $ | 1,241 | $ | (147) | $ | (284) | $ | 810 | $ | (7) | $ | 803 | $ | 4.26 | |||||||||||||||||||||||||||||||||||||||||||||
| Fully Diluted Shares Outstanding | 188.1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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-to-Date 2020 Actual Results | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net | Gross | Operating | Income from | Interest & | Net | Noncontrolling | Wabtec | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sales | Profit | Expenses | Operations | Other Exp | Tax | Income | Interest | Net Income | EPS | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reported Results | $ | 2,024 | $ | 506 | $ | (345) | $ | 161 | $ | (43) | $ | (31) | $ | 87 | $ | 1 | $ | 88 | $ | 0.46 | |||||||||||||||||||||||||||||||||||||||||||||
| Restructuring & Transaction costs | — | 21 | 30 | 51 | — | (12) | 39 | — | 39 | 0.20 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-cash Amortization expense | — | — | 71 | 71 | — | (16) | 55 | — | 55 | 0.29 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign Currency Loss | — | — | — | — | 1 | (1) | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tax on Transaction Costs | — | — | — | — | — | 6 | 6 | — | 6 | 0.03 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted Results | $ | 2,024 | $ | 527 | $ | (244) | $ | 283 | $ | (42) | $ | (54) | $ | 187 | $ | 1 | $ | 188 | $ | 0.98 | |||||||||||||||||||||||||||||||||||||||||||||
| Fully Diluted Shares Outstanding | 189.7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Wabtec Corporation Reconciliation of Reported Results to Adjusted Results (in millions) | Q4 Year-to-Date 2020 Actual Results | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net | Gross | Operating | Income from | Interest & | Net | Noncontrolling | Wabtec | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sales | Profit | Expenses | Operations | Other Exp | Tax | Income | Interest | Net Income | EPS | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reported Results | $ | 7,556 | $ | 2,137 | $ | (1,392) | $ | 745 | $ | (188) | $ | (145) | $ | 412 | $ | 2 | $ | 414 | $ | 2.17 | |||||||||||||||||||||||||||||||||||||||||||||
| Restructuring & Transaction costs | — | 45 | 71 | 116 | — | (29) | 87 | — | 87 | 0.45 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-cash Amortization expense | — | — | 282 | 282 | — | (71) | 211 | — | 211 | 1.11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign Currency Loss | — | — | — | — | 9 | (2) | 7 | — | 7 | 0.03 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tax on Transaction Costs | — | — | — | — | — | 6 | 6 | — | 6 | 0.03 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted Results | $ | 7,556 | $ | 2,182 | $ | (1,039) | $ | 1,143 | $ | (179) | $ | (241) | $ | 723 | $ | 2 | $ | 725 | $ | 3.79 | |||||||||||||||||||||||||||||||||||||||||||||
| Fully Diluted Shares Outstanding | 190.4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||||
| 2021 Q4 EBITDA Reconciliation | ||||||||||||||||||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||||||||||||||
| Reported Income | + | Other Income | + | Depreciation & | = | EBITDA | + | Restructuring & | = | Adjusted | ||||||||||||||||||||||||||||
| from Operations | (Expense) | Amortization | Transaction Costs | EBITDA | ||||||||||||||||||||||||||||||||||
| Consolidated Results | $ | 264 | $ | 13 | $ | 121 | $ | 398 | $ | (2) | $ | 396 | ||||||||||||||||||||||||||
| Wabtec Corporation | ||||||||||||||||||||||||||||||||||||||
| 2021 Q4 Year-to-Date EBITDA Reconciliation | ||||||||||||||||||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||||||||||||||
| Reported Income | + | Other Income | + | Depreciation & | = | EBITDA | + | Restructuring & | = | Adjusted | ||||||||||||||||||||||||||||
| from Operations | (Expense) | Amortization | Transaction Costs | EBITDA | ||||||||||||||||||||||||||||||||||
| Consolidated Results | $ | 876 | $ | 38 | $ | 485 | $ | 1,399 | $ | 78 | $ | 1,477 | ||||||||||||||||||||||||||
| Wabtec Corporation | ||||||||||||||||||||||||||||||||||||||
| 2020 Q4 EBITDA Reconciliation | ||||||||||||||||||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||||||||||||||
| Reported Income | + | Other Income | + | Depreciation & | = | EBITDA | + | Restructuring & | = | Adjusted | ||||||||||||||||||||||||||||
| from Operations | (Expense) | Amortization | Transaction Costs | EBITDA | ||||||||||||||||||||||||||||||||||
| Consolidated Results | $ | 161 | $ | 6 | $ | 118 | $ | 285 | $ | 51 | $ | 336 | ||||||||||||||||||||||||||
| Wabtec Corporation | ||||||||||||||||||||||||||||||||||||||
| 2020 Q4 Year-to-Date EBITDA Reconciliation | ||||||||||||||||||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||||||||||||||
| Reported Income | + | Other Income | + | Depreciation & | = | EBITDA | + | Restructuring & | = | Adjusted | ||||||||||||||||||||||||||||
| from Operations | (Expense) | Amortization | Transaction Costs | EBITDA | ||||||||||||||||||||||||||||||||||
| Consolidated Results | $ | 745 | $ | 11 | $ | 466 | $ | 1,222 | $ | 116 | $ | 1,338 | ||||||||||||||||||||||||||
Appendix F
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION
SALES BY PRODUCT LINE
(UNAUDITED)
| Three Months Ended December 31, | |||||||||||
| In millions | 2021 | 2020 | |||||||||
| Freight Segment | |||||||||||
| Equipment | $ | 377 | $ | 433 | |||||||
| Components | 218 | 195 | |||||||||
| Digital Electronics | 167 | 164 | |||||||||
| Services | 663 | 547 | |||||||||
| Total Freight Segment | $ | 1,425 | $ | 1,339 | |||||||
| Transit Segment | |||||||||||
| Original Equipment Manufacturer | $ | 299 | $ | 322 | |||||||
| Aftermarket | 349 | 363 | |||||||||
| Total Transit Segment | $ | 648 | $ | 685 | |||||||
| Twelve Months Ended December 31, | |||||||||||
| In millions | 2021 | 2020 | |||||||||
| Freight Segment | |||||||||||
| Equipment | $ | 1,302 | $ | 1,531 | |||||||
| Components | 867 | 819 | |||||||||
| Digital Electronics | 640 | 664 | |||||||||
| Services | 2,430 | 2,068 | |||||||||
| Total Freight Segment | $ | 5,239 | $ | 5,082 | |||||||
| Transit Segment | |||||||||||
| Original Equipment Manufacturer | $ | 1,193 | $ | 1,139 | |||||||
| Aftermarket | 1,390 | 1,335 | |||||||||
| Total Transit Segment | $ | 2,583 | $ | 2,474 | |||||||
Appendix G
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION
RECONCILIATION OF REPORTED RESULTS TO ADJUSTED RESULTS - BY SEGMENT
(UNAUDITED)
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||||||||||||
| In millions | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
| Freight Segment Reported Gross Profit | $ | 454 | $ | 339 | $ | 1,667 | $ | 1,488 | ||||||||||||||||||
| Freight Segment Reported Gross Margin | 31.9% | 25.3% | 31.8% | 29.3% | ||||||||||||||||||||||
| Restructuring & Transaction costs | 3 | 14 | 8 | 30 | ||||||||||||||||||||||
| Freight Segment Adjusted Gross Profit | $ | 457 | $ | 353 | $ | 1,675 | $ | 1,518 | ||||||||||||||||||
| Freight Segment Adjusted Gross Margin | 32.1% | 26.4% | 32.0% | 29.9% | ||||||||||||||||||||||
| Transit Segment Reported Gross Profit | $ | 198 | $ | 167 | $ | 702 | $ | 649 | ||||||||||||||||||
| Transit Segment Reported Gross Margin | 30.6% | 24.4% | 27.2% | 26.2% | ||||||||||||||||||||||
| Restructuring & Transaction costs | 2 | 6 | 45 | 14 | ||||||||||||||||||||||
| Transit Segment Adjusted Gross Profit | $ | 200 | $ | 173 | $ | 747 | $ | 663 | ||||||||||||||||||
| Transit Segment Adjusted Gross Margin | 30.9% | 25.3% | 28.9% | 26.8% | ||||||||||||||||||||||
Appendix H
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION
RECONCILIATION OF REPORTED RESULTS TO ADJUSTED RESULTS - BY SEGMENT
(UNAUDITED)
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||||||||||||
| In millions | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
| Freight Segment Reported Income from Operations | $ | 207 | $ | 121 | $ | 717 | $ | 584 | ||||||||||||||||||
| Freight Segment Reported Margin | 14.5% | 9.0% | 13.7% | 11.5% | ||||||||||||||||||||||
| Restructuring & Transaction costs | (7) | 32 | 9 | 76 | ||||||||||||||||||||||
| Non-cash Amortization expense | 67 | 66 | 267 | 262 | ||||||||||||||||||||||
| Freight Segment Adjusted Income from Operations | $ | 267 | $ | 219 | $ | 993 | $ | 922 | ||||||||||||||||||
| Freight Segment Adjusted Margin | 18.7% | 16.3% | 19.0% | 18.1% | ||||||||||||||||||||||
| Transit Segment Reported Income from Operations | $ | 79 | $ | 57 | $ | 238 | $ | 230 | ||||||||||||||||||
| Transit Segment Reported Margin | 12.2% | 8.3% | 9.2% | 9.3% | ||||||||||||||||||||||
| Restructuring & Transaction costs | 4 | 15 | 59 | 27 | ||||||||||||||||||||||
| Non-cash Amortization expense | 5 | 5 | 20 | 20 | ||||||||||||||||||||||
| Transit Segment Adjusted Income from Operations | $ | 88 | $ | 77 | $ | 317 | $ | 277 | ||||||||||||||||||
| Transit Segment Adjusted Margin | 13.6% | 11.3% | 12.3% | 11.2% | ||||||||||||||||||||||
Appendix I
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION
RECONCILIATION OF REPORTED RESULTS TO ADJUSTED RESULTS - BY SEGMENT
(UNAUDITED)
| Three Months Ended December 31, | |||||||||||||||||||||||
| In millions | Freight | Transit | Consolidated | ||||||||||||||||||||
| 2020 Net Sales | $ | 1,339 | $ | 685 | $ | 2,024 | |||||||||||||||||
| Acquisitions | 61 | — | 61 | ||||||||||||||||||||
| Restructuring & Transaction costs | (2) | (15) | (17) | ||||||||||||||||||||
| Non-cash Amortization expense | 27 | (22) | 5 | ||||||||||||||||||||
| 2021 Net Sales | $ | 1,425 | $ | 648 | $ | 2,073 | |||||||||||||||||
| Change ($) | 86 | (37) | 49 | ||||||||||||||||||||
| Change (%) | 6.4% | (5.4)% | 2.4% | ||||||||||||||||||||
| Twelve Months Ended December 31, | |||||||||||||||||||||||
| 2020 Net Sales | $ | 5,082 | $ | 2,474 | $ | 7,556 | |||||||||||||||||
| Acquisitions | 138 | — | 138 | ||||||||||||||||||||
| Restructuring & Transaction costs | 23 | 111 | 134 | ||||||||||||||||||||
| Non-cash Amortization expense | (4) | (2) | (6) | ||||||||||||||||||||
| 2021 Net Sales | $ | 5,239 | $ | 2,583 | $ | 7,822 | |||||||||||||||||
| Change ($) | 157 | 109 | 266 | ||||||||||||||||||||
| Change (%) | 3.1% | 4.4% | 3.5% | ||||||||||||||||||||
Appendix J
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 | ||||||||||||||||||||||||||
| 2021 Q4 Cash Conversion Calculation | ||||||||||||||||||||||||||
| (In millions) | ||||||||||||||||||||||||||
| Reported Cash from Operations | ÷ | (Net Income | + | Depreciation & Amortization) | = | Cash Conversion | ||||||||||||||||||||
| Consolidated Results | $ | 314 | $ | 193 | $ | 123 | 99 | % | ||||||||||||||||||
| Wabtec Corporation | ||||||||||||||||||||||||||
| 2021 Q4 YTD Cash Conversion Calculation | ||||||||||||||||||||||||||
| (In millions) | ||||||||||||||||||||||||||
| Reported Cash from Operations | ÷ | (Net Income | + | Depreciation & Amortization) | = | Cash Conversion | ||||||||||||||||||||
| Consolidated Results | $ | 1,073 | $ | 565 | $ | 491 | 102 | % | ||||||||||||||||||
| Wabtec Corporation | ||||||||||||||||||||||||||
| 2020 Q4 Cash Conversion Calculation | ||||||||||||||||||||||||||
| (In millions) | ||||||||||||||||||||||||||
| Reported Cash from Operations | ÷ | (Net Income | + | Depreciation & Amortization) | = | Cash Conversion | ||||||||||||||||||||
| Consolidated Results | $ | 326 | $ | 87 | $ | 119 | 158 | % | ||||||||||||||||||
| Wabtec Corporation | ||||||||||||||||||||||||||
| 2020 Q4 YTD Cash Conversion Calculation | ||||||||||||||||||||||||||
| (In millions) | ||||||||||||||||||||||||||
| Reported Cash from Operations | ÷ | (Net Income | + | Depreciation & Amortization) | = | Cash Conversion | ||||||||||||||||||||
| Consolidated Results | $ | 784 | $ | 412 | $ | 473 | 89 | % | ||||||||||||||||||
Confidential & Proprietary 1 Wabtec 4th Quarter 2021 Financial Results & Company Highlights February 16, 2022
2 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 Litigation Reform Act of 1995, including statements regarding the impact of acquisitions by Wabtec, including the acquisition of GE Transportation (the “GE Transportation merger”) and Nordco, statements regarding Wabtec’s expectations about future sales and earnings and statements about the impact of evolving global conditions on Wabtec’s business. All statements, other than historical facts, including statements synergies and other benefits from acquisitions; statements regarding Wabtec’s plans, objectives, expectations and intentions; and statements regarding macro-economic conditions and evolving production and demand 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 acquisitions, including the GE Transportation merger; (2) uncertainty of Wabtec’s expected financial performance; (3) failure to realize the anticipated benefits of acquisitions, including as a result of integrating acquired targets 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, supply chain disruptions, 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; (13) the severity and duration of the evolving COVID-19 pandemic and the resulting impact on the global economy and, in particular, our customers, suppliers and end-markets; and (14) 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 2022 financial guidance mention certain non-GAAP financial performance measures, including adjusted gross profit, adjusted operating expenses, adjusted income from operations, adjusted interest and other expense, adjusted operating margin, adjusted income tax expense, adjusted effective tax rate, adjusted earnings per diluted share, EBITDA and adjusted EBITDA, net debt and operating cash flow conversion rate. Wabtec defines EBITDA as earnings before interest, taxes, depreciation and amortization. Wabtec defines operating cash flow conversion as net cash provided by operating activities divided by net income plus depreciation and amortization including deferred debt cost 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. Wabtec is not presenting a quantitative reconciliation of its forecasted GAAP earnings per diluted share to forecasted adjusted earnings per diluted share as it is unable to predict with reasonable certainty and without unreasonable effort the impact and timing restructuring-related expenses and the outcome of certain regulatory, legal and tax matters; the financial impact of these items is uncertain and is dependent on various factors, including the timing, and could be material to Wabtec’s Consolidated Statement of Earnings.
3 Today’s participants Rafael Santana President & Chief Executive Officer John Olin Executive Vice President & Chief Financial Officer Kristine Kubacki Vice President, Investor Relations PRESENTERS INVESTOR RELATIONS
4 4Q 2021 overview SALES ADJUSTED OPERATING MARGIN (2) ADJUSTED EARNINGS PER SHARE(2) CASH FROM OPERATIONS (1) BACKLOG $1.18 GAAP: $1.02 $2.07B 16.1% $314M $22.17B • Sales growth driven by Freight Services & Components … despite ongoing supply chain disruptions • Delivered 210 bps of adj. margin expansion … improvement across both segments despite cost headwinds • Adjusted EPS up 20.4% YoY … driven by productivity gains, realization of synergies & positive mix • Robust cash flow from operations … 99% cash conversion • Returning capital to shareholders … executed $100M share buyback & paid $23M in dividends • Strong backlog provides improved visibility … up $578M YoY 4Q 2021 HIGHLIGHTS GAAP: 12.7% S O L I D E X E C U T I O N … S A L E S G R O W T H , M A R G I N E X P A N S I O N & S T R O N G C A S H F L O W Up 2.4% YoY (1) 4th quarter cash from operations included a negative impact from securitization of accounts receivable of $137 million (2) Adjusted numbers represent non-GAAP financial measures, see Appendix for additional details and reconciliations
5 0% 5% 10% 15% 20% Kazakhstan Russia China Brazil India 2 0 2 1 V o lu m e s v s 2 0 2 0 Market outlook Average North American Parked Locomotives 2022 Market Assumptions 2021 Global Freight Volumes 2018 2019 2020 2021 YoY North American Rail Carloads (5.9%) (17.7%) (6.4%) 3.2% 5.1% 20.2% (0.1%) (4.8%) 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 F R E I G H T NA Carloads + Locomotive & Railcar Parkings + International Freight Volumes + NA Railcar Production ++ Mining Commodities ++ T R A N S I T Infrastructure Investment + Global Ridership + Source: Association of American Railroads (AAR) Sources: China, Kazakhstan, India Ministry of Railways, Brazil: ANTT
6 FLXDRIVE DEMAND ADVANCING THE FUTURE OF CLEAN RAIL EUROPE RAIL JOINT UNDERTAKING FOUNDING MEMBER FREIGHT TRANSIT Recent wins
7 4Q 2021 financial summary S A L E S 2021 O P E R A T I N G I N C O M E 2021 GAAP E P S 2020 2021 Adj(1)2020 Adj(1) $2.07B $264M $2.02B $283M $334M 14.0% 16.1% I N C R E A S E D S A L E S , M A R G I N S A N D A D J U S T E D E P S D E S P I T E S U P P L Y C H A I N D I S R U P T I O N S A N D I N F L A T I O N H E A D W I N D S 2.4% Increase 2.1 pts of Adj Margin Expansion 20.4% Adj EPS Increase $161M 2020 GAAP 2021 GAAP 2021 Adj(1)2020 Adj(1) $1.02 $0.98 $1.18 $0.46 2020 GAAP 8.0% 12.7% (1) Adjusted numbers represent non-GAAP financial measures, see Appendix for additional details and reconciliations
8 4Q 2021 sales P R O D U C T L I N E 4 Q 2 1 Y O Y F Y 2 1 Y O Y Equipment $377 (12.9%) $1,302 (15.0%) Components $218 11.8% $867 5.9% Services $663 21.2% $2,430 17.5% Digital Electronics $167 1.8% $640 (3.6%) Freight Segment $1,425 6.4% $5,239 3.1% Transit Segment $648 (5.4%) $2,583 4.4% T O T A L S A L E S $2,073 2.4% $7,822 3.5% E Q U I P M E N T Decreased due to lower locomotive deliveries, offset somewhat by higher mining sales C O M P O N E N T S Higher due to increased OE railcar build, railcars coming out of storage and improving industrial end-markets S E R V I C E S Increased as a result of record MODs deliveries, lower locomotive parkings and the acquisition of Nordco D I G I T A L E L E C T R O N I C S Improved demand for on-board locomotive products, partially offset by ongoing chip shortages T R A N S I T Decreased as a result of supply chain issues, COVID-19 related disruptions and unfavorable foreign currency exchange 4 T H Q U A R T E R K E Y D R I V E R S
9 4Q 2021 consolidated adjusted gross profit 4 Q ( 2 ) F Y 2 1 ( 3 ) 2 0 2 0 A D J G R O S S P R O F I T (1) $527 $2,182 % of Sales 26.0% 28.9% Volume ↑ ↑ Mix/Pricing ↑↑ ↑ Raw Materials ↓↓ ↓ Currency ↓ ↑ Manufacturing/Synergies/Other ↑ ↑ 2 0 2 1 A D J G R O S S P R O F I T (1) $657 $2,422 % of Sales 31.7% 31.0% 4 T H Q U A R T E R K E Y D R I V E R S M I X / P R I C I N G Favorable mix between business groups & higher pricing/escalations R A W M A T E R I A L S Costs increased sharply due to higher steel, copper, aluminum and fuel C U R R E N C Y Unfavorable foreign exchange impacted gross profit by $5M M A N U F A C T U R I N G / S Y N E R G I E S / O T H E R Productivity & realization synergies, partially offset by significantly higher transportation and logistics costs (1) Adjusted numbers represent non-GAAP financial measures. See Appendix for additional details and reconciliations (2) 4Q 2020 GAAP gross profit was $506M (GAAP gross profit margin of 25.0%). 4Q 2021 GAAP gross profit was $652M (GAAP gross profit margin of 31.5%) (3) FY 2020 GAAP gross profit was $2,137M (GAAP gross profit margin of 28.3%). FY 2021 GAAP gross profit was $2,369M (GAAP gross profit margin of 30.3%)
10 4Q 2021 consolidated adjusted operating income C O N S O L I D A T E D 4 Q (2) F Y 2 1 (3) 2 0 2 0 A D J O P I N C O M E (1) $283 $1,143 % of Sales 14.0% 15.1% Adj Gross Profit 130 240 SG&A (65) (128) Engineering (14) (14) 2 0 2 1 A D J O P I N C O M E (1) $334 $1,241 % of Sales 16.1% 15.9% A D J U S T E D O P E R A T I N G I N C O M E W A S U P Y O Y O N H I G H E R G R O S S M A R G I N , P A R T I A L L Y O F F S E T B Y I N C R E A S E D S G & A A N D E N G I N E E R I N G E X P E N S E S (1) Adjusted numbers represent non-GAAP financial measures. See Appendix for additional details and reconciliations (2) 4Q 2020 GAAP operating income was $161M (GAAP operating margin of 8.0%). 4Q 2021 GAAP operating income was $264M (GAAP operating margin of 12.7%) (3) FY 2020 GAAP operating income was $745M (GAAP operating margin of 9.9%). FY 2021 GAAP operating income was $876M (GAAP operating margin of 11.2%)
11 4Q 2021 Freight segment performance 2021 4Q214Q202020 $1.43B(2) $1.34B $17.89B $18.50B(2) (1) Adjusted numbers represent non-GAAP financial measures, see Appendix for additional details and reconciliations (2) Foreign exchange rates negatively impacted Freight sales by $2 million; Foreign exchange rates had a negative $78 million impact on segment backlog (3) Freight segment operating income was positively impacted by below market intangible amortization of $14 million, down $6 million from 4Q 2020 2021 GAAP 2021 Adj(1,3)2020 Adj(1) $207M $219M $267M 16.3% 18.7% $121M 2020 GAAP 6.4% Increase 2.4 pts of Adj Margin Expansion 3.4% Increase 9.0% 14.5% S A L E S O P E R A T I N G I N C O M E B A C K L O G
12 4Q 2021 Transit segment performance 2021 4Q214Q202020 $648M(2) $685M $3.70B $3.67B(2) 2021 GAAP 2021 Adj(1)2020 Adj(1) $79M $77M $88M 11.3% 13.6% $57M 2020 GAAP 5.4% Decrease 2.3 pts of Adj Margin Expansion 1.0% Decrease (1) Adjusted numbers represent non-GAAP financial measures, see Appendix for additional details and reconciliations (2) Foreign exchange negatively impacted Transit sales by $15 million; Foreign exchange rates had a negative $163 million impact on segment backlog 8.3% 12.2% S A L E S O P E R A T I N G I N C O M E B A C K L O G
13 Resilient business allows for execution on financial priorities FOCUSED ON CASH CONVERSION(1) FY 2021FY 2020 $0.78B $1.07B Cash from Ops Record cash generation … full-year up 37% YoY Proactively managing working capital Capex of $52M in 4Q … $130M for FY 2021 STRONG FINANCIAL POSITION 4Q214Q20 $3.59B Net Debt $3.64B Adjusted net leverage(2) improved ... committed to maintaining investment grade ratings Strengthening balance sheet… strong liquidity of $1.67B R O B U S T C A S H G E N E R A T I O N ; I N V E S T I N G I N H I G H - R E T U R N O P P O R T U N I T I E S F O R G R O W T H Adj leverage 2.7x RETURN CAPITAL TO SHAREHOLDERS FY 2021 FY 2020 $300M $207M Deploying capital to execute on strategic priorities Returning capital to shareholders … announced $750M share buyback and 25% increase in quarterly dividend Adj leverage 2.5x 102% cash conv (1) Cash from Operations conversion % is defined as GAAP Cash from Operations divided by GAAP net income plus depreciation and amortization including deferred debt cost amortization (2) Net debt is defined as total debt minus cash and cash equivalents; adjusted leverage is defined as net debt divided by adjusted EBITDA 89% cash conv $93M $92M Share repurchases Dividends
14 2021 overview SALES ADJUSTED OPERATING MARGIN (1) ADJUSTED EARNINGS PER SHARE(1) CASH FROM OPERATIONS $4.26 GAAP: $2.96 $7.82B 15.9% $1.07B • Full-year sales growth driven by Services, Components & recovery in Transit … strong growth in Mods, improving railcar deliveries & partial recovery in Transit • Delivered 80 bps of adjusted margin expansion … strong improvement across both segments despite cost headwinds • Adjusted EPS up 12.4% YoY … driven by productivity gains, early realization of synergies & positive mix • Record cash flow from operations of $1.07B … 102% cash conversion … completed Nordco & MASU acquisitions F U L L Y E A R 2 0 2 1 H I G H L I G H T S GAAP: 11.2% S T R O N G E X E C U T I O N F O R T H E Y E A R … S T R O N G F O U N D A T I O N F O R G R O W T H I N 2 0 2 2 Up 3.5% YoY (1) Adjusted numbers represent non-GAAP financial measures, see Appendix for additional details and reconciliations
15 2022 outlook and guidance $8.3B to $8.6B R E V E N U E S $4.65 to $5.05 A D J U S T E D E P S >90% C A S H C O N V E R S I O N (1) B R O A D - B A S E D R E C O V E R Y A C R O S S P O R T F O L I O E Q U I P M E N T Significantly higher deliveries of international locos & favorable mining fundamentals C O M P O N E N T S Railcars coming out of storage … higher railcar build … improved industrial end-markets S E R V I C E S Increased demand for reliable, efficient power… unparking of locos & higher MODs D I G I T A L E L E C T R O N I C S Growth driven by international expansion & product upgrades T R A N S I T Increased global infrastructure investment & recovering ridership trends K E Y A S S U M P T I O N S Adjusted operating margin up o Favorable productivity/absorption, offset by mix & cost inflation o SG&A as % of sales down o Engineering as % of sales up Tax rate ~26% Capex ~2% of sales (1) Cash from operations conversion % is defined as GAAP cash from operations divided by GAAP net income plus depreciation and amortization including deferred debt cost amortization
16 What you’ve heard Advancing our long-term strategies… leading decarbonization and utilization of rail … creating significant value for our customers Leveraging significant installed base … resilient business model Strong execution in dynamic cost environment … navigating supply chain disruptions Generating strong cash flow with disciplined capital allocation … improving ROIC and shareholder returns S T R O N G F O U N D A T I O N F O R G R O W T H A N D I N C R E A S E D S H A R E H O L D E R V A L U E
Save the date March 9, 2022 . 8:00 AM ET . Virtual Webcast
18 Appendix
19 Income statement Appendix A ( 1 of 2) 2021 2020 2021 2020 Net sales 2,073$ 2,024$ 7,822$ 7,556$ Cost of sales (1,421) (1,518) (5,453) (5,419) Gross profit 652 506 2,369 2,137 Gross profit as a % of Net Sales 31.5% 25.0% 30.3% 28.3% Selling, general and administrative expenses (264) (236) (1,030) (948) Engineering expenses (52) (38) (176) (162) Amortization expense (72) (71) (287) (282) Total operating expenses (388) (345) (1,493) (1,392) Operating expenses as a % of Net Sales 18.7% 17.0% 19.1% 18.4% Income from operations 264 161 876 745 Income from operations as a % of Net Sales 12.7% 8.0% 11.2% 9.9% Interest expense, net (42) (49) (177) (199) Other income (expense), net 13 6 38 11 Income before income taxes 235 118 737 557 Income tax expense (42) (31) (172) (145) Effective tax rate 17.4% 26.6% 23.2% 26.0% Net income 193 87 565 412 Less: Net (income) loss attributable to noncontrolling interest (3) 1 (7) 2 Net income attributable to Wabtec shareholders 190 88 558 414 Earnings Per Common Share Basic Net income attributable to Wabtec shareholders 1.02$ 0.46$ 2.96$ 2.18$ Diluted Net income attributable to Wabtec shareholders 1.02$ 0.46$ 2.96$ 2.17$ Basic 186.0 189.2 187.7 189.9 Diluted 186.5 189.7 188.1 190.4 December 31, December 31, WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2021 AND 2020 (AMOUNTS IN MILLIONS EXCEPT PER SHARE DATA) (UNAUDITED) Three Months Ended Twelve Months Ended
20 Appendix A ( 2 of 2) Income statement (cont.) 2021 2020 2021 2020 Segment Information Freight Net Sales 1,425$ 1,339$ 5,239$ 5,082$ Freight Income from Operations 207$ 121$ 717$ 584$ Freight Operating Margin 14.5% 9.0% 13.7% 11.5% Transit Net Sales 648$ 685$ 2,583$ 2,474$ Transit Income from Operations 79$ 57$ 238$ 230$ Transit Operating Margin 12.2% 8.3% 9.2% 9.3% Backlog Information (Note: 12-month is a sub-set of total) December 31, 2021 September 30, 2021 Freight Total 18,502$ 18,211$ Transit Total 3,667 3,633 Wabtec Total 22,169$ 21,844$ Freight 12-Month 4,520$ 4,060$ Transit 12-Month 1,748 1,648 Wabtec 12-Month 6,268$ 5,708$ December 31, December 31, WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2021 AND 2020 (AMOUNTS IN MILLIONS EXCEPT PER SHARE DATA) (UNAUDITED) Three Months Ended Twelve Months Ended
21 Balance sheet Appendix B December 31, 2021 December 31, 2020 In millions Cash and cash equivalents 473$ 599$ Receivables, net 1,477 1,412 Inventories 1,689 1,642 Other current assets 193 227 Total current assets 3,832 3,880 Property, plant and equipment, net 1,497 1,601 Goodwill 8,587 8,485 Other intangible assets, net 3,705 3,869 Other noncurrent assets 833 619 Total assets 18,454$ 18,454$ Current liabilities 2,910$ 3,226$ Long-term debt 4,056 3,792 Long-term liabilities - other 1,249 1,283 Total liabilities 8,215 8,301 Shareholders' equity 10,201 10,123 Noncontrolling interest 38 30 Total shareholders' equity 10,239 10,153 Total Liabilities and Shareholders' Equity 18,454$ 18,454$ WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
22 Appendix C Cash flow 2021 2020 In millions Operating activities Net income 565 412 Non-cash expense 571 444 Receivables (76) 315 Inventories (41) 181 Accounts Payable 109 (269) Other assets and liabilities (55) (299) Net cash provided by operating activities 1,073 784 Net cash used for investing activities (540) (155) Net cash used for financing activities (653) (619) Effect of changes in currency exchange rates (6) (15) Decrease in cash (126) (5) Cash and cash equivalents, beginning of period 599 604 Cash and cash equivalents, end of period 473 599 WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Twelve Months Ended December 31,
23 EPS and non-GAAP Reconciliation Appendix D (1 of 2) 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 Results 2,073$ 652$ (388)$ 264$ (29)$ (42)$ 193$ (3)$ 190$ 1.02$ Restructuring & Transaction costs - 5 (7) (2) - 5 3 - 3 0.01$ Non-cash Amortization expense - - 72 72 - (18) 54 - 54 0.29$ Foreign Exchange Gain - - - - (1) - (1) - (1) (0.01)$ Amended Return, net - - - - - (25) (25) - (25) (0.13)$ Adjusted Results 2,073$ 657$ (323)$ 334$ (30)$ (80)$ 224$ (3)$ 221$ 1.18$ Fully Diluted Shares Outstanding 186.5 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 Results 7,822$ 2,369$ (1,493)$ 876$ (139)$ (172)$ 565$ (7)$ 558$ 2.96$ Restructuring & Transaction costs - 53 25 78 - (15) 63 - 63 0.33$ Non-cash Amortization expense - - 287 287 - (74) 213 - 213 1.13$ Foreign Exchange Gain - - - - (8) 2 (6) - (6) (0.03)$ Amended Return, net - - - - - (25) (25) - (25) (0.13)$ Adjusted Results 7,822$ 2,422$ (1,181)$ 1,241$ (147)$ (284)$ 810$ (7)$ 803$ 4.26$ Fully Diluted Shares Outstanding 188.1 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. Fourth Quarter 2021 Actual Results Fourth Quarter Year-to-Date 2021 Actual Results
24 Appendix D (2 of 2) EPS and non-GAAP Reconciliation 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 Results 2,024$ 506$ (345)$ 161$ (43)$ (31)$ 87$ 1$ 88$ 0.46$ Restructuring & Transaction costs - 21 30 51 - (12) 39 - 39 0.20$ Non-cash Amortization expense - - 71 71 - (16) 55 - 55 0.29$ Foreign Exchange Loss - - - - 1 (1) - - - -$ Tax on Transaction Costs - - - - - 6 6 - 6 0.03$ Adjusted Results 2,024$ 527$ (244)$ 283$ (42)$ (54)$ 187$ 1$ 188$ 0.98$ Fully Diluted Shares Outstanding 189.7 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 Results 7,556$ 2,137$ (1,392)$ 745$ (188)$ (145)$ 412$ 2$ 414$ 2.17$ Restructuring & Transaction costs - 45 71 116 - (29) 87 - 87 0.45$ Non-cash Amortization expense - - 282 282 - (71) 211 - 211 1.11$ Foreign Exchange Loss - - - - 9 (2) 7 - 7 0.03$ Tax on Transaction Costs - - - - - 6 6 - 6 0.03$ Adjusted Results 7,556$ 2,182$ (1,039)$ 1,143$ (179)$ (241)$ 723$ 2$ 725$ 3.79$ Fully Diluted Shares Outstanding 190.4 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. Fourth Quarter 2020 Actual Results Fourth Quarter Year-to-Date 2020 Actual Results
25 EBITDA reconciliation Appendix E Wabtec Corporation 2021 Q4 EBITDA Reconciliation (in millions) Reported Income Other Income Depreciation & Restructuring & Adjusted from Operations (Expense) Amortization Transaction Costs EBITDA Consolidated Results $264 $13 $121 $398 ($2) $396 Wabtec Corporation 2021 Q4 YTD EBITDA Reconciliation (in millions) Reported Income Other Income Depreciation & Restructuring & Adjusted from Operations (Expense) Amortization Transaction Costs EBITDA Consolidated Results $876 $38 $485 $1,399 $78 $1,477 Wabtec Corporation 2020 Q4 EBITDA Reconciliation (in millions) Reported Income Other Income Depreciation & Restructuring & Adjusted from Operations (Expense) Amortization Transaction Costs EBITDA Consolidated Results $161 $6 $118 $285 $51 $336 Wabtec Corporation 2020 Q4 YTD EBITDA Reconciliation (in millions) Reported Income Other Income Depreciation & Restructuring & Adjusted from Operations (Expense) Amortization Transaction Costs EBITDA Consolidated Results $745 $11 $466 $1,222 $116 $1,338 Set forth below is the calculation of the non-GAAP performance measures included in this press release. We believe that these measures provide useful supplemental information to assess our operating performance and to evaluate period-to-period comparisons. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, Wabtec's reported results prepared in accordance with GAAP. + + = EBITDA + = = + + = EBITDA + = + + = EBITDA + =+ + = EBITDA +
26 Sales by product line Appendix F In millions 2021 2020 Freight Segment Equipment 377$ 433$ Components 218 195 Digital Electronics 167 164 Services 663 547 Total Freight Segment 1,425 1,339 Transit Segment Original Equipment Manufacturer 299$ 322$ Aftermarket 349 363 Total Transit Segment 648 685 In millions 2021 2020 Freight Segment Equipment 1,302$ 1,531$ Components 867 819 Digital Electronics 640 664 Services 2,430 2,068 Total Freight Segment 5,239 5,082 Transit Segment Original Equipment Manufacturer 1,193$ 1,139$ Aftermarket 1,390 1,335 Total Transit Segment 2,583 2,474 Twelve Months Ended December 31, WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION SALES BY PRODUCT LINE (UNAUDITED) Three Months Ended December 31,
27 Segment gross margin reconciliation Appendix G In millions 2021 2020 2021 2020 Freight Segment Reported Gross Profit 454$ 339$ 1,667$ 1,488$ Freight Segment Reported Gross Margin 31.9% 25.3% 31.8% 29.3% Restructuring & Transaction costs 3 14 8 30 Freight Segment Adjusted Gross Profit 457$ 353$ 1,675$ 1,518$ Freight Segment Adjusted Gross Margin 32.1% 26.4% 32.0% 29.9% Transit Segment Reported Gross Profit 198$ 167$ 702$ 649$ Transit Segment Reported Gross Margin 30.6% 24.4% 27.2% 26.2% Restructuring & Transaction costs 2 6 45 14 Transit Segment Adjusted Gross Profit 200$ 173$ 747$ 663$ Transit Segment Adjusted Gross Margin 30.9% 25.3% 28.9% 26.8% WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION RECONCILIATION OF REPORTED RESULTS TO ADJUSTED RESULTS - BY SEGMENT (UNAUDITED) Three Months Ended December 31, Twelve Months Ended December 31,
28 Segment operating margin reconciliation Appendix H In millions 2021 2020 2021 2020 Freight Segment Reported Income from Operations 207$ 121$ 717$ 584$ Freight Segment Reported Margin 14.5% 9.0% 13.7% 11.5% Restructuring & Transaction costs (7) 32 9 76 Non-cash Amortization expense 67 66 267 262 Freight Segment Adjusted Income from Operations 267$ 219$ 993$ 922$ Freight Segment Adjusted Margin 18.7% 16.3% 19.0% 18.1% Transit Segment Reported Income from Operations 79$ 57$ 238$ 230$ Transit Segment Reported Margin 12.2% 8.3% 9.2% 9.3% Restructuring & Transaction costs 4 15 59 27 Non-cash Amortization expense 5 5 20 20 Transit Segment Adjusted Income from Operations 88$ 77$ 317$ 277$ Transit Segment Adjusted Margin 13.6% 11.3% 12.3% 11.2% WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION RECONCILIATION OF REPORTED RESULTS TO ADJUSTED RESULTS - BY SEGMENT (UNAUDITED) Three Months Ended December 31, Twelve Months Ended December 31,
29 Segment sales reconciliation Appendix I In millions Freight Transit Consolidated 2020 Net Sales 1,339$ 685$ 2,024$ Acquisitions 61 - 61 Foreign Exchange (2) (15) (17) Organic 27 (22) 5 2021 Net Sales 1,425$ 648$ 2,073$ Change ($) 86 (37) 49 Change (%) 6.4% -5.4% 2.4% Freight Transit Consolidated 2020 Net Sales 5,082$ 2,474$ 7,556$ Acquisitions 138 - 138 Foreign Exchange 23 111 134 Organic (4) (2) (6) 2021 Net Sales 5,239$ 2,583$ 7,822$ Change ($) 157 109 266 Change (%) 3.1% 4.4% 3.5% Twelve Months Ended December 31, WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION RECONCILIATION OF CHANGES IN NET SALES - BY SEGMENT (UNAUDITED) Three Months Ended December 31,
30 Cash conversion reconciliation Appendix J Wabtec Corporation 2021 Q4 Cash Conversion Calculation (in millions) Reported Cash from Operations Consolidated Results $314 $193 $123 99% Wabtec Corporation 2021 Q4 YTD Cash Conversion Calculation (in millions) Reported Cash from Operations Consolidated Results $1,073 $565 $491 102% Wabtec Corporation 2020 Q4 Cash Conversion Calculation (in millions) Reported Cash from Operations Consolidated Results $326 $87 $119 158% Wabtec Corporation 2020 Q4 YTD Cash Conversion Calculation (in millions) Reported Cash from Operations Consolidated Results $784 $412 $473 89% Cash Conversion ÷ (Net Income + Depreciation & Amortization) = Cash Conversion ÷ (Net Income + Depreciation & Amortization) = Cash Conversion 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. ÷ (Net Income + Depreciation & Amortization) = Cash Conversion ÷ (Net Income + Depreciation & Amortization) =