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): April 27, 2022 (April 27, 2022 )
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(Exact name of registrant as specified in its charter)
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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) | |||||
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| 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 April 27, 2022, Westinghouse Air Brake Technologies Corporation (the “Company”) issued a press release reporting, among other things, the Company’s 2022 first 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 first quarter of 2022 (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 April 27, 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 first quarter of 2022, 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 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 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; (14) the imposition of economic sanctions on Russia resulting from the invasion of Ukraine could lead to disruption, instability, and volatility in global markets and negatively impact our operations and financial performance; and (15) 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: | |||||
Exhibit 99.1
News Release
Wabtec Reports Strong 1st Quarter 2022 Results
•First Quarter Reported GAAP Earnings Per Share of $0.80; Adjusted Earnings Per Share of $1.13, Up 27.0%
•Sales Growth of 5.3% to $1.93 Billion; GAAP Operating Margin of 12.4%; Adjusted Operating Margin of 16.5%, Up 1.4 pts
•Repurchased 3.1 Million Shares During the First Quarter for $296 Million; Raised Quarterly Dividend by 25%
•Multi-Year Backlog Up 5.0% Year-Over-Year to $22.76 Billion, Provides Strong Forward Momentum
PITTSBURGH, April 27, 2022 – Wabtec Corporation (NYSE: WAB) today reported first quarter 2022 GAAP earnings per diluted share of $0.80, up 35.6% versus the first quarter of 2021. Adjusted earnings per diluted share were $1.13, up 27.0% versus the same quarter a year ago. First quarter sales were $1.93 billion and cash from operations was $161 million.
“The Wabtec team made solid progress in the quarter against our long-term strategy by delivering profitable growth and continued margin expansion across our Freight and Transit segments” said Rafael Santana, Wabtec’s President and CEO. “The resiliency of the business and the focus of the team was evident in the strong first quarter financial results despite rising costs, continuing supply disruptions, and the impact on our business due to the conflict in Ukraine.
“Looking forward, Wabtec is well-positioned to drive long-term profitable growth. The growth opportunity and value proposition for the rail industry is improving as global energy prices surge and commodity flows are reoriented. The breadth and unique capability of the Wabtec product portfolio, combined with our multi-year backlog, provides us with a solid foundation for growth in 2022 and beyond. Our confidence in the Company’s future is further reflected in our first quarter purchase of $296 million of Wabtec stock and a 25% increase in our first quarter dividend.”
2022 First Quarter Consolidated Results
| Wabtec Corporation Consolidated Financial Results | |||||||||||
| $ in millions except earnings per share and percentages; margin change in percentage points (pts) | First Quarter | ||||||||||
| 2022 | 2021 | Change | |||||||||
| Net Sales | $1,927 | $1,830 | 5.3 | % | |||||||
| GAAP Gross Margin | 30.9 | % | 29.2 | % | 1.7 pts | ||||||
| Adjusted Gross Margin | 31.1 | % | 29.4 | % | 1.7 pts | ||||||
| GAAP Operating Margin | 12.4 | % | 10.5 | % | 1.9 pts | ||||||
| Adjusted Operating Margin | 16.5 | % | 15.1 | % | 1.4 pts | ||||||
| GAAP Diluted EPS | $0.80 | $0.59 | 35.6 | % | |||||||
| Adjusted Diluted EPS | $1.13 | $0.89 | 27.0 | % | |||||||
| Cash Flow from Operations | $161 | $292 | (44.9) | % | |||||||
| Operating Cash Flow Conversion | 59 | % | 124 | % | |||||||
•Sales increased compared to the year-ago quarter driven by higher Freight segment sales, partially offset by lower Transit segment sales which were adversely impacted by foreign currency exchange.
•Both GAAP and adjusted operating margin increased from last year as a result of higher sales, increased pricing, improved mix and strong productivity, partially offset by $45 to $50 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 operating margins. GAAP EPS further benefited from a favorable effective tax rate, along with lower restructuring and transaction costs.
2022 First Quarter Freight Segment Results
| Wabtec Corporation Freight Segment Financial Results | |||||||||||
| Net sales $ in millions; margin change in percentage points (pts) | First Quarter | ||||||||||
| 2022 | 2021 | Change | |||||||||
| Net Sales | $1,322 | $1,183 | 11.7 | % | |||||||
| GAAP Gross Margin | 32.1 | % | 30.1 | % | 2.0 pts | ||||||
| Adjusted Gross Margin | 32.2 | % | 30.2 | % | 2.0 pts | ||||||
| GAAP Operating Margin | 14.3 | % | 12.0 | % | 2.3 pts | ||||||
| Adjusted Operating Margin | 19.6 | % | 18.1 | % | 1.5 pts | ||||||
•Freight segment sales for the first quarter were driven by demand for Services, Components and Equipment, along with the acquisition of Nordco.
•Both GAAP and adjusted operating margin benefited from higher sales, favorable mix/price and operational efficiencies, partially offset by higher costs. GAAP operating margin also improved year-over-year as a result of lower restructuring and transaction costs.
2022 First Quarter Transit Segment Results
| Wabtec Corporation Transit Segment Financial Results | |||||||||||
| Net sales $ in millions; margin change in percentage points (pts) | First Quarter | ||||||||||
| 2022 | 2021 | Change | |||||||||
| Net Sales | $605 | $647 | (6.5) | % | |||||||
| GAAP Gross Margin | 28.2 | % | 27.5 | % | 0.7 pts | ||||||
| Adjusted Gross Margin | 28.7 | % | 27.9 | % | 0.8 pts | ||||||
| GAAP Operating Margin | 10.7 | % | 10.8 | % | (0.1 pts) | ||||||
| Adjusted Operating Margin | 12.3 | % | 12.2 | % | 0.1 pts | ||||||
•Transit segment sales for the first quarter were down versus last year due to unfavorable foreign currency exchange, supply chain issues and COVID-related disruptions.
•GAAP and adjusted operating margins were approximately flat versus last year with higher pricing being largely offset by higher input costs.
Backlog
| Wabtec Corporation Consolidated Backlog Comparison | |||||||||||
| Backlog $ in millions | March 31, | ||||||||||
| 2022 | 2021 | Change | |||||||||
| 12-Month Backlog | $6,631 | $5,706 | 16.2 | % | |||||||
| Total Backlog | $22,759 | $21,672 | 5.0 | % | |||||||
At March 31, 2022 the multi-year backlog was $1.09 billion higher than March 31, 2021 due primarily from increased orders for Equipment, Services and Digital Electronics.
Cash Flow and Liquidity Summary
•During the first quarter, the Company generated cash from operations of $161 million versus $292 million in the year ago period due primarily to proactive building of inventory ahead of higher volumes and supply chain disruptions.
•At the end of the quarter, the Company had cash and cash equivalents of $488 million and total debt of $4.24 billion. At March 31, 2022 the Company’s total available liquidity was $1.50 billion, which includes cash and cash equivalents plus $1.01 billion available under current credit facilities.
•During the first quarter, the Company repurchased $296 million of shares and raised the regular quarterly common dividend by 25%.
2022 Financial Guidance
•Wabtec’s 2022 financial guidance continues to be 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, (14) the imposition of economic sanctions on Russia resulting from the invasion of Ukraine could lead to disruption, instability, and volatility in global markets and negatively impact our operations and financial performance; and (15) 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 MONTHS ENDED MARCH 31, 2022 AND 2021
(AMOUNTS IN MILLIONS EXCEPT PER SHARE DATA)
(UNAUDITED)
| Three Months Ended March 31, | |||||||||||
| 2022 | 2021 | ||||||||||
| Net sales | $ | 1,927 | $ | 1,830 | |||||||
| Cost of sales | (1,332) | (1,296) | |||||||||
| Gross profit | 595 | 534 | |||||||||
| Gross profit as a % of Net Sales | 30.9 | % | 29.2 | % | |||||||
| Selling, general and administrative expenses | (238) | (234) | |||||||||
| Engineering expenses | (45) | (38) | |||||||||
| Amortization expense | (73) | (70) | |||||||||
| Total operating expenses | (356) | (342) | |||||||||
| Operating expenses as a % of Net Sales | 18.4 | % | 18.7 | % | |||||||
| Income from operations | 239 | 192 | |||||||||
| Income from operations as a % of Net Sales | 12.4 | % | 10.5 | % | |||||||
| Interest expense, net | (43) | (48) | |||||||||
| Other income, net | 4 | 14 | |||||||||
| Income before income taxes | 200 | 158 | |||||||||
| Income tax expense | (50) | (43) | |||||||||
| Effective tax rate | 25.1 | % | 27.5 | % | |||||||
| Net income | 150 | 115 | |||||||||
| Less: Net loss attributable to noncontrolling interest | (1) | (3) | |||||||||
| Net income attributable to Wabtec shareholders | $ | 149 | $ | 112 | |||||||
| Earnings Per Common Share | |||||||||||
| Basic | |||||||||||
| Net income attributable to Wabtec shareholders | $ | 0.80 | $ | 0.59 | |||||||
| Diluted | |||||||||||
| Net income attributable to Wabtec shareholders | $ | 0.80 | $ | 0.59 | |||||||
| Weighted average shares outstanding | |||||||||||
| Basic | 184.5 | 188.5 | |||||||||
| Diluted | 185.0 | 188.9 | |||||||||
| Appendix A | ||||||||
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021
(AMOUNTS IN MILLIONS EXCEPT PER SHARE DATA)
(UNAUDITED)
| Three Months Ended | |||||||||||||||||
| March 31, | |||||||||||||||||
| 2022 | 2021 | ||||||||||||||||
| Segment Information | |||||||||||||||||
| Freight Net Sales | $ | 1,322 | $ | 1,183 | |||||||||||||
| Freight Income from Operations | $ | 189 | $ | 142 | |||||||||||||
| Freight Operating Margin | 14.3 | % | 12.0 | % | |||||||||||||
| Transit Net Sales | $ | 605 | $ | 647 | |||||||||||||
| Transit Income from Operations | $ | 65 | $ | 70 | |||||||||||||
| Transit Operating Margin | 10.7 | % | 10.8 | % | |||||||||||||
| Backlog Information (Note: 12-month is a sub-set of total) | March 31, 2022 | December 31, 2021 | March 31, 2021 | ||||||||||||||
| Freight Total | $ | 19,024 | $ | 18,502 | $ | 18,502 | |||||||||||
| Transit Total | 3,735 | 3,667 | 3,667 | ||||||||||||||
| Wabtec Total | $ | 22,759 | $ | 22,169 | $ | 22,169 | |||||||||||
| Freight 12-Month | $ | 4,812 | $ | 4,520 | $ | 4,520 | |||||||||||
| Transit 12-Month | 1,819 | 1,748 | 1,748 | ||||||||||||||
| Wabtec 12-Month | $ | 6,631 | $ | 6,268 | $ | 6,268 | |||||||||||
| Appendix B | ||||||||
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
| March 31, 2022 | December 31, 2021 | ||||||||||
| In millions | |||||||||||
| Cash and cash equivalents | $ | 488 | $ | 473 | |||||||
| Receivables, net | 1,382 | 1,477 | |||||||||
| Inventories | 1,828 | 1,689 | |||||||||
| Other current assets | 213 | 193 | |||||||||
| Total current assets | 3,911 | 3,832 | |||||||||
| Property, plant and equipment, net | 1,468 | 1,497 | |||||||||
| Goodwill | 8,567 | 8,587 | |||||||||
| Other intangible assets, net | 3,632 | 3,705 | |||||||||
| Other noncurrent assets | 860 | 833 | |||||||||
| Total assets | $ | 18,438 | $ | 18,454 | |||||||
| Current liabilities | $ | 2,880 | $ | 2,910 | |||||||
| Long-term debt | 4,225 | 4,056 | |||||||||
| Long-term liabilities - other | 1,245 | 1,249 | |||||||||
| Total liabilities | 8,350 | 8,215 | |||||||||
| Shareholders' equity | 10,049 | 10,201 | |||||||||
| Noncontrolling interest | 39 | 38 | |||||||||
| Total shareholders' equity | 10,088 | 10,239 | |||||||||
| Total Liabilities and Shareholders' Equity | $ | 18,438 | $ | 18,454 | |||||||
| Appendix C | ||||||||
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| Three Months Ended March 31, | |||||||||||
| In millions | 2022 | 2021 | |||||||||
| Operating activities | |||||||||||
| Net income | $ | 150 | $ | 115 | |||||||
| Non-cash expense | 122 | 116 | |||||||||
| Receivables | 93 | 9 | |||||||||
| Inventories | (137) | (11) | |||||||||
| Accounts Payable | 48 | 47 | |||||||||
| Other assets and liabilities | (115) | 16 | |||||||||
| Net cash provided by operating activities | 161 | 292 | |||||||||
| Net cash used for investing activities | (18) | (422) | |||||||||
| Net cash (used for) provided by financing activities | (133) | 8 | |||||||||
| Effect of changes in currency exchange rates | 5 | 7 | |||||||||
| Increase (decrease) in cash | 15 | (115) | |||||||||
| Cash and cash equivalents, beginning of period | 473 | 599 | |||||||||
| Cash and cash equivalents, end of period | $ | 488 | $ | 484 | |||||||
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) | First Quarter 2022 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 | $ | 1,927 | $ | 595 | $ | (356) | $ | 239 | $ | (39) | $ | (50) | $ | 150 | $ | (1) | $ | 149 | $ | 0.80 | |||||||||||||||||||||||||||||||||||||||||||||
| Restructuring & Transaction costs | — | 5 | 2 | 7 | — | (2) | 5 | — | 5 | $ | 0.03 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-cash Amortization expense | — | — | 73 | 73 | — | (18) | 55 | — | 55 | $ | 0.30 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted Results | $ | 1,927 | $ | 600 | $ | (281) | $ | 319 | $ | (39) | $ | (70) | $ | 210 | $ | (1) | $ | 209 | $ | 1.13 | |||||||||||||||||||||||||||||||||||||||||||||
| Fully Diluted Shares Outstanding | 185.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Wabtec Corporation Reconciliation of Reported Results to Adjusted Results (in millions) | First Quarter 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 | $ | 1,830 | $ | 534 | $ | (342) | $ | 192 | $ | (34) | $ | (43) | $ | 115 | $ | (3) | $ | 112 | $ | 0.59 | |||||||||||||||||||||||||||||||||||||||||||||
| Restructuring & Transaction costs | — | 4 | 11 | 15 | — | (4) | 11 | — | 11 | $ | 0.06 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-cash Amortization expense | — | — | 70 | 70 | — | (19) | 51 | — | 51 | $ | 0.27 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign Exchange Gain | — | — | — | — | (9) | 3 | (6) | — | (6) | $ | (0.03) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted Results | $ | 1,830 | $ | 538 | $ | (261) | $ | 277 | $ | (43) | $ | (63) | $ | 171 | $ | (3) | $ | 168 | $ | 0.89 | |||||||||||||||||||||||||||||||||||||||||||||
| Fully Diluted Shares Outstanding | 188.9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||||
| 2022 Q1 EBITDA Reconciliation | ||||||||||||||||||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||||||||||||||
| Reported Income | + | Other Income | + | Depreciation & | = | EBITDA | + | Restructuring & | = | Adjusted | ||||||||||||||||||||||||||||
| from Operations | (Expense) | Amortization | Transaction Costs | EBITDA | ||||||||||||||||||||||||||||||||||
| Consolidated Results | $ | 239 | $ | 4 | $ | 121 | $ | 364 | $ | 7 | $ | 371 | ||||||||||||||||||||||||||
| Wabtec Corporation | ||||||||||||||||||||||||||||||||||||||
| 2021 Q1 EBITDA Reconciliation | ||||||||||||||||||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||||||||||||||
| Reported Income | + | Other Income | + | Depreciation & | = | EBITDA | + | Restructuring & | = | Adjusted | ||||||||||||||||||||||||||||
| from Operations | (Expense) | Amortization | Transaction Costs | EBITDA | ||||||||||||||||||||||||||||||||||
| Consolidated Results | $ | 192 | $ | 14 | $ | 119 | $ | 325 | $ | 15 | $ | 340 | ||||||||||||||||||||||||||
Appendix F
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION
SALES BY PRODUCT LINE
(UNAUDITED)
| Three Months Ended March 31, | |||||||||||
| In millions | 2022 | 2021 | |||||||||
| Freight Segment | |||||||||||
| Equipment | $ | 274 | $ | 262 | |||||||
| Components | 229 | 203 | |||||||||
| Digital Electronics | 153 | 156 | |||||||||
| Services | 666 | 562 | |||||||||
| Total Freight Segment | $ | 1,322 | $ | 1,183 | |||||||
| Transit Segment | |||||||||||
| Original Equipment Manufacturer | $ | 292 | $ | 287 | |||||||
| Aftermarket | 313 | 360 | |||||||||
| Total Transit Segment | $ | 605 | $ | 647 | |||||||
Appendix G
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION
RECONCILIATION OF REPORTED RESULTS TO ADJUSTED RESULTS - BY SEGMENT
(UNAUDITED)
| Three Months Ended March 31, | ||||||||||||||||||||||||||
| 2022 | 2021 | |||||||||||||||||||||||||
| In millions | Gross Profit | Income from Operations | Gross Profit | Income from Operations | ||||||||||||||||||||||
| Freight Segment Reported Results | $ | 424 | $ | 189 | $ | 356 | $ | 142 | ||||||||||||||||||
| Freight Segment Reported Margin | 32.1% | 14.3% | 30.1% | 12.0% | ||||||||||||||||||||||
| Restructuring & Transaction costs | 2 | 2 | 1 | 7 | ||||||||||||||||||||||
| Non-cash Amortization expense | — | 68 | — | 65 | ||||||||||||||||||||||
| Freight Segment Adjusted Results | $ | 426 | $ | 259 | $ | 357 | $ | 214 | ||||||||||||||||||
| Freight Segment Adjusted Margin | 32.2% | 19.6% | 30.2% | 18.1% | ||||||||||||||||||||||
| Transit Segment Reported Results | $ | 171 | $ | 65 | $ | 178 | $ | 70 | ||||||||||||||||||
| Transit Segment Reported Margin | 28.2% | 10.7% | 27.5% | 10.8% | ||||||||||||||||||||||
| Restructuring & Transaction costs | 3 | 4 | 3 | 4 | ||||||||||||||||||||||
| Non-cash Amortization expense | — | 5 | — | 5 | ||||||||||||||||||||||
| Transit Segment Adjusted Results | $ | 174 | $ | 74 | $ | 181 | $ | 79 | ||||||||||||||||||
| Transit Segment Adjusted Margin | 28.7% | 12.3% | 27.9% | 12.2% | ||||||||||||||||||||||
Appendix H
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION
RECONCILIATION OF CHANGES IN NET SALES - BY SEGMENT
(UNAUDITED)
| Three Months Ended March 31, | |||||||||||||||||||||||
| In millions | Freight | Transit | Consolidated | ||||||||||||||||||||
| 2021 Net Sales | $ | 1,183 | $ | 647 | $ | 1,830 | |||||||||||||||||
| Acquisitions | 39 | 1 | 40 | ||||||||||||||||||||
| Foreign Exchange | (4) | (33) | (37) | ||||||||||||||||||||
| Organic | 104 | (10) | 94 | ||||||||||||||||||||
| 2022 Net Sales | $ | 1,322 | $ | 605 | $ | 1,927 | |||||||||||||||||
| Change ($) | 139 | (42) | 97 | ||||||||||||||||||||
| Change (%) | 11.7% | (6.5)% | 5.3% | ||||||||||||||||||||
Appendix I
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 | ||||||||||||||||||||||||||
| 2022 Q1 Cash Conversion Calculation | ||||||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||
| Reported Cash from Operations | ÷ | (Net Income | + | Depreciation & Amortization) | = | Cash Conversion | ||||||||||||||||||||
| Consolidated Results | $ | 161 | $ | 150 | $ | 122 | 59 | % | ||||||||||||||||||
| Wabtec Corporation | ||||||||||||||||||||||||||
| 2021 Q1 Cash Conversion Calculation | ||||||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||
| Reported Cash from Operations | ÷ | (Net Income | + | Depreciation & Amortization) | = | Cash Conversion | ||||||||||||||||||||
| Consolidated Results | $ | 292 | $ | 115 | $ | 120 | 124 | % | ||||||||||||||||||
1 F I R S T Q U AR T E R 2 0 2 2 Wabtec Financial Results & Company Highlights
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; (14) the imposition of economic sanctions on Russia resulting from the invasion of Ukraine could lead to disruption, instability, and volatility in global markets and negatively impact our operations and financial performance; and (15) 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 P R E S E N T E R S RAFAEL SANTANA President & Chief Executive Officer W A B T E C Today’s participants I N V E S T O R R E L A T I O N S JOHN OLIN Executive Vice President & Chief Financial Officer KRISTINE KUBACKI Vice President, Investor Relations
4 1Q 2022 overview Sales growth driven by Freight Services, Components and Equipment … even with supply chain disruptions Delivered 1.4 percentage points of adj. margin expansion … improvement driven by Freight segment Adj. EPS up 27.0% YoY… driven by sales growth and strong margin expansion partially offset by cost increases Cash flow from operations impacted by proactive inventory build Returning capital to shareholders … executed $296M share buyback and paid $28M in dividends Strong backlog provides improved visibility… up $1.09B YoY W A B T E C S AL ES ADJUS TED O PERA T IN G M AR GIN (2) ADJUS TED EA RN I N GS PER S HARE (2) CA S H F L O W FR OM O PERAT IO N S (1) BACK L O G $1.93B 16.5% $1.13 $161M $22.76B I N C R E A S E D S A L E S , M A R G I N E X P A N S I O N & A D J E P S G R O W T H (1) Year-over-year benefit from securitization of accounts receivable was $62 million (2) Adjusted numbers represent non-GAAP financial measures, see Appendix for additional details and reconciliations 1Q 2022 HIGHLIGHTS GAAP: 12.4% GAAP: $0.80 UP 5.3% YoY
5 (5.9%) (17.7%) (6.4%) 3.2% 5.1% 20.2% (0.1%) (4.9%) (3.7%) 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 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 + W A B T E C Market assumptions N O RTH AME RI CAN F REI GHT CARL O ADS 1Q 2022 FR EI GHT V OL UM ESA V G . N O R T H A M E R I C A N P A R K E D L O C O M O T I V E S 2018 2019 2020 2021 Sources: China, Kazakhstan, India Ministry of Railways, Brazil: ANTT, South Africa (4.2%) (0.1%) 7.0% 2.7% 9.5% Brazil China India South Africa Kazakhstan 2022 YTD
6 DRIVERS OF PORTFOLIO GROWTH RECENT WINS Strategic Digital Electronics orders … largest predictive maintenance order in India … next-gen dispatch and PTC upgrade with Class Is 330 modernization order with Norfolk Southern Launch of new lower-carbon, heavy-haul locomotive in Brazil Launched Integration 2.0 W A B T E C Executing on our value creation framework Accelerate innovation of scalable technologies Grow and refresh expansive global installed base Lead decarbonization of rail Expand high-margin recurring revenue streams Drive continuous operational improvement
7 INCREASED SALES, MARGINS AND ADJ EPS DESPITE SUPPLY CHAIN DISRUPTIONS AND COST HEADWINDS (1) Adjusted numbers represent non-GAAP financial measures, see Appendix for additional details and reconciliations 1Q 2022 Financial summary W A B T E C OPERATING INCOME/ OPERATING MARGIN 5.3% INCREASE 1.4 PTS OF ADJ MARGIN EXPANSION $192M 10.5% 2021 GAAP SALES EPS 27.0% ADJ EPS INCREASE $1.83B 2021 $1.93B 2022 $239M 12.4% 2022 GAAP $277M 15.1% 2021 ADJ(1) $319M 16.5% 2022 ADJ(1) $0.59 2021 GAAP $0.80 2022 GAAP $0.89 2021 ADJ(1) $1.13 2022 ADJ(1)
8 W A B T E C 1Q 2022 sales P R O D U C T L I N E 1 Q 2 2 Y O Y Equipment $274 4.6% Components $229 12.8% Services $666 18.5% Digital Electronics $153 (1.9%) Freight Segment $1,322 11.7% Transit Segment $605 (6.5%) T O T A L S A L E S $1,927 5.3% E Q U I P M E N T Increased due to higher mining sales C O M P O N E N T S Higher due to increased OE railcar build, railcars coming out of storage and improving industrial end-markets S E R V I C E S Increased from higher MODs sales, lower locomotive parkings and the acquisition of Nordco D I G I T A L E L E C T R O N I C S Decreased due to ongoing chip shortage … partially offset by higher demand for on-board locomotive products T R A N S I T Decreased as a result of supply chain issues, COVID-19 related disruptions and unfavorable foreign currency exchange 1 Q K E Y D R I V E R S ($ in millions)
9 W A B T E C 1Q 2022 consolidated adjusted gross profit 1 Q K E Y D R I V E R S 2 0 2 1 A D J G R O S S P R O F I T $538 % of Sales 29.4% Volume ↑ Mix/Pricing ↑↑ Raw Materials ↓↓ Currency ↓ Manufacturing/Other ↑ 2 0 2 2 A D J G R O S S P R O F I T $600 % of Sales 31.1% 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 $10M M A N U F A C T U R I N G / O T H E R Favorable fixed cost absorption, partially offset by higher transportation and logistics costs ($ in millions) 1Q (1) (2) (1) Adjusted numbers represent non-GAAP financial measures. See Appendix for additional details and reconciliations (2) 1Q 2021 GAAP gross profit was $534M (GAAP gross profit margin of 29.2%). 1Q 2022 GAAP gross profit was $595M (GAAP gross profit margin of 30.9%)
10 W A B T E C 1Q 2022 consolidated adjusted operating income (1) Adjusted numbers represent non-GAAP financial measures. See Appendix for additional details and reconciliations (2) 1Q 2021 GAAP operating income was $192M (GAAP operating margin of 10.5%). 1Q 2022 GAAP operating income was $239M (GAAP operating margin of 12.4%) A D J O P E R A T I N G I N C O M E U P Y E A R - O V E R - Y E A R 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 2 0 2 1 A D J O P I N C O M E $277 % of Sales 15.1% Adj Gross Profit 62 Adj SG&A (13) Engineering (7) 2 0 2 2 A D J O P I N C O M E $319 % of Sales 16.5% 1Q (1) (2) ($ in millions)
11 (1) Adjusted numbers represent non-GAAP financial measures, see Appendix for additional details and reconciliations (2) Foreign exchange rates negatively impacted Freight sales by $4 million; Foreign exchange rates had a positive $67 million impact on segment backlog (3) Freight segment operating income was positively impacted by below-market intangible amortization of $12 million, down $1 million from 1Q 2021 1Q 2022 Freight segment performance W A B T E C 11.7% INCREASE OPERATING INCOME/ OPERATING MARGIN 1.5 PTS OF ADJ MARGIN EXPANSION $142M 12.0% 2021 GAAP SALES BACKLOG 5.7% INCREASE YoY $1.18B 2021 $1.32B(2) 2022 $189M 14.3% 2022 GAAP $214M 18.1% 2021 ADJ(1) $259M 19.6% 2022 ADJ(1,3) $18.01B 2021 $19.02B(2) 2022
12 (1) Adjusted numbers represent non-GAAP financial measures, see Appendix for additional details and reconciliations (2) Foreign exchange negatively impacted Transit sales by $33 million; Foreign exchange rates had a negative $135 million impact on segment backlog 1Q 2022 Transit segment performance W A B T E C OPERATING INCOME/ OPERATING MARGIN 6.5% DECREASE 0.1 PTS OF ADJ MARGIN EXPANSION $70M 10.8% 2021 GAAP SALES BACKLOG 1.9% INCREASE YoY $647M 2021 $605(2) 2022 $65M 10.7% 2022 GAAP $79M 12.2% 2021 ADJ(1) $74M 12.3% 2022 ADJ(1) $3.67B 2021 $3.74B(2) 2022
13 W A B T E C Resilient business allows for execution on financial priorities STRONG FINANCIAL POSITION NET DEBT FOCUSED ON CASH CONVERSION CASH FROM OPS RETURN CAPITAL TO SHAREHOLDERS Cash generation … impacted by proactive inventory build Full-year cash generation on track >90% cash conversion Adjusted net leverage(2) improved ... committed to maintaining investment grade ratings Strengthening balance sheet … strong liquidity of $1.50B(3) Deploying capital to execute on strategic priorities Returning capital to shareholders… executed share buyback and 25% increase in quarterly dividend S T R O N G F I N A N C I A L P O S I 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 (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 trailing 12-month adjusted EBITDA (3) At March 31, 2022 the Company’s total available liquidity was $1.50 billion, which includes cash and cash equivalents of $0.49 billion plus $1.01 billion available under current credit facilities 124% cash conv $292M 2021 59% cash conv $161M 2022 Adj leverage 2.7x $3.79B 1Q 21 Adj leverage 2.5x $3.75B 1Q 22 $23M Dividends $1M Share repurchases $28M 2021 2022 $296M
14 Adjusted operating margin up - Favorable productivity/absorption, offset by mix & cost inflation - SG&A as % of sales down - Engineering as % of sales up Tax rate ~26% Capex ~2% of sales W A B T E C 2022 outlook and guidance R E V E N U E S $8.3B to $8.6B (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 BROAD-BASED RECOVERY ACROSS PORTFOLIO A D J U S T E D E P S $4.65 to $5.05 C A S H C O N V E R S I O N (1) >90% E Q U I P M E N T Significantly higher deliveries of international locos & favorable mining fundamentals C O M P O N E N T S Railcars coming out of storage … higher railcar build … improved industrial end-markets S E R V I C E S Increased demand for reliable, efficient power … unparking of locos & higher MODs D I G I T A L E L E C T R O N I C S Growth driven by international expansion & product upgrades T R A N S I T Increased global infrastructure investment & recovering ridership trends ... foreign currency impacts and supply chain challenges K E Y A S S U M P T I O N S
15 W A B T E C What you’ve heard Portfolio well positioned to deliver long-term profitable growth … resilient large global installed base Strong operational performance in a rising cost environment, continued supply chain disruptions and impacts from Russia Delivering on value creation framework… leading decarbonization, efficiency and utilization of rail Solid financial position with disciplined capital allocation … improving ROIC and shareholder returns S T R O N G F O U N D A T I O N F O R G R O W T H A N D I N C R E A S E D S H A R E H O L D E R V A L U E
16 Income statement Appendix A ( 1 of 2) 2022 2021 Net sales 1,927$ 1,830$ Cost of sales (1,332) (1,296) Gross profit 595 534 Gross profit as a % of Net Sales 30.9% 29.2% Selling, general and administrative expenses (238) (234) Engineering expenses (45) (38) Amortization expense (73) (70) Total operating expenses (356) (342) Operating expenses as a % of Net Sales 18.4% 18.7% Income from operations 239 192 Income from operations as a % of Net Sales 12.4% 10.5% Interest expense, net (43) (48) Other income, net 4 14 Income before income taxes 200 158 Income tax expense (50) (43) Effective tax rate 25.1% 27.5% Net income 150 115 Less: Net income attributable to noncontrolling interest (1) (3) Net income attributable to Wabtec shareholders 149$ 112$ Earnings Per Common Share Basic Net income attributable to Wabtec shareholders 0.80$ 0.59$ Diluted Net income attributable to Wabtec shareholders 0.80$ 0.59$ Basic 184.5 188.5 Diluted 185.0 188.9 March 31, WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021 (AMOUNTS IN MILLIONS EXCEPT PER SHARE DATA) (UNAUDITED) Three Months Ended
17 Appendix A ( 2 of 2) Income statement (cont.) 2022 2021 Segment Information Freight Net Sales 1,322$ 1,183$ Freight Income from Operations 189$ 142$ Freight Operating Margin 14.3% 12.0% Transit Net Sales 605$ 647$ Transit Income from Operations 65$ 70$ Transit Operating Margin 10.7% 10.8% Backlog Information (Note: 12-month is a sub-set of total) March 31, 2022 December 31, 2021 March 31, 2021 Freight Total 19,024$ 18,502$ 18,006$ Transit Total 3,735 3,667 3,666 Wabtec Total 22,759$ 22,169$ 21,672$ Freight 12-Month 4,812$ 4,520$ 3,910$ Transit 12-Month 1,819 1,748 1,796 Wabtec 12-Month 6,631$ 6,268$ 5,706$ March 31, WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021 (AMOUNTS IN MILLIONS EXCEPT PER SHARE DATA) (UNAUDITED) Three Months Ended
18 Balance sheet Appendix B March 31, 2022 December 31, 2021 In mill ions Cash and cash equivalents 488$ 473$ Receivables, net 1,382 1,477 Inventories 1,828 1,689 Other current assets 213 193 Total current assets 3,911 3,832 Property, plant and equipment, net 1,468 1,497 Goodwill 8,567 8,587 Other intangible assets, net 3,632 3,705 Other noncurrent assets 860 833 Total assets 18,438$ 18,454$ Current liabilities 2,880$ 2,910$ Long-term debt 4,225 4,056 Long-term liabilities - other 1,245 1,249 Total liabilities 8,350 8,215 Shareholders' equity 10,049 10,201 Noncontrolling interest 39 38 Total shareholders' equity 10,088 10,239 Total Liabilities and Shareholders' Equity 18,438$ 18,454$ CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
19 Appendix C Cash flow 2022 2021 In mill ions Operating activities Net income 150$ 115$ Non-cash expense 122 116 Receivables 93 9 Inventories (137) (11) Accounts Payable 48 47 Other assets and liabilities (115) 16 Net cash provided by operating activities 161 292 Net cash used for investing activities (18) (422) Net cash (used for) provided by financing activities (133) 8 Effect of changes in currency exchange rates 5 7 Increase (decrease) in cash 15 (115) Cash and cash equivalents, beginning of period 473 599 Cash and cash equivalents, end of period 488$ 484$ WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Three Months Ended March 31,
20 EPS and non-GAAP Reconciliation Appendix D 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 1,927$ 595$ (356)$ 239$ (39)$ (50)$ 150$ (1)$ 149$ 0.80$ Restructuring & Transaction costs - 5 2 7 - (2) 5 - 5 0.03$ Non-cash Amortization expense - - 73 73 - (18) 55 - 55 0.30$ Adjusted Results 1,927$ 600$ (281)$ 319$ (39)$ (70)$ 210$ (1)$ 209$ 1.13$ Fully Diluted Shares Outstanding 185.0 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 1,830$ 534$ (342)$ 192$ (34)$ (43)$ 115$ (3)$ 112$ 0.59$ Restructuring & Transaction costs - 4 11 15 - (4) 11 - 11 0.06$ Non-cash Amortization expense - - 70 70 - (19) 51 - 51 0.27$ Foreign Exchange Gain - - - - (9) 3 (6) - (6) (0.03)$ Adjusted Results 1,830$ 538$ (261)$ 277$ (43)$ (63)$ 171$ (3)$ 168$ 0.89$ Fully Diluted Shares Outstanding 188.9 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. First Quarter 2022 Actual Results First Quarter 2021 Actual Results
21 EBITDA reconciliation Appendix E Wabtec Corporation 2022 Q1 EBITDA Reconciliation (in millions) Reported Income Other Income Depreciation & Restructuring & Adjusted from Operations (Expense) Amortization Transaction Costs EBITDA Consolidated Results $239 $4 $121 $364 $7 $371 Wabtec Corporation 2021 Q1 EBITDA Reconciliation (in millions) Reported Income Other Income Depreciation & Restructuring & Adjusted from Operations (Expense) Amortization Transaction Costs EBITDA Consolidated Results $192 $14 $119 $325 $15 $340 Set forth below is the calculation of the non-GAAP performance measures included in this press release. We believe that these measures provide useful supplemental information to assess our operating performance and to evaluate period-to-period comparisons. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, Wabtec's reported results prepared in accordance with GAAP. + + = EBITDA + = =+ + = EBITDA +
22 Sales by product line Appendix F In mill ions 2022 2021 Freight Segment Equipment 274$ 262$ Components 229 203 Digital Electronics 153 156 Services 666 562 Total Freight Segment 1,322$ 1,183$ Transit Segment Original Equipment Manufacturer 292$ 287$ Aftermarket 313 360 Total Transit Segment 605$ 647$ WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION SALES BY PRODUCT LINE (UNAUDITED) Three Months Ended March 31,
23 Segment gross margin & operating margin reconciliation Appendix G In mill ions Gross Profit Income from Operations Gross Profit Income from Operations Freight Segment Reported Results 424$ 189$ 356$ 142$ Freight Segment Reported Margin 32.1% 14.3% 30.1% 12.0% Restructuring & Transaction costs 2 2 1 7 Non-cash Amortization expense - 68 - 65 Freight Segment Adjusted Results 426$ 259$ 357$ 214$ Freight Segment Adjusted Margin 32.2% 19.6% 30.2% 18.1% Transit Segment Reported Results 171$ 65$ 178$ 70$ Transit Segment Reported Margin 28.2% 10.7% 27.5% 10.8% Restructuring & Transaction costs 3 4 3 4 Non-cash Amortization expense - 5 - 5 Transit Segment Adjusted Results 174$ 74$ 181$ 79$ Transit Segment Adjusted Margin 28.7% 12.3% 27.9% 12.2% 2022 2021 WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION RECONCILIATION OF REPORTED RESULTS TO ADJUSTED RESULTS - BY SEGMENT (UNAUDITED) Three Months Ended March 31,
24 Segment sales reconciliation Appendix H In mill ions Freight Transit Consolidated 2021 Net Sales 1,183$ 647$ 1,830$ Acquisitions 39 1 40 Foreign Exchange (4) (33) (37) Organic 104 (10) 94 2022 Net Sales 1,322$ 605$ 1,927$ Change ($) 139 (42) 97 Change (%) 11.7% -6.5% 5.3% WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION RECONCILIATION OF CHANGES IN NET SALES - BY SEGMENT (UNAUDITED) Three Months Ended March 31,
25 Cash conversion reconciliation Appendix I Wabtec Corporation 2022 Q1 Cash Conversion Calculation (in millions) Reported Cash from Operations Consolidated Results $161 $150 $122 59% Wabtec Corporation 2021 Q1 Cash Conversion Calculation (in millions) Reported Cash from Operations Consolidated Results $292 $115 $120 124% 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 Cash Conversion÷ (Net Income + Depreciation & Amortization) =