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 26, 2023
____________________________________
(Exact name of registrant as specified in its charter)
____________________________________
| (State or other jurisdiction of incorporation or organization) | |||||||||||
| (Commission File No.) | (I.R.S. Employer Identification No.) | ||||||||||
| (Zip code) | |||||||||||
| (Address of principal executive offices) | |||||||||||
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
____________________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.):
| 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 April 26, 2023, Westinghouse Air Brake Technologies Corporation (the “Company”) issued a press release reporting, among other things, the Company’s 2023 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 2023 (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 website 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 26, 2023, the Company issued a press release reporting, among other things, the Company’s 2023 first quarter results. A copy of the press release is attached to this report as Exhibit 99.1 and is incorporated into this Item 7.01 by reference. The Company also furnished a Presentation relating to its first quarter of 2023, 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, 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) changes in general economic and/or industry specific conditions, including the impacts of tax and tariff programs, inflation, supply chain disruptions, foreign currency exchange, and industry consolidation; (2) changes in the financial condition or operating strategies of Wabtec’s customers; (3) unexpected costs, charges or expenses resulting from acquisitions and potential failure to realize synergies and other anticipated benefits of acquisitions, including as a result of integrating acquired targets into Wabtec; (4) inability to retain and hire key personnel; (5)
evolving legal, regulatory and tax regimes; (6) changes in the expected timing of projects; (7) a decrease in freight or passenger rail traffic; (8) an increase in manufacturing costs; (9) actions by third parties, including government agencies; (10) 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, (11) potential disruptions, instability, and volatility in global markets from the imposition of economic sanctions on Russia resulting from the invasion of Ukraine; (12) cybersecurity and data protection risks; and (13) other risk factors as detailed from time to time in Wabtec’s reports filed with the SEC, including Wabtec’s annual report on Form 10-K, periodic quarterly reports on Form 10-Q, 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 First Quarter 2023 Results
•Sales Growth of 13.9% to $2.19 Billion; Sales Up 16.8% Excluding Impacts of Foreign Currency Exchange
•First Quarter Reported GAAP Earnings Per Share of $0.93; Adjusted Earnings Per Share Up 13.3% to $1.28
•Returned $209 Million to Shareholders via Dividends and Share Repurchases
•Strong Visibility From $22.3 Billion Multi-Year Backlog
PITTSBURGH, April 26, 2023 – Wabtec Corporation (NYSE: WAB) today reported first quarter 2023 GAAP earnings per diluted share of $0.93, up 16.3% versus the first quarter of 2022. Adjusted earnings per diluted share were $1.28, up 13.3% versus the same quarter a year ago. First quarter sales were $2.19 billion driven by strong sales across the portfolio.
“The Wabtec team delivered a strong start to 2023 demonstrating continued momentum across both our Freight and Transit segments supporting a double-digit percentage increase in earnings per share,” said Rafael Santana, Wabtec’s President and CEO. “We remained resilient in the face of considerable macro-economic challenges by focusing on operational excellence as we continued to deliver for our customers and shareholders. The underlying business fundamentals strengthened in the first quarter despite a challenging environment.”
“Looking forward, Wabtec is well-positioned to navigate the current economic environment, and we remain confident in our ability to execute against our strategic growth plans as we deliver for our customers. Our differentiated portfolio of products and technologies, expansive global installed base, and multi-year backlog position us to remain highly resilient and drive long-term profitable growth for our shareholders.”
2023 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 | |||||||||||||
| 2023 | 2022 | Change | ||||||||||||
| Net Sales | $2,194 | $1,927 | 13.9 | % | ||||||||||
| GAAP Gross Margin | 30.3 | % | 30.9 | % | (0.6 pts) | |||||||||
| Adjusted Gross Margin | 30.5 | % | 31.1 | % | (0.6 pts) | |||||||||
| GAAP Operating Margin | 12.6 | % | 12.4 | % | 0.2 pts | |||||||||
| Adjusted Operating Margin | 16.4 | % | 16.5 | % | (0.1 pts) | |||||||||
| GAAP Diluted EPS | $0.93 | $0.80 | 16.3 | % | ||||||||||
| Adjusted Diluted EPS | $1.28 | $1.13 | 13.3 | % | ||||||||||
| Cash Flow from Operations | $(25) | $161 | $(186) | |||||||||||
| Operating Cash Flow Conversion | (8) | % | 59 | % | ||||||||||
•Sales increased 13.9% compared to the year-ago quarter driven by significantly higher Freight segment sales and increased Transit segment sales. On a constant currency basis, consolidated sales were up 16.8%.
•GAAP operating margin was slightly higher than prior year at 12.6% and adjusted operating margin was slightly lower at 16.4%.
•GAAP EPS and adjusted EPS increased from the year-ago quarter primarily due to higher sales, partially offset by higher interest expense.
2023 First Quarter Freight Segment Results
| Wabtec Corporation Freight Segment Financial Results | |||||||||||
| Net sales $ in millions; margin change in percentage points (pts) | First Quarter | ||||||||||
| 2023 | 2022 | Change | |||||||||
| Net Sales | $1,566 | $1,322 | 18.5 | % | |||||||
| GAAP Gross Margin | 30.6 | % | 32.1 | % | (1.5 pts) | ||||||
| Adjusted Gross Margin | 30.7 | % | 32.2 | % | (1.5 pts) | ||||||
| GAAP Operating Margin | 14.5 | % | 14.3 | % | 0.2 pts | ||||||
| Adjusted Operating Margin | 19.0 | % | 19.6 | % | (0.6 pts) | ||||||
•Freight segment sales for the first quarter were up across all product lines, with very strong growth in Equipment, Components and Digital Intelligence. On a constant currency basis, Freight segment sales were up 20.0%.
•Both GAAP and adjusted operating margins benefited from higher sales and operational efficiencies, offset by unfavorable sales mix between business groups and higher next generation product development costs in our Digital Intelligence business.
2023 First Quarter Transit Segment Results
| Wabtec Corporation Transit Segment Financial Results | |||||||||||
| Net sales $ in millions; margin change in percentage points (pts) | First Quarter | ||||||||||
| 2023 | 2022 | Change | |||||||||
| Net Sales | $628 | $605 | 3.8 | % | |||||||
| GAAP Gross Margin | 29.5 | % | 28.2 | % | 1.3 pts | ||||||
| Adjusted Gross Margin | 29.9 | % | 28.7 | % | 1.2 pts | ||||||
| GAAP Operating Margin | 11.0 | % | 10.7 | % | 0.3 pts | ||||||
| Adjusted Operating Margin | 13.1 | % | 12.3 | % | 0.8 pts | ||||||
•Transit segment sales for the first quarter were up due to strong aftermarket sales partially offset by unfavorable foreign currency exchange. On a constant currency basis, Transit segment sales were up 9.6%.
•GAAP and adjusted operating margins were up as a result of higher sales and Integration 2.0 savings.
Backlog
| Wabtec Corporation Consolidated Backlog Comparison | |||||||||||
| Backlog $ in millions | March 31, | ||||||||||
| 2023 | 2022 | Change | |||||||||
| 12-Month Backlog | $6,925 | $6,631 | 4.4 | % | |||||||
| Total Backlog | $22,334 | $22,759 | (1.9) | % | |||||||
The Company’s multi-year backlog continues to provide strong visibility. At March 31, 2023 the 12-month backlog was $294 million higher than March 31, 2022. At March 31, 2023, the multi-year backlog was $425 million lower than March 31, 2022 and excluding unfavorable foreign currency exchange, the multi-year backlog decreased $101 million, down 0.4%.
Cash Flow and Liquidity Summary
•During the first quarter, cash used for operations was $25 million versus cash provided from operations of $161 million in the year ago period due primarily to higher working capital.
•At the end of the quarter, the Company had cash, cash equivalents and restricted cash of $417 million and total debt of $4.16 billion. At March 31, 2023 the Company’s total available liquidity was $2.01 billion, which includes cash, cash equivalents and restricted cash plus $1.59 billion available under current credit facilities.
•During the first quarter, the Company repurchased $178 million of shares and raised the regular quarterly common dividend by 13% to 17 cents per share.
2023 Financial Guidance
•Wabtec’s 2023 financial guidance continues with sales expected to be in a range of $8.7 billion to $9.0 billion and adjusted earnings per diluted share to be in a range of $5.15 to $5.55.
•For full year 2023, Wabtec expects strong cash flow generation with operating cash flow conversion of greater than 90 percent.
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: 4647602).
About Wabtec
Wabtec Corporation (NYSE: WAB) is revolutionizing the way the world moves for future generations. 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 2023 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 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. 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, 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) changes in general economic and/or industry specific conditions, including the impacts of tax and tariff programs, inflation, supply chain disruptions, foreign currency exchange, and industry consolidation; (2) changes in the financial condition or operating strategies of Wabtec’s customers; (3) unexpected costs, charges or expenses resulting from acquisitions and potential failure to realize synergies and other anticipated benefits of acquisitions, including as a result of integrating acquired targets into Wabtec; (4) inability to retain and hire key personnel; (5) evolving legal, regulatory and tax regimes; (6) changes in the expected timing of projects; (7) a decrease in freight or passenger rail traffic; (8) an increase in manufacturing costs; (9) actions by third parties, including government agencies; (10) 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, (11) potential disruptions, instability, and volatility in global markets from the imposition of economic sanctions on Russia resulting from the invasion of Ukraine; (12) cybersecurity and data protection risks and (13) other risk factors as detailed from time to time in Wabtec’s reports filed with the SEC, including Wabtec’s annual report on Form 10-K, periodic quarterly reports on Form 10-Q, 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
Tim Bader / Tim.Bader@wabtec.com / 682-319-7925
| Appendix A | ||||||||
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022
(AMOUNTS IN MILLIONS EXCEPT PER SHARE DATA)
(UNAUDITED)
| Three Months Ended March 31, | |||||||||||
| 2023 | 2022 | ||||||||||
| Net sales | $ | 2,194 | $ | 1,927 | |||||||
| Cost of sales | (1,529) | (1,332) | |||||||||
| Gross profit | 665 | 595 | |||||||||
| Gross profit as a % of Net Sales | 30.3 | % | 30.9 | % | |||||||
| Selling, general and administrative expenses | (263) | (238) | |||||||||
| Engineering expenses | (51) | (45) | |||||||||
| Amortization expense | (75) | (73) | |||||||||
| Total operating expenses | (389) | (356) | |||||||||
| Operating expenses as a % of Net Sales | 17.7 | % | 18.4 | % | |||||||
| Income from operations | 276 | 239 | |||||||||
| Income from operations as a % of Net Sales | 12.6 | % | 12.4 | % | |||||||
| Interest expense, net | (48) | (43) | |||||||||
| Other income, net | 5 | 4 | |||||||||
| Income before income taxes | 233 | 200 | |||||||||
| Income tax expense | (60) | (50) | |||||||||
| Effective tax rate | 25.5 | % | 25.1 | % | |||||||
| Net income | 173 | 150 | |||||||||
| Less: Net income attributable to noncontrolling interest | (4) | (1) | |||||||||
| Net income attributable to Wabtec shareholders | $ | 169 | $ | 149 | |||||||
| Earnings Per Common Share | |||||||||||
| Basic | |||||||||||
| Net income attributable to Wabtec shareholders | $ | 0.94 | $ | 0.80 | |||||||
| Diluted | |||||||||||
| Net income attributable to Wabtec shareholders | $ | 0.93 | $ | 0.80 | |||||||
| Weighted average shares outstanding | |||||||||||
| Basic | 179.9 | 184.5 | |||||||||
| Diluted | 180.6 | 185.0 | |||||||||
| Appendix A | ||||||||
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (CONTINUED)
FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022
(AMOUNTS IN MILLIONS EXCEPT PER SHARE DATA)
(UNAUDITED)
| Three Months Ended March 31, | |||||||||||||||||
| 2023 | 2022 | ||||||||||||||||
| Segment Information | |||||||||||||||||
| Freight Net sales | $ | 1,566 | $ | 1,322 | |||||||||||||
| Freight Income from operations | $ | 227 | $ | 189 | |||||||||||||
| Freight Operating margin | 14.5 | % | 14.3 | % | |||||||||||||
| Transit Net sales | $ | 628 | $ | 605 | |||||||||||||
| Transit Income from operations | $ | 69 | $ | 65 | |||||||||||||
| Transit Operating margin | 11.0 | % | 10.7 | % | |||||||||||||
| Backlog Information (Note: 12-month is a sub-set of total) | March 31, 2023 | December 31, 2022 | March 31, 2022 | ||||||||||||||
| Freight Total | $ | 18,362 | $ | 18,641 | $ | 19,024 | |||||||||||
| Transit Total | 3,972 | 3,800 | 3,735 | ||||||||||||||
| Wabtec Total | $ | 22,334 | $ | 22,441 | $ | 22,759 | |||||||||||
| Freight 12-month | $ | 4,978 | $ | 4,901 | $ | 4,812 | |||||||||||
| Transit 12-month | 1,947 | 1,859 | 1,819 | ||||||||||||||
| Wabtec 12-month | $ | 6,925 | $ | 6,760 | $ | 6,631 | |||||||||||
| Appendix B | ||||||||
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
| March 31, 2023 | December 31, 2022 | ||||||||||
| In millions | |||||||||||
| Cash, cash equivalents and restricted cash | $ | 417 | $ | 541 | |||||||
| Receivables, net | 1,576 | 1,519 | |||||||||
| Inventories, net | 2,228 | 2,034 | |||||||||
| Other current assets | 275 | 233 | |||||||||
| Total current assets | 4,496 | 4,327 | |||||||||
| Property, plant and equipment, net | 1,422 | 1,429 | |||||||||
| Goodwill | 8,540 | 8,508 | |||||||||
| Other intangible assets, net | 3,333 | 3,402 | |||||||||
| Other noncurrent assets | 878 | 850 | |||||||||
| Total Assets | $ | 18,669 | $ | 18,516 | |||||||
| Current liabilities | $ | 4,165 | $ | 3,467 | |||||||
| Long-term debt | 3,189 | 3,751 | |||||||||
| Other long-term liabilities | 1,181 | 1,151 | |||||||||
| Total Liabilities | 8,535 | 8,369 | |||||||||
| Shareholders' equity | 10,085 | 10,102 | |||||||||
| Noncontrolling interest | 49 | 45 | |||||||||
| Total Equity | 10,134 | 10,147 | |||||||||
| Total Liabilities and Equity | $ | 18,669 | $ | 18,516 | |||||||
| Appendix C | ||||||||
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| Three Months Ended March 31, | |||||||||||
| 2023 | 2022 | ||||||||||
| In millions | |||||||||||
| Operating activities | |||||||||||
| Net income | $ | 173 | $ | 150 | |||||||
| Non-cash expense | 124 | 122 | |||||||||
| Receivables | (51) | 93 | |||||||||
| Inventories | (188) | (137) | |||||||||
| Accounts payable | 47 | 48 | |||||||||
| Other assets and liabilities | (130) | (115) | |||||||||
| Net cash (used for) provided by operating activities | (25) | 161 | |||||||||
| Net cash used for investing activities | (32) | (18) | |||||||||
| Net cash used for financing activities | (72) | (133) | |||||||||
| Effect of changes in currency exchange rates | 5 | 5 | |||||||||
| (Decrease) increase in cash | (124) | 15 | |||||||||
| Cash, cash equivalents and restricted cash, beginning of period | $ | 541 | $ | 473 | |||||||
| Cash, cash equivalents and restricted cash, end of period | 417 | 488 | |||||||||
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 2023 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 | $ | 2,194 | $ | 665 | $ | (389) | $ | 276 | $ | (43) | $ | (60) | $ | 173 | $ | (4) | $ | 169 | $ | 0.93 | |||||||||||||||||||||||||||||||||||||||||||||
| Restructuring costs | — | 4 | 5 | 9 | — | (2) | 7 | — | 7 | $ | 0.04 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-cash Amortization expense | — | — | 75 | 75 | — | (20) | 55 | — | 55 | $ | 0.31 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted Results | $ | 2,194 | $ | 669 | $ | (309) | $ | 360 | $ | (43) | $ | (82) | $ | 235 | $ | (4) | $ | 231 | $ | 1.28 | |||||||||||||||||||||||||||||||||||||||||||||
| Fully Diluted Shares Outstanding | 180.6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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 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 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||
First Quarter 2023 EBITDA Reconciliation | |||||||||||||||||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||||||||||||||
| Reported Income | + | Other Income | + | Depreciation & | = | EBITDA | + | Restructuring | = | Adjusted | |||||||||||||||||||||||||||||||
| from Operations | (Expense) | Amortization | Costs | EBITDA | |||||||||||||||||||||||||||||||||||||
| Consolidated Results | $ | 276 | $ | 5 | $ | 121 | $ | 402 | $ | 6 | $ | 408 | |||||||||||||||||||||||||||||
| Wabtec Corporation | |||||||||||||||||||||||||||||||||||||||||
First Quarter 2022 EBITDA Reconciliation | |||||||||||||||||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||||||||||||||
| Reported Income | + | Other Income | + | Depreciation & | = | EBITDA | + | Restructuring | = | Adjusted | |||||||||||||||||||||||||||||||
| from Operations | (Expense) | Amortization | Costs | EBITDA | |||||||||||||||||||||||||||||||||||||
| Consolidated Results | $ | 239 | $ | 4 | $ | 121 | $ | 364 | $ | 7 | $ | 371 | |||||||||||||||||||||||||||||
Appendix F
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION
SALES BY PRODUCT LINE
(UNAUDITED)
| Three Months Ended March 31, | |||||||||||
| In millions | 2023 | 2022 | |||||||||
| Freight Segment | |||||||||||
| Services | $ | 707 | $ | 666 | |||||||
| Equipment | 393 | 274 | |||||||||
| Components | 279 | 229 | |||||||||
| Digital Intelligence | 187 | 153 | |||||||||
| Total Freight Segment | $ | 1,566 | $ | 1,322 | |||||||
| Transit Segment | |||||||||||
| Original Equipment Manufacturer | $ | 282 | $ | 292 | |||||||
| Aftermarket | 346 | 313 | |||||||||
| Total Transit Segment | $ | 628 | $ | 605 | |||||||
Appendix G
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION
RECONCILIATION OF REPORTED RESULTS TO ADJUSTED RESULTS - BY SEGMENT
(UNAUDITED)
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2023 | 2022 | ||||||||||||||||||||||
| In millions | Gross Profit | Income from Operations | Gross Profit | Income from Operations | |||||||||||||||||||
| Freight Segment Reported Results | $ | 480 | $ | 227 | $ | 424 | $ | 189 | |||||||||||||||
| Freight Segment Reported Margin | 30.6 | % | 14.5 | % | 32.1 | % | 14.3 | % | |||||||||||||||
| Restructuring costs | 1 | 2 | 2 | 2 | |||||||||||||||||||
| Non-cash Amortization expense | — | 68 | — | 68 | |||||||||||||||||||
| Freight Segment Adjusted Results | $ | 481 | $ | 297 | $ | 426 | $ | 259 | |||||||||||||||
| Freight Segment Adjusted Margin | 30.7 | % | 19.0 | % | 32.2 | % | 19.6 | % | |||||||||||||||
| Transit Segment Reported Results | $ | 185 | $ | 69 | $ | 171 | $ | 65 | |||||||||||||||
| Transit Segment Reported Margin | 29.5 | % | 11.0 | % | 28.2 | % | 10.7 | % | |||||||||||||||
| Restructuring costs | 3 | 7 | 3 | 4 | |||||||||||||||||||
| Non-cash Amortization expense | — | 7 | — | 5 | |||||||||||||||||||
| Transit Segment Adjusted Results | $ | 188 | $ | 83 | $ | 174 | $ | 74 | |||||||||||||||
| Transit Segment Adjusted Margin | 29.9 | % | 13.1 | % | 28.7 | % | 12.3 | % | |||||||||||||||
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 | |||||||||||||||||
2022 Net Sales | $ | 1,322 | $ | 605 | $ | 1,927 | ||||||||||||||
| Acquisitions | 21 | — | 21 | |||||||||||||||||
| Foreign Exchange | (21) | (35) | (56) | |||||||||||||||||
| Organic | 244 | 58 | 302 | |||||||||||||||||
2023 Net Sales | $ | 1,566 | $ | 628 | $ | 2,194 | ||||||||||||||
| Change ($) | 244 | 23 | 267 | |||||||||||||||||
| Change (%) | 18.5 | % | 3.8 | % | 13.9 | % | ||||||||||||||
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 | |||||||||||||||||||||||||||||
2023 First Quarter Cash Conversion Calculation | |||||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||
| Reported Cash from Operations | ÷ | (Net Income | + | Depreciation & Amortization) | = | Cash Conversion | |||||||||||||||||||||||
| Consolidated Results | $(25) | $173 | $123 | (8)% | |||||||||||||||||||||||||
| Wabtec Corporation | |||||||||||||||||||||||||||||
2022 First Quarter Cash Conversion Calculation | |||||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||
| Reported Cash from Operations | ÷ | (Net Income | + | Depreciation & Amortization) | = | Cash Conversion | |||||||||||||||||||||||
| Consolidated Results | $161 | $150 | $122 | 59% | |||||||||||||||||||||||||
1 F I R S T Q U A R T E R 2 0 2 3 Wabtec Financial Results and 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, 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 include statements regarding: Wabtec’s plans, objectives and intention; Wabtec’s expectations about future sales, earnings and cash conversion; Wabtec’s projected expenses and cost savings associated with its Integration 2.0 initiative; Wabtec’s 5-year outlook (established in March 2022); Wabtec’s expectations for evolving global industry, market and macro-economic conditions and their impact on Wabtec’s business; synergies and other expected benefits from Wabtec’s acquisitions; Wabtec’s expectations for production and demand conditions; and any assumptions underlying any of the foregoing. 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) changes in general economic and/or industry specific conditions, including the impacts of tax and tariff programs, inflation, supply chain disruptions, foreign currency exchange, and industry consolidation; (2) changes in the financial condition or operating strategies of Wabtec's customers; (3) unexpected costs, charges or expenses resulting from acquisitions and potential failure to realize synergies and other anticipated benefits of acquisitions, including as a result of integrating acquired targets into Wabtec; (4) inability to retain and hire key personnel; (5) evolving legal, regulatory and tax regimes; (6) changes in the expected timing of projects; (7) a decrease in freight or passenger rail traffic; (8) an increase in manufacturing costs; (9) actions by third parties, including government agencies; (10) 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, (11) potential disruptions, instability, and volatility in global markets from the imposition of economic sanctions on Russia resulting from the invasion of Ukraine; (12) cybersecurity and data protection risks and (13) other risk factors as detailed from time to time in Wabtec’s reports filed with the SEC, including Wabtec’s annual report on Form 10-K, periodic quarterly reports on Form 10-Q, 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 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. Adjusted EBITDA is further adjusted for restructuring. 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 of 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 RAFAEL SANTANA President and Chief Executive Officer W A B T E C Today’s participants JOHN OLIN Executive Vice President and Chief Financial Officer KRISTINE KUBACKI Vice President, Investor Relations 3
4 1Q 2023 overview Increased sales were driven by strong Freight segment growth … excluding impacts of FX, sales were up 16.8% YoY Operating margin benefited from higher sales growth and lower SG&A as a percentage of sales GAAP EPS up 16.3% … Adjusted EPS up 13.3% YoY from higher Freight sales Operating cash flow was impacted by seasonally low cash generation quarter and higher working capital Backlog provides improved multi-year visibility … 12-month backlog up 4.4% to a new high of $6.9 billion W A B T E C S ALE S O PE RATIN G MAR GIN E AR N IN GS PE R S HAR E CAS H FLO W FR O M O PE RATIO N S (1) MULTI-Y E AR BACK LO G $2.19B 16.4% $0.93 ($25M) $22.33B S T R O N G U N D ER L Y I NG M O M ENT U M D E S P I T E M A C R O V O L A T I L I T Y (1) Year-over-year 1st quarter cash flow impact from securitization of accounts receivable was unfavorable $10 million (2) Adjusted numbers represent non-GAAP financial measures. See Appendix for additional details and reconciliations 1Q 2023 HIGHLIGHTS Up 13.9% YoY 12.6% GAAP Adjusted(2) $1.28 GAAP Adjusted(2)
5 5.1% 20.2% (0.1%) (4.9%) (3.7%) (3.3%) 0.2% (0.8%) (3.6%) 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 F R E I G H T NA Carloads -/↔ Locomotive and Railcars Unparkings ↔/- International Freight Volumes + NA Railcar Deliveries + Mining Commodities ↔/- T R A N S I T Infrastructure Investment + Global Ridership +/↔ W A B T E C 2023 Market Expectations N O R TH AME R ICAN FR E IGHT CAR LO ADS 2023 FR E IGHT VO LUME SA 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 2019 2020 2021 2022 Sources: China, Kazakhstan, India Ministry of Railways, Brazil: ANTT, South Africa (0.4%) 2.7% 3.8% (5.5%) (2.7%) Brazil China India South Africa Kazakhstan 2023 Source: Association of American Railroads Source: Wabtec
6 DRIVERS OF PORTFOLIO GROWTH RECENT WINS Signed strategic order with VLI in Brazil for new locomotives Secured key order for mining drive systems in high altitude applications Moody’s upgrade of senior unsecured debt … reflects resiliency of the business, balance sheet strength and strong cash generation Delivered 500th locomotive to Indian Railways … significant milestone in 10-year contract 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 6
7 STRONG SALES GROWTH DESPITE DISRUPTIONS AND MACRO VOLATILITY (1) Adjusted numbers represent non-GAAP financial measures. See Appendix for additional details and reconciliations 1Q 2023 financial summary W A B T E C OP INCOME/OP MARGIN 13.9% INCREASE $239M 12.4% 2022 GAAP SALES EPS $1.93B 2022 $2.19B 2023 $276M 12.6% 2023 GAAP $319M 16.5% 2022 ADJ(1) $360M 16.4% 2023 ADJ(1) $0.80 2022 GAAP $0.93 2023 GAAP $1.13 2022 ADJ(1) $1.28 2023 ADJ(1) (16.8% INCREASE EX-CURRENCY)
8 W A B T E C 1Q 2023 sales P R O D U C T L I N E 1 Q 2 3 Y O Y Equipment $393 43.4% Components $279 21.8% Digital Intelligence $187 22.2% Services $707 6.2% Freight Segment $1,566 18.5% Transit Segment $628 3.8% T O T A L S A L E S $2,194 13.9% E Q U I P M E N T Higher international locomotives sales C O M P O N E N T S Higher due to improving OE railcar build, more railcars in operation and increased demand for industrial products D I G I T A L I N T E L L I G E N C E Higher demand for on-board locomotive and mining solutions, international PTC and acquisitions of Beena Vision and ARINC (10% YoY growth excluding acquisitions) S E R V I C E S Increased sales from larger active locomotive fleet T R A N S I T Strong aftermarket sales, partially offset by unfavorable foreign currency exchange … sales up 9.6% on constant currency basis 1 Q K E Y D R I V E R S ($ in millions)
9 W A B T E C 1Q 2023 consolidated gross profit 1 Q K E Y D R I V E R S 2 0 2 2 G R O S S P R O F I T $595 $600 % Gross Profit Margin 30.9% 31.1% Volume ↑↑ ↑↑ Mix/Pricing ↔ ↔ Raw Materials ↔ ↔ Currency ↓ ↓ Manufacturing/Other ↓ ↓ 2 0 2 3 G R O S S P R O F I T $665 $669 % Gross Profit Margin 30.3% 30.5% V O L U M E Freight segment sales growth of 18.5% M I X / P R I C I N G Less rich mix of products between business groups (Equipment and Services), offset by price R A W M A T E R I A L S Largely flat input costs C U R R E N C Y Unfavorable foreign exchange impacted gross profit $14M (operating income negatively impacted by $8M) M A N U F A C T U R I N G / O T H E R Favorable productivity/absorption and benefits of Integration 2.0 offset by higher digital development costs ($ in millions) (1) Adjusted numbers represent non-GAAP financial measures. See Appendix for additional details and reconciliations GAAP Adjusted (1)
10 2 0 2 2 O P I N C O M E $239 $319 % Operating Margin 12.4% 16.5% Gross Profit 70 69 SG&A (25) (22) Engineering (6) (6) Amortization (2) - 2 0 2 3 O P I N C O M E $276 $360 % Operating Margin 12.6% 16.4% W A B T E C 1Q 2023 consolidated operating income (1) Adjusted numbers represent non-GAAP financial measures. See Appendix for additional details and reconciliations O P M A R G I N B E N E F I T E D F R O M H I G H E R S A L E S A N D L O W E R S G & A A S P E R C E N T A G E O F S A L E S Adjusted (1) ($ in millions) GAAP
11 (1) Adjusted numbers represent non-GAAP financial measures. See Appendix for additional details and reconciliations (2) Freight segment operating income was positively impacted by below-market intangible amortization of $12 million; flat versus 1st quarter 2022 (3) Foreign exchange negatively impacted Freight sales by $21 million; Foreign exchange rates had a negative $215 million impact on segment backlog 1Q 2023 Freight segment performance W A B T E C 18.5% INCREASE OP INCOME/OP MARGIN $189M 14.3% 2022 GAAP SALES BACKLOG 3.5% DECREASE YoY $1.32B 2022 $1.57B(3) 2023 $227M 14.5% 2023 GAAP $259M 19.6% 2022 ADJ(1,2) $297M 19.0% 2023 ADJ(1,2) $19.02B 2022 $18.36B(3) 2023 (2.3% DECREASE EX-CURRENCY)(20.0% INCREASE EX-CURRENCY)
12 (1) Adjusted numbers represent non-GAAP financial measures. See Appendix for additional details and reconciliations (2) Foreign exchange negatively impacted Transit sales by $35 million; Foreign exchange rates had a negative $109 million impact on segment backlog 1Q 2023 Transit segment performance W A B T E C OP INCOME/OP MARGIN 3.8% INCREASE $65M 10.7% 2022 GAAP SALES BACKLOG 6.3% INCREASE YoY $605M 2022 $628M(2) 2023 $69M 11.0% 2023 GAAP $74M 12.3% 2022 ADJ(1) $83M 13.1% 2023 ADJ(1) $3.74B 2022 $3.97B(2) 2023 (9.3% INCREASE EX-CURRENCY)(9.6% INCREASE EX-CURRENCY)
13 W A B T E C Resilient business allows for execution on financial priorities STRONG FINANCIAL POSITION LEVERAGE FOCUSED ON CASH CONVERSION (1) CASH FROM OPS RETURN CAPITAL TO SHAREHOLDERS YoY cash generation impacted by higher working capital investment … in particular, higher receivables and inventory Debt leverage (2) improved ... Upgraded by Moody’s Strengthening balance sheet … strong liquidity of $2.01B (3) Returning capital to shareholders … $209M returned through share repurchases and dividends 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 F U T U R E G R O W T H A N D M A X I M I Z I N G S H A R E H O L D E R R E T U R N S (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) Leverage is defined as net debt divided by trailing 12-month adjusted EBITDA. Net debt is defined as total debt minus cash, restricted cash and cash equivalents (3) At March 31, 2023, the Company’s total available liquidity was $2.01 billion, which includes cash, cash equivalents and restricted cash of $0.42 billion plus $1.59 billion available under current credit facilities 59% cash conv $161M 2 0 2 2 (8%) cash conv ($25M) 2 0 2 3 Leverage 2.5x 1 Q 2 2 Leverage 2.3x 1 Q 2 3 $28M Dividends $296M Share repurchases $31M 2 0 2 2 2 0 2 3 $178M
14 Adjusted operating margin up - Favorable productivity/absorption offset by mix - SG&A as % of sales down - Engineering as % of sales flat Tax rate ~25.5% Capex ~2% of sales W A B T E C 2023 outlook and guidance R E V E N U E S $8.7B to $9.0B (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 STRONG MOMENTUM ACROSS THE PORTFOLIO A D J U S T E D E P S $5.15 to $5.55 C A S H C O N V E R S I O N (1) >90% E Q U I P M E N T Higher deliveries of locomotives C O M P O N E N T S Higher railcar build and improved demand for industrial components S E R V I C E S Continued demand for reliable, efficient power and higher deliveries of MODs … partially offset by uptick in locomotive parkings D I G I T A L E L E C T R O N I C S Growth driven by next gen technologies, international expansion and 2022 acquisitions T R A N S I T Increased global infrastructure investment K E Y A S S U M P T I O N S
15 W A B T E C Key takeaways 02 Well-positioned to drive profitable growth with strong momentum across the portfolio and increased multi-year visibility 03 Productivity driven by continuous cost improvement combined with initial realization of Integration 2.0 savings 04 Strong long-term business fundamentals driving higher returns and maximizing long-term value creation for shareholders 01 Strong performance to start the year despite significant macro volatility M S D C O R E O R G A N I C G R O W T H C A G R 2 5 0 - 3 0 0 B P S M A R G I N E X P A N S I O N + + D I S C I P L I N E D C A P I T A L D E P L O Y M E N T = D O U B L E - D I G I T E P S G R O W T H W I T H S T R O N G O P E R A T I N G C A S H F L O W C O N V E R S I O N ( 9 0 % + ) 5 - Y E A R O U T L O O K ( 1 ) (1) Long-term guidance as of March 9, 2022 15
16 Income statement Appendix A ( 1 of 2) 2023 2022 Net sales 2,194$ 1,927$ Cost of sales (1,529) (1,332) Gross profit 665 595 Gross profit as a % of Net Sales 30.3% 30.9% Selling, general and administrative expenses (263) (238) Engineering expenses (51) (45) Amortization expense (75) (73) Total operating expenses (389) (356) Operating expenses as a % of Net Sales 17.7% 18.4% Income from operations 276 239 Income from operations as a % of Net Sales 12.6% 12.4% Interest expense, net (48) (43) Other income, net 5 4 Income before income taxes 233 200 Income tax expense (60) (50) Effective tax rate 25.5% 25.1% Net income 173 150 Less: Net income attributable to noncontrolling interest (4) (1) Net income attributable to Wabtec shareholders 169$ 149$ Earnings Per Common Share Basic Net income attributable to Wabtec shareholders 0.94$ 0.80$ Diluted Net income attributable to Wabtec shareholders 0.93$ 0.80$ Basic 179.9 184.5 Diluted 180.6 185.0 March 31, WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022 (AMOUNTS IN MILLIONS EXCEPT PER SHARE DATA) (UNAUDITED) Three Months Ended
17 Appendix A ( 2 of 2) Income statement (cont.) 2023 2022 Segment Information Freight Net Sales 1,566$ 1,322$ Freight Income from Operations 227$ 189$ Freight Operating Margin 14.5% 14.3% Transit Net Sales 628$ 605$ Transit Income from Operations 69$ 65$ Transit Operating Margin 11.0% 10.7% Backlog Information (Note: 12-month is a sub-set of total) March 31, 2023 December 31, 2022 March 31, 2022 Freight Total 18,362$ 18,641$ 19,024$ Transit Total 3,972 3,800 3,735 Wabtec Total 22,334$ 22,441$ 22,759$ Freight 12-Month 4,978$ 4,901$ 4,812$ Transit 12-Month 1,947 1,859 1,819 Wabtec 12-Month 6,925$ 6,760$ 6,631$ March 31, WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022 (AMOUNTS IN MILLIONS EXCEPT PER SHARE DATA) (UNAUDITED) Three Months Ended
18 Balance sheet Appendix B March 31, 2023 December 31, 2022 In mill ions Cash, cash equivalents and restricted cash 417$ 541$ Receivables, net 1,576 1,519 Inventories 2,228 2,034 Other current assets 275 233 Total current assets 4,496 4,327 Property, plant and equipment, net 1,422 1,429 Goodwill 8,540 8,508 Other intangible assets, net 3,333 3,402 Other noncurrent assets 878 850 Total assets 18,669$ 18,516$ Current liabilities 4,165$ 3,467$ Long-term debt 3,189 3,751 Long-term liabilities - other 1,181 1,151 Total liabilities 8,535 8,369 Shareholders' equity 10,085 10,102 Noncontrolling interest 49 45 Total shareholders' equity 10,134 10,147 Total Liabilities and Shareholders' Equity 18,669$ 18,516$ WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
19 Appendix C Cash flow 2023 2022 In mill ions Operating activities Net income 173$ 150$ Non-cash expense 124 122 Receivables (51) 93 Inventories (188) (137) Accounts Payable 47 48 Other assets and liabilities (130) (115) Net cash (used for) provided by operating activities (25) 161 Net cash used for investing activities (32) (18) Net cash used for financing activities (72) (133) Effect of changes in currency exchange rates 5 5 (Decrease) increase in cash (124) 15 Cash, cash equivalents and restricted cash, beginning of period 541 473 Cash, cash equivalents and restricted cash, end of period 417$ 488$ Three Months Ended March 31, WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
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 2,194$ 665$ (389)$ 276$ (43)$ (60)$ 173$ (4)$ 169$ 0.93$ Restructuring costs - 4 5 9 - (2) 7 - 7 0.04$ Non-cash Amortization expense - - 75 75 - (20) 55 - 55 0.31$ Adjusted Results 2,194$ 669$ (309)$ 360$ (43)$ (82)$ 235$ (4)$ 231$ 1.28$ Fully Diluted Shares Outstanding 180.6 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 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 First Quarter 2022 Actual Results First Quarter 2023 Actual Results 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.
21 EBITDA reconciliation Appendix E Wabtec Corporation 2023 Q1 EBITDA Reconciliation (in millions) Reported Income Other Income Depreciation & Restructuring Adjusted from Operations (Expense) Amortization Costs EBITDA Consolidated Results $276 $5 $121 $402 $6 $408 Wabtec Corporation 2022 Q1 EBITDA Reconciliation (in millions) Reported Income Other Income Depreciation & Restructuring Adjusted from Operations (Expense) Amortization Costs EBITDA Consolidated Results $239 $4 $121 $364 $7 $371 + = Set forth below is the calculation of the non-GAAP performance measures included in this press release. We believe that these measures provide useful supplemental information to assess our operating performance and to evaluate period-to-period comparisons. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, Wabtec's reported results prepared in accordance with GAAP. EBITDA + =+ =+ + = EBITDA +
22 Sales by product line Appendix F In mill ions 2023 2022 Freight Segment Equipment 393$ 274$ Components 279 229 Digital Intelligence 187 153 Services 707 666 Total Freight Segment 1,566$ 1,322$ Transit Segment Original Equipment Manufacturer 282$ 292$ Aftermarket 346 313 Total Transit Segment 628$ 605$ Three Months Ended March 31, WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION SALES BY PRODUCT LINE (UNAUDITED)
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 480$ 227$ 424$ 189$ Freight Segment Reported Margin 30.6% 14.5% 32.1% 14.3% Restructuring costs 1 2 2 2 Non-cash Amortization expense - 68 - 68 Freight Segment Adjusted Results 481$ 297$ 426$ 259$ Freight Segment Adjusted Margin 30.7% 19.0% 32.2% 19.6% Transit Segment Reported Results 185$ 69$ 171$ 65$ Transit Segment Reported Margin 29.5% 11.0% 28.2% 10.7% Restructuring costs 3 7 3 4 Non-cash Amortization expense - 7 - 5 Transit Segment Adjusted Results 188$ 83$ 174$ 74$ Transit Segment Adjusted Margin 29.9% 13.1% 28.7% 12.3% WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION RECONCILIATION OF REPORTED RESULTS TO ADJUSTED RESULTS - BY SEGMENT (UNAUDITED) Three Months Ended March 31, 2023 2022
24 Segment sales reconciliation Appendix H Freight Transit Consolidated 2022 Net Sales 1,322$ 605$ 1,927$ Acquisitions 21 - 21 Foreign Exchange (21) (35) (56) Organic 244 58 302 2023 Net Sales 1,566$ 628$ 2,194$ Change ($) 244 23 267 Change (%) 18.5% 3.8% 13.9% (UNAUDITED) Three Months Ended March 31, WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION RECONCILIATION OF CHANGES IN NET SALES - BY SEGMENT
25 Cash conversion reconciliation Appendix I Wabtec Corporation 2023 Q1 Cash Conversion Calculation (in millions) Reported Cash from Operations Consolidated Results ($25) $173 $123 (8%) Wabtec Corporation 2022 Q1 Cash Conversion Calculation (in millions) Reported Cash from Operations Consolidated Results $161 $150 $122 59% 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. ÷ + = Cash Conversion(Net Income Depreciation & Amortization) ÷ + = Cash Conversion(Net Income Depreciation & Amortization)