UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________________________
FORM 8-K
____________________________________
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): February 14, 2024 (February 14, 2024 )
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(Exact name of registrant as specified in its charter)
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| (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, former address and former fiscal year, if changed since last report)
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Securities registered pursuant to Section 12(b) of the Act:
Class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02 | Results of Operations and Financial Condition | ||||
On February 14, 2024, Westinghouse Air Brake Technologies Corporation (the “Company”) issued a press release reporting, among other things, the Company’s 2023 fourth quarter results. A copy of this press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated into this Item 2.02 by reference. The Company is also furnishing an investor presentation relating to its fourth quarter of 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 web site at www.wabteccorp.com.
In accordance with General Instruction B.2 of Form 8-K, the information furnished pursuant to this Item 2.02 in this Current Report on Form 8-K, including Exhibits 99.1 and 99.2, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.
| Item 7.01. | Regulation FD Disclosure | ||||
On February 14, 2024, the Company issued a press release which, among other things, provided earnings guidance for fiscal year 2024. A copy of the press release is attached to this report as Exhibit 99.1 and the paragraph under the heading “2024 Financial Guidance” which discusses 2024 guidance is incorporated into this Item 7.01 by reference. The Company also furnished a Presentation relating to its fourth 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. All statements, other than historical facts, including statements regarding Wabtec’s plans, objectives, expectations and intentions; 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, 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 impacts of epidemics, pandemics or similar public health crises on the global economy and, in particular, our customers, suppliers and end-markets, (11) potential disruptions, instability, and volatility in global markets as a result of global military action, acts of terrorism, or armed conflict, including 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
Wabtec Delivers Strong Fourth Quarter 2023
Results; Issues 2024 Full-Year Guidance
| SALES | GAAP EARNINGS PER SHARE | ADJUSTED EARNINGS PER SHARE | ||||||||||||
| 4Q’23 | FY’23 | 4Q’23 | FY’23 | 4Q’23 | FY’23 | |||||||||||||||||||||||||||
| $2.5B | $9.7B | $1.20 | $4.53 | $1.54 | $5.92 | ||||||||||||
| +9.5%YOY | +15.7% YOY | +39.5% YOY | +30.9%YOY | +18.5% YOY | +21.8% YOY | ||||||||||||
Q4 2023 HIGHLIGHTS
| “The Wabtec team delivered a strong finish to 2023 as evidenced by higher sales, margin expansion, increased earnings and improved cash flow” said Rafael Santana, Wabtec’s President and CEO. “Strong demand for our products in North America and international markets, combined with our team’s relentless focus on execution and delivering for our customers resulted in a year that exceeded our expectations. | ||
| “We remain committed to our capital deployment strategy to maximize shareholder returns. We invested for future growth, executed on two strategic acquisitions and returned over $530 million to shareholders through share repurchases and dividends. And based on our strong performance in 2023 and confidence in the future, our Board of Directors recently reauthorized our stock buyback program to refresh the amount available to $1.0 billion and approved a 17.6% increase in our quarterly dividend. | ||
| “Looking ahead, with robust international activity and strong order pipeline, Wabtec is well-positioned to drive profitable growth in 2024 and beyond. Our differentiated portfolio is aligned to solving our customers’ most pressing needs and making rail the safest and most efficient way to move people and goods across the land. Wabtec’s products and technologies will enable us to capitalize on these trends and drive profitable growth and increase long-term shareholder value.” | ||
| Rafael Santana President and CEO | ||
•GAAP Earnings Per Share of $1.20, Up 39.5%; Adjusted Earnings Per Share of $1.54, Up 18.5% Behind Sales Growth of 9.5%
•GAAP Operating Margin at 12.2%; Adjusted Operating Margin Up 1.7 pts to 17.0%
•Fourth Quarter Operating Cash Flow of $686 Million; Full-Year Cash Flow from Operations up 15.7% to $1.20 Billion
•Announced $1.0 Billion Share Buyback Authorization and 17.6% Increase in Quarterly Dividend
•Issues 2024 Financial Guidance of Adjusted EPS Between $6.50 to $6.90; Up 13.2% at the Mid-Point
PITTSBURGH, February 14, 2024 – Wabtec Corporation (NYSE: WAB) today reported fourth quarter 2023 GAAP earnings per diluted share of $1.20, up 39.5% versus the fourth quarter of 2022. Adjusted earnings per diluted share were $1.54, up 18.5% versus the same quarter a year ago. Fourth quarter sales were $2.53 billion and cash from operations was $686 million. Full year 2023 GAAP earnings per diluted share was $4.53, up 30.9% versus full year 2022. Full year adjusted earnings per diluted share were $5.92, up 21.8% versus full year 2022. Total 2023 sales were $9.68 billion and cash from operations was a record high of $1.20 billion.
2023 Fourth Quarter Consolidated Results
| Wabtec Corporation Consolidated Financial Results | |||||||||||
| $ in millions except earnings per share and percentages; margin change in percentage points (pts) | Fourth Quarter | ||||||||||
| 2023 | 2022 | Change | |||||||||
| Net Sales | $2,526 | $2,306 | 9.5 | % | |||||||
| GAAP Gross Margin | 30.3 | % | 28.3 | % | 2.0 pts | ||||||
| Adjusted Gross Margin | 30.8 | % | 29.6 | % | 1.2 pts | ||||||
| GAAP Operating Margin | 12.2 | % | 10.7 | % | 1.5 pts | ||||||
| Adjusted Operating Margin | 17.0 | % | 15.3 | % | 1.7 pts | ||||||
| GAAP Diluted EPS | $1.20 | $0.86 | 39.5 | % | |||||||
| Adjusted Diluted EPS | $1.54 | $1.30 | 18.5 | % | |||||||
| Cash Flow from Operations | $686 | $410 | $276 | ||||||||
| Operating Cash Flow Conversion | 182 | % | 147 | % | |||||||
•Sales increased 9.5% compared to the year-ago quarter driven by increased sales across the Freight and Transit segments.
•GAAP gross margin was higher than prior year at 30.3% and adjusted gross margin was higher than the prior year at 30.8%. Both GAAP and adjusted gross margin benefited from higher sales, improved price/mix and productivity.
•GAAP operating margin was higher than the prior year at 12.2% and adjusted operating margin was higher than the prior year at 17.0%. Both GAAP and adjusted operating margins benefited from higher gross margin and lower SG&A and Engineering expenses as a percentage of sales.
•GAAP EPS and adjusted EPS increased from the year-ago quarter primarily due to higher sales and margin expansion, partially offset by increased interest expense. GAAP EPS also benefited from a gain resulting from a change of ownership interest of an assembly joint venture.
2023 Fourth Quarter Freight Segment Results
| Wabtec Corporation Freight Segment Financial Results | |||||||||||
| Net sales $ in millions; margin change in percentage points (pts) | Fourth Quarter | ||||||||||
| 2023 | 2022 | Change | |||||||||
| Net Sales | $1,798 | $1,669 | 7.7 | % | |||||||
| GAAP Gross Margin | 31.0 | % | 28.9 | % | 2.1 pts | ||||||
| Adjusted Gross Margin | 31.3 | % | 29.4 | % | 1.9 pts | ||||||
| GAAP Operating Margin | 13.7 | % | 12.5 | % | 1.2 pts | ||||||
| Adjusted Operating Margin | 19.3 | % | 17.0 | % | 2.3 pts | ||||||
•Freight segment sales for the fourth quarter were up 7.7%, driven by double-digit growth in Services and Components.
•GAAP operating margin and adjusted operating margin benefited from strong gross margin gains and lower SG&A and Engineering expenses as a percent of sales.
2023 Fourth Quarter Transit Segment Results
| Wabtec Corporation Transit Segment Financial Results | |||||||||||
| Net sales $ in millions; margin change in percentage points (pts) | Fourth Quarter | ||||||||||
| 2023 | 2022 | Change | |||||||||
| Net Sales | $728 | $637 | 14.3 | % | |||||||
| GAAP Gross Margin | 28.4 | % | 26.7 | % | 1.7 pts | ||||||
| Adjusted Gross Margin | 29.4 | % | 30.3 | % | (0.9 pts) | ||||||
| GAAP Operating Margin | 11.9 | % | 9.9 | % | 2.0 pts | ||||||
| Adjusted Operating Margin | 14.9 | % | 14.8 | % | 0.1 pts | ||||||
•Transit segment sales for the fourth quarter were up 14.3% due to strong OE and aftermarket sales.
•GAAP and adjusted operating margins were up as a result of higher sales and savings related to Integration 2.0, partially offset by unfavorable product mix. GAAP operating margin also benefited from lower year-over-year restructuring expense.
Backlog
| Wabtec Corporation Consolidated Backlog Comparison | |||||||||||
| Backlog $ in millions | December 31, | ||||||||||
| 2023 | 2022 | Change | |||||||||
| 12-Month Backlog | $7,457 | $6,760 | 10.3 | % | |||||||
| Total Backlog | $21,999 | $22,441 | (2.0) | % | |||||||
The Company’s 12-month and multi-year backlogs continue to provide strong visibility. At the end of the fourth quarter, the 12-month backlog was $697 million higher than the prior year. And at December 31, 2023, the multi-year backlog was $442 million lower than the same time a year ago and excluding foreign currency exchange, the multi-year backlog decreased $645 million, down 2.9%.
Cash Flow and Liquidity Summary
•During the fourth quarter, the Company generated cash from operations of $686 million versus $410 million in the year ago period. Cash flow from operations benefited from higher earnings and improved working capital management.
•At the end of the quarter, the Company had cash, cash equivalents and restricted cash of $620 million and total debt of $4.07 billion. At December 31, 2023 the Company’s total available liquidity was $2.12 billion, which includes cash and cash equivalents plus $1.50 billion available under current credit facilities.
•The Company repurchased $157 million of Wabtec shares in the fourth quarter, bringing the full year total to $409 million.
•During the fourth quarter, Wabtec acquired the remaining 50% of the Company’s joint venture, Lokomotiv Kurastyru Zauyty (LKZ), for $81 million, net of cash received.
•Wabtec’s Board of Directors reauthorized the Company’s stock buyback program to refresh the amount available to $1.0 billion. The Board of Directors also increased the quarterly dividend by 17.6% and declared a regular quarterly common dividend of 20 cents per share, payable on March 8, 2024 to holders of record on February 23, 2024.
2024 Financial Guidance
•Wabtec issues 2024 financial guidance with sales expected to be in a range of $10.05 billion to $10.35 billion and adjusted earnings per diluted share to be in a range of $6.50 to $6.90.
•For full year 2024, Wabtec expects strong cash flow generation with operating cash flow conversion of greater than 90 percent.
2024 OUTLOOK
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.
Forecasted GAAP Earnings Reconciliation
Wabtec is not presenting a quantitative reconciliation of our forecasted GAAP earnings per diluted share to forecasted adjusted earnings per diluted share in reliance on the unreasonable efforts exemption provided under Item 10(e)(1)(i)(B) of Regulation S-K. Wabtec is 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 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: 4474477).
Information about non-GAAP Financial Information and Forward-Looking Statements
Wabtec’s earnings release and 2024 financial guidance mentions certain non-GAAP financial performance measures, including adjusted gross profit, adjusted operating expenses, adjusted operating margin, adjusted gross margin, EBITDA, adjusted EBITDA, adjusted income tax expense, adjusted income from operations, adjusted interest and other expense, adjusted net income, adjusted earnings per diluted share and operating cash flow conversion. Wabtec defines EBITDA as earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA is further adjusted for restructuring costs. 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. All statements, other than historical facts, including statements regarding Wabtec’s plans, objectives, expectations and intentions; Wabtec’s expectations about future sales, earnings and cash conversion 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 impacts of epidemics, pandemics, or similar public health crises on the global economy and, in particular, our customers, suppliers and end-markets, (11) potential disruptions, instability, and volatility in global markets as a result of global military action, acts of terrorism or armed conflict, including 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 AND TWELVE MONTHS ENDED DECEMBER 31, 2023 AND 2022
(AMOUNTS IN MILLIONS EXCEPT PER SHARE DATA)
(UNAUDITED)
| Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||
| December 31, | December 31, | ||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
| Net sales | $ | 2,526 | $ | 2,306 | $ | 9,677 | $ | 8,362 | |||||||||||||||
| Cost of sales | (1,762) | (1,654) | (6,733) | (5,822) | |||||||||||||||||||
| Gross profit | 764 | 652 | 2,944 | 2,540 | |||||||||||||||||||
| Gross profit as a % of Net Sales | 30.3 | % | 28.3 | % | 30.4 | % | 30.4 | % | |||||||||||||||
| Selling, general and administrative expenses | (296) | (272) | (1,139) | (1,029) | |||||||||||||||||||
| Engineering expenses | (61) | (60) | (218) | (209) | |||||||||||||||||||
| Amortization expense | (99) | (73) | (321) | (291) | |||||||||||||||||||
| Total operating expenses | (456) | (405) | (1,678) | (1,529) | |||||||||||||||||||
| Operating expenses as a % of Net Sales | 18.1 | % | 17.5 | % | 17.3 | % | 18.3 | % | |||||||||||||||
| Income from operations | 308 | 247 | 1,266 | 1,011 | |||||||||||||||||||
| Income from operations as a % of Net Sales | 12.2 | % | 10.7 | % | 13.1 | % | 12.1 | % | |||||||||||||||
| Interest expense, net | (55) | (51) | (218) | (186) | |||||||||||||||||||
| Other income, net | 27 | 14 | 44 | 29 | |||||||||||||||||||
| Income before income taxes | 280 | 210 | 1,092 | 854 | |||||||||||||||||||
| Income tax expense | (63) | (51) | (267) | (213) | |||||||||||||||||||
| Effective tax rate | 22.6 | % | 24.3 | % | 24.5 | % | 25.0 | % | |||||||||||||||
| Net income | 217 | 159 | 825 | 641 | |||||||||||||||||||
| Less: Net income attributable to noncontrolling interest | (2) | (1) | (10) | (8) | |||||||||||||||||||
| Net income attributable to Wabtec shareholders | $ | 215 | $ | 158 | $ | 815 | $ | 633 | |||||||||||||||
| Earnings Per Common Share | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Net income attributable to Wabtec shareholders | $ | 1.20 | $ | 0.87 | $ | 4.54 | $ | 3.46 | |||||||||||||||
| Diluted | |||||||||||||||||||||||
| Net income attributable to Wabtec shareholders | $ | 1.20 | $ | 0.86 | $ | 4.53 | $ | 3.46 | |||||||||||||||
| Weighted average shares outstanding | |||||||||||||||||||||||
| Basic | 178.0 | 181.0 | 178.8 | 182.2 | |||||||||||||||||||
| Diluted | 178.8 | 181.7 | 179.5 | 182.8 | |||||||||||||||||||
| Appendix A | ||||||||
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (CONTINUED)
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2023 AND 2022
(AMOUNTS IN MILLIONS EXCEPT PER SHARE DATA)
(UNAUDITED)
| Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
| Segment Information | |||||||||||||||||||||||
| Freight Net sales | $ | 1,798 | $ | 1,669 | $ | 6,962 | $ | 6,012 | |||||||||||||||
| Freight Income from operations | $ | 246 | $ | 209 | $ | 1,071 | $ | 864 | |||||||||||||||
| Freight Operating margin | 13.7 | % | 12.5 | % | 15.4 | % | 14.4 | % | |||||||||||||||
| Transit Net sales | $ | 728 | $ | 637 | $ | 2,715 | $ | 2,350 | |||||||||||||||
| Transit Income from operations | $ | 86 | $ | 63 | $ | 289 | $ | 231 | |||||||||||||||
| Transit Operating margin | 11.9 | % | 9.9 | % | 10.7 | % | 9.8 | % | |||||||||||||||
| Backlog Information (Note: 12-month is a sub-set of total) | December 31, 2023 | September 30, 2023 | December 31, 2022 | ||||||||||||||||||||
| Freight Total | $ | 17,831 | $ | 17,614 | $ | 18,641 | |||||||||||||||||
| Transit Total | 4,168 | 3,869 | 3,800 | ||||||||||||||||||||
| Wabtec Total | $ | 21,999 | $ | 21,483 | $ | 22,441 | |||||||||||||||||
| Freight 12-month | $ | 5,450 | $ | 5,282 | $ | 4,901 | |||||||||||||||||
| Transit 12-month | 2,007 | 1,809 | 1,859 | ||||||||||||||||||||
| Wabtec 12-month | $ | 7,457 | $ | 7,091 | $ | 6,760 | |||||||||||||||||
| Appendix B | ||||||||
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
| December 31, 2023 | December 31, 2022 | ||||||||||
| In millions | |||||||||||
| Cash, cash equivalents and restricted cash | $ | 620 | $ | 541 | |||||||
| Receivables, net | 1,684 | 1,519 | |||||||||
| Inventories, net | 2,284 | 2,034 | |||||||||
| Other current assets | 267 | 233 | |||||||||
| Total current assets | 4,855 | 4,327 | |||||||||
| Property, plant and equipment, net | 1,485 | 1,429 | |||||||||
| Goodwill | 8,780 | 8,508 | |||||||||
| Other intangible assets, net | 3,205 | 3,402 | |||||||||
| Other noncurrent assets | 663 | 850 | |||||||||
| Total Assets | $ | 18,988 | $ | 18,516 | |||||||
| Current liabilities | $ | 4,056 | $ | 3,467 | |||||||
| Long-term debt | 3,288 | 3,751 | |||||||||
| Other long-term liabilities | 1,120 | 1,151 | |||||||||
| Total Liabilities | 8,464 | 8,369 | |||||||||
| Shareholders' equity | 10,487 | 10,102 | |||||||||
| Noncontrolling interest | 37 | 45 | |||||||||
| Total Equity | 10,524 | 10,147 | |||||||||
| Total Liabilities and Equity | $ | 18,988 | $ | 18,516 | |||||||
| Appendix C | ||||||||
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| Twelve Months Ended December 31, | |||||||||||
| 2023 | 2022 | ||||||||||
| In millions | |||||||||||
| Operating activities | |||||||||||
| Net income | $ | 825 | $ | 641 | |||||||
| Non-cash expense | 473 | 506 | |||||||||
| Receivables | (195) | (52) | |||||||||
| Inventories | (58) | (368) | |||||||||
| Accounts payable | (58) | 306 | |||||||||
| Other assets and liabilities | 214 | 5 | |||||||||
| Net cash provided by operating activities | 1,201 | 1,038 | |||||||||
| Net cash used for investing activities | (492) | (235) | |||||||||
| Net cash used for financing activities | (633) | (708) | |||||||||
| Effect of changes in currency exchange rates | 3 | (27) | |||||||||
| Increase in cash | 79 | 68 | |||||||||
| Cash, cash equivalents and restricted cash, beginning of period | 541 | 473 | |||||||||
| Cash, cash equivalents and restricted cash, end of period | $ | 620 | $ | 541 | |||||||
Appendix D
Set forth below is the calculation of the non-GAAP performance measures included in this press release. We believe that these measures provide useful supplemental information to assess our operating performance and to evaluate period-to-period comparisons. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, Wabtec’s reported results prepared in accordance with GAAP.
| Wabtec Corporation | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reconciliation of Reported Results to Adjusted Results | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | Fourth Quarter 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 | $ | 2,526 | $ | 764 | $ | (456) | $ | 308 | $ | (28) | $ | (63) | $ | 217 | $ | (2) | $ | 215 | $ | 1.20 | |||||||||||||||||||||||||||||||||||||||||||||
| Restructuring and Portfolio Optimization costs | — | 13 | 34 | 47 | — | (9) | 38 | — | 38 | $ | 0.21 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gain on LKZ investment | — | — | — | — | (35) | — | (35) | — | (35) | $ | (0.19) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-cash Amortization expense | — | — | 76 | 76 | — | (18) | 58 | — | 58 | $ | 0.32 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted Results | $ | 2,526 | $ | 777 | $ | (346) | $ | 431 | $ | (63) | $ | (90) | $ | 278 | $ | (2) | $ | 276 | $ | 1.54 | |||||||||||||||||||||||||||||||||||||||||||||
| Fully Diluted Shares Outstanding | 178.8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Wabtec Corporation | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reconciliation of Reported Results to Adjusted Results | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | Fourth Quarter Year-to-Date 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 | $ | 9,677 | $ | 2,944 | $ | (1,678) | $ | 1,266 | $ | (174) | $ | (267) | $ | 825 | $ | (10) | $ | 815 | $ | 4.53 | |||||||||||||||||||||||||||||||||||||||||||||
| Restructuring and Portfolio Optimization costs | — | 38 | 41 | 79 | — | (17) | 62 | — | 62 | $ | 0.34 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gain on LKZ investment | — | — | — | — | (35) | — | (35) | — | (35) | $ | (0.19) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-cash Amortization expense | — | — | 298 | 298 | — | (74) | 224 | — | 224 | $ | 1.24 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted Results | $ | 9,677 | $ | 2,982 | $ | (1,339) | $ | 1,643 | $ | (209) | $ | (358) | $ | 1,076 | $ | (10) | $ | 1,066 | $ | 5.92 | |||||||||||||||||||||||||||||||||||||||||||||
| Fully Diluted Shares Outstanding | 179.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Appendix D
Set forth below is the calculation of the non-GAAP performance measures included in this press release. We believe that these measures provide useful supplemental information to assess our operating performance and to evaluate period-to-period comparisons. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, Wabtec’s reported results prepared in accordance with GAAP.
| Wabtec Corporation | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reconciliation of Reported Results to Adjusted Results | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | Fourth Quarter 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 | $ | 2,306 | $ | 652 | $ | (405) | $ | 247 | $ | (37) | $ | (51) | $ | 159 | $ | (1) | $ | 158 | $ | 0.86 | |||||||||||||||||||||||||||||||||||||||||||||
| Restructuring costs | — | 31 | 1 | 32 | — | (8) | 24 | — | 24 | $ | 0.14 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-cash Amortization expense | — | — | 73 | 73 | — | (19) | 54 | — | 54 | $ | 0.30 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted Results | $ | 2,306 | $ | 683 | $ | (331) | $ | 352 | $ | (37) | $ | (78) | $ | 237 | $ | (1) | $ | 236 | $ | 1.30 | |||||||||||||||||||||||||||||||||||||||||||||
| Fully Diluted Shares Outstanding | 181.7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Wabtec Corporation | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reconciliation of Reported Results to Adjusted Results | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | Fourth Quarter Year-to-Date 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 | $ | 8,362 | $ | 2,540 | $ | (1,529) | $ | 1,011 | $ | (157) | $ | (213) | $ | 641 | $ | (8) | $ | 633 | $ | 3.46 | |||||||||||||||||||||||||||||||||||||||||||||
| Restructuring costs | — | 43 | 9 | 52 | — | (13) | 39 | — | 39 | $ | 0.21 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-cash Amortization expense | — | — | 291 | 291 | — | (73) | 218 | — | 218 | $ | 1.19 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted Results | $ | 8,362 | $ | 2,583 | $ | (1,229) | $ | 1,354 | $ | (157) | $ | (299) | $ | 898 | $ | (8) | $ | 890 | $ | 4.86 | |||||||||||||||||||||||||||||||||||||||||||||
| Fully Diluted Shares Outstanding | 182.8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||
| Fourth Quarter 2023 EBITDA Reconciliation | |||||||||||||||||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||||||||||||||
| Reported Income | + | Other Income | + | Depreciation & | = | EBITDA | + | Restructuring | = | Adjusted | |||||||||||||||||||||||||||||||
| from Operations | (Expense) | Amortization | Costs | EBITDA | |||||||||||||||||||||||||||||||||||||
| Consolidated Results | $ | 308 | $ | 27 | $ | 159 | $ | 494 | $ | (18) | $ | 476 | |||||||||||||||||||||||||||||
| Wabtec Corporation | |||||||||||||||||||||||||||||||||||||||||
| Fourth Quarter 2023 YTD EBITDA Reconciliation | |||||||||||||||||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||||||||||||||
| Reported Income | + | Other Income | + | Depreciation & | = | EBITDA | + | Restructuring | = | Adjusted | |||||||||||||||||||||||||||||||
| from Operations | (Expense) | Amortization | Costs | EBITDA | |||||||||||||||||||||||||||||||||||||
| Consolidated Results | $ | 1,266 | $ | 44 | $ | 526 | $ | 1,836 | $ | 6 | $ | 1,842 | |||||||||||||||||||||||||||||
| Wabtec Corporation | |||||||||||||||||||||||||||||||||||||||||
| Fourth Quarter 2022 EBITDA Reconciliation | |||||||||||||||||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||||||||||||||
| Reported Income | + | Other Income | + | Depreciation & | = | EBITDA | + | Restructuring | = | Adjusted | |||||||||||||||||||||||||||||||
| from Operations | (Expense) | Amortization | Costs | EBITDA | |||||||||||||||||||||||||||||||||||||
| Consolidated Results | $ | 247 | $ | 14 | $ | 119 | $ | 380 | $ | 29 | $ | 409 | |||||||||||||||||||||||||||||
| Wabtec Corporation | |||||||||||||||||||||||||||||||||||||||||
| Fourth Quarter 2022 YTD EBITDA Reconciliation | |||||||||||||||||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||||||||||||||
| Reported Income | + | Other Income | + | Depreciation & | = | EBITDA | + | Restructuring | = | Adjusted | |||||||||||||||||||||||||||||||
| from Operations | (Expense) | Amortization | Costs | EBITDA | |||||||||||||||||||||||||||||||||||||
| Consolidated Results | $ | 1,011 | $ | 29 | $ | 473 | $ | 1,513 | $ | 49 | $ | 1,562 | |||||||||||||||||||||||||||||
Appendix F
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION
SALES BY PRODUCT LINE
(UNAUDITED)
| Three Months Ended December 31, | |||||||||||
| In millions | 2023 | 2022 | |||||||||
| Freight Segment | |||||||||||
| Services | $ | 958 | $ | 773 | |||||||
| Equipment | 347 | 430 | |||||||||
| Components | 283 | 241 | |||||||||
| Digital Intelligence | 210 | 225 | |||||||||
| Total Freight Segment | $ | 1,798 | $ | 1,669 | |||||||
| Transit Segment | |||||||||||
| Original Equipment Manufacturer | $ | 326 | $ | 280 | |||||||
| Aftermarket | 402 | 357 | |||||||||
| Total Transit Segment | $ | 728 | $ | 637 | |||||||
| Twelve Months Ended December 31, | |||||||||||
| In millions | 2023 | 2022 | |||||||||
| Freight Segment | |||||||||||
| Services | $ | 3,262 | $ | 2,819 | |||||||
| Equipment | 1,770 | 1,528 | |||||||||
| Components | 1,157 | 936 | |||||||||
| Digital Intelligence | 773 | 729 | |||||||||
| Total Freight Segment | $ | 6,962 | $ | 6,012 | |||||||
| Transit Segment | |||||||||||
| Original Equipment Manufacturer | $ | 1,235 | $ | 1,095 | |||||||
| Aftermarket | 1,480 | 1,255 | |||||||||
| Total Transit Segment | $ | 2,715 | $ | 2,350 | |||||||
Appendix G
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION
RECONCILIATION OF REPORTED RESULTS TO ADJUSTED RESULTS - BY SEGMENT
(UNAUDITED)
| Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||||||||||||||||||||||||
| In millions | Gross Profit | Income from Operations | Gross Profit | Income from Operations | Gross Profit | Income from Operations | Gross Profit | Income from Operations | |||||||||||||||||||||||||||||||||||||||
| Freight Segment Reported Results | $ | 558 | $ | 246 | $ | 482 | $ | 209 | $ | 2,190 | $ | 1,071 | $ | 1,896 | $ | 864 | |||||||||||||||||||||||||||||||
| Freight Segment Reported Margin | 31.0 | % | 13.7 | % | 28.9 | % | 12.5 | % | 31.5 | % | 15.4 | % | 31.5 | % | 14.4 | % | |||||||||||||||||||||||||||||||
| Restructuring and Portfolio Optimization costs | 5 | 30 | 8 | 7 | 13 | 41 | 15 | 15 | |||||||||||||||||||||||||||||||||||||||
| Non-cash Amortization expense | — | 71 | — | 68 | — | 277 | — | 272 | |||||||||||||||||||||||||||||||||||||||
| Freight Segment Adjusted Results | $ | 563 | $ | 347 | $ | 490 | $ | 284 | $ | 2,203 | $ | 1,389 | $ | 1,911 | $ | 1,151 | |||||||||||||||||||||||||||||||
| Freight Segment Adjusted Margin | 31.3 | % | 19.3 | % | 29.4 | % | 17.0 | % | 31.6 | % | 19.9 | % | 31.8 | % | 19.1 | % | |||||||||||||||||||||||||||||||
| Transit Segment Reported Results | $ | 206 | $ | 86 | $ | 170 | $ | 63 | $ | 754 | $ | 289 | $ | 644 | $ | 231 | |||||||||||||||||||||||||||||||
| Transit Segment Reported Margin | 28.4 | % | 11.9 | % | 26.7 | % | 9.9 | % | 27.8 | % | 10.7 | % | 27.3 | % | 9.8 | % | |||||||||||||||||||||||||||||||
| Restructuring costs | 8 | 17 | 23 | 27 | 25 | 38 | 28 | 37 | |||||||||||||||||||||||||||||||||||||||
| Non-cash Amortization expense | — | 5 | — | 5 | — | 21 | — | 19 | |||||||||||||||||||||||||||||||||||||||
| Transit Segment Adjusted Results | $ | 214 | $ | 108 | $ | 193 | $ | 95 | $ | 779 | $ | 348 | $ | 672 | $ | 287 | |||||||||||||||||||||||||||||||
| Transit Segment Adjusted Margin | 29.4 | % | 14.9 | % | 30.3 | % | 14.8 | % | 28.7 | % | 12.8 | % | 28.6 | % | 12.2 | % | |||||||||||||||||||||||||||||||
Appendix H
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION
RECONCILIATION OF CHANGES IN NET SALES - BY SEGMENT
(UNAUDITED)
| Three Months Ended December 31, | ||||||||||||||||||||
| In millions | Freight | Transit | Consolidated | |||||||||||||||||
| 2022 Net Sales | $ | 1,669 | $ | 637 | $ | 2,306 | ||||||||||||||
| Acquisitions | 32 | — | 32 | |||||||||||||||||
| Foreign Exchange | 5 | 28 | 33 | |||||||||||||||||
| Organic | 92 | 63 | 155 | |||||||||||||||||
| 2023 Net Sales | $ | 1,798 | $ | 728 | $ | 2,526 | ||||||||||||||
| Change ($) | 129 | 91 | 220 | |||||||||||||||||
| Change (%) | 7.7 | % | 14.3 | % | 9.5 | % | ||||||||||||||
| Twelve Months Ended December 31, | ||||||||||||||||||||
| 2022 Net Sales | $ | 6,012 | $ | 2,350 | $ | 8,362 | ||||||||||||||
| Acquisitions | 109 | — | 109 | |||||||||||||||||
| Foreign Exchange | (23) | 25 | 2 | |||||||||||||||||
| Organic | 864 | 340 | 1,204 | |||||||||||||||||
| 2023 Net Sales | $ | 6,962 | $ | 2,715 | $ | 9,677 | ||||||||||||||
| Change ($) | 950 | 365 | 1,315 | |||||||||||||||||
| Change (%) | 15.8 | % | 15.5 | % | 15.7 | % | ||||||||||||||
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 Fourth Quarter Cash Conversion Calculation | |||||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||
| Reported Cash from Operations | ÷ | (Net Income | + | Depreciation & Amortization) | = | Cash Conversion | |||||||||||||||||||||||
| Consolidated Results | $686 | $217 | $160 | 182% | |||||||||||||||||||||||||
| Wabtec Corporation | |||||||||||||||||||||||||||||
| 2023 Fourth Quarter YTD Cash Conversion Calculation | |||||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||
| Reported Cash from Operations | ÷ | (Net Income | + | Depreciation & Amortization) | = | Cash Conversion | |||||||||||||||||||||||
| Consolidated Results | $1,201 | $825 | $531 | 89% | |||||||||||||||||||||||||
| Wabtec Corporation | |||||||||||||||||||||||||||||
| 2022 Fourth Quarter Cash Conversion Calculation | |||||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||
| Reported Cash from Operations | ÷ | (Net Income | + | Depreciation & Amortization) | = | Cash Conversion | |||||||||||||||||||||||
| Consolidated Results | $410 | $159 | $120 | 147% | |||||||||||||||||||||||||
| Wabtec Corporation | |||||||||||||||||||||||||||||
| 2022 Fourth Quarter YTD Cash Conversion Calculation | |||||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||
| Reported Cash from Operations | ÷ | (Net Income | + | Depreciation & Amortization) | = | Cash Conversion | |||||||||||||||||||||||
| Consolidated Results | $1,038 | $641 | $479 | 93% | |||||||||||||||||||||||||
F O U R T H Q U A RT E R 2 0 2 3 Wabtec Financial Results & Company Highlights
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. All statements, other than historical facts, including statements regarding Wabtec’s plans, objectives, expectations and intentions; 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, 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 impacts of epidemics, pandemics, or similar public health crises on the global economy and, in particular, our customers, suppliers and end-markets, (11) potential disruptions, instability, and volatility in global markets as a result of global military action, acts of terrorism or armed conflict, including 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 2024 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 net income, adjusted operating margin, adjusted gross 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 costs. 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 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 the timing, and could be material to Wabtec’s Consolidated Statement of Earnings.
W A B T E C TODAY’S PARTICIPANTS J O H N O L I N Executive Vice President & Chief Financial Officer R A F A E L S A N T A N A President & Chief Executive Officer K R I S T I N E K U B A C K I Vice President, Investor Relations
W A B T E C 4 4Q 2023 OVERVIEW S A L E S $ 2 . 5 3 B Up 9.5% YOY O P E R A T I N G M A R G I N 1 2 . 2 % G A A P 1 7 . 0 % Adjusted(2) E A R N I N G S P E R S H A R E $ 1 . 2 0 G A A P $ 1 . 5 4 Adjusted(2) C A S H F L O W F R O M O P E R A T I O N S ( 1 ) $ 6 8 6 M 1 2 - M O N T H B A C K L O G $ 7 . 4 6 B S T R O N G P E R F O R M A N C E A C R O S S T H E B U S I N E S S 4 Q 2 0 2 3 H I G H L I G H T S Increased sales were driven by growth across the Freight and Transit segments Operating margin benefited from sales growth, increased gross margin and lower SG&A/Engineering expenses as a percentage of sales GAAP EPS up 39.5% YoY … Adjusted EPS up 18.5% YoY from higher Freight and Transit sales and operating margin expansion Operating cash flow driven by higher net income and improved working capital YoY Backlog continues to provide strong visibility … 12-month up 10.3% and multi-year backlog at $22.0 billion Note: Adjusted numbers represent non-GAAP financial measures. See Appendix for additional details and reconciliations (1) Year-over-year 4th quarter cash flow impact from securitization of accounts receivable was unfavorable $70 million
W A B T E C 5 2024 MARKET EXPECTATIONS F R E I G H T NA Carloads +/↔ Active Locomotive Fleet ↔ International Freight Volumes + NA Railcar Deliveries - Mining Commodities ↔ T R A N S I T Infrastructure Investment + Global Ridership +/↔ FAVORABLE / UNFAVORABLE -3.2% -4.6% -3.3% 2.8% 1Q23 2Q23 3Q23 4Q23 N O R T H A M E R I C A N F R E I G H T C A R L O A D S 2 0 2 3 I N T E R N A T I O N A L F R E I G H T V O L U M E S Sources: China, Kazakhstan, India Ministry of Railways, Brazil: ANTT, South Africa 6.2% 1.3% 4.0% 2.5% 2.8% Brazil China India South Africa Kazakhstan Source: Association of American Railroads A V G N O R T H A M E R I C A N A C T I V E L O C O M O T I V E S 2020 2021 2022 2023 Source: Wabtec 33K 30K 41K 45K 38K 2020 2021 2022 2023 2024F Source: Rail Supply Institute and FTR Associates 5 2 K H I S T O R I C A L 1 0 - Y E A R A V E R A G E N O R T H A M E R I C A N R A I L C A R D E L I V E R I E S
W A B T E C EXECUTING ON OUR VALUE CREATION FRAMEWORK DRIVERS OF PORTFOLIO GROWTH RECENT WINS Won a multi-year order from CSX for >200 mods in North America Mining orders $300+ million … up double-digit versus prior year Awarded $150+ million brake order in India Expanded Digital portfolio with entry into railcar telematics market Acquired the remaining 50% of LKZ joint venture in Kazakhstan 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
W A B T E C 7 RESILIENT PORTFOLIO THROUGH THE CYCLE Note: Adjusted numbers represent non-GAAP financial measures. See Appendix for additional details and reconciliations Strong 12-month backlog provides resiliency and visibility despite macro uncertainty Significant recurring revenue base drives ~60% of profits FAVORABLE END-MARKETS ROBUST BACKLOG & RECURRING REVENUE DEMONSTRATED EXECUTION S O L I D O U T L O O K S U P P O R T E D B Y R E S I L I E N T A N D M O R E P R E D I C T A B L E E A R N I N G S 72% Freight 28% Transit FREIGHT + Aged fleet … accelerating investment in the fleet + Strong international order pipeline + Growing installed base TRANSIT + Increased global investment in infrastructure + Mega trends favor increasing ridership 4Q20 4Q23 $7.5B $6.8B Expanded margins despite higher input costs, supply chain disruptions and the exit of our business in Russia Aggressively managing costs and accelerating lean actions; executing on Integration 2.0 Average cash conversion of 93% during 2020 to 2023 46%* recurring revenue 2021 2022 2023 15.9% OP MARGIN 17.0% 16.2% 4Q21 4Q22 $6.3B $5.5B *based on 2023 sales 13.1%12.1%11.2% GAAP Adjusted 2021 2022 2023 *based on 2023 sales 2020 9.9% 15.1% 2020
W A B T E C 8 0 0.5 1 1.5 2 2.5 3 Chart Title 4Q 2023 FINANCIAL SUMMARY 0 50 100 150 200 250 300 350 400 450 500 Category 1 Chart Title (1) Adjusted numbers represent non-GAAP financial measures. See Appendix for additional details and reconciliations INCREASED SALES, MARGIN EXPANSION AND EPS GROWTH DESPITE MACRO UNCERTAINTY 9.5% INCREASE (8.1% INCREASE EX-CURRENCY) SALES 2 0 2 2 2 0 2 3 2 0 2 2 GAAP 2 0 2 3 GAAP 2 0 2 2 ADJ(1) 2 0 2 3 ADJ(1) $247M 10.7% $308M 12.2% $352M 15.3% $431M 17.0% OP INCOME / OP MARGIN $0.86 $1.20 $1.30 $1.54 0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 Category 12 0 2 2 GAAP 2 0 2 3 GAAP 2 0 2 2 ADJ(1) 2 0 2 3 ADJ(1) +39.5% YOY +18.5% YOY EPS $2.31B $2.53B
W A B T E C 9 4Q 2023 SALES (in millions) P R O D U C T L I N E 4 Q 2 3 Y O Y Equipment $347 (19.3%) Components $283 17.4% Digital Intelligence $210 (6.7%) Services $958 23.9% Freight Segment $1,798 7.7% Transit Segment $728 14.3% T O T A L S A L E S $ 2 , 5 2 6 9 . 5 % 4 Q K E Y D R I V E R S E Q U I P M E N T Higher mining sales offset by lower locomotive deliveries (2nd half deliveries significantly skewed to 3Q) C O M P O N E N T S Increased demand for rail and industrial products, and L&M acquisition (4.1% YoY growth excluding acquisitions) D I G I T A L I N T E L L I G E N C E Higher demand for international PTC, on-board locomotive hardware, and digital mining products offset by lower sales in NA S E R V I C E S Increased sales from significantly higher mods deliveries (2nd half deliveries significantly skewed to 4th quarter) and increased parts sales T R A N S I T Strong OE and aftermarket sales … sales up 9.9% on constant currency basis
W A B T E C 10 4Q 2023 CONSOLIDATED GROSS PROFIT ($ in millions) 2 0 2 2 G R O S S P R O F I T $ 6 5 2 $ 6 8 3 % Gross Profit Margin 28.3% 29.6% Volume ↑ ↑ Mix/Pricing ↑ ↑ Raw Materials ↔ ↔ Currency ↑ ↑ Manufacturing/Other ↑ ↑ 2 0 2 3 G R O S S P R O F I T $ 7 6 4 $ 7 7 7 % Gross Profit Margin 30.3% 30.8% GAAP Adjusted Note: Adjusted numbers represent non-GAAP financial measures. See Appendix for additional details and reconciliations 4 Q K E Y D R I V E R S V O L U M E Higher Freight and Transit segment sales M I X / P R I C I N G Favorable price/mix of products, partially offset by unfavorable mix between segments R A W M A T E R I A L S Slightly favorable input costs C U R R E N C Y Favorable foreign exchange increased adjusted gross profit $8M (adjusted operating income favorable by $5M) M A N U F A C T U R I N G / O T H E R Favorable fixed cost absorption and benefits of Integration 2.0
W A B T E C 11 4Q 2023 CONSOLIDATED OPERATING INCOME 2 0 2 2 O P I N C O M E $247 $352 % Operating Margin 10.7% 15.3% Gross Profit 112 94 SG&A (24) (14) Engineering (1) (1) Amortization (26) - 2 0 2 3 O P I N C O M E $308 $431 % Operating Margin 12.2% 17.0% O P M A R G I N B E N E F I T E D F R O M H I G H E R S A L E S , I N C R E A S E D G R O S S M A R G I N A N D L O W E R S G & A / E N G I N E E R I N G A S P E R C E N T A G E O F S A L E S Adjusted ($ in millions) GAAP Note: Adjusted numbers represent non-GAAP financial measures. See Appendix for additional details and reconciliations
W A B T E C 12 0 1 2 3 4 5 6 Chart Title 0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 2 Chart Title 4Q 2023 FREIGHT SEGMENT PERFORMANCE 0 50 100 150 200 250 300 350 400 Category 1 7.7% INCREASE (7.4% INCREASE EX-CURRENCY) SALES 2 0 2 2 2 0 2 3 2 0 2 2 GAAP 2 0 2 3 GAAP 2 0 2 2 ADJ(1) 2 0 2 3 ADJ(1) $209M 12.5% $246M 13.7% $284M 17.0% $347M 19.3% OP INCOME / OP MARGIN 12-MONTH BACKLOG $1.67B $1.80B(2) Note: Adjusted numbers represent non-GAAP financial measures. See Appendix for additional details and reconciliations (1) Freight segment operating income was positively impacted by below-market intangible amortization of $15 million; up $1 million versus 4th quarter 2022 (2) Foreign exchange positively impacted Freight sales by $5 million; Foreign exchange rates had a positive $117 million impact on segment multi-year backlog 11.2% INCREASE YOY 4.3% DECREASE MULTI-YEAR BACKLOG(2) YOY 2 0 2 2 2 0 2 3 $4.90B $5.45B
W A B T E C 13 0 0.5 1 1.5 2 2.5 Chart Title 0 100 200 300 400 500 600 700 800 Chart Title 4Q 2023 TRANSIT SEGMENT PERFORMANCE 0 20 40 60 80 100 120 Category 1 14.3% INCREASE (9.9% INCREASE EX-CURRENCY) SALES 2 0 2 2 2 0 2 3 2 0 2 2 GAAP 2 0 2 3 GAAP 2 0 2 2 ADJ(1) 2 0 2 3 ADJ(1) $63M 9.9% $86M 11.9% $95M 14.8% $108M 14.9% OP INCOME / OP MARGIN 12-MONTH BACKLOG $637M $728M(1) 8.0% INCREASE YOY 9.7% INCREASE MULTI-YEAR BACKLOG(1) YOY 2 0 2 2 2 0 2 3 $1.86B $2.01B Note: Adjusted numbers represent non-GAAP financial measures. See Appendix for additional details and reconciliations (1) Foreign exchange positively impacted Transit sales by $28 million; Foreign exchange rates had a positive $86 million impact on segment multi-year backlog
W A B T E C 14 INTEGRATION 2 .0 – UNLOCKING GREATER PROFITABILITY ACROSS THE PORTFOLIO On track to deliver target run-rate savings by 2025 C O N S O L I D A T E F O O T P R I N T 15+ facilities Headcount redundancy Office/facility rationalization S T R E A M L I N E M A N U F A C T U R I N G Restructure NAM distribution Remanufacturing localization Best-cost-country capacity expansion S I M P L I F Y T H R O U G H S Y S T E M S E N A B L E M E N T Implement indirect source-to-pay Data/process simplification 2022 2023 2024 2025 $75-90M BY 2025 Realized $5M RUN-RATE SAVINGS(2) Unrealized (1) Restructuring expense and restructuring related one-time charges (2) Savings include Bochum restructuring announced in the 4th quarter 2021 with a $23 million charge Restructuring charges (1) $46M $135-165MExpected total thru 2024 $22M $49M
W A B T E C PORTFOLIO OPTIMIZATION – UNLOCKING GREATER PROFITABILITY ACROSS THE PORTFOLIO Acquired 100% of L&M in 2Q23 • Leading provider of mining truck radiators; expands Wabtec mining and heat transfer portfolios • Purchase price of $229M (net of cash received) • Accretive to 2023 earnings and ROIC Acquired remaining 50% stake of our LKZ assembly JV in late 4Q23 • LKZ was an unconsolidated assembly JV in Kazakhstan • Purchase price of $81M (net of cash received) … $35M GAAP non-cash gain on existing 50% stake • No impact expected to 2024 sales; limited benefit to 2024 earnings Wabtec to exit various low margin product lines • Pruning will improve focus and profitability while reducing manufacturing complexity • Divestitures represent approximately $110M of 2023 low margin revenues o Roughly 50/50 split between Freight and Transit segments • Expect net exit charges of ~$85M in predominantly non- cash asset write downs o $28M non-cash charge booked in 4Q23 GAAP results P O R T F O L I O P RU N I NGR EC E N T P O R T F O L I O A D D I T I ON S 15
W A B T E C 16 RESILIENT BUSINESS ALLOWS FOR EXECUTION ON FINANCIAL PRIORITIES Strong balance sheet and financial position … liquidity of $2.12B Debt leverage of 1.9x(2) Strategic acquisitions of L&M ($229M) and LKZ ($81M) net of cash received Returning capital to shareholders … $532M returned through share repurchases and dividends ROIC(4) improved 1.2 percentage points YoY FOCUSED ON CASH CONVERSION(1) YTD CASH FROM OPS DISCIPLINED CAPITAL ALLOCATION 4th quarter CFOA of $686M driven by strong growth in net income and improved working capital Full year 2023 cash conversion impacted by higher working capital investment to support 15.7% FY23 sales growth S T R O N G F I N A N C I A L P E R F O R M A N C E ; I N V E S T I N G F O R 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 December 31, 2023, the Company’s total available liquidity was $2.12 billion, which includes cash and cash equivalents of $0.62 billion, plus $1.50 billion available under current credit facilities (4) Adjusted numbers represent non-GAAP financial measures. See Appendix for additional details and reconciliations 93% cash conv $1.04B 2022 89% cash conv $1.20B 2 0 2 3 $1.20B Dividends Share repurchases $409MCash from Ops $308M Full year 2023 Acquisitions Capex Debt /Other financing $123M $96M $186M Change in cash$79M Share repurchases
W A B T E C 17 2023 OVERVIEW S A L E S $ 9 . 6 8 B Up 15.7% YOY O P E R A T I N G M A R G I N 1 3 . 1 % G A A P 1 7 . 0 % Adjusted E A R N I N G S P E R S H A R E $ 4 . 5 3 G A A P $ 5 . 9 2 Adjusted C A S H F L O W F R O M O P E R A T I O N S ( 1 ) $ 1 . 2 0 B S T R O N G E X E C U T I O N I N V O L A T I L E E N V I R O N M E N T 2 0 2 3 H I G H L I G H T S Increased sales were driven by strong Freight and Transit growth Operating margin up from higher sales growth and improved productivity … partially offset by unfavorable mix and manufacturing inefficiencies due to strike in Erie EPS driven by strong sales and operating margin expansion … GAAP EPS up 30.9% and adjusted EPS up 21.8% YoY Strong cash generation enabling investment for future growth and maximizing shareholder returns Note: Adjusted numbers represent non-GAAP financial measures. See Appendix for additional details and reconciliations (1) Year-over-year annual cash flow impact from securitization of accounts receivable was unfavorable $120 million
W A B T E C 18 2024 OUTLOOK AND GUIDANCE OUTLOOK IN LINE WITH LONG-TERM GROWTH FRAMEWORK Adjusted operating margin up ⁻ Favorable productivity/absorption ⁻ Benefits of Integration 2.0/Portfolio Optimization ⁻ Lower SG&A and Engineering expenses as % of sales Tax rate ~25% Capex ~2% of sales E Q U I P M E N T Higher NA and international locomotive deliveries and increased mining sales C O M P O N E N T S Stable demand for industrial components and 2023 acquisition of L&M, offset by lower North American railcar build S E R V I C E S Continued demand for reliable, efficient power and higher deliveries of MODs … partially offset by slight reduction in the NA active fleet D I G I T A L I N T E L L I G E N C E Strong growth in international markets and new products … with slower growth in the North American market 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 (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 R E V E N U E S A D J U S T E D E P S $6.50 to $6.90 C A S H C O N V E R S I O N (1) >90% $10.05B to $10.35B
W A B T E C 19 KEY TAKEAWAYS (1) Long-term guidance as of March 9, 2022 (on an adjusted earnings basis) Continued momentum across the portfolio and strong order pipeline internationally and in North America Positive productivity driven by continuous cost improvement combined with realization of Integration 2.0 savings Wabtec is well-positioned to drive higher returns and create significant long-term value for shareholders Strong revenue growth, margin expansion, cash flow and increased earnings in 2023 … despite macro uncertainty01 02 03 04 5 - Y E A R O U T L O O K ( 1 ) MSD CORE ORGANIC GROWTH CAGR 250 – 300 BPS MARGIN EXPANSION DISCIPLINED CAPITAL DEPLOYMENT D O U B L E - D I G I T E P S G R O W T H W I T H S T R O N G O P E R A T I N G C A S H F L O W C O N V E R S I O N ( 9 0 % + )
Income statement Appendix A ( 1 of 2) 2023 2022 2023 2022 Net sales 2,526$ 2,306$ 9,677$ 8,362$ Cost of sales (1,762) (1,654) (6,733) (5,822) Gross profit 764 652 2,944 2,540 Gross profit as a % of Net Sales 30.3% 28.3% 30.4% 30.4% Selling, general and administrative expenses (296) (272) (1,139) (1,029) Engineering expenses (61) (60) (218) (209) Amortization expense (99) (73) (321) (291) Total operating expenses (456) (405) (1,678) (1,529) Operating expenses as a % of Net Sales 18.1% 17.5% 17.3% 18.3% Income from operations 308 247 1,266 1,011 Income from operations as a % of Net Sales 12.2% 10.7% 13.1% 12.1% Interest expense, net (55) (51) (218) (186) Other (expense) income, net 27 14 44 29 Income before income taxes 280 210 1,092 854 Income tax expense (63) (51) (267) (213) Effective tax rate 22.6% 24.3% 24.5% 25.0% Net income 217 159 825 641 Less: Net income attributable to noncontrolling interest (2) (1) (10) (8) Net income attributable to Wabtec shareholders 215$ 158$ 815$ 633$ Earnings Per Common Share Basic Net income attributable to Wabtec shareholders 1.20$ 0.87$ 4.54$ 3.46$ Diluted Net income attributable to Wabtec shareholders 1.20$ 0.86$ 4.53$ 3.46$ Basic 178.0 181.0 178.8 182.2 Diluted 178.8 181.7 179.5 182.8 December 31, December 31, WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2023 AND 2022 (AMOUNTS IN MILLIONS EXCEPT PER SHARE DATA) (UNAUDITED) Three Months Ended Twelve Months Ended
Appendix A ( 2 of 2) Income statement (cont.) 2023 2022 2023 2022 Segment Information Freight Net Sales 1,798$ 1,669$ 6,962$ 6,012$ Freight Income from Operations 246$ 209$ 1,071$ 864$ Freight Operating Margin 13.7% 12.5% 15.4% 14.4% Transit Net Sales 728$ 637$ 2,715$ 2,350$ Transit Income from Operations 86$ 63$ 289$ 231$ Transit Operating Margin 11.9% 9.9% 10.7% 9.8% Backlog Information (Note: 12-month is a sub-set of total) December 31, 2023 September 30, 2023 December 31, 2022 Freight Total 17,831$ 17,614$ 18,641$ Transit Total 4,168 3,869 3,800 Wabtec Total 21,999$ 21,483$ 22,441$ Freight 12-Month 5,450$ 5,282$ 4,901$ Transit 12-Month 2,007 1,809 1,859 Wabtec 12-Month 7,457$ 7,091$ 6,760$ December 31, December 31, WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2023 AND 2022 (AMOUNTS IN MILLIONS EXCEPT PER SHARE DATA) (UNAUDITED) Three Months Ended Twelve Months Ended
Balance sheet Appendix B December 31, 2023 December 31, 2022 In mill ions Cash, cash equivalents and restricted cash 620$ 541$ Receivables, net 1,684 1,519 Inventories, net 2,284 2,034 Other current assets 267 233 Total current assets 4,855 4,327 Property, plant and equipment, net 1,485 1,429 Goodwill 8,780 8,508 Other intangible assets, net 3,205 3,402 Other noncurrent assets 663 850 Total assets 18,988$ 18,516$ Current liabilities 4,056$ 3,467$ Long-term debt 3,288 3,751 Long-term liabilities - other 1,120 1,151 Total liabilities 8,464 8,369 Shareholders' equity 10,487 10,102 Noncontrolling interest 37 45 Total shareholders' equity 10,524 10,147 Total Liabilities and Shareholders' Equity 18,988$ 18,516$ WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
Appendix C Cash flow 2023 2022 In mill ions Operating activities Net income 825$ 641$ Non-cash expense 473 506 Receivables (195) (52) Inventories (58) (368) Accounts Payable (58) 306 Other assets and liabilities 214 5 Net cash provided by operating activities 1,201 1,038 Net cash used for investing activities (492) (235) Net cash used for financing activities (633) (708) Effect of changes in currency exchange rates 3 (27) Increase in cash 79 68 Cash, cash equivalents and restricted cash, beginning of period 541 473 Cash, cash equivalents and restricted cash, end of period 620$ 541$ Twelve Months Ended December 31, WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
EPS and non-GAAP Reconciliation Appendix D (1 of 2) Wabtec Corporation Reconciliation of Reported Results to Adjusted Results (in millions) Gross Operating Income from Interest & Noncontrolling Wabtec Net Sales Profit Expenses Operations Other Exp Tax Net Income Interest Net Income EPS Reported Results 2,526$ 764$ (456)$ 308$ (28)$ (63)$ 217$ (2)$ 215$ 1.20$ Restructuring and Portfolio Optimization costs - 13 34 47 - (9) 38 - 38 0.21$ Gain on LKZ Investment - - - - (35) - (35) - (35) (0.19)$ Non-cash Amortization expense - - 76 76 - (18) 58 - 58 0.32$ Adjusted Results 2,526$ 777$ (346)$ 431$ (63)$ (90)$ 278$ (2)$ 276$ 1.54$ Fully Diluted Shares Outstanding 178.8 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 9,677$ 2,944$ (1,678)$ 1,266$ (174)$ (267)$ 825$ (10)$ 815$ 4.53$ Restructuring and Portfolio Optimization costs - 38 41 79 - (17) 62 - 62 0.34$ Gain on LKZ Investment - - - - (35) - (35) - (35) (0.19)$ Non-cash Amortization expense - - 298 298 - (74) 224 - 224 1.24$ Adjusted Results 9,677$ 2,982$ (1,339)$ 1,643$ (209)$ (358)$ 1,076$ (10)$ 1,066$ 5.92$ Fully Diluted Shares Outstanding 179.5 Fourth Quarter Year-to-Date 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. Fourth Quarter 2023 Actual Results
EPS and non-GAAP Reconciliation Appendix D (2 of 2) Wabtec Corporation Reconciliation of Reported Results to Adjusted Results (in millions) Gross Operating Income from Interest & Noncontrolling Wabtec Net Sales Profit Expenses Operations Other Exp Tax Net Income Interest Net Income EPS Reported Results 2,306$ 652$ (405)$ 247$ (37)$ (51)$ 159$ (1)$ 158$ 0.86$ Restructuring costs - 31 1 32 - (8) 24 - 24 0.14$ Non-cash Amortization expense - - 73 73 - (19) 54 - 54 0.30$ Adjusted Results 2,306$ 683$ (331)$ 352$ (37)$ (78)$ 237$ (1)$ 236$ 1.30$ Fully Diluted Shares Outstanding 181.7 Wabtec Corporation Reconciliation of Reported Results to Adjusted Results (in millions) Gross Operating Income from Interest & Noncontrolling Wabtec Net Sales Profit Expenses Operations Other Exp Tax Net Income Interest Net Income EPS Reported Results 8,362$ 2,540$ (1,529)$ 1,011$ (157)$ (213)$ 641$ (8)$ 633$ 3.46$ Restructuring costs - 43 9 52 - (13) 39 - 39 0.21$ Non-cash Amortization expense - - 291 291 - (73) 218 - 218 1.19$ Adjusted Results 8,362$ 2,583$ (1,229)$ 1,354$ (157)$ (299)$ 898$ (8)$ 890$ 4.86$ Fully Diluted Shares Outstanding 182.8 Set forth below is the calculation of the non-GAAP performance measures included in this press release. We believe that these measures provide useful supplemental information to assess our operating performance and to evaluate period-to-period comparisons. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, Wabtec's reported results prepared in accordance with GAAP. Fourth Quarter 2022 Actual Results Fourth Quarter Year-to-Date 2022 Actual Results
EBITDA reconciliation Appendix E Wabtec Corporation 2023 Q4 EBITDA Reconciliation (in millions) Reported Income Other Income Depreciation & Restructuring Adjusted from Operations (Expense) Amortization Costs EBITDA Consolidated Results $308 $27 $159 $494 ($18) $476 Wabtec Corporation 2023 Q4 YTD EBITDA Reconciliation (in millions) Reported Income Other Income Depreciation & Restructuring Adjusted from Operations (Expense) Amortization Costs EBITDA Consolidated Results $1,266 $44 $526 $1,836 $6 $1,842 Wabtec Corporation 2022 Q4 EBITDA Reconciliation (in millions) Reported Income Other Income Depreciation & Restructuring Adjusted from Operations (Expense) Amortization Costs EBITDA Consolidated Results $247 $14 $119 $380 $29 $409 Wabtec Corporation 2022 Q4 YTD EBITDA Reconciliation (in millions) Reported Income Other Income Depreciation & Restructuring Adjusted from Operations (Expense) Amortization Costs EBITDA Consolidated Results $1,011 $29 $473 $1,513 $49 $1,562 + = Set forth below is the calculation of the non-GAAP performance measures included in this press release. We believe that these measures provide useful supplemental information to assess our operating performance and to evaluate period-to-period comparisons. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, Wabtec's reported results prepared in accordance with GAAP. + + = EBITDA + = EBITDA + =+ = + =+ = EBITDA + + + = EBITDA +
Sales by product line Appendix F In mill ions 2023 2022 Freight Segment Equipment 347$ 430$ Components 283 241 Digital Intelligence 210 225 Services 958 773 Total Freight Segment 1,798$ 1,669$ Transit Segment Original Equipment Manufacturer 326$ 280$ Aftermarket 402 357 Total Transit Segment 728$ 637$ In mill ions 2023 2022 Freight Segment Equipment 1,770$ 1,528$ Components 1,157 936 Digital Intelligence 773 729 Services 3,262 2,819 Total Freight Segment 6,962$ 6,012$ Transit Segment Original Equipment Manufacturer 1,235$ 1,095$ Aftermarket 1,480 1,255 Total Transit Segment 2,715$ 2,350$ Twelve Months Ended December 31, WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION SALES BY PRODUCT LINE (UNAUDITED) Three Months Ended December 31,
Segment gross margin & operating margin reconciliation Appendix G In millions Gross Profit Income from Operations Gross Profit Income from Operations Gross Profit Income from Operations Gross Profit Income from Operations Freight Segment Reported Results 558$ 246$ 482$ 209$ 2,190$ 1,071$ 1,896$ 864$ Freight Segment Reported Margin 31.0% 13.7% 28.9% 12.5% 31.5% 15.4% 31.5% 14.4% Restructuring and Porfolio Optimization costs 5 30 8 7 13 41 15 15 Non-cash Amortization expense - 71 - 68 - 277 - 272 Freight Segment Adjusted Results 563$ 347$ 490$ 284$ 2,203$ 1,389$ 1,911$ 1,151$ Freight Segment Adjusted Margin 31.3% 19.3% 29.4% 17.0% 31.6% 19.9% 31.8% 19.1% Transit Segment Reported Results 206$ 86$ 170$ 63$ 754$ 289$ 644$ 231$ Transit Segment Reported Margin 28.4% 11.9% 26.7% 9.9% 27.8% 10.7% 27.3% 9.8% Restructuring costs 8 17 23 27 25 38 28 37 Non-cash Amortization expense - 5 - 5 - 21 - 19 Transit Segment Adjusted Results 214$ 108$ 193$ 95$ 779$ 348$ 672$ 287$ Transit Segment Adjusted Margin 29.4% 14.9% 30.3% 14.8% 28.7% 12.8% 28.6% 12.2% WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION RECONCILIATION OF REPORTED RESULTS TO ADJUSTED RESULTS - BY SEGMENT (UNAUDITED) 2023 2022 Three Months Ended December 31, Twelve Months Ended December 31, 2023 2022
Segment sales reconciliation Appendix H In mill ions Freight Transit Consolidated 2022 Net Sales 1,669$ 637$ 2,306$ Acquisitions 32 - 32 Foreign Exchange 5 28 33 Organic 92 63 155 2023 Net Sales 1,798$ 728$ 2,526$ Change ($) 129 91 220 Change (%) 7.7% 14.3% 9.5% Freight Transit Consolidated 2022 Net Sales 6,012$ 2,350$ 8,362$ Acquisitions 109 - 109 Foreign Exchange (23) 25 2 Organic 864 340 1,204 2023 Net Sales 6,962$ 2,715$ 9,677$ Change ($) 950 365 1,315 Change (%) 15.8% 15.5% 15.7% (UNAUDITED) Three Months Ended December 31, Twelve Months Ended December 31, WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION RECONCILIATION OF CHANGES IN NET SALES - BY SEGMENT
Cash conversion reconciliation 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 Q4 Cash Conversion Calculation (in millions) Reported Cash from Operations Consolidated Results $686 $217 $160 182% Wabtec Corporation 2023 Q4 YTD Cash Conversion Calculation (in millions) Reported Cash from Operations Consolidated Results $1,201 $825 $531 89% Wabtec Corporation 2022 Q4 Cash Conversion Calculation (in millions) Reported Cash from Operations Consolidated Results $410 $159 $120 147% Wabtec Corporation 2022 Q4 YTD Cash Conversion Calculation (in millions) Reported Cash from Operations Consolidated Results $1,038 $641 $479 93% ÷ + = Cash Conversion(Net Income Depreciation & Amortization) + = Cash Conversion(Net Income Depreciation & Amortization) ÷ + = Cash Conversion(Net Income Depreciation & Amortization) ÷ + = Cash Conversion(Net Income Depreciation & Amortization)
Return on invested capital reconciliation Appendix J Set forth below is the calculation of the non-GAAP performance measures included in this press release. We believe that these measures provide useful supplemental information to assess our operating performance and to evaluate period-to-period comparisons. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, Wabtec's reported results prepared in accordance with GAAP. Wabtec Corporation Reconciliation of Reported Results to Adjusted Results (in Millions) 2021 2022 2023 In mill ions Income from operations 876$ 1,011$ 1,266$ Annual effective tax rate 23.2% 25.0% 24.5% Net operating profit after tax 673$ 758$ 956$ Total debt 4,058 4,002 4,069 Operating lease liability 318 334 313 Wabtec equity 10,201 10,102 10,487 Noncontrolling interest 38 45 37 Allowance for doubtful accounts 32 28 31 Net pension liabilities 48 33 40 Total Invested Capital 14,695$ 14,544$ 14,977$ Return on Invested Capital 4.6% 5.2% 6.4%