WILMERDING, Pa., Oct. 24, 2017 (GLOBE NEWSWIRE) -- Wabtec Corporation (NYSE:WAB) today reported results for the third quarter and updated its financial guidance for 2017.
2017 Third Quarter Consolidated Results
2017 Third Quarter Segment Results
Cash Flow Summary
Backlog and Other Information
2017 Guidance Update
Based on its year-to-date results and fourth quarter forecast, Wabtec expects revenues for the year to be about $3.8 billion and earnings per diluted share to be between $3.45-$3.50 excluding expenses for restructuring, integration and contract adjustments. The company’s adjusted operating margin target in the fourth quarter is about 15 percent.
Raymond T. Betler, Wabtec’s president and chief executive officer, said: “Excluding the contract adjustments and restructuring and integration expenses, our third quarter results were in line with our expectations. Although we have faced challenging market conditions this year, we have also seen many positive developments, too. During the third quarter our transit business once again grew its record backlog, winning orders throughout our major geographic markets and product categories. Our freight revenues and backlog have remained mostly flat for the past four quarters, indicating a level of stability, and we are seeing a slight pick-up in the aftermarket. We expect a strong finish to the year based on our existing backlog and increasing synergies.
“In addition, we have continued to make meaningful progress in the Faiveley integration, combining the best technologies, processes and practices from each company, less than one year after completing the acquisition. Last week, we presented to our Board of Directors our first strategic plan with Faiveley as part of Wabtec, and it was received enthusiastically. Based on this plan, we’re excited about our worldwide growth opportunities and our ability to drive margin improvement through the application of lean principles and the Wabtec Excellence Program.”
Wabtec Corporation (www.wabtec.com) is a leading global provider of equipment, systems and value-added services for transit and freight rail. Through its subsidiaries, the company manufactures a range of products for locomotives, freight cars and passenger transit vehicles. The company also builds new switcher and commuter locomotives, and provides aftermarket services. The company has facilities located throughout the world.
This release contains forward-looking statements, such as statements regarding the company’s expectations about future sales and earnings. Actual results could differ materially from the results suggested in any forward-looking statement. Factors that could cause or contribute to these material differences include, but are not limited to, an economic slowdown in the markets we serve; changes in the expected timing of projects; a decrease in freight or passenger rail traffic; an increase in manufacturing costs; and other factors contained in the company’s filings with the Securities and Exchange Commission. The company assumes no obligation to update these statements or advise of changes in the assumptions on which they are based.
Wabtec will host a call with analysts and investors at 10 a.m., eastern time, today. To listen via webcast, go to www.wabtec.com and click on “Webcasts” in the “Investor Relations” section.
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION | ||||||||||||||||
CONDENSED CONSOLIDATED STATEMENT OF INCOME | ||||||||||||||||
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016 | ||||||||||||||||
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA) | ||||||||||||||||
(UNAUDITED) | ||||||||||||||||
Third | Third | For the | For the | |||||||||||||
Quarter | Quarter | Nine Months | Nine Months | |||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Net sales | $ | 957,931 | $ | 675,574 | $ | 2,806,218 | $ | 2,171,206 | ||||||||
Cost of sales | (704,728 | ) | (463,093 | ) | (2,009,345 | ) | (1,466,156 | ) | ||||||||
Gross profit | 253,203 | 212,481 | 796,873 | 705,050 | ||||||||||||
Gross profit as a % of Net Sales | 26.4 | % | 31.5 | % | 28.4 | % | 32.5 | % | ||||||||
Selling, general and administrative expenses | (117,838 | ) | (70,757 | ) | (367,753 | ) | (241,118 | ) | ||||||||
Engineering expenses | (24,709 | ) | (16,289 | ) | (71,511 | ) | (52,271 | ) | ||||||||
Amortization expense | (8,645 | ) | (5,339 | ) | (27,039 | ) | (16,100 | ) | ||||||||
Total operating expenses | (151,192 | ) | (92,385 | ) | (466,303 | ) | (309,489 | ) | ||||||||
Operating expenses as a % of Net Sales | 15.8 | % | 13.7 | % | 16.6 | % | 14.3 | % | ||||||||
Income from operations | 102,011 | 120,096 | 330,570 | 395,561 | ||||||||||||
Income from operations as a % of Net Sales | 10.6 | % | 17.8 | % | 11.8 | % | 18.2 | % | ||||||||
Interest expense, net | (17,893 | ) | (6,057 | ) | (51,025 | ) | (15,897 | ) | ||||||||
Other (expense) income, net | (2,933 | ) | 1,188 | (2,166 | ) | 113 | ||||||||||
Income from operations before income taxes | 81,185 | 115,227 | 277,379 | 379,777 | ||||||||||||
Income tax expense | (12,746 | ) | (32,799 | ) | (64,776 | ) | (112,701 | ) | ||||||||
Effective tax rate | 15.7 | % | 28.5 | % | 23.4 | % | 29.7 | % | ||||||||
Net Income | 68,439 | 82,428 | 212,603 | 267,076 | ||||||||||||
Less: Net (Gain) Loss attributable to noncontrolling interest | (1,040 | ) | - | 710 | - | |||||||||||
Net income attributable to Wabtec shareholders | $ | 67,399 | $ | 82,428 | $ | 213,313 | $ | 267,076 | ||||||||
Earnings Per Common Share | ||||||||||||||||
Basic | ||||||||||||||||
Net income attributable to Wabtec shareholders | $ | 0.70 | $ | 0.92 | $ | 2.23 | $ | 2.94 | ||||||||
Diluted | ||||||||||||||||
Net income attributable to Wabtec shareholders | $ | 0.70 | $ | 0.91 | $ | 2.22 | $ | 2.92 | ||||||||
Weighted average shares outstanding | ||||||||||||||||
Basic | 95,709 | 89,589 | 95,163 | 90,546 | ||||||||||||
Diluted | 96,316 | 90,293 | 95,807 | 91,316 | ||||||||||||
Segment Information | ||||||||||||||||
Freight Net Sales | $ | 340,185 | $ | 361,998 | $ | 1,032,959 | $ | 1,201,734 | ||||||||
Freight Income from Operations | $ | 61,596 | $ | 77,999 | $ | 196,328 | $ | 276,990 | ||||||||
Freight Operating Margin | 18.1 | % | 21.5 | % | 19.0 | % | 23.0 | % | ||||||||
Transit Net Sales | $ | 617,746 | $ | 313,576 | $ | 1,773,259 | $ | 969,472 | ||||||||
Transit Income from Operations | $ | 47,531 | $ | 51,164 | $ | 155,901 | $ | 148,321 | ||||||||
Transit Operating Margin | 7.7 | % | 16.3 | % | 8.8 | % | 15.3 | % | ||||||||
Backlog Information (Note: 12-month is a sub-set of total) | September 30, 2017 | June 30, 2017 | ||||||||||||||
Freight Total | $ | 610,686 | $ | 611,174 | ||||||||||||
Transit Total | $ | 3,920,280 | $ | 3,843,046 | ||||||||||||
Wabtec Total | $ | 4,530,966 | $ | 4,454,220 | ||||||||||||
Freight 12-Month | $ | 419,659 | $ | 413,231 | ||||||||||||
Transit 12-Month | $ | 1,822,208 | $ | 1,729,153 | ||||||||||||
Wabtec 12-Month | $ | 2,241,867 | $ | 2,142,384 | ||||||||||||
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION | ||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
Unaudited | ||||||
September 30, 2017 | December 31, 2016 | |||||
In thousands | ||||||
Cash and cash equivalents | $ | 228,080 | $ | 398,484 | ||
Receivables, net | 1,144,339 | 942,508 | ||||
Inventories | 764,781 | 658,510 | ||||
Current assets - other | 139,925 | 868,129 | ||||
Total current assets | 2,277,125 | 2,867,631 | ||||
Property, plant and equipment, net | 550,367 | 518,376 | ||||
Goodwill | 2,384,758 | 2,078,765 | ||||
Other intangibles, net | 1,140,387 | 1,053,860 | ||||
Other long term assets | 97,013 | 62,386 | ||||
Total assets | $ | 6,449,650 | $ | 6,581,018 | ||
Current liabilities | $ | 1,465,440 | $ | 1,446,639 | ||
Long-term debt | 1,824,156 | 1,762,967 | ||||
Long-term liabilities - other | 423,685 | 394,587 | ||||
Total liabilities | 3,713,281 | 3,604,193 | ||||
Shareholders' equity | 2,717,702 | 2,205,977 | ||||
Non-controlling interest | 18,667 | 770,848 | ||||
Total shareholders' equity | $ | 2,736,369 | $ | 2,976,825 | ||
Total Liabilities and Shareholders' Equity | $ | 6,449,650 | $ | 6,581,018 | ||
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
Unaudited | ||||||||
Nine Months Ended September 30, | ||||||||
2017 | 2016 | |||||||
In thousands | ||||||||
Net cash provided by operating activities | $ | 26,511 | $ | 246,893 | ||||
Net cash used in investing activities | (149,824 | ) | (115,891 | ) | ||||
Net cash used in financing activities | (70,049 | ) | (112,336 | ) | ||||
Effect of changes in currency exchange rates | 22,958 | 5,525 | ||||||
(Decrease) increase in cash | (170,404 | ) | 24,191 | |||||
Cash, beginning of period | 398,484 | 226,191 | ||||||
Cash, end of period | $ | 228,080 | $ | 250,382 | ||||
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. | |||||||||||||||||||||||||||||||
Reconciliation of Reported Results to Adjusted Results | |||||||||||||||||||||||||||||||
(in millions) | Third Quarter 2017 | ||||||||||||||||||||||||||||||
Gross | Operating | Income from | Interest & | Minority | Wabtec | ||||||||||||||||||||||||||
Profit | Expenses | Operations | Other Exp | Tax | Interest | Net Income | EPS | ||||||||||||||||||||||||
Reported Results | $ | 253.2 | $ | (151.2 | ) | $ | 102.0 | $ | (20.8 | ) | $ | (12.7 | ) | $ | (1.0 | ) | $ | 67.5 | $ | 0.70 | |||||||||||
Integration & Restructuring costs | - | 5.9 | 5.9 | - | (1.6 | ) | - | 4.3 | $ | 0.04 | |||||||||||||||||||||
Contract Adjustments | 20.4 | - | 20.4 | - | (7.1 | ) | - | 13.3 | $ | 0.14 | |||||||||||||||||||||
Tax on Opening Balance Sheet Adjustments | - | - | - | - | 0.5 | - | 0.5 | $ | 0.01 | ||||||||||||||||||||||
Adjusted Results | $ | 273.6 | $ | (145.3 | ) | $ | 128.3 | $ | (20.8 | ) | $ | (20.9 | ) | $ | (1.0 | ) | $ | 85.6 | $ | 0.88 | |||||||||||
Reconciliation of Reported Results to Adjusted Results | |||||||||||||||||||||||||||||||
(in millions) | Year-to-Date 2017 | ||||||||||||||||||||||||||||||
Gross | Operating | Income from | Interest & | Minority | Wabtec | ||||||||||||||||||||||||||
Profit | Expenses | Operations | Other Exp | Tax | Interest | Net Income | EPS | ||||||||||||||||||||||||
Reported Results | $ | 796.9 | $ | (466.3 | ) | $ | 330.6 | $ | (53.2 | ) | $ | (64.8 | ) | $ | 0.7 | $ | 213.3 | $ | 2.22 | ||||||||||||
One-Time Costs Related to Inventory Step-up | 3.4 | - | 3.4 | - | (0.9 | ) | - | 2.5 | $ | 0.03 | |||||||||||||||||||||
Integration & Restructuring costs | - | 20.4 | 20.4 | (2.2 | ) | (4.9 | ) | - | 13.2 | $ | 0.14 | ||||||||||||||||||||
Tax on Opening Balance Sheet Adjustments | - | - | - | - | 3.0 | - | 3.0 | $ | 0.03 | ||||||||||||||||||||||
Contract Adjustments | 20.4 | - | 20.4 | - | (7.1 | ) | - | 13.3 | $ | 0.14 | |||||||||||||||||||||
Minority Interest Adjustment | - | - | - | - | (1.9 | ) | (1.9 | ) | $ | (0.02 | ) | ||||||||||||||||||||
Adjusted Results | $ | 820.7 | $ | (445.9 | ) | $ | 374.8 | $ | (55.4 | ) | $ | (74.7 | ) | $ | (1.2 | ) | $ | 243.3 | $ | 2.52 | |||||||||||
Tim Wesley | Phone: 412.825.1543 | Wabtec Corporation | ||
E-mail: twesley@wabtec.com | 1001 Air Brake Avenue | |||
Website: www.wabtec.com | Wilmerding, PA 15148 |