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Westinghouse Air Brake Technologies Annual Report, Year Ended Dec 31, 2004

Filing Date
Filed March 16, 2005
Period End
December 31, 2004
Security
WAB
In the record · 2016–202610-K1110-Q338-K132

WAB filed 11 annual reports (10-K), 33 quarterly reports (10-Q) and 132 current reports (8-K) between 2016 and 2026.

  1. Deal closed8-K · Mar ’17Mar ’17
  2. Leadership change8-K · Jul ’19Jul ’19
  3. Leadership change8-K · Aug ’21Aug ’21
  4. Material agreement8-K · May ’25May ’25

01—Abstract

Summary

Summary of the 10-K filed March 16, 2005. Cited figures are marked; the original filing is the authoritative source.

Westinghouse Air Brake Technologies Corporation (Wabtec) reported 2004 net sales of $822.0 milliona, up 14.5% from $717.9 million in 2003, and net income of $32.4 million, or $0.71 per diluted share, compared with $22.7 million, or $0.52, in 2003.

Income from operations rose to $55.4 millionb from $49.8 million. The Freight Group accounted for 71% of net sales and the Transit Group for 29%, and aftermarket sales represented about 54% of total sales. Management attributed the sales increase to higher freight car, locomotive and transit car deliveries, and noted that gross profit as a percentage of sales fell to 25% from 26.4% due to higher raw material costs, retiree medical costs and foreign exchange effects on Canadian operations.

Cash generation and balance sheet improvement were highlighted. Operating cash flow was $52.9 millionc, and the company reduced debt, net of cash, by $65 million during 2004. Total debt fell to $150.1 million at year-end from $190.2 million, and cash rose to $95.3 million.

The filing states that net debt to book capitalization declined from 73% at December 31, 2000 to 15% at December 31, 2004. Shareholders' equity increased to $312.4 milliond. Looking ahead, management expects 2005 freight car deliveries of about 55,000 units and locomotive deliveries of about 1,100 units, and a slight increase in transit car deliveries to about 725 units, with transit deliveries expected to rise to 950 units in 2006 on New York City orders.

The company completed the acquisition of Rütgers Rail S.p.A.'s assets (CoFren S.r.l.) on February 1, 2005 for $36.6 million in cash. Risks cited include raw material cost increases, particularly steel, higher medical and insurance costs, and foreign currency fluctuations. The filing also discloses a $3.2 million liability to GETS-GS, which the company disputes and intends to contest.

02—Key points

Key Highlights

  1. Net sales rose 14.5% to $822.0 million in 2004, led by higher freight car, locomotive and transit deliveries and aftermarket growth.
  2. Net income increased to $32.4 million ($0.71 per diluted share) from $22.7 million ($0.52) in 2003, helped by a $4.9 million tax benefit.
  3. Gross profit margin declined to 25% from 26.4%, pressured by higher steel and copper costs, retiree medical costs and Canadian dollar effects.
  4. Operating cash flow was $52.9 million, and net debt was reduced by $65 million during 2004; total debt fell to $150.1 million.
  5. Aftermarket sales were about 54% of 2004 net sales, supporting less cyclical revenue; the Freight Group produced 71% of sales.
  6. Freight car backlog reached 58,677 units at year-end 2004, the highest year-end level since 1998, and 2005 freight car deliveries are forecast at about 55,000.
  7. Acquisition of Rütgers Rail S.p.A.'s assets (CoFren S.r.l.) closed February 1, 2005 for $36.6 million in cash.

03—Questions

Frequently Asked Questions

  1. How did Wabtec perform financially in 2004?

    Net sales were $822.0 million, up 14.5% from $717.9 million in 2003. Income from operations was $55.4 million, compared with $49.8 million, and net income was $32.4 million, or $0.71 per diluted share, versus $22.7 million, or $0.52, in 2003.

  2. What drove the 2004 sales increase?

    Management attributed the increase primarily to volume gains in freight car, locomotive and transit car deliveries, as well as higher aftermarket parts sales and international sales. The Freight Group's sales rose to $587.7 million from $522.3 million, and the Transit Group's rose to $234.3 million from $195.6 million.

  3. Is Wabtec's debt position improving?

    Yes. Total debt fell to $150.1 million at December 31, 2004 from $190.2 million a year earlier, cash rose to $95.3 million from $70.3 million, and the company reduced debt, net of cash, by $65 million during 2004. The $150 million 6.875% senior notes due 2013 make up the bulk of the debt.

  4. What risks and margin pressures does the filing identify?

    Gross profit as a percentage of sales declined to 25% from 26.4%, mainly due to higher raw material prices, especially steel and copper, higher retiree medical costs, and negative foreign exchange effects on Canadian operations. Management also cites general economic risk, customers curtailing spending, and risks from global expansion. A $3.2 million liability to GETS-GS was recognized in 2004, which the company disputes.

  5. What is the outlook for 2005?

    Management expects improved demand from the freight rail and passenger transit aftermarket and growth in new freight car orders. Industry forecasts include about 55,000 freight car deliveries, about 1,100 locomotives and about 725 transit vehicles in 2005, with transit deliveries expected to rise to about 950 units in 2006.

04—Continue

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