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Westinghouse Air Brake Technologies Annual Report, Year Ended Dec 31, 2007

Filing Date
Filed February 29, 2008
Period End
December 31, 2007
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 February 29, 2008. Cited figures are marked; the original filing is the authoritative source.

Westinghouse Air Brake Technologies Corporation (Wabtec) reported 2007 net sales of $1,360.1 milliona, up from $1,087.6 million in 2006, and net income of $109.6 million, or $2.23 per diluted share, versus $84.8 million, or $1.73 per diluted share, in 2006.

Income from operations rose to $179.7 millionb (13.2% of sales) from $130.2 million (12.0% of sales). The Transit Group drove much of the growth, with sales rising to $625.9 million from $378.3 million, while the Freight Group grew to $734.2 million from $709.4 million. The company describes itself as one of the world's largest providers of technology-based equipment for the rail industry, with roughly 50% North American market share in its primary braking equipment and aftermarket sales over 50% of total 2007 sales.

Backlog was $1.0 billionc at December 31, 2007, essentially flat year over year, with the Transit Group's backlog offsetting a decline in the Freight Group's. Operating cash flow was $142.5 million in 2007 versus $151.0 million in 2006. Cash grew to $234.7 million, and total debt was $150.3 million, consisting mainly of $150 million of 6 7/8% senior notes due 2013.

Shareholders' equity increased to $617.3 milliond from $469.9 million. The board authorized an additional $100 million share repurchase program on February 20, 2008.

Key risks disclosed include dependence on a limited number of key customers (top five accounted for 23% of 2007 net sales), cyclicality in rail and transit markets, international exposure (about 40% of sales outside the U.S.), asbestos litigation tied to subsidiary Railroad Friction Products Corporation, and a pending Faiveley Transport arbitration and federal court proceeding seeking to restrict the sale of certain transit components. Management states it does not believe these matters will have a material adverse effect.

02—Key points

Key Highlights

  1. 2007 net sales rose 25.1% to $1,360.1 million, with the Transit Group sales increasing to $625.9 million from $378.3 million.
  2. Net income was $109.6 million, or $2.23 per diluted share, compared with $84.8 million, or $1.73 per diluted share, in 2006.
  3. Income from operations was $179.7 million, or 13.2% of sales, compared with $130.2 million, or 12.0% of sales, in 2006.
  4. Backlog stood at $1.02 billion at December 31, 2007, versus $1.04 billion a year earlier; the Transit Group carried $796.3 million of it.
  5. Cash rose to $234.7 million and total debt was $150.3 million, mainly the $150 million 6 7/8% senior notes due 2013.
  6. Operating cash flow was $142.5 million in 2007, down from $151.0 million in 2006, while the company made $73.6 million of acquisitions (Ricon).
  7. The board authorized an additional $100 million share repurchase on February 20, 2008, on top of the earlier $50 million program.

03—Questions

Frequently Asked Questions

  1. How concentrated is Wabtec's customer base?

    The top five customers, Electro-Motive Diesel, Greater Toronto Transit Authority (GO Transit), GE Transportation Systems, Trinity Industries, and Alstom, accounted for 23% of 2007 net sales. No single customer represented 10% or more of consolidated sales, and the company notes that its top customers can change from year to year.

  2. What drove the increase in 2007 sales?

    The filing attributes the $272.5 million increase primarily to internal growth: $69.4 million in locomotives, $30.3 million in refurbishing transit cars, $38.1 million in heat exchangers, and $20.6 million in transit authority contracts, plus $99.4 million from acquisitions completed in late 2006 and mid-2007.

  3. What is the status of the asbestos and Faiveley litigation?

    Asbestos claims are mostly against subsidiary Railroad Friction Products Corporation and are submitted to insurers, and management believes their final resolution will not be material. Faiveley Transport Malmo AB sought arbitration and a federal court injunction against the sale of certain transit components; the company denies the allegations, says it does not believe it has material liability, and has appealed a denial of its motion to dismiss the federal action.

  4. How much debt does Wabtec carry and what are the covenants?

    Total debt was $150.3 million at December 31, 2007, mainly $150 million of 6 7/8% senior notes due 2013. The Refinancing Credit Agreement, which provided available borrowing capacity of approximately $115.9 million net of $59.1 million of letters of credit, imposes a minimum interest coverage ratio of 3, a maximum debt to cash flow ratio of 3.25, and limits on dividends and acquisitions. The company states it is in compliance.

04—Continue

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