01—Abstract
Summary
Summary of the 10-K filed February 24, 2010. Cited figures are marked; the original filing is the authoritative source.
Westinghouse Air Brake Technologies Corporation (Wabtec) reported 2009 net sales of $1,401.6 milliona, down from $1,574.8 million in 2008, as the global recession reduced rail traffic and Freight Group demand.
Income from operations was $180.0 millionb compared with $212.5 million in 2008, and net income attributable to Wabtec shareholders was $115.1 million, or $2.39 per diluted share, versus $130.6 million, or $2.66 per diluted share, a year earlier. The decline was attributed to lower Freight Group sales and severance and downsizing costs, partly offset by cost-saving initiatives and a lower effective tax rate of 29.6% (36.1% in 2008). Freight Group sales fell $185.2 million, while Transit Group sales rose $12.0 million to $813.2 million, and aftermarket sales represented about 54% of total 2009 sales.
Balance sheet and cash flow were comparatively steady. Operating cash flow was $160.5 millionc, capital expenditures were $18.3 million, and cash rose to $188.7 million at year-end. Total debt was $391.8 million, including $150.0 million of 6.875% senior notes due 2013, and the company repurchased 669,700 shares during 2009.
Management expects challenging freight rail conditions in 2010 and a generally stable passenger transit market, and it may take further cost-reduction actions. Key risks disclosed include customer concentration (top five customers were 22% of net sales), labor agreements expiring in 2010 covering about 21% of the workforce, asbestos litigation through subsidiary RFPC, and an arbitration award requiring a $3.9 milliond royalty payment to Faiveley Transport Malmo AB.
02—Key points
Key Highlights
- Net sales declined 11.0% to $1,401.6 million in 2009 from $1,574.8 million in 2008, driven by the recession and lower Freight Group sales.
- Diluted EPS was $2.39 in 2009 versus $2.66 in 2008; net income was $115.1 million compared with $130.6 million.
- Aftermarket sales and services were about 54% of 2009 total sales, which management views as less cyclical than original equipment sales.
- Transit Group sales rose to $813.2 million from $801.2 million, while Freight Group sales fell 23.9% to $588.4 million.
- Backlog was about $951 million at December 31, 2009, down from $1,060.7 million a year earlier, with $551.7 million expected to be delivered in 2010.
- Acquisitions of Unifin (for $92.9 million net) in 2009 and SCT and POLI in 2008 expanded the Freight and Transit portfolios; goodwill rose to $483.0 million.
- Cash increased to $188.7 million and total debt was $391.8 million at year-end; the company repurchased 669,700 shares for $19.7 million in 2009.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2009, Westinghouse Air Brake Technologies kept $0.08.
- Revenue$1.40B100.0%
- Cost of revenue−$1.01B71.9%
- Gross profit$393.3M28.1%
- Operating costs−$213.3M15.2%
- Operating income$180.0M12.8%
- Interest, other & tax−$65.0M4.6%
- Net income$115.1M8.2%
Where FY2009 revenue went
$1.40B- Cost of revenue: $1.01B, 72% of revenue
- Net income: $115.1M, 8.2% of revenue
- R&D: $42.4M, 3.0% of revenue
- SG&A: $161.0M, 11% of revenue
- Other operating costs: $9.8M, 0.7% of revenue
- Interest, other & tax: $65.0M, 4.6% of revenue
Kept 8.2% as net incomeNet income $115.1M · 8.2%Other operating costs $9.8M · 0.7%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2009filed February 24, 2010Financial Statements
FY2009 against FY2008
| Line item | FY2009FY2008 | Change |
|---|---|---|
| Revenue | $1.40B$1.57B | −11.0% |
| Cost of Revenue | $1.01B$1.15B | −12.1% |
| Gross Profit | $393.33M$427.19M | −7.9% |
| R&D Expenses | $42.45M$38.98M | +8.9% |
| SG&A Expenses | $161.00M$170.60M | −5.6% |
| Operating Expenses | $213.29M$214.67M | −0.6% |
| Operating Income | $180.03M$212.52M | −15.3% |
| Interest Expense | -$16.67M— | — |
| Net Income | $115.06M$130.55M | −11.9% |
| EPS (Basic) | $2.41$2.69 | −10.4% |
| EPS (Diluted) | $2.39$2.66 | −10.2% |
| Shares Outstanding (Basic) | 47.50M48.23M | −1.5% |
| Shares Outstanding (Diluted) | 47.98M48.85M | −1.8% |
05—Questions
Frequently Asked Questions
How did Wabtec perform financially in 2009?
Net sales were $1,401.6 million, down from $1,574.8 million in 2008. Income from operations was $180.0 million, and net income attributable to shareholders was $115.1 million, or $2.39 per diluted share. The decline reflected lower Freight Group sales during the recession, partly offset by cost-saving initiatives and a lower effective tax rate of 29.6%.
What is the outlook for 2010?
Management expects conditions to remain challenging in the freight rail market, with lower demand for new freight cars and locomotives due to surplus equipment. The passenger transit market is expected to be generally stable, supported by increased federal funding and stable ridership. Wabtec may take further cost-reduction actions, such as plant consolidations and workforce reductions.
What are the main risks to the business?
The filing highlights dependence on key customers (top five accounted for 22% of 2009 net sales), cyclical rail and transit markets, intense competition with price pressure, and international operations exposure. It also cites labor agreements expiring in 2010 covering about 21% of the workforce, asbestos claims against subsidiary RFPC, and integration risks from acquisitions.
How is the company's debt structured?
Total debt was $391.8 million at December 31, 2009, consisting of $150.0 million of 6.875% senior notes due 2013, a $170.0 million term loan, $71.0 million outstanding under the revolving credit facility, and $0.8 million of capital leases. The 2008 Refinancing Credit Agreement provides a $300 million revolver and a $200 million term loan, with covenants limiting dividends and other activities.
06—Continue