01—Abstract
Summary
Summary of the 10-K filed February 25, 2011. Cited figures are marked; the original filing is the authoritative source.
Westinghouse Air Brake Technologies Corporation, doing business as Wabtec Corporation, reported 2010 net sales of $1,507.0 milliona, up from $1,401.6 million in 2009, and net income attributable to Wabtec shareholders of $123.1 million, or $2.56 per diluted share, versus $115.1 million or $2.39 in 2009.
The Freight Group drove growth, with sales rising $196.1 millionb or 33.3%, partly from acquisitions, while the Transit Group's sales fell $90.7 million or 11.2%. Aftermarket sales and services were about 55% of total sales, and about 46% of sales went to customers outside the U.S. Income from operations rose to $202.8 million, or 13.5% of sales, from $180.0 million in 2009. Cash flow from operations was $176.1 million in 2010, and the company spent $138.2 million net on acquisitions, including Xorail, G&B, Bach-Simpson and Swiger Coil Systems.
Total debt was $422.1 millionc at year-end, against cash of $236.9 million, and the company stated it was in compliance with its credit agreement covenants. Backlog was about $1.08 billion at December 31, 2010, of which about $589.9 million was expected to be delivered in 2011. The filing also highlights ongoing risks: asbestos claims against the subsidiary RFPC, which management believes will not be material, a pending trade secret lawsuit brought by Faiveley entities with trial scheduled for June 13, 2011 and a claim of $17.2 million, labor agreements covering about 28% of employees, and reliance on key customers, the top five of which accounted for 18% of net sales.
02—Key points
Key Highlights
- Net sales rose to $1,507.0 million in 2010 from $1,401.6 million in 2009, and net income increased to $123.1 million from $115.1 million.
- Diluted earnings per share were $2.56 in 2010, compared with $2.39 in 2009.
- Freight Group sales increased 33.3% to $784.5 million, while Transit Group sales decreased 11.2% to $722.5 million.
- Aftermarket sales and services represented about 55% of 2010 total sales, which the company describes as less cyclical than original equipment sales.
- Backlog was about $1.08 billion at December 31, 2010, with $589.9 million expected to be delivered in 2011.
- Total debt was $422.1 million at year-end 2010, including $150.0 million of 6.875% senior notes due 2013, and cash was $236.9 million.
- The company completed several acquisitions in 2010 with a combined net purchase price of about $138.2 million in cash, and it repurchased 206,560 shares for $8.4 million during the year.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2010, Westinghouse Air Brake Technologies kept $0.08.
- Revenue$1.51B100.0%
- Cost of revenue−$1.06B70.2%
- Gross profit$449.1M29.8%
- Operating costs−$246.3M16.3%
- Operating income$202.8M13.5%
- Interest, other & tax−$79.7M5.3%
- Net income$123.1M8.2%
Where FY2010 revenue went
$1.51B- Cost of revenue: $1.06B, 70% of revenue
- SG&A: $195.9M, 13% of revenue
- Net income: $123.1M, 8.2% of revenue
- R&D: $40.2M, 2.7% of revenue
- Other operating costs: $10.2M, 0.7% of revenue
- Interest, other & tax: $79.7M, 5.3% of revenue
Kept 8.2% as net incomeOther operating costs $10.2M · 0.7%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2010filed February 25, 2011Financial Statements
FY2010 against FY2009
| Line item | FY2010FY2009 | Change |
|---|---|---|
| Revenue | $1.51B$1.40B | +7.5% |
| Cost of Revenue | $1.06B$1.01B | +4.9% |
| Gross Profit | $449.08M$393.33M | +14.2% |
| R&D Expenses | $40.20M$42.45M | −5.3% |
| SG&A Expenses | $195.89M$161.00M | +21.7% |
| Operating Expenses | $246.27M$213.29M | +15.5% |
| Operating Income | $202.81M$180.03M | +12.7% |
| Interest Expense | $15.98M-$16.67M | +195.9% |
| Net Income | $123.10M$115.06M | +7.0% |
| EPS (Basic) | $2.57$2.41 | +6.6% |
| EPS (Diluted) | $2.56$2.39 | +7.1% |
| Shares Outstanding (Basic) | 47.60M47.50M | +0.2% |
| Shares Outstanding (Diluted) | 48.01M47.98M | +0.1% |
05—Questions
Frequently Asked Questions
How did Wabtec perform in 2010 compared with 2009?
Net sales increased $105.4 million to $1,507.0 million, income from operations rose to $202.8 million from $180.0 million, and net income attributable to Wabtec shareholders grew to $123.1 million, or $2.56 per diluted share, from $115.1 million, or $2.39 per share. The filing attributes the growth to higher sales volume and operating margins, partly offset by higher income tax expense.
What is driving the difference between the Freight and Transit Groups?
Freight Group sales rose $196.1 million, or 33.3%, on higher sales from acquisitions, specialty products, brake products and other freight products. Transit Group sales fell $90.7 million, or 11.2%, on lower brake product, transit-related product and locomotive remanufacturing sales, which the company partly attributes to the completion of major contracts and project delays and budget constraints at municipal transit authorities.
What are the main risks to the company's debt and cash position?
At December 31, 2010, total debt was $422.1 million, including $271.5 million borrowed under the 2008 Refinancing Credit Agreement and $150.0 million of 6.875% senior notes. The credit agreement and the notes indenture contain covenants that limit dividends, additional indebtedness, acquisitions and other actions, and the company states it was in compliance. The company also notes that a 1% change in variable-rate interest would change annual interest expense by $1.3 million.
What legal matters could affect investors?
The company's subsidiary RFPC faces asbestos bodily injury claims, which management believes will not be material given insurance coverage and settlement history. Separately, Faiveley entities filed a suit in May 2010 alleging trade secret misappropriation and other claims, with plaintiffs asserting $17.2 million in compensatory and other unspecified damages; the company says it does not believe these claims would result in material legal liability, and trial is scheduled to begin June 13, 2011.
06—Continue