01—Abstract
Summary
Summary of the 10-K filed February 22, 2013. Cited figures are marked; the original filing is the authoritative source.
Westinghouse Air Brake Technologies Corporation, doing business as Wabtec Corporation, reported 2012 net sales of $2,391.1 milliona, up from $1,967.6 million in 2011, and net income attributable to Wabtec shareholders of $251.7 million, or $5.19 per diluted share, versus $170.1 million, or $3.51 per diluted share, in 2011.
Income from operations rose to $392.3 millionb, or 16.4% of sales, from $270.7 million, or 13.8% of sales. The Freight Segment accounted for 63% of 2012 sales and the Transit Segment for 37%. Aftermarket sales and services represented about 54% of total sales, and sales to customers outside the U.S. were about 50%.
Growth was driven by higher Freight Segment sales of $1,501.9 millionc, up 24.1%, and Transit Segment sales of $889.2 million, up 17.4%, along with $138.3 million of sales from acquisitions. The company's backlog was $1.66 billion at December 31, 2012, up from $1.55 billion a year earlier. Positive train control (PTC) work generated about $215 million of revenue in 2012, and the filing notes that a House committee has proposed extending the December 31, 2015 PTC deadline, which could affect industry spending on the technology.
Balance sheet and cash flow data show cash and cash equivalents of $215.8 milliond and total debt of $317.9 million at year-end 2012, compared with $395.9 million a year earlier. Cash provided by operating activities was $237.7 million, and the company repurchased $46.6 million of stock during 2012.
The $150.0 million 6.875% senior notes due August 2013 are classified as long-term because the company states it intends to refinance them under its $600 million 2011 Refinancing Credit Agreement, which expires in November 2016. Subsequent to year-end, the company acquired Napier Turbochargers Ltd. on January 31, 2013 for a net purchase price of approximately $112.5 million.
02—Key points
Key Highlights
- Net sales rose to $2,391.1 million in 2012 from $1,967.6 million in 2011, with the Freight Segment at $1,501.9 million (up 24.1%) and the Transit Segment at $889.2 million (up 17.4%).
- Net income attributable to Wabtec shareholders was $251.7 million, or $5.19 per diluted share, compared with $170.1 million, or $3.51 per diluted share, in 2011.
- Income from operations was $392.3 million, or 16.4% of sales, compared with $270.7 million, or 13.8% of sales, in 2011.
- Backlog was about $1.66 billion at December 31, 2012, compared with $1.55 billion at December 31, 2011.
- Aftermarket sales and services represented about 54% of 2012 total sales, and sales to customers outside the U.S. were about 50%.
- Positive train control revenue was about $215 million in 2012, and a House committee has proposed extending the December 31, 2015 PTC deadline.
- Total debt declined to $317.9 million at year-end 2012 from $395.9 million, and cash provided by operating activities was $237.7 million.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2012, Westinghouse Air Brake Technologies kept $0.11.
- Revenue$2.39B100.0%
- Cost of revenue−$1.70B71.0%
- Gross profit$694.6M29.0%
- Operating costs−$302.3M12.6%
- Operating income$392.3M16.4%
- Interest, other & tax−$140.5M5.9%
- Net income$251.7M10.5%
Where FY2012 revenue went
$2.39B- Cost of revenue: $1.70B, 71% of revenue
- Net income: $251.7M, 11% of revenue
- R&D: $41.3M, 1.7% of revenue
- SG&A: $245.7M, 10% of revenue
- Other operating costs: $15.3M, 0.6% of revenue
- Interest, other & tax: $140.5M, 5.9% of revenue
Kept 11% as net incomeNet income $251.7M · 11%R&D $41.3M · 1.7%Other operating costs $15.3M · 0.6%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2012filed February 22, 2013Financial Statements
FY2012 against FY2011
| Line item | FY2012FY2011 | Change |
|---|---|---|
| Revenue | $2.39B$1.97B | +21.5% |
| Cost of Revenue | $1.70B$1.40B | +21.4% |
| Gross Profit | $694.57M$570.42M | +21.8% |
| R&D Expenses | $41.31M$37.19M | +11.1% |
| SG&A Expenses | $245.71M$247.53M | −0.7% |
| Operating Expenses | $302.29M$299.72M | +0.9% |
| Operating Income | $392.28M$270.70M | +44.9% |
| Interest Expense | $14.92M$15.39M | −3.0% |
| Net Income | $251.73M$170.15M | +47.9% |
| EPS (Basic) | $2.62$1.77 | +48.0% |
| EPS (Diluted) | $2.60$1.76 | +47.7% |
| Shares Outstanding (Basic) | 95.47M95.64M | −0.2% |
| Shares Outstanding (Diluted) | 96.74M96.66M | +0.1% |
05—Questions
Frequently Asked Questions
How did Wabtec's profitability change in 2012?
Net income attributable to Wabtec shareholders rose to $251.7 million, or $5.19 per diluted share, from $170.1 million, or $3.51 per diluted share, in 2011. Income from operations increased to $392.3 million, or 16.4% of sales, from $270.7 million, or 13.8% of sales. The filing attributes the increase to higher sales volume, partially offset by higher operating expenses, including $18.0 million of expenses from acquisitions in selling, general and administrative costs.
What drove the increase in sales?
Net sales increased by $423.5 million to $2,391.1 million. The filing cites $153.9 million of higher Specialty Products and Electronics sales, $138.3 million from acquisitions, $97.7 million of Remanufacturing, Overhaul and Build sales, and $40.8 million of Brake Products sales. Freight Segment sales rose 24.1% and Transit Segment sales rose 17.4%.
What is the status of Wabtec's debt and refinancing plans?
Total debt was $317.9 million at December 31, 2012, including $150.0 million of 6.875% senior notes due in August 2013 and $167.0 million outstanding under the revolving credit facility. The company states it has both the intent and ability to refinance the notes on a long-term basis using capacity under its $600 million 2011 Refinancing Credit Agreement, which expires November 7, 2016, and had about $400.5 million of available bank borrowing capacity at year-end.
What risks does the filing highlight regarding Positive Train Control (PTC)?
The U.S. mandate requires on-board locomotive computers and software by December 31, 2015. Wabtec recorded about $215 million of PTC-related sales in 2012. The filing notes that a House committee has proposed extending the deadline as part of a new surface transportation funding bill, which could affect the rate of industry spending. If the federal government changes the mandate's timing, scope or requirements, revenues in future periods could be adversely affected.
What notable events occurred after year-end 2012?
On January 31, 2013, Wabtec acquired Napier Turbochargers Ltd., a UK-based provider of turbochargers and related parts for the power generation and marine markets, for a net purchase price of approximately $112.5 million, net of cash. Separately, on February 6, 2013, the U.S. Court of Appeals for the Second Circuit vacated the $18.1 million damages judgment in the Faiveley litigation and remanded the case for a new trial on damages, unless the plaintiffs agreed to reduce the award to $15 million, plus interest.
06—Continue