01—Abstract
Summary
Summary of the 10-K filed February 19, 2016. Cited figures are marked; the original filing is the authoritative source.
Westinghouse Air Brake Technologies Corporation, doing business as Wabtec Corporation, reported 2015 net sales of $3,307,998 thousanda (about $3.31 billion), up from $3,044,454 thousand in 2014, and net income attributable to Wabtec shareholders of $398,628 thousand, up from $351,680 thousand.
Income from operations was $607,567 thousandb, or 18.4% of sales, compared with $527,109 thousand, or 17.3%, in 2014. The Freight Segment accounted for 62% of 2015 sales and the Transit Segment for 38%. Aftermarket parts and services represented about 62% of total sales, and sales outside the U.S. were about 47%.
Diluted earnings per share were $4.10c, compared with $3.62 in 2014. Cash provided by operating activities was $448.3 million in 2015, versus $472.4 million in 2014. Total debt rose to $695.7 million at December 31, 2015, from $521.2 million, driven by $445.0 million drawn on the revolving credit facility, and cash fell to $226.2 million from $425.8 million.
The company repurchased $387.8 milliond of stock in 2015 under its authorization. Backlog was about $2.1 billion at year-end 2015, versus $2.3 billion a year earlier. The filing describes a proposed acquisition of Faiveley Transport S.A. for a total purchase price of about $1.8 billion including assumed debt, with the cash portion funded by cash on hand, existing credit facilities and potentially other debt financing.
Closing is subject to regulatory requirements, and the timing of completion is unknown. Wabtec also set aside €186.9 million in escrow for the transaction before year-end 2015.
02—Key points
Key Highlights
- Net sales rose to $3.31 billion in 2015 from $3.04 billion in 2014, with the Freight Segment at $2.05 billion and the Transit Segment at $1.25 billion.
- Net income attributable to Wabtec shareholders increased to $398.6 million from $351.7 million, and diluted EPS rose to $4.10 from $3.62.
- Gross profit margin increased to 31.7% from 30.7%, and income from operations was 18.4% of sales versus 17.3% in 2014.
- Total debt increased to $695.7 million at year-end 2015 from $521.2 million, while cash declined to $226.2 million from $425.8 million.
- Proposed Faiveley Transport S.A. acquisition has a total purchase price of about $1.8 billion including assumed debt, with closing subject to regulatory conditions and timing unknown.
- Backlog was about $2.1 billion at December 31, 2015, and aftermarket sales represented about 62% of 2015 total sales.
- The Positive Train Control (PTC) deadline was extended to the end of 2018, and the company recorded about $400 million of revenue from freight and transit PTC projects in 2015.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2015, Westinghouse Air Brake Technologies kept $0.12.
- Revenue$3.31B100.0%
- Cost of revenue−$2.26B68.3%
- Gross profit$1.05B31.7%
- Operating costs−$440.2M13.3%
- Operating income$607.6M18.4%
- Interest, other & tax−$208.9M6.3%
- Net income$398.6M12.1%
Where FY2015 revenue went
$3.31B- Cost of revenue: $2.26B, 68% of revenue
- Net income: $398.6M, 12% of revenue
- R&D: $71.2M, 2.2% of revenue
- SG&A: $347.4M, 11% of revenue
- Other operating costs: $21.7M, 0.7% of revenue
- Interest, other & tax: $208.9M, 6.3% of revenue
Kept 12% as net incomeR&D $71.2M · 2.2%Other operating costs $21.7M · 0.7%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2015filed February 19, 2016Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Revenue | $3.31B$3.04B | +8.7% |
| Cost of Revenue | $2.26B$2.11B | +7.2% |
| Gross Profit | $1.05B$935.98M | +11.9% |
| R&D Expenses | $71.21M$61.89M | +15.1% |
| SG&A Expenses | $347.37M$324.54M | +7.0% |
| Operating Expenses | $440.25M$408.87M | +7.7% |
| Operating Income | $607.57M$527.11M | +15.3% |
| Net Income | $398.63M$351.68M | +13.3% |
| EPS (Basic) | $4.14$3.66 | +13.1% |
| EPS (Diluted) | $4.10$3.62 | +13.3% |
| Shares Outstanding (Basic) | 96.07M95.78M | +0.3% |
| Shares Outstanding (Diluted) | 97.01M96.89M | +0.1% |
05—Questions
Frequently Asked Questions
How did Wabtec's profitability change in 2015?
Income from operations rose to $607.6 million, or 18.4% of sales, from $527.1 million, or 17.3%, in 2014. Net income attributable to Wabtec shareholders increased 13.3% to $398.6 million, and the effective income tax rate rose to 31.9% from 30.8%.
What is the status of the proposed Faiveley Transport acquisition?
Wabtec entered into a definitive share purchase agreement with the 51% shareholders on October 6, 2015, and plans a subsequent tender offer for the remaining public shares. The total purchase price offered is about $1.8 billion including assumed debt. Closing is subject to conditions including regulatory requirements, and the timing of completion is unknown.
How is the company financing its growth and shareholder returns?
Operating cash flow of $448.3 million was supplemented by $787.4 million of debt proceeds, with $612.7 million repaid. Wabtec repurchased $387.8 million of stock and paid $27.0 million in dividends. Its revolving credit facility had $445.0 million drawn at year-end 2015, and the company had $333.1 million of available borrowing capacity, net of letters of credit.
What are the main risks highlighted for investors?
The filing cites dependence on key customers, with the top five accounting for 22% of 2015 net sales, and cyclical rail and transit markets. It also flags international exposure, with about 47% of sales outside the U.S., acquisition integration risk, and the PTC mandate deadline extension, which could change the timing of revenue. Asbestos litigation tied to subsidiary RFPC and rising indebtedness are also noted.
06—Continue