01—Abstract
Summary
Summary of the 10-K filed February 17, 2022. Cited figures are marked; the original filing is the authoritative source.
Westinghouse Air Brake Technologies Corporation, doing business as Wabtec Corporation, reported 2021 total net sales of $7.82 billiona, up from $7.56 billion in 2020, with income from operations rising to $876 million from $745 million and net income attributable to Wabtec shareholders of $558 million versus $414 million.
Gross profit was $2.37 billionb, and diluted earnings per share were $2.96 compared with $2.17 in 2020. Results were helped by acquisitions, which contributed $138 million of sales (primarily Nordco, acquired March 31, 2021), and by favorable foreign exchange, which added $134 million, while organic sales declined $6 million. The filing states that COVID-19 had a materially adverse impact on operations and business results in both 2021 and 2020, and that supply chain disruptions, chip shortages and broad-based cost inflation are expected to continue into 2022.
The Freight Segment generated $5.24 billionc of sales (about 67% of total) and income from operations of $717 million, while the Transit Segment generated $2.58 billion of sales and $238 million of income from operations. Operating cash flow was $1.07 billion, up from $784 million, and capital expenditures were $130 million. Year-end cash was $473 million against total debt of $4.1 billion, mainly senior notes.
Backlog stood at approximately $22 billiond at December 31, 2021, of which $6.27 billion is expected to be delivered in 2022. The company also issued a €500 million 1.25% senior note due 2027, repurchased $300 million of stock in 2021, and on February 10, 2022 increased its repurchase authorization to $750 million.
The filing describes a leading position in freight and transit rail, with aftermarket sales historically about 60% of total net sales and more than 23,000 locomotives in service. Key risks include customer concentration (top five customers about 28% of net sales), COVID-19 uncertainty, raw material and supply chain volatility, international exposure (about 60% of net sales from outside the U.S.), and the leverage covenants in its credit agreement.
02—Key points
Key Highlights
- Net sales rose to $7.82 billion in 2021 from $7.56 billion, with acquisitions adding $138 million and foreign exchange adding $134 million, while organic sales declined $6 million.
- Net income attributable to Wabtec shareholders was $558 million, up from $414 million, and diluted EPS was $2.96 versus $2.17.
- Income from operations increased to $876 million from $745 million, and the cost of sales ratio improved to 69.7% from 71.7%.
- Freight Segment sales were $5.24 billion with $717 million of operating income; Transit Segment sales were $2.58 billion with $238 million of operating income.
- Operating cash flow increased to $1.07 billion from $784 million, and year-end cash was $473 million against total debt of $4.1 billion.
- Backlog was approximately $22 billion at December 31, 2021, with $6.27 billion expected to be delivered in 2022.
- The board raised the share repurchase authorization to $750 million on February 10, 2022, and the company issued a €500 million 1.25% senior note due 2027 in June 2021.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, Westinghouse Air Brake Technologies kept $0.07.
- Revenue$7.82B100.0%
- Cost of revenue−$5.45B69.7%
- Gross profit$2.37B30.3%
- Operating costs−$1.49B19.1%
- Operating income$876.0M11.2%
- Interest, other & tax−$311.0M4.0%
- Net income$565.0M7.2%
Where FY2021 revenue went
$7.82B- Cost of revenue: $5.45B, 70% of revenue
- SG&A: $1.03B, 13% of revenue
- Net income: $565.0M, 7.2% of revenue
- R&D: $176.0M, 2.3% of revenue
- Other operating costs: $287.0M, 3.7% of revenue
- Interest, other & tax: $311.0M, 4.0% of revenue
Kept 7.2% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 17, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $7.82B$7.56B | +3.5% |
| Cost of Revenue | $5.45B$5.42B | +0.6% |
| Gross Profit | $2.37B$2.14B | +10.9% |
| R&D Expenses | $176.00M$162.00M | +8.6% |
| SG&A Expenses | $1.03B$948.00M | +8.6% |
| Operating Expenses | $1.49B$1.39B | +7.3% |
| Operating Income | $876.00M$745.00M | +17.6% |
| Net Income | $565.00M$412.00M | +37.1% |
| EPS (Basic) | $2.96$2.18 | +35.8% |
| EPS (Diluted) | $2.96$2.17 | +36.4% |
| Shares Outstanding (Basic) | 187.70M189.90M | −1.2% |
| Shares Outstanding (Diluted) | 188.10M190.40M | −1.2% |
05—Questions
Frequently Asked Questions
How did Wabtec perform financially in 2021?
Total net sales were $7.82 billion, compared with $7.56 billion in 2020. Income from operations was $876 million versus $745 million, and net income attributable to Wabtec shareholders was $558 million versus $414 million, or diluted EPS of $2.96 versus $2.17.
What drove the growth in 2021 sales?
Acquisitions contributed $138 million, primarily Nordco, and favorable foreign exchange added $134 million, mainly in the Transit Segment. Organic sales decreased $6 million, with lower Freight Equipment sales offset by higher Services sales.
How much debt does Wabtec carry and how is it managed?
Total debt was $4.1 billion at December 31, 2021, primarily senior notes. The company was in compliance with its credit facility covenants, including a 3.00x minimum interest coverage ratio and a 3.25x maximum leverage ratio, and it issued €500 million of 1.25% senior notes due 2027 in June 2021.
What risks does the filing highlight for investors?
The filing cites dependence on key customers (top five about 28% of net sales), COVID-19 impacts on demand and supply chains, chip and raw material shortages, cost inflation, international operations (about 60% of net sales outside the U.S.), and the covenants and cash flow demands of its indebtedness.
06—Continue