01—Abstract
Summary
Summary of the 10-K filed February 15, 2023. Cited figures are marked; the original filing is the authoritative source.
Westinghouse Air Brake Technologies Corporation, doing business as Wabtec Corporation, reported 2022 total net sales of $8.36 billiona, up from $7.82 billion in 2021, with income from operations of $1.011 billion versus $876 million and net income attributable to Wabtec shareholders of $633 million versus $558 million.
Growth was driven mainly by the Freight Segment, which accounted for about 72% of 2022 net sales, and by higher Services sales from locomotive modernizations and a larger active locomotive fleet. Diluted earnings per share were $3.46b, compared with $2.96 in 2021. Operating cash flow was $1.038 billion, and capital expenditures were $149 million.
The company ended 2022 with total backlog of about $22 billionc, of which $6.76 billion was expected to be delivered in 2023. Total debt was $4.0 billion, mostly Senior Notes, and cash, cash equivalents and restricted cash was $541 million. Management launched Integration 2.0, a three-year initiative targeting incremental run-rate synergies of $75 million to $90 million by 2025, with one-time charges estimated at $135 million to $165 million.
About $46 milliond of those charges were recorded in 2022. Shareholders received $473 million in share repurchases and $111 million in dividends during 2022. The filing also flags risks, including supply chain disruptions, inflation, the Russia-Ukraine conflict, and exposure to international operations, with about 55% of 2022 net sales made to customers outside the United States.
A cyber incident detected in June 2022 was reported as not having a material financial impact. The auditor, Ernst & Young LLP, issued unqualified opinions on the financial statements and on internal control over financial reporting.
02—Key points
Key Highlights
- Net sales rose to $8.36 billion in 2022 from $7.82 billion in 2021, led by the Freight Segment, which grew to $6.01 billion.
- Net income attributable to Wabtec shareholders was $633 million, or $3.46 diluted EPS, up from $558 million and $2.96 a year earlier.
- Total backlog was about $22 billion at December 31, 2022, with $6.76 billion expected to be delivered in 2023.
- Integration 2.0 targets $75 million to $90 million of run-rate synergies by 2025, with one-time charges estimated at $135 million to $165 million.
- Total debt was $4.0 billion, and cash, cash equivalents and restricted cash was $541 million at year-end 2022.
- Shareholder returns in 2022 included $473 million of share repurchases and $111 million of dividends, and the board reauthorized a $750 million repurchase program in February 2023.
- About 55% of 2022 net sales came from customers outside the United States, and the Russia-Ukraine conflict and supply chain disruptions remain key risks.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2022, Westinghouse Air Brake Technologies kept $0.08.
- Revenue$8.36B100.0%
- Cost of revenue−$5.82B69.6%
- Gross profit$2.54B30.4%
- Operating costs−$1.53B18.3%
- Operating income$1.01B12.1%
- Interest, other & tax−$370.0M4.4%
- Net income$641.0M7.7%
Where FY2022 revenue went
$8.36B- Cost of revenue: $5.82B, 70% of revenue
- SG&A: $1.03B, 12% of revenue
- Net income: $641.0M, 7.7% of revenue
- R&D: $209.0M, 2.5% of revenue
- Other operating costs: $291.0M, 3.5% of revenue
- Interest, other & tax: $370.0M, 4.4% of revenue
Kept 7.7% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2022filed February 15, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $8.36B$7.82B | +6.9% |
| Cost of Revenue | $5.82B$5.45B | +6.8% |
| Gross Profit | $2.54B$2.37B | +7.2% |
| R&D Expenses | $209.00M$176.00M | +18.8% |
| SG&A Expenses | $1.03B$1.03B | −0.1% |
| Operating Expenses | $1.53B$1.49B | +2.4% |
| Operating Income | $1.01B$876.00M | +15.4% |
| Net Income | $641.00M$565.00M | +13.5% |
| EPS (Basic) | $3.46$2.96 | +16.9% |
| EPS (Diluted) | $3.46$2.96 | +16.9% |
| Shares Outstanding (Basic) | 182.20M187.70M | −2.9% |
| Shares Outstanding (Diluted) | 182.80M188.10M | −2.8% |
05—Questions
Frequently Asked Questions
How did Wabtec's revenue and profitability change in 2022?
Net sales increased to $8.36 billion from $7.82 billion, and income from operations rose to $1.011 billion from $876 million. Net income attributable to Wabtec shareholders increased to $633 million from $558 million, and diluted EPS was $3.46 versus $2.96. Foreign exchange reduced sales by $304 million, while acquisitions added $87 million.
What is the size of Wabtec's backlog and how much of it is expected to convert in 2023?
Total backlog was approximately $22 billion at December 31, 2022, up from $22.169 billion a year earlier. The filing expects $6.76 billion to be delivered in 2023, with $15.68 billion in later years.
What debt and liquidity position did Wabtec report at year-end 2022?
Total debt was $4.0 billion, mostly Senior Notes, and the Restated Credit Agreement provided a $1.5 billion revolving facility plus a $250 million delayed draw term loan. Current availability under the credit agreement was $1.747 billion, and the company reported being in compliance with its financial covenants.
What is Integration 2.0 and what costs does it involve?
Integration 2.0 is a three-year strategic initiative announced in the first quarter of 2022 to consolidate the operating footprint, reduce headcount, streamline manufacturing, and restructure North American distribution channels. The company expects $75 million to $90 million of incremental run-rate synergies by 2025 and one-time charges of $135 million to $165 million, of which about $46 million was recorded in 2022.
Did the 2022 cyber incident have a material impact on Wabtec?
According to the filing, the company detected a cyber security incident on June 26, 2022, and based on its assessment the incident has not had a material financial impact and is not expected to have a material impact on its business, operations or financial results. The filing also notes that the incident affected Transit Segment supply chain and manufacturing operations.
06—Continue