01—Abstract
Summary
Summary of the 8-K filed October 23, 2024. Cited figures are marked; the original filing is the authoritative source.
On October 23, 2024, Westinghouse Air Brake Technologies Corporation (now Wabtec Corporation, NYSE: WAB) reported third quarter 2024 results in a press release (Exhibit 99.1) and furnished an earnings presentation (Exhibit 99.2).
Third quarter net sales were $2.66 billiona, up 4.4% year over year. GAAP diluted earnings per share were $1.63, up 22.6%, and adjusted diluted earnings per share were $2.00, up 17.6%. GAAP operating margin was 16.3% and adjusted operating margin was 19.7%, which the company describes as up 1.8 points.
Cash from operations was $542 millionb. By segment, Freight sales were $1.93 billion, up 2.6%, with Services up 16.5% and Digital Intelligence up 12.7%, while Equipment declined 17.3%. Transit sales were $733 million, up 9.6%, driven by higher original equipment sales.
Total backlog was $22,234 millionc at September 30, 2024, up 3.5%, and the 12-month backlog was $7,624 million, up 7.5%. The company raised and tightened its 2024 adjusted diluted EPS guidance to $7.45 to $7.65, from $7.20 to $7.50 previously. Revenue guidance was unchanged at $10.25 billion to $10.55 billion, and full-year operating cash flow conversion is expected to be greater than 90%.
During the quarter, the company returned $634 milliond to shareholders through share repurchases ($599 million) and dividends ($35 million). At quarter end, total debt was $4.02 billion and total available liquidity was $1.90 billion.
02—Key points
Key Highlights
- Third quarter net sales of $2.66 billion, up 4.4% year over year, with Freight up 2.6% and Transit up 9.6%.
- GAAP diluted EPS of $1.63, up 22.6%; adjusted diluted EPS of $2.00, up 17.6%.
- Adjusted operating margin of 19.7%, up 1.8 points; GAAP operating margin of 16.3%.
- 2024 adjusted diluted EPS guidance raised and tightened to $7.45 to $7.65; revenue guidance unchanged at $10.25 billion to $10.55 billion.
- Backlog: 12-month backlog of $7,624 million, up 7.5%; total backlog of $22,234 million, up 3.5%.
- Third quarter cash from operations of $542 million versus $425 million a year earlier, with cash conversion of 129%.
- Returned $634 million to shareholders in the quarter; total debt of $4.02 billion and total available liquidity of $1.90 billion at September 30, 2024.
03—Questions
Frequently Asked Questions
Why did the company raise its 2024 adjusted EPS guidance?
The presentation attributes the updated guidance to adjusted operating margin expansion, favorable productivity and absorption, benefits from Integration 2.0 and Portfolio Optimization, and lower SG&A and engineering expenses as a percentage of sales. The adjusted EPS range moved to $7.45 to $7.65 from $7.20 to $7.50.
Did the company change its revenue outlook?
No. The 2024 revenue guidance remained unchanged at $10.25 billion to $10.55 billion. The change was limited to adjusted EPS guidance.
What drove third quarter sales growth?
Freight Services sales rose 16.5% and Digital Intelligence rose 12.7%, partially offset by a 17.3% decline in Equipment as planned locomotive deliveries were lower. Transit sales rose 9.6%, driven by higher original equipment sales.
How do GAAP and adjusted results differ this quarter?
Adjusted results exclude restructuring and portfolio optimization costs and non-cash amortization expense. In the third quarter, these adjustments added $0.07 and $0.30 per diluted share, respectively, moving GAAP EPS of $1.63 to adjusted EPS of $2.00.
How strong is the company's balance sheet and liquidity position?
At September 30, 2024, cash, cash equivalents and restricted cash were $410 million and total debt was $4.02 billion. Total available liquidity was $1.90 billion, including cash and cash equivalents plus $1.50 billion available under current credit facilities. The presentation states a leverage ratio of 1.7x, compared with 2.1x in the year-ago quarter.
04—Continue