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Westinghouse Air Brake Technologies 8-K Report, Financial Results (Jan 14, 2025)

Reports
Earnings & Results·Regulation FD·Other Events+1
Filing Date
Filed January 14, 2025
Period End
January 13, 2025
Security
WAB
In the record · 2016–202610-K1110-Q338-K132

WAB filed 11 annual reports (10-K), 33 quarterly reports (10-Q) and 132 current reports (8-K) between 2016 and 2026.

  1. Deal closed8-K · Mar ’17Mar ’17
  2. Leadership change8-K · Feb ’20Feb ’20
  3. Leadership change8-K · Apr ’22Apr ’22
  4. Material agreement8-K · Mar ’24Mar ’24

01—Abstract

Summary

Summary of the 8-K filed January 14, 2025. Cited figures are marked; the original filing is the authoritative source.

Westinghouse Air Brake Technologies Corporation (Wabtec) disclosed on January 14, 2025 that it entered into a definitive agreement, dated January 13, 2025, to acquire Evident Inspection Technologies, a business line of Evident Corporation, for $1.78 billiona, subject to customary adjustments.

The filing describes Evident's Inspection Technologies as a global leader in Non-Destructive Testing, Remote Visual Inspection and Analytical Instruments solutions for mission critical assets, with four engineering and production facilities in North America and Japan and more than 1,300 team members. The company expects the acquisition to add automated inspection capabilities to its Digital Intelligence business and to extend its reach in the rail, mining and industrial sectors. The accompanying press release and presentation, furnished as Exhibits 99.1 and 99.2, state that the business is expected to generate approximately $433 millionb in revenue and $112 million in EBITDA for calendar year 2024, a 25.9% EBITDA margin, with recurring revenue of approximately 68%.

Wabtec states the purchase price represents a multiple of 12.0x projected 2025 EBITDA, adjusted for transaction and separation costs, estimated tax benefits of approximately $95 millionc, and run-rate cost synergies of $25 million. The company says the deal is expected to be immediately accretive to its underlying growth profile and adjusted EBIT margin, slightly accretive to adjusted EPS in the first year, and accretive to ROIC over time. Wabtec expects to finance the deal with cash on hand, its credit revolver and an incremental term loan, and projects pro forma net leverage of approximately 2.5x, within its targeted range of 2.0-2.5x.

Closing is subject to customary closing conditions and regulatory approvals, and the company expects to finalize the purchase by the end of the first half of 2025. Key risks noted in the filing include the possibility the transaction is not completed on the expected timeline or at all, unexpected costs, uncertainty about the business's future financial performance, and integration challenges.

02—Key points

Key Highlights

  1. Agreed to acquire Evident Inspection Technologies for $1.78 billion in cash, subject to customary adjustments, under a definitive agreement dated January 13, 2025.
  2. Target expected to generate approximately $433 million in 2024 revenue and $112 million in EBITDA, a 25.9% EBITDA margin, with approximately 68% recurring revenue.
  3. Purchase price stated at 12.0x projected 2025 EBITDA after adjustments for transaction and separation costs, estimated tax benefits of approximately $95 million, and $25 million of run-rate cost synergies.
  4. Wabtec estimates the deal effectively doubles its Digital Intelligence total addressable market from approximately $8 billion to $16 billion.
  5. Financing mix of cash on hand, the credit revolver and an incremental term loan, with pro forma net leverage of approximately 2.5x, within the 2.0-2.5x target range.
  6. Expected to be immediately accretive to underlying growth and adjusted EBIT margin, slightly accretive to adjusted EPS in year one, and accretive to ROIC over time.
  7. Closing expected by the end of the first half of 2025, subject to customary closing conditions and regulatory approvals.

03—Questions

Frequently Asked Questions

  1. What is Wabtec buying and for how much?

    Wabtec agreed to acquire Evident's Inspection Technologies division, formerly part of the Scientific Solutions Division of Olympus Corporation, for $1.78 billion in cash, subject to customary adjustments. The business provides Non-Destructive Testing, Remote Visual Inspection and Analytical Instruments solutions.

  2. How large is the business being acquired?

    The filing says the division is expected to generate approximately $433 million in revenue and $112 million in EBITDA for calendar year 2024, with a 25.9% EBITDA margin. It has four engineering and production facilities in North America and Japan and more than 1,300 team members.

  3. How will Wabtec pay for the acquisition and what will leverage look like?

    Wabtec plans to finance the purchase with cash on hand, its credit revolver and an incremental term loan. It projects pro forma net leverage of approximately 2.5x at closing, within its targeted range of 2.0-2.5x, and expects to maintain investment-grade ratings.

  4. When is the deal expected to close and what could prevent it?

    Wabtec expects to finalize the purchase by the end of the first half of 2025. Closing is subject to customary closing conditions and regulatory approvals. The filing also cites risks including the deal not closing on the expected timeline or at all, unexpected costs, and integration challenges.

  5. What financial benefits does management expect?

    Management expects the deal to be immediately accretive to its underlying growth profile and adjusted EBIT margin, slightly accretive to adjusted EPS in the first year of ownership, and accretive to ROIC over time, with an IRR in the double digits. It expects $25 million of run-rate cost synergies by the end of year three, against an estimated one-time cost of $5 million.

04—Continue

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