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Wabtec (WAB) Beats on Q1 Earnings & Revenues, Decrease Y/Y

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Westinghouse Air Brake Technologies Corporation, which operates as Wabtec Corporation WAB, reported first-quarter 2021 earnings (excluding 30 cents from non-recurring items) of 89 cents per share, surpassing the Zacks Consensus Estimate of 85 cents. However, the bottom line declined 8.3% year over year due to lower revenues.

Total sales fell 5.2% year over year to $1,830.2 million due to weak revenues from freight equipment. The top line, however, surpassed the Zacks Consensus Estimate of $1825 million.

Total operating expenses in the reported quarter dropped 5.2% to $342.6 million on the back of a 3.2% reduction in selling, general and administrative expenses. Notably, the operating ratio (operating expenses as a percentage of revenues) was flat at 18.7%.

Westinghouse Air Brake Technologies Corporation Price, Consensus and EPS Surprise

Westinghouse Air Brake Technologies Corporation Price, Consensus and EPS Surprise
Westinghouse Air Brake Technologies Corporation Price, Consensus and EPS Surprise

Westinghouse Air Brake Technologies Corporation price-consensus-eps-surprise-chart | Westinghouse Air Brake Technologies Corporation Quote

Segmental Highlights

Freight net sales declined 9% to $1,183.3 million. Results were hurt by a $115-million decline in organic sales. This downside is due to coronavirus-induced disruptions and lower delivery of locomotives in North America. However, improvement in freight services as result of factors like greater modernizations and higher utilization aided segmental results.

Segmental operating margin (income from operations as a percentage of sales) deteriorated to 12% from 12.4% in the year-ago quarter.

At the transit segment, net sales improved 3% to 646.9 million owing to lower organic sales. Transit segment organic sales were hurt by disruptions stemming from the coronavirus pandemic. Segmental operating income improved to 6% (on an adjusted basis) owing to operational efficiencies.

Balance Sheet Data

As of Mar 30, 2021, Wabtec, currently carrying a Zacks Rank #2 (Buy), had $483.5 million worth of cash and cash equivalents compared with $598.7 million at the end of 2020. The company generated cash from operations of $292 million in the March quarter.

Long-term debt at the end of the quarter was $3,923.3 million compared with $3,792.2 million at 2020 end. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

2021 Guidance

Wabtec now anticipates sales in the range of $7.7-$7.9 billion (old guidance: $7.6-$7.9 billion). The mid-point of the guided range, $7.8 billion, lies below the Zacks Consensus Estimate of $7.91 billion. Additionally, adjusted earnings per share are now estimated in the band of $4.05-$4.30 (past view: $3.90-$4.30). The mid-point of the guided range, $4.175, is lower than the Zacks Consensus Estimate of $4.22.

The company still expects to achieve run-rate savings of $250 million in the current year owing to cost management and synergies from the Wabtec and GE Transportation merger, which in turn, should lead to improved margins. Further, it retains a strong cash flow generation for 2021 with operating cash flow conversion exceeding 90%.

Sectorial Snapshots

Let’s take a look at some of the other recently-released earnings reports from companies within the Zacks Transportation sector.

Canadian National Railway Co. CNI reported first-quarter 2021 earnings (excluding 11 cents from non-recurring items) of 97 cents per share (C$1.23), missing the Zacks Consensus Estimate of 99 cents. Quarterly revenues of $2,791.6 million (C$3,535 million) also lagged the Zacks Consensus Estimate of $2,813.1 million.

Landstar System LSTR reported first-quarter 2021 earnings of $2.01 per share, surpassing the Zacks Consensus Estimate of $1.61. Additionally, revenues of $1,287.5 million outperformed the Zacks Consensus Estimate of $1,142.5 million.

Southwest Airlines LUV incurred a loss of $1.72 per share (excluding $1.91 from non-recurring items) in the first quarter of 2021, narrower than the Zacks Consensus Estimate of a loss of $1.82. Moreover, operating revenues of $2,052 million surpassed the Zacks Consensus Estimate of $2,031.7 million.

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