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Wabtec (WAB) Beats Q2 Earnings Estimates, Ups 2022 EPS View

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·4 min read
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Westinghouse Air Brake Technologies Corporation, operating as Wabtec Corporation WAB, reported mixed second-quarter 2022 results wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same.

Quarterly earnings of $1.23 per share beat the Zacks Consensus Estimate by a penny. The bottom line improved 16% year over year, owing to higher sales and increased operating margins.

Revenues of $2,048 million lagged the Zacks Consensus Estimate of $2,082.5 million. However, the top line grew 1.8% year over year on the back of higher Freight segment revenues, partially offset by lower Transit segment revenues.

Total operating expenses in the reported quarter increased 1.1% year over year to $381 million. The operating ratio (operating expenses as a percentage of revenues) deteriorated 10 basis points from the year-ago quarter’s figure to 18.6%.

During the reported quarter, Wabtec completed the acquisitions of Beena Vision and ARINC for $69 million. The company repurchased shares worth $103 million.

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 increased 11.5% to $1,490 million. Results were boosted by strength across all product lines, with solid growth in Equipment and Services. Segmental operating margin (on an adjusted basis) increased to 20.3% from 18.5% in the year-ago quarter.

In the transit segment, net sales declined 17.5% to $558 million due to supply-chain disruptions and unfavorable foreign currency exchange. Segmental adjusted operating margin fell to 10.3% from 10.8%.

Balance-Sheet Data

As of Jun 30, 2022, Wabtec had $501 million worth of cash and cash equivalents compared with $488 million at the end of March 2022. Long-term debt at the end of the quarter was $3,987 million compared with $4,225 million in March 2022.

WAB generated cash from operations of $263 million in the reported quarter.

2022 Guidance

Wabtec reaffirms sales in the range of $8.3-8.6 billion. Wabtec continues to expect strong cash flow generation with operating cash flow conversion exceeding 90%.

Adjusted earnings per share are now estimated in the band of $4.70-$5.00 compared with the prior guidance of $4.65-$5.05. The Zacks Consensus Estimate of $4.91 lies within the updated guidance.

Currently, Wabtec carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Transportation Companies

Delta AirLines’ DAL second-quarter 2022 earnings (excluding 29 cents from non-recurring items) of $1.44 per share fell short of the Zacks Consensus Estimate of $1.71. Escalated operating expenses induced the earnings miss. Multiple flight cancellations in May and June also hurt results. The earnings miss disappointed investors, resulting in the stock shedding value in early trading. In the year-ago quarter, Delta incurred a loss of $1.07 per share when air-travel demand was not as buoyant as in the current scenario.

DAL’s revenues came in at $13,824 million, which not only beat the Zacks Consensus Estimate of $13,608.9 million and soared 94% from the year-ago quarter’s figure as air-travel demand rebounded from the pandemic lows. The uptick in air-travel demand in the United States can be gauged from the fact that 75.9% of second-quarter 2022 passenger revenues came from the domestic markets.

J.B. Hunt Transport Services, Inc. JBHT reported better-than-expected second-quarter 2022 results, wherein both earnings and revenues outperformed the Zacks Consensus Estimate.

JBHT’squarterly earnings of $2.42 per share surpassed the Zacks Consensus Estimate of $1.61 and improved 50.3% year over year.

JBHT’stotal operating revenues of $3,837.53 million also outperformed the Zacks Consensus Estimate of $2,908.37 million. The top line jumped 32% year over year on the back of strength across all segments. JBHT’s total operating revenues, excluding fuel surcharges, rose 21.2% year over year.

CSX Corporation (CSX) reported better-than-expected second-quarter 2022 results, wherein both earnings and revenues outperformed the Zacks Consensus Estimate.

CSX’s quarterly earnings of 50 cents per share (excluding 4 cents from non-recurring items) beat the Zacks Consensus Estimate of 47 cents and improved 25% year over year.

CSX’s total revenues of $3,815 million outperformed the Zacks Consensus Estimate of $2,990 million. The top line increased 28% year over year on the back of higher revenues in almost all markets, driven by pricing gains, fuel surcharge, and contribution from the acquisition of Quality Carriers. CSX’s overall revenues per unit increased 27%.


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