Wabtec (WAB) Q3 Earnings & Revenues Top Estimates, View Up
Westinghouse Air Brake Technologies Corporation, operating as Wabtec Corporation WAB, reported third-quarter 2023 earnings (excluding 36 cents from non-recurring items) of $1.70 per share, which beat the Zacks Consensus Estimate of $1.46. The bottom line improved 39.3% year over year owing to higher sales.
Revenues of $2,550 million also surpassed the Zacks Consensus Estimate of $2,401.2 million. The top line grew 22.5% year over year on the back of higher sales of the Freight and Transit segments.
Total operating expenses in the reported quarter increased by $35 million to $422 million. Operating ratio (operating expenses as a percentage of revenues) improved 150 basis points from the year-ago quarter to 17.9%. A lower value of the metric is preferable. Operating margin benefited from sales growth and lower SG&A as a percentage of sales.
Segmental Highlights
Freight net sales jumped 23.4% to $1,890 million. The actual percentage increase was higher than our expectation of a 10.6% year-over-year rise. Results were boosted by strength across all product lines, with solid growth in Equipment, Components and Digital Intelligence. Segmental operating margin (on an adjusted basis) extended to 17.3% from 15.2%.
In the Transit segment, net sales grew 20% to $660 million due to strong aftermarket sales. The actual percentage gain was higher than our projection of a 19.3% year-over-year climb. Segmental adjusted operating margin expanded to 10.3% from 9.6%.
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
Balance Sheet & Liquidity
As of Sep 30, 2023, Wabtec had $392 million worth of cash, cash equivalents and restricted cash compared with $541 million at the end of December 2022. Long-term debt at the end of the quarter was $3,288 million compared with $3,751 million in December 2022.
WAB used $425 million of cash from operations in the reported quarter.
WAB returned $344 million through share repurchases and dividends.
2023 Guidance
Wabtec now expects sales of $9.50-$9.70 billion (prior view: $9.25-$9.50 billion). The Zacks Consensus Estimate is pegged at $9.44 billion.
Adjusted earnings per share are now estimated to be between $5.80 and $6.00 (prior view: $5.50 and $5.80). The Zacks Consensus Estimate is pegged at $5.68.
Management still anticipates strong cash flow generation, with operating cash flow conversion exceeding 90%.
Currently, Wabtec carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Q3 Performance of Some Other Transportation Companies
United Airlines UAL reported third-quarter 2023 earnings per share (excluding 23 cents from non-recurring items) of $3.65, which outpaced the Zacks Consensus Estimate of $3.40 and improved 29.9% year over year.
Operating revenues of $14,484 million beat the Zacks Consensus Estimate of $14,441.8 million. The top line increased 12.5% year over year due to upbeat air-travel demand.
J.B. Hunt Transport Services, Inc.’s JBHT third-quarter 2023 earnings per share of $1.80 missed the Zacks Consensus Estimate of $1.85 and declined 30% year over year.
Total operating revenues of $3,163.8 million also lagged the Zacks Consensus Estimate of $3,224 million and fell 18% year over year.
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