Wabtec (WAB) Tops on Q2 Earnings & Revenues, Raises View
Westinghouse Air Brake Technologies Corporation, operating as Wabtec Corporation WAB, reported second-quarter 2023 earnings (excluding 35 cents from non-recurring items) of $1.41 per share, which beat the Zacks Consensus Estimate of $1.35. The bottom line improved 14.6% year over year, owing to higher sales.
Revenues of $2,407 million also surpassed the Zacks Consensus Estimate of $2,207.6 million. The top line grew 17.5% year over year on the back of higher sales of the Freight and Transit segments.
Total operating expenses in the reported quarter increased $30 million to $411 million. Operating ratio (operating expenses as a percentage of revenues) improved 150 basis points from the year-ago quarter to 17.1%. Lower value of the metric is preferable.
Segmental Highlights
Freight net sales increased 14.6% to $1,708 million. The actual percentage increase was higher than our expectation of a 7.5% 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) was kept at 20.3%, flat from the year-ago quarter.
In the Transit segment, net sales grew 25.3% to $699 million due to strong aftermarket sales. The actual percentage gain was higher than our expectation of an 8.7% year-over-year increase. Segmental adjusted operating margin rose to 11.1% from 10.3%.
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 Jun 30, 2023, Wabtec had $371 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 $3,401 million compared with $3,751 million in December 2022.
WAB used $115 million of cash from operations in the reported quarter.
It repurchased $75 million worth of shares.
2023 Guidance
Wabtec now expect sales of $9.25-$9.50 billion (prior view: $8.7-$9 billion). The Zacks Consensus Estimate is pegged at $8.88 billion.
Adjusted earnings per share are now estimated to be between $5.50 and $5.80 (prior view: $5.15-$5.55). The Zacks Consensus Estimate is pegged at $5.42.
Management still anticipates strong cash flow generation, with operating cash flow conversion exceeding 90%.
Currently, Wabtec carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Q2 Performance of Some Other Transportation Companies
J.B. Hunt Transport Services’ JBHT second-quarter 2023 earnings of $1.81 per share missed the Zacks Consensus Estimate of $1.97 and declined 25.2% year over year. Total operating revenues of $3,132.6 million also missed the Zacks Consensus Estimate of $3,347.5 million. The top line fell 18.4% year over year.
The downfall was due to a decline in revenue per load of 24% in Integrated Capacity Solutions, 13% in Intermodal and 21% in Truckload. A 4% decrease in productivity in Dedicated Capacity Solutions added to the woes. Changes in customer rate, freight mix and lower fuel surcharge revenues resulted in this downtick.
Delta Air Lines’ DAL second-quarter 2023 earnings (excluding 16 cents from non-recurring items) of $2.68 per share comfortably beat the Zacks Consensus Estimate of $2.42. DAL reported earnings of $1.44 a year ago.
Revenues of $15,578 million outshined the Zacks Consensus Estimate of $14,991.6 million. Total revenues increased 12.69% on a year-over-year basis driven by higher air-travel demand. The adjusted operating margin was 17.1% compared with 11.7% in the prior-year period.
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