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Wabtec's (WAB) Q1 Earnings & Revenues Beat Estimates, Up Y/Y

Zacks Equity Research

Westinghouse Air Brake Technologies Corporation, which operates as Wabtec Corporation WAB, reported first-quarter 2019 earnings (excluding $1.10 from non-recurring items) of $1.06 per share. The bottom line handsomely beat the Zacks Consensus Estimate of 80 cents and improved 15.2% year over year.

Total sales jumped more than 50% year over year to $1,593.6 million and outpaced the Zacks Consensus Estimate of $1,449.8 million. The substantial year over year increase in sales was due to the inclusion of GE Transportation products. We remind investors that Wabtec’s merger with GE Transportation — the transportation business of General Electric Company GE — was completed in February 2019. Following the completion of the transaction, Wabtec was included in the coveted S&P 500 index.

Total operating expenses in the reported quarter increased almost 80% to $321,710 million, primarily due to a 76.4% rise in selling, general and administrative expenses. Also, the operating ratio (operating expenses as a percentage of revenues) deteriorated to 20.2% from 17% in the prior-year period. Notably, lower the value of the metric the better.

Segmental Highlights

At the Transit segment, net sales climbed 6% to $717.18 million driven by organic sales growth and sales from acquisitions. Segmental operating margin (income from operations as a percentage of sales) declined to 8.2% from 10.1% in the year-ago quarter.

Freight net sales jumped 131% to $876.43 million backed by organic sales growth and sales from acquisitions. Segmental operating margin declined to 8.6% from 18.3% in the year-ago quarter.

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 Quote

Liquidity

As of Mar 31, 2019, Wabtec had $512.87 million in cash and cash equivalents compared with $580.91 million at the end of 2018. Long-term debt at the quarter-end was $4.64 billion compared with $3.79 billion at 2018 end.

2019 View Intact

Wabtec, carrying a Zacks Rank #3 (Hold), still anticipates sales of $8.4 billion for the current year. Adjusted EBITDA and income from operations is estimated at $1.6 billion and $1.2 billion, respectively. Additionally, adjusted earnings are still expected to be between $4 and $4.20 per share. The Zacks Consensus Estimate for the same stands at $4.18, above the mid-point ($4.10) of the guided range. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

New CEO Named, Incumbent to Retire

Apart from announcing first-quarter 2019 earnings results, the company announced that Rafael Santana will succeed Ray Betler as its president and chief executive officer (CEO), from Jul 1, 2019.

Betler, who joined Wabtec in 2008, was appointed as president and CEO in 2014. Santana, will also become a member of a Wabtec’s board.

Upcoming Releases

Investors interested in the Zacks Transportation sector are keenly awaiting first-quarter earnings reports from key players, such as C.H. Robinson Worldwide CHRW and Air Lease Corp. AL. While C.H. Robinson will report first-quarter earnings on Apr 30, Air Lease will announce the same on May 9.

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