Wabtec Reports Fourth Quarter and Full-Year 2020 Results; Issues 2021 Financial Guidance

Wabtec Corporation (NYSE: WAB) today reported fourth quarter and full year 2020 results and issued financial guidance.

“Wabtec delivered strong operational performance during a year of unprecedented global challenges,” said Rafael Santana, Wabtec’s president and chief executive officer. “I am proud of how our team responded to the crisis in 2020. We quickly protected our teams, kept our operations delivering for customers, and focused on liquidity, cost management, and execution to strengthen our financial position while returning significant capital to shareholders. We also never lost sight on future growth, investing in new sustainable rail technologies that will transform the future of transportation – making it cleaner, greener, safer, and more efficient.”

“We enter 2021 with positive momentum, as our end-markets continue to show signs of recovery. Global freight volumes and equipment utilization have sequentially improved over the last two quarters, North American OE markets are transitioning through trough, and sustainable investment in global transit remains. I’m confident we’re well-positioned for growth and will continue to perform for our shareowners, our customers, and our employees in the short- and long-term.”

Fourth Quarter and Full Year 2020 Financial Summary

In the fourth quarter of 2020, Wabtec had cash from operations of $326 million, sales of $2.0 billion and GAAP earnings per diluted share of $0.46. Adjusted earnings per diluted share were $0.98 and excluded after-tax expenses of $0.20 for restructuring and transaction costs, $0.29 for non-cash amortization expense and $0.03 for tax on transactions costs (see reconciliation table).

For the full year of 2020, Wabtec had cash from operations of $784 million including approximately $220 million in one-time cost impacts related to restructuring, transaction and litigation costs, sales of $7.6 billion and GAAP earnings per diluted share of $2.17. Adjusted earnings per diluted share were $3.79 and excluded after-tax expenses of $0.45 for restructuring and transaction costs, $1.11 for non-cash amortization expense, $0.03 for foreign exchange loss and $0.03 for tax on transaction costs. (see reconciliation table).

Backlog remains strong, despite a challenging market. At December 31, 2020, Wabtec’s total, multi-year backlog was $21.6 billion, which was higher than at September 30 as OEM and after-market orders increased in both Freight and Transit. At December 31, 2020 the 12-month backlog was $5.5 billion.

2021 Financial Guidance

• Wabtec issued its 2021 sales guidance to a range of $7.6 billion to $7.9 billion, GAAP earnings per diluted share guidance to between $2.65 to $3.05 and adjusted earnings per diluted share to between $3.90 to $4.30. The adjusted guidance excludes estimated expenses for restructuring and amortization expenses.
• With cost actions and synergies stemming from the Wabtec and GE Transportation merger on-track, we expect to achieve a run rate savings of $250 million in 2021, driving improved margins. For full year 2021, Wabtec expects strong cash flow generation with operating cash flow conversion of greater than 90%.
• The company also announced it renewed its share buyback authorization up to $500 million.

2020 Fourth Quarter Consolidated Results

• Sales were $2.0 billion versus $2.4 billion in the same period a year ago. The decrease compared to the year-ago quarter was primarily driven by lower sales in Freight Equipment, Components, Digital Electronics, and Transit Aftermarket sales.
• Income from operations was $161 million (8.0 percent of sales) and adjusted income from operations was $283 million (14.0 percent of sales), which was unfavorably impacted by lower sales in Freight and Transit primarily due to COVID-19 pandemic disruptions. Adjusted income from operations excluded pre-tax expenses of $122 million, of which $71 million is for non-cash amortization expense and $51 million is for restructuring and transaction costs (see reconciliation table).
• Net interest expense was $49 million and other income was $6 million.
• The reported and adjusted effective tax rates for the quarter