Wabtec: ‘Strong’ 3Q24 Results, ‘Raised, Tightened’ Adjusted EPS Guidance
For third-quarter 2024, Wabtec GAAP earnings per diluted share of $1.63 were up 22.6% from third-quarter 2023; adjusted, they were $2.00, up 17.6% from 2023. “GAAP EPS and adjusted EPS increased from the year-ago quarter primarily due to higher sales and operating margin expansion,” the company reported.
Third-quarter sales came in at $2.66 billion, up 4.4% from the same quarter in 2023, which Wabtec attributed to growth in the Freight and Transit segments. Among the key drivers, according to Wabtec:
- Equipment: “Lower locomotive deliveries as planned, partially offset with increased mining sales.”
- Components: “International freight car and industrial growth offsetting [the] North American freight car decrease,” Wabtec noted. “Industry [is] forecasting the build to be down 9% in 2024.”
- Digital Intelligence: “Higher sales from international, including PTC, next generation onboard locomotive products and digital mining.”
- Service: “Increased sales from higher modernization deliveries and overhauls.”
- Transit: “Higher OE sales; sales up 8.4% on constant currency basis.”
GAAP operating margin for the three months ending Sept. 30, 2024, was higher than the prior year at 16.3%, and adjusted, it was higher than the prior year, up 1.8 pts at 19.7%, according to Wabtec. The company said both GAAP and adjusted operating margins “benefited from higher sales and improved gross margins.”
At Sept. 30, 2024, the 12-month backlog was $533 million higher than at Sept. 30, 2023, according to Wabtec, and the multi-year backlog was $751 million higher than at Sept. 30, 2023. The company said that “excluding foreign currency exchange, the multi-year backlog was $692 million higher, up 3.2%.”
Freight segment sales for third-quarter 2024 were up 2.6% over the same period last year, “driven primarily by Services and Digital, which were up 16.5% and 12.7%, respectively,” Wabtec reported. GAAP operating margin and adjusted operating margin, it noted, “benefited from higher sales, improved gross margin and operating expenses which grew at a slower rate than revenue.”
Transit segment sales for third-quarter 2024 were up 9.6%, “driven by higher OE sales,” according to Wabtec. Additionally, GAAP operating margins “were up 0.5 percentage points behind lower restructuring and transaction costs,” the company noted, and adjusted, they were up “behind improved operating expenses as a percent of revenue; partially offset by lower gross margins.”
2024 Outlook
Wabtec reported that it “raised and tightened” its 2024 adjusted EPS guidance to be in the range of $7.45 to $7.65, up 27.5% from 2023 at the midpoint, and noted that its revenue guidance range “remains unchanged at $10.25 billion to $10.55 billion.” For full-year 2024, Wabtec said it expects operating cash flow conversion of greater than 90%.
“Demand for products and services has remained strong, and our pipeline of opportunities is robust, especially in our international markets,” Rafael Santana said. “Our team’s continued focus on product innovation, cost management, and relentless execution for our customers, along with our continued strong results, gives us confidence to raise our full year guidance again this quarter.”
