Wabtec’s Santana: Another ‘Strong’ Quarter, Evidenced by ‘Robust’ Sales and EPS Growth

For second-quarter 2024, Wabtec reported GAAP earnings per diluted share of $1.64, up 54.7% from first-quarter 2024; adjusted, they were $1.96, up 39.0% from 2023. “GAAP EPS and adjusted EPS increased from the year-ago quarter primarily due to higher sales, margin expansion and a lower tax rate,” Wabtec reported.

According to Wabtec, sales came in at $2.64 billion for second-quarter 2024, rising 9.8% from the same quarter last year. The company attributed this to higher sales in both the Freight and Transit segments.

GAAP operating margin for second-quarter 2024 was higher than the prior year at 16.3%; adjusted, it was higher than the prior year at 19.3%, according to Wabtec. The company said that both “benefited from higher sales and improved gross margins.”

Freight segment sales for second-quarter 2024 were up across the company’s business groups “driven primarily by Equipment and Components,” which were up 36.4% and 17.5%, respectively, according to Wabtec. “GAAP operating margin and adjusted operating margin benefited from higher sales, improved gross margin and operating expenses, which grew at a slower rate than revenue.”

For second-quarter 2024, Transit segment sales were up 2.0% “due to higher aftermarket sales,” Wabtec reported. GAAP and adjusted operating margins were “driven up by higher gross margin, partially offset by operating expenses, which grew at a higher rate than revenue.”

The company’s multi-year backlog “continues to provide strong visibility,” Wabtec reported. At June 30, 2024, the 12-month backlog was $114 million higher than the prior year period.  At June 30, 2024, multi-year backlog was $356 million lower than the prior year period, and excluding foreign currency exchange, multi-year backlog decreased $140 million, down 0.6%.

According to Wabtec, for second-quarter 2024, cash provided by operations was $235 million versus $115 million in the year ago period “due primarily to higher net income and improved working capital, partially offset by a reduction in accounts receivable securitization funding.”

At the end of the quarter, Wabtec had cash, cash equivalents and restricted cash of $595 million and total debt of $4.00 billion. At June 30, 2024, the Wabtec’s total available liquidity was $2.09 billion, which includes cash and cash equivalents plus $1.50 billion available under current credit facilities.

During the second quarter, Wabtec repurchased $200 million of the company’s shares and paid $35 million in dividends.

2024 Outlook

Wabtec’s revenue guidance remains unchanged at $10.25 billion to $10.55 billion and adjusted earnings per diluted share to be in a range of $7.20 to $7.50.

“For full year 2024, Wabtec expects operating cash flow conversion of greater than 90%.”

“With the first half behind us, we are focused on executing against our second half deliverables,” Santana said. “Demand on our end markets continues to be strong and we have significant opportunities for further growth given the quality of our products and the productivity and reliability that we provide for our customers.

“We just finished our annual strategic planning, and at this point we stand confident in our ability to drive profitable growth ahead, consistent with our long- term guidance.”