Wabtec Corp. on Feb. 12 reported “strong” fourth-quarter 2024 results that included 350-plus bps (basis points) of adjusted operating margin expansion, mid-single-digit revenue growth and a double-digit adjusted EPS (earnings per share) CAGR (compounded annual growth rate). The company provided a five-year long-term guidance update, and announced 2025 financial guidance of Adjusted EPS between $8.35 to $8.75 up 13.1% at the mid-point. Compared to 4Q23, orders grew 20%, including more than $1 billion in new locomotives and rebuilds. Cash from operations rose 52.7% (117% cash conversion). The company’s Board increased the quarterly dividend by 25% and share buyback authorization by $1 billion in December.
Wabtec reported 4Q24 GAAP earnings per diluted share of $1.23, up 2.5% vs. 4Q23. Adjusted earnings per diluted share were $1.68, up 9.1%. Sales were $2.58 billion and cash from operations was $723 million. Full-year 2024 GAAP earnings per diluted share were $6.04, up 33.3% vs. 2023. Adjusted earnings per diluted share were $7.56, up 27.7%. Total 2024 sales were $10.39 billion, and cash from operations was a record $1.83 billion.
4Q24 Consolidated Results
- Sales increased 2.3% compared to the year-ago quarter, “driven by increased sales in the Transit segment.”
- The GAAP operating margin was higher than the prior year at 12.9% and adjusted operating margin was down slightly vs. the prior year at 16.9%. GAAP operating margins “benefited from higher gross margin and lower operating expenses as a percent of revenue.” Adjusted operating margins “benefited from higher gross margin, offset by higher SG&A (selling, general and administrative) expenses as a percent of revenue.”
- GAAP EPS increased from the year-ago quarter “primarily due to higher sales and margin expansion, partially offset by the absence of last year’s gain resulting from an increase in ownership interest of an assembly joint venture.” Adjusted EPS increased “primarily due to higher sales. Both benefited from share repurchases during the year.”
4Q24 Freight Segment Results
- Freight segment sales “were up modestly in the quarter due to the rebalance of Freight segment production to the first half of the year.” Full year sales were up 7.9%.
- The GAAP operating margin “benefited from lower operating expenses as a percent of revenue behind lower intangible amortization expenses. Adjusted operating margin benefited from modest gross margin improvement.”
4Q24 Transit Segment Results
- Transit segment sales for the fourth quarter were up 7.1% “due to strong OE (original equipment) and aftermarket sales.”
- GAAP and adjusted operating margins were up “as a result of higher sales, savings related to Integration 2.0, and favorable product mix.”
Backlog
Wabtec’s 12-month and multi-year backlogs “continue to provide strong visibility,” the company said. “At the end of the fourth quarter, the 12-month backlog was $224 million higher than the prior year. And on Dec. 31, 2024, the multi-year backlog was $273 million higher than the same time a year ago. Excluding the impacts of foreign currency exchange, the 12-month backlog was up 5.5% and the multi-year backlog was up 3.6%.”
Cash Flow and Liquidity Summary
- During 4Q24, Wabtec generated cash from operations of $723 million vs. $686 million in the year-ago period. Cash flow from operations “benefited from increased customer deposits and receipt of a tax refund.”
- At the end of the quarter, the company had cash, cash equivalents and restricted cash of $715 million and total debt of $3.98 billion. Total available liquidity was $2.21 billion, “which includes cash and cash equivalents plus $1.50 billion available under current credit facilities.”
- Wabtec repurchased $123 million of shares in the fourth quarter, bringing the full year total to $1.10 billion.
- The Board increased the quarterly dividend by 25% and declared a regular quarterly common dividend of 25 cents per share, payable on March 7, 2025 to holders of record on Feb. 21, 2025.
- In early December, the Board also increased Wabtec’s existing share repurchase authorization by $1 billion.
2025 Financial Guidance
- Wabtec “has largely achieved its previous 5-year guidance over the past 3-year period” and is replacing its previous long-term guidance with new 5-year guidance.” The company “expects mid-single-digit revenue growth CAGR, 350+ bps of adjusted operating margin expansion, and double-digit EPS growth CAGR while delivering greater than 90% average cash conversion over the 5-year period through the end of 2029.”
- Wabtec’s 2025 financial guidance “expects sales to be in a range of $10.725 billion to $11.025 billion and adjusted earnings per diluted share to be in a range of $8.35 to $8.75.” For full-year 2025, the company “expects strong cash flow generation with operating cash flow conversion of greater than 90%.”
“The Wabtec team delivered a strong 2024 as evidenced by higher orders, sales, margin expansion, increased earnings and robust cash flow,” said Wabtec President and CEO Rafael Santana. “We remain committed to our capital deployment strategy to maximize shareholder returns. We returned $1.2 billion to shareholders through share repurchases and dividends. And, based on our strong performance in 2024 and confidence in the future, our Board of Directors approved a 25% increase in our quarterly dividend, and in December, increased our share buyback authorization by $1.0 billion. I am encouraged by the underlying momentum of our business, and the team’s unrelenting focus on execution and delivering for our customers. And just as important, we continue to lay a solid foundation for us to build upon. Looking ahead, I believe Wabtec is well positioned to drive top quartile returns over time.”
In related news, Juan Perez joined Wabtec’s Board on Jan. 29, and will be a nominee for election at Wabtec’s annual meeting of stockholders in May. 2025. Perez “has extensive experience in information technology and corporate digital strategy as the Executive Vice President and Chief Information Officer for Salesforce,” the company noted. Prior to joining Salesforce in 2022, he was CIO and Engineering Officer for UPS and a member of the Executive Leadership Team. Perez led the company’s adoption of new technologies including AI, virtual assistants and virtual reality solutions for driver training. He also was responsible for all technology, including operations, airline, automation, sortation, and customer and back-office systems. Perez is a senior member of the Institute of Industrial Engineers and serves as a program evaluator for the Accreditation Board of Engineering and Technology. He also serves on the board of the Hershey Company and the advisory boards for the School of Industrial and Systems Engineering at the University of Southern California and the School of Business at Georgia Tech.
“Juan is a respected technology leader with extensive experience driving digital transformations for Fortune 500 companies,” said Santana. “As we continue to advance our digital solutions, his expertise in leveraging cutting-edge performance technologies across operations, engineering, and supply chain will be instrumental in strengthening our competitive edge and delivering greater value to our customers.”
