Faiveley pumps up Wabtec quarter
Written by Railway Age Staff
Recent acquisitions helped boost results for component and systems provider Wabtec Corp. in the third quarter as sales of existing equipment in the transit and freight categories faced “challenging market conditions.”
Sales for the Wilmerding, Pa.-based company totaled $958 million, a 42% increase compared to the year-ago quarter, mainly on acquisitions in the Transit Group. Changes in foreign exchange rates helped push up sales by $7 million.
Income from operations was $102 million including expenses of $20 million for contract adjustments and $6 million for restructuring and integration actions. Excluding these expenses, the company’s operating margin was 13.4%, slightly better than its adjusted operating margin in the first half of the year.
Net interest expense was $18 million, reflecting a higher debt balance due mainly to the acquisition of a majority stake in rail systems provider Faiveley Transport of France in late 2016.
Earnings per diluted share were 70 cents including expenses of 18 cents per diluted share for contract adjustments and restructuring and integration actions. Excluding these items, adjusted earnings per diluted share totaled 88 cents.
Transit sales increased 97% or $304 million and income from operations fell 7% from a year ago, on sales from acquisitions of $290 million. In the Freight segment, sales decreased 6% or $22 million and income from operations declined by 21% percent, on lower sales from original equipment rail products. Acquisitions increased sales by $41 million.
The total, multi-year backlog increased in the quarter 2% on-year, to a record $4.5 billion. The 12-month backlog increased 5% to a record $2.2 billion. Recent new orders include projects in all major markets around the world and in all major product categories, including contracts worth more $100 million to supply components and systems for the new generation of double-deck trains for Paris.
Following the end of the quarter, Wabtec acquired AM General Contractor, a manufacturer of fire protection and extinguishing systems, mainly for transit rail cars. Based in Europe, AM has annual sales of about $25 million.
Wabtec expects revenues for the year to be about $3.8 billion and earnings of $3.45-$3.50 excluding expenses for restructuring, integration and contract adjustments, in line with consensus estimates of $3.48. The company’s adjusted operating margin target in the fourth quarter is about 15%.
“Our third quarter results were in line with our expectations,” said Raymond T. Betler, president and chief executive. “Although we have faced challenging market conditions this year, we have also seen many positive developments, too. During the third quarter our transit business once again grew its record backlog, winning orders throughout our major geographic markets and product categories. Our freight revenues and backlog have remained mostly flat for the past four quarters, indicating a level of stability, and we are seeing a slight pick-up in the aftermarket. We expect a strong finish to the year based on our existing backlog and increasing synergies.”
Betler said the Faiveley deal would help boost worldwide growth and improve margins.
