Wabtec: Strong 2015, promising 2016

Wabtec Corporation on Feb. 18, 2016 reported record results for fourth-quarter 2015, as higher sales in the company’s Freight Group more than offset lower sales in the Transit Group, which led to $833 million in sales for the quarter.

Changes in foreign exchange rates reduced sales by about $27 million compared to the year-ago quarter, Wabtec says.

Wabtec reported fourth-quarter income from operations of $151 million or 18.2% of sales, compared to $137 million or 16.7% of sales in the year-ago fourth quarter. Earnings per diluted share were a record $1.05, 11% higher than fourth-quarter 2014.

For the full year, Wabtec had sales of $3.3 billion, income from operations of $608 million or 18.4% of sales, and earnings per diluted share of $4.10, all of which were records, the company says. For the full year, the company generated cash flow from operations of $448 million, which exceeded net income of $399 million.

At year-end, the company had cash of $226 million, an additional $203 million of cash held in escrow for the planned acquisition of Faiveley Transport, and debt of $696 million.

In 2015, Wabtec repurchased 4.9 million shares of its common stock for $388 million, or about $79 per share.

Additionally, Wabtec today issued 2016 guidance for earnings per diluted share of between $4.30-$4.50, with revenues expected to be flat to slightly up. The company expects 2016 quarterly results to improve sequentially during the year as it realizes the benefits of ongoing cost reduction initiatives and as projects already in backlog begin to ramp up. This guidance does not include Wabtec’s pending acquisition of Faiveley Transport, which is progressing and which Wabtec currently expects to close by mid-year depending on the timing of regulatory approvals. Faiveley Transport is a global supplier of high added value integrated systems for the railway industry.

Raymond T. Betler, Wabtec’s President and CEO, said: “We finished 2015 with a strong performance and are positioned for record results again in 2016, even as we face challenges in some of our key markets. We have responded to these challenges by accelerating our cost and efficiency improvement programs. At the same time, we continue to invest in our growth strategies and remain optimistic about our long-term prospects, thanks to continued investment in freight rail and passenger transit projects around the world. As always, we expect to benefit from our diversified business model, balanced growth strategies and rigorous application of the Wabtec Performance System.”