Wabtec Reports Mixed Q2 Results; Tightens FY22 EPS View

Westinghouse Air Brake Technologies Corp WAB (Wabtec) reported second-quarter FY22 net sales growth of 1.8% year-over-year to $2.05 billion, missing the consensus of $2.07 billion.
Sales growth was driven by higher Freight segment sales, partially offset by lower Transit segment sales, and was +5.6% Y/Y on a constant currency basis.
Adjusted EPS was $1.23 (+16% Y/Y), above the consensus of $1.22.
The gross margin expanded by 270 bps to 31.5%, and the adjusted gross margin was 31.6%, up by 170 bps.
The adjusted operating margin was 16.7%, up by 150 bps.
The backlog stood at $23.23 billion (+7.9% Y/Y). Wabtec generated cash from operating activities year-to-date, totaling $424 million versus $515 million a year ago.
Adjusted EBITDA increased by 6.3% Y/Y to $391 million, and margin expanded by 80 bps to 19.1%.
Wabtec had cash and equivalents of $501 million and total debt of $4.21 billion. As of June 30, 2022, its total available liquidity was $1.48 billion.
WAB repurchased $103 million of shares and closed two strategic bolt-on acquisitions during the quarter.
FY22 Guidance: Wabtec continues to expect sales of $8.30 billion - $8.60 billion, versus the consensus of $8.38 billion.
WAB sees adjusted EPS of $4.70 - $5.00 compared with previous guidance of $4.65 - $5.05.
It expects strong cash flow generation with operating cash flow conversion of greater than 90%.
Price Action: WAB shares are trading higher by 2.49% at $94.53 on the last check Friday.

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