Westinghouse Air Brake Technologies (NYSE:WAB) Corporation, which operates as Wabtec Corporation WAB, reported second-quarter 2021 earnings (excluding 40 cents from non-recurring items) of $1.06 per share, surpassing the Zacks Consensus Estimate of 98 cents. The bottom line improved 21.8%, driven by higher revenues. Total sales improved 15.8% year over year to $2,012.3 million owing to impressive revenues from both segments, namely freight and transit, as economic activities gain pace. The top line surpassed the Zacks Consensus Estimate of $1887.7 million.
Total operating expenses in the reported quarter increased 15.1% year over year to $376.8 million primarily due to a 21.7% uptick in selling, general and administrative expenses. The operating ratio (operating expenses as a percentage of revenues) improved 10 basis points from the year ago quarter to 18.7%.
Segmental Highlights
Freight net sales increased 11% to $1,335.9 million. Results were boosted by higher organic sales of $73 million, a $38-million acquisition value of Nordco and $21 million proceeds from favorable foreign currency exchange rates. Segmental operating margin (income from operations as a percentage of sales) increased to 13% from 11.7% in the year-ago quarter.
At the transit segment, net sales improved 27% to $676 million owing to higher organic sales. Transit segment organic sales increased $81 million while favorable foreign currency movements boosted sales by $63 million. Segmental operating margin declined to 6.7% from 7.5%
Balance Sheet Data
As of Jun 30, 2021, Wabtec, currently carrying a Zacks Rank #2 (Buy), had $453.5 million worth of cash and cash equivalents compared with $598.7 million at the end of 2020. The company generated cash from operations of $223 million in the June quarter.
Long-term debt at the end of the quarter was $4,079.6 million compared with $3,792.2 million at 2020 end. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
2021 Guidance
Wabtec now anticipates sales in the range of $7.9-$8.2 billion (old guidance: $7.7-$7.9 billion). The mid-point of the guided range, $8.05 billion, lies above the Zacks Consensus Estimate of $7.92 billion. Adjusted earnings per share are now estimated in the band of $4.15-$4.35 (past view: $4.05-$4.30). The mid-point of the guided range, $4.25, is higher than the Zacks Consensus Estimate of $4.23.
The company still expects to achieve run-rate savings of $250 million in the current year owing to cost management and synergies from the Wabtec and GE Transportation merger, which in turn, should lead to improved margins. It continues to anticipate generating a strong cash flow for 2021 with operating cash flow conversion exceeding 90%.
Sectorial Snapshots
Let’s take a look at some of the other recently released earnings reports from companies within the Zacks Transportation sector.
Knight-Swift Transportation Holdings KNX reported second-quarter 2021 earnings (excluding 6 cents from non-recurring items) of 98 cents per share, surpassing the Zacks Consensus Estimate of 87 cents. Total revenues of $1,315.7 million also outperformed the Zacks Consensus Estimate of $1,300.8 million.
United Parcel Service (NYSE:UPS) UPS reported second-quarter 2021 earnings (excluding a penny from non-recurring items) of $3.06 per share, beating the Zacks Consensus Estimate of $2.75. Quarterly revenues of $23,424 million also outperformed the Zacks Consensus Estimate of $23,085.4 million.
Ryanair Holdings (NASDAQ:RYAAY) RYAAY incurred a loss of $1.46 per share in the first quarter of fiscal 2022 (ended Jun 30, 2021), narrower than the Zacks Consensus Estimate of a loss of $1.50. Quarterly revenues of $446.4 million fell short of the Zacks Consensus Estimate of $459 million.
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