PITTSBURGH--(BUSINESS WIRE)--Wabtec Corporation (NYSE: WAB) today reported fourth quarter and full year 2020 results and issued financial guidance.

“Wabtec delivered strong operational performance during a year of unprecedented global challenges,” said Rafael Santana, Wabtec’s president and chief executive officer. “I am proud of how our team responded to the crisis in 2020. We quickly protected our teams, kept our operations delivering for customers, and focused on liquidity, cost management, and execution to strengthen our financial position while returning significant capital to shareholders. We also never lost sight on future growth, investing in new sustainable rail technologies that will transform the future of transportation – making it cleaner, greener, safer, and more efficient.”

“We enter 2021 with positive momentum, as our end-markets continue to show signs of recovery. Global freight volumes and equipment utilization have sequentially improved over the last two quarters, North American OE markets are transitioning through trough, and sustainable investment in global transit remains. I’m confident we’re well-positioned for growth and will continue to perform for our shareowners, our customers, and our employees in the short- and long-term.”

Fourth Quarter and Full Year 2020 Financial Summary

In the fourth quarter of 2020, Wabtec had cash from operations of $326 million, sales of $2.0 billion and GAAP earnings per diluted share of $0.46. Adjusted earnings per diluted share were $0.98 and excluded after-tax expenses of $0.20 for restructuring and transaction costs, $0.29 for non-cash amortization expense and $0.03 for tax on transactions costs (see reconciliation table).

For the full year of 2020, Wabtec had cash from operations of $784 million including approximately $220 million in one-time cost impacts related to restructuring, transaction and litigation costs, sales of $7.6 billion and GAAP earnings per diluted share of $2.17. Adjusted earnings per diluted share were $3.79 and excluded after-tax expenses of $0.45 for restructuring and transaction costs, $1.11 for non-cash amortization expense, $0.03 for foreign exchange loss and $0.03 for tax on transaction costs. (see reconciliation table).

Backlog remains strong, despite a challenging market. At December 31, 2020, Wabtec’s total, multi-year backlog was $21.6 billion, which was higher than at September 30 as OEM and after-market orders increased in both Freight and Transit. At December 31, 2020 the 12-month backlog was $5.5 billion.

2021 Financial Guidance

• Wabtec issued its 2021 sales guidance to a range of $7.6 billion to $7.9 billion, GAAP earnings per diluted share guidance to between $2.65 to $3.05 and adjusted earnings per diluted share to between $3.90 to $4.30. The adjusted guidance excludes estimated expenses for restructuring and amortization expenses.
• With cost actions and synergies stemming from the Wabtec and GE Transportation merger on-track, we expect to achieve a run rate savings of $250 million in 2021, driving improved margins. For full year 2021, Wabtec expects strong cash flow generation with operating cash flow conversion of greater than 90%.
• The company also announced it renewed its share buyback authorization up to $500 million.

2020 Fourth Quarter Consolidated Results

• Sales were $2.0 billion versus $2.4 billion in the same period a year ago. The decrease compared to the year-ago quarter was primarily driven by lower sales in Freight Equipment, Components, Digital Electronics, and Transit Aftermarket sales.
• Income from operations was $161 million (8.0 percent of sales) and adjusted income from operations was $283 million (14.0 percent of sales), which was unfavorably impacted by lower sales in Freight and Transit primarily due to COVID-19 pandemic disruptions. Adjusted income from operations excluded pre-tax expenses of $122 million, of which $71 million is for non-cash amortization expense and $51 million is for restructuring and transaction costs (see reconciliation table).
• Net interest expense was $49 million and other income was $6 million.
• The reported and adjusted effective tax rates for the quarter were 26.6 percent and 22.6 percent, respectively.
• Earnings per diluted share were $0.46 and adjusted earnings per diluted share were $0.98 (see reconciliation table). Adjusted earnings per diluted share excluded after-tax expenses of $0.52 as follows: $0.29 for non-cash amortization expense, $0.20 for transaction and restructuring and $0.03 for tax on transaction costs. (see reconciliation table).
• EBITDA, which Wabtec defines as earnings before interest, taxes, depreciation and amortization was $285 million and adjusted EBITDA was $337 million. Adjusted EBITDA excluded pre-tax expenses of $51 million for transaction and restructuring costs (see reconciliation table).

2020 Fourth Quarter Freight Segment Results

• Freight segment sales of $1.3 billion decreased by 20 percent from the year-ago quarter. The decrease was due to lower organic sales of $327 million and unfavorable changes in foreign currency exchange rates of $11 million, offset somewhat by $10 million of sales from acquisitions. Freight segment sales were primarily impacted by disruption due to the COVID-19 pandemic resulting from lower deliveries of locomotives, lower demand for new freight car components and lower Digital Electronics sales.
• Freight segment income from operations was $121 million (9.0 percent of segment sales) and adjusted income from operations of $218 million (16.3 percent of segment sales). Freight segment adjusted income from operations decreased 31 percent from the year-ago quarter primarily driven by mix of sales, lower absorption of fixed costs due to decreased locomotive deliveries offset somewhat by synergies and lower operating costs. During the quarter, we took further actions to aggressively adjust operational costs to current volume levels.

2020 Fourth Quarter Transit Segment Results

• Transit segment sales of $684 million decreased by 2 percent from the year-ago quarter. The decrease was due to lower organic sales of $54 million, offset somewhat by favorable changes in foreign currency exchange rates of $37 million. Transit segment sales were negatively impacted by lower after-market sales primarily related to the disruption caused by the COVID-19 pandemic.
• Transit segment income from operations was $57 million (8.3 percent of segment sales) and adjusted income from operations was $77 million (11.3 percent of segment sales). Transit segment adjusted income from operations increased from the year-ago quarter by 40 percent as a result of continued improvement in operational performance, improved risk management and cost actions, offset somewhat by lower volumes as a result of the COVID-19 pandemic.

Cash Flow and Liquidity Summary

• The company generated cash from operations of $326 million for the fourth quarter compared to cash from operations of $448 million in the year-ago quarter.
• For the full year 2020, the company generated cash from operation of $784 million, which included approximately $220 million of one-time impacts related to restructuring and transactions costs.
• The company repaid $190 million in debt during 2020. At year end, the company had cash and cash equivalents of $599 million and debt of $4.2 billion. At the quarter end, the company’s total available liquidity, which includes $599 million in cash and cash equivalents plus $1.3 billion available under current credit facilities, was $1.9 billion.

About Wabtec Corporation

Wabtec Corporation is a leading global provider of equipment, systems, digital solutions and value-added services for freight and transit rail. Drawing on nearly four centuries of collective experience across Wabtec, GE Transportation and Faiveley Transport, the company has unmatched digital expertise, technological innovation, and world-class manufacturing and services, enabling the digital-rail-and-transit ecosystems. Wabtec is focused on performance that drives progress, creating transportation solutions that move and improve the world. The freight portfolio features a comprehensive line of locomotives, software applications and a broad selection of mission-critical controls systems, including Positive Train Control (PTC). The transit portfolio provides highly engineered systems and services to virtually every major rail transit system around the world, supplying an integrated series of components for buses and all train-related market segments that deliver safety, efficiency and passenger comfort. Along with its industry-leading portfolio of products and solutions for the rail and transit industries, Wabtec is a leader in mining, marine, and industrial solutions. Based in Pittsburgh, PA, Visit: www.WabtecCorp.com