On October 23, 2024, Westinghouse Air Brake Technologies Corp (WAB, Financial) released its 8-K filing detailing the financial results for the third quarter of 2024. The company, a leading provider of technology-based products and services for the freight rail and passenger transit industries, reported a GAAP diluted earnings per share (EPS) of $1.63, which fell short of the analyst estimate of $1.65. However, the adjusted EPS of $2.00 exceeded expectations, reflecting a 17.6% increase from the previous year. Revenue for the quarter was $2.66 billion, falling short of the estimated $2.691 billion, marking a 4.4% year-over-year growth.
Company Overview and Segment Performance
Westinghouse Air Brake Technologies Corp (WAB, Financial) operates through two main business segments: Freight and Transit. The Freight segment, which generates the majority of the company's revenue, saw significant growth driven by increased demand for services and digital solutions, with sales up by 16.5% and 12.7%, respectively. The Transit segment also experienced a 9.6% increase in sales, primarily due to higher original equipment (OE) sales.
Financial Achievements and Challenges
The company's financial achievements in the third quarter were marked by a GAAP operating margin of 16.3% and an adjusted operating margin of 19.7%, both benefiting from higher sales and improved gross margins. The operating cash flow was robust at $542 million, up from $425 million in the same period last year, highlighting the company's strong cash generation capabilities.
The Wabtec team delivered another strong quarter, evidenced by continued growth in sales, margin, earnings, and operating cash flow, said Rafael Santana, Wabtec's President and CEO.
Key Financial Metrics and Analysis
Westinghouse Air Brake Technologies Corp (WAB, Financial) reported a GAAP gross margin of 33.0%, up from 31.0% in the previous year, and an adjusted gross margin of 33.3%. The company's backlog also showed positive trends, with a 12-month backlog increase of $533 million and a multi-year backlog increase of $751 million compared to the prior year period.
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Net Sales | $2,663 million | $2,550 million | +4.4% |
| GAAP Diluted EPS | $1.63 | $1.33 | +22.6% |
| Adjusted Diluted EPS | $2.00 | $1.70 | +17.6% |
| Cash Flow from Operations | $542 million | $425 million | +27.5% |
Outlook and Guidance
Westinghouse Air Brake Technologies Corp (WAB, Financial) has raised and tightened its 2024 adjusted EPS guidance to a range of $7.45 to $7.65, reflecting a 27.5% increase from 2023 at the midpoint. The revenue guidance remains unchanged at $10.25 billion to $10.55 billion. The company expects an operating cash flow conversion of greater than 90% for the full year 2024.
Overall, Westinghouse Air Brake Technologies Corp (WAB, Financial) demonstrated strong financial performance in the third quarter of 2024, driven by robust sales growth and improved margins. Despite missing the GAAP EPS estimate, the company's adjusted EPS and revenue fell short of expectations, underscoring its resilience and strategic focus on innovation and cost management.
Explore the complete 8-K earnings release (here) from Westinghouse Air Brake Technologies Corp for further details.
