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Westinghouse Air Brake Technologies Corporation, which operates as Wabtec Corporation (WAB - Free Report) , reported second-quarter 2020 earnings (excluding 41 cents from non-recurring items) of 87 cents per share. The figure surpassed the Zacks Consensus Estimate of 77 cents. However, the bottom line declined 17.9% year over year due to deteriorating operating ratio.
Total sales declined 22.3% year over year to $1,737.4 million and missed the Zacks Consensus Estimate of $1,808.8 million. This year-over-year decline was caused by lower sales in Freight Equipment, Services, Components and Transit sales as well as unfavorable changes in foreign currency translations.
Total operating expenses in the reported quarter dropped 21% to $327.3 million, with 25.5% reduction in selling, general and administrative expenses. Also, the operating ratio (operating expenses as a percentage of revenues) deteriorated to 18.8% from 18.5% in the prior-year quarter owing to lower revenues. Notably, lower the value of the metric the better.
Westinghouse Air Brake Technologies Corporation Price, Consensus and EPS Surprise
At the Transit segment, net sales fell 25% to $533 million. Results were hurt by organic sales decline of $160 million and unfavorable currency translations. The coronavirus-induced lower original equipment and aftermarket sales also hurt segmental numbers. Segmental operating margin (income from operations as a percentage of sales) declined to 7.5% from 8.8% in the year-ago quarter.
Freight net sales declined 21% to $1,204.7 million due to organic sales fall and adverse foreign currency movements. Segmental results were boosted by sales from acquisitions worth $19 million. Segmental operating margin improved to 11.7% from 11% in the year-ago quarter.
Balance Sheet Data
As of Jun 30, Wabtec had $587.9 million in cash and cash equivalents compared with $604.2 million at the end of 2019. Long-term debt at the end of the quarter was $3,768.7 million compared with $4,333.6 million at 2019 end.
Unlike in the first quarter, Wabtec provided its annual guidance amid the COVID-19 crisis.
For the current year, sales are anticipated range of $7.3 - $7.6 billion. The midpoint ($7.45 billion) of the guided range lies below the Zacks Consensus Estimate of $7.77. Meanwhile, adjusted earnings per share are forecast in the band of $3.50-$3.80. The midpoint ($3.65) of the guided range lies above the Zacks Consensus Estimate of $3.56. Moreover, the company hopes to achieve net synergy benefit of more than $150 million in the current year owing to cost-cutting measures and synergies from its merger with GE Transportation. Further, Wabtec expects cash flow conversions to be greater than 90%.
Sectorial Snapshot
Let’s take a look into some other Zacks Transportation sector companies’ second-quarter earnings.
Canadian National’s (CNI - Free Report) second-quarter 2020 earnings (excluding 36 cents from non-recurring items) of 92 cents per share (C$0.77) were in line with the Zacks Consensus Estimate. However, the bottom line declined 28.7% year over year. Quarterly revenues of $2,315 million (C$3,209 million) missed the Zacks Consensus Estimate of $2,407.6 million and fell 21.8% year over year.
J.B. Hunt Transport (JBHT - Free Report) , carrying a Zacks Rank #3 (Hold), reported second-quarter earnings of $1.14 per share that surpassed the Zacks Consensus Estimate by 31 cents. Total revenues of $2,145.6 million beat the Zacks Consensus Estimate of $2,060.9 million.
Kansas City Southern’s second-quarter earnings (excluding a penny from non-recurring items) of $1.15 per share beat the Zacks Consensus Estimate of $1.12. This Zacks Rank #3 (Hold) company’s total revenues of $547.9 million lagged the consensus mark of $550.2 million.
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Wabtec (WAB) Q2 Earnings Beat Estimates, Posts 2020 Guidance
Westinghouse Air Brake Technologies Corporation, which operates as Wabtec Corporation (WAB - Free Report) , reported second-quarter 2020 earnings (excluding 41 cents from non-recurring items) of 87 cents per share. The figure surpassed the Zacks Consensus Estimate of 77 cents. However, the bottom line declined 17.9% year over year due to deteriorating operating ratio.
Total sales declined 22.3% year over year to $1,737.4 million and missed the Zacks Consensus Estimate of $1,808.8 million. This year-over-year decline was caused by lower sales in Freight Equipment, Services, Components and Transit sales as well as unfavorable changes in foreign currency translations.
Total operating expenses in the reported quarter dropped 21% to $327.3 million, with 25.5% reduction in selling, general and administrative expenses. Also, the operating ratio (operating expenses as a percentage of revenues) deteriorated to 18.8% from 18.5% in the prior-year quarter owing to lower revenues. Notably, lower the value of the metric the better.
Westinghouse Air Brake Technologies Corporation Price, Consensus and EPS Surprise
Westinghouse Air Brake Technologies Corporation price-consensus-eps-surprise-chart | Westinghouse Air Brake Technologies Corporation Quote
Segmental Highlights
At the Transit segment, net sales fell 25% to $533 million. Results were hurt by organic sales decline of $160 million and unfavorable currency translations. The coronavirus-induced lower original equipment and aftermarket sales also hurt segmental numbers. Segmental operating margin (income from operations as a percentage of sales) declined to 7.5% from 8.8% in the year-ago quarter.
Freight net sales declined 21% to $1,204.7 million due to organic sales fall and adverse foreign currency movements. Segmental results were boosted by sales from acquisitions worth $19 million. Segmental operating margin improved to 11.7% from 11% in the year-ago quarter.
Balance Sheet Data
As of Jun 30, Wabtec had $587.9 million in cash and cash equivalents compared with $604.2 million at the end of 2019. Long-term debt at the end of the quarter was $3,768.7 million compared with $4,333.6 million at 2019 end.
Zacks Rank
The company currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Mixed 2020 Guidance
Unlike in the first quarter, Wabtec provided its annual guidance amid the COVID-19 crisis.
For the current year, sales are anticipated range of $7.3 - $7.6 billion. The midpoint ($7.45 billion) of the guided range lies below the Zacks Consensus Estimate of $7.77. Meanwhile, adjusted earnings per share are forecast in the band of $3.50-$3.80. The midpoint ($3.65) of the guided range lies above the Zacks Consensus Estimate of $3.56. Moreover, the company hopes to achieve net synergy benefit of more than $150 million in the current year owing to cost-cutting measures and synergies from its merger with GE Transportation. Further, Wabtec expects cash flow conversions to be greater than 90%.
Sectorial Snapshot
Let’s take a look into some other Zacks Transportation sector companies’ second-quarter earnings.
Canadian National’s (CNI - Free Report) second-quarter 2020 earnings (excluding 36 cents from non-recurring items) of 92 cents per share (C$0.77) were in line with the Zacks Consensus Estimate. However, the bottom line declined 28.7% year over year. Quarterly revenues of $2,315 million (C$3,209 million) missed the Zacks Consensus Estimate of $2,407.6 million and fell 21.8% year over year.
J.B. Hunt Transport (JBHT - Free Report) , carrying a Zacks Rank #3 (Hold), reported second-quarter earnings of $1.14 per share that surpassed the Zacks Consensus Estimate by 31 cents. Total revenues of $2,145.6 million beat the Zacks Consensus Estimate of $2,060.9 million.
Kansas City Southern’s second-quarter earnings (excluding a penny from non-recurring items) of $1.15 per share beat the Zacks Consensus Estimate of $1.12. This Zacks Rank #3 (Hold) company’s total revenues of $547.9 million lagged the consensus mark of $550.2 million.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>