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Wabtec (WAB) Q4 Earnings Lag, Revenues Beat, Dividend Up
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Wabtec Corporation (WAB - Free Report) reported fourth-quarter 2023 earnings (excluding 34 cents from non-recurring items) of $1.54 per share, which fell short of the Zacks Consensus Estimate of $1.57. The bottom line, however, improved 18.5% year over year owing to higher sales.
Revenues of $2.53 billion surpassed the Zacks Consensus Estimate of $2.49 billion. The top line grew 9.5% year over year on the back of higher sales of the Freight and Transit segments.
Total operating expenses in the reported quarter increased by $51 million to $456 million. Operating ratio (operating expenses as a percentage of revenues) deteriorated 60 basis points from the year-ago quarter to 18.1%. A lower value of the metric is preferable.
Adjusted operating margin increased 1.7 points to 17%. Operating margin benefited from higher sales and improved price/mix and productivity.
During the December quarter, WAB generated cash from operations of $686 million compared with $410 million a year ago. The uptick was due to higher earnings and improved working capital management. WAB exited the quarter with cash, cash equivalents and restricted cash of $620 million and total debt of $4.07 billion. At 2023-end, WAB’s total available liquidity was $2.12 billion. WAB repurchased shares worth $157 million and $409 million in the December quarter and full-year 2023, respectively.
Segmental Highlights
Freight net sales jumped 7.7% year over year to $1.8 billion, in line with our expectation. Results were boosted by double-digit growth in services and components. Segmental operating margin (on an adjusted basis) increased to 31.3% from 29.4% in fourth-quarter 2022.
In the Transit segment, net sales grew 14.3% year over year to $728 million due to strong aftermarket sales. The actual segmental sales figure was higher than our projection of $694 million. Segmental adjusted operating margin contracted to 29.4% from 30.3% in fourth-quarter 2022.
Other Notable Developments
Highlighting its pro-investor stance, management announced a 17.6% increase to its quarterly dividend. The new dividend of 20 cents per share will be paid on Mar 8, 2024, to shareholders of record at the close of business on Feb 23, 2024. The dividend hike raises Wabtec’s annualized cash dividend rate to 80 cents from 68 cents. In another shareholder-friendly move, WAB’s board announced a $1 billion share buyback authorization.
2024 Guidance
Wabtec expects sales in the $10.05-$10.35 billion band. The mid-point of the guided range, i.e. $10.2 billion, is above the Zacks Consensus Estimate of $10.12 billion.
Adjusted earnings per share are estimated to be between $6.50 and $6.90. The mid-point of the guided range, i.e. $6.70, is just below the Zacks Consensus Estimate of $6.71. Management anticipates strong cash flow generation, with operating cash flow conversion exceeding 90%.
Delta Air Lines’ (DAL - Free Report) fourth-quarter 2023 earnings (excluding $1.88 from non-recurring items) of $1.28 per share comfortably beat the Zacks Consensus Estimate of $1.17. Earnings, however, declined 13.5% on a year-over-year basis due to high labor costs.
Revenues of $14.22 billion surpassed the Zacks Consensus Estimate of $14.07 billion and increased 5.9% on a year-over-year basis driven by strong holiday-air-travel demand. Adjusted operating revenues (excluding third-party refinery sales) came in at $13.66 billion, up 11% year over year.
United Airlines (UAL - Free Report) reported fourth-quarter 2023 earnings per share (excluding 19 cents from non-recurring items) of $2, which outpaced the Zacks Consensus Estimate of $1.61 but declined 18.7% year over year.
Operating revenues of $13.6 billion beat the Zacks Consensus Estimate of $13.5 billion. The top line increased 9.9% year over year due to upbeat air-travel demand. Cargo revenues fell 14.8% year over year to $402 million. Revenues from other sources jumped 10.6% year over year to $803 million.
J.B. Hunt Transport Services' (JBHT - Free Report) fourth-quarter 2023 earnings per share of $1.47 missed the Zacks Consensus Estimate of $1.74 and declined 23.4% year over year.
Total operating revenues of $3.3 billion surpassed the Zacks Consensus Estimate of $3.2 billion but fell 9.5% year over year. Total operating revenues, excluding fuel surcharge revenues, decreased approximately 6% year over year.
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Wabtec (WAB) Q4 Earnings Lag, Revenues Beat, Dividend Up
Wabtec Corporation (WAB - Free Report) reported fourth-quarter 2023 earnings (excluding 34 cents from non-recurring items) of $1.54 per share, which fell short of the Zacks Consensus Estimate of $1.57. The bottom line, however, improved 18.5% year over year owing to higher sales.
Revenues of $2.53 billion surpassed the Zacks Consensus Estimate of $2.49 billion. The top line grew 9.5% year over year on the back of higher sales of the Freight and Transit segments.
Total operating expenses in the reported quarter increased by $51 million to $456 million. Operating ratio (operating expenses as a percentage of revenues) deteriorated 60 basis points from the year-ago quarter to 18.1%. A lower value of the metric is preferable.
Adjusted operating margin increased 1.7 points to 17%. Operating margin benefited from higher sales and improved price/mix and productivity.
During the December quarter, WAB generated cash from operations of $686 million compared with $410 million a year ago. The uptick was due to higher earnings and improved working capital management. WAB exited the quarter with cash, cash equivalents and restricted cash of $620 million and total debt of $4.07 billion. At 2023-end, WAB’s total available liquidity was $2.12 billion. WAB repurchased shares worth $157 million and $409 million in the December quarter and full-year 2023, respectively.
Segmental Highlights
Freight net sales jumped 7.7% year over year to $1.8 billion, in line with our expectation. Results were boosted by double-digit growth in services and components. Segmental operating margin (on an adjusted basis) increased to 31.3% from 29.4% in fourth-quarter 2022.
In the Transit segment, net sales grew 14.3% year over year to $728 million due to strong aftermarket sales. The actual segmental sales figure was higher than our projection of $694 million. Segmental adjusted operating margin contracted to 29.4% from 30.3% in fourth-quarter 2022.
Other Notable Developments
Highlighting its pro-investor stance, management announced a 17.6% increase to its quarterly dividend. The new dividend of 20 cents per share will be paid on Mar 8, 2024, to shareholders of record at the close of business on Feb 23, 2024. The dividend hike raises Wabtec’s annualized cash dividend rate to 80 cents from 68 cents. In another shareholder-friendly move, WAB’s board announced a $1 billion share buyback authorization.
2024 Guidance
Wabtec expects sales in the $10.05-$10.35 billion band. The mid-point of the guided range, i.e. $10.2 billion, is above the Zacks Consensus Estimate of $10.12 billion.
Adjusted earnings per share are estimated to be between $6.50 and $6.90. The mid-point of the guided range, i.e. $6.70, is just below the Zacks Consensus Estimate of $6.71. Management anticipates strong cash flow generation, with operating cash flow conversion exceeding 90%.
Currently, Wabtec carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Q4 Performances of Other Transportation Companies
Delta Air Lines’ (DAL - Free Report) fourth-quarter 2023 earnings (excluding $1.88 from non-recurring items) of $1.28 per share comfortably beat the Zacks Consensus Estimate of $1.17. Earnings, however, declined 13.5% on a year-over-year basis due to high labor costs.
Revenues of $14.22 billion surpassed the Zacks Consensus Estimate of $14.07 billion and increased 5.9% on a year-over-year basis driven by strong holiday-air-travel demand. Adjusted operating revenues (excluding third-party refinery sales) came in at $13.66 billion, up 11% year over year.
United Airlines (UAL - Free Report) reported fourth-quarter 2023 earnings per share (excluding 19 cents from non-recurring items) of $2, which outpaced the Zacks Consensus Estimate of $1.61 but declined 18.7% year over year.
Operating revenues of $13.6 billion beat the Zacks Consensus Estimate of $13.5 billion. The top line increased 9.9% year over year due to upbeat air-travel demand. Cargo revenues fell 14.8% year over year to $402 million. Revenues from other sources jumped 10.6% year over year to $803 million.
J.B. Hunt Transport Services' (JBHT - Free Report) fourth-quarter 2023 earnings per share of $1.47 missed the Zacks Consensus Estimate of $1.74 and declined 23.4% year over year.
Total operating revenues of $3.3 billion surpassed the Zacks Consensus Estimate of $3.2 billion but fell 9.5% year over year. Total operating revenues, excluding fuel surcharge revenues, decreased approximately 6% year over year.