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Wabtec (WAB) Up Despite Q4 Earnings Miss, '19 View Solid
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Westinghouse Air Brake Technologies Corporation, which operates as Wabtec Corporation (WAB - Free Report) , reported fourth-quarter 2018 adjusted earnings of 97 cents per share. The bottom line missed the Zacks Consensus Estimate of $1.02 but improved 7.8% year over year. Total sales increased 4% year over year to $1.12 billion and outpaced the Zacks Consensus Estimate of $1.1 billion. Results were partly affected by foreign currency fluctuations.
Despite the earnings miss, shares of Wabtec have gained more than 6% at the close of business on Feb 25. The prime reason for this can be attributed to the company’s long-awaited merger completion with GE Transportation. Subsequently, the company has issued an upbeat outlook for 2019.
Including GE Transportation’s full-year results the company anticipates sales of $9.2 billion, adjusted EBITDA of $1.7 billion and adjusted income from operations of $1.4 billion for 2019. The figures exclude one-time transaction costs for the GE Transportation merger.
Total operating expenses in the reported quarter increased 15.1% to $203.57 million, primarily due to a 16.9% rise in selling, general and administrative expenses. Also, the operating ratio (operating expenses as a percentage of revenues) deteriorated to 18.2% from 16.4% in the prior-year period.
Segmental Performance
At the Transit segment, net sales climbed 4% to $736.97 million driven by organic sales growth and sales from acquisitions. Moreover, income from operations at the segment totaled $41.14 million, up 25%. As a result, the segmental operating margin (income from operations as a percentage of sales) expanded to 5.6% from 4.6% in the year-ago quarter.
Freight net sales rose 5% to $380.91 million backed by organic sales growth and sales from acquisitions. Meanwhile, income from operations amounted to $71.44 million, up 4%. However, operating margin remained flat year over year at 18.8%.
Liquidity
As of Dec 31, Wabtec had $580.91 million in cash and cash equivalents compared with $233.4 million at the end of 2017. Long-term debt at the quarter-end was $3.79 billion compared with $1.82 billion at 2017 end.
2019 Outlook
Wabtec anticipates sales of $8.4 billion for the current year. Adjusted EBITDA and income from operations is estimated at $1.6 billion and $1.2 billion, respectively. Additionally, adjusted earnings are expected to be $4.00-$4.20 per share. The Zacks Consensus Estimate for the same stands at $4.49.
Further, the company predicts adjusted operating margin to be 14% in 2019. Also, effective tax rate for the year is estimated at 24%. Moreover, adjusted cash flow from operations is forecast to exceed adjusted net income.
While Trinity and Herc surpassed estimates in three of the trailing four quarters, Air Lease exceeded the same in each of the preceding four quarters.
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Wabtec (WAB) Up Despite Q4 Earnings Miss, '19 View Solid
Westinghouse Air Brake Technologies Corporation, which operates as Wabtec Corporation (WAB - Free Report) , reported fourth-quarter 2018 adjusted earnings of 97 cents per share. The bottom line missed the Zacks Consensus Estimate of $1.02 but improved 7.8% year over year. Total sales increased 4% year over year to $1.12 billion and outpaced the Zacks Consensus Estimate of $1.1 billion. Results were partly affected by foreign currency fluctuations.
Despite the earnings miss, shares of Wabtec have gained more than 6% at the close of business on Feb 25. The prime reason for this can be attributed to the company’s long-awaited merger completion with GE Transportation. Subsequently, the company has issued an upbeat outlook for 2019.
Including GE Transportation’s full-year results the company anticipates sales of $9.2 billion, adjusted EBITDA of $1.7 billion and adjusted income from operations of $1.4 billion for 2019. The figures exclude one-time transaction costs for the GE Transportation merger.
Total operating expenses in the reported quarter increased 15.1% to $203.57 million, primarily due to a 16.9% rise in selling, general and administrative expenses. Also, the operating ratio (operating expenses as a percentage of revenues) deteriorated to 18.2% from 16.4% in the prior-year period.
Segmental Performance
At the Transit segment, net sales climbed 4% to $736.97 million driven by organic sales growth and sales from acquisitions. Moreover, income from operations at the segment totaled $41.14 million, up 25%. As a result, the segmental operating margin (income from operations as a percentage of sales) expanded to 5.6% from 4.6% in the year-ago quarter.
Freight net sales rose 5% to $380.91 million backed by organic sales growth and sales from acquisitions. Meanwhile, income from operations amounted to $71.44 million, up 4%. However, operating margin remained flat year over year at 18.8%.
Liquidity
As of Dec 31, Wabtec had $580.91 million in cash and cash equivalents compared with $233.4 million at the end of 2017. Long-term debt at the quarter-end was $3.79 billion compared with $1.82 billion at 2017 end.
2019 Outlook
Wabtec anticipates sales of $8.4 billion for the current year. Adjusted EBITDA and income from operations is estimated at $1.6 billion and $1.2 billion, respectively. Additionally, adjusted earnings are expected to be $4.00-$4.20 per share. The Zacks Consensus Estimate for the same stands at $4.49.
Further, the company predicts adjusted operating margin to be 14% in 2019. Also, effective tax rate for the year is estimated at 24%. Moreover, adjusted cash flow from operations is forecast to exceed adjusted net income.
Zacks Rank & Stocks to Consider
Wabtec carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the same space are Trinity Industries (TRN - Free Report) , Herc Holdings (HRI - Free Report) and Air Lease Corporation (AL - Free Report) . While Trinity sports a Zacks Rank #1 (Strong Buy), Herc and Air Lease carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
While Trinity and Herc surpassed estimates in three of the trailing four quarters, Air Lease exceeded the same in each of the preceding four quarters.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +98%, +119% and +164% in as little as 1 month. The stocks in this report could perform even better.
See these 7 breakthrough stocks now>>